Fertitta family history
A century of making headlines
BY HENRY ABBOTT
Not too long ago, someone who works in the NBA wondered aloud to me: “Why did the NBA let a fourth-generation member of a mafia family buy the Rockets?”
It seemed like a breathless secret, the kind of thing you could never put in print—not without interviewing FBI agents and the like.
But it turns out I was wrong. It’s not even a secret. While I did not encounter anyone who suggested Tilman Fertitta is in the mob presently, his family tree is a tangle of magazine articles, FBI busts, books, wiretaps, even a major Hollywood motion picture about the old days of the mob.
The Fertittas are legendary, woven into the incredible history of Galveston, Texas.
Galveston is a little different. It has a reputation as a barrier island in the Gulf of Mexico, an hour’s drive from Houston, where people go to party.
But like Las Vegas, Galveston has a longstanding reputation for lawlessness. The story begins in the 1800s. From Wikipedia: “The United States outlawed the importation of slaves in 1808, but domestic trade flourished … Between 1816 and 1821, Louis-Michel Aury and Jean Lafitte smuggled slaves into the United States through Galveston Island. Various clans arose to control the various trades that followed slavery: sex, alcohol, gambling.”
Katy Vine wrote a Texas Monthly story about Galveston which includes this background: “Indeed, for more than one hundred years, power on the Island has belonged almost exclusively to members of three families: the Moodys, Kempners, and Sealys, who made their money in cotton and banking, among other ventures, in the late 1800’s.”
The early 20th century
Gary Cartwright writes in Texas Monthly about how Tilman Fertitta’s family—related to the Maceo family by marriage—came to power:
For thirty years the Maceos ran Galveston—economically, politically, spiritually. Papa Rose and Big Sam were the undisputed dons of the gang, and their brothers, Vincent and Frank, along with a number of cousins and in-laws, ran various parts of the operation. Gigolo managed the Studio Lounge on the second floor of the Turf Athletic Club, and other family members managed the Balinese Room, the Western Room, the Moulin Rouge, and a variety of Maceo ventures on the Island as well as the mainland part of Galveston County, which they also controlled; motorists driving south from Houston spoke of crossing the “Maceo-Dickinson Line.”
Tilman Fertitta’s grandfather Victor, whose mother was Olivia Maceo, was born in 1908 and went on to own the famed Balinese Club in Galveston.
Galveston’s red-light district may have been the only one in the country that thrived with the blessings of both city hall and the Catholic church. Proportionally, it was probably the largest red-light district in the world, boasting 1 hooker for every 62 citizens. Chicago, by comparison, had a ratio of 1 to 430, Paris 1 to 481, and Shanghai 1 to 130.
What outsiders viewed as corruption, Islanders called business as usual. Walter Johnston, the longtime police commissioner, once bragged that he was on the payroll of 46 whorehouses. Frank L. Biaggne, who was the sheriff of Galveston County from 1933 to 1957, explained to a state investigative committee that the reason he had never raided the Balinese was because it was a private club and he wasn’t a member. Occasionally, the Texas Rangers—in those days, effectively the governor’s private police force—swept down from the mainland and smashed a few slot machines, but not one of the Maceo’s clubs was ever closed for long. The skinny was that the family had close contacts in the governor’s office by which they were warned of approaching trouble. Gambling paraphernalia at the Balinese was designed to convert into billiard and bridge tables so that by the time the Rangers arrived, all they found were some well-dressed patrons playing bridge and sipping soft drinks.
Michael Hardy writing in Texas monthly:
Two branches of his family, the Maceos and the Fertittas, have deep roots in the more colorful side of Galveston history. Two of his great-great-uncles, Sicilian immigrants Salvatore and Rosario Maceo, operated the island’s notorious Balinese Room, a nightclub and illegal casino that featured entertainers like Frank Sinatra, Bob Hope, and the Marx Brothers. Fertitta’s paternal grandfather and great-uncle helped run the Maceos’ casinos.
