Ep 72: LBJ (Part 3)

We are currently in the middle of a deep dive into the life of Lyndon Johnson. So far, we’ve covered his ascent to the Senate and the stolen election of 1948, as well as the details of how Johnson somehow made his way on to the 1960 Democratic Party presidential ticket at the last minute.

We’ve now reached the part of the LBJ series where we’re about to get into some of the more infamous and interesting characters in the JFK Assassination conspiracy lore.  Johnson was closely connected to two men who would go on to face legal repercussions for their business deals: Bobby Baker and Billie Sol Estes.

In this episode, we begin to explore Johnson’s business dealings, including the radio station he bought, his ties with the Mafia, and Johnson’s close relationship with Bobby Baker.

Radio Station

We know that Lyndon Johnson was not from a wealthy background. He worked briefly as a schoolteacher, and then became involved in politics. Despite Johnson’s career in public service, he somehow accumulated fourteen million dollars as of 1964, according to Time Magazine’s expose that year.[1] So, how then did the public servant, Lyndon Johnson, end up with the equivalent of $144 Million in today’s money?[2]

Johnson’s business dealings began in 1943, when he bought Austin based radio station, KTBC. Before Johnson bought it, the station had been struggling financially because of its weak radio signal and because it was limited to daytime broadcasting only. However, when the prior owners of the station applied for a stronger signal, the Federal Communications Commission denied their requests multiple times.[3]

Johnson, who was a supporter of FDR’s programs, had a friend in the New Dealer leader of the FCC, Clifford Durr. Lyndon’s wife, Lady Bird, even asked Durr for his advice on whether she should buy the KTBC radio station. Lady Bird told Durr that Austin needed more liberal voices on the air. And Durr, the chair of the FCC, agreed with her that she should move forward. The Johnsons, under Lady Bird’s name, then acquired the KTBC radio station for the discounted price of $17,500.[4] That’s a pretty good deal considering, that the FCC denied the application of another purchaser who offered to buy the station for $50,000.[5]

Immediately after the Johnsons bought the station, the FCC changed its position and approved several applications for expanded reach within 3 weeks of when the Johnsons took over. The prior owners spent years having those same applications denied. LBJ was successful in expanding the station’s geographic reach, and securing FCC approval for 24 hour broadcasting.[6] By 1945, the station was approved to increase its power to five times the wattage it was allowed to have before, expanding the reach of the station to 63 counties.[7] The revenue of the radio station grew almost ninefold, from $2,600 a month before the Johnsons owned it, to $22,700 a month just four years later.[8]

In 1952, KTBC was granted the right to broadcast television over Channel 7. This single channel, which was the only VHF channel approved in Austin, contracted to carry programs from all three major networks: CBS, ABC, and NBC. For a period of time, KTBC TV had an effective monopoly on television in the Texas Capitol – one that did not exist anywhere else in the country.[9]

Johnson would go on to use the advertising of the station as a way to funnel kickbacks to himself. As journalist Holland McCombs concluded, to get Johnson’s help, QUOTE “You got to do business with KTBC. If you’d advertise on the station, Lyndon would sign your recommendation letter.”[10]  

Political Payback

Another way Johnson made money was straight up old-fashioned political bribery. Gulf Oil lobbyist Claude Wild, Jr. testified to the Securities and Exchange Commission that in 1961, just after Johnson was elected Vice President, Gulf Oil gave Johnson Fifty Thousand Dollars for his personal use. Wild said that he delivered the money in cash in plain envelopes to people associated with Johnson’s campaign, like John Connally.[11] 

This Gulf Oil bribe was far from the only one Johnson received. According to historian Robert Caro, John Connally and Ed Clark regularly took envelopes stuffed with large amounts of cash to Washington inside the breast pockets of their suit jackets.[12] The contributions were then given to Johnson himself, to decide whether to keep the money or to give it to his campaign.[13]

Lyndon Johnson was also on the take from the mafia. The payoffs were made by John Halfen, who ran a gambling syndicate in Houston under mob boss, Carlos Marcello.[14] Halfen was prosecuted for tax fraud in 1954. During that trial, the issue of Halfen’s payouts came up, but Halfen refused to say who he had been paying off.[15] However, Halfen later acknowledged that he had given Lyndon Johnson $50,000 per year for ten years. In return for this half a million dollar sum, LBJ “repeatedly killed anti-rackets legislation, watered down bills that could not be defeated and curbed Congressional investigations of the Mob.”[16]

