Transcript of interview with Frank H. Johnson by George Baker, February 21, 1980

UNLV University Libraries Frank Johnson i An Interview with Frank Johnson An Oral History Conducted by George Baker Ralph Roske Oral History Project on Early Las Vegas Special Collections and Archives Oral History Research Center University Libraries University of Nevada, Las Vegas UNLV University Libraries Frank Johnson ii © Ralph Roske Oral History Project on Early Las Vegas University of Nevada, Las Vegas, 2019 UNLV University Libraries Frank Johnson iii The Oral History Research Center (OHRC) was formally established by the Board of Regents of the University of Nevada System in September 2003 as an entity of the UNLV University Libraries’ Special Collections Division. The OHRC conducts oral interviews with individuals who are selected for their ability to provide first-hand observations on a variety of historical topics in Las Vegas and Southern Nevada. The OHRC is also home to legacy oral history interviews conducted prior to its establishment including many conducted by UNLV History Professor Ralph Roske and his students. This legacy interview transcript received minimal editing, such as the elimination of fragments, false starts, and repetitions in order to enhance the reader's understanding of the material. All measures have been taken to preserve the style and language of the narrator. The interviewee/narrator was not involved in the editing process. UNLV University Libraries Frank Johnson iv Abstract On February 21, 1980, George Baker interviewed Frank H. Johnson (born July 27th , 1929 in El Paso, Texas) about his occupational history in Southern Nevada. The two discuss Johnson’s career as a journalist for the Nevada State Journal and how he transitioned into his position as a government official. Johnson then recalls problems that arose while he was chairman of the Nevada Gaming Commission. The interview concludes with Johnson speculating about the impact of industrial growth on the environment. UNLV University Libraries Frank Johnson 1 Narrator is Frank Johnson. Place is Las Vegas Hilton Hotel, 3000 Paradise Road. Collector is George Baker, 691 Naples in Las Vegas. Project is Project 11: Oral History, Life of a Las Vegas Old Timer. Tape One Side One. We are on the air, and there’s plenty to record. Needless to say, I don’t know much about either of these machines, I don’t have a personal one, and these are both borrowed. But they do work, I know that, so they’re not missing anything. (Unintelligible) what you say is now going to be a part of the Dickinson Library. (Laughs) Alright. The purpose, as you know, is an oral history. And it is, as a matter of fact, considerably dealt with by scholars from various portions of the United States of, a number of disciplines. As a matter of fact, there are, I think here, scholars that come in from, oh, I’d imagine Atlantic City now, to see what problems have been handled and how they were handled in the past. And I think that that probably seems, now that you are an area of expertise, perhaps, we should be begin right—when you came out here from D.C., did you come from a state government official Mr. Johnson? No, I came as a fifteen-year-old boy with my parents. (Laughs) So that was in 1945, my father was with the U.S. Bureau of Mines and heading to the western region. That was then located in Boulder City, which was instantly, tremendous place to be a teenager. And at some point that first year, Senator Pat McCarran decided he wanted the headquarters of the Bureau of Mines moved to Reno, and I can recall being very upset. As a matter of fact, I was so upset that I didn’t do it right away, having move up to the big city, because Reno was so much bigger, not only than Boulder City, but then from Las Vegas. And as I say, I was very upset about it, and was allowed to stay in Boulder City to at least finish out the 1946 football season before I moved up. UNLV University Libraries Frank Johnson 2 And as I say, there was just no, no comparison between Reno and Las Vegas. Las Vegas, gambling was almost an afterthought. And in Reno, it was you know, they had the Golden Hotel, the Riverside Hotel, and Alice Club, it was big enough to be kind of awesome. Like somebody who lived in Washington, or used to seem that way to me. So where did you—completed your education, I assume in Reno? In Reno. Ah, was it aimed at any particular specialty? Did you think that you wanted to get into gambling? That was probably the last thing in my mind. As a matter of fact, my high school counselor, (Unintelligible) High School, very distressed. She thought my folks were either getting divorced or getting into gambling. (Laughs) Pretty traumatic thing for her to lose a pupil to Nevada and that was the last thing in my mind, as a matter of fact. I can’t say I had the world’s most distinguished college career, I started out as an engineering major and managed to get on probations, and came back as—what did I come back as? I came back in pre-med, and got through a couple years of pre-med, and discovered that I didn’t care much for that. I was little squeamish about some things, I got a cat that was a tube filled with formaldehyde. (Laughs) Then I came back as a journalist major where I thank goodness did well in something, and I also went in and started majoring some in sociology, which was a whole upshot. The thing is, I put in about seven years