Two prominent Washington investors with connections to the Carter administration were involved in a proposal to build a hotel and gambling casino in Atlantic City, with Washington gambling king pin Joe Nesline as a consultant.
The investors are multimillionaire builder Nathan Landow and Smith Bagley, a Reynolds tobacco heir. Landow is under consideration for appointment as U.S. ambassador to the Netherlands. Bagley has in the past been rumored to be in line for several diplomatic posts, including U.S. chief of protocol and U.S. ambassador to Great Britain.
Nesline's involvement with the casino venture became known Jan. 14, when federal and local police raided Nesline's Bethesda apartment as part of a federal investigation of gambling here. FBI agents seized a file containing correspondence and memoranda spelling out a proposed $85 million deal involving Bagley and Landow.
Landow admits knowing Nesline. Bagley told The Washington Post, "I have never met this man I never heard of this man."
Landow acknowledge a casual acquaintanceship with Nesline of many years' standing, and an involvement in one other hotel-casino venture in which Nesline also played a role. However, Landow said he did not know Nesline to be an important illegal gambling figure.
Nesline, who lives in the luxurious Promenade highrise apartment building owned by Landow at 5225 Pooks Hill Rd. in Bethesda, has been an internationally known gambling figure for 40 years. He had long been identified in local police files as the suspected "godfather" of bookmaking and other gaming action is and around Washington.
With an arrest record spanning four decades. Nesline has been charged with bribery and bootlegging as well as gambling. He was convicted of carrying a deadly weapon in the fatal shooting of a man at point-blank range in an after-hours club in 1951.
In more recent years, Nesline has been associated with a casino on Yugoslavia's Adriatic coast.
FBI agents and local police officers who searched Nesline's apartment on the Saturday night before the Super Bowl pro football game, had been planning the raid for more than a year. It was one of many conducted simultaneously here and in Las Vegas. The U.S. Attorney's Office here is expected to present evidence from the raid to a federal grand jury.
The file seized in Nesline's apartment, and now in the custody of the FBI, contained a draft copy of a letter bearing the typewritten names of Landow and Bagley, along with handwritten memos and notes describing their interest in building a hotel-casino in Atlantic City.
When pressed to explain how the file and its contents came to be found in his possession. Nesline admitted to officers conducting the raid that he had been acting as a "consultant" in the casino venture. "Consulation" Described
During a series of interviews with The Washington Post that totalled 10 hours over the last 10 days, Landow's lawyer.Saul Schwartzbachs, blamed himself for involving Nesline. "I may have destroyed my client." Schwartzbach said, because he had consulted Nesline for half an hour for expertise that would enable Landow and Bagley to negotiate knowledgeably in what was to be a joint venture with Resorts International Inc., a conglomerate with gambling in the Bahamas and elsewhere.
Bagley did recall some reference to consulting an expert for the venture with Landow. He said that he remembers "Nate (Landow) saying he had a contact, an expert in gambling. I don't recollect his name, but he consulted him. That man knew something about gambling. If we took the lease we wouldn't lose out."
The proposed Altlantic City hotel-casino project, which never reached fruition because of financial problems, was not the only gambling venture in which Nesline had been involved with Landow. Also found in the raid on Nesline's apartment was a large color photograph of an architectural rendering for another proposed hotel-casino deal on the Carribean island of St. Maarten's in which Nesline was acting as a middleman.
Involved in the St. Maarten's venture were Landow and Edward Celini, a brother of Dino Cellini, a former associate of organized crime figure Meyer Lansky. Edward Cellini formerly ran the Paradise Island casino operation in Nassau, the Bahamas for Resorts International, but he was let go.
Robert D. Peloquin, the former chief of the Justice Department's Organized Crime Strike Force who is now the head of Resorts International's Intertel security firm, said in a press conference in Atlantic City in 1976 that Edward Cellini was removed "frankly because of the newspapers; it was unfair but we had to let him go because of his brother."
Cellini brother Dino, according to Peloquin, had been operating a gambling club in Holland until recently, when he became ill with cancer.
Edward Cellini was already operating one hotel casino. The Concord, on St. Maarten's when he and Landow were brought together by Nesline two years ago.
In order to obtain a casino license in New Jersey, all applicants must submit to detailed scrutiny and satisfy the Casino Controls Committee and the state Attorney General's Office that no organized crime money is involved.
