First, I’d like to thank you all for your readership and support. It means a lot.

On another note, the gambling history book, A Bold Gamble at Lake Tahoe: Crime and Corruption in a Casino’s Evolution, is finally here! I offer you the first chapter below.

The nonfiction book now is available for purchase as a paperback ($14.95) and an e-book ($7.99) in both EPUB and Kindle formats. To buy, click here.

Here’s a glimpse again at the story:

Their new, nature-inspired hotel stood amid a Northern Nevada township of more trees than people. The raw beauty of that lakeside spot on the cusp of development portended enormous getaway potential. The owners, legitimate businessmen, strove to add a casino, but no one would finance it.

Then Jimmy Hoffa’s Teamsters pension fund wormed its way in. The locals objected to a gambling house in their neighborhood. Shady characters usurped the enterprise. Lives were threatened. State agents witnessed an employed stickman using misspot dice. Felonious crimes occurred on the property, allegedly. Lawsuits by and against one owner crept into the double digits. And those events were just a handful of a mounting pile of troubles.

This is the story of a gambling business’ journey from concept to stability during the 1960s and ’70s, a time when the industry was Mob infiltrated, often volatile, theft and cheating prone, and unpredictably policed.

That once fledgling inn now is the Hyatt Regency Lake Tahoe Resort, Spa and Casino.

I wish you all a fantastic winter holiday season and new year.

Take care,

Doresa

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CHAPTER 1: 

DIP INTO THE UNDERWORLD

1964

With Jimmy Hoffa and the fund’s co-trustees waiting inside their headquarters to meet him and seal the deal, California businessman Bill Swigert told the broker his company now was refusing the proffered loan.

“You are finished with the Teamsters, and you better get out of Chicago,” Norman Tyrone said while dragging a thumb across his own throat.[i]

“We got the hell out of there,” said Swigert, referring to himself and his attorney.[ii]

Desperation for financing is what had spurred William “Bill” G. Swigert, Jr. to the Windy City that autumn. He and his two partners — collectively Pacific Bridge Company & Associates (PBC&A) — recently had built and opened The Sierra Tahoe, the premier hotel in a new, sparsely inhabited, developing community on the north shore of Lake Tahoe[1] in Nevada, U.S.A. Four months later, they still needed money to cover the construction and other incurred expenses and to fund the project’s next phase, adding a casino and more guestrooms.

A few months before, Swigert had received a telephone call from Norman B. Tyrone, who’d introduced himself as a financier and had asserted he could arrange a Teamsters Pension Fund (TPF) loan for PBC&A for The Sierra Tahoe.

By that time, the TPF had underwritten more than $20 million in loans ($163 million)[2] in Nevada, for hotel-casinos, including the Riverside in Reno, and the Dunes and the Desert Inn in Las Vegas, as well as other facilities.

The TPF — formally the Central States, Southeast, Southwest Areas Pension Fund of the International Brotherhood of Teamsters — collected and managed employer contributions for retirement, disability and death benefits for its unionized truck drivers and warehouse workers in about 20 states.

One of the fund’s eight trustees was James “Jimmy” R. Hoffa, who, as the Teamsters union president, allegedly had ordered bombings, arsons, beatings and murders and had aligned himself with Mobsters nationwide.

Tyrone had arranged for PBC&A to receive $2.6 million ($21.2 million) in financing from the TPF. The loan was PBC&A’s last resort, as Swigert had exhausted all other potential options over the prior 2.5 years. Swigert and his counsel, Frank E. Farella, had flown to Chicago to finalize the transaction.

On Friday, September 25, the two men convened with Tyrone in the new riverfront, 36-story, downtown Executive House hotel, about seven blocks from the TPF’s building. Tall but portly, the man wore expensive apparel.

“Tyrone just looked dishonest,” Swigert said. “He looked like a big, tall gangster, like Al Capone[3] on steroids.”

In Tyrone’s suite, piles of papers lay strewn across the furniture. The loan liaison darted around and made and answered several calls supposedly to and from Elliott Roosevelt, who was said to be waiting in the TPF’s boardroom to meet Tyrone and his loan applicants from the West Coast. Tyrone had indicated this son of Franklin D. and Eleanor Roosevelt, former United States president and first lady, was his business partner.

