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Howard Hughes Buys Las Vegas

Money Talks in Las Vegas, that’s the way it’s always been. In the 1960s nobody proved the adage better than a crazy old man who never left his penthouse room high above the Las Vegas Strip. It’s strange but true. Stranger than you knew!

Howard Robard Hughes Jr. (December 24, 1905 – April 5, 1976) was born in Humble, Texas. From an early age, he might have been considered odd, impetuous, and demanding, but not humble. His parents weren’t rich, but his father was a crafty inventor and patented a two-cone roller bit for drilling earth in search of oil wells.

The newfangled bit was a hit and spread the Hughes Tool Company name throughout the southwest, but it was Howard Hughes who would push the name to infinity and beyond. Howard’s parents died in the early 1920s and left him 75% ownership of the tool company.

He hated the notion that his relatives might have ideas about how to control the company, so he convinced every remaining shareholder to sell him their interest in the business, using all the cash on hand.

Remember, this was the 1920s, so the $300,000 cash was substantial, but Hughes wanted to do things his way. To that end, he hired Noah Dietrich to run the tool company, married Ella Botts Rice, and the couple moved to California so Howard could make movies. Why not, they were 19 years old and knew everything.

Howard Hughes the Early Years

Howard Hughes took to making movies in Hollywood like an old hand. He was smart enough to hire technically-sound engineers and movie professionals who helped guide his productions before he fired and forgot about them.

His early movies were financially successful and garnered a series of Academy Award nominations, including one for cinematography in 1930s film Hell’s Angels, an aviation war picture that spurred him to learn more about airplanes and flying.

He took flying lessons and flew in some of the aircraft in the film, narrowly surviving serious injury in a crash involving another plane. The accident didn’t deter him from flying. He started Hughes Aircraft in California a few years later and commissioned the construction of a custom aircraft.

The H-1 offered new technology and new ways to increase speed while reducing drag and friction. Hughes insisted that all bolts and fitting be recessed, and then set a new landplane airspeed record of 352 miles per hour flying the aircraft himself.

Unfortunately, Hughes was seriously injured in two separate air crashes.

On May 17, 1943, Hughes flew a Sikorsky S-43 amphibian aircraft to Lake Mead outside of Las Vegas to practice water landings in preparation for qualifying his H-4 Hercules aircraft a month later.

Hughes came in too steep on a landing and crashed the Sikorsky. CAA inspector Ceco Cline was killed on impact as was Hughes Aircraft employee Richard Felt.

Hughes floundered in the water after splitting his head open on the upper control panel. He was rescued as the aircraft sank into the cold water. The plane was recovered from the lake at the cost of $100,000 and eventually restored.

Three years later, Hughes took the first flight of the US Army Air Force XF-11 near Culver City, California. The plane handled well, but an oil leak caused the plane to lose altitude rapidly. Hughes wasn’t able to reach flat land at the Los Angeles Country Club golf course, and the aircraft crashed into a Beverly Hills neighborhood.

The aircraft was demolished and burst into flames.
Hughes was thrown to the ground after impact.

He lay nearby as the plane burned, finally rescued by Marine Master Sgt. William L. Durkin.

The crash left Hughes with a crushed sternum, broken ribs, smashed collarbone, broken fingers, third-degree burns, and a lifelong addiction to the painkiller codeine.

He stated that the doctors had done a wonderful job saving him,
but attributed his recovery to fresh-squeezed orange juice.

His statements about his recovery might have been the first sign that his mental capacity had been affected. His purchase of land in the desert surrounding Las Vegas may have been another.

Howard Hughes Leaves the Public Eye

Howard Hughes left the hospital after his XF-11 accident with a new mustache covering a large scar on his upper lip. He didn’t run from public attention, but his demeanor was different.

Instead of happily talking about upcoming projects,
he faded slowly away,
spending weeks watching films at his RKO studios.

His friends worried about him. Both of them.

