N.J. Regulators Cite Ties With Korshak : Atlantic City Hilton’s Casino License Denied

New Jersey gambling regulators Thursday found Hilton Hotels Corp. unfit to hold a casino license for its nearly completed, $270-million Atlantic City Hilton. Opponents cited the firm’s 13-year association with Los Angeles and Chicago labor lawyer Sidney Korshak as the major reason for their vote.

Korshak, 77, has long been described by law enforcement agencies as a representative of organized crime figures and an influential figure in Hollywood, Las Vegas and the California racing industry.

In 1978, the California Organized Crime Control Commission included Korshak in a list of 92 reputed mob figures and said the U.S. Justice Department had described him as “a senior adviser to organized crime groups in California, Chicago, Las Vegas and New York.”

Beverly Hills-based Hilton had dismissed Korshak as its “labor law consultant” last March, after having paid him $700,000 in fees over the years, according to testimony in the New Jersey casino licensing case.

2nd Public Firm Rejected

The New Jersey Casino Control Commission previously has denied licensing to a number of high officials of corporate applicants, but the Hilton case was only the second instance where a major publicly traded corporation has been rejected.

Barron Hilton, chairman and chief executive of Hilton Hotels and the son of founder Conrad Hilton, said in a statement issued by the firm’s Beverly Hills headquarters that he was “shocked and stunned” by Thursday’s decision to deny the firm a casino license. Hilton, who twice testified at the licensing hearings last year, said the firm will take an appeal to the New Jersey courts.

He noted that the granting of a license had been recommended earlier by the state Division of Gaming Enforcement “after intensive investigation.” The division, which is under the state attorney general, investigates casino applicants and monitors casino operators.

Hilton Hotels, which is licensed by Nevada to operate the Las Vegas Hilton and the Flamingo Hilton, needed a majority vote to be licensed in New Jersey, but the commissioners split 2 to 2 in the voting.

Commission Chairman Walter N. Read recommended Thursday that the Hilton firm be granted a license on the condition that some of its executives be forced to resign. But two commissioners refused to go along.

Explanations for Vote

One opposing commissioner, Carl Zeitz, said he could not find “that the wrongdoing in this case was limited to certain persons.” He said he could conclude that the company “failed to demonstrate the good character, the honesty and integrity of certain corporate officials who appeared before us.”

Commissioner Joel Jacobson, explaining his vote against the corporation, said in reference to Hilton’s severing of ties with Korshak last year: “The corporation apparently didn’t get religion until it was pounding on the pearly gates of licensure.”

Jacobson added: “For 13 years, the Hilton corporation either ignored or disregarded every shred of information about Korshak’s tainted operations and associations.”

The firm, he added, “had labeled its associations with Korshak as isolated and innocuous. I disagree. I regard the Hilton-Korshak relationship as continuing and contagious. I do not believe the stain has been cleansed.”

Zeitz backed Jacobson’s expressions on the Korshak relationship, and added that he was concerned on other matters, too.

One, Zeitz said, was the fact that the casino at the Las Vegas Hilton had cashed $100,000 in checks in 1975 for lawyer Sorkis Webbe, “which we know were kickback payments on the Aladdin hotel-casino construction financed by the Teamsters’ Central States Pension Fund.”

Webbe was sentenced to prison in 1983 on conviction of concealing Aladdin construction kickbacks from the IRS. At his trial, attorneys for the Justice Department’s Organized Crime Strike Force maintained that the checks were “laundered” for Webbe at the Hilton.

Zeitz also made reference to a Hilton internal investigation in the mid-1970s. A commission spokesman said the report on the so-called St. Vincent investigation made allegations about the conduct of Henri Lewin, who is the firm’s executive vice president for hotel-casino operations in Las Vegas.

In 1979, the Justice Department filed criminal charges against Lewin and Teamsters Union officer Rudy Tham of San Francisco, accusing them of Taft-Hartley Act violations regarding free lodging, meals and drinks provided at the Las Vegas Hilton. A federal judge later threw out the case, holding that Taft-Hartley did not cover “comps” that casinos give to gamblers.

Korshak’s name figured in another New Jersey casino licensing case three years ago involving Playboy Enterprises Inc.