The Arrogance of Power (18 page)

As the Senate stated in its formal report, Rebozo obstructed its official investigation, at one point even leaving the country to avoid further questioning. Nixon meanwhile tried to subvert IRS inquiries. An IRS intelligence supervisor, Andy Baruffi, said in 1996 that his team concluded that the IRS investigation “was being manipulated by the White House.” Called to a meeting at the office of the director of IRS intelligence in Washington, he and his lead agent expressed the view that at least two of Nixon's own tax returns had been fraudulent. Baruffi never forgot his shock at the reaction of his superiors, who simply left the room. Attempts to resume the conversation were met with blank stares and pointed silence.

A more senior IRS source, also interviewed for this book, confirmed the shameful way the Rebozo case was blocked. “I was assigned to review the entire case file. We had Rebozo primarily on a straight up-and-down provable false statement charge. It was a dead-bang case. I believe a deal was made with the White House to kill the investigation.”

Senate hearings on the Rebozo matter were likewise aborted. The special prosecutor eventually decided, at the end of a trail littered with promising
leads and frustrating dead ends, not that Rebozo was innocent but—in the careful words of the published report—that “the evidence would not support an indictment.” Rebozo escaped prosecution, and the former president claimed in his memoirs that his friend had been “exonerated.” He had “endured a modern-day Star Chamber of political persecution,” Nixon wrote. “His crime was that he was Richard Nixon's friend.”

A number of salient facts and leads give context to the friendship that paralleled Nixon's rise and fall. Some are small but cumulatively significant. There was Rebozo's ability to obtain business favors by devious means, starting in 1962, when he wanted a federal loan to help pay for a real estate deal. Having been repeatedly rejected by the Small Business Administration (SBA), and for good reason, Rebozo's application suddenly was approved. Strings had been pulled in Washington and Miami. The official involved in Miami wound up owning lots on Fisher's Island and—when Rebozo's bank started up, holding stock in that business. This was the first in a series of such breaks, culminating in the extraction of government money to develop a shopping center for Cuban refugee merchants.

One of the SBA directors recalled Rebozo's conduct at a 1967 meeting about the planned shopping center. He described him as “having an extremely quick temper and being a name-dropper,” one of the names dropped being that of his “close friend” Richard Nixon. Rebozo and his partner won the deal and profited nicely. The man he brought in to organize the shops, the former Batista cabinet minister Edgardo Buttari, headed the Cubans for Nixon lobby in the 1968 election and was later appointed to a highly paid job in the Department of Health, Education, and Welfare.

Early in the presidency, when the government was buying up islands in Biscayne Bay that had been zoned as a national monument, Rebozo demanded and got a higher price than other landowners. An Army Corps of Engineers official involved said he had been told Rebozo was “an intimate of people in high places,” to be “treated with kid gloves.” Rebozo's brother-in-law remained caretaker of one of the islands, on a federal salary.

When a business group not connected to Rebozo applied to open a second bank on Key Biscayne, again during the presidency, it was twice turned down by the federal agency that regulates banks. Rebozo had let it be known that he objected. When a group of
his
associates applied to open a savings and loan institution, however, it was given an approval.

More sensational, but much harder to substantiate, were the allegations about the amount of money Nixon accumulated with Rebozo's help, where it came from, and where it ended up. The public learned during Watergate that the president's net worth, $307,000 when he took office, had tripled during his first five years in the White House to nearly $1 million. In the same period Rebozo's net worth—reported as $673,000 in late 1968—had increased nearly sevenfold, to $4.5 million.

There was suspicion, though, that Nixon had more money than was publicly acknowledged. That Rebozo did hold funds for Nixon, over and above what is known, seems certain, on the basis of scraps of surviving correspondence and Nixon's own comments to aides, some of them preserved on the White House tapes.
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In an interview shortly before his death Nixon's longtime campaign treasurer, Maurice Stans, revealed: “Bebe told me: ‘I've set up a trust fund for Richard Nixon's family from my own and the bank's money to take care of the family. It's money I have set aside.' It was Bebe's generosity.” Stans said he did not know the eventual extent of the fund, which he learned about in 1968.

