CHAPTER 17

GOLD FEVER

“COMSTOCK SHARES SHOWED MODERATE GAINS”

THE economic warnings were unmistakable: a steadily rising worldwide demand, a static supply, and government policies that favored both conditions. After three decades of monetary stability, the United States was running out of the two precious metals long used as the basis for American currency—gold and silver. The great gold and silver rush of 1967-68 was under way, and the United States and the rest of the free world were headed into the worst international monetary crunch since the Great Depression.

Through 1967 and into 1968, record quantities of gold and silver flowed out of the United States Treasury as speculators, hoarders, businessmen, and wary bankers inundated the government and money markets with buy orders for both metals. By March of 1968, the London gold market was in a frenzy. One-day sales totaled as much as $180 million—more than thirty-six times the average. When $1.1 billion more in gold left the Treasury, Congress rescinded its requirement that Federal Reserve notes be backed by gold. The price of the metal soared on international markets.

The surging gold and silver prices triggered a renewed interest in mining around the world. In London, gold-mining stocks more than doubled their 1967 lows. In Toronto, an index of thirteen gold-mining stocks rose nearly one hundred points. In Leadville, Colorado, there was talk of reopening silver mines that had been idle since the turn of the century. And in Las Vegas, Robert Maheu sent a one-paragraph memorandum to Howard Hughes:

Because of the gold situation and since we know where the proven gold deposits and reserves are in the State of Nevada, what do you think of the possibility of our moving expeditiously and tying them up forthwith.¹

The response was swift:

This sounds good, why don’t you find out specifically what we can tie up and upon what terms. However, why don’t you let me know first from your own knowledge—before you make any inquiries. I would hate to attract somebody else to these gold properties before we are ready to move in any substantial degree.²

The gold fever that was sweeping the world had gripped the world’s best-known recluse. There was a touch of irony to this. After more than half a century, the Hughes family had come full circle. Unable to discipline himself to a law career in Iowa, Hughes Sr. had set out in 1896 to seek a fortune “under the surface of the earth.”³ Two years of mining for low-grade silver in Colorado and two more years seeking zinc in what is now Oklahoma had been followed by a stint in lead mining near Joplin, Missouri. Although Hughes Sr. did not strike it rich as a miner, he came away with something as valuable as the mother lode—knowledge of drilling techniques which he later put to use in developing the Hughes drill bit. Now it was the son’s turn.

Less than two weeks after Hughes’s directive to Maheu, paperwork on his initial mining transaction was quietly begun. On March 27, 1968, two deeds to a string of mining properties were signed over to the Hughes Tool Company by their joint owners, Eldon L. (Jack) Cleveland and George Von Tobel. The sale price of $225,000 was a mere suggestion of what the future held.

Jack Cleveland, a collector of Jim Beam whisky bottles and ornamental mining rocks, was a promoter, stock dealer, and claim trader with three decades of experience in mining, and a millionaire in his own right. Cleveland’s investments ranged from mining claims to California real estate to a Las Vegas casino. He bought and stored silver at the Chase Manhattan Bank in New York, and dabbled in stocks until the late 1960s when “he got disgruntled with the market and just quit.”⁴ More often than not, a large bundle of cash accompanied Cleveland wherever he went, at least five or ten thousand dollars which he carried “in his pocket, or in a zipper belt or zipper neck tie.”⁵

Von Tobel was a former Republican state legislator, onetime president of both the Las Vegas and Nevada Junior Chambers of Commerce, and a member of a pioneering Las Vegas family. Although he was a member of the five-man Nevada Gaming Commission, the agency charged with issuing licenses and approving the sale of casinos, Von Tobel saw no conflict of interest in selling mines to Hughes while regulating Hughes’s gambling operations. “It was a bona fide sale of a mining investment,” he explained. “It has nothing to do with Hughes’ interest in the future or in the past on gaming transactions.”⁶

The Von Tobel and Cleveland claims were near the historic Comstock Lode at Virginia City, an area that from 1860 to 1880 was “the most important and productive mining camp in the world,” yielding upward of $300 million worth of gold and silver.⁷ Untouched by serious prospectors for fifty years, the Cleveland and Von Tobel claims carried names like the Fort Knox Placers, the Delaware Lode, the Red Jacket Lode, and the Santiago Lode.⁸

Five days went by from the time Cleveland and Von Tobel signed the deeds until their signatures were notarized. The date proved to be an omen for Hughes. It was April Fool’s Day.

When the deeds were filed on April 3, 1968, at the Storey County Recorder’s Office in the old courthouse at Virginia City, Howard Hughes’s secret mining project was no longer a secret. An eight-column headline in the Las Vegas Sun announced “Hughes Buys N. Nevada Mines.”⁹ The Reno Evening Gazette noted that “Nevada mining officials have predicted a rebirth of the Comstock area because of rising gold and silver prices.”¹⁰ But it was left to the Virginia City Territorial Enterprise, a newspaper whose tradition of tongue-in-cheek prose traced back to Samuel L. Clemens, to place the Hughes purchase in perspective. Under the simple one-line, one-column headline “Vegan Buying Area Land,” the newspaper reported:

Comstock shares showed moderate gains on Virginia City brokers boards on Thursday when it was learned that a Las Vegas businessman named Howard Hughes had, through his Hughes Tool Company, exercised options on 260 acres of land and four mining claims at the Lyon County end of American Flat, about 4.5 miles south of here…. When the Enterprise phoned Hughes’ office on Thursday for further information, the girl said he was out for coffee. Since we were on deadline we couldn’t await his return.¹¹

In keeping with tradition, Hughes Tool Company officials declined to comment on their chief executive’s latest undertaking, leaving Nevadans to guess Hughes’s intentions. Even so, optimism bloomed in Virginia City. Gold and silver dug out of the Comstock had helped to finance the Civil War for the North, lifted California out of a severe depression, provided capital for the building of San Francisco, and seeded family fortunes for men like George Hearst, the father of newspaper publisher William Randolph Hearst. But little of the wealth had remained in Virginia City, and few of the people. Where once more than thirty thousand had lived in the 1800s, there was now a town of only two thousand people, many of them engaged in the tourist business. A revival of the mining industry would mean a revival of Virginia City.

There were, to be sure, skeptics. A state mine inspector questioned whether Hughes could ever profitably mine gold and silver claims. Other mining engineers doubted that “any commercially practical breakthrough in mining” could be applied in the area.¹² It was naturally assumed that the eccentric industrialist had a masterplan for reopening the state’s long-abandoned gold and silver mines, a plan based on inside information and unique expertise not available to anyone else. That was the way Hughes did business. Everyone knew it.

Hughes had assigned full responsibility for securing gold and silver claims to John Herbert Meier, a thirty-four-year-old Long Island native and former life insurance company manager. A big, genial man who was six-foot three and weighed 205 pounds, Meier had an engaging manner and shared Maheu’s facility for moving comfortably within political, business, and social circles. But he was an odd choice to head a multimillion-dollar mining program. Most recently he had worked in electronic data processing. His mining experience was nil and, moreover, Maheu had just recommended to Hughes that Meier be fired for continuing indiscretions, the latest being his premature release of information to the media about Hughes’s mining plans. Instead, Hughes told Maheu not to fire “this bastard Meier,”¹³ and two weeks later, Hughes, curiously, placed Meier in charge of mining.

