FBI Wiretaps Brought Down
Nevada's Senator Cannon
  In Part One of this series of interviews with retired FBI agent Joseph Yablonsky, Electric Nevada reported on alleged assistance to the mob by former Nevada U.S. Senators Pat McCarran and Paul Laxalt. In Part Two, the subject was what the former supervising agent saw as support for corruption in southern Nevada by the late Las Vegas Sun publisher Hank Greenspun, especially during Yablonsky's pursuit of U.S. Federal Judge Harry Claiborne, who was eventually convicted of tax evasion and impeached by the U.S. Senate. This week, Yablonsky recounts mob bribery of the late U.S. Senator Howard Cannon, and Harry Reid's indifference to Frank Sinatra's mob links when Reid -- currently Nevada's senior U.S. Senator -- was chairman of the state gaming commission.

by Del Tartikoff
copyright 1996, Electric Nevada

It was FBI wiretaps that eventually revealed how the Chicago Mob had bought Howard Cannon, Nevada's senior senator in 1978, says Yablonsky.
"The FBI in Chicago," says the former Supervising Agent in Charge of the Nevada district, "had an operation called 'Pendorf', which stood for 'Penetrate Dorfman.'"
"Dorfman" was Allen Dorfman, stepson of long-time Al Capone associate and Jimmy Hoffa friend Paul "Red" Dorfman. He had been designated by Hoffa as his stand-in on the Central States Pension Fund.
"When Jimmy Hoffa went to jail," said Yablonsky, Allen Dorfman "became the alter ego for Hoffa, and he was the one who controlled the Central States Pension Fund.
"Of course, he was controlled by the Chicago mob, and I think the guy who had the main contact with him was Joey 'The Clown' Lombardo."
Yablonsky endorses the account of researcher James Neff, author of Mobbed Up; Jackie Presser's High-Wire Life in the Teamsters, the Mafia, and the FBI.
"It goes into the whole shmear," says the retired agent.
According to Neff, Hoffa had given the younger Allen control of the Central States pension fund as a payoff to the senior Dorfman for help in getting the support of the Chicago Mob. Paul "Red" Dorfman was a close friend of Tony Accordo, a Capone lieutenant who'd taken over when Capone had been forced to depart.
And the Central States Pension Fund, says Neff, "had loaned money, sometimes with disastrous results, to the neon lords of the Aladdin, Caesar's Palace, Circus Circus, the Desert Inn, the Fremont, the Lodestar, the Stardust and the Plaza Towers casinos and hotels, all in Las Vegas.
"In Lake Tahoe, the truck drivers' retirement money was sunk into the King's Castle and the Sierra." In Reno, the Riverside Hotel / Casino got Teamsters money.
By 1977, says Neff, more than 50 Central States loans -- with an original cost of $200 million -- were in default, and the fund was losing roughly $15 million a year in annual interest payments.
"Half the loans, according to one estimate, went to the Mob or Mob associates, earning Central States a cynical sobriquet -- the Mafia's bank."
The man who brought what Neff calls "the Central States honeypot and its low-interest loans" to Las Vegas was Moe Dalitz (see Part One), who had been a member of the ruthless Detroit Purple Gang, during Prohibition, had met Hoffa in the mid-Thirties, and had paid him off to stop a Teamsters strike in 1949.
After opening the Desert Inn on the Vegas strip that same year, and two years later being revealed in the televised Kefauver Senate hearings as a top man in the Cleveland bootleggers syndicate, in 1957, seeking social acceptance, Dalitz in decided to build a new for-profit hospital in Las Vegas. Two years after that, he borrowed $2 million from the Central States Pension Fund, began the construction and hired a San Francisco public-relations firm to promote the project -- and, incidentally, anoint himself with do-gooder status.
Then, a few years later, Dalitz arranged another $8 million loan from the Teamsters -- for the purchase of the Stardust Hotel and Casino.
About 20 years later -- long after the Mob had seriously penetrated most of the major Las Vegas casinos, Dalitz, according to FBI informants, was still the Mob's point man in the city.
"The individual who oversees the operations for the LCN [La Cosa Nostra] families in Las Vegas," said a contact agent report in 1978, "is MOE DALITZ.
"DALITZ makes certain that there is no cheating with regard to the skim money taken out of the casinos and further, that there is no fighting among families for control of various casinos."