Robert Draper writing in Texas Monthly:
Yet what the Maceos ran for thirty years was indisputably an organized-crime syndicate. The brothers’ slot machines were ubiquitous, and their homemade booze was distilled and bottled in a large Galveston warehouse. They could defy the law because the local lawmen were on their payroll—“Paid them off, every month, in cash,” according to 85-year-old Pete Salvato, a close ally of the Maceos who operated casinos in the Galveston County town of Dickinson. “They used the law to chase the competition out of town.” Judges and politicians were equally compromised. Additionally, the Maceos owned a number of legitimate local businesses—a fish house, a dairy, a trucking company, a concrete-mixing company—and applied their muscle to ensure that these industries as well remained under their control.
Sometimes it got rough. On April 22, 1933, the Shreveport Journal carried the following Associated Press report (accessed through Newspapers.com):
Lee Hausinger, aviator, slain here Thursday night, has been identified as one of two men who robbed a night club employee of $900 a few hours before. Chief of Detectives Frank Henry announced that Frank Fertitta, the night club bookkeeper, who was robbed, had identified Hausinger by photographs as one of his assailants. Fertitta made a statement at the county attorney’s office, saying he was held up en route from his home to the club. A murder charge has been filed against Rosario Maceo, brother of the night club manager, in connection with the shooting. Maceo surrendered to officers shortly after it occurred on a Galveston street near the beach.
Gary Cartwright writing in Texas Monthly:
The Maceos maintained law and order with their own squad of vigilantes, known as Rose’s Night Riders. Miscreants simply disappeared. While the Maceos were in power, mobsters from other parts of the country were normally wise enough to stay the hell off the Island. On one memorable occasion, when the Al Capone gang sent Frank Nitti to Galveston to inquire about “investing” in the Maceo organization, a Maceo in-law, Anthony Fertitta, personally showed Mr. Nitti the way back to the mainland. There were a number of gangland killings in the thirties—Rose Maceo was suspected of murdering several people, including his first wife and her lover—but no member of the Maceo family was ever convicted of a felony. On the contrary, the Maceos were the first to offer help to the police.
1943
May 29 Weekly Town Talk (Alexandria, Louisiana—accessed on Newspapers.com):
Another case, that against the Fertitta brothers of Leesville, is due to come up Friday. Judge Porterie, in as stern a statement as had been in the courtroom here, pointed out to Sliman that during wartime, the laws of his country must regulate his property and said that his government would not permit him to charge soldiers and their families excessive rents particularly when those soldiers are fighting to protect that property.
1951
Associated Press in the Fort Worth Star-Telegram (as accessed by Newspapers.com):
The Galveston County grand jury Wednesday indicted 19 persons, including seven members of the Maceo family, on charges of running a gambling house. … The Maceo interests include the famed Balinese Room on the Gulf Coast at Galveston … The indictments were returned against Joe T. Maceo, Vic A. Maceo, Rose Maceo, Sam J. Maceo, Charles Bernard, W.D. Dennis, Vic J. Fertitta, Anthony Fertitta, Lorainsa Grillette, Frank J. Fertitta, AJ Adams, Frank Maceo ...
1954
Texas Coffee Company formed with Maceos and Fertittas as officers.
1954-57
Gary Cartwright writing in Texas Monthly:
World War II had been over for nearly a decade—and both Rose and Sam were in their graves—before a Galveston County politician dared campaign on a promise to bust up the rackets. The candidate was Jim Simpson, a former FBI agent who now practices law in Texas City. Running for county prosecuting attorney in the 1954 elections, Simpson lost by eight votes. But two years later he put together an undercover operation for Attorney General Will Wilson that eventually gathered enough evidence to close down the Maceo syndicate for good. The coup de grace was administered by a task force of Texas Rangers in June 1957. Most of the old gang had already gone by then anyway. By the early fifties, the dealers and pit bosses who worked for the Maceos had mostly migrated to Las Vegas, as had the high rollers and all the big-name entertainment.
That story then concludes: “The Fertitta family, related to the Maceos by marriage, had assumed control of what remained of the syndicate.”
1960
Frank Fertitta, Jr. goes to Las Vegas, where he will become a casino owner and—details below—part of some events that reportedly inspire the Nicholas Pilleggi book and movie “Casino.”
