Federal Drug Probe Almost Crashed Playboy Empire 40 Years Ago

The once heavily-publicized Playboy drug scandal peaked and then abruptly ended forty years ago this December, an anniversary men’s magazine magnate and American sex icon Hugh Hefner certainly won’t be celebrating along with his usual Christmas festivities in six months. Back in the early-to-mid 1970s, Hefner and his Playboy empire were the high-priority targets of a high-profile, yet ultimately unsuccessful multi-year federal narcotics probe that concluded in 1975 with the suicide of Hefner’s 34-year old personal assistant and executive secretary Bobbie Arnstein on the heels of a cocaine-trafficking conviction and U.S. Department of Justice closing down the investigation shortly thereafter citing lack of evidence.

It certainly wasn’t due to a lack of trying. The feds aggressively hounded Hefner for close to four years, intent on proving that his Playboy magazine brand, two mansions that doubled as twin hedonistic paradises – one in Hefner’s hometown of Chicago and the other in L.A.– and a series of popular nightclubs and resorts he had stationed around the world were moonlighting as havens for drug-dealing.

Hefner, 89, started Playboy, the first mainstream nude-pictorial, in 1953 and turned it into a staple of American male pop culture, building it into a brand worth hundreds of millions of dollars at its’ apex .

Born to a Jewish family in the Windy City, the smart, attractive and sharp-witted Arnstein began working at Playboy headquarters in downtown Chicago right out of high school. After briefly dating Hefner, she quickly transitioned to his “social secretary” and moved into an apartment at the first Playboy mansion, located on State Street in Chicago’s exclusive Gold Coast section.

Arnstein oversaw the risqué activities at the mansion whenever Hefner was away and ran his day-to-day meeting and appointment schedule in the years before he moved out west to California full time. When she reached her thirties, Arnstein began dating younger men and fell into a romance with a 24-year old drug dealer named Ron Scharf, who became a frequent overnight guest at the mansion in the early 1970s as the hip party house turned into a more narcotic-friendly environment then it had been in the past. Because of his relationship with Arnstein, Sharf was allowed to ply his trade within the limestone-columned confines of the posh Playboy estate that sat just a stone’s throw from the banks of Lake Michigan and right down the street from the famous Pump Room restaurant and bar.

Once holding a stringent anti-drug stance, Hefner admittedly loosened his opinion on the subject in the days that followed the hippie age after discovering that marijuana enhanced his sex life. Reports of abundant cocaine use at Playboy parties in Chicago and the newly-opened and now lone-standing L.A. branch of the mansion in the 1970s were rampant, as the soirees began attracting a jet-set, celebrity crowd and getting constantly written up in media gossip columns.

At some point, the government became convinced that Hefner was allowing a wide range of drug-dealing business (as well as the already well-established social consumption), to transpire on his watch, not just at his mansion estates, but in his many nightclubs and resorts, too and was undertaking measures to cover-up illicit activity within his then-vast and prolific Playboy kingdom.

The FBI and DEA focused in on the relationship between Arnstein and Scharf, a young man they already heard was in the process of constructing a distribution network of cocaine, marijuana and pills across the affluent north shore suburbs of Chicago – the coke he was receiving in Florida was coming straight from Bolivia and it was the Florida drug operation the feds were monitoring when they stumbled across the link to Playboy. The feds bugged Scharf’s phone and began a heavy surveillance routine in both states, hoping that Scharf would lead them to Arnstein and Arnstein, in turn, to Hefner.

Grand jury testimony related to the Playboy drug investigation told of cocaine parties being hosted by Hefner at both mansions, with large glass bowls of the libidinous white powder being passed around to the guests for personal use. Several Hollywood movie and television stars were called to testify in front of the grand jury, one of whom, after being granted immunity, admitted to helping supply mansion parties with cocaine. More than one Playboy Club member testified that they were provided controlled substances by club employees during a number of their visits.

On September 15, 1971, federal agents followed Scharf to Florida, where he negotiated a large cocaine deal (6 pounds) with George Matthews, his primary supplier and a wholesale drug trafficker from Coral Gables. Matthews got his cocaine from a Jamaican with ties to the Bolivian coke market.

The very next week, on September 23, they tracked Scharf and Arnstein on a flight from Chicago to Florida to meet Matthews and secure a part of the deal – a half-pound of blow –, which Arnstein carried back on the plane to Illinois in her purse. The bug on Scharf’s phone line intercepted conversations with Arnstein requesting some “dynamite coke” for mansion parties and a hand-to-hand sale by Scharf to a wired-up FBI informant in November proved the final straw – a federal drug indictment came down in February 1972, nailing Scharf and Matthews.

Arnstein wasn’t named and the government used it as leverage. She was herded into dozens of interrogation sessions with the FBI and DEA. They let her know what they had on her and were threatening to lock her up if she didn’t help them build a case against Hefner. U.S. Attorney Bill Thompson personally summoned her to his office to inform her that the FBI was being told that a murder contract had been placed on her head – implying that it was put there by Hefner. Still, she steadfastly refused to give in, nor give up her friend, former lover and boss. Her days free of criminal charges were waning.

Finally, on the afternoon of March 23, 1974, Arnstein was arrested by DEA agents at the Chicago Playboy Mansion. Her name was added to the original indictment and she went on to be found guilty at trial by year’s end. The conviction was based primarily on the testimony of Matthews, who had cut a deal and fingered her and Scharf in the September 1971 coke transaction witnessed by federal agents.

Scharf was sentenced to six years in prison, while Arnstein was slammed with a 15-year term, many believing the extra nine years were tacked on as punishment for not delivering the government Hefner’s head on a platter. Distraught by the prospect of prison, Arnstein committed suicide on January 12, 1975, checking into the Maryland Hotel some 10 blocks south of the Chicago Playboy mansion and overdosing on sleeping pills. Less than a year later, in December 1975, the U.S. Department of Justice discontinued the Playboy drug probe, quietly issuing a press release stating there wasn’t enough credible evidence to proceed with the investigation.