THE FEDERAL EFFORT AGAINST ORGANIZED CRIME

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70B00338R000200020001-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 187
• Document Creation Date: December 12, 2016
• Document Release Date: April 9, 2002
• Sequence Number: 1
• Publication Date: June 13, 1967
• Content Type: OPEN

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THE FEDERAL EFFORT AGAINST
ORGANIZED CRIME
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE 0)
GOVERNMENT OPERATIONS
HOUSE OF REPRESENTATIVES
NINETIETH CONGRESS
FIRST SESSION
PART 2
JUNE 13, 20, AND 27, 1967
Printed for the use of the
Committee on Government Operations
U.S. GOVERNMENT PRINTING OFFICE
78-108 WASHINGTON : 1967
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402- Price 45 cents
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COMMITTEE ON GOVERNMENT OPERATIONS
WILLIAM L. DAVISON, Illinois, Chairman
CHET IIOLIFIELD, California
JACK BROOKS, Texas
L. U. FOUNTAIN, North Carolina
PORTER HARDY, JR., Virginia
JOHN A. BEATNIK, Minne3ota
ROBERT E. JONES, Alabaria
EDWARD A. GARMATZ, Maryland
JOHN E. MOSS, California
DANTE B. FASCELL, Florida
HENRY S. REUSS, Wiscotriin
JOHN S. MONAGAN, Conn( cticut
TORBERT H. MACDONALE, Massachusetts
J. EDWARD ROUSH, Indiana
WILLIAM S. MOORHEAD, Pennsylvania
CORNELIUS E. GALLAGHER, New Jersey
WILLIAM J. RANDALL, M ssouri
BENJAMIN S. ROSENTHAL, New Ycrk
JIM WRIGHT, Texas
FERNAND J. ST GERMAIN, Rhode Island
FLORENCE P. DWYER, New Jersey
OGDEN R. REID, New York
FRANK HORTON, New York
DONALD RUMSFELD, Illinois
JOHN N. ERLENBORN, Illinois
JOHN W. WYDLER, New York
ROBERT DOLE, Kansas
CLARENCE J. BROWN, JR., Ohio
JACK EDWARDS, Alabama
GUY VANDER JAGT, Michigan
JOHN T. MYERS, Indiana
FLETCHER THOMPSON, Georgia
WILLIAM 0. COWGER, Kentucky
MARGARET M. HECKLER, Massachusetts
GILBERT GUDE, Maryland
CHRISTINE RAY DAVIS, Staff Director
JAMES A. LANIGAN, General Counsel
TYIILE14 Q. ROMNEY, Associate General Counsel
J. P. CARLSON, Minority Counsel
WILLIAM H. COPEN HAVER, Minority Professional Staff
LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE
DANTE B. FASCELL, Florida, Chairman
COBNELIUS E. GALLAGH Ut, New Jersey
JIM WRIGHT, Texas
FERNAND J. ST GERMAID , Rhode Island
It
JACK EDWARDS, Alabama
GUY VANDER JAGT, Michigan
WILLIAM 0. COWGER, Kentucky
DI. JOSEPH MATAN, Chief Counsel
CHARLES ROTIIENBERG, Counsel
MILLI:ENT Y. MYERS, Clerk
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CONTENTS
Hearings held on?
Page
June 13, 1967 137
June 20, 1967 187
June 27, 1967 261
Statement of?
Enright, John R., Assistant Commissioner of Narcotics, Department
of the Treasury; accompanied by Donald Miller, Chief Counsel,
Bureau of Narcotics 188
Finlator, John, Director, Bureau of Drug Abuse Control, Food and
Drug Administration, U.S. Department of Health, Education, and
Welfare 265
Fleishman, Lawrence, Assistant Commissioner, Office of Investiga-
tions, Bureau of Customs, Department of the Treasury 238
Goddard, Dr. James L., Commissioner, Food and Drug Administra-
tion, U.S. Department of Health, Education, and Welfare 262
Kreig, Mrs. Margaret, author of "Black Market Medicine" 139
Letters, statements, etc., submitted for the record?
Enright, John It., Assistant Commissioner of Narcotics, Department
of the Treasury:
Conviction of violators reported for prosecution by Bureau of
Narcotics by calendar years 1062-66, table 235
Excerpts from papers entitled?
"A Piece of Your Mind--Smoking Marihuana Common?" 229
"Cannabis Sativa in Relation to Mental Diseases and Crime
in India" 224
"Drug Dependence of Cannabis (Marihuana) Type" 222
"Narcotic Drug and Marihuana Controls" 217
"Survey of Findings by Several Marihuana Researchers and
Writers on the Relationship Between Marihuana and
Narcotic Addiction" 223
List of organized crime figures and associates apprehended
through the efforts of the Bureau of Narcotics since 1951 189
Fascell, Hon. Dante B., a Representative in Congress from the State
of Florida: Excerpt from "The Challenge of Crime in a Free Society,"
a report by the President's Commission on Law Enforcement and
Administration of Justice 177
Finlator, John, Director, Bureau of Drug Abuse Control, Food and
Drug Administration, U.S. Department of Health, Education, and
Welfare:
Involvement of organized crime figures in BDAC cases 295
Pharmacy and drug industry groups cooperating with BDAC in
education and voluntary compliance 266
Statement of the Food and Drug Administration regarding co-
operation between Bureau of Drug Abuse Control and other
Federal agencies 289
Fleishman, Lawrence, Assistant Commissioner, Office of Investiga-
tions, Bureau of Customs, Department of the Treasury:
Bureau of Customs cooperation with other agencies, table 244
Comparative statistics showing seizures and arrests for the fiscal
years 1965 and 1966, illustrations 246, 247
Descriptions of three cases involving narcotics violations 242
ILL
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IV CONTENTS
Letters, statements, etc., submitted for the record?Continued
Goddard, Dr. James L., Commissioner, Food and Drug Administra-
tion, U.S. Departn ent of 113alth, Education, and Welfare: Page
Fact Sheet 4?Depressants (sedatives-hypnotics) 290
Fact Sheet 5?Hallucinogens 291
Fact Sheet 6?Stimulants 291
Statement of tin Food ar d Drug Administration on training op-
portunities for State and local regulatory officials 287
Statement of the Food and Drug Administration regarding pro-
fessional train mg and cooperation amendments 287
Statement of tla, Food and Drug Administration regarding the
Neo-American Church 301
Kreig, Mrs. Margaret, author of "Black Market Medicine": Statement_ 151
St Germain, lion. Fernand J., a Representative in Congress from the
State of Rhode IsJand: U.S. Department of Agriculture?Food in-
spectors and gradcrs as of June 30, 1967 (except as noted), table 301
APPENDIX
Article from FDA papers entitled "Good Manufacturing Practice" 313
Hoover, J. Edgar, Direct)r, Federal Bureau of Investigation, U.S. Depart-
ment of Justice, letter to Hon. Dante B. Fascell dated July 5, 1967 309
Instructions for form FL-1597, Initial or Amended Registration of Drug
Establishment_ 310
Krippner, Stanley, senioi research associate, Maimonides Medical Center,
Maimonides Hospital, letter to Hon. Dante B. Fascell dated June 20,
1967 319
Material used by FDA t ) fill request for information on drug abuse 317
Public Health Service Audiovisual Facility?Film release 316
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
TUESDAY, JUNE 13, 1967
ITOTJSE OF REPRESENTATIVES,
LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
Washington, D.O.
The committee met, pursuant to recess, at 10 a.m. in room 2247, Ray-
burn House Office Building, Representative Dante B. Fascell (chair-
man of the subcommittee) presiding.
Present: Representatives Fascell (presiding) , Wright, St Germain,
Vander Jagt, and Cowger.
Also present: M. Joseph Matan, chief counsel; Charles Rothenberg,
counsel; and Millicent Y. Myers, clerk.
Mr. FASCELL. The subcommittee will please come to order.
In almost all of the studies that have been made concerning or-
ganized crime, emphasis has been laid on what might be called the
traditional criminal activities in which crime syndicates engage, such
as gambling, loan sharking, narcotics, prostitution, bootlegging, and
the infiltration into legitimate businesses.
Recently the subcommittee's attention has been pointedly called to
the fact that organized crime has found a new source of easy money in
the counterfeiting of prescription drugs and medicines. In her book
entitled "Black Market Medicine" Mrs. Margaret Kreig alleges that
vicious hoodlums have infiltrated the ethical drug industry in the past
few years, by manufacturing pills and medicines of dubious or con-
taminated quality, labeling them with well known product names of
recognized pharmaceutical manufacturers, and distributing such drugs
to the unknowing public as legitimate products. In the study being
made by the Legal and Monetary Affairs Subcommittee of the Federal
Government's efforts and capabilities to corn-bat organized crime, the
subcommittee is interested in the allegations that crime syndicates
are moving into the prescription drugs and medicines areas which can
so vitally affect the well-being of every person in this. country.
The potential profits from the selling of fake copies of pills and
medicines that are commonly prescribed for the whole range of human
ills seems to make this a natural field for organized activity, unless
stopped. The subcommittee will want to ascertain just how big a threat
this new counterfeiting activity poses to everyone who must depend
upon the integrity of prescription drugs and medicines. We will also
want to find out fully what the Federal Government is doing, and can
do, to eliminate that threat.
Mrs. Kreig who will testify this morning worked with undercover
agents of the Food and Drug Administration, and many of her ex-
periences are related in her book.
137
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138 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. George P. Larrick, who was the Commissioner from 1954 to
1965 of the U.S. Food and Drug Administration, made this statement
regarding the book:
This Is a factual book based on the author's firsthand observation of under-
cover investigations condneted by U.S. Food and Drug Administration inspectors.
The dialog is abstracted from tape recordings made on the scenes. Details of
cases as well as general I.es.criptions of criminal and law-enforcement activities
are supported by investigational reports, records of hearings, statements made
on oath, court transcripi s, and other legal procedures. This documentation is
corroborated by files mk.e available to the author by FDA and, we understand,
by other Federal agencies, congressional investigators, local police departments,
private detectives, and pharmaceutical manufacturers.
Margaret Kreig is the first writer not employed by FDA to participate in our
undercover operations as d to have access to many of these records.
The idea for this book originated with the author. The viewpoint and conclu-
sions are her own. As a ondition of FDA's cooperation, we placed only two re-
strictions on her completed manuscript:
That it be technically accurate, and
That it be written, insofar as possible, so that lives and pending cases would
not be jeopardized.
While working undercover, the author's life and the lives of several FDA
inspectors were threatered by es-convicts known to have close affiliation with
Mafia leaders. These men are still, at large, as are most of the individuals whose
illicit practices are descr.bed.
The events in this boo E. are so contemporary that we could not permit the use
of actual names, locatio is, and other identifying characteristics.
That is signed by George P. Larrick, Commissioner.
Now, in the briefing part of this book I would like to read into the
record some of the c )mments made by the author.
This is a report of tie mushrooming, hoodlum-infiltrated illicit prescription
drug industry that few 2eople outside the Food and Drug Administration know
exist.
Black-market medicine-makers and distributors operate beyond all laws de-
signed to protect people from dangerous medications. Their broad spectrum of
activity ranges from the sale of outdated and contaminated medications to the
theft of formulas and the hijacking of legitimately produced drugs. They smuggle
substandard products tam abroad to market with false labels. Dangerous re-
stricted drugs like LS3) and the stimulant, amphetamine, are manufactured
specifically for illicit distribution. A wide variety of other drugs to fill pre-
scriptions for sick poor le are produced in totally unregulated plants operated
in the manner of bootleg stills. There is a complex intermingling of legal and
black-market medicines all along the distribution chain, from the synthesizer of
active ingredients to the medicine cabinet of the ultimate consumer.
Still quoting:
From many reliable aources?FDA, FBI, IRS, Customs, the Federal Bureau
of Narcotics, State and local policemen, prosecutors, congressional investigators,
experts on labor racketeering, private detectives working for ethical drug com-
panies, attorneys and o:her specialists in pharmaceutical law?I have compiled
sufficient evidence to st ite that organized crime already has a good start in the
infiltration of yet another major industry.
The international crime syndicate moves in where there is money?and the
"U.S. legitimate drug industry has a $4.1 billion-a-year global business.
The pill traffic is definitely tied in with traditional mob enterprises like
prostitution, pornograrhy, pinball machines, bootleg whiskey, and policy, or
the numbers.
We are here toC.ay to hear this evidence. We have requested
Margaret Kreig tc give us the benefit of her observations and
suggestions.
I must add the comment that she certainly is a very determined
woman and very courageous to have put in the time and effort to
have compiled the material which she is presenting.
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Mrs. Kreig, would you start out by giving us a short background
statement and I understand you have a prepared statement.
STATEMENT OF MRS. MARGARET KREIG, AUTHOR OF "BLACK
MARKET MEDICINE"
Mrs. KREIG. Yes, I have.
Mr. FASCELL. Without objection, the prepared statement will be
inserted in the record, and you may then summarize as you wish.
Mrs. KREIG. Thank you, Mr. Chairman.
Gentlemen, my name is Margaret Kreig. I am a free-lance writer;
that is, I am self-employed, and my research and writing on "Black
Market Medicine" was done on my own time and at my own expense,
without grants, sudsidies, or reimbursements of any kind. I have
devoted the past 3 years' full time to this investigation.
I very much appreciate your interest in my work, of course, but
I am particularly gratified to find a congressional committee focusing
attention upon the hoodlum-infiltration of the prescription drug in-
dustry. This is a problem that few people outside the Federal Food
and Drug Administration even know exists, and the recent report of
the President's Crime Commission, did not even allude to this.
Yet this is a problem that threatens the health and endangers the
lives of countless Americans.
One billion prescriptions were filled in this country last year. No
one knows?and "no one" includes the Food and Drug Administra-
tion?no one knows exactly how many were filled with counterfeited,
contaminated, outdated, or otherwise substandard black-market
medicines that have no business circulating in legal distribution chan-
nels, or anywhere else, for that matter.
The existence of these spurious and shoddy drugs is making a mock-
ery of the Food, Drug, and Cosmetic Act and all of its amendments
and every other safety provision designed to protect sick people who
must take medication on doctors' orders.
My own deep concern about the infiltration of legitimate businesses
by hoodlums began when I covered the Senate Judiciary Committee's
investigation of interstate racketeering. I wrote an article in 1951 en-
titled "Will We Follow Through on the Kefauver Crime Investiga-
tion ?"
So you can see I have been professionally interested in this partic-
ular subject, the subject of your inquiry, for 16 years.
As a consumer, as a parent, and as a former medical editor of
Parents' magazine, I also have been, for a very long time, both per-
sonally and professionally concerned about prescription drugs, their
use and their misuse and their abuse, as well as their cost to the aver-
age family when children suffer from a seemingly endless variety of
infections and other people require long-term therapy for accidents
and chronic illness.
However, I feel very strongly that drug quality, not to mention its
authenticity, is of primary importance.
Drugs have become so increasingly complex and potent that we can-
not call them lifesaving without recognizing they also may be death-
dealing.
Because of the truth-in-packaging and other safety measures passed,
the 89th Congress was characterized as a "consumers' Congress." I
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hope that this trend continues, but with much greater emphasis on
major threats to life and health rather than just concentrating on the
perils to our pocketbooks.
We should be at least as concerned about what is really in our bottles
of, say, the lifesaving and death-dealing antibiotic, chloramphenicol,
as we have been about our boxes of corn flakes.
If -I were dying of typhoid fever, I would want chloramphenicol
despite its highly publicized adverse reaction, because it is the drug of
choice for typhoid. I might be too far gone to ask questions about the
actual synthesizer of .the medications being administered, and I cer-
tainly could not comp tie the prices of the almost 100 generic distrib-
utors of this drug in tie New York area alone, nor would I be able to
go from pharmacy to pharmacy checking the prices in the New York
retail outlets. I would have to put my faith in FDA's antibiotic batch
certification program, and I would have to put out of my mind a com-
plaint by an inspector that "Everybody and his brother are in chlor-
amphenicol these days." The fact is money from loan sharking and
labor racketeering, narcotics, gambling, this "black money" that is
skinamed off these illicit activities has been invested in the manufactur-
ing,; in the distribution of chloramphenicol and other drugs.
I would also try to forget that this drug, and virtually every other
leading medication, has turned up on the. black market in this coun-
try and abroad. Such thoughts can make sick persons sicker. Having
faith in one's doctor and in the medicines prescribed is part of the
cure.
Every patient, I am sure you gentlemen agree, should have this
peace of mind, shoule. be fully protected against bogus and bootleg
medications.
It was in the hope of ultimately helping to achieve this protection
that I wrote "Black Market Medicine," that I have been traveling
around the country talking about it, and that I am here today. But
I have had many misgivings and second thoughts along the way.
No experienced, responsible writer in the medical field would pub-
licize such a shocking situation without first trying to determine
whether it was in the public interest to do so. I feared that helpless
patients would be upset by these revelations, so before I wrote one
word I consulted man:7 authorities to try to determine whether or not
the legitimate drug ir dustry, ethical doctors and pharmacists, trade
associations, and local, State, and Federal regulatory agencies could
cooperate in cleaning up the illicit traffic in prescription drugs with-
out. pressure from the public arid from Congress.
It is tragic, I think, that these various factions are so preoccupied
with the details of their own petty (petty to me in the overall pic-
ture) differences with Bach other that they cannot seem to get together
even when all of thei vested interests are threatened by a common
enemy. That enemy is, to stateit as simply as possible, the insidious,
corrupt influence of a few renegades in the health professions and
pharmaceutical manui!acturing and distribution who will collaborate
with hardened criminals.
All ethical people and companies involved with drugs suffer from
the !sins of the few violators who are publicized in my book. But the
tendency is to deny the facts exposed, rether than to face up to them
and to cooperate in dri. ring the racketeers out of this vital field.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 141
I first became aware of the black market in medicine while doing
worldwide research on an earlier book called "Green Medicine: The
Search for Plants that Heal."
I spent 4 years on that book, which traced the discovery and the
development of compounds from the plant kingdom into major
pharmaceuticals.
While in Latin America I was shocked to learn that antibiotic cap-
sules and vials of injectable drugs shipped from the United States
were being emptied of their expensive ingredients and filled with
worthless substances before being sold to unsuspecting patients.
Such criminal diversion and adulteration of medication appeared
again and again on the periphery of my research.
I also began to hear about the outright counterfeiting of tablets and
capsules by hardened criminals with no qualifications for drug pro-
duction.
Among my many sources in government, industry, and university
research groups, there was a feeling that something quite drastic
should be done about these problems. But the extent and nature of the
criminal activities were all but unknown to the scientists.
The total problem had to be defined. The bits and pieces of informa-
tion that I collected from all these sources had to be put together?
and this, it seemed, could only be done with the full cooperation of
the U.S. Food and Drug Administration.
In the late summer of 1964 I sought an interview with the FDA
Commissioner at that time Mr. George P. Larrick. This was the first
time I had called upon FA.
After several interviews, and I am sure much careful consideration,
Mr. Larrick permitted me to observe the FDA's undercover investiga-
tions of drug counterfeiting and diversion. He permitted me to par-
ticipate actively in some of these cases, and to have access to criminal
case files.
To the best of my knowledge and that of FDA, I was the first per-
son with this particular background?which included medical writing
and editing, pharmaceutical research, and crime reporting?to request
permission to work on this specific subject inside FDA while still
maintaining complete independence as an investigator and a writer.
The idea for the book was my own. Mr. Larrick placed only two re-
strictions on my completed manuscript: That it be technically accu-
rate and, that it be written, insofar as possible, so that lives and pend-
ing cases would not be jeopardized. Therefore, actual names of crimi-
nals in cases still under investigation could not be used in the book.
However, all the material upon which the book is based, including
much information that I obtained outside FDA, has been turned over
to the Federal Government. I have retained no records and I shall,
of course, continue to live up to my agreement to protect lives and
pending cases.
Upon Mr. Larrick's retirement, Dr. James L. Goddard, his succes-
sor, and his staff, permitted me to complete my research. Other Fed-
eral, State, and local law enforcement agencies also cooperated.
Several years of this close working relationship with law enforcers
on the scenes of the crimes has convinced me that organized groups
of criminals are beginning definitely to infiltrate the drug industry
at various levels.
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142 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
In fact, I believe that we have in this country two so-called drug
industries, and they are not at all easy to define, although I shall try.
One is the registered and routinely inspected, although not often
enough, drug industry including such giants as Merck, Lederle, Squibb,
Upjohn, Parke-Davis, Eli Lilly, and so on, as well as smaller com-
panies producing drugs under their generic rather than their brand
names.
The giants were once small, and some of them also produce generic
narhe products. There is nothing wrong with being small or marketing
unbranded products' so long as these are in compliance with the Food,
Drug, and Cosmetic Ad.
Large, medium, an small drug producers are not exempt from
human error, and from time to time their products are recalled and
their advertising and pricing policies are the subject of hearings and
popular articles and books.
The adverse reactiors that their drugs sometimes produce in patients
are also much in the news. But thevast majority of people who operate
these companies are by no stretch of the imagination charter members
of the international crime cartel known as the Mafia or La Cosa Nostra.
When they are charged with violation of the Food, Drug, and Cos-
metic Act, they usually try to, remedy the situation and bring about
a state of voluntary compliance. Some of them?FDA district direc-
tors have told me?even have been known to strive for the utopian
goal of zero defects in manufacturing.
The se.cond drug industry is many faceted. Basically, it includes
clandestine laboratories not known to the FDA and, therefore, not
registered for inspection ; and persons in the legitimate drug industry
who are moonlighting beyond the reach of the law.
Then there is a gra-7 market between the two, a sort of no man's
land, teeming with willful violators, as the FDA calls them.
The closer one gets to the so-called prescription drug industry?
and . I have been a fairly close observer from many vantage points
since the late 1950's?lhe more one is ready to state that there is no
such entity.
People who defend or attack the drug industry?in capital letters?
whatever their motivations, should consider that this term is virtually
meaningless without extensive amplification.
The black-market m4licinemakers, distributors, and dispensers are
crooks. It is as simple RE that and it is self-explanatory.
That was my prefatory statement. I would like to go back to my
prepared statement now, in which I, on page 3, allude to the fact
that these facts should prompt serious concern about the medicines
we take.
The advice we consumers receive is not always as authoritative as
it purports to be. For ?,xample, widely distributed published lists of
drug manufacturers flat are being publicized as reliable guides to
low-cost sources of dependable medications have been published
recently by reputable publishers.
One of the. lists of drug firms is allegedly used by the military pro-
curement.
Along with its companion. list, these have received warm endorse-
ment by respected Members of the Congress, editorial writers, and
other influential opinion molders throughout the country.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 143
Under the circumstances, most Americans would consider such com-
pilations thoroughly reliable.
But, gentlemen, I am sure that the congressional sponsors are un-
aware that more than just one or two of those companies are current-
ly involved in FDA criminal cases, and I emphasize here that I am
not only speaking of poor manufacturing practices, not having any
vitamin B12 in B12 capsules; I am speaking of outright conniving on
the part of presidents and vice presidents of these firms, owners, and
operators, with the underworld and black-market deals.
In fact, some of the officials of these various listed companies de-
scribe their shady operations in my book "Black Market Medicine,"
in excerpts from officially tape-recorded conversations I heard while
accompanying FDA undercover inspectors. These transcripts are
available. They are on file.
You and I know the problems of interagency communication and
cooperation which permit such a situation to arise in Government, but
the consumer does not. He innocently believes he is receiving the final
word from our Government on where to buy safe medications: names,
addresses, and telephone numbers.
But actually FDA is investigating and prosecuting these very man-
ufacturers, at this very moment.
The distribution of counterfeits has encompassed the entire coun-
try. One of the most vicious crimes is the counterfeiting of lifesaving
prescription drugs. This is not against a specific counterfeiting law in
most States, and, according to Federal law, passed in 1965, it is a
misdemeanor.
According to FDA, drug counterfeiting began to increase enor-
mously in 1960. Industry sources and the FDA report that every ma-
jor drug company has, at one time or another, had to cope with the
problem of imitations or counterfeits of its products.
Preparations of underworld origin have been found intermixed in
almost every type of commonly prescribed medication. I have some
examples here of the fact that black marketeers deal in all kinds of
medications that may be counterfeited, contaminated, subpotent, out-
dated, or otherwise substandard.
The drugs listed here are some samples that were picked up in
FDA cases: antibiotics; sulf ; antifungals; antispasmodics; tranquil-
izers; asthma remedies; hormones, including thyroid, diuretics, qui-
nine and quinidine; sedatives; and "knockout drops" and drugs for
the control of serious mental disorders.
Dosage forms range from liquid injectables to tiny tablets of thyroid
extract.
One of the most complicated drugs to produce, the hard-gelatin cap-
sule filled with medicated pellets for timed release, has been a favorite
with drug counterfeiters.
Counterfeit tablets and capsules are usually so nearly perfect in their
resemblance to genuine products that physicians, pharmacists, and
patients cannot, on sight, distinguish any differences. It is necessary to
compare them with the authentic products, both microscopically and
chemically in special FDA laboratories staffed by "pillistics" experts
to detect the vital differences.
In other words, while a chemist or even a pharmacist could analyze
a tablet or a capsule for its ingredients, unless he had a complete file
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144 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
of all the authentic tablets punched out on the punches and dies of
legitimate manufacturers, he would not be able to tell whether or not
that particular tablet was an authentic medication or a bogus one.
I brought an unma,rked punch and die such as are used in a tableting
machine to show you that the principle is the same as the scratches left
on a bullet by the rifle barrel. Each tablet in the world, each tablet
punched, is unique. The problems of the FDA sleuths, when they find
a counterfeit tablet with unusual scratches on it are: Where is that
clandestine lab? W. lo has those punches? And, did they ever see a
tablet with that scratch on it before? Sometimes they did, because
this tableting machinery is not controlled. When companies go bank-
rupt?as one company on a widely circulated list went bankrupt last
week?they may have gotten their tableting and other manufacturing
equipment from sowe of the shady characters that I mentioned in my
book, and when they auction off all this, other shady characters come
and put their initials down but not their names, and they will spirit
off this manufacturhig equipment and begin operating again.
So the FDA problem is really overwhelming in trying to trace the
source of a counterfeit or a dangerous drug that is being distributed
outside legitimate channels.
I have another exhibit here taken from drugs confiscated during one
of the operations that I was observing, and which has the counterfeit
tablet or capsule nest to the genuine one. The question is: Which pill
is the phony?
I am sure all agree that this counterfeiting is a very sophisticated
operation so far as the tableting and the capsulemaking is concerned,
and so far as their visual appearance is concerned.
The distribution ol! counterfeits has encompassed the entire country.
They are dispensed in spanking new pharmacies in shopping centers,
as well as in cutrate c;minstores in rundown neighborhoods.
No statistics are av ailable on the extent of the problem. During 1964
the New York State Board of Pharmacy found 131 different samples
of what they called spurious drugs, but the only nationwide drug
counterfeiting survey was made back in 1960.
In one phase of thi 3 survey, the FDA had prescriptions for six drugs
known to be counterfeited filled by retailers under suspicion in various
parts of the country. Of 59 prescriptions dispensed, 42 were counter-
feit.
FDA has no regular survey procedure nationwide to keep track of
the national black market today.
A New York Tine report in 1964 on Dexedrine quoted a drug com-
pany executive as sa:7ing, "The drug industry is bedeviled constantly
by counterfeit drugs whose annual sale amounts to between $50 and
$100 million."
John Finla,tor, Director of FDA's relatively new Bureau of Drug
Abuse Control (1311/1.,C), has publicly stated that an estimate of $25
million worth of counterfeit drugs annually "would only scratch the
surface."
"have seen, in just one FDA raid?and this was when there was a,
delay of 9 weeks in obtaining the search warrant for the premises, and
we lied reliable information from informants of evidence that much of
this clandestine mant,facture had been destroyed in the meanwhile?I
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 145
saw $1 million worth of counterfeit, medications for heart disease,
arthritis, and other ailments stashed away in a suburban garage.
I have seen invoices and shipping labels directing counterfeit medi-
cations to customers in virtually every State.
The black market is big; it is growing; it is developing virtually
unchecked by regulation or restraint. Criminal participation has and
apparently will continue to expand. Hole-in-the-wall clandestine
manufacturing and back-door drug distribution by legitimate fronts
show little sign of abating in the face of minimal penalties.
The amount of medication outside of legitimate channels and be-
yond the reach of existing regulation is difficult to estimate. But the
cost. in lives, to me, far outweights the economic considerations. One
death should be sufficient to shock us out of our apathy; the deadly
stockpiles which FDA has uncovered should spark major concern. Yet
that concern does not exist yet.
Sometimes I think the very complexity of the problem and the over-
lapping jurisdictions of Government agencies contribute, however ac-
cidentally, to maintaining a frightening, dangerous situation.
I won't read the drug company names of the medications that have
been counterfeited, duplicated, or put on bottles and shipping cartons,
because they are available in my prepared statement, but also because
every major 'drug company at some time or another has had this prob-
lem. If we single out the drugs that- have been confiscated as of this
hour, tonight and -tomorrow and next week, competitive brands may
well be in the-hands of ?the underworld.
So this singling out?although I have had to do it in my book for the
sake of documentation?the singling out of any particular company
or product is, in a sense, unfair and Unrealistic because it is a wide-
spread problem.
These drugs, diverted or illegitimately produced, are intermingled
all along the line of distribution with authentic medications.
A drug company vice president confessed that he had trouble pick-
ing out the imitations of his firm's own products without resorting
to laboratory analysis. He said, "Since I have to take some of these
on doctor's orders, and sometimes buy them on the outside while travel-
ing, I mu-st admit that it makes me quite uneasy."
Well, very, very few of us in this country can go inside of what we
know. or hope to be legitimate companies and obtain our medications;
we have to play, what I call, a form of pharmaceutical roulette down
at the corner drugstore.
In previous -Government investigations of underworld ownership
and financing -of - legitimate businesses, racketeers were, as you know
very well, found to have direct and substantial interests in food prod-
ucts, garment manufacturing, home construction, restaurants, even
the control of banks and brokerage firms.
In addition, during the course of my own investigation, I compiled
from many reliable sources, FDA, FBI, IRS, Customs, the Federal
Bureau of Narcotics, State and local enforcers, prosecutors, congres-
sional investigators, experts on labor racketeering, private detectives
working for legitimate drug companies, attorneys and other special-
ists in Piarmaceutical law; from all of these people I compiled suffi-
cient evidence to state that organized crime already has a good start in
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146 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
the infiltration of yet another major industry. But this time, the
muscling-in constitutes a life or death matter for millions.
Our apathy could be the death of us. The lurid "black hand" that
skins money off the lake in Las Vegas is also reaching right into our
family medicine cabinets.
The reason primarily is greed. Some active ingredients for prescrip-
tion drugs are several hundred times more costly than gold, ounce for
ounce. A tractor-tra ler load, of finished drugs can be worth close to
half a million dollar:3.
The value, the ultimate value, of a newly discovered chemical com-
pound, a manufactming process, or an antibiotic culture may prove to
bel many, many millions.
Drugs in all stage; of development, manufacture, and distribution,
have been stolen from laboratories, hijacked en route, fenced through
criminal rings whicl. sometimes involve pharmacists and wholesalers,
smuggled across borders, smuggled back into this country under differ-
ent labels and sold to unsuspecting ethical companies, pharmacists,
hospitals.
I have heard defense attorneys plead that these are only economic
crimes, forms of pa;ent infringement. In fact, even a drug counter-
feiter's lawyer not long ago used this very same plea even though the
FDA had their medical experts there to testify that these specific
drugs were dangerous to health and life.
These crimes are crimes against people, and they are perpetrated in
many cases by hoodlums with long criminal records hiding behind
legitimate fronts.
We have heard a great deal about victimless crimes, gambling and
so forth, in which citizens collaborate with the underworld.
I think the most horrible thing about this crime, and one thing
that we should face is that these are crimes with victims, innocent,
sick, helpless peoplc: who, in no way are collaborating or conniving
with the underworld when they go in with a doctor's prescription in
their hands, and thc.t prescription is filled with drugs that are manu-
factured by willful lawbreakers.
Black market me licine cuts across so many different business and
professional levels i hat it undoubtedly includes a greater variety of
legitimate fronts or covers than any other illegal endeavor. But
prosecutors cannot expose the criminal backgrounds of such people
during pretrial het.rings or in court because this might prejudice
the judge and jury, end also the press.
Chronic criminal ity may be concealed indefinitely because of scat-
tered or lost records, a multiplicity of aliases, and new occupational
covers in different jurisdictions as these people flit from one jurisdic-
tion to another.
Consequently, un irmed FDA inspectors who are not empowered to
make arrests, have dealt with lieutenants and soldiers in charted
Mafia families thinking they were only petty crooks or shady
businessmen.
The moment of truth comes when gangland contracts are made on
the lives of the FD.t inspectors and the BDAC undercover agents.
While I was working undercover with FDA unarmed inspectors,
an underling of a notorious mobster on the eastern coast threatened to
kill me if I turned out to be a writer. He has a record for crimes of
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violence going back 30 years. When he came to trial on violation
of the Food, Drug, and Cosmetic Act, the Federal judge suspended
his sentencing and he is now at large.
I am afraid of this man, and I have been for a long time. But I am
even more afraid of the far-reaching consequences of hoodlums pro-
ducing lifesaving medications for mass distribution.
Sgt. Ralph Salerno, formerly of the New York Police Department,
and one of the country's top experts on organized crime, was one
of the men I turned to when my life was threatened. FDA inspectors
did not then know the true nature of the criminals that they were
trying to apprehend. IIe and other experts such as Mr. George II.
Gaffney, the Deputy Commissioner of the Federal Bureau of Nar-
cotics identified these people for me as did Sgt. Ben Gregor of the
NYPI) and some former special agents of the FBI, who were able
to fill me in. I have actually seen criminal records and obtained a
great deal of information which I then passed on to the FDA.
Sgt. Ralph Salerno says that when hoodlums take over a legitimate
business people often say, "Well, are the products just as good ?"
I have actually been asked this question many times by interviewers,
Are the counterfeit drugs just as good as the ones made by the legiti-
mate companies?
The answer to that is that whenever racketeers take over a legiti-
mate business, eventually there is cornercutting. In the meatpacking
business, some aspects of which they took over, you know in no time
at all there was adulteration and contamination.
As Ralph Salerno says, "Even when they are 'legitimate,' they just
can't go straight!"
In discussing the new drug abuse control amendments in 1965, I
heard a counterfeit drug salesman, who was a former loan shark,
breezily observe, "What difference, old laws, new laws, all the same.
We aren't legit, so the law don't apply to us."
Mr. George Gaffney told me that the Mafia's first venture into so-
called ethical drug manufacturing consisted of counterfeiting of syn-
thetic pain relievers for sale to hospitals.
One of the characters in my book, a big time heroin peddler who
turned to prescription drug manufacturing). and distribution, started
out initially, by making facsimiles of the Treasury stamps used on
narcotic medications for sick people. Then he branched out into heart
medicines, reducing pills2 tranquilizers, and so forth.
Exctise me, I am trying to summarize this for you because you
would like me to wouldn't you?
Mr. FASCELL. to,
Mrs. KREIG. I would like to say a word about the gray market,
moonlighting. Any company that employs, as some drug companies
do, a thousand researchers or more can have in its midst a trusted
man who is selling trade secrets about the lifeblood of the industry?
new drugs in development. Or they can have a man who is synthe-
sizing active ingredients in his bathroom at night, and I have some
pictures of bathtub laboratories. This man may be in the grip of
blackmailers or loan sharks and, therefore, he is vulnerable, and he
might stoop to anything, even to stealing monogramed punches and
dies, and giving them to the underworld for duplication.
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You might ask, What of the small company where there are only
two men making the command decisions, a partnership? There are
no stockholders, and the few employees out in the plant are not about
to countermand any oriers that come from the head office.
There are some genetic drug producers who moonlight by imprint-
ing the brand names other manufacturers on their products, and
then sell them as the rea. thing.
Among these registered, although irresponsible, drug producers,
FDA inspectors discovered the tableting of oral. medications on ma-
chines immediately af:er deadly pesticides were tableted with no
cleaning whatsoever in between. In fact, the plant did not even have
facilities to clean the tibleting machines. It would not have to be a
case of contamination with a pesticide to be deadly because making
penicillin or hormones, has ca7ised contamination between drugs to
be e:ttremely dangerous when they were also punching out, say, vita-
min C tablets.
The Federal judge felt, when this case came to trial, that these
persons should not be in the prescription drug business. However,
since. the production manager had no other means of livelihood, he
was permitted on probation to supervise the production line in a new
company set up by these people, and he is still in business today, as are
all the other people invelved in this case.
In order to begin pharmaceutical production, one must, according
to the current law, send in for a registration number. This i.s a record-
keeping device. It mea as that sometime during the next year or so
an inspector will check up on your qualifications and your physical
plant.
Meanwhile you are free to punch out all the pharmaceuticals you
can manage to produce. You are "home safe" until they catch you,
that is. Or, as one man put it, "You could, meantime, have a cage of
ring-tailed monkeys making the stuff." But some drug producers
prefer not to register at all. They operate in the manner of bootleg
stills, completely beyond the law.
Where are these plmntom bibs? Who knows? We heard rumors
there were four on the Upper West Side of Manhattan. In tape-
recotided conversations we have heard hardened criminals talking
about taking over. farmhouses in the Northwestern States and turning
them into counterfeit :hug production plants and "knocking" the
drugs out all over the 3ountry. This was based upon their previous
practical experience in setting up stills during Prohibition.
In those days it was tootleg whiskey in fake bottles. Now it is boot-
leg pills, ditto.
The Mafia's heavy hand falls on key people. They know just how
to staff an organizatior. and keep it going, and their reasoning goes
something like this: He f.e is a chemist whois having financial trouble.
Let him know how he c an make a buck and then lean on him.
Here is a little manufacturer going under, so they take over. Maybe
he does go under, but they start a new corporation, and maybe it is
more profitable to go bankrupt again.
A pharmacist does not like their pills? Then they offer to throw
him down the cellar stairs or through his front window.
The Mafia and other organized crime rings comprised of other
ethnic groups or mixed groups, say, "We already have truck stops--
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we already have them over a barrel as far as pinball and vending
machines are concerned. Why not push pills and pornography and
30-unit, motel brothels? Have a package deal. And while we are at it,
we might as well stake out a three-Stare or four-State territory." They
will kill to protect these territories. "Joe's Truck Stop won't stock our
I3ennies ? Break Joe's legs !" That has happened.
Shadowy figures remaining in the background are the big names
on the Mafia family charts, the 24 Mafia "families."
I have heard a criminal underling assure two FDA Chief Inspec-
tors that no action will be permitted in that particular jurisdiction,
which included two FDA districts, without a slice of the action going
to the overlords in the area.
In a number of cases the names of overlords and lieutenants and
buttonmen were dropped in the course of relatively mundane drug
buys.
Informants assured FDA that "the big boys" are in it. One said
that the entire United States has been divided into 18 drug distribu-
tion territories, and he showed us counterfeits of Lederle, CIBA, and
Warner-Chilcott prescription drugs that were manufactured abroad.
Who was bankrolling this? We were told that the bankrollers in
this very businesslike takeover were so-called "numbered accounts" in
Swiss banks.
This particular FDA investigation evidently has collapsed because
too many agencies were involved. It was a case of "Lay off, this guy
is our informant." This sort of thing happens all the time, as you
know.
But I could not help thinking that the overseas planners with their
18 districts were one up on FDA which now has only 17 districts.
Is it an exaggeration to talk of a criminal takeover of segments of
the legitimate drug industry when:
A major manufacturer sold only a few bottles of a leading drug in
one of our largest cities because black-marketeers got there first?
At least one company has already been driven into bankruptcy be-
cause its most heavily advertised drug was counterfeited?
Countless pharmacies are forced out of business by unfair competi-
tion from unethical druggists who buy on the black market.
Mafia leaders from a number of States have little Apalachin-type
"sitclowns" to discuss getting into chemicals and pharmaceuticals to
avoid the heat of narcotics trafficking?
Hoodlum enforcers use muscle to persuade reluctant collaborators?
and there is more than Et Whiff of suspicion that labor racketeers have
engineered splendid drug-selling deals in various parts of the country
by forcing union members to trade in pharmacies supplied and con-
trolled by mob members?
An FDA district director told me just this last week that he had
several, ongoing investigations. There are conspiracy cases involving
pharmaceutical manufacturing backed by Mafia money.
These people are making, among other drugs, one of the most potent
medications on the market today. These thugs require the most skilled
handling and the most care in prescribing.
(I'll not give you the history of drug counterfeiting because it is in
my prepared statement.) I will say that what we seem to need most to
remedy the situation is to go beyond merely strengthening our drug
75-508-67-pt. 2-2
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laws, in order to deal with the criminals who hold all laws and our
lives in such contempt.
Ij think one of the important, most important things is that we
mut change our attitude toward the Federal agency that regulates
the legitimate prescri 3tion drug business and tries to stamp out the
illicit traffic. This, oi course, is the U.S. Food and Drug Admin-
istration.
Parenthetically, I should probably emphasize that I am not now,
and I never have been, an FDA employee, and I was, in fact, quite
prejudiced against thE FDA when I began my research in the autumn
of 1964.