“God, it was almost like a show,” Swigert said about Tyrone’s behavior.[iii]

Swigert and Farella reviewed the loan papers. As a condition of the financing, PBC&A previously had agreed to pay 1 point, or 1 percent of the loan amount, which equaled $26,000 ($212,000), to the TPF for appraisals, estimates and other costs. It also had agreed to pay 2 points, which was $52,000 ($424,000), to Tyrone as commission for brokering the deal.

However, among the documents, Swigert spotted a letter that committed PBC&A to giving an additional $208,000 ($1.7 million), or 8 points, as a subsidiary loan to the International Mortgage and Statistical Corporation, supposedly Tyrone and Roosevelt’s company in the Bahamas.

“What’s this? What’s it all about?” Farella asked.

“To Swigert and Farella … the Bahamas loan had an imme-diate and unmistakable stench,” reported the Oakland Tribune.

The additional $208,000 meant PBC&A would pay 11 versus 3 points on the loan. Tyrone defended it as “a hell of a good deal”[iv] and said all TPF financings were transacted at a 10 point-minimum.[4]

Frank Sheeran, who once had been Hoffa’s right-hand man, explained to author Charles Brandt how the TPF loans worked: “Jimmy’s cut was to get a finder’s fee off the books. He took points under the table for approving the loans. Mob bosses would bring customers. The bosses would charge the customers 10 percent of the loan and split that percentage with Jimmy.”[v]

If this were to have been the case with the loan to PBC&A, then $104,000 of that $208,000 would have gone to Hoffa, the rest to Tyrone. (Tyrone wasn’t a Mob boss, but like one, he connected loan candidates and the TPF.)

When Swigert asked him what his corporation did, Tyrone explained that it was somewhat of a startup, aiming to computerize global information about potential loan sources. Farella requested the business’ latest financial reports, but Tyrone said they weren’t and wouldn’t be available. He admitted that no paper trail documenting the $208,000 disbursement would exist.

“We said that if this was a legitimate loan [to Tyrone’s firm], then there was a legitimate business reason for doing it,” Swigert recalled. “Otherwise, this clearly would be immoral and illegal.”[vi]

About then, it was time for Swigert and Farella to rendezvous with the TPF’s trustees at their 29 E. Madison Street offices. Swigert told Tyrone he and Farella would catch up with him there with a final decision on the loan. First, Swigert had to discuss with his partners the surprise term just thrust upon PBC&A, by phone. He did so.

“It didn’t take us long to decide we wanted no part of any deal like that,” Swigert said.[vii]

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[1] Often called the “Jewel of the Sierra” or “Big Blue,” Lake Tahoe straddles the California-Nevada border. With a surface area of 191 square miles, it’s North America’s largest alpine lake.

[2] With most of the dated dollar figures throughout this book, a corresponding current value is provided in parentheses immediately after. These amounts are based on 2019 United States government consumer price index data and adjusted for inflation.

[3] Alphonse “Scarface” Capone was the American Mobster who allegedly murdered his way to becoming Chicago’s organized crime boss during the U.S.’ Prohibition Era.

[4] That was true, but it was a high rate, as traditional lenders typically charged borrowers 1 to 4 origination points.

CHAPTER 1: DIP INTO THE UNDERWORLD

[i] Nevada State Journal, “Teamster Fund Trial Starts on Tahoe Loan,” Jan. 26, 1971.

[ii] Interview of William G. Swigert, Jr., June 24, 2010.

[iii] Oakland Tribune, “$200,000 Fee on Loan for Teamsters,” June 5, 1970.

[iv] Ibid.

[v] Brandt, Charles. I Heard You Paint Houses: Frank “The Irishman” Sheeran & Closing the Case on Jimmy Hoffa, Hanover, N.H.: Steerforth Press, 2005. Ebook.

[vi] Interview of William G. Swigert, Jr., June 24, 2010.

[vii] Oakland Tribune, “$200,000 Fee on Loan for Teamsters,” June 5, 1970.

1967

The North Lake Tahoe gambling house had been running smoothly for eight months since Arthur “Art” L. Wood, developer of the Incline Village master-planned community, had assumed ownership of it earlier in the year. He’d acquired it along with the lakefront restaurant and bar components of The Sierra Tahoe in Nevada from then owner Calvin Kovens and afterward, renamed the gaming entity Incline Village Casino.

