Bugsy Siegel opened The Flamingo in Las Vegas, NV on December 26, 1946 but from the beginning the federal revenuers were onto the mob's game including skimming gambling cash "off the top" and paying nightclub performers "under the table." Excerpts from a report dated February 27, 1947 by IRS Special Agent Howard J. Werner provides the following:
Perhaps the investigation which will prove most interesting, and profitable, concerns the latest addition to amusement centers of Las Vegas which opened on December 26, 1946, under the name of "The Flamingo." This monstrous establishment covers acres of ground and consists of a hotel, restaurant, cocktail lounge, gambling casino, shopping center, swimming pool, outdoor cafe, and a nightclub and dining room that seats in excess of 700 persons.
The Flamingo is owned and operated by a syndicate using the name "Nevada Projects Corporation" and is incorporated in the State of Nevada. The central figure behind the corporation is the notorious Benjamin "Bugsy," or "Benny," Siegel who is having a private penthouse erected on top of the hotel building. The Flamingo . . . is advertised and broadcast as having cost $5,000,000. Actually, information was received from one of the contractors that the cost was in excess of $6,000,000, most of which was derived from black market operations during the war.
The theory that the funds originated in the black market is fostered by the fact that the backers wanted the structure erected in the desert in approximately eight months, despite the scarcity of various materials, fixtures and labor. To achieve this, plasterers and electricians were paid $40.00 per day; common laborers often received in excess of $100.00 per week; fabulous prices were paid in the Los Angeles market for commodities that could not be purchased elsewhere because of the national shortage of certain building materials; and no expense was spared to provide the finest quality obtainable in every phase of construction.
Opening night at The Flamingo, which cost $15.00 per person admission, including dinner, featured Xavier Cugat and his orchestra and Jimmy Durante. George Jessel was master of ceremonies. The show is reputed to have cost $35,000.00 per week, and a reliable informant told me that Benny Siegl paid Cugat an additional $4,000.00 per week "under the table," which money was taken "off the top"of the winnings in the gambling casino. Cugat's engagement lasted approximately five weeks.
In September, 1946, Siegel made a trip to New York to obtain additional funds for the construction of the resort. . . . When Siegel returned he is said to have carried $1,100,000.00 with him to Las Vegas. He has a safe built into the floor of his inner office at the Flamingo.
Benny Siegel's partners in New York are said to be: Frank Costello, leader of the Union Sicilio (spelling uncertain) and notorious gangster of the east coast; Joseph A. Doto, Alias Joe Adonis, who is rumored never to have reported more than $16,000.00 gross receipts for taxation in any year although that amount is only a small fraction of his total annual income; and Meyer Lansky, well-known gambler in New York, Florida and Chicago.
Siegel, Costello, Adonis and Lansky are said to own the Colonial Inn and the Greenacres in Hollywood, Broward County, Florida, and control all gambling activities in most of the State of Florida. The foursome allegedly had an income in excess of $10,000,000.00 in Broward County during 1946.
Siegel's wife's name was Esther, but she obtained a divorce from him in Reno, Nevada, in July 1946, and obtained custody of two minor daughters. A property settlement was drawn up in June, 1946, voluntarily by Siegel, under which he is to pay to her $32,000.00 per year.
Pending completion of the hotel section of the Flamingo, which is advertised as ready for occupancy March 1, 1947, Siegel is registered in room 412 of the Last Frontier Hotel, Las Vegas. His reputed mistress is one Virginia Hill, who also lives in room 412 at the same hotel. . . .
One of the most active characters in the gambling business in Las Vegas is Morris Sidwirtz, alias Moe Sedway. He and one Gus Greenbaum purchased the El Cortez Hotel from Mr. Marion Hicks and a Mr. Grayson early in 1945. Sedway was formerly a part owner of the Copacabana nitery in New York and is contemplating opening a replica locally. He is financially interested with Benny Siegel in The Flamingo, and is affiliated in one way or another with several gambling ventures in town. In 1942, he reported a net income of $3,272.76. No other returns are available at this time.
Mr. Marion Hicks, mentioned hereinabove, from whom Moe Sedway and Gus Greenbaum purchased the El Cortez Hotel, Las Vegas, also owns the El Cortez Hotel in Reno, Nevada, as well as several gambling ventures in that city. He also owns the Savoy cocktail lounge and casino in Las Vegas, which place operates one of Siegel's race books. Plans now are being negotiated by Hicks and Clifford Jones, the latter of whom is a local attorney, for the construction of a hotel in Las Vegas to be known as the Nevada Ambassador. . . . Other partners associated with Sedway and Siegel include David Berman, who came here from Minneapolis after a vice cleanup in that city where his brother, Charles "Chickie" Morton Berman, was convicted and sentenced to five years for being involved in negotiating the ransom in what was known as the Bremer kidnapping case; Israel Alderman, alias "Izzy" Alderman, also a refugee from the reform movement in Minneapolis; and August Bertrand Greenbaum.
In the midst of all this scheming and tax evasion are the local city and county commissioners who hold the authority as to whom shall be issued liquor, cafe and gambling licenses, as well as issuing permits for construction and remodeling. Graft and bribery are rampant in Las Vegas.
The Mafia over the decades got away with a lot in Las Vegas but the boys certainly weren't getting over on anyone, and federal authorities knew from day one exactly what was going on in Sin City.
Further reading that may be of interest: