Hughes’ Two Most Important Business Decisions: Noah Dietrich and the ClA
We all know the story of brilliant businessman Howard Hughes, who made billions in the oil, movie, aviation, defense and casino industries. But the truth is, Hughes was a terrible businessman.
Hughes’ best business moves were two critical personnel decisions: the hiring of Noah Dietrich in 1925, and his decision to partner up with the ClA. That decision happened no later than 1948, right after the ClA’s creation, but Hughes was likely involved with the OSS and/or various ClA predecessor intelligence units in the military and State Department even earlier, during the war. The decision to partner up with the ClA made Hughes even more money than Noah Dietrich did. But that decision to partner with the agency was also his worst.
Hughes was born December 24, 1905. He inherited 75% of Hughes Tool Co., his father’s company, when his father died on January 14, 1924. His father had invented a revolutionary oil drilling bit that pulverized rock instead of scraping it. The bit was nicknamed “the rock eater.” It got through rock at 10x the speed of any other drill bit.
Within a year of his father’s death, Hughes bought out the other 25% of the company from his relatives. He also hired Dietrich, a CPA with a diverse business background in banking, real estate, and oil. Hughes’ father, like Howard, was never much of a businessman despite his brilliant invention. Dietrich took the company, worth $660,000 in 1925 (roughly $10 million in 2020 dollars), applied sound business and tax-saving strategies to it, and turned it into a $75 million company by 1930 (roughly $1 billion in 2020 dollars), enough to fund Hughes’ stabs at becoming a professional golfer, a movie producer, an aviator, and everything else.
Later, Dietrich won war production contracts for Hughes Tool, invested in real estate for the company, and automated its “hobby shop” style production line. After the war, Hughes Tool made $285 million in profits under Dietrich’s management before Dietrich left the company after 32 years in 1957. That’s roughly $2.4 billion in 2020 dollars.
Dietrich ran TWA for Hughes as well, for which Hughes paid about $1.4 billion (in 2020 dollars) for a 75% stake in 1939. Hughes also paid a $1.1 billion penalty (in 2020 dollars) for mismanagement of the airline in the 1950s. But Hughes sold his stock for $3.8 billion in 2020 dollars when he was forced out in 1965. That’s another $1.3 billion that Dietrich made Hughes.
The value of Hughes’ estate when he died in April 1976 was $1.5 to $2 billion (roughly $7.5 to $10 billion in 2020 dollars), plus another $5-$6 billion in Hughes Aircraft ($25 billion in 2020 dollars), which had been spun off from Hughes Tool into a tax shelter called the Howard Hughes Medical Institute. The “charity” donated virtually nothing to medical research during Hughes’ lifetime.
Dietrich had made Hughes about $5 billion of that (in 2020 dollars). The rest of Hughes’ money appears to have come, in one way or another, from the ClA, and the ClA made sure they got it back.
Robert Maheu, the ClA, and Hughes
The story of Howard Hughes in Las Vegas starts with Edward Bennett Williams referring Robert Maheu to Hughes.
Edward Bennett Williams was a DC power broker connected to the ClA. In fact, he was offered the job of Director of the ClA by both Gerald Ford and Ronald Reagan, but turned it down. When Williams turned down Ford, the job went to George H.W. Bush. But Williams was on the President’s Foreign Intelligence Advisory Board for both Ford and Reagan.
Williams, like many other ClA-connected people, left the official employ of the agency to start a business of his own (likely at the agency’s request). In Williams’ case, it was the DC law firm of Williams & Connolly, where he worked as a trial attorney and defended Sam Giancana, John Hinckley Jr., Frank Sinatra, John Connally, Hugh Hefner, Frank Costello, Jimmy Hoffa, Marc Rich, Richard Helms, Edward Kennedy, the DNC, and more high-profile defendants.
If there was a crime or scandal someone connected to the ClA needed handled, Williams was the man to protect the agency’s assets, and he got very rich doing it.
Ben Bradlee of the Washington Post was one of Williams’ drinking buddies and best friends. Williams was said to have no political convictions other than a devotion to obtaining and wielding power.
Robert Maheu had been Williams’ debate team partner at Holy Cross, and they had both gone to Georgetown University for law school. Then in 1954, Maheu put together an investigation firm that Williams hooked up with the ClA’s Office of Security. Essentially, Williams got Maheu hired by the ClA to carry out wiretapping and dirty tricks in what was reportedly a conspiracy of multinational oil companies against oil tanker tycoon Aristotle Onassis.
