Fraud Museum Game: The Mafia and the Making of Sin City

Jen Liebman, CFE, Anna Brahce and Crystal Zuzek

Sponsored by Fraud Magazine

This year we’re taking conference attendees on a tour through the Vegas Strip’s most notorious players.

Each year at the Association of Certified Fraud Examiners’ (ACFE) Annual Global Fraud Conference, attendees get to explore some of the biggest frauds of the past — and a chance to win an Amazon gift card — with our Fraud Museum exhibit and trivia game. This year, the ACFE takes 35th Annual ACFE Global Fraud Conference attendees on a tour of the Vegas Strip and its most notorious mobsters. The Mafia played an integral role in developing Las Vegas as an international destination for gambling and entertainment, building some of the most famous hotels and casinos that populate the Strip to this very day. Of course, as gangsters will do, many of them leveraged those hotels and casinos to fraudulently fill their coffers.

The ACFE’s Fraud Museum, located at our headquarters in Austin, Texas, features artifacts, memorabilia, documents and other pieces of fraud history collected by ACFE founder and Chairman Dr. Joseph T. Wells, CFE, CPA. 

To participate in this year’s game, read about The Mafia and the Making of Sin City below, and answer the questions in this quiz to be entered for your chance to win a $250 Amazon gift card. The game begins Sunday, June 23, and closes Tuesday, June 25 at 11:59 p.m., Pacific Daylight Time. Only attendees of the 35th Annual ACFE Global Fraud Conference are eligible to participate. Please read the official rules before submitting your entry. The winner will be notified via email.

The Mafia’s Influence on Las Vegas

The Mafia’s early investment in Las Vegas left a lasting impact on the city’s culture. Despite a diminished presence today, early Mafia-funded resorts like the Flamingo and the Sands in the 1940s and 1950s shaped the city’s architectural landscape and entertainment standards. Depictions in the media also immortalized this Mafia-influenced era, adding to the city’s allure.

After a ban in 1909, gambling became legal again in Nevada in 1931. The mob was slow to see the potential of all forms of gambling in the state, opting initially to focus on running horse-racing parlors via control of the race results wire. But by the 1940s, it made significant inroads with big casino construction projects. In its heyday from 1950 to the early 1980s, the mob controlled every Las Vegas Strip resort that was worth controlling, stealing untold millions of dollars in tax revenues.

The Mafia’s use of casinos to skim hundreds of millions of dollars in revenue also prompted stricter gaming regulations in the 1980s, ensuring regulatory scrutiny in the industry that’s maintained to this day.

Today, the city’s vibrant casino culture and entertainment scene owe much to the Mafia’s role in its formative years, shaping its identity as a global gambling destination.

The Kefauver Commission

The climate for illegal gambling changed in the U.S. by the 1940s. In 1950, a U.S. Senate committee led by Sen. Estes Kefauver (D) of Tennessee began investigating organized crime’s influence on interstate industries such as gambling and liquor. The televised hearings brought public attention to the issue and helped pave the way for tougher federal legislation on gambling; multiple states outlawed it over the next few years.

The hearings took place in 14 cities, including Las Vegas. However, the Vegas hearing was reportedly anticlimactic. As the Las Vegas Review-Journal wrote, “The United States Senate’s crime investigating committee blew into town yesterday like a desert whirlwind, and after stirring up a lot of dust, it vanished, leaving only the rustling among prominent local citizens as evidence that it had paid its much-publicized visit here.”

Kefauver recommended that the federal government impose a 10% tax on all gaming, but Nevada Sen. Pat McCarran successfully argued against it, knowing it would be disastrous for Las Vegas. And the Mafia’s hold on gambling only seemed to grow. Within five years of the hearings, five more Mafia-funded casinos were built in the city: the Sahara, the Sands, the Riviera, the Fremont and the Tropicana. Although, state officials attempted to make a few changes. In 1955, Nevada required casino owners to be licensed by the state gaming board, and in 1960 the Gaming Control Board published “A List of Excluded Persons,” which banned known gangsters from casinos.

Meyer Lansky: The Mob’s Financial Wizard

Meyer Lansky was known as “the mob’s financial wizard” for his investments in some of the most famous casinos on the Vegas Strip. His mathematical prowess helped legitimize gambling in Vegas — as he allegedly skimmed profits, secreted funds in Swiss banks, laundered money and evaded taxes. One FBI agent reportedly said, “He would’ve been chairman of the board of General Motors if he’d gone into legitimate business.”