Meier had come to Las Vegas on a strong recommendation from Bill Gay. Before Nevada, he had worked as a $17,500-a-year assistant in marketing management at Hughes Dynamics, an obscure subsidiary of the Hughes Tool Company in Los Angeles. Hughes Dynamics, which sold a computerized management-information service and later branched out into computerized credit reporting, had been “formed without [Hughes’s] knowledge” by Gay.¹⁴ When Hughes subsequently learned that $9.5 million of his money had flowed into the struggling company, he ordered it closed.^* It was at that point, according to Maheu, that Gay took a keen interest in Meier’s future welfare, asking Maheu if he could find a place for the young man on Maheu’s payroll. Gay spoke highly of Meier’s background, averring that he “had been employed by Hughes Aircraft, that he had two doctorates, that he [Gay] had brought him over to Hughes Dynamics.”¹⁵ There had been some suggestion, by Gay or one of his associates, that “Meier’s wife was dying of cancer and that he was in dire financial straits.”¹⁶

Maheu obliged, and Meier’s first assignment was to evaluate investment opportunities for Maheu himself. Soon thereafter, Meier went to work full time persuading the Atomic Energy Commission to abandon its underground nuclear tests in Nevada. With the new job came a new title—“scientific adviser to the Hughes Tool Company,” and frequent trips to Washington, where he met with government officials and politicians.¹⁷ It was Meier’s behavior on these trips that first provoked Maheu’s displeasure. Wherever he went, it seemed, Meier regaled politicians and even fellow Hughes employees with stories about his intimate relationship with his boss. When he described himself as the “right-hand man” of Howard Hughes, everyone was impressed.¹⁸ Not many visitors to Washington could tell of personal experiences with Hughes.

In an organization where the only constant was secrecy, no executive could be sure with whom Hughes was, or was not, meeting or talking. It was safest to assume that anyone who claimed to have had lunch with Hughes really had—or at the very least that he had had, say, a telephone conversation and was embroidering it. After all, what other Hughes lieutenant would question the assertion and thereby admit that he himself was not so favored in the Desert Inn penthouse? Least of all Maheu, who never once met his employer.

Meier’s stories, however, eventually proved embarrassing to Maheu. After Nixon entered the White House, Maheu, working through his own political channels, secured a promise that the president would either call Hughes or send Secretary of State Henry A. Kissinger to meet with Hughes to explain the administration’s position on underground testing. But then he was thwarted by Hughes’s reclusiveness. Despite the urgency of the subject, Hughes was not prepared to deal with any strangers, whether in person or on the telephone, whether the president or the secretary of state. So Maheu could not follow through on the White House promise. But with Meier running around Washington recounting tales of his luncheons with “the old man,” Maheu found “it very difficult for us to explain to Dr. Kissinger and the President of the United States that they could not talk to Mr. Hughes.”¹⁹

Meier, of course, had never lunched with Hughes. He had never met Hughes. He had never talked with Hughes on the telephone. All his reports to Hughes were channeled through Maheu or one of the five aides in the Desert Inn penthouse. Finally, “Dr. Meier,” as he had been known at Hughes Dynamics, had apparently never earned one doctorate, let alone two. According to a loan application Meier submitted to a bank, he had a high school diploma and some technical training in the United States Army. Nonetheless, Meier began 1968 as the Hughes organization’s ambassador without portfolio to Nevada’s mining towns, seeking out gold and silver claims.

A PARADE OF PROSPECTORS

The Virginia City properties were just the beginning. Two weeks after the quarter-million-dollar purchase of the Comstock claims, Maheu forwarded a memorandum to Hughes touting another acquisition: “We obtained an option from Mr. and Mrs. Denny Hill last month on 240 acres of mining property including seven patented mines for $240,000. The estimated value of this property is $2 million. It is primarily composed of zinc, lead and silver at Goodsprings in Clark County….”²⁰

To convince Hughes of the true value of the Hill claims, if such convincing was necessary, Maheu noted that two wealthy Texans, the Murchison brothers (John Dabney and Clinton William, Jr., whose fortunes also flowed out of their father’s oil business) were ready to pounce on the property if Hughes did not exercise his option. “The man representing the Murchison interests from Texas is in town waiting to give them a firm offer if we turn this down,” Maheu reported. “The Murchison people do not know that we have an option on this property.”²¹

Three months later, on July 18, 1968, Maheu sent along to the Desert Inn command post two more memoranda enthusiastically summarizing the potential of more mining properties on offer to Hughes: “Approximately $150 million worth of silver, lead, zinc, gold and copper can be produced from mining properties available to us in Nevada. Many of these are eligible for exploratory funds from the federal government…. John Meier has estimated the approximate net profit after development would be $50 million. We can acquire this group of diversified mining properties for $2.5 million.”²²

And further, Maheu reported, “there are 900 acres of mining land available in Mineral County, Nevada, near Mina…. The gross value of ore according to engineering reports is anywhere from $3 million to $30 million worth of gold and silver. This property is available for $276,500, which includes title to the land plus water rights….”²³

Word of Hughes’s approval was flashed from the penthouse. On August 26, the Hughes Tool Company bought eleven claims in Clark County from Mr. and Mrs. Dennis C. Hill at a cost of $240,000, and on October 16, thirty-six claims in Mineral County from a company called Basic Industries, Inc. The sale price was $276,500.

That was only the beginning. From August until the end of the year, Hughes acquired mining claims with the same facility that he acquired movie starlets when he was in Hollywood. In August, Hughes gave Jack Cleveland $146,000 for five claims in Churchill County. In October, a big month, he paid $35,000 to Atlas International for two claims in Clark County, $340,000 to Henry Eddy for thirteen claims in Mineral County, $220,000 to the Arivaca Mining Company for six claims in Mineral County, $250,000 to Leonard F. and Josephine Traynor for sixty claims in Nye County, and $240,000 to Harry Vonderheide for four claims in Lyon County.

In November, $220,000 went to Arivaca Mining Company for nine claims in Esmeralda County, $262,000 to Mr. and Mrs. Dennis Hill for five claims in Nye County, and $375,000 to Clarence Hall for four claims in Humboldt County. In December, a handsome $752,000 was paid to the same Clarence Hall for fifteen claims in Nye County.

Nevada had seen nothing like it in a hundred years. By spreading more money around the state than had been spent by any single individual since the great gold and silver rushes of the nineteenth century, Hughes had collected nearly two hundred claims and hundreds of acres of land at a cost of about $4 million. The claims were scattered across the 110,540 square miles of Nevada, and if, when viewed on a map, the Hughes acquisitions appeared to follow no order, no masterplan, that is because there was none. But there was a master plan of a different sort at work in the claims that John Meier selected for Howard Hughes to purchase.

There were, for example, the mining claims owned by Mr. and Mrs. Dennis Hill, claims that Meier had advised Maheu that Hughes should buy. Hill, a lifelong resident of Nevada, happened to be well acquainted with Jack Cleveland, the wily prospector who sold the first Virginia City properties to Hughes. In fact, Hill and Cleveland had engaged in joint business ventures, including ownership of mining claims, for some three decades. It was Cleveland who suggested to Hill that he could arrange for Hughes to buy the Hill claims. In return, though, Cleveland insisted that a substantial percentage of the sale price be paid to him. When Hill sold his properties for the $240,000 recommended by Maheu, he retained only $55,000. After paying federal income taxes, he turned over the balance to Cleveland, who had suggested that Hill report the entire proceeds of the transaction on Hill’s federal income-tax return. This would allow Cleveland to receive his share of the Hughes money without reporting it on his own tax return.

Hill, in turn, was a lifelong friend of Harry Vonderheide, and they, too, had done business together since the Second World War. One of those ventures had ended badly, and as a result, Vonderheide owed Hill somewhere between $35,000 and $50,000. The precise amount was a matter of dispute between the two men. Sensing an opportunity to recover at least a part of his loss, Hill—who knew that Vonderheide also owned some mining properties—passed the information along to Cleveland. In turn, Cleveland, arranged with Meier for Hughes to buy Vonderheide’s claims for $240,000. Out of the $240,000, Vonderheide received $55,000, Hill picked up $20,000 for his services as an intermediary, and the rest of the money went to Cleveland.