Schwartzbach, Landow's lawyer, said that the letter found in Nesline's apartment, naming Landow and Bagley, was "a draft copy" of correspondence that was never mailed to the Atlantic City Housing Authority.
But The Washington Post, which first learned of the proposed Landow-Bagley construction project six months ago from sources here and in Atlantic City, learned from an official source in New Jersey that an apparently identical letter was mailed on April 25, 1977, to the Atlantic City Housing Authority.
The original, according to sources here, was turned over last week to New Jersey State Police, the investigative unit of the Division of Gaming Enforcement in the Attorney General's Office. Partnership Planned
Landow and Bagley, according to the letter, were to be partners with another realtor. William C. Whitner of Charleston, S.C. in the development of a hotel and casino complex on a 56 acre traft optioned by Resorts International near the steel pier on the boardwalk.
Bagley, 42, a member of the Reynolds tobacco and metal family was a supporter of candidate Jimmy Carter.Bagley's Musgrove Plantation on St. Simon's Island off the coast of Georgia was rented this past weekend (as it has been several time in the past) as a presidential vacation retreat.
Bagley's wife Vicki, a Carter fundaraiser and "diplomatic liaison" in Carter's election. She was appointed by the president last month to be a member of the prestigious Committee for the Preservation of the White House.
President Carter has described himself as being "very close" to the Bagleys and as considering them to be "warm friends."
Landow, 45, a self-made entrepreneur, has been heavy contributor to the Democratic Party and was an active Carter fund raiser. Like Bagley, he has become socially active here during the Carter administration.
Landow, who came to The Washington Post yesterday afternoon to ask that this story be abandoned so that he could continue to be of service "to his community and his country," pointed out that 23 members of the Democratic National Committee and of the U.S. Senate and House - had written letters to the White House in support of an ambassadorial appointment for Landow.
In June, Landow and Bagley and their wives flew with President Carter to New York on Air Force One for a $1.000-a-plate Democratic National Committee dinner.
In November, Mr. and Mrs. Landow gave a dinner party for actress Shirley Maclaine that attracted more than 200 people to the Landow's $640,000 Bethesda home.
Among the guests were President Carter's son Jeff and Jeff's wife Annette: Midge Constanz assistant to the president for public liaison: Jerry Rafshoon, Carter's unofficial media adviser: Pat Caddell, the president's pollster and Richard Hardeen, the president's management and director of the office of administration.
Also at the party was former Rep. Bella Abzug, to whom Landaw had lent $50.000 to help finance her unsuccessful bid for mayor of New York City last summer. The loan has not yet been repaid. Bagley had introduced Landow to Abzug. Police Observed Party
The party at Landow's home was observed by Montgomery County plainclothesmen, who took down the license plate numbers of guests' cars. Officers of the county's organized crime section have had Landow under surveillance for nearly a year. They learned from Florida police that Ln-dow had a financial interest in a now defunct corporation whose concealed owners allegedly included an identified member of the Carlo Gambino Mafia "family."
Secret Service agents, who were at the party to protect the president's son, questioned the Montgomery County plainclothesmen, who explained their interest in Landow.
The next day, according to one source, a Secret Service agent showed up at Montomery County Police headquarters "to take a few notes" and look at Landow's file apparently, there have been no further inquiries to the Montgomery County police about Landow from the White House.
Accompanied by their attorneys, Barley and Landow came separately to The Washinton Post for lengthy interviews. In addition to his own lawyer. Schwartzbach, Landow was accompanied by two of Bagley's lawyers, Thomas Wilner and Irvin B. Nathan, from this law firm of Arnold & Porter.
in both sessioms at Yhe Post and another with Landow in his office, the Atlantic City hotel-casino partnership proposed by the two men was described as a real estate venture that they said they abandoned several months ago when they were unable to come up with estimated financing of some $85 million to $100 million.
Both Bagley and Landow said it was never their intention to have anything to do with the gambling aspect of the proposed joint venture with Resorts International. But the amount of rental income the partnership would ultimately have realized, had the deal gone through, would have been based in part on the casino's profit or loss.
