November 9, 1999

Another "Insider" and another killed Sixty Minutes story

Copyright © 1985, 1999 by Robert I. Friedman and Dan E. Moldea

     In anticipation of Big Tobacco's possible legal battle over Michael Mann’s newly-released motion picture, The Insider, I reprint the following article, “Networks Knuckle Under to Laxalt:  The Story That Never Aired," which I co-authored with investigative journalist Robert I. Friedman and published in the Village Voice on March 5, 1985.

     This lengthy piece chronicles, among other things, how Sixty Minutes producer Lowell Bergman, one of the two principal characters in the movie, fought to protect a key source for an upcoming story--and how that story, which had been completed and scheduled for broadcast, was killed.  The parallels between this fourteen-year-old article and Mann’s fascinating movie are striking.  (To my knowledge, no one has ever challenged the accuracy of our article, which received an award from Project Censored.)

     In the course of our research in 1985, I interviewed Bergman and, among others, Sixty Minutes executive producer Don Hewitt and senior correspondent Mike Wallace, two other important characters in the film.

     There was an air of excitement at 60 Minutes late last summer as journalists at that top-rated CBS news program completed an expose about Nevada Senator Paul Laxalt's alleged ties to organized crime.  Earlier stories in the press--most notably in the Miami Herald in 1981 and the Wall Street Journal in 1983--included long lists of Laxalt's friends and campaign contributors who have mob connections.  By mid-September, Lowell Bergman, a 60 Minutes producer for senior correspondent Mike Wallace, was putting finishing touches on his own story--the end-product of a three-month-long investigation--that had uncovered startling revelations about Laxalt's notorious friendships.  On September 14, 1984, Wallace said on the Phil Donahue Show that the forthcoming Laxalt segment on 60 Minutes could possibly change the course of the November presidential election.

     But the story, pegged for the season opener in late September, never aired.  On September 20, CBS News executives received a hand-delivered letter from Laxalt's New York attorney, Seymour Shainswit, which threatened a libel suit if they broadcast a report linking Laxalt to organized crime.  The letter called into question the credibility of the network's key on-camera source, Joseph Yablonsky, the former head of the FBI in Las Vegas, whose allegations about Laxalt's mob connections were the centerpiece of the story.

     ABC's World News Tonight, which had also obtained an interview with Yablonsky and was racing to scoop its arch-rival with its own Laxalt expose, received a similar letter that same day.

     Shortly after getting the letter, 60 Minutes executive producer Don Hewitt called Roone Arledge, the president of ABC News and Sports.  The news executives agreed to shelve their Laxalt stories, which had been scheduled to air on September 23 and September 21, respectively.

     Fear of a lawsuit had not been Hewitt's chief concern.  His star correspondent, Mike Wallace--who is described in his recent memoir, Close Encounters, as having one of the most demanding personalities in the news business--wanted to kill the segment after learning that Yablonsky had talked to ABC, giving that network the chance to scoop him.  Yablonsky, who had promised Wallace an exclusive interview, talked to ABC after getting what he thought were assurances that ABC would not run its program until after the 60 Minutes segment had aired.

     In the end, while the networks' stories self-destructed, Laxalt, one of Ronald Reagan's closest friends and the chairman of both the Republican National Committee and Reagan's reelection campaign, skipped away from the serious allegations contained in the reports.  And the American viewing public was deprived of a significant insight into one of this country's most powerful public officials.

     What follows is an anatomy of the two networks' aborted Laxalt stories in the era of the multimillion-dollar libel suit, as well as an inside view of what happens to journalists and their sources when rival networks are locked in bitter competition over the same story.

    In early 1984, CBS's 60 Minutes producer Lowell Bergman read a piece in the Los Angeles Times, detailing a long-standing personal feud between Las Vegas Sun publisher Hank Greenspun and Joseph Yablonsky, who was the FBI's bureau chief in Las Vegas.  Greenspun is recognized as one of the most influential people in Nevada and is a long-time friend of both President Ronald Reagan and Senator Paul Laxalt.  Yablonsky, who is known as the "King of Sting" for his exploits in FBI undercover operations, was hand-picked by FBI director William Webster in 1979 to head the Las Vegas bureau.  In December 1983, Yablonsky reached the mandatory retirement age and became a private investigator.

