Leaving Vegas: The True Story of How the F.B.I. Wiretaps Ended Mob Domination of Las Vegas Casinos

Leaving Vegas: The True Story of How the F.B.I. Wiretaps Ended Mob Domination of Las Vegas Casinos

By Gary Jenkins

Copyright 2016 by Gary Jenkins

Copyright 2016 by Gary Jenkins

ALL RIGHTS RESERVED

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means--electronic, mechanical, photocopying, recording or otherwise--without prior written permission.

Published December 2016 by Gary Jenkins

ISBN-13: 978-1540779250

ISBN-10: 1540779254

Acknowledgements

I must acknowledge the following folks for their courage and dedication to duty. We all sacrificed many nights and weekends to make Kansas City, and the rest of the country, a safer and more civilized place.

F.B.I. agents William Ouseley, Lee Flosi, and Shea Airey developed the sources that started this bullet down the barrel. The first Department of Justice Strike Force chief attorney, Mike DeFeo, and his staff created the atmosphere and supplied the legal direction. When DeFeo was promoted, David J.J. Helfrey and his team continued to a successful prosecution of the Midwest mafia leaders. Many agents, like Hank Bledsoe (not his real name), Cullen Scott, Eugene Thomeczek, Ed Humphry, Ed Skelly and the rest of the surveillance squad, did hours of legwork. Kansas City Police Intelligence Unit Captain Robert Pattison, along with Sergeants Lawrence Weishar and Billy Trollope, created a trusting relationship with the F.B.I. Organized Crime Squad. They assigned detectives Harold Nichols, Tommy Joe Walker, Lee Floyd and Robert Arnold to help with the tedious and delicate surveillance work. I was privileged to be assigned to that team. Many other F.B.I. agents and KCPD officers spent long, tedious hours physically watching and electronically listening to the upper echelon of the Kansas City organized crime family.

CONTENTS

Acknowledgements

Prologue

Chapter 1 - The Times

Chapter 2 - The Escalation of Violence

Chapter 3 - The Villa Capri Probable Cause

Chapter 4 - Installation

Chapter 5 - The Villa Capri

Chapter 6 - The Breckinridge Inn Probable Cause

Chapter 7- Politics Ain’t What They Used To Be

Chapter 8- Ownership Schemes

Chapter 9 - Lefty And The Nevada Gaming Board

Chapter 10 - A Window Into The Lawyer’s Office

Chapter 11- Lefty Tries Blackmail

Chapter 12 - Rosenthal’s Blackmail

Chapter 13 - Nick Civella reaches out for Lefty

Chapter 14 - The Skim Leakage

Chapter 15 - Secrets Revealed: Marlo Meeting

Chapter 16 - What Are You Going to Do, Pay Taxes?

Chapter 17 - Rats Leave a Sinking Ship

Who’s Who In The Investigation

Links to Photos of Mob Associates

About the Author

Prologue

Strawman is defined as a person used as a cover for another’s activity. In 1978, the Kansas City F.B.I. commenced an investigation into the Midwest crime families’ influence over Las Vegas casinos. The investigation would uncover two different skim operations: one from the Tropicana, and one from the Stardust. The Justice Department code-named the Tropicana case, Strawman I and the Stardust case, Strawman II.

Prior to this investigation, most knowledgeable people suspected organized crime families exerted some control over trucking company union activities in the Teamsters Union. In the Strawman investigation, law enforcement would prove that several Midwest crime families improperly influenced the Teamsters Central States Pension Fund Trustees to loan money to an unqualified debtor for the purpose of buying Las Vegas casinos. In exchange for their influence, the mob bosses from Kansas City, Chicago, Cleveland and Milwaukee required the debtor receiving a pension fund loan to be a strawman owner. Mob bosses required these strawman owners to hire specified employees to run the casinos. These mob puppets set up schemes to skim cash from casino profits in order to pay the mob bosses back for their influence.

During the Strawman investigation, the F.B.I. Organized Crime Squad used electronic surveillance in ways that had not been done before. For example, they placed a hidden microphone in a mob lawyer’s office and a wiretap on that phone. Over the course of a year, and many different recording devices, thousands of hours of audio would be recorded, resulting in 4,200 hours of audio being placed in evidence at the subsequent trials. This story would be fictionalized in the Martin Scorsese film, Casino. This book tells the real story using the actual voices of mob members and associates.

