How the Gamblers Got In

Cleveland's 67-year-old Cyrus S. Eaton is an indefatigable financier and promoter with a finger in many pies. His latest promotion is a $100 million steel mill which, if the Government will provide $90 million of the money, Eaton will build on a 1,000-acre site on the Detroit River at Gibraltar, Mich. To run the new company, Eaton has picked Max J. Zivian president of Detroit Steel Corp., in which Eaton controls 24% of the stock.

Last week the Kefauver Senate Crime Investigating Committee came to Detroit to investigate some of Zivian's other stockholders. The committee was checking on how gangsters get into legitimate business. Through a series of mergers, including his recent $13 million purchase of Eaton's Portsmouth Steel, Zivian has made his company one of the biggest U.S. producers of cold-rolled strip steel. But the merger the Kefauver Committee wanted to know more about was his 1944 deal with Cleveland's Reliance Steel Corp.

As Zivian explained the Reliance deal, he and his associates had put $400,000 into escrow to buy out Reliance's owner Sol Friedman. But Friedman insisted on $580,000. Zivian had to raise the additional $180,000 or lose the $400,000. Zivian raised part of the balance from Moe Dalitz, a Cleveland gambler.

"I met Mr. Dalitz on the street outside the Statler Hotel," said Zivian. "I told him we were short $100,000, and he said: 'Let me arrange to get it.' A couple of hours later we went over to his lawyer's office--"

Committee Counsel John L. Burling interrupted: "And Dalitz offered you $100,000, like that, without even a look at the company's balance sheet?"

"Well," said Zivian, "he called his attorney."

In return for his $100,000, Dalitz got 10,000 shares of Detroit Steel stock (now worth $340,000), which he divided with ex-Convict Morris Kleinman, Sam Tucker and Lou Rothkopf, members of a Cleveland gambling syndicate, and Lawyer Samuel Haas.

The committee is still looking for Stockholder Dalitz, to question him.

This file is automatically generated by a robot program, so reader's discretion is required.