Still, while Hughes fretted over germs, communists, and taxes, he managed to expand his business empire greatly.

The Hughes Aircraft Company, founded in 1932, became a major defense contractor with the government throwing gobs of money its way. The Hughes Helicopters division was started in 1947 and produced radar systems, lasers, and aircraft computer systems.

In the interim, the little airline Hughes had purchased control of in 1939, Trans World Airways, had grown into a major carrier. In 1956, Hughes ordered $400 million dollars worth of airplanes, setting off a series of lawsuits with creditors demanding that Hughes relinquish control of TWA in exchange for providing the money to purchase new aircraft.

Hughes considered moving his business interests to Nevada.

It wasn’t just the credit issues motivating him; it was the loss of control and the high taxes he was paying. Texas and California had stiff business taxes. Nevada did not.

The state also had no personal income tax law. Hughes bought huge plots of land around Las Vegas and leveraged his business interests to get California to offer him tax breaks. California stood firm.

Taking a new approach, Hughes enlisted the help of his Hughes Tool Company CEO Noah Dietrich to inflate the company’s value to finance his aircraft purchase through a stock sale. Dietrich was in, but wanted a stock option plan that had been long-agreed upon but never implemented. Hughes balked, Dietrich walked.

In 1957, Howard Hughes married film star Jean Peters in a secret ceremony in Tonopah, Nevada. He had been single since divorcing his first wife in 1929. His marriage didn’t change his now socially ill-at-ease behaviors, and Peters remained alone most of the time. They were rarely seen together.

Physical Decline

Howard once again spent months sitting and watching films at his television studios while detectives gave him updates on his wife.

His obsessive-compulsive disorder became more pronounced as he sat in the screening room, refusing to eat anything but chicken and chocolate bars.

  • He drank milk from quart bottles and unrinated into them when they were empty.

His aides were instructed to speak only when asked a question and got five-page detailed instructions on how to prepare his chicken.

Four months passed and his aides finally brought him a change of clothes and a pair of sunglasses. He left the studio to take a bath in a bungalow at the Beverly Hills Hotel where he rented rooms for his aides and his wife.

  • His behavior didn’t change.
  • He sat naked watching movies covered only with a napkin.
  • He refused to have his hair cut or his nails trimmed.
  • His hotel bill for the next year ran more than $10 million.

To amuse himself, Hughes purchased restaurant chains in the state of Texas. Then he resold them. To amuse his staff, Hughes insisted on peas with each meal, but not just any peas.

Each can had to be washed, scrubbed with paper towels, poured onto a plate, and sorted by size with a special fork. Peas too small for consumption were trashed.

In 1966, the lawsuits begun years earlier finally concluded and a US federal court forced Hughes to sell his TWA shares. His original purchase price of $7 million seemed tiny after he sold out, pocketing $547 million.

So, what did a fairly crazy, compulsive man with time on his hands and all the money in the world do?
He moved to Las Vegas and started another empire under some of the strangest living conditions imaginable!

Howard Hughes in Vegas

Howard Hughes had a strange fascination with Las Vegas. He didn’t gamble, but on occasion, he would get 20 silver dollars and make one-dollar bets for fun. He also stayed at resorts like the Last Frontier when he flew to Vegas and California in the 1940s.

He bought what others considered worthless land on the outskirts of Sin City.
What a fool, they all thought.

By the time he was serious about moving to Las Vegas, Hughes had purchased thousands of acres of land and put an ex-CIA operative named Robert Maheu in charge of his Nevada operations. Maheu never met Mr. Hughes face to face.

In fact, the reclusive millionaire hadn’t been seen in public for years when his special Pullman train car made its way into downtown Las Vegas on Thanksgiving 1966.

A specially equipped ambulance transported Hughes on a stretcher to the Desert Inn, owned and operated by Moe Dalitz. Hughes and his entourage took the top two floors, with Hughes staying in the 250 sq. ft. bedroom of the penthouse. There he lay on his bed, naked, and watched movies.

