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Allegations regarding "Butch" Merritt, Watergate, Intelligence Agencies and "Crimson Rose," Vol. XI PDF Print E-mail
Written by Kris Millegan   
Saturday, 26 March 2011 23:24

Allegations regarding "Butch" Merritt, Watergate, Intelligence Agencies and "Crimson Rose," Vol. XI

By Kris Millegan

Nixon the crook

I want to say this to the television audience. I made my mistakes, but in all of my years of public life, I have never profited, never profited from public service. I have earned every cent. And in all of my years of public life, I have never obstructed justice. And I think, too, that I can say that in my years of public life, that I welcome this kind of examination because people have got to know whether or not their President is a crook. Well, I'm not a crook. I've earned everything I've got.
                                                                                – Richard M. Nixon, November 17, 1973, Walt Disney World, Florida



Starting to get a picture of pregame? Nixon, the blackmailer, was making a play to corner intelligence, especially drug intelligence. What would he do with information? Simply a strategic diplomatic move, so he doesn’t step on the toes of his own foreign policy or were there other reasons? And there were other things going on.

Nixon didn’t simply walk into office, several big things had to happen. Lyndon Johnson didn’t run, Robert Kennedy died, and George Wallace took 13,5% of the vote. Nixon won, on a platform of law and order with only 43.4% of the popular vote.

Some background on Nixon’s mob friends from the 1956 magazine, Behind the Scenes, the politics and information given in the following article is obviously scandal slanted and makes many assertions without much substance. As always, caveat lector!

Dick Nixon’s Secret Link To The Underworld!

by Marvin Higgins

In his swift rise to the top of the' political heap, young Richard has picked up some strange companions! But none stranger than a certain Influential gentleman who pulls the strings backstage for "Tricky Dick" Nixon . . .

Sometime during the early morn­ing of December 11th, 1950, a lawyer named Samuel Rummel was blasted into eternity by a 12-gauge shotgun in the driveway of his swank Hollywood home.

The day after lawyer Rummel was wafted to the Supreme Bench, the police got a clue.

It was a strong clue. It might have cleared up a lot of mysteries. But the cops never' got the chance to follow It up.

An attorney named Murray Chotiner made a few phone calls, talked to a few influential people and, when he was finished, the clue became a dead end.

Rummel's death and a whole story of gangland violence, illegal gambling syndicates, police corruption and vice in California ended in a blank wall.

The Man Behind Nixon

Murray Chotiner, who was instrumental in building that wall, is the right‑hand man of Richard M. Nixon, Vice-President of the United. States!

And if, through the sudden death of the President, Nixon should take over the White House, the same Murray Chotiner will probably be the chief adviser to the nation's Chief Executive!

What kind of secrets did Sam Rummel take to his grave—secrets which Murray Chotiner apparently did not want revealed?

Between 1945 and 1950, seven important figures in the West Coast underworld died violent deaths. With the exception of Bugsy Siegel, their names were not well known to the public.

They included such picturesque characters as Benny "Meatball" Gamson, Harry Hooky" Rothman and “Needle” Herbert.

All had one thing in common. In one way or another, all were involved with Mickey Cohen, Rummel's client. And Mickey Cohen, In turn, was involved with the West Coast gambling syndicate, which masqueraded under the name of the Guarantee Finance Co.

At the time of Rummel's death, however, three separate agencies were investigating the operations of Guarantee Finance.

A special‑grand jury, for instance, was scheduled to open its sessions on the very morning Sam Rummel was killed. One of the questions it wanted answered was:

"What cop or cops got a $108,000 payoff from Guarantee Finance, the bookie syndicate?"

To help answer this question, the grand jury had subpoenaed Sheriff's Capt. Carl H. Pearson. But before Pearson could testify, Rummel—who knew where all the bodies were buried—was killed.

Meeting Ends In Death

Then came the clue the police had been waiting for.

Pearson admitted that he and Sheriff's Deputy Lawrence C. Schaffer were probably the last persons to see Sam Rummel alive!

Pearson confessed that he, Schaf­fer and Rummel had, held a conference, at the lawyer's request. Pearson said that he had brought with him, to the meeting, the complete police files on the Guarantee Finance Co.!

The meeting ended at 10:40 p.m., December 10th. And the following morning, some time around 1:30 a.m., Rummel was dead.

Pearson and Schaffer knew what had been discussed at that meeting with the gamblers' lawyer. And when they appeared before the grand jury, many things about the syndicate's op­erations were bound to come to light.

The Big Fix

Schaffer, realizing the spot he was in, picked up a phone and called Murray Chotiner. What he said will probably never be known. But Chotiner—who packs a lot of weight in California—fixed it, so that Schaffer got off the hook.

That doused any light that might have been shed on gangland violence, ­ the $108,000 payoff and the compli­cated operations of California's book­ies.

And the man who engineered the blackout—Murray Chotiner—is a key figure In California's Republican hierarchy. He is the “man to see" if you want any favors from the Vice President of the United States!

Why should Murray Chotiner—who pulls the strings for Nixon—be interested in helping to cover up the workings of a giant bookie syndicate?

