The Dark Side of Camelot

Suffolk Downs was the major asset of the Aldred Investment Trust (AIT), a nearly bankrupt Massachusetts firm that was registered with the SEC. During World War II the firm’s trustees, in what was later determined to be a “gross abuse of trust,” sold off many of its investments in order to buy the racetrack; some of the trustees then appointed themselves highly paid officers of the track. The SEC and an investor successfully sued AIT’s management in federal court and forced the appointment of two outside receivers, who were instructed to reorganize or liquidate the trust. After the war, a group of independent investors, who included a financier named Richard Rosenthal, of Stamford, Connecticut, bought stock in AIT but found, to their dismay, that the court-appointed receivers were in the process of selling off the firm’s control of Suffolk Downs for slightly more than $1 million—one-tenth the racetrack’s value. The buyer, as all involved learned later, was Joe Kennedy, operating in his usual manner. The receivers’ “idea of competitive bidding,” Rosenthal recalled in an interview for this book, “was to get into a telephone booth with Joe Kennedy. They made a deal and brought it to court. We objected.” Rosenthal retained his brother-in-law, the New York attorney Milton S. Gould (later of Shea and Gould), and others, and filed suit in federal court in Boston to stop the sale. “We argued that they [AIT management] had not followed common sense in having a private negotiation. The minimum is that you should have taken bids.” What he and his lawyers did not know, Rosenthal added, with a laugh, “was that you couldn’t beat Joe Kennedy in the Boston area.”

Gould, who in 1997 was still practicing law in New York, recalled in an interview what happened next. The federal judge hearing the case, George C. Sweeney, who was named to the bench by President Roosevelt in 1935, summoned Gould and his cocounsel to an afternoon meeting in early 1946 in his chambers with the two AIT receivers, their lawyer, and the regional SEC director. Sweeney had a tough message for Gould and his clients: “You’re sticking your nose where you don’t belong. This is a local thing and we want local people involved.” Gould later concluded that the judge was telling him that the AIT receivers did not want to sell the racetrack “to a bunch of Jews.” Gould’s cocounsel proposed to write a brief for the judge, summarizing the legal issues involved, to which Sweeney replied: “I don’t need a brief. I may be wrong, but I’m never in doubt.” Judge Sweeney, who died in 1965, then announced that he would deny the Rosenthal motion to intervene, with this sweetener: he would instruct the AIT receivers to buy back the stock held by Rosenthal and his colleagues for $250,000 more than they had initially paid; he also would grant Gould and his legal colleague a fee of $100,000.

The Rosenthal-Gould team rejected Judge Sweeney’s offer and filed suit in the U.S. Court of Appeals. Competitive bidding for the racetrack was eventually ordered, and Suffolk Downs was sold at auction to a Boston businessman for roughly $10 million. That businessman was not Joe Kennedy or even a proxy. Kennedy lost out, but not before one last, and typical, maneuver. Richard Rosenthal, while struggling unsuccessfully to put together a syndicate to bid on the track, received a telephone call and a visit from Joseph Timilty, the former police commissioner of Boston, who—as Rosenthal did not know at the time—was one of Joe Kennedy’s most trusted operatives. “His entrée,” recalled Rosenthal, “was that he’d been police commissioner and he could be helpful to me.” Rosenthal also did not know that in March 1943, Timilty, then police commissioner, and six of his aides had been indicted by a grand jury in Boston and forced out of office for conspiring “to permit the operation of gaming houses and the registration of bets.” The charges against Timilty never came to trial.*

At their meeting, Rosenthal told me, Timilty raised a disturbing issue: “He said you have to be careful how you handle this. This track is supported by people who drive out to it, and the roads are not in great shape. Suppose somebody decides to start repairing them during the [racetrack] meet. You’d be out of business.” Rosenthal responded, simply, that “they wouldn’t do that.” “I wouldn’t be too sure,” answered Timilty. It was an obvious threat.

