THE FEDERAL EFFORT AGAINST ORGANIZED CRIME

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70B00338R000200020060-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 139
• Document Creation Date: December 12, 2016
• Document Release Date: April 9, 2002
• Sequence Number: 60
• Publication Date: May 16, 1967
• Content Type: OPEN

Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST
ORGANIZED CRIME
HEARINGS
SUBCOMIVIITTEE OF THE
COMMITTEE ON
GOVERNMENT OPERATIONS
HOUSE OF REPRESENTATIVES
NINETIETH CONGRESS
Printed for the use of the
Committee on Government Operations
U.S. GOVERNMENT PRINTING OFFICE
78-508 WASHINGTON : 1967
For sale by the Superriin ende t ofD Do um20402 - ents, U.S. Go ernment Printing Office
Washinon, .0
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
COMMITTEE ON GOVERNMENT OPERATIONS
WILLIAM L D W
SON, Illinois, C'hairrnan
cHET HOLIFIELD,Calif zrnia
liLOttRNCE 1~. DWYER, New Jersey
JACK BROOKS, Texas
OLDEN R. REID, New York
L. H. FOUNTAIN, North 'arolina
FRANK HORTON, New York
PORTER HARDY, JR., Vilgjr is
,pNALD IRyXSFELD, Illinois
JOHN A. BLATNIK, Min Iesinta
OHK N. EI'tLENBORN, Illinois
ROBERT E. JONES, Alabama
E
JOHN W. WYDLER, New York
DWARD A. GARMATZ Maryland
`O)=T
? Kansas
JOHN E. MOSS, California
o
CLAB J.' ROWN, JR., Ohio
DANTE B. FASCELL, Fhrida
JACK EDWARDS, Alabama
HENRY S. RJ OSS WiSCO] In
1c
i
GUY.}A~IDE,R 7,A.GT,'~Iicbjgaa
JOHN S. MONAUA
; Co> necticut
JOHN T. MYRRS, InAiaua
T:ORBERT H. MACDON tLD, Massachusetts
FLETCHER THOMPSON, Georgia
WILLIAM 0., QQWGER, K sstiory
WILLIAM S.'1tIOp12IItA-?j 1'eh:Is3'IpalrEa
'Pv tiIiGARET;11 ,' H>10KI.J R, Ma4sachusetis
CORNELIUS E. GALLAGHER, New Jersey
GILBERT GUDE, Maryland
WILLIAM J. RANDALL, 1Iisouri
BENJAMIN S. ROSENTIuAL;New tbrk
JIM WRIGHT, Texas
FERNAND J. ST GERMA IN, Rhode Islaail
CIiRiSTIy'E RAY DAMS, Staff Director
JAMES A. LANIGAN, General Counsel
Y ILES Q. FOMNE.Y, Aspocfate General Counsel
J. P. CARLSON, Minority Counsel
WILLIAM H. COPENHAVER, Minority Professional Staff
LEGAL AND MONETARY AFFAIRS SUBCOM4IITTEE
DANTE B FASCELLL, Florida Chairman
CiORNELIUS E. GALLAG]IER I'4eiv Jersey' ~~iJAOIc Et WARDS, Alabama
JIM WRIGHT, Texas I '
Michigan
FERNAND J. ST GERMAN, Rhode Island WILLIAM 0. COWGER, Kentucky
M_ Tn0.R.Tlr Rr-- Ql..rt Aa.... -.,__a__
nax..aa ILOTHENBERG, Counsel
MILLICENT Y. MYERS, Clerk
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70BOO338ROO0200020060-8
Hearings held on- k ' Page
April 5, 1967 - --- + in-f:* ------------
April 33
13, 1967 ----------------------, -- ------
May 16, 1967------------------------------------------------- 59
Statement of-
Kolar, William A., Director of the Intelligence Division, Internal
Revenue Service, accompanied by Thomas B. Carney, executive
assistant, office of the Director------------------------------- 60, 108
Serr, Harold A., Director, Alcohol and Tobacco Tax Division, accom-
panied by Thomas Casey, Chief, Enforcement Branch, Office of
Alcohol and Tobacco Tax Division; and John McCarron, Office of
Chief Counsel, Internal Revenue Service----------------------- 79
Vinson, Fred M., Jr., Assistant Attorney General, Criminal Division,
Department of Justice, accompanied by Henry Petersen, Chief,
Organized Crime and Racketeering Section--------------------- 5, 34:
Letters, statements, etc., submitted for the record-
Kolar, William A., Director of the Intelligence Division, Internal
Revenue Service:
Letter from Willie Bauer, chief of police, Beaumont, Tex.,
dated March 15, 1967, with enclosure---------------------- 78
Organized crime drive status report, fiscal years 1961 to 1966,
inclus,ivc, table ------------------------------------------ 61
Public officials presently included in the organized crime drive
category,table ------------------------------------------ 76
Serr, Harold A., Director, Alcohol and Tobacco Tax Division, Internal
Revenue Service, statement ----------------------------------- so
Vinson, Fred M., Jr., Assistant Attorney General, Criminal Division,
Department of Justice:
Exhibits showing the results of a survey by the Immigration
and Naturalization Service of the Kefauver committee hearings,
19,50-51, made for the. purpose of determining what persons
were amenable to Service action leading to deportation or
denaturalization----------------------------------------- 9
Federal resources applied in combating crime, fiscal year 1967
(approximations), table___________________________________ 20
Letter filed by the Department with the Supreme Court in con-
nection with two pending wagering cases which indicate the
revenue from wagering taxes and the estimated cost of enforcing
those statutes, dated January 23, 1967--------------------- 7
Memorandum from James W. Musket:t, staff assistant, Criminal
Division, Department of Justice, to Mr. Gerald Shur, dated
March 20, 1967, re Division appropriations and average
number of Division assignments--------------------------- 52
Memorandum from the President sent to all departments and
agencies which participate in the organized crime program---- 13
Memorandum of understanding between the Departments of
Justice and Labor relating to the investigation and prosecution
of crimes and civil enforcement actions under the Labor-
Management Reporting and Disclosure Act of 1959 (Public
Law 89-257) -------------------------------------------- 35
Narcotics convictions by the Bureau of Narcotics and the Bureau
of Customs in 1966-------------------------------------- 15
Organized Crime Section statistics indicating the number of
criminal informations and indictments, the individuals
indicted, and the individuals convicted, from 1961 through
1966--------------------------------------------------- 11
Approved For Release 2002/05/08 : CIA-RDP70BOO338ROO0200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
CONTENTS
Letters, statements, etc.-Continued
Vinson, Fred M., Jr.-Continued
Percentage or increase of voluntary compliance, comparing all
taxpayers in the North Atlantic region with racketeers in that
same region, June 31), 1961-66---- ____---------------------
15
Quantitative analysis of indictments, convictions, and acquittals
of Cosa Nostra personnel, 1961-66, table___________________
19
Statutes administered by the Organized Crime and Racketeering
Section _____-________ -----------------------------------
34
Wagering enforcement, Intelligence Division, IRS, June 30,
1961-66,table -------------------------------------------
17
White House press release dated May 1966 entitled "Remarks
of the President-The Drive Against Organized Crime"__
12
4ppendix-Task Force Report: Organized Crime______________________
113
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED
CRIME
WEDNESDAY, APRIL 5, 1967
HOUSE OF REPRESENTATIVES,
LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2:25 a.m., in room
2247, Rayburn Office Building, Hon. Dante B. Fascell (chairman of
the subcommittee) presiding.
Present: Representatives Dante B. Fascell, Cornelius E. Gallagher,
Fernand J. St Germain, Jack Edwards, Guy Vander Jagt, and William
0. Cowger.
Also present: M. Joseph Matan, staff administrator; Charles
Rothenberg, counsel; Millicent Y. Myers, clerk; and William H.
Copenhaver, minority counsel.
Mr. FASCELL. The subcommittee will please come to order.
Today we begin an examination of the Federal Government's efforts
and capabilities to cope with the menace of organized crime.
From all the evidence at hand, there is no doubt that organized
crime exists, and that its existence and influence constitute very real
threats, in one way or another, to the well-being of every man, woman,
and child in this Nation.
Crime, in general, has risen to such an extent in our land that every-
where strong efforts are underway to cope with that problem. Or-
ganized crime, too, is growing, and recognition of the problem that its
growth presents caused the President to ask his Crime Commission
to find out why organized crime was expanding despite the Nation's
best efforts to prevent it.
It would have been a happier day if the Commission could have
reported that the menace is being contained. But after studying the
problem, the Commission had to conclude that efforts to curb the
growth of organized crime in America have not been successful. This
is a frightening conclusion and indictment.
The Federal Government's efforts necessarily have been only a
part of the country's fight against organized crime. Prosecutions for
offenses, except in fairly limited instances, are within the jurisdiction
and prerogatives of the States and their subdivisions.
Organized crime, however, does not confine its . operations to local
areas, or within particular States, or to local offenses. It operates
pretty much throughout the Nation, and with little regard for State
or local boundaries, except as it might serve its purposes to try to
avoid Federal criminal jurisdiction.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Ap roved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
` THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
7Phe Federal effort to combat syndicated crime, though limited., is
'a very important pact of the whole. We are here to determine the
capabilities of the Federal Government to control organized crime,
particularly in the lig it of the fact that the spread of such crime has
not; been stopped. We do so because this subcommittee has the obli-
gatloif l Af ' e `afn'i tcig t;nd evalu ,ting ` the Eflic ei3oq ' iid economy of
operations of many of the agencies of the Government which are
involved in the Feder al effort, against organized crime, including the
De artment of Justice, and theTreasury Department.
These two Departments themselves include the FBI, Immigration
and Naturalization ; 'ervice, Secret Service,, Bureau of Narcotics,
Internal Revenue Ser ice; Customs Bureau, and Alcohol and Tobacco
Ta Division.
Also within this- e ubcomrmttee's jurisdiction are other agencies
which participate in c)mbating organized crime in' one way or another,
sucYt 'ds,,the.,Secu'ities and Exchange Commission and the banking
aril itl) the premise that organized crime exists, we will want
to determine as best we can the full magnitude of, the problem. that it
presents,? whot:tl, e Federal Government's role is in the fight against
organized . crime; what weapons it has with, which to carry out its
responsibilities; whether its resources are fully used to the greatest
advantage; whether the best possible results are being obtained; and
whether greater resources, through increased manpower or equipment,
or ,whatever else would strengthen its capabilities.
The Chief Justice i;i addressing the President's Conference on Crime
Control last week stated that-
rganized crime can be stopped because it is a direct assault upon the dom-
m pity in. which it thri'Tes, and no crime syndicate can openly defy the law in
an of its moneymaking activities if the community is determined that it shall
no exist.
f the subcomrnitt,-e were to do nothing more than to provide the
,people of the United States with a better comprehension of the
organized crime menace and the obligation of the citizenry to aid in
eradicating this evil, I would feel that our efforts. were more than
justified. However, ere; do not intend to stop at that point. It. is cer-
ta}nly my fervent ho )'e that this study will result in actions and recom-
mendations which will further buttress the Federal Government's
abilities to carry out its responsibilities against syndicated crime.
The Department of Justice, as the Federal Government's prosecu-
tive arm, has the responsibility for, and supervision of, the enforcement
of all Federal criminal laws. Its Criminal Division, for the past 13
years or more, has it aintained an Organized Crime and Racketeering
Section, with responsibilities for coordinating generally the enforce-
ment activities wh.c.h are directed against organized crime and
racketeering.
We want to find cut how it could be that although the section has
been in operation for quite a few years, and although organized crime
c ntinues to flouris i,; the Department with all its U.S. attorneys,
Oegedly has neitlu T the personnel nor the financial resources to
investigate all those suspected of being associated with organized
crime.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved ForiRe1"seA2DO2iM@8AC,fWRQR6QP , 3~%W20002%060-8
The head of the Organized Crime and Racketeering Section is re-
ported to, have 'made that statement recently, and to have also said
that-
411.4
even taking into account other Federal investigative agencies with which
the Justice Department operates-including Secret Service, FBI, Bureau of Cus-
toms, internal Revenue Service-we couldn't police one major community.
At this point, I would like to yield to my distinguished colleague and
'ranking minority member, the, distinguished Congressman, Jack
Edwards.
Mr. EDWARDS., Thank you, Mr. ;Chairman.
The United ;States is an affluent society. Unfortunately, it is afilu-
en.t not only in' wealth but in crime. Each year, criminal offenses and
arrests increase faster than populations growth. Each year, the crime
rate advances more rapidly than the 'gross national product. It has
,been noted that reported crime constitutes about a third or less of
offenses actually committed'.
Crime now affects the lives of each and every one of us.' How we
live, where we work, the manner in which we organize our daily
activities; are increasingly being influenced by the incidence of crime.
Yet the` type of crime perhaps that poses the greatest threat to our
life and` welfare, organized crime, is not that which we normally
encounter or. think about,
C~r'eneral]y, we are aware of that type of crime that I choose to call
surface crime=murder, robbery, burglary, rape, aggravated assault,
larceny, and auto theft. As serious as these crimes are, however, they
are no more disturbing to me than those we classify as organized
crimes.
Make no mistake,, ,I am e4remelyy concerned about surface crime.
Its ,daffy threat to the lives and welfare of our citizens is intolerable,
an4 we -must 'put a stop to it with every means at our disposal. But
in general, this type of crime is .visible to us. Although we lack all the
(au~wei to its, prevention, we at least know what we are dealing with.
Such is not the case with organized crime.' We only have limited
knowledge of its breadth, who its members are, how they operate,
and who its wiling or unwilling victims and collaborators are.
In truth, organized crime is a pervasive threat to, and cancerous
growth, upon, the very foundations of ' our society. Every individual
in every walk,of life is adversely affected, personally and materially,
by the tentacles of organized crime. Ill-gotten wealth, acquired
through gambling, narcotics, loan-sharking, and other unlawful
.means, is used to seize ,power and control of lawful endeavors.
Legitimate businesses are infiltrated, labor unions are taken over,
public officials are corrupted.
Government-Federal, State, and local-has exhibited greater or
lesser degrees of initiative in recent years in attacking organized
crime. Our growing knowledge of its nature and scope has spurred us
.on. But what knowledge I :have of current operations leads me to
believe that the country must exert much greater effort against the
network of organized crime.
Every citizen must be made fully aware of its scope and threat to
society. Every legitimate technique must be utilized to rid the country
of its presence. Every law enforcement agency must be harnessed into
a coordinated and efficient instrument to apprehend its membership.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
41 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
'Every lawful judicial process must be employed to punish and
incarcerate those ap ?rehended.
Today we begin hearings to learn what the Department of Justice
is doing to meet the threat of organized crime. As the Federal Govern-
n vent's chief law enforcement and prosecutive agency, it must bear
the chief burden in this direction. But, of course, since organized
dime reaches into every community and touches upon all aspects of
our lives, we must not expect the Department of Justice to shoulder
this burden alone.
1 Other agencies of the Federal Government, together with the State
and local governments, private organizations and individual citizens,
must be called upon to assist in this fight.
It is my hope thE.t this subcommittee will examine into the activ-
ities of a number of these other groups and entities. If we are to sue-
c ed, however, we E hall have to develop improved coordination and
leadership in this fight, a task which may be best handled by the
Department of Justice.
Not only will it :)e our purpose to determine how efficiently and
effectively the Department of Justice is conducting its own operations,
but how successful has it been in communicating, training, cooperat-
iig, and coordinatir g efforts with these other groups?
We have been called upon recently to fight many domestic wars-
against poverty, injustice, ignorance, and so forth. The time has now
come for the country to launch a war against organized crime.
i Thank you, Mr. I,hairman.
Mr. FASCELL. Thank you, Mr. Edwards.
Mr. Assistant Attorney General, I want you and others to realize
at the outset that, having made our opening statements in a bipartisan
inquiry into this subject, we are not unmindful of the outstanding
job which has been one by the prosecutive arm of the Government
aynd the investigative arms of our Government in recent years in
dealing with the problem of organized crime and other criminal
matters.
But in light of recent events, the Crime Commission study and
the national conference which has just been held, I think that we
lave to take judical knowledge of the fact and start out, at least
temporarily, with ,he assumption that deficiencies in the Govern-
rent's armaments do exist in this fight. We are interested to know
what they are and what can be done to remedy them.
We have invited, you to be here and I want to thank you very
rpuch. I know you nave been busy testifying before other committees
on legislative matters and you have a very full schedule, as does
Pdr. Petersen. We also take note of the fact that there have been at
le ast two select committees in the other body that have gone into
this matter over a period of years.
But I do not re3all any regularly constituted committee or sub-
committee on the House side that has ever gone into this matter
4s we propose to do.
We are delighted and privileged to have you here, Mr. Fred Vinson,
and Mr. Henry Petersen. Both of you have outstanding backgrounds
in this field. We would like you at this time to submit brief statements
of your individual backgrounds for the record so that we can have
them as you begin to testify.
We see our hearings as an extension or furtherance constructively
of that which has oeen started, both by the Crime Commission and
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved F 2~ j3 A 0~ jW8Ab f2q? gg3PM20002QJU60-8
the National Crime Control Conference at the national level, and in
many State areas.
It is not our purpose to make public any operational information,
either of current or proposed investigations or prosecutions. If any
inquiry touches on this point as we move along in these hearings,
then the chairman would consider calling executive sessions for
receiving that testimony..
So, having set these predicates, we will be very pleased now to hear
from you, Mr. Vinson.
STATEMENT OF FRED. M. VINSON, JR., ASSISTANT ATTORNEY
GENERAL, CRIMINAL, DIVISION, DEPARTMENT OF JUSTICE,
ACCOMPANIED BY HENRY PETERSEN, CHIEF, ORGANIZED
CRIME AND RACKETEERING SECTION
Mr. VINSON. Thank you, Mr. Chairman; gentlemen.
It is a pleasure to be here before you on what I consider to be one
of the great internal problems of our country today. We welcome
your interest.
I am the Assistant Attorney General in charge of the Criminal
Division, and have been for approximately 2 years.
Mr. Petersen is the Chief of our Organized Crime and Racketeering
Section. He has been with that Section since 1951. He served as its
Deputy Chief for a period of many years, and last fall became Chief
of the Section.
Before making a statement, I think perhaps we should define our
terms. We have a twofold definition of organized crime: first, what
we call, or think is the hard-core problem, La Cosa Nostra; secondly,
we treat as organized crime any large continuous criminal conspiracy
which has significant impact upon a community, a region, or an area
of our country.
However, my statement is devoted primarily to the problem of the
Cosa Nostra. However, our techniques are basically the same with
respect to the handling of both sorts of problems.
Organized crime, as you stated, is not a new problem. The Federal
Government's interest in this problem, organized crime, dates back
to at least 1929, when the Wickersham Commission examined into
the problem of what they termed, "Lawlessness precipitated by war
and prohibition."
Following the Wickersham Commission report, there were various
law enforcement conferences, and of course, as you noted, there has
been continuing congressional interest. I feel that no set of hearings
or no conference has so shocked the conscience of the American
people as the Kefauver committee hearings in 1951.
Throughout the reports of that committee, there were inferences
and indications of these massive criminal conspiracies, and indications
that they were aided and abetted by local corruption.
Syndicate control of the local bookmaker, considered by many to
be just a local problem, a street-corner problem, became very obvious.
The existence of loose-knit, interlocking directorates which controlled
certain types of crime in specified areas became established as a reality.
But the committee was also to learn that the racketeer was found
not only engaged in these illegal activities, but that he also took his
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
6 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
ill-wined funds and put them into legitimate businesses as well. And,
of ' course, the racketeer, in addition to transferring his funds to
legitimate enterprise.,, also generally transferred his illegal methods.
in the third interim report of the Kefauver committee, they stated,
an. I quote:
The ruthless elimination of competitors from enterprises which Mafia leaders
decide to take over, the ruthless elimination of persons who have weakened in
their Mafia loyalties, failed to carry out Mafia orders, or who have informed
ag4inst the Mafia, has left a trail of murder from Tampa to San Francisco.
~s 'a result of the Kefauver hearings, and the previous support
fuirnished by the 19,0 Attorney General's Conference on Organized
Crime, two pieces of legislation were enacted. This was probably the
real beginning of congressional interest in this subject. The witnesses
convinced the committee that the basic source of racketeering income
wags gambling and gambling devices.
This obviously was a matter of Federal interest because of inter-
state shipments, so Congress enacted the Gambling Devices Act,
w4ich restricted the shipment of slot machines and similar gaming
equipment, and also, Congress enacted the wagering stamp law, which
required those engaged in the business of wagering to purchase.
Federal tax stamps.
These two pieces cf legislation offered new tools for Federal aid to
local communities, to buttress local communities' fight against syndi-.
cated crime. And to some extent, the tools were effective, although
the actual results we re less than anticipated. Gambling device ship-
monts were severely curtailed and unquestionably this legislation
made a significant impact in this area.
The wagering stamp law provided another vehicle for Federal en-
trance into the orgarized crime field. And over the years, the Intelli-
gence Division of the Internal Revenue Service has increased its
manpower commitm mt from 1 percent to approximately 10 percent
in the enforcement o:' the statute.
The committee might be interested in a letter which was filed by
the Department with the Supreme Court in connection with two
petlding. wagering ei,ses which indicate the revenue from wagering
taxes, estimated cost. of enforcing those.statutes. I would be happy
to i tender that as an 3xhibit.
Mr. FASCELL. Without objection, it will be included. at this point.
(The document referred to follows:)
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 7
OFFICE OF THE SOLICITOR GENERAL,
Washington, D.C., January 23, 1967.
Re No. 38, Marchetti v. United States of America; No. 181, Grosso v. United States
of America.
Hon. JOHN F. DAVIS,
Clerk, Supreme Court of the United States,
Washington, D.C.
DEAR MR. DAVIS: At the oral argument of these cases Mr. Justice Black
inquired about the cost of enforcing the wagering tax as compared'to the revenue
collected and as to the number of people involved in that endeavor. We have
compiled the following figures, many of them estimates.. (as will be explained
further below) :
Revenue:
Total revenue from wagering taxes during 1952 through 1966-- $105, 988, 000
Total amount collected as criminal fines and through forfeiture
of property during 1955 through 1966-------------------
$11,
418,
000
Expenses:
Internal Revenue Service's estimated cost of enforcing wager-
ing taxes during 1955 through 1966 ----------------------
$18,
651,
000
De
artment of Justice's estimated cost of
ros
uti
n
nde
p
p
ec
o
s u
r
the wagering tax laws during 1952 through 1966----------
$8,370,000
Manpower:
Number of agents in the IRS' Intelligence Division, which has
primary responsibility for enforcing, inter alia,, the wagering
tax:
1952----------------------------------------------
1,200
1966 --------------------------------------------
1,760
Estimated percentage of Intelligence Division's time devoted to enforcing the
wagering tax during 1955-66, between 2.9 and 11.4 percent.
IRS expenditures.-The task of enforcing the wagering tax is primarily handled
by the Intelligence Division of the Internal Revenue Service. As shown on the
attached schedule, the total cumulative budget of the Intelligence Division from
1955 through 1966 was $258 million. No cost figures are available for 1952-54.
The Intelligence Division has, based on daily work sheets, estimated the percent-
age of time spent by its agents on enforcement of the wagering tax. As shown on
the schedule, this has varied during 1955-66 between 2.9 and 11.4 percent. Using
these percentage estimates and the Intelligence Division's total budget, the Serv-
ice estimates that enforcement of the wagering tax during 1955-66 has cost
$18,651,000. This figure includes support expenses, such as secretaries and sup-
plies, but does not include overhead, such as maintenance of buildings, nor does
it include the cost of relatively minor clerical recordkeeping tasks performed by
other divisions of the Internal Revenue Service.
In addition, regular revenue agents, when auditing the income taxes of those
engaged in the business of wagering, may spend a small portion of their time on
examining wagering tax returns. However, this is more than offset by the income
tax information uncovered by Intelligence Division agents incident to their
wagering tax investigations. For example, during 1962 through 1966 such activities
of the Intelligence Division uncovered approximately 330 income tax cases which
resulted in approximately $34 million of additional income tax assessments.
Department of Justice expenditures.-It is more difficult to estimate the Depart-
ment of Justice's expenses incurred in prosecuting wagering tax violations.
Approximately 95 percent of such cases are handled by the U.S. attorney's
offices; this has amounted to an average of approximately 800 cases per year.
The vast majority of such cases require between one-half and 3 days of trial.'
Eight hundred prosecutions per year, each of which take an average of 3 days of
trial and 3 days of preparation, would require 4,800 man-days of work, or approxi-
mately 20 men full time per year. This would cost approximately $240,000, at an
average compensation for assistant U.S. attorneys of $12,000. Additionally, we
estimate that an average of three attorneys at the Department of Justice in
Washington, D.C., are occupied with such cases, which would cost approximately
$39,000 per year. Thus, according to our estimates, total annual attorney's
I While the Grosso prosecution lasted more than a month, this was highly unusual. Mr. Grosso was
indicted for failure to pay the wagering excise tax for 18 separate months during a 3-year period, and the
record shows that in a 1-week period in February 1959, he and his associates took $250,000 in bets. Cases of
this magnitude are unusual; we have been informed that only a few of the approximately 800 prosecutions
per year take more than a week of trial time.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 A rpved For Release 2002/05/08: CIA-RDP70B00338R000200020060-8
THE FEDERAI, EFFORT AGAINST ORGANIZED CRIME
salat+ies amount to $279,000 ($240,000 and $39,000). Doubling this figure in order
to allow for supporting e:epenses (such as secretarial help, supplies, equipment,
-etc.)' indicates an estimate of $558,000 per year, or $8,370,000 for the 15-year
perk d from 1952 through 1066.
T}}1lus, as shown by the ostimates set forth on page 1 above, we believe that the
wag~ring tax has produces substantially more revenue than its enforcement has
costI
Is the Marchetti case, p(titioner, in his brief (p. 11), hasreproduced a quotation
from former IRS Commis; ioner Caplin's 1961 Senate testimony which apparently
indicates that the wagering tax laws cost more to enforce than the Government
collebts. Reading the quo-,atlon in context, however, it is clear that Mr. Caplin
did not intend this meaning. Rather, he meant that the IRS recent increase in
wagging tax enforcement expenditures had not produced an equal increase in
revetlue.2
I Would appreciate it if you will make copies of this letter available to each of
the ,ustices.
Sincerely,
THURGOOD MARSHALL,
Solicitor General.
cca Jacob D. Zeldes, Esq., 955 Main Street, Bridgeport, Conn., James E.
McLaughlin, Esq., 606 Frick Building, Pittsburgh, Pa.
I INTERNAL RI,VENUE SERVICE, INTELLIGENCE DIVISION
Total
revenue
from
wagering
Cost of
wagering
invesiiga?
tions
Total
revenue
from
wagering
Cost of
wagering
investiga-
tions
Fisca
11
year:
52 --------------
$5, 345, 0 i6
(')
Fiscal year-Con.
1961-------------.
$7,323,000
$1, 208, 000
1
53------------- -
10,476,00
1962--------------
5,929,000
1, 799, 000
1
54--------------
9,558,0)0
('
1963 --------------
5,698,000
2,711,000
11
55 --------------
7,808,0)0
$319,000
1964 --------------
6,056,000
3,330,000
V
----------
50
7,024,0)0
382,000
1963 --------------
6,674,000
3,342,000
5
----
57--------------
7,325,0)0
598,000
1966--------------
6,394,000
3,249,000
11
11
58 --------------
69 --------------
6,939,0)0
6,787,0)0
451,000
537,000
Total -----------
-
105, 988, 060
18, 651,000
1
60--------------
6,614,00
666, 000
I Not available.
log t and the following exchango occurred:
Th CHAIRMAN. Was that incr, ase in revenue procured adequate to cover the cost Incurred?
Mr CAvLtN. I do not believe sc. * *
Th CHAIRMAN, In other words, in this effort under existing laws to collect the tax, it costs more to collect
it th that which you are able tip collect?
? * * if we had the personnel aid the equipment to follow through completely, there is this tax potential
whlcb Is not being collected undi r the present statute. (Hearings before the Senate Subcommittee on In-
vestigations of the Committee on Government Operations, 87th Cong., let secs., pt. 1, pp. 96-98.)
Apprbved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
Cost of wagering investigations
[Dollar amounts in thousands]
Obligations
incurred
Wagering
time as a
percent of
total time
available
Cost of
wagering in-
vestigations
1952
1
1953- --------------------------------`------------------
~
)
(1)
1954-------------------------------- -------------------------
t
1955--------------------------------------- -----------
$10,999
2.9
$319
1956------------ -------------------------------------------
13,167
2.9
382
1957
15,739
3.8
598
1958------------------------------------- ----------------
17,333
2. 6
451
1959----------------------------------------------------------
18,337
3.2
587
1960----------------------------------------------------------
18, 509
3.6
666
1961---------------------------------------------------------
20,820
5.8
1
208
1962
23,089
7
5
,
1
799
1963
26, 577
.
10.2
,
2
711
1964
29,289
11.4
,
3
339
1965 ----------------------------------------------------------
31,235
10.7
,
3
342
1966
32,493
10.0
,
3,249
Total, 1955 through 1966,inclusive ---------------------
Mr. VINSON. Also, in response to certain suggestions made at the
close of the Kefauver hearings, the Immigration and Naturalization
Service reviewed the testimony before the committee and they im-
mediately instituted a program of investigation of known racketeers.
The program's purpose was to determine whether any of these persons
were susceptible to denaturalization and/or deportation.
I would like to tender to the committee an exhibit that shows the
number of investigations, the results and some of the frustrations, I
might add.
Mr. FASCELL. What period of time does that cover, Mr. Vinson?
Mr. VINSON. It covers the period of time immediately following
the Kefauver hearings-1951 until the present.
Mr. FASCELL. Without objection, it will be included in the record
at this point.
(The document referred to follows:)
The Immigration and Naturalization Service reviewed all of the testimony
offered during the hearings held in 1950 and 1951 by the Select Committee of the
Senate To Investigate Organized Crime in Interstate Commerce (known as the
Kefauver committee) for the purpose of determining what persons were amenable
to Service action leading to deportation or denaturalization. The table below
reflects the results of this survey and of Service investigations conducted prior
and subsequent to the hearings. The attached exhibits are self-explanatory.
Total number of persons investigated-------------------------------- 559
Determined to be U.S. citizens (total)-------------------------------- 348
By birth------------------------------------------------------ -315
By derivation---------------------------------------------- -- 33.
Deceased ----- -- ---- -- - -------------- 62
Total number of aliens and naturalized citizens------------------------ 149
Found not amenable to Service action;
Aliens-------------------------------------------------------- 26 aturalized citizens-------------------------------------------- 90
Deported (exhibit A) ----------------------------------------------- 24
Deportation ordered (exhibit B)------------------------------------- -4
Denaturalized and ordered deported (exhibit C) -------------------1
Denaturalized, but not deportable (exhibit D)------------------------- 4
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
l d THE FEDERAL, EFFORT AGAINST ORGANIZED CRIME
EXHIBIT A.-Deported (24)
Adcardi, Joseph_____________________ Deported Aug. 17, 1955.
Adcardo, Settimo -------------------- Left United States under W; D. Located
in Italy, June 18, 1956.
Brancato, Salvatore------------------ Deported June 30, 1951
Commarata, Frank------------------ Deported Dec. 8, 1958.
Carrola, Charles V------------------- Deported Jan. 7, 1954.
C talanotte, Giuseppe --------------- Deported Sept. 5, 1957.
Circella, Nicholas -------------------- Deported Apr. 21, 1955
Coppola, Francisco P__ Deported Jan. 9, 1948.
D~ Simone, James------------------- Deported Sept. 26, 1953.
Dbto, Joseph------------------------ Deported Jan. 3, 1956.
Guarino, Salvatore------------------ Deported July 15, 1949.
Guarnieri, Salvatore_________________ Deported Jan. 10, 1951.
Inkpostato, Nicolo _ _ _ _ _ _ - - - _ _ _ _ - _ _ _ _ _ Deported Sept. 5, 1955.
Luciano, Charles____________________ Deported Feb. 10, 1946.
M~tranga, Gaspare------------------ Deported June 18, 1954.
M naudo, Onofrio------------------- Deported Sept. 8, 1954.
N~ni, Sebastiano _ Deported Feb. 8, 1958.
Soria, Angelo----------------------- Deported June 23, 1953.
,Scbzzari, Simone------------------- Deported June 13, 1962.
:SoUlazzo, Salvatore T_____ Deported 1961.
Sucher, Joseph--------------------- Deported Aug. 24, 1964.
Tabone, Frank______________________ Deported June `23, 1951.
T mburello, Nicolo---------------- - Deported 1954.
Terranova, Antonio__________________ Deported 1951.
EXHIBIT B.--DEPORTATION ORDERED (4)
Birns, Shondor (Alex,.: Ordered deported December 16, 1946, no passport.
Dentico, Joseph M.: *Ordered deported January 14, 1959, no priority case.
Heart condition certifie i by U.S. Public Health Service precludes deportation at
tins time.
Mareello, Carlos: Ordered deported August 1, 1961. Travel documents to
e ectuate the order haN. e yet to be obtained.
Prozansky, Morris: Ordered deported April 28, 1934. No passport.
EXHIBIT C.-DXNATURALIZED AND ORDERED DEPORTED (1)
DeLucia, Paul: Ordered deported October 25, 1965.
EXHIBIT D.--DE NATURALIZED BUT NOT DEPORTED (4)
.Brancato, Frank: De naturalized December 16, 1946, not deportable.
!Costello, Frank: Denaturalized, not deportable.
Li Mandri, Michael ; Denaturalized July 13, 1955. Found not deportable
October 18, 1956.
Scott, Neufio: Dena t,uralized September 12, 1956. Found not deportable
.suggestions of the Kefauver committee, the Department of Justice
e e tablished its Orgi.nized Crime and Racketeering Section. In May
157, 3 years after its formation, the Section had it total of 10 attorneys.
During this period, the results were marginal. The problem was
tpo great and the Section was too small.
But on Novembe;? 14, 1957, there was again an event which brought
the problem to public notice. This was the Apalachin meeting; that
all of us are familiar With, where State and Federal investigators
discovered a grout of questionable individuals at the home of a
gentleman named Larbara in Apalachin, N.Y.
More than 60 in ividuals were attending this clandestine meetino,
4nd they represented criminal syndicates front all over the United
States.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Flg?9WA&i?0 8f 0$, RiA38# A02000$b060-8
As a direct result of this meeting, the Attorney General's Special
Group on Organized Crime was appointed in April of 1958. This
group established some regional offices and began to gather intelligence
information on all of the attendees at the Apalachin conference.
Extensive grand jury investigations were conducted and, as a result,
20 of the attendees were indicted and convicted. of conspiracy to
obstruct justice.
The case, however, was subsequently reversed in the Second Circuit
Court of Appeals. After the Apalachin trial, the Special Group, which
had been established in response to Apalachin, was disbanded and
some of its personnel and its functions were shifted into the Organized
Crime Section of the Department.
In 1959, the Special Group that had been created proposed that
there be established an Attorney General's Office on Syndicated
Crime, with nationwide jurisdiction under all Federal laws. I believe
we previously tendered to committee counsel the report of that group.
The suggestion was that the unit be a field prosecution office first,
operating just as closely to the cooperating Federal, State, and local
agencies as possible.
But despite these steps, it is a fact that little alteration in the staff
of the Section or in the program took place, except for minor increases
in manpower, until 1961, when the Department's present organized
crime program got underway.
In 1961 a sharp "beefing up" of our Organized Crime Section began,
and by 1963, we had 60 attorneys assigned to the Section. They began
making regular trips to the field to meet with representatives of
investigative agencies and U.S. attorneys. The flow ofinformation to
the Section increased considerably, and the interagency exchange of
information and cooperation improved to a marked degree. The
increase in convictions over preceding years was impressive.
I have here something I, could offer for the record now. It is our
Organized Crime Section statistics, running from 1961 through 1966,
indicating the number of criminal informations and indictments by
year, the individuals indicted by year, and the individuals convicted.
In each of these categories, there is a steady trend upward, with
one exception, one category in 1 year, where there was a dip.
Mr. FASCELL. Without objection, that will be included in the record
at this point.
(The document referred to follows:)
DEPARTMENT OF .JUSTICE, ORGANIZED CRIME AND RACKETEERING SECTION
Organized Crime Section statistics, 1961-66
1961
1962
1963
1964
1965
1966
Number of criminal informations and
45
118
262
: 316
491
609
indictments -----------------------------
Individuals indicted______________________
121
350
615
666
872
410
1,198
477
Individuals convicted______________
73
138
288
593
. Mr. VINSON. One of the most beefed-up activities of the new Section
was a gathering of substantial intelligence. This was largely con-
tributed by the Federal Bureau of Investigation, which showed the
definite existence of a national cartel known as the Cosa Nostra.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
1 THE FEDEI,AL EFFORT AGAINST ORGANIZED CRIME
Today, more than 25 Federal investigative agencies are contributing
formation to us or. more than 3,100 principals, their associates, and
their business connections. This has resulted in a massive accumu-
lation of information which our Section attorneys analyze and which
we disseminate to other interested Government agencies.
In order to mak( maximum use of the increased activity of the
investigative agencies and the increased intelligence since 1961, our
staff of attorneys has more than tripled, and we are still growing. In
addition, we have es bablished permanent antiracketeering units in the
ofices of U.S. attorneys in Chicago, Los Angeles, Miami, Newark,
and New York City,
We also have one )r more people designated to handle this problem
soely in a number of other U.S. attorneys' offices.
,But we feel that increasing the staff is not enough, and it is certainly
not the sole answer. We need new ideas, and we need to constantly
re ew our efforts and our dedication to the program that was estab-
lished.
President Johnson, aware of the nature of the organized crime
problem, indicated l:.is concern about what he called this "guerrilla
warfare against society" which is a very apt description, I think, and
he stated his determination to increase the Federal effort against this
menace. To achieve this end, in May of 1966, he designated the
Attorney General as the focal point in the Federal Government for
th drive against org inized crime.
would like to tenc.er you for the record the remarks of the President
on that occasion.
Attached to that is a memorandum which the President sent to all
departments and agencies which participate in the organized crime
program.
4r. FASCELL. Wit;iout objection, it will be included in the record
at this point.
The document ref )reed to follows:)
THE WHITE HOUSE-REMARKS OF THE PRESIDENT
THE DRIVE AGAINST ORGANIZED CRIME
Ij have just concluded a most informative meeting on organized crime with
Attorney General Katzenbach, FBI Director Hoover, IRS Assistant Commis-
sio4er (Compliance) Bacon, Internal Revenue Service Commissioner Cohen, As-
sist nt to the Secretary of the Treasury for Enforcement, David Acheson, Fred
Vin on, Jr., Assistant Attorney General (Criminal Division) and William Hundley,
Chi f of the Organized Crime and Racketeering Section of the Justice Department.
I,know how deeply all of you share my concern over the scope and power of
organized crime in Ameri(a. It constitutes nothing less than a guerrilla war against
loci ty.
This is a war that takes scores of lives each year in gangland violence.
It is a war that terroris es thousands of citizens. It is a war in which billions of
dollars are drained off by illegal gambling, narcotics, prostitution, loan-sharking,
arson, and other forms of racketeering.
ost damaging of all are the efforts of racketeers to seek protection against
hon st law enforcement )y corrupting public officials. Such evil strikes at the
heart of democracy. It corrupts individual officials. It breeds a general contempt
for aw. It saps public resaect for law enforcement.
We have, sought to figh ; this war with every Federal resource. The intense and
vigorous efforts-of the Justice Department and the Treasury Department have
given the Nation cause ;'or encouragement. Federal prosecutions in organized
cringe have risen from 17 in 1960 to 491 last year.
Daring the same perioc, the Federal Bureau of Investigation, the Intelligence
Division of the Internal Revenue Service, the Bureau of Narcotics and other
Appr~ved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 13
agencies have been gathering more and more information on organized crime.
As a result of this work, we have been able to identify the membership of criminal
syndicates; to anticipate many of their activities; to prosecute their members.
I salute and congratulate all the dedicated Federal officials who are joined in
this concerted campaign.
But, we must be realistic about the nature of organized crime. We must recog-
nize that it cannot be uprooted by a short-term campaign. Criminal syndicates
continue to bore into the structure of society. As we apply pressure in one area,
such as gambling, racketeers shift to another, such as infiltrating legitimate
business.
This makes our job more difficult-and more important. The campaign against
racketeering must not only be continued but it must be accelerated.
I am today calling on each Federal Department and agency engaged in the war
against organized crime to redouble its efforts.
I am today directing the Attorney General, our chief law enforcement officer,
to direct the Government's renewed drive against these corporations of corruption.
A society can be neither great nor just as long as organized crime exists.
There will be no instant victory.
But today we serve notice on all syndicates of crime that victory will come.
It will come through the joint efforts of all concerned Americans.
It will come through a new partnership between Federal, State, and local
governments.
Together, we will match our determination with effective action, fairly taken,
to rid our land of the menace of organized crime.
THE WHITE HOUSE-MEMORANDUM FOR HEADS OF DEPARTMENTS AND AGENCIES
PARTICIPATING IN THE FEDERAL ORGANIZED CRIME DRIVE
Organized crime constitutes one of the most serious threats to a peaceful and
prosperous society. It drains untold millions of dollars yearly from our national
wealth. It carries corruption and violence in its wake. It erodes respect for the law.
The Federal investigative agencies can be proud of their accomplishments
during the past several years in identifying and amassing evidence against the
leaders of organized crime in this country. The success of the Department of
Justice in securing indictments and convictions in organized crime cases is due to
the ability of your many separate investigative units to work closely together
toward a common goal. You have demonstrated that this unified coordinated
program of action can be effective in combating organized crime.
I have today stated my determination to continue and accelerate this priority
program.
To add further strength to our efforts, I have asked the Attorney General, as
the Nation's chief law enforcement officer, to act as a focal point of the Federal
Government's attack on organized crime.
I want each of you to give him your help and support.
To accomplish our purposes, each investigative unit in your department or
agency participating in the drive against organized crime should:
Carefully review its current organized crime programs and present detailed
status reports to the Attorney General, with emphasis upon allocation of
personnel and upon suggested areas of new and additional investigation.