Landow said he brought Bagley into the prospective deal because U.S. lending institutions have shied away from Atlantic City and it was anticipated that Bagley would be able to find financing through Middle Eastern contacts that he had made socially on Washington's embassy circuit.
Specifically, Bagley and Landow were optimistic that Iran's Ambassador Ardeshir Zahedi would get them backing from the Pahlavi Foundation, which is controlled by the Shag Mohammad Reza Pahlavi's family. Those negotiations were a disappointment, as were appraches made to the ambassadors of Kuwait and the United Arab Emirates.
According to Landow's attorney, Schwartzbach, the decision to consult Nesline was made when Schwartzbach, Landow and Bagley were returning here in a small chartered plane from Atlantic City in early April. They had gone there to confer with Resort International executives.
The idea to go to Nesline was his, Schwartzbach insisted. Landow told the Post that when the idea was first brought up, he said to Schwartzbach. "I ain't talking to him: you talk to him." Bagley told the Post he does not recall any conversation along these lines during the plane ride.
Schwartzbach said he arranged to meet with Nesline because "it was obvious that three of us know nothing about gambling."
According to Schwartzbach, he arranged to meet Nesline in the management office at the Promenade. The meeting lasted about 30 minutes.
Schwartzbach he went to the Nesline "basically" for two purposes. Number one, to find out what it would take to set up a casino. And secondly, what profit is there in a casino? I had no idea. Well, I got a little education."
Landow said that he had been interviewed last Friday night by New Jersey State Police, who wanted to know "what was Joe (Nesline) doing in there ... why did we go to him...to expalin his role."
Landow said he told them, "Look, if I'd known Prince Rainier. I would have gone to him because his casino and his knowledge of the operationwas probably a lot more than Joe Nesline's. I said, if I knew the Tisch brothers from the Lewis Hotel chanin, they have a very successful hotel-casino in Monti Carlo...I would have gone to MGM. I would have gone to the Sheraton people...I would have gone to Mr. Rockefeller, who operates a casino in Dorada Beach." But Landow said he didn't know any of them.
Schwartzbach said that neither he nor Landow could explain how the draft copy of the letter to the Atlantic City Housing Authority came to be in Nesline's possession. Schwartzbach said he "may have" given the copy to Nesline during the meeting.
Nesline took note awhile they were talking. Schwartzbach said, explaing that this could account for the handwritten memoranda found by policewith letter.
In April 25 Letter, Barley and Landow wrote to "Willam J. Downing" (his name is actually Downey, the director of the housing authority in Atlantic City) to confirm "proposed developmental plans" that had been outlined in his office at a meeting on April 12.
Bagley and Landow informed Downey that they had, that same month, "entered into a letter of partnership to acquire a tract of land from the Housing Authority...and to develop a hotel and casino complex thereon...a subject to a redevelopment contract between the housing authority and Resorts International Inc."
The letter ot Downey continues: "We intend to obtain mortgage finanacing for the project. It isnot comtemplated that additional equity partners will be required in the partnership since the undersigned feel they are personally capable of providing such funds as may be necessary in excess of obtained loan proceeds and are committed by the partnership agreement to do so if and as required.Attached you will find financial statements..."
In conclusion, Bagley and Landow wrote: "We are anxious to lease, on a participating basis, our hotel casino space and feel that the proximity of Resorts (International) and its expertise in casino gaming should make possible a mutually beneficial arrangements between us."
The letter was signed by Bagley and Landow. A typed line for the signature of their third partner, William Whitner was left blank. Playboy Deal Sought
Bagley, in a telephone interview with The Post early last week said that he and Landow originally had tried to put together a similar deal in Atlantic City with Playboy Inc., which has under option a much smaller (100 by 341 feet) parcel of housing authority property alongside the convention center.
Bagley said that one of their meetings with the Playboy negotiators took place in the Senate Appropriations Committee chamber on Capitol Hill. It was a session, recalled another participant in the meetings that "was like something out of a Hollywood movie script ...Smith saying they were going to fly the head of Playboy down to his plantation in Georgia where he could sleep in the same bed Jimmy Carter sleeps in."
Bagley said, "It was never certain that we were going down there. We thought we might just put them up at my place here."
Landow said that the meeting actually took place in the hallway outside the Senate Appropriations Committee chamber. Present, he said, were himself, Bagley. Whitner, his brother, a lobbyist R.C (Preacher) Whitner, a Playboy Financial adviser and James R. (Jim) Calloway, chief counsel and staff director for the Senate Appropriations Committee.