At the time Mr. Larrick gave me permission to work with the
FDA, neither he nor I knew whether I would write a positive story
about FDA or not. It could well have been another book like Fred
CoOk's "The FBI Nobody Knows," [or "Inside The FBI"].
As I traveled from one law enforcement agency to another in the
course of my research, I found a reluctance on the part of other Fed-
eral agencies to share important information with FDA.
Some local and State police officers handling dangerous drug cases
were even unaware that FDA has jurisdiction over goofballs and pep
pills and LSD, and !>o forth. I realize that interagency cooperation
has always been a problem. In fact, it seems that many law enforcers
are more jealous of their pet informants [and cases] than they might
be of their wives.
FDA inspectors mist be college graduates, and most of their time
is spent regulating reasonably ethical people.
A few old hands at FDA felt that OTC-work, illicit drug sales, was
somehow beneath thcir dignity. As one put it, "If I wanted to be a
cop. I would have jolted New York's finest." He thought that he was in
the business of regul ming gentlemen, and he was a gentleman.
Unhappily, not all the drug producers and handlers in his district
were certified gentlemen; happily, he is retired, and that attitude is
beginning to change.
As an outsider, I have found many things to criticize inside F.DA.
Not all of the officials or men in the field emerge as heroes. However,
I think part of the fault lies not so much with the agency as with
the public and with Ihe Congress and the press. We get what we pay
for, and what we demand, and I believe we taxpayers pay something
like 19 cents per car ita for FDA's broad coverage of consumer pro-
tection.
If we expect FDA to fight the mushrooming drug business?mush-
rooming illicit drug business, we must radically revise our thinking,
nOt to mention our budgeting, and the budgeting should include
"Warm bodies" as well as dollars. These people need more inspectors as
well as money.
The criminal and noncriminal industries cannot be neatly compart-
mented. They, like -their products, are sometimes intermingled, and
they require the attention of both the FDA inspectors and the under-
cover?the well trained, criminally-oriented, you might say?BDAC
agent, working as a t ?,am.
This means that to control the willful criminals, many ethical com-
panies and individuals will have to bear the burden of stronger regu-
lation, more frequen; inspection and, as I suggest in my book, licensing
rather than just mete registration.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 101
I believe the decent people in the drug industry and in the health
professions do want this black market in medicine cleaned up, al-
though they were far from eager to see it publicized. In the final
analysis, it will take full cooperation all along the line, including that
between regulators and the regulated, to drive the criminals from the
pharmaceutical industry.
Contrary to some critics of FDA, who see an unholy alliance when-
ever this agency meets with representatives from the drug industry,
I feel that there must be much, much greater cooperation and com-
munication, and it should somehow be removed from the day-to-day
adversary situation.
Perhaps, in fighting criminality in the drug business, an outside
agency should coordinate the effort. For instance, I have been the
recipient of much useful information on specific criminal activities
passed on by drug companies' security men, who were former special
agents of the FBI in many cases, and from the drug company officials
and pharmacists who did not wish to go directly to FDA. lest this be
misconstrued as currying favor with the regulators.
As an example, dozens of hijacked truckloads of legitimately manu-
factured drugs are not reported to FDA. Now, this is one of the areas
in which there is the most pronounced and easily detected and proved
organized crime effort in the pharmaceutical field.
What happens if FDA has to recall batches of these drugs? Fre-
quently they are repacked. Their lot numbers are changed and all the
protection we have in all of the carefully designed amendments to the
Food, Drug and Cosmetic Act are completely scuttled by this.
FDA cannot check on this medication because they are unaware that
it has left legal channels of distribution, only to reenter in some other
guise.
Information that for one reason or another cannot be given directly
to FDA, should probably be given through the Organized Crime Divi-
sion of the Department of Justice, which has coordinating authority
over the many agencies now involved in pharmaceuticals in one way
or another. FBI is called in on interstate shipments of drugs that are
hijacked. Customs is involved when drugs are smuggled. Federal nar-
cotics agents frequently find LSD and other dangerous drugs during
the course of their raids, although these come under the Food, Drug
and Cosmetic Act, not under the Harrison Act, which they enforce.
Lastly, I urge consumers and Congressmen and the members of the
press who are perennially preoccupied with the price of drugs to give
at least some consideration to their quality and safety.
We cannot have a dependable, safe drug supply with two drug in-
dustries, one regulated and one virtually unregulated by reason of
being clandestine.
Instead of only demanding, for instance, that drugs be prescribed
by their generic names, I feel we should ask that drugs be prescribed
from known, inspected drug plants with approved quality controls,
be they brand name producers or generic producers.
The actual source of the medication, its authenticity is important, as
well as its price.
(The prepared statement of Mrs. Kreig follows:)
PREPARED STATEMENT OF MARGARET KREIG, AUTHOR or "BLACK MARKET MEDICINE"
Mr. Chairman, gentlemen, ray name is Margaret Kreig. I am a freelance writer;
that is, I am self-employed and my research and writing on "Black Market
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152 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Medicine" were done on m:, own time and at my own expense, without grants,
subsidies, or reimbursemenis of any kind. I have devoted the past 3 years, full
time, to this investigation.
I had the opportunity some years ago to write a magazine article resulting
from the revelation of the original Kefauver crime hearings. Subsequently, I
specialized in science writing and as medical editor of "Parents' Magazine," was
exposed to the problems and concerns of the consumer about the increasing
multiplicity and complexity of lifesaving medications which are now used by the
American people to the extent of 1 billion prescriptions annually. Several years
ago I had the opportunity to do worldwide research which produced my earlier
book, "Green Medicine." Tht.t book traced the development of many so-called folk
medicines into major pharnaceuticals in current use today in ethical medical
practice.
It was then that I first became aware of the black market. I was first surprised
and then shocked to find, I South America for example, that lifesaving anti-
biotics in distribution there, apparently from legitimate American sources, were
not what they appeared to be. The capsules had been diverted from distribution
channels, the active ingredients removed and the capsules filled with worthless
substances such as sawdust, then returned to circulation.
Such diversion and adulteration or' medication appeared again and again on
the periphery of my research.
As a result, when that bt ok was completed, I began to check on the extent
of this new problem in our country. I found that on the part of many sources
among pharmacists, within the drug industry and in the Federal Government,
a reluctant acknowledgment that the problem existed and a frank but private
avowal that the extent of the counterfeiting and diversion of drugs was not
really well known.
As a: result, I sought an .nterview with the then-Commissioner of the Food
and Drug Administration, ,3teorge Iarrick, in September 1964. That was my
first contact with the FDA. Mr. Larrick permitted me, after several interviews,
to begin my research on "Blt,ck Market Medicine" from a unique position. I was
given access to FDA files or pending and developing cases. I was permitted to
work actively, usually undercover, with agents of the Food and Drug Administra-
tion investigating counterfeiting and diversion.
To the best of my knowledge and that of the Food and Drug Administration,
I am the first reporter who :las been given an opportunity to work closely from
the inside of any comparable Federal agency while maintaining complete inde-
pendence as an investigator and writer. FDA placed only two conditions upon
their cooperation?that my completed manuscript be technically accurate and
that it! be written insofar ?.8 possible so that lives and pending eases would
not be jeopardized. In his documentation in my book as published, Mr. Larrick
points out, "while working undercover the author's life and the lives of several
FDA inspectors were threatened by exconvicts known to have close affiliation
with Mafia leaders. These men are still at large as are most of the individuals
whose illicit practices are des2ribed."
On Mr. Larrick's retirement, Dr. Goddard, his successor, and his staff, con-
tinued the cooperation which permitted me to complete my research. Other Fed-
eral, local, and State law enforcement agencies also extended frank cooperation.
Several years of this close working relationship with FDA has revealed with-
out question that organized L'rime is making a major move to substantially in-
filtrate the drug industry at the manufacturing and distribution levels. There
is no question that those actively engaged in this effort have close connections
with organized crime in th- s country and with the international aspects of
what is sometimes called the crime syndicate or the Mafia.
For obvious reasons, most of the names used in cases described in my book are
pseudonyms. However, all cf the facts are contained in records now in the
hands of Federal agencies including materials which I developed independently
of the FDA.
These facts should prompt serious concern about the medicines we all take.
And the advice we get is not always as authoritative as it seems to be.
For example, I recently saw a group of widely distributed, published lists of
drug manufacturers, purportedly a guide to reliable, low-cost sources of medi-
cations. One of the lists of irug firms is allegedly approved for Defense De-
partment procurement. That, along with its companion lists, have received warm
endorsement from respected .nembers of the Congress. "Under the circumstances
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I am sure most Americans would consider such compilations as thoroughly re,
liable.
But gentlemen, I am sure that all of the congressional sponsors are unaware
that more than a few of those companies are currently involved in FDA criminal
cases. I emphasize here I am speaking not only of poor manufacturing practice,
but black market deals. In fact some of the officials of those companies describe
their operations in my book, in recorded conversations I heard while accom-
panying FDA undercover inspectors. Those transcripts are on file.
You and I, perhaps, know the problems of interagency cooperation which exist
in Government, permitting such a situation to arise, but the consumer does not.
He innocently believes he is taking the advice of one Government agency about
where to buy, while another is investigating the very integrity of the products
involved.
In 1965 amendments to the Food, Drug, and Cosmetic Act, the Congress
clearly defined "counterfeiting" as applied to medications. I should like to quote
that section of the law?for it is precisely here that organized crime, the Mafia,
has chosen to launch its attack on the American medicine chest.
"The Congress finds and declares that there is a substantial traffic in counter-
feit drugs simulating the brand or other identifying mark or device of the manu-
facturer of the genuine article; that such traffic poses a serious hazard to the
health of innocent consumers of such drugs because of the lack of proper quali-
fications, facilities, and manufacturing controls on the part of the counterfeiter,
whose operations are clandestine; that, while such drugs are deemed misbranded
within the meaning of section 502(i) of the Federal Food, Drug, and Cosmetic
Act, the controls for the suppression of the traffic in such drugs are inadequate
because of the difficulty of determining the place of interstate origin of such
drugs and, if that place is discovered, the fact that the implements for counter-
feiting are not subject to seizure, and that these factors require enactment of
additional controls with respect to such drugs without regard to their inter-
state or intrastate origins. * * * The term 'counterfeit drug' means a drug which,
or the container or labeling of which, without authorization, bears the trademark,
trade name, or other identifying mark, imprint, or device, or any likeness there-
of, of a drug manufacturer, processor, packer, or distributor other than the per-
son or persons who in fact manufactured, processed, packed, or distributed such
drug and which thereby falsely purports or is represented to be the product of, or
to have been packed or distributed by, such other drug manufacturer, processor,
packer, or distributor."
One billion prescriptions costing $3 billion were filled in this country last
year. But no one knows exactly how many were filled with counterfeited, con-
taminated, outdated, or otherwise substandard black-market products.
The distribution of counterfeits has encompassed the entire country?being
dispensed in spanking new pharmacies in shopping centers as well as in cut-
rate chain stores in run-down neighborhoods. Few statistics are available on
the extent of the problem. During 1964 the New York State Board of Pharmacy
found 131 different samples of spurious drugs. The only nation-wide survey was
made back in 1960. In one phase of this survey, the FDA had prescriptions for
six drugs known to be counterfeited, filled by retailers under suspicion in vari-
ous parts of the country. Approximately 250 stores were visited and of 59
prescriptions dispensed, 42 were counterfeit. Two random surveys of drug
stores were made at about the same time. One of these surveys of 900 stores
showed that 1 percent of the drugs purchased were bogus; the other survey
made in an east coast city showed that all purchases were authentic drugs. FDA
has no regular survey procedure to keep track of the black market today.
A New York Times report in 1964 on fake Dexedrine quoted a drug company
executive as saying, "The industry is bedeviled constantly by counterfeit drugs
whose annual sale amounts to between $50 and $100 million."
John Finla ter, Director of FDA's relatively new Bureau of Drug Abuse Con-
trol, has publicly stated that an estimate of $25 million worth of counterfeit
drugs annually, "would only scratch the surface." I would certainly agree.
I have seen?in just one FDA raid?more than $1 million worth of counterfeit
medications for heart disease, arthritis, and other ailments stashed away in a
hidden, underground garage.
I have seen invoices and counterfeit shipping labels directing counterfeit medi-
cations to customers in virtually every State.
The black market is big; it is growing; it is developing virtually unchecked
by regulation or restraint. Criminal participation has and apparently will con-
tinue to expand. Under-the-counter manufacture and distribution by legitimate
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154 THE FEDERAL EFFOR': AGAINST ORGANIZED CRIME
front companies shows little sign of abating in the face of minimal penalties.
The amount of medication which is beyond the reach of existing regulation
mounts.
But the cost in lives, to me, far outweighs dollar considerations. One death
should be sufficient to ea; through apathy?the deadly stockpiles which FDA
has uncovered should be sufficient to spark major concern. Yet that concern does
not exist, yet. And someti nes, I think, the very complexity of the problem and
the overlapping jurisdictions of government agencies contributes, however ac-
cidentally, to maintaining a frightening, dangerous situation.
Health is big business. Public and private expenditures for medicines will
continue to mount. And where large amounts of money are, organized crime fol-
lows.I Because of the virtual immunity of black marketeering in medications
with millions of potential, innocent customers, the Mafia is moving in. Prepara-
tions:of underworld origin have been found in druggists' stocks of tranquilizers,
sedatives, stimulants, ho mones, blood-pressure-lowers, antibiotics, diuretics,
asthma remedies, weight-reducers, arthritis drugs, and so on. The dosage forms
range from liquid injeetables, such as vitamin B,2, to tiny thyroid tablets. One
of the most complicated-. ooking medications, the timed-release capsule, is a
favoiite item with these crooks.
Miltown, Equanil, Dexedrine, Dexamyl, Preludin, Desoxyn, HydroDiuril, Ser-
pasil, Premarin, Peritrate Meticorten, Tedral, the Broad Spectrum antibiotics
and a wide variety of 0th er commonly prescribed medications have either been
counterfeited or diverted f .om legal channels. The trade names of leading ethical
drug !producers such as IV yeth, E. R. Squibb, Ciba, Schering, Warner Chilcott,
Merck Sharp & Dohme, ,SAnith Kline & French, Wallace, etc., are printed on
tablets and capsules, package inserts, bottle labels, and shipping cartons. Even
the wax paper sanitary sealers and special metal caps on the bottles are exact
reproductions.
The disturbing fact is, the counterfeits are usually so nearly perfect in appear-
ance that physicians, pharinacists, and patients cannot tell the difference between
them l and authentic products, just by looking at them. As a result, they are inter-
mixed all along the line. .L drug company vice president said that he had trou-
ble ptcking out the imitations of his firm's own products without resorting to
laboratory analysis. He st : "Since I have to take some of these on doctor's
ordes, and sometimes bu;? them on the outside while traveling, I must admit
that it makes me quite unef sy."
In previous Government investigations of underworld ownership and financing
of legitimate businesses, racketeers were found to have direct and substantial
interests in food products garment manufacturing, home construction, restau-
rants, even the control of bt.nks and iar oker age firms.
In addition, I have conipiled from many reliable sources?FDA, FBI, IRS,
Custdms, the Federal Bur( au of Narcotics, State and local law enforcers, prose-
cutors, congressional investigators, experts on labor racketeering, private detec-
tives working for legitimate drug companies, attorneys and other specialists in
pharmaceutical law--I ha,e compiled sufficient evidence to state that organized
crime already has a good start in the infiltration of yet another major industry.
But this time, the muscling-in constitutes a life or death matter for millions.
Oar apathy could be the death of us. The lurid "black hand" that skims money
off the take in Las Vegas iE also reaching right into our family medicine cabinets.
The reason primarily is greed. Some active ingredients for prescription drugs
are several hundred times more costly than gold, ounce for ounce. A tractor-
!trailer load of finished drugs can be worth close to half a million dollars. The
value of a newly discove..ed chemical compound, a process, or an antibiotic
culture may prove to be many, many millions. Drugs in all stages of development,
mannfacture, and distribution have been stolen from laboratories, hijacked en
routes smuggled across boAers, fenced through criminal rings, smuggled back
into this country, and sold to unsuspecting ethical companies, pharmacists, and
hospitals.
I have heard defense attorneys plead that these are only an "economic" crime,
a form of "patent infringement." In fact, even a drug counterfeiter's lawyer
used this same plea only a few months ago, though FDA's medical experts testi-
fied that the drugs he mado were dt ngerons to health and life. These crimes are
crimes against people and they are perpetrated, in many cases, by hoodlums
with long criminal records hiding behind legitimate fronts. (Exhibit P. 27(1,
BM3f.)
Black market medicine cats across so many different business and professional
levels that it undoubtedly includes a greater variety of legitimate fronts or
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covers than any other illegal endeavor. But prosecutors cannot expose the
criminal backgrounds of such people during pretrial hearings or in court because
this might prejudice the judge and jury. Chronic criminality may be concealed
indefinitely because of scattered or "lost" records, a multiplicity of aliases and
new occupational covers in different jurisdictions. Consequently, unarmed FDA
inspectors who were not empowered to make arrests, have dealt with lieutenants
and soldiers in Mafia families, thinking they were only petty crooks or shady
businessmen. The moment of truth came, in one case, when a gangland "contract"
was made on the life of the inspector.
While I was working with FDA undercover inspectors, an underling of a
notorious mobster threatened to kill me if I turned out to be a writer. He has
a record for crimes of violence going back 30 years. When he came to trial on
violations of the Food, Drug, and Cosmetics Act, the Federal judge suspended
his sentencing and he is now at large.
I am afraid of this man and I have been for a long time?but I am even more
afraid of the far-reaching consequences of hoodlums producing life-saving medi-
cations for mass distribution.
Sgt. Ralph Salerno, formerly of the New York Police Department, one of the
country's top experts on organized crime, gave me the answer for people who
ask: "What if the counterfeited drugs are just as good as the authentic ones?"
He pointed out that when racketeers have taken over other legitimate businesses,
such as meatpacking, in no time at all there was adulteration, contamination,
and corner-cutting. "Even when they are 'legitimate,' " he said. "They just can't
go straight."
In discussing the new Drug Abuse Control Amendments of 1965, a counterfeit
drug salesman-former loan shark breezily observed, "What difference, old laws,
new laws, all the same . . . we aren't legit, so the law don't apply to us."
Mr. George II. Gaffney, Deputy Commissioner of the Federal Bureau of Nar-
cotics told me that the Mafia's first venture into so-called ethical drug manu-
facturing consisted of the counterfeiting of synthetic pain-relievers for sale to
hospitals. One of the characters in my book, a big time heroin peddler, turned
to prescription drug counterfeiting initially by making facshnilies of Treasury
stamps used on narcotic medications for sick people. Then he branched out into
heart medicines, reducing pills, tranquilizers, and so forth.
There are two drug industries in this country. And they are most difficult
to separate. One is the registered and routinely inspected (though not often
enough) drug industry that includes such giants as Merck, Lederle, Squibb,
Upjohn, Parke Davis, etc., as well as smaller companies that market products
under their generic names. The giants were once small and there is nothing
wrong with being small or marketing unbranded products. These large, small,
and medium drug producers are not exempt from human errors and from time
to time their products are recalled and their advertising policies and prices are
the subject of hearings and popular books. The adverse reactions that their
products sometimes have on patients are also much in the news. But the vast
majority of the people who operate these companies are by no stretch of the
imagination card-carrying members of the international crime syndicate. Nor
are they chronic "willful violators" of the Food, Drug, and Cosmetic Act, in
FDA parlance. When they are advised of their failings, they usually try to
remedy the situation and bring about a state of voluntary compliance, if not
the utopian goal of "zero defects."
Are there -any crooks among them? Most definitely, yes. And this brings us
to the gray areas of "moonlighting." A company that employs 1,000 research
workers or more can have in its most trusted inner sanctum a man who is selling
trade secrets about the life-blood of the industry, new drugs in development;
who is synthesizing active ingredients in his bathroom at night; who is in the
grip of blackmailers or lean sharks and therefore will stoop to anything, even
stealing monogramed tablet punches and dieS for underworld duplication.
And what of the small company, the partnership where two men make the
command decisions? There are no stockholders, and the few employees out in
the plant are not about to countermand any orders. There are small generic drug
producers who "moonlight" imprinting the brand names of other manufacturers
on their products and then sell them as "the real thing." Among these registered
drug producers, one finds, upon FDA Inspection: the tableting of oral medica-
tions on machines immediately after deadly pesticides were tableted with no
cleaning whatsoever in between. The Federal judge felt that such persons should
not be in the prescription drug business, but since the production manager had
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156 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
no other means of liveihood, he was permitted, on probation, to supervise the
production line in the "new ' company set up by the owners.
Now we come to the second drug industry. This is the unregistered faction.
(In order to begin pharmaceutical production, one must, according to the cur-
rent law, send in for a registration number. This is a recordkeeping device. It
means that some time during the next year an inspector will check up on your
qualifications and your physical plant. Meanwhile, you are free to punch out
all the pharmaceuticals you can manage to produce. You are home safe until
they catch you, that is. Oi , as one man put it, "You could have a cage of ring-
tailed monkeys making the stuff!") But some drug producers prefer not to
register at all. They opera e in the manner of bootleg stills, completely beyond
the law.
Where are the phantom Labs? Who knows? (There is a rumor that there were
four on the Upper West ;iide of Manhattan.) In tape-recorded conversations,
we heard hardened criny nals talking about taking over farmhouses in the
northwestern States and turning them into counterfeit drug production plants
and "knocking the drugs cut all over the country." Their modus operandi was
based upon their practical experience in setting up stills during prohibition.
Then it was bootleg whisky in fake bottles; now it is bootleg pills, ditto.
The Mafia's heavy hand falls on key people, they know just how to staff an
organization and keep it going. Their reasoning goes something like this: Here
is a chemist who is having financial trouble, let him know how he can make a
buck, then lean on him. E ere is a little manufacturer going under, so we take
over. Maybe he does go und.)r, but we start a new corporation. And maybe it's more
profitable to go bankrupt again. A pharmacist doesn't like our pills? We offer
to throw him down the cellar stairs if he refuses to reorder. Truck stops: We
already have them over the barrel on the pin-ball and vending machines, why
not push pills? And pornography? And 30-unit motel-brothels? A package deal.
And while we are at it, we might as well stake out a three-State territory.
Joe's Truckstop won't buy your }Jennies? Break Joe's legs. These things do
happen.
Shadowy figures remaining in the background are the big names in the Mafia
families. Yet one underliug assured two FDA chief inspectors that no action
would be permitted withal, t a slice going to the overlords in the area. In several
cases, the names of the overlords were carelessly dropped in the course of rela-
tively mundane drug buys. Informants assured FDA that the "big boys" were in
on it, One said that the ex tire United States has been divided into 18 drug dis-
tribution territories and he showed us counterfeits of Lederle, Ciba, and Warner-
Chilcott prescription drug; manufactured abroad. The bankrollers of this very
businesslike takeover wer? said to be "numbered accounts" in Swiss banks.
That FDA investigation evidently collapsed because too many agencies were
involved. It was a case of, "He's our informant, so lay off !" But I couldn't help
thinking that the overseas planners with their 18 districts were one up on FDA,
which now has only 17 districts.
Is it an exaggeration to talk of a criminal takeover of segments of the legiti-
mate drug industry when--
A major manufactu 7er sold only a few bottles of a leading drug in one of
our largest cities because black marketeers got there first?
At least one company has already been driven into bankruptcy because
its most heavily aclver lsed drug was counterfeited?
Countless pharmacies are forced out of business by unfair competition
from unethical druggt s who buy on the black market?
Mafia leaders from a number of States hold little Apalachin-type sit-
downs to discuss getting into chemicals and pharmaceuticals to avoid the
heat of narcotics traffic king?
Hoodlum enforcers use muscle to persuade reluctant collaborators?and
there is more than a v; hiff of suspicion that labor racketeers have engineered
splendid drug-selling teals in various parts of the country, by forcing union
members to trade in pharmacies supplied and controlled by mob members?
An FDA district di 'ector told me just this week that he had several on-
going investigations involving pharmaceutical manufacturing backed by
Mafia and teamster m mey, making one of the most potent drugs on the mar-
ket today?a drug requiring the most skilled handling and the most care in
prescribing?
Prof. Chauncey Leake, eminent pharmacologist and author of the "Amphet-
amines," pointed out that in the latter part of the 19th century, with the develop-
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 157
meat of synthetic drugs, opportunists had a difficult time of it for awhile because
they needed the cooperation of chemists. After World War I, and especially dur-
ing the depression, bootleggers and rumrunners were able to secure help from
some chemists as they branched out into the production of brand name medic-
inals. Listerine and Bayer aspirin were among the earlier targets of the breed
of counterfeiters we have with us today.
The first counterfeit prescription drug in commerce was detected officially by
the FDA in 1950; but only in the past few years has there been a marked increase
in the number of drugs counterfeited, diverted into illegal channels, or stolen.
Clearly, we must go beyond merely strengthening our drug laws in order to
deal with professional criminals who hold all laws?and our lives?in such con-
tempt.
What we seem to need most to remedy this particular situation is a change in
our attitudes toward the Federal agency that regulates the legitimate prescrip-
tion drug business and that tries to stamp out the illicit traffic. This is, of course,
the U.S. Food and Drug Administration. (Parenthetically I should probably em-
phasize that I am not now and never have been an FDA employee and I was, in
fact, somewhat prejudiced against the FDA when I began my research in the
autumn of 1964.)
As I traveled from one law enforcement agency to another in the course of my
research, I found a reluctance on the part of other Federal agents to share
important information with FDA. Some local and State police officers, handling
dangerous drug cases, were unaware that FDA has jurisdiction over "goof balls"
and "pep pills" and "LSD." I realize that interagency cooperation has always
been a problem. In fact, it seems that many law enforcers are more jealous of
their pet informants than they might be of their wives.
FDA inspectors must be college graduates and most of their time is spent
regulating reasonably ethical people.
A few old hands at FDA felt that OTC-work (illicit drug sales) was, some-
how, beneath their dignity. "If I had wanted to be a cop, I would have joined
New York's finest," one old timer observed. He felt that he was in the business
of regulating gentlemen and he was a gentleman.
Unhappily, not all the drug producers and handlers in his district were
certified gentlemen; happily, he is retired and the attitude is changing.
As an outsider, I have found many things to criticize inside FDA. Not all of
the officials or men in the field emerged as heroes. However, the fault lies not
so much with the agency as with the public and the Congress. We get what
we pay for, and I believe we taxpayers pay about 19 cents per capita each
year for FDA's broad coverage of consumer protection. If we expect FDA to
fight the mushrooming illicit drug business, we must radically revise our think-
ing. The criminal and noncriminal industries cannot be neatly compartmented.
They, like their products, are sometimes intermingled and they require the atten-
tion of both the FDA inspector and the undercover BDAC agent. This means
that to control the willful criminals, many ethical companies and individuals
may have to bear the burden of stronger regulations, more frequent inspections,
and, as I suggest in my book, licensing rather than mere registration.
I believe that decent people in the drug industry and in the health professions
do want this cleaned up, although they were far from eager to see it publicized.
In the final analysis, it will take the full cooperation of the regulators and the
regulated to drive the criminals from the pharmaceutical industry. Contrary to
the critics of FDA, who see an unholy alliance whenever this agency meets
with representatives from the drug industry, I feel that there must be much
greater communication?and it should somehow be removed from the day-to-day
adversary situation.
Perhaps, in fighting criminality in the drug business, an outside agency should
supervise and coordinate. For instance, I have been the recipient of much useful
information by drug company security men and officials, who did not wish to
go directly to FDA, lest this be misconstrued as currying favor with the regu-
lators. Dozens of hijackings of truckloads of legitimately manufactured drugs
have been reported to the FBI or State police, but not to the FDA. Big-time
criminal organization is required to dispose of stolen material in those quantities
and feed it into legitimate channels. But what happens if FDA has to recall
some of that batch? They don't know it is gone. What happens if the drug needs
to be stored at a particular temperature or under other special handling situa-
tions? FDA is not aware of its existence and cannot protect the consumer.
Such information should probably be given to the Organized Crime Division
of the Department of Justice, which has coordinating authority over the many
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agencies now involved in pharmaceuticals in one way or another: FBI, for in-
stance, is called in when interstate shipments of drugs are hijacked. Customs
is inYolved when drugs are smuggled. Federal narcotic agents frequently find
LSD! during their raids, but it comes under the Food, Drug, and Cosmetic Act,
not the Harrison Act.
Lastly, consumers and "congressmen and the members of the press who are
pereilmially preoccupied with the price of drugs should give at least equal time
to tile question of quality and safety. We cannot have a dependable, safe drug
suply with two drug industries, one regulated and one virtually unregulated
by r ason of its being clandestine. Instead of demanding only that drugs be pre-
scribed by their generic names, we should ask that drugs be prescribed from
known, inspected drug plants with approved quality controls, be they brand-name
prodiscers or generic mann facturers.
Organized groups of criminals aee moving in on the nonnarcotic drugs listed
as %abject to abuse under the Drug Abuse Control Amendments of 1065. For in-
stanee, trafficking in the etimulant methamphetamine, which is injected by ad-
dicts can be extremely lucrative. B DAC agents recently seized a 50-pound bag of
this drug which would have brought $1,750,000 when peddled in 1-grain doses
selling for $5 each.
The drug was shipped to a person who gave an FDA registration number over
the telephone. In contrast to peddLng heroin, the illicit sale of this drug to ad-
dicts is only a misdemeanor.
Yet as much as SO percent of the undercover work today in such FDA districts
as New York, Los Angeles., and San Francisco is devoted to LSD cases. FDA is
not principally interested n convicting LSD users. The Federal agents are trying
to find the sources of this dangerous drug. However, they are severely handicapped
by the fact that loopholes in the law are pointed out in newsletters written by
advocates of the drug experience who may be students or "hippies" or other
enth isiasts for expanding 2onsciousness. The point is, anyone who is not approved
by4DA to experiment as an authorized researcher but who is manufacturing
it
and elling LSD is breaking a Federal law. Because of the great demand for this
drug!, there are indications that criminals formerly involved in narcotics traffic
are becoming interested in supplying LSD. The 196 million potential consumers
of prescription drugs in :his country do not get adequate protection by FDA
partly because LSD users require so much time from the few agents that it is
diffidult for them to spend much needed work on snaking cases against drug
counterfeiters.
In other words, I believe that consumers should be as concerned about what
is really in their package of chloramphenicol as they have been about the truth
in the packaging of corn flakes.
This brings me to the controversial subject of electronic surveillence. From my
personal observations, the FDA's use of miniature microphones, worn by under-
cover agents, and transmitting and recording devices have proved useful in four
ways: (1) Protecting the lives of the agents; (2) uncovering legitimate fronts ?
(3) indicating where, and when, and how criminals will strike next; and (4)
expediting cases through t'ae courts.
I do not pretend to be an authority on criminology, and I am not an active
member of the "law enforcement establishment." I am primarily a science writer,
specializing in the :field of drugs. But early in my career, I wrote a series of
articles about wrongfully convicted persons. I was then, and still am, concerned
about fundamental civil rights. My telephone has been tapped, I have been
"tailed," and, believe me, it is a terrible feeling, as more and more people are
finding out every day wits the uncontrolled sale of electronic eavesdropping de-
vice% Industrial spies, swpicious spouses, nosey neighbors, anyone and everyone
can purchase our privacy i or a few dollars.
However, only a fraction of the equipment used today for transmitting and
recording conversations was purchased by Federal agencies, and only a small
part of these Government purchases found their way to FDA undercover in-
spectors and agents, who used them primarily for self-protection.
During the course of my 3-year investigation of FDA's methods for handling
criminal eases, my own a :titude toward these "insidious devices" changed from
one of revulsion at the thought of listening in on conversations, to acceptance of
the fact that these are vii al weapons in a certain type of warfare. In fact, they
may be the only useful weapons in some cases. Specifically, I mean the uncover-
ing of legitimate fronts.
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Throughout my book there are excerpts from FDA tape recorded conversations
in which renegade chemists, physicians, pharmacists, drug company officers, and
distributors?all masquerading as legitimate business and professional men?
willingly discuss their plans to circumvent Federal laws designed to protect our
lives. These men eagerly?one might say, greedily?discussed their big deals with
undercover agents. One can assume that they would also discuss them with many
others whom they hoped to engage in the lucrative traffic in black-market medi-
cine. I feel very strongly now that this use of a concealed microphone worn by the
Federal agent?not planted?and recording equipment does not constitute an
invasion of privacy. These willful wrongdoers gave up their privacy when they
began to plot ways and means to circumvent very important health safeguards for
the rest of society.
We should ask ourselves: Who is to protect the life of an infant with a ful-
minating infection, when the antibiotics administered are 50 percent potent?
What about the victim of pernicious anemia whose 13' contains none of the life-
saving vitamin? And the patients suffering pain after surgery or the agony of
terminal cancer?what about their basic rights to medical relief?
Within the last week one of the most notorious characters in my book report-
edly ordered a "contract" made on the life of a BDAC agent. But, since the
President's state of the Union message in January 1907, FDA undercover men
have been stripped of all electronic surveillance equipment. Within a few days
after that message, a BDAC agent in the course of apprehending a drug trafficker,
tried to summon help by tile only means then available to him?by waving out
the window to other agents?and was seriously injured.
I understand that recording conversations is still prohibited. However, crim-
inals very often lie to their attorneys and insist that they are innocent. In a
recent case in which I have been an observer, involving the president and other
officers of a shady drug firm, a few minutes of tape recordings were played for
the defense attorney. He then questioned his clients, and they admitted that they
had indeed engaged in the recorded conversations. Their plea was changed to
guilty, thus saving taxpayers the expense of a long court procedure and saving
Federal agents much time in testifying.
Although I completed my book some months ago, the criminal activities de-
scribed are all too contemporary. Just last week another company on a circulated
list of so-called approved suppliers went bankrupt and auctioned off equipment
that had changed hands many, many times among the various gray marketeers
known as Abe, Bert, et cetera, in my book. Where these punches, dies, and tablet-
big machines will next be operating is anybody's guess. The purchasers were re-
quired only to put down their initials at the time of the auction. But the defunct
listed company can now hardly be expected to stand behind the product it
distributed to pharmacies throughout the Nation.
Because of the weakness of Federal law, the relatively few Federal investi-
gators (even today BDAC has fewer than 300), a lack of urgency on the part of
the courts, and restrictions on electronic surveillance, cases are extremely diffi-
cult to make against drug counterfeiters. As I have seen and heard, hardened
professional criminals discuss these very points, which in their sophistication
makes the drug market all the more attractive to them.
Unregulated criminal activity in the medicine field has a special ugliness all
its own. Gambling, vice, and to at least an extent, abuse drugs enrich the criminal
world because the public?the customers?choose to seek out and purchase out-
lawed services or products. But the customers for black-marketed medications
are all unknowing?and it may well be a fatal ignorance. Only a handful of
pillisties experts of the FDA can detect expertly counterfeited medication. An
unknowing doctor, prescribing for a seriously ill child, may well have his pre-
scription filled by a conscientious pharmacist?and have his patient die. The
reason? The lifegiving medicine is a counterfeit, without the necessary active
ingredient or, perhaps, with a fatal overdose.
Many heart patients depend upon regular dosages of prescribed anticoagulant
to maintain their health. Even a dose or two, lacking the active ingredient, can
spell death. The criminals, in the black market, counterfeit blood thinners, too.
Many hospital patients depend on the regular intake of diuretics to maintain
their critical body fluid balance. The adulterated, subpotent counterfeit dosage,
sold an unknowing hospital purchasing agent, cannot have the desired effect.
Result: another fatality which might have been prevented.
No one can measure the cost of this black market in human lives. But the
counterfeiters are making vital medications. I have seen them in huge quantities.
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160 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Those medications get into legitimate channels. And the effect of drug failure,
mediCal examiners tell me will not be apparent in a post mortem examination.
Weak laws, anemic enforcement agencies, lenient courts and overlapping ju-
risdictions have contributed to an open invitation to organized crime, to the venal
scientist, to the greedy and unscrupulous fringe operator, and to the Mafia. They
have responded with the creation of a black market in medicine.
I have been disturbed t ) see black marketeers put on probation--because a
judge and sometimes a pros mutor see only an "economic' crime.
I have been disturbed tc see drug companies report hijackings of drug loads
to the FBI?but not the FDA?because of an adversary relationship between
regulated and regulator. And I've been equally disturbed to find that the FDA
after discovering a compan 7'8 proda2t is being counterfeited, does not inform the
manufacturer, for the same reason.
I have been disturbed tc see hours of transcripts obtained by electronic sur-
veillance made useless in prosecution because it is inadmissible evidence even
though evidence of plans to distribute millions in shoddy medication.
I am disturbed to know :hat one arm of the Federal Government does not in-
form another when an invcstigation is underway of their potential suppliers.
I am disturbed that dealing death to innocent men, women, and children is a
misdemeanor, stealing a car is a felony.
I am disturbed that a small, new agency, the Bureau of Drug Abuse Control,
cannot use the latest detecl ion devices, while organized crime can tap the scien-
tific community for talent and know-how. Hijackers, for example, regularly use
walkie-talkies and other electronic devices to communicate with each other, and
with their in-plant collaborators to avoid detection.
My experience has conviaced me 1:hat a whole new industry-Government rela-
tionship must be created. In must focus on guaranteeing that each American gets
precisely the medication?En quality and quantity?that is intended. It must
eliminate the broad loopholes that can victimize the conscientious physician, the
honest manufacturer, and the ethical pharmacist if the ultimate consumer is to
be safe.
This committee and the Congress know far better than I the broader prob-
lems of law enforcement, the problems of dealing with organized crime, and the
difficulties of interagency :!ooperation. But in the field of black marketing in
medicine, I do feel strongly about the potential benefits of certain specific recom-
mendations.
The FDA should institute an immediate, continuing survey of the prevelence
of counterfeited, black-market, outdated, and contaminated drugs in distribution.
I would hope the problem w mild be statistically small; I know it to be realistical-
ly serious.
Pharmaceutical plants should be licensed, rather than just issued an FDA
registration number without any prior investigation of the professional qualifica-
tions and background of the drug producers, inspection of the facilities and equip-
ment, let cetera. The actual owners should be identified, whether they are sole
owners, partners, or corporate investors. Any person or firm that alters any drug,
in any way, should be closEly regulated?for synthesizing, tableting, encapsulat-
ing, repackaging, and relab ?ling all provide opportunities for changing drugs.
Manufacturing or distribution of any medication, without license should be a
Federal felony. Similar pa Riffles should be applicable to the counterfeiting of
labels and packaging.
The! FDA should be required to advise the industry, the medical profession--
and especially all Federal procurement agencies?of any change in the status of
any licensee.
The Bureau of Drug Abuse Control, created less than 2 years ago, should be
strengthened in manpower financial resources, and above all, in professional
training.
Reports persist among Government investigators regarding FBI files on
criminal infiltration of the drug industry?purportedly developed for, but unused
in, hearings by the late Senator Estc-s Kefauver. They should be made available
for congressional study.
EnfOrcement agents in th?, drug field?charged as they are with the protection
of our very lives?should le permitted to use electronic surveillance under ap-
propriate court supervision.
A central office should Is maintained, under the supervision of the Assistant
Attorney General for the Of ganizecl Crime Division, to coordinate information on
all criminal activities in the field of medication?hijacking, counterfeiting, et
cetera.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 161
Urgency and priority should be given drug abuse cases by Federal prosecutors;
BDAC agents should have powers of subpena granted other investigators, along
with authority to seize vehicles carrying illegally produced medications.
The entire regulator-regulated relationship between drug manufacturers and
the FDA should be reexamined. In several other industries?where the public
safety is paramount?realistic cooperation and mutual confidence are reflected
in enforcement procedures. The airline-Federal Aviation Agency relationship in
aircraft maintenance and safety is one example.
The FDA-drug industry relationship can be immeasurably improved if both
take advantage, immediately, of the protections on confidentiality of commercial
data exchanged by business and Government under section ( e) of the public
records law which takes effect July 4 of this year.
Fresh consideration should be given measures such as that introduced by Sen-
ator Harrison Williams, of New Jersey which would amend the securities laws
to require disclosure of the identity of any person or group acquiring as much as
5 percent of the voting stock of any registered company.
Laws should be enacted to permit sampling of the tax returns of the 100 lead-
ing racketeers who have been convicted for major crimes, to permit a determina-
tion of income sources, investments in legitimate industry, and infiltration
techniques.
These recommendations can be refined, supplemented, and documented by many
who have shared my experience in looking into the frightening picture of a crimi-
nal drug industry. My eases, described in "Black Market Medicine," and many
more, are documented in the files of FDA and other agencies.
But you gentlemen have a unique role no one else can fill. You can alert the
country and your colleagues. Your hearings can prompt legislation by other com-
mittees and the Congress as a whole which will stop terrible abuses and frustrate
other crimes. You can encourage a badly needed spirit of cooperative urgency on
the part of Government agencies.
I hope that I can assist in some small way as the result of my experience.
Mr. FASCELL. Thank you, Mrs. Kreig. You have focused on a very
shocking and dangerous situation. This certainly would destroy the
confidence of every person in this country buying any medicine at a
drugstore or having to resort to physicians' prescriptions.
With the obvious potential it has for death and Injury, I really can-
not think of a more important subject, as far as the national welfare is
concerned, for a determined effort to eliminate the danger.
