the attention, interest, and labor of their business representatives or of the officials of their union. Can you point out where those working people got any benefit from it whatsoever? Mr. ENGLISH. I decline to answer on the ground it may tend to incriminate myself. Mr. KENNEDY. Mr. Chairman, believe me, again, as we said, in order to bring this pressure, Lormar not only brought the pressure through the union, Joey Glimco and "Juke Box" Smitty, but they also formed this E. & E. Co. The E. & E. Co. would be the whip company. As we have seen it operate not only in Chicago, but as we have seen it operate in the cartage industry and other industries, they don't care what kind of a loss they take temporarily, because the idea is to try to obtain a monopoly in a particular community. We have found from an examination of some of the accounting papers of the Lormar Co. that they took a loss of $85,000 for jukebox sales during the period of 1957, the end of 1957, and 1958. The CHAIRMAN. What company? Mr. KENNEDY. Lormar. That is the company that was supposed to be producing records but they took a loss in jukebox sales of $85,000, which would be the E. & E. Co. The CHAIRMAN. Do you know anything about that? Mr. ENGLISH. I decline to answer on the ground I may tend to incriminate myself. Mr. KENNEDY. That is all, Mr. Chairman. The CHAIRMAN. Are there any other questions? If not, you may stand aside. The committee will stand in recess until 2 o'clock. (Members of the select committee present at time of recess: Senators McClellan and Capehart.) (Whereupon, at 11:55 a.m. the select committee recessed, to reconvene at 2 p.m. the same day.) AFTERNOON SESSION The CHAIRMAN. The committee will come to order. (Members of the select committee present at time of reconvening: Senators McClellan and Capehart.) The CHAIRMAN. Call your next witness. Mr. KENNEDY. Mr. Chairman, we have been discussing the jukeboxes, and this afternoon we will be devoting our time to witnesses in connection with the amusement games in Cook County and the surrounding area of Illinois. I would like to call as our first witness Mr. Arthur Kaplan, who will just testify briefly as to the association and some of the names that will be involved in connection with this matter. TESTIMONY OF ARTHUR G. KAPLAN-Resumed The CHAIRMAN. Mr. Kaplan, you have been previously sworn? Mr. KAPLAN. Yes, sir. The CHAIRMAN. You may proceed. Mr. KENNEDY. What is the association that we will be dealing with? What is its name, the initials we will be using? Mr. KAPLAN. The association that was formed by the game machine operators is what is known as the Chicago Independent Amusement Association, Inc. We have been referring to it as CIAA, and it is so referred to in the business in Chicago. The CHAIRMAN. Chicago-what? Mr. KAPLAN. Independent Amusement Association, Inc. Mr. KAPLAN. The association was formed by a group of operators in late December 1955, and incorporated under the State laws of Illinois as a nonprofit association. Its purposes were very similar to that of the Jukebox Operators Association and, indeed, several of the people who were in it said what they wanted to do was to get the same kind of protection that the jukebox operators had for their locations; that is, protecting their machines on locations from competition. Among the incorporators were William Knapp and Sam Greenberg. Mr. KENNEDY. How do you spell his name? Mr. KAPLAN. K-n-a-p-p, and G-r-e-e-n-b-e-r-g. And then several others. Knapp became one of the directors and Greenberg became the president, and one of the directors of the association. Mr. KENNEDY. What kind of games are involved and how many different games are covered by the association? How many operators, also? Mr. KAPLAN. The types of games with which these people are concerned, and they are the operators of them, are the amusement pinballs, so-called, the shuffle alleys and bowlers, the pool tables that you see in taverns, this small type of pool table, and various other kinds of machines which are not otherwise outlawed by ordinance. Payoff pinballs are assertedly outlawed, although in some instances we think these machines are used that way. The group announced that their purpose was to legislate against unfair legislation on the bagatelle game, which is a kind of fancy trade