Calloway, a longtime aide to the committee's chairman the late Sen. John L. McClellan, lives in one of Landow's apartment buildings, as did McClellan was a longtime family friend, Landow said, and was one of the Democrats who wrote a letter to the White House recommending Landow's appointment as ambassador.
Landow offered no explanation for Calloway's presence at the meeting or why he joined the group for dinner afterward. Calloway, when asked why he was present and what his anticipated rule was to have been, said he could not recall. Nesline Not Present
Nesline was not at that meeting or any other involving the Atlantic City hotel-casino project, Landow said, except for the one with Schwartzbach.
Landow complained that Bagley did not seem to have the entree he had expected Bagley to have with embassies. "It didn't seem to me like he knew the guys," Landow said. "When we went into a room, it was a handshake, no big thing like hugging sand a kiss and all that."
Landow supplied the Atlantic City Housing Authority and Resorts International with a financial statement, as requested, showing a reported net worth of some $10 million.
Bagley, who said he has never given anyone a financial statement, gave instead an 11-page biography and listed three references. Two were bankers. The third was James R. Gilley, who succeeded Bagley as head of the Washington Group, a North Carolina conglomerate Bagley founded in 1972. The Securities and Exchange Commission earlier this month issued subpoenas for the records of Bagley and several of his former associates in the Washington Group, which filed for reorganization under Chapter 10 of the Federal Bankruptcy Act last June.
SEC probers reportedly are attempting to puy together the pieces that led to the mear-failure of the Washington Group. One of the first problems noted by a court-appointed consultant hired to untangle the company's affairs were unsually high consulting fees paid to Bagley and others. The fees, including $60.000 a year to Bagley, were canceled, at least temporarily by federal Judge Rufus W.Reynolds after he said in court that he was "floored" by them.
Bagley, who founded the Washington Group in 1972, sold his share in 1975, at a time when, he said the company was making about $5 million a year on $100 million sales.
Bagley said he first began to have misgivings about dealing with Landow and Resorts International last summer when he "had a phone call from a banker friend in North Carolina saying that there was someone down there asking questions about me from Resorts."
"Those people scared the bell out of me." Bagley added. "I called the head of Resorts and said. "What's going on?" He first told me he didn't know anything about it. Then he called me back and admitted that they had an ex-FBI agent down there. He said he'd put a stop to it."
Internal revenue agents recently asked to examine Landow's rental records pertaining to Nesline. Landow told The Post. Landow and his lawyer said that Nesline is not shown any "favoritism," although they said he does pay less than some other tenants in similar apartments because he moved when rents were lower and has never had an increase.
Nesline, whose two-bedroom apartment is rented in the name of his girlfriend, pays $480 a month, always in cash.
Landow supplied The Post with a list of other family friends and business acquaintances who also have lower rents.
Landows said that Nesline has shown him and his family many kindnesses and courtesies throught the years. Nesline arranged for Landow's elderly parents to take a free trip to Yugoslavia, where Nesline once ran a casino, and one to Las Vegas.
When Landow himself wanted to go to Las Vegas, he said, he would often ask Nesline to call to make the room reservation, sometimes enabling Landow to stay free, other times to pay only for phone bills.
One summer, when Landow took his wife and three children to Europe. Nesline was spending the summer in Monte Carlo. When Landow's family arrived in that famous gambling resort, they discovered that the hotel into which they were booked was not to Mrs. Landow's taste and she refused to unpack.
Landow said she insisted: "Call Joe."
Nesline, who was staying a few blocks away at Loews, arranged for the Landows to get better accommodations there. Nesling and his girlfriend took the Landows to dinner one might and the Landows reciprocated the next evening, Landow said.
Another time, it was Nesline who needed a favor. He had two families with small children coming to visit him from Holland, he told Landow, and needed help in entering them and arranging their sightseeing.
Landow invited the families and Nesline and his girlfriend to dinner and hired a guide to show them Washington. Later, when Landow found himself in Europe on business, Nesline's friends in the Netherlands reciprocated by entertaining him and arranging for a $150-a-day guide to show him the sights.
