Friday, July 08, 2011
When Louise Leach planned her vacation, she had three priorities for her visit here: "architecture, pizza and gangsters."
Leach, 63, a retiree from Manchester, England, took an architecture boat tour and by Day Three of her stay had eaten at two pizzerias. She came to the Biograph Theater, where John Dillinger was fatally shot in 1934, for a taste of the gangster life.
"Next we're going to the site of the St. Valentine's Day Massacre, even though I know it's not there anymore," Leach says. "Someone told me the house where Al Capone once lived is still standing, so we'll go there as well. Do you know where I can find some former speakeasies?"
For Leach and her three traveling companions, Chicago's gangster past is part of its allure. "It was quite a dangerous place then, wasn't it?" muses Sally Wetherford, 61. "You see it in the movies all the time, so we simply have to sample it in person."
Las Vegas, St. Paul and Kansas City, Mo., have tours celebrating the often-violent history written by gangsters in the 1920s and '30s. New York has the Museum of the American Gangster. Chicago, though, may relish its links to gangsters more than any other American city.
Bus tours visit the secret bars where they sold alcohol during Prohibition and the places they died. At Holy Name Cathedral, bullet holes from a 1926 gangster shootout are still visible. The Renaissance Blackstone Chicago Hotel, which boasts that Capone patronized its barbershop, offers a "good to be a gangster" package.
"Hollywood got it right. These were exciting, charismatic guys who really captured the imagination of the public," says Jonathan Eig, a Chicago resident and author of the 2010 book Get Capone: The Secret Plot That Captured America's Most Wanted GangsterOrganized Crime Books).
Chicago had a reputation for illicit activity by the 1840s, but the arrival of Capone from New York in 1919 and Prohibition's start in 1920 launched the headline-grabbing reign of criminal groups that ran gambling, alcohol and prostitution rackets. Gangsters here were and are still called the Outfit. The moniker probably originated with Western ranch hands and military buddies, says John Binder, a University of Illinois-Chicago finance professor who wrote the 2003 book The Chicago Outfit (IL) (Images of America).
Binder, who leads tours of gangsters' lavish suburban homes four times a year, says Capone's notoriety during and after his lifetime cemented Chicago's reputation as a rough-and-tumble haven for criminals. "He crossed over from being an historical figure to a legend, like Billy the Kid," he says. "As time goes by, the nasty side of it is forgotten and the fascinating side rises to the forefront. The interest doesn't go away."
One of Binder's favorite spots is the site of the St. Valentine's Day Massacre in a garage where Capone's gang allegedly gunned down seven rivals. At Capone's grave in Mount Carmel Catholic Cemetery in suburban Hillside, he says, admirers often leave whiskey bottles, coins and Valentine cards. Binder doubts Chicago's bloody history taints its current reputation. "It's history," he says. "It's not going to go away, and it's part of what Chicago is."
Jim Peters, president of the preservation group Landmarks Illinois, says the city "has been very hesitant to glorify or recognize" its gangster sites.
Capone's onetime headquarters, the Lexington Hotel, was designated a Chicago landmark by the group for its architecture but was torn down in 1995, he says. An effort to have Capone's home added to the National Register of Historic Places failed.
The Biograph has landmark status "more because of the significance of the building," Peters says.
Craig Alton, owner of the Untouchable Tours, a two-hour bus journey to Chicago gangster locales that's marking its 24th summer, says he had trouble getting city licenses for his business when it began. He believes the city's gangster era is worth commemorating.
"It's history," he says. "We get people who have found this stuff interesting for their whole life. Everybody has a relationship with Al Capone."
Interest in gangsters was one reason Tamotsu Hata and his wife, Yuki, both 29, included Chicago in their first visit to the USA from their home in Tokyo. They took a taxi to the massacre site and planned to stop next at the Biograph.
"We love this part of American history and we have seen many movies about it," says Tamotsu Hata. His wife's favorite was the 2009 movie Public Enemies and the star who portrayed Dillinger. What intrigues Yuki Hata most about Chicago's gangsters? "Johnny Depp."
