Union-Tribune Still Covers-Up Mobster Money Behind La Costa’s Development

Hat’s off to Don Bauder, San Diego’s Reader columnist and blogger, who in the most recent hardcopy and online editions goes behind the story of the Union-Tribune‘s velvet glove obituary on the recent death of a local mobster. The mobster, Allard Roen, died August 28th, and the U-T ran two obits, one anonymously on the 30th, and a second by staff writer Steve Schmidt on the 31st. Roen was 87 when he died in his home at La Costa.

Now, Roen, had been a major player in the original financing of Carlsbad’s La Costa Spa & Resort. And since the mid-1970s the public has known about mobster-Teamster money behind the development of La Costa. And we’ve known that because of a Penthouse magazine article published in 1975 about those connections: how mobster influence was used to funnel Teamster pension money by Roen and Moe Daliltz and others from Las Vegas into the ‘world-class resort’ to be built at La Costa and other San Diego developments. Bauder’s story is the next step, so go here.

Bauder discovered something about the U-T obit:

It did not mention the background of one of Roen’s major partners in La Costa and other projects, Moe Dalitz. He was among the 20th Century’s most notorious gangsters, as the Senate Special Committee to Investigate Organized Crime in Interstate Commerce, known as the Kefauver Committee, pointed out in 1950 and 1951.

Bauder takes pains in showing Dalitz’s mob background and heavyweight role in America’s organized criminal underground. But the succinct part clarifies Dalitz and Roen’s role in routing the Teamster pension fund into investments in San Diego.

The fund played a key role in San Diego. It loaned $100 million to San Diego’s Irvin J. Kahn, a mobbed-up financier who used the money to develop Peñasquitos.

Part of the main thrust of Bauder’s history lesson:

But the Central States Teamster fund’s big investment was La Costa. The interim loans were made by U.S. National Bank, controlled by C. Arnholt Smith, named “Mr. San Diego” by the Downtown Rotary Club and “Mr. San Diego of the Century” by a reporter for the San Diego Union. Following the interim loans, the Teamster fund would assume the U.S. National loans. There was a cozy relationship. Frank Fitzsimmons, who became head of the Teamsters after Jimmy Hoffa was exterminated, used to come down to watch the Smith-owned minor-league Padres play. And Fitzsimmons would play golf in San Diego with politician Richard Nixon.

Bauder’s article clearly outlined the record of the Roen-Dalitz-Teamster-La Costa connections. Now, remember the 1975 Penthouse magazine article? The mob and their friends at La Costa weren’t going to let their reputations be soiled, and they sued for libel.  It turns out that Michael Aguirre was one of the Penthouse lawyers, and is quoted by Bauder. At any rate, legal maneuvering went on for a decade. But at trial, Bauder explains:

… the jury exonerated the magazine, agreeing that it had proved that everything it said was true.

Back to the Union-Tribune’s obituary. Bauder makes the point:

The Union-Tribune’s recent panegyric to Roen mentioned that in 1975 Penthouse magazine ran an article charging that La Costa was a hangout for mobsters, and the founders sued for libel.Here’s how the U-T summed up the result: “A 10-year court battled ensued until La Costa accepted a written apology from the magazine.” This is a rank distortion. A joke.

What does this all mean?

Still – to this day, the Union-Tribune denies that local bigwigs with mob connections – someone like Roen who the paper has supported over the years – by its pious backing of such developments like La Costa, like Penasquitos – are who they are: developers with mob connections.

And specifically, the paper is still covering up the proven record of mobster money behind the original financing of La Costa. And Roen’s role.

“Local Boy” Hounded for Writing About Mobster Money Behind La Costa

Now, here’s something that Bauder omitted.  One of the writers of the Penthouse article that caused so much ruckus was “local boy”, Lowell Bergman, who cut his journalistic muckraking teeth as part of the staff of the ground-breaking San Diego Street Journal, which published from the late sixties into the early seventies.

Bergman attended UCSD as a philosophy grad student of Herbert Marcuse’s. When Martin Luther King was assassinated, Bergman and others moved off campus and began publishing underground newspapers.  Bergman and the Street Journal did much of the original publicizing of the C. Arnholt Smith scandals that eventually caused his downfall. Bergman went on to become a successful muckraker, 60 Minutes producer – portrayed in the movie “The Insider” by Al Pacino – and current distinguished academic-and video / film writer-reporter. (Here’s Wikipedia on Lowell. And here’s a 2000 interview with him with Britannica that we posted – the interview explores Bergman’s early academic and intellectual history, studies with Marcuse and his early underground journalistic forays.)

But when Bergman’s Penthouse article came out, all hell broke out – for him professionally, personally, and physically.  In many ways, Bergman was harassed and intimidated by those working for the La Costa mobsters. His true story has yet to be fully told. He was hounded and even had to go incognito for a while to avoid detection. The Wikipedia info on Bergman did not even mention Penthouse or La Costa. Neither did his University of California Berkeley Graduate School of Journalism website.

Back in April of this year, however, our local internet news site voiceofsandiego.org did mention the Penthouse story. In a piece titled, “The Top Ten San Diego Corrections” by Seth Hettena, the Penthouse story made it to “Number 2” with the “correction” being the retraction and apology the magazine had to make due to its allegations that two named mobsters had connections to La Costa. Here’s what voiceofsandiego said:

No. 2 La Costa Nostra
A 1975 article in Penthouse magazine on the La Costa resort in Carlsbad led to one of the biggest libel lawsuits in U.S. history.

Future Pulitzer Prize winners Lowell Bergman and Jeff Gerth reported that two of the resorts founders, Merv Adelson and Irving Molaskey, had connections with organized crime. Adelson and Molaskey responded with a libel lawsuit seeking more than half a billion dollars.

Before trial, Gerth and Bergman got cold feet, apologized, and settled their case, but Penthouse kept up the fight. Following a lengthy trial, the jury found in favor of the adult magazine, but Judge Kenneth Gale threw out the verdict and ordered a new trial. In December 1985, the two sides settled on the eve of the second trial. Penthouse said it did not mean to imply that Adelson and Molaskey are or were members of the Mob.

Upshot: The lawyers won.

Wrong – go here for the post. This is incredible. Even so-called alternative internet news gets it wrong.

Now, Bergman’s co-author Jeff Gerth in the Penthouse article went on to work for the New York Times. His Wikipedia site does mention the Penthouse article:

[Jeff Gerth] did some freelance journalism, including an expose of the La Costa resort’s ties to organized crime that ran in Penthouse. Gerth, and his co-author, Lowell Bergman, were sued, along with Penthouse, by the founders of the resort for more than half a billion dollars. Before trial, Gerth and Bergman both settled and apologized.

Basically, Bergman and Gerth were hounded until they cried uncle. But remember what Bauder said the jury decided: the magazine had proved eveything it had said was true.  The Penthouse article connecting mobster and Teamster pension money to La Costa was exonerated.

And to this day, San Diego’s monopoly paper – about to be sold – still does a white-wash on the mob connections to local developers, like Allard Roen. Little wonder then of its falling readership. The paper can’t even get the facts straight in its obituaries. Obituaries on mobsters at least.  Lowell Bergman had got it right the first time. Just nobody remembers.