La Costa developer Merv Adelson dead at 85 After long lawsuit, and denial, he admitted he had mob ties

The Vanity Fair article in which Merv Adelson admitted his mob ties, January 31, 2013

Merv Adelson, one of the co-founders of La Costa, is dead at age 85, according to a story yesterday (September 9) on deadline.com.

Irwin Molasky

Adelson, co-founder of Lorimar Television and former spouse (twice) of TV star Barbara Walters, developed La Costa along with other Las Vegas notables, including Moe Dalitz (a longtime Prohibition and Vegas gangster), Allard Roen, and Irwin Molasky (who, as Matt Potter of the Reader has pointed out, is now building offices for the FBI).

Allard Roen

Adelson was an integral part of the history San Diego would like to forget — how mob money developed much of the county. Dalitz, Roen, Molasky, and Adelson were primary developers of La Costa, the resort in Carlsbad. Lowell Bergman, who now holds a chair in investigative journalism at UC-Berkeley, joined with another writer to pen a 1975 article, "La Costa: The Hundred-Million Dollar Resort with a Criminal Clientele," for Penthouse magazine.

The four Vegas men filed a $522 million libel suit that dragged on, essentially, for ten years. The attorney who pinned down the four men's ties to organized crime, Mike Aguirre, now operates in San Diego and was once city attorney. The jury sided with Penthouse. But the suit had dragged on for so long that both sides agreed in 1985 to make insincere compliments about the other and pay their portion of the costs, said to be around $20 million. They did not make payments to each other.

In 2013, Adelson shocked people by telling Vanity Fair that he knew he had had mob associations.

Moe Dalitz

"I enjoyed a very close relationship with Moe Dalitz," Adelson told the magazine. Longtime gangster Dalitz was known as the "Godfather of Las Vegas," the iron man who enforced peace among the mob families. "So I know you're thinking, 'How do you account, Merv, for the fact that Moe Dalitz was a mob boss? All I can say is, in all the years I knew Moe, we never discussed anything criminal." Said Adelson, "I began thinking about leaving Las Vegas. I wanted to get away from the Mafia."

On January 30 of this year, Bergman sued Adelson and Molasky in San Diego Superior Court for malicious prosecution. I called Bergman yesterday.

Lowell Bergman wikipedia

"The lawsuit is dead," Bergman said, particularly now that Adelson is also dead. "The suit was filed 38 years beyond the statute of limitations," he chuckled. He said, "[I] never thought I would live long enough" to see Adelson admit his mob ties. Bergman remembered hours and hours of depositions and hearing Adelson and the others claim over and over that they had no mob ties.

C. Arnholt Smith was Nixon's first big contributor back in 1946 and was alone with him on election night in 1968.

Interim La Costa loans were made by San Diego's U.S. National Bank, controlled by C. Arnholt Smith, whom the San Diego Union had named "Mr. San Diego of the Century." He was later convicted of finance-related crimes and spent time in custody.

While he was in San Diego, writing for an alternative publication, Bergman had dug into real estate records to find that the Swiss-based Cosmos Bank had been involved in the La Costa financing. The Cosmos Bank, closed down by joint action of the U.S. and Swiss governments in the mid-1970s, had numerous mob clients. Cosmos loaned money to San Diego builder Irvin J. Kahn for the development of Rancho Penasquitos. Cosmos also loaned money to U.S. Financial, a San Diego–based real estate conglomerate that was in essence an accounting fraud. Its top executives went to prison after U.S. Financial collapsed.

On July 18, 2012, I wrote a column for the Reader showing that Richard Nixon had a secret account at the Cosmos Bank.