Kansas City F.B.I. agents would learn that local mob boss, Nick Civella, was managing most of the Vegas skimming activities. One particular hidden microphone, in the home of Josephine Marlo, produced detailed evidence of skimming as well as evidence of a murder plot against a rival crime family.

Josephine Marlo, a relative of Kansas City mob boss, Nick Civella, lived in Filumena Acres, a suburban neighborhood filled with post-war, ranch-style homes. The cops and many others called it the mob neighborhood. Nick Civella lived in the largest home on a corner lot. Directly across the street, Nick’s brother, Carl Cork Civella lived in a pink stone home. Cork’s next-door neighbor was his son, Anthony Tony Ripe Civella, who lived in a split-level brick home. Cork’s neighbor on the west was his nephew, Carmen Butch Civella. The entire square block was nearly filled with friends and relatives. Most of the Civella neighborhood houses were joined by a high wooden security fence with a swimming pool in the middle. Neighborhood children all joined in the pool fun. Like John Gotti, on July 4th Cork would put on a neighborhood fireworks show in the common area. Most of the Filumena Acres residents were very suspicious of outsiders. For example, they used a private contractor for trash collection in an effort to prevent law enforcement from searching for clues in their trash. Most people driving through this neighborhood felt watched.

One day in November of 1978, Agent Hank Bledsoe and another agent left the F.B.I. office dressed in the work clothes and yellow hard hats of Southwestern Bell telephone employees. Ms. Marlo was glad to see them because her phone was not working properly. They found her stirring a pot on the gas stove and smelled a pungent aroma. The agents split up, one looking at the kitchen phone while Hank Bledsoe went into the family room. He observed a leather sofa and two matching chairs in a seating arrangement around a cocktail table and thought it was the ideal setup for a meeting. As Bledsoe made his room survey, looking for the ideal place for a microphone, Ms. Marlo left the other agent alone in the kitchen and followed Agent Bledsoe to the family room. Hank Bledsoe appears to be the kind of man you’d meet at a Rotary luncheon, not a black bag (a non-destructive entry technician) expert with ice water running through his veins. In his smooth and innocent manner, Agent Bledsoe attempted to put Ms. Marlo at ease by asking what was cooking on the stove. When he learned it was chili, Bledsoe compared notes with her on chili recipes and learned the Marlo chili secret is adding cumin to the recipe. After identifying the best locations for hidden microphones, the agents left with the phone system miraculously working. These same agents will return to the Josephine Marlo house and install some of the most important microphones of the investigation.

F.B.I. Title III Hidden Microphone

Josephine Marlo Residence

November 28, 1978

The following is a substantially verbatim transcript of a conversation between CIVELLA: NICHOLAS CIVELLA AND THOMAS: CARL THOMAS

THOMAS: I remember one night in Circus Circus, we had an obligation to meet, course I was young and had some balls, I guess. There was two guys from the state outside, Bybee was one of them, and I was in there on my fuckin’ back, snatching that money, and they weren’t as far from me as that refrigerator, puttin’ money in my pockets. Ah, you always, I think if you do things out in the open, you stare a guy right in the face, the guy won’t think you’re doin’ nothin’!

CIVELLA: Sometimes the most obvious is the best way.

This is one small snippet from a 112-page document that became known as the Marlo Tapes. F.B.I. agents recorded Nick Civella, his brother Cork Civella, and Kansas City mob underboss Tuffy DeLuna discussing Las Vegas casino skimming with their underlings, Carl Thomas and Joe Agosto.

Carl Thomas was seen as squeaky clean by the Nevada Gaming Control Board and Las Vegas casino executives. Because of that image, casino owners, politicians and other casino executives allowed Thomas access to elite social, business and government circles. He had come up in the casino business at Circus Circus, had worked at the Stardust, and ended his career at the Tropicana.

Apparently Thomas’s story about Circus Circus was reminiscent of the time he worked at Circus Circus between 1974-1976. Bybee was Shannon Bybee, a young, aggressive investigator for the Nevada Gaming Control Board. Apparently, Thomas thought he was pretty slick, skimming Circus Circus casino money right in front of Bybee. The investigator had started his career as a military policeman at West Point, later became a deputy sheriff in Washoe County, NV, attended the University of Utah School of Law, joined the Nevada Gaming Control Board in 1971, and went on to become one of the most respected men in the gaming industry.

By having an obligation to meet, Thomas meant he was skimming to satisfy a Teamsters loan kickback. Circus Circus was built by a longtime successful casino operator named Jay Sarno. Carl Thomas would later testify that he began his skimming career at Circus Circus in 1969, when it was owned by the late Sarno. Thomas said he was asked to handle the skim at Circus Circus by Allen Dorfman, a Chicago Outfit associate and a consultant to the Chicago-based Teamsters pension fund. He (Dorfman) told me there were obligations to fulfill and he wanted my help in fulfilling them, Thomas testified. It was my understanding that a fee had to be paid for the loans, and I was to do the skimming. Thomas would figure out methods of removing gambling money before it was counted. His favorite method was to have confederates inside the count room. He had other methods, such as rigging the scales that weighed the slot machine coins or moving money from one game table to another and creating false records. The goal was to take the money before it was recorded for the Gaming Control Board to tax. In the Circus Circus case, as with other casinos with borrowed Teamster pension funds, mob associates like Allen Dorfman ensured these loans were approved and then expected this under-the-table kickback for their efforts.

Nick Civella was the quintessential Mafia Don (in the mold of the fictional Don Corleone, for those familiar with Mario Puzo’s The Godfather). At an early age, he rebelled against the older La Cosa Nostra mobsters and robbed protected gambling games. After one of his gang was assassinated and an attempt was made on his life, he was forced to flee from Kansas City to Chicago.

While in Chicago, Civella found mobsters that recognized his potential. He used the Chicago Outfit’s clout and returned to Kansas City. Within a few years, during the early 1950s, he rose to the top job of Kansas City’s modern criminal syndicate that had been enriched and emboldened by Prohibition. He saw the advantage and opportunity of a close relationship with the powerful Teamsters Union. He never acted out of passion and mob killings were always approved in advance and conducted out of the public view, when possible.

Civella was always gracious and generous to service providers, family, neighbors and other casual contacts. While he was alive, all his close family members lived within eyesight of his home. Several other made members of the Kansas City crime family lived within a one-square block radius. To be a made member of the family meant the person made their living primarily from criminal activity and had been inducted into the group with a secret ceremony. Civella was aware that adverse publicity from violent action in a public place was bad for the family (sometimes called La Cosa Nostra, the Outfit, the mob), and good for the government. He was quick to see opportunity and adapt to keep a steady flow of income for himself and other made members.

Understanding the value of political connections, Civella knew that he needed cash money to obtain and maintain those connections. That cash would come out of Las Vegas casinos. To keep the money flowing from the casinos, Civella needed trustworthy moles and minimal government attention.

When it came to stealing, Civella once said, Sometimes the most obvious is the best way. He was capable of using violence when necessary but he was also smart enough to know when to use a briefcase rather than a gun. Alongside his brother, Cork, Nick Civella would rule the Kansas City mob family from the 1950s until their deaths in the 1980s.

Chapter 1

The Times

The Omnibus Crime Control Act of 1968 created a statute that allowed court-ordered electronic surveillance. The electronic surveillance section was known as Title III, soon shortened to T-3. President Carter’s political appointees in the Justice Department discouraged the F.B.I from conducting T-3 investigations. The statute stipulated that agents must demonstrate that no other investigative strategies would be successful, as well as adhere to many other stringent restrictions. For example, to install a hidden microphone, investigators must have detailed evidence as to the reason why the audio must be gathered, why other investigative techniques have failed, strong evidence that the criminal conversations will happen and exactly what room will host these conversations. In Kansas City, Missouri, the local F.B.I. office understood this was a powerful tool in their fight against organized crime activities because witnesses are hard to find and generally do not cooperate with authorities.

The 1970s were not good for law enforcement in the U.S. Anti-Vietnam War activists had plotted to disrupt the 1972 Republican Convention in Florida. The U.S. Attorney charged these activists in federal court, but before the trial, defense attorneys learned that key members of the Vietnam Veterans Against the War were actually F.B.I. operatives and the case was dismissed. During these turbulent years, anti-war activists had burglarized an F.B.I. office and stolen files. The burglars found that those files revealed the existence of a counter-intelligence program known as COINTELPRO. Under this program, the F.B.I. sought to disrupt American anti-government political organizations. The public learned of other abuses of power by government agents from the 1973-1974 Watergate hearings. These Congressional hearings revealed the use of electronic surveillance and covert entry for political purposes. In 1976, All the President’s Men was released as a best-selling book and popular film starring Dustin Hoffman and Robert Redford. Even though Deep Throat, the famous inside source, was an F.B.I. agent, this popular depiction of government abuse of power fueled an anti F.B.I. sentiment in the United States.