Thanks to Judy Keen
Tuesday, July 05, 2011
He is the man who helped build a greater part of Las Vegas with millions of dollars from Jimmy Hoffa’s mobbed-up Teamsters’ pension fund. Along with his close friend and business partner, the legendary Moe Dalitz, an early associate of Detroit’s notorious Purple Gang — high school dropouts who built their fortune on murder, hijacking, and rum-running during Prohibition — he built Paradise Development, a firm that prospered mightly during the heyday of the Vegas mob. Now he is working for the FBI. His name is Irwin Molasky.
“Dalitz was one of the most illustrious figures in the annals of crime,” wrote attorney Roy Grutman in his 1990 memoir, Lawyers and Thieves. “Able to trace his mob ties back to such underworld icons as Lucky Luciano and Bugsy Siegel, he even had the distinction of having been chased out of Cleveland in the 1940s by the city’s celebrated public safety director, Elliot Ness.”
In 1962, Dalitz, Molasky, Paradise, and two partners, Merv Adelson and Allard Roen, would snap up a total of 5000 acres outside the tiny San Diego County beach town of Carlsbad. There, with funds loaned by the Teamsters and C. Arnholt Smith’s US National Bank, they built Rancho La Costa, the posh resort that became synonymous with America’s mid-century wave of organized crime, murder, and political corruption.
Today, at the age of 84, according to a signed declaration filed under penalty of perjury, Molasky is sick and infirm, requiring a cane to move about a room. He is in the painful last stages of a rare form of incurable bone-marrow cancer and is in urgent need of taking care of business now rather than later.
Once worshipped as the financial genius of the Las Vegas Strip, he has been forced to watch as his trusted elder son Steven declared bankruptcy, with $55.4 million of unsecured debts during the financial meltdown of 2008.
His son-in-law, Kenneth Collin Cornell, who pled guilty to fraud charges resulting from a telemarketing boiler-room swindle in 1994, is being sued for breach of contract in a case arising from a Mission Beach condominium project he developed with his wife, Molasky’s daughter Beth. But despite the maelstrom of his later years, Molasky has vowed to complete one project above all: a new San Diego headquarters for the Federal Bureau of Investigation.
Incredible as it seems to some old bureau hands, Molasky, loyal friend and associate of Moe Dalitz and a litany of other gamblers and bookies, has won a 20-year, $223.4-million lease from the U.S. General Services Administration to construct a 248,882-square-foot field office and campus overlooking Interstate 805 on Vista Sorrento Parkway in Sorrento Mesa.
The financing method the government is using to construct the project is itself controversial. By agreeing to lease the building from Molasky at $11.2 million a year, rather than paying $100 million up front to build it, critics say taxpayers will end up paying more than double.
The project was announced to the public this January as a fait accompli. But since then, a major complication has arisen. Molasky does not yet actually own the property, and he can’t obtain a loan with which to buy or build on it. A neighboring landowner filed suit against him in March, charging that the old Las Vegas hand, true to form, is trying to strong-arm his way to the capstone of a legendary career.
In a May 4 filing, lawyers for SN Investment Properties LLC, a Portland, Oregon–based development firm that owns the property adjoining the FBI site, charged that Molasky and his companies “are some of the largest real-estate developers in Las Vegas, Nevada” that “believe they can utilize their significant wealth and power to do whatever they want, wherever they want.”
At issue is a vehicle-access easement, granted in 1984, that runs across the land Molasky wants to use for the project. Molasky and his fellow defendants allegedly “knew months before the contract was awarded by the GSA, and even while they were bidding the contract and seeking approvals from the City of San Diego to develop the project, that the proposed FBI Building was to be built directly on top of an express deeded easement owned by SNI and running over the site of the FBI Building.”
“The current effort to expedite the trial date, despite the fact that Defendants have known since August 2010 of SNl’s easement,” the May filing says, “is just one further part of their strong-arm tactics.”
For their part, Molasky and his lawyers insist that the Portland firm is trying to waylay the FBI building for selfish financial gain at the expense of the public. “Upon learning that the tenant would be the FBI, Plaintiff began protesting that the development and construction of the FBI project would allegedly ‘diminish the value’ of Plaintiff’s property,” according to a response by Molasky and company filed May 4.
The filing added that Molasky had obtained documents showing that the strategy of its foe was “simply to stall and thereby obstruct the development of the FBI project in its entirety or receive a large payment from the Molasky Defendants.”
