Mob meltdown in Las Vegas: Sudden slaying stunned agents

Editor's note: This is the second of a three-part series on the FBI's last major assault on organized crime in Las Vegas.

It is the inside story of how longtime underworld figure John Branco became the government's most significant witness against the mob locally in two decades.

Branco and FBI agents tell the Sun exclusively about the inner workings of "Operation Thin Crust," the undercover investigation that led to prison terms for ranking crime figures while costing mobster Herbie Blitzstein his life.

In this part FBI agents secretly set up a social club to keep track of local organized crime associates, and Branco explains how he left his life of crime to assist agents.

Herbie Blitzstein spent the afternoon of Jan. 6, 1997, with his good friend and business partner, Joe DeLuca.

When the two parted ways at 5:30 p.m. at their Any Auto Repair shop on Fremont Street, Blitzstein had no idea his friend had double-crossed him and was sending him to his death.

Neither did FBI agents who were closing in on Blitzstein's criminal activities at the Sea Breeze social club, a storefront set up by the FBI in "Operation Thin Crust."

It was a surprise that would dramatically change the course of the biggest racketeering investigation into organized crime in Las Vegas in years.

Months earlier agents had learned through their chief informant, longtime mob associate John Branco, that Los Angeles and Buffalo crime family members had sanctioned a plot to force Blitzstein out of Any Auto Repair and take over his lucrative loan-sharking operation.

The scheme surfaced in an Oct. 28, 1996, conversation Branco secretly recorded at the Gold Coast with Carmen Milano, a reputed underboss of the Los Angeles mob.

From the back booth of a restaurant, Milano described Blitzstein as a "greedy, selfish miser" who had gotten too big on the street, FBI transcripts show.

Branco agreed.

"You got this Jew boy running around here, making money hand over fist, doing whatever he wants to do, you know, and nobody steps in on him," Branco said.

Later Robert Panaro, a reputed Buffalo mob soldier with ties to the Los Angeles crime family, became involved in the takeover scheme, transcripts show. Panaro, a tall, gray-haired man who owned a used-car dealership, planned to become DeLuca's new partner at Any Auto.

Although Branco was kept busy secretly taping conversations with the underworld figures plotting against Blitzstein, he never knew that two conspirators -- DeLuca, a 40-year-old auto mechanic with family connections to organized crime, and Peter Caruso, 56-year-old career criminal -- were determined to have Blitzstein killed. Both longed for a piece of Blitzstein's street action.

Blitzstein's days as a tough guy on the street ended in 1986 with the brutal slaying of his boss, Anthony Spilotro, the Chicago mob's feared overseer in Las Vegas. In Spilotro's absence, the crime family abandoned Blitzstein and gave up its leading role in local rackets.

"Herbie had nobody behind him anymore," said Frank Cullotta, a close Spilotro associate who turned government witness against the late mob kingpin in 1982. "He was living off his old reputation. There were a bunch of young sluggers seeing that he was making all of this money, and naturally they were going to take advantage of him. He had nowhere to run."

Blitzstein's fate was sealed on the morning of Jan. 6, 1997, after Caruso informed Branco that he was going to burglarize Blitzstein's 3655 Mount Vernon Ave. home in the afternoon before Blitzstein was to be told he was being put out of business. DeLuca, Caruso reported, had obtained the key and alarm code to Blitzstein's residence.

As DeLuca and Blitzstein said their goodbyes at the end of the business day, DeLuca made one last gesture of loyalty to his friend. He told Blitzstein about the plans to cut him out of the loan-shark business and suggested that he "watch his back."

By that time, however, it was too late for Blitzstein to do anything. Caruso already had looted his house and cleared the way for two contract killers to slip inside and ambush him.

The hitmen, Antone Davi and Richard Friedman, small-time hoodlums best known for robbing area drug dealers, were hired by Alfred Mauriello, a seasoned underworld figure who had accepted the Blitzstein contract from Caruso.

Davi and Friedman, wearing latex gloves, one armed with a .22-caliber handgun and the other a .38-caliber revolver, entered the house about 3 p.m. and lay in wait for Blitzstein.

Davi, a 29-year-old former professional boxer, later told FBI agents that he was coming out of the bathroom about 6 p.m. when Blitzstein entered the home with a cellular phone in his hand. Friedman, Davi explained, shot Blitzstein with the .22 caliber pistol at point-blank range once in the face and heard Blitzstein say, "Oh no. Why me?"