During the bribery trial of former Senator Daniel Brewster, his aide, Jack Sullivan testified that in 1964, he saw Senator Brewster and Teamster boss, Jimmy Hoffa, speaking in private at a party. Shortly after, Brewster told Sullivan that Hoffa asked him to take $100,000 in cash to then President Johnson through Johnson’s aide, Cliff Carter. Sullivan testified that he saw teamster lobbyist, Sid Zagri, bring a suitcase of money to Senator Brewster. After that, Sullivan went with Brewster to take the suitcase to Cliff Carter.[17] The purpose of the bribe was to get Johnson’s help with blocking Hoffa’s jury tampering and pension fund fraud, for which Hoffa was ultimately convicted.

Enter Bobby Baker

As soon as LBJ began his career in the Senate, he quickly established a close relationship with 20 year old Senate page, Bobby Baker. Johnson reached out pro-actively to work with Baker because, as Johnson put it, Baker QUOTE “[knew] where all the bodies [were] buried in the Senate.”[18] The two men were so close that Baker named two of his children Lyndon and Lynda (both spelled with Ys). On Capitol Hill, Baker was known as “Little Lyndon.”[19] Baker would even drink LBJ’s cocktails at receptions to test them to make sure they were not too strong so that Johnson did not get drunk.[20]

When Johnson became Senate Majority Leader in 1955, he hired Baker as his Secretary. In that role, one of Baker’s jobs was to decide who would receive campaign funds and fancy official trips. Senators could travel free of charge to England, France, Germany, or Japan. But the sole decider of who got to go on what trips was Lyndon Johnson.[21] Johnson and Baker used those perks of the job to encourage Senators to vote how LBJ wanted.

Baker maintained the position of secretary to the Majority Leader when Johnson became Vice President. During his time in that position, Baker’s net worth increased from $10,000 to $2.1 Million Dollars – all while he was on a salary of about $19,000 a year.[22]  The big picture when we talk about Bobby Baker is that he is getting all of his leverage and power from his relationship with Lyndon Johnson. There is not an obvious paper trail for every transaction, but the implication is clear: Baker was almost certainly providing LBJ with a piece of the action on many, if not all, of his deals.[23]

Serve U Corporation

Another benefit to being secretary to the Majority Leader was the power to award some government contracts. At first, Baker shook down vending machine companies for fees in exchange for him securing the machine locations. Later, Baker started his own vending business called the Serve U Corporation, which placed and serviced vending machines in factories that were doing business with the government.[24] This was at a time when the vending business was booming and most companies did not have cafeterias. Baker’s business partner was his and LBJ’s neighbor, Fred Black, Jr., an extremely well-connected defense industry lobbyist.[25]  By 1963, Serve U was grossing millions of dollars per year and had a near monopoly on soft drink, candy, and cigarette sales at manufacturing plants related to military contracts.

One of the businesses where Baker helped to place vending machines was Capitol Vending Company, owned by Ralph Hill. In 1962, Baker charged Hill an up front fee of $5,600, to help Hill get a vending contract for an airplane parts manufacturer – Melpar. When Baker insisted that the fee was supposed to be paid annually – not just one time, Hill refused to pay it. Eventually, Hill sued Baker for $300,000 after Hill’s contract was canceled and a company owned by Baker replaced his vending machines at the Melpar plant. While this lawsuit was settled out of court, it came to the attention of the Senate and eventually led to Baker’s conviction and imprisonment.[26]

Haitian Meat

On top of doling out campaign funds and vacations to Senators and grifting off of prime vending machine locations, Baker also got involved in solving a problem that Clint Murchison, Jr’s meatpacking operation in Haiti was having. Murchison’s company, HAMPCO, failed to pass the sanitation requirements of the US Department of Agriculture, which meant that it could not export meat to the US or Puerto Rico.[27]