Maheu had done counterintelligence work in Europe for the FBI during the war, had left the FBI in 1947 (when the ClA was officially created), and then spent seven years doing something nobody appears to know much about. But in 1954, Onassis had just negotiated a deal with the King of Saudi Arabia for an Onassis monopoly on Saudi oil shipping. Apparently U.S. oil companies were worried about what that would do to their incomes. The conspiracy reportedly involved Vice President Richard Nixon, ClA director Allen Dulles (former senior partner of the law firm that represented Standard Oil), future Chief Justice of the United States Warren Burger, and the Rockefeller’s Chase Manhattan Bank.
The ClA helped Maheu in the plot by planting negative stories about Onassis in the press. Onassis lost the Saudi contract.
Maheu’s involvement in the campaign against Onassis was alluded to in a footnote in a November 1975 Senate Intelligence Committee report. Maheu also testified in his later defamation suit against Howard Hughes that he had first started receiving a retainer from the ClA in early 1954 and continued to receive it for more than 15 years. Plus the ClA has acknowledged paying Maheu a retainer, starting at $500 a month, for about 15 years from that time.
Williams also introduced Maheu to Jimmy Hoffa, who hired Maheu to sweep his office for bugs (the surveillance kind). And it was Williams who referred Howard Hughes to Maheu in 1955. Hughes initially brought in Maheu to spy on Jean Peters and Ava Gardner, intimidate a would-be blackmailer, and obtain info on business rivals. In 1956 Hughes employed Maheu to block a move to replace Richard Nixon with Christian Herter as Eisenhower’s running-mate. In 1957, Hughes made Maheu the public face of all his business operations.
Maheu continued working for Hughes until 1970. That means he was working for the ClA the entire time he was working for Hughes and both employment deals reportedly ended at the same time.
Robert Maheu and the Mob
Fidel Castro seized power in Cuba in 1959 and the ClA immediately began trying to assassinate him. There may have been a failed attempt or two, then the ClA’s next call was to Maheu.
The idea from the beginning was to have Maheu arrange for the mafia to assassinate Castro, with the narrative that the killing was revenge for Castro’s seizure of the mob’s casinos in Cuba. According to a 1977 FBI memo by Special Agent Edward J. Dunn Jr., it was Edward Bennett Williams who also hooked up Maheu with Johnny Roselli, a former bootlegger for Al Capone’s Chicago Outfit who had gone on to racketeering and extortion in the L.A. movie industry, for which he went to prison from 1943 to 1947.
According to Gus Russo’s book The Outfit, it was Roselli who intervened with Harry Cohn to get Frank Sinatra the role in the movie From Here to Eternity (no horse’s head was required). According to Robert Pack, author of Edward Bennett Williams for the Defense, Sinatra was a client of Edward Bennett Williams and that’s who got Roselli to do Sinatra the favor.
By the mid ’50s, Roselli had become Sam Giancana’s man in Las Vegas. By 1957, Roselli had put together mob funding to build the Tropicana Casino in Las Vegas. Maheu met Roselli for the first time in 1959 and by 1961, Robert Maheu and John Roselli were so close that Roselli joined Maheu’s family for Thanksgiving dinner and Maheu’s children were calling Roselli “Uncle Johnny.”
Maheu and Roselli met with James O’Connell, Roselli’s first (but not last) ClA handler. Roselli involved mob bosses Sam Giancana and Santos Trafficante in the plot. Their role was to provide his crew.
O’Connell initially expected the gangsters to go and kill Castro in a hail of bullets, but the gangsters rejected that plan as too dangerous for them. So everyone agreed on poison, which O’Connell provided. Maheu reportedly handed over the poison pills to Johnny Roselli in Miami Beach’s Fontainebleau Hotel.
“If anything went wrong,” Maheu later wrote in his memoir, “I was the fall guy, caught between protecting the government and protecting the Mob, two armed camps that could crush me like a bug.”
Although the ClA/mob plot to assassinate Castro failed, and was eventually supplanted by the Bay of Pigs invasion plot, the ClA and the mob continued to work together, including on the assassination of JFK. There were multiple mob hit men in Dallas. Roselli claimed that he was the shooter who delivered the mortal wound.
To show you how deeply the ClA was involved with the mob at that time, the agency also paid Maheu $1000 to bug the Vegas hotel room of Dan Rowan, of Rowan and Martin, strictly out of friendship for Sam Giancana, who suspected his girlfriend Phyllis McGuire was seeing Rowan there. The bugging was flubbed and that was how word got to J. Edgar Hoover about the Castro assassination plot. Hoover then told Attorney General Robert Kennedy that the ClA was protecting Giancana and Trafficante, both on RFK’s ten most-wanted list. If you ever wondered how Jeffrey Epstein got away with his operation for so long, this is how right here.
In any case, by the fall of 1960, Maheu was spending so much time on the Castro plot that Howard Hughes started to complain about his absence. Maheu then got permission from the ClA to tell Hughes he was working on disposing of Castro pending an invasion of Cuba, a piece of info never disclosed to JFK. The ClA gave the okay to tell Hughes about Maheu’s involvement because they had already been involved with Hughes for so long and because Hughes was allowing the ClA to use his Cay Sal, leased from George H.W. Bush’s Zapata Offshore (another ClA front), to launch the Bay of Pigs invasion.
The ClA’s Domestic Contacts Division acknowledged in a 1974 memo that the ClA had “close and continuing relationships with the Hughes Tool Company and the Hughes Aircraft Company since 1948” — again, pretty much since the official founding of the ClA and Hughes’ recovery from his July 7, 1946 plane crash during his test flight of a reconnaissance aircraft. This was the crash that tore half the roof off a Beverly Hills dentist’s house, sliced a wing through the occupied bedroom of another house, and dropped an engine like a bomb through two other homes.
In fact, the DCD had contact with over 250 employees of Hughes Aircraft at one time or another and about 100 more in Hughes Tool from 1948 to 1974. DCD files also show that both companies likely had contracts with the ClA. The value of the ClA’s contracts with Hughes Aircraft from the mid 1960s to the mid 1970s alone has been estimated at $6 billion (or roughly $25 billion in 2020 dollars).
The ClA Takes Over Hughes’ Companies
But Hughes was no longer running his companies anyway. Documents in the Howard Hughes collection at the University of Nevada Las Vegas (UNLV) show that Hughes Aircraft had recruited a number of engineering stars from Cal Tech to lead his research and development teams. But by 1953, most of his top management had left because Hughes was so painful to deal with — an obsessively controlling micromanager who was also incapable of making a decision.
The Secretary of the Air Force told Hughes that he had to remove himself from any personal involvement in managing the company or lose all his Air Force contracts. That’s when Hughes turned over Hughes Aircraft to the Howard Hughes Medical Institute, and turned over management of the company to Lawrence Hyland, one of three people credited with the invention of radar. Hyland became VP of research and development as well as general manager of Hughes Aircraft.
In 1966, Albert D. Wheelon resigned as Deputy Director of the ClA in charge of its science and technology division — including development of spy satellites — to become President of Hughes Aircraft Co., where he built its satellite manufacturing business into the largest in the world. Hughes biographers Bartlett and Steele, in their book Howard Hughes: His Life and Madness, wrote, “The Hughes payroll was studded with former intelligence operatives, government agents, and retired army, navy and air force officers.”
Hughes’ code name around the ClA was “Stockholder,” and in his book Howard Hughes, Mark Fisher says the Stockholder was the ClA’s largest contractor. Reportedly, what Hughes also got out of the deal beyond contracts was protection. During the late ’60s, Fisher reports Hughes asked Maheu to offer his empire to the ClA as a front. Hughes was troubled by a number of lawsuits at the time and hoped to obtain a “national security shield” from them. It worked in 1969 to protect his Medical Institute tax shelter. A bill that overturned tax shelters of this type suddenly included an exemption for medical charities.
It was precisely at this time, in early 1966, that the ultimate Deep State attorney, Edward P. Morgan, a DC power broker like Edward Bennett Williams, enters the story. Morgan, like Maheu, worked as a special agent for the FBI from 1940 to 1947. In 1951, he was recruited by the ClA and did legal work on a secret agency contract with Johns Hopkins. Later, through Maheu, he knew about the ClA/mob Castro assassination plots from their earliest days (Maheu said he had hired Morgan as his lawyer years earlier). In 1964, Morgan became Jimmy Hoffa’s attorney, handling the appeal of his conviction for labor racketeering. Later he handled a multi-million dollar lawsuit against the FBI for bugging the apartment of Fred Black, a friend and associate of John Roselli.
Morgan started working with Maheu, Roselli and Hoffa to persuade the owners of a Teamster-financed Vegas casino, probably the Desert Inn, to sell to Howard Hughes. The owners they worked on included Sam Giancana.