Rosenthal had few illusions, even then, about Joe Kennedy. In the years immediately before the war, as a young stock analyst in New York, he was assigned the shipbuilding industry. He wrote Kennedy, then chairman of the Maritime Commission, to arrange a face-to-face meeting. The airplane flight from New York to Washington was unforgettable—it was Rosenthal’s first. He and Kennedy had “an informative conversation,” recalled Rosenthal. “I was two years out of school and brash and young. I had a conviction that we were going to get into war.” Kennedy asked whether Rosenthal had looked into a certain company, Todd Shipyards, and volunteered his view: “I think it’s one of the best shipyards in the United States.” Duly impressed, Rosenthal recommended Todd as a buy in his report. Years later, Rosenthal said, he learned that Kennedy, while chairman of the Maritime Commission, had maintained a large, and secret, personal investment in Todd. The stock was registered in the name of Edward E. Moore, Kennedy’s longtime personal secretary.*

Ironically, Rosenthal maintained his financial interest in AIT and eventually became its sole owner. The firm is still being operated as a private investment company by Rosenthal, now an investor and philanthropist in Stamford. “When I was young,” he said, “I thought intellect would win over everything. I honestly didn’t believe that things got fixed, or that you could buy judges.” He still does not understand, Rosenthal said, why Kennedy wanted the track and was willing to spend “a lot of political currency to get it.” The financier shrugged and then offered an answer: “The track was a big cash handle business and he may have wanted it for other business.”

Jack Kennedy once explained to Arthur Schlesinger, as Schlesinger recorded in A Thousand Days, that his father “held up standards for us, and he was very tough when we failed to meet those standards. The toughness was important.” Kennedy brought his father’s toughness and his history into the presidency, and with them he brought a sense that he, like his father, understood how the world really worked. It was an understanding that the earnest young businessmen, government officials, and academics in the Kennedy administration could never have—and it increased their awe and reverence for the president. Joe Kennedy’s street-hardened past became, ironically, further proof of Jack Kennedy’s qualifications for the Oval Office.

* Kennedy was accompanied on the high-profile London trip by James Roosevelt, the son of the newly elected president, who had star quality abroad. Kennedy, then forty-five years old, and Roosevelt, just twenty-seven, had become close friends during the 1932 presidential campaign. It was a friendship based on Roosevelt’s weaknesses for liquor and women and Kennedy’s ability to exploit weakness.

* Kennedy’s recklessness in these years extended, not surprisingly, to his womanizing. Shortly after Prohibition ended in 1933, he began an affair with a Broadway showgirl named Evelyn Crowell, who was the widow of Larry Fay, a notorious and fashionable New York gangster who, at his height of power in the 1920s, maintained a lavish mansion and gave lavish parties in Great Neck, New York. The dapper Fay, who began his career as a bootlegger but soon moved into extortion, became the model for the gangster in the F. Scott Fitzgerald classic The Great Gatsby. Fay was shot to death in 1932. Three years later, Kennedy’s affair with Fay’s widow made it as a blind item into Walter Winchell’s widely read New York Journal-American gossip column: “A top New Dealer’s mistress is a mobster’s widow.” Winchell’s longtime assistant, Herman Klurfeld, who wrote most of Winchell’s columns for thirty years, said in an interview for this book that Kennedy, who was an expert at dealing with the press, arranged a meeting with Winchell after publication of the item. The two men quickly became friends, Klurfeld said, and Kennedy eventually became one of Winchell’s key sources. Although no such evidence exists in the case of Winchell, Kennedy’s “friendship” with many journalists—such as Arthur Krock, the revered Washington bureau chief of the New York Times—was predicated on the fact that Kennedy provided them with the equivalent of money: lavish gifts and prepaid vacations and, in the case of Krock, women.

* Clancy said his job at first was to investigate various real estate properties and businesses for Kennedy, beginning with a Chicago company that was for sale. “I spent a week,” Clancy said, before returning to report to Kennedy at his summer home in Hyannis. Kennedy began the meeting by telling his new employee what he was about to report: “For ten minutes he sat there and told me what I was going to tell him. He even had the sequence right. I thought this is the smartest son of a bitch I’ve ever met.”

* During Prohibition, Zwillman and Reinfeld operated out of Newark what the federal government later determined was the nation’s largest bootlegging operation, responsible at its height for as much as 40 percent of illicit liquor sales. Reinfeld, who later changed his name to Renfield, went on after Prohibition to become a successful and legitimate liquor importer; Zwillman committed suicide in 1959, while facing a subpoena from the Senate Permanent Investigations Subcommittee, whose chief counsel was Bobby Kennedy. It was, as we will see, Zwillman and Reinfeld who bought Joseph Kennedy’s Somerset Importers in 1946.