Americans were still reeling from the revelations of Watergate: presidential- sanctioned burglaries to copy files, install secret illegal hidden microphones and listen to wiretapped recordings. President Gerald Ford had incurred the enmity of many Americans for his pardon of disgraced President Richard Nixon in 1974. Surprise Democratic candidate, Georgia Governor Jimmy Carter, was a squeaky clean outsider to Washington politics. He was a serious threat to the Republican Party, which had held the White House since Dwight D. Eisenhower defeated Harry Truman in 1952. Jimmy Carter would be elected President. The election of a liberal Democrat did not create an atmosphere supportive of federal electronic surveillance.

In Kansas City, the mob found a huge source of income in sports gambling. Until Congress allowed electronic interception of audio communications under T-3, the enforcement of gambling laws in the area of sports gambling was minimal. Retired F.B.I. agent William Ouseley tells a story about a 1960s pre-wiretap effort to uncover sports-booking operations. The Bureau watched a known bookie disappear into an apartment building on a daily basis. Agents believed he had a safe-house apartment. They knew if this was considered a safe place, the apartment would contain evidence of sports gambling. Agents suspected a search would reveal evidence like betting lines on the current sporting events, betting notations, gamblers names, bookies names and other records necessary for the business of booking sports events. But they had to get creative to locate the exact apartment. They sprinkled a powder on the apartment lobby floor that would show up with a black light. After the bookie left for the day, agents entered the building and used a black light to follow the bookie’s footprints. The agents obtained a search warrant based on the black light tracking. When the F.B.I. made arrests in this case, the use of ultraviolet lights was revealed and mobsters could easily avoid that tactic in the future. After the T-3 statute was enabled, the Kansas City agents would use electronic surveillance.

In 1970, the Kansas City F.B.I. Organized Crime squad was able to obtain their first T-3 warrant for a wiretap. The KCPD Intelligence Unit and F.B.I. Organized Crime Squad had monitored the activities of the Civella crime family for many years. They found that the Northview Park Social Club at 5th & Troost was the popular gathering spot for the mob members to play cards. This was a private club, not unlike John Gotti’s Ravenite Social Club in New York City. The F.B.I exhausted all other investigative avenues such as obtaining cooperating witnesses, observing sports gambling activity in a public place, witness protection, or using undercover agents. They could develop confidential informants to disclose that specific mobsters used the club for interstate sports gambling. Informants could provide information that the club telephone was used to facilitate the gambling activity. They could use physical surveillance to verify the informants’ statements. Undercover agents failed to infiltrate this club. Successful prosecution required more evidence. A wiretap could provide that evidence.

When this T-3 wiretap order was issued and signed by a judge, the agents were restricted to listening to the telephone conversation of one specific person, Frank Tousa, and whoever he was talking with. They were limited to recording conversations specifically related to interstate sports gambling. The monitoring agents had to be notified that Tousa was inside the club before they could start listening. If another person used the phone, they had to turn off the listening capability or minimize. They could turn the audio back on every few minutes and listen in for the dirty conversations by Frank Tousa. Despite this limitation, Ouseley reports in his book, Mobsters in Our Midst, that the Kansas City Organized Crime Squad soon netted Nick Civella talking about the large number of bets placed on the Kansas City Chiefs with Tousa.

In the 1970 Super Bowl IV, the Minnesota Vikings were pitted against the Kansas City Chiefs. Kansas City bettors were betting more than anticipated on the hometown favorite Chiefs. Because sports books do not actually gamble, they wanted to handle an equal amount of action for both teams to win. The losers pay a ten percent vig or lug to the bookie and that is the fee earned by the mob. In this situation the books were out of balance, so the bookie had to lay off the bets on the Chiefs to another book. The Kansas City mob could lay off to Minneapolis or Chicago bookies because those bookies might be overweight in