Any delay in San Diego would be costly, Molasky’s attorneys say. “The Molasky Defendants are currently developing three other FBI office projects for the GSA in Minneapolis, Portland, and Cincinnati, and this existing relationship could be damaged solely because the adjacent property owner claims it would like a different tenant, when in fact Plaintiff simply wants a huge payday for a long abandoned and never used 1984 easement. In addition, the Molasky Defendants have built up goodwill and a relationship of trust with the GSA, the FBI, builders and lenders, all of which is likewise threatened by Plaintiff’s attempt to belatedly assert rights that remained dormant for 26 years.”
Molasky himself filed a personal declaration, dated April 29, implying that, because his days were numbered, the court should hasten to hear the easement case: “I have…Waldenström’s Disease. This disease is a rare form of cancer that affects the bone marrow space in the human body. That disease is treated by chemotherapy and a drug called Rituxan. This disease was diagnosed approximately 15 years ago and I have been treated since that time.
“There is no cure for Waldenström’s Disease. I am in stage 4 of this disease, which is the last stage of the disease. I have received numerous chemotherapy treatments over the years and I am being treated by Dr. Allan Saven at Scripps Clinic in La Jolla, California. Because of my age and health issues, the importance of this case being quickly tried, and the importance of this new FBI project to the City of San Diego, I request that this Court set the earliest possible trial date.”
Molasky’s lawyers have argued that he has the public interest at heart, claiming that the fight over the easement threatens “to thwart years of work by the federal government to create a new FBI building in San Diego. In such an event, the federal government will likely have to start the process all over again — resulting in the delay of much needed space to the FBI and much needed economic stimulus to the City of San Diego and its citizens. The City of San Diego will lose the immediate value of 700 new construction jobs and 500 permanent jobs, new revenue from property taxes, additional protection and security from the FBI facility and a new office development in Mira Mesa/Sorrento Valley area.” They add that “prominent members of the City Council of San Diego are fully behind the project as it directly impacts the citizens in this City.”
In order to build that support, Molasky — no stranger to the uses of politics and politicians — has launched an all-out blitz on San Diego’s city hall, quietly retaining Paul Robinson, the high-priced dean of the city’s lobbying corps, a former aide to GOP mayor Pete Wilson, informal advisor and fundraiser for current mayor Jerry Sanders, and a member of the San Diego County Regional Airport Authority board. Robinson has deep ties to some of the city’s most sacred institutions, including county Republicans and San Diego State University. Through the first quarter of this year, Molasky has paid Robinson’s law firm a total of $63,000 for its services, according to disclosure documents on file at city hall.
An appointment calendar on the website of city councilwoman Marti Emerald shows that Robinson sat down with her on April 15 to lobby the FBI project with Molasky executive Rich Worthington. Campaign records show that Robinson contributed $270 to Democrat Emerald in January 2009, having previously backed April Boling, Emerald’s failed Republican foe, the year before. On April 25, Robinson and Worthington also paid a visit to first district councilwoman Sherri Lightner, according to her official calendar posted online.
According to his disclosure filings, last year Robinson and associate Neil Hyytinen lobbied city councilman Carl DeMaio; Sanders assistant Phil Rath; city development services division director Kelly Broughton; assistant director of development services Cecilia Gallardo; and assistant city attorney Donald Worley about the Molasky project, and the Robinson law firm was paid a total of $9000. During the first quarter of this year, his firm received $54,000 from Molasky; it lobbied Worley, DeMaio, Broughton, Sanders chief of staff Julie Dubick, and deputy city attorney Debra Bevier, among other city staffers.
According to a source familiar with the project, the Molasky forces want the city to condemn the disputed easement, claiming that public safety demands that the FBI field office be expedited.
On Monday of this week, a source in the office of Councilman DeMaio said that an internal memo from Mayor Jerry Sanders was expected to be sent to City Attorney Jan Goldsmith requesting that condemnation be undertaken by the city.
Will it happen? Molasky’s alliance with the government is astonishing to many who know his history. But to others, it is not unsurprising, given the rise of the national power and influence of Las Vegas over the last 30 years. One of Molasky’s favored politicians, Democrat Harry Reid — once city attorney of dusty Henderson, Nevada, and ex-chairman of the state’s Gaming Control Board — is now majority leader of the United States Senate, where he controls a vast network of campaign contributions and federal patronage.