Caught In The Act

On a day in mid-October, employee Clayton P. Gatterdam was working there as a craps stickman, responsible for calling the dice rolls and moving the dice around the table. While a game was in progress, he pulled misspot dice — ones without certain numbers — a few times from a hidden pocket in his apron and swapped them for those in play to increase the player’s chance of winning. One of his dice, for instance, contained two ones, two fours and two fives.

Two members of the Nevada Gaming Control Board (NGCB), the investigative gambling regulatory arm that reports to the Nevada Gaming Commission (NGC), witnessed Gatterdam cheating! At the time, the NGCB happened to have been conducting a random, clandestine, undercover check of the Incline Village Casino.

Gatterdam had arranged in advance with an acquaintance to collude in the swindling and split the winnings. The co-conspirator was to bet at Gatterdam’s craps table, and Gatterdam was to insert the misspot dice to facilitate one or more wins.

“[We was] going to try to put the dice in and take the place off, shoot the bankroll. We was going to try to beat the house,” Gatterdam said in his statement to Wood’s attorney. He also admitted to having been a “crossroader,”* or cheater, for the previous 20 years. (About 1.5 years later, Gatterdam again would be caught using misspot dice but in London, England.)

Protocol Followed

Consequently, the NGCB closed the Incline Village Casino — standard procedure — and filed a formal complaint against its operators, Wood, who owned 90 percent, and Benjamin “Benny” Lassoff, the bartender there who owned 10 percent. Neither of them had been on the premises when the trickery occurred.

The NGCB recommended the NGC revoke Wood and Lassoff’s gambling licenses. That’s just what it did; it pulled them for a year.

“These procedures were established for two purposes, to protect players against cheating and to protect the reputation of the state,” stated an editorial published in the Las Vegas Sun (Nov. 3, 1967). “Should it ever become established that the state allowed a cheating operation to continue one minute after irregularities are detected or even strongly suspicioned, the fat’s in the fire for sure and there’ll be a field day for the ever-ready critics of our major industry.”

Business Left Hanging

Wood pleaded with the NGC to let him keep his license, saying he’d do whatever it would take. No dice. 

“I think this thing was handled unfairly,” Wood said. “But [the NGC] is the boss” (Nevada State Journal, Dec. 5, 1967).

Unable to run the casino, Wood sought to lease or sell his majority interest in it and even unload the restaurant and bar components he owned as well, if necessary.

—————-

*A crossroader is a casino cheater; the term, which originated in the Old West, denoted someone who practiced their trickery at saloons located at crossroads.

Sources

Hostess (princess)

1970-1975

The doorman was a knight in armor; the maître d’, a prince; the dining room hostess, a princess … Each and every one of the 900 or so employees at Kings Castle, even the phone operators, wore a costume while at work.

Kings Castle, the brainchild of Nathan “Nate” S. Jacobson, debuted in Incline Village on Lake Tahoe in Nevada in 1970. The work uniforms were just another extension of the English royalty motif that permeated the resort.

Eye-Catching Fashion

The costumes boasted vibrant colors — deep orange, Gainsborough blue, gold and silver — and , according to their famous designer Michel Fresnay, a “mod-medieval” style  (Reno Evening Gazette, July 7, 1970).

Fabrics primarily were crêpes and an imported French silk cotton used on both its shiny and matte sides. Embellishments included pearls, brass, horsehair, gold braided headdresses for the men, tiaras for the women, faux chain mail and leather.

Maître d’ (prince)

Tommy Papagna recalled wearing a court jester costume, a long-sleeved lavender top with a large collar and cuffs shaped like crowns, both yellow. He was a roulette, 21 and baccarat dealer in Kings Castle’s casino during 1973 and 1974.

“I liked wearing the costumes because they were comfortable,” he said (March 2018).

Not Just Any Designer

Jacobson chose and commissioned Fresnay to create the costume series. Fresnay, age 39 at the time and a graduate of the Beaux Arts Academy in Paris, France, had become renowned after designing Marlene Dietrich’s gowns for her appearance at the Olympia Theatre in 1962. 