1974
Robert Draper writing in Texas Monthly:
In 1974 the Fertittas relocated to the west Houston suburbs, and Tilman attended Westchester High School, the same one I did. I remember him as a swarthy guy who threw his weight around and didn’t settle for anything second-rate. He drove a Mustang convertible, went after the flashiest of girls, and when the football coaches told him he would be playing on the offensive line rather than at running back, he quit the team.
1976
By Steve Weigand, Sacramento Bee, June 9, 2003 (accessed on Newspapers.com) on Frank Fertitta, Jr.:
In 1976, Fertitta scraped together enough to buy a small casino off the Strip with a partner, Carl Thomas. The casino became known as the Bingo Palace and later Palace Station. Both Thomas and Fertitta had other jobs as well. When Thomas was made chief executive officer of four casinos owned by the Argent Corp., he brought Fertitta in to be general manager of one of them, the Fremont.
But Thomas also had other partners. They were Giuseppe Nicoli “Mr. Nick” Civella and Carl “The Cork” Civella, brothers and bosses of the La Cosa Nostra chapter in Kansas City. In the 1980s, federal prosecutors charged that Thomas, the Civellas and other conspired to “skim” money from the Argent casinos by taking it from the counting rooms before it was on the casinos’ books. …
One witness who had been fired by Fertitta, former Fremont security chief Harold McBride, testified Fertitta had been involved in the skimming. Fertitta’s name also surfaced in FBI wiretaps of conversations between the Civellas and Thomas.
1983-86
Tilman Fertitta purchases a 3 percent stake in the Rockets.
Michael Hardy in Texas Monthly:
After two desultory years of college, including two semesters at the University of Houston’s Conrad N. Hilton College of Hotel and Restaurant Management, [Tilman] Fertitta dropped out and embarked on an unlikely series of commercial ventures, including a women’s clothing store, a vitamin retailer, a construction company, and—most lucrative of all—an arcade-game distribution business. But he spent freely, and during the economic crash of the eighties, his companies managed to run up more than $10 million in debt. Twenty-five of his creditors sued him. Thanks to an aggressive team of lawyers led by Steve Scheinthal, who’s now the general counsel of Landry’s, Fertitta was able to restructure his debt without having to declare bankruptcy.
In 1986 he purchased the Louisiana-born brothers Bill and Floyd Landry’s stake in two Houston-area restaurants: Landry’s Seafood Inn and Oyster Bar in Katy and Willie G’s in the Galleria area. After buying out his sole remaining partner the following year, Fertitta launched an aggressive expansion campaign. His two new Landry’s locations in Houston failed, but he had more success farther afield, opening up profitable outposts in Galveston, Kemah, Corpus Christi, and San Antonio.
1985
March 24, 1994 Louisville Courier-Journal (accessed via newspapers.com) about Frank Fertitta Jr.:
Frank Fertitta Jr., founder of the applicant, Station Casinos Inc., was implicated but never charged during a 1985 criminal trial in a mid-1970s conspiracy to siphon money to mobsters from casinos before it was recorded on the company’s books. A dozen reputed organized-crime figures in Chicago; Kansas City, Mo.; Milwaukee; and Cleveland were convicted in federal court in Kansas City. …
A key figure in the elder Fertitta’s past was Carl Wesley Thomas, a casino executive whom investigators credit with teaching the Mafia how to steal money from Las Vegas casinos. Thomas, a close friend and once business partner of Fertitta’s, was sentenced in 1983 for stealing from casinos. Until his death last year, Thomas was listed on Nevada’s “Black Book” of people banned for life from entering any casino in that state.
An AP story on July 11 1987 Reno Gazette-Journal notes Thomas “ratted” on some of the most fearsome mobsters on the planet, but wouldn’t testify about Frank Fertitta. Thomas appealed his appearance in the “Black Book,” through an attorney named Richard Wright.
Wright said Thomas refused to answer questions concerning Palace Station owner Frank Fertitta, a former business partner. Thomas, 54, was convicted in Kansas City of conspiring to skim $280,000 from the Tropicana Hotel in 1978-79. FBI wiretaps caught Thomas instructing the late Kansas City mob boss Carl Civella on how to skim money from the casino. Thomas was sentenced to 15 years in prison but the sentence was reduced to two years after he testified at a trial at which several Midwest mob bosses were convicted of skimming money from the Stardust.