As the injured Blitzstein turned toward Friedman, Davi said, the pistol jammed and Friedman was unable to fire another shot. Davi handed Friedman the .38 caliber revolver, and Friedman shot Blitzstein again in the face.

Blitzstein fell down on his knees with his face and upper body resting on the seat of a black leather recliner. He still was holding his cell phone in his left hand, as blood dripped onto the chair and the ivory carpet below.

Police at the death scene found Blitzstein dressed in gray pants, a tan shirt and white athletic shoes. The left front pocket of his pants was turned inside out, and there was a gunshot wound in the back of his head.

Friedman had bragged in the getaway car that he was forced to shoot Blitzstein in the head before leaving the house because his body still was moving on the recliner, Davi told agents.

Crime scene analysts noticed that Blitzstein's house, decorated with brass furnishings and artwork from famed Russian artist Erte, was immaculately clean. But there were obvious signs of a burglary. Two unlocked floor safes, one in his office and the other in an extra bedroom, had been emptied. In the master bedroom, his dresser drawers had been rummaged through, and a jewelry box tray was missing.

Davi told agents that he called Mauriello with Friedman's cellular phone as they left Blitzstein's home to report "the party went well," which was a pre-arranged phrase meaning that the killing had been accomplished.

That evening they were paid $1,500 each by Mauriello for their services. Eventually each received another $2,000.

A couple of hours before the killing, Caruso met Branco at a service station on West Sahara Avenue, where Caruso gave Branco details of the burglary and presented him with an expensive diamond-studded watch taken from Blitzstein's home.

Caruso, FBI transcripts show, told Branco that he also took 25 pounds of gold and a nine-carat diamond worth $65,000, as well as $10,000 in cash from the home. Caruso, however, never let on that Blitzstein was going to be killed.

In the end, Blitzstein -- described by his longtime lawyer, John Momot, as a good-humored and "stand-up" guy -- suffered the same violent fate as Spilotro, his childhood friend and mentor.

Spilotro, who once ruled the streets of Las Vegas with an army of 150 associates, had brought Blitzstein to town from Chicago in the mid-1970s to help him run his rackets empire.

"He saw Blitzstein as very trustworthy," said former FBI agent Michael Howey, the lead investigator in Operation Thin Crust. "He discussed virtually everything with him."

Blitzstein, although he struggled with his weight, sometimes ballooning to 250 pounds, was tall, well-manicured and gregarious. He loved to wear gold jewelry and drink expensive champagne while partying with beautiful young women at nightclubs.

His sense of humor never left him during his later years, but his night life was limited because of health problems brought on by diabetes and a bad heart.

On the morning of Jan. 7, 1997, Branco, by now deep undercover in Thin Crust, was one of the first to learn of Blitzstein's death. He received the word at a meeting with Caruso.

"I had to make out like it didn't bother me," Branco said. "I had to play the game. So I started laughing. I said, 'I didn't like that fat ass anyway. Who cares?' But to tell you the truth, I felt bad. Even though I didn't like him, I still wouldn't let anybody do that to the guy."

After the meeting, Branco frantically telephoned undercover FBI agent Charles Maurer, who in turn called his boss, John Plunkett, supervisor of the FBI's Organized Crime Squad in Las Vegas.

"I got a call from Charlie (Maurer) saying, 'Hey I think we've got a problem.' " Plunkett said. "Branco had just talked to Caruso, and Caruso said Herbie was dead."

Agents quickly checked with Metro Police and learned that there was a report of a homicide at Blitzstein's home.

The slaying dampened the spirits of the FBI agents eyeing Blitzstein as a prize catch in Thin Crust.

"Something we thought we had complete control over, we found out for a variety of reasons, we didn't," Plunkett said. "And so solving that murder became paramount."

Bobby Siller, special agent in charge of the Las Vegas FBI at the time, said agents were ready to expand the undercover probe to other cities when Blitzstein was killed.

"We were set up for a long-term investigation, not a short-term one," said Siller, now a member of the state Gaming Control Board. "This was the last thing we wanted to happen."

Plunkett said agents to this day believe they did everything possible to prevent Blitzstein's death.

There was no formal internal FBI investigation, but local agents had to justify their actions with the head of its organized crime section in Washington.