of college and didn’t have a degree in anything and lacking three credits. Really? In the right field, in my, something called law, the press, to get my degree in journalism. But I ended up leaving college. I got married early, and we were beginning to have children and it was, UNLV University Libraries Frank Johnson 3 it just occurred to me, I couldn’t stay in college forever and raise a family, and maybe I ought to go to work, so I did. (Laughs) As a matter of fact, I really did not better myself too much. I went to work for the Nevada State Journal for forty-five dollars a week. I was making ninety dollars a week as a janitor. The job as a journalist—how long were you in that before you went to a state government? Well, I was in that from 1952 to 1967, so I kind of came through the ranks. I was the assistant managing editor of the Nevada State Journal, and I had specialized in the last few years, not only doing that, but I liked to keep my hand in the national reporting site. Specialized in being in control and also political work for it. And one of the, one of the things, I guess, that really got me leaning towards state government and gaming was probably the skimming that were going on in the latter part of 1967 of Las Vegas and Carson City, which were prompted by confrontations between the federal government and the state game control agencies. By federal government, do you mean the IRS? Primarily the Justice Department, but also the IRS. They followed by about two years, Bobby Kennedy’s invasion of Nevada with his investigators and various allegations of skimming and corruption that came out of the hotels. Hmm, was there a considerable time period that they were investigating gaming? I’m trying to put my finger on it right now, looking back that far, but I would say, minimum of two years, a great many well—federal government lead exposes (unintelligible) to the Chicago sometimes, which was a primary source for government information, dealing both with skimming and with mafia or underworld ties. I can’t remember whether the mafia was being UNLV University Libraries Frank Johnson 4 accepted by the FBI as a real thing at that time or not, but at least the back money from Nevada was presumably being skimmed and going into underworld hands. Was this both in Las Vegas and Reno? Or was it mostly centered in Reno? It was mostly centered in Las Vegas, maybe a little bit in Lake Tahoe, but mostly, primarily within Las Vegas casinos. It was about that time that some of the gaming figures discovered something called the Henderson Novelty Company. I wonder if you’ve ever heard of the Henderson Novelty Company. That was the federal wiretap operation—one other thing of the Henderson Novelty Company, it had wiretaps on many of the top gaming figures. Some entire hotel operations were bugged, and this came out, there were law suits against the federal government on invasion of privacy. The relationship between the state and Washington deteriorated pretty badly at that same time. Was there a connection? Or any hint of a connection name between any of the gaming officials, then say, officials on the local state government? No, absolutely no end at all with that. I think that the only thing that could be inferred would be derogatory, and I don’t even think that was inferred, as perhaps they were not doing the same, as good a job as federal government thought it was doing. I think one interesting thing regarding skimming obviously, the state was looking into it at the same time and they had developed the thing called the “Pocket Cops.” They had oh, trying to think of the right designation for my—the best thing I can (unintelligible) is part-time help, but they were pretty high as far (unintelligible) help. Going around various casinos and kind of, counting money at the window of the table. And then the next day having your audit team come in and the—or not the next day necessarily, but afterwards, find out what was counted on those tables on the counters. And they found that very, very small discrepancy—where the federal government doing the same thing came up with some UNLV University Libraries Frank Johnson 5 drastically different figures. And I think the game became kind of a laughing stock because they weren’t as discreet with their counters as the state was. So it was a kind of (unintelligible). Was that the main bone of contention between state and feds? This actual count of the money or the extrapolation from what perhaps the observer was looking at? That and persons who reputedly connected with the underworld, supposedly having hidden interests in casinos, yes. And there were some stories about the skim that went out of here and who took it out. I remember one interesting one that I had read a great deal about, named Dusty Peters. He was supposed to be associated with Meyer Lansky. A few years later, I had a chance to meet Dusty over in the Bahamas, where he also was supposedly bagging his money back and forth. Happened to have lunch with him, and he was carrying these two bags back and forth, and I said, “How much can you get into that bag?” He says, “(Unintelligible) come up to my room and I’ll show you.” He went up and showed me to black bags filled with dirty laundry. Whether or not this is, I gotta believe he really had some other black bags, but he was kind of a funny— Peters? Dusty Peters. Is that—I kind of wonder, Meyer Lansky from what I