Bennie Ball was yet another Hill acquaintance who owned mining claims. Once again acting as the middleman, following instructions from Cleveland, Hill informed Ball that if he sold the mining properties both men could make $25,000. Ball immediately suggested that he and Hill should go into the deal as partners. Hill demurred. Ball recalled: “I asked him [Hill], ‘Why don’t we go in partners on this?’ and he said that he didn’t care to have his name appear on it, that he had been on other mining ventures at that time, and didn’t want his name on the sale.”²⁴ When the transaction was completed on February 9, 1969, Hill and Ball each received $10,000 instead of the $25,000 originally mentioned, and the rest of the $180,000 went to Cleveland. Hill characterized the money he received in the various Hughes mining deals like this: “Well, I would get a piece of it, of any of them [mining properties] that were sold… kind of like a commission.”²⁵

Leonard Traynor, a deputy state mine inspector, was another close friend of Cleveland and an acquaintance of Hill. Cleveland arranged for Traynor to sell Hughes sixty mining claims for $250,000. It is unclear how much, if any, of Traynor’s $250,000 found its way back to Cleveland. Both men have since died. But on November 4, 1968, Traynor and Dennis Hill opened a joint savings account at the First National Bank in Las Vegas and deposited a cashier’s check for $77,539. The check represented part of the proceeds from the sale of Traynor’s claims to Hughes.

Then there were the thirty-six mining properties in Mineral County that Hughes purchased on Maheu’s recommendation for $276,500 from Basic Industries, Inc. According to a stock-ownership certificate for Basic Industries, dated February 21, 1968, “all of the issued and outstanding stock” of the company was owned by Jack Cleveland.²⁶

As for the two claims that Hughes bought for $35,000 from the Atlas International Corporation, the president of the company and a major stockholder was Hill. Another substantial stockholder was Cleveland.

All in all, 1968 was a good year for prospector Cleveland. Of the nearly $4 million paid by Howard Hughes for one series of mining properties, Cleveland owned, had an interest in, or received “commissions” on the sale of more than half. And 1969 started out every bit as well.

Cleveland and his company, Basic Industries, now became something more than just sellers of gold and silver mines. Cleveland, in fact, was serving as a mining consultant to John Meier, who was serving as a mining consultant to Hughes. There was even talk that Basic Industries would act as a managing agent for Hughes’s growing inventory of claims. During May and June of 1969, Cleveland’s company established an office in the central Nevada mining town of Tonopah and collected $99,186.33 more from Hughes for miscellaneous services.

By this time, Basic Industries had taken on a new employee and stockholder, John Herbert Meier.

Mrs. Jean Beckers, who worked as Cleveland’s private secretary in 1968 and part of 1969, was unable to remember precisely how much Cleveland and his company paid Meier. But she did recall that Meier was paid by check. Sometimes the checks were drawn on an account in a northern Nevada bank, and sometimes Mrs. Beckers wrote the checks at Cleveland’s office in Las Vegas. Her memory was hazy on amounts, although she “would guess they would be more in the thousands than in the hundreds.”²⁷

And what services was Meier performing for Basic Industries in exchange for the payments?

“I really don’t know what you would call his services,” mused Mrs. Beckers. “I really don’t know.”²⁸

Whatever his services, “Dr. Meier” was being paid by Hughes to buy mining properties at the same time he was being paid by a company that was selling mining properties to Hughes.

A PIG IN A POKE?

As 1968 gave way to 1969, Meier continued to press for the acquisition of additional mining claims. On January 9, 1969, he put together a three-page report for Maheu outlining proposals to develop Hughes’s properties:

Hughes Nevada Operations has now acquired approximately one-half of the area of Tonopah mining, some in Nye County and some in Esmeralda. This consists of approximately 80 percent of the known silver reserves in this area.

I am recommending the establishment of an exploration headquarters for a milling facility to mill on a custom basis and for a metallurgical testing program. This would include a modern assay office…. This program would be a preliminary to a larger milling facility established in the center of the known reserves as determined by the exploration program….²⁹

The one-year price tag on the milling operation was $950,000, but there were complications. Remembering Hughes’s pathological concern about federal income taxes, Meier pointed out,

One of the prime advantages of mining for silver is that the mined silver can be stored without having to pay income tax on it as a profit. Continuous mining expenses can be incurred and until the silver is actually disposed of, no credit need be taken for the silver mined. It should be stored in the mines. Thus a considerable loss can be sustained prior to having to pay income taxes on the silver mined.³⁰

And last, but not least, the Hughes mining chief proposed that “during 1969 we acquire additional mining properties, after we have carefully evaluated them, as we have done in the past four months.”³¹

By now, there seemed no need to wait for an answer from either Maheu or Hughes. In the time before and after the report to Maheu, Meier continued to negotiate for more gold and silver mines. In one of those transactions, Traynor, the deputy state mine inspector, sold seven more claims to Hughes for $200,000. The sale was noteworthy for two reasons: first, deeds filed in the Virginia City courthouse showed that Traynor had bought the claims just one day before he sold them; second, the claims were situated on rocky sagebrush land surrounding the old Occidental Mine outside Virginia City. The Occidental was one of those mines which even during the great gold rush of 1860-1880 was most unprofitable. Miners and investors had poured a lot more money into it than they had taken out.

Once again, the natives speculated as to Hughes’s plan. One perplexed Storey County official observed, “Old timers here can’t figure out what the deal is. There’s other property might be more productive he could’ve gotten.”³² When Traynor was asked whether he had sold any other properties to Las Vegas’s biggest gambler, he declined to discuss the matter, but said he saw no conflict between his position as a state mine inspector responsible for enforcing Nevada mining laws and his position as a private investor selling mines to Hughes. “I wanted to make some money for myself and help mining in the state,” Traynor said. “I read up on the history of Virginia City and checked out the mine some time back. Hughes might do some good for mining in this state. They are a good legitimate operation. Look what they did for gambling…. Hughes might be the best thing this state has ever had for mining.”³³

Traynor also took exception to the criticism leveled at Hughes by some miners who contended that he could not be serious about mining because of the scattered location of his claims and who charged that his free spending was driving up prices on all properties. These people, said Traynor, “can’t see the forest for the trees. The Hughes people are serious about this. They are not just playing around. They didn’t just buy a pig in a poke. They studied this.”³⁴

Jack Cleveland, who had already sold Hughes more than $1 million in mining properties, was equally enthusiastic. “The theory is that a major part of the silver is still there in those mines,” Cleveland maintained. “We have 400-500 percent better methods of mining than they had in the boom days of those mines. The only advantage they had was cheaper labor.”³⁵

For one who once said too much, Meier now said very little; he just continued to buy claims. In January, Cleveland’s Basic Industries sold sixty-eight claims in Churchill County to Hughes for $340,000; Dennis Hill sold four more claims in Esmeralda County for $280,000; and Hill and Cleveland’s Atlas International sold twelve claims in Nye County for $120,000. Maheu later maintained that all the mining transactions were handled exclusively by Meier. The payments for all the claims were made directly from the executive offices of the Hughes Tool Company in Houston, after authorization was received from one of the penthouse aides.

