Denial of license for Rosenthal called start of mob’s decline in Vegas

Las Vegas attorney Jeff Silver saved the best story for me.

After his formal presentation about his days as a bulldog gaming regulator going head-to-head grilling Frank "Lefty" Rosenthal, he told me another head-to-head tale with the mob associate, one that took place in a men's restroom.

During the second installment of Mob Month at the Clark County Library, this one featuring good fellas who fought the mob in the '70s and '80s, Silver described how he was appointed to the Gaming Control Board in 1975. He was 29, a lawyer and certified public accountant, yet knew little about gaming before Gov. Mike O'Callaghan appointed him.

Six months later, he was sharply questioning Rosenthal for hours during a tense, angry two-day licensing hearing.

Rosenthal wanted to be director of operations at the Argent Corp.'s four casinos. It might have happened except for happenstance. Silver said a few months before the memorable Rosenthal hearing, a former FBI agent from Florida was looking for some information on a private investigation. After Silver helped him, the ex-agent asked if there was any way he could help Silver.

Silver mentioned Rosenthal was coming up for licensing, and the private investigator volunteered information about Rosenthal's illegal activities in Florida and his history of fixing college basketball games. Later, he sent files to Silver, who realized none of this material had been in the preliminary investigative report provided to the three board members.

He asked Chairman Phil Hannafin about it and discovered Rosenthal had agreed to become an informant for the control board if the investigation would cover only his activities in Nevada, nothing outside the state.

Gaming regulators had cut a deal with the devil, until Silver began disclosing the information he had collected. So when Rosenthal came before the control board in January 1976, Silver questioned him for hours over two days in what evolved into ugly exchanges.

Here's the part Silver shared with me: During one of those days, Silver and Rosenthal found themselves in a bathroom standing side-by-side at a urinal.

Silver recalled Rosenthal said, "You're Jewish, I'm Jewish, why can't we just get along?"

Silver, known for his quick wit, didn't reply. "I generally don't talk to gentlemen at restroom urinals."

Really, what would you say in that situation?

When the control board denied Rosenthal a gaming license in 1976, and the Nevada Gaming Commission also denied the license, Rosenthal's agreement to become an informant about organized crime went bye-bye.

My sources confirmed Rosenthal later agreed to become an informant for the FBI, which in hindsight probably explains why he was never indicted for any federal offense.

Silver only began telling about the ill-fated informant agreement after Rosenthal died in 2009.

The denial of Rosenthal's license was a turning point, Silver told the library audience. "That was the beginning of the end for the mob."

During those years, the mob controlled many casinos. The Chicago mob was in the Stardust. The Detroit mob was in the Tropicana. The Aladdin was being looted by the boys in Kansas City. The Cleveland mob was in the Desert Inn. St. Louis mobsters enjoyed a piece of the Dunes.

The Aladdin Theater for the Performing Arts was built at a cost of $60 million with the help of a Teamsters pension fund loan. "Only $20 million actually went in to the construction," Silver said.

"They took so much out of the Aladdin, sometimes there was not enough money to operate it, so Morris Shenker had to go lose three or four hundred thousand at the blackjack table so they could meet payroll," he said. Shenker was part owner of the Dunes and a savvy defense attorney for the mob.

Las Vegas had some "rotten gaming licensees," but that was starting to change through the efforts of gaming regulators, local police, the FBI and the IRS.

Nevada gaming regulators were concerned the federal government might abolish gaming if organized crime remained overtly prevalent in casino operations.

Instead, as former Las Vegas police Cmdr. Kent Clifford explains in Monday's column, organized crime moved into the lower-profile business of supplying materials to the hotels.

Bet you never thought stolen coffee and sugar could pour money into the mob's coffers.

Jane Ann Morrison's column appears Monday, Thursday and Saturday. Email her at @reviewjournal.com or call her at (702) 383-0275. She also blogs at lvrj.com/blogs/Morrison