understand, which is probably wrong, was head man for the syndicate in the New Orleans area. Is that right? Well no, he was really the financial genius and was closely related to, at least by reputation with Nevada and probably with New Orleans, and what else, the Caribbean. As I say, he wasn’t really the right nationality to be mafia but (unintelligible) and still is I suppose. The financial genius, certainly can figure— I’ve always heard of that. I understand that this skimming was supposedly taking millions out at once? UNLV University Libraries Frank Johnson 6 Well, look George, I won’t give you a figure as there were so many thrown around. Certainly the state did not find any evidence that it was nearly as great as the federal government claims to be, and yet I don’t think anybody can logically, assume that there wasn’t anyway. Certainly was, but to what degree, in my subsequent experience, I can tell you, I’d just hesitate to guess. There were, they weren’t very liberal very frankly, in Nevada at the time, concerning how (unintelligible) conducted people. With three licensees in a room, and let ‘em count the money, and whatever they decided they had is what you had. The licensee goes into the count room and bent over the regulations no more than one can be in there at any one time, which I think is very good. Licensee, I’m not certain I understand that term. You can’t have two owners in the count room at the same time. You have to have a minimum of three people, and usually that’s four people including Cage. Each one will be in supervision of a different department unrelated to money, so that you don’t have a situation where people are able to say, “You’re one for you, and one for me, and one for you, and we’ll put this one aside for the state,” but that could go on, and I’m certain it did. I guess what I heard then probably was the federal ideas of what was going on more than what was actually proven in litigation I suppose. Well, the federal people, I have got to say this, had the advantage of wiretaps, and some conversations. On the other hand, I had a chance to listen to some of the wiretaps, and I don’t know that you’d cut your own conversations, but sometimes, the things you say over the telephone or just talking with the people around you, you tend to exaggerate a little bit and so we—the accuracy is something that I question, especially when it comes to those multi-million UNLV University Libraries Frank Johnson 7 dollar figures. They at least, multimillion on a monthly basis—I wouldn’t doubt it on a yearly basis. Is that right? Do you think that there was that much leakage on a yearly, on an annual basis, a multi-million? I think that (unintelligible) Would that be from one major operation from the city? No, I mean, from the city as well. Oh, okay. I do know that one operation, one year reported a bottom line profit of something under a hundred thousand dollars and was then taken over by a corporation next to your, and reported a bottom line profit of nine million and I don’t think that the new people that came in were that good. I don’t blame you. That does sound a little farfetched. I assume that you were following this area very closely when you were still a journalist? That’s true. Was the next step in your career to state government official—was that as a consequence of following and giving accurate reporting on this particular area of concern? Well I think inquiries and editorial writing, but that isn’t the entire reason for me leaving. I reached a place very honestly where the trends in journalism were not ones that I liked too much. Objectivity was thrown out of it to great degrees and it was beginning to feel a little uncomfortable in journalism to be very honest with you. I used to talk about journalism and sensationalism and I think going from that to a degree of objectivity to a degree of character assassination, or something close to it—in any event, I was ready to leave that particular UNLV University Libraries Frank Johnson 8 profession. Major deal, I mean put together, while everyone (unintelligible) and also, I had another feeling of, which was a very sincere one, that two areas: one, I wasn’t sure I wanted to spend my entire life reporting on what other people were doing and not doing it myself. Smart move. And the other one, I found that I had a very, very good (unintelligible) and if I had an opportunity to do something, it sounds awfully corny, but if I had an opportunity to do something on a limited basis and on brief basis, because I never had anything desire to be a bureaucrat, but you know, some little thing was stake holding and I wanted to do it. (Tape one ends) When you said that journalism had changed from objectivity to personnel, character assassination, would you—? A term, character assassination shows you what you do when you’re talking. That’s probably going a little too far of the day. Would you say that there was perhaps, more political pressure being put on the journalism profession? Would that have been a—? No, I think that would be untrue. I think the part that disturbed me was that the journalism profession was trying to put the pressure on the political process. Instead of reporting the news, they were trying to—well a measure of your success was how much you could maybe manipulate what happened. That’s what I thought was a big problem. Can’t say that I blame you for that? I guess one of