After merrily spending $1 million more of Hughes’s money without having received a response to his January 9 memorandum, Meier sent along a second memorandum, labeled a “Mining Status Report.” Alluding to the intense rivalry for choice mining properties, he confided to Maheu:

“We have assiduously cultivated [an official] of the Department of the Interior on trips to Washington on other matters. He has supplied to us the advance sheets on new mining possibilities long before they have been released to the general public. On the basis of these specific studies we have been able to obtain choice mining properties. We have moved quickly but with the very best advice on these matters.”³⁶

Maheu was either impressed by Meier’s presentation or simply was not taking any chances. On February 5, he submitted a report to the Desert Inn penthouse advising Hughes that “we still have a few more options outstanding that we are going to close within the next few days. Under the properties we have bought there is an estimated $200 million worth of silver and gold at present prices.”³⁷ Repeating in an abbreviated version the information Meier had given to him, Maheu focused on the potential for avoiding federal income taxes by mining and then holding the processed gold and silver. Without mentioning Meier by name, Maheu concluded that “our expert mining consultants recommend that we budget $950,000 on an exploration, evaluation, drilling and comprehensive assay program. At the same time we will establish a custom mill….”³⁸

The command post apparently did not hesitate. Maheu and Meier were authorized to proceed with the mining program. But even as Hughes was spending millions in a mining venture that had not returned a single penny, and that gave no indication it would ever do so, he was deeply concerned about his personal finances. In a handwritten memorandum to Maheu dated February 12, 1969, he complained about the seemingly endless flow of cash from his bank accounts:

“I don’t hold you responsible for all of the expenditures and losses we have encountered since coming here [Nevada]. Cook is responsible for the helicopter losses, and I share with you the responsibility for the Las Vegas expenditures. However, that does not make the financial horizon any brighter. I am concerned about Air West because I don’t think I can afford this acquisition at this time.”³⁹

Two days before Hughes wrote those words, Meier had completed the purchase of nearly $1 million in mining properties in two separate deals. The sellers were both familiar figures. Jack Cleveland’s Basic Industries received $490,000 for nineteen claims in Nye County and Clarence Hall received $430,000 for seventeen claims in White Pine County.

The news media were intrigued more than ever by Hughes’s plans. In a story about his Nevada mining operation, the Los Angeles Times reported:

One Hughes aide, who declined to be identified, said plans are underway to reopen many of the mines, using a new mining process developed by the Hughes-Nevada Operations.

No timetable on the reopenings was given and Hughes aides refused to give the details of the new process. They said, however, that it involved new methods of finding ore bodies, new methods of mining and of crushing and separating worthless minerals from valuable metals, and new cost-saving methods of making finished products at the mines.⁴⁰

The anonymous aide was vague about the “new mining process developed by the Hughes-Nevada Operations,” but the newspaper noted that “there is talk about atomic blasting, laser-beam mining, and computerized systems.”⁴¹

It was that kind of talk that conjured up visions of a new Tonopah, Nevada, where Hughes had pulled together a substantial collection of gold and silver properties. Tonopah, like Virginia City, was once a miner’s Mecca. Legend had it that Jim Butler, a forty-five-year-old prospector, was wandering about the desert in the spring of 1900, drifting from water hole to water hole, when his burro ambled off toward one of the six-thousand-foot peaks on the southern end of the San Antonio range. While seeking the animal, Butler noticed some outcroppings on the mountain. He took a few samples, acquired a partner to finance the assaying, and shipped the rocks off to Austin, the county seat.

The rocks contained high-grade silver, and in the boom that followed, Tonopah was founded. From 1900 to about 1930 a hundred miles of mining tunnels were carved out beneath the town and in the surrounding mountains. The mines produced $150-million worth of silver and other precious metals, and Tonopah came to be known as the Silver Queen of the West. With the onset of the Depression, however, the mines were shut down and the miners and the townspeople drifted away. By 1969, Tonopah’s population was seventeen hundred, the town little more than a rest stop along the 450 miles from Las Vegas to Reno. The mountains around the town were a graveyard of weathered head frames, abandoned mine buildings, and the skeletal remains of mills.

But when Howard Hughes’s money began arriving in Tonopah, it brought the hope of instant renewal. Hughes, after all, was no stranger. Tonopah had been the site of his marriage to Jean Peters. At the Mizpah Hotel, one of Tonopah’s genuine landmarks—the saloon opened in 1901 and rooms were added two years later to make it a hotel—local citizens gathered to discuss Hughes and the future. Pat Naylor, a waitress, reflected an optimism tempered by experience:

I’ve seen this town when you had to fight your way to cross the street. I’ve seen it when you could throw a ball down the street and never hit a dog, let alone a human. People have come through here off and on through the years talking about opening the mines. But nothing has ever come of it. This time I don’t know. With a man like Howard Hughes—this could be the brass ring.⁴²

Others were more certain of the brass ring. Like Traynor, the deputy state mine inspector who sold claims to Hughes, who also lived in Tonopah: “This is one of the biggest things to happen to this state in its history. It sure as hell will give this part of the country a boost—improve it 500 percent.”⁴³

The belief in the rebirth of Tonopah was so strong among some people that in the weeks preceding Hughes’s actual purchase of the claims, residents who knew about the negotiations kept it to themselves, fearing that if word leaked out, prices would rise steeply and Hughes would pull out. Instead, the pace of purchasing quickened.

It was a peculiar parade of mining entrepreneurs that “Dr. Meier” led across Nevada and even parts of California, marching them up to bank windows to exchange the Hughes millions for their titles to gold and silver believed buried in the deserts and mountains of the two states. There was, for example, the Arivaca Mining Corporation, an Arizona company established by Thomas J. Garrity, a 1954 Yale Law School graduate and onetime attorney in the New York City law firm of Donovan, Leisure, Newton & Irvine. When it came to adding up the dollar value of minerals mined by Arivaca, the company was less than a spectacular success. From the time it was organized in 1963 until 1970, Arivaca spent $334,829 “in exploration for lead, zinc, silver, and copper without developing commercially mineable ore bodies.”⁴⁴ In 1968, Arivaca began negotiations to secure a lease on thirty-one copper claims, known as the Courtland property, in Cochise County, Arizona.

On August 27 that year, Arivaca awarded 20,000 shares of stock in the company to one J. E. Cravotta as a “finder’s fee” for the Courtland claims.⁴⁵ John Meier’s wife was named Jennie Elizabeth Cravotta. In October and November of 1968, two months after J. E. Cravotta received 20,000 shares of stock in Arivaca Mining Corporation, Arivaca sold fifteen mining properties in Mineral and Esmeralda Counties, Nevada, to Howard Hughes, for $440,000. By the spring of 1970, stock in Arivaca was trading at $5 a share.

Then there was the Georgetown Research and Development Corporation, which maintained an office in a Washington, D.C., apartment building. The company was formed by Thomas E. Murray, Jr., whose father was a member of the Atomic Energy Commission from 1950 to 1957 and later served as a consultant to the Joint Congressional Committee on Atomic Energy. Meier placed the younger Murray on the Hughes payroll as a $3,000-a-month consultant, and in April of 1969 Georgetown Research and Development Corporation sold six mining properties to Hughes for $250,000. The claims were in Mono County, California, along the California-Nevada border. Later, Murray and Meier went into business together, setting up a motion-picture company called Meier-Murray Productions.

There was Alan E. Jarlson, a Las Vegas newsman, who was first approached by Meier and later by both Meier and Cleveland and invited to enter the mining business. Jarlson agreed, and in December of 1968 he acquired an option to buy certain mining properties. Two months later the properties were transferred to Jarlson, although he still had no financial interest in them. Then late in February of 1969, Jarlson sold the properties to Howard Hughes for $243,000. Jarlson received a check from the Nevada Title Guaranty Company for $85,895.17. Where the rest of the money went is unclear, but later Jarlson, acting on “instructions from John H. Meier, delivered to Eldon L. Cleveland the sum of $45,000 in currency.”⁴⁶

Such was the way of the mining business of Howard Hughes. But if Hughes and his staff showed little concern about the way Meier was parceling out the Hughes millions, someone else was very concerned about John Meier. That someone was the president of the United States.

