Nelson Johnson - Boardwalk Empire - The Birth, High Times, and Corruption of Atlantic City

By August 1973, less than a year after his initial stock purchase, Steve Wynn was in charge of the casino. Within a year casino profits skyrocketed from $1.1 million to $4.2 million. By 1977 he completed construction of a 579-room hotel tower, with the casino’s profits soaring to $12 million. Steve Wynn had come a long way from running bingo games.

When Wynn learned of the money being raked in by Resorts International, he decided to fly east again. One look at the lines of people was enough to convince him. He wasted no time looking for a casino site. By the time he left Atlantic City to return to Las Vegas, Wynn had an agreement for a choice piece of real estate. The property chosen was the Strand Motel on the Boardwalk. The Strand was one of the motels built during the ’50s when Atlantic City was trying to capture part of the tourist market traveling in cars. There were a few good seasons but as its novelty wore off, most of the Strand’s rooms were empty. Had Wynn wanted to purchase the site prior to the ’76 referendum, he probably could have acquired it by simply assuming the mortgages against the property; however, by summer 1978, the Atlantic City real estate market was on fire and the sale price was now $8.5 million.

Within months Wynn demolished the Strand and began construction of a tinsel palace that soon became a magnet. Golden Nugget invested nearly $200 million in creating a glittering Victorian hotel casino. With huge murals depicting early 1900s beach scenes, mirrored ceilings and walls, crystal chandeliers, stained glass, marble columns, and gold-colored slot machines, the Golden Nugget was a dazzling, and purposely overstated, piece of architecture (later sold to Bally’s and now the Atlantic City Hilton). It was designed to appeal to the middle-class’s craving for nostalgia and established Wynn’s name in Atlantic City.

Steve Wynn thought he had found a new marketing executive in Mel Harris. He was the person Wynn needed in Atlantic City. They had met during college and Wynn’s wife Elaine had known Harris since high school. The three rekindled their relationship in the early 1980s, and Wynn was so impressed he hired Harris in the summer of 1984 to be vice-president of marketing at a salary of $400,000. Wynn admitted that he thought so highly of Mel Harris he believed Harris might move quickly into the position of chief operating officer, a step below Wynn.

The decision to hire Harris was made with the knowledge that there were some skeletons in his closet. Harris admitted to a “social” relationship with some mob figures. After all, his father “Big Allie” Harris had been one of the biggest bookmakers in the Miami area. In addition, Harris’ first wife was the daughter of Louis Chessler, another Lansky associate who had worked to bring the mob to the casinos in the Bahamas. His security staff was aware of these links, but Wynn concluded that Harris’ social relationships weren’t enough to prevent hiring him. What Wynn didn’t know was that a few months before he was hired, Harris had met with Anthony “Fat Tony” Salerno. Fat Tony was head of the Genovese crime family in New York. In December 1984, a month after Mel Harris was elected to Golden Nugget’s Board of Directors, the Division of Gaming learned of the meetings with Salerno. Harris, who insisted he had nothing to do with the mob, was captured on videotape during an FBI stakeout of Salerno. On at least two occasions, he was seen entering the Palma Boys Social Club in Manhattan where Salerno held court. Harris claimed he only stopped to talk to Salerno about the death of his father. The FBI was skeptical of his explanation because there had been two meetings with Fat Tony, one of which lasted an hour. Learning of Harris’ meetings with Salerno, the Division of Gaming called him in for questioning. When it was over, he reported back to Golden Nugget officials and said the Division’s staff had asked a lot of questions about his contacts with Salerno. That was enough for Steve Wynn. Within days, Harris was gone.

The Harris episode caused Wynn some uncomfortable moments, but he survived it. At the time of its license renewal, Golden Nugget was criticized by the commission Chairman:I must note that the prospect of a person having uncontested access to Anthony Salerno sitting as an officer and director of a casino enterprise is, to say the least, frightening … It is simply unacceptable for a company functioning in this most highly regulated of all industries to place a person of Harris’s known background in its highest operational and policy making echelons based on hit-or-miss investigations and haphazard and conclusory oral reporting to the chairman.

Wynn publicly conceded his company had blundered and admitted that hiring Harris had been an embarrassment to Golden Nugget. Several years later, after Fat Tony’s trial was over, the government revealed how close the mob had come to infiltrating the Golden Nugget. The FBI had managed to bug the Palma Boys Social Club and recorded a number of conversations involving Salerno and his cronies. Those discussions made it clear the mob intended to use Harris to make inroads into the Atlantic City casino industry.

Harris, O’Donnell, and the Perlmans—their stories only begin to tell the tale of a long cast of unscrupulous characters who thought they could cash in on legalized gambling. There were many lesser lights of organized crime that tried to infiltrate the casino industry as vendors in everything from junkets for high rollers to sales of food and beverage supplies. Given Atlantic City’s past and New Jersey’s reputation for corruption, many criminal types assumed the only thing needed for admission was money. They never had a chance. What they hadn’t bargained for was a licensing process akin to a proctology exam. That process was established by the Casino Control Act and the scope it created amplified the tiniest warts.

There’s nothing quite like the Casino Control Act anywhere. As a threshold, every applicant has the burden of proving a negative, namely, that he or she isn’t corrupt and has no ties to corrupt individuals. As William O’Donnell and the Perlmans learned, a person can be guilty by association. An applicant can be so tainted by his ties and acquaintances that he will never be licensed, even if he’s never been charged with a crime and is an asset to his community. Every applicant, whether an individual or corporation, must consent to a background examination that an ordinary, thinking person would find very disturbing. For starters, an applicant waives his rights under the 4th Amendment to the U.S. Constitution, which prohibits unwarranted searches. When you apply for a license in the Atlantic City casino industry, you authorize investigators to inspect, demand production of, and, if necessary, seize any documents or records of any kind, pertaining to any aspect of your past. It’s heavy-handed stuff but has been upheld by the courts. The reason is because a license is a privilege , not a right . If you want the privilege to own or work in a casino, you must agree to subject yourself to scrutiny, which the courts have described as “extraordinary, pervasive, and intensive.”

The architect of the Casino Control Act was Steven Perskie. Perskie was elected to the state assembly on the ticket with Senator Joe McGahn, which unseated Hap Farley in 1971. The adoption of the ’76 Referendum had raised the political ante in Atlantic City. By 1977, Perskie was tired of following Joe McGahn’s lead. He particularly bristled at having to contend with Joe’s brother, Pat, who was the Senator’s alter ego. Farley’s long tenure in the position of state senator had made it the most coveted position in city and county politics. His career still cast a shadow over local politics and was the standard for leadership. In the perception of politicians and the public alike, state senator was where the power was. Perskie wanted it for himself.