Baker was able to arrange for a re-inspection of HAMPCO. This time, they passed, which meant that they were able to sell their meat to Puerto Rico and the US. HAMPCO paid kickbacks to Baker to the tune of about $30,000 per year. While Lyndon Johnson’s name does not appear in the documents, it is unlikely that Bobby Baker could have procured the reversal of a sanitation ban and a new export license from the USDA, all on his own.[28] This is especially true given that Murchison was a long-time financial supporter of Johnson’s campaigns.[29]

The Carousel, Ocean City

In the early 1960s, Baker got into the motel development business for the first time, with a new project called The Carousel, which was on the beach in Ocean City, Maryland.[30] In the Spring of 1962, just before the Carousel was slated to open, Baker’s partner in the project, Alfred Novak died from an apparent (but not confirmed) suicide, just before a huge northeaster storm caused serious damage to the Carousel. These twin calamities required more funds to be raised. Baker was able to get another loan for the project from his friends, Ed Levinson (a Las Vegas casino operator) and Benjy Siegelbaum (a Miami investor and gambler).[31]

When the motel opened on July 22, 1962, the guest of honor was Vice President Lyndon Johnson, who, according to Life Magazine, appeared amid QUOTE “a bevy of lush and scantily dressed beauties as hostesses.”[32]

The Quorum Club

Another project started by Bobby Baker was the Quorum Club, a private gentleman’s club located on the second floor of the Caroll Arms Hotel – which was just two blocks away from the Capitol. Politicians would be accosted by the press at the public bar. That’s why, according to Baker, the club’s membership QUOTE “was comprised of senators, congressmen, lobbyists, Capitol Hill staffers, and other well-connecteds who wanted to enjoy their drinks, meals, poker games, and shared secrets in private accommodations.”[33]

In reality, the FBI had bugged the private lounge, and Baker himself was making his own tapes of conversations at certain tables.[34] We know that LBJ already worked hand in hand with J. Edgar Hoover to weaponize any dirt that Hoover collected against their mutual enemies. With Bobby Baker collecting his own dirt in a place where people thought they could speak freely, he and his boss, LBJ, gained even more leverage.[35]

Baker made sure that there were always beautiful women at the Club. He introduced one of these women, Ellen Rometsch, to President Kennedy. Rometsch became one of the several women Kennedy had affairs with while in the White House.[36] As we will soon see, Ellen Rometsch would later be a problem for the Kennedys, and a lifeline for Lyndon Johnson.

The Mob and the Neighbors

In addition to LBJ’s relationship with the Marcello crime family through John Halfen, Bobby Baker served as another primary bridge to organized crime. Baker obtained casino contracts with the Intercontinental Hotel system on behalf of Meyer Lansky associates Cliff Jones and Ed Levinson. As an example of how interconnected the study of the JFK Assassination is, Jones and Levinson were the owners of the Havana Hilton before Fidel Castro came to power and expropriated private property.[37] As noted earlier, Levinson was one of the mafia connected financiers of The Carousel Hotel who Baker turned to when more funds were needed. Levinson also helped Baker finance his vending machine business. In addition to working with Meyer Lansky, Levinson was also an associate of Chicago mob boss, Sam Giancana.[38]

Lyndon Johnson’s close friend and neighbor was lobbyist, Irving Davidson. According to author John Davis, it had been principally Davidson who provided Carlos Marcello with most of his access into the agencies of the federal government. Davidson also represented the CIA and the Teamsters Union as a lobbyist.[39] AndDavidson worked with Bobby Baker and Clint Murchison on fixing the Haitian meat deal with the USDA. The guy was everywhere!

Davidson was also friendly with his neighbor, J. Edgar Hoover. As Davidson put it, QUOTE, “I’m a great admirer of Mr. Hoover, and I did have access. We used to have parties before the Redskin games. And Hoover always came to them. He was a darned good friend. I lived around the corner from him, three quarters of a block. I’d go over and say hello to him and Clyde Tolson.”[40]

I know we’ve mentioned the idea that Hoover and Johnson were neighbors. But, now that we know the connections that all of these men had, it’s even wilder that they lived within a stone’s throw. We’ve got J. Edgar Hoover, the head of the FBI who denied the existence of the mafia. Then, we’ve got Johnson, who, as we already mentioned had been being paid off by Carlos Marcello. Then, there’s Irving Davidson – the super lobbyist for both the CIA and some mob bosses.

