Justice Department before dealing with Malnik and Cohen were also rejected. With the purchase of Sky Lake, Clifford and Stuart became increasingly involved with the mob. They already were in debt to the Teamsters Pension Fund—notoriously corrupt and controlled by the mob—from Lum’s purchase of Caesar’s. When they bought Sky Lake, they went further into debt with the same pension fund that had held the underlying mortgage for Malnik and Cohen.
The Perlmans were warned by Nevada regulators about dealing with Malnik and Cohen following a 1972 deal with Malnik and two of Cohen’s sons for a Florida condominium project. A second warning came in 1975, prior to a deal with sons of the two men. This time, in order to raise cash, the Perlmans sold their honeymoon resorts in Pennsylvania’s Pocono Mountains to Malnik and Samuel Cohen’s sons and then leased the property back from the pair. In addition to warnings from Nevada gaming regulators, the company’s security chief told the Perlmans that Malnik was tied to the mob. He also expressed concern that a number of Teamsters Union officials with ties to the mob had received free memberships at the Sky Lake Country Club.
This was the resume the Perlmans brought with them when they came to Atlantic City. It proved to be fatal. At the time Caesar’s received its temporary license, the Division of Gaming forced the Perlmans to take a leave of absence pending a hearing before the Casino Control Commission. In a report to the commission, the Division concluded, “As long as it maintains a relationship with Alvin Malnik and Samuel Cohen, we do not consider Caesar’s World suitable for licensure.” When the Boardwalk Regency opened its doors in June 1979, Caesar’s agreed to “make its best efforts to terminate all of its existing relationships with Alvin I. Malnik, Samuel E. Cohen, or members of their existing families.” But it wasn’t until 16 months later, October 1980, after the commission had completed its hearing on the firm’s application, that Caesar’s finally distanced itself from Malnik and Cohen.
Unable to buy out Malnik and Cohen, Caesar’s agreed to establish trusts to take over the firm’s leases in the Pocono Mountains honeymoon resorts and its Florida country club. The trusts purchased bonds to generate cash to make the lease payments. Then there would be no direct dealings between Caesar’s and Malnik and the Cohens. The company also agreed to prepay the balance of a $4.8 million mortgage it owed to Malnik and Cohen. But it was too little, too late. Less than a week later, the commission ruled the Perlman brothers were unfit to be licensed. The commissioners said their repeated dealings with Malnik and Cohen made them fear “these dealings may not have been isolated transactions.” The commission found that “while it may be true that Mr. Malnik and Mr. Cohen were not literally in control of the casino, their financial arrangements provided them with an obvious opportunity to exercise economic leverage against Caesar’s World … Thus, Mr. (Clifford) Perlman in a very real sense delivered his company into the hands of Mr. Malnik, Samuel Cohen, and Mr. Cohen’s sons.”
Both Perlmans were denied licenses and forced to leave the company. Their appeal to the State Supreme Court was unsuccessful despite representation by Irving Younger, one of America’s finest legal minds. While they were relicensed in Nevada and obtained a federal license to run an airline, Clifford and Stuart regretted their return to Atlantic City. After all the publicity surrounding their license denial, they could never escape the stigma attached from their dealings with the mob. And they weren’t alone. The same fate befell William T. O’Donnell, president and chairman of Bally Manufacturing Corporation.
The Division of Gaming believed O’Donnell, like the Perlmans, had too many ties to the mob. But this time, the ties led to New Jersey. Bally Manufacturing Corporation was a giant in the slot machine, pinball, and jukebox business. It dominated the slot market, having a stranglehold on a number of Nevada casinos. While the slot machine business was profitable, O’Donnell tired of making machines for others. He wanted slot machines of his own and decided Atlantic City was the place to be. He entered the market by acquiring a long-term lease for an aging hotel on the Boardwalk.
