Sunday, July 11, 2010

Fertitta Family's Organized Crime History Offers Clues to Current Station Casinos Crisis

Chapter One: The Maceos and Fertittas establish rackets and roots in Texas:

By: Rich Bergeron


Sam and Rosario (Rose) Maceo blossomed from humble Italian-born barbers to booming businessmen overseeing a vast array of organized crime operations from prohibition bootlegging to the gambling boom. It is well documented that back in his day Sam Maceo reported to Carlos Marcello of New Orleans, and for years New Orleans was the highest grossing entity of all the Italian based crime families––more than NY or Chicago.

There is a great writeup about the Maceos and Fertittas early Texas days in this Texas Ranger Dispatch.

Ironically, many folks seem to remember mob rule under Maceo-Fertitta control in Galveston as very safe and secure. The same sort of “Mafia nostalgia” exists in Vegas these days since corporate control has taken the “family” out of many local businesses in more ways than one. I’ve heard of safety in numbers and mob rule, but mob safety? Not even other more well-known territorial Mafia Icons like Al Capone could muscle in on Galveston’s rackets with these guys in charge. Apparently, everything was OK in Galveston as long as the Maceos and Fertittas kept their dirty work hidden in the shadows. They peddled influence with politicians and police, and the public didn’t seem to complain much. It was often the patrons themselves at places like the Balinese Room who helped hide the gambling equipment from the Texas Rangers who would eventually bring gambling to a screeching halt in Galveston. While they lasted, though, many remember those old Texas times as a little slice of Heaven while the rest of the country was in shambles:

The Maceo brothers were very well respected and treated their business customers with the utmost courtesy. They were also experts at hiding their income and their illegal activities. When the heat finally came down on the family enterprise only one bean counter, Sam “Books” Serio, would come forward while every other member of the conspiracy remained silent. Serio reported to authorities in 1951 that the enterprising family outfit took in over $3.5 million in fiscal year 1950. Three of the family’s bosses were Fertittas at the time: Frank J. Fertitta Sr., Victor J. Fertitta, and Anthony J. Fertitta. 23 indictments came down against the Maceos, Fertittas and many of their other associates this time. But there were no convictions in the long run. The Fertittas and Maceos maintained an iron grip on their illegal gaming enterprises in Galveston until long after both Sam and Rosario Maceo were in their graves. When Texas Rangers finally broke the back of the Texas mob in Galveston, it was a long abandoned Maceo family property that actually proved to be the scene of one of the biggest breaks in the case. In the summer of 1957, Sam Maceo’s Hollywood Supper Club became a slot machine storage area while Texas Rangers squatted in all the local casinos trying to dissuade customers from sticking around while they snooped around for whatever clues they could find to bring down the operation:

The over-ambitious politicos who wanted to publicize the bust actually did haul a bunch of the slot machines into the Gulf of Mexico and dumped them ceremoniously for a bevy of press to snap some opportunistic photos and write glowing stories about the successful operation. Later on the move proved to be a political disaster as not all of the machines sank. The Army Corps of Engineers fumed about the machines fouling their waters. Still, it was the beginning of the end for gambling in Galveston.

Here’s a concise history of Sam and Rosario Maceo’s reign over Texas rackets:

Eventually Texas gambling was made obsolete by the blossoming desert flower called Las Vegas, and Mob interests began to focus intently on the area with easy access to massive Teamster loans. Yet, that wasn’t the only money going into these shady Vegas Mafia expansion operations. If you want to go deep into the conspiracy theories and enjoy reading a great deal of spastic, disorganized JFK assassination forum posts, go here:

What Sam and Rosario Maceo were able to do with their sway over the Texas illegal rackets and their shrewd business tactics, the Fertittas have since taken to a whole new level. Old habits never die, especially proven ones. More often than not the old ways simply adapt with the changing times.

It is important to look at the full spectrum of this family and their part in the history of illicit and illegal profiteering in America. When you fully examine the foundation the Fertittas' business empire is built on, you have to wonder how it could ever be possible to completely shake the Mafia influence on the family and its business strategies. Even at this late stage in the game while the latest Fertitta brothers Lorenzo and Frank III are viewed by much of the the public as smart, upstanding businessmen with no more Mob ties, they operate with the kind of overzealous impunity that only “connected guys” can muster. They rule the roost in Vegas with bullish bravado, and their role in the Xyience bankruptcy being tied to the Global Cash Access Holdings skimming scandal reveals the potential for a whole new conspiracy that hasn’t yet been fully explored.

And that brings us to the next chapter of the family history: The Vegas pioneering of Frank Fertitta, Jr. and his role in skimming the take at the Fremont Hotel. In the next installment, we’ll look at what saved Frank Junior from going to jail with all his buddies when the FBI’s “Strawman” investigations ravaged mob rule in Vegas. We’ll look at what finally broke Frank Junior and led him to give up control of the family business to his son Frank III (Frankie “Three Sticks”). We’ll explore how the Fertitta empire came to pass, built on a one-dollar transaction between friends. We’ll trace Frank Junior’s steps from his 1960 arrival in Vegas to his present day behind the scenes role as a Fertitta Enterprises and Station Casinos consultant and a major republican party influence peddler. We’ll also touch on how the sins of the father wound up setting the stage for the sons becoming ruthless business tycoons. We’ll get into how Missouri gaming authorities put Frank Junior under such a microscope that he was forced to forget about doing business there on his own. He signed the business over to Frank III and may have even made his old friend Carl Thomas disappear to prevent him from telling Missouri gaming officials what he knew about Frank Junior’s skimming at the Fremont. We’ll rehash how Frank Junior’s skimming operation is portrayed in the movie Casino and touch on how the Global Cash Access connection represents the possibility of a worldwide skimming enterprise masterminded by the Fertittas and the GCA castoffs who bankrupted Xyience for them.

We will also assess where the Fertittas are at today with Station Casinos nearing collapse and their Vegas piggy bank shattered. They may just be down to their last pennies, and bankruptcy appears imminent. The way the news is coming out piecemeal and because the Fertittas seem to be scrambling to screw with their financing arrangement leads me to believe that they are determined to prevent a bankruptcy, but it may not be up to them. If it doesn’t come from their own pockets and selling off other major Fertitta Enterprises assets, the rescue package that saves Station Casinos will have to come from someone with even bigger profit margins and deeper pockets.

Unlike the Texas ranger threat that led to the family’s Texas exodus (only Tillman Fertitta stuck it out and prospered there) and the deaths in the family that helped along the collapse of the illegal infrastructure there, in Vegas the Fertittas are going to be vanquished by their own insatiable greed and want for more. Their Vegas luck seems to have run out, even though they followed the same principles that allowed their ancestors Sam and Rosario Maceo to die free, wealthy men. If history proves anything however, the Fertittas will not go down with the ship. They will find a way to avoid incrimination, escape accountability, and resurface elsewhere. They will bounce back, and in doing so they just might become even more ruthless and cut-throat than they already are. Regardless of whether or not the ghosts of the Maceo family are still haunting the Fertittas, the new regime can very well be considered gangsters. They may not carry Thompson Machine Guns or make people kiss their rings, but they live and breathe with gangster blood running through their veins. Their minds are pre-programmed with the old-school way of doing things, conditioned by their father’s well-worn experience dancing the fine line between legal and illegal business activity. The Mafia’s connection like an umbilical cord to the Fertitta family’s history can in many ways never be cut. The brothers Fertitta will never be able to outrun their family’s reputation.

Though up to this point the Fertitta “family” secret hasn’t really burned them much at all, the family’s personal financial burn rate is said to be in excess of a hundred million each year even as their company is leveraged with massive debt. Perhaps being so used to having that kind of expendable cash around is what led to the brothers deciding to pocket much of the $350 million senior secured credit facility they acquired for Zuffa, LLC in the summer of 2007.

And who could forget Dana White? While the guy doesn’t have much of a history at all and his upbringing is a tale of two sides of the country (stints in Maine, Boston, and Vegas), Dana White does seem overly fascinated with the gangster set. In some ways he’s like the wanna be gangster errand boy who never got made. Still, he became fast friends with Lorenzo Fertitta in high school at Bishop Gorman in Las Vegas, and he never did forget his South Boston roots, either. White just spent some time in his old stomping grounds with a couple of guys who aren’t afraid to admit their thug life resume.

Jimmy Martorano's brother John Martorano confessed to killing 20 people and was only sentenced to 12 years time for the murders, most of which were carried out at the behest of South Boston Crime Lord-turned FBI Informant James “Whitey” Bulger. Patrick Nee helped Whitey with enforcement as well and played a pivotal role in one potential whistleblower’s disappearance and death. Suffice it to say Nee drove young John McIntyre to his last appointment with Bulger who tortured, strangled, and shot McIntyre with Stephen “The Rifleman” Flemmi’s help. Since McIntyre confessed to helping Bulger with an IRA gun shipment, his tongue was ripped out with a pair of pliers. And these two guys who assisted efforts like that are considered “gentlemen” by Dana White’s standards.

The whole Whitey Bulger saga has been front page news for decades, and still today there are ongoing cases involving the principal players, and of course Bulger remains a fugitive. My father was on the other side of the law fighting against the influence of organized crime in South Boston during Bulger and Flemmi’s rise to power, and he came face to face with Whitey himself on a few occasions. Dad has a whole chapter about his organized crime investigations in “Black Mass” and a particularly tragic connection to McIntyre.

And so, there are many parallels and contrasts in the situation I now find myself in. The Fertittas seem to be carrying on the traditions of their fathers and grandfathers and great uncles. Even though I never pursued a career in criminal justice myself, I wound up falling back on the same instincts that made my father a good cop. Like the Fertitta family tree is populated with Mafioso, my family is made up of a high percentage of police officers and government agents. We have a face-off here between the direct offspring of a criminal mastermind and the direct offspring of an honest cop done in by the government’s unclean hands. It’s just too classic, but at the same time it represents the principle that led me to writing non-fiction rather than flashy novels: Fact is stranger than fiction. I know in the movies the hero usually wins, but reality is much more cruel in situations like this. I just hope in the end my work isn’t made meaningless by some yet unforeseen hand of fate, and I hope the Fertitta family history of getting away unscathed is drastically altered. It would be fitting justice if the current economic crisis is what finally puts the spotlight on the corruption involved here, as I truly believe it is people like the Fertittas who have created this crash and burn climate. All we can hope for now is that they’ll actually end up paying for the damage they’ve done.


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