On top of that, another neighbor to this crew was Fred Black, Jr – a defense industry lobbyist who was Bobby Baker’s partner in the vending machine business. Black was also a close friend of mobster Johnny Roselli. In fact, Black and Roselli were so close that Black warned Roselli to get out of Miami the night before he was murdered in July of 1976, which raises the question of ‘what else did Fred Black know’.[41]

Bobby Baker’s Downfall

In September of 1963, two months before President Kennedy would be assassinated, Bobby Baker’s wheeling and dealing was put under the spotlight by Republican Senator John Williams, who got a tip about Baker from none other than Attorney General Bobby Kennedy, who said that Baker was surrounding himself with unsavory characters and conflicts of interest.[42]

RFK even assigned a Justice Department lawyer to serve as an intermediary to the Republican Senate Staff so that the DOJ (and the Kennedys) would be made aware of documents about Lyndon Johnson’s financial dealings with Baker.[43] According to Burkett Van Kirk, who, at the time was the chief counsel for the Republicans on the Rules committee, Bobby Kennedy’s motive in sharing this information with Senator Williams was QUOTE “To get rid of Johnson. To dump him. I am as sure of that as I am that the sun comes up in the East.”[44] Indeed, Newsday also reported in October of 1963 that QUOTE “the Justice Department started an investigation of Baker as a means of embarrassing Johnson and eliminating him from the Democratic ticket next year.”[45]

At this time, Lyndon Johnson, who was aware of Bobby Kennedy’s ploy, fell back on the same tried and true tactics that had gotten him to the Vice Presidency in the first place. Johnson reached out to his old friend, J. Edgar Hoover, and encouraged Hoover and the FBI to confront the Kennedys about President Kennedy’s affair with Ellen Rometsch, one of the girls from the Quorum Club who joined the president for naked pool parties at the White House.[46]

Johnson tried to distance himself from Baker when the scandals broke, saying that Baker was QUOTE “just an employee around here.”[47] Contrary to what Johnson said, he was still in touch with Baker. In a breach of normal protocol, on August 21st, Johnson had a documented meeting on the books with Bobby Baker and Fred Black.[48] In addition, Baker used Johnson’s old buddy and 1948 election lawyer, Abe Fortas, as his lawyer to defend against the Senate investigation. Johnson, who had not spoken to Fortas with frequency before the scandal, talked to him on the phone almost daily in October of 1963 and visited Fortas twice, including once in his home after being driven there in a borrowed car by Lady Bird Johnson. Johnson’s calls to Fortas ended in November, when Fortas was brought in to work directly under Johnson, full-time, with the goal of shutting down the congressional investigations.[49]

If JFK had so many other girlfriends, what was the big deal with Ellen Rometsch? The Quorum Club hostess was born in East Germany and was rumored to have been some kind of a spy. This led the FBI to investigate Rometsch. On July 12, 1963, an FBI memo concluded that the investigation did not substantiate the claims that Rometsch was a spy or even that she had QUOTE “high level sex contacts.”[50] Given that we know that Rometsch did, in fact, have an affair with the President of the United States, it appears that this FBI report is a whitewash.

Even though the FBI formally determined that Rometsch was not a spy, the context here is important. Around the same time as the Ellen Rometsch scandal was in the news, across the ocean, the British government had just gone through a similar scandal known as the Profumo Affair. John Profumo, the British Secretary of War, lied about having an affair with a 19 year old model, who happened to also be sleeping with a Soviet Naval Attache, which would be a major security risk. The Profumo Affair resulted in the resignation of Prime Min  ister Harold MacMillan around the same time, in October of 1963.[51] Americans were wondering whether the Ellen Rometsch scandal would end up the same way for President Kennedy.