One clue was recently unearthed by a West Coast reporter from the files of the Superior Court of Los Angeles County.

Between 1949 and June 1952, a single law firm represented defendants in 220 bookmaking cases in that court.

The Bookies' Friend

The name of the firm—the bookies' friend, for a price—was, of course, Chotiner & Chotiner!

The same reporter could not find a single criminal case of any other type in which Murray Chotiner's firm acted during the same period!

In other words, the professional career of a man who may one day be a White House advisor depends largely on defending illegal bookmakers!

How did this singular circumstance come to be?

Young Dick Nixon first came to Chotiner's attention in 1946, when the future Vice President first decided to throw his hat in the political arena.

Chotiner was already well established in California politics. In 1942, he had been campaign manager for Gov. Earl Warren. Two years later, he got himself elected president of the state's Republican assembly.

And in 1946, at the very time Nixon came to see him, Chotiner was, directing the campaign of another rising California Republican—Sen. William S. Knowland, now GOP leader in the Senate.

A Campaign Gimmick

Chotiner is a shrewd lawyer and a shrewder politician. He looked Nixon over and weighed the odds. The election of this political newcomer was not going to be easy.

Nixon had picked himself a whopper for his first battle. He was running for Congress against a veteran campaigner, the Democratic incumbent, Jerry Voorhis.

Also, Chotiner decided, Nixon had other odds against him. He lacked campaign funds, an organization and an issue. Most of all, he needed a smart handler.

And, in the estimation of Murray Chotiner and of less-interested observers, Chotiner is among the smartest.

The lawyer had already worked out what looked like a perfect campaign gimmick for Knowland. There was no reason, he decided, why it wouldn't work for Nixon as well.

Smear Target

So, with Murray Chotiner doing the tailoring and, fitting, Richard Nixon donned the shining white armor of an anti‑Communist crusader. And with slight alterations by the master, as occasion demanded, the armor carried him through Congress and the Senate all the way to the nation's second‑highest job.


… press uncovered that nasty business about a $16,000 private slush fund, raised by certain real estate and business Interests to cover Nixon's senatorial "campaign expenses."

TV Soap Opera

Nixon's opponents dug up his Senate voting record. Many of his; votes on important domestic bills could be viewed as benefiting the interests of the contributors to his secret campaign fund.

There was an understandable public demand that Nixon tell what had been done with the money, since it had not been listed among regular campaign contributions as required by law.

Murray Chotiner outdid himself. Faced with a tidal wave of questions, which the GOP, couldn't afford to ignore, the bookies' lawyer became a dramatic impresario.

"We'll give 'em a soap opera," he decided. And that was just what he did.

It was Chotiner who was instrumental in dreaming up the script for the famous television appearance of "Poor Richard" Nixon, in which the clean‑cut boy wonder confessed that his wife Pat didn't even have a mink cost.

It was Chotiner who saw the dramatic possibilities in the Nixon dog, Checkers, and made the poor beast the most famous pooch in the country. (Although nobody could ever figure out what Checkers had to do with the $16,000).

In short, it was the sophisticated Chotiner who cast the Vice Presidential candidate in the role of Rube, the barefoot farm boy—pulling a TV rabbit out of a hat and Nixon out of a hole.

And if anyone can squeeze Nixon in the Presidential race, that man is Murray Chotiner.

From there on in, it's tip to the people. And if the vote should go to Richard Nixon, you can be sure that Murray Chotiner—mouthpiece for gamblers—will be around the White House, running things for the Chief.

Murray Chotiner moving into his office right above CREEP headquarters


To add some more perspective to the times of Nixon presidency, here is an excerpt from, On The Take, where William Chambliss, a Doctor of Sociology, presents a different view of organized crime. To gather the information, he worked at a local bar in Seattle, and the follows the paper-bag of pay-off money all the way to the top:

Higher Circles

The satchel the state congressman carried out of Seattle every month flew with him to an expensive bar, to a lawyer who represented illegal interests in that city. The lawyer took the satchel with him to his office, where he added its contents to an even larger amount gathered from his own city's illegal businesses. The entire amount was then flown to Las Vegas, where a representative took the money. A few days later the currency was converted to larger bills, added to the "skim" from Las Vegas casinos, and flown to Florida. Meyer Lansky took his share of the profits and sent the remainder off to investors and associates in other cities – New Orleans, Cleveland, Detroit, and New York‑whose investments entitled them to a certain share of the profits from Seattle, San Francisco, Las Vegas, and Miami.

Crime networks flourished in the cities of America during prohibition. Many of the leading personalities in these associations had begun their upwardly mobile ascent out of poverty earlier, when they were employed by businesses as strikebreakers. Some were later employed by or actively engaged as members of labor unions to combat the violence of businesses that tried to break union inroads.

But prohibition was the impetus for the emergence of organized efforts to provide the illegal commodities that people wanted, namely alcoholic beverages, and the services they were willing to pay for: gambling, prostitution, high‑interest loans, and so forth.