“In an America so widely dominated by corporate and individual wealth, the Strip’s once disreputable Mob ethic of exploitation and greed has become in large measure a national ethic,” wrote Sally Denton and Roger Morris in The Money and the Power, their 2001 history of post-war Las Vegas. “To chart its rise is far less a walk on the dark and aberrant side of American life than a way to see the larger history of the nation more completely, and without illusion.”
The Molasky File
Irwin Molasky was born in St. Louis in 1927 and grew up Dayton, Ohio. He put in a year at Ohio State University before heading to Los Angeles, where, according to testimony he gave in January 1982, he helped his parents build and run a small hotel on Wilshire Boulevard’s Miracle Mile. At the age of 20, he said, he built a five-unit apartment house in Westwood. He later moved to Las Vegas and started building small houses, as well as the 18-room Pyramids Motel on the Vegas Strip.
His uncle, William Molasky, of St. Louis, had been indicted by a federal grand jury for tax fraud in August 1939, along with millionaire Moses “Moe” Annenberg, publisher of the Philadelphia Enquirer and owner of Consensus Publishing Company, tied to Pioneer News, a racing wire primarily patronized by St. Louis bookies. In November 1940, William, president of Consensus, pled guilty to a single charge of evading $57,800 in personal income taxes. He was sentenced to 18 months behind bars.
When William testified before the organized-crime investigating committee of Senator Estes Kefauver in June 1950, he issued a statement: “I have never engaged in bookmaking or in any commercial gambling. I have never had a financial interest in any gaming establishment; and my personal and business associates do not include bookmakers or professional gamblers…There are no gangsters, mobsters, racketeers, or other persons of questionable character connected with, interested in, or employed by Pioneer News.” William was represented before the committee by St. Louis attorney Morris Shenker, once referred to by Life Magazine as the “foremost lawyer for the mob in the U.S.,” whose most prominent client was to be Jimmy Hoffa.
Irwin Molasky ended up in Las Vegas in the early 1950s, he later recalled, where he met future business partner Merv Adelson, a Beverly Hills grocer’s son who was then-owner of Market Town, a 24-hour-a-day supermarket on Las Vegas Boulevard. Among their other ventures was the Colonial House, a bistro that enjoyed an edgy reputation as a haunt for high-class hookers, recounted Ovid Demaris and Ed Reid in 1965’s The Green Felt Jungle.
They soon linked up with Moe Dalitz, who had become one of the richest and most powerful denizens of the underworld after expanding the base of his hometown Detroit empire of gambling and other assorted rackets to Cleveland. Dalitz, it’s been said by some, first arrived in Las Vegas in the late 1940s, on a mission for the East Coast mob to keep track of Bugsy Siegel and the construction of his over-budget Flamingo hotel.
An example of how Dalitz did business is recounted by Michael Newton in his 2009 Dalitz biography, Mr. Mob. In September 1947, four men carrying submachine guns held up the Mounds Club casino outside of Cleveland, fleeing with between $250,000 and $500,000 in cash and jewelry. Another heist followed at the Continental Club. Cops took no action, but, according to Newton, “Moe Dalitz used his influence to learn the bandits’ names. A trial of sorts was held, sentence was passed, and manhunters hit the ground running. By March 1948, it is said, every one of the robbers was tracked down and killed.”
Molasky testified in January 1982 that he was introduced to Dalitz by Allard Roen, a Dalitz protégé, general manager of the Desert Inn, and convicted stock manipulator who was the son of notorious Cleveland gambler and bookie Frank Rosen. Molasky said Dalitz wanted him to build houses on the new golf course at the Desert Inn, which Dalitz controlled.
Shortly after that, according to Molasky, he and Adelson began building the for-profit Sunrise Hospital on Maryland Parkway. Its construction had been financed by loans from a savings and loan, but “we ran out of money and had to take in some investors,” Newton quoted Molasky as saying. When the deal was finally worked out, Molasky later testified, he and Adelson owned 45 percent of the stock, another 45 percent was held by Dalitz and Roen, and the remaining 10 percent by a doctor who put up the original $40,000 to help get Molasky and Adelson off the ground.
The first 62 beds of the hospital opened on December 15, 1958. Senator-elect Howard Cannon, cozy with Dalitz and his friends, cut the ribbon. Another prominent financier of the project remained low profile: Jimmy Hoffa’s Teamsters Union pension fund, which had advanced a million dollars at 6 percent interest in a complicated deal that obscured the origin of the money.