Sources

1970-1975

More than nine centuries after her purposeful and likely shocking stunt* in Coventry, England, Lady Godiva provoked controversy at a hotel-casino on Lake Tahoe’s North Shore.

When Kings Castle debuted in Incline Village in 1970, a nude Lady Godiva astride a horse and flanked by two medieval, sword-wielding sentinels (all replicas, of course) welcomed guests at the resort entrance. Situated in the archway of a tall, stone wall, the long-haired beauty appeared to be about to pass through a gate and cross a drawbridge.

In Poor Taste

A contingent of Northern Nevadans considered the Lady Godiva statue offensive, presumably because the subject was naked. That sentiment extended to other elements of Kings Castle, too, including the nude revue FLESH featuring topless showgirls performed there and the “Thy Kingdom Come” sign outside the hotel.

The Nevada resort, inside and out, bore the look and feel of England’s royal architecture during its Tudor period, about 1485 to 1603, however, the real Lada Godiva had predated that by hundreds of years, having made her splash in 1040. As such, she wasn’t emblematic of the Tudor era, so why she was at Kings Castle in the first place isn’t clear. Perhaps the fact that both she and the Tudor dynasty were English was enough for then proprietor Nathan “Nate” S. Jacobson to connect the two.

Minimizing Her Effect

When Kings Castle came under new ownership, that of Jud D. McIntosh, in 1973, he sought to change the resort’s image to a family-friendly one and, thus, had Lady Godiva clothed.

Even clad in apparel, the English noblewoman only remained there two more years.

Doesn’t Fit In

After The Hyatt Corp. acquired Kings Castle in 1975 and renamed it Hyatt Lake Tahoe, it eradicated all signs of the royalty motif, transforming the facilities back to one that blended with the natural surroundings; their first iteration The Sierra Tahoe (1964 to 1966) had been designed with that very intent.

Only 1.5 months after assuming control of the hotel-casino, Hyatt auctioned off all of the medieval décor, including Lady Godiva, and donated the proceeds to the North Lake Tahoe Historical Society. As a result, Lady Godiva’s new home became Bill Anderson’s Ponderosa Ranch, a nearby theme park based on the television show Bonanza (it closed in 2004).

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* In 1040, Lady Godiva implored her husband Leofric, the Lord of Coventry, to reduce or eliminate the taxes he’d levied recently, as she found them oppressive. Knowing she was modest, he agreed to lift them if she rode her horse naked through the town’s streets. To his surprise, she did just that, after getting the local citizens to agree to not watch her carry out the challenge.

Sources

Inside the Crystal Bay Club Casino at Lake Tahoe, Nevada, 1960s

1966

A 34-year-old 21 dealer at a Crystal Bay Club Casino at Lake Tahoe slipped $100 worth of gambling chips into her bra each day for a week before getting caught.

Once busted, she accepted termination of employment there.

Reno Evening Gazette, July 15, 1931

1945-1947

Ray Wherrit and Austin K. Wright of San Luis Obispo, California set out in 1945 to build a $120,000 hotel-casino in the Crystal Bay Park subdivision on the Nevada side of Lake Tahoe. The two had purchased five lots there for that purpose.

In November, after hearing the details of the project, the Washoe County Commissioners approved it.

A number of property owners in the tract petitioned the commissioners to withdraw their approval. Instead, the authoritative body stood by its original decision to greenlight the resort.

The Move To Plan B

For whatever reasons, perhaps due to the protests, Wherrit, with Wright no longer as a partner, downscaled the proposed development to a casino-bar to be built on his lots that, according to the deed, could be used for such a commercial enterprise.

At the time, the town of Crystal Bay already contained some casinos, including the Ta-Neva-Ho and the Cal-Neva Lodge.

Wherrit went before the county commissioners a second time, in February 1946, for permission to proceed. Despite  major grumblings from some, construction was approved.

Again, some Crystal Bay Park residents were unhappy with the ruling, which galvanized them to abort the project.

Their efforts, including public objections to such an enterprise being built in their neighborhood, eventually succeeded in getting Wherrit to scrap his plan. At that point, he conveyed the land back to John J. Heffernan, from whom he’d purchased it.

