December 12, 1963: "INTERNALLY CIRCULATED FBI INTELLINGENCE INSERT"

DOCUMENT INSERT:12/1/63. Internally circulated FBI intelligence report. Marked: "Classified Confidential 2-A: Restricted Agent Access"/"Pertinent Facts & Observations on Major Las Vegas Hotel-Casino Ownerships & Related Topics." Note: Officially logged at Southern Nevada Office, 2/8/63.

The major Las Vegas hotel-casinos are situated in two locales: The downtown (Fremont Street/"Glitter Gulch") area and "The Strip" (Las Vegas Blvd, the city's main north-south artery). The downtown establishments are older, less gaudy & cater to local residents & less affluent tourists who come to gamble, enjoy low-quality entertainment & engage the services of prostitutes. Junket groups (Elks, Kiwanis, Rotary, Shriners, VFW, CYO) are frequent downtown hotel-casino visitors. The downtown establishments are largely owned by "Pioneer" consortiums (e.g., native Nevadans & general non-organized crime groups). Some of the owners have been forced to sell small (5%-8%) interests to organized-crime groups in exchange for continued "Preferential Treatment" (e.g., on-site "protection," a "service" to insure the absence of labor trouble & untoward on-site incidents). Organized-crime associates frequently serve as casino "Pit Bosses" & thus as enforcers and on-site informants for their organized-crime patrons.

The downtown area is jurisdictionally covered by the Las Vegas Police Department (LVPD). The LVPD's jurisdiction adjoins that of the Clark County Sheriff's Department (CCSD). Both agencies work within the other's jurisdiction by mutual consent. The Sheriff's Dept patrols the "Strip" area south of the Sahara Hotel. Like the LVPD, it provides investigatory services for its specific jurisdiction, with an operational mandate inside LVPD, or "City" jurisdiction. The LVPD is similarly allowed to conduct investigations inside Sheriff's Dept, or "County" jurisdiction. It should be noted that both agencies are widely influenced and corrupted by factions of organized crime. This corruption is of the type most identified with "Company Towns" (e.g., casino revenue forms the financial base of Las Vegas & thus influences the political base & law-enforcement policy). Numerous officers within both agencies benefit from organized-crime bestowed "Gratuities" (free hotel stays, free casino gambling chips, the services of prostitutes, "police discounts" at various businesses owned by organized-crime associates) & outright bribery. The LVPD and Sheriff's Dept enforce organized-crime policies with the implicit consent of the Clark County political hierarchy & by extension the consent of the Nevada State Legislature. (E.g., Negroes are strongly discouraged from entering certain "Strip" hotel-casinos and on-site casino personnel are allowed to see to their expulsion. E.g., crimes against organized-crime-connected casino employees are frequently avenged by LVPD officers, acting on orders from the Casino Operators Council, an organized-crime front group. E.g., LVPD officers and Sheriff's deputies are often used to track down casino card cheats, "discourage" them & run them out of town.)

The best-known hotel-casinos are situated on the "Strip." Many of them have been infiltrated by organized crime, with percentage "Points" divvied up among the overlords of organized-crime cartels. (E.g., the Chicago Crime Cartel controls the Stardust Hotel-Casino & boss Sam "Mo," "Momo," "Mooney" Giancana has an 8% personal interest. Chicago hoodlum John Rosselli (the Chicago Cartel's Las Vegas overseer) has a 3% interest & Chicago Mob enforcer Dominic Michael Montalvo aka "Butch Montrose" has a 1% interest.) (See Addendum File #B-2 for complete list of crime-cartel ownerships & percentage-point estimates.)

Smaller percentage points are traded between organized crime factions as part of an ongoing effort to insure that all factions have a stake in the expanding Las Vegas casino economy. The profit base is thus shared & faction-to-faction rivalry is averted. Thus, organized crime presents a unified face in Las Vegas. The man responsible for developing & maintaining this policy is Morris Barney "Moe" Dalitz (b. 1899), a former Cleveland mobster & organized crime's "Goodwill Ambassador" & Las Vegas "Fix-It Man." Dalitz owns points in the Desert Inn Hotel Casino and is rumored to have points in several others. Dalitz is known as "Mr. Las Vegas," because of his numerous philanthropic endeavors & his convincing non-gangster image. Dalitz founded the Casino Operators Council, dictates their enforcement policies & is largely responsible for the "Clean Town" policy that organized-crime factions believe will help promote tourism & thus increase hotel-casino revenue. This "Policy" is informally enforced & has the implicit approval of the Las Vegas political machine & the LVPD & Sheriff's Dept. One goal is to enforce ad hoc segregation in the "Strip" hotel-casinos (e.g., admit Negro celebrities or perceived "High Class" Negroes & refuse admittance to all others) & to isolate Negro housing in the slum area of West Las Vegas. (Restrictive real-estate covenants are widely observed by Las Vegas-based realtors.) A key "Policy" dictate is the "No Narcotics" rule. This rule applies specifically to heroin. The selling of heroin is forbidden & is punishable by death. The rule is enforced to limit the number of narcotics addicts, specifically those who might support their addiction by means of robbery, burglary, "flim-flam" or other criminal activities that would sully the reputation of Las Vegas & thus discourage tourism. Numerous heroin pushers have been the victims of unsolved homicides & numerous others have disappeared & are presumed to have been killed per the aforementioned policy (see Addendum File #B-3 for partial list). The last homicide occurred on 4/12/60 & there appears to be no heroin traffic in Las Vegas as of this date. It is fair to conclude that the aforementioned deaths have served as a deterrent. Dalitz is a close associate of Teamster President James Riddle Hoffa (b. 1914) & has secured large loans from the Teamsters' Central States Pension Fund that have covered the cost of hotel-casino improvements. The Fund (estimated assets 1.6 billion dollars) is a "Watering Hole" that organized-crime factions borrow from routinely. Dubious organized-crime-connected "Businessmen" also borrow from the Fund at usurious interest rates that often result in the forfeiture of their businesses. It is rumored that a second set of Pension Fund financial books exists (one that is hidden from government subpoena & thus official audit). These books allegedly list a more accurate accounting of Pension Fund assets & detail the illegal & quasi-legal loans & repayment schedules.

