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Senator Refuses to Address New Allegations in Libel Case

November 29, 1985

RENO, Nev. (AP) _ A 12-year-old report says investigators were told that an underworld figure received money skimmed from a casino when it was owned by the family of Sen. Paul Laxalt, and the senator refused to answer questions about the allegations last month, court documents show.

Laxalt’s refusal, at his attorney’s directions, appears in transcripts of a four-day deposition taken in Washington, D.C., in October as part of the senator’s $250 million libel suit against the Sacramento-based McClatchy newspaper group.

The deposition is on file in U.S. District Court here, where the libel suit was filed.

During the deposition, McClatchy attorney James Brosnahan questioned Laxalt about a Nov. 29, 1973, report by the Organized Crime and Criminal Intelligence Branch of the California Department of Justice.

The report said employees at Ormsby House casino indicated that 15 percent to 25 percent was skimmed from gaming tables by a pit boss. Skimming is the illegal practice of removing a casino’s profits before taxes are paid.

The report, which did not identify the employees, said the money was picked up by Rocco Youse, identified as a front for reputed organized crime figure Frank Balistrieri.

Laxalt’s attorney, Jim Beasley, refused to allow his client to answer questions about the document.

There was no answer to telephone calls Friday to Laxalt’s home or offices or to his local attorney.

Beasley did let the senator respond when Brosnahan asked whether there was something in the way the Carson City hotel-casino was managed that would prevent such a skim.

″I would hope so,″ Laxalt answered.

″Do you know what that would be?″ Brosnahan asked.

″Internal controls and honesty of your employees,″ Laxalt replied.

Laxalt’s family bought the casino in the early 1970s after Laxalt stepped down following one term as Nevada governor. The family sold the casino in the mid 1970s.

Laxalt has been a close friend and adviser to President Reagan since Reagan was governor of California and Laxalt was chief executive in adjoining Nevada. He is general chairman of the Republican Party, a new position to which he was appointed in early 1983 with the urging of the White House.

He was elected to the U.S. Senate in 1974 and announced earlier this year he would not seek a third term, saying he wanted to spend more time with his family. He said the lawsuit was not a factor in his decision.

Laxalt filed the suit following publication of a 1983 article in the Sacramento Bee which said the Internal Revenue Service had developed evidence that at least $2 million was illegally skimmed from the family’s casino in the early 1970s.

The newspaper reported that the money that was skimmed went to organized crime figures. Laxalt denied the charges. McClatchy filed a $6 million countersuit against Laxalt, claiming his suit was an effort to suppress the newspaper group’s First Amendment rights. The countersuit was dismissed Nov. 19 by U.S. District Judge Edward C. Reed Jr.

The two sides have spent most of this year disputing what documents should be exchanged in the pretrial process of discovery. Brosnahan said U.S. Magistrate Phyllis Halsey Atkins would be asked to order Laxalt to answer questions about the report.

According to Brosnahan, Laxalt claimed in his deposition he never met Youse and only casually knew casino manager Joe Viscuglia, who is accused in the California report of turning over money to Youse.

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