Permanent Solution Sought

In February, about ten residents sued Heffernan and the Crystal Bay Corp. (CBC), the company that originally had subdivided the acreage. The purpose of the suit was to place development restrictions on Heffernan’s property and any unrestricted, CBC-owned land, thereby forever preventing the erection of any similar entities in the future.

The defendants fought back to keep their parcels restrictions free.

The Final Answer

After a delay of more than a year, a non-jury trial finally took place in May 1947 and lasted two days.

Judge A.J. Maestretti ruled in the plaintiffs’ favor. He determined the same limitations on development and use should apply to the entire subdivision and ordered that, accordingly, all property in Crystal Bay Park be built out only for residential purposes.

Sources

Trailways bus parked at the Golden Nugget Casino in Sparks, Nevada, 1970

1969-present

When executives of Caesars Palace in Las Vegas, Nevada hosted 12 people from Kansas City in 1969 as part of a gambling junket, it unexpectedly backfired.

When their guests, after four days at the resort, boarded the plane to return home, Clark County sheriff’s deputies arrested all of them on charges of vagrancy because they were believed to be mobsters or associates.

The Nevada Gaming Control Board (NGCB) recommended that each of Caesars’ 59 shareholders be fined up to $50,000 and the casino, $10,000.

“Catering to persons of notorious or unsavory reputation or to persons who have extensive police records reflects or tends to reflect discredit upon the State of Nevada and the gaming industry and is a violation of the regulations in that it is an unsuitable method of operation,” the NGCB’s complaint noted  (Nevada State Journal, June 13, 1969).

Throughout the 1960s, these strategic trips brought hundreds of thousands of tourists to The Silver State to gamble. Under this type of arrangement, an employee or, most often, an independent operator, frequently out of state, found people with a good credit rating and a desire to gamble (some casinos required that visitors be able to lose $2,500) then transported them to a hotel-casino for a few days to play.

The gambling licensee assumed all costs of transportation, meals and accommodations in the hopes the guests would lose money — lots of it — in his casino. The junket organizer received about $50 per person per junket.

“The casinos spend millions for the trips from as far away as New York and try to recoup the money from patrons at the gambling tables,” reported the Reno Evening Gazette (February 17, 1967).

If a junket gambler exceeded his credit, the casino might give them a marker, or written IOU. Typically, the coordinator, or junketeer, was responsible for collecting that money for the casino once the guest got home.

Cheating, Extortion, Murder

The lack of rules governing these trips led to abuses by junketeers. Some were involved with organized crime. Some enlisted people who couldn’t meet the credit requirements, then loaned them money at exorbitant rates. Some skimmed off the debts they collected before turning the money over to the casino. Via phone, some threatened junket participants who owed money.

In early 1970, the Nevada Gaming Commission (NGC) proposed regulations that addressed these problems. Soon after, Harry Otake, 46, who’d facilitated many gambling junkets from Hawaii to Las Vegas and Lake Tahoe hotel-casinos, was found lifeless in the trunk of a car, having been strangled.

Police theorized that gangsters had murdered him, gamblers who’d lost significant amounts or from whom he’d attempted to collect on debts. Robbery was another possible motive, as Otake allegedly had $95,000 in his possession before his death.

Shaken by this homicide, NGC members got all casinos in the state to stop voluntarily all junkets run by non-employee agents until governing rules could be established.

Nevada Takes Control

That same year, after months of discussions and six drafts, the NGC adopted a rule calling for punishment, even potential gaming license revocation, of any casino doing business with unsavory junketeers.

In 1972, the NGC added further stipulations, which comprised Regulation 25. Among them, all junketeers, now called independent agents, had to register with the NGCB, and licensees could work only with those whom the board had approved.

All junketeers, now called independent agents, must register with the NGCB and provide certain documentation, including a copy of the agreement between the agent and the gaming licensee, financial info if the agent is to give money to the licensee and a designation of secondary representatives. Licensees had to report quarterly what agents they’d worked with during the previous three months.

Some minor additions in 1992 aimed to ensure agents and licensees were made aware of the rule’s requirements. Regulation 25 remains in effect today.

As for Caesars Palace, for some reason, the state dropped the matter, leaving the resort’s shareholders free from reprisal.

Sources

1966

Suddenly, in the fall, the Nevada Gaming Commission (NGC) directed 41-plus casinos to cease operation of specific electronic blackjack machines because they were “experiencing difficulties when played so as to render the devices more liable to win or lose” (Nevada State Journal, Oct. 21, 1966).

