Mr. Cleanface’s Dirty Laundry: Harry Reid’s Mob Money
By Fedora
“I’ve gotta Cleanface in my pocket,” boasted Kansas City Mafia representative Joe Agosto, unaware the FBI was monitoring his conversation (reproduced loosely in the movie Casino).
FBI surveillance of Mafia gambling operations in Las Vegas in the late 1970s picked up Agosto making references to an individual he codenamed “Mr. Cleanface” and “Mr. Gillette”. Agosto’s conversations mentioned Mr. Cleanface was close to Nevada Governor-Elect Robert List.
After turning state’s evidence, Agosto claimed that Mr. Cleanface was Harry Reid, then chairman of the Nevada Gaming Commission and sporting a cleanshaven, boyish look. Agosto’s claims were echoed by former Tropicana Hotel part-owner Deil Gustafson, who testified about Reid’s relationship to Tropicana attorney Jay H. Brown.
Agosto’s testimony led to the conviction of several top Midwestern Mafia bosses, but failed to touch Reid. When questioned after Agosto’s surveillance became public knowledge in mid-1979, Reid admitted to being the subject of the “Mr. Cleanface” references, but denied being paid for any favors. The Justice Department investigated whether Mafia funds had been funneled to Reid through Brown and Mafia attorney Oscar Goodman. A five-month investigation cleared Reid, and 25 years later, Reid is attacking political opponents with slogans like “If we can beat mob, we can fight DeLay-style politics”, and claiming in the process that he “kick[ed] the mob out of Las Vegas in the 1970s”.
Did Harry Reid really kick the mob out of Las Vegas in the 1970s, as he claims? Or was he in the Mafia’s pocket, as Joe Agosto claimed? What are the real facts about Reid’s relationship to organized criminal elements in the gambling industry? Is he Mr. Cleanface, or Mr. Dirty Laundry?
Reid has been using the same tactics to project an image of being Mr. Cleanface since the beginning of his political career. He started as a protege of Donal “Mike” O’Callaghan, who served as Governor of Nevada from 1970 to 1978. Reid was elected as O’Callaghan’s Lieutenant Governor in 1970. With support from O’Callaghan, he ran for Senate in 1974 against Republican Paul Laxalt. Reid’s campaign rhetoric accused Laxalt of profiting from association with billionaire Howard Hughes, who had a long relationship with Capone mob representative Johnny Rosselli and had recently secured Rosselli’s assistance in acquiring Las Vegas’ Desert Inn from associates of Cleveland mobster Moe Dalitz in 1967.
Laxalt had indeed taken contributions from Hughes. But what Reid failed to mention was, so had his own former running mate O’Callaghan. And so had Reid himself.
Hughes, like the Mafia, hedged his political bets by adopting a nonpartisan policy towards graft. He sold Laxalt, O’Callaghan, and other politicians on his move into Las Vegas by portraying it as a broomstick for sweeping the Mafia out of the casino business. Then “reformer” Hughes turned around and paid Johnny Rosselli a finder’s fee. Meanwhile handsome profits from the deal went to Moe Dalitz, then a partner in developing Rancho La Costa in the San Diego area. From bases outside Las Vegas the Mafia maintained a lower-profile presence in the city, and the Chicago Outfit and its Midwestern partners were soon creeping back into town by 1974--just in time for Mr. Cleanface to “kick the mob out of Las Vegas”, again.
O’Callaghan replaced Nevada Gaming Commission Chairman Peter Echeverria with Reid in mid-1977, in the midst of the new Chicago Mafia move into town spearheaded by Agosto. As chairman, one of Reid’s first acts was to approve the sale of the Hacienda hotel-casino (now the site of Mandalay Bay), controlled by a Chicago Mafia front company called Argent Corporation, to former lounge musician Paul Lowden.
Reid approved the sale despite objections from the state’s Gaming Control Board alleging the involvement of Lowden with hidden associates from a company based in San Diego. Also in 1977 Reid and the Nevada Gaming Commission initially approved the deal that allowed Agosto’s associates to skim funds from the Tropicana for two years before Reid decided to “kick the mob out of Las Vegas”.