In late October, Bobby Kennedy had Rometsch deported back to Germany. Still, stories about the Rometsch affair were in newspapers and the Bobby Baker investigation was ongoing in the Senate.[52] At this point, Bobby Kennedy, the man who had put the wheels in motion on the Senate Investigation of Bobby Baker, had to go with his hat in his hand to J. Edgar Hoover – the same man who Bobby’s nemesis, LBJ was relying on to clean up the Bobby Baker mess. This led to Hoover having a secret meeting on October 28, 1963 with Senate Majority Leader, Mike Mansfield, and Senate Minority Leader Everett Dirksen where Hoover explained that there are large numbers of Senators implicated in the Quorum Club sex scandal on both sides of the aisle. Hoover encouraged the Senate leaders to shut down the investigation into Rometsch based on that logic. And, sure enough, by that afternoon, the Senate cancelled its plans to investigate Rometsch.[53]

Wrapping Up The Baker Scandal

With Hoover’s help, the sexual scandal angle of the Bobby Baker investigation was gone. But the financial side of the inquiry remained in place. Two weeks before JFK’s assassination, Life magazine featured a cover story with a picture of Bobby Baker and the headline QUOTE “Capital Buzzes Over Stories of Misconduct in High Places: The Bobby Baker Bombshell.”[54]

There were many possible transactions that could have demonstrated Bobby Baker and Lyndon Johnson’s lawlessness. But, one seemingly small shakedown of an insurance salesman, would draw a clear line to LBJ - on the record.

On the day of the assassination, literally at the moment President Kennedy was being shot and while the Parkland doctors were working on him, Don Reynolds was testifying to the Senate Rules Committee about Bobby Baker and Lyndon Johnson.

Reynolds laid out how Johnson demanded kickbacks on Reynold’s life insurance commissions in the form of paying for $1,200 in advertising on Johnson’s radio station and a Magnavox stereo. Reynolds described how the stereo was selected by Lady Bird Johnson from a catalogue provided by Bobby Baker. He even provided records showing the stereo was delivered to the Johnson home.[55]

Reynolds also testified about Baker skimming commissions on other transactions, like his vending contracts, and construction contracts for major projects, like the Rayburn House Office Building and the football stadium that would later be known as RFK Stadium. For the stadium, Reynolds told the Senate that contractor Matt McCloskey bribed Baker and Johnson to get the contract and then increased the cost by $14 million to help cover the difference.[56] The details of this transaction were never established before President Johnson was able to close down the investigation. Reynolds also said that he witnessed a suitcase full of money that Bobby Baker described as a $100,000 payoff to Johnson for securing the TFX contract – a saga that we’ll cover in a future episode.[57]

In the November 22, 1963 edition of Life Magazine, which was distributed a few days before the publication date, the cover page said QUOTE “The Bobby Baker Case: U.S. Senate writhes as nation focuses on a mess involving one of its own.”[58] According to Life Magazine executive editor at the time, James Wagenvoord, an even more damaging story about Johnson and Bobby Baker had been written, but was pulled from publication at the last minute. Wagenvoord said about this article, QUOTE “On publication Johnson would have been finished and off the ’64 ticket and would probably have been facing prison time…On Kennedy’s death, research files and all numbered copies of the nearly print-ready draft were gathered up by my boss and shredded.”[59] The issue of Life Magazine that was supposed to put the spotlight on the corruption of Bobby Baker and Lyndon Johnson, instead, focused on the Zapruder film.

NEXT TIME ON SOLVING JFK: We continue to analyze the life and relationships of Lyndon Johnson, as we turn our attention to Billie Sol Estes and Mac Wallace.

[1] https://time.com/archive/6813738/the-presidency-the-multimillionaire/

[2] https://www.in2013dollars.com/us/inflation/1964?amount=14000000

[3] Phillip Nelson, LBJ: The Mastermind of the Kennedy Assassination, at 44.

[4] Id. at 44-45.

[5] Id.

[6] Robert Caro, The Years of Lyndon Johnson: Means of Ascent, at 97.

[7] Id. at 99-100. (Johnson also obtained an affiliation with CBS in Austin, which had historically been denied there because the signal from the San Antonio CBS affiliate could be heard.) Id. at 101.

[8] Id. at 104-105.

[9] Life Magazine, August 21, 1964; Nelson at 46. On one occasion, Johnson wanted NBC to pay his station the highest rate scale for nationally broadcast commercials, even though Austin was much smaller than markets like New York and Chicago. An NBC executive explained to Johnson that his station isn’t large enough to qualify for the highest rates. Johnson then responded QUOTE “I say it is. I know how you fellows work. You can do anything you want to. Well, want to!” NBC then paid KTBC TV at the highest rate scale as Johnson demanded. Nelson at 46.