the sure hold things I did, either am or am not proud of, was be a big person, I think the only person to actually have a state government officials arrested under the Freedom of Information Act, and that involved a highway location in Reno and at the request of the paper, UNLV University Libraries Frank Johnson 9 and Governor Grant Sawyer, Attorney General Roger Pulley, who’s now a federal judge, and he actually had him arrested, fingerprinted and booked for violation of the open meetings law, which seemed a little tough when you look back on it. Arrested by the local—? Arrested by the (unintelligible) sheriff’s office. (Laughs) how did you ever get him to arrest the governor? Well, I filed a complaint, they didn’t have much choice. That again, is a thing that might’ve carried things a little far. It certainly gave me a little more notoriety than I wanted at the time, but it also put a kind of crimp in my state government parole. (Laughs) When you—I’m surprised that your next job was with the state government. After that sort of an introduction, it seems to me like that would’ve been the last job. Well, I had been acquainted with it for a long time, and it was a new administration that came in. So perhaps you were picked up as a like, new broom, sweeping out all the old administration. Actually, I think that’s a very accurate way to state it. All (unintelligible), they had a press conference in Reno, it had indicated that individually they had an admiration for the three members (unintelligible) but that he felt that through his contacts in Washington with the federal government, and through his own analysis of it, that they had not been doing a professional job in controlling. More importantly in maintaining the necessary relationships with the federal law enforcement agencies, you’d have to continue. So it was pretty clear that he was going to get rid of all three of them and make some changes. Is that how you got in? UNLV University Libraries Frank Johnson 10 Well, after he was elected, no. As a matter of fact, I didn’t even go in, I was chairman of the—there was always one other factor in there, I also just, undergoing what I thought was a heart attack, which turned out to be a super, super case of ulcers, probably because of my feelings towards journalism as profession at the time. Anyhow, I was offered a job with the Game and Control Board as a public information officer for a little less than half my salary. As a journalist? Yes. Hmm. (Laughs) (Laughs) But, anyway, for that time, I thought for health reasons, that: one, I would like to do it, two, the chairman at the time, (Unintelligible), was planning to become one of the owners of Channel 13 down here in Las Vegas, and was going to be working. And I was given the understanding that it was true, that I could function as a sort of unofficial member of the board until the vacancy opened. Ah. I will be very candid, I was a little concerned with how I was appointed because it struck me as being a fairly political, as long as it came out, I was a pretty good chairman. At the time, I, you know, wasn’t—it looked like an interesting thing to do, it gave me a chance to make a career change. It must’ve been an outstanding introduction into gaming here. That’s the best on-the-job training I can think of. (Laughs) Well that’s true. So— UNLV University Libraries Frank Johnson 11 One thing that I found out, I think this is probably true, is that in many governmental positions, not just state government, not just Nevada, as I said, I was a public information officer and the honest truth is that I think the least needed job in the governmental agency is a public information officer. I think myself, the top people, and the people directly involved should be dealing with the press, find that P.R., public information officers spend an awful lot of time sitting behind their desks looking for news clippings and (Laughs) generally, not doing one hell of a lot. As a matter of fact, the day after I did become chairman of the board, which was in August of ’67, I abolished the position. Which may have bothered Governor Laxalt, ‘cause I think he had some ideas of being able to give somebody else a job. (Laughs) (Laughs) How long were you involved with the Gaming Commission? You mean, as an employee in state government? Well, all together. I mean, excluding covering from the newspaper—I had superb relationships with the board and the commissioner’s office. It almost felt like I was living—as a practical—on the payroll, so to speak, from January of ’67 till, I guess it was the December of ’70. Is that the normal times of appointment? It’s a four-year term, yes. Ah. Okay. While you were there setting policy for control of gaming here in the state, was there any major or even miner new trends that you initiated? One, I don’t like to say “setting policy,” because that’s a thing that’s done jointed by the Gaming Commission and the whole board and the legislature, it isn’t one person who sets policy. But yes, UNLV University Libraries Frank Johnson 12 I think a very major thing that’s happened in a period of time is opening the Nevada Gaming Department of Business. With one exception of the Dell Web company, which it was either grandfathered in or manipulated in, I don’t know which term would be the most correct. Basically, they were not a publicly held corporation with an open license (unintelligible), we had a