In 1978 Reid’s commission approved applications for new Reno and Lake Tahoe ventures by the Del E. Webb Corporation, named for Del Webb, a Phoenix construction contractor whose Las Vegas buildings had been used by Bugsy Siegel and Meyer Lansky for skimming funds.
After the use of Reid’s name by Agosto and his associates was reported by papers in mid-1979, Reid and the Gaming Commission approved transfer of control of the Tropicana from Agosto’s group to the Phoenix-based Ramada hotel chain, which had been founded with initial investment input from Webb.
By 1980 Reid had been cleared of Agosto’s allegations by the Carter Justice Department (then also in the process of bringing about virtually no successful prosecutions in Billygate, Koreagate, ABSCAM, BCCI, or the investigation of cocaine use by Treasury Secretary Hamilton Jordan). Since then Reid has received contributions from various donors connected with the gambling industry, including:
--Moe Dalitz, associated with the Cleveland mob, the Desert Inn, the Stardust Resort & Casino, and Rancho La Costa.
--Irwin Molasky and Merv Adelson, who partnered with Dalitz in developing Rancho La Costa but deny any criminal associations.
--Morris Shenker, an attorney associated with the St. Louis Mafia, Meyer Lansky, Jimmy Hoffa, and the Dunes Hotel.
--Paul Lowden, who after purchasing the Hacienda in 1977 from Argent Corporation purchased the Sahara Resort and Casino in 1982 from Del Webb.
--Ed and Fred Doumani, associated with the Tropicana Hotel, the El Morocco casino, Agosto, and Joey Cusumano, former lieutenant of Chicago Mafia representative Anthony Spilotro; Agosto’s infiltration of the Tropicana was facilitated in 1975 when the Chicago and Kansas City Mafia families conspired to block a Teamsters Central States Pension Fund loan to the Doumanis; when Argent Corporation’s gambling license was revoked in 1979 Argent initially agreed to sell its holdings to the Doumanis; later in 1983 the Doumanis loaned funds to the now-bankrupt Agosto.
--Bart Rizzolo, who along with his son Rick Rizzolo operates the Crazy Horse Too strip club; associated with the Doumanis and Joey Cusumano.
--Kirk Kerkorian, owner at various times of Caesar’s Palace (built with financing from the Teamsters Central States Pension Fund), the Flamingo Hotel (sold in 1970 to the Hilton Hotels Corporation, partly financed in the 1940s by Henry Crown, who also financed Chicago mob associate Jacob Arvey, and later associated with mob lawyer Sidney Korshak), and the MGM Grand Hotel and Casino (built on the heels of Kerkorian’s acquisition of controlling MGM shares from Edgar Bronfman, son of Lansky bootlegging associate Samuel Bronfman; Bronfman’s son Edgar Jr. has also been a Reid contributor).
--Steve Wynn, a casino developer who used profits from a 1970 deal involving Howard Hughes and Caesar’s Palace to purchase the Golden Nugget; described in a Scotland Yard report as a front man for New York’s Genovese Mafia family.
--Joseph Alioto, a San Francisco politician related to Milwaukee Mafia boss John Alioto; alleged by informer Jimmy “the Weasel” Fratianno to be associated with San Diego Mafia boss Frank “the Bomp” Bompensiero, a charge Alioto denied; implicated in the Koreagate Congressional bribe scandal.
--Tony Coelho, a corrupt former Congressman who in 1997 at the time of his donation to Reid was involved in a business venture with El Rancho, a Las Vegas casino formerly run by Ed Torres, an associate of Meyer Lansky.
While receiving donations from such sources, Reid has remained associated with the two attorneys involved in the Justice Department probe of Agosto’s allegations, Jay H. Brown and Oscar Goodman. Brown has been a regular contributor to Reid’s campaigns since 1982, and his law firm Singer & Brown lists Reid as a reference in one online profile. In January 2006 Reid and Goodman--now the Mayor of Las Vegas--discussed the possibility of Goodman running for Senate, with Reid describing Goodman to the press as “a very, very strong candidate”. Meanwhile Goodman had recently created a local scandal by throwing a party with a guest list which included Joey Cusumano, legally barred from Las Vegas casinos for his ties to the Chicago Mafia. Goodman’s open association with Cusumano was called by former Las Vegas FBI chief Bobby Siller “an embarrassment to the state, an embarrassment for Las Vegas and an embarrassment for gaming”. Another former Las Vegas FBI chief, Joseph Yablonsky, said of Goodman, “'Mob lawyer' is a title Goodman has relished and promoted over the years, although it's contradictory to his sporadic and inane denials that organized crime exists in the United States. The 'boys' in Chicago, Kansas City and elsewhere must be elated about their guy in Vegas. They're probably thinking 'we'll have some political juice there again.'”