     In the center of the feud between Yablonsky and Greenspun is one of Greenspun's closest friends, Harry E. Claiborne, Nevada's former chief federal district judge, who was indicted in December 1983 for accepting $85,000 in bribes from Joseph Conforte, a former Nevada brothel owner.  Greenspun had run a series of articles in the Sun, attacking Yablonsky for "framing" Claiborne--because the judge's defense-oriented decisions had threatened federal undercover operations in Nevada.  Citing "secret government documents," Greenspun charged that Yablonsky had paid Conforte to manufacture evidence against Claiborne.  (Claiborne was subsequently convicted of filing false income tax returns last year and sentenced to two years in prison.)

     At the behest of Greenspun, James Phelan, an investigative reporter who had worked on a number of investigations for the Sun, went to New York and spoke with Mike Wallace, hoping that 60 Minutes would consider doing this story.  Wallace and Bergman viewed the conflict as good television drama.  In February 1984, Bergman began researching Greenspun's allegations.

     In August, Mother Jones ran a cover story in its August/September issue about Laxalt, his associations, his attempts to limit the scope of FBI investigations in Nevada, and his efforts to get Yablonsky reassigned.  Bergman, who received a galley of the story more than two months before publication from an editor at the magazine, contacted the story's author, Robert I. Friedman, a frequent contributor to the Village Voice, and paid him $300 to look at his notes.  About six weeks later, Friedman was contacted by Peter Lance, a 37-year-old ABC News correspondent, who had seen the Mother Jones story.

     On August 24, Lance, who said he spent two-and-a-half weeks researching the public record on Laxalt, wrote a 10-page memorandum to William Lord, the executive producer of ABC's World News Tonight, and Charlie Stuart, the head of ABC's investigative unit.  In the memo, Lance outlined some of the allegations against Laxalt, adding, "So far, none of the networks has touched the story.  But right now Lowell Bergman is producing a major Mike Wallace 60 Minutes piece on Laxalt for air early this fall. . . . "  Lance concluded that ABC "should immediately begin our own investigation of the alleged Laxalt/organized crime connection."  He also proposed that Friedman be hired as a consultant--because of the information he had already collected and his access to Yablonsky, with whom Friedman had intended to write a book.  Friedman called Yablonsky in Las Vegas at Lance's request and asked him if he would go on camera with ABC.  Yablonsky agreed.  Bill Lichtenstein, an ABC producer, was assigned to work with Lance and Friedman on the project.

     Later that week, Bergman learned from a source in Nevada that Lance had been making telephone inquires about Laxalt for a proposed story for ABC's World News Tonight.  Bergman recalls he then called Lance, trying to avoid a fight between the two networks over the story.  "I told him that if he could beat me, to do it," Bergman says.  "This was a big story."

     On August 27, Mike Wallace and Bergman flew to Nevada and interviewed Yablonsky on camera for their story.  Wallace says, "We did Yablonsky at his home.  He made some serious allegations for which he was the only source."  Yablonsky reiterated to Wallace the charges he had made in Mother Jones:  that Laxalt was the prototype of a politician whose career was nurtured by members of the underworld.  Though Bergman had uncovered corroborative evidence for much of Yablonsky's charges, he had no other source of Yablonsky's stature and force of personality to go on camera.

     After the interview Wallace obtained Yablonsky's promise not to talk to any other television network until after the 60 Minutes story had been aired.

     Then Wallace phoned Laxalt.  "We had called Laxalt and told him what Yablonsky had said," recalls Wallace, who has been acquainted with Laxalt since he was governor of Nevada in the late 1960s.  "He had originally said that he didn't want to talk until after the Claiborne trial.  Lowell called after the trial--but Laxalt still wasn't sure he wanted to do the interview.  He invited us down to Washington in September to have lunch and talk about it.  Lowell told him he wanted to meet sooner."

