Ed Reid.The Grim Reapers
Chapter 7: Bahamas Hoodlum Sea

Chesler arrived on the scene at a time when Grove’s initial ideas were undergoing change. What had originally been planned, ostensibly, at least, as an industrial boom—seen in terms of harbor development, hotels, golf courses, shops, homes, and various private businesses—was beginning to take on a new aspect. The Groves enterprises apparently needed a few additional inducements for the growth their creator had envisioned, something to bring in thee fun-loving rather than the sun-loving tourists with money in their pockets. Gambling, therefore, was put on the agenda for Grand Bahama Island, and in the winter of 1961 construction began on the lavish, 250-room Lucian Beach Hotel—for which Chesler—as part of his agreement with Groves, had to raise and invest $12 million—containing among other conveniences, a room with nine thousand square feet of floor space designed officially as a convention hall and privately as a handball court.

Since gambling was, and still is, specifically forbidden by law in the Bahamas, some legal maneuvering was necessary. But getting the needed certificate of exemption was easy, provided the right lawyer was on hand. And he was. Sir Stafford Sands—the lawyer of the Bay Street Boys and of the primarily white, long-standing governing party—had helped Groves all along the way in setting up his numerous interlocking firms in the island and was just the man for the job.

Louis Chesler, being a Canadian, would supposedly carry / none of the onus of the American gangster influence with him into the hallowed halls of a casino and thus another essential party to the scheme. Finally, all was ready. In March, 1963, Groves and Chesler went to the Bahamian government to seek an exemption from the anti-gambling laws. They went specifically to the governor’s executive council, and their case was presented by Sir Stafford, who just happened also to be a member of the council. The certificate of exemption was made out in the name of Bahamas Amusements, Ltd., —whose shares were then split equally between Chesler and Groves’s wife, Georgette—was granted in April. The gambling license was ordered prepared for issuance, and the boys were in business.

The initial contract stipulated that casino employees be British, Irish—no one could be more surprised than the Irish! —or European citizens and specifically excluded American executives and personnel. It provided that company casinos could be operated anywhere on Grand Bahama so long as they were in, or in the vicinity of, a hotel having at least two hundred rooms. What a happy coincidence that the newly built Lucayan Beach Hotel had not only the necessary guest rooms, but also a sizeable “convention hall,” which could be, and quickly was transformed into a casino!

The hotel opened in January, 1964, with all the glitter and gold its social director,
Mrs. John McLean, could muster. The plan was to operate gambling on the highest level—a white-tie-and-tails copy of the ornate gambling palaces of Monaco. But the great experiment proved a great bust, at first, as the fickle phonies of the jet set failed to show. The Monte Carlo room remained as empty and cold at a pit boss’s heart,

Chesler and Groves, however, quickly learned what the big-time operators of Las Vegas and Reno, Nevada, spent millions to find out: that a successful casino must in the long run grind its dollars out of the pockets of little people, simply because there were so many more of them than jetsetters. Accordingly, plans were changed, and the boys in the know—Meyer Lansky and crew, who had made a life-long study of gambling within the framework of the crime syndicate—were brought in. The avant-garde of the gambling fraternity, with the love of warm climes already in their blood, turned their hawk noses to the Spanish Main, and things began looking up in the Bahamas. Early in 1967 Chesler blandly told a four-man investi- / tive Royal Commission of Inquiry headed by Sir Ranulph Bacon, former assistant commissioner of Scotland Yard, that he sought Lansky’s advice on gaming potential in the Bahamas because he considered him a “dean of gambling.” “It was no easy job,” he told the probers, to organize a large-scale gambling operation, and he needed the advise of an expert.

A smooth and profitable route for the gambling industry always seems to require the Lansky types and their knowledge, but sometimes you wonder what keeps their noses to the grindstone. Is it the result of a sort of force-feeding hoodlums have to put up with? Or perhaps the Lanskys of this world have nothing else to do with their days? Whatever the reason, apparently no one ever really retires in the crime syndicate, although a few have claimed to have done so when investigators were on their trail.

