Davidson, Bill.The Mafia:
Shadow of Evil on an Island in the Sun

SE Post Feb 25, 1967 vol 204 issue 4 p. 27 - 37

In a remarkably candid interview with me in November, Groves acknowledged that all of these payments had been made. The interview came about in a totally unexpected way. Although Groves had steadfastly refused to see any reporters prior to my arrival on Grand Bahama, I was suddenly summoned for an audience through a Hill & Knowlton intermediary. The interview took place in the Grand Bahama Port Building, which is called "the Kremlin" by the local inhabitants.
Groves talked to me in his private office, which is large and luxurious but spare in its decoration. His five college degrees were hung on one wall, and what seemed to be a small, antique treasure chest rested on his desk. Groves himself is a medium-sized portly man with a bald head, heavy jowls and darting eyes. His cufflinks were made from old Spanish doubloons taken from a wreck of a sunken 17th-century galleon recently discovered in the waters near the Lucayan Beach Hotel.

Seated alongside Groves's desk, wearing almost identical solemn-hue clothing and antique cufflinks, was his aide-de-camp, a port authority vice-president named Martin Dale. Dale is an earnest young man with red hair and moustache who once was a U. S. Foreign Service officer. He resigned a consular post to become privy councilor to Prince Rainer of Monaco. Groves hired Dale away from Rainer, and Dale was still acting as if he was in the presence of royalty. He bowed to Groves and incessantly called him "Sir." One he slipped up and began to address him as "Your Highness."

Groves was prepared for the interview with pages of closely spaced handwritten notes on a yellow legal pad in front of him. He began by talking about what a small and unimportant part of his half-billion-dollar empire the gambling operation was. He said he hoped I had the good sense to emphasize his industrial and commercial achievements rather than the gambling, "which netted me only one hundred and ninety-three-odd dollars last year." An hour later when he had exhausted the topics on his pad, I asked him, "How about the alleged 'consultant fees' to Sir Stafford Sands?" He said, "I pay a ten-thousand-a-month retainer to Sir Stafford, but I can't tell you where the legal fees end and the consultant fees begin."

I asked, "What about the 'consultant fees' to Premier Symonette, which he denies receiving?" "Well, Sir Roland did get paid. He was a consultant on road building and the construction of golf courses here." I asked, "And Dr. Sawyer?" "Oh," said Groves, "Dr. Sawyer just got a few thousand dollars. He advised us on setting up a public-health service. And before you ask me about the minister of marine affairs, Trevor Kelly, he did get the shipping contracts to supply Grand Bahama by sea."

I brought up the subject of Lansky and his henchmen, and Dale said, "If the United States has never been able to indict Lansky, why should we worry about him?" Groves hastily began to talk about his island's many golf courses, and with difficulty I got back to the matter of payments to government officials just before the end of the interview. Groves said, "How else could I express my gratitude to men like that? Besides, it wasn't that they didn't do something for their money."

Under Bahamian law and ethics—as in few other places in the world—such payments to government officials are considered perfectly proper. The full extent of the financial camaraderie between the Groves gambling interests and members of the Bahamian government may not be known until federal grand juries now sitting in New York and Philadelphia complete their investigations of the operations of Americans involved in gambling casinos in the Bahamas and elsewhere. From a former Chesler associate in Miami, s and members of the Bahamian government may not be known until federal grand juries now sitting in New York and Philadelphia complete their investigations of the operations of Americans involved in gambling casinos in the Bahamas and elsewhere. From a former Chesler associate in Miami, the New York grand jury has subpoenaed a series of five payoff contracts between the casino operators and members of the former Bahamian government. The contracts were dated April 2, 1963, through April 25, 1963—the period just after the granting of the first gambling "exemption." If proved to be authentic, these contracts alone represent actual payoffs to government officials totaling $87,808 a year.

Whatever the contractual arrangements, Meyer Lansky and his Mafia backers have been milking the casinos they helped set up and run on the islands. Lansky's men have been able to operate literally under the noses of a so-called security system which consists of routine accounting procedures (paid for and controlled by the casinos), and two inspectors (also paid for and controlled by the casinos) in each of the gambling establishments. The security men are all pleasant, elderly gentlemen retired from British colonial police jogs in outposts like Singapore and Aden. Sgt. Ralph Salerno of the Criminal Intelligence Bureau of the New York Police Department told us, "They're nice old guys who wouldn't recognize a Mafia man if he walked right up t them and offered to sell them a bag of heroin."

