Reid.The Grim Reapers (pp.
Columbus didn’t know it, but he did find a pot of gold at the end of the rainbow when he steered his little ships into the heart of what has become one of the greatest crime syndicate enterprises since Al Capone left Brooklyn and discovered Chicago.
Capone had no connection with Columbus, of course, but their descendants share one thing in common: a place at the trough of gold where pigs and paladins are born, weaned and grow to maturity—the West Indies. Laved on the north by the Atlantic Ocean and on the south by the warm waters of the Caribbean Sea, this ancient haunt of pirates is the new playground of the mob.
The Caribbean can be blue or green, according to weather conditions, but for gamblers who rarely give it a second glance the sea generally glints gold. Just a scant ten years ago these almost tropical waters harbored a pearly string of tranquil islands, stretching from the Bahamas, seventy miles off the coast of Florida, to Barbados and Trinidad, off the northern coast of Venezuela, South America—a thousand island crescent of peace and pleasure providing retreat for tired tycoons, wound-up executives, and more or less lethargic but happy natives, many of whom though voodoo was the closest they could get to the devil. Places with names such / as Bimini, Nassau, Virgin Islands, and Martinique were shrines dedicated to those who liked to take the sum every now and then.
If there was a devil in the area, he didn’t make himself manifest until Fidel Castro unlocked the Cuban Pandora’s box and drove a segment of the American crime syndicate that had obtained a foothold in Havana—long a way-stop, as we have seen, in the dope traffic that flows through the Caribbean via Florida and New Orleans into the veins of the addicts in the United States and, during the years of Batista’s regime, a gambling hot spot as well.
Castro, who sought no piece of the action in the country he took over, banished the gambling operators, pimps, and dope pushers from the Cuban littoral. America’s law-enforcement officials were impressed with Castro’s efforts to clean his nest, but Cuba’s loss was America’s unfortunate gain for the hoods drifted back into the underworlds of the cities that had spawned them: Miami, Tampa, Biloxi, Gulfport, New Orleans, and Las Vegas.
Thwarted only temporarily by Cuba’s rejection, the hoods soon regrouped, returned to some of the smaller islands in the Caribbean, and began to discover more riches than Columbus ever dreamed of. In outflanking Castro on the Spanish Main, they became part of a milieu that combined many talents—the know-how of financiers, lawyers, legislators, politicians, construction men, show-biz nabobs, gamblers, and plain “ordinary” greedy people—and came up with what in financial and real estate parlance is called a “real business boom.”
There is little doubt that Castro has since taken note of this “capitalistic” influx of money just a few blue waves from the shores of Cuba, where, under his guiding hand, communism is making its play under a somewhat marginal economy. But one of the first to note the potential in the Bahamas and get the ball rolling for the entry of the syndicate boys was a man named Wallace Groves, “Boy Wonder of Wall Street.” Groves did not throw himself out of a window when the financial crash of 1929 tumbled fat cats and golden calves throughout the United States, and he now has just about everything a man could want—a man such as Groves, that is—though he’d no doubt like to expunge from his record a 1941 conviction involving a $750,000 stock swindle for which hw was sentenced to two years in prison. In fact, he served only five months in durance vile, in the / federal penitentiary at Danbury, Connecticut, and was released in December 1942.
The conviction arose through Groves’s pyramiding company on top of company until he had built up $10 million in assets at a very small cost to himself, though this success could hardly have changed the flavor of the federal food allotment at Danbury. At the time of his conviction the Securities Exchange Commission said: “Almost all of the companies that came under the control of Mr. Groves suffered severe losses.” Yet a friend said of Groves, who owned substantial pieces of twenty-three corporations, “He had a good reputation on Wall Street. He wasn’t one of those sharpshooters.”
In January, 1967, after trying to dig out the facts on Groves, Parade magazine reported: “There is one area in which Groves’s friends and enemies agree: He is shrewd, quick and perceptive—‘a natural genius at making money.’” Groves is also credited with having extrasensory perception when it comes to business deals and has said that he receives “vibrations” during business negotiations.
Groves’s vibrations were apparently unhampered by his short vacation behind bars, for he went to Grand Bahama Island in the mid-forties to cut timber and found natural beaches, a frost-free climate, and convenient proximity to the tip of Florida—whence the scent of tourists wafted across the surging sea waters, Since then, the sixty-seven-year-old Boy Wonder has managed to wolf down half the island for himself with the help of two other men peculiarly suited to the task of helping him build up what is now a one-hundred-and-fifty-thousand-acre barony plus substantial pieces of outlying enterprises. The two associates have been fifty-six-year-old Louis Chesler, a 256-pound, blue-eyed son of a Lithuanian immigrant to Canada, and sixty-seven-year-old syndicate gambling chief Meyer Lansky.
Groves provided the land; Chesler, through his Canadian connections and financing, helped smooth the way for the construction of a beautiful hotel and subsequent permission for gambling therein; and Lansky came up with the syndicate know-how of casino operation to entice, cater to, and gauge the financial limits of the tourists—thousands of them—that was the main prerequisite to the money-making dreams of all three men.