Report periodically in detail to the Attorney General on the progress of its
organized crime investigations, showing for each current or proposed investi-
gation the planned area of inquiry, the number and type of personnel assigned,
and the expected prosecutive potential.
Establish direct lines of liaison with the Department of Justice to enable
the Attorney General to carry out his responsibility for directing this program.
To uproot the menace of organized crime from our society, we must work closely
together, attain new levels of cooperation and match our will with effective action.
LYNDON B. JOHNSON.
Mr. VINSON. Now, all of the investigative agencies-to name a few,
the principal ones are the Bureau of Narcotics, Secret Service, FBI,
Department of Labor, Internal Revenue Service-which includes
both IRS Intelligence and Alcohol and Tobacco Tax-Customs, the
Post Office, and SEC-have all pledged full cooperation to the
Attorney General.
Approved ftP?1&,e4a$te12o22/05/08 : CIA-RDP70B00338R000200020060-8
 App4pved FrRE Fi,lg@?j,2gg;(/0l~g F~79?293~Rp0200020060-8
And in our shop, the Criminal Division, we intend to meet our com-
mitment to implement the President's directive.
s I have indicated. previously, we are adding additional attorneys
and we are trying to focus, concentrate our efforts in major metro-
pollitan areas, areas in! which the major criminal organizations are
located and deep rooted.
As a part of this emphasis, let me tell you a few of the things we
hate done recently. As an experimental proposition, really-it has
been discussed but never tried-we have put a task force of five at-
t4eys and superviso ?y personnel from most of the major investigative
Mncies in one partic filar metropolitan area to determine whether our
rt to coordinate organized crime investigations can be improved.
This group, as such, has no direct investigative duties.
Their modus operandi is really to analyze all available data in this
entire area, to relate that to their own jurisdictions, and to sort of
divide up the problem along logical and rational boundaries. They
have the task of assessing the entire problem in the area, however,
and they make recommendations jointly arrived at to us, and to
their own respective ;tgencies as to what investigative approach can
bent be taken.
Ti o supplement their efforts, we are holding grand jury inquiries
in number of cities 'n this particular area.
I might add that ,his group is also receiving a very substantial
assistance from local law enforcement agencies in this particular area.
Secondly, to cope with the problem of racketeer infiltration of labor
unipns, we have recently established a labor unit which we envision
as a highly mobile force, one that can move from area to area, wherever
the. are needed. The attorneys in this unit, of course, work very closely
with the two investigative agencies having principal jurisdiction in
labor matters, the FB[ and the Department of Labor.
Thirdly, we put another group of five attorneys into an Eastern
State. They are using conventional grand jury techniques, conven-
tioral investigative techniques of the whole spectrum of the Federal
investigative establishment, and their chore is really, through these
convventional techniques, to explore the entire picture of organized
crime activities in tha ~ entire State.
They are looking i lto La Cosa Nostra, its organization in that
State, into gambling, extortion, corruption of public officials, and
labor racketeering.
Fourthly, we are di?ecting our efforts at those activities which we
believe bring the racketeer his greatest income. This, in our definite
judgment, is wagering, gambling. Here the principal investigative
agencies we work wit.1 are the FBI and Internal Revenue Service,
Intelligence Division.
I~ is not enough to arrest and convict bookmakers and writers.
That is not our purpose. To be successful in an antiwagering cam-
paign, we have to arrest and convict the higher ups. To this end, we
use ;grand juries to assist in the development of evidence against
the e who direct illegal gambling enterprises.
T aisinvolves, partica.larly in. large national layoff bookie operations,
,the use of immunity statutes.
Fifthly, we intend to place a greater emphasis on the narcotics
problem. A careful review of our program over the past 5 or 6 years
indicates that the Bureau of Narcotics and Customs-as you know,
they have a comparatively small number of agents-have made
I
Appr ved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Fo le K X02 9 :Aq QP0 QQ 8 ZQW00020f?0-8
extensive inroads on the importation and distribution of narcotics in
this country.
The total number of their convictions, particularly when viewed
against their manpower, is most impressive.
I have here an exhibit with respect to the Bureau of Narcotics con-
victions and Bureau of Customs convictions in fiscal 1966 that I
would like to offer for the record. The Bureau of Narcotics had 923
convictions for narcotics and marihuana violations. The Bureau of
Customs had 800 such convictions.
Mr. FASCELL. Without objection, it will be included in the record.
(The document referred to follows:)
NARCOTICS CONVICTIONS
The Bureau of Narcotics advised that in calendar year 1966 they had 923
convictions for narcotics and marihuana violations. The Bureau of Customs
advised that in fiscal year 1966 they had 800 narcotics and marihuana convictions.
They also advised that in fiscal year' 1966 they seized 6 tons of smuggled marihuana
on the Mexican border alone. They advised that for the first 7 months of this
fiscal year they are ahead.
Mr. VINSON. I was speaking just a moment ago about a campaign
directed at the real source of power, money; that campaign being the
one directed against gambling operations. I think the committee
would be most interested in some data we have here with regard to
the activities of IRS in this area.
There has been, from time to time, some discussion about the
amount of resources, the cost of IRS wagering programs, for instance,
as related to the amount of revenue it brings in. I submitted the letter
to the Supreme Court which goes into those facts. But this exhibit
is very interesting to me.
If we take the North Atlantic region of the United States, it shows
that for the 3-year period, 1958 to 1960, the average taxpayer was
reporting $5,000 of adjusted gross income. During the period 1961 to
1963, the adjusted gross income on the average increased about 11
percent, to $6,000. That is for your general run of taxpayers.
Now, during the base period, 1958 to 1960, major racketeers in
this same North Atlantic region were reporting an average adjusted
gross income of $11,000. After our program commenced in 1961, and
for the next 2 following years, the average adjusted gross income of
these known racketeers-that which was reported, I should make
clear-leaped up to $16,700, an increase of 57 percent.
Mr. FASCELL. Without objection, we will include that in the record
at this point.
(The document referred to follows:.)
PERCENTAGE OF INCREASE OF VOLUNTARY COMPLIANCE, COMPARING ALL TAX-
PAYERS IN THE NORTH ATLANTIC REGION WITH RACKETEERS IN THAT SAME
REGION
The accompanying bar graph discloses that the average taxpayer in the North
Atlantic region for the 3-year period 1958 to 1960 inclusive, was reporting $5,000
adjusted gross income. During the period 1961 to 1963 inclusive, the average
adjusted gross income increased to $6,000, an increase of 11 percent.
During the period 1958 to 1960 inclusive, major racketeers in the North Atlantic
region were reporting an average adjusted gross income of $11,000. During the
period 1961 to 1963 inclusive, after the inception of the drive on organized crime,
the average adjusted gross income leaped to $16,700, an increase of 57 percent.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
1
^t
t
r
1
gy
1
~
a
ice-
TTr
I
~
; I I~ r
rt
1
F
L
t
1
J
J
y+
-
_
~-
r
- - L
-
~ .
-a- _ t-r
-1-
TT
{
f_j
T
IT_
~+
f
1
T
rid
y
t~ r
!
..
-
_ -
_
....
1
_
+-r
' 1
L
17
L-
-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 17
INTERNAL REVENUL SERVICE, INTELLIGENCE DIVISION
Wagering enforcement
Juno 30,
1961
June 30,
1962
June 30,
1963
June 30,
1964
June 30,
1966
June 30,
1966
Wagering, excise tax:
Total program:
Prosecution recommended----.---
80
153
132
152
92
176
Convicted________________________
31
25
60
50
46
28
OCD:
Prosecution recommended ------------
14
78
1393
113
68
160
Convicted____________________________
1
3
(%)
31
22
7
Wagering, occupational tax:
Total program:
Prosecution recommended--------
701
878
1,001
1,106
996
1,001
Convicted________________________
447
496
548
816
760
696
O CD:
Prosecution recommended____________
0
333
1393
749
743
811
Convicted____________________________
0
68
(,)
305
467
1
185
1 Wagering excise and occupational.
2 Not available.
Mr. VINSON. Our plans for the near future include the greater use
of grand juries and the immunity statutes which are available to us.
Many of the regulatory statutes, as you know, have immunity pro-
visions. The Federal Communications Act is probably the most
commonly used.
And, of course, under the narcotic statute and under the labor
statutes, we also have available to us immunity provisions whereby
we can compel the testimony of those whose testimony we feel is
more valuable to us than their conviction.
We find repeatedly that it is necessary to grant immunity to the
small-time racketeer to get evidence to convict his boss, and we are
prepared to do that. However, we are seeking new and additional
immunity legislation which would operate more directly in areas
which are principally populated by La Cosa Nostra.
This includes interstate transportation in aid of racketeering, for
instance.
Now, of vital importance in any program of this nature is the
development of meaningful intelligence information, because today's
intelligence is tomorrow's prosecution. In order to gather this informa-
tion, close cooperation among local, State, and Federal authorities is
vital. In the Department, and particularly in the Criminal Division,
we recognize that crime fighting is basically a grassroots proposition;
that truly lasting success can come only with effective action at the
community level. The President's Crime Control Act of 1967 reflects
this philosophy.
Also, in your statement, Mr. Chairman, you mentioned that Henry
Petersen had stated that all of the Federal investigative agencies
would have trouble policing one major city. That is certainly true.
For instance, in New York City, I think they have over 27,000 police-
men, which is more people than we have in the Federal investigative
establishment.
That comment, of course, was directed to that sort of quantitative
analysis, or comparison. However, though we think the ultimate
solution depends upon effective community, State, and local law en-
forcement, we know and you know that there are major criminal
syndicates whose activities transcend the boundaries not only of cities
but of States and countries, as well.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
18 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
We recognize the ev:istence of problems that are so large and so
complex that only a unified effort can succeed. I think Congressman
Edwards' statement rovealed that law enforcement today really is
fighting a two-fronted war. We have a war against organized crime
and we also have will. us the very serious problem of street crime,
crimes against person and property.
Now, it is not easy to say which fight is more difficult, because each
of them has its own particular and peculiar set of problems, but al-
though still involving himself occasionally in street crime, murder,
today's racketeer has taken on a different character and really tries to
avoid notoriety which s associated with crimes of violence. Today he
is the sophisticate. He moves into areas of commercial crime, where
the -Octim is brought into the web of conspiracy, made a party to the
crime.
These crimes, really, you have to deal with dif erently. I call them
consensual crimes, or victimless crimes.
Narcotics is a good (ample. Gambling is a good example, shylock-
ing I . s a good example, ii-here the victim walks in willingly to make his
bet or loan. The real victim, of course, is society.
T$ e syndicate leader-s. these days employ lawyers i,ncl accountants
in the establishment of very intricate business setups. They use-well,
we know there is one gentleman we are very interested in-in checking
on 1}im through our ir_tclligence files, we find that there are 17 pur-
portedly legitimate bu finesses in which lie has a substantial interest.
T~iese modern-day .;yndicate leaders use modern public relations
techniques. They join ;he country club and they are very good about
supl7orting local charitI hey make every effort to be looked upon
as pillars of the comm Znity. Yet, under the facade of legitimacy and
above layers of insulation in the organization, tl?e illegal methods are
continued.
One of the real basic weapons of snydicated crane is the use of force
or the threat of the ume of force to maintain discipline within the or-
ganization, to prevent, witnesses from testifying, to collect a debt,
and, to maintain theii rne Commission that each State form organized crime units similar
to that in the Department of Justice. Before the Crime Commission
report came out, as i, matter of fact, in Michigan, we assisted the
Appt-?$~~refI~PalicfOfi/O~m113~4siF870~0@~91~-00020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 19
We stand ready, of course, to furnish to the States whatever assist-
anee we can so that, in a unified effort, we can achieve maximum
reduction in the influence and in the extent of organized crime.
Now, I noted that your opening statement was oriented largely to
the Organized Crime Section of the Criminal Division. My statement,
Of, course, was so oriented also, as that is my primary responsibility.
However, I must point out in fairness to them, the people who are
massively involved in the effort against organized crime and the
people whose efforts pay off in the struggle against organized crime
are the investigative agencies, the principal ones of whom I have
mentioned.
I have two further exhibits that may be of interest to the committee.
The: first is a quantitative analysis of indictments, convictions, ac-
quittals,; and so forth, of persons in the period 1961 to 1966, whom
we 'have definitely identified as "Cosa Nostra personnel."
It is broken down on pages 2, 3, and 4 as to type violations for which
they- were indicted.
,;Mr, FASCEI,L. Without objection, the exhibit will be included in
the record.
(The;,docullient referred to follows:)
Indictments------------------------------------------------------- 185
Convictions--------------------------- --------------------------- 102
Acquittals-------------------------------------------------------- 6
Dismissals-------------------------------------------------------- 6
Reversals--------------------------------------------------------- 4
Violation
Indict-
ment
Convie-
tion
Aquittal
Dis-
missal
Reversed
Narcotics ---------------------------------------- -__-
35
20
---------
2
3
T&X:evasion-----------------------------------------
25
16
-
----------
Wagerng (stamptaxes)
18
2
1
1nttFstate gambling---------------------------------
12
6
-
--
----------
Extortion-------------------------------------------
12
9
1
__________
_________
SEG:
Taters tate transportation of stolen securities-----
13
3
__________
_
__________
__________
-rInterstatetransportationofcounterfeitbonds-_._'
2
__________
_
__________
__________
---------
Illegal sale of securities--------------------------
1
1
----------
----------
___-------
i.'.lale of worthless stock-------------------------
1
----------
----------
----------
----------
Miscellaneous------------------------------------
1
contempt-------------------------------------------
8
8
---------
Theft from interstate commerce ----------------------
8
2
_
on Federal officer----------------------------
7
6
________
_
_______
0bstrlction of justice-------------------------------
7
4
2
Bankrclptcy fraud------------------- -------------
6
4
-
On FIIA loans- ------- -------- ---------
8
---- -
------ -
IRS agents--- -- - - ------ _
1
1
- .
pBJJAloanapplications- __ _ ___ --
i
-----------
1
o Federal savings and loan company _
?
.1
1
-
transportatio of stolen merchandise
4
3
lumpingball -- -
Labor:,.
Racketeering --- ------ -----------------
2
-
----
Taft-nattley --- -----
---
PerjlYy _r -
Bankrollbery- -- -------- -------
3
2
Counterfeiting------------------------------------
2
;2
---
Mail fraud
2
----_
Paroleviolatloh
2
2
1-Iar1~bp g
[ntetae transportation of stolen rnoney, et aL_i
1
(a)
_______
____
-
g5
.------
tor
' ~
B
r~
obds from bonded area-
Moving
?
1
------- --
1
---
Smu
contraband to prisoners -____
- _
li
n
----------
-----
-
1 1 severed.
Ap p rdWdaPdieRe lease 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
l r. VINSON. I also have an exhibit that may be of interest to the
committee, of certain Federal resources applied in combating organized
crime for the fiscal year 1967. I would point out that this is incomplete.
Also, I would point out that the figures are approximations only.
For instance, from the Treasury Department, we have approximations
from IRS and the Bureau of Narcotics. That, obviously, leaves out
Secr t Service, with whom wo are constantly involved to a lesser
degree than these two rgencies, and it also leaves out Customs.
There are other agencies which are not listed here.
The approximations are both of man-years devoted to the organized
crime program and dollars in thousands.
Mr. FASCELL. That is distinguished from all other operations in
the Criminal Division?
Mr. VINSON. It goes beyond. the Criminal Division, Mr. Chairman.
It is the Treasury Department, IRS and Narcotics; Justice Depart-
ment, FBI, Criminal Division, and U.S. attorneys. Obviously, we
had to make some fairly arbitrary determinations here.
For instance, in the Criminal Division, we have now 55 attorneys,
but they are supported by a large appellate section, a large legislative
section. So that is why I say these are approximations.
Mr. FASCELL. Without objection, it will be included in the record
('Ihe document referred to follows:)
Federal resources applied in combating organized crime, fiscal year 1967
(approximations)
[Dolars in thousands]
Treasury Department:
I31cynal Revenue Service------------------------------------------------
B reau of Narcotics------------- ----------------------------------------
$6,600
3,900
otal, Treasury-------------------------------------------------------
10,500
Justicej Department:
Fe(ioral Bureau of Investigation -----------------------------------------
--------------
8,600
C urinal Division-------------------------------------------------------
--------------
1, 679
U. . attorneys -----------------------------------------------------------
--------------
1,300
Total, Justice----------------------------------------------------------
700
11,579
Post O 1lce Department -----------------------------------------------------
12
179
Securfes and Exchange Commissi 7n----------------------------------------
10
97
otal------------------------------------------------------------------
292,355
r VINSON. I apologize for the length of my statement, Mr.
Chairman. But that is it. I shall be delighted to answer any questions
you, the committee, or counsel may have.
Mr. FASCELL. Thank you, Mr. Vinson. I am sure we have plenty.
I want to thank you for a good summary of your operations.
Let me ask you about the National Conference on Crime Control.
This' was called by the Attorney General, I believe, and at that con-
fere ce Governors of the 50 States were invited, and the attorneys
general of each State. Each Governor was permitted three additional
members of the delegation.
VINSON. Each Governor was invited to bring representatives.
Actually, I do not believe the Governors came. They ordinarily send
their j delegates, who might or might not be the director of public
safety of the State.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08: CIA-RDP70~ g 8F 1WJ00024f60-8
THE FEDERAL EFFORT AGAINST ORG Z
One of the difficulties in talking about local law enforcement in
States is that each State is set up so differently. In Michigan, we were
able to establish an organized crime unit-to assist them in establish-
ing it-because the attorney Feneral had very broad powers.
California, likewise. But in most States, the attorney general's
office is connected, is really interested only in and has jurisdiction only
over civil matters. So the representatives from States vary.
Mayors were invited to send one or two delegates.
Mr. FASCELL. From what I have read and learned about that
conference, it seems to have. served a very useful purpose for cross-
communication between interested people at the local level and the
Federal Government. Am I correct in that assessment as far as you
are concerned?
Mr. VINSON. I think you are very correct. It also served to
open up lines of. communication between the various parts of the
criminal justice system-investigations, courts, and corrections.
Mr. FASCELL. In the light of the problem that we have in the
growth of both population and in terms of crime, organized and
otherwise, would it not be a good idea for the Attorney General to
call such a national conference on a regular or annual basis?
Mr. VINSON. I would defer judgment on that, Mr. Chairman.
It would depend entirely on the makeup of the conference. We hope,
actually, with the Crime Control Act of 1967, which is presently before
the. Judiciary Committee, to open up really meaningful lines of
communication between the Federal Government and local and State.
Mr. FASCELL. You mean organizationally and from a funding
standpoint?
Mr. VINSON. Well, funding, and as a practical matter, too.
Mr. FASCELL. How do you take care of the problem, for example,
that will exist in a State like Florida, which, under its laws, does not
give the attorney general the same power the attorney general has in
Michigan or California?
Mr. VINSON. Well, the act does not require a State organization-
for instance, the city of Miami, under the Crime Control Act, could
develop a plan for upgrading and improving its police services, or its
correctional system, and apply for a grant under the act. .
Mr. FASCELL. I was referring, primarily, to your conclusion that you
concurred in the recent recommendation of the National Crime Com-
mission that each State form an organized crime unit similar to that
in the Department of Justice.
Mr. VINSON. Right.
Mr. FASCELL. Now, what you are talking about is one legislatively
established and publicly funded-I assume that is what you are
suggesting
Mr. VINSON. Yes, sir.
Mr. FASCELL (continuing). Or recommending, as the best means of
dealing with the problem. At least at the State level?
Mr. VINSON. That is right. It would have to be located at different
places in different States. For instance, in Michigan, it can be located
in the attorney general's office. In Florida, the legislature may wish to
locate it elsewhere because the attorney general of Florida, as I
understand it, has only appellate jurisdiction in criminal matters.
Mr. FASCELL. Of course, it is of direct interest to us in Florida
because of this new concept which the Governor of Florida has under-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 i
A ovedTim Re fl?5/0&~iI-Ia~a 1900200020060-8
.,_,, ..
'. , ~.~, ,
tak'na which I suppo ie ,is under examination not only federally but
ifi they states of a direct contract or' direct deputizing of investiga-
tiv .personnel iu order to carry out a law nnforcemeut,program.":',
f course the two 4;onceptti are''es far apart ss A and Z ? At least
the, are in my j u'dgm int.
"Sli. VINSON. I think that is unquestionably true, because I''think
la,w enforceiii.ent has ?,o be institutionalized.; That is one of the rst
orders of the public binsdness.
r. FASO LL. I ha a Made myself clear on this point and.; of
,.4 icly because it'is a matter of vital concern to, us. I, too;' think
ilegh isls atteodb, e ihstitution'ilized in a regular public sense; duly authorized,
and fundec.: No matter how worth whine the objectives
may be, I think from le standpoint of dealing with the problem on a
i#atiConal basis-for ex imple, dealing with organized crime-in odder
` to be able' to do your' job 'effectively, you have to have proper and
Wept lines' of communication both ways, with the State and the
c6n0unities and' wi t i.' ` the ' I+ ederal organization. Otherwise, -'there
wottld b_e very little that you could do, as 1,see it.
1V$r. FASCELL. 'By' tie way, how about explaining to the while we
are ,on that subject, just exactly what the Organized Crime',S'ection
does?
lV r. VINSON. Well, the examples I gave, I 'think, are illustrative
of what we' do. I suppose, to oversimplify it, intelligence information
is thered. We will t e all the intelligence information in a given
are?y, given city, given Sate, and analyze it, explore it, and cletr.{mine
what investigative app roaches will best reach the.heart of the problem,
the rd-core organiza tioh.
34r. FASCEJLL. In your statement you said that in 1961 attorneys
begati snaking regular trips to the field to meet with represefitatives
of investigative agencies and U.S. attorneys.
I Mr. VINSON. Right.
Mr. FAScEii.' 1 am trying to, reconcile that statement with kvh4t
you are`telling me noiG.
14tr'. VINSON. No; I. was talking about preliminary and rou are
talking about ultimate
As a preliminary matter, we will digest intelligence in a given' area.
Per, aps we have recei'Ted 90 pieces of information that action
Mr. FASCELL. Do I understand then, that what you are, talking;
about is the input fr )iii 25 investigative agencies at the 'Fedetal
level
Mr. VINSON. Exactl-r.
Mr. FASCELL (continuing). That come' into: the organized crime
section?
Mx. VINSON. Exacthr.
I Vr. FASCELL..This isr`intell.igence," Is this automatic. or directed?
I mean, how do you get the intelligence to start with, or why *dictyou
;get it?
VINSON. We gel It as it comes in from some agencies.` Other
agenc~ies report to us idonthly with intelligence information; If, it'is
a particularly hot piece of information, it may be communicated
immediately. Virtually all agencies give a quarterly report to u? '6 f
cinrint investigations, investigations: contemplated.
In addition
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved F 9O.A.f} r. ?R~ D33 li A 00 8060-8
Mr, FASCELL. But,,, Mr. Vinson, is not'that kind of stale? What, good
are statistics on a mnthly or, gi~arteily basis or a sen?Iannual basis?
VV,1iat, good is that kind of mtehi ence?
Mr. I+ASCEI,{,,: They are 10 407
e
lli
gence o v Uh e s
1V1,T., FASO ELL R4r'u inte
Mr,. TINSON.. Yes-well, it is hard and soft. We` look for 'the hard,
A n c l after that is analyzed then we decide what avenues of investiga-
Lion are best. Then our people go out'. They w , 1 well, .for instance,
Henry and I ,have had seven meetings in about seven of the major
That s Cori
., . . . 11 L ..,
1V11. V IPISON
ELL (continuing) Just recently.
F
NI
ASC
T.
Mr. V1rrSOrr. That was this. winter. We went in the winter, and
IVX
Mr. ST GERMAIN. It SOUndS to me as though' this is 'a shotgun
approach, however:'ou say you get this information in from approxi-
mately 25 Federal agencies. However, is this directed--in other words,
do you tell them.: "We.,want information oil John floe or on this, in-
formation"? Do the 25 agencies in various wads go out' and gather
evidence and statistics and what have you on; this operation or on this
individual or on this group of individuals? Or do you just wait and they
dump this into your laps and you analyze it, and from there you decide
who you are going to go after or what you are going after?
Mr. VINSON. It works both ways But it is not.'a shotgun approach,
Mr,' Con ressman. It is the exact opposite because our effort is to
focus and to choose targets in a given area and then to discuss these
targets with the investigative agencies in their jurisdictional limits;
then to, conduct grand juries.
So it is the exact opposite of a shotgun approach, but I think where
I may have misled you, we, get intelligence on specific people. We also
get general criminal intelligence.
Mr. FASCELL. Mr Edwards.
Mr. EDWARRDS. Well, along that same lute are you saying that if
the Internal Revenue Service,' for 'example, has an issue come up
concerning a certain individual, a criminal issue, that that information
is immediately fed into this central. area and a file is made in your
section on this individual?
Mr. VINSON. Yes,. if it is an `individual--we have approximately
,40Q people that we have told Internal Revenue that z~ e are interested
in, and any information concerning them' would flow in in a matter
of course.
Mr. EDWARDS. And these are the 400-odd, people that make up
what you consider the leadership in the criminal element; is that
correct?
Mr. VINSON. We consider them to be leadership and also vulnerable
to tax investigation.
Mr. EDWARDS. Now, you mentioned, or, -I have seen somewhere
mentioned 2,000 or. 3,000 names on the cards that you fellows try to
keep up with. _
sir
SON
, ..- `may
. -
1V11. Y lltl
Mr. EDWARDS. Why are yogi limiting it to 400 0
thereabouts?
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Apps- ved F Ice 00 /05/08 :CIA-RDP70B00338R000200020060-8
E FORT AGAINST ORGANIZED CRIME
IMr. VINSON. Well, that list changes from time to time. Investiga-
tions are closed; investigations are opened.
!Mr. EDWARDS. Wiat you are saying is that you have generally
about 400 active
!Mr. VINSON. Oh, would say within the past 2 years it may have
rug a little less than that to 700-tax, I am speaking of, only.
VIr. EDWARDS. Do you feel that you have satisfactory guidelines
for these other agencies so that you are convinced you are getting in
the type of informati,mn in a proper procedure to keep your section in-
fo med on the individuals?
Mr. VINSON. Generally, yes. However, I am not at all satisfied
wi h our system. We are now exploring the possibility of computeri-
zation of this intelligonce system in the Department.
Mr. EDWARDS. On the known or suspected criminal element?
Mr. VINSON. Yes, sir.
Mr. EDWARDS. Yo z are not getting over into that nebulous field
of putting everybody in the country on a card?
Mr. VINSON. No, Sir.
Mr. FASCELL. You ;just woke up Mr. Gallagher;
Mr. EDWARDS. I si,w him blink his eyes.
You are referring tD the criminal element?
Mr. VINSON. Yes, Dir. Of the 3,100 people that you referred to that
we are interested in, approximately two-thirds of them have been
idebtified by us definitely and definitively as Cosa Nostra members.
Mr. EDWARDS. Tho. guidelines that you are using, they are written?
Do':: you have some rules or procedures written out that you follow in
your Interagency rela ,onships?
Mr. VINSON. That is a question that cannot be answered yes or no.
We have letter agreements with some. We prepare memorandums
of understanding between investigative agencies to define their
responsibilities.
Mr. EDWARDS. But what you do have you are convinced is doing
the~,', ob as it needs to be done?
Mr. VINSON. I think it does, Mr. Congressman.
Mr. EDWARDS. Now, the chairman mentioned a moment ago the
meeting of State officials and what not. On March 30 there was a
story in the New Yor:r Times that Mr. Petersen, I guess it was, said
that the criminal element was linked up with the Teamsters and also
the East Coast Long, horemen's Union. Can you elaborate on that?
Or perhaps I should isk Mr. Petersen.
Mr. VINSON. Certainly. I would be glad to.
We feel elements off' organized crime have infiltrated many legiti-
male organizations, certain labor unions, locals, certain legitimate
bu-s}}~nesses.
Mr. EDWARDS. That is all you care to say?
1V~Ir. PETERSEN. I think we are talking about current investigations
here and, frankly, I would not like to identify them further.
Mr. EDWARDS. WeL., how general is the term or the designation
"Cosa Nostra"? When you use that term, are you speaking about .a
given group of people that you can, in effect, put your finger on, or
is it a general term used to denote organized crime generally?
Mr. VINSON. No, they are definitive groups, Mr. Edwards. I think
the Crime Commissior. Report points to 24 such "families," they are
called. That figure may be misleading because we feel some are sub-
gromjps. In any event, there are definitely groups banded together in
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 25
this organization, and they do have a loose board of directors at the
top which settles problems, jurisdictional strikes, so to speak, juris-
dictional disputes, and imposes discipline.
Mr. FASCELL. Will the gentleman yield at that point?
Mr. EDWARDS. Surely.
Mr. FASCELL. It might be appropriate at this point, without
objection, to include in the hearings all of chapter 7 of the Crime
Commission's Report, which deals with organized crime, so that we
have in the record specifically the matter which Mr. Vinson has just
referred to.'
Mr. VTNSON. Fine. I think that would be helpful.
Mr. EDWARDS. Now, the report says generally that all these folks
are Italians. Now, you mentioned in your statement the national crime
cartel, somewhere toward the tail end of your statement. How about
international-are there any international ties?
Mr. VINSON. Well, if you are speaking about-if you are speaking
in terms of control, control abroad?
Mr. EDWARDS. Yes.
Mr. VINSON. I don't think so. However, there are definite inter-
national ties. There are organizations, for instance, which overlap our
boundaries with Canada. The Canadian authorities have become in-
creasingly concerned in the last several years about the operations of
these groups there. Those who engage in the narcotics traffic obviously
have international ties in the Middle East and the south of France,
known as the Corsican mobs.
Mr. EDWARDS. Do you have any reasonable working relationships
with these other countries?
Mr. VINSON. That is done in the area of narcotics by the Bureau
of Narcotics which has, oh, I would guess, near 30 people, perhaps,
overseas and, of course, the FBI has legal attaches overseas. The
Organized Crime Section of the Criminal Division of course has none.
Mr. EDWARDS. How much are the wagering stamps-what is the
wagering stamp tax now?
Mr. VINSON. $50, I think. There may be an additional tax on each
employee or each runner.
Mr. EDWARDS. Is that high enough?
Mr. VINSON. Well, I think there are two cases pending before the
Supreme Court right now, Grosso and Marchetti, where the Court
has been asked to rule on the constitutionality of both the registration
provisions and the tax provisions and I think any comment on that
should wait. They have been pending. There will be a decision before
long, I would guess, in that area.
Mr. EDWARDS. In your statement you referred to several cities
where you have staff attorneys in your Section, racketeering units.
Are there other cities that need to be set up similarly and would be
but for funds or for some other reason?
Mr. VINSON. There are other cities where we are going to put
people-' instance, this list is incomplete, as a matter of fact. I do
not want to mislead the committee by saying we have an office, for
instance, in Detroit or Las Vegas. We do have a man there who uses
the resources of the U.S. attorney's office, among others, and this is
our man on the scene. We can use some more lawyers, and we have
1Dhapter 7 of the Crime Commission's Report was reprinted in the "Task Force Report: Organized
Crime" with the addition of annotations to indicate source material and to elaborate on statements con-
tained in the chapter, and appears on p. 113.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 CIA-RDP70B00338R000200020060-8
26 THE FE;DERu I. E'FF'ORT AGAINS RANILE D CRIME
requested more lawyers This is podding now before the' A. iiopria=
do~ s Committee:
i1lr. EDWAPDs. Hcly many do you have noO
Mr. V INSON. e We now have, I believe..e 55. In 2 or 3 month11
u we will
be up to 60. I have asked for 11 more.
Ix. ~iDWARDS yeferrrr~t i0' e ~act~,ti t frciquently you will
bypass a bookie to tr" r to get at tlle'higher irp. I suppose` this is normal
cra4ninal procedure. L'Vhen you mentioned you had about 900-odd.
convictions in 1966'ir` the Bureau of Narcotics.
an you breal th&t down as, }between; the, pusher.. or the user nd
the hi her u,p? I ow .s ect!y are you in getting at the higher up in
t'hip p icy,
a
today. It s ould be Lro} en own #T~t, thi1k ,, bet~veex~ marihuana'
an4 he}'oji~ ? a ld ether drugs, lje f pre you make that further bteaadgNvn.
Wo would be glad to get that for you. I think the ureau of Narcotics
does not--it really devotes its resources to the 'larger `traffickers.` -''
Ii st Ye 1y.had,. nuf.;gf two narcotic sgr plea I tiZrnk,eac of
the was t ig 'rgest 4n the, history.of the: ureau Une was 225 kilgs
anc t ;tithe ?,~ as 20c }TQ~S
TirT '}~_ ___ n"y.1 j? I, IS'c-+fl tr, 3 3 7 w :es,r : It.-Irn ., .rting and Disclosure Act of 1959, 29 U.S.C. 429-453 (all
criminal sections or let except those involving members of the Communist
arty referred to in sec. 504 of act which are assigned to Internal Security
Division).
Liquor violations:
Indian liquor laws :
18 U.S.C. 1154 (introduction, sale, etc., of intoxicating liquor in Indian
country) et s(q.
18 U.S.C. 1155 (punishment for sale, etc., of liquors in former Indian
j territory ; repeal as to part of Oklahoma).
Internal Revenue liquor laws :
26 U.S.C. 5001-5693, et al.
18 .S.C. 3045 (warrants of arrest for violations of Internal Revenue laws).
L?tterieUs, et seq. :
18 U.S.C. 1301 (imp )rting and transporting lottery tickets).
18 U.S.C. 1953 (interstate transportation of wagering paraphernalia).
Narcotics violations :
18 U.S.C. 1401 (defiuiitions) et seq.
18 U.S.C. 3616 (us( by narcotic agents of vehicles forfeited under Internal
Revenue Laws and Contraband Act).
21 U.S.C. 171-185 (import-Export Acts).
21 U.S.C. 184a (bringing narcotics on board U.S. vessel).
21 U.S.C. 188 et seq. (Opium Poppy Seed Act).
1 505 (restrictions on the manufacture of narcotic drugs).
515 (penalprovisions).
211 U.S.C. 4701-4736: 4771-4776: 7237 (Harroson Narcotic Act).
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 35
26 U.S.C. 4711-4715; 7238 (Smoking Opium Manufacturing Act).
26 U.S.C. 4741-4762; 7237 (marihuana).
Occupational tax, coin operated devices, 26 U.S.C. 4461-4463.
Occupational tax, wagering, 26 U.S.C. 4411-4414, 4421-4423.
Perjury, 18 U.S.C. 1621 (perjury before congressional committee).
Racketeering :
18 U.S.C. 1951 (Antiracketeering Act).
18 U.S.C. 1952 (interstate and foreign travel or transportation in aid of
racketeering).
18 U.S.C. 1953 (interstate transportation of wagering paraphernalia).
Slot Machine Act, 15 U.S.C. 1171-1176.
Strikebreakers, transporting, 18 U.S.C. 1231.
Taft-Hartley Act, 29 U.S.C. 159 (e), (g),162, 186.
Wagers :
18 U.S.C. 1084 (transmission of wagering information).
18 U.S.C. 1953 (interstate transportation of wagering paraphernalia).
26 U.S.C. 4401-4405 (excise on wagers).
26 U.S.C. 4411-4414; 4421-4423 (occupational tax).
Welfare and Pension Plans Disclosure Act, 29 U.S.G. 302 et seq.
Mr. VINSON. You also indicated an interest in the form of memo-
randums of understanding between investigative agents-and I have
one here that I am sure counsel would be interested in. It is the memo-
randum of understanding between the Department and the Depart-
ment of Labor.
Mr. I+ ASGELL . We would be very happy to receive that for the
record.
(The document referred to follows:)
MEMORANDUM OF UNDERSTANDING BETWEEN THE DEPARTMENTS OF JUSTICE AND
LABOR RELATING TO THE INVESTIGATION AND PROSECUTION OF CRIMES AND CIVIL
ENFORCEMENT ACTIONS UNDER THE LABOR-MANAGEMENT REPORTING AND DIS-
CLOSURE ACT OF 1959 (PUBLIC LAw 86-257)
Whereas the Labor-Management Reporting and Disclosure Act of 1959 (Public
Law 86-257, 73 Stat. 519) imposes certain duties and responsibilities upon the
Attorney General and Secretary of Labor with regard to prosecution of crimes
arising under the act and civil enforcement actions under the act; and .
Whereas that act, in section 601, imposes upon the Secretary of Labor the
responsibility for conducting investigations of persons who have violated, or
are about to violate, any provision of the act (except title I, or amendments
made by this act to other statutes) ; and
Whereas that act, in section 607 provides that the Secretary of Labor may
make interagency agreements which may help to avoid unnecessary expense
and duplication of functions among Government agencies and insure coopera-
tion and mutual assistance in the performance of functions under the act; and
Whereas it is desirable and essential that the areas of responsibility and the
procedure in connection with the investigations, prosecutions of offenses and
civil enforcement actions arising under the act should be the subject of formal
agreement between the Departments ;
It is hereby agreed and understood between the Department of Justice and
the Department of Labor as follows :
1. Criminal prosecutions.-All cases involving violation of the criminal pro-
visions of the act will be prosecuted by the Department of Justice. Those cases
investigated by the Department of Labor, hereinafter detailed, will be referred
to the Criminal Division, Department of Justice, as provided in section 607.
2. Investigations of natters made criminal by the act.-Subject to specific
arrangements agreed upon by the Department of Justice and the Department
of Labor on a case-by-case basis, investigation under the act will be conducted
as follows :
(a) The Department of Labor will, through its own staff, investigate
those criminal matters arising under :
1. Title II (reporting by labor organizations, officers, and employees
of labor organizations, and employers).
2. Title III (trusteeship).
3. Section 502 (bonding) of title V.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
36 THE FEDERSL EFFORT AGAINST ORGANIZED CRIME
4. Section 503(a) (making of loans by labor organizations to officers
and employees of the labor organization) of title V.
5. That part of section 503(b) of title V which relates to the pay-
ment of a fine of a labor official or employee by a labor union.
(b) The Department of Justice will, under delegation from the Secretary
of Labor, investigate those criminal matters arising under:
1. Section 5131(c) (embezzlement of union funds) of title V.
2. That part of section 503(b) of title V which refers to a payment
of a fine of a labor official or employee by an employer.
3. Section 5114, (prohibition against certain persons from holding
office) of title N.
4. Section 505 (containing an amendment to sec. 302, Labor Manage-
ment Relation. Act of 1947, as amended) of title V.
5. Section 602 (extortionate picketing) of title VI.
6. Section 610 (deprivation of rights by force and violence) of title VI.
8. Notilcation.-Whe:yever either Department learns or is informed of any
matter coming within ;he investigative jurisdiction of the other Department,
as set forth above, it will notify such other Department in writing and furnish
al information in its lossession regarding the matter.
. Exercise of other junctions.-Exercise of delegated investigative authority
byl the Department of Justice pursuant to this agreement shall not preclude
th. Department of Lalor from making inquiries for the purpose of adminis-
tr tive action related to the crime being investigated. Nothing in this memo-
ra dum of understanding shall be construed to affect the investigative jurisdic-
tion of the Department if,Justice under other statutes.
5. Prosec+ation of civil enforcement actions.-Any violations of the act which
foam the basis for civil enforcement actions will be investigated by the Depart-
m nt of Labor. Whenei er the Department of Labor concludes that a civil en-
focement action shouli. be instituted, it will refer the case to the Department
of;Justice, with the request that suit be instituted on behalf of the Secretary of
Ldbor, and will furnish he Department of Justice with all pertinent information
in.the possession of the Department of Labor. Upon receipt of such request, the
Department of Justice will institute and will conduct the civil enforcement
action on behalf of the Secretary of Labor. The Department of Justice will not
institute any civil enfo2 cement action under the act except upon the request of
the Department of Labor, nor will the Department of Justice voluntarily dis-
miss any action so instituted except with the concurrence of the Department
of;Labor. The Department of Justice will dismiss any action so instituted upon
the request of the Dept rtment of Labor. Department of Justice attorneys will
collaborate with the attorneys of the Office of the Solicitor of the Department
of Labor in the preparation and, to the extent feasible, in the presentation
of 'such actions In court.
6. Parole board proceedings.--The investigation and presentation of issues
concerning the appropriateness of a grant of a certificate under section 504(a)
to an individual by the board of parole will be the responsibility of the Depart-
mont of Labor, includil:g appearances before the Board of Parole.
't. Instructions.-So that the terms of understanding will be effectively per-
formed both Departments will issue instructions for the guidance of its officers,
such instructions to be submitted for comment prior to their issuance to the
other Department.
$. Periodic reviews 01 this agreement will be made to determine any adjust
ments which seem nece;asary based on experience under this act.
.Approved. WILLIAM P. ROGERS,
FEBRUARY 16, 1960.
Attorney General.
JAMES P. MITCHELL,
Secretary of Labor.
Mr. EDWARDS. On that point-is this what you would call a typical
memorandtun of unc'erst.anding that would be entered into between
yo .ir agency and othor:agencies?
arrangement, between our Organized Crime Section and other agen-
ci~s, is much less formal than this. This is the sort of arrangement
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 37
that we enter into, or that we negotiate between agencies where there
is a definite overlap of function, and that does not occur too much.
Mr. EDWARDS. Thank you.
Mr. VINSON. There were two matters that I thought would be well
to clear up. I reviewed the transcript of last week's session. I will have
it in Mr. Matan's hands later today.
One question you asked I tried to answer in very general, broad
terms. You asked how do you work, what do you do?
I think it might be helpful if we would respond to that question
in much more specific terms, using a concrete example as illustra-
tive of our general pattern of operation.
There was a time in the past when we became interested in a given
metropolitan area. We assigned several lawyers to that area. They
spent almost 3 months becoming most familiar with the criminal
activity in this particular metropolitan center.
They then went to this city-Mr. Petersen, myself, and our attor-
neys assigned there-and met with the representatives of each of the
investigative agencies. We told them the problems as we saw them,
and we solicited their suggestions as to approach, a pro rammatic
approach to the whole scope of the problems in this particular city.
As a result of that meeting, we then allocated responsibilities be-
tween the agencies. For instance, we found in this city there were
three gambling-three distinct gambling operations, one of which
was Cosa Nostra controlled exclusively. The other two had connec-
tions with Cosa Nostra.
We requested in this particular case that the FBI concentrate its
forces upon the larger gambling syndicate, which was Cosa Nostra
controlled. We requested IRS to concentrate their investigative efforts
upon the other two smaller operations.
We also, in this particular case, had substantial allegations of cor-
ruption, close relationships between some of the racketeering fraternity
and local public officials and police officials.
In this respect, we gathered the information and suggested that IRS
might conduct tax audits of those public officials who were alleged
to Abe in cahoots with either the Italian gambling syndicate or the
two other gambling syndicates who had no-they were not ethnic
groups.
We also had substantial allegations with respect to labor racketeer-
ing. 'There were in this particular city indications of tie-ups between
racketeers and about two locals.
Mr. FASCELL. You mean labor union locals?
Mr. VINSON. Yes. We requested an investigation by the Depart-
ment of Labor of those particular locals.
We requested that IRS-well, first we isolated those whom we con-
sidered to be the 70 top hoodlums in this particular metropolitan
region. We requested IRS audits of that group.
Following the launching of this program in this 'area, our attorneys
meet weekly with representatives of the investigative agencies. They
assist in such matters as obtaining of search warrants. And we find
generally that at some point in an investigation, grand jury inquiry
is eilther very helpful or an absolute necessity. And our attorneys
conduct such ~inquiries.
That is one small slice of ouractivities, and is fairly typical of the
way we operate.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
3$ THE FEDER?.L EFFORT AGAINST ORGANIZED CRIME
Mr. FASCELL. Now were all of these decisions in this example made
in the field?
i_r. VINSON. No, sir.
Mr. FASCELL. Direr>tion came out of the OCRS?
12r. VINSON. Yes, sir. But the attorneys assigned to this project
prbba:bly averaged 3 c:ays -a week in the field.
Mr. FASCELL. But ;lirection in this particular case came out of the
cei itra.l office, the Organized Crime Section?
MIr. VINSON. Yes, sir.
Mr. FASCELL. And decisions or requests for cooperation, investiga-
tiije and ,otherwise, cane directly out of that office?
Mr. PETERSEN. I should make it clear-when Mr. Vinson and I go
to'these cities, what ti ze: are presenting is a tentative plan that has been
wprked out by our a ;toriieys in conjunction with the investigators in
tho field. And the purpose of our visits is to formalize and to iron
out any difficulties that may exist, and agree upon a definite program,
a definite approach, ! that each agency will have its responsibilities
laid out for it. The ultimate decisions are really made by Mr. Vinson
wl e,n we make these fi el.d ttrips.
6Ir. VINSON. There is one other thing that I perhaps should em-
phasize. There is a oxeat feedback from the investigative agencies
themselves. I mean I hey are by and large very-most of the people
they assign to the organized crime area are experienced in that sort
of work, and they develop leads. And so it is a cooperative venture.
One other matter that I noticed in going through the transcript
did not register with the emphasis that I think it deserves, and that
is the tremendous significance of gambling to the organized crime
groups. I think the Crime Commission report indicated that there
ark estimates of gross illegal. wagering in this country ranging from
$7; billion to $50 billion.
think a very corservative estimate is possibly $20 billion.
. ccording to our best information-of course, the gross profit varies
b4ween racetrack be:;ting, numbers, :and so forth, but a good working
figure for gross profit; is probably one-third.
So take a conservative estimate of $20 billion, and take a conserva-
titTe percentage for gross profit, and you have in the hands of these
people at least $G billion. And that really is their bank roll. That
money can be used for;any purpose they see fit. It can be used for pur-
poses of corruption. [t can be used to bank roll shylocking operations.
It can be used to bank roll narcotics operations. And we are confident
tl~at a substantial a nount of that money of course goes out of the
country, squirreled away in foreign areas.
Mr. FASCELL, Mr. Vinson, doesn't a lot of it wind up in normal
legitimate business operations of the country?
Mr. VINSON. Yes, it certainly does. For instance, the city I had ref-
erence to previously we know of at least 25 substantial businesses
that we believe are controlled by these people.
Mr. FASCELL. Well, is that true all over the country?
Mr. VINSON. Yes, sir.
Mr. FASCELL. What kinds of businesses do they get into?
Mr. VINSON. Wel:, virtually any sort of business. I think they are
probably heavy on swrvice-type business-linen services, for instance.
Trey have been kno,vni to have interests in security dealerships. They
h~ve been known to have interests in dairies. They own trucking con-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 39
terns. They own brokerage houses, brokerage in terms of selling sup-
plies or food to retailers.
Mr. FASCELL. Is there any ascribable reason for the penchant for
that type of business that you can discern? Is there some difficulty in
tracing it?
Mr. VINSON. No-I am not so sure it is tracing.
There are two other areas that they are very active in-night club
and tavern business and restaurant business. I sometimes think this
is a sort of business where they like to have a home base, and they like
to clean up some of their income. Assume a man has a hundred thou-
sand dollars' income from an illegitimate enterprise. He obviously is
going to have to show some source of income on his income tax return.
I am confident that many of the taverns and restaurants that are run
by these people are used to cleanse the money, so to speak.
Mr. FASCELL. Legitimatize the reporting of the income?
Mr. VINSON. Yes, to show a source of income. I think the chart that
I showed you last year indicated that between the period of 1958 and
1963, I believe it was, that the racketeers were-I don't think they were
earning any more money, or making any more money, but they were
reporting almost 60 percent more income because of the emphasis on
audit and tax investigation of known racketeers.
Mr. FASCELL. Then the main thrust of what you are telling us is that
as far as organized crime is concerned, its heart and soul is gambling
on a national level, all. interstate, interlocked, and directed ?
Mr. VINSON. Yes, sir. That is definitely and distinctly the source of
the principal bank roll.
I would not say it is all interrelated, however. There are some open
areas. And it operates differently in different cities.
For instance, in the city I referred to there is one distinct gambling
operation that is Cosa Nostra owned, controlled, and run. This is a
tight ethnic group. There are two other gambling operations in that
same city that are not ethnic groups. They are connected. We are
frankly not sure how they are connected. We don't know whether it
is a question of tribute, maybe a 10-percent overriding royalty, so to
speak, or not.
We do know in some cities-there is one major city in the country
where the Cosa Nostra ran gambling; they owned it lock, stock, and
barrel, until about 3 or 4 years ago. They concluded to get out of the
business, and they did get out of the business. They are no longer
actively operating the barbute and numbers, and so forth. However,
our information is that they do extract an overriding royalty, if you
will, that approximates 10 percent of the gross in exchange for which
they arbitrate territorial disputes, they furnish bondsmen, lawyers,
et cetera.
Mr. FASCELL. Sounds kind of professional. You mean they have
given up settling disputes the old-fashioned way?
Mr. VINSON. Well, their ultimate mediation decision has quite a
few teeth in it, Mr. Chairman. They don't have the collection and
enforcement problems that some of us have.
Mr. FASCELL. You mean they still. do use the old-fashioned wary on
occasion ?
Mr. VIN SON. Yes, Sir.
Mr. FASCELL. Just line them up and shoot them?
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Apprpved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
401 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
~r. VINSON. Yes, 4ir.I actually believe they do it reluctantly these
days, though, because I believe
fr. FASCELL. Thai; is a new twist on crime.
Mr. VINSON. I believe they try to avoid the glare of publicity. We
hate a fairly apathet:.c.public, particularly in the gambling area, and
they are smart enough not to want to arouse the citizenry.
Mr. FASCELL. The .FBI's jurisdiction in this investigative operation
which you discussed-their total jurisdiction in organized crime is
wl~'at, racketeering and gambling?
vIr. VINSON. Yes. They have several statutes that give them juris-
diq tion over gambling. The principal statute is probably interstate
transportation in aid of racketeering, which is a fairly broad statute.
It was passed, I believe, either late 1961 or early 1962.
Mr. FASCELL. I ref,d a story the other day in the paper about in-
tensive, shall I say, operations in the Chicago area with respect to the
raids and the investigative assistance being given by the FBI, and the
successful local open tions and followup prosecutions in that case.
Now, is there something different going on there than is going on
any place else? -
Mr. VINSON. No, sir; I think that is a typical example of Federal
and local cooperatior. I think the reason that may have been singled
out-the statistics were very well developed in that area.
Mr. FASCELL. Tha:is what I understood. For example, over 1,200
persons there were irrested, and 340 have already been convicted.
TlI had hundreds a:id hundreds of raids.
Ww, that is an eB ample, as I see it, of Federal cooperation at the
local level to bring about local law enforcement, is that it?
Mr. VINSON. Yes, sir. That is what I like to think of as leveraging
o r efforts-which if, a necessity, in my judgment.
1fr. FASCELL. The estimates, as I recall it, were that they disrupted
operations there that ran into about $18 million a month., and that
evidently is just a part of the total "take" in that area. If that is in-
dicative of what is going on. in the major cities of the country, then
the estimate you have given is probably on the conservative side.
Mr. VINSON. The estimates, as I said, run between $7 and $50 bil-
lion, and $20 billion is probably a good, safe, conservative estimate,
of gross illegal wagers in the country.
Mr. FASCELL. Now, as good a job as has been done in the Chicago
a yea with respect to this gambling operation, the thing that interests
in) is, What directio a,; if any, did Mr. Petersen give this operation?
Mr. VINSON. That particular operation?
Mr, FASCELL. Yes. From August of 1963.
Mr. PETERSEN. I think the credit for that goes to the special agent
i charge of the Chicago office of the Federal Bureau of Investiga-
tion. And I might ss y, incidentally, with respect to local cooperation,
fdr the most part, local cooperation is effected by the investigative
a encies on the scene. They are in a much better position to know
w! iat needs to be doie. We cooperate with local authorities, State au-
tl 'En generally o a a specific basis. That is where we have a special
need to go to them, or they have a special need to come to us.
Ordinarily, however, the liaison is effected by the narcotics agent
irk the field, or the FBI agent in the field, or the Customs agent, or
Labor agent, as the case may be. The relationships are developed on
those levels. Of course, we encourage them, and our own people are
Appr~ ved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 41
in contact with the local prosecutors as the case may be. But basically
the credit for that operation goes to the special agent in charge of the
FBI office in Chicago.
Mr. FASCELL. I am of course very willing to concur in placing that
credit. But what you say disturbs me, because I don't see where the
direction comes out of your office.
Knowing that gambling is a national syndicated operation, with ten-
tacles all over, it is fine for the agent in charge of an investigative
agency to lead the fight, so to speak, with respect to providing law
enforcement in a given area. But, except indirectly, how does that tie
in with what you are trying to do-if you have an overall plan of op-
eration. It looks to me as if the tail is wagging the dog, instead of vice
versa.
Mr. PETERSEN. Well, I don't think that is so.
First of all, we deal with very special needs. May I refer for a
moment to a current investigation-I will let the city and the prin-
cipals go unnamed. But involved in this gambling operation, which
is interstate in character, is the police force of the city involved.
Mr. FASCELL. The point is, who makes a policy decision, like "We
are going to bear down on gambling in Chicago today"-or wherever
it is, an overall integrated effort against organized crime?
Mr. PETERSEN. Those decisions are made here. I should point out
the program has two facets. One, if you like, a special investigation,
such as the program Mr. Vinson has lined out here. The second is an
attempt on our part to generate better law enforcement and along
the line with respect to those statutes in which the organization is
generally involved.
That means stepped-up gambling enforcement by the Federal agen-
cies, stepped-up narcotics enforcement. It also means stepped-up
enforcement on the part of the State, where we can prevail upon them
to do so, or where they have the facilities and the manpower to devote
to it.
Mr. VINSON. If I may make one other thing clear, Mr. Chairman.
The cooperation of the sort you referred to-hard information that
would enable a local police force to seek a search warrant, for in-
stance-is customarily done in our business on the investigative level,
investigator to investigator, and not prosecutor to prosecutor.
But as far as emphasis on gambling in the national picture, we have
a distinct emphasis on that in every major city in the country.
Mr. FASCELL. I am sure you do, And I definitely got that under-
standing from your testimony. But I wasn't quite clear about how
this investigative assistance to local law enforcement effort is
related to the policy decisions which are made by the Organized
Crime Section. That is the thing that I am not clear on yet-when
it starts and when it stops. Because it sounds to me as if you have the
Federal Bureau of Investigation, for instance, doing its job and carry-
ing out its responsibility-which it does extremely well-but doing
it as the Bureau. And, because of its investigative emphasis in a par-
ticular area, or with respect to a particular problem, it then, in effect,
makes a policy decision which actually ought to emanate out of the
Organized Crime Section.
Mr. VINSON. That isn't a limited policy decision. That is a way of
life.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
4`2 THE FEDERAL. ;EFFORT AGAINST ORGANIZED CRIME
I
bor. FASCELL. In otl er words, this is a standard operating procedure
that goes on all the time?
Mr. VINSON. Absolt.tely.
Mr. FASCELL. I dor,'t know that I like that, from a management
standpoint. I like it from a law enforcement standpoint.
Mr. PETERSEN. May I add something? Again, when we make these
trips in the field, in most. every jurisdiction to which we have gone we
have met with the local law enforcement people, and present at most
of these meetings were the Federal enforcement. And policy decisions
were made there with respect to improving cooperation in a specific
area of organized crime. That is not to say that cooperation and coordi-
nation did not exist on an agent-to-agent level before that period.
Bub for example in ore city we have made arrangements for the FBI
to lbrief selected members of the State and local police on the organized
crir to program, the pE ople of importance in their respective areas, so
that they would be fariiliar with the problem, be able to assist us, and
we to assist them.
I3.ut the basic day-to-day operation, interchange of information with
respect to ongoing vio'ations of the law by force has to be done almost
imlirediately from the agent--from the SAC to the police officer con-
cerned, so they can tale prompt action on it.
I' am afraid ofttimes if it had to come back to Washington before
that cooperation coup: be effected, we would be there with too little
and; too late.
Mr. FASCELL. I agree with that. I would not argue that part of it
at all, from the standpoint of effective operation.
Mr. COWGER. Mr. Vinson, being a former mayor of a large city I
wa: interested in you:-, remarks concerning the involvement of local
officials in. organized ;rime. Would you expand that statement, and
tell about any specifics of involvement of public officials or law'local
enforcement agencies?
4r. VINSON. I suppose I could best illustrate that by example.
There have been cases within the last 3 years-well, one very recent-
ly. It was not organized crime per se. However, it grew out of a mas-
:siv? grand jury inquiry into organized crime in -a particular area.
It resulted in the indictment of a mayor and president of a city coun-
cil or bribery.
In another area, about 3 years ago, the department found that a
ma or, chief of polies, and the leading gambler, the man who con-
tro ed gambling in this particular area, were-had a close working
relationship. All were indicted and ultimately convicted.
Iii another area we found that the city commissioner was in collu-
sion with a large number of--in this case it was moonshiners and
gamblers-to afford 1 rotectiori in this particular county-which re-
sulted in indictment.
11r. COWGER. How common is this, Mr. Vinson?
Mr. VINSON. Police, fairly common, Mr. Congressman. The political
officials directly involved I would say not as common. It is really
subtle.
Mr. CowGER. What prompts your coming into a community to in-
vestigate any collusion. between the public officials, police officers, and
organized crime?
Mr. VINSON. Ordinarily it is the result of intelligence information
that causes us to interest ourselves. On occasion, as in the first example
Apprpved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R00020002 060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 43
that I recited to you, it is something that you just stumble into as a
part of a much larger investigation.
Mr. CowoER. Why would you go into some cities and not others?
You spoke of one particular example. Why wouldn't you go into
other cities? Almost all cities, I would assume-it would be my as-
sumption there is some involvement of organized crime perhaps in
every city in America. Is this a true statement?
Mr. VINSON. As the Crime Commission made clear-where orga-
nized crime flourishes, you can be assured there is some corruption. I
think that is really the pervasive danger of organized crime. That is,
its effect on law enforcement and the local power structure.
Mr. CowGER. Thank you, Mr. Chairman.
Mr. FASCELL. Mr. St Germain?
Mr. ST GERMAIN. You say you cooperate with local police officials.
But don't you find that by and large throughout the country, that our
communities are having difficulties recruiting and keeping on their
staffs competent police officials, and that one of the main reasons that
the communities either are unable to or don't see fit to pay their person-
nel, their police personnel, their law enforcement personnel, as well as
they should be paid?
Mr. VIN soN. I think you have put your finger on the real heart of
the problem.
Right now there are about 50,000 vacancies in police forces all over
the country. The average patrolman in the large city-and that is
where most of our problems are-the average patrolman has a start-
ing pay of about $5,300 a year. Worse than that, however, is the fact
that there is not much pay incentive to stay on a police force.
The average city will pay a patrolman about $1,000 more per year
than that $5,300 after he has been on the force some 15 to 20 years, as-
suming he has not risen to a supervisory position.
The other problem is one of fragmentation. There are over 40,000
law enforcement agencies in the country. Their jurisdictions are
overlapping in some respects, there are gaps in other respects. Be-
cause of this fragmentation, you have a substantial number of very
small police forces, and a small police force, I think, just cannot be
operated efficiently. They don't have the resources to train-if you
have a 25-, 50-man police force. They cannot go into retirement sys-
tems, for instance, that would attract and hold qualified people.
Mr. ST GERMAIN. And isn't their work rather discouraging to them
in many instances? I had an odd thing-we are faced now with a
problem where the postal employees all feel they are being underpaid,
and they have justification for their feelings, so they are coming be-
fore the Congress asking for increases in salaries. And yet I recently
had a police officer come into my office locally, at home, and asked me
what procedure he should follow in order to get a job with the Post
Office Department.
His comment was-No. 1, he was being underpaid, he felt. And he
is an educated, intelligent young man. He felt he was being under-
paid. And in addition to that he said-it is not a very pleasant life
when you have a couple of thugs beat up on you, and when they get
to court, they-they put you in the hospital a few days, and they get
to court, and end up with a $1.5 fine. So I think perhaps that is another
discouraging feature. Not only the fact that the pay is low, but see-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Apj)i?ved THE Release 200210 /OAt~iI F P~A7 M3 5800200020060-8 EFFO
ondly that they feel they are not being backed up, so to speak, by
the' courts.
Mr. VINSON. A serious problem of morale.
Mr. ST GERMAIN. Going back to the point that you brought up on
the, small police fore(:s, wouldn't we be wise, if it could be done-I
realize fully the pro olem in that all municipalities and townships
very jealously guard their individuality-but by the same token, as
you say, your one-, two-, and three-man forces in so many little com-
muiities--wouldn't v e be in essence a whole lot more efficient if we
could devise a system wherein the police forces would be statewide-
in gther words State police forces with barracks in each and every coin-
munity to cover those communities?
Mr. VINSON. There would be many advantages to such a situation.
You can start even umaller than that, however. Los Angeles County
is ti good example. They have a sheriff's office. They are well trained,
well paid. They have contractual arrangements with dozens and doz-
ens' of communities in the Greater Los Angeles area to furnish police
prdtection to those conirnunities.
The Crime Commis Sion sees as one of the hopes this pooling or con-
sol'dation or contracti:.al arrangement for police forces.
6f course, you have problems-and I suppose they are basically
political problems, with police forces and consolidation.
Everybody likes to have their own police force. Yet I meet at every
opportunity I have with mayors and city managers to preach this
doctrine. I met about 30 of them last Saturday. An interesting prob-
lem they raised-they said-Mr. Vinson, you have convinced us that
it would be desirable to raise police pay, but what do we do with
the; firemen ?
Historically, fireme i are paid on the same scales as policemen. They
have always been treated the same. I am not sure that is justified, but
it is a historical fact.
Mr. ST GERMAIN. :[ am wondering-in your testimony you m.en-
tio>ied-you divided crime into the organized crime, and then you
mentioned the crimes against the person and the property-in other
words, burglary, assault and battery, and what-have-you, murder,
kidnaping.
Do we have any statistics available to us that would indicate to
us what the success :.s of our local constabularies, our local police
forces, in the appreheasion and indictment of-successful prosecution
of individuals Comm: ting these crimes against the person, as part
of what is known as organized crime? That is, statistics which say out
of every 1,000 crimes committed, x number of convictions or indict-
mefits are returned.
Mr. VINSON. I havo seen studies that indicate that the arrest rate,
for; instance, is about 25 percent of reported crimes.
1{r. ST GERMAIN. My feeling is that we are not doing well at all in
this area. And I would say that 25 percent is not a good average.
Mr. VINSON. I world agree. Of course, the conviction rate, where
you count in guilty pleas, is very high, ranging between 80 and 90 per-
cent probably. But the 25 percent rate is disturbing.
Mr. Sr GERMAIN. Thank you.
Mr. EDWARDS. Do you mean 80- to 90-percent conviction of the 25
percent arrested? Is t1- at what you are saying ?
1VIr. VINSON. Yes, sir.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 45
Mr. EDWARDS. So once you catch them you have a pretty good
conviction rate. But finding them is the problem.
Mr. VINsox. That is correct. And also another fact that the Crime
Commission developed is that there is probably almost twice as much
crime committed as is reported.
Mr. FASCELL. Also the finding was that there was a great reluctance
to even report the crimes, so that you have no real basis of knowing the
extent of the problem.
Mr. ViNsox. That is correct.
Mr. FASCELL. So the figures have to be considered both from the
standpoint of enforcement efforts such as indictments and convictions,
and against a fluid base which none of us know the exact nature of,
except that we have an idea it is extremely large. Is that about right?
Mr. VINsoN. That is right..
Mr. FASCELL. You discussed the infiltration of organized crime
into all levels of economic society in this country, and at the local
level with public officials, and so forth. Is there any evidence that
organized crime has infiltrated State governments, through State
public officials, and the Federal Government, through Federal Govern-
ment officials and Federal agencies, including investigative agencies?
Mr. VINSON. I have no knowledge of infiltration of Federal agencies.
Very occasionally information comes to our attention with respect to
State and local agencies.
Mr. FASCELL. How would you compare that against the assess-
ment which you gave us about local public officials?
Mr. VINsoN. I am not sure I understand that question, sir.
Mr. FASCELL. I am trying to get some order of the magnitude with
respect to corruption by organized crime or otherwise of public of-
ficials, local government, State government, and Federal Government.
As I understand your testimony so far, you have no knowledge of
any infiltration by organized crime into Federal Government or its
agencies, but there' is some at the State ]evel, and considerably more at
the local level.
Mr. VINsoN. Yes, sir.
Mr. FASCELL. Is that a fair restatement?
Mr. Vlxsox. Yes, I think so.
You see, I don't believe that a large gambling operation, for in-
stance, can exist without some knowledge at the local level. And this
gets back to one of my comments last week-by and large we are deal-
in gg with consensual crimes-gam
bling, narcotics, shyloeking. And the
public is not concerned particularly about gambling, illegal gambling,
bookies, numbers operations. And I think that apathy is reflected in'
police operations locally.
Mr. FASCELL. I asked you about direct infiltration. How about cor-
ruptive influence of organized crime in the Federal Government.
Is there any that you know of ?
Mr. VINSON. None that I know of, Mr. Chairman.
Mr. ST GERMAIN. Mr. Chairman
Mr. FASCELL. Mr. St Germain?
Mr. ST GERMAIN. Getting back to the line of questioning that I was
about-the percentage of convictions, et cetera, as against the number
of crimes committed-it seems to me it would be a very fair and ac-
curate statement to say that we cannot-not only can we not be proud
78--508-67-pt. 1--4
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
46
of our accomplishment s in this area, but we should be rather ashamed
of the fact that we are doing so poorly in this area of apprehension of
criminals, and that much of this, it seems to me, stems from the fact
that we do not have eficient organizations for crime prevention, and
apprehension of criminals within our local communities.
o that going one step further, referring back to your original testi-
mony, it must make your work rather difficult where you feel that you
should be able to rely on local enforcement agencies for support and
cooperation-it must be rather difficult when you have so many local
co);muiaities whose p dice agencies or police departments are excep-
tiozially inefficient.
11Ir. VINSON. Well, I think there is a great deal of truth in that.
I-I wever, I think I sl.ould make clear here that this is not a universal
in3ictment of police forces. There are some excellent police forces
insome of our metropolitan areas, and even in those areas where we
find corruption, there are some outstanding policemen.
think most of oi.r major cities nowlave what they call central
inspection or integrity units that are responsive to the top' brass on the
p nice force. This wasn't always true.
\Ir. ST GEP,31A.IN. 'Would it be fair to state that in our larger cities
w ; have the more efficient forces that you refer to. Once you get into
the smaller communities and the smaller cities, this is where we hit
or problem, because the citizens themselves are not willing to pay
them?
1~Ir. VINSON. I think that is generally true. And I think the whole
system of criminal justice has a built-in conservatism, a built-in re-
siBtance to change. And it is my judgment that we desperately need
change in our police, in our courts, in our correctional systems.
1 At the national convention on crime, just 2 weeks ago, Superin-
t4ndent Wilson of the Chicago Police force, in charge of the Chicago
Police force, who is an outstanding policeman, they have a very ex-
cellent operation-Lc. made the statement that he thinks that police
people are more resistant to change than any other group in the
country.
Following on the heels of that statement, Dr. Magee, who is head of
tie correctional system in California, testified, and he said, "I disagree
with the superintendent, I think correctional people are more resistant
tp change than any other group." And shortly after that the Attorney
general made a speech, and he said he heard two things said that
horning that he violently disagreed with. He said he was convinced
ghat lawyers were more resistant to change than any other group.
There is a great deal of truth in all three statements.
Mr. ST GFRMAIN. In Chicago-I think I read recently where they
start their patrolman at $10,000 a year. Is that right?
Mr. VINSON. I am not sure, Mr. Congressman. That sounds a little
high.
I Mr. ST GFRMAIY. I think I am accurate on this figure, because it
was brought to me by some postal people, comparing their pay. But
,there, as you men Jcn, we have Wilson, who is in charge of public
safety in Chicago, you have a large city, well organized, and they are
paying their personnel properly.
Mr. VncsoN. Tl.ere are all sorts of problems involved. I adverted
Ito the problem of the firemen. I saw two stories in the Washington
paper yesterday. One was a proposal to raise the pay of policemen I
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
think from $6,700 to perhaps $7,200, starting pay. And on the same
page there was a story that the Montgomery County, Md., County
Council or Board of Education had voted to raise the teachers' pay
in Montgomery County only $180 instead of $200, which would give
them a starting pay of $5,880.
So there are all sorts of value relationships involved. It is not a
simple matter.
Mr. FASCELL. Mr. Vinson, you have told us that organized crime in
one way or another has infiltrated its way into business activity and
labor unions.
Is there any evidence that organized crime has infiltrated any of the
sports of the country, either amateur or professional?
Mr. VINSON. Well, I think we are all aware of the cases that Federal
and State governments have made in the past few years about shaving
points in various sports. The most recent one I guess was Louisiana.
Prior to that I believe we convicted two people on the west coast a
year ago, in Seattle, involved with point shaving conspiracies. That
seems to be a cyclical thing.
Mr. FASCELL. Are these independent acts, or are they part of an
organized effort?
Mr. VINSON. I believe they are part of an organized effort. I think
there are a lot of people in the know, so to speak. The bookies in this
country are a pretty close fraternity.
Mr. FASCELL. And there is some evidence and justification to think
that the effort is a kind of semidirected national effort?
Mr. VINSON. I believe so.
Mr. FASCELL. You have described the principal areas, generally, as
I understand it, in which organized crime operates in major metro-
politan areas of the country, for example, with not so much in the
smaller cities of the country, although its corrupting influence could
be felt or is felt in smaller communities.
Mr. VINSON. It is felt-particularly in those communities that are
reasonably near your large metropolitan centers.
You might be interested in a search warrant and arrest warrants
executed by us in one medium-sized city several months ago. One of
the documents that was seized at that time was a piece of paper show-
ing this particular gambler's monthly expenses. And his monthly ex-
penses included-I beg your pardon-weekly expenses. His weekly
expenses included one item that said "Ice, $300." Ice is jargon for
protection.
Another item was to a fellow-call him Tom S-that is the way he
was referred to--$500. And we have reason to believe this fellow re-
ferred to was a member of a Cosa Nostra family in one of the large
cities about 100 to 150 miles away.
Mr. FASCELL. Now, in this overall national operation-are there
certain areas of the country, metropolitan or otherwise-which
seem to be focal points or headquarters for the direction of a particu-
lar type of effort, and are they identifiable, and would you identify
them?
Mr. VINsoN. Well, I don't know that I would say that they are
identifiable with a particular narrow sort of effort.
Mr. FASCELL. Well, generally?
Mr. VINSON. However, if you take the greater New York area, the
judicial districts of southern New York and eastern New York, and
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 A p"tit p4 pved TH F_pEE~` RPIE%EsR.10 2/05/08 : CIA-RDP70B00338R000200020060-8
E~FORT AGAINST ORGANIZED CRIME
northern New Jerse,7, and Chicago-that is about 80 percent of the
h rdcore Cosa Nostrnn crowd.
fr. FASCELL. How about Miami, Fla., for example? Is that an op-
erational area, or non operational area?
Mr. VINSON. We don't believe that it is operational in the sense I
think you mean. There is a great deal of illegal gambling in the Miami
area. But we believe that it is sort of open territory, that there is no
operating Cosa Nost:'a apparatus in Miami.
'r. FASCELL. Doe., that state of facts exist anywhere else?
r. VINSON. Las Vegas.
Mr. FASCELL. How about in'California; is there any so-called "open
ar Z'. in California?
VINSON. Yes; I think the same situation exists in southern
California. There is no identifiable apparatus headquartered there.
Mybe it is because of. the good weather, Mr. Chairman.
Tr. FASCELL. How about Arizona, New Mexico, Texas, and areas
of 'that kind?
Ur. VINSON. Arizona, we have identified some operations. The other
States you mentioned, not as such. Most of the activity, once we get
out of the large urba:~ areas of the North, the Midwest, and the East
are largely large-scale gambling operations that are tied in nationally
to other interests.
Mr. FASCELL. In the Crime Commission report Mr. Edwards,
you have your finger right on that page. Why don't you ask the
question ?
Mr. EDWARDS. We[, we were just looking at the Crime Commission
re ort. I notice Floric.a is listed as one of the States in which organized
crie group member: both reside and operate. I am looking at page
192 of the Crime Commission report. Also Texas, Louisiana, Cali-
fornia, Nevada, Illinois, Missouri, Rhode Island, New Jersey, and
Colorado.
What is going on out in Colorado?
Mr. VINSON. There is an identifiable Cosa Nostra group in one part
of Colorado.
Mr. EDWARDS. These are where the 24 Cosa Nostra families are
generally located, in these areas?
Mr. VINSON. In the areas shaded on the map. However, the 24
families that are mentioned by the Crime Commission might be re-
du~ed to somewhere between 10 and 16, with the others as subgroups.
Mr. EDWARDS. You placed about 80 percent of that in the general
are#r of New York City ?
Mr. VINSON. And Chicago, and northern New Jersey.
Mr. EDWARDS. I have led a rather sheltered life growing up. I don't
know too much about bookies and this sort of thing. But let's take what
I a$sume would be a typical example. A small town, we will say, in
the South, where the local pool hall operator makes a little book on the
side. People drop by and get cards, and play the football pools, or
perhaps bet on races. '.Chis by and large, if I understand what you are
saying, would be something that the local police department ought to
concern itself with, and put these folks out of business.
Y'ou don't, as part of your organization, dip that far down into this
sortii, of thing, do you?
Mr. VINSON. No, sir.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 49
Mr. EDWARDS. My friends tell me that pool hall operator might
make a phone call to a larger city in the general area, where he lays
off his bets, or whatever he does-perhaps a regional headquarters of
sorts. Do you get into that phase of it?
Mr. VINSON. Yes, sir, we do. He does two things, actually. He does
one thing before the act, and one thing after the act, possibly. He will
get what is called the line, from some expert who will tell him that
the proper odds are three points, or what have you, or that the proper
odds on a horse are thus and so. And he pays for that service. And
the people furnishing him those services we are very interested in,
because we believe they are closely tied into organized crime.
Second, the man to whom he lays off we are interested in. We feel
that we should concern ourselves with what you might consider the
wholesaler.
Mr. EDWARDS. The wholesaler being in effect the regional headquar-
ters ?
Mr. VINSON. You might think of it that way. It is not quite that
geographical.
Mr. EDWARDS. Then is there also ultimately some central point, say
Chicago or New York, for example, where all of this comes to rest
at some point or another, where there is general supervision and
control?
Mr. VINSON. It is a little looser than that, we feel, Mr. Congressman.
We feel that there may be a dozen people who are loosely associated.
Mr. ST GERDrAIN. Would the gentlman yield at that point?
Mr. EDWAR,DS. Yes.
Mr. ST GERMAIN. Well, in essence, aren't the people themselves-
John Jones, who goes into the pool hall, for instance, on a weekly
basis, and plays the football pool, and on a Saturday will bet on half
a dozen races with the local bookie, who though he operates on a small
scale-nonetheless it is the myriad of local bookies combining these
services whose funds are actually supporting, the large-scale operation
and the large scale control. Is that not a fact
Mr. VINSON. No question about it.
Mr. ST GERMAIN. The people themselves-it would seem to me they
feel it is an innocent little thing playing the football pool on a weekly
basis. But each of their $1 and $2 bills are going into that fund, that
eventually, when added up, is financing the operations and giving
these people the moneys they need to Tuy the protection they are
getting.
Mr. VINSON. That is correct.
Mr. ST GERMAIN. If the gentleman would yield for just one more
point.
In the Boston area for the past 2 years-probably you people are
aware of this-the count now is up to about 32 of gangland murders.
Mr. VINSON. I think it is in the 40's.
Mr. ST GERMAIN. To the best of my knowledge, I don't think we
have had one conviction, have we?
Mr. VINSON. There have been convictions. But whether they have
been for murder, I am not sure.
Mr. ST GERMAIN. Not on these murders, no.
Mr. VINSON. There have been a lot of people that we thought com-
mitted the murders that were in turn murdered.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Ap rved For Release 2002/05/08: CIA-RDP70BQD03>00200020060-8
WQ THE FEDERA: EFFORT AGAINST ORGANIZE
lr. ST GERMAIN. ti o;that this is really a dramatic example of how
rampant crime is, and how utterly brazen organized crime is-just
take lives one after another, over this period of 2 years now.
J`'fr. VINSON. Those are largely Irish and Anglo-Saxon groups up
there.
Mr. FA.SCELL. I air sure that before we get through we will get
around to everybody.
1''Ir. ST GERMSIAIN. 'I `here has been no French at all.
Ir. FASCELL. Mr. 7dsvards?
Mr. EnwARDS. Let'3 get back, if we may, to the overall operation
of your department.
Tow, what special training do your lawyers have? You referred
frequently to the lawyers in ,your section who go to a city or do this,
doj that. Aside from their legal training, what particular training
doi they. have that gi.al ies them for the operation in the field.
dr. VINSON. Basicilly we use on-the-job training. We pair several
young lawyers with eyeral experienced lawyers. Perhaps Mr. Peter-
sen would want to address himself to that _ in detail. selective in
2r. PETERSEN. First of all, I should say we are very s .e
whom we take. We are looking for people, not only who are very
bright, from the upper portion of their class in law school-so far
as the younger people are concerned.
When they come to us, we have manuals on organized crime, trial
of Federal criminal oases, trial of Federal income tax cases they are
re4uired to study and familiarize themselves with on their own time..
then within the section we have two subgroups-one which deals
with labor matters, :ud another which deals with gambling, liquor,
and narcotics violat ions. Ordinarily we try to have them spend a
period of approximately 6 months familiarizing themselves with the
system in which we operate, the investigative agencies that do the
basic work, the statutes themselves, the legal problems involved.
!therefore they are assigned to one of the senior attorneys, where
they work in the field, on organized crime investigations as such. And
b~; that we mean the number of persons in that particular area who
b4ve earned for themselves the right to be called organized criminals,
arjd who have been, identified by the intelligence gathered over a
period of years.
(Initially, their firat job in the field is to analyze the intelligence
information, to broaden their scope, to develop a greater knowledge
oil the techniques employed, infiltration of legitimate businesses, pos-
sNe legal consequences, applications for FHA loans or small busi-
ness loans, which are worthy examples of the type of thing we ask
them to look for.
We expect them to be able to work grand juries, and I think that
takes a great deal cf aggressiveness in a very judicious fashion, to
probe in a rand jury investigation, to get the facts that are necessary.
We familiarize them with the immunity statutes, and the techniques
that are employed when people take the fifth amendment. Under the
law you cannot jus.; cite them for contempt. If you don't have an
iunity statute, you have to be content with failure to obtain testi-
n ony. But there are a number of immunity statutes throughout the
Federal Establishment, and generally speaking they are in such di-
verse fields as ICC, FTC, Federal Communications Commission. The
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For ReIeasxeA2002/05/08: CIA RDP70B003338R0100200022Q060-8
EDE antitrust laws present a special problem, because. that is an automatic
immunity provision.
All this time of course they are working under a senior attorney.
We have found that it is not quite possible to point out to a junior
lawyer just how to conduct an organized crime investigation, because
each presents a different set of facts. It is a, very professional job, and
a great deal depends on the intuitive sense of the man, the expertise.,
his professional ability, his ability to get along with people, particu-
larlyso in developing informants. Not all people have that ability. And
we have a few in the section who do it expertly. And, of course, we
make use of their talents, even in investigations in which they are not
immediately involved.
Mr. EDWARDS. Keeping in mind that all of its think we are under-
paid, are you able to offer these men sufficient income to attract the
type of men that you think you need?
Mr. PETERSEN. In my judgment-I am not sure I can be obj ective-
this is a very difficult job. It is very demanding. It is demanding in
terms of time away from home, work in the field. It is frustrating in
terms of the investigations themselves.
The present salary structure provides that young lawyers come to
its as grade 9. A year after they are promoted to grade 11, provided
they are
Mr. EDWARDS. What does that mean in terms of dollars?
Mr. VINSON. I think a 9 is $7,600-that may have been before the
last raise. Then they get about a $1,200 raise after a year.
Mr. PETERSEN. Generally speaking, they are in approximately thou-
sand-dollar increments. Again a year to grade 12. And from grade 12
the waiting period is 18 months-again assuming they merit pro-
motion.
We do have some difficulties at grade 14 and 15 because of the
Government-wide restriction on promotion to upper levels.
And I think that is a difficulty, because if a young attorney develops
well, at the end of 3 years, which is generally about the time that it
takes for him to become reasonably expert, he is basically doing the
same work as those who are paid more. And, of course, the restrictions
on pay do present something of a problem.
Mr. EDWARDS. What is your rate of turnover among these lawyers?
Mr. PETERSEN. I think it averages about 12 a year, sir. Now, of
that 12, I think that you will find-we will furnish the statistics to
you-I think you will find that approximately two or three of that 12
have gone out to U.S. attorneys' offices, which is not a total loss to
us, because it is of real benefit to us to have a person experienced in
organized crime investigations working in San Francisco, where we
have one of the assistants that was formerly with us, and in many
other sections of the country.
So if you reduce that by those who have gone as U.S. attorneys, it
averages about nine a year.
Mr. FASCELL. At this point, if the gentleman would yield, we would
like to put into the record the number of personnel and the salary
classifications for your section; also estimates of the total expenditures
of your section, and the categories of the expenditures.
Now, you have already submitted that to the committee in a meino-
randum, I believe, and we will take that submission and insert it in
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Appr ved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
5 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
the record at this point. And if you would care to comment on any
o~ that right now, you may.
(The information referred to follows:)
DEPARTMENT OF JUSTICE,
March 20, 1967.
M morandum to: Mr. Gi:rald Shur.
From : James W. Musket t, staff assistant, Criminal Division.
Subject : Division appr->priations and average number of division assignments.
I'he following sums at d averages are based upon the best information available :
Division Average Average Aver age
Fiscal year appropri- number of number of remainder,
ation division O.C, division
attorneys attorneys
'lProjected.
However, the unit wics formed. on June 30, 1954. Our records reflect from that
time to May 14, 1954, )nly three or four attorneys were assigned. On May 14,
1957, seven additional E ttorneys were assigned and the section then really started
to operate.
Mr. VINSON. Wel:., we have a letter that hopefully will be delivered
to you this afternoon. We received a request from Congressman. Ed-
wards-I think it got to my desk on Monday. It will show that so far
ir1 this fiscal year, w: rich has a little more than 2 months to go, we have
lcpst nine attorneys :n the Organized Crime Section. The reasons for
their departure -we had one death-we had five leave to go into pri-
vate practice-two went to the military service, and one left to go to the
office of a U.S. attorr.ey as an assistant U.S. attorney.
i Mr. GALLAGHER. What is the normal length of stay of the attorneys?
Mr. VINSON. I don't have that at my fingertips. I would be glad to
work that up for you
Mr. GALLAGHER. Would you guess? Is it 2 years, 3 years, 1 year, 4
years?
Mr. VINSON. I would say in the Organized Crime Section we have
a good cadre of probably one-third career people, which would raise
the average substan:ially. Of those who leave, who are not career ori-
e ited, I think 3 year;3 would be in the ball park.
i Mr. PETERSEN. We try to get a 3- to 5-year commitment from the
new people who come to us.
1 Mr. GALLAGHER. This is one of the things I have some reservation
obi. For every one that you might train to go into the U.S. attorney's
o'ice, you have five that. go into private practice, and therefore could
uido your techniquE s-like some internal revenue attorneys when they
re resent violators when they leave the service.
. Mr. PETERSEN. TImt is a mixed blessing I suppose. On the other
and-there is a plus side. We have one at the University of
I me, Dame, where the pi ofessors have organized an organized crime semi-
Apprbved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
196k (requested)---------------.---------------.
$3,777,500
168
66
102
1967------------ ------------------ ............ .
3,600,700
1 158
158
1 100
19~
3,240,732
3
206
565
140
140
48
54
92
86
19115 ...................................-.......
1964---------------------------.---------------.
,
,
3,226,630
153
63
90
19Ii--------------------------------------------
2,988,658
149
60
s9
1962--------------------------------------------
2,532,806
137
52
85
19911(~1_.__?--------------..-.--- ??--------------
19fi~0-. _
1,965,025
1, 562, 906
112
99
37
17
75
82
19.9--------------------------------------------
1,474,204
92
13
79
19,58--------------------------------------------
1,288,383
87
13
74
19x7----------------------------------------- --_
1,200,363
89
4
85
106 --------------------------------------------
1,336,985
94
2
92
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 53
nar. % Te have another one going to the University of Pennsylvania, and
a promise from him he will organize an organized crime seminar.
I have just been informed recently-though the person who did it
is not a member of the Organized Crime Section-that the University
of Southern California, has modified its criminal law course, and they
will devote the first 2 weeks to criminal law, and the remainder of the
course is devoted exclusively to organized crime.
So we do get some benefit from some of the people who leave us.
Mr. GALLAGHER. If they become exclusive to organized crime, aren't
we somehow then neglecting in the law schools the real problems of dis-
organized crime, which seems to present a far greater problem to
people today who walk the streets, fear resulting from the whole
spectrum of street violence and the breakdown of law and order in
our fast growing society?
Mr. PETERSEN. I did not mean to leave the impression they were
totally organized crime courses. One is simply a seminar, which supple-
ments the regular course on criminal law.
Mr. VINSON. If I might have one word.
Very few of these people leave us and go into criminal defense work.
I would say that the substantial percentage of them leave to go into
civil trial work.
There is also another factor.
We lose people to U.S. attorney's offices. And as Mr. Petersen says,
we are delighted to lose them to U.S. attorney's offices. We also get
recruits from U.S. attorney's offices.
Mr. FASCELL. Isn't the $64 question whether or not any of your
trained recruits have defected to organized crime?
Mr. VINSON. There has been no such instance, Mr. Chairman, I am
happy to report.
Mr. FASCELL. Mr. Edwards?
Mr. EDWARDS. While we are on this general subject, what about your
relationship with the U.S. attorney's offices generally? I assume from
what you have said that where you have a member of your Section
who goes into a U.S. attorney's office, your relationship is pretty good,
you seem to be happy with that situation.
Do you have situations where you are not happy with the relation-
ship?
Mr. VIN80N. No, sir. Generally speaking -we might have an inci-
dent, a problem developing once a year or so. But generally speaking, it
is a very good relationship.
Mr. EDWARDS. Do you find generally the U.S. attorney is really com-
petent to handle the matters that come out of your section?
Mr. VINSON. Yes, sir. And we actually-many of the cases we de-
velop our people try in court-a substantial number of them we don't
try, we pass them on to the U.S. attorney's office, and devote ourselves
elsewhere.
Mr. EDWARDS. But you feel that if you should come into a situation
where there is a U.S. attorney who perhaps would be weak in this field,
that you would certainly have one of your men there to see that the case
was not lost for want of a horse, or something like that?
Mr. VINSON. Yes, sir. You will find that most U.S. attorneys are
very interested in this area. On occasion it happens that they are not.
Or perhaps just by temperament they are not aggressive. And we sup-
plement in such situations.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
54 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. EDwARDS. If somebody up on high said to you-what one thing,
if y'; ou only had one choice, would you choose as the best weapon to
stop organized crime- -what would you choose?
Mr. VINSON. I world go back, I think, to Congressman St Ger-
mailn's comments--diligent, conscientious, effective local and State law
enforcement.
11r. ED-WARDS. Of course, there you are dealing with human beings.
I a talking about something that either this Congress or
r. VIN SON. Well, there is a bill before this Congress now, the
Cri e Control Act of 1967, which would
r. EDWARDS. Safe streets bill?
Mr. VINSON. Yes, ;ir-which would enable the Federal Govern-
ment, I think, to mal;:e, a significant contribution to State and local
lawl enforcement.
1V.-r. GALLAGHER. Would the gentleman yield?
Some time ago, whE n. I was a practicing lawyer, and this question
canle up, I threw out little suggestion which is rather simple. But if
we stopped publishing the results of races, we could reduce a great
deal of illegal gambling and thus greatly reduce illegal income to the
synclicates you describe. If you did away with off-track publishing of
reslalts on a regular b is s, it might help solve the problem. What do
youI think of that?
Mr. VINSON. Well--
Mr. GALL AGHER. I I.now of a newspaper that has a very wide cir-
culition. it is not bee iuse they like to read speeches of people down
here in Washington. It is because that is where the local number gets
pu lished.
'I1his sort of thing, _t would seem to me-if we had some sort of a
concentrated effort to reduce the publication of this sort of thing.
Hotse betting-since most of this is, as you say in your statement, a
result of gambling. Of course, this gets into all sorts of other areas.
BuY- it would be a simple way for cutting into the results, and without
proper and verifiable -esults there would be no effective coordination
between the fellow wfio places the bet and the person who accepts
the bet.
Mr. VINSON. I have a feeling that word would trickle down,
i 'r. GALLAGHER. Well, it might trickle down. But if you had to wait
until somebody came from a track where a legal bet was placed, it
would certainly cut into the vast organized operation that you
describe.
Mr. EDWARDS. Wou d you have a first amendment problem?
qr. GALLAGHER. Perhaps we would have a first amendment prob-
lem; but it is a lot beta er than putting a match to the whole Constitu-
tioli because there is organized gambling in this country.
L r. F ASCE.LL. Mr. Vinson, it has been suggested by many people that
if you legalize gambling, for example, this would have a tremendous
infljtence in reducing ;he effects of organized crime. Have you found
that true in Nevada and New Hampshire?
i'Jr. VINSON. Well, I think probably the closest analogy would be
the British experiment.' And I have read that those in a position to
know in England feel that legalized gambling has, if anything, in-
cre4sed the amount of llegal gambling in England.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 55
Mr. FASCELL. In other words, it is your considered opinion that
legalized gambling, either on a State basis or national basis, is not
the effective way to deal with organized crime ?
Mr. VINSON. That is correct, sir.
Mr. FASCELL. What is the jurisdiction of the Federal Government
with respect to corruption at the State or local level?
Mr. VINSON. Well, we have a number of jurisdictional handles; I
suppose income tax is one. That, however, when we are dealing with
small amounts of money for an individual, is not particularly effec-
tive. We then have the Interstate Transportation in Aid of Racketeer-
ing Act, which is probably the most useful tool. If in the process of
violating a State law the channels and facilities of interstate commerce
are used, we have jurisdiction.
Mr. FASCELL. In the organized crime that exists in this country, do
you find any substantial control or operation with respect to prosti-
tution rings, or homosexual rings?
Mr. VINSoN. Certainly organized-we think not organized by the
hardcore people that we are most interested in. Except in very lim-
ited areas, they do not really engage in the large-scale prostitution
activities any more.
The homosexual rings, we know of no connection with Cosa Nostra,
for instance, in that. But it was, I think-the indictments that were re-
turned within the past year that you are referring to indicated a na-
tional conspiracy probably made up of as many as 40 or 50 people
who travel throughout the country extorting money
w from homosexuals.
Mr. FASCELL. How about the interstate transmission, so to speak., of
adults, male or female, for immoral purposes,.in a kind of a national
ring. Is there any evidence of that?
Mr. VINSON. No, sir.
Mr. FASCELL. Briefly, to what principal factors do you attribute the
success of organized: crime in the United States?
Mr. VINSON. Well, I would have to list gambling, which in turn
means money, which in turn means entrenched power.
Second, public apathy.
Third, the failure of State and local law enforcement, and our
inability to fill that void. As we discussed last week-New York City
has more policemen, for instance, than we have investigators in the
whole Federal Establishment. We just cannot police every place.
Mr. FASCELL. I notice you have emphasized public apathy several
times in your testimony.
There are those who believe and have alleged that strongly stimu-
lating public interest in the problem would be a hindrance to effective
law enforcement rather than a help. This is on the thesis that an overall
stimulated population would clog the whole law-enforcement machin-
ery with all kinds of minor crimes, and local problems.
For example, some have discussed a suggestion box type of opera-
tion : if you have any ideas, drop in here, and we will drop it over to
the Organized Crime Section. The theory goes that if you stimulated
public interest and activity in this kind of thing-which would amount
to house-to-house informants, for example, and vigilante committees-
that you would clog the whole law-enforcement machinery to the point
where it could not do anything.
What is your comment on this kind of idea?
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
56 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
)Vr. VINSON. I would agree with you in part-that certainly we do
not need any committees of public safety, vigilante operations. That is
contrary to our history and philosophy. Public protection is Govern-
ment's business.
I:think an informed public, a public that is aware of the problem is
what I mean.
You do have the prcblem-and again it gets back to what Congress-
mail St Germain said-about the 25 percent arrest rates. Our courts
are;clogged. If the poi ice were to waive a magic wand and double their
arrst rate, our court, system could well collapse. This is a challenge
that! I would love to be faced with. We have resources in this country
that we can devote to our institutions of criminal justice, and that we
should devote to them.
Mr. FASCELL. Well, I agree with you.
You do not doubt th at the court system could meet the challenge, and
I a ii sure that the Co:igress could, and also the State legislatures.
I think then what we are really saying is that the manner in which
you would inform the public of the seriousness and the nature of the
entire organized crime problem must be judicious ?
Mr. VINSON. Yes, sir. I feel that somehow law enforcement has
failed in part in its mission to inform the public, because there are
people, and many people, who do not believe that there is a Cosa
Nostra, for instance. `Yes, Virginia, there is a Cosa Nostra." But
sous people-sometimes they do not like to recognize ugly things.
Mr. FASCELL. Well, of course, whether the label exists or not is
re lly immaterial. The fact is that you do have organized crime,
vIr. VINSON. Defin;.tely.
[r. FASCELL. That is the fact.
To what extent ar3 organized crime operations increasing or de-
er asing?
Mr. VINSON. I haieno way really to gage that except intuitively.
I don't believe they are increasing. I believe that in the past 6 years,
inroads have been made. I believe that-
Mr. FASCELL. You:nean by convictions or other actions?
Mr. VINSON. And investigative activities. I think they have been
fo~ced out of some heretofore profitable lines of endeavor and gotten
into others. I think the infiltration of legitimate business-bankruptcy
fr~uds were a thing that we knew very little about, heard very little
about, until the last 4: years, for instance. Bankruptcy frauds in many
pparts of the country were moved into by organized groups-particu-
larly true in New York, Philadelphia, and Chicago areas.
Mr. FASCELL. You said earlier that you were asking for 11 addi-
tipnal attorneys, is tl.at.correct?
Mr. VINSON. Yes, 3ir.
!Mr. FASCELL. Would doubling the size of your staff, or some sub-
stntial increase beyond what you have asked for, have any justifiable
results with respect to your Section? Mr. Petersen?
Mr. VINSON. That is conceivable. I think you would reach a point
o diminishing retwns. And I think the answer to that question is
somewhat related to whether the Safe Streets and Crime Control Act
acts out of Congres,. That will make funds available for State and
local communities to undertake intelligence operations, strategic intel-
lience operations, a.id to set up organized crime units. If that mate-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Foe I&J20iffi A~A -APgZ8RR2J38& 00022960-8
rialized, I would certainly seek additional attorneys in order to handle
that proposition.
Mr. FASCELL. Legislation aside, what resources at the Federal level,
in the way of manpower or relationship or structure or funds would
be needed to make your operation more effective?
Mr. VINSON. In my closing remarks last week, I indicated that while
we are sort of the focus and the coordinator, the work, the hard work-
and this is hard work-these investigations often take 2 years from
start to completion. It is investigative agencies that really commit
substantial resources in terms of manpower, which is money, into this
area. I am not prepared to speak for the various investigative agencies
in this regard. However, it is at that level that I would commit my
resources-and of course obviously if there is more investigative ac-
tivity, we need more lawyers, too.
Mr. FASCELL. What is the principal problem that the Depart-
ment of Justice or the Organized Crime Section faces in effectively
dealing with organized crime? Or in more effectively dealing with it?
Mr. VINSON. Evidentiary problems, basically.
We have difficulty. We have many people who will talk to us.
Informants will talk to the Bureau, or to us, or to IRS. They will not
testify. They won't put their neck on the line publicly.
We try to cope with this in a number of ways. Where we do have
a willing witness, we furnish protection to the best of our abilities.
We relocate them in other parts of the country, or sometimes outside
the country, and establish new identities for them. It is always an
ad hoc proposition. Who is going to protect them? How do we get
then a job someplace else, where they cannot have references, where
you cannot make inquiries at home base? And within the last year we
have started working toward a more permanent solution to this sort
of problem,, e are exploring now with the Department of Defense
setting up cilities in about four parts of the country where we can
put these people, pending trial, during trial, and where we can put
assistant U.S. attorneys whose lives or whose families have been
threatened.
Mr. FASCELL. In other words, put them in a security installation
without putting them in jail?
Mr. VINSON. Correct.
We have also instituted negotiations with both the Civil Service
Commission and with the President's Business Advisory Council, to
render us assistance in finding jobs for cooperative witnesses who must,
because of threats to their safety, be relocated in another part of the
country.
Mr. EDWARDS. Concerning your Department, is it true that there
are one or more vacancies in top posts in the Justice Department?
Mr. VINSON. We now have three vacancies in top positions.
Mr. EDWARDS. What are these positions?
Mr. VINSON. Deputy Attorney General, and two Assistant Deputies.
Mr. EDWARDS. Do you happen to know offhand when those will be
filled?
Mr. VINSON. I would hope soon. They were not filled because all
three of those jobs have a very personal relationship with the Attor-
ney General. Mr. Clark was appointed Attorney General just a month
ago.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 A~ roved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
e39THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. EDW ARDS. Arel't they, in your opinion, very essential to an
effe' tine job by the Justice Department?
1r. VINSON. They -re very important jobs; yes, sir.
fr. EDWARDS. One more question. We have not really gotten in
at gull, into the question of wiretappin and bugging. Now, there is a
great debate going on as to whether this is good or bad, if it is good
to that extent it shoi.ld be used, whether you need a court order to
set up such a system.
foes the Justice Department have a position that it feels is essential
to detecting organizE d; crime, and convicting criminals that are
brought in?
Mr. VINSON. We ha Tea position that has been made very clear with
respect to wiretappin?; and eavesdropping. The President has intro-
duc6d a bill, the Right to Privacy Act of 1967, which would in effect
bang all wiretapping, and to the extent possible for the Federal Gov-
erninent would prohibit other illegal forms of eavesdropping, with
one exception, and that is the national security, and then only with
the !Written consent of the Attorney General.
Mr. EDWARDS. Under this, then, you would not have available to you
wir tapping or eavesd:-opping equipment in detecting or carrying out
surveillance in all kinds of crime investigations; is that correct?
Mr. VINSON. That :--.s correct. And, of course, we have not-such
evidence has always keen inadmissible, and in that sense it has not
bee4' available to us in the past.
Mr. FASCELL. I promised the Assistant Attorney General we would
exc.se him. at 11:45. He has an appointment with the Attorney General.
We will probably be submitting some more written interrogatories,
andif you will at your earliest convenience supply us with the infor-
mation for the record, we would appreciate it. We undoubtedly will
think of a hundred other questions and matters we need to ask you
abo it. And we will be i:i touch with you about that.
I !Want to thank both you and Mr. Petersen for making time avail-
able. for us.
With that, the subcommittee will adjourn, subject to the call of the
Char.
11Ij'r. VINSON. Thank you, Mr. Chairman. We will be available for
any help you need.
Mr. FASCELL. Thank: you.
(Whereupon, at 11:45 a.m., the subcommittee was adjourned, to
reconvene subject to the call of the Chair.)
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED
CRIME
TUESDAY, MAY 16, 1967
HOUSE OF REPRESENTATIVES,
LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
TI'ashincton, D.C.
The subcommittee met, pursuant to notice at 10 a.m., in room 2247,
Rayburn Office Building, Hon. Dante B. Fascell (chairman of the
subcommittee) presiding.
Present : Representatives Dante B. Fascell, Cornelius E. Gallagher,
Fernand J. St Germain, Jack Edwards, and Guy Vander Jagt.
Also present : M. Joseph Matan, staff administrator ; Charles Roth-
enberg, counsel; and Millicent Y. Myers, clerk.
Mr. FASOELL. The subcommittee will come to order.
'Today we resume the Legal and Monetary Affairs Subcommittee
examination of the Federal efforts and capabilities in coping with the
menace of organized crime.
This subcommittee is charged with examining and evaluating the
efficiency and economy of operations of many of the agencies of the
Government which are involved in the Federal effort against or-
ganized crime. Today we shall inquire into the antiorganized crime
operations of the Internal Revenue Service, and particularly the In-
telligence, and Alcohol and Tobacco Tax Divisions.
Also recently we have had indications that organized crime has
found a new source of easy money in the counterfeiting of prescrip-
tion drugs and medicines. At least so says Margaret Craig in her new
book "Black Market Medicine." According to her, organized crime
syndicates are making huge profits from the manufacture and sale
of fake copies of many pills and medicines commonly prescribed for
the ills of humanity-and in addition to being an easy source of ill-
~otten gain, it dangerously affects the lives of men, women, and chil-
ren, and the subcommittee is interested in pursuing that course of
inquiry.
The: basic purpose of the subcommittee's study is to determine the
full magnitude of the syndicated crime problem and what the Fed-
eral Government is doing to combat organized crime. The Internal
Revenue Service is primarily a tax collecting agency; however, some
of the most successful efforts against organized crime have arisen
through the Internal Revenue Service's investigations which were
commenced in aid of its tax collection.
I am pleased to welcome here today from the Internal Revenue
Service, Mr. William A. Kolar, Director of the Intelligence Division,
and Mr. Harold A. Serr, Director of the Alcohol and Tobacco Tax
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
60i THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Division, from whori we expect to ascertain how the existence of
or g anized crime affects the operations of the Internal Revenue Service;
ho it moves against organized crime figures, what success it has had;
annl its relationship to the other agencies of the Federal Government
and to State and local governments that are fighting organized crime.
I want to put this note of caution again on the records.
We are not interested in open session of inquiring into any of the
proposed or active operations of your respective units on on-going
cases. If a question should arise with respect to that matter, I will con-
si. er going into executive session, and receive the full testimony, on
an, on-going investigation.
flow, gentlemen, etch of you has prepared statements. Mr. Kolar,
wo would be very glad to hear from you.
ST FiTEMENT OF WILLIAM A. KOLAR, DIRECTOR OF THE INTELLI-
GENCE DIVISION, INTERNAL REVENUE SERVICE, ACCOMPANIED
$Y THOMAS B. CARNEY, EXECUTIVE ASSISTANT, OFFICE OF
?PHE DIRECTOR
iMr. KOLAR. Thant: you.
Ir. Chairman, M . Edwards, it is a pleasure to be here today in
coinection with your consideration of the important problem of
organized crime in this country.
`First, it may be h 3lpful to define the functions of the Intelligence
Division. The official mission of the Division is as follows :
.To encourage and achieve the highest possible degree of voluntary
cgmpliance with thf internal revenue laws by : enforcement of the
criminal statutes ap.Dlicable to income, estate, gift, employment, and
certain excise tax la'cisthrouoh the investigation of suspected criminal
violations of such lags and tie recommendation of prosecution (when
warranted) ; development of information concerning the extent of
ciiminal violations of all Federal tax laws (except those relating to
alcohol, tobacco, narcotics, and firearms) ; and measurement of the
effectiveness of the investigation and prosecution processes.
The Intelligence Division has always been vitally concerned with
identifying and invE.stigating the tax affairs of top racketeers, gang-
sters, and other individuals engaged in illegal activities. An extra
degree of investigative emphasis has always been given to returns
f, ed by such major racketeers, on the assumption that they are
nlotivated by profit and have no more respect for our tax laws than
tliose which they violate to derive their ill-gotten gain.
The Intelligence Division presently has approximately 1,700 special
agents located at various posts of duty throughout the United States.
The frontline investigators operate at the district level as an integral
pRrt of 58 separatE district offices. A chief, Intelligence Division,
directly responsible to the District Director, is in charge of each
d~strict office. At eac a of the seven regional offices, an assistant regional
c mmi ssioner (intelligence), who is directly responsible to the regional
mmissioner, prov-des functional supervision to the district offices
within the region. While day-to-day supervision of all these field
activities is exercised by officials in either district or regional offices,
general control is maintained by the Director, Intelligence Division,
at Washington, D. 'J'.,, through program and procedural guidance,
visitations and reporting requirements. The Director, Intelligence
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved E~qLFWggft&,299?WOAiE&-PtRRZRRP93~PM0200giOO60-8
Division, in turn, reports to the Assistant Commissioner (Compliance)
who is directly responsible to the Commissioner and the Deputy
Commissioner of Internal Revenue.
The Intelligence Division assigns top priority to organized crime
drive investigations and at the inception of the organized crime drive
in 1961 a separate group was established in the national office to co-
ordinate such cases on a nationwide basis. In addition, a new position
of regional coordinator was established in each regional office to
coordinate organized crime drive activities within the region, with
other regions and with the national office. The selection of personnel
for assignment to organized crime drive duties is approached with
deliberation and only qualified personnel, experienced in racketeer
work, are assigned to such duties. Throughout an investigation there
is coordination at the field level with attorneys from the Organized
Crime and Racketeering Section of the Department of Justice. Every
effort is made to assign all needed manpower to these cases so that
these investigations can be promptly and effectively completed.
During the period from the inception of the organized crime drive
in February 1961 to March 31, 1967, the Intelligence Division con-
ducted over 5,000 investigations relating to organized crime. This
number represents income tax evasion and wagering tax violations.
During the period involved, approximately 20 percent of Intelligence
Division's manpower was devoted to organized crime drive investiga-
tions. Our efforts have resulted in 2,198 convictions and 1,338 cases
are now pending prosecution. In addition to imprisonment, the courts
have imposed fines totaling more than $3 million. As a result of the
tax investigations, we have recommended assessment of over $295
million in taxes and penalties. These figures include both income tax
and wagering tax violations.
Mr. FASCELL. Mr. Kolar, you have submitted a statistical table on
organized crime for the fiscal years 1961 to 1966 inclusive, showing the
total projects and also the dollar amounts through June 30, 1966,
$274,256,357. Reconciling that against the figure you have here of
$295 million-this is for a later date, is that right?
Mr. KOLAR. Yes, sir.
Mr. FASCELL. Without objection, we will insert the table in the
record at this point.
(The table referred to follows:)
ORGANIZED CRIME DRIVE STATUS REPORT, FISCAL YEARS 1961 TO 1966, INCLUSIVE
Assignments
Projects
National
Satellite
Fiscal year
office
designs-
Total
National
Regional
numbers
tion
office
June 30,11961.._____
__________ --------------
June 3Q f1962--------------------------
June 30
11963
------------
------------
18
62
266
118
599
180
,
_______________________________
June 30,11964____________
_
1
8
12
109
635
757
_
_________________
June 30,11965__________________________
.
10
19
11
95
976
1,093
_____
June 30, 1966____________________________
10
10
132
8
1,083
1,236
1
876
977
Total. ______________________________
Cancellations_______________
24
16
70
745
4,287
5,126
____________
11
251
1,697
1,975
Assignments open___________________
8
59
494
2,590
3,151
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release, 2002/05/08 : CIA-RDP70B00338R000200020060-8
~j2 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Status
June 30,
1961
June 30,
1962
June 30,
1903,
Juno 30,
1964
June 30,
1965
June 30, Total
1966
trosecution completed:
_________________
Convictions_
2
76
242
505
518
577 i 1,900
_____
Dismissals or acquittals- -----------
0
11
56
124
128
133 454
Projects completed -----------------
ending prosecutions---_--__'_--__--__
0
25
0
364
1
231
1
168
8
192
1 11
244 1,224
dditional active investigations-_--___
d
151
2
373
59
38
187
48
247
91
299
(137) 564
179 473
osed, nonproseeution___-------------
Total
_
-
-
-
-
-
-----
-
180
883
757
1,093
1,236
977 5,126
_
__
_
-
t.elated cases -------------
--
-
-
-
--
0
216
347
278
426
165 1,342
Additional jar and penalties, fines imposed
Fines im-
posed
Additional
tax and
penalties
tune 30, 1961-?---- ------------ --- ---- ----
une 30, 1962------ ------- ------ ------------- ----- ---------
une 30, 1964 -------------------- ----- ------------ -- ---
une 30, 1965 _______
June 3"'9 --- --- --------------------------- ----- - --
une 30, 1966---------------- ------------------------------------------------
Total ---_--_____
Total
Mr. KoLAR. May I explain these figures?
$139, 664
409, 560
793,548
164,369
557, 015
$4,48, 823
29,512,400
37, 388, 363
65, 028, 771
'77,843, 000
60,065,000
There has been iiouniformity, to my knowledge, of keeping figures
between the' Department of Justice and the Internal Revenue Service.
In 1961, in addition to working on the names submitted by the De-
partment of Justice as organized crime figures, the Revenue Service
created its own de 6laition, and principally it included people operat-
.ing in a continuos: s fashion to violate the laws in a manner deemed
!detrimental to the communi ty in which they resided.
It seems to me, in trying to reconcile figures-while doing a little
homework for this appearance-that our figures are not consistent
with those of the Department of Justice.
We did include in our figures-in fact, in the figures I cite here, I
(Would say that 80 percent of these convictions are wagering-type vio-
lations. In other words, what I am trying to say, sir, is that we were
more liberal in designating an individual as being involved in orga-
nized crime than it appears that the Department of Justice was.
However, withia the post year, we have instituted a system under
which we do not c.esignate an individual as an organized crime drive
subject until we have the concurrence of the Assistant Attorney Gen-
eral in writingg ar d stating that he agrees that this is an organized
crime drive subject. The purpose, of course, is to keep the organiza-
tions concentrating on the same individuals, to keep the statistics in
line. And secondl,r-let's say, to assure the citizenry, that when they
become the subject of an organized crime drive investigation, it is with
the full concurren ce of the, Department of Justice, who has the respon-
sibility for administering the organized crime drive.
So I would say from now on our figures will be totally consistent
over the years.
Mr. FASCELL. Mr Kolar, I think that is a very important point,
simply from the s~,andpoint of personnel, and the effectiveness of your
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 63
drive-if you have a more liberal interpretation, you bring people
across the line, so to speak.
Mr. KoLAR. Yes, sir, We are not precluded from investigating those
people. We make wagering investigations that are no longer called
organized crime drive investigations.
Frankly, the term organized crime drive is more administrative
within the organization to allot people and funds. So we are not pre-
cluded from doing it just because we do not designate it as an orga-
nized crime drive case.
Mr. ST GERMAIN. If I may make an observation at this point. I go
back to the testimony given to us by Mr. Vinson of the Organized
Crime Section. In it, he testified that other agencies were cooperating
with the Department of Justice. But I personally got the impression
from his testimony that it was more or less-I used the word, I think
"shotgun approach." And I am wondering if this does not confirm my
opinion that there is not the coordination, possibly, that there should
be. And I.am wondering if the witness might not care to comment on
that. The coordination amongst the various agencies-the FBI, Jus-
tice, Treasury, Immigration, and Customs-that there should be-the
strong coordination.
Mr. FASCELL. We are interested in that. Suppose we let Mr. Kolar
finish his statement, then we .will go back and let him answer Mr. St
Germain's question, in which we are all interested.
Mr. KOLAR. Thank you.
As a result'of Intelligence Division efforts in the organized crime
drive, the Government has been instrumental in bringing. to justice
some of the most notorious underworld figures in the country.
Insofar as the coordination of our activities with those of other Fed-
eral investigatory agencies is concerned, the Criminal Division of the
Department of Justice. has acted as a focal point through which per-
tinent information disclosed during investigations by the other agen-
cies has been disseminated to our investigators. To the extent per-
mitted by statutory restrictions, information disclosed during our in-
vestigations which concerns crimes not under our jurisdiction, has
been forwarded to the Department of. Justice. In this regard, our field
offices in all of our operating divisions are required to report to the
national office of the Intelligence Division any indications of such
crimes that come to their attention.
The disclosure prohibitions of the Internal Revenue Code have, to
some degree, handicapped our exchange of information with other
agencies; however, those agencies are aware of the necessity for plac-
ing restrictions on information divulged in income tax returns and
have not to our knowledge interpreted the restrictions as a lack of co-
operation on our part.
We have found the coordination rendered by the Criminal Division
of the Department of Justice to be extremely beneficial and frequently
successful prosecutions of organized crime figures for crimes not under
our jurisdiction are based on evidence which we helped to develop.
Intelligence Division officials, over the past 16 years, have estab-
lished and cultivated important relationships with State and local
enforcement organizations. The value of these relationships can best
be demonstrated by the following remarks by Chief Judge W. H.
Timbers, U.S. District Court, District of Connecticut, in passing
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
64 THE FEDEr AL EFFORT AGAINST ORGANIZED CRIME
s1ntence on several individuals convicted of violating the Federal
wagering tax laws :
During the past 2 months, I have been preoccupied with the trial and disposi-
t.4on of some 49 I! edere i gambling tax cases. The evidence and other information
which has been broug:it by officials to the court's attention in these cases has
r' salted in certain de:inite impressions. First, I have been impressed with the
extraordinary skillful, fearless, and effective work of the law enforcement and
investigative agencies which have devoted long hours over many months to the
difficult task of obtaining the evidence and presenting it in court. This includes
the U.S. attorney and sis staff, the Intelligence Division of the Internal Revenue
ervice and the Conn>eticut State Police. The undercover work, in particular,
disclosed in these cas,~s has been most impressive. These men, in the perform-
nee of their duties, have acted without fear or favor. Many of these men are
4narried and have children. Their conduct in this dangerous sector of organized
grime, where their lives often are in jeopardy, merits the highest praise of the
ourt and the everlasting appreciation of a grateful public.
Secondly, I have b(en impressed with the highly commendable and effective
ooperation between the participating Federal and State law enforcement agen-
ies, specifically the ] ntelligence Division of the Internal Revenue Service and
the Connecticut State Police. This is precisely the type of cooperation which the
Public demands and d ,?serves.
Cooperation is, of course, also maintained and even to a closer degree
tvith other Treasu y law enforcement segments. This is particularly
true between the I:itelligence and the Alcohol and Tobacco Tax Divi-
sions. These Divisions frequently conduct joint investigations and ex-
change personnel when expertise is required in a particular field.
Criminal syndicates in this country make tremendous profits due
primarily to the a3ility of such gangs to secure monopolies in the il-
legal operations i-1 which they are engaged. These monopolies are
;types that provid) continuing financial profit. They are established
,through the use of terror and corruption to accomplish their purposes.
It is found most frequently in the. vice violations such as gambling,
narcotics, and shy locking. These all have characteristics which make
them particularly suitable to the monopolistic approach of syndicates
and very often are not frowned upon by the general public. The profits
are large and cont.nuous. The geographical location or "territory" can
be easily defined, assigned} and controlled. The laws involved are fre-
quently unpopular. There is usually a principal in the background who
shares in the profits but who does not apparently participate in the
frontline operation. The principal or his top lieutenants may arrange
for the corruptior of public officials which is essential for the existence
of extensive, continuing and profitable vice operations, and for the
elimination of competitors who attempt to intrude into profitable il-
legal ventures.
Organized cririinal. gangs operating in interstate commerce are
firmly entrenched in our large cities in the operation of many different
gambling enterprises such as bookmaking and policy, as well as in
other rackets such as the sale and distribution of narcotics, shyloek-
ing, and prostitution. Gambling profits are the principal support of
big-time racketeering and gangsterism. These profits provide the
financial resources whereby ordinary criminals are converted into big-
time racketeers, political bosses, pseudo-businessmen and philanthro-
pists.
It is generally agreed that the flow of money to bookmakers taking
bets on horsseracin; and sporting events and wagers placed in lottery
operations totals billions of dollars annually. From its huge gambling
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
profits, organized crime is able to finance other illicit activities. The
gambling business in this Nation involves a socioeconomic problem of
great magnitude. Gambling, the financial support of organized crime,
has the potential to destroy our democratic way of life if we do not
control it, and contributes to the poverty which exists in many parts
of the country. Certainly we are all conscious that racketeering has
often subverted local governments and destroyed their integrity. It
is reaching further into legitimate businesses every day, and when it
reaches into legitimate business, integrity goes out the window. Orga-
nized crime touches many citizens of this Nation and ferreting out
and prosecuting its leaders is a formidable challenge to Federal,
State, and local enforcement officials throughout our country. A basic
must in combating organized crime is more stringent enforcement
of gambling laws at the local and State levels. These governments
have the laws and machinery to curb and control -ambling. If the
gambling profits which finance most, if not all, organized crime activi-
ties, were eliminated or materially reduced, mobsters would have
difficulty financing their other nefarious enterprises such as loanshark-
ing, prostitution, and so forth. It would also substantially reduce the
extent cif corruption of public officials, for without huge gambling
profits, there would be little incentive to corrupt police and public
ofricia is.
One of the most significant steps taken by State and local enforce-
ment organizations in recent years to combat organized crime is the
creation of departmental intelligence units. Presently, there are ap-
proximately 150 police departments in the country that have formed
such units. The primary functions of these units are. gathering and
exchanging information concerning the top echelons of organized
crime. They have proven that a police organization so constituted
can accurately collect and disseminate relevant information essential
to the prosecution of those engaged in organized crime.
The Federal Government, together with local and State govern-
ments, has the responsibility of making the public aware of the nature
and extent of organized crime. All too often, the general public evi-
dences an apathy toward gambling and corruption of local officials.
The public evidently fails to recognize that a breakdown in one area of
enforcement encourages breakdowns in others. The public has to be
aroused to the fact that the tentacles of organized crime reach into
virtually every community throughout the country. The public has
to be sold on the idea that stamping out organized crime is in the
first instance a local enforcement obligation which depends on its own
attitude toward appointed and elected officials and what it expects of
them in administering and enforcing the laws.
In closing, I would again like to thank you for the opportunity of
being invited here today and for your courtesy in permitting me to
present my statement. The task of combating crime in the United
States is complex and defies imagination. If I may quote from the
recent report of the President's Crime Commission:
Controlling crime in America is an endeavor that will be slow and hard and
costly.
As stated in that same report, over 60 percent of the convictions
secured between. 1961 and July 1965, resulted from tax investigations
conducted by the Internal Revenue Service. We are proud to have
played a significant role in this very real challenge. I can safely speak
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
66 THE FEDERA:f 'EFFORT AGAINST ORGANIZED CRIME
for everyone in the Internal Revenue Service in assuring your com-
mittee of our continuing dedication to this cause and hope that we
will be able to contribute even more in the future than we have in the
past.
Mr; FASCELL. Thark you, Mr. Kolar.
Mr. KOLAR. Thank you, sir.
Mr. FASCELL. I thi:ik I must be one of many who have the layman's
,opknion that if we c.id not have the Internal Revenue Service, the
Intelligence Division, and other units, that we probably would not
have any effective weapon against organized crime in this country.
I t"l-dnk your assumption that organized criminals derive their incomes
fr*m? illegal sources and that they cheat on their income tax returns
IS R pretty good one.: The fact that you have 60 percent of the orga,
ni2ed crime convicticns would seem to bear that out adequately.
'Mr. KOLAR. Thant: you, sir.
Mr. FASCELL. I might as well add at that point, that it is probably
a j great bargain for the American taxpayer to have the Internal
Reevenue Service aro-ind.Except on April 15.
Mr. KOLAR. It is tonioh on me, too, sir.
Mr. FASCELL. WO ilN you like to direct yourself to questions? You
could start with the question that Mr. St Germain asked.
Mr. KOLAR. I think that this business of coordination-well, there
ale two phases. One of course is in designating individuals as coming
it ider the program, anO as a subject of concerted effort by the various
agencies.
,The other, of col rse, is the cooperation with respect to investiga-
tions, or during inv;stigations.
But I make this statement.
I have worked in. five different investigative agencies or capacities
bi the Government, and I happen to be very conscious of cooperation,
or the simple reason that in all the agencies I have worked, I have
found the people to be identical, their desires to do a job to be identi-
cal. The only thine; that separates them is agency designations. This
of course at times xaakes for problems.
But I would have to say that I find the cooperation to be as good
os you could ever isxpect of agencies having different responsibilities
and different titles
Mr. ST GERMAI:A. The word is coordination, not cooperation. I
igree there is coopisration. My question is on coordination, so you con-
centrate your efforts in. the right direction.
Mr. KOLAR. It me make a brief statement. I will try to make it
brief. Unfortunately at times it is difficult.
I have been in t:ae Intelligence Division only a year and 5 months.
Certainly I have Looked to the Organized Crime Section for guid-
ance-as well as the people in our Division.
I have found tl:.at guidance there, I have found that coordination
there.
To me, in all oj! my years of investigative experience, the best in-
vestigator is an experienced investigator with legal advice. Now, if an
attorney is with him on a day-to-day basis, I believe you have got the
best investigator.
I find the coordination coming out of the Department of Justice to
be excellent. The leadership, the designation of individuals that we
should concentrat i on.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
I hope, I have answered the question. At least, -I have done my best.
I will be be pleased to speak further.
Mr. EDWARDS. Do you defend generally on attorneys from the
Justice Department in your investigations, or. do you have your own
staff of attorneys?
Mr, _ KOLAR. We have,our own Chief Counsel within the Revenue
Service. We have our own regional counsel within the Revenue Service.
We have the Tax Division of the Department of Justice, the Criminal
Division, the Organized Crime and Racketeering Section, and the
U.S. attorney. I know of no agency that has more attorneys working,
with them.
We go to our own counsel when we have a question that needs legal
research, where we need legal guidance we go to our own counsel.
During the course of an investigation where an O.C. & R. attorney
from Justice is on the case in the field, we go to him.
Might I say that it is rather difficult sometime deciding just where
to o and who to go to.
Our own counsel has instituted; a program of working with us in the
field on investigations.
I think this is going to be extremely helpful, and to a degree will
necessitate our going less to the OCD attorneys for guidance, since we
have our own counsel.
Mr. EDWARDS. Have you ever found any problems in going to the
Organized Crime Section for help from their counsel?
Mr. KOLAR. From their counsel or our counsel?
Mr. EDWARDS. Theirs.
Mr. KOLAR. None whatsoever. The Organized Crime Section is rela-
tively new, and I think any organization takes a long time to adjust
to the new responsibilities it has-at least many of their personnel are
relatively new.
But I will say to you I have found no problem in Washington or in
the field. And I am enthused about the cooperation, the coordination
that they have given us, And I would recommend if anything that it be
somewhat strengthened, if that is possible.
Whenever you have a group of people doing a single job, someone,
it seems to me, has to sit at the top and help direct the effort.
Mr. EDWARDS. You see the Justice Department's Organized Crime
Section in that role?
Mr. KOLAR. That is the role that I see them in, yes, sir. Now, this
might be contrary to the way others view it. But this is my sincere
feeling. I think it is very valuable assistance to us.
Mr. EDWARDS. Does your agency or your division have any type of
letter agreement or anything else in writing between the Justice De-
partment and the Internal Revenue Service, concerning coordination
of efforts?
Mr. KOLAR. To my knowledge, we have nothing in writing. It is
simply an agreement that we will do the job, and our differences are
generally ironed out by conversation, and we have no problem.
In view of my lack of history in some of these areas, I have asked
Mr. Carney, who is an executive assistant in the office of the Director,
to come with me. He has been a lifelong employee of the Revenue Serv-
ice, and certainly has a broader knowledge than I have and a deeper
knowledge of organized crime. So possibly he can aid me on that
question, if I have overlooked something.
Mr. CARNRY. No, we do not have any formal agreement, sir.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
68 THE FEDER1.L EFFORT AGAINST ORGANIZED CRIME
Mr. ST GERMAIN. Would the gentleman yield?
Mr. EDWARDS. YeI.
Mr. ST GERMAIN. You mean you don't have anything even in the
farm of a rnemorar. dum that points out guidelines to the agencies
involved, such as I mentioned before-Internal Revenue, Justice,
C~xstoms, Immigration, and what-have-you-that gives you the guide-
lifes as to what general technique you follow whenany one of these
agencies comes upon an individual or a group that they feel is part of
the organized grouf-and here is how we proceed from there, and at
this point we ought t o call in Justice, or what-have-you.
Mr. KoLAR. What we do--every time we decide that an individual
belongs in the organized crime drive, that the Department of Justice is
responsible for adn nistering, we write a letter to the Assistant Attor-
ney General and advise him this is our view. He writes back and tells
us, this man will be included in the drive or won't.
that procedure we will take within our own agency, that is pretty
=ell defined.
Mr. ST GERMAIN. That is why I keep harping on this coordinating-
t ie question of cocrdinatinn. Don't you feel that it would be bene-
Acial to the agencies involved if they did have a general guideline, a
Ynemorandum, that could be distributed to all the individuals con-
cerned working in the field, so that when they come upon something,
though it might not ordinarily occur to them that they have got some-
thing that is worth looking into further, and calling maybe some of
the other agencies i .i-this indicates to them automatically-well, here,
we should submit this situation to the Justice Department, to the
Organized Crime Section.
Don't you feel that that would be helpful.?
Mr. KoLAR. Yes, I feel it would be helpful, certainly. But I have
not found it to be a problem-I will put it that way-the lack of it.
But there is no qu lstion that the more clearly these things are spelled
,out, the more helpful they become.
We have received letters designating people, especially at the incep-
tion, as being the prime figures to be investigated. Their names appear
in every one of our offices. And any time information is received with
respect to them, it is forwarded to Washington. We can, of course,
use our judgment as to Whether it should go to the Organized Crime
Section of Justice.
Mr. ST GERMAI N. But the Organized Crime Section also testified
that they rely upcn you to bring individuals to their attention. I mean
I it is a two-way thing.
Mr. KOLAR. Yes, sir. In fact, I am rather proud of the fact that
we have made it n- ore two way than it ever was.
We don't want to designate an individual, a citizen, as an organized
crime drive subjeAtwithout some concurrence from the Attorney Gen-
oral that this is in line with the program that he is charged with
administering.
Mr. FASCEI,L. Mr. Edwards.
Mr. EDWARDS. Mr. Kolar, going back a moment-you mentioned
that you had been in this section about a year.
Mr. KOLAR. A year and 5 months, sir.
Mr. EDWARDS. What is your background prior to that?
Mr. KOLAR. I worked 4 years in private industry, graduated from
law school back in 194.. I became a special agent of the FBI. I re-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME. 69
mained there 8 years, served 2 years as a supervisor in Washington.
My work was principally in the espionage field during World War II.
I left the FBI in 1951. I was employed in the Office of Price Stabiliza-
tion in an investigative capacity. I thereafter obtained employment
with the Senate Judiciary Committee on the administration of the
Trading with the Enemy Act-that was a Judiciary subcommittee.
In January 1954, I obtained employment with the Internal Reve-
nue Service. I have been in-call it their Special Police Force, if you
will, in the Inspection Organization, as an Assistant to the Director.
I was Director of the Internal Security Division of the Revenue
Service from 1960 to 1966, and in 1966, upon the request of the Deputy
Commissioner, and the Assistant Commissioner, Compliance, I took
the position that I have today.
Mr. EDWARDS. You fall into the category, generally, then, of a ca-
reer employee in the Internal Revenue Service?
Mr. KOLAR. I would think so-since 1954, sir.
Mr. EDWARDS. Now, when Justice gives you the names of those
individuals who they say should be in the organized crime drive,
what is the normal procedure in your Division? What do you do with
these names?
Mr. KOLAR. First we would check the names against our own files
in the national office to see what had been done before.
Ours is a decentralized organization as compared to most other
investigative agencies, which are centralized. Therefore, we don't have
the same files in the headquarters that other agencies have in theirs.
We send the name as well as all background data to the office of the
district director concerned, with a request that this individual be in-
cluded in the organized crime drive, and that investigation be under-
taken.
Every 45 days we receive in Washington a status report, outlining
the course of the investigation. That is made available to the Organized
Crime Section of the Department of Justice.
Mr. EDWARDS. Do you generally ride herd on the tax returns of all
those who are on the list of organized criminals?
Mr. KOLAR. Over the years-and I am sure it is even prior to 1951-
it is since the days of Capone, really-the Revenue Service has had
what we call an inservice racketeer program. Certainly it was stepped
up after the Kefauver hearings, and after the Apalachin meeting,
and after the McClellan hearings. All of these emphasized the need
to continue it. We have a system where racketeers in the United States
are identified within our own offices, and their returns-there is a
continuing file-it is not an investigative file, but it is a file in which
we collect data. Their returns are looked at every year, and every 2
years they may be audited as-let's say a look at their returns and the
other data would indicate whatever action should be taken.
We collect the names within our own organization of known rack-
eteers. We look at their returns annually. This is done in the Intelli-
gence Division-and take such steps to see that they pay their proper
taxes.
Mr. EDWARDS. On page 3 of your statement, you mention the fact
that the disclosure prohibitions in the code have handicapped your
activities to some extent. I assume this is-well, in the exchange of
information, as you say, between agencies, and so forth.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
'70 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Do you recommend or have you recommended any changes in the
hiw that, would ease that situation?
Mr. KOLAR. I have recommended none in the period that I have
been in Intelligence. I know of none that in the past have been recom-
mended.
Mr. EDWARDS. Dc you believe that there are any amendments to.
the law necessary waich would of course be consistent with the right
of a.n individual not to have his tax return spread out to the four
winds?
Mr. KOLAR. I thi:ik we are doing the job the way it is. We have
agreements with va:-ious States. If the Governor of a State requests
ii formnation, the Commissioner will release it to him. I think the
safeguards are necessary. There is no question in my mind. And cer-
tainly I would not hesitate, if I found a better way of doing it, or
a. way to ease them, but still give the citizens the protection. and the
security of his return-to suggest it to my superiors. I know of none
at this time.
Mr. EDWARDS. Ycu.feel the right of protection that the individual
citizens is entitled to outweighs what handicaps you may find in the,
low as it is written?
Mr. KOLAR. As of today I do, sir.
Mr. EDWARDS. W X11, now, what would your advice be to a State
that was considering legalizing horseracing, dogracing, or this sort
of 'thing-no reflections on my chairman's State. It comes up in my
state of Alabama f .equently. Somebody wants to put in a dog track,,
down in' Mobile, to .eep all our citizens from going over to Pensacola
and seeing the races )'ver there.
What would be y)ur advice? You have made quite a case here that
gambling seems to be at the root of so much of the organized crime.
What would your advice be?
Mr. KorAR. ' Well, I:will put it this way.
111 think that a sincere attempt should be made to wipe out gambling
or it should be leg , tl d. I am evading,, to a degree, your question.
But I do not see this; iazeiddle, road. that we seem to be_in. And, if a State
wishes to legalize i;, I would see no problem there. I think that it
should be carefully supervised, as all activities should be, by respon-
sible officials.
But I would certa icily not say don't to it.
Mr. EDWARDS. W(11, of course people are going to gamble one place
or another.
j Mr. KOLAR. They certainly do.
Mr. EDWARDS: TI ey gam le on football games. I don't suppose you
would recommend doing away with college football.
In Nevada, for e:cam.ple, where gambling is supposed to be highly
legalized and contr )lied, we still hear of numerous cases where big-
name criminals are involved, or try to get involved.
Do you know any way to completely police gambling in a State
there it is legalized?
Mr. KOLAR. I knc w of no way to completely police anything, really.
I can only recommend that where we do have laws, that we do enforce
them intelligently, but stringently. And I think this would make a big
itnpact in the whole area, personally.
Mr. EDWARDS. Much of this would go to local law enforcement,
vy-ould it not?
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 71
Mr. KoLAR. Yes, sir. In fact, I think that we would be pleased to
get out of the wagering business if local law enforcement would
assume a greater responsibility and make a greater impact. There is
no particular glamor to being in the wagering field. I think the Fed-
eral Government has to fill in if the States have shown-the cities-
that they have not been able to cope with the problem. And I think
the Crime Commission report and others will bear out that they have
not coped with the problem.
Mr. EDWARDS. Thank you, Mr. Chairman.
Mr. FASCELL. Mr. Vander Jagt?
Mr. VANDER JAGT. Are there any weapons in your war on organized
crime that would be helpful to you that you do not now have?
Mr. KOLAR. That is a rather tough question, but I will do my best
Certainly we do not have the use of electronic equipment. It is .a
very controversial subject. Certainly the administration has a posi?
tion, and I certainly respect it, and we will live within it a hundred
percent. The restrictions today on the use of electronic equipment are-
let's say by the standards that previously existed-they are tough. It
has been outlawed practically, except for only the nicest legal uses.
As an investigator, I think the tool' would be valuable, the ability
to wiretap under, let's say, strict supervision. And I say strict super-
vision. There is no question that.it yields valuable information.
The other question is-does it invade privacy, and is it so distaste-
ful that it should not be employed. I can only assume an'investigator's
position. I think I am it great respectoi of privacy-and I say this A
a tool that would be helpful. But certainly ;in the position I am in,
I live within the7' rules laid down by the Congress and my superiors.
Mr. VANDER eJAGT. Laying aside-not forgetting-but -laying aside
temporarily the problems of the rights of privacy, and the other con-
stitutional safeguards-just laying those aside-would the use of elec-
tronic equipment, measurably aid our war agid.nst. organized crime?
Mr. KOLAR. In my personal opinion, yes, sir--especially in the
wagering area, where you have the interstate-the laying off-the tele-
phone in this instance has become an instrument of crime. This is my
experienced view.
Mr. VANDER JAOT. In your opinion, are we winning the war against
organized crime, are we losing it, or are we just managing to stay
about even?
Mr. KOLAR. On the basis of all that has come to my attention in the
year and 5 months, my other knowledge, I would say that we are losing
it a little.
- Mr. VANDER JAGT. What other steps would you recommend to see
that we do not continue to lose this war?
Mr. KOLAR. I think that, first, we need-there are numerous laws
on the books to cope with the problem, and I think we need intensified
enforcement at the local State, and Federal levels. This is why I
happen to be, let's say an advocate of the Organized Crime Section
of Justice, because I think it is through that Section that there has
been an intensification.
I think that the protection of witnesses-I have to feel that it is de-
plorable that people are, first, afraid to come forward, and then when
they do come forward, that we have to spend 20 and 30 men protect-
ing their lives until the trial takes place. I don't know the answer-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
7. THE FEDEFAL EFFORT AGAINST ORGANIZED CRIME
e~ce t to provide some facility where these people can be housed and
protected for as long as it is in the best interests of the Government.
I certainly think fiat an immunity statute within the revenue laws,
(hiving immunity f nom prosecution, but not the payment of taxes,
xyould be helpful ii. encouraging people to come forward and coop-
Oa le.
I think the Crimp Commission recommendations are all excellent,
Would all be excellent aids and tools in helping to cope with the prob-
lm.
Mr. VANDER JAGT. I have gathered from what I thought was your
vbry excellent staterent--
Mr. KOLAR. Thank you, sir.
Mr. VANDER JAGT" (continuing). And your testimony, that--well,
lit me make a statement, and you correct it if it is wrong. That really
tie key to the probl>mn is better local law enforcement and more effec-
tive local law enfor,-ement. That here in many areas is the weak link
in the chain.
Is that a correct i :iterpretati.on l
Mr. KOLAR. I don'; think there is any question about it.
In addition, I might put in an unasked for plug for the police-
n)en. I have been is .this business 25 years in plain clothes. I have
Iipver felt that the policeman was adequately paid. I think they have
lxrobably one of the toughest, the most responsible, one of the most
thankless jobs of any persons working for a government. And I think
that-I would like to say, if you don't mind my saying it-that the
better training, better pay, could not help but improve local enforce-
nient.
Mr. VANDER JAG r. In your opinion, it certainly would improve
riorale ?
Mr. KOLAR. There is no question in my mind, sir.
Mr. VANDER JAGT, Have the recent supreme Court decisions in your
opinion had any impact on the morale of the local police officer'?
Mr. KOLAR. I think, they have, but I am really not qualified, since I
clo not associate enough with them to say just what the conditions are.
Ii would rather be careful with that answer, because the truth is I do
not really know. I have heard they have. And I have seen statements
to that. effect.
Mr. VANDER JAGT. Thank you.
Thank you, Mr. Chairman.
Mr. FASCF.LL. Mr, Kolar, local law enforcement, in a basic sense, is
the key to the problem. If we do not have, as has been proven many
times, a nationally directed organized crime effort, it .is obvious that
combating organized crime as a whole is far and beyond the scope of
tjre local municipal police department. So there are obviously great
a.';reas-and this is the reason we are here-with which the local police
dlepartment or even the States cannot cope effectively unless some-
where there is an organized direction at the Federal level. The proof
of the pudding is ,our own statement. Sixty percent of all the or-
ganized crime cony ctions are through Internal. Revenue Service-. Mr.
IIeterson told us, t.t our list hearing, that these guys are getting
smarter-they do not want to go out and plug people-that makes
ti7em easily vulnerable. So they are getting more-what shall we say-
c6rnputerized and sophisticated. And it is going to be tougher and
t nigher to control them.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 73
The organized crime executive is not a mugger.
Mr. KOLAR. That is true.
Mr. FASCELL. And he is insulated from the acts. So it would appear
that his main weakness is his greed and his willingness to gamble, if
you will, with the Internal Revenue laws. Therefore enforcement of
these laws is going to be an important bulwark of the fight against or-
ganized crime in the future, as it has been up until now.
Do you agree with that?
Mr. KOLAR. I certainly do..
In fact-maybe I can illustrate what I think is one of the things
that needs to be done.
We have made a local study of the infiltration of organized crime
in legitimate business, and we hope to make further studies.
Certainly all other agencies have some information in this area.
And I would like to see the Department of Justice collect all that data,
so that we really know exactly what we have to cope with, and what
the problem is.
Mr. FASCELL. I would concur with you. We think that is vital.
Now, do we have this criminal data on a centralized computer any-
where or data processing equipment that is immediately available to
IRS, Justice, local police departments?
Mr.KOLAR. No not to my knowledge. We have only our own studies.
Mr. FASCELL. How about FBI information? Is that immediately
available, off the automatic data processing equipment, to IRS?
Mr. KOLAR. I would not know that1 sir. I would guess it certainly is
not available off data processing equipment. But I want to make sure
that I am not misunderstood in that area. We have a tremendous rela-
tionship with these other agencies. And in my year and 5 months,
I have not seen real friction; in fact, I am convinced every time there
is a problem. if people would just sit down and talk about it, it gets
solved, and everybody is reasonable.
Mr. FASCELL. Mr. Kolar, let me assure you I am not looking for fric-
tion, I am looking for efficiency. It seems to me if you are the head
of the Intelligence Division,, and you are working on thousands of
cases, and making 60 percent of the prosecutions that are successful,
that you would have-ought to have the benefit immediately of all the
investigative reports of any agency. I don't know that it ought to be
on request necessarily, or on a case by case basis. I assume that is what
you are telling me. Or that you don't even get it ?
Mr. KOLAR. One never knows what he doesn't get. I only know what
we do get. And it seems adequate under the present system. There is
no question that-we could give more and others could give us more.
No one really
Mr. FASCELL. In other words, what you are telling me is you do your
own investigations and you are responsible for the successful prose-
cution of your own case, other. -investigative agencies of the Federal
Government, to the contrary notwithstanding.
Mr. KoLAR. I guess it could be put that way.
Mr. FASCELL. In other words, I have stated it correctly. So in addi-
tion to all the other problems we have, now we find that every investi-
gative unit is probably duplicating investigations beyond belief.
Mr. KoLAR. Let's say to the extent that the Organized Crime Sec-
tion does not see this duplication, or doesn't correct this duplication,
it exists, I am sure.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08: CIA-R[~N7$0~00200020060-8
74 THE FEDERAL EFFOR'P AGAINST OR
Mr. FASCELL. If the OCRS does not get the benefit of information
from all the investiga~,ions that are performed by either IRS or the
Bureau, or whatever oi:he r agency is involved then they are processing
and' coordinating only it certain percentage of the total sum of infor-
mation being gathered and collected by all these investigative agencies.
If tie OCRS sees onl;7 a percentage of this information, it is likely
than they are not eve:i aware of much of the duplication. It seems
somewhat less than desirable for all this mass of intensive investiga-
tive; effort to continue without some coordination.
r. EDWARDS. Would you yield right there, at that point.
MT. FASCELL. Yes, s r.
Mr. EDWARDS. Do you, as a matter of practice, when you are pre-
pparng to make a case against John Doe, inquire of the FBI and the
r Organized Crime Section what they might have on this individual?
T. KOLAR. Yes.
Mr. EDWARDS. In other words, you make this inquiry yourself?
Mr. KOLAR. We institute the, inquiry.
11 r. EDWARDS. As a iiorinal part of your investigation.
Mir. MOLAR. And if they know we are working on somebody, they
voltinteer information if they run into it in the course of the investi-
gat~on we are makin;;.'
Mr. EDWARDS. Well., now, if they know, is there a missing link
thee-should they kn w earlier? Should: there be a, procedure whereby
yoi would make knc wn automatically to these other investigative
agencies that you are after a given individual?
Ir. KOLAR. It would be helpful from a disseminating standpoint.
There is no question about it.
Mr. EDWARDS. But there is no, present guideline that would call for
that. Is that what you are saying?
Mr. KOLAR. I know of no present guideline.
Mr. EDWARDS. Thank you.
jr FASCELL. Of course a case could be made for separate investi-
ons on the theory that you have separate ultimate aims. In your
ca0e, a separate investigation would be made for prosecuting a vio-
lation of the tax law: There might be an entirely separate investiga=
tio; by the Bureau or. the same individual for a different reason.. That
is conceivable.
You recognize the difference, in discussing gambling as a major
source of the profits (f organized crime-the difference between legal-
ized parimutuel wagE,rs and open gambling, crap table gambling, and
so ;forth?
Mr. KOLAR. Yes.
VIr. FASCELL. Do we have any evidence around the country, for
example, of the infiltration of organized crime in the parimutuel
wagers ?
Mr. KOLAR. I have none at my disposal.
VIr. CARNEY. In 1963, we arrested about 200 track bookmakers in
Chicago, who were--
Apprpved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B003 $l5Q00200, 30060-8
THE FEDERAL EFFORT AGAINST ORGANIZED
Mr. FASCELL. That was illegal on-track betting ?
Mr. CARNEY. That is right. But we have no indication there is any
hoodlum infiltration in legal track betting.
Mr. FASCELL. How about open-type gambling, where it is legalized,
or lotteries, where they are legalized. Is there any information that
organized crime has moved into those areas ?
Mr. KOLAR. Only the information that comes out with respect to
Las Vegas.
Mr. FASCELL. I just read somewhere seven persons were indicted,
were they?
Mr. KOLAR. Yes, sir.
Mr. FASCELL. For skimming off the top.
Mr. KOLAR. Yes.
Mr. FAscELL. Not properly reporting the gross to the State for tax
purposes.
Mr. KOLAR. Right. To the Federal Goveriunent. Evaclirig Federal
income tax is the charge.
Mr. FASCELL. So this is an ongoing case now ?
Mr. KOLAR. Yes.
Mr. FASCELL. That is the only evidence you have of that?
Mr. KOLAR. Yes, sir.
Mr. FASCELL. Do you have any public official designated as part of
the organized crime drive?
Mr."KOLAR. Again, I do not have that particular: statistic with me.
I believe we would have. But I do not really-I cannot positively say
yes or no at this point.
Mr. FASCELL. Do you know as of right now whether or not you have
any State official, public official, designated as a member of the orga-
nized crime drive?
Mr. KOLAR. Well, was your first question with respect to a Federal
,official 2 f
Mr. FASCELL..Any public official. Now, I am just zeroing in'.
Mr. KOLAR. All I can say is we have in the past, but I do not know
exactly what is in the organized crime area with respect to public
officials today..I would be pleased to check.
Mr. FASCELL. Do you know. of your own knowledge as of right now
whether or not any Federal public official, either administrative or
?e tive, has been designated as part of the.Qrganized crime drive?
V KOLAR. I do not know at this point. If I: had to.guess,.1 would
say no. :
.Mr. FASCELL. Would,you supply us that information for,the record?
Mr. KOLAR. Be pleased to.
Mr. FASCELL. In all three counts. Public aflicia.ls generally, State
officials, Federal officials.
We are not interested in the names. We just want to know whether
or not anybody has been so designated and is under concentrated
surveillance.
Mr. KOLAR. Be glad to furnish that, sir.
Mr. FASCELL. Thank you.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Apprbved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
76 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
(The information. requested of Mr. Kolar follows:)
The Intelligence Division has investigated a number of public officials. The
following are presently included in the organized crime drive category :
Presently
under
investigation
Pending completed
investigations-
With
Department
of Justice
Federal----------------------?-----------------
State-------------------------------------
Local ----------------------------------------
Total------------------?-----------------
With U.S.
attorney
Mr. FASCELL. Mr. Kolar, exactly just what happens when an in-
dividual is designated by IRS and the Attorney General for Com-
pliance-is it--the Assistant Attorney General for Compliance
Mr. KOLAR. The A_ssista,nt Attorney General, Criminal Division.
'Mr. FASCELL (continuing). Approves the designation? Exactly
what happens at that point, as far as your Department is concerned?
Mr. KOLAR. We it struct the Intelligence Division in the field. Coin-
n1unication goes out from my superior to the district director of In-
ternal Revenue regi:esting that an OCD-type investigation be made
o t this individual. We say OCD-type-we mean it is just more thor-
oulgh than the average investigation. Greater depth
Mr. FASCELL. You are looking for unusual angles, too?
Mr. KOLAR. Yes; that is exactly right. Not only that, but it takes
three times as long, ind it is exceedingly difficult. But at least the in-
sti uctions go out to the district director from the Assistant Commis-
sioner, Compliance. ()ue of the reasons that these people are involved
is that the Assistant Commissioner, Compliance, is the only one that
caul authorize the re easing of tax information to the Department of
JiJ stice, at their writi;en request.
The instructions g) out to the District Director, as I pointed out be-
fore with respect to Mr. Edwards' question. The investigation is i:nsti-
tuted. We receive 45 day reports. They are reviewed by our organized
cr me coordinators in Washington. They arereviewed"by the reional
organized crime cooidinator. They go over to the Department 0'1, Jus-
tiee, Organized Crime Section, for review.
Certainly, even di: ring that period, you have the organized cringe
attorney from Justice in many cases on the scene while the investiga-
tion is going on, and working very closely with the investigator.
After the investigation is completed, the special agent may recom-
mend prosecution, in which case the report would go to the assistant
regional commissioner intelligence, in the regional headquarters. It is
reviewed. Whether lie concurs or not, the report must go forward to
out regional counsel, because it is an organized crime drive subject.
In; the normal tax case, the assistant regional commissioner intelli-
gence can say, "I disagree with the field, there is no prosecution here,"
and the case is finished. The organized crime case goes to the regional
counsel. If regional counsel agrees with the recommendation for prose-
cution the case goes to the Tax Division of the Department of Justice
wii h a copy to the Criminal Division. If regional counsel does not
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 77
agree with the recommendation for prosecution, the case goes to the
Criminal Division with a copy to the Tax Division of the Department
of Justice. Organized crime drive investigations are not closed by In-
telligence without prior approval of the Organized Crime and Rack-
eteering Section of the Criminal Division, Department of Justice.
Mr. FASCELL. Let me ask you this at this point. This procedure sug-
gests to me that the investigator makes the case.
Mr. KOLAR. The investigator makes the case-the investigator in
the Intelligence Division recommends prosecution
Mr. FASCELL. Well, now
Mr. KOLAR (Continuing). Or not.
Mr. FASCELL. I know they are experts as investigators. Obviously
you have not encountered any particular problem in making the case
on the ones somebody has decided the case ought to be made against.
But at what point does the prosecutor, as a lawyer, come into the
matter to determine making the case?
Mr. KOLAR. Well, if by the prosecutor you mean the U.S.
attorney
Mr. FASCELL. Whoever is going to handle it as a lawyer. I know if
I am charged with the responsibility of a case, I want to tell my in-
vestigators what to do and how to do it. Let them investigate; let me
worry about the case.
Now, the procedure you have described is the other way around.
As a lawyer I would be handed an investigative file with a recom-
mendation by the investigator whether or not I ought to prosecute.
Mr. KOLAR. It would be a recommendation by the investigator that
has been agreed upon up the line by the various levels of review.
Mr. FASCELL. The system must work. You have 60 percent of all
the convictions.
Mr. KOLAR. It works. It is a little frustrating at times.
Mr. FASCELL. It sure must be frustrating for the lawyers, I will
tell you that.
Mr. KOLAR. It is even worse sometimes for the investigator. After
he has spent 2 years to find that he does not have a case in the opinion
of the attorneys.
Mr. EDWARDS. Two questions.
First, along that line-is it quite possible that the attorney may
very well send the file back to the investigator for additional work?
Mr. KOLAR. Yes.
Mr. EDWARDS. In other words, he says, "You have not looked into
this point or that point, get the file back down there, and do some
more work."
Mr. KOLAR. That is very possible.
Mr. EDWARDS. Secondly how long does this procedure take? This
seems like a real chain of command that you are carrying those things
through. After the investigator finishes his work-he has reported
every 45 days, he is now through. How long does this chain of com-
mand take to get to where somebody really decides "We are going to
go after this individual."
Mr. KOLAR. It would be hard to make a statement covering all of
them. It depends-some would take, I would suspect, a year or more,
and others would be done more swiftly. A lot of it would depend on
the complexity of the case, and I guess the workload of the various
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 ii
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
78
attor eys reviewing it. There would be a lot of factors. It is a time-
consuming process.
However, there are good arguments for having it, and that is the
protection of an individual against an unjust prosecution in the tax
evasion area,
In most agencies rer orts go directly from the investigator to the
U.S.;'attorney, and the prosecution is the decision of the U.S. attorney.
The ;tax case goes through a very complex procedure of reviews, and
the prime purpose being to assure that only those taxpayers who should
be prosecuted for tax evasion are.
C{ir 60 percent figure covers a lot of wagering cases, and on those we
go directly to the U.S. attorneys.
Mir. KOLAR. We appreciate all the credit we can get in this tough
business.
1Vjr. FASCELL. Mr. K )Iar, we have a lot of other questions, obviously,
the subcommittee wanks to ask you. But Mr. Serr is here, and he has
quite a statement for is with exhibits: If it is all right, we would like
to plit Mr. Serr on, let him get his basic information on the record. And
theft if necessary we would like to get back to you for further question-
ing., Will you be available this morning, to stay'with us?
'1Xr. KoLAR. I certaii fly will.
Mr. FASCELL. I wou .d appreciate it. I would hope we can get through
with you two gentlemen today if it is at all possible.
Mr. KOLAR. I am available at any time. And if I can be of assistance,
fine. 1
ST GERMAIN. Mr. Chairman, that is an unusual statemen t. And
In
I think the gentleman should be commended for it.
Mr. FASCELL. I agi ee with you, Mr. St Germain. I thank you, sir.
41r. EDWARDS. It must come from his experience on the Senate sub-
committee.
Mr. KOLAR. May I put into the record a letter from a chief 'of
police in Beaumont, Tex., to the District Director of Internal Revenue,
where he expresses nicely as I have ever seen, his appreciation for
our cooperation.
Mr. FASCELL. Yes, sir, Mr. Kolar. without objection we will put it in
the record and advise Congressman Brooks that it is there.
The letter referred to by Mr. Kolar follows:)
Mi. WILLIAM 1CLAR,
13 rector of Intelligence Division,
EAUMONT, TEX.,
POLICE DEPARTMENT,
March 15, 1961.
In11,ernal Revenue Service, Washington, D.C.
rDEAR MR. KOLAR: Enclosed, herewith, you will please find copy of my ,letter
directed to Mr. R. 11. Phinney, Director of Internal Revenue Service, Austin. Tex.,
cooeerning assistance given this department by the Intelligence Division of the
I Iternal Revenue Servi,:e.
Please be assured of my very sincere and humble desire to adequately express
h?w very grateful we are for the assistance rendered us by the Intelligence
Division of the Internal Revenue Service, to the end that we honestly and truly
de have a moral atmosphere in which to live and rear our children. For this we
ave, of course, so very deeply grateful.
WILLIE BAUER, Chief of Police.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Far eIee QOZ " ~,Q&RD~79M2g8gq%20002%60-8
CITY or BEAUMONT, TEX.,
POLICE DEPA$TMENT,
March 15, 1967.
Mr. R. H. PIUNNEY,
Director of Internal Revenue,
Austin, Tex.
DEAR Mn. PHINNEY : There comes a time, .I think, in the life of every police
executive when he is faced with the almost insurmountable desire to draft an
appropriate letter of appreciation wherein there appears to be no adequate means
with which to effectively express or describe his very deep sense of gratitude.
This, I assure you, is one of those times for me.
No one knew any better than I did, upon assuming the duties of chief of
police here in Beaumont some 6 years ago, how monumental and critical the
task that lie ahead in reducing, to nonentity, a vice machine of more than 30
years' duration.
Knowing full well that a journey of 1,000 miles begins with the first step;
that the good people of Beaumont would support honest law enforcement, and
realizing that assistance from the U.S. Treasury Department had already begun
to make itself known in the form of aiding our narcotic investigations, we began
the task. of, building a new image for our police officers .to the end that, thanks
to your continued support and assistance throughout the intervening years, we
not. only have a community in which there is no organized vice but, in addition
and by reason of, we have one in which the moral climate has been so vastly
improved that it is now recognized as a fine place in which to live and rear
children-not to mention our economic advances.
I. have made it no secret and seldom, if ever, have missed an opportunity to
say publicly that had it not .been for the outstanding. assistance provided us by
the Intelligence Division. of the Internal Revenue Service, and particularly in , of
Mr. beelookingsback upon lan era which, for all intents and purposes, would
ended after today
6
long years of hard work when Walter Sekaly went through the gates of Seagoville
to begin serving a sentence which many had said publicly would never begin.
Yes, .thanks to the Intelligence Division of the Internal -Revenue Service ; to
Mr. Hughes and Mr. Sawyer, we, here in Beaumont, can truly say that we
honestly do have a good place in which to live and rear our children.
. True, many will never know of your outstanding assistance and maybe this is
as it should be, I don't really know, but I can tell you one thing I do know and
that is, it is awfully, awfully comforting for any police chief to know that assist-
ance from the Intelligence Division of the Internal Revenue Service in combat-
ing organized vice is as near as the telephone.
There are, of course, no words within my limited vocabulary with which to
adequately express my very deep and sincere appreciation for your assistance.
I do hope, however, that you will be kind enough to accept this communication
as my very humble and sincere means of saying : "Thank you and God bless
you and yours." .
Sincerely yours,
WILLIE BATTER, Chief of Police.
Mr. FASCELL. Mr. Serr. Would you.come up to the witness table. We
will be very happy to hear from you.
STATEMENT OF HAROLD A. SERR, DIRECTOR; ALCOHOL AND TO-
BACCO TAX DIVISION, ACCOMPANIED BY THOMAS CASEY, CHIEF,
ENFORCEMENT BRANCH, OFFICE OF ALCOHOL AND TOBACCO TAX
DIVISION; AND JOHN McCARREN, OFFICE OF CHIEF COUNSEL,
INTERNAL REVENUE SERVICE
Mr. Smut. Thank you, Mr. Chairman.
Mr. FASCELL. Mr. Serr, you have a rather lengthy statement with
considerable exhibits. If you would like, we could submit the entire
statement with the exhibits for the record, and then you can sum-
marize, in the interests of time. We do not want you to leave out any-
thing that you consider important. But I believe that perhaps you
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 ArovedlFor Release
O~Q 95A~ I; AAAPFj71QP9?R000200020060-8
could cover the same gr=)und just as easily and in less time, and perhaps
give! us a little better opportunity to get to questions.
Mr. SERB. Very good.
Mr. FASCELL. Without objection, we will put your entire statement
in the record with the exhibits at this point and allow you to sum-
marize in any fashion t at you may desire.
(The prepared statESri.ent of Mr. Serr with attached exhibits fol-
low : )
PREPARED STATEMENT OF HAROLD A.D SEER, DIRECTOR, ALCOHOL AND TOBACCO TAX
ORGANIZATION AND MISSION
Tlte Alcohol and Tobacco Tax Division is one of the operating divisions in the
Internal Revenue Service. The Division is responsible for the administration and
enforcement of the laws and regulations relating to liquor, tobacco, and firearms.
To meet this responsibilit , the Division is divided into what are basically known
as the Enforcement and Permissive Branches. The Permissive Branch is ;pri-
marily concerned with pi otecting the revenue derived from both liquor and to-
bacdo, and in controlling particularly the liquor industry through the issuance
of basic permits, regulating advertising and labeling, providing onpremise super-
vision of production, packaging, and storage at distilleries, and in the regula-
tion of the tobacco industry. On the other hand, the Enforcement Branch has the
responsibility for carryin; out an investigative and preventive program relating
to violations of those internal revenue laws that govern the production and dis-
tribution of distilled spirits, wines, fermented malt liquor, and tobacco, as well
as. nnO,,nforcing the National and Federal Firearms Acts, the Federal Alcohol Ad-
Enforcement
StattesrCode, entitled "Liquors T1261 raffic," which 1265 of includes the Lr iquor title
Act; of 1936. (Attachment No. 1.1)
The history of the enforcement branch actually dates back to Civil War clays
whtfn the first Commissioner of Internal Revenue was appointed and three "de-
tectives" were hired to investigate the illicit manufacture of distilled spirits.
This investigative function continued through all the ensuing years and gained
prominence during the l rohibition era when gangsters took over the manufac-
ture and distribution of illicit liquor. These criminals formed large syndicates
and combinations in whit may be termed the forerunner of "organized crime"
as it is known today. With the repeal of prohibition in '1933, the investigative
force was merged with the permissive function under the title of Alcohol Tax
Unlt. When the tobacco functions were added to the Alcohol Tax Unit in 1952,
thee resulting organization became the Alcohol and Tobacco Tax Division. The
atttiched statistical chart shows the total seizures and arrests for liquor viola-
tions for the period of ] 935 through 1966. In fiscal 1966, Division investigators
made 7,548 cases, of which 5,273 involved the seizure of illicit distilleries, and
the arrest of 6,788 criminals. Included in this case total were 466 violations of the
firearms laws. Today, V. percent of all violations of the internal revenue liquor
laws occur in the seven Southeastern States. (Attachments No. 2 and No. 31)
To meet the current enforcement responsibilities, the Division has an investi-
gative force of approx mately 975 men, stationed at selected posts of duty
throughout the Nation. Our greatest concentration of manpower is in the South-
ea$t, where we find the greatest number of violations. Because the enforcement
of the liquor laws has 1Er6ven to be the most hazardous of any Federal law en-
forcement endeavor, apl ointments to the position of special investigator are very
se ective. The investiga :ors are thoroughly trained and supervised. Their aver-
age age is approximate) ~ 38 and they have a wide range of experience in outside
fields of endeavor whic z provides them with a firm foundation for almost any
type of an investigative assignment. The men are, for the most part, extremely
a dept at undercover work. Morale is high and the force willingly maintains a
high degree of mobility. (Attachment No. 4.1)
Attachment No. 10 appears on p. 92.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 81
DIVISION'S PAST EFFORTS AGAINST ORGANIZED CRIME
The enforcement of the internal revenue liquor laws has for many years
brought investigative personnel of the Division face-to-face with well-known and
large-scale criminals. As I mentioned earlier, this confrontation began during
prohibition when racketeers, rich and powerful as the result of their illicit liquor
traffic, were making their presence felt at every level of public life. For a short
period after the repeal of prohibition, the syndicates continued to operate large
illicit distilleries throughout the United States. However, a great crusade against
all forms of racketeering was spearheaded by the Treasury Department in 1933.
The brunt of this campaign was carried by the Alcohol Tax Unit. Within a
few years, the backbone of illicit distilling by syndicate members was broken
in most of the United States. But the complete task took time. Pockets of re-
sistance remained in the Northeastern section of the United States where investi-
gators continued to detect and seize large illicit column distilleries owned and
operated by organized crime members.
Recognizing that only one remaining pocket of syndicated illicit traffic re-
mained around the metropolitan areas of the Northeast, the Division launched
a program in 1958 aimed at identifying and placing under "round-the-clock"
surveillance the financiers of large illicit distillery operations. Our efforts in
this field were later coordinated with the Organized Crime and Racketeering
Section, Department of Justice. Throughout Pennsylvania, New Jersey, New
York, and all of New England, our investigators literally put high-ranking crim-
inals "to bed at night and got them up in the morning." The results were found
in the indictment and conviction of.several syndicate members for liquor viola-
tions, including Joseph "Pop" Pritchard, a trusted follower, of Al Capone,
Nicholas Barbone, and Augustine Mazzio. The large column distilleries, once
so prevalent in the area, disappeared from sight and the syndicate was reported
to be putting its money into gambling, loan-sharking, and narcotics. Our efforts
against organized crime were recognized in a commendatory letter received by
the Division in December 1959 from William G. Hundley, then Chief of the
Organized Crime and Racketeering Section in the Department of Justice. (At-
tachment No. 10.1) With the successful conclusion of our drive in the North-
eastern section of the United States, our limited investigative staffing had to be
shifted to provide additional manpower in the Southeast States where it was
urgently needed.
The Alcohol and Tobacco Tax participation in the war on "organized crime"
from 1958 until the fall of 1966 has not been publicized, although the Division
was actually quite Involved in the organized crime drive program. During those
years, notorious criminals in other parts of the Nation were feeling the effects
of our efforts. Samuel "Alky Sam" Rosencranz, with violators from New Jersey,
New York, Massachusetts, and Maine, was arrested for a column distillery in
Maine. Percy Flowers, the North Carolina bootlegger who had grown so power-
ful that his influence was felt in high State political circles, tumbled to an
undercover investigator from New York who posed as a member of the New
York syndicate. Fritz Marks of Norfolk, Va., was sentenced to 8 years in State
prison for operation of an interstate abortion ring as a result of evidence uncov-
ered by investigators while investigating him for violation of the internal
revenue liquor laws. In 1955, ..Florida State Circuit Judge C. E. Chillingsworth
and his wife disappeared from their oceanfront home in West Palm Beach,
Fla. It was assumed they had been murdered but their disappearance remained
a mystery until an undercover investigation was started by an A. & T.T. investi-
gator which led not only to the arrest of 60 bootleggers but the eventual solving
of the Chillingsworth murders.
Isadore "Kid Cann" Blumenfeld, whose crime syndicate had reigned supreme
in Minneapolis, Minn., for years, was tried and convicted for violation of the
internal revenue liquor laws through the filing of false representations as to
the ownership of several wholesale and retail liquor establishments in Min-
neapolis. In Chicago, Frank "Hot Dog" Lesciandrello, top crime syndicate hood-
Dim, was convicted for the same type violation even though other Federal agen-
cies had tried unsuccessfully for years to put Lesciandrello in prison. Kansas
City racketeer Frank LaRocca was sentenced to 5 years in a Federal prison for
perjury as an outgrowth of an investigation of a Federal Firearms Act violation.
Lewis "Black Louie" Cangolese, the No. 2 racketeer from Kansas City, was
arrested with two companions for violation of the Federal Firearms Act in
an investigation stretching from Kansas City into the middle of South Dakota.
1 Attachment No. 10 appears on p. 92.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
82 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
In Florida, investigators seized two antitank guns plus other weapons and
arrested Thomas Wilcoxiien. The resulting investigation led through four regions
with the eventual identi cation of Robert Wilcoxsen and Alfred Nussbaum as
the two men who had robed two banks in Buffalo and one in Brooklyn, where
they had killed a bank guard, using a Thompson submachinegun. In another
instance, six members o' the Mannarino mob in Pennsylvania, operating from
Nev York City to Mia:Ei, established a gunrunning organization where the
gulps were flown in a p:,ivate plane from West Virginia to Florida. This was
part of the large-scale movement of guns to Cuba during the overthrow of
Ba ista by Fidel Castro. The resultant investigation by the Division brought
about the sentencing of five of the men to Federal prison for 5 years while the
sixth received a 3-year sentence.
]between 1961 and 190, the Division conducted many other investigations on.
th hidden ownership of major criminals in the legitimate retail and wholesale
liglior business. Eleven of these investigations were at the request of the Or-
ganized Crime and Rael eteering Section and approved by the Attorney General.
One of the individuals subjected. to investigation was a member of the famed
Applachin meeting in Aaalachin, N.Y., in 1957 which was raided by New York
St to Police who were accompanied by one of our investigators. Even though
these were extremely difficult investigations, prosecution was recommended in
ei lit of them.
in addition, the Intelligence Division drew heavily on the highly experienced
investigative staff of th ; Alcohol and Tobacco Tax Division to spearhead their
attempts of penetrate syndicate gambling lairs through the use of undercover
agents. The repeated-sue?ess of these A. & T.T. investigators is best exemplified by
thq 1961 investigation of Gabriel and Samuel Mannarino, racketeers and hoodlums
who controlled the , city of New Kensington, Pa., where A. &.T.T. investigators
wore able to infiltrate l ap.narinc's gambling casino and gather evidence against.
them. This is the same Troup involved in a gunrunning case which we made in
199. - ,
DIVISION'S :'RESENT EFFORTS AGAINST ORGANIZED CRIME
On November 28, 1936, a Service internal document, Manual Supplement
720-48 (attachment No, 51), was issued and for the first time the Alcohol and
Tobacco Tax role in the"organized crime drive was clearly defined. The enforce-
mant objective was spelled out as being that of suppressing criminal activities in
the United States by-
(1) Perfecting criminalcasesagainst highly organized groups engaged in
illicit liquor or illicit alcohol continuous-process distilling operations in the
southeastern and n~ ltheastei?n sections. of the country. The selection of these
groups is confined .o those whose operations are of such magnitude as to
constitute a substar tipl fraud on the revenue.
(2) Perfecting q Iminal cases against the racketeering element having
concealed Interest i it control in restaurants Serving wine, beer, or liquor ;
taverns ; nightclubs wine, beer, and liquor distributorships ; or any other
activity of the legal swine, beer, and liquor industries.
(3) Perfecting'-criminal cases regarding firearms possession or firearms-
transfer violations, by hoodlums and racketeers.
(4) Perfecting c.iminal cases against public officials who aid and abet
the criminal element in violating laws coming within the jurisdiction of the
Alcohol and Tobacco Tax Division.
(5) Perfecting ciiminal eases against hoodlums and racketeers who oc-
casionally or coincidentally while conducting other illegal activities violate-
the laws-enforced by the Alcohol and Tobacco Tax Division.
(6) Assisting oft er law enforcement agencies in their efforts to combat
and suppress crime.
(7) Furnishing assistance in the suppression of crime particularly in the
following areas lis :ed by the Attorney General of the United States as
requiring special a :tention : New York, Pittsburgh, Philadelphia, Boston,
Miami, Tampa, New Orleans, Chicago, Kansas City, Detroit, Los Angeles,.
Las Vegas, Clevelan, and the State of New Jersey.
T1}ese objectives were m orked out In conjunction with the Organized Crime and
Racketeering Section, D,ipartment of Justice. It should be noted that the Division
hal found that serious crime does not necessarily mean syndicate sponsorship or
involvement. While we recognize that in most parts of the Nation sustained
i Attachment No. 5 appears on p. 88.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70BOO338ROO0200020060-8
criminal activities on a large scale can only exist through the payment of tribute
to (or Involvement by) the reigning syndicate in that geographical area, we also
know from experience that there can be large-scale liquor or firearms violations
in which the principals act independently of the syndicate. Our program was de-
signed to cover both, and it is toward this end that our investigations are
directed.
Our first organized crime drive investigation under Manual Supplement 72G-
48 was authorized on October 16, 1966, and since that time we have authorized
28 additional investigations, all recognized by the Organized Crime and Racket-
eering Section of the Department of Justice as falling within their concept of an
OCD case. Of this number, four of these investigations are of large moonshining
rings in the southeast region. These four gangs, between them, are placing ap-
proximately 17,800 gallons of illicit whiskey on the market each week, represent-
ing a weekly potential tax fraud of approximately $187,000. Two other illicit
whiskey investigations, both with syndicate involvement, are underway in the
North Atlantic region, while a similar investigation is in progress in New Jersey
of the Mid-Atlantic region.
Thirteen of the current investigations involve syndicate ownership, hidden or
otherwise, in retail liquor establishments. These investigations are fairly well
sprinkled throughout the United States and individuals involved rank high in
the syndicate membership. These establishments not only provide the owners
with an air of respectability but serve as key communication centers from which
syndicate members can direct their other criminal activities. However, proof
of hidden ownership is extremely difficult, often requiring extensive surveillance
and the untangling of financial arrangements to offset the corporate structure
now being employed by the syndicate to avoid pinpointing individual financial
interests in the establishment. So far, we have been successful in three of the
13 investigations, some of which have only been initiated within the last 30 days.
'For the most part,, firearms violations are of an individual nature and Involve
the criminal's possession and/or sale of an automatic weapon, a sawed-off
shotgun or similar weapon in violation of existing laws or his causing any weapon
to move in interstate commerce. The National and Federal Firearms Acts were
originally designed to keep such weapons out of the hands of the criminal ele-
ment. Toward this end, we have authorized six OCD investigations involving
firearms violations wherein the principal subjects are suspected of supplying
firearms to syndicate members or are syndicate members charged with Possession
of weapons in violation of either the National or Federal -Firearms Acts. The
interstate commerce aspects of such investigations present unusual problems
in that successful prosecution hinges on positive proof that the felon did In: fact
-transport a firearm across a State line (or caused it to be transported) in viola-
tion of the Federal Firearms Act. In most instances, the case originates from an
inspection of the records of a firearms dealer who must record the name and
address of each, purchaser of a firearm. Often the felon. will give a ficticious
name and address which makes identification and apprehension almost impos-
sible. If the felon gives his correct name and address, the investigator must still
locate the individual and, through questioning, prove that the gun was. carried
across the State line. Under the current judicial restrictions for questioning a
suspect, the possibility of the suspect's admitting that he did indeed purchase
the gun and move it in "interstate commerce" is very remote. One of the weak-
nesses of the existing Federal Firearms. Act is that it permits such sales to
"out-of-State" customers and places little or no burden on the dealer to ascertain
the true identity of the buyer before the sale is consummated. The administration
is aware of this weakness in the statute and has recommended greatly needed
changes.
One of the more sinister aspects of organized crime and the illicit liquor
traffic is the bribery of some public officials and local law enforcement officers
by violators in order to insure protection against detection and apprehension.
Although it is an exceptional case when this happens, the Division has found it
necessary to include such public officials or local law enforcement officers as de-
fendants in some of our liquor cases. Such investigations are never tasteful or
rewarding, but they must be made if we are ever to gain the confidence of the
citizenry. Three of the current OCD cases fall within this category, with the
most notable being a bootlegging ring headed by James E. "Bookie" Turner,
police commissioner of Chattanooga, Tenn, A Federal indictment has been re-
turned charging Turner and two of Tennessee's largest bootleggers with a con-
spiracy to violate the internal revenue liquor laws. The case is awaiting trial.
Approved For Release 2002/05/08 : CIA-RDP70BOO338ROO0200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
$4 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
The dependence of every State on taxes imposed on the legitimate liquor in-
dustry as part of the State revenue and the interest of every police officer in the
ille al possession and use of firearms places the Division in an unsual position,
insgfar as Federal agencies: are concerned, of having a common cause with local
and; State police officials. Because of this, the Division has always stressed that
the street between our investigative force and that of local (and other Federal)
enf rcement agencies be lesigned for two-way traffic. We must not only be able
to isk the police department or .State police for intelligence or assistance during
our' investigations, but w : must also be ready to respond when a similar request
is rude of us. The achievement of such a working relationship has not always
beep easy, but the Alcohol and Tobacco Tax Division has enjoyed over the years
an enviable and productive association with local, State, and other Federal law
enforcement agencies, even before our "official" advent into the organized crime
dribe. As an example, tl.e Division last year made several firearms surveys in
large cities. The intelligence gathered was of great interest to the local police
in each of the cities. This naturally strengthened the cooperaton between our
forjces. The first survey was made in the District of Columbia and disclosed the
ease with which guns could be acquired in adjoining areas and transported into
the District. As a result bfthe survey, one of the adjoining counties in Maryland
passed additional local legislation restricting the sale of firearms. District of
Columbia police used the information gathered in furtherance of their local police
work. In Chicago, where the police were apprehensive of the problem facing them
be ause of racial unrest In the city, our Investigators contacted every firearms
de.ler licensed under the Federal Firearms Act In Chicago and the suburbs and
cbecked their records In an effort to determine the flow of handguns into Chicago.
Information developed in the survey was turned over to the Chicago police who
fond It to be of great value in their enforcement of city statutes controlling the
acquisition and possession of guns. The information also permitted them to bet-
tey, assess their riot-control capabilities. A similar survey was conducted in Boston
w xere A. & T.T. Investigators uncovered the source of several of the guns used
toll, commit some of the 28 gangland-style murders that city had experienced In
r"nt months. This evidence was instrumental in the successful completion of
s me of the police depa,tment's investigations. These surveys disclosed the need
114t only of baiter Federal firearms controls, but the need of tighter State and
l0al laws.
Our Investigators, as a byproduct of their every day efforts, turn up evidence
not only of extensive gambling operations but also bring to light data on crime
activities of great Importance to local law enforcement agencies. In Worcester,
Mass., three associates of a major criminal, under investigation for violation
of the Federal Firearms Act, were under surveillance by A. & T.T. officers.
The three suspects lef i the motel under surveillance and robbed a nearby con-
struction company of $8,000. Information furnished by our men led to the
identification and arrest of two of the suspects within an hour of the robbery.
In another instance In New England, we uncovered the source for pornographic
movies and gave this .nformation to the local police. During the first 2 months
cif our program, over 21,500 referrals of potential firearms violations were made
to local enforcement iuthorities. This number continues to mount every day.
1Juring the 3-month rerlod of Tanuary through March 1,966, hundreds of sus-
Mected violations of ether Federal and State or local laws were referred to
the proper agencies.
There is little doubt that these referrals will Increase as time goes by.
"riminal activities are usually intermingled and, as a result, it is impossible
or the investigator lo work on one phase of the criminal's activity without
being exposed to evi,lenee of other violations by the same individual or by
ussoeiates. Many of these violations will be of local or State laws. Failure to
furovide a complete and immediate report of any information to the responsible
unthorities would constitute a dereliction of duty on the part of any law en-
forcement officer.
There has always been cooperation between the Division and other Federal
Jaw enforcement agelieies. The Secret Service has drawn ntwrn our men many
times for additional monpower to provide protection to the President or other
dignitaries. I have rr-entioned earlier the use of our investigators by the Intel-
iligence Division. For years we have worked closely with Investigative personnel
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 85
of the U.S. Bureau of Customs on cases where firearms are being smuggled in
or out of the United States. The latest case of this type in which customs
agents moved side by side with A. & T.T. investigators concerned the movement
of automatic weapons from Canada into the United States where they were sold
to one of our undercover men. Last year we assisted postal authorities in unveil-
ing a large mail fraud ring where firearms were offered for sale. Requests for
the importation of weapons requires us to be in almost daily contact with
State Department officials.
Within the Department of Justice, the Organized Crime and Racketeering
Section has provided the Division with continued support and guidance. The
section has, on many occasions, assigned one of its members to assist us in
the development or prosecution of a case. The trial of James E. "Bookie" Turner
in Chattanooga will be conducted by a special prosecutor from the Organized
Crime and Racketeering Section. In one of our investigations of a crooked sheriff
in the South they supplied us with the services of an attorney who was an ex-
pert in the legalistics of granting immunity to witnesses during our presenta-
tion of the case to the grand jury. Presently, the section is supplying our field
personnel with invaluable intelligence on syndicate members under investiga-
tion. This intelligence, collected by the section from varied sources, supplements
that which we have gathered and enables us to do a more effective job.
(1) Overcoming public apathy
The most difficult obstacle facing all law enforcement agencies today is the
public apathy toward crime and the law violator. This has sounded so often
lately that many persons are beginning to believe that the obstacle is insurmount-
able. Such is not the case. The enforcement of the liquor laws has been handi-
capped by public apathy since Civil War days. Moonshining and bootlegging has
too often been accepted as a way of life. We were aware that we had to break
through this wall of complacency if we were to make substantial headway in
controlling the nontaxpaid liquor traffic. In 1957 we initiated a vigorous pub-
licity campaign designed to alert the public to the dangers of moonshine whisky,
both insofar as consumption was concerned and the relationship between moon-
shining and other crimes. Wide distribution was made by the investigative force
of well-designed and eye-catching posters. (Attachment No. G.1) But even this
did not have the desired effect of reducing the number of moonshine violations.
With the Moonshining problem centered in the Southeastern States, the Divi-
sion embarked on a drive in 1961 designed to drastically reduce the illicit liquor
traffic in a given State as a test measure of an enforcement effort built around
the support of the honest citizen and local law enforcement officer. South Caro-
lina was the State selected for ,a number of reasons :
(1) Taxpaid liquor could be purchased in every county of the State so
a measurement of our success or failure could be made ;
(2) The State was one of the top five States in the United States in the
production of illicit whisky ; and
(3) A good rapport had been established with the State liquor enforcement
authorities. We also found that the prosecuting officials and the courts were
aware of our problem and receptive to our plans.
Our personnel studied the problem and decided that no criminal activity could
endure for long if it did not have the tacit support of the people. It was apparent
that the public could change a criminal activity if they were made aware of its
scope, dangers, and possible effects on them. A program was planned to alert
the public to the size of moonshine operations with the attendant tax frauds, to
the dangers of consuming moonshine whisky with its often lethal content of
lead salts and to the effect that the blight of moonshine whisky has on a com-
munity. To project our message, we enlisted the help of movie stars, famous TV
personalities, race car drivers, professional ballplayers and other notables in
many fields. We secured from these persons recordings which warned of the
possible deadly effects of moonshine whisky, the fantastic profiteering by crimi-
nals from the illicit liquor traffic and the deplorable social effects that resulted
from this criminal activity. All of these recordings were obtained at no cost.
We began to broadcast these messages from almost every radio station in South
Carolina on a public service basis, again at no cost to the Government. Every
possible means of alerting the public to the moonshine problem was utilized.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
86 THE FEDERAL; EFFORT AGAINST ORGANIZED CRIME
Investigative personnel took everp opportunity to speak before civic groups,
student assemblies, and )olice officers where the program was outlined and
handouts given to the aldience. (Attachment No. 7). The South Carolina
Medical Association endorsed our program wholeheartedly. Television stations,
newspapers, and magazin3s cooperated in publishing the message. The educa-
tional television network ,ETV) in the State, with the sanction of the Governor
of South Carolina, made tnd played an hour-long documentary on the subject.
Bumper stickers, billboards, and bus placards were common throughout the State
with. the universal theme that "Moonshine is Poison." Exhibits were set up at
the Mate fair where thousands of people viewed them. (Attachment No. 8.1)
A shifting of investigaLve manpower from other areas of the country where
we had achieved a great(r measure of success in curbing the illicit traffic in
liquor enabled us to mor m than double our manpower in South Carolina. In
addition, we were gratified with the increased support from State and local
authorities:
The results achieved were startling. The estimated production of illegal
whisky in South Carolina dropped 80 percent, in large part because the normal
consumer had been reached .by our public information campaign and would no
longer buy "moonshine." Ube sales of taxpaid whisky soared as did the revenue
from, these sales. The put lie, in general viewed with disfavor and disgust the
manufacturer and peddler of moonshine whisky. The effectiveness of the pro-
grant' was reflected in the attitude of the juries toward liquor violators.
In Columbia, S.C., the police departmentattributed a decline of 71 percent In
homibides in the city for a 3-month period in 1965 as compared to the same
period in 1964 to the closing down ofmoonshining activity in the State. Other
police agencies throughot t South Carolina reported similar trends. It is an
accepted fact that illegal establishments peddling moonshine whisky are the
hub of many other criminal activities. Narcotics, stolen property, illegal fire-
arms' prostitution are only a few of the crimes associated with these places.
Fights and murders are common. All police agencies noted reductions in vio-
latio>?s of this nature as these places closed.
I believe continued nationwide appeals to the citizens of this country to bring
the facts of crime home to the individual, to deglamorize the criminal, and to
portray the police officer in his true role as defender of law and order, should
be used in the fight on crin(e. I do not suggest that crime can be eliminated in its
entirety in this country b3 a public information program but an exposd an "or-
ganized crime" and its so-( ailed respectable members similar to the one in South
Carolina on the "bootlegger" would go a long way toward arousing the citizen
to action, both by involvement on his part as well as by his support of constituted
authorities. The greatest impact of such a public information program would be
on the "crime in the street." which is of greatest concern to John Q. Public today.
The action of the Chicago Police Department, as told in the recent articles in
the Washington Post entitled "Crime-Busting Citizens," is a good example.
(Attachment No. 9.1)
(2) Ingenuity in law enforcement application
The law enforcement of leer today is confronted by such a changing climate
invol+ing his day-by-day responsibilities that he must constantly change his meth-
ods and devise new techni(ues if he Is to achieve his objectives. Progressive and
creative thinking is a mmit if we are to increase the effectivness of our fight
agai st crime. I will cite as one example of such creative thinking the efforts of
our investigators in Chicago in May 1986 when they took it upon themselves to
lay tile groundwork for a series of conferences between leaders of Chicago's large
juverjrle gangs and the U.S. attorney in an effort to alleviate the tension created
by the existence of these well-armed youth gangs and their defiance and dis-
respect for law and order in that city. The conferences- were coordinated with
1 Attachment retained in the files of the subcommittee.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 87
the Chicago Police Department Youth Bureau and civic leaders of the South
Side of Chicago where the gangs were centered. The thrust of our confrontation
with the groups was to exhort them to voluntarily surrender their weapons to
the U.S. attorney or alcohol and tobacco tax investigators under the promise
of immunity from prosecution, to advise them of the penalties of the law for the
possession of such weapons and to try to convince them to refrain frpm acquir-
iug additional weapons. This was the first time the preventive approach had
been used with youth gangs in the firearms field and a sizable number of fire-
arms, including sawed-off shotguns, sawed-off rifles, and other National Fire-
arms Act weapons were turned in along with knives, razors, chains, and other
weapons. Considerable interest was generated on the part of the public, local
agencies, and the press. Valuable insight was gained as to the problems of these
teenage gangs.
We are proud that we have pioneered in another area of progressive thinking
by a Federal agency in law enforcement with the formation of our "metro
squads" in most of the major cities in the South. Ilere `ve found as many as four
separate law enforcement bodies addressing themselves to enforcing the liquor
laws, each at their own level. We proposed that a representative from each
agency-the city, .the county, the State, and the A. & T.T.-meet as a single unit
with a common purpose of combating the illicit liquid traffic. For the first time
in our experience, separate agencies were asked to put aside their jurisdictional
jealousies and.bond themselves together into a hard-hitting enforcement body
through a mutual sharing of intelligence data, investigative techniques, and
available manpower. All information pertaining to liquor violations in, the city
are funneled to the metro squad for whatever action they deem necessary. The
squad, headed by an experienced A. & T.T. investigator, is made up of fully
qualified officers from each of the participating agencies. The results have been
a unified approach to an enforcement problem of interest to each enforcement
agency in the city and local officers, at first wary of the approach, are now
becoming more and more aware of the value of combined efforts.
The current project sponsored and directed by the Organized Crime and
Racketeering Section of the Department of Justice, where top-level agents from
Federal law enforcement agencies are joining hands in perfecting criminal cases
against predesignated members of organized crime, is a step in this same
direction. I believe the technique can be applied at the local level in other fields
of criminal activity provided that appropriate single sponsorship will be found
and accepted. But the success of any such unit will depend on how well each
agency can concern themselves with the enlarged objectives of the joint venture.
(8) Analysis of forensic evidence
Current activities of the courts regarding the protection of the rights of the
individual dictate the need for reliance on the rapid developments in the forensic
scientific fields. The Alcohol and Tobacco Tax Division laboratory has made
outstanding contributions in this field. Staff scientists have worked in conjunc-
tion with the Atomic Energy Commission in the adaptation of neutron activation
analysis to criminal evidence. We have accepted many requests from State and
local police departments to assist in developing evidence In their cases through
such analysis, with the result that several crimes of violence-murders, rapes,
etc.-have been solved. It is apparent that all law enforcement officers must
take advantage of this and other techniques in the field of forensic evidence.
In closing, I want to say that in my opinion we can gain the upper hand in
our war on crime. However, it will require enlightenment and action on the
part of the individual citizen as well as increased cooperation by all levels of
governmental authorities. I want to emphasize that I am not suggesting any
change in jurisdiction or responsibility on the part of any cooperating agency.
I am suggesting that by pooling our intelligence and by utilizing our resources
on a coordinated basis, we can increase the sum of our individual endeavors.
Our own experience has yielded gratifying results from each of these two
methods. I want to thank the committee for this opportunity of meeting with you.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 A rpved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
88 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
(Attachments Nos. 1-4, 6-9, have been retained in the subcommit-
tee'4files. Attachments Nos. 5 and 10 are as follow:)
ATTACHMENT No. 5
U.S. TREASURY DEPARTMENT, INTERNAL REVENUE SERVICE
MANtAL SUPPLEMENT
(November 28, 1900)
THE ALCOHOL AND TOBACCO TAX DIVISION'S PARTICIPATION IN THE ORGANIZED CRIME
DRIVE
Section 1. Purpose
T 4 is Supplement sets f )rth guidelines and general procedures regarding the
Alcohol and Tobacco Tax Division's Participation in the Organized Crime Drive.
Sectllion 2. Background
.0$ The Alcohol and Tobacco Tax Division consistently has provided material
assistance in the Organized Crime Drive operations conducted by the Service
since January 1961. It will continue to do so.
.03 On May 5, 1966, Pr-~sident Johnson stated : "The campaign against racket-
eerii g must not only be continued, it must be accelerated." The following Alcohol
and Tobacco Tax Divisioi. functions in the Organized Crime Drive are designed
to irlplement this directive of the President.
Sectpon 8. Objective
.01 The objective of the Alcohol and Tobacco Tax Division functions in the
Organized Crime Drive is to suppress criminal activities in the United States by :
1 Perfecting criminal ,rases against highly-organized groups engaged in illicit
liquor or illicit alcohol con inuous-process distilling operations in the Southeastern
and ortheastern sections of the country. The selection of these groups is confined
to those whose operation,; are of such magnitude as to constitute a substantial
fraud on the revenue.
2 Perfecting criminal cases against the racketeering element having concealed
interest or control in res:aurants serving wine, beer or liquor ; taverns ; night-
clubs ; wine, beer and liquor distributorships ; or any other activity of the legal
wine, beer and liquor industries.
3 Perfecting criminal cases regarding firearms possession or firearms transfer
Vio14tions by hoodlums alidracketeers.
4 Perfecting criminal cases against public officials who aid and abet the
criminal element in violat ng laws coming within the jurisdiction of the Alcohol
and Tobacco Tax Division.
5 Perfecting criminal cases against hoodlums and racketeers who occasionally
or ciincidentally while conducting other illegal activities violate the laws enforced
by tale Alcohol and Tobacco Tax Division.
6 Assisting other law enforcement agencies in their efforts to combat and
suppress crime.
7 Furnishing particulf.r assistance in the suppression of crime in the follow-
ing areas listed by the Atl orney General of the United States as requiring special
attention: New York, P'ttsburgh, Philadelphia, Boston, Miami, Tampa, New
Orleans, Chicago, Kansas City, Detroit, Los Angeles, Las Vegas, Cleveland and
the State of New Jersey.
Section I. Achieving the ~Ibjective
.01. The objective of the Alcohol and Tobacco Tax Division functions in the
Organized Crime Drive will be achieved by :
1 . Vigorous investigation of selected syndicates. combines and conspiracy
groups engaged In illicit li.luor and illicit alcohol activities.
2 In-depth examination and investigation into the business operations of
restaurants serving wine. beer or liquor: taverns; nightclubs; wine, beer and
liquor distributorships; and other activities of the legal wine, beer and liquor
industries which are suspected of having concealed racketeer interest and
control.
3 Intensive investigation of selected hoodlums and racketeers suspected of
violating the provisions of the National and Federal Firearms Acts.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For RE leasei2A00E//0 2002/05/08 : CIA-RDP770BOO338ROO0 00020060-8
4 Tactful and vigorous investigation of selected public officials to detect and
expose through prosecution the liquor and firearms violation conspiracies in
which these corrupt holders of public trust have been and are involved.
5 Prompt investigative follow-up of information that racketeers normally
engaged in activities not coming within the jurisdiction of the Alcohol and
Tobacco Tax Division have committed or are committing liquor or firearms
violations.
6 Furnishing information regarding local firearms violations discovered
through the Firearms Record Inspection Program to appropriate State and local
law enforcement agencies to assist these authorities in their efforts to combat
crime in the streets.
7 Furnishing information discovered in the performance of activities de-
scribed in Sections 4.011 through 4.016 of suspected violations of laws not
enforced by the Alcohol and Tobacco Tax Division to the appropriate Federal,
State and local law enforcement agencies.
8 Continuation of assistance and manpower and equipment assignments to
other law enforcement bodies requesting such aid in their campaigns against
crime, particularly those agencies which are engaged in suppressing crime in
the areas listed by the Attorney General of the United States as requiring spe-
cial attention (see Section 3.017).
Section 5. Organized crime drive cases
Alcohol and Tobacco Tax Division Organized Crime Drive cases are those
cases initiated and conducted to achieve the Drive's objective and which provide
a reasonable basis for concluding that further investigation may develop suffi-
cient evidence on which to base recommendations for prosecution of the subjects
involved.
Section 6. Responsibilities
.01 The Assistant Regional Commissioner, under the direction of the Regional
Commissioner, is responsible for the administration of the Alcohol and Tobacco
Tax Division's operations in the Organized Crime Drive in his Region.
.02 The Chief, Enforcement Branch, is responsible for the prompt and thor-
ough investigation of persons coming within the purview of the Drive in his
Region.
.03 The Chief, Enforcement Branch, is responsible for maintaining liaison
with the Regional Coordinator, Intelligence Division ; the United States At-
torneys ; the attorneys assigned in the field to the Organized Crime and Racketeer-
ing Section of the Department of Justice ; other Alcohol and Tobacco Tax re-
gional offices ; and the National Office.
.04 The Chief, Enforcement Branch, or the Supervisor in Charge, whichever
is charged with the immediate supervision and control of a particular Organized
Crime Drive investigation, is responsible for the suitability of the personnel as-
signed to that investigation.
.05 Upon receipt of an Organized Crime Drive number for an assigned in-
vestigation in his area, the Chief, Enforcement Branch, will notify the Regional
Coordinator, Intelligence Division, of the issuance of such number, the identity
of the purported violator, the nature of the alleged offense, and such other in-
formation pertaining to the investigation as is necessary for coordination
purposes.
Section 7. Procedures
.01 The Chief, Enforcement Branch, immediately will review the region's cur-
rent inventory of investigations, and employing the criteria set forth in Sections
3 and 5 above, will determine which of these investigations warrant inclusion
in the drive.
.02 On or before January 1, 1967, the Chief, Enforcement Branch, will for-
ward, through the Assistant Regional Commissioner, a request to the Director,
Attention : CP :AT :EO, for an Organized Crime Drive control number for each
investigation which the region desires to have included in the Drive. Each request
must set forth in detail the basis for having the investigation so identified in-
cluded in this activity.
.03 The National Office will review each request to determine if the suggested
investigation meets the criteria set forth in Section 3 above, and to determine
whether the subjects named in the request warrant inclusion in the Drive's ac-
tivities. Following this review, the Director will issue an Organized Crime Drive
control number and assign the case for investigation under the auspicies of the
Drive, deny the request as not suitable for the Drive's purpose, or return the
request for further information.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Appoved Fo ReleEpRsAe 29~Q gq/OA~i y$-F p~A7 3 800200020060-8
THE
4 When suspected or known violations arise after January 1, 1967?where
the subjects involved waerant consideration for inclusion in the Drive's activi-
tiesf the procedures set f>rth above will apply. However, preliminary investiga-
tion, prior to referral to tl ie!National Office, must substantiate that the case meets
the Drive's criteria and provide a reasonable basis for concluding that further
investigation may develop 'sufficient evidence on which to base a recommenda-
tion for prosecution of the subjects involved.
.05 When the National Office receives information or a request coming within
the Scope of the Drive fro3n the Office of the Attorney General or other. responsible
authority, an Organized Crime Drive control number will be assigned to the
matter and the case will be referred to the appropriate region(s) for investi-
gatton.
.06 The security prov: lions pertaining to the transmission and disclosure of
information regarding sensitive cases shall apply to the fullest extent to Orga-
nized Crime Drive investi.;ations.
.07 All journeymen special investigators will be available for assignment to
Organized Crime Drive activities.
.08 Before personnel )utside of the Alcohol and Tobacco Tax Division are
assigned to an Organized Crime Drive investigation under Alcohol and Tobacco
Tai Division's control, their suitability for such work will be discussed and
cleared with the Region-1 Coordinator, Intelligence Division.
.0;9 On the last working day of each month, Form 4200, Investigative Progress
Report (Report Symbol c0-CP:AT-101), will be prepared for each Organized
Crime Drive case which 'lad not been closed by the first of that month through
prosecution or administrative action.
.10 The Assistant Reitonal Commissioner will forward to the Director, At-
tention: CP:AT:EO, a Form 4200 copy, to be received by no later than the 5th
work day following the reported month, for each Organized Crime Drive. case
in his Region which had nDt.been closed by the first of the reported month through
prosecution or administration action.
.11 The Assistant Regional Commissioner will furnish the Director with an
Organized Crime Drive situation summary report following the close of each
quarter of the fiscal year A copy of the report will be furnished to the Regional
Coordinator, Intelligence Division, for information and coordination purposes.
.12 Each Organized Crime Drive situation summary report should include the
following information :
1 The number of investigations opened and closed (luring the quarter,
and the number of investigations currently on hand.
2 Definite accomp: ishments and achievements made in assigned Investi-
gations during the quarter, particularly in the areas specified in Section
3.017.
3 The number of persons arrested during the quarter as the result of
the Drive.
4 The number of persons recommended for prosecution during the quarter
as the result of the D rive.
5 The results of Organized Crime Drive trial actions during the report-
ing period.
6 The number of information referrals made during the reporting period
to Federal enforcem ant bodies (i.e.: the Intelligence Division, Federal Bu-
reau of Investigaticn, Bureau of Narcotics, Secret Service, etc.) and to
State and local law enforcement agencies.
7 Problems encountered during the reporting period in conducting the
Drive.
8 Anticipated problems in conducting the Drive.
13 When the Assistant Regional Commissioner determines that an Organized
Crime Drive investigatio a should be closed without prosecution, he will furnish
the! Director, Attention : 0P :AT :EO, with the original and one copy of a memo-
ranjdum report setting f )rth the reasons why the investigation should be ter-
mhlated. The investigation will not be closed until the Assistant Regional Com-
missioner receives notifi2ation from the Director that termination of the in-
vestigation is authorized.
.14 When an Organiz, 1. Crime Drive investigation culminates in an Alcohol
and! Tobacco Tax case teing recommended to the United States Attorney for
prosecution, the case rep)rt shall carry a regular Alcohol and Tobacco Tax case
number with the Organized Crime Drive control number appearing in paren-
the$es as a suffix to the t number. The Assistant Regional Commissioner will
Apprbved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Fgfele3P0/ QI#pg7P8920002Y?60-8
furnish the Director, CP :AT :EO, with two copies of the report upon its
completion and approval.
.15 The time expended by special investigative personnel on the Organized
Crime Drive activities outlined in this Supplement will be combined and
recorded with the other time expenditures under the appropriate items (firearms,
legal liquor, illicit liquor, etc.) appearing on page 2, Form 2300, Regional Alcohol
and Tobacco Tax Monthly Operations Report (Report Symbol NO-CP:AT-7).
In addition, notation will be made at the bottom of this form as to the number
of special investigative man-hours spent on Organized Crime Drive activities
during the reported month. This data may be obtained from submitted Forms
4200. Previous instructions relative to reporting time expenditures of personnel
detailed to the Intelligence Division for Organized Crime Drive purposes remain
in effect.
.16 The intensive nature of Organized Crime Drive investigations may
require above-normal expenditures for premium, pay, regular travel, or materials
and facilities that cannot be absorbed within allotted funds. If the Regional
Fiscal Management Officer and the Assistant Regional Commissioner find this
to be the case, requests for additional funds to pay for the above-normal costs
of these investigations. should be made. (See Manual Supplement 15R-10 (Rev.
1), C.R. 94R-4 (Rev. 1), dated July 25, .1963, entitled "Funding Organized Crime
Drive and Other Special Projects.") Amounts needed for premium pay, regular
travel,. and each object class of materials and facilities should be identified.
Section 8. Procurement of forms
An initial supply of Form 4200 will be forwarded without requisition. All
future requirements will be obtained through normal procedures..
Section 9. Effect on other documents
IRM 7100, 7200, 9400 and 9500 are supplemented.
DONALD W. BACON,
Assistant Commissioner (Compliance).
U.S. TREASURY DEPARTMENT, INTERNAL REVENUE SERVICE
MANUAL SUPPLEMENT
(April 11, )
THE ALCOHOL AND TOBACCO TAX DIVISION'S PARTICIPATION IN TIDE ORGANIZED
The purpose of this Manual Supplement is to amend the instructions for the
preparation and distribution of Form 4200, Investigation Progress Report (Re-
port Symbol NO-CP :AT-101) , and the distribution of the Organized Crime
Drive situation summary report.
Section 2. Procedural Changes to Basic Manual Supplement
.01 Section 7.09 is amended to read as follows :
"On the last working day of each month,. Form 4200, Investigation Progress
Report, will be prepared for each Organized Crime Drive case which had not
been closed by the first of that month through prosecution or administrative
action."
.02 Section 7.10 is amended to read as follows :
"The Assistant Regional Commissioner will forward to the Director, Atten-
tion : CP :AT :EO, two copies of the prepared Form 4200 to be received by no
later than the 10th workday following the reported month for each Organized
Crime Drive case in his Region which had not been closed by the first of the re-
ported month through prosecution or administrative action."
.03 Section 7.11 is amended to read as follows :
"The Assistant Regional Commissioner will furnish the Director, Attention :
CP :AT :EO, with an Organized Crime Drive situation summary report (Report
Symbol NO-CP:AT-102), following the close of each quarter of the fiscal year,
the report to be received no later than the 15th workday following the close of
the quarter. A copy of the report will be furnished to the Regional Coordinator,
Intelligence Division, for information and coordination purposes."
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 200?~0/08G ; FR~7$3L3~,A0200020060-8
THE FEDERAL EF A AI
Section 3. Effect on Othe- Documents
7" his Manual Supplem(nt amends Section 7.09, Section 7.10 and Section 7.11 of
Maiuial Supplement 72G-48, and C.R.'s 71G-17, 94G-32 and 95G-22, dated Novem-
HAROLD A. SERB,
Director, Alcohol and Tobacco Tax Division.
ATTACHMENT NO. 10
U.S. DEPARTMENT OF JUSTICE,
Washington, D.C., December 10, 1959.
DVOIaHT E. AvIS, Esq.
Director, Alcohol and Tol )acco Tax Division,
Internal Revuene Servioe, Washington, D.C.
~EAR MR. Avis : We lave recently been advised of the sentences imposed in
thq case of United States v. Mazzin, et al., in the Eastern District of Pennsylvania
and of the convictions obtained in the case of United States v. Barbone, at al.,
in the District of New Jersey. We know that you will agree with us that these
are important convictions and will have far-reaching effect on syndicated illicit
alcohol operations in the Philadelphia-New Jersey area.
We in the Organized Crime and Racketeering Section have followed these
cases with some interest and are most gratified with the results. It is our belief
that your agents who co 9ducted the investigations leading to these prosecutions
are deserving of commen lation.
un fact, we note that yDur major violators program has begun to show excellent
resjnlts and that there ?Lre at least six cases now pending in New Jersey and
Brooklyn against large-wale moonshine syndicates. You may be sure that the
efforts of your Division in this program are greatly appreciated and that the
cal . es now pending will ; eeeive the prompt and vigorous prosecution which they
warrant.
Sincerely,
MALCOLM R. WILKEY,
Assistant Attorney General,
Criminal Division.
By WILLIAM G. HUNDLEY,
Chief, Organized Crime and
Racketeering Section.
Mr. SERR. May I sa.y, before I start in on the summary, that I have
with me Mr. Thomas Casey, the Chief of our Enforcement Branch,
iu d he is directly responsible for the so-called enforcement work in
our Division. I also have Mr. John McCarren. He is with the Alcohol
and Tobacco Tax Division of the Chief Counsel's Office. And he is
ottr legal adviser in tl Le national office.
1TOw the statement I had prepared here follows fairly closely the
le4ter we received fr,:m you. We tried to outline the background and
the results that we hr:ve obtained in the past, the cooperation, our rela-
tionship with other a;encies and so on.
Mr. FASCELL,. Why don't you touch on each of those points.
Mr. SEP.R. Fine.
We are a division :.n the Internal Revenue Service, just like the In-
telligence Division. Mach that Mr. Kolar has said to you also applies
to'the Alcohol and Tc bacco Tax Division.
In the statement ;7ou will notice that we confine ourselves to the
operations of the Ale )hol and Tobacco Tax Division.
We do work closely with the Intelligence Division, our people in
the field work with one another on cases back and forth. So that phase
of our cooperative effort is not highlighted in our statement. I wanted
to point that out.
Our Division is responsible for the enforcement of the laws relating
to. liquor, tobacco and firearms. Within it, we have two principal func-
Apprpved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
TAE FEDERAL EFFORT AGAINST ORGANIZED CRIME 93
tions. One is : the collection and control of the industries, the. legal in-
dustries, they pay taxes on liquors and tobacco. This is a substantial
portion of the work of the Alcohol and Tobacco Tax Division.
The second, part of our work has to do with the detection of viola-
tions of law relating to liquors, tobaccos, and firearms.
It is this second part that we came here to discuss this morning.
Insofar as organized crime is concerned, our contact with it goes
back particularly into prohibition days, when organized crime really
took over the so-called liquor business in this country, and became
one of the most lucrative businesses there was.
Mr. FASCELL. Mr. Serr, you are not playing reruns in your office,
are you ?
Mr. SEER. No, sir-I trust not.
Mr. EDWARDS. Was Elliott Ness a part of your section?
Mr. SERR. Yes, sir. He was one of our people. We have a lot of in-
teresting cases.
I want to point out that our work in liquor control involves a good
many cases. Last year, for example, we made over 7,500 cases. We
seized more than 5,000 illicit distilleries, and arrested over 6,000 in-
dividuals.
Mr. FASCELL. Right there-may I inquire? Was there any evidence
of an organized crime effort in these illegal or illicit distilleries?
Mr. SERR. There are organizations at work on an organized basis,
that is right. And we have tried to pick those out and highlight those
as so-called organized crime cases, right.
Altogether, we have a little under a thousand investigators in the
field to do our job for us. We think we have them well trained. They
have a tough job, they have a dangerous job. But we think we have
got a force that has good morale, is mobile, and does what the job
requires.
I think we should move along. I have tried to highlight over the
years some of the important types of criminals and gangsters that we
have run into.
Mr. FASCELL. How about picking one out of your most recent
notorious cases?
Mr. SERR. WellMr. GALLAGHER. Whatever happened to Joe Valachi?
Mr. SEER. He is not one of ours. No, he is not one of our violators.
Mr. GALLAGHER. He got a lot of good coverage.
Mr. SERR. Let me come to that in just a minute, Mr. Chairman.
Mr. FASCELL. All right.
Mr. SERR. Let me first say that during the early organization of the
organized crime program, under the Department of Justice, we partici-
pated in it informally. For about 5 or 6 years we worked informally
with the Intelligence Division and with the Department of Justice.
Last November we formalized our own procedures, and I have
attached as one of the exhibits a manual supplement, 72-G-48, which
clearly defines the organized crime program as it is conducted in the
Alcohol and Tobacco Tax Division.
We have outlined the types of cases we consider falling within this
category, and we have spelled out the procedures, both in our shop,
the Department of Justice, and in our field offices.
I might say since we have formalized this program, we have orga-
nized 28 investigations, all recognized by the Organized Crime and
7S-50S-67-pt. 1-7
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 7 THE roved For ReBDeEaR a 200 d0 /OAS ,-FPA730200020060-8 AI9
App4
Racketeering Section of the Department of Justice, as falling within,
the concept of an OCII case.
Four of these are I arge moonshining operations in the Southeast..
Thirteen of them involve syndicated ownership, hidden or otherwise,,
in he retail industry.
Tr. FASCELL. Let ine review that for just a minute. What was the
major part in the Southeast?
Mr. SERR. Illicit distilleries.
Mr. EDWARDS. Is that because we have the best or the worst or the
mdst?
Mr. SERR. Well, so netimes we think it is the most. I am sure if you
saW some of the hidden stills that we find in the woods, sometimes
with dead pigs floati gig in the mashboxes and rats and vermin of all
kinrds, people would not think what, they bought from the moonshiner
w~s at all in the categ )ry of desirable merchandise.
Mr. GALLAGHER. I here should be truth in the packaging.
Mr. SERR. We wou:d:like to acid that to one of the requirements for
mponshiners.
,Mr. FASCELL. Most of the illicit distilleries are in the Southeast?
Mr. SERR. Yes, sir, about 75 percent.
Mr. FASCELL. Of t rat 75 percent, what is the percentage in Florida?
Mr. SERR. Florida is not high on the list. It is pretty well. down
the list. We have worked with the local people, and have it fairly
well cleaned up. Our big States down there today are Georgia and
Alabama.
Mr. EDWARDS. I have even run across a few of them campaigning.
Mr. FASCELL. Mr. Serr, you made reference to organized crime
elements in--
-;Mr. SERR. In the retail and wholesale end of it, yes. In order to get
into the liquor business, a person has to come to our organization,
make an application., and for the most part get a permit. Now, this
i~'not true in the retail end. We find that many racketeers try to invest
their money in the retail distribution of liquor, use that as a front and
as a legitimate means of conducting additional operations. Many of
these places serve as meeting points for mobsters and others. And
t0 the extent that - we can harass the criminal element and get them
out of the legal li.nuor business, we direct our attention to that. end.
Mr. FASCELL. Now, most States have laws with respect to licensing
of both retail establishments and wholesale establishments which pro-
hibit anybody with i Criminal record from owning a license or actually
having an agent or i rustee or front for a license.
Mr. SERR. Right.
Mr. FASCELL. How do you cooperate with States agencies with
respect to the enfor~,enent of the State law, if you do?
Mr. SERR. Well, we cooperate to the extent that they must disclose
ii their application for a special tax stamp who the actual owners
are. Usually we find. in these situations they do not do that.
who is
So we have a legitimate reason for working on a person w
suspected of being in a retail establishment unlawfully.
We know that tl.e States, as you pointed out, have similar require-
ments, and we gene rally try to get together with them, and any infor
piation they have we try to get, and any information we have, we try-
to exchange with them. Our objective is to bring cases against undis
Closed racketeer owners. And if we can prosecute them under a Fed-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 95
eral charge, we take them to Federal court ; if the best means of
prosecution is in the State courts we prosecute there, or through admin-
istrative action, either ours or in the State. We work it that way.
Mr. FASCELL. There is no requirement now for the States, except
simply on a cooperative effort, with your unit, to make any informa-
tion available to you, is there?
Mr. SERR. That is correct.
Mr. FASCELL. That is for retailers and wholesalers-because you
have no jurisdiction.
Mr. SEER. We have no jurisdiction in the licensing of retailers.
Wholesalers do get permits from us.
Mr. FASCELL. It is from the special permit that you get the
information?
Mr. SERR. And special tax stamps-right.
Mr. FASCELL. Thank you, go ahead.
Mr. SERB. I might point out-I think interest was expressed about
public officials in the OCD category. Three of our current OCD cases
fall within this category. As I pointed out in my statement, the most
notable is a bootleg ring headed by a Mr. James E. "Bookie" Turner,
Police Commissioner of Chattanooga, Tenn. He is under indictment,
and the case is now awaiting trial.
There are others.
Mr. FASCELL. I notice you mention the Chillingsworth case in your
statement, too.
Mr. SERR. That is true. This was a subsidiary part of a wider
investigation of a larger bootleg ring down in the South.
Mr. FASCELL. You. also mention something about illegal gunrun-
ning, with respect to furnishing guns
Mr. SERR. For the Cubans-right. We also enforce Federal and
national firearms laws.
Mr. GALLAGHER. Mr. Chairman
Mr. FASCELL. Mr. Gallagher.
Mr. GALLAGHER. May I ask a question at that point. I have been
reading your statement here, and I notice that you have got quite a
bit to do about firearms.
Mr. SERR. Right.
Mr. GALLAGHER. Do you take an interest in the large-scale gun
selling that apparently is going on in many areas of the country
right now-people who do not have such exotic names as "Alky
Sam" or "Lucky Louie." Or some of the names you have here-just
plain, well-meaning, allegedly well-meaning, people who are in the
gun business today.
Mr. SEER. Now, if I understand your question-are we interested
in people who sell guns, or buy guns generally?
Mr. GALLAGHER. Are you, (a) interested-(b) are you doing any-
thing about it? Even though it does not come under the exotic headings
of this thing, it would seem to me this poses a tremendous problem.
Mr. SERR. It does.
Mr. GALLAGHER. For instance, I know of an area that has been
reported to me, and I do not know it to be factual or not-one small
area, there has been 300 carbines sold by a fellow very large up in
so-called veterans circles. They are made in the United States. I
do not know whether they are made correctly or not. I am iust
wondering who takes a look at this, and what the purpose of it all is.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
96~ THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. SERR. Well, certain guns of course are legitimate. Under Fed-
erl law anyone can )uy them and sell them. And we have laws that
cllssify certain guns into categories where they are taxable whenever
they are transferred. We have other laws that require certain record-
ke~pmg operations.
Taw, these laws are designed basically to keep guns out of the
ha}ids of criminals.
1VIr. GALLAGIIER. Neil, shouldn't we also keep the guns out of the
liands of nuts?
Mr. CASEY. I might answer that, Mr. Gallagher. We are increas-
ingly getting involved with certain paramilitary type groups.
Ir. GALLAGHER. Y'S, exactly.
41r. CASEY. We have infiltrated the Minute Men. We have convicted
recently the head of that, DePugh. He is out seeking an appeal on
that now. We have j?ist recently arrested William Thorensen the son
of a millionaire, and a millionaire himself, in California, who has
arriassed an arsenal. We are very much on top of this, and very much
involved in this. There are certain segments of our society today who
haze joined forces to establish vigilante type groups. In the South we
are having much activity down there with the Klan, obtaining guns.
4Ir. GALLAGHER. NDtonly the South. The North.
Mr. CASEY. Yes, sir. You had your Minute Men group in New York.
Mr. GALLAGIIER. Yes-up in Jersey, where evidently there are a
grat many people who discuss quite openly the purchase of guns. I am
ju. t wondering what we are doing about it.
Mr. S T GERMAIN. Would you yield there for one question?
~ust yesterday in Warwick, R.I., I believe it was, a cache of arms
was found. Were you involved in that particular investigation?
r. CASEY. Yes. 17e, had one yesterday in Michigan, too.
Mr. ST GERMAIN. Hotchkiss, I think it was.
r. CASEY. Yes.
VIIr. GALLAGHER. "hat would your estimate be of a number of guns
in possession of not necessarily criminal types, but if you want to
th ow criminal type; in, fine.
fr. SE RR. Guns of dl types?
k r. GALLAGHER. I am talking of nonhunting guns. It could be clas-
si4ed as shotguns, of used for hunting. I am talking about the pro-
lifration of carbine, Luger sales, machineguns.
Mr. FASCELL. Anti ank weapons.
Mr. GALLAGHER. T.iis sort of thing.
1VIr. FASCELL. Gatl_ng guns.
11fr. GALLAGHER. There are people you can buy a carbine from
fok $80.
Mr. CASEY. Since the end of World War II, with all that military
ha?dwaro that was dunped throughout the country, and with the ease
with which you could bring stuff back, we have had a tremendous in-
cr4ase in this area. Congress is aware of it. There are many bills before
the Congress right now that would tighten up these areas. To answer
your question, I do not think anybody could give you an estimate
about the number of guns floating around the country today.
Mr. GALLAGHER. IE it possible to give an estimate on gun sales, other
than hunting rifles?
Mr. CASEY. That--
Apprpved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 97
Mr. GALLAGHER. I am talking about the Minute Men kind of opera-
tion, frankly.
Mr. CASEY. We are right in the middle of that operation. It is a
very loosely knit organization. Anybody can join. I believe when the
raid was made up in New York State, that the president of the or-
ganization, DePugh, stated he had no connection with that particular
setup in New York. But we have found that that was not true. We have
several pending cases of members of that organization before the
courts in Kansas City right today. And the interest in guns has seemed
to have increased over the past 10 years. I was amazed at the number
of gun shows that take place throughout the country.
We were concerned because we were getting information that some
of these different organizations were using these gun shows to in-
crease the collection, so-called collection. There is a terrific resistance
on the part of certain segments of our citizenry to tighten up the gun
laws. And if there were more stringent regulations in this area, it
would help us immeasurably.
Mr. GALLAGHER. I couldn't agree with you more; because while we
are talking of one thing, I think a frightening thing that has hap-
pened in this country is the number of people who are manufacturing
guns, selling them to well-meaning people for when the day comes-
whatever "der Tag" is- I am not quite sure. But this business of sell-
ing guns-I am just wondering who is watching it.
Mr. SERR. There are probably more than a hundred million guns in
the country.
Mr. GALLAGHER. A hundred million guns?
Mr. SERR. Yes, sir. And let us keep in mind that the sale of a gun
as such is not prohibited in Federal law.
Now, there are certain types of weapons, National Act weapons,
that require the payment of a transfer tax.
Mr. GALLAGHER. What about a carbine?
Mr. CASEY. It should be registered.
Mr. GALLAGHER. And therefore a person who sells a carbine to an-
other person is in violation?
Mr. CASEY. Yes, sir.
Mr. GALLAGHER. I would like to talk to you about this when this is
over.
Mr. SERR. You are talking about an automatic carbine?
Mr. GALLAGHER. Yes.
Mr. SERR. An automatic, yes should be registered.
Mr. EDWARDS. And tax paid i
Mr. SERR. There is a tax that has to be paid-$200.
Now, in addition to that, convicted criminals or people who have
been indicted are prohibited by law from transporting guns across
State lines.
Mr. GALLAGHER. I am not talking about the criminals now.
Mr. SERR. To that extent we have a direct responsibility to keep
guns out of certain people's hands.
Mr. GALLAGHER. I am with you on that. I read that, and I thoroughly
-concur in it. What I am really worried about, however, is not those
types who, as you say, you go to bed with, and put to bed, and get up
with them at night here-that is a questionable statement, but if that
is the way you feel about it, it is all right. I am worried about all of
the people who now 'the nuts. You people seem to be worried about
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
98 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
t~e criminals taking over, and many people worry about the Com-
unists taking over. I worry about the nuts taking over the country.
4nd therefore I just would hope that we are putting sufficient em-
phasis on the kind of people who are now selling guns for the day
when guns will be :needed. And I would tell you this-that there is a
tremendous proliferation of this kind of activity going on, for what-
~ver purpose-I am not quite sure.
Mr. SERR. We agr ?e with you.
Mr. GALLAGHER. It may well have to be you will have to call on
Alky Sam and Lucky Louie, and the Gallo brothers, to defend our
Aide of this thing.
Mr. SERR. We agree with you, and we feel something should be done
4bout it. But up to the present time about the only thing the Federal
f government has really been trying to do is fill in the void between
the States. The States basically control the sale of guns. And we feel
our responsibility it least ought to be to protect one State against
people in another State taking advantage of their situation.
Mr. GALLAGHER. What I would like-and then I will be quiet, Mr.
,61hairman-you have had a long history, a long experience with this
type of thing-if you could make some recommendations to this com-
inittee on what we can do about this problem. I think it is under-
played. We are not really paying enough attention to it. And I think
it needs the kind o:' a ,public relations buildup that some of the other
activities have gotton.
Mr. CASEY. We did not include any of this in the statement because
it was not to the point.
Mr. GALLAGHER. I know it is not to the point. But we got talking
about firearms. I think it is a more significant point than some of the
things we are talking about..
Mr. SERR. The public relations that has been built up so far has
been a. buildup by the NRA.
Mr. GALLAGHER. What we need is Joe Valachi, so we can polarize
.he thinking on this.
Mr. SEER. Right.
Mr. FASCELL. Go right ahead, Mr. Serr.
Mr. SERR. I did w ant to point out
Mr. FASCELL. Before we leave that point-I notice in your state-
i rent you say there are six ongoing cases with respect to furnishing of
firearms to syndicate membership. Does this mean they are in the
business, either manufacture, distribution, wholesaling, or are they
just getting a source of supply?
Mr. SERR. Maki:ig silencers, the gangster-type weapons that are
iised. Our activities tend to go away from "organized crime" into the
erime on the street areas, where we supply this intelligence to the
police departments.
Mr. FASCELL. I was trying to analyze or understand exactly where
the organized trim 3 element comes into the firearm picture. Is it man-
ufacturing, distribution, or use?
Mr. SERR. Well, we had Mannarino. He is an organized crime figure
that was at the Apalachin meeting. Intelligence made a wagering case
W ainst him u pin Kensington, Pa. We made a gun case against him.
e was trafficking in firearms, shipping them to the Latin-American
countries. It was during the time that Castro came into being. But
he got in there because there was a buck in it. And he was actually
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME ':99
engaged in gunrunning. We tailed him by airplane, with the Immi-
gration people; and made a case a couple of years ago in en Pittsburgh- on
at individual. But it is very rare that these peopl at that higher
that you might
echelon in the Cosa Nostra family, or the Mafia, whatever
want to call it, will get active in this area. But we do have some active
cases where people in that organization are making the type of weap-
ons that they use to hit these people.
Mr. FASCELL. Thank you.
Mr. ST GERMAIN. Mr. Chairman-on this same point-did I under-
stand you to say that some of them are manufacturing firearms and
silencers and what have you
Mr. SERB. Yes.
Mr. ST GERMAIN. As far asorganized crime is concerned, I think
you mention in your statement the situation we have in Massachusetts,
where we have about 30 to 32 gangland murders which I personally
feel, and I think many of the people in law enforcement in Massa-
chusetts feel, are part of organized crime, and most of this has to do
with loan sharking.
Now, I notice you mention two successful cases. Do you feel that
we have convicted two murderers?
Mr. SERB. We
Mr. ST GERMAIN. To the best of my knowledge, they have not got-
ten anywhere yet in Massachusetts.
Mr. CASEY. Through our inspection program-this is where we go
into the dealers premises and check his records-we have found some
of those weapons that were used. We found one that was used in one
of those murders in Boston.
Mr. ST GERMAIN. It was up for resale?
Mr. CASEY. No. It was purchased. They purchased several .38's---one
of the members of the gan up there went into Now Hampshire and
Vermont and those places that have dealerships, and one of them had
a bodyguard, a policeman, from one of those towns up there, and they
purchased seven or eight .38's, and one of those guns we were able to
trace, and attach it to one of those murders up there.
Mr. ST GERMAIN. But to date there have been no convictions.
Mr. CASEY. No, sir.
Mr. SERB. In other words, our responsibility did not go to solving
the murder. We came in on the gun angle. And we established that
the gun was brought in-they could not have purchased the gun in
Massachusetts-so they went to an adjoining State that has loose
laws on guns, and bought their weapons, and brought them in.
Mr. GALLAGHER. All they have to do is join the Minute Men-take
out a membership card in one of these organizations that sell guns,
whether they are in organized crime or not. The availability of guns
is just frightening and appalling.
Mr. SERR. You are right. What we are hoping to do is tighten up,
so that as a minimum, people who purchase guns will be identified
and if they do reside in another State, the thing will be controlled
so that they will have to conform to the laws in their own State.
Mr. GALLAGHER. You mean your organization abides by State bor-
ders? May I commend you as the first organization that has been here
that recognizes State borders.
Mr. FASCELL. Mr. Serr, do you want to finish?
Mr. St Germain?
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
100 T7 FEI? RAID EFFORT AGAINST ORGANIZED CRIME
4r. Sr G-BunrAix. P,arhaps you would rather not comment on this-
buk you said you werf involved in this latest Minute Man situation in
Rhode Island that developed over the weekend.
4r. C4suY. Yes, sir:
Mr. ST GERMAZN. Were these firearms also purchased from out of
the State, out of Rhcde Island, or would you rather not answer that
at this time?
Mr. CASEY. I don't, have the information, sir, at this time.
Mr. FASCELL. Mr. 13err?
Mr. SERB. I do wait to emphasize that we have had very good rela-
tiqns with the Depat tment of Justice, and the Organized Crime and
Racketeering Section. They have been of great assistance to us in
supplying us with information. We look forward to continued good
re ations with them.
If you are interested, I would like to highlight the two suggestions
w.6 have for improving enforcement. One has to do with overcoming
public apathy. This ;;tarts on page 20 of our statement. Our experience
gees back many years, in our war on moonshining. In many areas
of the country moonshining: was not looked down upon as being too
s6rious a way of li: e-until the public began to realize that moon-
shhining has many ;;poets to it that are harmful, that the person who
consumes it is riski:ig the consumption of liquor that may have lead
salts in it, and be harmful to his health, that moonshining is a. way
of breaking down :?espeet for local laws, and the life in local com-
munities. And until we could correct this, we were not getting far
iii the South.
We set up what we called "Operation Dry-Up" in the State of South
Carolina, and startf d quite a public relations campaign. We organized
it-we obtained tf levision and radio scripts without charge and
showed them to th3' public down there. The State also went into it.
They put on a program over their TV stations. We met with many
local organizations Rotary clubs, and went into the schools, met with
the police, developed a campaign to bring to the people the harmful
effects of moonshin' ng.
1 We improved our contacts with all local law enforcement officials.
We put in more manpower, and within a couple of years,
illegal whiskey prcduction in South Carolina dropped over 80 percent.
This, of course, helped in improving the revenues to the State treasury.
They got more moiey from the liquor than was sold there. Their sales
of legal liquor increased. We noticed there was a drop in. the rate of
'crime. Some of the police officers down there pointed this up. And
altogether we find that there is a better climate for law enforcement
in the State of South Carolina as far as liquor goes. I think it extends
into other areas, tc o.
We are carrying this kind of a program on in Georgia at the present
tune and intend to move into Alabama next.
So that we hope to improve our posture down there.
Mr. EDWARDS. May I ask a couple of questions?
Mr. I+ ASCErL.. Mr. Edwards?
M. EDWARDS. San you tell any difference in the number of crimi-
nals' involved in. sin area where you have legal liquor as opposed to an.
I area where you do not have legal liquor.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
THE FEDERAL EFFORT AGAINST ORGANIZED CRIME'; 101
Mr. SEm. That is a kind of a tough one, Mr. Edwards. Naturally
where you do not have legal liquor there is more of a tendency for
someone to come in and fill the void.
Mr. EDWARDS. Well, let's take a State where you have legal liquor
throughout the State. Do you have a real bootlegging problem in a
State like that?
Mr. SEER. I think I know what you are driving at. South Carolina,
the State where we started, was open throughout the State. The sales
of liquor were legal in all parts of the State; but you still had some
moonshining. There is a great incentive for moonshining because of
the high prices of legal liquor. And people with low incomes are going
to buv the cheaper product if it is available.
Now, in the States of Georgia and Alabama, where there are large
areas that are dry by local option, you have both incentives-the fact
that there are no legal liquor stores-you have to go long distances to
get legal liquor, and you have the people who are willing to buy the
moonshine product. So there is certainly a greater tendency toward
the moonshining criminals who move into that area than there is in
other areas.
The other thing I want to point out- I hope you will find our efforts
of interest-for example, our Chicago experience, where because of
a very tense situation we worked with the local police and the U.S.
attorney's office in making contact with the juvenile gangs out there
a year ago, and got these people to voluntarily surrender guns and
clubs and weapons of all kinds which were simply productive of vio-
lence and lawlessness in the area.
Mr. FASCELL. You mean you called these people together and talked
to them, and got them to give tip their weapons?
Mr. SEER. Right-induced them that it was to their advantage to
give up their weapons, and that we would not prosecute those who had
give weapons. And we were thoroughly successful in getting that
result. So much can be done if
Mr. FASCELL. Was that effort coordinated with the Department of
Justice's effort which was going on at the same time to get employment
for these kids ?
Mr. SERB. I cannot answer that.
Mr. CASEY. No; it was not coordinated, sir. We just took it upon
ourselves through the U.S attorney's office to see if we could not het
some of these people to surrender these arms, and we gave them im-
munity if they had the type of weapons that came within the purview
of the act. And they surrendered a small arsenal of meat cleavers, axes,
picks, pick handles, and sheath knives, and we did get several weapons
that fell within the category of the National Firearms Act. We were
trying to get the weapons out of the hands of tfie two groups that were
warring against one another out there. I think we got some of them,
but I don't think we got all of them.
One group declared a war immediately after the meeting because
they said one group surrendered more than the other. So we did take
some weapons away from them:' '
Mr. SEER. I would also like to point out our success in the South in
establishing what we call Metro Squads. Here again, keep in mind that
we are concerned with a liquor problem. Most States have police offi-
cers who are charged with the responsibility of enforcing laws against
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
1O THE FEDERE.IJ EFFORT AGAINST ORGANIZED CRIME'
liquor violators. Citios have officers with that responsibility ; counties
have the same situation.
We have gone especially into the cities and tried to organize our
efforts along with ti.e State and county and city people to establish
sgjuads that are prinarily concerned with liquor enforcement. By
working together, by trying to get over petty jealousies that might exist
between competing organizations, throwing our forces into one effort,
we have found that vw e were much more successful than we were before,
when we were each working on our own.
And this, we think, has a lot of promise, not only in our area, but
we hope in other area s.
Mr. FASCELL. Did I understand you correctly in your testimony
that that particular project is one sponsored and directed by the
O~ganized Crime Section of the Department of Justice?
Mr. SERR. No; this is one we have been working on. We have been
promoting what we all Metro Squads.
Mr. FASCELr,. I wculd like to ask you at what point or how you make
a determination that you have an organized crime case on your hands.
Mr. SERR. Well, of course, we do have the guideline instructions that
hive been issued to a Il of our people.
Mr. FASCELL. Guideline instructions by whom to whom?
Mr. SERR. By the-the manual supplement that I pointed out to
you, signed by our Assistant Commissioner. This goes out to all of
our people, and is me re or less the rule we live by.
Mr. EDWARDS. Is tl.at No. 5 in your appendix? ~
Mr. SERR. Right.
Mr. FASCELL. What does that guideline say about a determination of
an organized crime case, if it says anything?
Mr. SERR. We developed ground rules for determining what should
be considered as fa:.lin.g within the program, what the objective is.
When we find individuals who are engaged in major operations., and
in our judgment they ought to be set up and worked on particularly,
We identify them, we prepare a letter to the Department of Justice,
see if they agree with us, and if they do, we advise our field. We are
very similar to the Intelligence Division in the way we operate.
Mr. FASCELL. Yoi i send your request to the same Assistant Attorney
General ?
Mr. SERR. Right, we do. And we also make reports to them.
Mr. FASCELL. ThiI would be Mr. Vinson's office.
Mr. Spam. Mr. Peterson.
'Mr. FASCELL. In your case, as in the Intelligence Division's case,
the determination goes to Mr. Vinson's office for review, and it comes
back, and says, "O'ER; this individual can be considered part of the
organized crime drive."
Mr. SERR. They w ill consider it as an organized crime case, and from
there on we do, too.
Mr. CASEY. I mi?;ht add, Mr. Chairman, in reverse-we get many
requests from this section of Justice, for us to get into the hidden
oiwnership or the racket money that might be in nightclubs, bars, and
r staurants. And w s go into those areas in New York, Chicago, and
tie metropolitan areas, and try to determine if there are hidden assets,
a(nd we have been successful in this area. It is difficult-as you men-
Attachment No. 5 appears on p. 88.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
nli YEiERA1. EIT$"ORT AGAIN 'T? OIriOAI~1ZEP dRIME, 1O3
tioned earlier, the State 6f Florida possibly has s- law that prevents
anybody from using a front. But we have been able to get some of
these topnotch hoods where they falsified a form 11, that is the original
application for one of these occupational stamps. But I think that
maybe this is the most pertinent type of work that we are doing in
this organized crime area today, as far, as the Justice Department is
concerned-checking hidden assets in these legitimate businesses.
Mr. FASCELL, I was interested in your public relations aspect of
dealing with the problem of moonshining in .one State. And I must
say it appears that it was successful.
Phere seems to be a considerable difference of opinion expressed by
some experts-perhaps they are not field men-concerning the applica-
tion of such a public relations campaign to a general crime problem,
or an organized crime problem.
Do you have any opinion on that?
For example, one expert who at this point shall be nameless has
said that if you really stirred up the public with a great big public
relations drive about organized crime and crime on the streets, you
would clog up the courts. You would have so many minuscule cases
that were meaningless that you would never get to the big ones, and
we are so far behind now we cannot prosecute.
Mr. SERR.. Well, if people are violating the law, I would think
that-and their violations are substantial, T would think whether it is
a Federal case or a State case, someone should do something about it.
And I am not the least concerned about not being able to move our
cases forward. We are concerned about finding who is a violator. Then
working with the U.S. attorney to get prosecutions. And we feel we
have done our job when we have put the cases in their hands.
Mr. FASCELL. I am sure you have. Maybe it is not fair to have you
address the overall problem. As far as your particular area is con-
cerned, I cannot argue with that position. But I could argue with the
proposition, for example, of clogging the courts with traffic cases,
where you are trying to try a murderer.
Mr. Srnx. Right. Well, we have not .found too much of a problem
here.
Mr. FASCELL. In other words, if the emphasis and the priority on
organized crime has any meaning, then it ought to have meaning also
in prosecution, as well as investigation as well as in trial.
Mr. CASEY. We have found through a publicity program in the,
South, particularly in South Carolina-and I do not suppose there has
been any more hard core apathy, the code of the hills, and all this sort
of thing, where they would not talk. When we broke through that wall
of complacency on the part of the public-we used it gimmick, if you
want to call it that, of poisoned moon, which it was, and it was in-
jurious to the health of those people who drank it. It actually was de-
veloped through an Army hospital in North Carolina where over the
years possibly they have been putting these deaths down and charg-
ing them to alcoholism, but it was ingesting the lead salts that became
intolerable, and they died from it.
Mr. GALLAGHER. What is lead salts?
Mr. CASEY. It comes from the solder that gets into the product it-
self. Everybody ingests a certain amount of lead salts, I understand,
but your system is geared to throw it off. But when you get an over-
tolerance on it, it will kill you. It is a slow death process, too.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200022060-8
104 THE FEDERAL. EFFORT AGAINST ORGANIZEID CRIME
But when we broke through that wall of complacency in the South,
we found that convictions rose, jury convictions. So I think we are
reading the public when we got the word across that this was not only
a flyby-night type of an operation, there was tax involved, there were
many social problems a;tacked to it. We found in the city of Columbia
thatithe rate of homicic.es decreased because of the lack of the product
on t.e market. I think it ties in with your statement about the legal
ones!. I think when yo. knock out the illegal, there might be a lot of
bootlle gin but it is legal liquor that we are not interested in because
the tax has been paid or. it.
But we found there were :many crimes fostered in these places
that; stay open for 24 lours a day, where these people congregate to
buythis stuff.
Mr. FASCEr i . Mr. Edwards?
14 r. EDWARDS. Mr. Chairman, I would just like to say one thing
before I go.
Tam impressed with what appears to me to be an on-going program
in your particular division, trying to stop the crime before it starts-
a public relations pro.gram, and your pilot project in South Carolina
apparently has had some good results. I would hope not only your
division, but other divisions and agencies involved in this would carry
out similar type programs to get to the people.
This seems to be the great problem-at the local level, we must
wok with the police departments, and the local citizens, in creating
interest in not particippating, whether it be buying or producing or
sell4ng or what not, in his illegal whisky business.
r. SERR. We agree with you, sir.
Tr. FASCELL. Mr. St Germain?
liIr. ST GErtMAix. As a followup to the questioning I was doing with
ouri~ previous witness, I notice, your ending, in which you conclude by
saying:
I; am suggesting that by pooling our intelligence and by utilizing our resources
on n coordinated basis, we could increase the sum of our individual endeavors.
And I conclude in reading that that you agree with me that in truth
flit pooling and the coordination is not really there as of this time,
and a great deal has to be done to improve this pooling and co-
oraination.
Am I correct in this interpretation of your statement?
Mr. SERB. We used the formation of those Metro Squads as evi-
dence that in our own area of responsibility, by pooling our efforts
with thr States and the counties and the city enforcement agencies,
w got much better results than when we each went our own way.
Ypu are right. That was the reason that we put that illustration in
there.
Mr. ST GERMAIN. ~7o you agree with me that there is a further need
of more coordination. and pooling?
Mr. SERB. Right. And it is not necessary for the city police or the
county police to givtup anything. Just work together.
1 Mr. ST GER.MAIN. Well, I am talking now on the Federal level.
Supposing you want information from the FBI this afternoon on
Jbhn Doe that you are investigating, and you feel that information
tley have in their files would be of immense value to you, you save
your investigators a great deal of time, and help you to conclude suc-
c6sfully this investigation and indictment, a whole lot sooner, and
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Fern 2ehea?#A ,OQ?#WQBAGgkg,4R[;g7 g~3P Q200q~g060-8
perhaps make sure that you do get sufficient evidence to have an in-
dictment.
Can you get that information this afternoon?
Mr. CASEY. Yes. But I understand what is in the back of your mind,
sir.
I think the Justice Department has reached that point. I think may-
be Mr. Vinson and Mr. Peterson, during their presentation, men-
tioned about a project that they have going where everybody as one
unit is involved in a certain area.
We found
Mr. FASCEZL. That is the experimental project in the East up here?
Mr. CASEY. Yes, sir.
We have found in the past the Justice Department was accumulat-
ing all of this information and intelligence.
We could seek that out by going to them on an individual basis,
on a case-by-case basis.
We find now that with their attorneys that they have assigned to
the different districts throughout the country, where our people are
involved, that he is sort of a local on-the-spot coordinator there.
We might have a very minimum amount of evidence on one of
these individuals where he will have knowledge that Immigration
or Narcotics or somebody else who have more. And through the
united effort they try to get the whole group together working to-
ward one goal to get the individual involved on the type of violation
where the most evidence exists.
Mr. ST GERMAIN. My question is this.
If you were to call the FBI this afternoon on John Doe and say
"We have reason to believe that we can make a case here, however
there are certain parts of the puzzle that we do not have as yet, and
we need your file on this man with all the information that you have
on him for our people to go over, to see whether or not the missing
links are available from your file." Can you get that information this
afternoon?
Mr. CASEY. We possibly will not get the file. But through the liaison
man assigned to the Internal Revenue Service, Mr. Putnam, he would
get that information for us.
Mr. ST GERMAIN. You would have to go to Internal Revenue to get
it from FBI?
Mr. CASEY. They have a liaison man assigned to IRS, and we
would deal through him. On this case that I was mentioning, Mr.
Gallagher, on the big firearms case we made out in California on this
individual-he was a suspect in a murder case, just a suspect with a
lot of other people. We liaisoned and coordinated that information
through the FBI because they were the ones that had the information
that he was a suspect in this murder.
But we would not get the case file or the intelligence file.
Mr. ST GERMAIN. Now, one further question.
The Intelligence Division testified they had 1,700 agents out in the
field. You have how many agents?
Mr. CASEY. 970, sir.
Mr. ST GERMAIN. According to the concept of the Organized Crime
Division, as now set up, they are supposed to be coordinating all of
this. They have got 60 men to coordinate, just between your two agen-
cies, the work of 2,600 men, and to serve as liaison.
78-508 0-67-pt. 1-8
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Apftved THE- FADER?L2 EP'?f11t'i ~ G9~r j9?9g3,~? 0200020060-8
Mr. CASEY. I don'" think they have enough manpower myself.
r ST GERMAIN. It seems evident, wouldn't you say?
VIr. CASEY. Yes, sir; I would agree with you.
Mr. FASCELL. Wit you gentlemen yield at that point. The real
point is that the Organized Crime Section cannot coordinate, because
they have no line authority with respect to investigations.
Ir. CASEY. That is correct, sir.
Mr. FASCELL. Furl hermore', on a case-by-case basis, with anything
thIt is in the FBI file, which they are carrying on as an independent
investigation, unless you ask the specific question on the evidence
yqu want, you don't get an answer, because you don't see the file.
Mr. CASEY. We do get a flow of information.
Mr. FASCELL. I know. But you don't get the file.
Mr. CASEY. No, sir.
IMr. FASCELL. Now, the only case and working rule is that if the FBI
decides that they cannot make the case, OK, they let you have the file-
it is no good to them. Is that a working rule?
Mr. CASEY. In the firearms area we have maybe a closer relationship
with FBI than any of the other areas of jurisdiction that we have.
We do get daily information on Klan members who possess firearms,
we get it on the Minute Men. This is a general day-to-day referral
basis. They give us tae complete file on what they develop in that area.
But the other-it is usually on a case-to-case-we go to them for
c rtain information.
Mr. FASCELL. How about with other agencies that have investigative
information that might be of value to you? Do you have the same kind
of difficulty? Is it on a case-by-case basis with specific requests for
evidence?
Mr. CASEY. In our own family of the Treasury Department, no
s'veat, sir.
1 Mr. FASCELL, But you go outside of Treasury, and you have a prob-
1dm. An operational problem.
Mr. CASEY. That is why I think this section over here has been in-
valuable to us in Justice, because they have been able to get informa-
tion from all of th,3 agencies, I expect, and we go to them, if there
a missing link in our case, to see if they have something we need.
Mr. FASCEI.I.. And if they can get it. We are talking about the Or-
ianized d Crime Sect on.
Mr. CASEY. Yes, ;;ir.
Mr. FASCELL. And if they can get it. Because they probably cannot
get the file either.
Mr. GALLAGHER. Who?
Mr. FASCELL. Th ,. Organized Crime Section.
Mr. GALLAGHER. Why?
Mr. FASCELL. Don't ask me. Ask them. I don't know.
Mr. ST GERMAIN. Are there any FBI agents in this experimental
unit that you referr,>d to, that you are aware of ?
Mr. CASEY. I ca-inot answer that, sir. We have a man up there,
my assistant is up there-not constantly. But I understand that the
P.ff I did come in in the general discussion when they kicked the thing
Whether they have somebody in there now or not, I do not know.
Mr. ST GERMAIN. One further question. OCD asks you to concen-
~rate, once again, en John Doe, maybe a member of the Cosa Nostra,
r a suspected head of organized crime in a particular area.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved Fo
fJeL gqO;9 A I - g 8 00ED 8R000200010760-8 CRIE,
Does OCD then supply you and Internal Revenue and let's say Im-
migration and Customs with a full file from all the agencies-in other
words, compile your respective files into one complete file-here is the
information we have to date on this individual.
Mr. CASEY. We have access to go into these files on any case that
we have. But as far as getting a complete file from them, I am sure
we could get it.
Mr. FASCELL. The answer is, Mr. St Germain, there is no such master
file. There is no compilation of investigative evidence.
Mr. ST GERMAIN. Why haven't OCD Division, where they say they
are coordinating and working together-if they are not going to work
in this manner
Mr. GALLAGHER. Their computer is not complete.
Mr. FASCELL. That is the reason we are holding this inquiry, be-
cause there seems to be some question about what is really being co-
ordinated with respect to an organized crime drive in the country. That
is a very good point.
Mr. CASEY. We have an active undercover case going now in. a cer-
tain area of the country where we have three men under cover. We
went in there originally with the intention of staying within our own
jurisdiction, of course, hidden assets, racket money. And we have run
into narcotics, we run into prostitution-many thin that came outside
of our jurisdiction. We had a meeting in the Justice Department last
week with Henry Peterson. He decided what action should be taken
with this information that we are getting, that is beyond our realm.
Mr. FASCELL. In other words, which way to go?
Mr. CASEY. Yes, sir.
Mr. GALLAGHER. Do you ever make mistakes?
Mr. CASEY. US? Many, many, sir.
Mr. GALLAGHER. I know of one where they sent in 12 or 14 agents
with guns, locked the place up. I am not sure whether it was your
outfit. Locked the place up 59 days. Kept three agents around the
clock, which is quite an expensive operation. It turned out that at the
end of it, the real reason-the purpose supposedly was that the stamp
was not paid. The fact was that for 2 years the fellow did not open
his mail because he owed so much money that it was depressing to
open his mail. At the end of it, of all this Government money that
went into it, it turned out that he owed the Government some $105-
whatever the interest would be on $100 for 2 years. And never having
made any money, the fact was he did not owe any income tax. And
at the 61st day, he died of a broken heart, and disgrace, I might say.
So I think sometimes we get quite careless, our Government does,
when we decide to go and make a case against somebody when in fact
a case should not have been made.
So I just wonder about things like that, how often that happens.
Mr. CASEY. I don't know what type of a case it is. We don't have-
Mr. GALLAGHER. It was a stamp case. This was the justification
for closing him for 59 days. I mean it was just a poor guy who had
a little saloon. I am sure he was suspected of all sorts of things. A
little like Fearless Fosdick. The fellow who snatched the purse run-
ning down the street, and you must fire the machinegun. A lot of
people might get killed, but it is important to get that purse back.
I sometimes wonder that we make sure we really don't overdo this
sort of thing.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08l~S`P 0 00200020060-8
10$ THE FEDERAL, EFFORT AGAY -bl 'Al~T 9S RP
11 r. CASEY. I can assure you that we do not. If I had known that
that existed in our d;partment, I would have had that supervisor
in in about 15 minut?S. We just don't have that type of manpower
that we could be deal ing with a situation like that.
Mr. GALLAGHER. I :hmk at the same time there were in our area
a hundred and some candy stores that were raided-the same day
that Sobel got on an airplane, because we did not have enough man-
power to watch him--the convicted he got on an airplane, and dis-
griced our entire country for 2 or 3 months, because we did not have
anybody to keep him from getting on the airplane. In the meantime
we' arrested a lot of candy store owners.
Jr. CASEY. I don't know what we would be doing in a candy store.
r. FASCELL. Mr. c>err, Mr. Casey, Mr. McCarren, thank you very
m ch. We appreciate your being with us. Mr. Kolar, we would like
to bring you back for a few more questions, and Mr. Carney.
Would you come on up, and take a seat.
Whank you very iv uch, gentlemen. A very thorough presentation.
I appreciate your effort.
STATEMENT OF WILLIAM A. KOLAR, ACCOMPANIED BY THOMAS B.
CARNEY-Resumed
Mr. FASCELL. Mr. Kolar, in your opinion, are tax violations by
organized crime figures increasing?
Mr. KOLAR. In my opinion, yes.
Mr. FASCELL. In the President's Crime Commission report, and
other studies have shown, and I believe you stated, that the basis for
organized crime rev mue is gambling, illegal gambling.
I Mr. KOLAR. Yes,, ir.
I Mr. FASCELL. Is n lost of that revenue untaxed, in your opinion?
Mr. KOLAR. Actu,i.lly, that is a very difficult question, because we
have no way of knowing just what is untaxed. Again, giving my opin-
ion, much of the revenue is untaxed. That is an opinion, sir.
Mr. FASCELL. The Crime Commission report says on page 190:
From its gambling i.nd other illegal revenue on most of which no taxes are
p id, the criminal groi.p always has a ready source of cash with which to enter
a iiy business.
Mr. KOLAR. My experience would cause me to agree with that state-
rhent, sir.
Mr. FASCELL. Wc: do not have any real hard way of basing a judg-
ment on that?
Mr. KOLAR. It is very difficult. It is a matter of dealing in cash.
Mr. FASCELL. Ju.;t a good educated opinion.
Mr. KOLAR. Yes, sir. And I think Mr. Carney with more experience
would share my view. We can ask him, if you wish.
Mr. FASCELL. YOU testified that there are some 400 organized crime
eases being workec on by IRS, and yet over 3,000 people have been
identified, according to the Organized Crime Section, as being part of
the organized crimp; effort.
Mr. KOLAR. My answer to that would be that we have asked the or su Cosa Crime s Section
We 1 ave a list, I rwouldaguessi trconta inspected
in number. We arc going over the list to see what we have done in the
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved ForTRgI ;A0249p RR :ACT 70BOOZE3D8RCRIME, OO02000 l0o0~6O-8
past, and whether we believe we should do anything more in the
future.
In other words, we are trying to bring ourselves up to date by look-
ing at each of the individuals from a record standpoint within the
Revenue Service. If we believe we have done an adequate job, that
will be the end of it. If we think there is more to do, we will do more,
sir.
Mr. FASCELL. Yet, you testified that your definition of an organized
crime individual is more liberal than that used by the Organized
Crime Section.
Mr. KOLA. Can I say that it was more liberal-in the statistics keep-
ing. We still have different definitions of organized crime. However,
it seems to me that for the purposes of working with the Department
of Justice, we are not as concerned with definitions as we are with
their acceptance of this individual by their definition as being a mem-
ber of organized crime.
We might work it from a racketeer's standpoint, a tax evasion stand-
point. But who and what is organized crime insofar as I am con-
cerned must come out of the Department of Justice. And we abide
by their decision and assist them as best we can.
Mr. FASCELL. What is the status of the Supreme Court cases in
which the constitutionality of the wagering stamp is being questioned ?
Mr. KOLAR. Still pending to my best knowledge.
Mr. FASCELL. What specific recommendations in the report might
be of greater use to IR'S ?
Mr. KOLAR. Greater use to IRS or the Nation as a whole? I certainly
believe that a continuing committee of Congress to keep abreast of
the organized crime program would be a contribution to the Nation
as a whole, and I frankly do not see how it would hurt-I think it
would ;bene'fit IRS.
Insofar as IRS is concerned, again, I go back to the previous state-
ment--
Mr. FASCELL. Excuse me. You mean a committee of Congress, not
in the legislative sense, but in the oversight sense as we are now per-
forming?
Mr. KOLAR. Yes, sir. I think this would be a real contribution to
the success of the program and the welfare of the country.
Insofar as the work is concerned, the immunity from prosecution
for prospective witnesses, and the protection of witnesses, are the only
two that I can offhand suggest to the committee.
I might point out to the committee that we probably face a trouble-
some area in the future. We use undercover people, and undercover
people have contributed a great deal to the success of investigations.
Mr. FASCELL. Paid informants.
Mr. KOLAR. Our own people in attempting to infiltrate organized
crime.
Mr. FASCELL. Right.
Mr. KOLAR. This of course can be a future controversial area. And
I would suggest that it be looked into, and that we either have the
backing of the Congress in using this technique and the support, or
that we in effect be told that this is a technique that the Government
no longer wishes to see used.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Ap% ved Fo r Release ?P~gAg5//A%- R~~,71qpq ac} 000200020060-8
1
I (say this only based on experience we have had in the use of elec-
troijic equipment. Mary thought they were doing right. It was found
they were doing wrong. I think the same question can arise in the fu-
ture with respect to undercover people.
Mr. FASOELL. I thinly: you have a valid point there, and you are prob-
abl safe until somebody. blows your cover.
r. KOLAR. I would like to anticipate
r. GALLAGHER. Do you use electronic equipment now ?
Mr. KOLAR. I would say the use of electronic equipment is practi-
cally zero. We use a recorder to record an interview. Everything is
above board.
Mr. GALLAGHER. Ne, no, not an interview. I can see that. I am talk-
ingnow about an eavesdropping device.
1\ r. KOLAR. We don't use eavesdropping devices. Our restrictions
are i so tight that we are just about out of business with respect to the
use of electronic equipment.
4r. GALLAGHER. Ar d do you use wiretapping?
1"1r. KOLAR. Of course not--not under present conditions.
Mr. GALLAGHER. You say of course not as if this was never used.
Air. KOLAR. No, no We just don't use wiretapping. Certainly we
all know it has been r sed. I have been in investigations 25 years, and
I think it has been there as long as I have been in it. The question is
how it was used more than whether it was used, because the rules were
notl quite clear in my himble opinion.
Mr. GALLAGHER. I :;ure agree with that. Frankly, the Congress was
at P" great deal of fault in not giving some sense of direction on its use.
Mr. KOLAR. As an _ nyestigator, I have been looking for that direc-
tio for 25 years, to '')e very honest with you, to clear the air.
Ir. GALLAGHER. That is why I was happy that I introduced the first
bil on eavesdropping in the Congress.
What is your feeling on the. question of informants? While it might
be (helpful-do you t rink that there should be some group that you
discuss this with, suc'i as the CIA Watchdog Committee, so that you
do not go down the same path again ?
] {r. KOLAR. No. It is not a question of discussing it. Again, it is
like electronic eavesdropping. Its use has been questioned.
I think its use is c uestioned by much of the citizenry. And if we
call anticipate problems and resolve them, and accept responsibility
foa them, just like electronic equipment, we will do a far better
j olj.
Mr. GALLAGHER. As I read all of these statements on organized
crime, I find that gambling runs through it as the main source. What
would your opinion b : of legalizing gambling ?
r. GALLAGHER. Therefore, we might be able to eliminate all L111m
soft of thing.
Mr. KOLAR. It is cc neeivable that that could happen-well policed-
mid again I am afra: d it would have to be well policed. I would have
nd objection to legalising gambling.
t don't think I am adequate to say that we should or should not. I
think it would be a s onderful subject for further study.
Mr. GALLAGHER. Because sometimes I have the feeling as we go
ddwn the path toward-into all sorts of uncharted areas, especially
Appr ved For Release 2002/05/08 :_ CIA-RDP70B00338R000200020060-8
 Approved Fof&lft1p3~0~05/08 : CIA-RDP70B00338R000200020060-8
FORT AGAINST ORGANIZED CRIME 111
in the area of computers, and the invasion of privacy, that if there had
been no Mafia, perhaps big Government would have had to invent
one-a little like the Orwell book-every once in a while it was neces-
sary to have a Hate Goldberg area.
We need a target. And the Mafia, of course, is a, very popular target
right now.
But one of the problems overlooked is that in the pursuit of this,
many rights of the people are being eroded, and therefore if one of the
great problems of crime in the United States is gambling, it would
seem to me that it might be a far more enlightened way to legalize
gambling-if people want to bet, then we ought to bet, report their
taxes, and not be involved in criminal activities. You could get out
of the Mafia business, and we could perhaps pay more attention to
some of the greater problems, which is the breakdown of law and order
on the streets. Organized crime does not embrace murder and rape
and mugging and robberies and this sort of thing.
So I think while we all talk about organized crime, it might be better
to dry it all up, if gambling is the chief source.
I note in your statement here that-the Federal Government-"The
public has to be sold on the idea that stamping out organized crime is
in the first instance a local obligation."
I think what we are really doing-and I would like your comment
on this-is developing a Federal police force.
Now, should we have this? Is it a problem of such magnitude we
ought to have a Federal police force?
Mr. KOLAR. I don't think we would ever want a Federal police force.
I would not. I would not want to be part of it.
On the other hand, I think there is plenty of room for Federal inter-
est in assisting or aiding, if necessary, forcing a little bit the local
police to do their job more effectively
Mr. GALLAGHER. Oh, yes. I definitely agree with you.
Mr. KOLAR. I know of course your views on the invasion of privacy,
and I would like to think that in many ways I share them-mine are
as strong as yours. It just so happens I am in this business, and people
assume that we tread on other people. And I don't think we-we try
hard not to tread on other people and still do the job. I think the dif-
ference is that I live in one particular world in a. sense and you in
another, and you get this type information and I get the other. And I
want to impress upon you, though, that the job we do, we try to do
without injuring people who should never be injured. And this is a
prime concern, believe it or not-it is as important as catching the
criminal. We have to have balance in everything we do.