He wrote long memos to his aides detailing how each can of fruit should be opened after a vigorous washing and drying using Kleenex tissues. Hughes had boxes of tissues littered around his room, using the empty ones as slippers from time to time.

He preferred not to leave his bed and the wall on one side
of the room was quickly crowded with bottles of urine.
They stayed there for years.

To combat pain, Hughes gave himself shots of codeine, often breaking the needles off in his arm, further impacting his ability to move about without pain. The man was a mess. Still, he thought his mental powers were quite strong. He bought mining claims and land around old gold strikes at the request of an aide who was bilking the money from him by selling Hughes worthless dirt that would never produce new gold.

As 1966 passed, the Desert Inn staff got ready for their New Year’s Eve party. The event brought high rollers that the casino counted on for big bucks, but Hughes refused to leave the property when asked about his original plans to vacate before Christmas.

Hughes and his aides were paying a hefty $26,000 per day for their piece of the hotel, and Maheu offered to double the rate to extend through the holidays. Hotel management rebuffed the offer. Maheu said “We’re staying anyway,” and called Johnny Roselli, a friend, and powerful Chicago Outfit mobster. Roselli talked to Moe Dalitz about the problem. Moe wouldn’t budge.

When told the news, Hughes wasn’t upset. In fact, he was happy with a new fight.

He told Maheu over a 30-foot phone line from his room to the rest of the penthouse he knew about the Purple men (Moe’s involvement with the Purple Gang). He also said, “Tell him I’ll buy his little hotel.” Now Maheu smiled.

He went downstairs and met with Dalitz at the bar, and the negotiations began. Moe figured he had the upper hand, but Howard tended to lean towards his OCD issues, always finding one more thing to fight over.

Hughes fought over the price, the terms, the transfer, money in the vault, the staff, even the time of the transfer. When Moe agreed to the most of the conditions, Howard changed the transfer time to 7 pm. When Moe agreed, Howard changed it to 6 pm and finally midnight. He stayed up writing notes to Maheu, his aides, and his wife.

At the dawn of each morning, he changed his notes. And, he waited for his monthly enema, which was the only way to relieve his constipation from the heavy use of codeine. The negotiations dragged on until March of 1967 when a final purchase price of $13.2 million was agreed to.

Strangely enough, when the March 22 transfer took place, the Nevada Gaming Control Board allowed Howard Hughes a gaming license, although it had always insisted on a personal meeting with any proposed licensee. Money talks in Nevada, and Howard had more than enough. The board loved the idea that a mobbed-up casino was being purchased by a legitimate businessman. Or was it?

How was Howard Hughes any more legitimate than Moe Dalitz?
He wasn’t, but the public’s perception of Hughes was different.

So, on went Mr. Hughes, even though all that the board knew about him was that he was 61 years old and listed at six-foot-two and 150 pounds.

In reality, the frail man hiding in the penthouse was much lighter. He ate chicken reheated over and over again, peed in bottles, hadn’t had a haircut in a year, had fingernails that were approaching two-inches long, and smelled like a sewer. What a treat he must have been.

Down in the casino, Maheu made changes to the internal accounting of all cash transactions which allowed for tighter control of all assets. A casino’s main asset is cash, and Hughes wanted to know where it was at all times.

One Casino Isn’t Enough

Howard Hughes was delighted with the Desert inn purchase, feeling fit and in charge for the first time in years. The negotiations, as crazy as they had been for Dalitz, were an elixir of life for the man in the penthouse. He told Maheu to find another casino, and fast.

Maheu found interest in the Sands, another Mob casino, and Howard was back to writing memos. Frank Sinatra, one of the owners at the Sands, was pissed off. He and his Rat Pack were the faces of Las Vegas at the time, and he didn’t want to sell, but the deal eventually went through for $14.6 million.