The Marlborough-Blenheim was one of the few remaining palatial Boardwalk hotels. The marriage of two grand old buildings—the quaint Marlborough, a wood frame hotel with deep red shingles and a slate roof, built in the Queen Anne style, and the Moorish-style Blenheim, a poured-concrete sand castle—the Marlborough-Blenheim was an architectural gem. Unfortunately, the aging hotel wasn’t adaptable for use as a casino and had to be demolished. O’Donnell and Bally’s then bought the neighboring Dennis Hotel and combined the two sites. The Dennis was gutted and renovated to provide the required 500 hotel rooms, while new construction on the site of the Marlborough- Blenheim housed the casino, restaurants, and convention space. Upon completion it became Bally’s Park Place Casino Hotel.
While Bally’s main base of operations was Chicago, O’Donnell was no stranger to New Jersey. The company’s biggest distributor of pinball machines and amusement games was based in New Jersey. And that distributor was owned, in part, by one of the state’s most notorious mobsters, Gerardo Catena. A well-known racketeer and underboss in the Genovese crime family, it was Catena who ran the family business when Genovese went to prison on federal drug charges. The Division of Gaming received evidence suggesting that during the 1960s some of the funds skimmed from Las Vegas casinos “were ultimately funneled from Las Vegas to New Jersey, where they were shared by, among others, Gerardo Catena.”
Runyon Sales, a vending machine company in Springfield, New Jersey, was Catena’s front. Runyon was Bally’s largest distributor, with the exclusive for New York, New Jersey, and Connecticut. Through Runyon, Bill O’Donnell had regular contact with Catena’s people, especially Abe Green. O’Donnell had met Catena during a visit to Runyon Sales and had heard rumors about his mob ties. When he asked Green about the roles of both Catena and Joseph “Doc” Stacher in Runyon, he was told they were still partners. At the time of the O’Donnell-Green conversation, Catena was in prison for contempt of court. He had been called to testify before a New Jersey grand jury hearing testimony on organized crime. Despite a grant of immunity, Catena refused to answer the grand jury’s questions and spent five years in prison.
While Catena’s interest in Runyon linked Bally’s to the mob, there were even stronger ties. Bally’s corporate predecessor was Lion Manufacturing Corporation. When Lion’s founder died, the bank managing the estate decided to liquidate the company, creating an opportunity for O’Donnell to buy the company. His efforts to raise money failed, and he turned to Green for help. Together with five other investors, they put together a corporation known as K.O.S. Enterprises, which bought Lion for $1.2 million. Gerardo Catena acquired an interest in the company through Abe Green and Barnet Sugarman. When Sugarman died in 1964, Green and Catena acquired his interest. While Catena’s name was never listed officially as a stockholder, he owned 12.5 percent of the company. In July 1965, O’Donnell bought out Catena for $175,000, in a transaction filtered through Green. In April 1968 K.O.S. became Bally Manufacturing Corporation. O’Donnell and Green each owned 22.2 percent of the company. Sam Klein and Irving Kaye controlled the balance of the stock. Both Klein and Kaye had links with Catena through a Brooklyn-based billiard table company. These acquaintances were heavy baggage for Bill O’Donnell.
Before Bally’s could be licensed to sell slot machines in Las Vegas, Nevada’s regulators demanded O’Donnell and Bally sever ties from Catena, Green, and Kaye. Nevada later forced Sam Klein to leave the company after he had been seen playing golf with Catena in Florida. Even though Bally’s wasn’t supposed to use Klein in any capacity, he was the one who approached Caesar’s Palace President William Weinberger to see if he’d be interested in running Bally’s new casino in Atlantic City. Klein also tried to put together a deal for Bally’s to buy the Howard Johnson’s Regency Hotel. While the deal never went through—the property was bought by the Perlmans—O’Donnell had promised Klein a “finder’s fee” if it had. Abe Green also kept doing business with Bally’s despite the Nevada Gaming Commission’s ruling.
Green’s son, Irving, formed a company called Coin-Op, which was separate from Runyon and in which his father owned no interest. New Jersey regulators claimed that the younger Green told O’Donnell that the new company was just another name for Runyon. That was true. Bally’s kept receiving purchase orders from Runyon and listed it on service orders, even though the bills went to Coin-Op, whose offices were next to Runyon’s. In late 1977 to ’78,