     Laxalt then invited Wallace and Bergman to his cabin retreat in Nevada where they had a preliminary, off-the-record interview.  "We were trying to work out an on-camera interview," Wallace explains.  "But a few days later, Laxalt changed his mind and refused to do it.  Finally, I told Laxalt, 'Come on, you're a tennis fan.  Come on up to New York on September 8, and see the tennis matches at Forest Hills.  We'll do the interview, and go to the match.'  He said, 'Fine.'"  [However,] Laxalt called back and again refused to do the interview but accepted Wallace's invitation to accompany him to the U.S. Open tennis tournament.

     Meanwhile, on September 3, Friedman and Lichtenstein met with Yablonsky in the MGM Grand Hotel's coffee shop in Las Vegas.  Yablonsky said he would grant an interview--but only with the proviso that ABC's program not be aired before the 60 Minutes broadcast.  Lichtenstein says, "I assured Yablonsky that ABC was not trying to beat CBS on the story.  That was not our intention then."

     When Friedman and Lichtenstein returned to Las Vegas the following week to interview Yablonsky, he categorically refused to go on camera.  The two men then drove to Yablonsky's home to persuade him to reconsider.  "When Yablonsky refused to budge," Lichtenstein says, "I went out and sat in the car while Robbie [Friedman] pleaded with Joe for nearly an hour."  Friedman finally told Yablonsky that if he didn't go on camera, ABC's story on Laxalt would probably be canceled.

     "Billy [Lichtenstein] and Robbie [Friedman] called me all upset and said that Yablonsky had canceled out," Lance recalls.  "I went back and talked to my people here at ABC, and they told me, 'Look, he revoked his promise to us.  Work on him; see if he will do it.'"

     The following day, September 13, Lance called Yablonsky and pushed for the on-camera interview.  Yablonsky says he again refused unless he had ABC's guarantee, in writing, that it would not scoop 60 Minutes.  "I told him that I had no control over when the piece ran; I wasn't the executive producer," Lance explains.  "I did tell him that we weren't in competition with 60 Minutes--which is what I was told by my bosses.  I made no promises as to when the story would air, because I couldn't."

     After Yablonsky's refusal to do the interview without conditions, the gloves came off between ABC and CBS.

     Lance called Bergman and "started screaming and yelling that we had paid Yablonsky off," says Bergman, who became angry with Lance and then hung up.  Lance denies ever making that charge to Bergman but recalls accusing Bergman of being overprotective of Yablonsky and acting as his exclusive agent.  "Competition is something we live with everyday," Lance says.  "I couldn't blame Mike Wallace and Lowell [Bergman] for trying to get an exclusive.  But I was trying to get Yablonsky to live up to his previous agreement with ABC, and Bergman was accusing me of meddling in his story."

     Lance called Yablonsky back and said that ABC was not going to beat CBS--but added he could not put it in writing.  Yablonsky finally agreed to do the interview, believing he had an iron-clad agreement that ABC would not air before CBS.  "He said he checked with his bosses and his bossed agreed," Yablonsky recalls.

     Assurances aside, Yablonsky still felt nervous after talking to Lance.  Later that afternoon, Yablonsky called Steve Schorr, the anchorman for KTNV-TV, a local ABC affiliate, and asked him if ABC could be trusted.  Schorr said he would see what he could find out.  Schorr called Yablonsky back several hours later and said he had talked to an ABC spokesman who, Schorr claims, assured Yablonsky that "the promise is golden."

     Meanwhile, Bergman received a call from Jeff Gerth, a New York Times reporter based in Washington, D.C.  Gerth had had an earlier conversation with Lichtenstein, who was fact-checking the ABC story.  Lichtenstein, unaware that Gerth and Bergman were close friends, told Gerth about the ABC story.  Gerth phoned Bergman, "Hey, ABC is calling up, and they say they have Yablonsky!"

     Bergman then called Yablonsky and confronted him with Gerth's information.  Yablonsky denied that he had gone on camera with ABC--which was true at that point.