THE PRESIDENT’S BROTHER

Shortly after Meier went to work for the Hughes organization in Nevada, he began to cultivate an association with Francis Donald Nixon, the younger brother of President Richard M. Nixon. It was Donald Nixon who had obtained a $205,000 loan from Hughes back in 1956 in an unsuccessful effort to save one of his failing businesses. The loan, never repaid, became a large political liability for Richard Nixon when it was disclosed during the 1960 presidential campaign. Eight years later, with Nixon finally in the White House, the president, his aides and friends all were uneasy about the possibility of another embarrassing Hughes-Nixon family relationship. It was not that anyone questioned the integrity of Donald Nixon. Rather, it was, as Charles G. (Bebe) Rebozo, the Florida banker who was the president’s friend and confidant, expressed it:

“I don’t think Don Nixon is dishonest; I think he’s very naive. And I was concerned, again, about the possibility of some more embarrassment, such as he had showered on the president in 1960 and 1962…. Many families have relatives they would like to keep in the closet for awhile now and then, but I’m not saying—I don’t mean to say this derogatorily about Don, because I want to repeat, I really just feel that he’s overly endowed with naivete.”⁴⁷

John Meier was not the only person connected with the Hughes organization who had developed a fondness for the president’s brother. So too had Meier’s personal mining consultant, Jack Cleveland. The three men sometimes exchanged telephone calls and met in Nevada and California to review prospective business ventures. Cleveland once invested in some real estate for himself and Donald Nixon, as the president’s brother recalled:

Jack Cleveland, I have known him for many years, and in discussing with him I often mentioned to him—he was telling me about all the properties he was buying out there in Nevada. He was going in the farming business. He was going to raise four crops of alfalfa a year on this Nevada property, and he said that there are some real good buys out there.

And he says, “Don, you ought to buy a piece of one of these properties out there with me.”

And I said, “Well,” I says, “I haven’t got any money to buy property with.” And I said, “If you come across a real good buy, why just let me know and I will think about it.” But I said, “It has to be nothing over $5,000 as far as my investment is concerned.”…

The guy went ahead and bought this property without me even seeing the property, told me, “Don, you own a half interest in a 300-acre piece of property out in Nevada.”

And that is how it came about. Then I told him, “Well, Jack, goddam it, I don’t have $5,000 right now.”

He said, “Well, we will work out something on this.” He says, “You can pay me when you have the five later on or work it out in some way.”⁴⁸

Then there were Donald Nixon’s efforts to secure financing for a new Cleveland-backed company called Separation and Recovery Systems, Inc., which had developed a process to separate oil and water. The president’s brother was to receive 25,000 shares of stock in the company if he could raise the money needed to get it started. Donald Nixon, whose efforts to market Nixonburgers a decade earlier had ended in insolvency, offered this accounting of his duties:

My responsibility was to try to find them a buyer, an investor that would—or say a big daddy here with the money to come in here to take over this company and give it performance…. I don’t mind telling you I took this to Mr. [Aristotle] Onassis, and Mr. Onassis made them an over $3 million [offer]…. They turned it down.⁴⁹

As for Donald Nixon’s association with Meier, two weeks after Richard Nixon won the 1968 presidential election, Meier and his wife were on their way to Washington with Donald Nixon and his wife for a meeting with the president-elect, followed by a New York meeting with the other Nixon brother, Edward C., “for purposes of laying out suggested programs with the Nixon administration.”⁵⁰

By January of 1969, stories like this were appearing in newspapers:

John H. Meier, executive aide, Hughes-Nevada Operations, met recently in New York with President-elect Richard Nixon, Secretary of Interior-designate Walter J. Hickel, and the Task Force on Resources and Environment, headed by Russell Train, president of the Conservation Foundation….

Also attending the top-level session were Dr. Lee Dubridge, Nixon scientific adviser, and Dr. John W. Tukey, chairman of President Johnson’s Environmental Pollution Panel.

“After meeting with members of this distinguished committee—all of whom are concerned about preserving the quality of our natural environment from continued pollution—I am confident that conservation of our natural resources as well as their profitable development will be a major goal for the future good of America,” said Meier.⁵¹

By the spring of 1969 the president was concerned about his brother’s blooming relationship with Meier. He asked his friend Bebe Rebozo to use his influence with the Hughes organization to put an end to Meier’s association with Donald Nixon. Rebozo promptly called an old personal friend, Richard G. Danner, a former FBI agent who was managing director of Hughes’s Frontier Hotel in Las Vegas.

“Mr. Rebozo called me and told me that it had come to the administration’s attention that Donald Nixon was spending quite a bit of time in Nevada with John Meier,” Danner recalled.⁵² “He [Rebozo]…wanted to know first of all what he was doing, if I knew what connection he had with any of the Hughes organizations. They felt it was bad judgment, it could lead to bad consequences, both from the administration’s standpoint, and from our standpoint, being the Hughes standpoint.”⁵³

Danner took up the matter with his boss, Major General Edward H. Nigro, and together they questioned Meier about his association with the president’s brother. “Meier at the time assured us it was a personal friendship,” Danner recalled. “He visited Donald Nixon’s home, and vice versa. They were not involved in any business deals. Don Nixon had his own interests in Nevada and Utah, which necessitated his visiting the state. When he came up, he would usually call on Meier, and that was the extent of it.”⁵⁴ Both Danner and Nigro warned Meier about doing business with Donald Nixon. At the same time, Robert Maheu assigned Dean W. Elson, another FBI agent who had joined the Hughes organization after retiring from the bureau, to keep an eye on Meier and generally supervise the mining project.

Still, the worried president took additional measures. Herbert W. Kalmbach, the president’s personal attorney and a Newport Beach, California, neighbor of Donald Nixon, began dropping by Donald’s home to discuss his investments and his recurring money problems and tax troubles. After each meeting, Kalmbach reported back to H. R. Haldeman, the White House chief of staff, and John D. Ehrlichman, the assistant to the president for domestic affairs. Both Haldeman and Ehrlichman sought to separate Donald Nixon and John Meier. But Donald Nixon, who was then an executive in the food-service division of the Ogden Corporation, had his own reasons for cultivating Meier—he was trying to get the food concession at the Hughes Aircraft Company plants. He put it this way:

“Keep this in mind, I am still working for a company who is still pursuing the business of Hughes Aircraft Company see, the food service business. That is the business we were in. And I am not about to, you know, slap John Meier down when he is No. 2 man with Hughes.”⁵⁵

Although Hughes executives had promised Rebozo that Meier would break off his relationship with Donald Nixon, and Rebozo, Kalmbach, Ehrlichman, and Haldeman were all watching over the president’s fifty-five-year-old brother, Richard Nixon took one last precaution: He ordered government agents to place a twenty-four-hour-a-day wiretap on his brother’s telephones. The wiretap was installed on June 1, 1969, discontinued on June 19, and reinstituted on June 26. According to logs maintained by government agents, Donald Nixon called Meier on July 6, and agents prepared this summary of the conversation:

F. Donald Nixon, the president’s brother, whose budding relationship with Meier created alarm at the White House. United Press International

John H. Meier, who oversaw the acquisition of millions of dollars in worthless mining claims for Hughes and later fied to Canada. United Press International

On July 6, 1969, subject was in touch with Meier. At this time it was learned that Jack Cleveland might also be involved in this deal. Meier indicated to the subject that he would be at the Orange County Airport at 11 A.M. on Tuesday, July 8,1969. The subject suggested that Jack Cleveland and Carl Lans could pick Meier up at the airport and that they could then go to San Diego. The subject indicated that he did not want to go. Meier said that this would only complicate things and that things were already complicated enough. He indicated that the subject should meet him. Meier said that he would not even be using his own name on the flight from Las Vegas.⁵⁶

When the president’s brother arrived at the Orange County Airport to greet Meier on July 8, government agents were on hand secretly photographing the meeting. The information was quickly passed to the White House, which notified Rebozo, who in turn conveyed the White House displeasure to Maheu. Once again, Maheu asked Hughes for permission to fire Meier, and once again word shot back from one of the aides in the Desert Inn penthouse “that Meier should not be fired under any circumstances.”⁵⁷

Whatever the reason, it was clear that Hughes, or someone in the Desert Inn command post acting on Hughes’s behalf—for not every message got through to Hughes—was a firm believer in Meier. By now, the White House was concerned with more than John Meier’s association with Donald Nixon. Meier had brought a third party into the relationship, one “Tony,” who was mentioned during the tape-recorded telephone conversation Meier had with Donald Nixon on July 6.