Frank lost his juice at the club, and Hughes ignored his now three-inch nails and wrote memo after memo to Robert Maheu. One of his memos outlined a major change. Chorus girls would no longer be expected to sit at the bar after shows and get picked up by high rollers.

Upgrades were coming to Las Vegas!

A 500-room expansion was planned at the Sands, and Hughes envisioned a total of 4,000 rooms in the future. The new resort would have 24-hour shops, a theater, and fun for children that included the world’s largest bowling alley, ice-skating, and games like ski-ball, table tennis, and chess.

But of course, Las Vegas was designed for male visitors, and they didn’t want chess boards; they wanted the hookers back.

Was the Mob Gone?

While Hughes and his casino purchases looked great in the press, questions surfaced about continued skimming of profits by the Mob. Hughes never left his room and had almost no input on the way his new casinos were being run. And each managed to lose a substantial amount of money.

Maheu retained most of the “old crew” of bosses at each property.

Were the losses legit?

Years later, Jimmy “the Weasel” Fratianno stated that Johnny Roselli had claimed that the whole Desert Inn purchase was a Mob set-up. He said Dalitz talked Hughes into purchasing the property, and continued skimming the profits.

Hughes made the nation think Las Vegas was clean, but the IRS would later say that Hughes had been the victim of a vast Mob skim topping $50 million.

What Hughes didn’t know, didn’t matter, and he went on a buying spree that included the Frontier Casino for $14 million from the R. & H. Holding Company. Connected men listed as stockholders in hotel memos included Anthony J. Zerilli, the President of Detroit’s Hazel Park Racetrack, Attorney Pete Bellance, Jack Dean, and Louis Elias.

Their involvement in the casino was never proven.

Still, how could all these casinos be up and running and while losing money?
Hughes didn’t care.

He bought the Castaway’s next, paying $3 million for the 230-room property.

More Casinos

Although Howard was hidden away behind blackout drapes, the constant flashing of neon lights from a “stupid revolving slipper” made him antsy. So, he bought the Silver Slipper casino May 1, 1968, for $5.3 million.

Over the next three years, $858,500 was drawn from the cage of the small casino and given to Nevada politicians. Payments were made in cash and the politicians never signed receipts. It seemed a profitable system for some.

As a final test of Howard’s mental capacity, he purchased a closed construction site originally started in 1961. Then he competed with Kirk Kerkorian to build the tallest structure in 1969 Nevada. His plans for the Landmark resort changed daily.

Kerkorian’s International Hotel grew steadily in the desert until a successfully contracting to open with Elvis Presley as the main showroom draw. Howard’s Landmark lurched and belched, changed construction firms, architects, interior designers, and limped to the opening of a resort that resembled Seattle’s Space Needle. It was off the Strip, and it was never successful.

However, Hughes brought a corporate-style ownership to Las Vegas and gave the town a new lease on life. He revitalized the old and run-down resorts he purchased and gave Middle America a new belief in Vegas.

A belief was that the town was safe and sane,
and slightly more family-oriented.

Hughes and his Summa Corporation eventually spent nearly $300 million refurbishing Las Vegas. He also purchased KLAS-TV so he could watch the movies he wanted each night.

Hughes lobbied steadily to have the government stop detonating nuclear bombs at the Nevada Test Site. That didn’t seem crazy. Each time a bomb went off, the shock waves bounced his bed all the way up in the penthouse suite.

His concern about radiation poisoning in the air and water supply prompted him to tell Maheu to offer President Nixon a $1 million bribe to stop the tests. When that didn’t work, Howard snuck out of the Desert Inn in much the same way as he had arrived.

He was wheeled out of the suite and carried down the fire escape to a waiting ambulance. A flight later that morning took him to Managua, Nicaragua, where he relocated to the Intercontinental Hotel.

His days of dealing with casinos and Las Vegas were over.
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