     However, on September 15, Yablonsky was interviewed by Lance on camera in his Las Vegas office.

     Two days later, during a conversation with Lichtenstein, Yablonsky asked him when ABC was going to air.  Lichtenstein admits that he equivocated; Yablonsky says he then wondered if he was being double-crossed.  Yablonsky adds that he then tried to reach Lance, but that Lance was "busy and unavailable and never returned my calls."  Lance denies he avoided Yablonsky's calls.

     On September 18, Lance wrote a summary of the Laxalt investigation to William Lord, the executive producer of ABC's World News Tonight--with a special emphasis on the role of Yablonsky in the story.  In the memorandum, Lance said he had obtained an on-camera interview with former assistant FBI director Roger Young, who called Yablonsky "a superb agent who was a credit to the FBI."  Lance also wrote, "On this coming Sunday night 60 Minutes plans to air the story. . . . In a recent Phil Donahue interview Wallace touted the piece as his season opener."  Lance concluded, "We can make air with a piece for Friday night [September 21]."

     Lichtenstein says that he called Laxalt and talked to one of his aides, trying to secure an interview with the senator.  "During the conversation, I mentioned to him that we had also interviewed Yablonsky on camera," Lichtenstein explains.

     Mike Wallace says that Laxalt called him in New York and told him that Yablonsky had gone on-camera with ABC.  "We called Yablonsky two or three times during those next few days," Wallace explains.  "He just swore that he hadn't given them the interview."

     Finally, on September 19, a contrite Yablonsky called Wallace and confessed that he had been interviewed by ABC.  "He was almost on the verge of tears when he acknowledged that he had lied to us," Wallace says.  "That's what put up the red flags in the minds of Don Hewitt [60 Minutes' executive producer], Bergman, and me.  If the man would lie to you over and over again about something as inconsequential as whether or not he had talked to ABC, then you better move carefully with his story.

     So angry was Wallace with Yablonsky that, during a conversation with Laxalt later that day--in a final attempt to arrange an on-camera interview--Wallace told the senator that Yablonsky had "lied to me."

     The following day, September 20, Laxalt's New York attorney, Seymour Shainswit, wrote letters to ABC and CBS.  The ABC letter said, in part:  "I have been informed that ABC, in the 7:00 P.M. Nightly News Program conducted by Peter Jennings, will run either tonight or tomorrow a segment containing a defamatory attack upon my client. . . . I call explicitly to your attention that Mr. Mike Wallace at CBS has already stated to my client that he is convinced Mr. Yablonsky is a liar. . . . I urge you to act upon the information that I am now supplying you with before you unleash libel missiles that can inflict very substantial damages and expose your organization and the participants in the Nightly News Program to liability for massive compensatory and punitive damages." (Laxalt refused to comment to the Voice.)

     With Yablonsky's credibility in question, both networks considered the fallout if they ran their stories.  But producers and reporters from both networks say, as of Thursday night, September 20--even after Laxalt's letter arrived--the two stories remained alive.  It seemed that the only question was one of competition--who would get on first.

     However, additional problems were confronting both networks; William Westmoreland's multimillion-dollar libel suit against CBS was starting in two weeks.  At ABC, a two-part story that had aired on September 19 and 20, alleging that the CIA had planned to assassinate Ronald Rewald, a Honolulu investment counselor, provoked a sharp complaint from CIA director William Casey--who charged that ABC's allegations were "without foundations."  After an in-house investigation, Peter Jennings, the ABC World News Tonight anchorman, admitted on a subsequent broadcast that the Rewald report "cannot be corroborated, and we have no reason to doubt the CIA's denial."