In the past, Landow said, agents from both the Internal Revenue Service and Federal Bureau of Investigation have come to him to ask questions and alert Landow that they were watching Nesline. Landow said the inquiries began "six or seven years ago" when Nesline first moved into the Colonnade, another luxury high-rise that Landow built in 1967 on New Mexico Avenue, NW. The inquiries continued, Landow said, after Landow sold the Colonnade and Nesline and about 50 other tenants moved out to the Promenade.
Landow, after first saying that he had never talked with Nesline about gambling or the Atlantic City deal, later amended that to say that if the FBI or other law enforcement officers questioned him he would have to say:
"If they ask, did I ever TALK to him about it. I'd have to say yes. If I passed him in the hall, he'd say "How are things going in Atlantic City?" I'd say (making a thumbs-down gesture), "Agghh, it's the pits." St. Maarten Project
Landow said it was Nesline who asked him to get involved in the St. Maarten hotel-casino project with Ed Cellini. Landow arranged for a Washinton firm that has worked for him in the past to do preliminary engineering and architectural design studies.
Asked if he knew that Ed Cellini was the brother of former Meyer Landsky associate Dino Cellini, Landow said: "I assume so. They're a large family. But I don't know."
Dino Cellini, along with a number of his relatives, was listed in a telephone book and Roladex that Nesline later told Landow were confiscated by police in the gambling raid on his apartment.
To help find funding for the proposed casino on St. Maarten. Landow said he turned to a longtime skiing buddy. Lester Matz the Maryland construction engineer who admitted paying cash kickbacks to public officials including Spiro T. Agnew in order to obtain contracts for his firm.Matz was a key figure in the investigation that led to the resignation of Agnew, as Vice President and was given immunity from prosecution for his information against Agnew.
Landow said nothing to indicate that Matz's involvement was anything more than the advise of a friend who owned a chalet near Landow's in Aspen, although Landow said Matz had flown with him to London once to check out promised financing that never materialized.
However, an attorney involved in the discussions on financing said last week that Matz had indicated he expected to be a principal in both th e hotel-casino deal on St. Maarten and the one in Atlantic City. Matz wanted to raise money for both ventures at the same time the lawyer said, but "I told him let's get one out of the way at a time."
Matz was not available for comment according to his lawyer. Arnold Weiner.
Although Landow said that Nesline was not to his knowledge, financially involved in the St. Maaten deal, he acknowledged that when the plans for St. Maarten were ready he sum money Nesline to his home and gave the project plans to Nesline to forward to Edward Cellini.
Nesline would not return phone calls from The Washington Post. Painting of Nude
When police searched Nesline's apartment during the recent gambling raid. Montgomery County officers photographed a painting of a nude with cherubs that was found leaning against the wall. A newly opened packing crate addressed to Nathan Lanciow at his Bethesda home, was lying next to the picture.
Landow told the Post he had neither given the painting to Nesline nor accepted delivery for it at his house. Landow's explanation was that Nesline had "years ago" either "given" or "sold" the picture to an old friend who has since died. Nesline told the manage at the Promenade, Landow said, that the picture would look good harping in the lobby.
The business involvement of Landow's that originally attracted the attention of Montgomery County's organized crime unit was an investment in Quaker Masonry Inc., a firm that had offices in Silver Spring and in Hollywood. Fla.
According to corporate records in Tallahassee, Landow was listed in 1972 as a vice president and director of Quaker Masonry.
Florida law enforcement authorities reported to other police agencies in October 1973 that Anthony Plate, known to them to be an associate of the Gambinos was believed to have a 25 percent interest in Quaker.
Landow confirmed to the Post that he had invested between $120.000 and $160.000 om Quaker because a boyhood friend was involved and had told him that the company was going to be a moneymaker. He subsequently lost "much more" than this investment and is suing at least one other former Quaker official in an attempt to recoup.
Landow at first said he did not recognize the name "Plate" and his lawyer asked how it was spelled. Then, later, Landow recalled: "You know you're right. I do remember the guy, I remember his name and I remember the person ... being involved in the business down there."
Landow said he had seen Plate at Quaker when he went down on an inspection trip after his accountant had told him that "certain bills weren't being paid tha t certain withholding taxes ($19.000 worth) weren't going where they were supposed to go and there was just a mishmash."