term for pinball machines, and other restrictive legislation by the city of Chicago. But there is no question but that it was for location protection. Mr. KENNEDY. Before we get into that, how many different machines, approximately, are covered? Mr. KAPLAN. Do you mean the types or actual machines? Mr. KENNEDY. Actual machines. Mr. KAPLAN. Actual machines we think there are approximately between 7,000 and 9,000 machines on locations. The CHAIRMAN. These are not vending machines you are talking about? Mr. KAPLAN. No, sir. The CHAIRMAN. These are game machines when they may be used for gambling purposes? Mr. KAPLAN. Yes, sir. Well, not all of them for gambling purposes. The CHAIRMAN. I didn't say all of them. Mr. KAPLAN. Some may be; yes, sir. The CHAIRMAN. But ostensibly they are just games, amusement machines; is that right? Mr. KAPLAN. Yes, sir. The CHAIRMAN. This association that you mentioned, that involves between 7,000 and 9,000 boxes or units? Mr. KAPLAN. According to our best estimate from some of the licensing that took place in Chicago. The CHAIRMAN. In round numbers that is what you are talking about. Mr. KAPLAN. They are all supposed to be licensed by the city of Chicago. Mr. KENNEDY. How many operators are there, approximately? Mr. KAPLAN. Someplace between 125 and maybe 100, or less. The CHAIRMAN. About 100 operators? Mr. KAPLAN. About 100 operators; yes, sir. Mr. KENNEDY. Did they make a contract with the union? Mr. KAPLAN. Well, that didn't take place until almost a year later. But prior to that time, in about July of 1956, after the association appeared to find that they could not, by agreement among its members, effect the same restraints it wished that the jukebox operatiors were effecting so effectively, they hired a man named Thomas "Red" Waterfall as their executive secretary, and he Mr. KENNEDY. How do you spell that? Mr. KAPLAN. Yes, sir. We discovered after some investigation that this man was actually a man named Hyman Larner. Mr. KENNEDY. Tell how they brought him in. Mr. KAPLAN. Assertedly, he was elected to his position as executive secretary, but the facts show that he was hired before the election took place, and placed on the payroll, and he then ran the association. Immediately after he was hired, the association rented an office in one of the downtown office buildings, hired a girl, and went into highgear operation. The first thing they did was to announce that they had signed a labor contract with the coin machine division of local 134 of the IBEW. Mr. KENNEDY. The same union and the same individual that we have been discussing over the period of the past 3 days? Mr. KAPLAN. That is exactly right, sir. Mr. KENNEDY. This same Jukebox Smitty? Mr. KAPLAN. Yes, sir. Mr. KENNEDY. That part of local 134 of the IBEW that is headed by Jukebox Smitty? Mr. KAPLAN. Yes, sir. Mr. KENNEDY. They went into the same kind of a contract that the jukebox people had? Mr. KAPLAN. Yes. And they even announced that the negotiation. took place with Smith representing the union. On the basis of this purported contract that they signed, they then upped the dues to this association 600 percent. The dues for the members used to be 50 cents per machine per quarter, and it went from that to $1 per machine per month. They started to issue stamps, union stamps, that were to be on the machine. Mr. KENNEDY. The same kind of operation, once again, that the jukebox people had that the union stamps would be issued by the association, the employer association? Mr. KAPLAN. Yes, sir. The CHAIRMAN. The association, presuambly, had a contract with the union? Mr. KAPLAN. Yes, sir. The CHAIRMAN. Ánd the members of the association, the operators, got their union stamps to go on their machines from the association, and not directly from the union? Mr. KAPLAN. Yes, sir; but only after they paid their dues in advance. The CHAIRMAN. That was $1 per machine; is that correct? Mr. KAPLAN. Yes, sir; and they had to list the number of machines they had and where their locations were. Mr. KENNEDY. You went and visited the game association office; is that right? Mr. KAPLAN. Yes; I did. Mr. KENNEDY. At that time, Mr. Waterfall or Mr. Larner had taken off; is that right? Mr. KAPLAN. Yes, sir. He had taken off just previously. Mr. KENNEDY. We spent some 8 months trying