     Then, in quick succession, Laxalt sued the Sacramento Bee on September 21 (the same day as the ABC story on Laxalt was to have been broadcast) for $250 million.  The disputed article charged that substantial amounts of money were skimmed from a casino Laxalt owned in Nevada during the early 1970s.  A few days after the suit was filed, Newsweek ran a boxed correction, apologizing for a story published the previous week, which reported the Bee's allegations against Laxalt.  According to published reports, Laxalt had telephoned Katharine Graham--the chair of the Washington Post Company, which owns Newsweek--and asked her for the correction, which read:  "Newsweek did not intend to adopt as its own the Bee's story on Senator Laxalt or to impugn the senator's reputation."  Then, just a month after Laxalt filed his suit, Wallace Turner of the New York Times wrote a lengthy puff-piece about Laxalt that, according to the Columbia Journalism Review, "all but exonerated him of the Bee's charges."

    C.K. McClatchy, the publisher of the Bee newspapers, subsequently filed a $6 million countersuit against Laxalt, saying that the senator's suit acted "to silence criticism of him and his policies and practices, to squelch discussion and debate over matters of public interest, and . . . to deter other members of the press."  Both cases are pending.

     Ultimately, however, the fate of the ABC World News Tonight and 60 Minutes stories on Paul Laxalt were decided during a telephone conversation between Roone Arledge and Don Hewitt.

     Arledge could not be reached for comment, but Hewitt says, "I called Roone to try and find out if he [Yablonsky] had done something for ABC.  Roone's a friend of mine, and I called and said, 'We got a guy who's telling me he never did [an interview] with ABC.  And we understand from ABC people that he did.  Did he?'  Roone said, 'I don't know.  I'll call you back.'  He called back and said, 'Yeah, we got something on him.'  I said, 'But they [the 60 Minutes staff] say this guy, Yablonsky, says that you played fast and loose and promised him that this interview would not go on the air until after the 60 Minutes piece.'  Roone said he didn't know.  So he called back and said, 'Whoever promised that says that he didn't.  But if he did, and we were wrong, I apologize.  We shouldn't have done it.'"

     Hewitt continues, "I asked Roone, 'Are you going to run your story, because I don't want to keep working on this thing if you're going to do Yablonsky beforehand.'  He called me back.  I said, 'He lied to us.  I'll tell you that much!'  And Roone said, 'That's enough for me.  I'm not going to run it either.'"

     Charlie Stuart, the head of ABC's investigative unit, explains, "The story should've aired, and we continue to look at the Laxalt story to see if there's something we can do to get it on the air.  However, it was the decision that there wasn't anything of immediate news value in it.  It was dredging up old charges. . . . It was a piece that we were working on, but there was never a specific decision that the piece would air tonight, tomorrow night, or whatever. . . . The Laxalt letter was a total intimidation effort.  To me, great, that added more to the story.  It was a way to have the man respond [after Laxalt refused to be interviewed by ABC]. . . . The purpose is to air all points of view. . . . It's a credit to McClatchy that he stood up to Laxalt.  Laxalt fired one gun, and McClatchy drew both of his and fired back."

     With all the smoke in the air, NBC decided to investigate Laxalt as well.  Soon after ABC and CBS decided to sit on their Laxalt stories, NBC News correspondent Don Oliver wrote Yablonsky a letter, requesting an interview.  Yablonsky declined.  Nevertheless, Oliver did several weeks of research.  "I was never able to prove to myself that there was any validity in the charges against Laxalt," Oliver says.

     On November 30, Yablonsky sent a letter to Roone Arledge, chronicling his travails with ABC and CBS.  Yablonsky concluded:  "Simply put, ABC's lies to me turned me into a liar to Wallace. . . . Paradoxically, I became the scapegoat of an incident caused by ABC's lack of integrity.  I naively thought I could trust a network organization. . . . In retrospect, I really don't think you had the guts to do the story in the first place.  Your actions caused an important story to go untold to the American public."

     Besides the American public, however, the big loser in this story is clearly Joe Yablonsky, who, after a brilliant 32-year career with the FBI, jeopardized his reputation because of the manner in which he conducted himself with the networks.  Yet one could argue that Yablonsky was the victim of the heated competition between ABC and CBS.  And, as a result of that competition, neither story was aired.  Says Yablonsky, "I tried to please everyone:  ABC, CBS, Friedman, and myself.  In the end, I didn't please anyone."

     Except, of course, Senator Paul Laxalt.