Saturday, Oct. 18, 1997 | 5:32 a.m.
PRIZE-WINNING investigative reporter and author James R. Phelan died just a few short weeks before the publication of his last book "The Money." Phelan and Lewis Chester wrote the most complete analysis of the money trail that tells the story of "The Battle for Howard Hughes' Billions."
Prior to this, we came to know Phelan for writing "Howard Hughes: The Hidden Years," which was a best seller. It was the most accurate of all Hughes stories and biographies written about the time the billionaire was out of public sight. This included four years he lived at the Desert Inn Hotel.
"The Money," published by Random House, is not only interesting but gives readers an insight on several present and past actors on Nevada's stage of life. It also will remind SUN readers of the columns our late Publisher Hank Greenspun wrote about some of these same people and their relationships with Howard Hughes. Newcomers to Nevada may be surprised to learn that the money from the Hughes estate still affects them and where they live.
William R. Lummis Elementary School is named after the man who came to Las Vegas to save the Hughes fortune. When Hughes died in 1976, his closest relative was his 85-year-old aunt Annette Gano Lummis of Houston. Her son, known as Will, took care of the funeral arrangements and then assumed the task of straightening out the financial mess left behind by Hughes.
When Lummis arrived in Las Vegas, he found an arrogant general counsel for the Summa Corp. by the name of Chester Davis. Bill Gay was the administrator who controlled the caretakers surrounding Hughes and, at times, seemed almost subservient to Davis. They also, along with Nadine Henley, who had hired Gay 30 years earlier, had control of Hughes Aircraft and Howard Hughes Medical Institute. They were in power, and soon Lummis learned what he was up against.
Davis and Gay had been spending more than they were making, but there was still plenty of money remaining. The authors write, "At the time of his death, there were more than 60 lawsuits pending against Hughes and his empire. But even with these complications, the value of the assets controlled by Hughes was in the region of $6 billion, approximately three times the terminal wealth of J. Paul Getty."
It didn't take Lummis long to tangle with Davis who could start a riot in an empty warehouse. In the ensuing struggle with him and Gay, it took almost a year for Lummis to gain control. Wisely, he appointed a skilled administrator with knowledge of gambling to take over the casinos. The authors tell us, "His idea of turning a game-keeper into a game-runner by appointing Phil Hannifin, former chairman of the Nevada Gaming Control Board, as Summa's hotels and casinos boss soon produced more attractive balance sheets. By 1979, the hotel casino division had re-emerged as the group's largest moneymaker, earning $38.7 million."
Then Lummis took the next step when bringing in a fellow Texan, John L. Goolsby, to handle the vast real estate holdings of his deceased relative. Along with selling off the hotels and casinos, the effort was directed toward land development. "Goolsby developed Husite as a planned community called Summerlin (named for Hughes' grandmother). It combined office space, homes, a golf course, and schools. It was a long-term program, but realization of its early stages, at a cost to Summa of some $40 million, had a magical effect on the land's cash value. According to local developers, a one-acre parcel of prime Husite, worth perhaps $20,000 when Hughes died, would achieve a value of almost $90,000 as part of Summerlin. Goolsby also made extensive developments on valuable Hughes sites in the Las Vegas city center and out by the city's McCarran Airport. These also extended the investment base."
Phelan and Chester tell a series of most interesting stories about fraudulent attempts to produce a will claiming the Hughes estate. The late District Judge Keith Hayes was the hero who fended off claim after claim, including the so-called Mormon will that the perpetrators thought he would approve. Hayes, a devout Mormon, saw through the facade and recognized it for what it was. His church had nothing to do with the shenanigans, and he knew it. Even as he was dying from cancer, Hayes controlled the entire situation and demanded that justice rule.
"The Money" relates: "A year and a half after the Mormon will trial, Judge Keith Hayes died of cancer. At a memorial service, a friend related a conversation he had had with the jurist on his deathbed:
"'Keith discussed with me the hereafter life he knew he would soon begin. After I named the two souls I most looked forward to meeting in the next world, Keith said that his first was his mother, then Howard Hughes. Keith said something about a question he wanted to ask him.'"
The big winners eventually were Nevadans, the heirs, the tax man and Howard Hughes Medical Institute.
The authors write, "HHMI stands out as the most towering of all triumphs for The Money. It is also a monument to Hughes himself, a bizarre one perhaps for a man who variously humiliated his own medical advisers by ignoring them or turning them into drug suppliers, who pursued his bizarre health rituals to a point that devastated and laid waste his own body, and who viewed medical research as a useful cover for fiddling his tax. But it is, nonetheless, a monument built to last."
It's a well-written book with interesting information that makes it a must-read for every Nevadan.
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