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Tuesday, Jul 25, 2017
Cuba

Heirs of gangster Meyer Lansky want payment for hotel Cuba seized

The family of the late gangster Meyer Lansky has a message for the Cuban government: They want Lansky’s hotel in Havana back.

It was Lansky who helped turn Cuba into the “Las Vegas of the Caribbean” in the 1950s by establishing a flourishing gambling industry that also became a symbol of corruption in the island nation under then-President Fulgencio Batista.

After Fidel Castro’s revolution took power Jan. 1, 1959, the casinos were shuttered and the property nationalized. That included Lansky’s Habana Riviera, considered one of the finest hotels in the world at the time.

Now, the Cuban government is willing to negotiate settling an estimated $1.9 billion in nationalized property and business claims against the island nation by a combined total of nearly 6,000 U.S. citizens and corporations.

Lansky’s family wants to be compensated, too — either the hotel or its cash equivalent.

“The hotel was taken from my grandfather forcefully,” said Lansky grandson Gary Rapoport, 60, of Tampa. “Cuba owes my family money.”

It cost an estimated $8 million to build the Habana Riviera in the 1950s. It still is operated as a state-run hotel.

Rappaport has been in touch with a few attorneys in Miami who deal with property claims in Cuba as well as an individual with a relationship to the Cuban government who says he can act as a negotiator. Rappaport would not share names since no contracts have been signed.

“We never filed a claim with the government or hired an attorney earlier because we didn’t think the door for negotiating would ever actually open,” said Rapoport, son of Sandi Lombardo, Lansky’s only daughter and also a Tampa resident. “Now it is open.”

U.S. State Department and Cuban officials began negotiating Tuesday in Havana on the decades-old property claims, and on $4 billion in civil judgments against the Cuban government awarded to American citizens in U.S. courts.

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Also on the table are financial damages the Cuban government blames on the five-decade U.S. travel and trade embargo, with estimates ranging from $121 billion to more than $300 billion.

The discussions do not include losses by Cuban exiles since they were not U.S. citizens at the time of confiscation.

“The meeting is the first step in what we expect to be a long and complex process, but the United States views the resolution of outstanding claims as a top priority for normalization,” the State Department in a prepared public statement.

The Lansky family won’t be included in whatever a formal settlement entails. Whether they can ever be compensated is up for debate.

The nearly 6,000 claims that make up the $1.9 billion under negotiation were certified by the U.S. government’s Foreign Claims Settlement Commission. An initial list American properties and business nationalized in Cuba was completed on July 6, 1972. The commission accepted claims again from 2005 through 2006, but not since then.

In an e-mail statement to the Tribune, the State Department said, the commission “is not presently authorized to accept additional claims by U.S. nationals for property seized by Cuba.”

With that avenue closed, “There are no effective, open channels for non-certified claimants,” insists Richard Feinberg, author of a recently released Brookings Institution report titled “Reconciling U.S. Property Claims in Cuba,” in an interview with the Tribune.

But another expert, Robert Muse, a Washington, D.C.-based attorney who specializes in legal issues brought on by the Cuban embargo, takes a different view.

The commission operated pursuant to Congressional authority, Muse said, in order to archive the ownership and value of nationalized property to be used in negotiations with the Cuban government.

Just because the commission is not currently operating “shouldn’t mean no other claims can be accepted or espoused by the U.S. government,” he said. “It would have to go through the State Department. I would counsel people to submit whatever evidence they have.”

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The Lansky family also has the right to negotiate directly with the Cuban government on their own, said Antonio Martinez II, a New York-based attorney specializing in Latin America relations.

Martinez has a friend he would only describe as a “partner with a major law firm” whose Cuban born wife and her family saw their home there nationalized. It is being used as a government building. Martinez said his friend has reached out to the Cuban government.

“He was told they’d be happy to talk when the time was right,” Martinez said. “This seems to be the time.”

Still, the Lansky family may find that the Cuban government treats them differently.

While Cuba’s constitution calls for compensation for nationalized properties, it creates some exceptions — one of which is associates of the Batista government, said Feinberg with the Brookings Institution.

“The phrase ‘associates’ allows for considerable interpretation,” Feinberg said.

Lansky might be considered an associate. But that won’t stop the Lansky family from trying.

“I realize my grandfather was considered an enemy by the Castros, so that could hurt us,” Rapoport said. “But I also realize that at some point the Castro brothers will be off that island and things may change. I don’t want that property going to anyone else. It belongs to my family.”

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Lansky, Russian born and raised in New York City, is considered one of the most significant mob figures of the 20th century for his role in turning organized crime from an illegal industry segmented by cities and states to one that combined its resources into a national syndicate.

Cuba was a headquarters of sorts for Lansky.

There have always been rumors that Lansky helped finance the 1952 military coup that brought Bautista to power, said Tampa historian Rick Burkhart, whose book “Stone In My Shoe” on U.S-Cuba relations, is scheduled for release in January.

In return for kickbacks, Batista allowed Lansky and his associates — including Tampa’s mafia don Santo Trafficante Jr. — to turn Havana into the top Caribbean destination for gambling.

Lansky became the salaried “unofficial gambling minster.” His job was to grow the industry.