Following World War II the growth in wealth and power of crime networks was unmatched by the growth rate of any other industry. The nation's economy, which was thriving on the discovery of credit buying, on the wealth to be had from the expropriation of resources of less‑developed nations, and on the markets won by dividing the world up with the Soviet Union, created an affluence that seemed boundless. Commodities and services that were illegal were in heavy demand. Profits were incredible. Restrictions were minimal..

The associations shared similar problems of existence. They had incredibly high profits from gambling, drugs, and usury, which they wanted to invest. But where? How? The economy and criminal operations were expanding everywhere, and the investment of excess capital was critical. Furthermore, with their expanded operations, they were also in need of federal influence. The growth of the bureaucracy in Washington posed an ever‑increasing threat to criminal operations. Payoffs and cooperation of local and state governments were sufficient to ensure relatively trouble‑free operations locally, but federal agencies, controlling drugs and federal crimes as well as federal legislation that could either facilitate or impede operations, became increasingly important. Crime networks benefited from the same economic and political climate that benefited other businesses from 1945 on.

The situation was replete with opportunities for someone who could provide investment opportunities and federal political clout. As is always the case in situations such as this, someone came along for the job. That person was a man long associated with criminal operations in New York and a close associate of most of the leading crime figures of the thirties, Meyer Lansky.

Meyer Lansky had a shrewd businessman's eye for discovering new territories and creating impressively high profits for his associates, namely people who ran or profited from network operations in cities like Cleveland, New York, Cincinnati, and Kansas City.

Lansky's empire began with a fairly modest investment in Broward County, Florida. The Colonial Inn was south Florida's first major gambling and entertainment establishment outside of Miami Beach. Investors in the club included the major figure in Detroit's crime network, Mert Wertheimer, who owned one‑third of the Colonial Inn, and Joe Adonis, leading racketeer in one of New York's networks, who owned 15 percent. Lansky kept 16 percent for himself and distributed the remainder among his close friends and relatives. The profits were staggering, even by syndicate standards where profits less than 20 percent are considered losses. From Florida, Lansky moved into Cuba, where profits were even more impressive and where he also purchased the goodwill, friendship, and protection of Fulgencio Batista, the Cuban president before the socialist revolution. To top off these investments, Lansky invested heavily in the heroin traffic from Turkey and France and opened a hotel gambling casino in Las Vegas. By so doing, Lansky assured himself of the undying loyalty and admiration of even the most anti,‑Semitic members of crime networks across the nation. Mark it, however, that he was no 1, godfather." He was simply a well‑respected, trustworthy investor with excellent political connections‑connections, which were able to get even Lucky Luciano out of prison on a pardon.

Lansky also had an almost unerring eye for the political payoff system. He chose his candidates well, but he also covered himself (and those who depended on him for help) by financing candidates who competed with each other. Thus, he paid handsomely into the campaigns of both Thomas E. Dewey and Franklin Roosevelt. He contributed to the political campaigns of Lyndon Johnson, as well as Hubert Humphrey, George Smathers, Russell Long (and Huey Long before him), John Connolly, Richard Daley' Albert Rosellini, and Edmund Brown, to mention only a few.[10] But he paid more here than there, a fact that was ultimately to be his undoing. Those who play the political payoff game take the chance of financing the loser. When that happens, their fortunes fall as surely as they rose when they financed the winner.

Like his brothers and sisters in private industry, a syndicate leader is measured by the profits he produces. The stockholders are the profiteers from crime operations in New York, Trenton, New Orleans, Las Vegas, Seattle, Portland, and cities across the country. Also, like his brothers and sisters in private industry, a successful syndicate operator must manage political payoffs to ensure the protection of crime network interests. Meyer Lansky probably has done both jobs better than anyone in the history of organized crime.

The years from 1932 until 1964 were Democratic years almost everywhere. Naturally Lansky placed his money, at least a disproportionate amount of it, in the hands of Democrats. In Seattle as elsewhere he worked diligently for Democrats. It paid off. judges were appointed, legislation passed, and protection provided. Lansky's investments in the Democratic Party were often coordinated with, or given through, trade unions, especially the Teamsters.[11] Whether given directly or indirectly, the money funneled to politicians in the form of "campaign contributions" or bribes was designed to purchase influence. As newscaster David Brinkley observed:

George Meany of the AFL‑CIO is fawned over in Washington but not entirely for his intellectual brilliance. And not because he can deliver labor's votes. He can't. What he can deliver and does deliver is political money.

The present U.S. Ambassador to Great Britain was not appointed for his contributions to creative foreign policy and diplomacy but for his contribution of political money. This is not new. Back in the fifties, the President appointed one of his big contributors ambassador to a country, then it was found he didn't even know where the country was.

So, jobs like that, and Washington influence, are in effect for sale. All it takes is money, political contributions in election years. If you give enough, Washington's favors can be yours—influence, flattery, social success, invitations to swell affairs, and even ambassadorships to countries with nice climates and cheap servants. Perhaps more important, influence on domestic policy, such as taxes, affecting your own business and income.

Running for office has become incredibly expensive, and candidates have to get money somewhere. The Democrats get a lot of it from the unions, and the Republicans get a lot of it from rich individuals and corporations.