Yablonsky’s last comment could also be applied to Harry Reid. So did Mr. Cleanface really kick the mob out of Las Vegas, or did he just help them move to Washington?
Select Bibliography
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The Mob inside ObamaCare,
The New Jersey Democrat met with Centers for Medicare and Medicaid Services (CMS) Director Marilyn Tavenner on June 7, 2012 in an apparent attempt to persuade her that his close friend and major donor, Dr. Salomon Melgen, did not owe the federal government $9 million for Medicare overbilling.
It was a pure New Jersey-style political power play on Menendez’s part, since the CMS hadcarefully documented Melgen’s egregious violation of clear and widely understood billing practices.
Tavenner was unpersuaded by Menendez’s pitch. He reportedly left the meeting frustrated he had not been able to deliver a solution to his friend’s problems with the government.
Menendez decided to turn up the political pressure by speaking to Tavenner’s boss, Secretary of Health and Human Services (HHS) Kathleen Sebelius.
The very next day — June 8, 2012 — Melgen (through Vitreo-Retinal Consultants, the company HHS said overbilled the federal government by $9 million) contributed $300,000 to the Senate Majority PAC, a super PAC closely aligned with Senator Harry Reid (D-NV). Reid was the Majority Leader then and is currently the Minority Leader. Founded in 2011, the super PAC is co-chaired by two former top staffers from Reid’s office.
Ironically, the funds for this generous contribution may well have come from the $9 million CMS says the federal government overpaid Melgen because of his overbilling. CMS has asked for Melgen to repay that money, but Melgen apparently has other uses for it and is fighting desperately to hang on to it.
Shortly thereafter, Menendez began pressuring Reid to go over Tavenner’s head and set up a meeting with Sebelius where he could again make the case that his friend really didn’t owe the federal government that $9 million CMS said he had overbilled.
The lobbying of Reid by Menendez and his friend Melgen soon became very personal.
Reid’s subsequent use of his power as the Senate Majority Leader to advance Melgen’s private business interests raises obvious red flags that federal prosecutors have apparently ignored so far.
Breitbart News asked Peter M. Koski, the Department of Justice attorney leading the investigation into Menendez, which is widely reported to soon result in a grand jury returning a bill of indictment on corruption charges, how Reid’s conduct differs from Menendez’s and why Reid himself is not under federal investigation on similar charges of corruption. We have not received a response.
As Politico reported in 2013, Melgen’s private jet flew from Florida to Reagan National Airport in Washington, D.C. on June 17, 2012, presumably carrying Melgen. The next day, on June 18, Melgen’s private jet flew Reid from Reagan National Airport in Washington, D.C. to Boston and back. It is unclear if Melgen accompanied Reid on that flight, but if he did, the two would have had plenty of time to discuss Melgen’s Medicare overbilling problems, his potential future political donations to Reid’s Senate Majority Super PAC, and what Reid might be willing to do to advance his business interests.
Federal Election Commission records show that the Senate Majority PAC reimbursed Vitreo-Retinal Consultants $4,160 for “travel” on July 10, 2012, three weeks after the flight.
Senator Reid’s spokesperson later confirmed to Politico that the reimbursement was for Reid’s travel on Melgen’s private plane to Boston on June 18.
The trip apparently strengthened the developing political and business relationship between Melgen and Reid.
On June 28, 2012, Melgen’s Vitreo-Retinal Consultants contributed an additional $100,000 to Reid’s Super Majority PAC.
The next week, on July 2, 2012, Menendez spoke on the phone with CMS’s Tavenner, but made no progress in ending Melgen’s $9 million overbilling problem.
Over the next several weeks, Menendez succeeded in persuading Reid to convince Secretary Sebelius to meet with him in person. Reid seems to have summoned Sebelius to Capitol Hill for a meeting with Menendez that he would host in his Senate Majority Leader’s offices.