difficult time selling it to the legislature, the stake of being in a much better position and having respected publicly held corporations, already strictly controlled by exchange commissions, and little stock exchanges, and had their own responsibility with their shareholders, with members of casinos with two, three, or four people, they begin to wonder how they scraped together thirty or forty million, which is what the casinos cost at that time. Or on the other side of the coin, the situation non-existent in Caesar’s Palace, which had seventy-some individuals. But, each owning a couple of points here, it was our belief that it was just much better, particularly in terms of control, but also in terms of being able to afford the things that we would need to have done, in terms of building hotels, or refurbishing hotels. They have a publically traded corporations from within the state. And there was a great deal of (unintelligible) and I think some of it still exists. It shouldn’t happen, corporations should be responsive to the state’s needs, they take their money and run out of state, and you know, you get kind of investments that corporations have in Nevada, they are not obviously taking all out of state with their jobs— Right. I’m, I imagine that one of the concerns of the legislature, and I’m not sure about this by any means, but it must’ve been more difficult to enforce gaming restrictions, laws, regulations, not corporations. By that I mean, if a corporation you know, failed in some respect, or broke some regulation, who goes to jail? UNLV University Libraries Frank Johnson 13 That was one of the major concerns, I’m not even going to say that it was all wrong, it used to be, they had individual licensees, you could go talk to them, you didn’t have to worry about taking you to court. If you came across an incidence and back in that particular period of time, it was particularly the northern part of the state, and the smaller casinos mostly, a good deal of a problem with cheating. Coming into a small town where there’s maybe one or two casinos and one of them you know, have cold turkey is cheating, we can shut ‘em down and you know, really damage the communities that you would go into. And then have to say, “Why don’t you shut down for six months and paint everything, remodel, and then start up again, and play the game right,” well you can’t do that anymore. But with corporations, very honestly, they’re willing to take the state’s support on technicalities and legal departments that research the law—quite frankly the make it tougher—they make the state a hell of a lot more sophisticated in its controls and that was a concern, and probably was a valid one, I don’t think it’s nearly as valid as getting corporations into the state. But that particularly bothered Senator Carl Dodge, of Churchill County, I think that (unintelligible) is still bothered by it. But you can’t in effect go up and get what you want, what you think is good for the state without expecting a little bite from corporations. If a corporation is right and it goes to work it’s going to win. Right. I’m thinking now of the contra-temps, if you will, between the Gaming Commission and the Aladdin that has been going on for about a year now I suppose. This would seem to me to be almost exemplary of the situation that you just have been talking about. You know, here’s a big corporation, I don’t know what the home base of a corporation is, I have no idea, but a money-maker of that size out there, they can afford to drag on and on through various courts for much longer. Jeez, any individual that I can think of at least, bar maybe Howard Hughes, god rest his soul, if he was you know, someone with that UNLV University Libraries Frank Johnson 14 amount of money, and I suppose that the Aladdin corporation, whatever, it’s parent’s corporation is does have that kind of money. I think there’s no question of anything of it, I think that is where you know, not pretending to even have a perfect hindsight, but I think the problem is, that when you said, okay we’re giving license of a corporation, you open the door to a lot of corporations that don’t have the statutes—I think maybe they should have done something with the odds that limit the type of corporations, or the size of a corporation. Very frankly, in the first year that corporate gaming was permissible, we had mountains of applications from companies—there’s a Shell Corporation in Utah, and I’m certain its—on the other hand, you can’t, you can’t be unfair about that. If it’s a corporation and the people in there are legitimate, and they come up with money, I can’t criticize the state for letting ‘em in. I think we were very fortunately the cream of the crop were the first ones up. And by the time they were in, we were out. (Laughs) We left a lot of problems to our successors. (Tape two ends) Frank Johnson Interview, tape two, side one. When you made mention of your successors, did you mean that the corporations had just a big factor in Nevada gaming in December of 1970? That’s right. And as a matter of fact, we’ve even had experience with—prolonged experience with one corporation. In effect, (unintelligible), and I guess to put it bluntly, we have been doing our best to, you know, we did your best to get part of the board to change a lot of stockholders and become (unintelligible) to put his stock in a blind trust, we just, that was one