Mr. GALLAGHER. Mr. Kolar, I want to compliment you and the
agency on this particular feeling. The thing that disturbs me is not
the career people, because you people who have been in a. long, long
time have the responsibility of not only pursuing your job with great
diligence, but also protecting the average citizen. But when you get
into the exotic fields that the organized crime unit has got into-for
instance, a computer with 3,100 names on it-but there is also 300,000
other names. It, is quite conceivable that anybody who ever was in the
same theater with an organized crime identified type is going to find
that moment of his life frozen into a Government computer, and
forever more he rernaiiis part of the organized crime complex.
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08: Q~--ppf0>Q00200020060-8
THE FEDERAL EFFORT ALAI A
I think this has not; been thoroughly thought out, what we really
do shot want to do with this.
Mr. KOLAR. I have seen plenty of instances of people's name getting
in the file and going from pace to place. I do not like it any more
only question that has to be decided is, Are
that anybody else. The
there 300,000 names essential to intelligently combat organized
cririe? I think if you were convinced they are, you would agree that
we must have them, in the best interests of the country.
Jy think if the Department of Justice could be convinced-and I am
sure they are openm: nded-I have found them that way-that the
names are not essential, they would be the first to want to purge them
from the files. Unfortunately, though, we do not seem to get together
long enough and oftE n enough to have this decision made. Either it
is essential or it is not.
Mr. GALLAGHER. I worry about what is going to happen with this
tremendous police type-police state organization when all of the
organized crime type, disappear from the scene, '5, 10, 15 years from
now, and we have in fact the great mechanism of a police state, that
can then be used for political purposes.
Mr. KOLAR. First ve must; make them disappear. And I am sure
that-nobody wants n empire in an agency, unless he is a little bit
wgirped. And I hope most of us are not, or none of us are. We want to
do 'a job. And this i.: why-your interest in the job we are doing, I
find it encouraging, because only by this type of communication can
w~ all do the best job.
Believe it or not, is ; has been a real pleasure being before the com-
m(ttee. I hope I hav-1 been helpful. As I say, look at us, look at us
hard. And if we are doing anything wrong correct us. We are the :first
to want to receive it.
;ant GALLAGHER. Iet me please compliment you on that particular
statement, because if the whole Government is going to last, it is going
to last through that kind of cooperation-if the Republic is going to
survive. And I woulc_ hope there would be more people involved in the
other side who would adopt the kind of attitude that you have just
expressed.
Mr. KOLAR. It is the only attitude to have as far as I am concerned.
!Mr. FA5GELL. Thank you, Mr. Kolar.
The subcommittee stands adjourned, subject to call of the Chair.
(Whereupon, at h; :25 p.m., the subcommittee was adjourned, to re-
convene subject to th o call of the Chair.)
Appr~ved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
APPENDIX
TASK FORCE REPORT: ORGANIZED CRIME
[This section of the report is an annotated version of chapter 7 of the Commission's
general report, "The Challenge of Crime in a Free Society." The appendixes which
were printed with the task force report are not printed herewith.]
ORGANIZED CRIME is a society that seeks to operate out-
side the control of the American people and their govern-
ments. It involves thousands of criminals, working
within structures as complex as those of any large corpo-
ration, subject to laws more rigidly enforced than those
of legitimate governments. Its actions are not impulsive
but rather the result of intricate conspiracies, carried on
over many years and aimed at gaining control over whole
fields of activity in order to amass huge profits.'
The core of organized crime activity is the supplying
of illegal goods and services-gambling, loan sharking,
narcotics, and other forms of vice-to countless numbers
of citizen customers.' But organized crime is also exten-
sively and deeply involved in legitimate business and in
labor unions.3 Here it employs illegitimate methods-
monopolization, terrorism, extortion, tax evasion-to
drive out or control lawful ownership and leadership and
to exact illegal profits from the public.' And to carry
on its many activities secure from governmental inter-
ference, organized crime corrupts public officials.'
Former Attorney General Robert F. Kennedy illustrated
its power simply and vividly. He testified before a Senate
subcommittee in 1963 that the physical protection of wit-
nesses who had cooperated with the Federal Government
in organized crime cases often required that those wit-
nesses change their appearances, change their names, or
even leave the country.? When the government of a
powerful country is unable to protect its friends from its
enemies by means less extreme than obliterating their
identities surely it is being seriously challenged, if not
threatened.
What organized crime wants is money and power.
What makes it different from law-abiding organizations
and individuals with those same objectives is that the
ethical and moral standards the criminals adhere to, the
The Kelauvec committee found that:
dieate kenwn .. the Mrb,. orb..,
which lee are ifaund NI, many e It's, 11e title,. It hu internetloo.l ramitretion.
ppear ele.rly In a nee tiee with the ,l,. treble.
"2. 1. 3-d- ere u.ually found Or control ofe he mwt lucr.iire rocket.
in their t'e'st.
'3. There re indicmion. of a cair tired direction ed ontr l of hest
'ink1-,, hot le.derehip eppean to hr Ie a group rather th.. In a Ingle
.4. Th, Mafia h' the e m t that helps bled the Coetellv.Adoet,.Goeky
eyndtc.te el New ork end the Accerdo GuxlknFiecheiila odlc.te of Chlcego
Theegroup.le hove kep, h, ,... h dwiihi Lvcleno tl tees'Fish Je shout the count t.
nary i^ rietloe from this
ou5. The domioetfoe al the M.5, is hued lundementellY o 'mu Ie' red
mu der' Th. Mefie lea tree c nepter,y ag.inet law end o d,, which will
i
ruthleuy eliminte rey,ee who etende in the e y criminal
enterprise In which ii le in erseed. it willw Jeetroy it. ,e'ure
cone~who bckeye it.
? ft will e -P any mot,. svailebic- poR,ieel Influence, brlhe.Y, Ietimid,.
,o pi on the pert of ltIr.t. orcement to touch Its top
figure. or Ito interfere with ate
sen. SIR"-? comm. I- Invepeternionih,
to Orgeeized Crime in iet,,.t.te Commerce
(herein I er cited ee Kel Comm.?, .3d lei m Rep., . 307, 82d
Cao ., is, sen. 150 (1551), s,, .].I 9 crcr o e
esn n , cone Tinv canon zoo w xra-a aseo tee 1965 yoreu u n o sn con
coH o
J......e 0`1 e
mon,od nent&me: ChIlle ge ( it tOe American Legg,t .5,,i.,e (Pn.
I-S) 59 tee. e., . pees 399, 962-0M1 (1952), SS a. stet r., & r.. I,
127 (1963).
Meneumont r Vio]dSee. ,Sri- er omm. o~ Improper Aetirltlee to the Labor or
interim oe out rc s w: Lebno.Mgt, Rep..], do,
p., s . . 1417, 85th Cone, 2d Seer. (1958), 2d lnnrim Rep.
laws and regulations they obey, the procedures they use
are private and secret ones that they devise themselves,
change when they see fit, and administer summarily and
invisibly. Organized crime affects the lives of millions of
Americans, but because it desperately preserves its invisi-
bility many, perhaps most, Americans are not aware how
they are affected, or even that they are affected at all.
The price of a loaf of bread may go up one cent as the re-
sult of an organized crime conspiracy, but a housewife has
no way of knowing why she is paying more.' If organized
criminals paid income tax on every cent of their vast earn-
ings everybody's tax bill would go down, but no one
knows how much s
But to discuss the impact of organized crime in terms
of whatever direct, personal, everyday effect it has on
individuals is to miss most of the point. Most individuals
are not affected, in this sense, very much. Much of the
money organized crime accumulates comes from innu-
merable petty transactions: it 50-cent bets, $3-a-month
private garbage collection services, quarters dropped into
racketeer-owned jukeboxes, or small price rises resulting
from protection rackets. A one-cent-a-loaf rise in bread
may annoy housewives, but it certainly does not
impoverish them.
Sometimes organized crime's activities do not directly
affect individuals at all. Smuggled cigarettes in a vend-
ing machine cost consumers no more than tax-paid ciga-
rettes, but they enrich the leaders of organized crime.
Sometimes these activities actually reduce prices for a
short period of time, as can happen when organized
crime, in an attempt to take over an industry, starts a
price war against legitimate businessmen. Even when
organized crime engages in a large transaction, individ-
uals may not be directly affected. A large sum of money
may be diverted from a union pension fund to finance a
(p4. I & 2), e. en. or. to, 86th Cong., 1st Sere. (1959), Final Rep. (pt.. I-9),
0 1199, 86th Cong., 2d See,. (1960), /ode,. to Reports, Nth Con.., 2d
See`(I9 1).
epeenbleeete, o[E]ridencer rn a it ld mad b fern. hose moot suddenly I
e re nnoy
he use e un crapulousvlo leJ me. p 'net
n e bud- pmctleu,neaenloe. bomb.
leg .,2 oihe loans e( neo ,o elimleate owpeiiior. end t mpel c t,mers
to isle tole, .old by the m beteee.'? Kefeuv_----
facilitated systems in which the bookmaker may not k ow
the identity of the second-echelon person to whom he calls
in the day's bets. Organization not only creates greater
efficiency and enlarges markets," it also provides a system-
atized method of corrupting the law enforcement process
by centralizing procedures for the payment of graft."
Organization is also necessary to prevent severe losses.
More money may be bet on one horse or one number
with a small operator than he could pay off if that horse
or that number should win. The operator will have to
hedge by betting some money himself on that horse or
that number. This so-called "layoff" betting is accom-
plished through a network of local, regional, and national
layoff men, who take bets from gambling operations.2'
There is no accurate way of ascertaining organized
crime's gross revenue from gambling in the United States.
Estimates of the annual intake have varied from $7 to
$50 billion.2' Legal betting at racetracks reaches a gross
annual figure of almost $5 billion, and most enforcement
officials believe that illegal wagering on horse races, lot-
teries, and sporting events totals at least $20 billion each
year. Analysis of organized criminal betting operations
indicates that the profit is as high as one-third of gross
revenue--or $6 to $7 billion each year. While the Com-
mission cannot judge the accuracy of these figures, even
the most conservative estimates place substantial capital
in the hands of organized crime leaders."
Loan Sharking.30 In the view of most law enforce-
ment officials loan sharking, the lending of money at
higher rates than the legally prescribed limit, is the second
largest source of revenue for organized crime.' Gam-
elh A`e` Jcra'e l,ef orgeelm1en of pereounel, (2) a epui.l o,?enitstion In
et he ., do u 4 'led from a cemrel
-. me, poliun e , (3) the
d de public Mciele, prlncipellr police end polltl,lene, .re drawn Imo
pert of 'he organs rs in,, (4) legal aW In which member of th
legal prefeeelon becom, the edO.on end roneulent, of the o,e,eize,k,,'' can.ane
d ,
Numbers Gambling, A Study st Cultur, C-111- 68, 1910, unpubllehed Ph.D.
iesertion, Univ, of Mi,h. Dept of f Soelol^gy.
It w r ported, far ..e plc, that
,d in he In Detroit them w alma,, 100 poem
lone ol, operalluln ou o , Iottry ant rprl,c `rDet lip, -re d,,-
led ered`by 50 "pick " e e betetiooe they a I.snI.. er it
b,okkeepei ' Jetcrmiu,d he owinning clip', hthere e thprace,d. w taken 1
portion up through the hlmarchy. McClellan,
.NetsrcoItn 'ics hea.ie.i' ngs who list, tBh C J I,, Sr.,., p1. 2. a 460-e,o,tlg.62 (196ti3).
hie ,, TT Commieelon I i on of he Stet,
! New York on Apr" 22, 1960, Cherlrs R. Thom. Comm'' of
County (11-Y. Long lelend), N.Y Pollee of SAt,lk
., IJ: 'The od,anrages f yndicate open
.
I he
eb,olute heck ng whist ellminetedhtl ale land udedfey(1) di ,,el?d ruour a wseh
eaeeneedo ~, and he ever ge bookie quickly discov he w mPermmlt'ng v
5030 beale hen he formerly tede whered en ho c'all dltthe en"ee
banana oend (p1,yeN- Y-1 it re, wM,5Ctoede`Ithe bookietteee,ely ? n,IleuPor otf mlonay,e,redi,ei
the book' of he yndicate th
dding the ndsus f rough e effete,, bookkeeping .y.tem, e d
aactor het use .i t lephoncs we thus chsn?ed, greatly
,curd,, the efficiency of telephone tape; and (6) the eyn fI,eie agreed to provide
`'~ "It ~e eo whet efartl rig to lea,, other the syndlc.'e' e y
Dh rho coneolldaii,, of the elnc pall,, de tiCot,,fy hepppy
Department, they feel Met ntiu,, `laen. act the S. .11, County Polico
agency then through many. The Intensive , I ? f?^m? Through o
hr hie Department common Ing J.'onye le .,t` hdi edcefs
the problem of eh ye ---d,, Inetalde In ?Bem fin
?'boing r cr Itment e, ,
the pad di'.E.d le dependen into the arm 1 the eyndicete` lor`Ipr='
eio,, and e
admit." Ibid. ? ? now p ck end choose share operators whkh h`to
See Cree,ey, TA, Pony,,,,, o d 39,,,,,,. of Criminal
nted 1e eppen dir A of this Syndicafea, Sept, 1966,
et m06-36, pri volume.
[CJembling be th leading eau e ( ?reenluti,n rdo ,ling !or
probably half of organiz.'lo proS,..,, D has been ete ho, 111-1 gambling
o e from . , , e . y billl dolls,, a liy.,. 1,5,,,,, ooze, a to 2,
et 402. For come eetlmentnetee oe the volume of `illegal gambling, tse Id.
a[ 402
"CambI.eg p,-fit- . the principal p,,,' of blg.tim, cketeering end
erl^minale m. cThego profits provide the Rnenclel ee a see heuhy
red o blgtime ucketeen, polill,el boos,., eudo brdlnery
ust,,,.,
m n, end alleged phllen th Imropiete." Kereuver c...., 3d /marl- lop., e. aro. no.
to purchase heroin. Some small businessmen borrow from
loan sharks when legitimate credit channels are closed.s2
The same men who take bets from employees in mass
employment industries also serve at times as loan sharks,
whose money enables the employees to pay off their
gambling debts or meet household needs."
Interest rates vary from f to 150 percent a week, ac-
cording to the relationship between the lender and bor-
rower, the intended use of the money, the size of the
loan, and the repayment potential." The classic "6-for-5"
loan, 20 percent a week, is common with small bor-
rowers. Payments may be due by a certain hour on a
certain day, and even a few minutes' default may result
in a rise in interest rates. The lender is more interested
in perpetuating interest payments than collecting prin-
cipal; and force, or threats of force of the most brutal
kind, are used to effect interest collection, eliminate pro-
test when interest rates are raised, and prevent the be-
leaguered borrower from reporting the activity to en-
forcement officials.T No reliable estimates exist of the
gross revenue from organized loan sharking, but profit
margins are higher than for gambling operations, and
many officials classify the business in the multi-billion-
dollar range.98
Narcotics.B? The sale of narcotics is organized like a
legitimate importing-wholesaling-retailing business. The
distribution of heroin, for example, requires movement
of the drug through four or five levels between the im-
porter and the street peddler." Many enforcement offi-
cials believe that the severity of mandatory Federal nar-
cotics penalties has caused organized criminals to restrict
their activities to importing and wholesale distributon.'
7
307, 82d C,,0., let See.. 2 (1951).
ee, For en excellent tr atment of the subject In New York Stet,, sea n v
d
ylo,kiry .` repre'ente a eubstantiel 60,11,, a of the maul ibilll?n dolla
r
1, t
uke Po Itargent Sublme." n heecn r pre ..t. 2, at 403.
aryanind Crime un ,, Il(icu oioe,.Ilgell f the gen. Comm. on Gov'[ Op e,
(h relnette ed 1. M,ellnllen
h ooolkr R,p,t, a, x 72, 89th Con?.ftclrt S_
18 (1965); Im
ell. Bed r the S 6 omm. on Dap'? '15,21,, Je aed
Comore,,,,,,,,,J dic(
C,mm.,,A ell. d Re/atedu Agencies dpproPrio lone of rhfe` Noaa
in hie melemev etto hnl`a T - Gon g., 2d 5,... 2]2 (1966).
poury Communion of Invutigmion of the State of
New YorkrhonoApr. 22, 1960, Comm'r Ch.,I,. R. Thom dee,ribed how losn eherking
pwvldod mean for orgoeloing prevtouely Independent b,okmekere
Specking generally, prior to 1958, profeeeisnel gembDng In Suffolk County war
ondumed primarily by independent permore. There ee k pattern of
orgenlud ge bung beyond be u uel ite nown
. faeilllee (or laylne o8. and n, eep.,.td
reckete or 1.11-rat erlminm ee tivitlee.
' Abom t ye.re ego, repreee.teaves of o eyndlatee began
appro.,hing IS,,, i dependent gambling operators ish -view o incorpouting
steam Into eyndi,eted opeutlone. BY d l large, her. Independent g bier. ee
'used t be eo organized, d the yndicat,e withdrew their eRort' i,Aam r
ouch a Ice. The .,edl,atee then cam ^ctJ a IneldI,,. ,e peter fsln~
filtr.tlon, wherein the p,lnclple M.O. . Marra. With ~V n pocketbook, the
eyndto,te er led e n mbar o[ independent Pastore, by financin? their pare
'lone until` Ihese bookie, were hooked, Part of this eye[em Included the
"'le ue fi for 5 plug 5 0 a rem per week, which me nt impl' the, they financed
the booklee e the be.. ; het the 00051104 oper,,er hed Io rn 36.00 (or every
.5.00 borrowed, plus the m.gpering lete,eet of 5 per rent per eke IfanIndflow'
that a baokle w1, hed a couple of bad meek, es completely hooked fell
under he control of he ey^di,ete. 51,., f Ihese independent bookie. w
mall bs,inc..,oe, eluding the typical barber, rend, 'tore ope,etor e d the r Ilk,, wlthoul the fineeciel ecaourcu to wllhet..d hle .5,,,.,, which
eflecllvely sera pliehed by he money men ,t the eyndj,ale. 0.1. hooked, the
booklee on,, wo,"ked I,, the eyedlcate on s 5 -50 bees.:
led Irc Comml elan bye Fedcraloe rc era n.vonT 45 (1963),
for ne Vo eubmll
7 See McClellan, L.borM,,. Rape., Finaf Rep., e, esr y no. 1139, 8611, Cong.,
2d See'., Pb. 9, m ]]2 (1960(.
el Information eubmittd i^ Commieelon bye Federal g-y,
m See ee ee,Ilyy MeclellenNarroyl earHeur yTit
,,z Both`Gang.. irli Sees, ple.
1 k 2 (1968), let 8 2d So,.., pre. 3 & 4 (1843n-g 04), 21
Sees., p'. 5 (1964).
M seller,
Narcotics Rep., e. ear o. ]2, .,
Bee Grets>Y, supra nobs 5, 0, 5. 89th ra let Sets . (1965) .
It McClellan, Nerco,ks Rep., e, It. 72, 8915 Cong., let See,. 120 (1965).
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Appro4ed For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
116 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
They stay away from smaller-scale wholesale transactions organized crime has penetrated." Of the 75 or so racket
or deal(ng at the retail level. Transa:tions with addicts leaders who met at Apalachin, N.Y., in 1957, at least 9
are handled by independent narcotics bashers using drugs were in the coin-operated machine industry, 16 were in
imported by organized crime 42 the garment industry, 10 owned grocery stores, 17 owned
The large amounts of cash and the international con- bars or restaurants, 11 were in the olive oil and cheese
nections necessary for large, long-termheroin supplies business, and 9 were in the construction business. Others
can be provided only by organized er me. Conservative were involved in automobile agencies, coal companies,
estimates of the number of addicts n the Nation and entertainment, funeral homes, ownership of horses and
the average daily expenditure for herein indicate that the
gross heroin trade is $350 million annu ally,43 of which $21 race tracks, linen and laundry enterprises, trucking, water-
million are probably profits to the iml,orter and distribu- front activities, and bakeries."
tor.'} Most of this profit goes to orgy nixed crime groups Today, the kinds of production and service industries
in those few cities in which almost all. icroin consumption and businesses that organized crime controls or has in-
occurs. vested in range from accounting firms to yeast manu-
facturing. One criminal syndicate alone has real estate
Other Goods and Services. Pro, titution and boot- interests with an estimated value of $300 million." In a
leggin play a small and declining role in organized few instances, racketeers control nationwide manufactur-
crime' operations.4J Production of illegal alcohol is a ing and service industries with known and respected brand
risky usmess. The destruction of sills and supplies by names."
law erfforeement officers during the initial stages means Control of business concerns has usually been acquired
the logs of heavy initial investment cipital. Prostitution through one of four methods: (1) investing concealed
is difficult to organize and discipline is hard to maintain. fits acquired from and other illegal activi-
in important convictions of organized crime figures pro q gambling g
in pr titution cases in the 1930's aid 1940's made the ties; (2) accepting business interests in payment of the
crirnir4al executives wary of further participation. " owner's gambling debts; (3) foreclosing on usurious loans;
and (4) using various forms of extortion."
BUSIN~5S AND LABOR 1N'rearsTS Acquisition of legitimate businesses is also accomplished
in more sophisticated ways. One organized crime group
lnfltration of Legitimate Business. A legitimate busi- offered to lend money to a business on condition that a
ness ehables the racket executive to acquire respectability racketeer be appointed to the company's board of direc-
in thc[ community and to establish a source of funds that tors and that a nominee for the lenders be given first
appedrs legal and upon which just 1 noiagh taxes may be
paid (o avoid income tax prosecution." Organized crime option to purchase if there were any outside sale of the
invesljs the profit it has made from illegal service activities company's stock." Control of certain brokerage houses
in a variety of businesses throughott the country." To was secured through foreclosure of usurious loans, and
succeed in such ventures, it uses accountants, attorneys, the businesses then used to promote the sale of fraudulent
and business consultants, who in noise instances work stock, involving losses of more than $2 million to the
exclu ively on its affairs'" Too cften, because of the public."
recip-ocal benefits involved in organized crime's dealings Criminal groups also satisfy defaulted loans by taking
with the business world, or because , 'f fear, the legitimate over businesses, hiring professional arsonists to burn
secto~' of society helps the illegitimate sector." The I11i- buildings and contents, and collecting on the fire insur-
noisiCrime e Commission, after mv, stigating one service ante. Another tactic was illustrated in the recent bank-
indujtry in Chicago, stated : ruptcy of a meatpacking firm in which control was secured
as payment for gambling debts. With the original owners
The le is a disturbing lack of interea on the part of some remaining in nominal management positions, extensive
Legit mate business concerns regarding the identity of the product orders were placed through established lines of
per+s with whom they deal. This lackadaisical attitude credit, and the goods were immediately sold at low prices
is coiaducive to the perpetration of frauds and the inffl- before the suppliers were paid. The organized criminal
tratisn and subversion of legitimate businesses by the
orga~ized criminal element.s" group made a quick profit of three-quarters of a million
dollars by pocketing the receipts from sale of the products
Bicause business ownership is to easily concealed, it ordered and placing the firm in bankruptcy without
is d fficuIt to determine all the tySes of businesses that paying the suppliers."
l.et121-22.
wl5for1matioe sub,, lied m Commieelon b, a Fete stage"ry.
ambling hee eupplented praeti UI!ul e d ,kg ing ae the ehief --
b.". organized cr,m fore the Fire, World Wnr, ,he msjor prafin
1 nr anu d 'ml A, we ,eed tram pro tltutlon. The p.,,,,, of the
MennI White Steve Act, the chan?Ing tesuet m .see. end public oplnlve. m.
binedpiI,, make e m i lied proethalion a lee, prd9iable end r hazardous
teleSp.e.^1a 1954, , Comm, 2d heal,, Rrp ear. xe. 141,r 551 Conga.
Fo , o uilgetion ul c cielized ,.roetituilon, s
or ,nnerrearron, an ,nvrane.fnon o LAM ....... xne
(1961 n in eurraw
eople v. Luc)ano, 277 N.Y. 348, 14 N.E. d 493. ern. denied zubn
L .d . N- Ye k, 305 U.S. 620 (1938). Se , I ioweu,
(193 c pt for a brief deacr,p^,a.,,,l CherleevIL c(tnos r le Ines,,, rx
111111 from eo _ rime,
1 zgrg
-.4. 3)3 (The, eds. 1559),n' rxL o00 oe n' (1959). In on ~xro q
S Kefauver Comm., 3d Innrim Rep., 82d Cong., A. Seer.
170 1951).
a ? [oC]rlminels end nekrteers ere neing he ,,,7,a of artentzed c Ime is bur
u` U punts legitimate enterprlev.," K,!., er Camm., 3d lnreri,, Rey., e
. 307, 824 Cueg.. 5.t 5cn, 170 (1951).
"Mobeten and cke a hen been airted by come I,, aneUfl, me end
lea le pare in drlnudi,g ,he Goverm,feI." 1d. et 4.
?? "[n me lea!.,,,. legitimate buelen.emen h.,, aide) the ivnreele of he
u denurld Se weding lurative
help in b dung -ploy-, contraete to gaegenre and mobe,ere In nlurv for
defeel)eg attempt. at unlonlration, and in breaking
e,rtikeg" id. a1 s..
..
3965 i u U111 rwrger,c,h , "I" asr. ii
^ pus up
Using dummy to I , tha e reel owner. of ,aura see, the men wM1
ibermnay, n/ er here to B. brmeelvee o aGrutzn wners partner, or e v being
Involved m Y way i. be .Talon" 90 .. 1, Siepr Up , luerion
un,u Loosing oeu. N.Y. .., P1, ! R. ]d. 1963, p p. Io e'L 3, %X, col, 1.
McCle , Luh
-MalMgt. R-.. Final Repu n . 1139. Coeg., 2d
See,., V. 0 3. , aLabor a 481-88 (1960). The r port of On the Kefauver Committee provide,
z dleeue.lon of the degree of infiltrelion ,rain ,,mate
Ile[ bueineee. I. ,n, rag
of 50 1 b-- ep ...iree In e. ,l, o d coo c a 'a in Ii
1,1 Sere. v1700--S81
Kel cr Cou,mmm. .. 3d Inzrnm Rep., nun, no. Supt 0 Cons. ~~
(loss).
Inf r Oxon eubmixed to Commission son Federal age,,'.
n Ibld.ma
Ibid.
yr )bid.
Ibid. Sc,, air" Grutzner, supra neie 3, uz 65, cols. 3fi.
?"IU. la. 1-3. Hearing, Before th, 5,bcomm. on Criminal Lu,u, a d Pro?
cedar,, o) the Sen. Comm. an the rudicfvrr, 8pih Ceg., 2d 9,,,., al 204-06n(1966).
Apl~roved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Approved For Release 2002/05/08: CIA-RDP70B03D38 2000 60-8
THE FEDERAL EFFORT AGAINST ORGANI E
Too little is known about the effects on the economy of
organized crime's entry into the business world, but the
examples above indicate the harm done to the public BO
and at least suggest how criminal cartels can undermine
free competition." The ordinary businessman is hard
pressed to compete with a syndicate enterprise. From its
gambling and other illegal revenue-on most of which no
taxes are paid-the criminal group always has a ready
source of cash with which to enter any business. Through
union connections, the business run by organized crime
either prevents unionization or secures "sweetheart" con-
tracts from existing unions .2 These tactics are used effec-
tively in combination. In one city, organized crime
gained a monopoly in garbage collection by preserving the
business's nonunion status and by using cash reserves to
offset temporary losses incurred when the criminal group
lowered prices to drive competitors out of business 03
Strong-arm tactics are used to enforce unfair business
policy and to obtain customers 85 A restaurant chain con-
trolled by organized crime used the guise of "quality con-
trol" to insure that individual restaurant franchise holders
bought products only from other syndicate-owned busi-
nesses. In one city, every business with a particular kind
of waste product useful in another line of industry sold
that product to a syndicate-controlled business at one-
third the price offered by legitimate business.
The cumulative effect of the infiltration of legitimate
business in America cannot be measured." Law enforce-
ment officials agree that entry into legitimate business is
continually increasing and that it has not decreased or-
ganized crime's control over gambling, usury and other
profitable, low-risk criminal enterprises.
Labor Racketeering.'. Control of labor supply and in-
filtration of labor unions by organized crime prevent
unionization of some industries, provide opportunities for
stealing from union funds and extorting money by threats
of possible labor strife, and provide funds from the enor-
mous union pension and welfare systems for business ven-
tures controlled by organized criminals. Union control
also may enhance other illegal activities. Trucking, con-
struction, and waterfront shipping entrepreneurs, in
return for assurance that business operations will not be
interrupted by labor discord, countenance gambling, loan
sharking, and pilferage on company property. Organized
criminals either direct these activities or grant "conces-
sions" to others in return for a percentage of the profits.
Some of organized crime's effects on labor union affairs,
particularly in the abuse of pension and welfare funds,
were disclosed in investigations by Senator John McClel-
lan's committee, In one case, almost immediately after
receiving a license as an insurance broker, the son of a
major organized crime figure in New York City was
chosen as the broker for a number of such funds, with
significant commissions to be earned and made available
for distribution to "silent partners." The youthful
broker's only explanation for his success was that he had
advertised in the classified telephone directory."
In New York City, early in 1966, the head of one
organized crime group was revealed to be a partner in a
labor relations consulting firm. One client of the firm,
a nationally prominent builder, said he did not oppose
unions but that better and cheaper houses could be
built without them. The question of why a legitimate
businessman would seek the services of an untrained con-
sultant with a criminal record to handle his labor rela-
tions was not answered.
LOCATION OF ORGANIZED CRIME
ACTIVITIES
Organized criminal groups are known to operate in
all sections of the Nation. In response to a Commission
survey of 71 cities, the police departments in 80 percent
of the cities with over 1 million residents, in 20 percent
of the cities with a population between one-half million
and a million, in 20 percent of the cities with between
250,000 and 500,000 population, and in over 50 percent
of the cities between 100,000 and 250,000, indicated
that organized criminal groups exist in their cities. In
some instances Federal agency intelligence indicated
the presence of organized crime where local reports de-
nied it." Of the nine cities not responding to the Com-
mission survey," six are known to Federal agencies to have
extensive organized crime problems." Where the exist-
ence of organized crime was acknowledged, all police
departments indicated that the criminal group would con-
tinue even though a top leader died or was incarcerated.
Organized crime in small cities is more difficult to
assess. Law enforcement personnel are aware of many
instances in which local racket figures controlled crime
in a smaller city and received aid from and paid tribute to
organized criminal groups located in a nearby large
city. In one Eastern town, for example, the local
racket figure combined with outside organized criminal
groups to establish horse and numbers gambling gross-
ing $1.3 million annually, an organized dice game draw-
ing customers from four states and having an employee
payroll of $350,000 annually, and a still capable of pro-
ducing $4 million worth of alcohol each year. The town's
population was less than 100,000." Organized crime
cannot be seen as merely a big-city problem.
^ "There aen be 100e doubt the the public a Rere tram gengeter peneke0vn
Into IegiOm a bu lit I, .ugere bee a higher prices m [ S. paid for
arti.lu end a ,vice which It [ bur . 'rhe publla euflere bee a It
lure < put up with shoddy end inferior merchandise I, find. where gengeter? here
been able h, obtain poly." Kefmive= Comm.. 3d tnrertm Rep.,
307, 8Yd C-- le[ Sesemn0-71 (1951)
7
See Johnson, Organized Crime: Challenge to the American Legal Sy.rem (pt.
1), 55 o. urx. c., u n n. e. 399. 90607.
ep., s. nee. xa. 1917.
See generally McCl,llen, Labor-Mg;. Rape., t.r "V.)
85th Con,., 2d 5,... (1938), 2d tnrerim Rep. (pre. 1 d 2, e. nee. no. 621, 86th
c,,1., let 5,... (1959), Pin.! Rep. (p2( / O?dAg%rRPG7A~:PMP,0200 J0060-8
of the U.S. Congress behind the proposition that otga-
nized crime is a national problem of the highest priority.
PUBLIC AND PRIVATE CRIME INVESTIGATING COMMISSIONS
Crime investigating commissions financed by State gov-
ernments, such as in New York and Illinois, have proved
to be effective for informing the public about organized
crime conditions. Legislative proposals to combat orga-
nized crime also result from the hearings of these com-
mittees.
The Commission recommends:
States that have organized crime groups in operation
should create and finance organized crime investigation
commissions with independent, permanent status, with
an adequate staff of investigators, and with subpoena
power. Such commissions should hold hearings and
furnish periodic reports to the legislature,. Governor, and
law enforcement officials.
Independent citizen crime commissions in metropolitan
areas can provide enlightened resistance to the growth of
organized crime and to the formation of alliances between
it and politics. A citizen crime commission can give re-
liable and determined community leadership to assess the
local government's effort to control organzed crime. It
can provide impartial public education, marshal public
support for government agencies that have committed re-
sources to special organized crime drives, monitor judicial
and law enforcement performance, organize public re-
sponses, and enlist business cooperation against infiltration
by organized crime.
The Commission recommends:
Citizens and business groups should organize permanent
citizen crime commissions to combat organized crime.
Financial contributions should be solicited to maintain
at least a full-time executive director and a part-time
staff.
able for short-term assignments with local commissions,
a headquarters could establish formal procedures for
training professionals in crime commission management.
A national headquarters could also motivate States and
communities to undertake reforms in their criminal jus-
tice systems and to deal with other community problems
unrelated to organized crime.
PRIVATE AND GOVERNMENT REGULATION
Law enforcement is not the only weapon that govern-
ments have to control organized crime. Regulatory ac-
tivity can have a great effect. One means to diminish
organized crime's influence on politics, for example, would
be legislation subjecting political contributions and
expenditures to greater public visibility and providing
incentives for wider citizen contributions to State and
local political activity. Tax regulations could be devised
to require disclosure of hidden, or beneficial, owners of
partnerships and corporations that do not have public
ownership.
Government at various levels has not explored the
regulatory devices available to thwart the activities of
criminal groups, especially in the area of infiltration of
legitimate business. These techniques are especially valu-
able because they require a less rigid standard of proof
of violation than the guilt-beyond-a-reasonable-doubt re-
quirement of criminal law. Regulatory agencies also
have powers of inspection not afforded to law enforce-
ment. State income tax enforcement could be directed
at organized crime's businesses. Food inspectors could
uncover regulatory violations in organizc-1 crime's res-
taurant and food processing businesses. Liquor author.
ities could close premises of organized crime-owned bars
in which illicit activities constantly occur.''' Civil pro-
ceedings could stop unfair trade practices and antitrust
violations by organized crime businesses. Trade associa-
tions could alert companies to organized crime's presence
and tactics and stimulate action by private business.
The Commission recommends:
At this time there are not enough citizen crime cons,
missions functioning effectively in the Nation. A nation-
al coordinating headquarters could be established in
Washington, D.C., to encourage and guide the creation
of new commissions and to provide services to improve
existing ones. Private foundation funds should be sought
to help establish and administer the headquarters.
It would provide channels for communication among
citizen crime commissions, between such commissions and
national agencies of government, and between crime com-
missions and mutual interest associations such as the Inter-
national Association of Chiefs of Police the National Dis-
trict Attorneys Association, the National Council on
Crime and Delinquency, and others. Such a headquar-
ters could give concerned citizens in any community the
technical assistance necessary for initiating a crime com-
mission. In addition to making trained personnel avail-
"Johnson, Organised C.lme: Ch,l(enre to she American Legal Sy-. (p,. 2),
c. s e.,. 1, 22.26 (1963).
Groups should be created within the Federal and State
departments of justice to develop strategies and enlist
regulatory action against businesses infiltrated by
organized crime.
Private business associations should develop strategies to
prevent and uncover organized crime's illegal and unfair
business tactics.
In recent years, the American press has become more
concerned about organized crime. Some metropolitan
newspapers report organized crime activity on a continu-
ing basis, and a few employ investigative reporters whose
exclusive concern is organized crime. The television in-
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8
 Applrgfved Fpr,R~ e ~0 eN0?,c;,G?A,,RD7 3 ?0200020060-8
duytry, as well, has accepted a responsibility for inform- ditions should also be furnished periodically by the Fed-
in the American citizen of the magnitude of the problem. oral Government to State and local jurisdictions, and by
n some parts of the country revelations in local news- State governments to local jurisdictions. Reports should
pa ers have stimulated governme etal action and political be withheld from jurisdictions where corruption is appar-
rel. orm. Especially in smaller tonimunities, the inde- ent and knowledge by a corrupt official of the informa-
peridence of the press may be the public's only hope of tion in the report could compromise enforcement efforts.
finding out about organized trim:. Public officials con- Public fears of reporting organized crime conditions to
ce}ned about organized crime are encouraged to act when apparently corrupt police and governmental personnel
co prehensive newspaper report ng has alerted and en- must also be met directly. If an independent agency for
listed community support. accepting citizen grievances is established,"it should be
charged with accepting citizen complaints and informa-
The Commission recommends: tion about organized crime and corruption.
Information obtained in this way could be forwarded
All newspapers in major metropolitan areas where or- to Federal, State, or local law enforcement officials, or to
ganized crime exists should desig rate a highly competent all of them, at the direction of the agency. Names of
reporter for full-time work and writing concerning or- sources should be kept confidential if the citizen so requests
ganrzed criminal activities, the s orruption caused by it, or if the agency deems it necessary.
and governmental efforts to con trol it. Newspapers in The above program is not intended as a series of inde-
sntaller communities dominate9 by organized crime pendent proposals. It represents an integrated package
should fulfill their responsibility to inform the public of requiring combined action by the American people, its
the nature and consequence of tl ese conditions. governments and its businesses. Organized crime suc-
ceeds only insofar as the Nation permits it to succeed.
PARTICIPATION By LOCAL GOVERiMENT LEADERS Because of the magnitude of the problem, the various
branches of government cannot act with success in-
Enforcement against organizes I crime and accompany- dividually. Each must help the other. Laws and pro-
irig public corruption proceeds with required intensity cedures are of no avail without proper enforcement
ohly when the political leaders in Federal, State, and local machinery. Prevention fails unless citizens, individually
governments provide aggressive !leadership."' They are and through organizations, devise solutions and encourage
the only persons who can secur: the resources that law their elected representatives. Regulation must accom-
chforcement needs. They are the only ones who can plish what criminal law enforcement cannot. Above all,
assure police officials that no ille;a1 activity or participat- the endeavor to break the structure and power of orga-
iiig person is to be protected f urn proper enforcement nized crime-an endeavor that the Commission firmly
action. They are the only ones who can insure that per- believes can succeed-requires a commitment of the pub-
sbns cooperating with organized criminal groups are not lie far beyond that which now exists. Action must replace
appointed to public office. Th :y are the only ones who words; knowledge must replace fascination. Only when
den provide for effective monit( ring of regulatory action the American people and their governments develop the
to expose irregular practices or 'avors given to businesses will can law enforcement and other agencies find the way.
dominated by criminal groups. They are the ones who In many ways organized crime is the most sinister kind
dan provide full backing for a I olice chief who institutes of crime in America. The men who control it have be-
internal inspection, promotion and other practices" come rich and powerful by encouraging the needy to
or controlling police corruption gamble, by luring the troubled to destroy themselves with
i Mayors, Governors, and the President of the United drugs, by extorting the profits of honest and hardworking
$tates must be given adequate information concerning businessmen, by collecting usury from those in financial
organized crime conditions. Di ssemination of incomplete plight, by maiming or murdering those who oppose them,
or unevaluated intelligence aba at individuals would pre- by bribing those who are sworn to destroy them. Orga-
sent grave civil liberties problerr s. However, government nrzed crime is not merely a few preying upon a few. In
'cadets must be made aware of :he particular activities of a very real sense it is dedicated to subverting not only
organized crime groups. American institutions, but the very decency and integrity
that are the most cherished attributes of a tree society.
The Commission recommend r: As the leaders of Cosa Nostra and their racketeering
allies pursue their conspiracy unmolested, in open and
enforcement officials should p:ovide regular briefings to continuous defiance of the law, they preach a sermon that
leaders at all levels of goverrm ant concerning organized all too many Americans heed: The government is for sale;
crime conditions within n the jurisdiction. lawlessness is the road to wealth; honesty is a pitfall and
The briefings should be suf plemented by written re- morality a trap for suckers.
ports further describing those conditions as well as current The extraordinary thing about organized crime is that
governmental action to comb: t them. Reports of con- America has tolerated it for so long.
initiated h, e- Jahn Gem Connecticut emblin law v9en den occ~ti Fred, Lvice1 pollee depnr[me- t enforceme t eflorie
'.The eeulte of [he program peer
illueeret ,, ,. n pew enforce si which n Le achieved again improved, bot0Y5Jevp^nden[IL NenJ rn (1965) - rC[on, Gov.'e?Comm eso Cs.,bl ng,
ak 966). A ;--d .,plemetel report re b-v
isg trim plnv tee 5565. [n gr ,:,mg c~vicern vv r the problems al org,ni poi Ist Supvlementel Rep. [m'meo. 1
emebling, I Feb. 25, p1%5, the Ch, iI fed a Cnmvitcee Cambhn? the commh ee at the time of [hie wrltln?, which will rerenl exit
t e h - 1 took et illegal m o,gs, h,d s mbling Connecticut end w initiate r`Mrc J byforeement salts. ,ran rn a rasa
i *prAeente." J no' )um ? Ste a ..d
a? Geral R par[ of [hie C.?mm ur n, rxe n.ur? r. or ra
mope to deal with the problems the[
weh. 1.
M1 (39661o The ommrttce mpwc gee, Re f the Polies Taek roree,
Ito el clew lhciele, repreeente['vee reds 1 olflciel, -a 51- prose- ai Geen 115-36 IP96`)il th^ n Commue,an,
sell Imps,ee xs ex.?trrnca or _ n+s trv w rnsr
euto5, P~eunn0 t~fio[ r+p eentencen o.d by y ti he e o gmfi ,nis- roes t nail
n he n bar and to f a : t nvvicted ?rr 302A 3 (1 961).0
Approved For Release 2002/05/08 : CIA-RDP70B00338R000200020060-8