In the 1910s, Lansky ran craps games in New York with fellow mobster Benjamin “Bugsy” Siegel. After a stint as a Prohibition-era bootlegger, Lansky returned to gambling. He spent much of the ‘40s financing many of Siegel’s casinos. Siegel’s mismanagement of the Flamingo likely led to his murder in 1947; some speculate that Lansky hired the hit. He denied it.

Lansky’s gambling operations had a veneer of legitimacy, but he allegedly drained millions from the casinos he had helped finance. He wasn’t the flashiest mobster, but he was on law enforcement’s radar. After a yearslong investigation, U.S. prosecutors indicted Lansky in 1970 for concealing and distributing $36 million in unreported income between 1960 and 1967. He fled to Israel but was denied citizenship. In 1972, Lansky was indicted on charges of skimming millions from a Vegas casino. After living on the lam, he eventually returned to the U.S., and most of the charges against him were dropped due to his ill health.

Lansky managed to escape the violent end that befell many of his fellow mobsters like his old friend Siegel: In 1983, Lansky died of lung cancer at age 80 in Miami, Florida.

Bugsy Siegel: Driving Force in Vegas

Perhaps the most iconic figure associated with the early development of Las Vegas as a gambling destination was Benjamin “Bugsy” Siegel, a hit man who used New York Mafia connections and illegal funding to finance the construction of the Flamingo Hotel and Casino, one of the first major resorts on the Las Vegas Strip.

Siegel was involved in various criminal activities, including bootlegging, gambling and money laundering through his casino ventures. His Trans America Wire Service racing wire, which operated out of Chicago and Los Angeles, successfully ran in horse parlors throughout Vegas. He used the Mexican black market and political friends to build the Flamingo. Siegel lost favor with his mob bosses after the Flamingo failed to draw enough guests and the casino lost money after its first night. His girlfriend, Virginia Hill, also allegedly skimmed hundreds of thousands of dollars of the mob’s money. Siegel was shot four times and died at Hill’s home in Beverly Hills, California, in June 1947.

Frank “Lefty” Rosenthal and Anthony Spilotro: The “Casino” Boys

Frank “Lefty” Rosenthal was a renowned sports handicapper and casino executive who became deeply involved with the Chicago Outfit. He managed several Las Vegas casinos, including the Stardust and the Hacienda, using them as fronts for illegal sports betting operations. Rosenthal’s story was immortalized in the movie “Casino,” which depicted his turbulent relationship with the Mafia and law enforcement.

Anthony “The Ant” Spilotro was a notorious enforcer for the Chicago Outfit involved in extortion and loan sharking in Vegas casinos during the 1970s and 1980s. His brutal methods earned him a fearsome reputation. He and Rosenthal stole money directly from count rooms to send to mob bosses in Chicago, Kansas City, Milwaukee and Cleveland.

Spilotro ran the rackets from the Circus Circus gift shop and later fenced stolen jewelry at the Gold Rush jewelry store and led the “Hole in the Wall Gang,” a burglary ring named for drilling holes in the buildings it entered. In 1981, federal authorities broke up the fencing operations and arrested key members of the gang. Spilotro’s battered and bloodied body was found with his younger brother in an Indiana cornfield in June 1986. His mob killers were convicted in Chicago years later in 2007.

Moe Dalitz: The Philanthropist Gangster

Known later in life as a philanthropist and benevolent godfather who mentored young entrepreneurs, Moe Dalitz (born Morris Dalitz in 1899) got his start running bootlegging operations in Cleveland during Prohibition. An associate of Teamsters Union President Jimmy Hoffa, Dalitz turned his attention to Las Vegas in the 1940s, leading a group of investors that included some of his Cleveland Mob connections in financing completion of the $6.5 million ($84.2 million in 2024) Desert Inn.

His involvement in organized crime attracted the attention of U.S. Sen. Estes Kefauver, who got Dalitz to admit during a hearing in 1951 to manipulating stock shares during a 1945 steel company merger to the tune of $230,000. He also admitted that he and his mob associates invested in the Pettibone Club casino in Cleveland, the Frolics Club gambling hall in Florida and the Arrow Club casino in Cincinnati.

Regardless of his involvement in the mob, Dalitz never served jail time. From the 1960s to the early 1980s, he focused on supporting Las Vegas’ growth and prosperity. He helped build Sunrise Hospital, the city’s first private hospital, with a $1 million loan from the Teamsters Union pension fund. And he played a pivotal role in the development of the Las Vegas Convention and Visitors Authority, the Las Vegas Convention Center and the Nevada Resort Association.