Hughes Starts Buying Up Las Vegas Casinos
By late 1966, Maheu, Morgan, Roselli and crew had convinced both the mob to sell some of their Vegas casinos and Hughes to start buying them up. According to Steve Fischer, author of When the Mob Ran Vegas, all of the ones Hughes bought had two things in common: Meyer Lansky was involved in all of them and they all had outstanding loans from the Central States Teamsters Pension Fund.
Finder’s fees were paid in those days by the mob to mob-connected people who found fronts for mob-owned casinos. For example, Meyer Lansky got a $200k finder’s fee in 1960 when mob front man Albert Parvin had to be moved out of the Flamingo after he was convicted of skimming $30 million from the joint and sold the casino to Morris Lansburgh (later indicted for skimming the joint). But for the Hughes deals with mob casino owners, it was Maheu who paid Morgan and Roselli huge finder’s fees. Through Maheu, Morgan also got a $100k annual retainer for handling legal business for the Hughes empire.
Hughes bought the Desert Inn, Frontier, Castaways, Landmark, Sands and Silver Slipper and had no problem getting a gaming license even though, until about the mid ’80s, it was simply impossible to get a gaming license for a Vegas casino unless the mob was going to get a cut of the action (and by “mob” I mean Meyer Lansky and Sam Giancana). Even Tony Cornero, the original builder of the Stardust, who had been a bootlegger associate of Al Capone in L.A., couldn’t get a license. According to When the Mob Ran Vegas, when he tried to open The Meadows casino in Vegas without giving Lansky a cut, the place was burned down. Later the mob shut down his gaming license for the Apache Hotel and Cornero got shot in the stomach.
Then the plucky Cornero tried and failed to get a gaming license for the Stardust, despite getting mob loans to build the casino. He was playing craps at the Desert Inn shortly after the rejection when he got into a fight with Moe Dalitz (of the Detroit mob) on the casino floor. Then a waitress brought Cornero a drink, he swallowed it, and collapsed to the floor, dead. The cocktail server took the glass back to the bar to be washed and when the Stardust opened in 1958, mobster Moe Dalitz was running it.
In any case, Hughes got his license easily and Maheu became the CEO of the Vegas casinos he helped Hughes acquire.
Hughes’ handlers reportedly brought in skilled computer and security people to make it impossible for anyone to skim or cheat his casinos. Yet they and Hughes left the gangster former owners in their former jobs managing the casinos, including Moe Dalitz and crew at the Desert Inn, and all those skilled security people never calibrated a coin weighing machine critical to the skim. The New York Times reported that “reliable sources” had told them that Maheu had recommended to Hughes that some employees be replaced because of their connections with the mob, but Hughes refused on the ground that the knowledge these men had was required to operate the casinos.
And Omar Garrison, author of Howard Hughes in Las Vegas, wrote that a shift boss at a Fremont Street casino told him, “I’ve been told by someone I believe that no count was made that night at the changeover. Maybe Hughes himself is running the Mob now.”
The Man Who Hated Vegas
Howard Hughes bought as many casinos as he could before an antitrust suit by the DOJ blocked him from buying more. Hughes’ memos in the Howard Hughes collection at UNLV show he disliked the city so much that once he bought the Desert Inn, his first casino, he formed a vague plan of buying up the entire Strip, knocking it down, and rebuilding it the way he thought it should be.
Hughes was particularly horrified by Circus Circus, which he imagined to be a demented carny den filled with pooping circus animals and screeching caliopes and frightening freckle-faced kids, but there was no part of the town he really liked. Nuclear testing was going on at the time at the Nevada Test Site east of town, actually shaking Las Vegas itself, and that was an even bigger torture for him. He offered multiple politicians $1 million dollar bribes if only they would stop the testing, but they wouldn’t.
In the end, Hughes didn’t build anything in Las Vegas. Instead, he just stopped looking outside. He lived in a single room with covered-up windows, talked to very few people, mostly by phone, took huge amounts of codeine, Valium and other drugs, and watched movies and TV while he wasted away.
So why on earth did Howard Hughes start buying up Las Vegas? First, a lawsuit by other TWA shareholders over Hughes’ mismanagement of the airline ended with a judge ordering Hughes to sell all his shares. Hughes suddenly had $547 million to park somewhere.
Second, Maheu, Morgan and Roselli talked him into it, ostensibly based on the tax advantages of gambling income. But all three were deeply involved with both the ClA and the mob. The mob was under investigation for skimming and needed new clean ownership that would honor existing arrangements. Plus, a deal with Hughes would lead to big finder’s fees for Morgan and Roselli.