“Tony” was Anthony G. Hatsis, a Salt Lake City businessman, owner of a wholesale liquor distributorship, operator of mining companies, friend to politicians and judges, and as described in a confidential report circulating among high-level government officials—and made public during Senate Watergate hearings—an “unsavory character.”⁵⁸

Despite the White House’s concern, the president’s brother was soon flying off to Europe and South America with Meier and Hatsis. On a trip to Geneva, Donald Nixon was impressed by the Meier-Hatsis bankroll, a stack of $100 bills about an inch and a half thick which “never seemed to go any lower than that all the time they were over there.”⁵⁹ The president’s brother was along with Meier and Hatsis because “I was supposed to have met a couple of gentlemen who had a lot of money to invest in hotels. But I never met anyone.”⁶⁰ Meier “spent most of his time, a great deal of his time, in fact, away from us…. In fact, I spent more time relaxing by myself, and these guys were on the go. They had some business to take care of.”⁶¹

Donald Nixon was never quite sure who paid for the stay in Switzerland, but he believed that it was Hatsis. “It was charged to some travel service in Utah. So I surmised it must have… come from him, and I thought it was John Meier who was supposed to have been picking up the tab…. I will say this for John Meier, that fellow had a lot of money.”⁶²

On another occasion, Meier, Hatsis, and Donald Nixon visited the Dominican Republic. Nixon went looking for oceanfront property on which to build an apartment complex. Meier and Hatsis went in search of mining concessions. An agreeable President Joaquin Balaguer received the trio warmly. Like his American visitors, Balaguer had a special interest: he hoped to persuade the United States to increase its sugar quota for the Dominican Republic, and being nice to the brother of the president of the United States ought not to hurt his cause. Meier and Hatsis eventually got their mining concessions, while Donald Nixon abandoned his apartment project.

THE STING

Hatsis and Meier had only recently become friends, having met in 1968 when Hatsis was vacationing at Hughes’s Sands Hotel in Las Vegas. On learning that the Salt Lake City visitor also was in the mining business, Meier suggested that Hatsis prepare a brief summary of his mining interests. The Hughes organization, Meier explained, was still in the market for gold and silver mines. Hatsis was president of the Toledo Mining Company in Salt Lake City, which had been formed in July of 1968 by the merger of West Toledo Mines Company and the American Mining Company, two other companies in which Hatsis had an interest.^*

Hatsis delivered the mining information requested by Meier in August of 1968, and sometime thereafter the two talked by telephone. An ebullient Meier, saying that he had discussed Hatsis and his Toledo Mining Company “with Howard Hughes personally,” reported that Hughes not only was interested but was “greatly impressed with [Hatsis] because he was a man from a modest background and a small coal-mining town in the State of Utah, who had made it on his own.”⁶³

A series of conferences followed, often late at night, during which Meier would refer to some approval from the “penthouse” or “the old man.” He said Hughes wanted to buy from Hatsis, but only if Hatsis would deal with an intermediary, one Everd B. Van Walsum, an accountant and representative of a Netherlands company known as Maatschappij-Intermovie N.V. The Dutchman, confided Meier, “was internationally connected with Howard Hughes personally” and it was “the personal desire and direction of Howard Hughes” that Hatsis should work only with him.⁶⁴

Hatsis was ready. He advised Meier that his Toledo Mining Company already owned a number of claims in Nevada and Utah that “might be sold to the Hughes organization.”⁶⁵ Meier responded that Hughes was most interested. This intense interest by Hughes ignored a report filed just weeks before with the Securities and Exchange Commission in Washington, listing the various Toledo Mining Company claims and offering this assessment of them:

There are no known commercially mineable ore bodies on any of the claims in which [the company] has an interest or which [the company] owns, and [the company] has no present plans for exploration on these properties.⁶⁶

No one in the Hughes organization seemed concerned that a lot of money might soon be laid out for worthless claims. The game went on. In December of 1968, Meier told Hatsis that Hughes was ready to buy mining properties known as the Rattler group for $300,000. That transaction and the sale of other Toledo Mining Company claims for $330,000 were completed within two months. In April of 1969, Meier interrupted Hatsis’s game on a Salt Lake City golf course with an urgent telephone message—Hughes wanted to buy a group of mining properties called the Battle Mountain claims.

Hatsis, in a negotiating mood, replied that another person who had an interest in the claims quite probably “would not be willing to make a deal unless [he] could net approximately $3 million to himself.”⁶⁷ Impossible, said Meier. Hughes would pay only $2.9 million, and $900,000 of that had to go to the Dutch money man, Van Walsum, because “Howard Hughes had his reasons for wanting to get money out of the country through a foreign corporation.”⁶⁸ The deal was struck. But Toledo Mining could not be involved in the sale in any way, Meier stressed. That, too, was the way Hughes wanted it. When the sale was completed and the money changed hands in June, Meier had Hatsis give the $900,000, not to Van Walsum, but to a Los Angeles attorney representing Van Walsum and his Dutch company.

By now, Hatsis clearly had developed a feeling for the way Hughes conducted his mining business—or at least for the way Meier conducted the business for Hughes. He became more active, purchasing a group of claims for $25,000 and 30,000 shares of stock in another Salt Lake City company, Globe Mining Company, and immediately negotiating with Meier the sale of the same claims to Hughes for $850,000. In a personal letter dated June 18, 1969, Hatsis wrote to Van Walsum, then operating out of an office in Toronto:

“I have contacted Hughes Tool Company, and made arrangements to acquire the Huper claims. I believe we will have a deal and make a quick bundle. As per our understanding, $500,000 will go to your people, if we make the deal. No sense having our lawyers prepare a document—the deal will close before they get through a first draft.”⁶⁹

Van Walsum also saw no need for attorneys. He wrote his approval of the transaction on June 30: “I had my attorney draft up some kind of memorandum but it seemed to be a bit too stuffy for the Huper matter. I thought I would simply summarize the matter in this letter, and if it meets with your approval, please sign and return a copy to me….”⁷⁰

It was now well established that if you wanted to sell a gold or silver mine to Hughes, the man to see was “Dr. Meier,” who had such a close relationship with the recluse. What other explanation could there be for the White House’s failure to break up Meier’s relationship with Donald Nixon or for Maheu’s inability to fire a man who was on Maheu’s very own payroll?