For example, the current career of eighty-year-old George Sadlo, time-honored gaming Sancho Panza for Lansky, who, it appears, thought nothing of launching a new project such as the Bahamian enterprise.

In the early days, Lansky had been a murder partner of Las Vegas pioneer Bugsy Siegal, when Siegal was strong-arming it for Louis Buchalter. Years later, Lansky provided—through George Sadlo, his “insulation”—the wherewithal for the late gambler Marion B. Hicks and Cliff Jones when they decided to build the Thunderbird Hotel in Las Vegas. In fact, Jones himself is another example of how old friends stick together and of how men connected with the Mafia never seem to give up. A former Lieutenant-Governor of Nevada, Jones now has his fingers in various financial and gaming pies in and out of the Caribbean and is a good friend of top airline officials, who also have a vast financial stake in that tropical playground.

But to return to Sadlo, Lansky thought nothing of bringing his old friend out of semiretirement. And when Louis Chesler was asked about Sadlo’s duties by the investigative commission, he said: “George Sadlo was in complete control of the hiring and firing of employees” when the other casino got started. In fact, Sadlo’s activities in Grand Bahama merely illustrate the beginning of another operation featuring the competence and talent of the men who make up one side of a seemingly endless war of attrition waged by the syndicate against legal authority. There was, and is, a specific ban on the employment of American personnel in the big / Freeport casino. Yet at first it was not enforced; it was forgotten as is made clear by the following list, which appeared in the April 6, 1967, Wall Street Journal, of just a few of the syndicate workers, American born or naturalized, who moved in, along with Sadlo, as gambling aids in the Monte Carlo room of the Lucayan Beach Hotel:

Frank Reiter, alias “Frank Ritter”   credit manager
Max Courtney   general manager
Charles Brudner, alias “Charlie Brud”   floor manager
Dino Cellini   craps supervisor
James Baker   craps supervisor
David Geiger   craps supervisor
Al Jacobs   craps supervisor
Roy Bell   craps supervisor

Max Courtney and Frank Ritter first made their marks as close associates of Dutch Shultz, a leading bootlegger in the New York-New Jersey area who unsuccessfully plotted the murder of Thomas Dewey, prosecutor in Manhattan during the vicious Prohibition days of open gang warfare. When Dutch Shultz died—he was machine-gunned by his rivals—Ritter and Courtney decided to take up a less violent occupation. In the fifties they appeared in Montreal as operators of a huge bookmaking operation. To relieve the pressure of large bets made in Las Vegas, Chicago, New York, and other fast-buck areas, the two men set up their operation in Canada outside of the reach of U.S law-enforcement agencies. But someone must have snitched to the Royal Canadian Mounted Police, for they soon galloped into Montreal and arrested the two bookies. Expelled from Canada, Courtney, who is also known by his real name, Morris (Moishe) Schmertzler, and Ritter, who often moved around under the alias “Red Reed,” spent a number of years taking bets in the salubrious atmosphere of the various gaming centers in the United States, finally showing up as executives of the Monte Carlo Room in Freeport. Which all goes to prove that tough a good hood may be down, he’s never out.

Cellini, Baker, Geiger, Jacobs and Bell were eventually investigated by the Bahamian government and expelled from the Bahamas in March, 1964. Apparently it had taken some of the more conscientious officials that long to discover that the whole crew—including Sadlo and Lansky’s brother Jake— / had been the main-stem of the Lansky combine in Havana under Batista’s rule before Castro threw them out in 1959.

Ritter, Courtney, and Bruder, who had also done time with Lansky’s gang in Havana casinos, escaped pressure in the Bahamas until January 15, 1967, when it became clear to the Bahamians that they were fugitives from justice in the United States, having been charged with evading income taxes while allegedly running a bookmaking operation in New York. But at least three of the fugitives were still on hand when the new El Casino opened in Freeport on January 1st and had two weeks in which to give a high-level, graduate course in running the place to the new boxmen, stickmen, and pit bosses—also, of course, Lansky associates from way back.