No doubt, there are some rich unions and people charitable soul, who will give money expecting nothing return, but they are scarce. A big political contribution usually is seen as an investment. It's a scandal everyone admits. But it's worse now, because running for office costs more. Public cynicism about politics and politicians already runs high. If this is not cleaned up, the political system will come apart‑with influence, dominance, and even control put up for sale to the highest bidder.[12]

It has been commonly accepted by those who play the political game seriously that a major source of Democratic Party revenue for the past fifty years has been a labor-union‑crime network coalition.

The most important source of political money for the Democrats and Republicans alike is, of course, the contributions that flow from "legitimate" business, that is, from those businesses whose principal product is a legal one, although the means by which the business is conducted may be highly illegal. The means of conducting the business and the business itself may, in fact, be far more harmful to more people than the business of organized crime. Nonetheless, it makes sense to differentiate businesses, whose main product or service is illegal, since this difference in legality does create important differences in the way the businesses are managed and how they function.

Despite the fact that both Democratic and Republican parties receive their major share of financing from legal businesses, the sad fact (from the Democratic Party's point of view) is that the Republicans receive the greater share of that political money. However, the labor‑union‑crime network funds that oil the Democratic Party's machinery help to equalize the disproportionate share of political money that legitimate business and industry give to the Republican Party.

From the 1930s and into the 1960s, there emerged an unspoken detente between Republican and Democratic leaders with respect to some of the major sources of campaign contributions. The Democratic and Republican parties came to control different sources of the available political money. Obviously, if either party could undermine a major source of the other party's political money, the balance of power so crucial to any workable detente would be severely threatened as the money shifted into the coffers of one party.

Shortly after his election to the Presidency in 1968, Richard Nixon began a campaign which, had it been successful, would have shifted much of the labor‑union‑crime‑network political money from the Democratic to the Republican Party. Whether this was a knowledgeable plan on the part of Nixon and his political advisers is something we do not know. judging from the now available insights into how this group of men planned numerous political forays to increase their position of power, one suspects that the attempt to corner funds for their political interests may have been quite rationally made. In any case, whether by design or simply as a by‑product of other decisions, the consequence for the balance of power between the Republican and Democratic parties would have been the same.

Nixon had long‑standing and very close ties to a number of people whose business profits derived at least in part from illegal businesses. Regardless of how heavily involved in crime enterprises these associates and partners of Nixon were, it is tempting to speculate that they were involved enough in such places as Dade County, Florida; the Bahamas; Costa Rica; and Las Vegas, and in such enterprises as drug trafficking, stock frauds, bank swindles, and gambling casinos to have the wherewithal to run illegal businesses profitably.

The Nixon administration's campaign against "organized crime" was in fact a campaign against those crime networks that were most closely connected with Nixon's political foes, Republicans and Democrats. This campaign had the effect of eliminating the entrenched owners and managers of crime cartels, thus affording Nixon's associates and partners an opportunity to increase their share of criminal enterprises. To bring this about, the Nixon administration systematically exposed networks in Democratic Party strongholds, while ignoring networks that supported Nixon's wing of the Republican Party.[13] At the same time, the campaign against organized crime attempted to purge Meyer Lansky from his position as a major link between different organized crime interests and the Democratic Party.

Lansky's empire was vast. The Republicans' first attack was on his Las Vegas holdings. For this attack Howard Hughes was available to invest in the casinos and hotels, which Lansky was being forced to sell by state political pressure that threatened to end the skimming of profits which made the casinos so profitable, by subpoenas and indictments brought by Republican‑appointed U.S. attorneys where Democrats had reigned heretofore, by Internal Revenue agents under Republican control, and by FBI agents under Republican control. So he sold out of Las Vegas, and Howard Hughes came in. Immediately the profits that were for political payoffs began moving into the Nixon campaign fund and out of the Democrats'.

In south Florida Lansky was indicted by a Republican-controlled grand jury for perjury. In Las Vegas he was indicted for tax evasion.

Control of a Miami‑based bank shifted from Lansky to Nixon associate Bebe Rebozo. Union funds that had gone to Lansky for investment and into Lansky's banks were transferred. Law firms that had had lucrative union contracts lost them to Republican firms; the Teamsters hired Nixon's own law firm. For all of this, the Republicans paid off. Nixon granted Jimmy Hoffa executive clemency, and Hoffa was released from prison. Frank Fitzsimmons, who was the replacement for Hoffa as head of the Teamsters, was publicly acknowledged by Nixon as being "welcome in my office any time; the door is always open to Frank Fitzsimmons." [emphasis added]

It was not only the door to his office that was open; so too was the door to his airplane. In January 1973 the Los Angeles office of the Federal Bureau of Investigation learned that a syndicate leader from the Midwest was coming to Los Angeles to work with Teamsters officials to arrange a billion‑dollar health insurance contract for Teamsters' members. Frank Fitzsimmons came to attend the final meeting. The FBI bugged the offices for seventy-two hours preceding the major meeting, but when they requested permission to continue the bug (which by federal law they had to do), the attorney general's office turned down the request. The meeting between Fitzsimmons, a Midwest associate, and insurance company officials took place, and the contract was signed. Fitzsimmons left immediately to meet Richard Nixon in Palm Springs, and they flew back to Washington, D.C., together. The International Herald‑Tribune reported these events in the April 30, 1973, edition as follows:

Two ranking officials to the Department of justice eight weeks ago turned down a request by the Federal Bureau of Investigation to continue electronic surveillance that had begun to penetrate Teamsters’ union connections with the Mafia, according to reliable governmental sources. Attorney General Richard G. Kleindienst and Assistant Attorney General Henry E. Petersen were said to have made the decision after 40 days of FBI wiretapping had begun to help strip the cover from the Mafia plan to reap millions of dollars in payoffs from the welfare funds of the International Brotherhood of Teamsters. The officials acted on the grounds that investigation had failed to show "probable cause" to continue eavesdropping, the sources said.

They reportedly acted after having received a memorandum, prepared at the direction of L. Patrick Gray III, who was then the bureau's acting director. The memorandum, which made no recommendations, indicated the sensitivity of the investigation, which was reportedly producing disclosures potentially damaging and certainly embarrassing to the Teamsters' president, Frank E. Fitzsimmons, the Nixon administration's staunchest ally within the labor movement.


The administration's cultivation of the two‑million‑member union culminated last year in a Teamster endorsement of the President's reelection, and Mr. Nixon has made it clear that the door to his office is always open to Mr. Fitzsimmons.

The Kleindienst‑ Petersen decision came less than a month before Charles W. Colson, special counsel to the President, left the White House to join a Washington law firm to which Mr. Fitzsimmons had transferred the union's legal business.

Before leaving the White House, Mr. Colson had been instrumental in formulating administration political strategy regarding organized labor.

The electronic surveillance began on January 26, under an order of the Federal District Court in Los Angeles authorizing the FBI to tap 11 telephone numbers in the offices of People's Industrial Consultant, 9777 Wilshire Blvd., Los Angeles, justice Department sources said.

The consulting firm is a Mafia front set up to channel Teamster welfare money to underworld figures, the sources said.

On February 14, the court authorized an extension of the tap until March 6. The taps were requested and installed under the omnibus Crime Control and Safe Streets Act of 1968.

FBI Affidavit

What was learned from the taps was described in an FBI affidavit submitted to justice Department lawyers. The affidavit asked for continuance of the existing surveillance for 20 days and installation of new taps on a public telephone and the office telephone of an alleged mobster implicated in the plot to siphon money from the Teamsters.

The affidavit said that investigation up to then, including the use of electronic listening devices, had indicated "a pattern of racketeering activity‑that is, a series of payments of commissions or kickbacks" flowing from corporations controlled by a doctor in league with the mob through People's Industrial Consultants "to the officers and agents of the employee‑welfare benefit plan," in violation of federal statutes.

Mr. Petersen and Mr. Kleindienst, however, would not allow an application for renewal of the court order.

A request Friday to the justice Department for comment from the two government officials went unanswered.

The FBI affidavit cited information reportedly given to the bureau by an informant in contact with an associate of Allen Dorfman, consultant to the Teamsters' billion‑dollar Central States, Southeast and Southwest Areas Pension Fund, who began a federal prison term a month ago for conspiring to receive a kickback in connection with a loan application made to the pension fund.

"Source No. 3"

The informant, identified in the affidavit as "source No. 3," said that on February 8, at the Mission Hills Country Club in Palm Springs, California, Dorfman’s associate introduced Mr. Fitzsimmons to Peter Milano, Sam Sciortino and Joe Lamandri, identified, by the FBI as southern California members of the Mafia. The Teamster leader was in Palm Springs participating in the Bob Hope Desert Classic golf tournament.

Justice Department sources reported that, according to the informant, the three men presented to Mr. Fitzsimmons a proposal for a prepaid health plan, under which members of the union covered by its welfare program would be provided with medical care by Dr. Bruce Frome, a Los Angeles physician. Monthly medical fees for each union member would be paid by the central states fund from the millions of dollars contributed to it by employers under Teamster contracts.

In a 15‑minute conference with the three, the informant added, Mr. Fitzsimmons gave his tentative approval and sent the group to a Palm Springs residence for definitive discussions with Dorfman.

The FBI were said to have learned that the next day Mr. Fitzsimmons met with Lou Rosanova, identified by justice Department sources as an envoy for a Chicago crime syndicate, which sought a percentage of the Los Angeles mob's take on the health plan.

Justice Department investigators say that they have evidence that the Chicago branch of the Mafia is determined to retain the access it had to the pension fund through Dorfman during James R. Hoffa's Teamster presidency. Hoffa was imprisoned after being convicted of tampering with a federal jury and pension fund fraud.

As a result, according to the federal agents, the Chicago Mafia members have kept a sharp eye on Dorfman and Mr. Fitzsimmons since Mr. Fitzsimmons gained clear control of the union.

In 1971, President Nixon commuted Hoffa's eight‑year prison sentence, with a provision that precludes his holding union office until 1980.