With that power, Lansky created a “hedonistic adult playground,” said Scott Deitche, a St. Petersburg-based mob historian and author of several books on organized crime.

Beside gambling and shows with major entertainers, many from the U.S., the casinos also provided strip clubs and live sex shows.

These establishments also gave the syndicate a place to launder money it earned from illegal ventures in the U.S., far from the eyes of the IRS, and to hold meetings without the threat of American law enforcement.

Havana hotels controlled by the American mafia included the Tropicana Club, the Sevilla-Biltmore, the Capri Hotel Casino, the Commodoro, the Deauville, and the Havana Hilton.

When Lansky’s Habana Riviera opened in December 1957, it was the largest casino hotel in Cuba and considered the most extravagant in the Caribbean.

It boasted air conditioning in an era when it was a rarity, every room had a view of the Gulf of Mexico, white marble sculptures adorned the halls, outdoor bridges spanned sunken gardens, and the cabaret room was an electronic marvel showcasing acts such as Ginger Rogers, Steve Allen, and Abbot and Costello.

“It made Lansky a lot of money,” Deitche said.

Still, Rapoport said, his grandfather never earned back his personal investment in the project.

“He needed another six to eight months of business,” Rapoport said.

Fidel Castro’s Cuban Revolution got in the way.

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While not the main reason for the uprising, the casinos played a role nonetheless. Castro preached that the gambling, alcohol and sex shows were corrupting the island while lining the pockets of a few corrupt Americans rather than Cuban citizens.

“They were considered by Fidel as one of the most atrocious exploitations of the Cuban people,” author Burkhart said.

When news spread of Castro’s victory, he said, Cuban citizens celebrated by ransacking the casinos.

Lansky fled soon after.

Tampa’s Trafficante remained in Cuba, hoping Castro would see an economic benefit in keeping the casinos open. Instead, Trafficante was thrown in prison until August 1959 when he was deported to the U.S. for a payment rumored to be in the millions of dollars.

“My grandfather always told me if I was a plane that was hijacked to Cuba, don’t tell anyone there who I really was,” Rapoport said. “Castro did not like my grandfather.”

For the first few years following the revolution, the Cuban government nationalized all U.S.-owned properties and businesses.

Feinberg’s Brookings report says this was done “to reduce the leverage of the United States over economic and political choices.

“U.S. commercial interests were extensive and visible in pre-revolutionary Cuba, controlling key nodes of the economy including public utilities, energy industries, centers of finance, and large sugar estates.”

According to most historic accounts, during Batista’s presidency, the U.S. controlled 90 percent of the island’s electrical and telephone services, 50 percent of public service railways and 40 percent of raw sugar production.

Among the U.S. corporations nationalized were United Fruit Sugar Company, Exxon Corporation, Pan-American Life Insurance and IBM World Trade Corporation. A number of U.S. citizens also lost summer homes in Cuba.

These seizures were the primary reason the U.S. imposed the Cuban Embargo in 1961.

Under the follow-on 1996 Helms-Burton Act, the embargo cannot be lifted until compensation is resolved. The current negotiations for already-certified claims is intended to settle that.

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The federal government never declared Cuba was wrong to nationalize American property and businesses, Feinberg said in his report. The U.S. has long recognized that as a sovereign right of any country as long as the companies or individuals are properly compensated.

Cuban government has attempted to negotiate compensations with the U.S. in the past, most famously in Uruguay in August 1961 when the revolution’s iconic Ernesto “Che” Guevera met with Richard Goodwin, President John F. Kennedy specialist in Latin American affairs.

These early payment offers, Feinberg writes in his Brookings report, “were to be arranged by means of 30-year bonds with two percent interest, to be financed from sugar sales to the United States, which the United States was already cutting as punishment for previous Cuban actions.” The U.S. refused.

Still, Feinberg wrote, Cuba has successfully negotiated bilateral settlements of outstanding property claims with other governments, including Canada, England, France, Spain, and Switzerland.

Rapoport said his grandfather may have owned a stake in many ventures in Cuba.

He has heard a rumor that Lansky and Frank Sinatra were co-owners of property that is now part of Havana’s Marina Hemingway.

“I’ve seen references that Lansky may have also owned a stake in the Nacional Hotel in Havana and its casino,” mafia historian Deitche said. “I am sure he had financial interests in other things but none of this has been confirmed, or at least to my knowledge.”

Rapoport said his family does not have a deed to the Habana Riviera but they have proof of ownership through financial records. Plus, the website of the state-run hotel promotes it as the place that Lansky built and owned.

The Lansky family will rely on U.S. and Cuban negotiations to determine whether the property’s value should be assessed in 1959 dollars or today’s currency.

In today’s dollars, the $1.9 billion owed to U.S. government-certified claimants would equal almost $8 billion.

The Lanskys also are willing to take payment in whatever manner the two governments decide.

Besides cash payments or returning the property, options might be sovereign bonds or equity in other Cuban projects, said Feinberg with the Brooking Institution.

If the Lansky family gets full or partial ownership of the hotel or another property, they might turn around and sell it, Rapoport said.

“I don’t know if I want to run a hotel or any business in Cuba at the moment,” he said. “I just want my family to be compensated for what was forcefully taken from us.”

pguzzo@tampatrib.com

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