The Battle for Las Vegas: The Law vs. The Mob (2 page)

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The Early Years

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n 1829, an 18-year-old Mexican scout for the Antonio Armijo Trading Caravan was tasked with finding a new trade route from Santa Fe, New Mexico, to Los Angeles. In his search he came upon an oasis in the desert. With abundant wild grasses and an ample water supply, it was a perfect place for the traders to stop and rest during their arduous journey. His discovery was named Las Vegas, which means The Meadows, but knowledge of its existence remained primarily limited to the Mexicans and the indigenous Paiute population until explorer John Frémont put it on the map in 1844.

In 1855, Brigham Young ordered 30 missionaries to Las Vegas Valley to build a fort and teach the Paiutes farming techniques. The Paiutes rejected the Mormon’s offerings and the fort was abandoned in 1858. The area remained sparsely settled until the arrival of the railroad.

In the summer of 1904, work on the first railroad grade into Las Vegas began. Thanks to the water supply, a town sprouted, consisting of saloons, stores, and boarding houses to accommodate the railroad workers. On May 15, 1905, the railroad auctioned off 1,200 lots in a 40-block area surrounding downtown and Las Vegas was established as an unincorporated city. In 1909, it became the county seat for the new Clark County.

Railroaders were a hard drinking rough-and-tumble lot. The main problem the lawmen in those early days had to confront was dealing with the drunks and their drinking-related fights.

In 1910, Nevada passed an anti-gambling law so strict that it was illegal to even follow the western custom of flipping a coin for the price of a drink. Within weeks, however, underground gambling began to flourish.

On March 16, 1911, Las Vegas incorporated, covering an area of approximately twenty square miles. The city’s population was about 800. At the same time, Clark County had 3,321 residents.

By 1930, the population of Las Vegas had reached 5,165. Shortly thereafter, three events occurred that permanently altered the face of Las Vegas, Clark County, and Nevada. As a side effect, they also led to the initiation of Las Vegas Valley as a cash cow for organized-crime families across the country.

First, on March 19, 1931, gambling was legalized in Nevada. A month later, six gaming licenses were issued in Las Vegas, the first going to Stocker’s Northern Club on Fremont Street.

Second, state divorce laws were liberalized. With easier residency requirements, “quickie” divorces could be attained in only six weeks. Short-term residents flocked to Nevada. In Las Vegas, many of them stayed at dude ranches, the forerunners of the sprawling Strip hotels of today.

And third, construction began on Hoover Dam, generating a population boom and boosting the Valley’s economy, which was in the grip of the Great Depression.

Small-town Las Vegas would soon be on its way to becoming the entertainment and gambling capital of the world. But the influx of people and money would later earn Vegas another name: Sin City.

Benjamin Siegel

Ten years later, the first Strip casino appeared when the El Rancho Vegas opened on April 3, 1941. The Last Frontier followed on October 30, 1942. The next Strip property to arrive on the scene, in 1946, was the one that is acknowledged as the first of those backed substantially by mob money: Bugsy Siegel’s Flamingo.

Benjamin Siegel was born in Brooklyn in 1905. While growing up he developed a reputation for having a vicious temper, which earned him the nickname of “Bugsy.” As a teenager in New York, Siegel befriended Meyer Lansky and, with a group of other young tough guys, operated the Bug and Meyer Mob. Eventually, they teamed up with future New York City crime boss Charlie “Lucky” Luciano. In spite of alleged involvement in crimes ranging from bootlegging to murder, Siegel was able to avoid being convicted of any serious charges.

Bugsy had the looks of a Hollywood leading man and made frequent trips from New York to Los Angeles. He enjoyed the company of famous entertainers, many of whom liked the idea of socializing with the increasingly powerful gangster. His infatuation with Hollywood led him to move west to help establish the mob-controlled Trans-America wire service to compete with the Continental Press Service, which provided bookmakers with the results of horse races from across the country.

In pursuit of this objective, Siegel made an appearance in Las Vegas in 1942. His enterprise was legal in Nevada, where all potential clients held county licenses. He signed up a number of subscribers to the service, each paying a hefty fee. It’s estimated that Siege1’s income from the Las Vegas bookies was about $25,000 per month. During this brief visit, Siegel came to appreciate the tremendous earning potential of the Las Vegas casinos.