These 101 devices, available in gambling rooms in Las Vegas, Reno, Lake Tahoe, Carson City, Elko, Wells and Hawthorne and manufactured by Nevada Electronics, Inc., played like a slot machine with no dealer and were popular.

Because the NGC wouldn’t say more, mystery surrounded the issue. All, however, was revealed shortly.

Sneaky Tricks

It turned out these particular blackjack machines disfavored the player more than the hand-dealt version. This was because these electronic versions removed a card worth 10 points from the deck in play. This trick results in fewer blackjacks and boosts the casino’s edge by about half a percent, which doesn’t sound significant but is.

“Removing 10-value cards from play, whether by design of the game or by malfunction, requires some powerful, positive rules to make up for the impact it has on the odds of the game. If there really are 10-value cards missing from a deck in a regular blackjack game, you don’t want to play,” said gaming expert, John Grochowski (grochowski.casinocitytimes.com, Oct. 26, 2010).

Signs on the devices identified them as automatic blackjack games, thereby deceiving players into thinking they offered odds that were equivalent to games with a human dealer — which some blackjack machines actually did.

The suspect ones, however, did disclose, at the bottom of the game’s instructions, the 10-value card removal.

To satisfy the NGC, the distributor of the machines eliminated the automatic blackjack demarcation and replaced the instruction plates with ones where the card removal warning appeared at the top.

Once that was completed, about a month later, the gambling regulatory agency lifted the suspension.

Sources

1970-1974

During the years Kings Castle at Lake Tahoe in Northern Nevada was open, management routinely used polygraphs on employees, particularly for questions about cheating, theft and employment.

Photo from freeimages.com: “No Lies”

1980

Thirty-five years ago, on August 27, an intricate bomb blasted a chasm that spanned six of the 11 floors of Harvey’s Resort Hotel. The explosion hadn’t been intentional but, rather, the result of the best idea experts could conceive of to disarm the instrument.

“To this day it remains the most bewildering improvised explosive device the FBI has ever encountered,” wrote Jim Sloan in Render Safe: The Untold Story of the Harvey’s Bombing.

The big, intricate bomb

The concept was to sever the detonators in the top metal box from the roughly 900 pounds of dynamite in the second case underneath by using a charge of C4 set off remotely, rendering the weapon ineffective. Fortunately, the premises and those nearby in Stateline, Nevada had been evacuated beforehand, and no fatalities occurred.

During the 34 hours the bomb had sat on the hotel’s second floor and numerous x-rays, tests and discussions about it had taken place, the FBI had sought to deliver the $3 million ransom (really only $1,000 and bundles of newspaper) and capture the extortionist at the drop. The attempt had been a bust, though, as the helicopter pilot, instructed to fly to a remote part of the Lake Tahoe wilderness and land where he saw a strobe light, couldn’t spot it. A second try had been planned, but the explosion had pre-empted it.

Harvey’s reopened nine months later, after owner Harvey Gross made $18 million worth of repairs and security enhancements to it.

Despite a $200,000 then $500,000 reward for information about the crime, it took about a year for the FBI to identify and arrest the perpetrators.

“Big John” Birges

The mastermind was a 58-year-old retired business owner, János “Big John” Birges, who’d demanded his two sons, John, 19, and James, 18, help him carry out his scheme.

“The Birges boys were still bound together by at least one thing: a terror of their father,” wrote Adam Higginbotham in his Atavist Magazine article

Money Was Motive

Birges, Sr. had needed money, as he’d gambled away his savings, owed $15,000 ($43,000 today) to Harvey’s (his favorite casino that he’d frequented often) and lacked any more assets to sell. Previously, to cover casino debts, allegedly he’d burned down his restaurant for the insurance money and had sold his home. Twice divorced, he’d been unhappy, ill with severe abdominal bleeding and snubbed recently at Harvey’s, when he and a female companion were asked to leave a VIP suite to free it up for a person of higher standing.

The elder Birges was sentenced to life in federal prison. In 1996, after serving 11 years, he died from liver cancer. His sons received immunity for their cooperation and for testifying against their father at trial.

Sources

Photos from FBI files