The loan was just the beginning of an exceedingly profitable relationship between the Teamsters, Dalitz, Molasky, and their partners. To guarantee patients, Hoffa ordered that all members of the Teamsters’ and Culinary Unions’ medical plan be forced to use Sunrise if they required hospitalization. It was “an early form of managed care,” Molasky later said.
The Teamsters also loaned $1.2 million to Dalitz, Roen, Adelson, and Molasky, along with fifth partner, Bernie Rothkopf, to build the Stardust Golf Course and Country Club and the nearby Paradise Palms housing development. “If Moe told them to make a loan,” said one observer quoted by Sally Denton and Roger Morris, authors of 2001’s The Money and the Power, “they made the loan.”
All along the way, FBI agents dogged virtually every movement of Dalitz, Molasky, and their associates, taking copious notes and filing voluminous reports. According to Newton, in February 1961 G-men wanted to charge Dalitz with “bribery, labor racketeering, and Mann Act violations (transporting women across state lines for ‘immoral purposes’),” but bureau director J. Edgar Hoover killed the idea.
In February 1962, writes Newton, the FBI followed Dalitz and his friend, entertainer Phil Harris, to San Diego, where they had “quite a party” with unidentified women before heading for Mexico in Dalitz’s yacht. The same month, Dalitz and New York mob kingpin Meyer Lansky were listed by FBI agents as being among ten mobsters “marked for ‘intensified investigations.’”
Somehow, though, charges were never filed. Then along came the flamboyant publisher of a glossy skin magazine to do what federal authorities never had. Bob Guccione, the owner of Penthouse, was in the midst of taking on Hugh Hefner’s Playboy for the pinnacle of the nation’s men’s publishing business, and the Brooklyn-born Guccione was ready to get down to some serious muckraking.
“I first met Bob Guccione at the London Penthouse Club in 1970,” wrote attorney Roy Grutman. “Dressed in a white suit and an unbuttoned Hawaiian shirt and sporting an array of gold chains, he looked like a psychedelic Beau Brummel.”
“After years of selling soft-focus crotch shots, Guccione wanted to do something more important, something Hugh Hefner would never try,” added Grutman. “If the Washington Post could bring down Richard Nixon, he would go after something even bigger.” The target was La Costa.
Headlined “La Costa: The Hundred-Million-Dollar Resort with Criminal Clientele,” the story ran in March 1975. “The primary founders of La Costa were syndicate ‘bluebloods,’” Penthouse charged. “La Costa has been controlled by the Moe Dalitz mob, which includes Dalitz, Allard Roen, Merv Adelson, and Irwin Molasky.… It was Dalitz who persuaded then-president of the Teamsters Union, James Riddle Hoffa, to finance Las Vegas casinos, starting with [Dalitz’s] Desert Inn and related properties, with Teamsters retirement cash.”
That May, Dalitz and his partners filed a $630 million libel suit against Guccione and his magazine.
By coincidence, Grutman, who handled the case for Guccione, had earlier been a guest at La Costa: “A vast complex of white motel buildings and a golf course that looked like a semi-arid cemetery, it reminded me of Las Vegas. There were fountains, doormen who looked like ex-boxers, and many peculiar guests. I realized how peculiar when the tennis pro arranged a doubles match for me, and one member of the foursome was a recently convicted recipient of bribes, former New York state senator Bert Podell.”
The libel case dragged on for seven years before it finally reached a jury. By then, “Roen and Dalitz dropped out as plaintiffs when it was decided they were public figures and could not prove malice against Penthouse,” wrote Grutman.
“In my opening statement, I told the jury we would prove La Costa was built and maintained for the benefit of the mob,” he recalled. “I explained how the resort was designed as a safe haven for criminals on working vacations. Since Mafia members prefer to conduct their business in person rather than over the telephone or by mail, La Costa, far from the cops and other cares of the world, was the perfect place to relax and make deals.
“‘People who are the heads of rackets not only go [to La Costa] but are given the run of the place,’ I said.
“The resort provided complimentary accommodations to mobsters of all persuasions, from Louis ‘the Tailor’ Rosanova...to the legendary Meyer Lansky, who explained in a deposition that he had gone to La Costa only twice to take walks and visit a sick acquaintance.”