Our interest, as we have said before, is particularly with respect to
the efforts on organized crime in this area.
I know we have a lot of questions we want to ask. Since we have an
11 o'clock House session with a quorum call shortly, I will give each
member an opportunity to ask at least one question. After that we
will start questioning by each member under the 5-minute rule.
Mrs. Kreig, I will take the liberty of asking the first one, and I
might as well ask it before somebody else does. How is it you were able
to get permission to work with undercover agents; to work with the
FDA?
Mrs. KREIG. Well, I have been?my book, "Green Medicine," was
published in June of 1961, and during the summer of 1964 I traveled
around the country, as most authors do, appeared on television and
called on various people.
I dropped by Commissioner Larrick's office late in the summer to
present him with a copy of the book.
I had never met Mr. Larrick before, and I cannot recall ever going
to the FDA before, although I think in the course of writing the
LSD chapter I did write a letter to FDA asking about LSD.
But other than that one letter I had no previous contact with FDA,
and I did not know anyone in FDA.
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162 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
I had received a note from an FDA doctor commenting favorably
on the book that was sort of a fan letter. It was not official. It was
handwritten on this person's own stationery.
I gave Mr. Larrick a copy of this book and, at that time, I was very
concerned that something like 39 bills in 14 years aimed at controlling
drug abuse had failed in Congress.
I Was very angry, pe.?sonally, because I had started following this
legislation with Hale Boggs' bill introduced in the early 1950's.
I had read all the testimony, and I had seen the legitimate drug
industry, trade associations, professional (croups, the AMA, the PMA,
the APHA, the truckirng associations, all of these people coming for-
ward and testifying agtanst this, and it looked as if this bill that was
currently being discussed was never going to pass, either.
I 14rought the subjec-- up when I talked to Mr. Larrick, and said
that I would like to w rite a book called "Our Pill Happy Planet,"
about the abuse and misuse of prescription drugs. I had been research-
ing this book for about 10 years.
I wanted information from FDA, and I can only guess at what
Mr. Larrick was thinkit lg. It may be that he, too, hoped that if I wrote
this book "Our Pill Happy Planet," it would help to spell it [the need
for the bill] out. He maybe tho.ight I could write an instant book and
get it published by the eid of the year.
We talked a little bit about the counterfeit drug problem during our
first interview.
I asked him at that time if 1 could become the first woman inspec-
tor. I was willing to give up my free lance status as a science writer
and take the civil service exam and be an FDA inspector in order to
get this story.
He was not permitted to hire one single new inspector. That was
part of the problem he 'tad at that time.
Alew weeks later I called on him again and I asked him if I could
please work?since I cc uld not be an inspector?if I could please work
alongside FDA inspec:ors, and he thought this over very carefully.
He contacted the district director of the New York district, and told
him that he felt that I should be?or ordered him, I presume it was
an order, to permit me to work with the undercover inspectors in that.
district, and apparently he advised other FDA inspectors and chief
inspectors and directoi.s that I was to be permitted to get my story.
I called the New York District director. I made an appointment to
see him. A case was breaking that very day, a big dru,g counterfeiting
case and the chase began. (What I describe as "The Chase, The Bust
and The Stash" in part 1 of my book on black marketeers.)
It happened instantly?I walked in to the FDA District Office and
I did not get home until 3 o'clock that morning because I was riding
around in the "tailing" cars with the inspectors.
From that time on its was a very difficult thing to find time to write
because I was so busy: out with people making cases, and traveling,
and.working undercover.
Also, it was difficult to keep the book up to date because they were
all open cases, which I had to be very careful to conceal.
The drug law was passed, the Drug Abuse Control Amendments
of 1965, were passed midway in my research, and the new Commis-
sioner came in. It was not easy to complete this book.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 163
That is how I got into FDA, a straightaway request.
Mr. FASCELL. Mr. Vander Jagt.
Mr. VANDER JAGT. Thank you, Mr. Chairman.
I wonder if you could give me a better idea of how the black market
drugs flow into the normal and legitimate distributor channels. How
does this take place?
Mrs. KREIG. It is easier to chart than it is to describe, and it is also
much quicker.
In the appendix to my book, "Black Market Medicine," I have
drawn up a diversion and drug counterfeiting distribution chart
following page 287. On the lefthand side are the legal distribution
channels, from the raw material suppliers to the dosage form manu-
facturers to the wholesalers, retailers and the users.
On the righthand side you will see the diversion channels every
single step along the way from the primary synthesizer to the ultimate
seller, retailer.
Diversion could occur whereever there is a person who is willing
to trade his ethics, his know-how or his sense of responsibility for
money.
As a specific example, drug counterfeiting is so sophisticated that I
have some pictures here, official FDA pictures, that show the counter-
feiting of the cardboard carton the drugs are shipped in from the
manufacturing plants.
Now, let us take a case of a pharmacist who is caught dispensing
counterfeit drugs in a sampling program, either by the legitimate
drug industry, by the State Board of Pharmacy Inspector or by an
undercover FDA man.
He might have purchased, through his regular supplier or from
someone whom he had reason to believe was legitimate, expertly
counterfeited and packaged drugs at the same price that he would
have paid anywhere else.
So, therefore, he would not be able to tell that he was getting bad
drugs because the price was the same.
On the other hand, I have had access to many, many cases of regis-
tered pharmacists who would buy prescription drugs from the trunks
of automobiles of total strangers. The strangers were peddling these
with the cover stories?I will give you two or three: "These drugs I
Okn let you have cheap because they are part of the drugs that were
shipped to Florida for the Bay of Pigs prisoners exchange and they
didn't use all those drugs, and so here they are, and you can have them
cheap." Or, "You heard about that big fire in that warehouse? Well,
these drugs weren't touched, so you can have them. They are distressed
but they are not hurt."
Well, drugs are organic compounds, I mean, let us just say it was
from a fire. This is a shady practice, although it is not illegal. You do
not have to have a charred label to have a drug that is dangerously
harmed by fire.
I know a pharmacist, a very prosperous one, who fills in only one
pharmacy 400 prescriptions a day. He is a fence. He is tied in With
the mob.
He [reportedly] has made a contract through the mob on the life
of an FDA BDAC Agent, and just in the last day or so, another
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164 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
BDAC Agent heard that his children his family, were threatened,
and in an effort to get his family moved he suffered a heart attack.
Now, this pharmacis ;has been involved in every type of racketeering
under the sun. He buyk; swag, which is hijacked, stolen drugs. He buys
counterfeits. He engin( ers counterfeiting deals. He introduces chemists
to people who have the money to invest.
I can only ask, as I have asked for 3 years, why is this man still
operating a pharmacy in this country when every Federal agent prac-
tically, and local and tate people know of his record? He has a felony
recOrd, and they know of his existence, and his names appears in the
newspapers all the time.
I am sorry to get oil on this, but it is one of the answers to the ques-
tion: How do these drugs get into legitimate distribution channels?
The counterfeit drug racket could not exist if there were no unethical
professionally trained people, either biochemists, chemists, pharma-
cists, even dispensing physicians, who are willing to collaborate with
them.
Mr. FASCELL. Mr. 1Vright.
Mr. Winoirr. Mrs. Kreig let me congratulate you on a highly read-
able, exciting, shock in and in many ways, very frightening book.
Mrs. KRIEG. Thank :you.
Mr. WRIGHT. I would like to commend you particularly for bringing
this menace to public attention.
A whole host of questions suggest themselves. Let me just ask you
just this one. You know Congress has considered bills designed to re-
quire the prescribing by physicians of drugs by their generic names.
What effect, if any, would legislation of that kind have upon black
market practices?
Mrs. KREIG. There is no question in my mind that some prescription
drugs are overpriced. have spent a lot of time investigating firsthand
the research and the quality controls that go into the manufacturing
of pharmaceuticals.
I went to the Amaz pn on drug plant explorations; I followed drugs
through the laboratories?I think I have walked through almost
every major drug plant in America, and many abroad.
Therefore the reaRming that we hear from these people, the Phar-
maceutical Manufacturers Association, and so forth?that drugs have
to be high priced bec inse of the extensive amount of money spent in
discovering them, in developing them, and in producing them under
good quality controls?is valid to a certain extent.
They do, also, advertise their products heavily, and this is where
I understand most of the money is spent.
Now, the idea, as I understand it, behind wanting drugs prescribed
generically is to save the patient money at the retail level.
Your question is, llf, for instance, all the drugs were generic?no-
body made a brand name product?would there still be racketeers in
the pharmaceutical b isiness? My answer?and this comes from people
in FDA because I asked the question, too, of course?is yes, there
would be racketeers, and this is why: The reason the racketeers are
in business is twofold: One is to produce or divert or hijack brand
name products for sal es through pharmacies and hospitals in the legiti-
mate channels. That might be curbed through generic production.
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But they?the criminally inclined?also moonlight and illicitly man-
ufacture in clandestine labs millions upon millions of drugs that are
subject to misuse, such as stimulants, sedatives, and tranquilizers.
Generic prescribing would not curb this particular aspect of produc-
tion one bit and, indeed, drug counterfeiting began in the Midwest
with the counterfeiting of these drugs that were manufactured solely
for abuse, and for quack weight control clinics which are manned by
unethical doctors. So, you see, there is a tie-in there. Racketeers
supply both generics and leading name brands, depending upon the
demand.
Mr. FASCELL. Mr. Cowger.
Mr. COWGER. Thank you very much.
Mrs. Kreig, in your testimony you referred to page 3 and you read
from there, you referred to published lists of drug manufacturers
which purportedly are guides to low-cost sources of medication. Are
these lists reliable, and are these lists available to the public?
Mrs KREIG. Yes, they are widely available to the public because
they have been published in a paperback book.
Now, the author of this book is a physician. He is on the staff of
Harvard University, and he is?I have met him, I have interviewed
him. I am quite certain that this man is a competent clinical phar-
macologist and physician in his own practice.
I asked him two questions, and they were friendly questions: One,
"Did you ever set foot in any drug plant that you recommend by name,
address, telephone number, and so forth?" He had not. He said he was
a medical doctor. He knew what he was talking about. He didn't have
to go into the plant, I mean, or words to that effect.
I asked him then if he went to the FDA with his lists, before pub-
lication by a reputable publisher, and asked them whether or not any
of the people or the companies on these lists?and there are two or
three lists in the back of his book?were currently under investigation,
or had ever been charged with serious violations of the F.D. & C. Act
for poor manufacturing practices of, you know, a life-threatening
nature, or for criminal, outright black market medicine deals, and he
said he had been advised not to go near FDA.
Now, FDA would have checked those lists for him. They would
have told him that he was making a grave mistake in publicizing them.
They are widely sold and distributed and referred to and recom-
mended. The problem is that only the FDA is empowered to inspect
manufacturing plants, to do nationwide sampling, and knows the
details of current criminal cases and, therefore, such a list is danger-
ous and meaningless if it isn't checked by the FDA. I feel that the
FDA should prepare a list, I don't know whether this is practical or
not, but they should advise physicians. I don't feel that medical?for
one thing, I have interviewed hundreds of doctors in the course of
my research, and very, very few practicing physicians have the fog-
giest notion of black market medicine and they are appalled to learn
of counterfeiting. Therefore, a non-FDA physician is not a competent
person to recommend drug plants.
Mr. COWGER. In your written report you said one list was available
to the Defense Department, and then you said two. Who makes up
those two lists?
78-508-57--pt. 2 3
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Mrs. KREIG. Those a7e made up, I believe, by people who go out and
inspect for the military procurement officers.
Mr. COWPER. I see.
Mrs. KREIG. As I understand it, these lists were first alluded to as
firms who were actually fulfilling contracts for the military, or that
was the general impression received by the public at large; that all
these listed people we e good drug suppliers because they were, you
know, making drugs for the military.
The fact of the matter is, some are only prospective bidders. I have
some pictures in my book of the horrendous physical plant of a pros-
pective bidder who was?who didn't actually submit a bid, but who
was?not only pro due ing drugs under filthy conditions, but also was
a drug counterfeiter.
Anyone can be a prospective anything. Therefore a list is meaning-
less if it includes "prospectives."
Secondly, a number of the people on the lists are distributors who
can't stand behind a product. They didn't manufacture it. They don't
even have to have a registration number. They can just slap a label on
it and they get listed. The list was published only a month ago and
sone of them are alrea ly out of business.
here is no real regulation of distributors per Sc, they don't have
to keep records. They are supposed to keep records, but it is all sort
of loose. If they want to change a lot number or batch number, just
so long as, you know, they scribble it down in a little book some place
or on a scrap of paper, that is okay.
This is our mechanism in this country for tracing dangerous drugs
and recalling them. So if you are listing distributors, these are hardly
the people that have ?
Mr. FASCELL. Mr. St Germain?
Mr. ST GERMAIN. I will agree with my colleagues as to the value of
your testimony, and of your research and your book and go right into
the questioning.
Following up on .:he question just asked by my colleague, Mr.
Cowger, it sort of makes one think that we can't even believe in Santa
Claus anymore, and actually this is so, because people when told that
a Government agency approves a particular firm or a particular prod-
uct, feel that they can rely on the U.S. Government. We look at tele-
vision commercials today and we find second mortgage financial or-
ganizations that are actually interest gougers, advertising -FHA-
approved.
But going on a further and keeping these entire hearings in
perspective, we are ir. essence looking into organized crime, and there
is one aspect contained in your testimony, in your book, in your intro-
ductory statement a:id in your book, that very disturbingly keeps
arising in the testimony of all the witnesses we have had to date in
these hearings, and that is the fact that there is an utter lack of co-
operation and coordhation amongst the Federal agencies. I think you
used the term both in the book and in your introductory statement:
about the only way you get any cooperation is if somebody, and this,
I feel, is most disturbing, and it?I am now getting to my question:
It would appear to me from the testimony we have had to date, and
I wonder whether you would agree, that Cosa Nostra is a whole lot
better organized in t1.is country than are our law enforcement agencies,
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 167
and this despite the inception and the creation of the Organized Crime
Division in the Department of Justice, because once again at the con-
clusion of your testimony you refer to information that has been pre-
pared for the Kefauver hearings?
Mrs. KREIG. Yes.
Mr. ST GERMAIN. That is unavailable and that is hidden away in
Archives, and it seems to me from the testimony to date that one of
the prime perpetrators of this lack of cooperation would appear to be
the FBI, because in each and every instance those three letters, FBI,
are the ones that we usually get to, the lack of cooperation by the FBI.
Now, is this your impression also in your investigation, if you care
to answer?
Mrs. KREIG. Yes, I care to answer. I know that during the Green-
lease kidnaping case, which I went into in the greatest detail and
could well write a book on, seeking the source of the drugs, and a lot
of the casemaking, was done by a pharmacist who was an FDA in-
spector. Indeed, he was the one who pointed out that some scribbled
figures on the bottle of pep pills that Carl Austin Hall used to get up
his nerve to kill little Bobby Greenlease, before he received $600,000
ransom, was not, as the FBI insisted it was, a lot number or some
sort of manufacturing code. It was a telephone number in a pharmacy
where the calls were made for the ransom money.
Now, at that time the FBI insisted that FDA get out of the case,
and they finally got them out of the case.
If FDA had been able to pursue all of the leads from their inter-
views in the death house with Bonnie Brown Heady and Carl Austin
Hall, we wouldn't have the drug-abuse problem we have throughout
the Midwest today. Because some of the same doctors, the same phar-
macists, and the same shady manufacturers who are turning out pep
pills and goofballs by the millions for distribution to truck stops,
brothels, and prisons and hoodlums throughout the heartland of our
country would have been put out of business right at the beginning.
Now this is pretty rough on the FBI. They were fearful, and there
is something to be said for both sides?I talked to FBI agents who
worked on the case; they didn't look upon FDA.'s men as law en-
forcers. They couldn't carry guns, they couldn't make arrests. They
didn't have the stature of an FBI agent or a Federal narcotics agent
and, therefore, FBI was fearful FDA "was going to mess up the
case." The FBI wanted these people [kidnapers-murderers] executed,
and they didn't want any fringe things coming into the picture like
the peddling of bennies.1
But I would like to say, and I feel very strongly about this, I have
heard that it is impossible to get the records of investigators on the
hoodlum infiltration in the prescription drug industry that were pre-
pared and given to Senator Kefauver during his drug and crime hear-
ings, and that allegedly have been locked away in the archives of the
FBI.
I have heard on every side that it is impossible to exhume this evi-
dence, and I urge you, I plead with you, I ask you, is there anything
that can be done, if these records exist, to bring them out so that
Congress can look at them?
Comments by the Director of the FBI on this portion of the testimony are contained in
a letter to the subcommittee chairman dated July 5, 1967 and printed in the appendix.
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168 THE FEDERI,L EFFORT AGAINST ORGANIZED CRIME
I am not asking, you know, why are they suppressed and why does
everyone say he can't get them? I am just hoping that if they do
indeed exist, as the paople who compiled them assure me they do, they
can be brought out and looked at.
Mr. ST GERMAIN. :VII% Chairman, to pursue the statement I made,
I would just like to fcllow out one thing.
Mr. FASCELL. Sine you started it, you might as well finish it.
Mr. ST GERMAIN. 3: don't know whether I will finish it. Mrs. Kreig,
you used the word "aahume" and I hope you don't mean that this is
really buried and the carcass may have deteriorated?
Mrs. KIZEIG. Bodies are buried in New Jersey and sometimes nothing
remains.
Mr. ST GERMAIN. I asked the question in the manner in which I did,
Mr. Chairman, because I really am convinced as a result of these pre-
vious hearings and today's hearing that the time is fast approaching
that we should hear :from the FBI as to whether or not they feel they
are cooperating with our other law enforcement agencies because once
again I state it seems unfortunate, as you have stated, that Cosa Nostra
has divided the drug industry into 18 territories and the FDA is
divided into 17 and it is all well and good to have all this publicity
about this organized crime division; however, if they are not going
to get the cooperation that they should be getting from all the agencies
involved we are going to keep losing this fight.
Mrs. KREIG. May I just say also that I understand from reading the
testimony before you in earlier weeks that the Organized Crime Divi-
siOn does go out into the various Federal districts, and they do sit
down with the district directors of the Federal Bureau of Narcotics,
IRS, and so forth. The district director of the Food and Drug Admin-
isfiration?even in an area like New York or Chicago, which is heavily
infiltrated with criminals and also a heavy concentration of the drug
industry?these FDA people. are not invited to these conferences. Yet
I know as an actual fact that FDA district directors, and I am. not
talking about the B DAC agents now, are very much involved -with
fighting figures in organized crime, who are infiltrating pharmaceuti-
cals. Their jurisdiction?these are not drugs of abuse, they belong to
I3DAC?includes drugs used by sick people for a variety of ailments.
So I think that FDA should now be considered, you know, a law en-
forcement agency by other law enforcers.
Mr. FASCELL. Well, you made the statement that the people who
compiled these statements to which you referred have assured you that
these records do ac Lually exist.
MTS. KREIG. Yes.
Mr. FASCELL. I assume the information would be of value to the
FDA?
MTS. KREIG. Treme adously.
Mr. FASCELL. As a member of Congress, I am curious and interested,
and I would like to get it from the FBI if it exists, but I am not sure
that that is necessary, exactly. I would much rather, if it has pertinent
information, that it be turned over to the proper agency to do some-
thing about it.
Mrs. KREIG. It is c uite old. I don't think the reasoning could really
be, could it, that theue are very hot ongoing investigations, if they are
stored in the archly( s and the material was collected for inquiries in
the early 1950's, and in 1959, 1960, 19(31?
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 169
Mr. FASCELL. But it might be useful in tracing a historical pattern,
is that it?
Mrs. KREIG. The same shady people kept cropping up every year,
every 10 years or even 25 years as I was tracing their histories in my
book. They go on forever.
Mr. FASCELL. You covered the Kefauver hearings, as I recall ?
Mrs. KREIG. Yes, the crime hearings; and I followed the drug hear-
ings very closely.
Mr. FASCELL. And what you are saying is that some of the people
who worked on that as investigators have assured you that investiga-
tions were made and that the records do exist and they have never been
made public?
Mrs. KREIG. Yes; that is true and unfortunately in those hearings
some very shady characters got up before Congress and spoke their
piece, and were not identified as such. They were identified as very
legitimate people and everyone listened to them with great respect.
FASCELL. Mrs. Kreig, do you know whether or not FDA has
ever asked the FBI for these files or records or information?
Mrs. KREIG. My guess would be they don't ask FBI for much any-
more because they have been?you know, they have had some sour ex-
periences with them.
Mr. FASCELL. You mean it is a one-way street?
Mrs. KREIG. It is a one-way street. It depends, Mr. Fascell, on how
well I believe in BDAC. They have a better situation because there are
former special FBI agents and former Narcotics Bureau men in drug
abuse control, so BDA1C may have better cooperation. But I regret to
say in creating BDAC, which was very necessary in order to get police
powers for some FDA people, another agency was created, and unfor-
tunately in some jurisdictions there isn't such a wonderful brotherly
relationship even between BDAC and FDA. So it gets more and more
complicated as we go on.
Mr. ST GERMAIN. Thank you, Mr. Chairman. That brings up one of
the important problems. But as a result of the information you
brought to light and the situation and conditions, I think that it is in-
cumbent upon us at this point to try to arrive at some ideas, some de-
termination, some conclusions that might be helpful in stemming this
and, if not eradicating it, slow it down.
One idea that occurred to me was in view of the fact that the FDA,
just as the organized crime division and everybody else that appears
before us, is faced with the same problem, lack of personnel, lack of
appropriate funding, that perhaps we might look to some other means
of policing.
ow, in going through the text, I believe you mentioned there were
1,600 manufacturing firms, drug manufacturing firms?
Mrs. KREIG. Excuse me : That are known.
Mr. ST GERMAIN. That are known, registered, not licensed, but
registered, and of these 1,600 approximately 300 are what you might
call major manufacturing firms?
Mrs. KIILIG. I think I have those figures in my book.
Mr. ST GERMAIN. Right, I am quoting those fi.gures.
Mrs. KRETG. I don't know.
Mr. Sr GERMAIN. Now, you take these 300 major firms, and if we
concede that they are legitimate, that they are interested in the image
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170 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
of the industry, and in providing the drugs, proper medication, proper
potency, proper condition, to their distributors and thence to the phar-
macists and eventually to the actual consumer, certainly if they are
willing to spend as math money as they do on advertising, they should
certainly be willing to spend a little money to insure that the type of
operations you descrite in your book might well be eliminated. And
the thought occurred D me that what they might do is to organize
their own enforcement division or investigative division, wherein they
would set up their OWl 1 criteria and their own ethical standards, and
the enforcement group would not be the tool of any one of the manu-
facturers or any small group of them, but it actually would be an in-
dependent organizatio:i headed up by someone who is competent and
ethieal.
This organization would be financed by contributions from these
major drug manufacturers, and I certainly feel they could probably
even get an income tax deduction on this for the contribution they
would be naaking to the ethical drug industry in these United States
of America.
I wonder if you hav a any thoughts on that suggestion or what you
think of that type of su[4gestion.
Mrs. KREIG. I think that is a very interesting proposal.
As you may know, he Bureau of Drug Abuse Control, although
they. are trained in criminal investigations, spend about 40 percent of
their time doing acconntability surveys in the plants of people who
are in the registered category. It takes one of these few agents, there
are only about 300 of ihem now in the whole United States, about 3
weeks to do an accoun :ability survey in say, Merck. Meanwhile he is
not in the other parts of New Jersey chasing the racketeers, he is at
Mer,bk doing an accountability survey.
Mr. Larrick suggested to me?I have seen him again twice, once
to give him the page proofs of the book, and then to go back and find
out what he thought about it--he suggested to me that because of this
workload on BDAC there might be spot checking the industry might
do, you know, its own accountability surveying of these dangerous
drugs, and then FDA could check on them the way they check on
batch samples on the an tibiotics.
Now, coming from Mr. Larrick, this is important, especially note-
worthy, because he had asked two leading ethical pharmaceutical
manufacturers, when he was trying so hard to get the drug abuse con-
trol bill passed, to give him their production figures on amphetamines
and barbiturates. -While others agreed, these two major drug com-
panies refused to give aim the figures, even though he said he would
bury the amounts in the total. Because it was not required by law,
their lawyers told them not to do anything, not to volunteer anything
that is not required by Etatute.
So you have an attitude on the part?again we can't speak of "the
drug industry." I don't know how cohesive this group would be. Some
of them are very competitive with each other. I know from my own
research, they disagree ;trongly on whether drug counterfeiting should
i
be publicized or not. Some of them wanted to take care of it n their
own way, in their own good time, as FDA was trying to take care
of itin its own way, in i own good time.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 171
How could we be sure?well; we could try it, but how could we be
sure that they would get together in the first place to do it?
Mr. ST GERIVIAIN. You know, Mrs. Kreig, there are other alterna-
tive methods that have also occurred to me, and one is that in view of
the fact that according to the figures and information you give us also
that in many instances a drug manufacturing firm will fill out the
necessary registration forms and it might not be for 2 years that an
FDA inspector gets around to inspecting the plant, that we might do,
as has been done in other areas, that Congress might require bonding of
these firms so that if it is found that some of their drugs have been
harmful to people, and this can be proven, then should a civil suit arise
we are not faced with a corporation that has no assets, and the cost,
naturally then the bonding companies would be charged with the re-
sponsibility of investigating these firms before they wrote the bond on
it, and these manufacturers would then find there would be a cost in
bonding.
Mrs. KREIG. Yes.
Mr. ST GERIVIAIN. Another thought that occurred to me is that it
appears quite certain that perhaps not this year, maybe this year, may-
be next year, but very soon now as far as medicare is concerned, for
instance, that there is a great deal of thought being given to including
the cost of medications for our senior citizens who qualify under medi-
care. That being the case, then I think we could add to this amendment
or this addition to medicare benefits very strict controls whereby there
would be more teeth in the enforcement.
This automatically would, I believei legally take care of the inter-
state aspect, interstate traffic in these drugs, and it could be that what
we might look to save money, and to avoid counterfeiting, and these
impotent drugs that do no live up to standards, perhaps the Federal
Government might think of going into drug manufacturing, and that,
I think, would be very fine motivation for these people to start policing
their own industry and seeing to it that the drugs that are purchased
in a pharmacy are what the people are paying for.
Mrs. KBE-M. They will all be reaching for their tranquilizers when
they hear that. [Laughter.]
Mr. Sr GERMAIN. Well, I think that medication and drugs are a
very, very important item in this society of ours today, and if it is
found that the facts and the information you give us in this book,
that John Doe goes to a pharmacy and buys a prescription, he has
known the pharmacist all his life, and the pharmacist cannot assure
him that what he is paving for is what he is supposed to be getting
and that it will do the job that it will help to cure him or help to arrest
the d se that he is suffering from, well then perhaps we had better
look in o this type of an operation.
Mrs. Kimia. I agree with you if the drug industry and the health
professions, pharmacy and medicine and their trade associations, do
not clean un this mess, the Government will have to. And we i as tax-
payers, wi3.1 have to see to it that it is paid for, and that the laws are
passed. That is the whole purpose of my writing the book.
Nov,% there ape two points that you raised that I would like to men-
tion briefly. One is that medical examiners have told me than during
the postmortem examin?Ition it is impossible to prove drug failure. It
is even difficult and un usual for postmortem examination to include
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172 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
an analysis of the drugs taken, or a search for any possibility of a
drug death, unless it is something very flagrant like suicide, or a re-
action to penicillin that, follows very closely on the heels of a dose of
medication.
Therefore, regarding your bonding, the payoff in the case of a drug
death would be a rather difficult thing to prove in some cases.
Mr. ST GERMAIN. I am afraid I have to disagree with you, Mrs.
Kreig, because I did a lot of negligence work when I was practicing
law for a short period of time prior to coming to the Congress and
I can state these things have been proven and they have been proven
and the verdicts are mighty big.
Mrs. KREIG. Would this not mean "proof positive" every time a dose
of Medication is given in a hospital? Five billion doses were given
in hOspitals last year, and these medications came out of dispensing
stocks, huge bottles thtt everything. under the sun is dumped into, in
some cases. Intermingled black-market medicines and good medicines
and medium medicines?in one man's little paper cup he can have an
intevningling of all types of these things. If he had to take three pills
in one day, how could you prove that John Doe's product killed the
man?
M. ST GERMAIN. Well, Mrs. Kreig
Mrs. KREIG. How WO Rid you trace that medication?
INTr. ST GERMAIN. I don't propose to argue that point with you this
morning.
Mr. FASCELL. Let's please not.
Mr. ST GERMAIN. I would just state to you, your experience, of
couse I realize in the book there were occasions when you don't speak
too highly of attorneys; I happen to be an attorney.
Mrs. KREIG. Oh.
Mr. ST GERMAIN. But as an attorney, I would state that I feel that
this could be a very effective means, because the bonding companies
wonld see to it that ttey were well paid, the premiums were set at a
(rood rate.
Mrs. KREIG. It is a good suggestion.
Mr. ST GERMAIN. As a result, these could be very strong motivating
factors for the drug industry to start
Mrs. KREIG. Yes.
Mr. ST GERMAIN (continuing). Searching its own conscience and
decide that they had .3etter gosh darn soon come. up with their own
policing.
Mr. FASCELL. I beli? ve I have to agree with my colleague. We must
not underestimate the inequity of lawyers to get a verdict for their
clients.
Mr. ST GERMAIN. It 'works both ways.
.Mrs. KREIG. I must say some companies?now I do not hold stock
nor am I employed b3. these companies?but only because I have seen
it-4hey have taken some trouble to try to get around counterfeiting
of their products. However, I also know from working undercover
and tape recording wl..at the crooks say about these devices that almost
as fast as a company.. in years past, .has designed a capsule shape, a
monogram or some Epecial tracer or gimmick, the criminals?and
they are clever people and their collaborationists are well trained?get
around it.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 173
But here are some examples of ways that drug manufacturers have
tried to foil the counterfeiting of their products.
Mr. FASCELL. While you are on that point, Mrs. Kreig, I might as
well ask you this. You talk about the cohesiveness of the drug indus-
try, but at least one book reviewer hasn't been too excited about your
book and has alleged that you are an apologist for the large drug
companies in America.
Mrs. KREIG. I think if he were dying of typhoid he would like to
have an authentic chloramphenicol.
Mr. ST GER1VIAIN. I think the testimony this morning would dis-
spell that, Mr. Chairman.
Mr. FASCELL. I just want to give her an opportunity to kind of even
up the record.
Mrs. KRETo. I found nationally that that review?well, this partic-
ular reviewer spoke to me, interviewed me, and he said, "Why don't
you write about the real crooks, the real criminals, that are involved in
drug manufacturing?" I was waiting with bated breath. I thought,
here at last. He is knowledgeable in this field: I am going to get some
good information. He named one of the major manufacturers of an
ethical drug, then he went off into a tirade about the side effects of
that drug.
Now, I am not a pharmacologist, and neither is he, but he is hipped
on the subject of side effects and adverse reactions. But the adverse
reactions from counterfeited drugs and drugs made by outright crim-
inals and racketeers in clandestine laboratories he has never investi-
gated. I wish he would investigate those.
As far as book reviewing is concerned, that was the review I got
in Washington. Sorry it appeared here because I have had dozens and
dozens of terrific reviews throughout the world. That one review was
written by a person who wanted me to write a book that he feels is
very important. He did not review the book I wrote and researched.
He has written a book on this subject, FDA, industry, and so forth, a
(rood book on this subject; and he should write another book on this
subject because he feels very strongly about adverse reactions, and
monopoly and things like that.
Mr. FASCELL. Mrs. Kreig, I think I ought to add at this point I
wouldn't care if you were employed by a large drug company if you
write this book. The fact that you have publicly explained what I
think is a very, very shocking and dangerous situation is important,
and it doesn't make any difference to me whether you are employed
by FDA or whether you are employed by a drug company or whether
you are on your own. I don't think it destroys the merits of your
work. It either stands or falls based on what you have said in your
own documentation.
Mrs. KREIG. The facts are there, Mr. Fascell, but as you know, I
cut this book down from 600 to 300 pages, and to me it makes a lot
of difference whether I am a free-lance science writer.
Mr. FASCELL. I am sure it does to you as an author.
Mrs. KREIG. Because just in cutting a book you can load the dice.
mean, you. know, to belong to an organization and write about it
from the inside gives kind of an institutional story because you worry
about what your boss is going to think. I think that this kind of a
book has to be written by a completely unsubsidized free-lance writer,
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174 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
otherwise there will always be that aura, that question of, well, did
she leave out the other side of the story?
The fact is the book was about criminals, and I had to write what
I observed about criminals.
FASCELL. Right at that point, you said, in your statement, that
organized crime is making a major move to substantially infiltrate
the drug industry at the manufacturing and the distribution level. i
What s that major move?
Mrs. KREIG. Well, th 3re are about 24 Mafia "families" in the United
States, that ethnic gioup, and then there are countless bands of
hoodlums who are loosely organized but nevertheless working together
and in some ways congected with the international crime syndicate.
I would say from the games that I recognized as a former writer of
true crime articles for :iational magazines, that at least a dozen of the
bosses of these fainiliK and many, many of their underlings?I think
there are 2,000 or 3,000 members that your committee has brought out
from Mr. Henry Petersen's testimony?I would say hundreds of
underlings are involveC. in this.
Now, we have the problem even with FDA of the old-fashioned
type of inspector who thinks the Mafia is something dreamed up by
perhaps the Bureau of Narcotics to get more money and men; or that
this is some hysterical situation on the part of the press.
I would just like tc say we have to accept the fact that there is
organized crime, be it Mafia, La Cosa Nostra, or as was the case with
peo0e involved in &ug counterfeiting, remnants of the Murder,
Inc.? gang, which is an 3ntirely different ethnic group.
Last week I spoke to Dr. Joseph Lohman, who is the dean at the
University of California Criminology School at Berkeley. He ran
the first BDAC training course and also was my professor of crimi-
nolcigy at Chicago. I despair?because when I was a student years
ago he lectured on the almost impossibility of combating organized
crime. He has been sheriff of Cook County in the meanwhile. I asked
him what was the crucial thing today and he said that the public,
the press, and Congress have to accept the fact that there is organized
crime. It is an entity. We have to attack it and make war on it as an
entity, as an illicit government.
There are people w _thin the Bureau of Drug Abuse Control who
are experts in this field. Mr. Jack Bologna, for instance, who lectures
to the BDAC agents en orgarized crime, tells us they have a legisla-
tive and a judicial branch, and so forth. But by and large most people,
I know this from reporters who interviewed me on this subject, know
so little about organized crime. They are so eager to be cynical and
to dismiss the fact, tF at on television they ask me to name a Mafia
leader who is infiltrating a company and to name the company. They
should know that conspiracy cases like this take years and years and
years of the most perilous and difficult casemaking, and even when
you get a major figur?, in court, his lawyers get him off.
So how can they expect a member of the press to name names on
television? I did name names in the first draft of my book, and I
haVe turned that draft over to the F113, . I have given them the names
of all of the organized crime people that I checked out with Mafia
experts in police departments and in other agencies.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 175
So this book is not a fuzzy fictional account. It had to have pseu-
donyms to conceal the identity of people who are under investigation,
and to protect lives. But the names are there, and they are well known,
recognized names in organized crime, I assure you of that.
Mr. FASCELL. In the course of your investigation, did. you determine
what relationship, if any, the FDA or BDAC has with the organized
crime section in the Department of Justice?
Mrs. KREIG. I believe that Dr. Goddard has an FDA man by the
name of Mr. Arthur Davis who is working with this unit. I should
think that Mr. John Finlator, the head of BDAC, is in contact with
them. He is the president of the Federal Agents Association now.
And he also has a man on his staff, Mr. Dennis Dale, who is setting
up an organized crime unit within BDAC headquarters. In every
BDAC district, I understand, there is a person in charge of coordinat-
ing organized crime. But this is all just getting underway. This is a
fledgling agency, and in the year or so of its existence, it has been
beset by many problems, not the least of which was as soon as it was
created it couldn't even achieve its minimum complement of man-
power before it was restricted. Also, the microphones and transmitters
that are so vital to uncovering legitimate fronts and to saving the
lives of agents were taken away from these agents right after the
President's state of the Union message in January 1967. Within a
matter of days, a BDAC agent was making an arrest of a drug
trafficker, and he needed to summon help. The only way he could do
it was to put his fist through a window and wave down the street to
other Federal agents. He cut a tendon in his hand and almost lost
his hand.
As a result of that, I believe that FDA petitioned again for at least
a transmitter and a microphone for the safety of the agents' lives so
that they can broadcast their signals for help to fellow agents down
the street.
This brings me to electronics surveillance equipment which is so
controversial. When I went into FDA I was prejudiced against the
use of the equipment. I had written a series of articles on the wrong-
fully convicted, and I suppose I had a bleeding heart approach to
crime at that time.
T have been "tailed," I have had my telephone wires tapped, and I
know it is a sickening sensation to have this happen to you. Therefore,
the idea of listening in on peoples' conversations was repugnant to
me. I just couldn't go along with it, at first.
Now, as you see, I have a book that is based almost entirely on
excerpts of tape recordings made on the scene in which a Federal
agent wore a tiny microphone and transmitter and another Federal
agent recorded the conversation. No listening devices were planted
on the premises. No wires were tapped. This Was primarily for the
protection of the agent and secondarily to find out where, when, and
how these criminals were going to strike next, and also to uncover
legitimate fronts, as in doctor cases.
If an FDA undercover agent goes to a doctor?I have a "pill mill"
chapter in the book in which I had to select from many cases?it is
very difficult for FDA to make a case against a practitioner who
belongs to all the professional societies, and who is -a pillar in his
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176 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
community, even thot gh he may be selling, and I am not exaggerat-
ing, millions of dangerous drugs illicitly under his legitimate cover.
FDA records the conversation. Then when they come to trial, hard-
ened criminals, as well as some of these other legitimate fronts, very
frequently lie to their defense attorneys, so these tape recordings have
proved useful in recent weeks against some of the drug. companies
that I referred to earlier, in that the president and the vice president
of this particular firm lied to their attorney that they were ligitimate
The FDA inspector played just a few moments of that tape in thp,
U.S. attorney's office for the defense attorney who went back to his
clients and said, "Did you say this?" And they had to admit they did,
and immediately their plea was changed to guilty. This saved the tax-
payers money. It also saved the manpower of the FDA because these
cases are very long and drawn out, 3 or 4 years is nothing. We, the
taxpayers, have to pa :7 to send expert witnesses all over the country,
and the FDA is in a turmoil: it can't go on with its ongoing cases
because people are piffled off surveillance to go and testify on a case.
So if they can use this equipment that records conversations?even
if they can't use it in the actual trial?but if they can use it in these
other ways to find out how criminals are going to strike next, and use
it when they lie to their attorneys, I think this is very valuable. I
completely changed my attitude toward electronic surveillance.
wish we would got some guidelines from Congress on that.
MT. VANDER JAGT. Thank you.
May I follow it up and make it clear, in your opinion is the use of
electronic equipment crucial to a successful war on the counterfeiting
of drugs?
Mrs. KREIG. On the counterfeiting and on other aspects of willful
criminal activity invo lying pharmaceuticals, especially in uncovering
legitimate fronts.
Mr. VANDER JAGT. I think you indicated in your book that the
President's Crime Commission in their study came to the same con-
clusion that they felt that the use of electronic equipment was crucial
to successful waging of the war against organized crime. Do you
have any evidence tha t they did, in fact, come to that conclusion?
Mrs. KREIG. I was -7ery disappointed in their final report. It was
my i understanding, arLd I am only speaking from hearsay, I didn't
interview the commiti:ee. I understand the majority of the members
were very strongly fo r setting down guidelines for Federal agencies,
and that something Ii appened in between times, because the Acting
Attorney General?now the Attorney General?does not seem to favor
this. The report was somewhat watered down and this was a great
disappointment to mo personally because I had long awaited this
report and hoped at last there would be a change in the sentiment that
we have had in which everybody is lumped together in using these
snooping devices.
The fact of the mitter is, I believe the manufacture and sale of
these devices should Fe controlled or restricted, because the vast ma-
jority of snooping devices produced today are sold to nosey neigh-
bors, to suspicious spouses, to industrial spies, and not to lawmen.
Only a small part of this equipment goes to Federal law enforcement
agencies fighting organized crime, and only a very, very small part
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 177
of that goes to FDA and BDAC and now they cannot record con-
versations.
MT. VANDER JAGT. I was just curious. In your book you indicated that
the Commissioners on the President's Crime Commission had come
to the conclusion that it was crucial that electronic devices be used
in the war on crime, that it was deleted from the report. Do you have
any evidence that you can recall that they did come to this conclusion?
Mrs. KREIG. Well, there are reporters who apparently did have some
sort of a pipeline into the cloakroom, or something?I think I can
give you this reference: "As an example of the confusion and con-
troversy that exists, the majority of the President's National Crime
Commission members reportedly endorsed the view that"?this was
sent to the printer before their report was published "electronic sur-
veillance and wiretapping by Federal agents are crucial to the anti-
crime effort. But according to the New York Times of November 23,
1966, Acting Attorney General Ramsey Clark asked the Commission
to avoid the subject in its report. He reportedly said that the eaves-
dropping issue would act as a quote 'red herring' to distract public
attention from important and less controversial recommendations."