By now the FBI was alert to how much the Mob had penetrated Las Vegas under Allen Dorfman and the Teamsters pension fund.
"The agents had been compiling intelligence from different sources," writes Neff, "that revealed Dorfman as a hidden owner of Las Vegas casinos to which he had steered Teamster loans.
"In return for the loans, casino owners such as Allen Glick allowed Mob associates to skin unreported cash."
Soon, says Yablonsky, "The FBI in Chicago .. had all these wires [on Dorfman], they had his office and his phones and everything else, tapped."
It was about that time that Nevada Senator Howard Cannon decided to ask Dorfman for a favor.
The senator, who not only had business partners active in Teamsters-financed casinos, but also had a daughter working at the Stardust as a secretary to the Mob/Dorfman-installed duo of Frank "Lefty" Rosenthal and Allen R. Glick, had raised eyebrows just two years early with his 1975-76 campaign finance reports.
Thirty-three of his contributors had been involved in or associated with organized crime, or were top officials of firms linked to organized crime. A Cannon aide pooh-poohed it as routine in Nevada -- saying one couldn't run for Nevada office without taking contributions from the gambling industry.
"The senator," writes Neff, "lived in the exclusive Las Vegas Country Club Estates, which, like much of Las Vegas's choice real estate, abutted a vacant 5.8-acre parcel owned by the Teamsters Central States Pension Fund."
But by that November of 1978, the fund had a new government-appointed assets administrator, the Victor Palmieri Company, and the company had solicited bids for the land.
"The winning bidder wanted to build three nine-story condominium buildings on the land," says Neff, but "the last thing" Cannon and his wealthy neighbors wanted "was hundreds of new residents spoiling their view and property values."
Banding together, they vowed to stop the high rises. Cannon, for his part, offered to call Dorfman.
"He knew Dorfman was the man to see about getting a Teamsters favor," writes Neff.
But it turned out the Mobbed-up Teamsters also had a favor to ask. The Carter administration was seeking the deregulation of interstate trucking, which -- with its fixed rates and closed access -- had long been a cash cow for the union.
"The Teamsters did not want trucking to be deregulated," says Yablonsky, "because obviously the competition would have driven the rates down." In addition, the legislation was being pushed in the Senate by Sen. Edward M. Kennedy, brother of Teamsters bete noire Bobby Kennedy.
"On Wednesday, January 10, 1979," writes Neff, "in his private Las Vegas office, the senator sat down with Allen Dorfman and Roy Williams and a Teamster lawyer named Ed Wheeler...
"As a key participant later admitted, Williams and Dorfman asked Cannon to oppose Kennedy's proposed trucking deregulation bill after it was introduced. Cannon asked about buying the 5.8 acres