* Kefauver certainly understood the importance of Fusco’s testimony. Kefauver’s handwritten notes for the day of Fusco’s testimony include references to Cassara and his ties to Somerset Importers. The senator, who took notes only on the testimony of key witnesses, filled six pages of his notebook with remarks and comments on Fusco. Kefauver’s papers are on file at the University of Tennessee at Knoxville.

* Timilty and his senior aides in the police department were specifically accused of protecting in the early 1940s the vast gambling syndicate of Harry J. “Doc” Sagansky, the boss of New England’s largest numbers racket. At his height, Sagansky, who lived in the Boston suburb of Brookline, employed an estimated three thousand people in his illicit rackets. He also owned numerous nightclubs and three racetracks, leading the Kefauver Committee to describe him as “perhaps the principal gambling racketeer in the New England area prior to … his conviction … in 1943.” The committee also reported that Sagansky worked closely with Frank Costello and was in daily telephone communication with him through 1942, when Timilty’s alleged protection of the racketeer was at its height. The initial indictment of Timilty was quashed in June 1943, but Timilty was reindicted. The second charge was dropped after a judge in Boston somehow ruled that Timilty only “administered” the police department and did not “enforce the law” or participate in arrests, as specified in the indictment. Timilty’s term as police commissioner ended in November 1943.

* Edward K. Linen of Rye, New York, who retired in 1979 as secretary of Todd Shipyards, confirmed in an interview for this book that Kennedy did hold a “sizable” amount of stock in the firm while serving as chairman of the Maritime Commission. “It was in Eddie Moore’s name,” Linen said. “I was assistant secretary of Todd at the time and Moore was a trustee for Joe Kennedy. Kennedy’s name did not appear” on any document. Asked how he learned about the Moore-Kennedy connection, Linen recalled only that John D. Reilly, who was president of the shipyard in the 1930s, “was a friend of Joe Kennedy’s and, at some point, I found out that Eddie Moore was Joe Kennedy.” Kennedy’s use of Moore to mask his stock purchases was made more insidious by the fact that he seemed to be completely aboveboard in disclosing his stock holdings to the White House and to Congress prior to his Senate confirmation to the Maritime Commission. In a series of March 1937 letters on file at the Roosevelt Library, Kennedy acknowledged that one of the family trusts, over which he had no control, owned 3,300 shares of stock in Todd. He also acknowledged personal ownership of an additional 1,100 shares in Todd, and proposed turning those shares over to his broker for sale within sixty days. In a letter to the Senate, Kennedy forthrightly promised to put the stock “beyond my control … before taking the oath of office. I think an understanding of these facts will clear my position much more satisfactorily, at least in my own mind.” There is no evidence in the Roosevelt documents that Kennedy disclosed the stock he held in the name of Eddie Moore.

5 THE AMBASSADOR

Joe Kennedy played by his own rules both in running his personal life and in amassing his personal fortune. He employed the same ruthlessness and secrecy with all—his wife, fellow businessmen, organized crime leaders, newspapermen, and political figures. He served the Roosevelt administration with distinction as chairman of the Securities and Exchange Commission and, later, as chairman of the Maritime Commission, bringing the techniques and skills that worked so well in his business life to government service. His cherished ambition was to convince Franklin Roosevelt to nominate him as ambassador to Great Britain, the most socially prestigious post in the American government. “Being appointed ambassador to England,” explained one Kennedy biographer, “would mean social preferment for the Kennedys and their offspring, and an opportunity to ‘show’ the Brahmins that he could ‘get there’ without their support. He would be their social superior—the social superior of Boston’s snobbiest!” Kennedy spent months in 1937 lobbying for the appointment, with the continuing help of James Roosevelt, the president’s son, whose presence had assured favored treatment when he accompanied Joe to seek British liquor contracts in 1933.

The president and his aides understood the cynicism of Joe Kennedy’s friendship with Jimmy, but made no attempt to intervene. Kennedy’s influence on the president’s son remained enormous. Kennedy was rich and attractive to women, and the young Roosevelt wanted to be both. The two collaborated on business deals and vague promises of partnerships. Roosevelt, trading on his father’s fame, was working as an insurance broker, and at Prohibition’s end, Kennedy allowed him to write policies on overseas liquor shipments. There were always women. While ambassador to England, Kennedy told an embassy aide that Jimmy Roosevelt was “so crazy for women he would screw a snake going uphill.”

