Las Vegas Sun

September 2, 2014

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Hughes Vs. Maheu

Big Buying Spree Led To Battles

In 10 years billionaire Howard Hughes created a multi-million dollar land and gambling empire in Nevada that could rival the dazzle of gold and silver taken from the Comstock Lode.

Hughes began it all in Las Vegas arriving in a private train that stopped on the desert outskirts of the town in November 1966.

His arrival maintained the cloak of secrecy and intrigue he made apart of his life for years.

He left the train in a small automobile convoy and walked into the Desert Inn Hotel unnoticed as a covered stretcher was carried through the lobby as a diversion. Later weird stories began to circulate that he transported to and from the hotel in a refrigerator. It was known that he did spend some time on the Krupp Ranch outside the town.

Hughes brought with him $546 million from the safe of his stock in Trans World Airlines. He went on a buying spree that made him the states largest land owner, employer and casino operator.

Hughes spent several weeks in the penthouse of the Desert Inn Hotel before suddenly sending out orders to buy the hotel, reportedly because management asked him to vacate the suite for high rollers.

He acquired the hotel for $15 million and owned three other Strip hotels before the year was over.

His total finally came to five hotels and a casino in Las Vegas - the Desert Inn, Sands, Castaways, Frontier, Silver Slipper and Landmark.

Nevada officials welcomed Hughes' involvement in the gambling industry because the state was trying to improve its image and Hughes was pointed to as a sign of new legitimacy in the gaming industry.

With purchase of Harold's Club in Reno in1970, Hughes became the state's largest employer with 8,000 persons on the payroll. His casinos paid gaming taxes that amounted to more than five percent of the state budget.

But his hotel and casino buying spree sputtered to a stop when he tried to buy the Stardust Hotel in 1970. He ran into opposition from the U.S. Justice Department of anti-trust laws.

However, he was also buying land and mining claims. He soon owned nearly every piece of undeveloped land on the Strip.

Hughes enchantment with Las Vegas began years ago - possible because the 24-hour pace of the city agreed with him and his mania for the unusual. During his years in Hollywood he often visited Nevada. He was married to Jean Peters in Tonopah in 1957. The marriage ended in divorce June 1971 at the courthouse in Hawthorne, Nevada.

Before Hughes abrupt and mysterious departure from Nevada on Thanksgiving Eve 1970, he began buying mining claims and initiated exciting speculation that he would revitalize the Nevada mining industry.

While in Nevada, he probably held the position as the state's most important private citizen, and probably maintained that position during his residence in the Bahamas.

Hughes interest in mining probably reflected with his original stake - a $10 million inheritance in the form of Hughes Tool Co. that developed oil drilling machinery.

In the 1950's, Hughes had purchased 30,000 acres of land known as the Krupp Ranch near Las Vegas. To that purchase he began adding parcels and mining claims all over the state. He finally wound up holding more than 2,700 mines and claims - far more than held by any other person.

A tinge of disenchantment appeared in relations between Hughes and Nevada. Business leaders and some state officials talked of him as an interloper who simply bought anything new or adding to its economic base.

The man who was out front was Robert A. Maheu, who arrived with Hughes in 1966. Maheu announced acquisitions and occasionally told the state what Hughes had in mind.

Suddenly with Hughes disappearance from Las Vegas, top executives of the Hughes Tool Co. arrived and announced the firing of Maheu, previously considered the crown prince of the Hughes empire.

Maheu fought back. He claimed Hughes gave him a lifetime verbal contract that the tool company, wholly owned by Hughes was powerless to break.

A court battle followed with the tool company producing a proxy bearing the signature of Howard R. Hughes that gave company officials the power to act for Hughes in all matters. Both sides called handwriting experts to justify their positions. Maheu had claimed the proxy was forgery. Finally the judge decided in favor of the tool company ruling the proxy valid and saying it could fire Maheu.

Maheu countered with a $50 million damage suit and the Nevada Supreme Court decided Hughes must be subpoenaed for a deposition. Maheu won a $2 million judgment in that suit.

Following that Hughes apparently turned on his former aide calling him "a son of a bitch" who "stole me blind." Those remarks ignited Maheu to file a $17.3 million libel suit.

During the same period Hughes broke his Nevada operations off from Hughes Tool Co. He formed Summa Corp, which now owned and operated all of the Hughes business.

What did Hughes leave behind with his death? His empire apparently has run smoothly in his absence and may do so with his death, but he left behind a multitude of unsettled suits in which he was both defendant and plantiff and the judgments from Maheu's damage and libel suits still unpaid.

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