I think whether this is controversial or not, we must face it, even if
it is issued on a court order. For instance, if we trust our judges to
issue a search and seizure warrant, can we not trust our judges to
issue a warrant for the use of these devices at a specific time and spe-
cific place against a specific lawbreaker or known criminal?
Mr. FASCELL. Will the gentleman yield right at that point please?
I think we might as well get in the record at this point what the
President's Crime Commission report said on the subject was that a
majority of the members felt that the use of electronic surveillance in
organized crime was immensely helpful but since it was not a unani-
mous report of all of the members of this Commission the Congress
should specifically lay down the guidelines on the subject.
Mr. VANDER JAGT. IS that your understanding of it?
Mrs. KRIEG. Of course, Mr. Fascell is much more familiar with the
action of the board than I am.
Mr. FASGELL. We will let the report speak for itself, and at this
point in the record without, objection, we will extract from the Presi-
dent's report the exact language dealing with the subject.
(The excerpt referred to above follows:)
EXCERPT FROM "THE CHALLENGE OF CRIME IN A FREE SOCIETY," A REPORT BY
THE PRESIDENT'S COMMISSION ON LAW ENFORCEMENT AND ADMINISTRATION OF
JUSTICE
A majority of the members of the Commission believe that legislation should'
oe enacted granting carefully circumscribed authority for electronic surveillance
to law enforcement officers to the extent it may be consistent with the decision
of the Supreme Court in People v. Berger, and, further, that the availability
of such specific authority would significantly reduce the incentive for, and the-
incident of, improper surveillance.
The other members of the Commission have serious doubts about the desira-
bility of such authority and believe that without the kind of searching inquiry
that would result from further congressional consideration of electronic sur-
veillance, particularly of the problems of bugging, there is insufficient basis to
strike this balance against the interests of privacy.
Mrs. KREIG. I was handicapped in not having their report while
wrote the summary of my book and while the rest of the book is first-
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178 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
hand, 1 had to use a lot of those 'weasel words like 'allegedly" and "re-
portedly" and so forth.
Ido know the Congress has expended a good deal of time in investi-
gating snooping device s used by the Falk.. FDA agents have been
called Gestapo agents and storratroopers and what not, and Congress-
men have written books about these insidious devices in the FDA, and
here We go again. I mem, let's have an investigation of the other side
of the story.
Mr. VANDER JAGT. If I could move on very briefly to another topic,
did It understand from your book that the FDA does not license the
manufacture of drugs, only provides for registering them?
Mrs. KREIG. That is :rue, and that is just a recordkeeping device,
they do not inspect them prior to issuing this registration number
sent out by mail. They do not investigate who is going to make the
drugs, what their qua ifications are, or what their physical plant
consists of.
W. VANDER JAW. If they then discover that a manufacturer is
counterfeiting drugs then what authority do they have ?
KREIG. Until February 1, 1966, when the drug abuse control
amendment became enforceable, there was no law against counter-
feiting drugs, and they still go under sort of a misbranding situation,
which is only a misdeme anor. Maximum fine is a year in jail or $1,000,
and usually if it is your first offense, never mind if you have murdered
and you are an arsonist and an extortionist and a loan shark, et cetera,
if this is your first offense at drug counterfeiting, the Federal judge
will Usually suspend ycur sentencing. Therefore, the people suffer--
taxpayers have providec., you know, $12,000, $15,000, I don't how many
thouSands of dollars for drug buys in order to make counterfeiting
cases: nd the criminals take this money, pay off their bail bondsman,
pay their fines, and go merrily on their way. So it is very discouraging.
Mn. VANDER JAGT. Sc if there is no State law making it a felony,
which in many cases th3re is not, the counterfeiting in drugs is only
a misdemeanor?
Mrs. KREIG. It is still a misdemeanor in the Federal law unless it is
a conspiracy to defraud the Government, which is a very difficult case
to prOve because it involves many people and years of casemaking.
ME. VANDER JAGT. One last very brief question, if I might, Mr.
Chairman. I know although it is brief it is a very tough one because
we aren't very well organized in our war against organized crime.
We have developed in :Tour testimony the fact that they have made
their entry into the blaok market medicine business. You did testify
that on one occasion you saw a million dollars worth of black market
medicine?
Mrs. KREIG. That was a rough estimate given to me at the time.
Mr. VANDER JAGT. CO Ild you give us any rough but somewhat edu-
cated guess, your guess 3ertainly being far more educated than mine,
as to the extent and scope of black market medicine?
Mrs. KnEm. If that ncludes counterfeiting it would include the
drug company official's figure of up to $100 million a year given in
1964 on counterfeited products alone; and black markets would include
dozens of hijacked trailers of pharmaceuticals worth up to a half
million dollars apiece, so we can add all those.
It would include mas3 production for illicit sale at 10 to 25 cents
per tablet of amphetam .nes, and it just goes up and up and up. The
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 179
legitimate global prescription drug industry in this country is $4.1
billion a year.
Now, how big this illicit one gets, I wish FDA would try to find
out. I wish the legitimate industry would through their marketing
surveys. Believe me, the people that could supply a tremendous amount
of helpful information, and have, quite often are security men, detail
men, marketing men, who have given information to FDA?leads,
good leads on counterfeiting cases. But they could do far, far more to
describe the extent of this entire black market drug problem.
What I had to do in this book, as one reporter on the scene, was
describe the nature of the people involved and precisely how they go
about it and in their own words wherever possible.
What remains to be done, and I couldn't possibly do it alone, is to
have the Government and the affected industry do an extensive re-
search survey on how widespread the problem is. I would hope it is
very small.
Mr. VANDER JAGT. From the figures that you have just ticked off
and the figures that you do mention in your book, just as I add them
up I would get a ballpark figure of over half a billion dollars right
there. Would you agree with that?
Mrs. KREIG. I really don't know but I can give you a case from the
New York district in which 50 pounds of a stimulant that is a legiti-
mate drug, but that is also a drug of abuse, was seized, and this would
have been broken into $55 bags of 1 grain each. This 50-pound bag
of methamphetamine would bring about $13/4 million at the retail
level.
Now, one reason that organized criminals are anxious to go into this
business is raw materials and so forth are expensive. They can make
as much money smuggling $100,000 worth of vitamin B12 in a little
packet as they could, almost as much, smuggling heroin, and the
penalty is a slap on the wrist. Where you have vitamin B12 costing 229
times the price of gold ounce by ounce, this is a very valuable com-
modity. It is also a lifesaver in pernicious anemia, so we don't want
them in this business. They have no business handling lifesaving
drugs.
Mr. VANDER JAGT. Thank you.
Mr. FASCELL. Mrs. Kreig, one thought occurs to me and that is if
organized crime is doing as you have alleged and I am sure they are,
why would they even bother with any kind of drugs? Why go to the
trouble of getting adulterated drugs or contaminated drugs or raw
materials of any kind? All they have to do is get a pill the right color
and shape and a proper label, and they can sell it to anybody for any-
thing. What difference does it make what's in it? So why do they go
to all the expense of getting any kind of drugs, why not just use sugar
or chalk or some other cheaper substance?
Mrs. KREIG. Because one of the big problems, as you know, in orga-
nized crime is what to do with the black money they skim off their
gambling. I have a list here of all the legitimate fronts I have covered
in the pharmaceutical field?this list does not appear anywhere else?
plus a list of the well-known ones like distributing vending machines,
and so on.
The reason they go into legitimate businesses and set them up,
restaurants and bars, and so forth, is so, for tax purposes, they will
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180 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
have legitimate investn.ents. They hire accountants, lawyers and even
public relations people to keep this whole thing, respectable facade,
maintained.
SO when they set up a drug company it isn't just to knock out the
pills and get the mone:T on a quick sale. It is also an investment for
then. They would like to keep the thing going. They don't want to
makes waves. They would like to keep the product relatively good.
But then they are fighting their own impulses to cut corners, to adul-
terate, to contaminate, and the people are not trained in pharmaceu-
tical manufacture
ME. FASCELL. In other words what you are saying is they want to
make a drug product which is difficult to trace or to distinguish from
the c4iginal, except by ?,xperts and under laboratory conditions?
Mits. KRET.G. Ten FDA pillistics experts there are in this country,
and if takes them up to 5 hours to analyze a single sample, so obviously
we can't turn to them v .n.y often to do an analysis of a drug.
Mr. FASCELL. Let's take another case. Let's assume that you have
one of these illegitima ;e manufacturers who makes a fairly decent
drug in the sense that it is not adulterated, it is not contaminated, but
it is in some way subsandard,
Mrs._KREIG. Yes.
Mr. FASCELL. Why wouldn't he just go ahead and make a pretty
good; product and just duplicate a very famous brand name or label?
Mrs. KREIG. Why, would he do that?
Mt FASCELL. No?why wouldn't they produce an unadulterated but
cheaper drug and simpl.y duplicate a well-known brand label for the
container?
KREIG. They do. There is counterfeiting of brand name prod-
ucts, and there is regis:ered arid OK'd production of generics, and
then there is moonlighting over, say, Labor Day weekend. Last year
one 'llegitimate drug company" produced millions of generics which
they didn't put down in their accountability records for the Bureau
of Drug Abuse Control. They keep two and three sets of books. This
whole thing is a farce about the accountability surveys.
Mr. FASCELL. In other words, what you are saying is that the generic
drug, is produced cheaply or bought by an illegitimate operator who
then counterfeits the label, the bottle, and container and sells it as a
high-priced product on :he market?
Mrs. KREIG. We are dealing with two things confused here: counter-
feitirtg and illicit prod-rction of control drugs. It is so complicated.
They have .first manufactured generic -products for legitimate sales,
I aro not saying (and ]: must point this out because I have been ac-
cuse& of it) all generic manufacturers are criminals, by any means, but
in the cases in the FDA records, very rarely, if ever, have counter-
feiters been just counter i.'eiters. They have also been generic producers,
you See. So they start -with their generic capsule or tablet or makings
for them, and then they get the punches and dies and printing ma-
chines and so forth, and by night, when there are no FDA inspections
or over a weekend, or through subcontracting to other little manufac-
turers, and people who would be willing to go along on this thing, they
will have the imprinting done. Maybe somebody else will do the pack-
aging, and then somebody else will do the shipping and it all looks
very, shall we say, Smith Kline & French. This is from the FDA:
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 181
a counterfeit bottle of dexedrine, bottled, labeled, capped, even the cap
is all counterfeit. We have somewhere here a regular bottle and you
can tell by the ultraviolet light that this is a counterfeit label, but I
defy you to tell any other way that this is a counterfeit thing.
So they start with their generic production of maybe what they call
timed-release capsules of amphetamine. Perfectly all right to produce
those. Hundreds and hundreds and hundreds of people do. If they want
to use brown and clear capsules, this is getting a bit close to what
S.K. & F. uses but I think S.K. & F. may have a hundred, or 150 imita-
tors. This is a matter of economics, commerce, and I don't want to enter
into it. It is not a criminal charge. What becomes criminal, although
defense attorneys say it is only a patent infringement and not a crime
against a human being, what becomes criminal is when they stamp
S.K. & F. on with white ink in a markem machine.
Now, again, people say, "so what is the difference if they have 15
milligrams of dextro-amphetamine sulfate in here, and they are clean
and it disintegrates in 10 to 12 hours the way S.K. & F.'s does, it is go-
ing to save the people money." The point that these questioners do not
understand is the consumer doesn't save 1 penny on a counterfeit drug.
The counterfeit drug is usually sold for the same price to the consumer
as is the stolen drug, the contaminated drug, and the distress drug.
This talk about saving consumers money is all mixed up with some
very important issues that are not explored.
Mr. FASCELL. Except in those cases where drugs are sold as loss
leader items?
Mrs. KREIG. This, as we know from the AMA survey and other
surveys, depends on individual pharmacists.
One of my first questions took me 18 months to try to resolve in my
chapter on the pharmacy business. This harks back to my time as
an editor of Parents magazine, I don't want to frighten people need-
lessly. I wanted to try if I possibly could to find consumer tips to
pass on to people so they could save themselves. After 18 months of
qustioning, I came up with the ancient advice "let the buyer beware,"
because one of the worst criminals in this book operates the fanciest
pharmacy I have ever stepped into. He will not sell even a package of
cigarettes; he is purely prescriptions. And believe me, this man is a
fence, a felon, a very terrible man. Tie is involved with the Mafia, and
he buys swag.
He says?I have a conversation in the book?he buys it for, say, half
price.
Mr. FASCELL. This is hijacked stuff?
Mrs. KREIG. Hijacked stuff.
Mr. FASCELL. Legitimate drugs?
Mrs. KREIG. Yes, be even dictates who is going to hijack whom,
what, where, and when; I mean they use walkie tales to hijack drugs
from legitimate drug companies but the FDA can't use walkie-talkies
to catch them; I know this is the way it goes.
Mr. FASCELL. By the way, is this man still in,business ?
Mrs. KREIG. Oh, yes, and he has been in the newspapers for years.
I went to the school of pharmacy where he was graduated and I asked,
"How could you have graduated such a person ?" They said, "Well, he
made very good grades and he passed all his courses." [Laughter.]
They said, "We don't issue licenses; that is the State board of
pharmacy."
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182 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. FASCELL. And he is not violating any Federal law?
Mrs. KREIG. Yes, he is violating Federal laws practically every day
of his life.
Mr. ST GERMAIN. Jus; one quick question, if I might?
Mr. FASCELL. Go aheal, sure.
Mr. ST GERMAIN. WhE n you went to school and asked how they grad-
uated him did he have any criminal record prior to his graduation
from the him,
of Pharmacy?
Mrs. KREIG. Well, he had been bragging to us that when he was a
student in this pharmacy school he stole gold and various equipment
from the laboratories?and
Mr. FAscELL. Maybe that is the reason he got good grades. [Laugh-
ter.]
Mrs. KREIG. The dean of the School of Pharmacy said?because he
still practices, you see, and has for many years in the same town where
he was graduated from, it is a very fine school of pharmacy?he said:
He is a terrible embarrassment to us, but we found no indication of criminal
behavior, and even if we had, we would have had to do what the police do, that
is get actual evidence that ha was breaking a specific law.
Now, I went to the N ttional Association of State Boards of Phar-
macy and spent quite a pit of time talking with them and examining
their laws and I believe that in fewer than a dozen States as a part
of the licensing procedure is there any mention at all of good moral
character.
Mr. ST GERMAIN. How about criminal activity prior to ?
Mrs. KREIG. Some Stal es. There was a Government survey sponsored
by the FDA, done by the Public Administration Service on how well
the people who have the power of revoking, or suspending licenses of
pharmacists, are protecting us. It was incredible. About one-third of
the State boards of phannacy aren't doing anything to speak of. About
one-third are occasionally making a case. About one-third are termed
active. There are very interesting comparisons. A State out in the Far
West,.that has fewer pharmacists, will have the largest number of rev-
ocations and suspensions of licenses, while an Eastern State that has
many, many, more registered pharmacists, hasn't suspended a license.
Yet I know in such Statcs that there are pharmacists breaking the law
and so does the FDA, and I can't comprehend why the people con-
tinue in practice. This one man, to my certain knowledge, for the last
3 years has broken many, many laws.
Some people tell me he is an informant of another Government
agency. If he is, indeed, tn informant of another Government agency,
I think that this should be stopped at once, because every day in one
of his pharmacies, he fill3 400 prescriptions and therefore 400 sick pa-
tients are being maintair ed on doses of medication that are swag, that
are counterfeited, that are substandard, just so he can be maintained
as an informant. I think this, if true, is a scandal.
Mr. WRIGHT. Mr. Chairman.
Mr. FASCELL. Mr. Wright.
IVIT.IWRIGIIT. Mrs. Kreig, I know in your book, on page 19 you made
a statement which was r 3peated in your testimony. You say:
The crooks have everythi ig going for them. Drug counterfeiting, despite its
threat to the Nation's healti , is not even against the law in most States. Under
Federal law it is still cons dered a form of misbranding and as such only a
misdemeanor.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 183
I am sure you feel that our act of 1965 was an appreciable step
forward.
Mrs. Kimm. Yes. It was.
Mr. WRIGHT. Do you feel that certain specific acts, perhaps not alone
the misbranding but still more dangerous business of debilitating and
weakening drugs should become legally a more serious offense, punish-
able by much heavier fines and, perhaps punishable by the revocation
of any right to dispense drugs? Would the Federal Government have
the power to require such a penalty to be exacted upon conviction of
some of the more serious things that are done here?
Mrs. KREIG. Well, as I understand it, there is a trend in the other
direction, and that is for the Food and Drug Administration to dele-
gate regulation of pharmacists.
Now, FDA cannot suspend or revoke licenses of pharmacists or
doctors, you know.
Mr. WRIGHT. I understand that.
Mrs. KREIG. But there is a tendency because of the workload in FDA
to try to get better cooperation from State agencies. I think we need,
in addition to strengthening our Federal enforcement agency in the
drug field, we need to do far, far more with the State and local drug
inspectors, who are underpaid and very poorly trained. I know the
FDA has a pilot program going, the Federal-State relations program.
But now you are asking, should the Federal Government step in on
cases involving practitioners who are licensed by State agencies? Isn't
it true that the police powers are pretty much vested in the States?
Mr. WRIGHT. Yes, in this general area I think that is true. Basically
my question was whether or not, in your judgment, further amend-
ments to the law might be in order, and whether by making Federal
offenses of some of these things which heretofore have been only of-
fenses of State laws. Do you believe this might be helpful in curbing
these willful practices of people such as the pharmacist whom you
mentioned?
MTS. KREIG. They should be uniform laws, first of all. Every State
differs in its prescription drug law, although there is a uniform nar-
cotics law. I think there should be uniform State laws patterned on
the FDC Act and its amendments including the drug abuse control
amendments. Those laws, I feel, should be strengthened'. ButI get very,
very depressed when I think of the effort that will go into just trying
to get these amendments because they argued a whole year on just one
word "psychotoxic" in the drug abuse control amendments because
people thought this was a loaded phrase and inaccurate and so forth.
When you start treading on the toes of the AMA and APHA and all
these trade associations, the hearings would go on forever. I just am
trying to be realistic.
Mr. WRIGHT. What do you see as the most necessary improvement,
then in the structure of the law or enforcement of the laws that
exist"?
Mrs. KREIG. I think pharmaceutical plants and all people who are
changing a drug in any way, from the synthesizers to the tableters and
encapsulators, repackagers and relabelers?all of which activities pro-
vide opportunity for changing drugs and for muddying up the distri-
bution channels?all these activities should be licensed-. This will not
work a hardship on people who are complying with the law. But it
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184 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
will, I am assured by FDA officials, drive the shady people out of busi-
ness almost overnight.
New, in order to hava a licensing situation that works, we have to
have more men and mc re money and more authority for the agency
that Would regulate this. There is no use passing a law and just letting
it go at that.
Mr. WRIGHT. Are you suggesting it should be licensed by the Fed-
eral Government?spec_fical& the FDA?rather than the State Gov-
ernment?
Mrs. KREIG. Yes, I an. Instead of the registration number system
which is to me just a ridiculous situation.
Mr. FAscEr.L. You are talking about Federal registration?
Mr. WRIGHT. Yes.
Mrs. KREIG. We have all these arms of Government that never com-
municate with each other. It seems to me the military procurement peo-
ple, not to mention the Small Business Administration, which gave
some $200,000 to one of the characters in my book to start up a drug
plant, just so he can go into the rackets, these agencies should com-
municate with each other. No firm should be on a procurement list
that isn't licensed and approved.
Mr. FASCELL. You have stated several times now about the reluctance
on the part of Federal agencies to share important information with
FDA. Do you have a specific in mind that you were involved in and
can you tell us about it?
Mrs. KREIG. Yes, and it was outrageous because there were three
stepsIto this. A big furor, when I started my research, was diversion
of amphetamines and bnrbiturates. FDA was trying to track down the
production, where it Wi),S coming from. I knew for years, working on
"Grebn Medicine" and interviewing many people, that there were
hijacked trailer loads of pharmaceuticals worth half a million dollars
disappearing. Sometimes the driver was hit over the head before he
even left the loading platform.
Some drug companie 3 were willing to tell me about this, and even
let their security peop13 show me their records. I interviewed State
police officers who were ?ailed in. I went to the FBI and asked them to
tell Me, approximately, if they could, how many- tractor-trailer loads
of pharmaceuticals wer3 hijacked. They gave me a few leads. I went
to the FDA districts involved and they knew nothing about this. They
had to read about it in the newspapers. These people were hardened
criminals, even members of the Mafia, these hijackers.
But over and beyond that is the denial by the trucking industry
that this exists, daring training of agents in the Bureau of Drug
Abuse Control.
Last fall I attended the later drug abuse training sessions. I looked
upon the establishment of the Bureau of Drug Abuse Control with
such relief, after years of working on this subject, at last I would be
able to end my book on a hopeful note.
One of the first lectives I attended was by a trucking official. New
IMAC agents seated in the audience included: a man who had worked
11 years with the Fedex al labor racketeering section ; former Federal
Narcotics Bureau men; a detective who spent something like 20 years
on thle police force; a chief inspector of the FDA who made some of
the first truck stop case3 in America in the 1950's by riding with the
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truckers cross country on the bennie routes. This man from the truck-
ing industry gave a canned PR lecture that was sickening. As an
observer, I couldn't ask questions but I asked three agents to ask him
questions. I had done a lot of research on truck stop cases; I had gone
out to truck stops. I asked one agent to ask him: whether any pharma-
ceuticals had been hijacked and he said "not to his knowledge." I had
something like a list of 37 major hijackings that I had just compiled in
a random sampling.
Then, another person asked him "have you ever heard of any kind
of a hoodlum takeover of bennie drugs that involved truck stops or
truckers?" Oh, no, there was nothing like that going on! When,
indeed, there were two- and three- and four-tate territories that are
protected by extortion and murder for bonnie routes.
The third one was, "had he ever heard of any truckdriver maintain-
ing a double log? The gypsies, the owner-operators, in order to drive
more hours than are permitted by the ICC, keep double logs, even
triple logs. This is a menace on the highways because drivers hopped-
up with bennies have been in many crashes. "Well, maybe a few," he
said. "But only a very few would ever do a thing like that."
Now, this wasn't a Federal agency that wasn't cooperating, but it
was a so-called training lecture for Federal agents. I thought it was
shocking because every man in the audience knew from his own
experience, almost without exception, that this man was whitewashing
a serious problem.
Now, I am happy to say, that that type of instruction in the area
of trucking has been abolished. Partly, I imagine, because I was just
so furious, I walked out of the place. I felt that these BDAC men
could have had a seminar on how to deal with this. They didn't need
a PR man from the trucking industry to tell them all this nonsense.
This is one of the problems. I don't think the training of the agents is
adequate.
Mr. FAscELL. Any other question? Mr. St Germain?
Mr. Sr GERMAIN. Could you give us an example of one of the drugs
useful in medicine, the uncontrolled distribution of which could do
irreputable harm, in other words a useful drug which, if distributed
without proper controls could be very harmful?
Mr. FAS CELL. Chloromycetin.
Mrs. KREM. Chloromycetin, or Chloramphenicol, generically is one
already mentioned. I wonder if the fact that "everybody and his
brother" now that the patent is off this drug?after all the innovator
of this drug, which is Parke-Davis, has had many years of experience
and has indeed had a lot of trouble over the adverse reactions of this
drug. But at least as FDA inspectors have told me, they?P?D?know
the drug from years back. I am not arguing against the fact that there
should be generic products, but this one area is something to consider.
FDA_ can keep track of a drug like chloramphenicol when it is only
produced by one company under the name, say chloromycetin, much
more easily than with just a handful of men, they can trace a hundred
distributors in the New York area alone, there is something very
strange going on here, and it is the fault of the medical profession.
Chloramphenicol is dangerous but it is also a lifesaver in typhoid.
Now, how many typhoid cases are we having in this country that would
make it so profitable? I mean, it seems as though this drug is being
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186 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
overproduced for the number of cases that it should be used for. This
gets away from black market medicine, but this is an area that cer-
tainly should be explor? d, and FDA, it seems to me, should have some
say On the production. I know this is getting into very, very contro-
versinl areas2 but with a drug that produces very serious side effects,
if the physicians do not keep up with these and create a demand, then
everYbody and his brother will go into pharmaceutical manufactur-
ing to supply that dema ad, do you see what I mean? It is a supply and
demand situation, and where will all of this end with medicare and
medieaid and tremendous demands for drugs? There will be more and
inore and more pharmaceutical manufacturers, illicit and registered,
and FDA is swamped now. What will they be in years to come?
Mr. ST GERMAIN. One last one. We recall, as we discussed earlier,
the Minute you give any produce an aura of being approved by the
Federal Government, naturally people are then lulled into acceptance
of seCurity and tranquility. The mere fact that a drug manufacturing
firm iegisters and therel y is
a registration number, this is a registra-
tion number from FDA, s it not?
Mrs. KREIG. Yes, and it can be given over the phone to obtain a 50
pound bag of methamp Fietamine. Even if you don't own the number,
apparently you can phor e it in.
MrL ST GERMAIN. Yes therefore, whoever buys this looks at the reg-
istration number, says "this is fine, it is registered with FDA." There-
fore i have asked our counsel to have legislation prepared until such
time fts we can get to lice asing, to prohibit the issuance of a registration
number until such time is it has been determined by FDA that the par-
ticular firm that wishes this registration number has the proper person-
nel, is staffed, working under proper conditions, with the proper
safeguards.
Mrs. KREIG. And you should also give FDA the power to revoke or
suspend the registration number because don't you see--
Mr, ST GERMAIN. Wl.en they are no longer complying with these
requirements.
Mr. KREIG. Because :7ou see people have gone to jail and come out
and picked up their registration number again, because there is no
power of revocation or suspension over this registration number. It
doesn% matter what you do. You can hang on to your registration
number.
Mr! FASCELL. Thank you, Mrs. Kreig.
Gentlemen, we are in our seco.nd quorum call and second go around,
and I think we will term:nate at this point.
Mrs. Kreig, we want to thank you very much for making yourself
available and giving RE' a tremendous amount of time, energy, and
thought on this very vitil subject. I can assure you that you have made
a treinendous contribution not only to the deliberations of this commit-
tee, but to the Congress and the American people. I want to express my
appreciation to you on behalf of the committee for helping us with
this -very important task
Mrs. KRuro. Thank you, very much.
Mr FA SCELL. The subcommittee will stand adjourned subject to the
call o the Chair.
(-Whereupon, at 12 :3C? p.m., the hearing was adjourned, subject to
the call of the Chair.)
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
TUESDAY, JUNE 20, 1967
HOUSE OF REPRESENTATIVES,
LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
Washington, D .0 .
The subcommittee met, pursuant to recess, at 10 :05 a.m. in room
2247, Rayburn Office Building, Representative Dante B. Fascell
(chairman of the subcommittee) presiding.
Present: Representatives Fascell, St Germain, and Edwards of Ala-
bama.
Also present: Charles Rothenberg, counsel; Millicent Y. Myers,
clerk; and William Copenhaver, minority staff member.
Mr. FASCELL. The subcommittee will please come to order.
This morning we resume the Legal and Monetary Affairs Subcom-
mittee hearings into organized crime.
The purpose of the continuing study being made by this subcom-
mittee is to ascertain the nature and extent of organized crime, to
determine what efforts are being made by the Federal Government to
combat it, and to discover ways of improving the effectiveness of those
efforts.
The President's Commission found that the sale of illegal narcotics
is organized like a legitimate import-wholesale-retail business, but
that the severity of mandatory Federal penalties for narcotics viola-
tions has caused organized criminals to restrict their activities to im-
porting and wholesaling in such a way as to isolate the top echelon
from the actual operations to protect their immunity against prosecu-
tion.
Today we are pleased to have with us Mr. John R. Enright, As-
sistant Commissioner of Narcotics, of the Bureau of Narcotics, and
Mr. Lawrence Fleishman, Assistant Commissioner, Office of Investiga-
tions of the Bureau of Customs. The agencies represented by these
gentlemen have demonstrated a high degree of effectiveness in restrict-
ing and curtailing the activities and operations of organized crime,
and we hope to learn from them what factors, methods, and actions
have been responsible for this success.
Specifically, we are most interested in any significant changes and
improvements with respect to the cooperation and coordination of
efforts between and among the various agencies which have jurisdic-
tion and responsibilities concerning organized crime activities, since
the formation of the OCRS of the Department of Justice. We would
also want to hear of any problems and difficulties which may have been
encountered in the operations of the a gencies, and to receive sugges-
tions for improvement within the confines of these particular agencies
or in the overall fight against organized crime.
187
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1?41 &UAL EFFORT AGAINST ORGANIZED CRIME
Mr. Enright, I know you luxe a prepared statement. We would be
very happy to hear from you.
STATEMENT OF JOHN R. ENRIGHT, ASSISTANT COMMISSIONER OF
NARCOTICS, ACCOM.PANIED BY DONALD MILLER, CHIEF COUN-
SEL, BUREAU OF NARCOTICS
Mr. ENRIGHT. Yes, sir. Thank you.
Mr. Chairman and liembers
Mr. FASCELL. VVould you identify who is with you at the table?
Mr. ENRIGHT. Yes, sir; excuse me. I /HE pleased to introduce Mr.
Donald Miller, Chief Cpunsel, Bureau of Narcotics.
Mr. FAscELL. All rig it.
Mr. ENRIGHT. The Bureau of Narcotics appreciates the opportunity
of reporting to this committee its views concerning the problem of
organized crime.
For the past 37 years the Bureau of Narcotics has been the primary
force, in the Governmmt's drive against the illicit narcotic traffic..
Coincidentally, for approximately the same length of time, organized
crime has been the predominant force behind this national and inter-
national trade.
As a result, the Bureau came, to know this criminal organization in-
timately as it grew in :Arength, and recognizes it today as one of the
serious threats facing crir Nation.
Origanized crime is chminated by the Mafia, which is ruled by fear
and ironclad discipline It operates from a table of organization- simi-
lar to a complex military structure. In addition to its criminal en-
deavors, it controls mt ch lucrative commercial business. Indeed, the
day may come when its quasi-legitimate functions will rival, if not ex-
ceed, its overt criminal pursuits as a source of revenue.
It has been fortunate that the revelations of various committee in-
quiries, such as this, together with incidents such as the Appalachin
meeting and the Valachi testimony, have thrown the spotlight of pub-
licity, on the organization so that today at least its existence is gener-
ally accepted. This was :tot always the case.
Insofar as the operat :ons of the Bureau of Narcotics, our major con-
cern is the traffic in heroin, the drug of choice of most addicts in the
United States. A lesser portion of this drug enters the country from
Mexico and the Far East. However, the bulk of this heroin is derived
from opium produced in Turkey and converted to heroin by French-
Corsican elements operating laboratories in France. A strong bond of
cooperation exists between these Corsican suppliers and the U.S.
criminal organization.
To attack this international apparatus, the Bureau of Narcotics
operates with a relatively small force of 301 enforcement agents and
supervisors located in 13 districts covering the United States, Europe,
the Near, Middle, and Far East, and Central- and South America.
These affents are assitrne,c1 to the various offices in proportion to' theex-
tent of the traffic, with our largest forces located in New York, Chi-
cacro, and Los Angeles.
With regard to orgar ized crime's role in the narcotic traffic, certain
obser-vations must be made. The National Crime Commission esti-
mated that organized c7ime derives $6 or $7 billion annually from its
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 189
participation in illegal gambling. The Commission further reported
that the proceeds from the illicit traffic in narcotic drugs amount to
approximately $21 million per year. This would indicate, at least, that
narcotics are a relatively small part of the organization's activities.
This is in no way an attempt to minimize the drug problem but
rather an effort to place it in its proper perspective. We note, primarily
due to a strong enforcement effort, that many members of the national
organization have chosen in recent years to divest themselves of the
narcotic business. We find in certain cities, where organized crime
flourishes, they are completely out of the drug business on all distri-
bution levels. Where they remain active, the top figures strive, quite
successfully at times, to withdraw behind several layers of insulation,
protecting themselves from detection.
Our most successful thrusts behind these layers of insulation have
been our utilization of the conspiracy statutes which make it possible
to gain convictions even though the violator never touches the nar-
cotics. We also have had excellent results with the use of the under-
cover technique, whereby narcotic agents actually penetrate the or-
ganization. It must be admitted, however, this type of investigation
has its limitations for this reason. Bona fide members of the organiza-
tion gain the confidence of the leaders and rise in stature in the group
by performing criminal acts. Naturally, the undercover narcotic agent
cannot do this and therefore can go only so far into the organization's
structure.
Nevertheless, I believe it can be stated without fear of contradic-
tion that this Bureau, over the years, has been responsible for the ap-
prehension and conviction of more top-echelon members of organized
crime than any other agency.
At this point, Mr. Chairman, I would like to offer for the record
a list of organized crime figures and associates that have been appre-
hended through the efforts of this Bureau since 1951.
Mr. FASCELL. Without objection that list will be included in the
record at this point.
Mr. ENRIGHT. Thank you, sir.
(The document referred to follows:)
JUNE 1967.
Attached is a list of high-echelon narcotic traffickers who have been appre-
hended from 1951 through 1966 as a direct result of investigations conducted
by agents of the Federal Bureau of Narcotics. A brief r?m?f the criminal
background and activity of each violator is included. It does not include a score
of major traffickers apprehended in Europe, the Near East, and Asia.
Accardo, Settimo, Bloomfield, N.J. : Accardo, as a result of an undercover in-
vestigation initiated by agents of the Bureau of Narcotics, was arrested on
August 3, 1955, at Newark, N.J., for violation of the Federal narcotic laws.
He was arraigned at Federal court, New York, and subsequently jumped $92,500
total bond and fled to Italy. Accardo controlled rackets in northern New Jersey
and was a leader of organized crime in this area. He is familiar with every
major racketeer throughout the United States and Canada. Following his flight
to Italy, he established himself in the organized criminal element and reor-
ganized a smuggling ring which brought heroin from Italy to Canada. He traveled
to Toronto for the purpose of supervising this operation. Upon the implication
of his associates Vito and Albert Agueci and John Papalia in the narcotic in-
vestigations at Toronto, Accardo was extradited from Italy on November 12,
1963, and is now serving a 15-year sentence in a Federal penitentiary.
Agueci, Albert (deceased), Toronto, Canada. Agueci, Vito, Toronto, Canada:
The Agueci brothers emigrated from Sicily to Canada during the early 1950's.
They were part of the underworld organization that set up outlets for heroin
smuggled into Canada from Italy. In Toronto they operated a bakery as a front.
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190 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Following their implicaticn in the Federal narcotic conspiracy case at New York
City during November 1961, Albert Agueci was found murdered at Rochester,
N.Y.. He had been brutal.y beaten, strangled, and burned with his hands tied
behind his back. During February 1962, Vito Agueci stood trial and was con-
victed in the southern district of New York and sentenced to 15 years in prison.
Aiken, Leonard, New York, N.Y.: On December 18, 1964, a Federal grand jury
in the southern district of New York returned a nine-count indictment against
Aikein and several members of the criminal organization in New York City.
He and that group were responsible for large quantities of heroin being distrib-
uted! in the Harlem section for over 10 years. After being convicted in Federal
court, Aiken was sentence d to serve 25 years in a Federal penitentiary and pay
a fine of $20,000.
Amato, Angelo, Cleveland, Ohio: In 1952 Amato was sentenced to 5 years
imprisonment for violation of the Federal narcotic laws. He was one of the
main outlets of heroin in Cleveland, Ohio. As a member of the underworld, he
obtained large quantities of heroin for distribution in Ohio from his organiza-
tion's sources in New York. He was equally active in other aspects of organized
crime in his area before his imprisonment. His criminal record dates back to
1936i
Arigelet, Anthony, New York City, N.Y.: Anthony Angelet with his brother
William had a tight control over the criminal activities of Spanish-speaking
Harfem of New York. The y obtained this criminal control through violence and
intimidation. During April of 1956, Angelet was sentenced to 5 years by a Federal
court in New York City for assaulting a Federal narcotic agent. Among his
associates are numbered tie most important sources of South American cocaine.
His Criminal record dates back to 1934.
Armone, Joseph, Brook1;7n, N.Y.: Joseph Armone was associated with deceased
Lower East Side underwcrld leader Joseph Biondo. Armone, his brother Steve
Armone, and the late Cha les "Lucky" Luciano were major sources of heroin in
New York City. Armone acted as enforcer for the Biondo criminal organization
which was involved in a multitude of organized crime activities. His criminal
record dates back to 1933. In 1956 he became a fugitive in a Federal narcotic
case. After he was apprehended he was tried, convicted, and sentenced to serve
5 years in prison. After his release he returned to organized crime, and became
invoked in a heroin smuggling ccnspiracy with Vincent Pacelli, Steve Gram-
manta, Nicholas Viscardi. Frank Viscardi, Carmine Guanti, and Alexaminder
Schoenfield. This group m as supplied with heroin by the Aranci brothers and
the Le Coat organization in Marseille, France. They obtained their supply by
use of seamen couriers and airline stewards. During the period 1956 to 1960,
they allegedly smuggled approximately 1,000 kilograms of heroin into the United
States. On June 22, 1965, .n a Federal court at New York City, Joseph Armone
was found guilty of participation in this conspiracy and subsequently sentenced
to serve 15 years in a Federal penitentiary and pay a fine of $20,000. The Aranci
brothers and other meml,ers of the Le Coat organization were subsequently
arrested by the French pclice.
Bailistreri, Mario, Sal-Ai Clara, Calif.: On September 4, 1953. Balistreri was
sentenced to 8 years in tie Federal penitentiary for violation of the Federal
narcOtic laws and the terms of his parole. Balistreri has a total of three Federal
narcotic convictions. He is an important member of the underworld operating in
both southern California and Kansas City, Mo. areas. He is known to major
narcotic traffickers throng iout the United States and is also an important coun-
terfeiting suspect. He has a very lengthy criminal record.
Behrman, Nathan, New York City, N.Y.: Behrman was sentenced on March
15 1956, to 19-20 years by the State court of New York for violation of the
narcotics laws. Behrman was part of a narcotic smuggling organization financed
by Harry Stromberg with outlets in the major cities on the eastern seaboard
and the Midwest. This organization was equally active in other activities, includ-
ing eounterfeiting, gambling, and extortion. His criminal record dates back to
1938..
Bellanca, Sebastian?, Nam York City, N.Y.: During 1939, Bellanca was con-
victed of violation of the Federal narcotic laws at New York City. During the
postMar years he was apsrtner of Frank Scalici and Giacomo Scarpulla in con-
trol of the underworld activities in the Bronx. He was active in racket unions
and claimed to be a busir ess agent for the Teamsters Union in northern New
Jersey. Bellanca was closely associated with the Accardo organization and had
sourdes of supply in Italy. The criminal group he represented was equally in-
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 191
volved in the traffic of counterfeit currency, bootleg alcohol, smuggled gold, stolen
merchandise, and many other criminal ventures. In pursuance of these illegal
enterprises, he traveled to Canada, Mexico, France, Italy, and Germany. Follow-
ing his sale of heroin to an undercover narcotic agent during 1054, he was
arrested for violation of the Federal narcotic laws at New York City and subse-
quently jumped a $20,000 bond. He has since been a fugitive. Information from
underworld sources has it that he has been murdered. His partner, Bronx under-
world leader Frank Scalici, was murdered by gunfire in the Bronx in 1957.
Bellanca's criminal record dates back prior to World War II, shortly after he
emigrated to the United States.
Benichou, Jean Claude, France, Canada, and United States: Benichou is head
of a group of smugglers who imported heroin into Canada and the United States
for distribution to members of organized crime. Two couriers, Josephine Noelle
Kontoudenas and Marcious Francois Frontier, both French nationals, were
arrested during May 1967 as they attempted to smuggle 6 kilograms of heroin
into Canada for Benichou. Benichou is presently being sought.
Blase, Anthony, Omaha, Nebr. : Blase has been closely associated with noto-
rious criminals throughout the Midwest in the distribution of illicit heroin to
wholesalers in that area. Part of the organized underworld fraternity, he is
known to have sources of heroin in New York City, Chicago, and Kansas City.
Following the burglary of a wholesale drug firm at Council Bluffs, Iowa, during
1959, a Bureau of Narcotics undercover agent purchased a substantial quantity
of the burglarized drugs from Blase. The agent was introduced to him by one
Kenneth Sheets of Kansas City, who later became a Government witness. During
June of 1960, Sheetz, upon returning to his home in Kansas City, found Felix
Ferina and Anthony Cardarella in his living room with drawn revolvers. He was
shot and left for dead by his assailants. Sheetz, however, survived and in July
of that year Ferina, Cardarella, Carleton A. Young, and Anthony Blase were
indicted by a Federal grand jury in Kansas City on charges growing out of the
assault on Sheetz. Carleton A. Young is a labor union official in that city. Blase
Is one of four notorious brothers who operate a wide assortment of criminal
ventures in Omaha, Nebr. During December of 1960, Anthony Blase was sen-
tenced to 15 years' imprisonment following his conviction on a Federal narcotic
case. His criminal record indicates his involvement in burglary, theft, as well
as numerous arrests for bookmaking.