As always, Meier made much of his Hughes connection. Maheu had been hearing these stories for a year now, although never from Meier. Indeed, Meier always denied them when confronted. Usually, the tales filtered back to Las Vegas from Washington, New York, or other cities. For example, the letter Maheu received from his old friend, the Washington attorney Edward Morgan, dated August 15, 1969:

This one will give you a boot! I had lunch today with Steve McNichols, former governor of Colorado. After two or three “swacks” he told me of his great deal for the sale of a silver mine near Tonopah, Nevada. He had the top man, so he said, in the Hughes organization lined up to make the purchase—the only man who sits at Hughes’ right arm. I inquired as to who this man of influence might be and learned, to my great surprise, that it was your Mr. Meyer [sic]. I suggested to Steve that I understood that a fellow named Maheu was Mr. Hughes’ top man. He seemed undismayed in the certain knowledge that Mr. Meyer was the man who truly had Mr. Hughes’ ear. According to advice from Mr. Meyer, the only thing holding up the purchase of the mine was Mr. Hughes’ absorption with the Air West deal. I did not disillusion him. Where ignorance is bliss, ’tis folly to be wise. So sayeth the bard.⁷¹

If Maheu found this news disconcerting, he made no outward sign. The mining business proceeded apace. On September 2, Meier wrote Maheu that “the next of our options which we have outstanding expires September 20 midnight. We have an option on 69 claims in White Pine County, Nevada, near other properties we own. This particular property has silver, lead, copper, and gold on it. From 1920-40, the shipping records show that over $20 million of ore was taken out during that time; 95 percent of which was high grade silver…. In one area alone there was approximately 400,000 tons of ore which can be put into production immediately and have an ore value of from $12-$17 a tone…. The option is for $1.9 million.”⁷²

The option was exercised, and the acquisition completed in December. Of the $1.9 million that Hughes paid for the claims, the two owners of the properties received about $165,000. It was not an unreasonable return on their investment, considering that they had bought the claims earlier in the year for $25,000.

What happened to the remaining $1,735,000 of Hughes’s money? A total of $585,000 is unaccounted for. But on December 19, two checks totaling $1,150,000 were issued by the First Security State Bank in Salt Lake City to Everd B. Van Walsum, who promptly moved the money into foreign bank accounts.

Was anyone in the Hughes organization auditing the mining expenditures? In the year and a half since the purchase of the first gold and silver claims, the Hughes treasury had been disbursing mining money at the rate of more than $1 million a month with no questions asked. This free-spending policy was in marked contrast to the negotiations over the purchase of Air West, where Hughes executives scrutinized every line on the financial statements and even considered scrapping the deal because of the cost. No one apparently ever considered turning down a mining deal. On October 28, 1969, Meier recommended to Maheu the purchase of claims “on a major piece of gold and silver property, adjacent to and surrounding the recent acquisition we made in the Golconda Mining District…. We find that this acquisition, added to the one we already have, will give us all of the known copper and gold properties in the area, and would assure us that no other mining company would be able to touch the additional grounds around us without going through our property.”⁷³

To pique Maheu’s interest further, Meier confided that he had been “approached by two separate mining companies who have recently done extensive exploration, adjacent to us, to find out if we had this option…. The option is for 38 major mining claims for a price of $1.4 million. Please advise.”⁷⁴

Six days later, a memorandum went to Hughes bearing Maheu’s typewritten initials. It was almost identical to Meier’s memorandum, except that Maheu did not attribute the information to Meier. Instead, Hughes was simply advised that acquisition of the claims, “added to the ones we already have, will give us all of the known copper and gold properties in the area and would assure us that no other mining company would be able to touch the additional grounds around us without going through our property…. The option is for 38 mining claims for a price of $1.4 million and will expire at 6 P.M., Nov. 15, 1969. Please advise. In sincere friendship.”⁷⁵

Several years later Maheu would testify that he could not recall ever having seen that particular memorandum or several other memoranda concerning mining properties that bore his initials and were addressed to Hughes. Furthermore, he doubted that he had written them. The implication, of course, was that Meier or someone else in the Hughes organization sent reports to the Desert Inn penthouse under Maheu’s name and without his knowledge. If true, it was an alarming breach in the Hughes security system. It meant that Howard Hughes was making business decisions based on bogus documents—if it was Hughes making the decisions to begin with.

On the day the memorandum bearing Maheu’s initials was delivered to the Hughes suite at the Desert Inn, the Las Vegas Sun published a story that began:

John Meier, executive aide to Hughes Nevada Operations, has resigned, effective immediately, to form a research foundation, he has announced.

Meier, thirty-six, said his resignation from the Hughes organization was based upon a desire to apply system analysis and practical research to a solution of ecological problems in and around Nevada….

“This foundation,” Meier commented, “will give me the opportunity to use what I have learned as an executive in the Hughes organization to analyze problems as diverse as the regeneration of natural resources to school dropout rates and causes.”

Robert A. Maheu, chief executive of Hughes Nevada Operations, in a statement following Meier’s announcement, said, “John Meier has made a significant contribution to the Nevada Division of the Hughes Tool Company.”⁷⁶

There had always been an air of mystery about John Meier’s relationship with Hughes and the Hughes empire. He had been placed on Maheu’s payroll at the request of Bill Gay, who exercised stringent control over access to Hughes, and he had stayed on, unassailable, until the day of his resignation. Even the resignation was not exactly a resignation, if Maheu was to be believed. Maheu insisted later that Meier resigned only under duress after he had demanded the resignation, ignoring orders from the Desert Inn command post to keep Meier on the payroll.

“Mr. Hughes requested that I go back to Mr. Meier and ask him to come back aboard forthwith,” said Maheu. “I explained to Mr. Hughes that I would not do that, that under no circumstances would Mr. Meier ever again be on the payroll of Robert A. Maheu Associates, and that if he, Mr. Hughes, was really serious about having him come back that he should work out whatever arrangements he wants with Mr. Meier.”⁷⁷

So Meier was gone, but his influence lingered on. Negotiations continued for the purchase of the last group of mining properties he had recommended. These had until recently been owned by the Jackson Mountain Mining Company. But Jackson Mountain had sold the claims to Globe Mineral, Inc., in Salt Lake City for $57,000. Globe Mineral, another company in which Hatsis had an interest, then sold the claims to Howard Hughes for $1.4 million. The transaction was completed on March 3, 1970, when the Hughes Tool Company deposited $1.4 million into the Globe Mineral escrow account at the Continental Bank and Trust Company in Salt Lake City. Escrow and attorney’s fees amounting to $13,023.98 were paid by the bank, which then issued a check for the balance of $1,386,976.02 made payable to Globe Mineral.

The president of Globe Mineral endorsed the check back to Continental Bank, and the bank in turn issued a cashier’s check in the amount of $1,386,976.02. The check was made payable to none other than Maatschappij-Intermovie N.V., the Netherlands company represented by Everd B. Van Walsum.

This was the last of a series of deals in which nearly $5 million from the sale of mining claims to Hughes was moved through a string of foreign corporations and trusts and bank accounts in the Bahamas and Liechtenstein, and finally to a secret numbered account in Switzerland.

Everd B. Van Walsum, of course, had never met Hughes. He had never spoken with him, and he most assuredly was not “internationally connected” with Hughes, as Meier had assured Anthony Hatsis.

Rather, Everd B. Van Walsum was working for John Herbert Meier.

In a little less than two years, Meier had overseen a Hughes payout of $20 million for more than two thousand mining claims scattered across the deserts and mountains of Nevada and California. What were they worth?