In another incident, proof emerged that Nixon used $4,652 from 1968 campaign funds, maintained and moved about by Rebozo, to buy Pat diamond-studded platinum earrings from Harry Winston, the New York society jeweler. Nixon devoted a passage in his memoirs to an outraged rebuttal of corruption claims, but remained silent on that one. There was no denying it.

Both Nixon and Rebozo did vociferously deny a story published by the columnist Jack Anderson, suggesting they had hidden money in Switzerland. Nixon called the account “totally false,” and Rebozo dismissed it as “just about as accurate as most of the other things I've heard about Mr. Anderson's writing.” In fact, much of what Anderson dug up about Nixon over the years turned out to be true or at least close to the truth. New information suggesting that Nixon did indeed keep such funds abroad will be revealed in this book.

An even more questionable aspect of the Rebozo connection, however, was the pervasive presence of organized crime. Although the bane of many investigative books is the assigning of guilt by association—“so-and-so-knew-and-so-and-so-connects-to-so-and-so”—in this case the connections deserve examination.

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The pattern was evident early on. The man who brought Nixon to his first meeting with Rebozo, Richard Danner, is usually referred to merely as a former FBI agent or former Miami city manager. He had held both those jobs, but there were smudges on his record. Danner had also worked for the Miami Beach Hotel Owners Association at a time when several large Miami hotels were controlled by the mob—notably Meyer Lansky and his brother Jake, out of New York, and Joe Adonis out of Detroit—and was especially close to the association's president, gambler Abe Allenberg. He had been dismissed as city manager, accused of “playing both ends against the middle,” in the wake of a gangland dispute over control of the local police. Soon afterward Danner was alleged to have taken a mob bribe while managing George Smathers's congressional campaign.

Smathers arranged for Nixon to stay during the early Florida trips at oceanside villas on Key Biscayne owned by the Mackle family, who at the time
were coinvestors in land development with associates of Meyer Lansky's, including Trigger Mike Coppola. Nixon remained friendly with the Mackles over the years.

A decade into the Nixon-Rebozo friendship, when Nixon was temporarily out of politics, an intelligence report filed at the Miami Police Department cited a mob informant as saying Rebozo was running a numbers racket out of one of his coin laundry businesses. He was, the informant claimed, “fronting in this operation for ex–Vice President Nixon.” The report was uncorroborated, but it forms part of a larger picture. Organized crime figures were a presence in Rebozo's real estate and banking ventures.

Walter Frederich, a stockholder in the corporation controlling Fisher's Island, where Nixon bought land, was a convicted sugar bootlegger. Rebozo was a coowner of another island, close by Fisher's, along with a gambler called Richard Fincher. A former Florida state senator, Fincher was said by law enforcement sources to have fronted for a Meyer Lansky associate in national gambling operations.
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His phone records in later years revealed calls to associates of mob bosses Carlos Marcello and Santo Trafficante. “Bebe,” Fincher boasted, “is a very close friend of mine.”

To finance his Fisher's Island purchases, Nixon borrowed money from Rebozo's bank and an additional hundred thousand dollars from City National Bank of Miami. A prominent director of City National, Max Orowitz, was referred to in a Justice Department memo as having taken millions of dollars, through the Bank of Miami Beach, on behalf of Lansky. He was convicted of securities fraud, involving Swiss banks, the year Nixon was elected president.

That same year, when Rebozo organized the development of the Cuban shopping center in Miami, he picked the Polizzi Construction Company to build it. Alfred (“Big Al”) Polizzi, who headed the company, had been a top mobster in Prohibition days. He had headed the Cleveland mob, holding such seniority that according to an FBI report, he was on the Mafia Grand Council, a predecessor of the Commission. He too worked with Meyer Lansky and had been jailed in 1943 for smuggling liquor between Cuba and the United States, for violation of war price controls, and for tax evasion. In the fifties Polizzi was summoned before the Kefauver Committee because of his ownership of the Sands, one of the Miami Beach hotels then controlled by the mob. He was also associated with drug trafficking and named by the Bureau of Narcotics as late as 1964 as “one of the most influential members of the underworld in the United States.”