Many of the "Strip" hotel-casinos routinely hide a large portion of their assets. (See the attached IRS-filed table-by-table profit accountings for all craps, roulette, blackjack, poker, loball, keno, fan-tan & baccarat tables, broken down by hotel.) These reported accountings are generally considered to be only 70-80% accurate. (It is very difficult to detect sustained underestimation of taxable income in large cash-base businesses.) Underestimated table profits are estimated to amount to untaxed revenue of over $105,000,000 per year ('62 fiscal estimate). This practice is called the "Skim."

Cash receipts are taken directly from casino counting rooms and dispersed to couriers who messenger the money to pre-arranged spots. Large-denomination bills are substituted for slot-machine coins & daily accountings are fraudulently tallied inside the counting rooms proper. Casino "Skim" is virtually impossible to detect. Most hotel-casino employees subsist on low wages & untaxed cash gratuities & would never report irregularities. This endemic corruption extends to the labor unions who supply the major hotel-casinos with workers.

The Dealers and Croupiers Local #117 is a Chicago Crime Cartel front. Its members are paid a low hourly wage & are given play chips & (presumably stolen) merchandise as bonuses. All chapters of this union are rigidly segregated. The Lounge Entertainers Local #41 is a Detroit Crime Cartel front. Its members are well-paid, but pay weekly kickbacks to crew stewards. This union is nominally integrated. Negro lounge entertainers are "discouraged" from patronizing the hotel-casinos they work in & from fraternizing with white patrons. The four building & building-supply locals who service the "Strip" hotels are Cleveland Crime Cartel fronts & work exclusively with organized-crime-connected contracting firms. The all-female Chambermaids Local #16 is a Florida Crime Cartel front. Many of its members have been suborned into prostitution. The work crews for the above mentioned locals are run by "Ramrods" who report to the Casino Operators Council. The Kitchen Workers Union (Las Vegas-based only. There are no other chapters) is not organized-crime-connected & is allowed to operate as a sop to the Las Vegas "Pioneer" contingent & the largely Mormon Nevada political machine. The union is run by Wayne Tedrow Sr. (b. 1905), a conservative pamphleteer, real-estate investor & the owner of a bottom-rung or "Grind Joint" casino, the "Land o' Gold." The crew chiefs are all Mormons & the workers (mostly illegal Mexican aliens) are paid substandard wages & are given "bonuses" of dented cans of food & play chips for the Land o' Gold. The workers live in slum hotels in a Mexican enclave on the West-North Las Vegas border. (Note: Tedrow Sr. is rumored to have hidden points in 14 North Las Vegas "Grind Joints" & 6 liquor store/slot machine arcades near Nellis Air Force Base. If true, these ownerships would constitute infractions of the Nevada Gaming Commission charter.)

The Nevada Gaming Commission oversees & regulates the granting of casino licenses and the hiring of casino personnel. The Commission is a "rubber-stamp" panel that does the bidding of the Gaming Control Board and the Clark County Liquor & Control Board. The same five men (the Clark County Sheriff & District Attorney & 3 appointed "Civilian" members) serve on both boards. Thus, the power to approve liquor and casino license applicants for the entire state rests solely in Las Vegas. None of the 5 board members are overtly organized-crime-connected & it is difficult to assess the level of collusion the boards engage in, because a majority of the applications they review cloak hidden organized-crime backing that is difficult to detect. There are no dossiers available on members of the above organizations. The LVPD Intelligence Unit keeps detailed files on the Gaming Control & Liquor Board men, but has consistently refused to grant the FBI & U.S. Attorney's Office access to them. (As previously stated, the LVPD is strongly organized-crime-influenced.) The LVPD Intelligence Unit operates city & countywide & is the sole such unit in Clark County. It is a 2-man operation. The commanding officer is Lieutenant Byron B. Fritsch (the adjutant of the LVPD Detective Bureau & strongly connected to the Casino Operators Council) & the only assigned officer is Sergeant Wayne Tedrow Jr. (Sgt. Tedrow is the son of the aforementioned Wayne Tedrow Sr. He is considered incorruptible by Las Vegas Police standards.)

Concluding note: Addendum Files #B-1, 2, 3, 4, 5 require duplicate authorization: Southern Nevada SAC & Deputy Director Tolson.

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Excerpted from The Cold Six Thousand by James Ellroy Copyright 2001 by James Ellroy. Excerpted by permission of Knopf, a division of Random House LLC. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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