The death of Cuban dictator Fidel Castro has provoked intense commentary, but one story we haven't heard much about is how Castro's rise brought about one of the greatest business reversals in the history of American capitalism -- and, now, perhaps a comeback?
In the 1930s, with cash aplenty from Prohibition and gambling illegal in most of the United States, American gangland syndicates burned with twin desires: new investment opportunities and the chance for legitimacy.
New York-based racketeer, Meyer Lansky had wanted to "go legit" from the time he was a straight A student in grade school. Lansky, whose previously undiscovered diaries I first wrote about in 2001, fulfilled his dream in Cuba. Few people know that he bet almost everything he had on that hot-blooded island.
Cuba became a mob magnet because every illegal dollar stuffed into a suitcase on American soil became clean the minute a courier touched down in Havana, ninety miles off the coast of Florida. This transaction was captured in The Godfather Part II when Fredo Corleone brought such a suitcase for eventual delivery to Lansky's movie avatar, Hyman Roth. Mob bosses could legally own entire hotel-casinos in Havana and even report income to the Internal Revenue Service. They could also hold legitimate jobs. Lansky's salaried title at crown jewel of gambling palaces, the Riviera, was Kitchen Director. And, ever fussy about his customers' satisfaction, he genuinely kept tabs on the food service, too.
Castro, born into wealth, cited the mob's partnership with Cuban strongman Fulgencio Batista as a primary justification for his revolution against capitalism. To add insult to injury, when Castro descended upon Havana from the countryside in late 1958, his men literally brought pigs and other farm animals into the fancy American hotel-casinos.
When I spoke about the historical novel I wrote about Lansky in South Florida not long ago, I was approached not only by the children and grandchildren of Havana casino investors, but by passionate Cuban-Americans in exile who reminded me of their participation in the pre-Castro Cuban economy. Doctors, lawyers, restauranteurs, tailors, artists -- Castro destroyed their livelihoods and their lives. Said one man, "Mr. Lansky drove rented Chevrolets and brought jobs. Fidel wore army fatigues for the cameras, but lived like a king, killed my friends and neighbors, and put everybody out of work. Fidel was the real gangster. Everything Lansky did is legal now."
From the 1930s to the late 1950s, Lansky directed the inflow of tens of millions of dollars from the back alleys of American cities into Havana casinos like the Riviera, the Nacional and others. That was serious money in those days. The Cuban mob casinos reached their zenith in the late 1950s diverting funds away from Las Vegas, which held rewards, but also risks.
While the Las Vegas casinos were mob-controlled, on the heels of the Kefauver congressional hearings on the rackets, they had to operate under American law where the mobsters were considered "undesirables." Most were banned not only from ownership but from even setting foot in casinos. Moreover, most of the mob's income from Las Vegas came from "the skim," cash illegally taken from the counting rooms and distributed, tax-free, to mob bosses. With a few exceptions, in Las Vegas, American gangsters were still criminals. In Havana they were shareholding partners and executives.
Lansky did not see himself as a gangster; he saw himself as a private equity manager from brutal origins who grew what was to become the mob's biggest legal business: travel, tourism and gambling. He told friends and family he was no different from American moguls whose fortunes had had their provenance in illegal or questionable tactics. He named Rockefeller, Bronfman, Kennedy, Annenberg in particular. He secretly wanted but never received acceptance from the American power elite.
In Godfather II, Fredo's suitcase never got to Hyman Roth. In real life, those suitcases found their way to Lansky who believed for too long that American power would overwhelm the rebels. It was a bad bet.
When Lansky died in 1983, it touched off a frantic search for his assets, valued by a muckraking reporter in the hundreds of millions. His family found none of it for a simple reason: They didn't have it. Lansky and his partners like Vincent "Jimmy Blue Eyes" Alo had bet the house on Havana and lost it all. If you want to see their fortunes, go to Google maps and look up the Riviera and other hotels where they had interests, assets that would be worth billions today. As Lansky said after fleeing Havana -- and nearly dying of a heart attack in an oxygen tent in Miami Beach -- "I crapped out."
The irony is that the very enterprises Lansky set in motion in Cuba are now likely to be that nation's economic redemption. (Legalized gambling, by some measurements, is the fastest-growing industry in the world.) Some members of his family are seeking to recover his Cuban assets. The merits of their legal claims are unclear, but one thing is certain: Lansky's long-term bet that his investments would be worth big money was prescient. It was Castro's half-century reign of terror he hadn't factored into his prospectus.