Nixon's Plane

Rosanova and Mr. Fitzsimmons had talks again on February 12 at La Costa, a plush resort and health spa in San Diego County, according to the Orange County and San Diego County authorities. The same authorities reported that a few hours after that meeting Mr. Fitzsimmons boarded President Nixon's plane and flew to Washington with the President. Both Rosanova‑Fitzsimmons meetings were reportedly observed by informants of the Orange County District Attorney's Office. On February 27, at La Costa, the same informants say that they heard Rosanova boast of a future payoff split between him and Mr. Fitzsimmons.

In its affidavit seeking an extension and a broadening of electronic surveillance, the FBI cited as a basis for its request Title 18, Section 1954, of the U.S. code, which prohibits commissions and kickbacks to union and welfare plan officials in return for the placement of union business.


During the 40 days the devices were in operation, the sources said, recorded conversations greatly supplemented and tended to corroborate information gathered in other phases of the investigation being carried on by the bureau and authorities in Los Angeles, Riverside, San Diego, and Orange Counties.

On February 9, the day after Milano, Sciortino and Lamandri allegedly met with Mr. Fitzsimmons and Dorfman in Palm Springs, the taps at People's Industrial Consultants were said to have picked up a conversation between Dr. Frome and Raymond de Derosa, identified by the California authorities as a muscle man for Milano, who operates out of the consulting company's offices.

The FBI affidavit said that de Derosa had told the doctor that "the deal with the Teamsters is all set." De Derosa indicated to Dr. Frome, according to the affidavit, that People's Industrial was in the line for a 7 percent commission, and they talked about a possible $1 billion‑a‑year business.

In other tapped conversations, de Derosa reportedly said the PIC would get a 10 percent cut of the medical payments. He reportedly complained that the concern had to "give away three points (3 percent) to get the deal."

This is apparently a reference to that part of the deal surrendered by the Los Angeles Mafia figures to pacify the Chicago representatives.

Meyer Lansky was left out of the Teamsters‑Republican Party coalition. Several years later it was reported that Nixon could get $1 million from the Teamsters Union. He told John Dean that this fund could be used for hush money. The Washington Star reported on Sept. 29, 1977:

. . . the $1 million may have been what Nixon referred to in the March 21, 1973, White House meeting with Dean concerning the Watergate burglars, demands for huge sums [of] money in return for keeping quiet.

According to a transcript of a tape of that conversation, Nixon said to Dean: "What I mean is you could get a million dollars ... And you could get it in cash. I know where it could be gotten.... We could get the money. There is no problem in that."

But Lansky's empire was much more than a link with the Teamsters. His investments in Las Vegas were supplemented by major holdings of casinos and hotels in the Bahamas, which he helped open up after Cuba was brutally thrust outside the gambling circuit for American tourists. Businessmen who supported the Republican Party attempted to wrest control from Lansky in the Bahamas by manipulating political leadership. Bebe Rebozo made extensive investments in hotels and casinos and tried to buy up and compete with Lansky's enterprises. Someone attempted to murder a leading politician who was favoring Rebozo in the struggle. [emphasis added]

The final attack on Lansky was probably the most successful and the most serious. The Republicans attempted to close off his sources of heroin. They did this by pressuring the Turkish government to enforce the law prohibiting the growing of opium, the plant from which all heroin is refined. At that time (late 1960s) Turkey accounted for probably go percent of the opium processed into heroin and shipped to the United States. By 1972 Turkey was accounting for less than 40 percent, and Lansky had lost control over a major source of his financial empire.[14] The Republican administration also pressured the Latin American governments whose countries were layover points in the heroin route to America, and Lansky's principal Latin American coordinator of heroin traffic, Auguste Ricord, was forced out of Argentina, where he had been managing the traffic for years. He was eventually arrested in Paraguay.[15]

Meanwhile, the heroin traffic from Southeast Asia, especially from the Golden Triangle of northern Thailand, Burma, and Laos, expanded production and a new source of heroin for the incredibly lucrative American market opened up. It is unknown whether this new heroin source was linked to Republican politicians, but the fact that the CIA and the South Vietnamese governments under generals Ky and Thieu actively aided the development of this heroin source suggests that such a link is not beyond the realm of possibility.[16]

Lansky must have known he was fighting for his life. Always a heavy contributor to the Presidential election, in 1968 he outdid himself by a good margin. Through his agent, Sam Levinson, Lansky contributed at least $240,000 to Hubert Humphrey's campaign against Nixon. Lansky also contributed heavily in support of the Democratic governor of Washington. In fact, so heavily did he contribute that according to political observers there the Democratic candidate was able to ignore altogether the usually time-consuming task of raising campaign contributions.

The format of the attack against Democrat‑controlled crime networks was much the same everywhere. Newly appointed Republican U.S. attorneys called grand juries to investigate corruption and racketeering. In Chicago one of Illinois's leading Democratic politicians, Otto Kerner, who had formerly been the governor of Illinois and was at the time of his exposure a U.S. judge, was indicted, tried, found guilty, and sentenced to prison for accepting a payoff while he was governor. As we have seen, in Seattle the bulk of the political, law‑enforcement network members and even a few of the racketeers were indicted.

In the state the Democrats lost the governorship despite Lansky's heavy financing. Moreover, the state attorney general's office was also won by a Republican, and to make matters totally unlivable for the existing network, a Nixon‑affiliated Republican won the county prosecutor's office. These shifts in state and local political fortunes would mean considerably less money for Democrats in the state, because the new network would be formed around a moderate Republican‑oriented group. It would thus mean considerably more money for the Republicans.


Nixon knew a lot of secrets; Secrets get you favors and are used for blackmail. The M-fund represents a part of a netherworld of financing used by the “black” network, which affects the “real” world. An excerpt from, Gold Warriors, by Peggy and Sterling Seagrave:


America lost control of the M-Fund in 1960 when it was given away by Vice President Nixon, in exchange for Tokyo's secret financial support of his bid for the U.S. presidency. For more than forty years since then, the M-Fund has remained the illicit toy of seven LDP politicians who have used it to keep themselves in power. Nixon effectively gave them the ultimate secret weapon, a bottomless black bag.

President Eisenhower was going to Tokyo to conclude revisions to the Mutual Security Treaty, but his trip was canceled after violent protests in Japan. Instead, Prime Minister Kishi Nobosuke flew to Washington, where the Security Treaty negotiations were conducted by the vice president. Nixon was obsessed by his craving to become president, and was willing to tum over control of the M-Fund, and to promise the return of Okinawa, in return for kickbacks to his campaign fund. Kishi, an indicted war criminal, a key figure in the wartime regime and in hard drugs, munitions and slave labor, thereby gained personal control of the M-Fund. According to Takano Hajime and other well-informed sources, Nixon justified the deal with the dubious excuse that Tokyo needed an emergency covert source of money in the event that war broke out in Northeast Asia. In theory, Japan's postwar constitution prevented it from creating a new army, so Tokyo could not allocate a huge defense budget - at least not publicly. Nixon argued that full LDP control of the M-Fund would accomplish the same thing covertly. In 1960, the MFund was said to have an asset base worth ?12.3-trillion ($35-billion). How much of this Kishi agreed to kick back to Nixon is not known. It is important to note that Nixon did not tum the M-Fund over to the government of Japan, but to Prime Minister Kishi personally, putting the lie to his grandiose justifications. So a few months later, when Kishi ceased to be prime minister, he and his clique continued to control the M-Fund. It goes without saying that they never used it for the designated purpose, instead turning it into a private source of personal enrichment.

That Nixon made such Faustian bargains was widely rumored. Publication of The Arrogance of Power: The Secret World if Richard Nixon, by Anthony Summers, shows that to advance his political career, Nixon even made financial deals with Meyer Lansky and other underworld figures . This is further supported by evidence first presented by Christopher Hitchens in "The Case Against Henry Kissinger" in Harper's Magazine, arguing that Nixon and Kissinger secretly manipulated American policy for their own personal ends in violation of the U.S. Constitution.

Nixon's M-Fund giveaway was not the end of the story - far from it. Under LOP control, the M-Fund spawned a number of exotic financial instruments that propagated through global financial markets like Ebola virus. Investors or their attorneys have been snared in amazing international sting operations, charged with negotiating fraudulent instruments, ending in wrongful convictions and prison sentences. It is now painfully obvious that some of these victims were holding authentic paper, and only were stung to shield Japan's government from its own folly - although more crafty political and financial motives also may be discerned.

How did Nixon's dirty deal lead to such a scandalous impasse decades later? To know that, we must see what happened when the M-Fund changed hands.


Until Nixon interfered, the M-Fund was controlled and administered by a small group of Americans in Tokyo close to MacArthur. In 1950, when the Korean War started, most U.S. forces in Japan were rushed to Korea, creating a security vacuum. Because the postwar constitution prohibited setting up a new army, the M-Fund secretly provided over $50-million to create what was characterized as a self-defense force. When the occupation ended in 1952 and Washington and Tokyo concluded their joint security treaty, administration of the M-Fund shifted to dual control, staffed by U.S. Embassy CIA personnel and their Japanese counterparts, weighted in favor of the Americans. The Yotsuya Fund and Keenan Fund were folded into it. The M-Fund's asset base was being invested in Japanese industry and finance, and the returns were used for political inducements. The M-Fund council interfered vigorously to keep Japan's government, industry, and society under the tight control of conservatives friendly toward America. This meant blocking or undermining Japanese individuals or groups who wished to liberalize Japanese politics, or unbuckle what Dr. Miyamato Masao called Japan's 'straight-jacket society'.

