Havana Conference - The Siegel Situation

The Siegel Situation

The next item on the agenda at the Havana Conference was what Lansky called the "Siegel Situation". In the mid 1930s, the New York and Chicago crime families had been sent out west to set up and oversee a race wire service, gambling activities in Los Angeles and Nevada, and supervise narcotics shipments from Mexico. In a short while, Benjamin "Bugsy" Siegel had become a very popular and visible figure in Hollywood's most glamorous circles.

The Flamingo Hotel was the creation of Billy Wilkerson, a Hollywood nightclub owner and one of the founders of "The Hollywood Reporter". By the mid-1940s, it was an unfinished dream deferred. This Flamingo Hotel project became Siegel's obsession. Siegel persuaded his longtime friend and business associate Meyer Lansky to help him sell New York and Chicago crime bosses on investing in this project. Siegel promised the bosses that the hotel and casino would be a smart and profitable investment.

However, the Flamingo project immediately ran into problems. Siegel appointed his girlfriend Virginia Hill as a project overseer. As a result, contractors were stealing Siegel blind; they would sell him materials one day, then steal them from the building site at night, then resell them to Siegel the next day. The Flamingo project was also impacted by the rising cost of materials and labor from the post World War II building boom. The bottom line was that a project projected to cost $1.5 million would eventually reach $6 million.

To make matters worse, the bosses suspected Siegel and Hill of stealing project money. Lansky and the bosses had discovered that Hill was taking frequent trips to Zürich, Switzerland and depositing money in a bank account. They suspected that Siegel was skimming money and might flee the country if the Flamingo failed.

Following a discussion, the delegates voted to execute Siegel. The delegates assigned Chicago Outfit consigliere, Charles "Trigger Happy" Fischetti to oversee the contract. The actual hit would be given to Jack Dragna, the Los Angeles crime family boss and close to Siegel. Dragna, who despised Siegel, then gave the contract to Mob hitman, John "Frankie" Carbo, a Lucchese crime family soldier.

However, at the last moment, Siegel got a reprieve. The partly completed Flamingo was scheduled to open December 26. Longtime Siegel friend Lansky convinced the delegates to see how the hotel did in its opening. The delegates agreed and then took a break for Christmas Day. The delegates soon learned that the Flamingo opening night was a flop. The enraged mobsters demanded Siegel's head on a platter. However, Lansky again convinced them to wait. He argued that Siegel could still save the casino and make money.

After two weeks, the Flamingo closed to resume construction. The completed hotel opened a few months later. The Flamingo started making a small profit, but the Mafia investors had finally lost patience with Siegel. On June 20, 1947, Siegel was home alone at Hill's mansion in Los Angeles reading a newspaper by a living room window. A gunman with an army carbine rose up from the bushes and fired four shots into the room. Siegel was hit twice in the head and twice in the torso and died instantly.