Meier had estimated to Maheu, and Maheu had reported to Hughes, figures adding up to hundreds of millions of dollars. But a consulting geologist who studied the Hughes properties in the Belmont Mining District in Nye County, Nevada, concluded that “105 of the 112 claims involved had no value in terms of recognizable mineral deposits.” He recommended that “they be dropped from ownership rolls.”⁷⁸ In the Morey Mining District in Nye County, a geologic study “found that no metallic mineralization occurs anywhere on the property.” The 104 Hughes claims were described as “worthless as mining prospects.”⁷⁹ In the Red Hills Mining District in White Pine County, a geologic examination disclosed that sixty-five of eighty-five Hughes mining claims “lack metallic mineralization and can be considered worthless as mining properties.”⁸⁰

Not only had Hughes paid dearly for gold and silver properties that contained no gold or silver, some of the claims he paid for were not even owned by the sellers. In one instance, Hughes was obliged to pull up his claim stakes when the real owners of the property complained. Some claims, to be sure, did have recoverable mineral deposits. A modest mill was constructed at Tonopah, but the mining operation never made any money and the mill was closed several months after Hughes died in an effort to conserve the assets of his estate.

And what of “Dr. Meier”? In December of 1969, a month after leaving the Hughes organization, Meier was hired by Anthony Hatsis in Salt Lake City to serve “as a special adviser and consultant” to the president of the Toledo Mining Company.⁸¹ His fee was fixed at $6,000 a month and he was granted an option to buy 300,000 shares of stock in the Toledo Mining Company.

That same month, Meier, true to his press release, created his Nevada Environmental Foundation, a tax-exempt, nonprofit organization “to provide research, education, information, publications, conferences and scientific knowledge for the practical solution to problems encountered in a comprehensive inventory of the degradation of our ecological environment in the United States.”⁸² It was an imposing charter, but the foundation eventually became best known for an incident involving a prominent California ecologist who was invited to deliver a speech in Reno at the foundation’s expense. Believing that the Nevada Environmental Foundation was supported by Hughes, the ecologist was perplexed when the check he received from the foundation bounced. Meier then drifted on to New Mexico, where in 1972 he mounted a desultory and unsuccessful campaign for the Democratic party’s nomination for the United States Senate.

At that time Meier still owned his home in Las Vegas. But in July of 1972, he sold it, moved his family to Vancouver, and applied for permanent residence in Canada.⁸³ Later in the year, Meier also sold two apartments he owned in Hermosa Beach, California, apparently liquidating the last of his holdings in the United States.

His decision to relocate and sell off his properties was a fortunate one, for in 1973 and 1974 Meier was indicted by a federal grand jury in Las Vegas for income-tax evasion. He was accused of failing to report some $2.5 million in income, mostly money that IRS agents said he had pocketed in the Hughes mining transactions.

Meier subsequently was arrested while visiting Point Roberts, just inside the United States border and not far from his suburban Vancouver home. Government attorneys, sensing that he would not show up for trial, requested bail of $100,000, which Meier promptly posted in cash. He then returned to his home in Canada. As feared, Meier did not appear for trial; his bail was forfeited and a bench warrant was issued for his arrest, with new bail to be set at $500,000.^* Through it all, Meier maintained his innocence, claiming to be the victim of a conspiracy by the Internal Revenue Service, the Central Intelligence Agency, the Justice Department, and the White House.

After he left the United States, Meier continued to wheel and deal, working on a complex series of financial transactions involving stock transfers and, once again, mining claims, this time in New Mexico. Sometimes using aliases, Meier was connected to a string of corporations, mostly dummy companies, but the real business action centered around a company called Transcontinental Video Corporation, a New Mexico corporation.

Late in 1974, Alfred Netter of Vancouver, an associate of Meier’s in Transcontinental Video, flew to Los Angeles. On Tuesday, November 26, Netter, forty-four years old, Israeli-born, who stood five feet, seven inches, weighed 155 pounds, and wore a black toupee, checked into the Beverly Hilton Hotel in Beverly Hills. What happened during the next few days is uncertain. But on Friday, November 29, Netter called Meier and the two discussed “business.”⁸⁴ About eleven o’clock that night, a waiter brought dinner for two to Netter’s room. At 2:25 P.M. the following day, when a hotel maid entered the room, she found Netter, wearing only a pair of shorts, lying on the floor. There was blood on the twin beds, blood on the floor between the beds, blood on the lamp, blood on the clothes closet, and blood on the bathroom sink. There was a stab wound on Netter’s head, four stab wounds in his chest, two in his back, two on the right forearm, and multiple perforations of the heart, liver, and lungs.⁸⁵ Someone had carved up John Meier’s partner. After Netter was murdered, the London Life Insurance Company paid $400,000 on a “key-man” life insurance policy that had been issued to Netter as an officer of Transcontinental. In time, according to law-enforcement authorities, the $400,000 found its way to a Meier account in Switzerland.⁸⁶ The murder remains unsolved.

By 1978, Meier, still carefully avoiding the United States, was deeply involved in a business deal with the king of Tonga, a string of some one hundred fifty Polynesian islands about two thousand miles northeast of Australia. With the backing of King Taufa’ahua Tupou IV—also commander-in-chief of Tonga’s 50-member navy and 251-member army—an ordinance had sailed through Tonga’s parliament a year earlier granting Meier authority to establish the Bank of the South Pacific and giving him “a 99-year monopoly on merchant banking in the kingdom.”⁸⁷ The rising expectations of the islands’ 100,000 natives soared with Meier’s arrival and subsequent forecasts of an unprecedented economic development boom. There was talk of “aircraft assembly plants, pharmaceutical factories, and shipbuilding companies. Tonga would launch its own satellite. It would build a 250-unit condominium complex with a 550-room luxury hotel. There would be an industrial park and a national airline. And the airfield on the main island of Tongatapu would be expanded into a top-class airport.”⁸⁸ Indeed, the king announced that Meier’s fledgling bank would join the Tonga government and a Taiwanese group to “establish an airline to link Tonga with Australia, New Zealand, the United States and other Pacific Islands.”⁸⁹

There were, to be sure, a few setbacks along the way. In March of 1978, a United States district court judge in Utah ordered Meier to pay $7.9 million to the Hughes organization. The court entered the judgment against Meier in a lawsuit brought by Hughes in which the company charged that the onetime “scientific adviser” had defrauded Hughes of more than $8 million through the acquisition of worthless mining properties. Even when Tongans eventually learned about Meier’s past misdeeds, they still welcomed him in May of 1978 when he showed up with a man he identified as a contractor and four slightly worn bulldozers, to begin work on Tonga’s new airport. At a ribbon-cutting ceremony, the king announced that “this airport will put Tonga at the crossroads of the southwest and the northeast.”⁹⁰ While his colleague the contractor knocked down a few coconut trees, Meier moved into the International Dateline Hotel, where he handed out “$100 tips to the headwaiter in the restaurant.”⁹¹ When he finally left the islands, Meier took with him a special Tongan diplomatic passport bestowed on him by the king.

Meier put the passport to good use in the summer of 1978 in Australia. He was arested in Sydney in July at the request of United States authorities, who wanted to extradite him on yet another criminal charge that had been lodged against him in the states. Meier had been indicted for obstructing justice as a result of filing forged Hughes documents with the United States district court in Salt Lake City in connection with the civil lawsuit brought by the Hughes organization against him. But when Meier was brought before an Australian magistrate, he was promptly released after he produced his passport identifying him as a Tongan diplomat.

As one Tongan official philosophically lamented, “If he did it to Howard Hughes he could do it to us. The world is full of stupid people.”⁹²

One question, however, persists: How was it possible for Hughes, the businessman always so suspicious of others, to spend $20 million for gold and silver mines that, for the most part, had no value?

Perhaps the most likely explanation, and one never pursued by either the Hughes organization or by any law-enforcement agency, was the most obvious. It also was the most embarrassing, and far-reaching in its legal ramifications. Simply stated, it was this: the great gold- and silver-mining swindle could not have been carried out without the cooperation of someone in the Hughes hierarchy, someone in a key position until the day Howard Hughes died.