In 1955 Groves managed to wangle property from the Bahamian (British) government for £1 per acre (at that / time £1 equaled $2.80). Certainly Groves couldn’t complain. Some of the original $2.80-acres he purchased from the Bahamian government were reportedly later sold at $50,000 each. Critics of the Bahamian hierarchy say Groves was given a blank check. His domain on Grand Bahamas Island includes a 211-square-mile slice of the 430-square-mile island.
All Grove’s holdings are the legal property of various Groves corporate entities; the parent organization, Grand Bahamas Port Authority, Ltd., set up for the supposed purpose of creating a deep-water port to enable Groves to bring industrial and commercial establishments to his barony, which is named Freeport; the Grand Bahamas Development Company, established for the management and sale of the real estate; and Bahamas Amusements, Ltd., a subsidiary organized to take charge of the gambling casinos to be brought to the island.
No branch of the Bahamian government seems willing to tangle with Groves, yet the big man loathes descriptions of his operations as a “kingdom” or “dictatorship.” “That’s a lot of bunk, “ he scowls. Nevertheless, if you went to live—or play—in Freeport, you would use Groves’s airport, Groves’s harbor, Groves’s roads, Groves’s schools, Groves’s land, Groves’s supermarket, and Groves’s electricity. The Port Authority is a private, tax-exempt, super-corporation, and its subsidiaries affect Freeport’s twelve thousand residents from birth to death.
Freeport has no income tax, no profits tax, no real estate tax, and no sales tax. Indeed, Groves’s long-term contractual guarantees build in these privileges, which are almost impossible to find elsewhere. Consequently, wealthy businessmen looking for business outlets are quick to take advantage of such favorable opportunities.
These advantages were what probably first attracted Toronto tycoon Lou Chesler to the sunny Caribbean. Chesler was no novice at the art of making a fast dollar. Starting as a customer’s man for a brokerage firm, he had piled up $4 million on Toronto’s version of Wall Street almost before he was weaned. With his $4 million he built up a paper profit of $70 million by stalking small U.S. companies with big potential. His perception was uncanny. For example, he accurately presaged the coming boom in electronics, Florida land, and leisure activities, including horse racing. / In fact, he gave all such industries a boost up to the starting gate.
Chesler was also something of a bon vivant, building up a large and what, in June, 1964, the Wall Street Journal called “somewhat incongruous circle of friends and acquaintances.” Among these, the Journal pointed out, were such respected business figures as publisher Gardner Cowles, investment banker John Weinberg, and bank president Gabriel Hauge, sometime economic advisor to President Eisenhower, Others listed were such Eisenhower administration officials as Robert Anderson, who served as Secretary of the Treasury, and cabinet secretary Maxwell Rabb, who in 1964 was one of those trying to secure the Republican nomination for Henry Cabot Lodge,
Chesler, who fed $12 million into the Bahamas before Groves ousted him with a clever squeeze play in May, 1954, has been a prime mover behind many important companies in the United States, including General Development Corporation and Universal Controls, Inc. Universal makes electronic equipment and General Development is a huge mail-order merchandiser of Florida houses and lots. Banker Weinberg went on the General Development board of directors in 1959 at the same time publisher Cowles became interested in the organization. Cowles later succeeded Chesler as chairman and became the company’s second largest stockholder.
Chesler’s guiding hand has also functioned in Canada’s Lorado Uranium Mines, Ltd., and in the entertainment complex called Seven Arts Productions, Ltd., which has made its mark on the Hollywood movie-making scene. Incidentally, it was Maxwell Rabb who, as a board member of Seven Arts, came to Chesler’s defense in 1963, when the management was being attacked by the stockholders for investing $5 million in Chesler’s and Wallace Grove’s Grand Bahama Development Company—a squabble resulting in an announcement that Chesler would liquidate his holdings in Seven Arts and resign as chairman and director of the board after Seven Arts had disposed of its investment in the Grand Bahama Development Company.
The circle of Chesler associates and friends was not limited to Wall Street or Capitol Hill. He had a well-known love of horse racing, which may have prompted him in 1965 to secure, with the help of millionaire cronies such as Balti / more Colts’ owner Carroll Rosenbloom, an outfit known as Baltimore’s American totalizer, which owns and leases most of the racetrack “tote” systems that figure odds and winnings based on bet totals on individual horse races. Another Chesler associate, who had no business connections with the Canadian but was a friend, according to the Wall Street Journal, was Trigger Mike Coppola, whose activities were detailed in the chapter on the Mafia in New York.
Looking back on his Caribbean adventures in April, 1967, Chesler classified
himself as “probably the biggest loser in the Bahamas” and
admitted he paid huge sums of money to the “Bay Street Boys.”
the ruling clique at the time in Nassau, to buy permission to bring big-time
gambling into the British colony. The story began in 1960 and 1961 when
Chesler entered the picture as Grove’s partner in the Grand Bahama
Development Company, which was then selling real estate in Freeport.