In 1956, for example, the Eisenhower Administration labored long and hard to install Kishi as head of the newly merged Liberal-Democratic Party and as Japan's new prime minister. This was the same Kishi who had been a member of the hardcore ruling clique in Manchuria with General Tojo Hideki and Hoshino Naoki, head of the narcotics monopoly. Kishi had also signed Japan's Declaration of War against America in December 1941. During World War II, he was vice minister of munitions and minister of commerce and industry, actively involved in slave labor. Along the way, he made a personal fortune in side-deals with the zaibatsu. Following Japan's surrender, he was one of the most prominent indicted war criminals at Sugamo, where he was a cellmate of Kodama. In 1948, when his release from prison was purchased by Kodama, Kishi began organizing the financial base of the LOP, using Kodama's black gold and injections of M-Fund cash. For ten years, Kishi was groomed as America's Boy by Harry Kern, Eugene Dooman, Compton Packenham and other members of Averell Harriman's group at the American Council for Japan (ACJ). They worked tirelessly to improve Kishi's mousy image, tutored him in English, and taught him to like Scotch. To them, Kishi was America's 'only bet left in Japan'. All this was done covertly, for if the Japanese public learned that Washington was using the M-Fund to replace one prime minister with another, the democracy fiction would collapse.

Despite all this manipulation, when the 1956 election results were in, Kishi was trumped by rival LDP faction leader Ishibashi Tanzan, regarded as 'the least pro-American among the major LDP leaders'. Ishibashi had won because Washington had paid off Kishi supporters, but had not given enough to his opponents. Annoyed, President Eisenhower personally authorized the CIA to destroy Ishibashi, and put Kishi at the head of the LDP. This meant paying very large bribes to all factions of the LDP, to shift their support to Kishi. In February 1957, after an extraordinary amount of grunting and snorting behind the folding screen, Kishi at last replaced Ishibashi as leader of the LDP, and was named prime minister. According to historian Michael Schaller, Kishi then took over from Kodama as 'America's favorite war criminal'.

"Washington heaved an audible sigh of relief," Schaller said. "Kishi reasserted his loyalty to America's Cold War strategy, pledging to limit contact with [Communist] China and, instead, to focus Japanese economic attention on exports to the United States and mutual development of Southeast Asia."

During Kishi's term as prime minister (1957-1960) the LDP received $10-million each year directly from the CIA, chiefly from the M-Fund. Alfred C. Ulmer, Jr., the CIA officer who controlled the M-Fund and many other operations in Japan from 1955 to 1958, said: 'We financed them," because the CIA "depended on the LDP for information." When the party's coffers were depleted by the monumental effort to get Kishi named prime minister, Finance Minister Sato Eisaku (Kishi's brother) appealed to Ambassador Douglas MacArthur II (the general's nephew) for additional secret funds. In July 1958, Ambassador MacArthur wrote to the Department of State, providing details of this request: "Sato asked if it would not be possible for the United States to supply financial funds to aid the conservative forces in this constant struggle against Communism .... This did not come as a surprise to us, since he suggested the same general idea last year."

The ball then was lobbed into Nixon's court.

A few months later, when Nixon renegotiated the Mutual Security Treaty in 1959-1960, he not only gave Kishi the M-Fund, he also promised that when he became president he would give Okinawa back to Japan, while retaining military base rights there. According to sources close to former Prime Minister Tanaka, "Nixon told Kishi that if Japan would assist him in becoming president, he would see to it that the U.S. withdrew from its role in managing the M-Fund, and upon his being elected Nixon would return Okinawa to Japan." Accordingly, when Nixon and Kishi concluded the revision of the security treaty in 1960, the M-Fund was turned over to Kishi. And in 1973, when Nixon at last was elected president, he returned Okinawa to Japan.

White House national security advisor Richard Allen later remarked that the Okinawa transfer had puzzled him. "In 1973, when Nixon gave Okinawa back to Japan, I was following very closely. I was in touch with the White House and I was always puzzled by that, not that it was really a strange thing to do, but there was no agitation for that. He just up and did it. I never quite understood why he did that. Now [in light of Nixon's M-Fund deal] this makes sense to me."

In Japan, the revised Joint Security Treaty was so unpopular that Kishi immediately lost control of his cabinet and had to resign as prime minister. So, only a matter of months after giving him control of the M-Fund, America lost much of the leverage gained by the huge bribe. Nixon may not have got all the kickbacks he expected. Years later, when the chance came to take America off the gold standard, weakening the dollar and strengthening the yen, making Japanese exports more expensive, Nixon chortled that he was "sticking it to the Japanese".

Nevertheless, Kishi remained an LDP kingmaker behind the scenes. Virtually every prime minister of Japan since then was picked by the clique controlling the M-Fund, because they had the most inducements to pass around. Sarcastically called The Magnificent Seven, the clique included prime ministers Kishi, Tanaka Kakuei, Takeshita Noboru, Nakasone Yasuhiro, Miyazawa Kiichi, deputy prime minister Gotoda Masaharu, and LDP vice president Kanemaru Shin. Compared to Japan's great dynastic families and financial shoguns, these were only politicians greasing the wheels. But as politicians go, they were in an unrivaled position to steer Japan's economy, politics and government at every level, without being accountable to the Japanese people. War loot provided the asset base, generating huge profits hidden in creative ways, or offshore. They were all clever men, but Tanaka was the cleverest. How he acquired personal control of the M-Fund from Kishi provides a rare keyhole view of money-politics in Japan.


to be continued:


Last Updated on Saturday, 26 March 2011 23:25
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