Reid briefed Sebelius that the purpose of the meeting was to address “billing issues with Dr. Melgen,” as she told Politico on Monday.
But Politico reported that “Sebelius said she was ‘concerned that I knew enough about the investigation’ into Menendez’s actions that she ‘didn’t want to open the door to any inappropriate discussion’ during their meeting.”
Worried that the meeting might place her in legal jeopardy, Sebelius told Politico she consulted with HHS’s counsel’s office prior to the meeting.
According to Politico, “HHS attorneys assured her that she could meet with Menendez, and she said she told the senator the dispute was being handled by an outside administrative review board.” Breitbart News asked HHS General Counsel William B. Schultz, who was acting general counsel in 2012, to confirm Sebelius’s account but has not received a response.
As an added precaution, Sebelius decided to bring Jonathan Blum, deputy administrator of CMS, to the meeting. An expert on the billing policies and procedures required by law to be filed in Medicare reimbursements, Blum’s role was to firmly reiterate the CMS case against Melgen.
The meeting between Reid, Menendez, Sebelius, and Blum took place on August 2, 2012.
At the meeting, Sebelius says Menendez pushed for HHS to drop $9 million overbilling claim against Melgen’s Vitreo-Retinal Consultants. Blum laid out the details to Menendez, who once again protested the conclusions. Reid, for the most part, Sebelius told Politico, was quiet, his role having been primarily to facilitate the meeting.
Through a spokesperson, Menendez denied discussing anything but legislative matters in the August 2 meeting with Sebelius and Reid.
In a carefully parsed phrase, Menendez’s spokesperson Tricia Enright said “the senator did not mention Melgen during their meeting.”
It was the same language Menendez’s attorneys used to describe the meeting in a brief they presented to the Court of Appeals for the Third Circuit where they argued that one of Menendez’s aides who arranged the August 2 meeting, Michael Barnard, should not be compelled to answer 50 questions posed by the grand jury investigating Menendez.
The attorneys claimed that as a legislative aide working only on legislative matters, Barnard could not be compelled to answer questions about the meeting because he legitimately invoked the speech or debate clause of the Constitution.
Neither Enright nor Menendez’s attorneys offered any comment on whether the name of Melgen’s company, Vitreo-Retinal Consultants, was mentioned by Menendez or anyone else at the meeting.
There is no indication that either Reid or Menendez disclosed to Sebelius that the company that overbilled Medicare $9 million (completely controlled by Melgen) had recently donated $400,000 to Reid’s SuperPAC.
Breitbart News posed that question to Secretary Sebelius but has not received a response.
Breitbart News also posed the same question to Senator Menendez and Senator Reid but received no response.
Breitbart News also posed the question to former deputy administrator Blum, who now serves as executive vice president of medical affairs at CareFirst Blue Cross Blue Shield, and received no response.
Breitbart News also asked Blum to weigh in on the dispute between Sebelius and Menendez on whether or not Melgen’s $9 million Medicare overbilling problem was discussed.
On October 16, 2012, Melgen’s Vitreo-Retinal Consultants donated another $300,000 to Reid’s Super Majority PAC, bringing the company’s total contributions in 2012 to $700,000.
In November 2012, Menendez was easily re-elected to another six year term in the Senate, defeating his Republican rival by a 58 percent to 39 percent margin.
In January 2013, the FBI raided the offices Vitreo-Retinal Consultants in Florida, presumably to obtain evidence to be used by the Department of Justice in its ongoing investigation of Menendez and Melgen.
In the spring of 2014 the FBI interviewed Reid and Sebelius about the August 2, 2012 meeting with Menendez. Neither have been called before the grand jury that will reportedly return a bill of indictment against Menendez on corruption charges within the next few weeks.
It is unclear whether former CMS deputy administrator Blum was interviewed by the FBI or was called to testify before the grand jury.
If, as is expected, the grand jury shortly returns a bill of indictment against Senator Menendez on corruption charges, the question on the minds of many critics who say the Department of Justice is highly politicized will be this:
Given the known facts of the relationship between Dr.Salomon Melgen, his company Vitreo-Retinal Consultants, Senator Menendez, Senator Reid, and the Senate Majority PAC, why has the Department of Justice not initiated an investigation into possible corruption charges against Senator Reid as well?
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