Las Vegas Sun

November 15, 2018

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New book misses mark on Vegas’ past

A new insider's book on Las Vegas is causing well-known Nevadans to recall painful memories of a stormy political time two decades ago in this colorful city.

The memories are creeping back into their lives not because of what's in the book, but what isn't.

The book, "The Money and the Power: The Making of Las Vegas and Its Hold on America," was written by Sally Denton and her husband, Roger Morris.

Denton and Morris contend that Las Vegas, with its roots in the mob, became the "greatest business success story of the 20th century" with the help of a nation that worships money and corruption.

Part of that story is told in a chapter that sanitizes the exploits of Joseph Yablonsky, who headed the Las Vegas FBI office from 1980 to 1983 when the Justice Department was conducting a nationwide crackdown on organized crime and its influence on the Strip.

The book credits Yablonsky, once the FBI's self-described "King of Sting," with helping turn the tide in the war on the mob in Las Vegas.

"Despite the powers arrayed against him in Washington and Las Vegas," the authors write, "despite the fact that millions skimmed from Nevada casinos during the period continued to provide organized crime and its growing number of legitimate outlets more cash than from any other criminal source, including the vast drug traffic, Yablonsky's record would be impressive."

But in an interview with the Sun, Gerald Swanson, who served alongside Yablonsky as director of the Internal Revenue Service in Nevada, offered a more critical opinion of the controversial FBI chief's tenure here.

Breaking a 19-year-silence, Swanson described Yablonsky as a rogue agent who ruined Swanson's promising IRS career because he stood in the way of Yablonsky's overzealous efforts to nail a federal judge who had been critical of the government.

"I've dealt with federal agencies for more than 20 years, and Yablonsky was the most unethical federal agent I've ever seen," Swanson said. "He was a headhunter. To him, the end justified the means."

The 65-year-old Swanson, whose story is not told in "The Money and the Power," charged that Yablonsky tried to set him up on bribery charges in 1982 after he refused to participate in a federal grand jury probe of then-U.S. District Judge Harry Claiborne, who was Nevada's premier defense attorney before being named to the bench.

"He targeted me in retaliation because I was blocking his efforts to get Claiborne," Swanson said.

To many the cigar-chomping Yablonsky, who had made his way through the ranks of the FBI as an undercover agent adept at nestling up to crooks and drug dealers, was indeed an atypical local FBI boss. He was a braggart who wore gold chains and dressed as flashily as the hoods he had impersonated for 21 years on the street.

But his tenure was marred by more than his flamboyant appearance.

Denton and Morris ignore a wide-ranging Justice Department investigation of Yablonsky that surfaced in 1983, just as he was stepping up his bid to indict Claiborne on criminal charges.

The most serious allegation against Yablonsky -- his intervention in the November 1982 Nevada attorney general's race -- was uncovered by the Sun in March 1983.

The Sun reported that Yablonsky, in apparent violation of a federal law that prohibits government officials from using the power of their office in local politics, had sought to dig up election-year dirt on Brian McKay, who was running for attorney general against the Yablonsky-backed candidate.

Yablonsky had requested a background check into McKay's military record from a security officer at Nellis Air Force Base. The check did not keep McKay from being elected.

But it created an uproar within the law enforcement community months later, when the incident was disclosed in the Sun. McKay and other top Nevada lawmen were quick to publicly condemn Yablonsky's actions.

After an internal investigation, Yablonsky was censured by FBI Director William Webster for lying about his attempt to influence the attorney general's race.

Later, however, a top Justice Department investigator who reviewed the probe concluded that the FBI had not adequately examined the allegations.

Federal investigators also looked into why Yablonsky held onto a $40,000 bank error in his favor for three years without notifying authorities.

The bank mistakenly had credited an additional $40,000 deposit to Yablonsky's account, raising the total amount to $80,000.

Instead of reporting the error, Yablonsky was said to have opened a cash-management account with the extra money at a local brokerage firm.

After federal auditors discovered the situation, Yablonsky quietly was allowed to repay the $40,000 without any interest. He faced no sanctions.

There was talk at the time that the Justice Department went easy on Yablonsky because it did not want to compromise the high-profile Claiborne case, which by then had attracted the attention of Warren Burger, the late chief justice of the U.S. Supreme Court.

Yablonsky had lured brothel-baron Joe Conforte out of hiding in Brazil to return to the United States and accuse Claiborne of taking $85,000 in bribes, a charge Claiborne denies to this day.

Conforte, owner of the world-famous Mustang Ranch outside Reno and a one-time Claiborne client, had fled to Brazil rather than serve a lengthy prison term for tax evasion. The brothel boss had been indicted and convicted largely through Swanson's efforts.

Swanson, a soft-spoken man who now lives with his family in Reno, said Yablonsky told him early in the Claiborne investigation that he wanted the IRS to give Conforte millions of dollars in tax breaks for his testimony against the federal judge. Conforte claimed he had paid Claiborne the $85,000 in bribes to give to federal appeals judges to reverse his tax conviction and quash the subpoenas of two prostitutes in a federal investigation into voter fraud.

The former IRS director said he agreed to send an agent to Rio de Janeiro with one of Yablonsky's men to hear Conforte's allegations.

But the allegations couldn't be verified, and Swanson said he made it clear to Yablonsky that he would not support a grand jury probe based on Conforte's testimony.