Blaustein, Bernard, alias Bernie Barton, New York City, Los Angeles, Calif.,
and Miami, Fla.: Blaustein is associated with top union racketeering figures and
those controlling jukebox distribution. Among his intimate associates are Milton
Ilolt and Charles Bernoff. He is equally involved in organized gambling activities
and a leading figure among an underworld fraternity. During 1955, he was con-
victed in Federal court in New York on a charge of violation of the Federal nar-
cotic laws and sentenced to 3 years' imprisonment. His criminal record dates
back to 1938.
Bruno, Joseph, Chicago, Ill.: An important figure in the organized criminal
element of Chicago. In June 1958, he was convicted in Federal court in Chicago
on a charge of violation of the Federal narcotic laws and sentenced to 8 years.
For many years he had been involved in the distribution of bootleg alcohol and
narcotics to large-scale Negro peddlers in the South Side of Chicago. He has four
prior convictions for violation of the Internal revenue laws (alcohol).
Bucelli, John (deceased), Boston, Mass.: Bucelli, a member of an underworld
organization involved in large-scale distribution of narcotic drugs, was a leading
Boston racketeer who controlled the waterfront in that city through his influence
in the longshore unions. He was implicated in the Brink's robbery and was con-
victed for possession of $50,000 of the stolen money. During April 1958, he was
sentenced to 5 years' imprisonment for his part in the conspiracy case involving
Harry Stromberg, Saul Gelb, et al. Prior to his serving the sentence, he was mur-
dered by gunfire at Boston.
Bula, Angelo, New York City, N.Y. Buia, Matildo, New York City, N.Y.: The
Buia brothers were members of the organization of Settimo Accardo specializing
in large-scale distribution of heroin. Both have had at least two prior convic-
tions for violation of Federal narcotic laws. As part of the criminal organization
controlled by Aceardo, they were equally active in other criminal ventures en-
gaged in by this group.
Campisl, Charles, Newark, N.J., and Miami, Fla. Campisi, Thomas, Newark,
N.J., and Miami, Fla.: Both leading members of Settimo Accardo organization
which controlled the underworld in the northern New Jersey area. Both are
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192 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
known to have been active in organized gambling activities distribution of boot-
leg alcohol, and the enforcement of underworld agreements through violence and
intimidation. During November 1956, Thomas Campisi was sentenced to 8 years
at New York for violation of the Federal narcotic laws. Charles Campisi was
sentenced in Brooklyn during April 1960 to 5 years after being a fugitive for
several years.
Carmanati, Anthony, Bronx, N.Y.: An important member of the Bronx under-
world organization, his earliest record dates back to 1931. He was involved in
various organized criminal ventures of the Sealice organization. During Febru-
ary 1957 he was sentenced to 10 years in New York for violation of the Federal
narcotic laws.
Caruso, Frank, alias Frankie the Bug, New York City, N.Y.: One of the rank-
ing members of the underworld organization formerly headed by Anthony Strollo,
alias Tony Bender. Caruso, with Vincent Mauro and Salvatore Maneri, was in-
volved in the large-scale distribution of heroin smuggled into the United States
from his associates among the organized underworld element in Italy and Can-
ada. Caruso was an equal partner with Maneri and Mauro. As leading members
of the Stroll? organization, they were involved in the multiple illicit activities
in which this criminal org tnization specialized. As a result of an investigation
conducted by the Federal Bureau of Narcotics, Caruso was implicated in the
conspiracy case at the southern district of New York. Following his arrest, he
joined Maneri and Mauro in jumring bail, obtained a fraudulently executed
Canadian passport, and used this document to escape to Spain. There Caruso was
in contact with Charles "Lucky" Luciano, through an emissary of the latter, who
traveled between Spain and Italy. Following many months of investigation by
the Bureau of Narcotics, Caruso, Mauro, and Maneri were located in Spain and
through the cooperation of Interpol and the Spanish authorities, they were ap-
prehended. The three were extradited, faced trial and were convicted on March
11, 1963. Each was sentenced to 15 years' imprisonment in the southern district
court :in New York far violation of the Federal narcotic laws and 5 years for bail
jumping to run concurrent :o the 15.
Casella, Peter, Philadelphia, Pa.: Casella was one of the principal figures in
controlling crime in the Pniladelphia, Pa., and Camden, N.J., areas. Following
the death of Marco Regine [IL he assumed the leadership of the criminal organi-
zation headed by the latter As a result of an undercover investigation conducted
by agents of the Bureau of Narcotics, Casella was implicated in a case involving
distribution of large quant ties of heroin smuggled into the United States by his
associates, Vincent Todaro and Joseph Lo Pieollo. For the part played as one of
the principals in this ease, Casella was sentenced during July 1958 by a Federal
court. at New York City tc serve 40 years in prison. His criminal record dates
back to 1927 and includes entries reflecting arrests for larceny, illegal lottery,
and homicide.
Chalupowitz, Abraham, has Abraham Chapman, San Francisco, Calif.: Until
his conviction on a charge of violating the Federal narcotic law in August 1951
at San Francisco, at which time he was sentenced to 15 years' imprisonment as
a result of an undercover investigation conducted by agents of the Bureau of
Narcotics, Chalupowitz was an important figure in organized criminal activities
throughout the United States. He had been sentenced in Chicago, New Orleans,
Fort Worth, and San Frat cisco separtely for violation of the Federal narcotic
laws.
Christie, George, New York City, N.Y.: Christie has long been known by the
FBI and the New York p01 cc department as one of the most important receivers
of stdlen furs and jewelry in that city. His legal interests included ownership of
121/2 percent of the jewel' y Exchange of New York City. In spite of extensive
effort's to implicate him in such crimes, Christie had never been arrested until
an investigation by the 13- wean of Narcotics resulted in implicating him as a
man who conceived of an( financed a scheme to illicitly manufacture and dis-
tribute Amidone, a synthetic narcotic drug. His partner in this venture was
Morris Potnick and the two were equally involved in criminal activities related
to organized prostitution, as well as criminal receiving and trafficking of narcotic
drugs. During June 1958 ne was sentenced in New York to 3 years in prison
for violation of the Federal narcotic laws.
Cinquegrana, Benedetto, New York City, N.Y.: An important member of the
underworld organization cperating in the lower East Side area of New York
City. During May 1956 he was sentenced to 21/2 years in prison to be followed
by 5 years' probation, for violation of the Federal narcotic laws. He has been
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equally active in bookmaking activities and his arrest record reflects the latter
as well as entries for robbery.
Condi, Joseph Dominic, Chicago, Ill.: An important member of the organized
criminal element, he has been active in criminal activities in both New York
City and Chicago, Ill. In January of 1955 he was sentenced to 10 years at Chicago,
Ill., for violation of the Federal narcotic laws. His criminal records dates back
to 1919 and reflects entries for burglary, robbery, and safeblowing.
Cotroni, Giuseppe, Montreal, 'Canada: With his brother Vincent, Giuseppe
Cotroni has been for many years a leading figure in the organized underworld
operating in Montreal, Canada. The criminal organization he and his brother
head is responsible for the burglary of securities from several Canadian banks
in amounts totaling approximately $12 million. Operating in conjunction with the
criminal organization headed by Carmine Galante and Joseph Bonanno, this
group trafficked securities they obtained through the burglary of these banks.
Their organization instituted labor racketeering in Montreal and controlled both
organized prostitution and gambling in that city as well. In addition they have
been equally active in the sale and promotion of worthless securities. Since the
early 1950's the Cotrani group supplied a substantial portion of the heroin
distributed in the United States, receiving the drug from their sources in France.
As a result of an undercover investigation initiated by the Bureau of Narcotics,
Giuseppe Cotrani was arrested during August 1959 at Montreal, Canada, and
subsequently stood trial and was sentenced to serve a 10-year term by a Canadian
court.
Coudert, Roger, Paris, France: Coudert was known to the French police as a
member of the Paris underworld. In furtherance of various illegal enterprises,
Coudert traveled to Mexico, Canada, and the United States, under a fraudulently
executed Canadian passport. During this period, he was active in both the traffic
of illegal narcotics and organized prostitution. As a result of an undercover in-
vestigation initiated by the Bureau of Narcotics, he was apprehended during 1953
and subsequently sentenced to 10 years' imprisonment by a Federal court in
New York City. Following the expiration of his sentence, he was deported to
France.
Curcio, Charles, New York City, N.Y.: Curcio for many years has been active
in organized underworld ventures in partnership with Prank Borelli. He and
Borelli supplied traffickers in Chicago, Detroit, and Cleveland with large quanti-
ties of narcotic drugs. Borelli was arrested in 1948 for violation of the Federal
narcotic laws but he succeeded in convincing the district court judge that he was
addicted (although he was not an addict) and consequently received a 2-year
Probationary term with provision that he undertake a cure at the public health
hospital located in Lexington, Ky. Borelli was admitted to Lexington during
January of 1949 and released in July of the same year. During the period of
1950-52 Curcio, along with Borelli, Benjamin and Joseph Liceld, his two uncles,
and Dr. John E. Jackson, an underworld chemist, assembled and operated a
laboratory in northern New Jersey for the purpose of manufacturing Methadone.
Investigation by the Bureau of Narcotics resulted in the location of this labora-
tory and the obtaining of testimony from Dr. Jackson against Curcio and his
associates. Curcio and the Licchi brothers were arrested and convicted in New
Jersey State court, Bergen County and received substantial prison terms. Borelli,
however, fled to Chicago and through a series of legal maneuvers was able to
avoid extradition until February 1959, at which time he was ordered to be
returned to New Jersey. Shortly after 13orelli's return to New Jersey, the essen-
tial State witness in the case against him, Dr. Jackson, age 72, was murdered at
his home in the Bronx.
Derose, Theodore, Chicago, Ill.: On October 29, 1963, a Federal grand jury
in Chicago, Ill. returned indictments against 41 members of a Chicago organized
crime group which was reportedly responsible for the control of 80 percent of
the illicit narcotic traffic in that city. In addition to Derose, Americo DI Pietto.
Angelo Passinni, Joseph Battiato, Michael Demaro and Frank Carriscia were
named and indicted. On October 25, 1963, while conducting surveillance in this
investigation, narcotic agents observed Nolan Mack, a distribiltor of heroin and
a viscious criminal receive a quantity of heroin from Joseph Battiato. Mack rec-
ognized the agents and attempted to flee in his automobile. During his flight at
high speed, Mack crashed into a light pole. After emerging from his automobile,
Mack began firing at the agent with a pistol, wounding him severely. The agent
returned fire with two shots which struck Mack and caused his death. Nearly
all of the defendants in this conspiracy were members of the criminal organiza-
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Hon, headed by the infat aous Sam Giancana. Prosecution of the case was suc-
cessful and all convicl ed received substantial sentences in the Federal
penitentiary.
Dichiarente, Anthony Joseph, Chicago, Ill.: One of the more important mem-
bers of organized crime in the Chicago area, with contacts in New York for large
quantities of heroin. His criminal record dates back to 1939 with felony convic-
tions for robbery and theft from interstate shipment. In August 1959, Dichiarente
became involved in a nal cotic case in Chicago, Ill., along with Spartico Mastro
and: Salvatore Pisano an I in November 1965, Dichiarente was sentenced to 20
years' imprisonment.
DI Palermo, Joseph, N ?.w York City, N.Y.: A leading member of the under-
world organization of Ne Fi York, he is closely associated with Carmine Galante
and has acted as an unde ?world "enforcer." He has participated in the criminal
activities of this organizittion throughout the eastern seaboard, Cuba, Canada,
and in the past has made trips to Italy in furtherance of organized racketeering
activities. When Carmine Galante was apprehended in Binghamton, New York,
in the company of Joseph Barbara, Frank Garafolo and Joseph Bonanno, Galante
attempted to conceal his identity by maintaining he was Joseph Di Palermo and
used the latter's driver's license for that purpose. DI Palermo and Carmine
Galante were Jointly suspected of the 1943 murder in New York City of Carlo
Tresca, an Italian language newspaper publisher. During April 1959 Di Palermo
was sentenced to 15 years by a Federal court in New York City for violation of
the Federal narcotic law.His criminal record dates back to 1925 and reflects
various entries for homicide, conviction for both the Federal liquor laws and
counterfeiting violations. ae is described by underworld sources as a murderer.
Di Pietro, Carlo, New 'Cork City, N.Y. :An important member of the under-
world organization operated by Carmine Galante at New York, Di Pietro has
been equally active in or ;anized gambling activities and interstate theft. He
has the reputation of etu'orcing underworld agreements through intimidation
and violence. During Mar 1960, he was arrested in New York City and sub-
sequently stood trial on charge of' conspiracy to violate the Federal narcotic
laws. In July 1962, Di Pictro was sentenced to 20 years by a Federal court in
New York. His criminal record dates back to 1936 and reflects entries for crimi-
nal entry and criminal rece ving of scolen goods.
DI Pietto, Americo, Chklago, Ill.: Di Pietto headed a group of traffickers in
Chicago that was responsible since 1960 for the distribution of at least 80 per-
cent of the heroin in that area. During June 1964, Di Pietto, Michael De Maro
and Charles Cole, the molt important members of this group, were each sen-
tenced to 20 years' imprisonment. Other defendants involved in this ease received
terms of imprisonment rani dug from 5 to 10 years.
Frank Dio Guardi, France, New York, Miami, Fla.: For several months prior
to December 1965, U.S. narcotic agents and the French Surete Nationale devel-
oped Information of an in ternational organization which was alleged to be in-
volved in the smuggling of heroin into the United States. Extensive investigation
was established in France and the United States. Several persons suspected of
being; involved in the smuggling venture were placed under constant surveillance.
The trail of the suspects 131 to Columbus, Ga., where additional suspects were
identified and included in tile surveillance. Observations and information gleaned
during the investigation revealed the location of a large cache of heroin which
had been smuggled into the United States from France in the household effects
of Herman Conder, a chief warrant officer in the U.S. Army. On December 20,
1965, narcotic agents assisi ed by Customs agents and local police in Columbus,
Ga., arrested Conder and Eeized 95 kilograms of heroin. Subsequent investiga-
tion revealed that this her Din was consigned to Frank Dio Guardi, a powerful
member of organized crina?. in the Miami area, who was also deeply involved
in labor union rackets. Di,) Guardi was subsequently arrested as was Samuel
Desist, a retired Army off.cer, Anthony Sutera, an associate of Dio Guardi's,
Louis Jacques Douheret and Jean Nebbia, French nationals. All have been tried,
convicted and sentenced to substantial terms in a Federal penitentiary. The
French authorities continue their investigation of the source of the heroin seized.
Durso, Thomas, Chicago. Ill.: Durso was a Chicago police officer who was
assisted in his illicit narcotic dealings by a well-known hoodlum gunman,
Michael Gargano. An attempted undercover investigation of Durso and Gargano
was aborted when Durso learned of the informant's intentions and brutally
murdered the informant, diaposing of the body in the Des Plaines River. Follow-
ing exhaustive investigatio Is, Durso and Gargano were indicted by a Federal
grand Jury for narcotic v olations and by the Cook County grand jury for
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murder, and were subsequently convicted of the murder charge on October 28,
1964. While awaiting sentencing, Durso and eight other inmates, including six
convicted murderers, attempted to escape from prison but were unsuccessful.
Durso was identified as the leader of the plot. In November 1964, Durso and
Gargano were sentenced to identical terms of 100 to 150 years' imprisonment.
Evola, Natale, New York City, N.Y.: Evola is highly placed in the organized
underworld. He attended the Apalachin meeting of 1957. Evola has long been
known to enforcement authorities as an important figure in labor racketeering
activities in the New York garment center. His criminal record dated back to
1930 and includes entries for coercion and illegal possession of firearms. As a
result of an extensive investigation conducted by agents of the Bureau of Nar-
cotics, Evola was implicated and charged in a case involving conspiracy to
violate the Federal narcotic laws. Following his trial at the southern district
of New York, he was sentenced during April 1959 to 10 years' imprisonment.
Fuca, Anthony, New York City, N.Y.: On January 13, 1962, in Brooklyn, N.Y.,
agents of our New York office, working with New York City police, arrested
Joseph Fuca, Anthony Fuca, Pasquale Fuca, Barbara Fuca, Francois Scaglia,
and Nicholas Trovato and seized from them 11 kilograms, 91 grams of heroin.
Anthony Fuca was released on bail to await trial. On February 24, 1962,
Anthony Fuca was arrested in the Bronx, New York, in possession of 33 kilo-
grams of heroin. During this investigation it was learned that the heroin,
secreted in a trap specially built into an automobile belonging to Jacques
Angelvin, a French citizen, had been transported from Le Havre, France,
aboard the SS United States which had arrived in New York on January 10,
1962.
Galante, Carmine, New York, N.Y.: He has long been known as one of the
most ruthless underworld leaders in the United States. Prior to his expulsion
by Canadian authorities in 1956, Galante organized the underworld activities
in Montreal and was largely responsible for the powerful criminal organization
which has remained to date. He is suspected of having committed the murder
of Carlo Tresca in New York during 1943. During 1956, following the meeting
he had with underworld leaders Joseph Bonanno, Frank Garafolo, and Joseph
Barbara, Galante was arrested by the New York State police for a motor vehicle
violation. He was sentenced to serve 1 month in prison and during this period
there were numerous attempts on the part of various influential persons to
intercede on his behalf. Immediately prior to the Apalachin meeting of 1957,
Galante had appeared at Palermo, Sicily, with underworld leaders Joseph
Bonanno and John Bonventre, and it is believed that the meeting set the pattern
of topics to be discussed at the Apalachin meeting which followed immediately
afterward. He was sought for questioning with regard to the Apalachin meet-
ing of 1957. Following an investigation by agents of the Bureau of Narcotics,
Galante was subsequently implicated and charged with conspiracy to violate
the Federal narcotic laws. In spite of an intensive search by several law enforce-
ment agencies, Galante remained a fugitive until June 1959, when he was
apprehended by agents of the Bureau of Narcotics at a hideout in southern
New Jersey. During July 1962, Galante was sentenced by a Federal court in
New York City to 20 years for conspiracy to violate the Federal narcotic laws.
Gelb, Saul, New York City, N. Y.: Gelb has long been known as one of the
leaders of the underworld element of New York specializing in the smuggling
and distribution of narcotic drugs as well as the large-scale theft and transfer
of stolen securities. Prior to World War II Gelb headed a syndicate which was
engaged in the smuggling of narcotics between Europe, the Far East, South
America, and the United States on a large scale. This group distributed these
drugs throughout the United States. His criminal record dates back to 1913
when he was charged at New York, N.Y. as a juvenile delinquent for shooting
at a man. During May 1956 he was sentenced to 5 years by a Federal court at
New York City for conspiracy to violate the Federal narcotic laws, as a result
of an investigation conducted by the Federal Bureau of Narcotics.
Genovese, Vito, New York City, N.Y. and Atlantic Highlands, N.J. : Well
known as one of the most important leaders of organized crime in the United
States, Genovese attended the Apalachin meeting of 1957. In recent years he
suceeded in accumulating considerable wealth and influence as a result of his
position in the underworld. While the organization he headed was active in
many diverse criminal enterprises, Genovese operated free of detection until,
as a result of an investigation conducted by the Bureau of Narcotics, he was
implicated in a conspiracy case in New York. In April of 1959, he was sentenced
to 15 years by a Federal court at New York City following his trial in this case.
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Gernie, Joseph, New E.ork City: An "enforcer" for the criminal organization
fonmerly headed by Anthony Stroll? alias Tony Bender. Gernie came into promi-
nence during the early I 950's when Strollo's organization attempted to take con-
trol of the waterfront unions at the Claremont Pier Terminal, New Jersey. He,
with Pasquale Pagano, :?esorted to physical violence in order to bring the union
members in line. He is known as a professional strong-arm man and murderer.
As a result of an under -!over investigation conducted by the Federal Bureau of
Narcotics, Joseph Gernie, during 1957, was sentenced to serve 10 years by a
Federal court in New York City for violation of the Federal narcotics laws.
Giannini, Eugene, Ne IV York, N.Y.: Eugene Giannini was long known as a
highly placed member of the organized New York underworld element specializ-
ing in the traffic of narcotics and counterfeit currency. As a result of an investiga-
tion conducted by the Btreau of Narcotics, Giannini and his group made the mis-
take of selecting an undercover narcotic agent to act as their courier to Italy and,
in furtherance of largecale narcotic transactions, Giannini and his associates
furnished the undercover agent with sealed instructions and provided him with
round-trip transportatio a. Shortly after his arrest in this case, Giannini was
innrdered at New York City while under proceedings in Federal court on this and
other charges.
Gigante, Vincent, New York City, N.Y.: A strong-arm man and suspected killer
for the Vito Genovese organization. During 1957 Gigante was the prime suspect
in the attempted murde of Frank Costello at New York City. He is a former
professional boxer. As a result of an investigation conducted by the Federal
Bureau of Narcotics, Gigante was charged with conspiracy to violate the Federal
narcotic laws at New York and during April 1959, following his trial, was sen-
tenced to 7 years on this charge.
Giglio, Salvatore, New York City, N.Y.: A close criminal associate of Carmine
Galante, Giglio represen ted the New York underworld's interests in Montreal
following Galante's expulsion from Canada. During 1956, as a result of an
investigation conducted by the Federal Bureau of Narcotics, Giglio was indicted
on the charge of conspiracy to violate the Federal narcotic laws along with
Carmine Galante, John Ormento and others. Since that time Giglio has been
sought but never found, to date. Underworld sources indicate that he may have
been murdered. His crirn aral record dates back to 1937 and includes a conviction
for violation of the Federal narcotic laws.
Giordanello, Vito, Houston, Tex.: An important member of the underworld
organization operating throughout the Southwest, Giordanello was particularly
active in New Orleans, La., Houston and Beaumont, Tex. He secured heroin from
sources in Chicago and .Cew York and distributed the drug into the interstate
traffic throughout the Sc uthwest. As a result of an investigation conducted by
agents of the Bureau of Narcotics, Vito Giordanello was charged and convicted
for violation of the Federal narc Ale laws and sentenced to 10 years in prison
during December 1956 13:, a Federal court in Dallas, Tex. His source of supply,
Benjamin Indiviglio of Yew York, was sentenced to 4 years by the same court.
Giordanello's criminal record dates back to 1941 and includes other convictions
for violating the Federa narcotic laws. As a member of the organized under-
world, he has been equal1.7 active in other illicit ventures controlled by this group.
Harrison, St. Julian, Yew York City, N.Y.: Harrison headed an organization
which purchased large qt antities of heroin for adulteration and retail packaging
on an assembly line basis for local and interstate distribution. During August
1966 a complete assembly line plant operated by this group was discovered and 4
ounces of heroin were seir:ed. A similar operation was uncovered, later that month,
nine workers were arresi;ed, and over 7 kilograms of heroin were seized as was
the adulterating and packaging equipment. At the time of his arrest, Harrison
offered the arresting agents a $100,000 bribe for which offense he was additionally
charged.
Impastato, Nicol?, deperted to Italy: A high-ranking member of the organized
underworld which controlled criminal activities in Kansas City, Impastato was
known to maintain discOline within the Kansas City underworld through use
of violence. He was actively engaged in the multiple Illicit ventures operated by
this organization. Following an ir.vestigation conducted by the Bureau of Nar-
cotics, he was convicted oi a charge of violation of the Federal narcotic laws and
during 1955 deported to Mexico and from that country to Italy in the same year.
His criminal record in Laly date 3 back to the 1920's and includes entries for
homicide and attempted murder.
Isabella, Florio, New '.fork, N.Y.. An important member of the underworld
element operating on the Lower East Side of New York,. he has been equally
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 197
active in organized gambling and shylocking, interstate theft, criminal receiving
of stolen goods, and counterfeiting violations. Following an investigation con-
ducted by the Federal Bureau of Narcotics, Isabella in May 1957 was sentenced to
15 years for violation of the Federal narcotic laws. His criminal record dates
back to 1932 and includes entries for hijacking, interstate theft, counterfeiting,
and criminal receiving.
Landers, Clifford, Atlanta, Ga.: An important member of the organized crim-
inal element operating out of Atlanta, Ga., he is equally active in organized
prostitution and crimes arising out of interstate theft. Landers secured sources
of supply from major traffickers operating out of the Lower East Side of New
York. As a result of an investigation conducted by the Federal Bureau of Nar-
cotics, he was arrested, tried, and found guilty in Federal court at Atlanta and
during January 1957 was sentenced to 2 years in prison for violation of the
Federal narcotic laws. In March 1966, Landers received a 10-year term in an-
other narcotic case. Landers' criminal record dates back to 1928 and includes
entries for highway robbery, assault and battery, violation of the Mann Act,
and rape.
Lapi, Joseph, New York, N.Y.: During 1962 and 1963 narcotic agents in New
York City and officers of the New York City Police Department narcotic squad
revealed a heroin distribution conspiracy controlled by Lapi and participated in
by Anthony Michael Cutillo and Alvin Beigel. On March 22, 1963, the agents and
police officers seized approximately 51/2 kilograms of heroin in the apartment of
Alvin Beigel, where he was arrested. Seized also was a large quantity of cutting
and packaging paraphernalia which had been used to prepare the heroin for
addict distribution. Lapi is an important member of organized crime in New York
City and has been involved in varied criminal activities. He and his associates
were successfully prosecuted in the above case and are sentenced to substantial
prison terms.
Lessa, Daniel, New York City, N.Y.: An important member of the organized
crime element out of East Harlem, New York, Lessa is suspected of engaging
in labor union racketeering activities and the bringing about labor agreements
through violence and intimidation. Following investigation by the Federal Bu-
reau of Narcotics, Lessa was implicated, stood trial and was sentenced to 5
years' imprisonment during April 1958 for conspiracy to violate the Federal
narcotic laws. His criminal record dates back to 1935. He is also well-known
in both the Los Angeles Police Department and the Los Angeles County sheriff's
office.
Lewis, Wesley, (deceased), Chicago, Ill.: An important member of the or-
ganized criminal element operating in the South Side of Chicago. He has been
equally active in the criminal receiving and interstate shipment of stolen mer-
chandise and gambling violations. As a result of an investigation conducted by
the Federal Bureau of Narcotics, Lewis, during November 1957, was sentenced
to 10 years in Chicago, Ill., for the violation of the Federal narcotic laws. His
criminal record dates back to 1931 and includes entries for burglary and inter-
state shipment of stolen merchandise.
Locascio, Carmine, New York, N.Y.: After the arrest of Salvatore Rinaldo and
Matte? Palmeri on October 20, 1960, in Westchester County, N.Y. and the seizure
of 10 kilograms of heroin which was smuggled into the United States from the
Caneba brothers in Italy, a conspiracy involving 20 members of the New York
organized criminal element was developed and successfully prosecuted in the
southern district of New York. Among the defendants in this conspiracy were
Vincent Mauro, Frank Caruso, John Ormento, Carmine Galante, and others.
As a result of information developed in this case, sufficient evidence was revealed
for the initiation of a second conspiracy involving Carmine Locascio and 19 of his
associates, among whom were such infamous organized criminals as Rosario
and Joseph Mogavero, Angelo Loiacano, Charles Destefano, Frank Bore111,
and others.
This group is known to have handled about 400 kilograms of heroin between
January 1950 and August 1962. Their method of smuggling ranged from the use
of unsuspecting immigrants into the United States to elaborate traps built in
automobiles. This ease was successfully prosecuted, however, and convictions
were reversed as the result of court of appeals review.
Loiacano, Angelo, New York City, N.Y.: An important member of the or-
ganized criminal element operating in the Lower East Side and East Harlem
areas of New York City, Loiacano was equally active in the organized gambling
activities. As a result of an investigation conducted by the Federal Bureau of
Narcotics, Loiacano was brought to trial on charges of conspiracy to violate
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198 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
the Federal narcotic laws in Federal court in New York. During June 1962 he
was sentenced to 20 years imprisonment on these charges.
Lo Piccolo, Joseph, Chh:ago, and Miami, Fla. : A partner of Vincent Todaro,
Lo Piccolo was one of tae leading members of an organization that smuggled
large quantities of heroin into the United States and distributed this drug
throughout organized tar derworld channels. Lo Piccolo was active in various
criminal ventures at Chicago, Ill., Miami, Fla., Philadelphia, Pa., New York
City, and Havana, Cuba. Long a leading member of the underworld, Lo Piccolo
escaped detection until :2058 when an investigation conducted by the Federal
Bureau of Narcotics implcated him as a major source of heroin. During August
1958, he was sentenced tc 20 years in Federal court in New York on this charge.
Malizia?fohn, New York, N.Y. : An important member of the organized under-
world element operating out of the eastern Harlem and Bronx areas of New
York City, he, with his arother Joseph, are known as the "Pontiac" brothers.
The two brothers have been equally involved in large-scale bookmaking ac-
tivities. Following an undercover investigation during which an agent of the
Bureau of Narcotics purchased evidence from both, the brothers were arrested
and during November B 57 John and Joseph Malizia were sentenced to 9- and
7-year prison terms, respectively.
Maneri, Salvatore, dela uted to Italy (addicted) : Maneri, prior to his deporta-
tion, was an important figure in the organized underworld element operating
in the waterfront area of New York. His position as longshoreman helped him to
further large-scale theft from foreign shipments. Following his deportation to
Italy, he became associated with Charles "Lucky" Luciano and actively engaged
in the procuring of large quantities of heroin which he smuggled into the United
States. He became well-hnown to the sources of supply in France and Italy and
worked closely with the organized underworld's outlets of drugs in the United
States. As a result of an investigation conducted by the Federal Bureau of
Narcotics, Maneri was implicated in the conspiracy case at New York City. Fol-
lowing his arrest, he jimped bail and fled prosecution with fugitives Frank
Caruso and Vincent Marro. The three took refuge in Spain, using fraudulently
executed Canadian pas.ports. Following many months of investigation, the
Bureau of Narcotics located him and other fugitives in that country and through
the cooperation of Interpol succeeded in apprehending and successfully extra-
diting the three defenda ate. On March 11, 1963, Maneri was convicted and sen-
tenced to 15 years by a Federal court in New York and 5 years for bail jumping
to run concurrent to the 15. Mancri's criminal record dates back to 1929 and in-
cludes entries for burglary, grand larceny, illegal entry, violation of parole, pos-
session of burglary tools, theft from interstate shipments, theft from foreign
shipments and multiple convictions for illegal entry.
Marchese, Ignazio, Ar sonia, Conn.: An important member of the organized
criminal element out of"Slonnecticut. He has been equally active in robbery and
other crimes of violence. He is known to most of the major underworld figures
in the East Harlem area of New York. Marchese is equally active in other organ-
ized criminal ventures sr eh as gambling and interstate theft. During March 1958,
agents of the Bureau of Narcotics made several undercover purchases of heroin
from Marchese at his home in Connecticut. During September 1958, Marchese was
sentenced to 7 years by a Federal court at New York for violation of the Fed-
eral narcotics laws. His criminal record dates back to 1930 and includes entries
for carrying concealed weapons and robbery with violence.
Maresca, Raymond, New Haven, Conn. (addicted at arrest) : For many years
a leader of the organized underworld in the New England area, Maresca was
active in masterminding thefts from interstate shipments, gambling operations,
arson, and other assort( d racketeering activities in this area. He was also re-
sponsible for the theft a! firearms from manufacturers in Connecticut and their
subsequent sale to undei world figures. In the course of an undercover investiga-
tion conducted by agent 3 of the Bureau of Narcotics, several purchases of evi-
dence were made from .Vlaresca during 1952. On October 17, 1952, he was sen-
tenced to 8 years by a Federal court at New Haven, Conn., for violation of the
Federal narcotic laws. His criminal record dates back to 1933 and includes entries
for burglary and carrying concealed weapons.
Martello, Nicholas, New York City, N.Y.: A leading member of the organized
underworld element operating out of the Lower East Side of New York, Martell?
was equally active in tie distribution of bootleg alcohol, gambling violations,
and extortion. Following an undercover investigation conducted by the agents of
the Federal Bureau of Narcotics which implicated Martell?, the latter was ar-
rested on October 15, 158, for conspiracy to violate the Federal narcotic laws.
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Since that time he has disappeared and it is suspected that he has been murdered.
Martello's criminal record dates back to 1926 and includes entries for rape,
assault, robbery, grand larceny, extortion, violation of national firearms act, and
violation of liquor laws.
Matthews, Earl, Chicago, Ill. On March 5, 1067, narcotic agents at Chicago,
M., arrested Earl Matthews and Louis Pearman a sthey were delivering approxi-
mately 51/1? kilograms of heroin to James Luddie Oliver, Nathanial Westbrook,
Boysie Stephens, and Willard Evans.
Matthews is a trusted lieutenant in the Aukland IIolmes criminal organization
furnishing heroin to the Chicago traffic. This organization has flourished in Chi-
cago over many years of operation.
Mauro, Vincent, New York City, N.Y. : A high-ranking member of the criminal
organization formerly controlled by Anthony Stroll? and Tony Bender. In pur-
suance of the activities this organization engaged in, Mauro participated equally
in operating their gambling and shylocking interests and in the operation of hood-
lum controlled nightclubs. As a result of the investigation conducted by the Fed-
eral Bureau of Narcotics, Mauro was implicated in a narcotic conspiracy case.
Following his arrest during May 1961, Mauro with Caruso and Mailer' jumped
bail and fled to Spain using fraudulent Canadian passports. Intensive investiga-
tion conducted by the Federal Bureau of Narcotics resulted in the location of the
three fugitives and, through the cooperation of Interpol and the Spanish Police,
these defendants were extradited to the United States where- they subsequently
stood trial. On March 11, 1063, they were convicted and sentenced to 15 years
by a Federal court in New York and 5 years for bail jumping to run concurrent
to the 15.
Mazzie, Rocco, New York City, N.Y.: An important member of the organized
underworld element operating out of East Harlem, Bronx, and Westchester,
N.Y.. He is known as an "enforcer" and has been used to control dissident
underworld segments by means of violence and intimidation. For years he has
been a major source of heroin for outlets in Cleveland, Ohio, and Chicago, Ill.
Following an investigation conducted by the Bureau of Narcotics, Muzzle was
implicated in a conspiracy case and, during April 1959, was sentenced to 12
years for his participation in the illegal traffic. His criminal record dates back
to 1934 and reflects entries for robbery, and assault and robbery.
Meltzer, Harold, Los Angeles, Calif., Mexico City, Mexico, and New York
City, N.Y.: Meltzer now is reported to operate large bookmaking and prostitu-
tion syndicates in California. -A major figure in the organized underworld in
California and Mexico, he is known to all the important narcotic traffickers
throughout the United States. Ile has also operated in Oklahoma, Texas, Balti-
more, Miami, Las Vegas, Boston, and various areas ID Canada, Cuba, hong
Kong, Japan; Hawaii, and the, Philippines. Meltzer is also associated with the
More important labor organizers and has been involved in union racketeering
activities. AS a 'result of a lengthy investigation conducted by the Federal
Bureau of Narcotics,- Meltzer was implicated in a conspiracy case at the south-
'ern district of New York and in June of 1951 was sentenced to 5 years, upon
his plea of guilty, On this charge.
Mirra, Anthony, New York, N.Y.: An important member of the organized
. .
underworld element operating out of the Lower East Side, Bronx, and West-
chester areas of New York City, Mirra has been active in many aspects of
organized criminal. activities and has engaged in violence in pursuit of such
crimes. As a result of a lengthy investigation conducted by the Bureau of
Narcotics, Anthony Mirra was implicated and charged in a case involving con-
spiracy to Violate the Federal narcotic laws.. On September 4, 1957, Mirra was
arrested and following his trial at the southern district of New York, during
April 1958, he was sentenced to 3 years 6 months in this case. Continued
investigation of another group of traffickers implicated Mirra in the second
conspiracy case. in the course ,of the trial of this case in the southern district
of New York Mirra was cited for contempt. During July of 1962 he was
sentenced to 20 years for conspiracy to violate the Federal narcotic laws in the
latter case and also received a 1-year sentence on the contempt charge to run
concurrently.
Nobile, George, New York, N.Y.: His criminal record dates from 1937 and
reflects entries for policy and conspiracy to obstruct justice. George Nobile is
a trusted member of the underworld syndicate in the lower east side section
of New York City from whom he has obtained large quantities of heroin for
eventual distribution in interstate traffic. He has acted as an underworld chemist
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200 THE FE DERA :J EFFORT AGAINST ORGANIZED CRIME
in the conversion of nar2otic drugs for the illicit market. He is suspected of
having been active in counterfeiting, gambling, and the trafficking of illicit
alcdhol. Most recently lie was associated with Vincent Todaro who was a
principal in a narcotic organization which obtained vast quantity of heroin
from French-Corsican sources in France and from important members of the
Sicilian underworld.
Following an intensive undercover investigation by the Bureau of Narcotics
during 1957 and 1958, Nubile and several other important violators were arrested
in possession of narcotic 3 which originated from French-Corsican and Sicilian
underworld sources. Following trial in this case, he was sentenced on May 20,
1958, to 10 years' imprisonment iii Virginia for violation of the Virginia State
narcotic laws.
Orichiella, John, New York, N.Y.: A major trafficker of heroin in the New
York area, Orichiella ws s arrested during May 1967 following the delivery of
over a kilogram of heroin to Joseph Dominici, a previously convicted narcotic
violator, and James B. Henry.
Orlando, Lorenzo, Elmont, Long Island, N.Y.: Orlando's criminal record
dates to 1928 and inclu les entries for alcohol violations. In his early days,
Orliando was a member of the underworld in Kansas City, Mo., where he
engaged in multiple illicit activities, principally trafficking in alcohol. In recent
years he was part of the Vincent Todaro-Joseph Lo Piccolo organization which
obtained large quantities of heroin from French-Corsican and Sicilian traffickers
and smuggled same into the United States for eventual distribution in inter-
state traffic. At the time of his arrest in 1958 by the Bureau of Narcotics in the
extensive Todaro-Lo Piccolo narcotic conspiracy case, Orlando's home contained
a large cache of 9 kilos of heroin which had been smuggled into the United
States by the Todaro-Lo Piccolo organization. Orlando himself maintained close
ties with leading undervrorld figures in Sicily. In 1958 he was sentenced (re:
Todaro-Lo Piccolo case) to 17 years in Federal prison for violation of the
Federal narcotic laws.
Ormento, John, Lido Beach, Long Island, N.Y.: For many years John Ormento
was one of the most influential members of the notorious East 107th Street mob of
the East Harlem area of New York City. This criminal organization soon devel-
oped into one of the mos.; powerful syndicates in New York City and engaged in
various illegal enterprises, including trafficking in narcotics and illicit alcohol,
gambling, jukebox racket, extortion, labor racketeering, and shylocking. Ormento
has been a trusted lieutimant in this gang, and, in addition to being active in
gambling and allied illicit interests, specialized in distributing huge quantities
of heroin in local and it terstate commerce. He is acquainted with most of the
leading racketeers in tin United States. He attended the notorious Apalachin
meting on November 14. 1957. He was involved in recent years in the narcotic
traffic with Vito Genovese and some of the latter's underlings and with members
of the Joseph Cotroni 0] ganization of Montreal, Canada, which smuggled huge
ampunts of heroin into he United States. Ormento was a fugitive in the Vito
Genovese case until he ivas apprehended by agents of the Bureau of Narcotics
in 1959. During this time he was also being sought by other law enforcement
agencies regarding his attendance at the Apalachin meeting. Ormento did not
stand trial in the Vito genovese case but subsequent to his apprehension he
stood trial in the Joseph Cotroni conspiracy case. Following this trial, he was
sentenced in U.S. district court, southern district of New York on July 10,
1962, to 40 years' imprisonment in Federal prison where he is currently incar-
cerated. His arrest recur d dates from 1937 and includes entries for bookmaking.
His 1962 narcotic conviction, his latest, was his fourth narcotic conviction.
Pacelli, Vincent Joseph, New York, N.Y.: Pacelli, functioning under the direc-
tion of the notorious Joe Bendenelli, was a distributor of large quantities of
heroin to the east and we at coasts of the United States. During July 1965, Pacelli
was convicted of conspir Icy to smuggle approximately 1,000 kilograms of heroin
into the United States between 1956 and 1960. While awaiting trial in this case,
Paeelli, along with an attorney, Frances Kahn and her clerk, Israel Schwartz-
berg, were charged with tampering with a Government witness. Pacelli was sen-
tenced to 18 years' impr.sonment on the narcotic charge and an additional con-
secutive sentence of 2 ye us on the obstruction of justice charge. Miss Kahn and
Seliwartzberg were given respective terms of 2 years' imprisonment. Pacelli's
criminal record dates back to 1940 and includes arrests for burglary and narcotic
violations.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 201
Pagano, Joseph, New York, N.Y.: His criminal record dates back to 1946 and
includes entries for robbery, and assault and robbery. Pagano has been associated
for many years with the Anthony Strollo criminal combine of New York City.
About 15 years ago he was involved in strong-arm tactics in taking over opera-
tions at the Claremont Pier Terminal, New Jersey, for the Anthony Strollo or-
ganization. He was associated with racketeer Joseph Gernie of Harlem, New
York City, in the local and interstate trafficking of narcotics. In 1955 he was
sentenced to 7 years' imprisonment for violation of the Federal narcotic laws.