In 1935, with Kennedy’s help, Roosevelt was named president of the National Grain Yeast Corporation of Belleville, New Jersey, one of many companies that found themselves doing big business after the repeal of Prohibition. Yeast, of course, was essential for the mass production of beer, and it became one of the legitimate businesses that attracted former bootleggers. Roosevelt failed at the job and was out of work within six months.

James Roosevelt’s business disappointments no doubt figured in his father’s decision, despite opposition from his advisers, to name him his personal secretary at the beginning of his second term. Kennedy, not surprisingly, continued to lavish attention, affection, and, undoubtedly, women on the president’s son. “You know as far as I am concerned,” Kennedy wrote Roosevelt and his wife in a January 1937 letter on file in the FDR Library, “you are young people and struggling to get along and I am your foster-father.”

Foster father was hyperbole, but James Roosevelt, as personal secretary to his father, played a major—and not fully known—role in assuring Kennedy’s nomination as ambassador to England. The most extensive account of the machinations appeared in Memoirs, Arthur Krock’s autobiography, published in 1968. Krock, then the columnist and Washington bureau chief of the New York Times, had a secret life. By the late 1930s he had become another of Kennedy’s wholly owned subsidiaries—a journalist who vacationed at Kennedy’s Florida home, shared in his lifestyle, and very often wrote whatever Kennedy wanted. It was a pattern that would be repeated again and again by the reporters covering Joe and, later, Jack Kennedy. In his autobiography, Krock told of a dinner with Kennedy, then chairman of the Maritime Commission, at which James Roosevelt arrived and took Kennedy into another room for an extended private conversation. Kennedy’s nomination as ambassador was rumored at the time, and, Krock noted, there was sharp opposition inside the White House and from liberals in the Congress. After the meeting, a very angry Kennedy told Krock that young Roosevelt had proposed that he take an appointment as secretary of commerce. “Well, I’m not going to,” Kennedy said. “FDR promised me London, and I told Jimmy to tell his father that’s the job, and the only one, I’ll accept.”

Kennedy got his nomination in December 1937 and arrived in prewar London full of ambition.

Kennedy’s rise and fall as ambassador in London has been often told: a brief honeymoon with the British press and public, much of it revolving around his highly social and photogenic children, and then a relentless fall from grace. Kennedy was reviled for his defeatism. His widely quoted belief was that Great Britain had neither the will nor the armaments to win a war against Nazi Germany. And he was ridiculed for his perceived cowardice during the intensified Luftwaffe bombing of London in 1940, when he chose to spend his nights at a country estate well away from the targeted city centers. German Foreign Ministry documents published after World War II show that Kennedy, without State Department approval, repeatedly sought a personal meeting with Hitler on the eve of the Nazi blitzkrieg, “to bring about a better understanding between the United States and Germany.” His goal was to find a means to keep America out of a war that he was convinced would destroy capitalism.

There is no evidence that Ambassador Kennedy understood in the days before the war that stopping Hitler was a moral imperative. “Individual Jews are all right, Harvey,” Kennedy told Harvey Klemmer, one of his few trusted aides in the American Embassy, “but as a race they stink. They spoil everything they touch. Look what they did to the movies.” Klemmer, in an interview many years later made available for this book, recalled that Kennedy and his “entourage” generally referred to Jews as “kikes or sheenies.”

Kennedy and his family would later emphatically deny allegations of anti-Semitism stemming from his years as ambassador, but the German diplomatic documents show that Kennedy consistently minimized the Jewish issue in his four-month attempt in the summer and fall of 1938 to obtain an audience with Hitler. On June 13, as the Nazi regime was systematically segregating Jews from German society, Kennedy advised Herbert von Dirksen, the German ambassador in London, as Dirksen reported to Berlin, that “it was not so much the fact that we wanted to get rid of the Jews that was so harmful to us, but rather the loud clamor with which we accompanied this purpose. He himself understood our Jewish policy completely.” On October 13, 1938, a few weeks before Kristallnacht, with its Brown Shirt terror attacks on synagogues and Jewish businesses, Kennedy met again with Ambassador Dirksen, who subsequently informed his superiors that “today, too, as during former conversations, Kennedy mentioned that very strong anti-Semitic feelings existed in the United States and that a large portion of the population had an understanding of the German attitude toward the Jews.”*

