Dead lawyer, tax evasion and a 14-year-old case
Tax court ruling opens makes appeal likely
involving a now-dead lawyer who was one of the nation's leading tax advisers, millions of dollars in reported real estate kickbacks and a Supreme Court ruling that ended a long-standing practice of secrecy in tax court. And if that is not enough, it is probably not over.In the decision last week, Judge Harry A. Haines of the U.S. Tax Court ruled that the lawyer, Burton W. Kanter, and two associates had accepted kickbacks from the Pritzker family of Chicago, which owns the Hyatt hotels, and then evaded taxes on the payments. [For additional information on Kanter, see Pete Brewton, The Mafia, CIA and George Bush.]
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, is a top investigative reporter whose new book contains almost 100 pages of references, indexing and bibliography alone.This generation may not know who Korshak was, but Russo soon reminds us, calling him the Mob’s “fair-haired boy,” also known as
“The Fixer, who from the 1940s until his death in 1996 was not only the most powerful lawyer in the world, according to the FBI, but also the most enigmatic, almost vaporous player behind some of the shadiest deals of the twentieth century.”
[For more on Korshak, see Dan Moldea's book, Dark Victory.]
Russo’s book covers immense territory including Las Vegas with material on Moe Dalitz (who Russo says considered Korshak his legal adviser), Allen Dorfman (manager of the Teamsters pension fund), Conrad Hilton (patriarch of the Hilton Hotel dynasty), Jimmy Hoffa, Howard Hughes; Murray “The Camel” Humpreys; Kirk Kerkorian, former Nevada Governor Laxalt and Abner “Longy” Zwillman. The book details the growth of Las Vegas and the Mob influence at the Desert Inn, Stardust and Riviera; it covers Korshak’s show business and Hollywood connections
; and it reveals who investigated whom (Kefauver, the McClellan committees) and who influenced whom, legally and illegally.An amazingly well-researched book, illustrated (although I wish the black and white photos were larger), you’ll love this if you liked The Money and The Power: The Making of Las Vegas and Its Hold on America
, by Sally Denton and Roger Morris, published in 2001.
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... In l96l, Information was received by the Los Angeles Office that J. A. Pritzker was an officer and owner of the Hyatt House chain of motels, and that this company was arranging a pension fund loan from the Teamsters Union. Listed among the associates of PRITZKER was one SIDNEY KORSHAK, a Chicago attorney. In 1962, an informant of the Chicago Office advised that SIDNEY KORSHAK, a close associate of MURRAY HUMPHREYS, had become very wary of dining at St. Huberts Old English Grille at 181 East Lake Shore Drive, Chicago, due to the fact that KORSHAK was aware that some of the top members of organized crime in Chicago
In a previous interview with KORSHAK by Agents of the Chicago Office, KORSHAK had spoken of his close relationship with former Vice President ALVIN BARKLEY, Secretary of Labor ARTHUR GOLDBERG and Illinois Democratic Committeeman JACOB ARVEY....
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Bloomberg News observed in an April 15, 2011 article:
"President Barack Obama began his re-election fundraising drive yesterday in Chicago among some of his earliest political investors and near his 2012 campaign headquarters...Among longtime donors at the events were Penny Pritzker, who led the fundraising effort for his 2008 campaign and John Rogers, chairman of Chicago-based Ariel Investments LLC..."
Gus Russo's 2006 book, Supermob: How Sidney Korshak and His Criminal Associates Became America's Hidden Power Brokers, included the following interesting historical references to how the ultra-rich Pritzker family of Obama's 2008 campaign finance chairperson allegedly obtained some of its wealth, that apparently don't seem to get examined much on the Big Media television screen these days:
1. "What is most relevant to the Pritzker role in the Supermob is the large number of Pritzker transactions that involved known crime figures..." (page 68)
2. 'From LAPD Hamilton's Feb. 2, 1954 internal memo: `Abe Pritzker, a Chicago attorney with offices at 134 N. LaSalle Street, which is the same address as that of Sidney Korshak's office, has been closely connected with members of the Capone syndicate...and other underworld characters. It is believed by the undersigned that Pritzker may be active locally, as a front for eastern hoodlum money to be invested in the Los Angeles area...'" (page 136) [See also William J. Helmer's book about Al Capone.
3."...The Pritzkers also became one of the country's largest hospital operators, acquiring 6 of their own and operating 15 more under lease and contract management..." (page 138)
4. "Profits...were not the only constants in the Pritzker saga. Rumors flew that, as with their questionable real estate partnerships in the forties, the Pritzkers'...Hyatt endeavor was similarly tainted. One IRS informant who was quoted as saying that `the Pritzkers family of Chicago through their Hyatt Corp. initially received their backing from organized crime' was later identified as F. Eugene Poe, the late president of a bank in Perrine, Florida, and vice president of the offshore tax haven where the Pritzkers hid their wealth known as Castle Bank..." (page 138)
5."...By the mid-seventies, the Pritzker empire was awash in profit, the most recent success coming from Nevada casino investments. Between 1959 and 1975, the Pritzkers had obtained $54.4 million in Teamsterloans for their hotels...Thus, in 1972, under their Elsinore banner, the Pritzkers joined the Vegas party when they bought the Four Queens in `Glitter Gulch' and King's Castle with Teamsters Pension Fund loans (obtained at 4 percent discount, saving Hyatt $8 million). In return, the Teamsters bought $30 million in Hyatt stock..." (page 438)
6. "It was around this time, the early seventies, that IRS agents like Andy Furfaro noticed that the Prizkers' billion-dollar Hyatt chain was paying no taxes. It turned out the Pritzkers were the largest depositors in one of the most notorious offshore tax havensever devised, The Castle Bank of the Bahamas, which was nothing less than an intersection of the Supermob, known gangsters, pop stars, a U.S. president, and the covert branch of the CIA--all of whom had good reason to hide their money from Uncle Sam... [The ultimate book on the Castle Bank and similar institutions was written by Jonathan Kwitny.]
"Castle...was the brainchild of longtime CIA `front organization' mastermind Paul Helliwell..."In 1964, Helliwell joined forces with...Pritzker Chicago tax attorney (and Hyatt board member] Burton Kanter and Pritzker law firm partner [and Teamsters Pension Fund trustee] Stanford Clinton to establish the Castle Bank, where foreigners could set up trust accounts that were the key to both personal and commercial tax avoidance: since the trusts were, for U.S. tax purposes, foreign citizens, they owed no taxes to the U.S. government. The added beauty of the Castle setup was that the actual deposits never had to be delivered to the bank, which was a fake depository for money that the client could use anywhere in the world." (page 439)
7. "In the mid-seventies...the IRS mounted Operation Tradewinds (later Project Haven), an all-out investigation of Castle, referring to the probe as potentially the largest single-biggest tax-evasion case in U.S. history...IRS agent Richard Jaffee and detective Sybil Kennedy obtained a list of the bank's depositors, which included the Pritzkers...
"Given all the Pritzker associates involved in the management of Castle, it came as no surprise when Pulitzer Prize-winning journalist Knut Royce determined in 1982 that the Pritzkers were in fact the bank's largest depositors. A September 1972 IRS statement noted, `An informant [F. Eugene Poe, a former VP and director of Castle Bank] with access to the records of Castle Trust has stated that the Pritzker family of Chicago, through their Hyatt Corporation, received their initial backing from organized crime.'..." (page 440)
8. "...The CIA's general counsel John J. Greaney intervened and demanded that the Department of Justice and IRS end the probe--it seemed that the CIA had also used Castle Bank to launder money in furtherance of its clandestine operations, and it feared that an investigation would jeopardize national security, not to mention its own congressional free ride..." (page 443)
9. "Using seed money from Chicago investors including the Pritzkers.., Kanter next became the legal advisor to...Cablevision Systems, which went on to become the largest privately held cable television company in the United States..." (page 443)
10. "Castle Bank was not the only shady partnership entered into by Kanter and the Pritzkers. In the 1970s, Kanter and Pritzker were also involved in a massive kickback scheme with two executives from the real estate wing of Prudential Insurance Company...In a complex setup that took prosecutors over 20 years to unravel, Kanter and the Pritzkers devised a scheme wherein contractors paid them and the Prudential executives under the table in exchange for lucrative Prudential business..." (page 440)
11. "...Burt Kanter, the man who had devised so many tax dodges for the Pritzkers and other cadre associates, died of cancer on October 31, 2001, while awaiting sentencing on a finding that he had defrauded the IRS.
"In 1994, after spending years unraveling the Kanter-Pritzker-Prudential insurance kickback scheme, the IRS had finally brought the case to trial...Judge Couvillion concluded that Kanter and associate had devised a scheme of kickbacks to avoid paying taxes to the federal government..." (page 571)
12. "As for the Pritzkers, over the last quarter century the family business had partnered with the infamous Bank of Credit and Commerce International [BCCI] in developing Hyatt hotels in Saudi Arabia..." (page 521)
13. "Like so many of the Supermob who increased their wealth with offshore tax dodges, the Pritzkers attempted to balance their reputation with philanthropy, the clique's way of saying that they'd rather choose where their money goes than allowing the IRS to do it..." (page 68)
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