[10] Joan Mellon, Faustian Bargains, at 60.

[11] Robert Caro, The Years of Lyndon Johnson: Master of the Senate, at 406; https://time.com/archive/6880687/scandals-gulf-oils-misplaced-gifts/ (those people were John Connally, Walter Jenkins, Cliff Carter and Ed Clark, Johnson’s personal attorney.)

[12] Caro, Master of the Senate, at 407.

[13] Nelson at 189.

[14] Roger Stone, The Man Who Killed Kennedy: The Case Against LBJ, at 172.

[15] Nelson at 39.

[16] David E. Scheim, Contract on America: The Mafia Murder of President John F. Kennedy, at 247; Nelson at 307.

[17] Id.; Walter Sheridan, The Fall and Rise of Jimmy Hoffa, at 380-381; Nelson at 39; see also https://www.nytimes.com/1972/11/01/archives/exbrewster-aide-testifies-on-donations-and-lobbying.html (discussing the trial, but not the claim about Johnson’s bribery).

[18] Bobby Baker with Larry L. King, Wheeling and Dealing, Confessions of a Capitol Hill Operator, at 34.

[19] https://www.washingtonpost.com/local/obituaries/bobby-baker-protege-of-lyndon-johnson-felled-by-influence-peddling-scandal-dies-at-89/2017/11/17/ffb7ce04-cc06-11e7-b0cf-7689a9f2d84e_story.html

[20] Mellon at 115.

[21] Id. at 114.

[22] Nelson at 250-251.

[23] Id. at 252.

[24] Id.

[25] https://en.wikipedia.org/wiki/Bobby_Baker

[26] Nelson at 252.

[27] Mellon at 118.

[28] Id. at 119.

[29] Nelson at 119, 188.

[30] https://carouselhotel.com/our-history/

[31] Nelson at 251.

[32] Life Magazine, November 22, 1963, at 96.

[33] Bobby Baker, Wheeling & Dealing, at 78-80.

[34] Id. at 170.

[35] In addition to the quorum club, Baker also owned a townhouse on Capitol Hill that he rented to his secretary and mistress Carol Tyler, who eventually died in a plane crash ironically on the beach in front of the carousel Hotel. Nelson at 251.

[36] Mellon at 118.

[37] Peter Dale Scott, Deep Politics and the Death of JFK, at 218.

[38] https://en.wikipedia.org/wiki/Ed_Levinson

[39] John Davis, Mafia Kingfish, at 312.

[40] Scott at 139; Nelson at 42.

[41] Nelson at 250.

[42] Id. at 255.

[43] Id. at 256.

[44] Seymour Hersh, The Dark Side of Camelot, at 407.

[45] Newsday, October 29, 1963

[46] Nelson at 256.

[47] Id. at 260, Hersh/Burton at 57.

[48] Larry Hancock, Someone Would Have Talked, at 319.

[49] Id. at 196.

[50] https://archive.org/details/EllenRometschFBI/page/n3/mode/2up?view=theater

[51] https://en.wikipedia.org/wiki/Profumo_affair

[52] See Nelson at 258.

[53] Id. at 259; Anthony Summers, Official and Confidential, at 312-313. (Hoover’s price to Bobby Kennedy for shutting down the Ellen Rometsch investigation in the Senate was a guarantee that the Kennedy’s would not fire him (something Hoover had overheard Bobby boast on tapped phone lines that his brother was about to do), and permission to wiretap Martin Luther King. (Richard Mahoney, Sons & Brothers: The Days of Jack and Bobby Kennedy, at 278 ). The Kennedys traded the right to wiretap Martin Luther King in exchange for Hoover’s help in tamping down a sex scandal involving JFK.

[54] Life Magazine, November 8, 1963.

[55] Nelson at 262.

[56] Clark Mollenhoff, Despoilers of Democracy, at 296.

[57] Lasky, It Didn’t Start With Watergate, at 135-137.

[58] Life Magazine, November 22, 1963.

[59] Nelson at 311.