1991
Tilman Fertitta marries Paige Farwell.
1990s
In the early 1990s Frank Fertitta Jr. stepped down from his family’s business, leaving his business to his son—Tilman’s third cousin—to run. The Fertitta family applied to open casinos in many states, which prompted many articles re-examining Frank Fertitta Jr.’s brush with the law—for which he was never charged. The Nevada Gaming Commission voted 2-1 against punishing Fertitta in the episode. The outlier vote was retired deputy police chief Jerry Cunningham. John Carlson and Tom Witosky wrote a cover story that appeared in the October 24, 1992 Des Moines Register, which quoted Cunningham:
“I listened to the recordings (wiretaps) and read the transcripts of the trial,” said Cunningham. “I knew who and what Carl Thomas was. Carl Thomas admits he stole money for the mob and gave it to his superiors. Frank Fertitta Jr. was a member of the Carl Thomas’ crew.”
1993
Michael Hardy in Texas Monthly:
To finance further expansion, [Tilman] Fertitta took Landry’s public in 1993, raising $24 million on the stock market, which helped fund a decade-long buying spree: Joe’s Crab Shack (1994), the Crab House (1996), Rainforest Cafe (2000), Chart House (2002), and Saltgrass Steakhouse (2002). In 1997 Fertitta bought every restaurant on the Kemah waterfront he didn’t already own, erected a Ferris wheel, and rechristened it the Kemah Boardwalk. In 2003 he transformed two former municipal buildings on the banks of Houston’s Buffalo Bayou into the Downtown Aquarium, complete with yet another Ferris wheel and, controversially, a caged group of white tigers.
Tilman Fertitta makes a bid to purchase the Rockets, and falls a few million short of Leslie Alexander’s offer.
1997
Robert Draper publishes this in Texas Monthly:
Mob money got him in, mob money bailed him out, they would claim. After all, they’d say, wasn’t the arcade business controlled by the Mafia? Didn’t his Key Largo partner, cousin Frank, own three casinos in Vegas? And just what did Fertitta intend to do with all that property in Galveston and Kemah, if not make it a haven for gambling thugs? Because you knew, didn’t you, about his family ...
“It’s the one thing that gets to him,” sighs his father, Vic. “Because my son is a control freak, and this is the one thing he can’t control.” How do you prove the negative? Dean Witter vetted his finances before green-lighting the public offering of Landry’s, and the Secret Service all but turned his underwear inside out before letting him host a fundraiser for Clinton last September. I’ve seen his architect’s blueprints for the Kemah development, and the closest thing to a casino that’s in the works is a Ferris wheel for kids.
2001
Katy Vine writing in Texas Monthly:
Five years later, in 2001, Fertitta won over enough people around town, including Mayor Quiroga, to push for a special election on increasing the local hotel tax from 13 cents to 15 cents on the dollar. The plan would create funds for the city to build a Fertitta-run convention center to compete with the Moodys’...“That election was not just on the convention center, okay?” Fertitta told me. “More people turned out for that election than for any mayor’s race. That was a vote for change in Galveston.”
2003
The Toyota Center opens in Houston, the Fertittas have courtside tickets.
2004
Katy Vine writing in Texas Monthly about Galveston, in an article headlined “Fertittaville”:
All told, he’s invested $150 million here … They worry aloud that his legion of properties is turning Galveston into “Fertittaville,” a fear that was only heightened two months ago, when Mayor Roger “Bo” Quiroga proposed changing the name of Fifty-seventh Street to Tilman Fertitta Boulevard. Of even larger concern is what they perceive to be Fertitta’s long-term vision. This spring, when Fertitta backed a proposal during the special legislative session to bring video gambling to Texas, there was speculation that he hoped to turn it into a Gulf Coast version of Atlantic City. ...