In 1952 Rebozo's sister-in-law Eleanor signed an unsuccessful petition to get Polizzi a federal pardon. She, along with the other signers, stated that she had always considered Polizzi “a person of good moral character.” In 1965 Rebozo tried unsuccessfully to obtain a zoning permit for another gas station. Polizzi was one of only seven citizens who signed a petition supporting his bid, at a time he was still very much in the mob loop. A contemporaneous FBI bug
overheard another top mafioso insisting the only way to sort out an internal dispute was to see Polizzi.

In 1967, as Nixon prepared for the campaign that was to make him president, Rebozo got him to pose for a publicity photograph with Donald Berg, a customer of Rebozo's bank and a real estate developer and owner of Key Biscayne's Jamaica Inn, where Nixon often dined. Nixon had known Berg since he first came to the area and was aware that the photograph was intended to boost efforts to sell plots for Berg's Cape Florida Development Company. The picture was circulated around the country and proved useful to them both. Nixon “exposed the product like soap on TV,” said Berg. “All of a sudden people came down and discovered Key Biscayne was an island paradise.” Nixon, for his part, was able to buy two Cape Florida plots for half the price of two lots close by. Rebozo got a tract at a bargain as well.
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Both Nixon and Rebozo delayed recording their purchases of two of the Berg plots until several years later. Nixon finalized his registration only two years after becoming president, for it took that long for one of the plots to come clear of previous mortgages held by an associate of Lansky and Teamsters leader Jimmy Hoffa. He ultimately disposed of the land in 1972, following unwelcome publicity about the arrangements, and stopped eating at Berg's Jamaica Inn, reportedly at the request of the Secret Service after it had received a report on Berg's background.
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He remained friendly with Berg, however, as late as 1994, the year of his death.

Rebozo and his bank were embroiled in a securities case in 1968 that raised further questions about his integrity. The affair concerned the handling of IBM stocks lodged with him as collateral for a loan, stocks, it turned out, that had been stolen from a New York brokerage firm. The thieves and con men involved included associates of Tony “Fats” Salerno and Gil “The Brain” Beckley, known accomplices of the now familiar name of Meyer Lansky.

Rebozo's role in the deal raised a number of troubling questions. Why had he promptly offered the loan to a would-be customer who was a stranger from another state, without asking for any credit history? There were routine ways to conduct such checks. Yet, when he finally did place two calls, they were to the chairman of Resorts—the man who ran Paradise Island in the Bahamas—and to Nixon's businessman brother Don.

Why, even after he had been visited by FBI agents making inquiries about the stock, did Rebozo write a warm note to the man who provided them as collateral: “Everything thus far has worked out well for both of us . . .”?

Why, when an insurance investigator tried to tell Rebozo the stock was stolen, did Rebozo respond so strangely? He initially claimed he was too busy to see the investigator and canceled two appointments. When they did meet, Rebozo aroused great suspicion. “I do not believe,” the investigator wrote in his report, “that Mr. Rebozo was giving me all the information. . . . This would appear to me to be a shady deal, and I suspect that Mr. Rebozo is aware of this.”

Did Rebozo falsely tell the investigator that he had already sold on the stock when in fact he sold the balance of shares more than a week after the meeting?
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Finally, why was the litigation in the case settled in a way that avoided further complications for Rebozo? A civil suit against the bank was terminated after one day by a U.S. district court judge, James King, who had recently been appointed by President Nixon.

A Washington-based gambler jailed during the Nixon presidency for transportation of stolen securities, Alvin Kotz, was interviewed in prison for this book. Kotz asserted that the true role of Rebozo and his bank was common knowledge in criminal circles, long before publicity about the stolen stocks case. “Bebe and Bebe's bank were an outlet for these things. It was a well-known thing in organized crime circles.”