of the less successful ones, as far as I’m concerned. You know, we didn’t show—but that was our main corporate problem. As I said, the department and (unintelligible) in the situation. That’s the same one that eventually Hughes did control? UNLV University Libraries Frank Johnson 15 No, that’s the one that’s controlled the Stardust, the Fremont, the (Unintelligible) would eventually be up there. But at one point, Howard Hughes was willing to buy the Stardust (unintelligible) but the Justice Department refused to let him do it because he had numerous holds on Nevada. But no, that is not a Hughes corporation. What was that corporation that Hughes had? I thought it was Argent. No, Hughes, one was in here—his initial purchases were for Howard Hughes Mitchell, Hughes Tool opened, and later became Summa Incorporated. That’s it, that’s, that’s where I got messed up. Argent, Summa. For—for a single individual, Hughes, to have, what, I’m assuming is just enormous influence in state gaming control. Maybe not control, but in-state gaming, was there any hint that he had more than, more interest than was right with the game control board? State politics? I don’t think there’s any major control board or state politics, I think their problem was that he was here, and it was perhaps justified that he was just using too much control from the number of people that he employed through the extent of his holdings, which went beyond his casinos. Almost every non-casino piece of property on the Strip is considered to be property through Las Vegas, Summa was just a now-beginning program to make that available for sale. And the fact that Hughes had gained so many properties led to the creation to one of the dumber regulations that we’ve ever had—it had to do with multiple ownership and simply listed a bunch of criteria that ought to be considered—it’s sort of a non-regulation regulation. Mainly because every single regulation consists of nineteen census with question marks after ‘em, why that’s it. (Laughs) But there was a great deal for concern for the power that he was assuming. On the other hand, he took out many owners that sooner or later, had to be removed from the Nevada Gaming UNLV University Libraries Frank Johnson 16 Department. He was in many respects, he was good for gaming, he gave the town a whole new breath of life at a time when there were huge vacancy factors, morale was low, properties were running down, and there’s a great deal of what the government would now do to the state. Howard Hughes came along and started investing, it was a terrific morale factor of the property values, begin going up again, and the employment increased, heck, it did all kinds of good things as well as bad things. As a matter of fact, unless my memory is completely shot, I was stationed out here at Nellis when I was, I’m sure I wasn’t there when Hughes first took an interest, but his interest became very evident. He had bought here and buying here and buying there, I was on Nellis at the time, and I can recall pretty much that any number of people were saying, “This is the best thing to have happened to Las Vegas in twenty years.” Or something like that—probably an exaggeration— I don’t think that’s what an exaggeration, that’s what they were saying. Is that right? And it was, as a matter of fact, I’m trying to remember if that was a depression, or recession period, of whether he brought the town out of it, or whether he just—? I think it’d just be more accurate to say the town was, well, was in an economic slump. I wouldn’t say it was recession, but at the time, for instance, the town was just grossly overbuilt. They weren’t able to rent their apartments. They financed a great many, very nice homes, but in the process of trying to sell ‘em, just for about anything they could get for ‘em to move, people were leaving—it was just not a good period for Las Vegas. And a lot of it was caused by the fear that the federal government might even go so far as to shut down gambling altogether. And whether or not that fear was real, it certainly existed. It was a practical matter that the federal UNLV University Libraries Frank Johnson 17 government job would’ve. I’m sure the federal government thought about it, and might’ve if it could, but it was that type of attitude that prevailed. I think the fact that Mr. Hughes came into town, and was a highly respected man, like (Unintelligible) or Hoover, who had major government contracts, and major relationships with the government, the federal government. I think a substantial part was almost immediate turnaround and nobody can take credit for it except Mr. Hughes for having been here. I’m very surprised at your saying that the federal government was interested, or perhaps interested, even looked like they were going to pull us down and legalized gambling here. I had never heard that rumor. Did that only circulate on a higher level? No, as a matter of fact, at the time, the only way to impress, the politicians were expressing concern about it, I think there was actually some merit in thinking this might happen because there was an absolute oh, it’s hard to describe the warfare that was existing between the state of Nevada and the government. If it sounds like a joke, it happens to be that it wasn’t. The truth was, the federal government put bugs (unintelligible) bugs gained control of police officers between Las Vegas Boulevard South and L