But his detractors started gaining footing when Fertitta backed video gambling at the special session. They say gambling will bring corruption, and some even point to Fertitta’s family history as a warning sign: During the forties and fifties, his great-uncle Anthony Fertitta and his great-great-uncles Sam and Rosario Maceo worked together in the Balinese Room, the most notorious gambling tavern in the state. Asked about his own gambling aspirations, Fertitta said people were blowing them out of proportion. But he didn’t deny that he supported some level of gambling on the Island. After all, he explained, how would it be fair for the horse-racing tracks—or the failing greyhound track in nearby LaMarque—to get slot machines and not Galveston? “I’ll tell you,” he said. “I used to think it wasn’t coming. These days I think it’s inevitable. Will it be two years, five years, ten years? You’re going to be pulling a slot machine in Galveston, Texas, while we’re all still breathing. I can promise you that.”
2005
Michael Hardy in Texas Monthly:
In 2005, [Tilman] Fertitta followed his illustrious forebears into the gaming industry by purchasing the then-59-year-old Golden Nugget casino, which had locations in Las Vegas and Laughlin, Nevada. He has since opened new Golden Nugget resorts in Lake Charles, Louisiana; Biloxi, Mississippi; and Atlantic City.
2010
Caleb Melby writing in Forbes:
Since [Tilman Fertitta] took the company private in 2010, Landry's has acquired The Golden Nugget casino in Atlantic City, Oceanaire Seafood Room, Bubba Gump Shrimp Co., Claim Jumpers, Morton's and McCormick & Schmick's, of which he tells Forbes "I had never done a hostile [takeover] before. I wanted to see what it was like ...
"It wasn’t painful for me. Was painful for them."
2011
Caleb Melby writing in Forbes:
[Tilman Fertitta] bought the waterfront casino and hotel from bankrupt Trump Entertainment Resorts for $38 million in February 2011, less than one-tenth a recent offer and $282 million less than what Trump paid in 1985.
Daniel Fisher writing in Forbes about Frank and Lorenzo Fertitta:
A federal bankruptcy judge has ordered sanctions against Fertitta Enterprises for failing to turn over e-mails from its chief financial officer suggesting the firm might have had a hand in the bankruptcy of sport-drink maker Xyience. The Fertittas, Las Vegas gambling tycoons who also own the Ultimate Fighting Championship franchise, are accused by the trustee of bankrupt Xyience of lending the firm $12 million at a time of crisis and then using the loan to strip the company's assets from its shareholders. Xyience is a major sponsor of Ultimate Fighting Championship, which the Fertittas bought in 2001 for $2 million and quickly turned into a cash machine. The energy-drink company was founded by a twice-convicted felon and sales genius named Russell Pike, who raised millions of dollars from Midwest labor unions and other investors who later accused him of fraud. The Fertitta brothers also control Station Casinos, which emerged from bankruptcy in 2009.
2012
Caleb Melby writing in Forbes:
Most of the time [Tilman] Fertitta, the 100% owner of Landry's, wants to gobble up hospitality businesses: specifically, poorly managed, out-of-date and distressed restaurants, hotels, casinos and boardwalks that he can buy on the cheap, often right out of bankruptcy court. Fertitta then cleans house. He fires top executives, closes failing locations, revamps existing ones and moves management to Landry's headquarters in Houston, where he can keep an eye on everyone. "When we buy somebody, we cut the head off," he says. "We keep the operators who are looking—I hate to use this term—they're looking for a leader. We lead very well. And we immediately spend money on them and make them better. Everybody wants to be led.
"Except for me," he adds. "I want to lead." …
"He is like a private equity investor, but he does it with his own money," says Rich Handler, CEO of the investment bank Jefferies, who helped refinance Landry's debt in 2007 and has become Fertitta's close friend. "He took Landry's private because the public markets weren't going to allow him to invest in the properties as he saw fit. Now he has operated his way to exceptional cash flow that he continuously invests to improve and expand his properties."
Michael Hardy in Texas Monthly:
Taking Landry’s private sent Fertitta’s net worth soaring. He cracked the Forbes 400 list in 2012 with an estimated fortune of $1.6 billion, making him the world’s first billionaire restaurateur. He now owns a 164-foot yacht, two planes, four helicopters, and an $18 million, 25,548-square-foot mansion situated on more than five acres of carefully manicured grounds in Houston’s River Oaks neighborhood.
2016
To [Tilman] Fertitta, Trump’s comments about immigration during the campaign and in his first days in office were designed to satisfy his core voters.