Miami Crime Commission Director Dan Sullivan, on an “Open End” television program, said that Courtney and Ritter, before they left the country, were probably the “two biggest, heaviest bookmakers and sports bookmakers in the United States.” Yet, though officially banned from the Bahama casinos along with Bruder, all three men have been granted asylum “as residents” in the Bahamas despite their fugitive status. In this connection, too, it is interesting to note that Sir Ralph Francis Alnick Grey, Governor of the Bahamas by appointment of Her Majesty Queen Elizabeth II, said in relation to the hard lines tossed at the Lansky boys running the gambling details at Freeport: “The mere giving a dog a bad name ought not to be cause to have him hanged. If you go into the tourist business, all sorts of strange people with strange proclivities come in.”

Testimony before the Bacon investigative committee revealed that banishment of Courtney, Ritter, and Bruder from the casinos did not exactly leave them out in the cold. An agreement was made that the three men will, over the next ten years, receive $2.1 million for a credit-card file they apparently brought to the island when gaming first began. Thousands of well-heeled American gamblers are listed on the cards, and Keith Gonsalves, president of the Bahamas Amusements, Ltd., and former head of Barclay’s Bank in the Bahamas, told the commission that the purchase was made so the casinos would “continue to function smoothly.” As Gonsalves said, the men “could have left us with a completely sabotaged organization.”

While the hoods in the Bahamas have had to put up with / certain inconveniences, the operators of the casinos cannot complain about their profits, although their initial expenses were not negligible, either. For example, in 1965, its first full year of operation, the Lucayan Beach Hotel casino on Grand Bahama Island laid out $490,000 for chartered flights to bring in free-loading “high rollers” from the United States, people with blue-chip credit ratings meticulously provided by Lansky and his associates. And, according to a Life exposé of the Bahamian gaming idyll, another $930,000 was spent to provide hotel and ship accommodations for the pampered guests.

Rumors are that close to $500 million have been sunk into Wallace Groves’s island empire, and, according to Parade, Groves calls profits from his gambling casinos “peanuts.” For Groves’s information, Meyer Lansky has never settled for peanuts, and it is estimated that by 1970 more than a half a million tourists a year will be visiting the Lucayan Beach Hotel and others like it, some still to be built. And syndicate ledgers prophesy that each tourist will leave at least $25 on the tables. Some peanuts!

The Life article went on to point out that U.S. lawmen are convinced the mob is getting a big cut of casino profits, so perhaps their harassment is not too onerous. In January, 1967, the El Casino, a new carpet joint also owned by Bahamas Amusements, Ltd., opened to swell the total take, and 30 per cent of the sum is going, Life claimed, to such Lansky confederates in the Mafia as Stephen Magaddino of Buffalo, Angelo Bruno of Philadelphia, Frank Costello of New York City—this is disputed by the Mafia buffs in Manhattan—Santo Trafficante of Tampa, and Joe Adonis in Italy.

Newsman Clarence Jones of the Miami Herald reported in July, 1967, that so much money was being raked in by the casinos that “it had to be mailed, parcel post, to New York banks in cardboard beer cartons.” He quoted records of the Royal Commission of Inquiry and said the cartons full of money also “hinted at wholesale skimming from the casinos.”

If this is true, and there is little reason to doubt it, it is also true that the gambling operation is having a profound effect on the whole economy of Grand Bahama and neighboring islands. Some fringe “benefits” of wholesale gambling have already become manifest: the local, comparatively unskilled, and certainly confused police on Grand Bahama are, for the first time, up against organized prostitution and narcotics, traditional enterprises of the Mafia. Three Ameri- / cans were recently deported for trafficking in whores and drugs. Two of them had police records and Mafia affiliations in New York City, and used Las-Vegas-trained girls in the old “badger game,” housing them, according to the Saturday Evening Post, in the King’s Inn, one of the island’s plushest hotels.

The periodical also recounted the inauguration of a Mafia-type extortion enterprise in which local businessmen were threatened with physical harm if they did not pay protection money to the gangsters. To the Bahamian government it seems to be of little concern, in response to such allegations Sir Ralph Grey said: “We can’t police the world. No one has yet shown me any clear-cut evidence of wrongdoing.”