Of Penthouse’s publisher, Lansky opined, “I’d rather be counted a pal of Moe Dalitz than that fucking Guccione, who peddles slime and pornography to the youth of the country.”
“In court,” said Grutman, “both Molasky and Adelson denied that Dalitz had opened the door to the Teamsters’ pension fund. The evidence showed otherwise. Since the two had begun a business relationship with Dalitz and Roen, the fourway partnership had been one of the pension fund’s best customers, accounting for millions of dollars in loans and additional millions in equity deals. As part of its loan agreement with La Costa, the Teamsters bought 15 percent of the resort at a bargain price, and later sold the same shares for a profit of millions.
“Not surprisingly, the Teamsters’ loan came with strings attached. The union demanded the right to appoint three members to the La Costa board of directors. One of them was Teamsters’ consultant Allen Dorfman, later indicted for accepting kickbacks. Adelson testified that all he really knew about Dorfman was that he was a decorated war veteran. Dorfman was murdered in Chicago in a gangland-style execution in 1983.”
The trial featured a sworn affidavit on behalf of Molasky and his partners by their friend, San Diego sheriff John Duffy, who maintained that “no evidence of criminal activity by La Costa or the management of La Costa…has ever been detected.” It later came to light that Duffy had privately expressed his own doubts about Dalitz and company and had received campaign contributions from La Costa and three of its principals, including Molasky, but not Dalitz.
There was also testimony on behalf of Penthouse by Mafia hit man Aladena “Jimmy the Weasel” Fratianno, who was barred by the judge from telling the jury about a meeting Fratianno claimed he’d had at La Costa with Chicago mob boss Sam “Momo” Giancana and San Diego hit man Frank “the Bomp” Bompensiero to plot the murder of TV star Desi Arnaz. To discredit Fratianno, La Costa’s attorneys dug up a deposition from six years earlier in which he said he’d never been to the resort. Fratianno responded that he’d lied “maybe 100 times” in the sworn affidavit, of which he said 90 percent “are [sic] lies.”
In May 1982, after 15 days of deliberation, the jury decided in favor of Penthouse, but Judge Kenneth Gale quickly overturned the verdict, ordering a new trial. Grutman discovered that Gale had once been Fratianno’s lawyer and eventually got the judge removed from the case. More than three years later, in December 1985, just as a second trial was to finally begin, the exhausted litigants announced a settlement. Only words, not money, changed hands.
Guccione and his magazine were praised by Molasky and partners for their “many personal and professional awards and distinctions.” For his part, Guccione said, “Penthouse…did not mean to imply nor did it intend for its readers to believe that Messrs. Adelson and Molasky are or were members of organized crime or criminals.
“Penthouse acknowledges that all of the individual plaintiffs, including Messrs. Dalitz and Roen, have been extremely active in commendable civic and philanthropic activities which have earned them recognition from many estimable people. Furthermore, Penthouse acknowledges that among plaintiffs’ successful business activities is the La Costa resort itself, one of the outstanding resort complexes of the world.”
Molasky — who did not respond to a request for an interview for this story relayed through Richard Worthington, president and chief operating officer of Molasky’s Paradise Development Company — survived and prospered. Today he remains one of only two La Costa case principals still standing. Moe Dalitz died in August 1989 at 89. Allard Roen died in 2008, age 87. Guccione succumbed last year at 79. Besides Molasky, only Merv Adelson, who was once married to TV news personality Barbara Walters, lives on at 81.
“Shored up by the Teamster underwriting at Sunrise and eased by governmental concessions and favorable contracts at every turn, the trio’s Paradise Development Company shaped the emerging commercial and residential map of the city,” Denton and Morris wrote of Molasky, Dalitz, and Adelson in 2001.
As the years went by Molasky built Nevada’s first enclosed shopping mall, the first high-rise office building in Las Vegas, and its first high-rise luxury condominium complex. He was hailed as one of the town’s biggest philanthropists, with gifts of acreage for the University of Nevada and construction of the Nathan Adelson Hospice, named in honor of Merv Adelson’s father.
He became a close friend of Jerry Tarkanian, whom he helped recruit from Long Beach State with a big-money contract to become head basketball coach at UNLV in 1973. “It would have taken 50 years for the university to become the Harvard of the West,” Molasky told the New York Times in July 1991. “We felt it would be a lot easier to achieve it by getting a renowned basketball program and then gradually going into the academics.”