In the latter case he was involved with a group of individuals engaged in dis-
tributing narcotics in local and interstate traffic. In recent years he was in-
dicted in U.S. district court, southern district of New York, for conspiring to
violate the Federal bankruptcy law8 in that he and several other individuals had
fraudulently transferred $1.3 million in assets of a wholesale meat and poultry
corporation. Pagano is now serving a 5-year prison term in this case.
Pagano, Pasquale, Bronx, N.Y.: His criminal record dates back to 1952 and in-
cludes entries for atrocious assault and battery, and attempt to bribe an Inter-
nal Revenue agent. Pasquale Pagano was active in the early 1950's in gambling
and extortion activities. During this period he was involved in strong-arm tactics
at the Claremont Pier Terminal, New Jersey, on behalf of the highly organized
Anthony Strollo criminal group. Also, in the 1950's he was associated in inter-
national and interstate trafficking of narcotics with Joseph Valachi, Giacomo
Reina and the late Eugene Giannini. Pagano traveled to France for this group
and made arrangements with narcotic traffickers for huge quantities of heroin
to be smuggled into the United States, Investigation by the Bureau of Narcotics
eventually broke up this narcotic ring. The principals received substantial prison
sentences. Pasquale Pagano was sentenced relative to this case on April 23,
1956, to 5 years in Federal prison to run concurrently with a 3-year sentence
received in U.S. district court, southern district of New York for an attempt to
bribe a Government officer.
Papalardo, Sylvester, Cleveland, Ohio: His criminal record dates from 1932
and includes entries for burglary, robbery, and homicide. He derives the major
portion of his income from gambling and trafficking in narcotics. He has been
associated for the past several years with leading Cleveland, Ohio, racketeers
involved in interstate narcotic traffic with important New York City narcotic
distributors. On August 14, 1953, he was sentenced to 15 years in Federal prison
for violation of the Federal narcotic laws. In this case he was involved with de-
fendants Angelo P. Lavelle, Frank Ciccarello and Raymond J. Lamarca whose
operations were extensive and who supplied major narcotic dealers in the States
of Michigan and Ohio.
Papalia, John, Toronto, Canada: His criminal record dates back to 1942 when
he was arrested in Hamilton, Ontario, Canada, for assault and robbery. His sub-
sequent arrests include violation of the Canadian Liquor Control Act, violation
of the Canadian National Selective Civil Service Registration Act, burglary and
entry, assault (bodily harm), violation of the narcotic laws of Canada, and
violation of the narcotic laws of the United States. Papalia was associated in
the narcotic traffic in Toronto, Canada with the Agueei brothers, Vito and Albert.
These individuals furnished narcotic traffickers in the United States with vast
quantities of heroin which was eventually distributed in interstate traffic.
Papalia has engaged in multiple illicit activities in Canada including gambling,
organized prostitution, and trafficking in illicit alcohol. On March 11, 1963, he
was sentenced to 10 years' imprisonment for violation of the Federal narcotic
laws. This conviction resulted from his involvement in the Salvatore Rinaldo
conspiracy case which uncovered and broke up a vast conspiracy ring in the
United States engaged in the smuggling of narcotics from Canada and Europe.
Pardo-Bolland, Salvador, Paris, Montreal, New York: After the arrest of
Mauricio Rosal, a Guatemalan Ambassador to Belgium, in New York on October
2, 1960, and the seizure of 101 kilograms of pure heroin, information was de-
veloped that Gilbert Coscia, a French citizen and a member of the group for
which Rosal was acting as a courier, made frequent trips to New York and was
associated with another diplomat who was also serving as a narcotic courier.
Intensive investigation in the United States and France identified this second
diplomat to be Salvador Pardo-Bolland, Mexican Ambassador to Bolivia.
Early in February 1964, Pardo-Bolland arrived in France via Holland. He
was observed to register in a Paris hotel using a fictitious name. Continuous
surveillance by U.S. narcotic agents and the French police revealed Pardo-
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202 THE FEDERAL EFFOET AGAINST ORGANIZED CRIME
Bonand to meet with Juan Artiz.ti, a diplomat from Uruguay, Jean Baptiste
.Giacobetti, a notorious IP.ench narcotic drug trafficker, and Gilbert Coscia.
On February 14, 1964, Pardo-Bolland departed from France by air for New
York, Arizti also departed from France by air for Montreal, Canada. Arizti
was carrying six suitcase e Surveillance in Montreal revealed that he was carry-
ing 60 kilograms of heron. This was surreptitiously seized by the Royal Cana-
than Mounted Police.
Arizti was allowed to eepart from Montreal on February 17, 1964, with all of
his luggage and substituted material consisting of flour and one kilogram of
heroin. When he arrived in New York, he checked his luggage in a station
locker and registered in the same hotel as Pardo-Bolland.
Surveillance revealed Pardo-Bolland and Arizti Meeting several times and
on February 20, 1964, Prxdo-Bolland met Rene Bruchon, a French citizen who
had served a prison sentence in the United States for narcotic law violations.
On February 21, 1964, Bruchon was taken into custody and found in possession
of baggage checks for t1r3 luggage Arizti had checked in the station.
Pardo-Bolland and Ar: zti were also placed under arrest and the heroin evi-
dence seized. Giacobetti and Coscia became fugitives in France and are still miss-
ing? Pardo-Bolland, Arizti, and Bruchon were tried in New York City, found
guilty, and given substantial sentences inn Federal penitentiary.
Paroutian, Antranik, Marseilles, France: Paroutian was a major underworld
figure of Marseilles, Frt.nce, and part of the highly organized and powerful
Corsican criminal element. He is known to the French police as having main-
tained an organization that specialized in commercial-type crimes and is sus-
pected of the murder of one of his former business associates. Paroutian and
his partner, Gabriel Graziani, during the period of 1056-58, traveled from
France and set up operttions in Montreal, Canada; Havana, Cuba; and New
York City, N.Y. Working closely with leading underworld elements in each of
these countries, they set up channels of distribution of heroin which they had
smuggled into North America frem France by means of their organization. In
addition to the traffic in heroin, this group specialized in the traffic in stolen
securities and was one of the outlets for the securities burglarized from the
Canadian banks by the Cotroni organization. As a fruit of their illicit operations,
Paroutian and Graziani, during an 18-month period, were able to send to secret
Swiss bank accounts, a total of slightly more than $500,000. An intensive in-
vestigation conducted by agents of the Bureau of Narcotics uncovered the ac-
tivities of Paroutian. An a result, both he and Graziani were indicted at the
Southern district of New York during 1958. Continuing investigation by the
Bureau of Narcotics resulted in the arrest of Paroutian in Beirut and subsequent
extradition to the United States to stand trial on the narcotic charge. In the
course of Paroutian's trial, one of the essential pieces of evidence was the com-
plete record pertaining to the ceded Swiss bank accounts maintained by Par-
outian and his associates which the Bureau of Narcotics had succeeded in
obtaining from tile Swis 3 police. Following his retrial, Paroutian was convicted,
and in September 1962, was sentenced at the eastern district of New York to
two counts of 20 years each, the; sentences to run concurrently, on charges of
violation of the Federal narcotic laws.
Pieri, Salvatore. Buffflo, N.Y. ; his criminal record, since he was a juvenile.
includes entries for bulgiry, possession of firearms, and grand larceny. Pieri is an
important interstate nai?cotic trafficker and a trusted member of the Stefano
Magaddino, Buffalo, N.Y crime syndicate which controls multiple illicit activities
in upstate New York, mending ga :Adding, narcotics, illicit alcohol, shylocking, and
extortion. Pieri has no known legal source of income and has maintained his
livelihood through parti,!ipation in narcotics, gambling, extortion, and other il-
legal pursuits. In the early 1950s he was involved in the distribution of large
quantities of heroin ane, interstate traffic. Following an intensive investigation
by the Bureau of Nareolies, Pieri was implicated in a narcotic case for which he
received a 10-year prisor sentence in 1954.
Pisciotta, Anthony, Bi?onx, N.Y., His criminal record consists of two arrests
by. the Bureau of Nare)tics. Since the 1950's Pisciotta was engaged with im-
portant underworld racketeers at New York City in the wholesale narcotic traf-
fic and supplied heroin dealers from all sections of the United States. One of
is principal sources of heroin supply fas notorious narcotic trafficker Frank
Borelli who, through the years has had access to pure-grade heroin imported
from France. Pisciotta had an interest in the Skyway Bar near LaGuardia Air-
port in New York City which he used as a base of operations for many of his
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narcotic deals and other illicit activities, including gambling. On May 25, 1951,
he was sentenced to 9-years' imprisonment followed by 5-years' probation for
violation of the Federal narcotic laws. In 1960 he was sentenced to 10-years'
imprisonment for violation of the Federal narcotic laws. In the latter venture he
was associated with Thomas Garibaldi of New York City in the distribution of
vast quantities of heroin in interstate traffic.
Poliafico, Salvatore, Cleveland, Ohio: His arrest record dates to 1930, when he
was acquitted for murder, and includes an entry for robbery. Poliafico has been
employed as a night club manager and operator of a television repair service
shop. The Cleveland, Ohio, underworld has employed Poliafico as an inforcer of
its syndicate operations. In the 1950's he and his associates obtained from lead-
ing New York City racketeers large amounts of heroin which he and his associ-
ates caused to be distributed in the Midwestern part of the United States. It is
alleged that his other source of income, aside from trafficking in narcotics, is
derived from his gambling interests which are an integral part of the vast op-
erations of the criminal syndicate in Cleveland, Ohio, and its environs. Follow-
ing an intensive investigation by the Bureau of Narcotics, Poliafico was involved
in an important narcotics case and on April 28, 1957, he was sentenced to 15-
years' imprisonment in Federal prison for violation of the Federal narcotic laws.
Polizzano, Ralph, New York, N.Y. ; His criminal record commenced in 1957 with
an arrest and conviction for interstate narcotic violations. Polizzano was the
owner of the Squeez Inn Bar, 57 East Fourth Street, New York City. He used this
bar as a base of operations for distributing heroin which he had received from
members of the Vito Genovese criminal syndicate which controlled most of the
illicit activities in this area. He was subsequently implicated in the vast Vito
Genovese narcotic conspiracy case as one of the outlets for heroin for this group
and on April 17, 1959, he was sentenced to 7 years imprisonment in Federal
prison. This sentence was to run consecutive to a State sentence of 21/2 to 4
years which started on October 25, 1957, in New York State prison for violation
of the State narcotic laws. Polizzano was active in gambling activities in the
Lower East Side of New York City.
Pullings, Jeremiah, Chicago, : His criminal record dates from 1040 and in-
cludes entries for violation of the liquor laws. During past years Pullings was an
important member of the underworld in the South Side of Chicago, where he
controlled the distribution of narcotics from that area to other cities. Among his
other illicit operations, the sale of illicit alcohol and gambling activities played
an important role. He was arrested in 1955 by agents of the Bureau of Narcotics
for involvement in an important narcotic conspiracy case and on April 24, 1961,
as a result of a conviction in this ease, he was sentenced to 12 years in Federal
prison.
Ragone, Joseph, the Bronx, N.Y. : His criminal record dates to 1954 when he
was arrested for violation of the Federal narcotic jaws. This is his only arrest.
Joseph Ragone has been active with his brother Gaspare Ragone in the vending
machine business and has had interests in the Bluebird Bar, the Bronx, New York
City. Through the years he has been associated with several important narcotic
violators operating in the Bronx, N.Y. It is suspected that he has engaged
in strong-arm tactics in the jukebox racket. Ile and his associates have been
active in gambling operations controlled by the underworld element in the Bronx.
In 1954 he was implicated in a narcotic case and was sentenced on November 27,
1954, to serve 31/2 years in prison followed by 5 years of probation.
Robert, Rene, Montreal, Canada: His criminal record dates back to August
25, 1942, when he was arrested in the Province of Quebec, Canada, for breaking
into and theft. He was subsequently arrested for theft (5 years), attempted
strangulation, theft from person with violence (sentenced to 7 years on Octo-
ber 5, 1960), and lottery. As a result of an undercover investigation conducted
by agents of the Bureau of Narcotics, Robert stood trial at Montreal, Canada,
for violation of the Canadian narcotic laws. Robert is now in St. De Paul Prison
in Canada serving an 8-year sentence. Robert was an important member of the
Joseph Cotroni narcotic smuggling organization in Montreal, Canada, and was
instrumental in the smuggling of large quantities of heroin into the United States
to leading members of the Carmine Galante criminal syndicate. Robert's other
illicit activities included gambling, prostitution, and suspected counterfeiting.
Roberts, Tames Milton, Washington, D.C. : His arrest record dates to 1.926 and
includes entries for larceny, disorderly conduct, and assault. Roberts was closely
associated in the narcotic traffic with racketeers from the East Harlem section
of New York City who supplied him with sizable quantities of heroin which he
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204 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
distributed to Washingtcn, D.C., and neighboring cities. Roberts was active in
gambling activities in tlm Washington, D.C. area. On February 3, 1950, he was
sentenced to 15 years' in prisonment for violation of the Federal narcotic laws.
Robino, Cristoforo, native of :Italy (deceased) : Robino was an important
figure in the organized u tderworY1 in both the United States and Sicily. During
early 1950, there were a series a murders committed throughout Italy as a result
of Mafia. efforts to control the fruit industry in that country. Robino became
implicated in a double homicide described as a Mafia killing and was sought by
the Italian police in connection with the two murders. He fled to Canada and
subsequently entered th( United States. At Windsor, Ontario, he married and
he best man at his wedc ing was John Ormento, a high-ranking member of the
organized New York und3rworld and notorious narcotic trafficker. After settling
in Brooklyn, Robino eni ered the large-scale narcotic traffic, obtaining heroin
from his Mafia associates in Sicily. As a result of an extensive undercover in-
vestigation initiated by agents oil' the Bureau of Narcotics, evidence was de-
veloped against Robino, who was indicted by a Federal grand jury at New York.
Robino fled prosecution and became a fugitive. Following a prolonged investi-
gation by the Bureau of Narcotics and, as a result of these efforts, Robino sur-
rendered for trial durin; December 1957. Before his trial commenced he was
shot to death at Brooklyn N.Y., on July 18, 1958.
Rosal, Mauricio, New 'Cork and Paris: In June 1960, an agent of the Bureau
of Narcotics at Lebanon received information that a group of traffickers was
obtaining morphine base In large quantities from Near East sources. It was also
learned that this group was headed by Entienne Tarditi, a resident of Paris and
that he and his associates were regularly supplying heroin in 40- to 60-kilogram
lots from headquarters ii France to organized traffickers in the United States.
At the same time, it was learned that one of the principal methods of smuggling
heroin was by a courier c ?scribed as a Spanish-speaking diplomat.
Intensive investigation in France and the United States revealed that Tarditi
was acquainted with Mauricio Rosal, the Guatemalan Ambassador to Belgium
and the Netherlands. Surveillance and information developed in September of
1960 revealed that a large shipment of heroin was scheduled for New York.
On October 2, 1960, Tau diti, under surveillance in New York City, was observed
to meet with Rosal at 72c1 Street and Lexington Avenue, New York City. Rosal
had just arrived in the United States from France by air and was carrying sev-
eral pieces of luggage. F oth were placed under arrest and 49.256 kilograms of
pure heroin was found in Rosal's suitcases. Twenty-seven thousand four hundred
and sixty-six dollars in U.S. currency was also seized. Twenty-six thousand five
hundred dollars of this imount Lad been paid to Rosal as his commission for
services rendered.
Also arrested at this time was Charles Bourbonnais and Nick Calamaris.
Bourbonnais was a Transworld Airlines purser who frequently conveyed suit-
cases filled with heroin. Calamaris was a New York hoodlum representative of
orcanized interests and was to receive the heroin. Four days after the arrest
of Bourbonnais. he surrendered 51.893 kilograms of pure heroin from his mother's
home in Brooklyn, N.Y.
French authorities con Armed the investigation in France and during February
1961, arrested important members Df Tarditi's group in France.
Santagata, Aniello, Kearney, N.J.: His arrest record dates from 1909 and
includes entries for pickpocketing, larceny, kidnaping, bastardy, fornication,
assault and battery, disorderly conduct, and gambling. Santagata was born on
January 13, 1888, in Caserta, Italy. He is an oldtime hoodlum highly regarded
by his associates. For a number of years he has had sources of supply of narcotics
in Italy, Mexico, and Ca nada and has been responsible for smuggling and dis-
tributing large quantities of heroin throughout the United States. He lists him-
self as a retired barber but he has maintained his close ties with high-ranking
underworld figures in the metropolitan area of New York City. As a result of
an undercover investigation conducted by agents of the Bureau of Narcotics,
Santagata was brought :co trial at the eastern district of New York on charges
of violation of the Federal narcottii law.
Upon completion of the trial which took place during 1955, he was sentenced
to 10 years in prison.
Santora, Salvatore, Leonia, N.J.: His arrest record dates from 1952 and in-
cludes entries for grand larceny, assault, possession of a gun. and convictions for
violation of the Federal narcotic law. Santora is an important member of one of
the leading criminal syndicates in New York City, concentrating its principal
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 205
activities in the Harlem area of New York City and Westchester County, N.Y.
He has been active in gambling, shylocking, and labor racketeering. Through his
close association with racketeer John Ormento, he has established himself in a
key position in the underworld. He, John Ormento, Rocco Mazzie, Natale Evola,
and gangland chieftain Vito Genovese were implicated in a vast narcotic con-
spiracy case which resulted in their conviction in U.S. District Court, Southern
District of New York, in 1959. He was sentenced relative to this conspiracy case
in April 1959 to 20 years' imprisonment in Federal prison.
Schennault, Harry, Chicago, Ill.: His criminal record dates from 1922 and
includes entries for larceny, disorderly person, burglary, gambling, violation of
liquor laws, and violation of State and Federal narcotic laws. As a result of an
undercover investigation conducted by agents of the Bureau of Narcotics, evi-
dence was acquired implicating him and he was subsequently arrested for vio-
lation of the Federal narcotic laws. During February 1952, he was sentenced to
5 years, followed by 7 years probation on this charge.
Schiffman, Charles, Newark, N.J., and New York, N.Y.: His criminal record
dates to 1921 when he was arrested in Chicago, Ill., for burglary. This record
also reflects entries for robbery, holdup, kidnaping, and robbery, concealed
weapon (loaded revolver), assault with intent to rob, highway robbery, and
harboring. On March 30, 1934, he was sentenced to 4 years imprisonment for
violation of the Harrison Narcotic Act. On July 18, 1940, he was sentenced to
10 years in the U.S. penitentiary for violation of the Federal narcotic laws and
harboring. Following an investigation conducted by agents of the Bureau of
Narcotics, Schiffman was implicated and charged in a case involving conspiracy
to violate the Federal narcotic laws. During February 1962, he was sentenced
to 25 years in Federal prison as a result of this case. Through the years Schiff-
man has been a persistent narcotic violator and has been engaged in various
illicit activities including gambling, illicit alcohol, and suspected counterfeiting.
Schiffman is acquainted with numerous racketeers throughout the United States
and has been especially involved in numerous illicit activities with leading mem-
bers of the underworld element in the metropolitan area of New York City.
Schiffman is one of several racketeers who share close confidence with high-
ranking members of the underworld in New York City. In his most recent brush
with the law, he was involved in obtaining large quantities of heroin from the
Mauro-Caruso-Maneri narcotic organization and subsequently selling a greater
portion of these drugs to out-of-town violators.
Seritella, Sam, Hazel Crest, Ill.: His arrest record dates from 1942 and includes
entries for violation of liquor laws. He was sentenced on August 5, 1957, to 10
years imprisonment for violation of the Federal narcotic laws and was released
Since his release he has renewed his trafficking. Seritella obtained large quan-
tities of high grade heroin from important racketeers in New York City and
distributes same in Chicago and in interstate traffic. He is associated with lead-
ing Chicago racketeers and is active in gambling, illicit alcohol, and other illegal
activities.
Sherman, Harry, Los Angeles, Calif.: His criminal record dates from 1928 and
includes entries for felonious assault, robbery, and homicide. He was sentenced
on October 11, 1954, to 3-year and 10-year consecutive sentences as a result of
a case initiated and developed by the Bureau of Narcotics. Sherman is asso-
ciated with recketeers Samuel Goldstein, Abe Elenevitch, and Charles O'Connor
and is well known to all major racketeers in the Los Angeles underworld. He is
engaged in several illegal enterprises among which is included gambling as well
as interstate narcotic trafficking.
Siano, Fiore, New York, N.Y.: He was first arrested in 1948; charged with burg-
lary. His criminal record also includes entries for assault and robbery with a
gun. On November 27, 1954, he was sentenced to 8 years for violation of the
Federal narcotic laws. Fiore Siano has been a main source of supply for narcotic
traffickers operating in the Harlem area of New York City. He is a trusted as-
sociate of leading underworld figures operating and controlling the rackets in
Harlem, New York City. Siano is reportedly a trigger man for the crime syndi-
cate operating in the Harlem, New York City area. Ile has participated in luc-
rative gambling activities and has employed strongarm tactics in enforcing the
syndicate's interests in labor racketeering and the jukebox racket.
Spadaro, Phillipe, New York, N.Y.: Spadaro, together with French nationals
Paul Chastagnier and Alberto Larraine-Maestre, headed an international smug-
gling group that purchased large quantities of heroin in France and arranged to
smuggle the narcotics into the United States for distribution to members of or-
ganized crime. This group, in addition to utilizing couriers traveling with fraud-
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206 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
ulent passports, employed a unique system of smuggling. The contraband nar-
cotics: were concealed inside pieces of electronic equipment and shipped by air to
George Vargas, a represer tatty? of a legitimate importing firm. Spadaro and
Vargas are awaiting trial iii the United States and Chastagnier and other French
participants have been arrested in France. Larraine-Maestre is presently being
sought.
Stadter, Victor, New Yor t City: On June 7, 1962, an undercover narcotic agent
was introduced to James Joseph, who furnished the agent with an ounce of pure
heroin. The following day, the undercover agent purchased 1 kilogram of heroin
from Joseph for 818,000. S nveillance implicated Joseph's source of supply, one
Victor Stadter, who operat3d a Cessna aircraft. It was further ascertained that
Richard Gardiner and two airplane pilots, Marvine Wright and Roy Ehlen, were
associated with Stadter in the narcotic traffic.
On -June 14, 1962, James Joseph and Richard Gardiner were arrested as they
were about to deliver 11/2 ,tilograms of heroin to an undercover agent. Shortly
afterWard, Stadter, Wright, and Ehlen were arrested. An additional 30 grams of
heroin was seized at josepl 's apartment. The investigation, which was developed
with the Bureau of Customs, indicated the heroin was of French origin which
had been smuggled into the United States via Panama and Mexico. During Sep-
tember 1962, Stadter was ;entenced. to 8 years' imprisonment, Wright received
7 years, and Ehlen 6 years. Joseph and Gardiner received sentences of 8 years
and 3-years and 7 months, respectively.
StrOmberg, Harry, New York, N.Y. : His criminal record dates back to the early
1920'a and includes entries for robbery, illegal lottery, burglary and possession
of a gun, and violation of liluor laws. In 1958, as a result of an extensive investi-
gation conducted by agents of the Bureau of Narcotics, Stromberg was implicated
in a case involving conspiracy to violate the Federal narcotic laws. He was con-
victed and sentenced to 5 years' imprisonment in this case. Stromberg was re-
portedly a member of Murder, Inc. He is associated with leading racketeers in
the metropolitan area of New York City in criminality of all types, including
labor racketeering, gamblit g, extortion, and trafficking in narcotics. In the early
1950's, he was the principal financier of a vast narcotic organization which smug-
gled large quantities of heroin into the United States from France. Investigation
by the Bureau of Narcotics subsequently succeeded in breaking up the Stromberg
organization. Many of his associates and customers received substantial prison
sentences. Stromberg was :eleased from prison on April 28, 1963, and remained
under Federal parole super 7ision until April 28, 1964.
Teller, Sheldon R., Chicago, ill.: A Chicago police officer previously charged
as a defendant in a narcotic case in 1960. Teller and two other police officers were
indicted in a conspiracy which involved 13 defendants and 10 coconspirators.
The ease against the officers was dismissed by the trial judge and Teller was
reinstated to duty. Evidencm developed during the course of this investigation dis-
closed that Teller was a major source of supply to traffickers in the Chicago area
and he had connections with members of organized crime in New York. During
the early part of 1066, it was learned that Teller had resumed his narcotic ac-
tivities. A subsequent inve digation resulted in the arrest of Teller and John D.
Su1li4an, another police officer. A quantity of narcotics was seized from Teller's
residence and $46,000 in cash. In November 1966, Teller was sentenced to 18
yearsr imprisonment and S allivan received a term of 9 years. Teller's wife, Leah
J. Teller, who was also im Ilicated in this case received a 5-year sentence.
Thcianas, Mack, Chicago, : iTis criminal record dates from 1921 and includes
entries for carrying a cow ealed weapon, burglary and possession of a gun, and
violation of the State and Federal narcotic laws. On April 23, 1957, he was sen-
tenced from 5 to 10 years' imprisonment for violation of the Illinois State nar-
cotic laws. Thomas has maintained an organization is the south side of Chicago
where he has distributed sizeable quantities of heroin and has been active in
gambling and in the sale of illicit alcohol.
Thompson, John Willard, Dallas, Tex.: His criminal record dates from 1932
and includes entries for hu 7glary, auto theft, and theft of interstate shinmeot. As
a result of an investigation conducted by agents of the Federal Bureau of Narco-
tics, Thompson was implicnted and charged with violation of the Federal narcotic
laws. On May 11, 1953. he was sentenced to 8-years' imprisonment in this case.
He has been active locally In Dallas, Tex., and in interstate traffic in the whole-
sale distribution of narco;ics. He has also been active in hijacking interstate
truck cargoes and in gambli ng enterprises.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 207
Todaro, Vincent, Herndon, Va. : Ills criminal record dates from 1932 and in-
cludes entries for robbery, concealed weapon, receiving stolen goods, and counter-
feiting OPA stamps. On May 20, 1958, he was sentenced to 10 years in Fairfax
County, Va., for violation of Virginia State narcotic laws. Todaro was the prin-
cipal in a narcotic organization which obtained large quantities of heroin from
French-Corsican traffickers in France and from underworld Sicilian sources and
smuggled same into the United States for eventual distribution in New York City
and other major cities in the United States. Todaro maintained close ties with
French narcotic traffickers Edouard Giribone and Antoine Cordoleani, who fur-
nished Todaro with his major supplies of heroin. Todaro had in Ids organiza-
tion important narcotic traffickers such as George Nobile, Joseph Lo Piccolo,
Frank Moccardi, and others. Todaro's narcotic conviction resulted from evidence
developed through an undercover ease initiated and exploited by the Bureau of
Narcotics. As a leader of a major underworld organization, Todaro worked in
close criminal association with highly placed racketeers throughout the United
States in pursuit of multiple illicit ventures.
Tomasetti, Salvatore, New York, N.Y.: On January 27, 1967, Salvatore Toma-
sett was arrested by narcotic agents and New York police in Westchester County
after a wild automobile chase during which he discarded approximately one half
kilogram of heroin which was recovered. Tomasetti was accompanied by John
Condoluci and Thomas Ippolito. All are young members of the organized criminal
element in New York City.
Tramaglino, Eugene, New York, N.Y. : Ills criminal record dates from 1932 and
includes numerous entries for grand larcency, counterfeiting, intimidation of
witnesses, and violation of the Federal liquor and narcotic laws. On June 26,
1951, he was sentenced to 10 years for violation of the Federal narcotic laws.
Trambaglino is a key member of the Arnold Romano gang which distributes
wholesale quantities of heroin in New York and interstate I rattle. This criminal.
group is also active in the trafficking of illicit alcohol, counterfeiting, gambling,
and extortion.
Tuminaro, Angelo, New York, N.Y.: His criminal record dates to 1929 and in-
cludes entries for grand larcency, assault and robbery, and violation of New York
State and Federal narcotic laws. As a result of an investigation conducted by the
Bureau of Narcotics, Tuminaro was implicated in a case involving conspiracy to
violate the Federal narcotic laws. He was arrested during May 1960 on this
charge and subsequently jumped $35,000 bail. Following an intensive search for
this fugitive by agents of tile Bureau of Narcotics, he was located at Miami, Fla.
and apprehended on November 5, 1962. He was extradited to New York and is
currently under $300,000 bond awaiting trial in New York relative to the Joseph
Cotroni narcotic conspiracy case. Tuminaro was closely associated with his part-
ner, Anthony Di Pasqua, in the narcotic traffic. As part of the Galante organiza-
tion, he was involved with the Joseph Cotroni mob of Montreal, Canada, which
was responsible for flooding the New York City area with huge quantities of
heroin obtained from sources in France. Tuminaro and Di Pasqua dealt with local
traffickers who are engaged in interstate narcotic trafficking. Tuminaro has been
suspected of several unsolved homicides in New York City.
Turner, Randolph, Washington, D.C. : His criminal record dates from 1933 and
includes entries for disorderly conduct, violation of liquor laws, and violation of
the State and Federal narcotic laws in New York City and Washington, D.C. On
January 2, 1953, he was sentenced to 8 to 24 years for violation of the Federal
narcotic laws. Prior to his prison sentence in 1_953 he was one of the leading
narcotic traffickers operating in Washington, 1).C. His illicit activities extended
to other huge lucrative areas, including gambling and trafficking of illicit alcohol.
He had close ties with leading racketeers operating in the Harlem area of New
York City. The latter furnished Turner with large quantities of heroin which he
distributed to Washington, D.C., and surrounding areas.
Valachi, Joseph, Bronx, N.Y. : His criminal record dates from 1921 and includes
entries for concealed weapons, burglary, and robbery. For many years Joseph
Valachi was a member of one of the large criminal syndicates in New York City,
which specialized in narcotics, labor extortion, illicit alcohol, and various lucra-
tive illegal operations. At times Valachi was employed as a strong-arm man in
enforcing this syndicate's policies. Valachi was very active in the narcotic traffic
and in the 1950's supplied heroin to notorious violator John Freeman, who has
been one of the most active Harlem area interstate traffickers of heroin in the
United States. In 1960, as a result of an investigation conducted by the Bureau
of Narcotics, Valachi was sentenced to 15 years' imprisonment at the Eastern
district of New York for violation of the Federal narcotic laws. This sentence was
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
in regard to his involvement in the narcotic traffic with John Freeman's son and
other individuals. Whilo in Federal prison, Valachi killed an inmate and sub-
sequently was sentenced to life imprisonment. Valachi's subsequent disclosures to
enforcement agencies an I the McClellan committee are well-known.
Wexler, Irving, New york, N.Y.: One of the most significant cases made in 1951
was that against Irving Wexler, alias "Waxey Gordon." A fourth offender under
the New York law he was sentenced on December 13, 1951, to 25 years to life in
Federal prison. During the prohibition era he was the most important distributor
of illicit beer in the eastern part of the United States, with an income reputedly
running into the millions. In 1030 he was designated as New York's Public
Enemy No. 1. Traffickin ; in narcotics was one of his major illicit activities. At
the time of his arrest in this case, he was associated with one of the largest
nationwide illicit narcotic combines ever to operate in this country. Associated
with Wexler in this narc otic conspiracy case and arrested at the same time were
Samuel Kass, Benjamin .Katz, and Arthur Repola. These violators were sentenced
in December 1951 to subs :antial prison sentences.
Mr. ENRIGHT. It night be well also to briefly state what the com-
bined efforts of Federal, State, and local enforcement have meant in
ten-ns of the addictiat problem. Thirty years ago, the narcotic addic-
tion problem was wiCespread throughout the United States, the nar-
cotic drugs available in the illicit traffic were of a high percentage of
purity, and the addicts suffered extreme withdrawal symptoms when
deprived of their ust al dosage. Today the major addiction problem
is centered in only a law of our larger cities, New York, Chicago, Los
Angeles, Detroit, th? District of Columbia, Philadelphia, Newark,
San Diego, San ,Anto aio, San Francisco, and Balitmore. The narcotic
drugs being distributt d by the illicit traffickers to the consumers are of
a very low percentage of the original purity. Consequently, even in the
areill,S of greatest ad iction density, we seldom encounter an addict
with a severe degree of physical dependence on heroin. There has been
a dramatic reduction also in numbers of addicts in the United States
over the years. The findings of the National Crime Commission tend
to confirm the foregoittg.
In the course of its operation, the Bureau of Narcotics extends and
receives cooperation from many agencies at all levels. Over the years,
an excellent rapport has been established with State and local narcotic
enforcement units. This is partially attributable to the Bureau of
Narcotics Training Stthool established in 1956 to provide a course of
instruction in na,rcoth enforcement for police officers throughout the
United States. Became of the Bureau's international mission, foreign
officers on a select lott is also attend the school. Since 1956, the school
has graduated 2,563 students from law enforcement agencies in 49
States, the District o E Columbia, Guam, the Virgin Islands, and 37
foreign countries.
- On the Federal side, cooperation exists with all agencies but perhaps
most closely with the Bureau of Customs and the newly formed
Bureau of Drug Abuse Control. When information is developed by
the Bureau of Narcotics, which is within the jurisdiction of another
agency, that information is disseminated. Should an organized crime
matter be involved, the information is also forwarded to the Depart-
ment of Justice OrgLnized Crime Section. On a periodic basis, the
Bureau of Narcotics provides an organized crime status report to the
latter agency and any urgent intelligence data is furnished as received.
It was stated earlier that organized crime is a national menace. The
power and scope of this body defies the imagination. It can be likened
to an iceberg where only a small portion is visible on the surface.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 209
The Organized Crime Task Force of the National Crime Commis-
sion stated, "Law enforcement's way of fighting organized crime has
been primitive compared to organized crime's way of operating." We
believe this to be an accurate statement and the balance of power must
be shifted.
The small measure of success achieved by our Bureau in this field
can be traced to one basic factor, the obtaining of highly placed under-
world informants who have broken their code of silence in the face
of prosecution or for other reasons. Unfortunately, these individuals
are few and far between. Often retaliation against them has been
swift and cruel. They have been shot, stabbed, dismembered, dissolved
in acid, and even crushed in scrap metal compressing machines. There-
fore, every possible step must be taken to overcome their fear and
encourage potential informants to come forth.
Incentives could be in the form of immunity from prosecution; the
establishment of facilities to house and safeguard informants; funds
to provide for the individual and his family after his period of use-
fulness and severe punishment for those who threaten or otherwise
attempt to obstruct anyone from assisting the Government.
Public apathy toward the crime problem and in some instances even
hero worship of criminal figures must be overcome. Establishment of
a meaningful educational program would be helpful. Improvement
of the police image would be an essential part of any such program.
Of particular interest was a recommendation of the National Crime
Commission suggesting the creation of a permanent Joint Congres-
sional Committee on Organized Crime.
In the final analysis, no one action or one item of legislation will de-
stroy this evil. To combat organized crime effectively, it is necessary
to strike at all the individual components. This involves the combined
efforts of Federal, State, and local governments, with the complete
cooperation of the concerned professions as well as every citizen of
the United States.
Mr. FASCELL. Thank you very much, Mr. Enright.
I certainly would agree with that last paragraph. That leads to some
questions that have concerned this subcommittee since we started
these hearings.
I gather the thrust of your testimony to be that you make the cases
and you get the basic evidence by your own investigative work. If it
touches upon another agency you make it available to them.
Mr. Examirr. That is an accurate statement, Mr. Chairman.
Mr. FASCELL. Thank you.
That leads me to ask a question which Mr. St Germain and others
have been interested in, and which I am certainly interested in. What
about the basic investigative agency of the U.S. Government, do they,
in the course of their efforts, make their investigations available to
you so that you can make a case?
Mr. ENRIGHT. The basic investigative agency?
Mr. FASCELL. Yes, the Bureau, in other words.
Mr. ENRIGHT. Yes, the FBI.
We receive information from them when it concerns a narcotic mat-
ter, and we conduct the investigation. I am assuming whatever infor-
mation they get concerning narcotics, they provide us. They do pro-
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210 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
vide reports to us concerning narcotic matters which are outside of
their jurisdiction.
Mr. FASCELL. Is that on a regular basis, some intermittent basis, ad
hoc or special?
Mr. ENRIGHT. T would- assume as it comes to their attention.
Mr. FASCELL. There is no working arrangement with respect to the
conduct of investigations dealing with narcotics?
Mr. ENRIGHT. A workino-'- arrangement?
Mr. FASCELL. Yes, in the Bureau of Investigation; in other words, a
fundamental
Mr. ENRIGHT. They never, to my knowledge, work on a narcotic
matter, and whenever they get something that concerns a narcotic
matter they give us a report on it, and we pick it up.
Mr. FASCELL. So tit( investigation primarily is your responsibility
or your section's respcnsibility ?
Mr. ENRIGHT. At the Federal level.
Mr. FASCELL. Fedor Li level.
Mr. ENRIGHT. Together with the joint responsibility we share with
the Bureau of Customs in certain matters.
Mr. FASCELL. So yon develop a case initially, and then if it involves
an organized crime mater as you determine it, you report that to the
Department of Justice, the OC Section?
Mr. ENRIGHT. Yes, sr.
Mr. FASCELL. That has been going on since the section was orga-
nized, I assume?
Mr. ENRIGHT. Yes. We let them know when we develop something
along these lines.
Mr. FASCELL. What I am interested in now is whether or not the
reverse of the process takes place. Have you had any direction with
respect to the organized crime effort emanating out of the Department
of Justice?
Mr. ENRIGHT. Well, I think when you appraise the efforts of the
Organized Crime Section, you have to look at it from the overall
Federal enforcement viewpoint. I will try to be more specific in a
second.
What I have noted about the Organized Crime Section is that they
have provided the overall Government thrust. In other words, they
have agencies that, perhaps, were not as interested as they should be
in the organized crim? problem working on it. In other words, I think
they are keeping everybody on their toes, so to speak.
Now, to get specific is far as our agency is concerned, we have had?
we have been fighting organized crime for some 30-odd years, and we
have continued in this regard.
Where they have been of benefit to us has been in such instances
where we are in a jurisdiction where the complications of the case
may be, perhaps, beyond the immediate capabilities of the local U.S.
attorney; they have gone out and in some instances prosecuted cases
for us, given advice, ard things of this type.
Mr. 'FASCELL. I do rot want to be bound by what I am about to say
because we have had a lot of testimony, and I do not want to be pre-
judging what I have heard. But I got the distinct impression, for
example, that goes scmething like this: That each agency takes the
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credit for breaking the back of organized crime in the United States
by making the most cases, and that goes for IRS
Mr. ENRIGHT. I did not say we made the most, sir.
Mr. FAscEnn Drug
Mr. ENRIGHT. I was. speaking qualitatively.
Mr. FASCELL. Drug and alcohol. It is all right. They have all done
a good job. Yet I get the distinct impression they are all operating
very independently without any real direction at the top level by this
Organized Crime Section. So I am now beginning to ask myself what
does the Organized Crime Section do besides receiving telephone calls
from the agencies making the basic cases saying, "We have an orga-
nized crime figure involved in a case."
If there is more to it than that we are desperately looking for it,
but I am not sure it exists yet.
Mr. ExutonT. I do not see them as having an investigative function
as such.
FASCELL. I do not either.
Mr. ENRIGHT. I say this not facetiously, I do not think they are an
investigative body as such doing the actual investigation.
Mr. FASCELL. No?
Mr. ENRIGHT. But what I think they are doing, and I think their
operation is improving daily, they are providing?again I repeat?
a, thrust where they have the entire Federal investigative force mov-
ing in one direction.
Mr. FASCELL. You have stated that the drug problem overall has
been reducing. Am I correct?
Mr. ENRIGHT. Yes. Now, I am talking about one specific drug?I am
talking about the drug addiction in the United States, I am talking
about heroin.
Mr. FASCELL. Ri ht.
Mr. ENRIGHT. This is what I was alluding to here in this testimony.
do state again that the heroin problem on a long-range basis is
dramatically reduced.
Mr. FASCELL. What I mean by that is the number of addicts, and the
number of ounces or pounds or whatever the measurement is
Mr. ENRIGHT. What I am talking about is the fact that 40 years ago
by estimates other than the Bureau of Narcotics, the Public Health
Service and others, the medical profession, we had a quarter of a
million drug addicts in the United States, and today we estimate we
have 60,000 or thereabouts.
Mr. EDWARDS. Say that again.
Mr. FASCELL. Yes.
Mr. ENRIGHT. That 40 years afro WC had a quarter of a million
narcotic addicts in the United States, not by our count but by the
count of the medical profession, the Public Health Service, and so
forth, and today we estimate somewhere around 60,000.
Mr. FASCELL. That starting figure is a pretty good guess, just a
guess, is it not?
Mr. ENRIGHT. NO, ; it is not a guess.
Mr. FASCELL. IS it not?
Mr. ENRIGHT. One survey
Mr. FASCELL. I mean we did not have any records of any kind.
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212 THE FEDERAL EFORT AGAINST ORGANIZED CRIME
Mr. ENRIGHT. Yes, we lid. I want to tell how this was done.
Mr. FASCELL. All right.
Mr. ENRIGHT. Long ID( fore the Bureau of Narcotics came into exist-
ence, all people who were dealing with narcotics were registered. The
Public Health Service II ade a review of many surveys, including one
where questionnaires were sent out to thousands of pharmacists and
doctors asking for information concerning the number of narcotic
prescriptions that were written by doctors and filled by pharmacists.