Evidence is, however, not unavailable. Under oath, Keith Gonsalves, who was apparently third in the Groves hierarchy before Lou Chesler moved out of his post as president of the Grand Bahama Development Company in 1964, named a dozen Bahamian government officials who had been receiving largesse from the Groves operation, and he pointed out that Chesler negotiated most of these deals. One deal Gonsalves referred to involved Sir Etienne Dupuch, editor of the Nassau Tribune, who took “5,000 or 6,000 pounds a year “ for two years “to assist us with our public image,” which “locally has always been poor.” Gonsalves also testified that former Bahamian Premier Sir Roland Symonette had a road building contract with one Groves’s company that paid him over $16,000 a year. Symonette’s son, a jet-setter named Bobby whose yachting prowess got him on the cover of Sports Illustrated, was hired by Groves to act as adviser on marina construction at $14,000 a year.

The big man behind the men on the islands, however, was Minister of Finance and Tourism Sir Stafford Sands, the highest paid lawyer in the playground of pirates. Sands will deny it, but testimony indicates that his fees for guiding Groves through choppy legal waters over the years may run well over $1 million, so it was not surprising that Sir Stafford was said to be “ill in Spain” when the commission of inquiry first met in the Bahamas in May, 1967, and did not make an appearance,

When Gonsalves was asked by the commission about a $500,000 check reportedly given to Sir Stafford in April, 1964, the witness said it was an “omnibus fee,” related “to obtaining an exemption certificate [to operate gambling casinos in Freeport] from the government.” Gonsalves said / the size of the check “didn’t stagger me” and added that Sir Stafford performed many duties for Bahamas Amusements.

An additional $50,000 a year, for ten years, was promised to Sands, Gonsavles testified, for advice in “advertising, publicity, and promoting all phases of the development company.” In addition, Gonsalves listed “political contributions” by the Groves group to the United Bahamian party totaling $320,000, which were said to be funneled through Sir Stafford Sands as legal fees.

Thanks to the absence of a conflict-of-interest law in the Bahamian government, Sir Stafford and some of his other Bay Street Boys had functioned for years both as legislators and private lawyers, a combination that has enabled them to accumulate and manipulate considerable power and wealth.’

Apparently 1964 had been a very busy year for all concerned. According to the Wall Street Journal of October 19, 1966, Lou Chesler “resigned” in May, 1964, because he and Groves “didn’t see eye to eye.” “There was a lot of emotion built up,” Chesler stated. “It got to the point that I wanted out.” “Groves hates inefficiency,” said one person who had worked it the organization, belittling Chesler’s administrative abilities. “So he made it clear to Lou he’d have to go.”

The exact circumstances of the split are somewhat clouded, but in the obvious clash of personalities Chesler was apparently the one to yield and allow himself to be bought out. And he did it at a time when the development company was apparently becoming financially shaky and the ownership of the Lucayan Beach Hotel was undergoing some complicated legal shenanigans—the understanding of which would take a battery of Philadelphia lawyers.

The hotel itself, a separate entity from the Monte Carlo room casino within its walls, has run in the red almost since it’s opening. Officially, this is the result of overstaffing and poor management; unofficially, of the usual “tax write-off” or “robbing Peter to pay Paul” reasons. At any rate, while being subsidized to the tune of $500,000 yearly from the Monte Carlo room, which is raking in the oney hand over fist, the hotel has gone from Chesler’s sponsorship through the hands of another Canadian entrepreneur into the control of a Canadian holding company that had numerous other investments in Freeport but defaulted on $104 / million in debts in June, 1965, declaring bankruptcy and causing what was called an “international financial scandal.” The hotel then went into receivership.

The story goes on and on. But it is enough to say that Louis Chesler played his part well, spent his, or somebody’s. money, and left his mark on Grand Bahama. He brought money, his “good name,” and—despite the protestations of a Seven Arts publicist who said, in defense of his company’s $5-million investment in Chesler’s Bahama interests, that jurisdiction over the gambling licenses, there had een given to Bahamas Amusements, Ltd.,: “to make sure no improper elements infiltrated the operations of the exclusive gambling licenses”—the syndicate to the island.

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