Shortly afterward, Swanson said, Yablonsky decided to move him out of the way by targeting him in a phony sting. Conforte's Reno lawyer, Peter Perry, tried to reach out to Swanson through intermediaries to see if he would accept bribes to reduce the brothel owner's tax bill, Swanson said.

But Swanson said he never took the bait, and the sting was aborted without any charges filed against him. He maintained that it was ludicrous for anyone to believe he would accept money from Conforte, a man he had been trying to put behind bars for years.

Swanson, however, was placed on administrative leave in 1982 and later transferred to Dallas, where he became an assistant regional commissioner.

Several months after the aborted sting, Swanson learned that then-Sen. Paul Laxalt, R-Nev., had planned to recommend him for the No. 2 post in the IRS in Washington. But that was put on hold because of the bribery investigation.

Swanson said his career stagnated until his retirement as district director in Sacramento in 1997.

Today he still has bitter feelings toward Yablonsky, who no longer lives in Nevada.

"He was never called to task in this," Swanson said. "He totally abused his power."

Worse, Swanson never was given any administrative recourse within the federal government to clear his name and counter Yablonsky's activities against him once it was determined that he wasn't prone to being bribed by Conforte, Swanson said.

"Nobody even apologized to me," he said.

After neutralizing Swanson, Yablonsky was free in 1983 to solicit the help of the IRS in returning Conforte to the United States. Grand juries heard testimony against Claiborne in Portland and Reno, where the Conforte bribes allegedly were made, before indicting the judge on corruption and tax charges.

Claiborne's first trial in Reno ended in a hung jury in 1984, primarily because Conforte's bribery testimony did not hold up in court.

"Conforte perjured himself consistently at the trial," Swanson said. "His testimony was fabricated. I don't think there were any bribes at all. Conforte constructed the testimony to suit Yablonsky's needs."

Trial evidence showed that Conforte could not have been present in Nevada to make one of the bribes because he was in New York renewing a passport while appealing his tax conviction.

At Claiborne's second trial, after great lengths were taken to bring back the brothel boss, prosecutors sought the dismissal of the bribery charges and proceeded with just the tax charges, which did not involve Conforte.

Claiborne later was convicted of filing false tax returns in 1978 and 1979. Prosecutors alleged that the judge had hidden thousands of dollars in attorneys fees from the IRS after he was appointed to the federal bench in 1978.

Swanson said that had Conforte not been brought in to dirty up Claiborne, the IRS would have resolved the judge's tax problems through routine civil proceedings.

"It was one of those things that typically would have been a civil tax issue," he said.

The 83-year-old Claiborne, who leads a quiet life today practicing law, hasn't spoken out since 1987 after serving a two-year federal prison sentence for his tax conviction. Congress impeached Claiborne and removed him from the bench after his conviction.

His case raised allegations of government misconduct, primarily involving Yablonsky, that many still believe was covered up at the highest levels of the Justice Department.

Most of those allegations, pursued for years by late Sun Publisher Hank Greenspun and a team of reporters, stemmed from Yablonsky's scheme to entice Conforte back into the country. The newspaper won back-to-back community service awards from the Nevada Press Association in 1983 and 1984, the highest honor it could receive in the state, for its investigative reporting on the subject.

In their book, however, Denton and Morris summarily dismiss the allegations brought to light by the newspaper, many of which surfaced from the government's own documents, as "preposterous."

Greenspun, the legendary publisher who took on the anti-communist demagoguery of Wisconsin Sen. Joseph McCarthy in the early 1950s, is inaccurately portrayed as leading a relentless assault on Yablonsky for the sole purpose of protecting friends who were targets of the FBI chief.

Claiborne, known for his witty oratorical skills in the courtroom, describes Greenspun not as a protector, but rather as a gutsy newsman who exposed a top federal agent corrupted by power.

Some of the key information Greenspun gathered on Yablonsky's investigation of Claiborne came from federal agents unhappy with the FBI chief's overreaching.

"I think Yablonsky was so absorbed with himself that he didn't care how he affected other people's lives," Claiborne said. "Hell, he ruined the lives of a lot of people, not just me. He hurt a lot of innocent people who really did nothing wrong. And that's criminal.

"The amazing thing is that he had all of his superiors at the FBI believing that he was standing in the middle of a small island surrounded by alligators, and he was trying to keep from being devoured by these evil creatures in Las Vegas, and unfortunately they believed him."

Claiborne said Yablonsky came to town with a preconceived idea, without any evidence, that Claiborne was a crooked judge.

"How he arrived at that nobody will ever know because he was not mentally stable, in my opinion," Claiborne said. "He thought I was vulnerable because I had been a criminal defense lawyer. He thought I would be easy pickings."

At his well-publicized impeachment trial on Capitol Hill in October 1986, Claiborne tried to raise allegations of government misconduct against him. But the senators, moving toward a recess, were in no mood to hear it. Instead, they passed a resolution calling for a separate congressional investigation into those alleged abuses. The probe, however, never took place.

Conforte, meanwhile, got his multimillion-dollar tax break from the government and returned to the Mustang Ranch. Years later the IRS closed down the brothel for nonpayment of taxes, and Conforte was indicted by the government for a secret scheme to re-open it.

Conforte also fled to Brazil once more, but this time Perry, his lawyer and former Swanson stingman, would turn against the brothel boss and become a government witness.

Last November Perry was disbarred in Nevada after he pleaded guilty to the brothel scheme and testified against the fugitive Conforte.

His story and the stories of Gerald Swanson, Harry Claiborne and others who believe they were wrongly stung by Yablonsky were not reported in "The Money and the Power."