"We sent them tapes, transcripts, everything we had," Plunkett said. "We got a call a short time later, and they said we did what we had to do."

But Momot, who represented Blitzstein for 20 years, said he was troubled that the FBI never informed his client that some of his associates were plotting against him.

"I don't know all of the facts," Momot said. "But they had an obligation to tell Herbie that there was a problem."

Blitzstein's slaying, meanwhile, forced agents to refocus their efforts.

"We pretty much stopped everything," Maurer said. "We just dedicated ourselves to solving the murder."

Maurer said Blitzstein's death cost agents an opportunity to get closer to Peter Milano, the Los Angeles mob's reputed boss.

"It cut us out of a lot of things," he said. "In my mind there's no doubt we would have gotten Pete Milano."

Agents, however, later were able to make racketeering cases against Milano's brother, Carmen, the reputed underboss of the Los Angeles crime family, as well as several of the family's ranking members, primarily because of the undercover work of Branco and Maurer. Panaro also was ultimately charged.

Days after the slaying, agents wired Branco and sent him to the streets to keep track of the Los Angeles family's efforts to split up Blitzstein's criminal operations.

The plan was to give Peter Milano 20 percent of the proceeds from Blitzstein's $200,000 in loans on the street. Panaro, however, was to get nothing.

Branco tried to explain the arrangement to an angry Panaro during a secretly recorded conversation.

"You ain't going to make no deals for me, John," Panaro yelled. "There's only one person in the whole world that makes a deal for me."

"I know that," Branco responded.

"And he's out of Buffalo," Panaro said.

"I know that," Branco repeated.

Then Panaro said: "I stood out of prison for 55 years because I'm smart ... Don't make this deal, you know. You're trying to play the boss, John, and you're not."

A couple of days later, Panaro sent word to Branco that he wanted nothing to do with Any Auto or Blitzstein's loan-sharking business.

That opened the door for the Los Angeles mob to take total control of the operations.

The FBI, meanwhile, asked Branco to take on the dangerous assignment of getting Caruso to confess to the slaying on tape.

"We were glued to Caruso because he was a time bomb," Plunkett said. "Considering what had already happened, we weren't going to allow anything else to happen."

During a secretly recorded conversation on Jan. 30, 1997, Caruso told Branco that he had given the Blitzstein contract to Mauriello. Caruso also brazenly talked about wanting to burglarize the home of Horseshoe Club executive Ted Binion, a good friend of Blitzstein's, and have him killed in the same manner.

This gave agents reason to worry about Branco's safety.

"We felt that some of the guys involved in the murder (primarily Caruso) would want to get rid of Branco," Maurer said. "So we moved him into another secure location and picked up his living expenses."

The FBI gave Branco three weeks to sell everything he owned -- his trailer, mobile home and all of the assets from his lawn-service business. Then, while he maintained his cover as an informant, Branco secretly was moved into an FBI-rented apartment where the agents could watch him more closely.

By April 1997 Branco was able to get Mauriello on tape acknowledging his role in Blitzstein's death, and that quickly led to a federal murder indictment against Caruso and Mauriello.

Racketeering charges also were filed against DeLuca, Panaro and others in the move to muscle in on Blitzstein's criminal operations.

"We brought (Mauriello) back to the office, and he acknowledged doing it," Plunkett said. "But he said he didn't do the actual hit. He said he had other guys do it. We just about fell out of our chairs because we had the case nicely packaged at that point."

Eventually Mauriello explained to agents how Caruso had given him the Blitzstein murder contract for $10,000 and how he in turn had hired Davi and Friedman for $3,500 a piece.

The federal charges signaled an abrupt end to the undercover phase of Thin Crust.

"Branco left town and never came back," Maurer said. "Everybody arrested knew that he had set them up, so he couldn't come back at that point."

Added Plunkett: "We would have liked to see the case continue, but after working it for a couple of years, there was almost relief in the back of our minds that it was coming to an end."

Branco declined federal protection, but he kept in regular contact with Maurer as agents sought to put together their criminal cases against Blitzstein's killers.

Two months later, in June 1997, while sitting in jail, the 40-year-old DeLuca agreed to plead guilty and explain his role to agents in the burglary and murder plot.

"DeLuca ended up cooperating because he felt guilty about what had happened to Herbie," Maurer said.

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