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abutting his fancy home. Williams then promised the senator that he and his neighbors could buy the property if Cannon would tie up the deregulation legislation in his Commerce Committee."
Less than two weeks Teddy Kennedy unveiled his deregulation bill in the Senate Judiciary Committee.
"Cannon immediately insisted that the bill -- which proposed to outlaw rate-setting -- belonged in his Commerce Committee," says Neff. "Kennedy's bill was snagged and was never even introduced."
Dorfman, Roy Williams and other mobbed-up Teamsters soon found that the cleaned-up Palmieri administration of the Pension Fund, now using sealed bids to sell real estate, was making it difficult to put the fix in for Cannon.
But the Nevada senator, unaware of the Mob's problems, was busy holding up his end of the conspiracy, says Yablonsky.
"He was going through with it, and what happened, the Bureau had those wires there."
Cannon's son-in-law, a realtor named Robert Bjornsen, and Dorfman employee William E. Webbe, were recorded on the FBI tapes discussing the transaction in veiled terms.
A hidden microphone was also in Dorfman's office on May 21, 1979 when Senator Cannon personally called to ask about the land deal.
"Dorfman apologized for the delays and told Cannon to have his son-in-law resubmit their $1.4 million bid," writes Neff.
"'After he hung up, Dorfman announced, "Senator Cannon."
"'How's he doing?' Peters asked.
"'Huh? We fucked him around like no man has ever been fucked around. Get Bob Borgensen ... on the phone.'
"'Bjornsen?' Webbe said.
"'Bjornsen, what the fuck ever his son-in-law's name is,' Dorfman said.
"'He took care of deregulation, didn't he?' Peters asked. The entire Teamsters executive board seemed to know about the scheme.
"'Huh?' Dorfman said.
"'Did he take care of deregulation?' Peters repeated.
"'Of course,' Dorfman said. 'But we ain't fulfilled our commitment to him yet. You know, I'm surprised he still even talks to me.'
"A few minutes later, Dorfman told Peters that he had to meet Cannon on June 1 in Las Vegas to make another request.
"'You know why I gotta meet the senator on June 1st? This is even funnier. Gotta go for another favor. A favor for Dusty Miller. You know, I'm gonna wear out my welcome with this guy. I keep going to him for favors, he keeps performing, we keep delivering him shit.'"
Nevada's senior Senator never did get the real estate parcel he wanted, notes Neff. And, as the Chicago Strike Force leader, Doug Roller, would later point out, it was the Mob mentality that had defeated the Mob.
"'If Dorfman hadn't been such a cheap motherfucker, they wouldn't have even had this case,' Roller would say, noting that the price being asked for the property by the Victor Palmieri Company was $1.6 million.
"'All Dorfman had to have done was come up with that $200,000 for the senator through other machinations.' The Teamsters would have had him in their pocket and not left a steady six months of telephone calls for the FBI to intercept and interpret.
"'To Allen Dorfman and the Mob, $200,000 was nothing,' Roller went on. 'But that would have been too easy. They'd have to front their own money. That's a total antithesis to the mentality of organized crime. They don't give, they take. So they go get themselves in a jam for $200,000.'"
"When that investigation become public a few months later," says Yablonsky, "Cannon went the other way on [the deregulation issue]."
Yet all of the evidence indicated that the quid pro quo with the Mob had been, he said, "a done deal."
"So they were indicted -- Dorfman and Lombardo and a couple of others -- for, quote, attempting to bribe Senator Cannon. And Mr. Cannon was left out of the indictment."
The original memo to the Justice Department in 1980 from the Chicago Strike Force had sought permission to also indict Senator Cannon, but the Justice Department hadn't seemed particularly keen on that idea, says Neff.
"It was explained privately to Chicago Strike Force chief [Doug] Roller that the FBI had intercepted only one telephone call -- fairly innocuous on its face -- between Cannon and Dorfman.
"The Justice Department and the Chicago Strike Force haggled for a while over indicting Cannon, and eventually Roller was overruled."
Interviewed by Neff years later, Roller said, "In my fifteen years in the Department of Justice, I have never seen any response by my superiors to political pressure.
"The closest thing was the decision not to indict Cannon. This is speculation. It was summer of an election year. It wouldn't have done the Democrats any good to have a powerful senator linked to organized-crime figures. I don't know if there were other factors at work."
"Cannon escaped that situation," says Yablonsky, "but interestingly, when he came up for reelection in '82, he was defeated. A lot of it might have had to do with that situation."
Running down the list of well-known Nevada politicians active during Yablonsky's 1980 through '83 tenure in Nevada, Electric Nevada asked the former station chief about Senator Harry Reid.
The reaction was quick and blunt.
"Harry Reid is a mealy-mouth, and he was in their pocket just like the rest of them.
"Of course, there's certain things I know I can't speak about because of Privacy Act considerations. But he's a worm, and he was a Congressman, back there, representing Mr. Greenspun, you know, trying to agitate in terms of my removal.(see Part Two).
"But all you've got to do is read the poem he read when they had that phony Sinatra licensing."
EN: He wrote a poem?
Yablonsky explained that, even though Frank Sinatra had lost a gaming license in the state of Nevada back in 1963 after evidence surfaced that mobster Sam Giancana was the real owner of the Cal-Nevada Lodge at Lake Tahoe and that Sinatra was merely a mob-friendly figurehead, Sinatra was back before the state Gaming Control Board in the late '70s, seeking a gaming license again.
"After this ridiculous hearing," he said, "when Sinatra went up for licensing -- [in a hearing] which had no adversary witnesses -- McNeil-Lehrer played a half-hour of it on their program without even making a comment, it was so obvious."
"And when it came up to the Gaming Commission, which you know is [the top tier of] a two-tiered system, Reid was the chairman, and he read this kiss-ass poem.
"He's a faker."

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