In this way they made what I believe to be a rather accurate estimate.
They came to finding th It there were about 200,000 addicts in 1914.
Mr. FASCELL. Let us assume for the moment, and properly so, I
might add, that a great deal of this reduction is due to effective en-
forcement; and, secondly, as you have pointed out in your testimony,
it is not as useful as it was to organized crime members as it was once.
Are there other reasons, new drugs, new addictions, new fads?
Mr. ENRIGHT. Are we talking about the reason for the drop in ad-
diction or the organized crime retrenchment from the drug traffic?
Mr. FASCELL. No. We Are talkpg about the addiction. One factor is
enforcement; secondly, it is not as lucrative as it used to be to the
organized crime people and others; third, everyone knows they are
getting cut stuff, so they do not want to get that, it might injure their
health. Is there a fourth?
Mr. ENRIGHT. Well, I suppose there are many factors involved.
Mr. FASCELL. Let us be specific. Is it LSD or something that has
come up that has had any impact on the reduction in heroin addicts?
Mr. ENRIGHT. I think there has been a transition in many cases to
the use of other drugs, particularly the amphetamines, barbiturates.
But whether this is the factor chat causes the reduction or whether
they are using this because the heroin is unavailable, I personally
would choose to believe that because of unavailabiliti they are switch-
ing to other drugs.
For example, Atlanta, Ga., where I was stationed at one time, 15
years ago heroin was readily available, but today it is not. But there
are?we do find the use of these other drugs, the newer chemicals, the
amphetamines, the barbiturates, and the like.
Mr. FASCELL. Mr. Edwards.
Mr. EDWARDS. Chemic Os that can frequently be made in somebody's
small laboratory right here in this country.
Mr. ENRIGHT. Well, sir, I think the most publicity about making
bathtub narcotics has ben within the area of LSD. This is not within
our juridiction, but within the jurisdiction of the Bureau of Drug
Abuse Control, FDA.
Mr. EDWARDS. Let us talk about that for a minute. Is that wise?
Should your jurisdiction be limited only to certain things, and some
other agency or bureau involved with other types of drugs? How do
you draw the line or why is the line drawn the way it is drawn?
Mr. ENRIGHT. Sir, Congress, in its wisdom, made this determination
when they passed H.R. 2. This is what set up the new agency, and put
within their jurisdiction certain drugs.
Mr. EDWARDS. Was that a mistake?
Mr: ENRIGHT. I would not say 30, sir.
Mr. EDWARDS. Did we make a mistake in doing it that way?
Mr. ENRIGHT. No, sir; I do no think you did.
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Mr. EDWARDS. Well, sometimes we do not show much wisdom. You
are not going to hurt this panel's feelings, I am sure, if you point the
finger.
Mr. ENRIGHT. When I talk about a narcotic traffic, I am talking
about the traffic in drugs within our jurisdiction which are completely
illicit. The drugs that are on the street, illicitly produced, and most
generally smuggled into the United States. This is one area of the
drug traffic.
Now, in addition, you have the drugs which the, Bureau of Drug
Abuse Control has within its jurisdiction the manufactured type
drugs, the amphetamines, barbiturates, and related drugs.
I must confess there is?one drug that overlaps somewhat with our
jurisdiction, and this is the hand-and-glove use of LSD and mari-
huana. But again there is a difference because the marihuana traffic is
basically of an international nature, and the large violators who handle
marihuana are not generally concerned with LSD.
Mr. EDWARDS. Do you find there is any overlapping of the crime ele-
ment in these drugs or the chemicals; in other words, are you dealing
with a drug that involves a particular criminal and that same criminal
may very well be involved with LSD or some of these others?
Mr. ENRIGHT. Not generally at the wholesale level at which we try
to work.
Mr. EDWARDS. Well now, did I understand you correctly that, for
some of these big time operators narcotics, as such, is getting to be
rather risky, and it is for this reason that they are withdrawing into
this shell?
Mr. ENRIGHT. Yes, sir.
Mr. EDWARDS. Surrounded by many layers of people?
Mr. ENRIGHT. Yes, sir.
Mr. EDWARDS. YOU attribute this, with reasonable modesty, to the
work that your Bureau has done?
Mr. ENRIGHT. I would like to say with all due modesty, sir, that I
think we have had a share in this phenomenon.
Mr. EDWARDS. Explain to this uneducated one a little more about this
business of purity in heroin and bow that relates to, perhaps, not using
it as much any more.
Mr. ENRIGHT. Yes, I would be happy to, sir.
Years ago the drugs being found on the street, at the addict level,
were of a relatively high percentage of purity. Every item of drug
that we seize undergoes a chemical test, a qualitative analysis, per-
formed to determine its purity. We have noted over the years that the
purity percentage of the drug has been decreasing, and there are other
findings of a similar nature.
For example, President Kennedy's 1962 Narcotic White House Con-
ference Ad Hoc Committee survey, checking various institutions
where addicts are taken to be cured, determined an almost complete
lack of classic withdrawal symptoms. In other words, when the addict
takes drugs, his body undergoes an increase in tolerance for these
drugs, and he reaches the point where if he does not get the narcotic
he suffers all types of withdrawal symptoms. The doctors at these in-
stitutions reported to this ad hoc committee that there was almost a
lack of withdrawal symptoms on the part of these addicts. I mean
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there are even jokes made concerning this in the street. At times they
refer to somebody as being addicted to the needle rather than the drug.
Do not misunderstand me, I am not minimizing this problem at an.
There are still plenty of addicts running around, but what I am saying
is all these different things indicate something to us.
Mr. EDWARDS. Indies te a higher degree of impurity?
Mr. ENRIGHT. Well, I think, yes; and the adulteration indicates
less availability of the drug, I believe, because they are spreading it
further.
Mr. F,Dwzmos. Now. the $21 million that you mentioned in your
statement, as you said, seems relatively small. Is this generally the
heroin?
Mr. ENRIGHT. I am referring to heroin there; yes. I would, per-
haps, elaborate a little bit on that just so the record is perfectly clear.
This does not mean that the -total narcotic business or total heroin
business in the United States is $21 million. I have heard estimates,
and this, of course, is rather difficult, but you can get a handle on it
at least, I have heard estimates up to $350 million. But what we are
talking about is the amount of this is going into the coffers of or-
ganized crime. Once you get beyond a certain level while there are
still drugs being passed and money changing hands, this is not nec-
essarily going to organized crime. Once you get past a certain level
in the traffic organized crime is not involved in an active manner.
Mr. EDWARDS. How is your Bureau structured at the top? Do you
have a chief?
Mr. ENRIGHT. We have a Commissioner, the Commissioner of Nar-
cotics, Henry L. Giordano; we have a Deputy Commissioner, George
H. Gaffney; two assistant commissioners; I am one of these for en-
forcement. We have another Assistant Commissioner for Administra-
tion, and so on down the line.
Mr. EnwAims. All ri2,11t. Let us stop near that top level. Are all those
people career people?
Mr. ENRIGHT. Yes, sir.
Mr. EDWARDS. There are no political appointments, as we know them,
in that echelon?
Mr. ENRIGHT. No, sir. The Commissioner is appointed by the Presi-
dent upon the advice, and so forth, of the Senate but he is a career
man, some 28 years I believe, in the Bureau of Narcotics.
Mr. EDWARDS. Underneath this group of leadership you have about
300-odd
Mr. ENRIGHT. Field ',gents.
Mr. EowARns ( cont ) . Field agents.
MT. ENRIGHT. And supervisors.
Mr. EDWARDS. Is that geneTally sufficient? I am opening the door
now. I want you to tel me if there is a real need to double your agents.
Mr. Extztoirr. I do not know if doubling it?sometimes it is difficult
to establish the point, of diminishing returns but we see a need for
a few more men. I suspect we will be asking for them.
Mr. FdowARDs. :But you think, by and large, that you have been able
to accomplish the pu?pose fcr which you were organized with this
structure?
Mr. ENRIGHT. .By and large. We have necessarily depended, and do
depend, on local and state agencies. We think they have a big share
in this problem. This is not entirely a Federal Government problem.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 215
This is one of the reasons why we, through a mandate of Congress,
established a Bureau of Narcotics Training School, and have been
able to put 2,500 ex officio narcotic agents out throughout the country,
people on whom we are able to calf on who have some degree of fa-
miliarity with the drug problem.
Mr. EowAltos. What background does the average narcotic agent
have? What type of education is required?
Mr. Fixawarr. lie must have the basic requirement which is a college
degree. We will accept any college degree.
Mr. FA SCELL. Mr. St Germain.
Mr. ST GERMAIN. I want to compliment you. I am certainly desirous
of taking this as gospel truth, and, therefore, I must say it is a job
well done.
Mr. ENRIGI IT. Thank you, sir.
Mr. ST GERMAIN. But on page 4 you say the findings of the Na-
tional Crime Commission tended to confirm the foregoing, wherein
you tell us about that is at the end of the first paragraph, the last
sentence
Mr. ENRIGHT. Concerning the narcotics problem, excuse me, the
ddi ction problem.
Mr. ST GERMAIN. Right; the addiction problem.
Mr. ENRIGHT. Yes.
Mr. ST GERMAIN. Which, in effect, the reduction in the addiction
problem is in great part due to the unavailability, which is due to the
efforts of your organization?
Mr. ENRIGHT. We would like to think that.
Mr. ST GERMAIN. Well, that is logical.
Mr. ENRIGHT. I am talking here about the heroin. There is a tend-
ency, I think, when we talk about the narcotic problem, to include
every drug known to man. But the backbone of the addiction problem
in the United States is heroin, and this is what I am referring to
here.
Mr. Si' GERMAIN. Right.
Well, on what information did the National Crime Commission
base its findings in this particular instance? Where did they go to get
their facts upon which they reached this conclusion?
Mr. ENRIGHT. Well, I know generally what they did. They studied
all the literature available, the various previous committee reports.
They went around the country to various cities questioning the pro-
fessions, the enforcement agencies, and the like.
Mr. ST GERMAIN. Well, in essence, the enforcement agencies, they
would be questioning your agency
Mr. ENRIGHT. Not necessarily.
Mr. ST GERMAIN (continuing). A great deal of the time?
Mr. ENRIGHT. No. They went to California, they talked to the State
bureau of narcotics; they talked to the Los Angeles police; they
talked to the Bureau of Customs; in St. Louis they talked to the St.
Louis County authority, and they talked to the police in New York,
and so on.
I think the three cities that they concentrated were Los Angeles,
St. Louis, and New York in an attempt to get a sampling.
Mr. Sr GERMAIN. So far as the law enforcement agencies in the
larger cities are concerned, do you get your information from them
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216 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
or do they get their information from you as to what the situation is
that prevails during a pf,rticular period of time?
Mr.'ENRIGHT. Well, there is a type
Mr. ST GERMAIN. In other words, who was in charge of the proceed-
ings here, the Federal Bureau of Narcotics or
Mr. ENRIGHT. I belieVO so; yes.
Mr. ST GERMAIN. Right. So that, in essence, would not the local en-
forcement agencies rely in great part upon the information they are
getting from your Bur mu?
Mr. ENRIGHT. No, sir; not necessarily. New York City has some-
thing like 300 men working in their Narcotics Bureau. They have as
many Men in New York City as we have in countries throughout the
world, so they have much information on their own.
Mr. ST GERMAIN. Nothing further.
Mr. ;FASCELL. Mr. Enright, which of these cities, from the standpoint
of heroin use today, has the greatest incidence?
Mr.'ENRIGHT. New Ycrk City.
Mr. FASCELL. Where does Washington, D.C., come into the scale of
thinys?
Mr. ENRIGHT. They ftro in the first 10, toward the bottom of the first
10. sir. I could supply that for you if you wish.
Mr., FASCELL. Toward .;he top 10?
Mr. :ENRIGHT. I can su-3ply it for the record.
Mr. FASCELL. I was just curious.
What kind of a lead does the purchase of a needle at a drug counter
give the enforcement agencies?
Mr. ENRIGHT. Well, normally we are not working at this level our-
selves,: at the addict level, unless the addict happens to be the dope
peddler.
I suppose it is possible that the person buying that needle would be
a drug addict, but, of co arse, he could purchase it for any number of
reason's. For example, if he were a diabetic he would need it for that
purpose.
No, certain areas, certain jurisdictions, have laws regarding the
purchase of needles. Thy make them a prescription item.
Mr. FASCELL. There is no such law in the District of Columbia, is
there ?.
Mr. :ENRIGHT. Not that I know of. I just do not know.
Mr. ::FASCELL. Do you have any idea what the sales of needles are in
the District of Columb ?
Mr. .ENRIGHT. No, sir I do not.
Mr. EnwArms. Do you?
Mr. FASCELL. I do not know, but I have a good idea they sell an
awful lot of needles, and it is pretty easy to get one.
Mr. ENRIGHT. I beliey3 New York City has in their Public Health
Code a law which inakeE it a misdemeanor to be in illegal possession
of a hypodermic needle and syringe.
Mr.: FASCELL. Most of these people, as I understand it, just use the
needle.
Mr. iENRIGHT. Well, yo-i need the syringe.
Mr. FASCELL. No ? you I eally do not?
Mr. ENRIGHT. *ell, the sophisticated user. However, sometimes
they Otinch holes in their arms with safety pins and use an eye dropper.
But we were talking about needles at that point.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 217
Mr. FASCELL. I mean they do not need the bulb. I did not mean to
get technical.
So anyway there is no?from a Federal standpoint you do not get
down to that kind of investigation.
Mr. ENRIGHT. Not in that regard. There is a different function of
our Bureau where we do get down to the drugstore level and this is
our permissive side, the control we exercise over the flow of legitimate
narcotics, which is complete from importation down to the local
drugstores.
Mr. FASCELL. There is considerable discussion lately about the use
of marihuana and the waste of time of enforcement of the laws against
the use of marihuana. What opinion do you have to express on that?
In other words, the way a current theory goes is that marihuana is
less dangerous than a drink of whisky, and why go to all the trouble
of enforcing the laws to stop the use and possession and the sale of it?
Mr. ENRIGHT. Well, I think?that was not your statement, sir.
Mr. FASCELL. No, sir. I said it was a current view expressed by
others.
Mr. ENRIGHT. I was going to say I think you have to view sometimes
the individuals who are making these statements.
There is a rather vociferous, at times articulate, group around the
United States who do dream that there is nothing harmful about
marihuana. Again, usually these people are involved in other things
such as LSD and, perhaps, other acts, not completely in the general
interest of the public.
I think rather than?first of all, I do not think that enforcement is
useless or unneeded in this area. I admit it is a very complex problem.
One of the things I would like to cite for you is the fact that of the
60,000 drug addicts, narcotic addicts, that we have on file in our
Bureau, a great number have cited the use of marihuana as their first,
as their introduction, to the use of heroin.
Mr. FASCELL. Into taking heroin by needle, you mean?
Mr. ENRIGHT. What I am saying is that they started using mari-
huana and graduated to the use of heroin.
But rather than attempt to state this myself, I would like to intro-
duce a couple of items into the record. For example, the World Health
Organization Report on Drug Dependence, which cites the use of mari-
huana and what it can do.
We also here have a paper by Mr. Miller, part of which deals with
marihuana. Perhaps you would like to have it in the record. Also, ex-
cerpts from various publications concerning the transition from mari-
huana to heroin use.
Mr. FASCELL. Without objection we will include those in the record
at this point.
(The pertinent portions of the documents referred to follow:)
NARCOTIC DRUG AND MARIIITJANA CONTROLS 1
(By Donald E. Miller, Chief Counsel, U.S. Bureau of Narcotics)
At this point I want to dwell upon a subject which I perceive to be a most
important aspect of this conference?one which appears to be very controversial
Pertinent portions of paper presented at National Association of Student Personnel
Administrators Drug Education Conference, Washington, D.C., November 7-8, 1866. The
NASPA drug education project is supported by contract No. FDA 67-3, with the Food
and Drug Administration, Department of Health, Education, and Welfare.
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218 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
in academic communities. At all conferences of this type these questions are
always asked: "Why is marihuana controlled at all?" and "What is so bad about
Marihuana?" Accordingly, I shall meet the issues head on, furnish you with the
views of the officials of the Bureau of Narcotics, and illustrate why we consider
marihuana as an exceedingly dangerous drug. I sometimes fear that law enforce-
ment 'officers are the sole voices in the wilderness warning that today's languor
will lead to a spread of mar: huana abuse rather than its control.
Recently, within the United States, we have witnessed an increasing abuse of
marihuana, as well as other so-called hallucinogenic or "mind changing" drugs.
Regrettably this trend has been enccatraged by a small number of highly articu-
late spokesmen who attempt to justify its use with an aura of intellectualism or
religious practice. They readily extoll the virtuous effects of marihuana intoxi-
cation and advocate that its use be legalized. Of more concern are the conclu-
sions of a few observers in he academic field who have seemingly found no threat
sufficient to merit the prohibition cf. marihuana. Such a position is completely
contrary to the findings of medical consensus as well as the social experience of
this and other countries. A n examination of most leading authorities will serve
to illustrate this point.
Marihuana does differ sgnificantiy from the opiate class of drugs in that its
use does not produce addici ion of th morphine type. Abstinence does not produce
a physiological withdrawal syndrome in the user, however, its use does result in
a psychological dependenc3 and according to Dr. Ausubel chronic users go to
great lengths to insure tha they will not be without the drug. Moreover depriva-
tion may result in "anxiety, restlessness, irritability, or even a state of depression
with suicidal fantasies, sometimes self-mutilating actions or actual suicidal at-
tempts," all symptoms of a psychological withdrawal syndroms. For these reasons
marihuana is more often said to be habituating rather than addicting, although
one of the most recent investigators claims that at least from a psychiatric point
of view there is little diflerence. From a medical standpoint this distinction
cannot be overlooked, but it assumes only minor importance when considering
the practical social values of the drug. It is, therefore, somewhat incredible that
the distinction has been cited by some observers as though it were a positive
virtue of marihuana.
There is medical agreement that the active ingredients of marihuana, the
tetrahydrocannabinols, are powerful and dangerous compounds when used in
intoxicative proportions. The potent parts of the plant have been used from very
ancient times and there are claims that it is the most widely abused drug in
the world today. The plar t preparations are commonly found in a number of
forms of which hashish and marihuana for smoking are the most common. In this
country all such forms are included in the legal definition of "marihuana."
In the past, efforts to discover a medical use for marihuana compounds have
not proven fruitful. There Ire, however, current attempts being made to discover
uses for the drugs, and a Disearch team of Princeton University chemists, headed
by Dr. Edward G. Taylor, has succeeded in synthesizing tetrahydrocannabinol
compounds. He expresses the hope that marihuana may become the source of a
whole new generation of lrugs with a range of useful therapeutic functions.
Also Kabelik, a Czechos _ovakian scientist, has demonstrated antibacterial,
analgesic, anticonvulsive aid local anesthetic qualities of tetrahydrocannabinols.
One thing is clear from the research, and this is that a number of powerful drrigs
may be derived from the resins of the cannabis plant. In medicine, the current
task is still to find in them a proper therapeutic use. As for society, the fact
still remains that the evidence supports the view that the had aspects of mari-
huana abuse exceed far aid beyond any possible good which might be derived
from it.
The formal list of reported physiological and psychological effects of the
intake of marihuana is quite varied and lengthy. For example, the iocr; report
on Drug Dependence for the World Health Organization lists the following:
"Among the more promiPent subjective effects of cannabis * * * are: hilarity
* " carelessness: loquacious euphoria * * * distortion of sensation and per-
ception * * * impairment of judgment and Pp?mory distortion of emotional
responsiveness: irritabilit v, and confusion. Other effectR which appear after
repeated administration * * include: lowering of the sensory threshold,
especially for optical ani accoustical stimuli * * * illusions, and delusions
that predispose to antisocial behavior; anxiety and aggressiveness as a Possible
result of the various intellectual and sensory derangements; and sleep
disturbances."
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 219
The immediate physiological effects of marihuana intoxication include ataxia,
a loss of coordination in the limbs; hypoglycaemia, an abnormaly low concentra-
tion of glucose in the blood; hypothermia, an abnormal lowering of the overall
body temperature; bulimia, a voracious appetite accompanied by a desire for
sweets; and inflammation of the mucous membranes of the mouth, pharynx,
and bronchial tubes. It is, however, the effects upon the operation of the central
nervous system which are most profound and unfortunately, least explored. Dr.
Donald Louria also claims that marihuana may produce all of the hallucinogenic
effects of which LSD is capable.
A recent medical symposium sponsored by the CIBA Foundation smmnarizes
much of the current research and opinions of leading medical authorities. To
quote briefly from the conclusions of these studies:
"One can easily imagine the difficult situation to which society would be con-
demned if the selling of hashish were legal.
"It is Well known that taking hashish causes both pathological and psychic
disturbances, thus rendering the addict a burden to society."
At the present time marihuana is the subject of worldwide prohibition as
expressed in the Single Convention on Narcotic Drugs of 1961. This repression has
been found to be necessary not simply because of the harmful effects of the drug
on the consuming individuals but also because of the antisocial conduct which it
engenders. The U.S. laws are in accord with this global policy of suppression and
heavy penalties are prescribed for marihuana traffickers.
It has become popular with those who would legalize marihuana to claim
that its use is no worse than the current use of alcohol. However, any compari-
son of marihuana with other substances such as alcohol is extremely tenuous at
best, and in a basic sense, such efforts are pointless. The attempt, no matter how
successful, can produce no guide to action. Surely it is not valid to justify the
adoption of a new vice by trying to show that it is no worse than a presently
existing one. It is true that alcohol abuse also constitutes a major social prob-
lem, but the social damage which would result from a permissive use of mari-
huana cannot, like some finely balanced equation, be canceled out by placing
a measure of social damage resulting from alcohol opposite it. The result can
only be additive.
A factor which is frequently overlooked by critics of the present prohibition
is that the limited social experience which we have had in this country is with
marihuana having a low concentration of the active ingredient tetrahydrocan-
nabinol. In the marihuana which is distributed in the illicit traffic of this country
it is common to find conglomerations consisting of leaves, seeds, stems, and tops,
in spite of the fact that nearly all of the active principle of the plant is contained
only in the resins of the flowering tops of the female plant. This adulteration is
a consequence of the present enforcement activity, and while this policing effi-
ciency has the desirable benefit of lessening the amount of the active ingredients
consul-lied in the United States, it also unfortunately results in concealing from
investigators the full danger involved in its use. The low purity of the mari-
huana which is available results in disguising its consumption as a causative
factor in crime and mental illness, a connection which is much more apparent
in those who have used the more concentrated tenths such as hashish. Moreover
the difficulties of obtaining even the adulterated preparations further conceal
the damage of chronic consumption.
This fact has often mistakenly led to the belief that marihuana consumption
is one of the less damaging forms of drug abuse. The recent report of the Sub-
committee on Narcotic Addiction of the New York Medical Society found that the
prohibition against marihuana clearly should be maintained. The only significant
opposition to the existing controls is that the subcommittee feels the penalties
for possession should be decreased since the marihuana commonly found in the
United States is of a much lesser potency than that found elsewhere. The report
concedes that marihuana in its stronger forms such as hashish is definitely
associated with criminality, violence, and insanity, but it fails to comprehend
that the low grade of marihuana available in the United States is a direct conse-
quence of our nationwide policing effort. It should be realized that if the con-
sumption of marihuana were legalized the natural consumer demands would
result in the marketing of a more refined and consequently more dangerous
product than is usually obtainable.
Dr. Donald Lourift, Chairman of the New York Medical Society's subcommit-
tee, tacitly recognizes the inevitability of this process in his recent volume en-
titled "Nightmare Drugs." In it he speaks of inarihuana of the "American type"
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220 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
by which he means that mixture most often encountered in this Nation's illicit
traffic as opposed to the aetter grades such as hashish which he claims to be five
times as potent. Thus he rightly concludes that:
"If we legalize marihtana, of the American type, are we not taking the first
steps to legitimize the widespread use of more potent hallucinogens with all their
immense potential dangtws? With legalization, inevitably there would develop
in this country a substantial number of chronic, excessive users, thus encouraging
the likelihood of chronic psychosis and criminality.
The use of hashish and perhaps of pure tetrahydrocannabinol would develop.
Just as the refinements of the opium poppy finally made available the drugs
heroin and morphine, and the switch to the more sophisticated form of drug
taking, the refinement cf the cannabis plant can be expected to result in the
switch to tetrahydrocannabinol.
Availability of only the mild marihuana preparations in this country explains
much of the reason for tl e existing controversies as to the seriousness and perma-
nency of the effects of marihuana. For example, the report prepared for the
mayor of New York in 1944 concluded that there appeared to be no permanent
mental damage suffered by the tnarihuana-using subjects within its purview.
However, as Wolff pointed out 5 years later in his Latin America studies, these
observations were not based on the chronic use of marihuana. In the Near East
where the refinement of hashish is readily available, a very high incidence of
permanent insanity has been recorded among the users. In his study of drug
addiction, Dr. Ausubel tates that although no permanent physical damage or
deterioration has been reported in the United States among marihuana users:
"In India, on the ?tin r hand, where chronic addiction is more common and
of longer standing, relia3le evidence of damaged health has been reported for
42 percent of chronic users."
In Egypt, where accot ding to recent press reports, habitual marihuana use
has reached the alarminr? figure of 30 percent of the population, the Government
has unqualifiedly stated that: " * * * the prepared product of cannabis sativa
plant, while having very limited medical use, is capable of profoundly disturb-
ing the brain cells and of inducing acts of violence, even murder; that it is in
fact a thoroughly vicious and dangerous thing of no value whatever to humanity
and deserving of nothing but the odium and contempt of civilized people."
Wolff also ebalmed that his studies in Latin America make it clear that irre-
parable organic lesions result from the use of marihuana over a period of
years. Finally, the bota aist, Norman Taylor, who is not a supporter of the
present prohibitive laws, admits that hashish is so potent, "that its continued
use leads straight to the lunatic asylum."
The question of the permanency of the mental effects of marihuana remains
open for investigation. 1Wore likely than not the earlier failures in finding such
effects among subjects In this country resulted from the unavailability of
chronic users of high quality marihuana which is a testimonial to the need for
continued controls to pr.( vent spread of this abuse. However, it has been right-
fully observed that even if the effects of marihuana are temporary, a user
"may 'temporarily' be on: of his mind for the whole of his lifetime if he smokes
up to six marijuana cigarettes daily * * *" which is generally conceded to be
the average habitue's cor sumptiort in this country.
The relationship of crime to marihuana use is another hotly contested issue.
It has long been held that marihnana is linked with crime and other types of
antisocial behavior. What is less clear is whether the criminal conduct results
from actual neurological changes brought on by the use of the drug or whether
the drug's consumption IT erely aggravates preexisting criminal tendencies. Those
who have studied this question domestically find it difficult to reach a conclusion.
Thus, Kolb claims that marihuana "may cause criminally inclined persons fn
commit crimes, but its pitency as an instigator of crime has not been treasu-ed
or demonstrated in the United States, because of its limited use." On the other
hand, studies made in :Vow Orleans showed that the number of marihuana
users among major criminals was very high. The files of the Bureau of Narcotics
are replete with crimes of violence perpetrated under the influence of marihuana.
Again the studies :made in other countries where higher grades of marihuana
are more readily available show an alarming incidence of use among the
criminally insane.
Even the LaGuardia report of 1944, which is so often cited as support for
the harmlessness of marihuana, found that in a limited number of test subieets :
" * * * there were alterations in behavior giving rise to antisocial expression.
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This was shown by unconventional acts not permitted in public, anxiety reac-
tions, opposition and antagonism and eroticism. Effects such as these would be
considered conducive to acts of violence." And further that: The conclusion
seems warranted that given the potential makeup and the right time and environ-
ment, marihuana may bring on a true psychotic state." Moreover it is important
to note that these observations were based on the study of subjects in a rigidly
controlled environment and who were not themselves chronic users.
Of special significance is the investigation of Prof. C. G. Gardikas in which he
analyzed a group of 379 hashish-smoking criminals. He found that 117 of these
became criminally inclined only after their habituation to hashish. Nevertheless
they had between them more than 420 sentences for assaults, woundings, threats,
robberies, manslaughter, and sex offenses. Wolff refers to various other reports
from Greece, Turkey, Tunis, and Egypt which bear out his findings. Wolff also
lists a number of specific incidents taken from his own observations in Latin
America. The explanation to which most authorities subscribe in their accounts
of marihuana-induced crime, is that the drug causes psychotic episodes which
result in personality changes. Typically, users may suffer from delusions of
persecution. Many may believe themselves to be under attack when they commit
aggressive acts. Crime in these subjects must be viewed as a result of the ensuing
mental confusion and derangement that accompanies marihuana intoxication.
Also, the thesis that marihuana use results in criminal conduct in those who
are predisposed to crime is valid. Thus, like alcohol it may be used to bolster
courage or it may trigger a latent desire to commit acts of violence. Two noted
experts have pointed out that marihuana is particularly suited to the latter role:
"Marihuana does not so rapidly produce motor incoordination (as does al-
cohol), which means that the marihuana smokers may more frequently carry
through criminal tendencies into action or perform impulsive acts more effec-
tively * * *"
In the final analysis it is clear that marihuana may be causally associated with
the commission of crimes in a number of ways, depending upon the variability
of the strength of the dose and the underlying personality of the user. The im-
portant question for society is not in what manner marihuana causes crime?the
question is, How many crimes would not be committed but for the addition of
this dangerous drug to the social environment? The available studies are sugges-
tive enough of the risks involved in its use.
Another danger of marihuana which, although less spectacular is of consider-
able social significance, is the effect of the drug on the performance of complex
tasks and particularly the operation of motor vehicles. Wolff says that nu-
merous traffic accidents in Mexico and Cuba are attributed to the drug. In a
statement before the United Nations Commission on Narcotic Drugs, in 1963, the
French delegation expressed its concern over the high rate of road accidents
which appeared to be attributable to the abuse of drugs and "particularly can-
nabis." In a report to the Commission in 1965, on this general question, it was
noted that persons using heroin, morphine, and similar drugs are not likely to
be using motor vehicles for a variety of reasons but that: "An exception may
lie in the ease of cannabis, which is more readily available and more widely used
in several parts of the world. Light indulgence in cannabis may create euphoria
without a desire to curtail all physical activity as mentioned in the case of more
potent drugs." In a highly mechanized society such as our own, in which the
number of automobile accidents has been described as "slaughter on the high-
ways," the dangers of marihuana cannot be ignored.
One particularly grave danger of habitual marihuana use is that there is often
a clear pattern of graduation from marihuana to the stronger addictive opiates.
Those who seek personal well-being and exhilaration through the stimuli of
drugs ultimately discover that the opiates have more to offer. This point has been
disputed, of course, particularly in the case of student experimentation. Cer-
tainly, it is true that not all persons who ever smoked a marihuana cigarette
have gone on to the use of heroin, but actual experience leaves little room for
doubt that a large majority of addicts began their drug taking with marihuana.
This cycle of graduation has been observed in the United States, the Near East
and in Africa though admittedly the exact causal connection is unknown. In a
sample of 96 heroin users examined in the United States, 83 admitted to the use
of marihuana prior to their addiction. The World Health Organization has rea-
soned that one factor in the progression from marihuana use to heroin use is
that once a person begins using marihuana, he alines himself with the criminal
fringe where all forms of drugs may be available, and if he is so disposed to seek
pleasure in stronger drugs, he has a ready source of supply.
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The most recent review )f the subject is that of P.A.L. Chapple who studied
80 English heroin addicts. He found that 70 of these had first used marihuana
and apparently considered its effects to be second only to-those of heroin. They
themselves expressed surprise at the finding, but were not deterred in their inten-
tion to return to marihuana use since it was not addicting. In studying these
patients Dr. Chapple was led to the conclusion that the connection between mari-
huana and heroin could not be accounted for simply on the basis of the "mutual
influence of availability in illegal society * * *" and he warns "that there may
be greater dangers in canuabis * * *" than some observers currently express.
In conclusion, it is clear from the examination of the great bulk of authorita-
tive opinion, that the permissive use of marihuana would result in irreparable
damage to the health and well-being of society. Those few who advocate its
legaliMtion, do so on the lfasis of the most general and unrepresentative data.
They tend to characterize aupporters of the laws as "puritans preaching against
that ale devil marihuana." They so7ely neglect the public health aspects. When
one cOnsiders the recent volume of criticism to which the Federal Government
was Subjected for failing to actively insure that new medicines and drugs were
reasonably safe for medic nal use, it is difficult to comprehend that informed
perst would advocate free access to a substance containing such active and
powe ful drugs, and all for the sake of gratifying some misguided desire for a
new 'kick." In an area which may have such far-reaching and permanent effects
on tI4 culture and mores cf our communities, it would be sheer irresponsibility
to ignore the plain meaning of the accumulated evidence.
Aedordingly there is little doubt of the need to control the dangerous drug,
marihuana, and to control it in the best possible way. It is less important -that
the drug is controlled rind er the definition of a narcotic by the State laws or
unde the taxing powers of the Federal Government rather than under the com-
merce clause of the Constitt tion.
What have the laws accomplished? There may never be an absolute answer to
the addiction problem?pe7thaps it may not be in the nature of social problems
that there is such an answer. But, this does not mean we should substitute myth
for experience?we cannot indulge in hopeless speculation about how easily the
problem could be resolved without our system of controls. I can only say in
passing that I abhor thint lag what the problem of drug abuse would be today
had there been no controls.
In the past, the Bureau of Narcotics has always pursued a policy of vigorous
law enforcement. We intend to continue doing so. I do not mean, of course, that
prohibitions and good law enforcement are the answers to the drug abuse prob-
lems. We need a great deal of help. There is a need for more conferences of this
type. There is a need for educators to evaluate their roles and to formulate a
proper and effective educationa I program or antidrug abuse. By all means, I hope
we never give the impress on to a youngster toying with the use of drugs that
he may proceed with the nuderstanding that he is exceptional or misunderstood,
or a frustrated person "trying to find himself" who is merely taking up a crutch
to help him limp along in the face cf adversity. There is a dire need to retain in
our society a harsh concept against drug abuse, because such a concept has a
very important preventive value.
Enforcement officers 'feel the support of students and faculty at the colleges
and universities. We have been cooperating with many school officials and have
furniShed assistance by breaking up a local trafficking problem without fanfare
and before it became a blot on the school's reputation. I have good reason to
believe that this conference will lead to even more cooperation in the future.
DRUG :DEPENDENCE OF CANNABIS (MARIFITJANA) TYPE
IF IS not known with absolute certainty which of the chemical structures that
have been isolated from Cmtnabis sat tva L. is responsible for the typical cannabis
effects, but these can nevertheless be described as constituting an entity that
varies in degree according to the concentration of the active principle or prin-
ciples in the plant and the preparations obtained therefrom, and to the mode of
application. These effects are also producible by certain synthetic substances of
similar chemical structure
Among the more prominent subjective effects of cannabis, for which it is taken
occasionally, periodically or chronically, are: hilarity, often without apparent
motivation; carelessness; loquacious euphoria, with increased sociability as a
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result; distortion of sensation and perception, especially of space and time, with
the latter reinforcing psychic dependence and being valued under special circum-
stances; impairment of judgment and memory; distortion of emotional respon-
siveness; irritability; and confusion. Other effects, which appear especially after
repeated administration and as more experience is acquired by the user, include :
lowering of the sensory threshold, especially for optical and acoustical stimuli,
thereby resulting in an intensified appreciation of works of art, paintings and
music ; hallucinations, illusions, and delusions that predispose to antisocial
behavior; anxiety and aggressiveness as a possible result of the various intel-
lectual and sensory derangements; and sleep disturbances.
In the psychomotor sphere, hypermotility occurs without impairment of co-
ordination. Among somatic effects, often persistent, are injection of the ciliary
vessels and oropharyngitis, chronic bronchitis and asthma; these conditions and
hypoglycaemia, with ensuing bulimia, are symptoms of intoxication, not of with-
drawal.
Typically, the abuse of cannabis is periodic but, even during long and con-
tinuous administration, no evidence of the development of physical dependence
can he detected: There is, in consequence no characteristic abstinence syndrome
when use of the drug is discontinued.
Whether administration of the drug is periodic or continuous, tolerance to its
subjective and psychomotor effects has not been demonstrated.
Whereas cannabis often attracts the mentally unstable and may precipitate
temporary psychoses in predisposed individuals, no unequivocal evidence is avail-
able that lasting mental changes are produced.
Drug dependence of the cannabis type is a state arising from chronic or periodic
administration of cannabis or cannabis substances (natural or synthetic). Its
characteristics are:
(a) Moderate to strong psychic dependence on account of the desired
subjective effects.
(6) Absence of physical dependence, so that there is no characteristic
abstinence syndrome when the drug is discontinued.
(o) Little tendency to increase the dose and no evidence of tolerance.
For the individual, harm resulting from abuse of cannabis may include inertia,
lethargy, self-neglect, feeling of increased capability with corresponding failure,
and precipitation of psychotic episodes. Abuse of cannabis facilitates the associ-
ation with social groups and subcultures involved with more dangerous drugs,
such as opiates or barbiturates. Transition to the use of such drugs would be a
consequence of this association rather than an inherent effect of cannabis. The
harm to society derived from abuse of cannabis rests in the economic conse-
quences of the impairment of the individual's social functions and his enhanced
Proneness to asocial and antisocial behavior.
SURVEY OF FINDINGS BY SEVERAL MARIHUANA RESEARCHERS AND WRITERS ON THE
RELATIONSHIP BETWEEN MARIHUANA AND NARCOTIC ADDICTION
"Probably the most dangerous aspect of marihuana is the fact that it so often,
especially among youngsters, leads to the use of heroin; the reason for this cycle
of marihuana to heroin or heroin plus cocaine is not yet fully understood beyond
the fact that environment and propinquity make for a desire to graduate from
marihuana to opiates; it is possible that marihuana in some way conditions the
user for heroin. This same cycle has been reported by Bouquet in the Near East
and in Africa, although there heroin tends to replace hemp in many more mature
addicts, and the use of both hemp and heroin by teenagers is not epidemic as it
is in the United States." (Maurer and Vogel, "Narcotics and Narcotic Addiction,"
p. 245, (111(12). Charles C. Thomas.)
"One major argument often used against legalization of marihuana is that
users will subsequently turn to more dangerous drugs such as heroin and cocaine.
The figure used recently in a national publicized article was that 35 percent of
marihuana users progress to heroin or other opiate abuse. This is a serious statis-
tical error. Between 60 and 90 percent of the heroin users and addicts had experi-
ence with marihuana prior to turning to heroin." (Donald Louria, M.D., "Night-
mare Drugs," p. 37, (1966). Pocket Books, Inc.)
"At the time of our interview in 1953, experimentation with heroin typically
followed a period of smoking marihuana cigarettes; 83 of the 96 heroin users
who answered this question had smoked marihuana, 40 of them regularly, be-
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224 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
fore they began using here in." (Chein, Gerard, Lee, Rosenfeld, "The Road to
II," p. 149, (1964). Basic Books, Inc.)
"From a survey of 58 her Din addicts in New Orleans we have ascertained that
44 percent of them began timir drug career by smoking marihuana." (Walton and
Ceiling, "Marihuana, Amer: ca's New Drug Problem," p. 39, (1938). J. B. Lippin-
cott Co.)
"It would seem that most addicts traverse the whole field of drugs, before they
finally convert to heroin. 1.11 68 addicts born in England said they had taken
cannabis, as did those frog South Africa (two). Those from Canada (10) may
have started on cannabis after they came to England * * *. (p. 273)
"Ali the addicts had como through a series of preceding drug abuses, and this
seemed to be more extensive the longer time one was able to spend with the
patient and gain his confidonce. They were all agreed that the "best" effect was
obtained from cannabis. It was for them the most enjoyable substance (until
they took heroin). (p. 276:
"Cannabis is, therefore, one of the drugs of abuse used by addicts in this coun-
try, both subsequent to othor drugs of abuse such as those of the amphetamine-
barbiturate mixtures which are admittedly drugs of addiction, and also preced-
ing the narcotic drugs, to which they predispose and which are also drugs of
addiction." (p. 279) (P. A. L. Chapple, "Cannabis, a Toxic and Dangerous Sub-
stance?A Study of 80 Take rs," Br. J. of Addiction, vol. 61, (1906).)
"SiXth, the statement that marihuana users very frequently progress to heroin
needs careful scrutiny. It IA true that over 50 percent of heroin users have had
prior marihuana experience." (Report of the Subcommittee on Narcotic Addic-
tion, "The Dangerous-Drug Problem," New York Medicine, vol. 22, No. 9, (1966).)
"I have sat for hours with others as they smoked marihuana. I have listened
to them telling me over and over again that it was not addictive, less dangerous
than alcohol, no connector whatsoever with the big chainstore next door that
stocks the heavy drugs, the killer drugs.
"Yet every heroin addict I met had taken first either marihuana or one of the
amphetamine group like purple hearts." (Alan Bestic, "Turn Me On, Man," p.
8, (1966). Anthony Gibbs, Library Thirty-Three, Ltd.)