In early 1946 Siegel saw an opportunity to establish himself in the Las Vegas gambling business. A Hollywood nightclub owner named Billy Wilkerson had attempted to build a casino in Vegas called the Flamingo. The effort faltered and the partially completed resort was sitting idle. Bugsy packed his clothes and money and headed back to Vegas to take over the Flamingo project. He was confident that if his personal finances weren’t enough to finish the job, his hoodlum friends could be convinced to invest in his dream: building the first truly posh hotel and casino in the Las Vegas desert.

Bugsy hired the Del Webb Construction Company of Phoenix to complete the Flamingo. According to the book
The Green Felt Jungle,
the cost, initially estimated at $1.5 million, ballooned to $6 million. The many reasons cited for the huge cost overrun included Siegel’s insistence that the Flamingo be built like a fortress, constructed of steel and concrete where less expensive materials would have sufficed. He also wanted the best in furnishings, importing wood and marble at exorbitant costs. Each guest room even had its own sewer line, adding $1 million to the bill.

So soon after the end of World War II, not all of the supplies Siegel ordered Webb to use were readily available; such circumstances proved to be only minor annoyances to Bugsy, who simply turned to the black market for his needs. He got whatever he wanted, but had to pay outrageous prices. To make matters worse, the illegal suppliers sometimes delivered a load of expensive merchandise during the day, then returned at night to steal it back. Finally, they showed up at the site the next morning to sell Siegel the same items all over again.

The black marketeers weren’t deterred from their larcenous actions by Bugsy’s fearsome reputation, and Las Vegas police officer Hiram Powell was equally unimpressed with the gangster. The bronco buster from Texas arrived in Vegas in 1941 to compete in a rodeo and never left. He was hired as a cop in 1942 and recalled his first encounter with Siegel in a 2002 interview.

“It was a winter morning in the mid-1940s. I pulled Siegel over for a traffic violation at East Charleston and Fifth Street [now Las Vegas Boulevard]. When he handed me his license, there was a hundred dollar bill folded up with it. That was a lot of money at the time, but I let the bill drop to the ground. The last I saw of it, it was blowing down Charleston. I gave Siegel his ticket and let him go. Back then he had a reputation as a tough guy, but as far as I was concerned he was just another punk.”

Bugsy may have been just another thug to Powell, but the cop soon learned he was a well-connected one.

“About an hour after I stopped Siegel, I got a radio message to return to the station. The chief asked me what had happened between Siegel and me. I told him the story and then he fired me,” Powell recalled. The officer was reinstated a day later, but Siegel was never one of his favorite people.

Bugsy’s political clout, however, wasn’t able to help him when it came to his financial woes at the Flamingo. Quickly running out of his own estimated $1 million, he made numerous trips back to the Midwest and East Coast in search of additional funding. Over time, he was able to get his gangland associates to invest $3 million, but that still left him a couple million in the hole. Seeing the Flamingo project as a bottomless pit, Bugsy’s hoodlum friends cut off their largesse. Some even began to wonder if Siegel was just an incompetent businessman or if something more sinister was behind the burgeoning cost of the Flamingo. Was it possible that Bugsy had sticky fingers and was stealing from his friends? Coming under that type of suspicion from his investment partners didn’t bode well for the would-be gambling tycoon, neither financially nor physically.

In June of that year, an incident took place that convinced Siegel’s New York pals that his ego was growing as fast as the Flamingo’s debt. James Ragan, the owner of Continental Press Service, was gunned down in Chicago in an attempted hit. Surprisingly, the man survived the attack and was recovering in a hospital six weeks later when he suddenly died. An autopsy revealed that Ragan had enough mercury in his body to kill him twice over. In spite of an around-the-clock police guard, the Chicago Outfit had apparently found a way to spike the dead man’s soft drinks with the poison. The Chicago people quickly took over Continental Press, eliminating the need for the mob-owned Trans-America. Still, Bugsy needed his income from the wire service and figured his colleagues liked the extra cash, too. He also needed more money for the Flamingo. He flew to New York to discuss the situation with the board of directors of the Combination.

In a stunning presentation, Siegel told some of the most dangerous men in America that if they wanted Trans-America to stay in business, they’d have to give him $2 million, which happened to be the amount he owed Del Webb. That was the deal, take it or leave it. With that he walked out, leaving a room full of gangsters looking at each other in open-mouthed amazement.

Back in Las Vegas, Siegel was like a man possessed in trying to get the Flamingo ready for opening. He ordered everyone on twelve-hour shifts and seven-day work weeks. With the Vegas valley’s population at around a meager 40,000, additional craftsmen were flown in from Los Angeles, Denver, San Francisco, and Salt Lake City to supplement the local labor pool. Construction continued to be plagued by design flaws and poor workmanship.

Trouble was also brewing in Los Angeles, where the bookies were looking for relief from being forced to pay fees to both Chicago’s Continental Press Service and the still-operating Trans-America. They didn’t like it, but knew it was dangerous to cease doing business with either one. Siegel told them to go to hell. As the dissatisfaction grew, his attitude placed the local people running Trans-America in an increasingly tough spot.

Though unfinished, the Flamingo opened on December 26, 1946. The casino, lounge, theater, and restaurant were ready to go, and that was enough for Bugsy. Dressed in a white tie and swallowtail coat, his Beverly Hills girlfriend Virginia Hill by his side, the handsome gangster was ready for his big night. Unfortunately, it proved to be a disaster, a flop that was not well-received back east.

The day started out bad when planes Siegel had hired to bring in specially invited guests from Los Angeles were grounded due to poor flying weather in California. Even so, some entertainers and celebrities did make it to the Flamingo that night. They included Jimmy Durante, performing the leadoff act, followed later by the Xavier Cugat Band. Actors George Sanders and George Raft also appeared.

Siegel’s run of bad luck continued in the casino: It lost money. As word of the losses made their way to Bugsy during the evening, he became irate. He reportedly took his anger out on some of the guests, becoming verbally abusive and throwing out at least one family.

Two weeks later, as the losing streak continued, Bugsy closed the Flamingo’s doors. He decided to wait for the hotel to be finished to reopen, hopefully with better results.

As Siegel cooled his heels waiting for his next chance at gambling stardom, he received disturbing news from New York. Lucky Luciano, who had been exiled to Italy as part of a deal he made with the government to get out of prison after a racketeering conviction, had convened a meeting of the Combination in Havana and Bugsy wasn’t on the list of invitees. In Siegel’s world, a snub like that often boded ill for the one being excluded.

Sensing that he might be in trouble, Bugsy flew to Havana on his own to see Luciano. Meeting in the headman’s hotel suite, the talk eventually turned to the Flamingo. Siegel sang its praises, but Lucky was unimpressed with his underling’s descriptive phrases of glitz and glamour. He was more interested in where his partner’s $3 million investment stood. Siegel pleaded for more time, a year, to get the Flamingo open again and turn it into the revenue producer he was sure it could be.

Luciano dismissed Siegel with the admonishment that he should go back to Vegas and behave himself. The boss also ordered him to give up the wire service and let the Chicago Mob have the operation to itself. With that, the famous Siegel temper kicked into high gear. In no uncertain terms, Bugsy told Lucky what he could do with his orders, then stormed out of the meeting.

Few if any men talked to Lucky Luciano the way Siegel had and lived very long to tell about it. Bugsy would be no exception.

The Flamingo reopened on March 27, 1947. For the first three weeks it continued to operate in the red, and then things began to turn around. In May it was $300,000 in the black. Bugsy had been apprehensive after his return from Havana, but the positive financial reports calmed him down. His vision was finally being realized. The Flamingo was on its way to becoming the gold mine he’d predicted. He was sure Lucky and the others would be pleased they had listened to him. However, the Flamingo’s success was a case of too little, too late for Siegel.

On the night of June 20, a now-confident Siegel was relaxing in the living room of Virginia Hill’s mansion in Beverly Hills. Conveniently for her, she was away on vacation in Paris, but his trusted friend Al Smiley was with him. Suddenly, rifle shots rang out from outside the living-room window. Two slugs struck Siegel in the face. One of them ejected his left eye, which was found on the floor some 15 feet away from his body. Benjamin Siegel had been murdered at the age of 41. Bugsy was dead, but Las Vegas was just coming to life.