to find him; is that correct? Mr. KAPLAN. More than that, sir. Mr. KENNEDY. More than 8 months? Mr. KAPLAN. Yes, sir. Mr. KENNEDY. Finally we traced him down to Florida and then traced him back? Mr. KAPLAN. Yes, sir. Mr. KENNEDY. Ultimately we were able to subpena him. Did you find any union material at the office of the association operators? Mr. KAPLAN. Yes, sir; I did. I found a stamp, which had the legend of the IBEW, one of these rubber stamps. Mr. KENNEDY. Do you mean so that they could stamp their mail as if it came from the IBEW? Mr. KAPLAN. Exactly, sir. Mr. KENNEDY. That was in the office of the association? Mr. KAPLAN. Yes, sir. Mr. KENNEDY. Do you have that here? Mr. KAPLAN. I think we do; yes, sir. The CHAIRMAN. Do you mean the association, in effect, acted for the union whenever it wanted to? Mr. KAPLAN. Well, subsequent investigation disclosed that there was no contract with the union. The CHAIRMAN. In other words, apparently there was collusion between the association and the union; they were working together; is that correct? Mr. KAPLAN. Well, there was collusion between the business representative of that union and the association; yes, sir. The CHAIRMAN. That is what I mean, their representative. Mr. KAPLAN. Yes, sir. (At this point Senator Mundt entered the hearing room.) The CHAIRMAN. Was it after that arrangement was made between the business representative of the union and this Waterfall, or Larner, of the association, that the dues or payments on the part of the machines increased from 50 cents a quarter to $1 per month in advance? Mr. KAPLAN. Yes, sir. It was on this basis that they justified the increase to their members because they then, the association then, claimed it would remit to the union the necessary dues that these men would then have to pay to the union since they had then become members through an alleged master contract between the association and local 134. Mr. KENNEDY. Did the contract actually exist? Mr. KAPLAN. No, sir. We found several other items at the same time, however. We found, for example, 34 of these envelopes which are stamped "IBEW, Local 134." The CHAIRMAN. What does that signify? Mr. KENNEDY. Again, that they had the union material in the office of the association. Mr. KAPLAN. We found 85 of the calling cards of Fred Thomas Smith, which are on the union seal. The CHAIRMAN. This is material that you found in the association file? Mr. KAPLAN. Yes, sir. The CHAIRMAN. This envelope may be made exhibit No. 58 and the calling card of Mr. Smith may be made exhibit No. 58-A. (Documents referred to were marked "Exhibits 58 and 58-A" for reference and may be found in the files of the select committee.) Mr. KAPLAN. We found 118 of the obligation cards of the IBEW, of the international organization, which were in the association's office. The CHAIRMAN. That card may be made exhibit No. 58-B. (Document referred to was marked "Exhibit No. 58-B" for reference and may be found in the files of the select committee.) Mr. KAPLAN. We found 69 prepaid envelopes of local 134. (Document referred to was marked "Exhibit No. 58-C" for reference and may be found in the files of the select committee.) Mr. KAPLAN. We have here the stamp, a reproduction of the four rubber stamps, that were found in the office. The first says "Coin Machines Division." The second says "IBEW Local 134, 600 West Washington Boulevard, Chicago 6, Ill." The third one says "Chicago Independent Amusement Association, Room 1102, 188 West Randalph Street, Chicago"-and this is where these were all found-and the fourth one says "Pay to the Order of Main Street Bank, Chicago Amusement Association." The CHAIRMAN. That series of stamps may be made exhibit No. 58-D. (Stamps referred to were marked "Exhibit No. 58-D" for reference and may be found in the files of the select committee.) The CHAIRMAN. As I understand, you found the physical stamp there that was used to make these imprints? Mr. KAPLAN. Yes, sir. And at the time these stamps were made, they were made in the presence of the office secretary by me and she initialed them at that time, and we have a statement in which she so indicates that they were all done at that time. The CHAIRMAN. What is the significance of finding all of this union material there in the office of this association? |