“I don’t know that they have been blundered,” says Fertitta. “I think that he spoke more rhetoric to fire up his base. But Donald Trump is a smart man and he is not going to just start deporting people. He doesn’t want to deport illegal people. I think he makes that clear when you read and really listen to his speeches and what he says.” …
One of his restaurants was raided by immigration officials and employees who were found to be undocumented had to have their employment terminated. But, Fertitta says, those employees either got jobs at local competitors or started collecting food stamps.
2017
Michael Hardy in Texas Monthly:
On Thursday, August 24, [Tilman] Fertitta was on his yacht in Los Angeles’s Marina del Rey. He was in town to film an episode of Billion Dollar Buyer, but a severe cold had forced him to cancel shooting for the day. When Brown called him that morning, Fertitta could sense that the Rockets executive had something important to say. Then Brown broke the news: Alexander had chosen Fertitta’s $2.2 billion bid and wanted to move forward to finalize it. “He was very emotional,” Brown recalled. “It was one of those days for him and his family where they realized their lives would change forever. And that was the moment for me when I realized we had the right guy.”
Amazingly enough, Fertitta’s $2.2 billion wasn’t the highest offer the team received; at least two rivals offered more money, Brown said. In the end, though, Fertitta’s hometown connections, relentlessness, and ability to close the deal quickly proved decisive. …
A contract was soon signed, but Fertitta still needed to raise $2.2 billion—no easy feat, even for one of the world’s thousand richest people. Alexander agreed to finance $275 million of the deal. Fertitta then borrowed $250 million against the value of the Rockets, the maximum allowed by the NBA, and kicked in $300 million of his own money, but that still left him $1.375 billion short. Rather than selling equity in the company, which would have meant giving up full ownership, Fertitta decided to make up that difference by issuing corporate bonds and bank debt. It’s a strategy he’s used time and again since taking Landry’s and the Golden Nugget private, in 2010. “He has a very, very good reputation and track record in the bond market,” said Rich Handler, the CEO of Jefferies, which served as the lead underwriter of the bond sales. “We’ve done a lot of deals with him, and the lenders have made a lot of money.”
Over the course of less than two weeks, more than a hundred institutions bought bonds, including Citibank, Deutsche Bank, Fidelity, and Putnam. He secured the financing he needed, and because he never took on any partners in the deal, the Rockets are all his.
2019
2020
Michael Hardy quoting Tilman Fertitta in Texas Monthly:
If I survive, the country survives. I can tell you this, I’ll survive this before the country does. Okay? I’ll out-survive the country. Just like I out-survived the banks in 1987, okay? The country will fold before I do. If the country is shut down come October or November, it’ll be anarchy in the streets.
The same article, published in March mentions that Fertitta has been talking to politicians like the governor of Texas and the Trump advisor Larry Kudlow (who recently made headlines for evidently denying that racism exists). What does he tell them?
I say they’ve got to get the virus over with, and quick. … You know how excited I would be if Trump said on April 12, “Everybody go back to work”?
When it’s all over with, you can write an article [saying] that I survived and I didn’t get any help from the government.
Of course, not long after that article, Fertitta did seek help from the government—he’s on video asking Donald Trump in person to consider expanding the definition of restaurants that can receive bailouts.
The word is that 2020 has been particularly hard on Fertitta’s bottom line. Cash is tight. (Most of the money he used to finance the Rockets purchase came from Citibank, Deutsche Bank, Fidelity, and Putnam.)
Financial stability is the primary thing NBA team governors can offer the league. Which begs re-visiting the question at the beginning of this story: “Why did the NBA let a fourth-generation member of a mafia family buy the Rockets?”
There are a lot of billionaires who would like to own NBA teams. It is curious that in 2017, well into the tenure of the strategic Adam Silver, Fertitta—with the baggage of his family name, a need for profoundly creative financing, and not even the high bid—made it to the front of the line.
Thank you for reading TrueHoop! Tomorrow: David Thorpe watches overseas basketball to assess how the coronavirus affects gameplay.
I presume that there's no 'integrity test' for potential owners...?
Dana White, Rogan, the tech bros, the fight bros, NBA, the Qataris, mafia, casinos, crypto, money laundering; people in our "real world" being bled by corruption!