But the idea for the deal didn’t come from the mob, it started with Morgan and Maheu (meaning it likely came from the ClA). And Maheu never got into major deals like this without clearing it with the ClA first. But the ClA already controlled Hughes’ wealth through Hughes Tool and Hughes Aircraft. So why would the ClA want Howard Hughes to buy up casinos?
Was it because the ClA wanted to help out old mob friends? Not likely. By this time, Roselli was under constant surveillance by the FBI, and Morgan was leaking the Castro assassination plot to allies in the press. It was a false version, but the ClA and mob were still in it. He was doing that partly to help Roselli by pressuring the ClA to make Roselli’s FBI problems go away.
So if anything, the ClA wanted to get as far from the mob as they could at this point. Notably, though Maheu has been credibly accused by Lisa Pease in A Lie Too Big to Fail of running the plot to assassinate RFK, his alleged team for that job included only ClA operatives he’d worked with before. It didn’t include anyone from the mob.
So why would the ClA like the idea of Hughes owning casinos? Look, a government agency like the ClA can’t just ask Congress for an appropriation to assassinate Castro, or invade Cuba, or assassinate JFK or RFK. The money either has to be stolen, or earned through arms trafficking or drug trafficking or human trafficking or something else that pays equally well. Then it has to be laundered in a place like a Vegas casino so that an assassin can be paid for some other job that he never performed. Someone has to come up with that money and make all the money transfers look legal and make all payments look as if the money came from someone other than the ClA.
If you think it’s unlikely that the ClA would be involved in casino operations, note that Sheldon Adelson’s Sands Macau has been credibly accused of being a ClA front by a former chief executive of casino operations there. His attorney introduced a report prepared by a private investigator as evidence in court to back up the claim. You can read the private investigator’s report here.
While Hughes owned his Vegas casinos, Johnny Roselli was sent away to prison for five years after getting caught by the FBI running a crooked high-stakes gin rummy game at the Friar’s Club in L.A. Then finally, in 1970, both the ClA and Hughes fired Maheu. Or at least the ClA got Maheu off the books. Hughes fired Maheu after his Mormon Mafia handlers (the aides who supplied him with drugs, kept him isolated from the world, and manipulated him by withholding drugs) finally showed Hughes the casino books showing large amounts of money going to the mob. Later, Hughes publicly accused Maheu of robbing him blind.
Or maybe that was just the excuse they all agreed to use, as Maheu continued to live in a mansion on the property of the Desert Inn after he was fired by Hughes and eventually got a large defamation lawsuit settlement from him.
The Mormon Mafia aides were connected to the ClA as well.
How It All Turned Out
The term “Mormon Mafia” was coined by E. Howard Hunt in his Senate Watergate testimony. Every player in this story except Roselli, who was in jail, was involved with Hunt in the plot against Nixon.
Maheu confirmed his own role in the plot to assassinate Castro to the Church Commission, but declined to testify about the ClA to the 1975 Rockefeller Commission, and said that if he were subpoenaed, he’d take the 5th. Maheu resumed his “private investigations and PR” business and lived to the age of 90.
The same year that Maheu refused to testify about the ClA, Sam Giancana was murdered in June, days before testifying, and Jimmy Hoffa was murdered in July.
Johnny Roselli, who was forced to testify, was murdered after his testimony, in August of 1976. He knew he was in danger and was extremely careful until someone he trusted lured him onto a boat. I would bet the guy who lured him was Maheu, as Roselli knew he couldn’t trust his mob friends after talking to the Senate committee about them. His body was found floating in a barrel in Dumfoundling Bay, near Miami. The hit man was kind enough to strangle him before stuffing him in the barrel.
The ClA essentially got their money back from Hughes after his death in 1976 when a judge ordered the Howard Hughes Medical Institute, the tax shelter holding the $6 billion Hughes Aircraft (about $25 billion in 2020 dollars), to become a real charity, keeping the ClA’s money from Hughes’ heirs. Mormon Mafia head Bill Gay became a trustee of the Institute, deciding how funds were spent, until a year before his death in 2007.
Maheu said Hughes broke about even on his casino investments. But although Hughes’ Mormon Mafia-controlled Summa Corp sold off Hughes Tool — the one consistently profitable part of Hughes’ empire — in 1972, they held onto the “unprofitable” casinos well into the 1980s.
Note: Many of the documents referred to in this post can be found at maryferrell.org.