The first chairman of the UNLV Foundation, Molasky skirted controversy in May 1990, when the Washington Post reported he had bet on college football, pro football, and baseball games in the 1980s in partnership with Las Vegas physician and bookie Ivan Mindlin, leader of a national sports betting operation.
Mindlin was indicted in January 1990 after the FBI shut down his computerized betting operation in a nationwide raid on the eve of the Super Bowl, January 19, 1985. Molasky testified before the federal grand jury that indicted Mindlin and avoided being charged in the case. In 1992, in a major embarrassment for the FBI and U.S. prosecutors, the defendants were acquitted in federal court in Las Vegas.
Later, in April of 2002, federal prosecutors in Chicago accused Mindlin of attempting to hire a lieutenant in the Chicago mob’s Elmwood Park street crew to wipe out a former gambling partner. Defense attorneys for a Chicago cop, alleged to have been the go-between in the plot, denied that it had happened, according to an Associated Press report.
As his power over Las Vegas grew, Molasky and his wife Susan became heavy donors to Democratic causes, including, in the 1990s, the Searchlight Leadership Fund of Senator Harry Reid, which Reid used to distribute campaign contributions to curry favor among Reid’s Senate allies, with the aim of ultimately electing him majority leader.
In May 2007, Molasky was an honored guest at a lavish tribute to Reid; that November Molasky was named to the Nevada Business Leadership Council of then–presidential candidate Hillary Clinton. (Molasky’s most recent federal contribution was $500 this May 12 to Democratic congressional candidate Kate Marshall.)
During the same period, Molasky began an aggressive push into the financing, construction, and leasing of office buildings for the federal government. The deficit was growing out of control, and officials wanted to push capital expenditures into future years in the form of lease payments, rather than pay for buildings up front, a much cheaper alternative in the long run.
With close ties to Reid and other Democratic and Republican power brokers, Molasky was well positioned to take advantage of the trend. Ironically, sources say, Molasky’s many contacts with federal law enforcement agencies over the years also may have put him on the inside track to build a series of FBI and IRS regional headquarters.
“The competitive landscape was changing. The returns from our traditional line of work were less, so there was a conscious decision to diversify our focus,” Richard Worthington, Molasky’s right-hand man, told the Las Vegas Business Press in June 2005.
Molasky has also successfully leveraged his political relationships with local governments; in Las Vegas, the redevelopment agency gave him a bargain on downtown land. “Three years ago, Molasky responded to a request-for-proposal for a new Internal Revenue Service headquarters in the region,” the Business Press reported. “He beat out six competitors by securing a five-acre parcel of city-owned land in downtown Las Vegas for $2,000. The property has been valued at $2 million.”
“It’s outrageous,” an anonymous Las Vegas developer told the paper. “I can fully understand the need for economic development and the need to generate jobs and redevelopment for downtown. But when you’re doing a build-to-suit and the land is donated, it eliminates all the risk. How can anyone else compete?”
“Public-private partnerships make-up 10 to 15 percent of our overall portfolio, but it’s growing. And we want it to play a larger role,” Worthington was quoted as saying at the time. “These projects are all about the economics. But whenever there is a leap of faith, there is an advantage if you’re a proven commodity. And when you’ve been in town for as long as we have, there’s credibility.”
Today Molasky is counting on many of the same factors to give him an edge in the fight over San Diego’s FBI project. As Molasky’s legal battle with his Sorrento Valley neighbor approaches an early trial next month, Worthington said in a telephone interview last week, ongoing settlement negotiations have proved fruitless.
Worthington wouldn’t provide any further details, saying the case was still being litigated, but other sources say that Molasky has been vigorously lobbying both the FBI and the city of San Diego to condemn the disputed easement and turn it over to Molasky on the grounds that prompt completion of the new FBI building is vital to public safety. That would require hearings by the city council, which might shed new light on Molasky’s operations here.
What the FBI’s options are if its deal with Molasky unravels aren’t known. Neither the General Services Administration nor the FBI responded to requests for comment regarding the situation. What is almost certain, based on his sworn declaration last month, is that the FBI project, just a few miles down I-5 from the legendary La Costa resort where the Mafia came to play, is Irwin Molasky’s last hurrah.
Thanks to Matt Potter