Kennedy knew little about the culture and history of Europe before his appointment as ambassador and made no effort to educate himself once in London. He made constant misjudgments. In the summer of 1938, for example, he blithely assured the president in a letter, described in the published diaries of Harold Ickes, FDR’s secretary of the interior, that “he does not regard the European situation as so critical.” Diplomats serving on the American Desk in the British Foreign Office quickly came to fear—and hate—Kennedy. They compiled a secret dossier on him, known as the “Kennediana” file, which would not be declassified until after the war. In those pages Sir Robert Vansittart, undersecretary of the Foreign Office, scrawled, as war was spreading throughout Europe in early 1940: “Mr. Kennedy is a very foul specimen of a double-crosser and defeatist. He thinks of nothing but his own pocket. I hope that this war will at least see the elimination of his type.”

The Foreign Office notes also included many allegations of Kennedy’s profiteering once the war began. Kennedy, still very much in control of Somerset Importers, was suspected of having commandeered valued transatlantic cargo space for the continued importation of British scotch and gin; it was further believed that he was abusing his position of trust as a high-level government insider to support his Wall Street trading. No proof of such business activity was then available to the British Foreign Office—officially, at least—but Kennedy was worried that he might be doing something illegal: in April 1941, shortly after his return to the United States, he telephoned the State Department and inquired whether there were rules governing private financial transactions of U.S. officials serving abroad. Kennedy was told that Congress had passed legislation in 1915 making any business dealings for profit illegal.

In 1992 Harvey Klemmer, an ex-newspaperman who served as Joe Kennedy’s personal public relations aide at the Maritime Commission and had the same role in London, acknowledged in a British television interview that the Foreign Office suspicions more than fifty years before were valid: Kennedy, in fact, did continue to be a major investor and speculator on Wall Street, placing buy and sell orders by telephone through John J. Burns, a former justice of the Massachusetts State Supreme Court who was retained by Kennedy to run his New York office, a practice he continued into the 1950s. Klemmer, depicted by one British diplomatic reporter as Kennedy’s “brains trust,” remained silent about Joe Kennedy until a few months before his death, from cancer, in 1992, when he did a brief on-air interview with television producer Phillip Whitehead on Thames TV. Klemmer, who was severely disfigured from his cancer, also granted Whitehead an extraordinary interview on audiotape—much of it never made public until it was obtained for this book. The unedited transcripts of the two interviews provide a rare inside look at the Kennedy embassy. “Kennedy continued to do business as usual while in London,” Klemmer told Whitehead. One night, while out at dinner, the ambassador left the table for a telephone call. “He was gone a long time. When he came back, he said, ‘Well, the market’s going to hell. I told Johnny [Burns] to sell everything.’” Also at the dinner, Klemmer recalled, was “a Jewish friend of his and mine.… In a little while [the friend] began to fidget and finally excused himself on the basis that he had something important to do and left. As soon as he had left, Kennedy said, ‘Watch the son of a bitch go out and sell. Actually the market is doing very well and I told Johnny to buy.’”

Kennedy was equally unprincipled in his use of ambassadorial perquisites. Klemmer told Whitehead that one of his principal duties at the embassy was shipping Kennedy’s liquor. “Using his name and the prestige of the embassy and also my connection with the Maritime Commission, I was able to get shipping space for up to, I think, around 200,000 cases of whiskey at a time when shipping space [from England to the United States] was very scarce.” Kennedy’s abuse of office on behalf of Somerset Importers was so extreme, Klemmer said, that “a British friend in the Ministry of Shipping came to see me one day and said, ‘You’d better lay off with the ambassador’s whiskey, because some of the other distillers, who can’t get shipping space, are going to have the question raised in Parliament. He’s using the influence of the American Embassy to preempt shipping space.’ So,” Klemmer concluded, “we kind of tapered off a little bit after that.” Kennedy ignored the widespread gossip about his whiskey dealing, Klemmer added: “He just brushed it off.… His stock reply to any criticism was ‘To hell with them.’… He didn’t take things like that seriously.”