The technique used by Lansky is known in the trade as "skimming." U.S. law-enforcement authorities know exactly how it is done. Sgt. Salerno says, "Everyone makes the mistake of thinking that skimming is shoveling cash into briefcase before the authorities can count the night's take in a casino. Even in Las Vegas they don't do it that way. There are much simpler and more subtle methods, and all of them are being used in the Bahamas."

The first method is called The Kickback Skim. At the Monte Carlo casino on Grand Bahama, three top Lansky men employed by the establishment (Max Courtney, Frank Ritter and Charles Brudner) each received fantastic bonuses of $165,000 in 1966. These figure were reveled to me by an official high-ranking Bahamian Police source. Unofficial sources say the bonuses actually soared to as high as $330,000. U.S. organized-crime experts are convinced that most or all of this sum was "kicked back" to Lansky in Miami.

The second Mafia method of milking the Grand Bahama casinos is known as The Junket Skim. All over the United States—but particularly on the East Coast—there is a thriving group of travel agents and so-called sporting clubs whose specialty is assembling 90 or more "high-roller" gamblers with good credit and dispatching them in a chartered plane for an expense-paid weekend of gambling on Grand Bahama.

When the high-rollers lose, they often pay not the casino, but their junket manager. Thus these casino earnings never show up on the casino's books, except, possibly, for a small amount to pay the junketeers' hotel bills.
Many of the junket managers are known by U.S. law-enforcement authorities to have strong Mafia connections. Typical of them is Henry Shapiro of the Victory Sporting Club in New York. Shapiro is the son of Jacob (Gurrah) Shapiro, a renowned strong-arm man for Murder, Inc., who died in prison. The younger Shapiro has been summoned to testify before the New York Federal Grand Jury which is also investigating the "skim" from the off-shore gambling casinos. Recently, as he stepped off from a plane at Kennedy Airport with a load of returning gambling junketeers, Shapiro was intercepted and served with a subpoena by U.S. Marshall Bill Gallinaro, supervisor of the special squad of the eastern district of New York. The junket manager was then searched by customs officials under Gallinaro's direction, and/ he was found to have $30,000 in cash and $90,000 in checks in his pockets.

Sgt. Salerno estimates that at least three planeloads of junketeers per week fly from the New York-New Jersey-Connecticut area alone. Even if the net gambling losses per plane were as little as $20,000 (and some high-rollers have been know to drop that much individually in a single night at the crap table), the net gain to the mob from just these flights alone could be over three million dollars a year.

The third and possibly most profitable method of funneling money from the Grand Bahama casinos is called The Credit Skim. A with the Junket Skim this technique relies on the fact that American high-rollers do not show up with vast sums of cash, and they ask casino managers to extend them credit, against which they write personal checks and occasionally IOUs, or "markers." It is this bundle of paper profits that Dusty Peters transports to the Miami Beach bank twice a week-prior to his conference with Meyer or Jake Lansky at the Fontainebleau Hotel.

The checks go through regular bank collections in the United States. Law-enforcement experts are convinced that only part of this money, after it is collected through the banks, ever gets back to the casinos to be recorded on their books. "The rest," a high-ranking Justice Department official told me, "is bled out of the one bank account in Miami through which most of the money flows. Meyer Lansky takes his cut and sends the rest by courier to the Mafia investors he represents. These are Sam Giancana in Chicago, Steve Magaddino in Buffalo, Carlo Gambino in New York, and we're not sure but possibly Joe Zerilli in Detroit." IOUs are collected locally by their "enforcers," if necessary-in cash.
The official said, "We figure that the gross at the Monte Carlo casino on Grand Bahama in 1966 was twenty million dollars. They have certain fixed expenses such as salaries, subsidies to hotels and a license fee to the Bahamas government of about three hundred and fifteen thousand dollars. But the 'skim' from the Miami bank might be almost a third of the twenty-million-dollar gross—and we don't like where it's going."

"Their take will double in 1967 with the second casino on Grand Bahama—if the same crowd is allowed to continue to operate—and it will quadruple when the same people open the paradise Island casino in Nassau later this year. And knowing what they do with that money-bribing cops and public officials, buying heroin, paying off contracts for murder and mayhem—it's pretty damn frustrating."

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