"Heroin use among the Puerto Rican subjects of this study began as a part of
peer-group recreational or street activities. The juvenile initiate usually had
smoked marihuana before Lis first experience with heroin and in both instances
he sequred or was given the narcotic by neighborhood friends. The common se-
quence of events was comnencement of marihuana smoking at age 16 or 17,
heroin use at 18, and arres.: for possession or sale of drugs at age 20. The onset
of illicit drug use was, then. a peer-group phenomenon associated with delinquent
behavior.
The' mean age at which marihuana smoking began was 17.3 years for the males
and 17.4 years for the females. The youngest age at which marihuana use oc-
curred was 11 years (for two boys) and the oldest age was 30. Although 15 of
the 119 opiate addicts reperted that they had never used marihuana, of those
who had smoked marihuana 91 percent reported that marihuana use preceded
opiate use. Thus, the dominant pattern of behavior was marihuana smoking
followed by heroin use." (J( hn C. Ball, M.D., "Marihuana Smoking and the Onset
of Heroin Use," Committee on Problems of Drug Dependence, National Academy
of Science, National Resea-ch Courr-211, p. 5102 (1967) ).
[Reprint from Indian Journal of Medical Research, 30, Jan. 1, 19421
CANNABIS SATIVA IN RELATION TO MENTAL DISEASES AND CRIME IN INDIA
(By Col. Sir Ram Nath Chopra, C.T E.. M.D., SC]]. Cantab.), F.R.C.P. (T.(oncl.),
I.M,S. (Retd.) ; G. S. Chopra, MB., B.S., and T. C. Chopra, M.R.C.S., D.T.M.)
(Drug Addiction Ingwry, IRFA School of Tropical Medicine, Calcutta)
TNTRODPCTION
In spite of the popular belief that excessive and prolonged indulgence in hemp
drugs leads to certain forms of mental disorder and crime of a violent nature.
little attempt has so far been made to study this question from its scientific as-
pects.. The conclusions of the Indian Hemp Drug Commission (1893-94) were
in variance with the populs r belief. The Commission considered that "Moderate
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use of these drugs produces no injurious effects except to persons with specially
marked neurotic diathesis. Excessive use indicates and intensifies mental in-
stability. Moderate use produces no moral injury whatsoever." Ewens (1904)
found that the form of mental disease classed in this country as "toxic insanity"
has a direct relation to excessive use of hemp drugs. Robertson-Milne (1006) and
Dhunjibhoy (1027) also came to similar conclusions. None of these workers, how-
ever, studied the bearing of these drugs on the prevalence of crime. In this paper
an attempt has been made to discuss the part played by poisons in general, and
hemp drugs in particular, in producing mental instability and crime in India.
Besides the careful studies made on 1,500 cases of hemp drug addiction by
the authors ( Chopra and Chopra, 1939), investigations were carried out in al-
most all the mental hospitals of India, where inmates suffering from toxic in-
sanity were examined from time to time and kept under observation for a num-
ber of years. The histories of most of the discharged cases of toxic insanity were
also studied.
The cases in which hemp drugs were the apparent cause of insanity were
studied individually and attempts were made to obtain all possible information
with a view to determining how far the facts elicited were reasonably correct.
All doubtful cases were eliminated. In this way it was possible to collect reliable
data concerning 600 cases of hemp drug insanity.
PHYSIOLOGICAL AND PATHOLOGICAL CHANGES IN HEMP DRUG INTOXICATION
Chopra and Chopra (loc. cit.) studied the effects of hemp drugs on the cen-
tral nervous system. Since then further work has been done in this connection.
There is little doubt that Cannabis sativa, like other intoxicants or nerve poisons,
may give rise to an altered state of mind which in certain cases may simulate
mania. This drug is known to have a marked effect upon the intellectual processes
which become irregular, or even partially or totally suspended. En passant it
may be added that the higher centers, which are late in developing, are more
sensitive and more prone to be influenced by narcotic drugs.
The effects upon the brain may manifest themselves in the following ways:
(i) By causing certain general effects.?These are more or less diffuse in
nature and produce vague symptoms, which are common to all intoxicants, e.g.
euphoria, dizziness, exhilaration and a feeling of reliaf from worry, strain, etc.
(ii) Through their localized or specific action.?Localized or specialized ef-
fects of drugs exhibit themselves in the case of special centers in the brain and
are believed to differ in the case of each drug. Thus, each narcotic drug is apt
to cause certain special symptoms or derangement of mental faculties, in addi-
tion to the general effects, which are peculiar to it.
It is apparent, therefore, that in spite of the great dissimilarity in the effects
produced by substances which are capable of producing narcotic effects, there
are certain clinical features which are common to all. For this reason it is almost
impossible to give a definite picture or symptomatology of toxic insanity for each
individual drug. Mental derangement resulting from the use of toxic substances
is nothing but the reaction on the part of cerebral cells whose regular activity
is either held in abeyance or is perverted partially or totally. There is a relaxa-
tion of control of the higher centers which allows the lower centers to come
under the influence of external abnormal excitations which may be different
from the usual stimulation. This reaction may be observed in one or more parts
of the central nervous system, leading to differences in the symptoms produced.
Thus, it appears that a drug when it is absorbed in the system does not add any
new element to the brain. Therefore, a drug simply excites or depresses the
existing trend of the mind or mental aberrations if any. Therefore, all types of
insanity resulting from intoxication through any drug whatsoever, are char-
acterized by certain general symptoms, such as excitation of the organs of
thought, sense of intoxication, and incoherent ideas and actions. The symptoms
in case of a particular drug may differ widely in individuals. Persons with
psychopathic and neurotic tendencies appear to be more easily affected than
normal healthy individuals with a stable nervous system. It is well known that
the same dose of a narcotic, for example alcohol, bhang or opium, does not
produce similar effects in all individuals. The individual personality and idio-
syncrasy of different persons are important factors in the resultant effects. The
authors found that the hallucinations occurring in Western people could not be
observed in Indians who are more prone to dreams pertaining to sex and of a
voluptuous nature. The symptoms may thus be influenced primarily by the
selective affinity on the part of special group of cells in the brain for a partic-
ular drug and secondarily by the personality of the individual taking the drug.
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226 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Besides the above two- tiere are other factors of importance which have to be
considered in evaluating the effects of hemp drugs on an individual. They are
the degree of education, reasoning, judgment, dosage, mode and time of ad-
ministration of the drug, etc. All these factors may modify the symptoms and
effects. The influences of taese factprs are discussed in the section on analytical
studies. As regards the dc sage and the mode of administration, the effects are
intense with larger doses and appear much earlier when the drug is taken on
an empty stomach. Similarly, different preparations, such as ganja, charas
and siddhi (bhang)., give rise to effects which vary a great deal in intensity
according to the amount of the active principle contained in them (Chopra and
Chopra, loc. cit.).
DIAGNOSIS OF HEMP DRUG INSANITY
Acute toxic hemp drug :nsan,ity.?Besicles, the generally accepted view that a
short duration is diagnostic of hemp drug insanity, this form has points of dis-
tinction from other types of mental disorders. General care of the patient and
withdrawal of the drug lends to rapid recovery.* In regard to the different
diagnostic symptoms, delirium frequently occurs. Acute mental derangements
due to hemp drugs are marked by extreme vehemence of the mania. Mental,
moral, and muscular manifestations are more pronounced, and differ from
those seen in case of alcohol and other drugs. The individual looks confused
and excited, has bright shning eyes which are almost always heavily congested.
He shouts, vociferates, sighs, walks quickly up and down or round his cell, and
shakes the door out of its fastenings. If at liberty, he is violent and aggressive
and may run amuck. Tin se symptoms are not so pronounced in other forms
of mania. Instances are on record where the patient under excitement got hold
of a weapon and committ eed murder without any reason or provocation. The
attack, however, was usually of short duration, being limited to a few days.
Later, in most cases the !e was perfect recovery, but the patient was quite
oblivious of things which took place during the period of intoxication.
Chronic toxic hemp insonity.?The insanity produced by a long-continued and
excessive indulgence in gE nja or charas has also certain definite symptons and
points of its own. The patients are hilarious and full of a sense of well-being;
they are as a rule good matured and trustworthy, and recover in a large pro-
portion of cases when admitted to a hospital and after the drugs have been
withdrawn.
Relapses, however, are quite common in cases of chronic form of the disease.
C RIME AND HEMP DRUG HABIT
As regards the relations alp between hemp drug addiction and crime, there are
instances where the addicts committed criminal acts under the effects of these
drugs, especially after smoking gartja or charas, under grave provocation or in
cold blood and with premeditation. Such instances do not necessarily prove any
definite relationship between the use of hemp drugs and crime. Indulgence in
alcohol undoubtedly gives rise to a feeling of bravado and courage by depressing
the higher controlling cerebral centers, and there are many instances in which
it has led to crimes of a vc ry grave nature. So far as hemp drugs are concerned,
however, the situation has to be viewed from a different angle. Hemp drugs are
cheap and are generally used by the poorer classes who belong to the lower strata
of society to which most o:7 the criminals in this country belong. This may be an
explanation of the fact t aat proportionately more consumers of hemp drugs,
especially ganja and charm; smokers, are found among bad characters than among
the normal population in general.
It should also be remembered that the habitual use of these drugs impoverishes
the addicts whose income ? s generally small. They spend a large portion of their
earning on them and in consequence they have very little money left to obtain
the daily necessities of life. This may lead them to commit thefts and other
crimes of a similar nature. This, Imwever, does not mean that the use of hemp
drugs is entirely responsible for their misbehavior.
So far as premeditated crime is concerned, particularly that of a violent
nature, the role of hemp drugs is quite distinctive. In some cases they not only
*Sudden withdrawal of the drug, unlike opium and morphine, gives rise to no abstinence
symptoms.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 227
do not lead to it but actually act as deterrents. We have already remarked that
one of the important actions of these drugs is to quieten am' stupefy the indi-
vidual so that there is no tendency to violence, as is not infrequently met with
in cases of alcoholic intoxication. The result of continued and excessive use of
these drugs in our experience is to make the individual timid rather than to lead
him to commit crimes of a violent nature. Our opinion in this respect based on
the study of a large series of addicts, is that the tendency of the drugs appears
to be to develop or bring into evidence the natural disposition of the consumer
and to emphasize his true character and peculiarities. For example, if he is
inclined to be lazy and easy going, he will be quiet and restful, but if he is irrita-
ble or excitable he may, if interfered with, become violent. The results of the
statements of the addicts in this series who volunteered information on this
point are summarized in table VIII.
From table VIII it is clear that there were 102 or 8.24 percent of individuals
who gave the history of being convicted once and 98 or 7.92 percent who were
convicted more than once. The figures for conviction in this series are higher than
those usually met with among the general population. It will also be observed
that the number of those who had convictions in this series is much larger in
the case of ganja and charas users than in the case of bhang. The reason no doubt
is that the effects produced by smoking are rapid and more intense than when
the drugs are taken by the mouth. Besides, ganja and charas are used more by
the lower strata of society, which include a higher proportion of habitual
criminals.
TABLE VIII
Showing relation between addiction to hemp drugs and crime in 1,238 hemp drug
addicts
Percentages have been worked in row totals]
Drugs
No conviction
1 conviction
only
More than 1
conviction
Total
Number
Percent
Number Percent
Number
Percent
B hang
704
91. 19
48
6.22
20
2.09
772
Ganja and charas
331
71. 67
54
11. 59
78
10.74
466
Total
1, 038
83. 84
102
5.24
98
7.92
1, 238
USE OF HEMP DRUGS FOR HOMICIDAL AND SUICIDAL PURPOSES
It has already been remarked that hemp drugs have been used by criminals
for two purposes. Firstly, to fortify themselves to commit premeditated crimes,
and, secondly, to enable them to endure unusual fatigue or exposure to inclement
weather and to stimulate them for extra exertion. In both eases the drugs are
used by those who have been indulging in them habitually.
Hemp drugs have not been used for suicidal or homicidal purposes in the same
ways as opium. It has been stated that sometimes they are used for stupefying
people with the object of robbing them. It is doubtful if stupefaction can be ef-
fected with these drugs except in those who are not accustomed to take them
habitually, and very often dhatura has to be mixed to obtain the desired effects.
Another difficulty in the way of using these drugs, especially ganj a and charas,
is that they can readily be detected by their characteristic and penetrating smell,
and therefore it is difficult to mix them with tobacco or other substances for the
purpose of smoking without detection. It is, however, possible to utilize them for
stupefying individuals who are addicted to their use or otherwise by secretly mix-
ing with more potent drugs such as dhatura. Cases have been reported where
prostitutes were stupefied in this manner and robbed of their ornaments. Children
are sometimes decoyed and offered sweetmeats containing hemp drugs to make
them insensible and to rob them of their ornaments. Generally speaking, because
of the difficulty of their administration without detection and their uncertain
action, these drugs are seldom resorted to for such purposes.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
SUMMARY AND DISCUSSION
Excessive indulgence in narcotics, such as Indian hemp, is apt to produce in
healthy individuals and in susceptible individuals mental confusion which may
lead to delusions with disorientation and disordered movements. The use of hemp
drugs if pushed further tl an the stage of light depression of higher centers may
produce confusion of mind and restlessness. Intellectual impairment as well as
disorientation may show itself in various ways, such as weakening of moral sense,
habit of telling lies, prostitution, theft, etc. The addict may become egotistic and
unreliable and may have ..esourse to theft, pilfering, and unnatural sex perver-
sions. Sometimes it may rc lease subconscious impulses and lead to violent crime.
Indulgence in Indian 1 emp drugs often results in illusions, delusions, and
hallucinations. In young individuals hallucinations of pleasant and sexual nature
sometimes form the chief attraction for the use of these drugs. These hallucina-
tions depend upon the per sonality and subconscious trend of the habitue's mind.
A person with a religious trend of mind may imagine himself to be a messiah, a
messenger of God or a pr fphet, while a person with loose morals may imagine
himself in the lap of his b ?loved. The hallucinations and delusions in the case of
Indian hemp drug are largely visual and auditory. They are mostly transitory,
but in more susceptible individuals may assume a chronic form resembling para-
phrenia. Delusions of a p,srsecutory nature and sexual infidelity are dangerous
and frequently lead to homicidal crimes, the power of discrimination being lost
through a lack of control over the higher centers. Inquires in various jails and
mental centers revealed that in quite a number of cases simple indulgence even
in a single ganja or charas smoke was responsible for a heinous crime.
Another important poin ; to be considered is the difference in susceptibility to
the effect of hemp drugs in different individuals. Differences in effects produced
in the same individual at Efferent times and under different environments have
alseady been recorded (Chopra and Chopra, be. cit.), but it may be noted that
individuals may react differently after head injuries or following special nervous
and mental strain.
It is well known that the cerebral centers (higher centers) are responsible for
keeping in cheek the lower centers upon which the behavior of an individual
depends. Hemp drugs and other narcotics depress the higher centers to begin
with. Moderate interference with these may not be dangerous and sometimes may
even be helpful as, for ins .ance, in removing inferiority complexes and tempera-
mental difficulties. With frequent repetitions of the dose, however, harm is likely
to result through prolonged inhibition of the higher faculties of the mind, and
this may lead to permanent changes in character and even the production of
such conditions as megalomania, irritability of temper, boastful nature, etc. Fits
of aggressive mania are not infrequently observed after indulgence in hemp
drugs. Impulses of a suicidal and morbid nature have been known to occur with
drugs such as bhang whe a taken in large doses, especially during a period of
mental depression. The higher centers when kept under constant repression un-
doubtedly suffer; they are the last to develop and first to succumb to the action
of these drugs. The lower centers also suffer through overaction, but they are
more, resistant and do not show signs of degeneration till late. Our studies in
mental hospitals, in the field * * * and in prisons show that not infrequently
addiction to hemp drugs was the immediate cause of a sudden unbalance of
mind and the commission of a crime.
Deliberate indulgence in hemp drugs by religious mendicants to induce a state
of frenzy for impressing :he onlookers with their supernatural powers is fre-
quently found. Frenzy is also deliberately induced to enable the subject to carry
out enterprises of a difficult and dangerous nature, either planned beforehand
or only decided upon on the spur of the moment.
A milder condition is sometimes induced by criminals to enable them to keep
up their courage while con mitting offenses. Though they differ in degree yet the
two uses are essentially imilar. In the first instance it may be followed by
murder, while in the secon I by robbery, theft, and the like. The striking example
of the abuse of these drugs occurred in the sect Hassassins in Persia who com-
mitted terrible deeds null( r the influence of hemp drugs. The frenzied state is
more:likely to be induced by a cumulative effect of repeated doses of hemp drugs
than by a single dose.
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[From Maplewood-South Orange News Record, Apr. 6, 1967]
A PIECE OF YOUR MIND
SMOKING MARIHUANA COMMON?
(By Karl H. Platzer, Ph. D.)
"I started to drive home after the party, then I realized Pd made a mistake.
The street stretched out endlessly before me. Time stretched out, too. It took
me 15 minutes, it seemed, to move my foot from the accelerator to the brake.
I lost all judgment of distance and space and time. As soon as I saw a red light
I would stop, most of the time a half block from the corner. The lights felt sharp
and bright inside me, and the cars were so wide apart I felt I could drive right
between them. I don't know how I ever got home. But I got out of the car and
walked into the house. My parents were still up watching television. 'Did you
have a good time?' they asked me. 'Oh, sure,' I said. I didn't want them to come
too close to me, so I went to bed right away. I woke up feeling beautiful. But
the car was half in the driveway and half on the lawn. I never want to drive
like that again."
The boy had driven home an hour or so after smoking one, just one, mari-
huana cigarette.
I am impressed by the growing number of adolescents I see who are smoking
or have smoked marihuana. From what they tell me, the practice is accepted as
common. It is no longer confined to a small nonconformist clique. Its use cuts
across social and economic lilies.
I am impressed also by the vigor with which these boys and girls defend the
practice.
"It's less harmful than alcohol," they argue. "It sharpens our senses, it lets
us really see things and feel them. It's absolutely harmless and nonaddictive."
I am not so impressed by these arguments. Nonaddictive? I know boys who
after refraining from smoking marihuana for only a week or two develop a
terrible craving for it. Nonaddictive? The user develops a tolerance toward the
stuff; after a while he must have 2 cigarettes to gain the same effect one had
formerly given him. Obviously, there is a psychological addiction. The develop-
ment of the tolerance and the craving for the drug strongly point toward a
physiological addiction as well.
In the case of LSD, research tends to show a definite change in the brain
tissue. This accounts for the fact that in one observed case the person went
into a hallucinogenic state 2 years after he had had just one dose of LSD.
Less harmful than alcohol? For any one who has seen the misery and degrada-
tion and suffering that alcohol has caused, this argument is less than impressive.
For anyone who has seen the figures on deaths and cripplings caused by driving
after drinking, such a comparison is grim.
Sharpens our senses? Marihuana distorts, weird sensations. The drug is not
a mood accentuator. The person who smokes marihuana while depressed will
undergo a frightening experience, a had trip, as one boy said.
From my experience with drug users of all kinds I have come to certain definite
conclusions.
I believe a person who takes drugs, whether for curiosity, kicks, pleasure, or
companionship, is neurotically sick to begin with.
I believe the use of drugs heightens and prolongs his sickness.
And I believe the continued use of drugs renders him less amendable to treat-
ment that might otherwise restore him to normal health.
The use of drugs, marihuana or any other, is a sickness, engaged in by sick
people.
Unfortunately, that sickness appears to be growing. Think long and strong
before you include yourself in it.
Mr. EDWARDS. Will you yield?
Mr. FASCELL. Mr. Edwards.
Mr. EDWARDS. What you are saying then is that you would argue
with those who say that marihuana is not a preliminary to heroin.
The argument goes, as I have read it in the papers, that marihuana is
not addictive, and, therefore, simply smoking marihuana does not
78-508-67--pt. 2 7
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230 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
means you are going to end up taking heroin, and those of us who
worry about this are rather foolish to worry about it.
You would say that the evidence does not indicate this?
Mr. ENRIGHT. This is true, and as far as the harm, I would argue
to my dying gasp, as far as the harm of marihuana in not only being
an introductory drug, but for other reasons. I have arrested people
under the influence of marihuana. Nobody is going to tell me these
people are not dangerous at times. Marihuana is a very unpredictable
drug. I concede some people can probably smoke marihuana, but it is
so unpredictable that the next user is liable to jump out of a window
under its influence.
Mr. FASGELL. In previous testimony it was stated, that in calendar
year 1966 your Bureau had 800 narcotics and marihuana convictions,
and that in fiscal 1966 you seized 6 tons of smuggled marihuana on the
Mexican border.
Can you describe the extent to which the convictions involved or-
ganized crime?
Mr. ENRIGHT. The seizures that you referred to on the Mexican bor-
der were made by the Bureau of Customs and not our Bureau. We
have had multikilogram, even multiton, seizures working with the
Mexican police in Maxie?, but I can answer the last part of your ques-
tion' and that concer :us organized crime.
We do not note organized crime generally being involved in the
marihuana truffle. There is an organized activity but not organized
crime as I think we are referring to it here today.
Mr. FASCELL. What do you think accounts for that, there is not
enough money to fool with it?
Mr. ENRIGHT. They have never been in?organized crime has never
been in the marihuana traffic to any extent at all. Occasionally some-
body might get into it, but the profits are less, this is true.
One kilogram of marihuana, 2.2 pounds at the Mexican border, can
be purchased for $40, and it can cost you $12,000, $15,000, $18,000 for
the same amount o:! heroin.
Mr. FASGELL. And you take that 2.2 pounds of marihuana which you
buy for how much
Mr. ENRIGHT. Well, at the border probably for $40 or so.
Mr. FASCELL. Atli it sells for what, 50 cents a cigarette or some-
thin u ?
MT. ENRIGHT. 50 cents, a dollar, a cigarette.
Mr. FASCELL. IIcw many cigarettes do you get out of flint 2.2
pounds?
Mr. ENRIGHT. I should say a couple of thousand.
Mr. FASCELL. Will you describe the function of the Bureau with re-
spect to the licensinz of opium manufacturers and the controls which
you exercise with respect to manufacture and distribution?
Mr. ENinotrr. I would be pleased to, sir. I would be pleased to do so
to my limited ability, at any rate. This is not my general area.
We exercise, through the various laws, a control of all the legitimate
medicinal narcotic drugs, starting with the importation of crude opium
from which our phArmacenticar manufacturers derive or extract the
opium alkaloids, such as morphine.
We issue import licenses :or this importation of the opium. I would
say we probably import 100 to 200 tons of opium a year.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 231
Three pharmaceutical companies in the United States are allowed
this importation.
As I say, they extract the opium alkaloids, and 'then it goes on to
other manufacturers who formulate the various pills, the tablets, the
cough syrup, et cetera, and as these narcotics pass from hand to hand
they are accounted for by a series of purchase orders which are under
our control, which are issued by the Internal Revenue Service for us
right down to the doctor and the local drugstore.
In addition to this, manufacturers and wholesalers are required to
submit, on a quarterly basis, reports to the Returns Section of our
Bureau where we are able to determine that there is no diversion of
these drugs.
We also establish quotas for the manufacturer of drugs based on
medical requirements and these reports are sent to the International
Narcotics Control Board of the United Nations where each party to
the treaties is required to submit the quotas for that country. In this
way not only is the use of the drugs, legitimate drugs, known in the
United States, but it is known what drugs are being used legitimately
throughout the world.
Mr. FASCELL. Would you say the system is effective?
Mr. ENRIGHT. I would say our control in the United States is ab-
solutely effective.
Mr. FASCELL. Do you see any reason why it could not be 'applied to
other drugs, prescription or otherwise?
Mr. ENRIGHT. I know Of RO reason; no, sir.
Now, let me
Mr. FASCELL. There is no administrative reason that you can see?
Mr. ENRIGHT. No, sir.
Let me clear one point. I say it is absolutely effective?there is oc-
casional diversion at the drugstore and doctor level; an unscrupulous
doctor, and thieves burglarizing drugstores, in this way there is a
diversion.
Occasionally you will have somebody purchase at this retail level on
his own official order forms, drugs which are not going into medical
channels, but are being diverted. But these are the exceptions certainly
to the rule.
Mr. FAscELL. We have touched on part of this question, but would
you describe the differences between 'heroin, marihuana and cocaine
with respect to their drug and medical classifications, and the legal
classification?
Mr. ENRIGHT. Well, heroin is a derivative of opium. It is basically,
I suppose you would describe it as, a sedative-type drug.
Marihuana and cocaine?cocaine, secondly, is a stimulant-type drug.
It is derived from the coca shrub, the coca bush, from South America.
It is derived from the leaves of this bush.
Marihuana could be described as both a sedative and stimulant at
various stages.
This is derived from cannabis sativa, the marihuana plant.
But the second half of the question?
Mr. FASCELL. Now, the enforcement problems relative to each group.
Mr. ENRIGHT. I do not know in what detail you want me to go. I can
start right at the beginning with crude opium if you wish.
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232 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. FASCELL. I mean is there a legal difference between the medical
classification and the enforcement classification?
Mr. ENRIGHT,. Well, heroin, for example, is outlawed completely in
the United States. Taere is no production, use?excuse me, legitimate
US$.
Mr. FASCELL. Right.
Mr. ENRIGHT. It lk just outlawed entirely, as it is in many countries
of the world.
Cocaine has a limited medical use. I know ophthalmologists use it.
It is a drug that wi a freeze?it is a local anesthetic drug. It can be
used in this manner for eye operations.
Of course, marihuana
Mr. FASCELL, In other words, there is not a complete prohibition
by law.
.Mr. ENRIGHT. Of cocaine?
.Mr. FASCELL. Yes.
;Mr. ENRIGHT. No, sir. It is a pharmaceutical-type drug.
Mr. FASCELL. Right. And marihuana?
Mr. ENRIGHT. Mixihuana has no legitimate use that I know of,
although at one time it was used as a hemp in some countries. The
fibers were used to manufacture rope. But there are other fibers
available.
Mr. FASCELL. There is a complete prohibition by law of marihuana?
Mr. ENRIGHT. No. Marihuana is controlled by the Marihuana Tax
Act of 1937, and if an individual is registered to deal in marihuana he
can. There are a few indivichals who are conducting experiments with
the fibers who are able to purchase it legitimately. But as far as selling
it for consumption, there are none, I know of none. The tax is rela-
tively prohibitive. I -think it is $100 an ounce.
Mr. FASCELL. Whith act?
. Mr. ENRIGHT. Marihuana Tax Act. 1937.
Mr. FASCELL. The act presumes the opportunity for license of some
kind, or for some kind of action such as sale, possession, or distribution?
Mr. ENRIMIT. This is?perhaps I should defer to my lawyer.
. Mr. FASCELL. Mr. ?
Mr. MILLER. Well legally the provisions are similar to the Harrison
Narcotic Drug Act which controls all the narcotics. The acts are
almost identical so lar as the medical profession is concerned, and the
medical use of mail-mama.
Mr. FASCELL. TeL me as a layman what all that means.
: Mr. MILLER. That means that any person who handles marihuana in
any manner must become registered with the District Director of In-
ternal Revenue and pay a special tax to engage in that activity.
Before he may do so he must be qualified under the State law to
engage in that activity, which essentially means that all of the persons
who do use narcotic drugs must in some way either be licensed or be a
professor in a university or have some legitimate use for marihuana
before the District Director of Internal Revenue will register him.
Mr. FASCELL. IS the smoker violating a Federal law?
Mr. MILLER. A smoker is violating the Federal law to the exent that
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 233
he acquires marihuana without having paid the transfer tax. Mr. En-
right spoke that the law
Mr. FASCELL. Supposing it is a gift.
Mr. MILLER. The tax is really due on the transfer and not necessarily
on the sale.
Mr. FASCELL. The tax is due on a transfer, not on a sale?
Mr. MILLER. On a transfer whether it is sold or whether it is given
away.
Mr. FASCELL. What is the penalty?
Mr. MILLER. The penalty for the unlawful acquiring of marihuana
begins at not less than 2 year or more than 10 years; and the second
offense is 5 to 20; the third offense is 10 to 40.
Mr. FASCELL. Is that different from mere possession?
Mr. MILLER. There is no possession statute per se under the Federal
law.
Mr. FASCELL. The technical violation is not paying a tax.
Mr. MILLER. Is acquiring without having paid the transfer tax. But
a person who is found in possession of it is presumed to have acquired
it illegally.
Mr. FASCELL. Right, and subject to the payment of the tax.
Mr. MILLER. Yes sir.
Mr. FASCELL. And having paid the tax, then what?
Mr. MILLER. Well, he cannot pay the tax unless he is registered and
has the order forms.
Mr. FASCELL. Supposing he gets caught and he decides to register
and pay the tax?
Mr. MILLER. He would still be in violation of the law because he was
not registered at the time of the commission of the offense.
Mr. FASCELL. What is the penalty for that?
Mr. MILLER. That is the penalty I just gave you.
MT. FASCELL. I see.
MT. EDWARDS. Would you yield?
Mr. FASCELL. Yes.
Mr. EDWARDS. What about the convictions now? The penalties sound
like they should deter people from sitting around on street corners
smoking marihuana. But I wonder if the conviction rate would change
the impression?
Mr. ENRIGHT. Well, certainly, I think we have a relatively high
conviction rate.
Mr. EDWARDS. Of marihuana smokers?
Mr. ENRIGHT. NO, I am talking about traffic.
Mr. EDWARDS. We were talking for the moment about the transfer
tax.
Mr. ENRIGHT. Yes, we were.
Mr. EDWARDS. I just wonder how many people out in Georgetown
are convicted.
Mr. ENRIGHT. First of all, again I point out, we do not normally
operate at this level of the traffic. It is something that we leave to the
local
Mr. EDWARDS. But this is a Federal offense, is it not?
Mr. ENRIGHT. Yes, sir; it is a Federal offense.
Mr. EDWARDS. Who would
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234 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. ENRIGHT. But it is also a State offense, and in the District of
Columbia it is a Federal offense, but the Metropolitan Police also have
jurisdiction.
Mr. EDWARDS. But you do not have information at hand of convic-
tions in-the District ol users, transfer or
Mr. ENRIGHT. I do not, sir.
Mr. FASCELL. Mr.:--j:nright, you submitted a list of more than 100
organized crime figures apprehended by the Bureau since 1951. Can
you say with any degree of certainty when the Bureau first encoun-
tered what you described as organized crime figures in operations of
narcotics?
Mr. ENRIGHT. Mos": generally from the inception of the Bureau of
Narcotics organized ,rime has been in the narcotic traffic. I think a
great many organize (t crime figures entered the narcotic traffic at the
end of prohibition, which was around the time that we came into
existence. This has been an organized traffic since roughly the 1920's.
Mr. FASCELL. Haw there been any significant changes in your Bu-
reau's operations since the establishment of the Organized Crime Sec-
tion in the Departme it of Justice, and, if so, what are they?
Mr. ENRIGHT. Inso!ar as significant changes in method of operation,
I cannot cite any other than, perhaps, a broader dissemination of in-
formation.
Mr. FASCELL. Prior to the formation of the Organized Crime Sec-
tion, what was your relationship and coordination, if any, between
your Bureau and other Federal enforcement agencies? We touched on
this, particularly the -.FBI, for example.
Mr. ENRIGHT. Well, whenever we receive information beyond our
jurisdiction we immediately give it to the agency concerned. We al-
ways have had--
Mr. FASCELL. You mean when you run across information as a re-
sult of your investigt-tion which is not clearly a narcotic case
Mr. ENRIGHT. Which is not a narcotic case, I would say.
Mr. FASCELL (continuing). Then you turn it over to whatever.
Mr. ENRIGHT. A stc len car ring, we give it to the FBI. If it is alcohol,
we give it to the ATTID, whatever the case might be.
Mr. FASCELL. How long have you been with the Bureau?
Mr. ENRIGHT. I started in 1951 in New York City.
Mr. FASCELL. How many cases or convictions would you say you?
you made 800 last ycar?I was trying to get some perspective on the
number of convictions since the time you have been there.
Do you have any idea at all? If you had 800 last year, would you
say it was 800 a year uring that period of time?
Mr. ENRIGHT. Numbers of convictions?
Mr. FASCELL. Yes.
Mr. ENRIGHT. It sounds somewhat low. I would be happy to supply
that, sir. -We run about 1,800 or 1,900, violators a year. However, they
are not all prosecuted in the same year.
Mr. FASCELL. Righ:.
Mr. ENRIGHT. And I think our conviction rate is higher.
Mr. FASCELL. You can supply that for the record.
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(The information referred to follows:)
Conviction of violators reported for prosecution by
calendar years 1962-66
Bureau of Narcotics by
1962
1187
1963
1101
1964
1342
1965
1318
1966
1340
Mr. FASCELL. The majority of those cases were made by the Nar-
cotics Bureau; in other words, investigated, turned over, and prose-
cutions obtained?
Mr. ENRIGHT. Most generally from the initiation of the case.
Mr. FASCELL. I understand.
Mr. ENRIGHT. Now, we do make cases in cooperation with local
police many times.
Mr. FASCELL. Of course.
Mr. ENRIGHT. The Bureau of Customs, and things of this type.
Mr. FASCELL. Have you had any particular jurisdictional problem
in carrying out your assigned responsibility under the law and, if
so, what is it?
Mr. ENRIGHT. I do not know that we have a jurisdictional problem,
sir.
Mr. FASCELL. Are you represented in any way in the Organized
Crime Section?
Mr. ENRIGHT. Yes. Well, first of all, I am, in general terms, liaison
with the Organized Crime Section for our Bureau. But then we have
a man assigned also to the Organized Crime Section.
Mr. FASCELL. Actually over in their staff, physically?
Mr. ENRIGHT. He is physically, assigned to them. He is working on
a project at the moment with the Organized Crime Section.
Mr. FASCELL. Is that a special program of some kind?
Mr. ENRIGHT. Yes, sir.
Mr. FASCELL. Does it have anything to do with organized crime?
Mr. ENRIGHT. Hopefully it has everything to do with organized
crime.
Mr. FASCELL. I am just Curious.
Mr. Edwards, do you have any further questions?
Mr. EDWARDS. Yes.
Well, I am concerned still about the general relationship and ex-
change of information between your agency and the other investi-
gative agencies of the Government.
Do you have a normal exchange of information on a routine basis
between these investigative agencies or between your agency and the
Organized Crime Section?
Mr. ENRIGHT. We have an organized flow of information to the
Organized Crime. Section. Every 90 days we submit them a status
report on our organized crime information and operations.
Mr. EDWARDS. They testified when they were here several weeks
ago that there is a list of, I forgot now what the figure was, a certain
number of criminals that fall into this organized crime category. I
presume you have a list of those
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236 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. ENRIGHT. I have a copy of that list; yes, sir.
Mr. EDWARDS. About 3,000 names.
Mr. ENRIGHT. Righ
Mr. EDWARDS. You use that list in your operation?
Mr. ENRIGHT. Well, we have this list in our files, and whenever in-
forimation concerning any of these individuals comes to our attention
it is forwarded to the Organized Crime Section.
Now, many of the;e 3,000 people on this list are not engaged in
narcotics traffic. I woild say the bulk of them are in the gambling field.
Mr. EDWARDS. You lo not find a general pattern of the big criminals
being in a little of eve] ythina ?
Mr. ENRIGHT. Could I add one thing before I go to that?
Mr. EDWARDS. Yes.
Mr. ENRIGHT. The people who are in the narcotic traffic, in organ-
ized crime, however, are on this list.
Po I generally find -:hat the organized criminals are
Mr. EDWARDS. That they operate across the board?
Mr. ENRIGHT (cont nuing). Are in a variety of endeavors? Well, this
is true, particularly the upper level, are getting a feedback from any
number of criminal pursuits. But, by the same token, the individuals
in the various mobs a re not necessarily all engaged in this variety of
crimes. You might hare some people who are strictly gamblers.
Mr. EDWARDS. On _page 5 of your statement you quote a statement
from the National Crime Commission that somehow fighting crime
seems to be primitive while the organized criminals seem to have the
most up-to-date operating methods. You say that the balance of the
power must be shifted. That is your statement.
Mr. ENRIGHT. That is my statement.
Mr. EDWARDS. What is need.ed, what do you propose to shift the bal-
ance of power?
Mr. ENRIGHT. I With I had the answer to that, sir. I think this is
wliiat we are all seeking. What the answer is going to be is a variety
of things.
I contributed my suggestions here, and again our greatest effort has
been due to informers. Some people do not even like the use of, you
know, the word "informer" or "informants." But in gathering criminal
intolligence---
Mr. EDWARDS. Tha.; is rather primitive in itself, though, is it riot?
Mr. ENRIGHT. Well, in time of war armies send out spies, and this is
what it amounts to. We are fighting a war here, and this is one method
of countering it. Any intelligence we can gather on the enemy is
helpful.
Mr. EDWARDS. How about the use of electronic equipment, bugging,
or wiretapping, this sort of thing; would this serve the purpose?
Mr. ENRIGHT. To a limited degree we do use some types. We are
allOwed to use certaii types of electronic devices. This is, of course,
within the laws that .ite are able to use this, I mean what the laws set
forth.
tsually it is the monitoring of conversation with the permission of
one of the parties. This is the basic type.
Mr. EDWARDS. Well, should the law be expanded? Would it help you
if the wiretapping or bugging laws were expanded in any way?
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TIE FEDERAL . EFFORT AGAINST ORGANIZED CRIME 237
Mr. ENRIGHT. Well, I would like to see a clarification of the laws.
I think that, speaking from the enforcement viewpoint, I think it is
quite obvious that any, additional tools that you have would be help-
ful, including being able to tap a telephone. But, of course, there are
other. considerations involved here beyond the needs of enforcement.
Mr. EDWARDS. Let us put it another way. As I understand it, the
President's safe streets and crimes bill has proposed that wiretapping
and bugging only be allowed in the case of a national emergency?in
the case of national security. Would that restrict your operation?
Mr. ENRIGHT. No, sir; it will not because we have not been doing it.
Mr. EDWARDS. Can you make a case for the national security in view
of the fact that some of these criminals are involved in many legiti-
mate businesses2 involved in government agencies, involved in inter-
national operations; can you tie their operations or the network to
national security in any way?
Mr. ENRIGHT. Well, this again, I suppose, we first have to define the
national security, and whether this is a threat to national security. It
is certainly a threat, I concede.
In answer to your statement or your question, rather, no, we have
never done this.
Mr. EDWARDS. Do you maintain any kind of a central card file of
criminals engaged in the drug traffic?
Mr. ENRIGHT. Yes, sir.
Mr. EDWARDS. IS it shared with other agencies?
MT. ENRIGHT. It is shared with other?well, there are two types of
files we keep. First of all, we have our criminal files which would?
which are and will be available to enforcement agencies upon their
request.
In addition, we maintain a file on the addicts in the United States,
which again is shared.
Mr. EDWARDS. SO, as I understand what you have been saying, infor-
mation is available to another agency on request unless you
Mr. ENRIGHT. If it is not?excuse me, sir. Go ahead.
Mr. EDWARDS. Unless you get information that is not necessarily
pertinent to your operation but you know is pertinent to theirs, and
you arbitrarily pass that on to them.
Mr. ENRIGIIT. Yes' sir.
Mr. EDWARDS. But generally, other than that, they have to ask you,
they come to you and say, "Do you have anything on Joe Blow?" And
you look in your cards and pass on what you have; is that a fair
statement?
Mr. ENRIGHT. That is a fair statement; yes, sir.
Mr. EDWARDS. You do not have any?there is no central filing sys-
tem, we will say, in the Justice Department or any other agency where
all of this information is brought together from all of the investiga-
tive agencies?
Mr. ENRIGHT. Yes, there is. From our standpoint there is because we
provide the Department of Justice with a copy of every case report on
every criminal case that we make.
Mr. EDWARDS. Do you know
Mr. ENRIGHT. They receive a copy of the case report.
Mr. EDWARDS. DO you know what they do with it?
Mr. ENRIGHT. NO, Sir.
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238: THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. FASCELL.. We probably have some more questions, Mr. Enright,
but we have another w .tness here, and we would like to move on to him.
Mr. Rothenberg has a question that Mr. St Germain requested him
to ask.
Mr. ROTHENBERG. 1:r. St Germain would like to know what these
convicted criminals are doing, those who are on the list that you sub-
mitted, who are now ort of jail.
Mr. ENRIGHT. It is au excellent question, sir.
Siome of them, I suppose, are engaged in criminal pursuits of vari-
ous: types, including narcotics, and if they are we hope to apprehend
them.
Mr. FASCELL. OK. Thank you very much, Mr. Enright and Mr.
Miller.
Mr. ENRIGHT. Than( you, sir.
Mr. FASCELL. 1. appreciate your time and your contribution to this
study by this subcomrr ittee.
We would like to co 11 up Mr. Lawrence Fleishman, Assistant Com-
missioner, Office of Incestigations, Bureau of Customs.
Mr. Enright, we rm,y want to submit some questions to you for the
record.
Mr. ENRIGHT. I wou Ed be please to answer them.
Mr. FASCELL. All right. Wc will get them to you just as quickly as
possible and keep the record open for that purpose.
Mr. FASCELL. Mr. Fleishman, I am very happy to have you here.
You have a prepared statement and you may proceed.
STATEMENT OF LAWRENCE FLEISHMAN, ASSISTANT COMMIS-
SIONER, OFFICE OF INVESTIGATIONS, BUREAU OF CUSTOMS
Mr. FLEisirmAN. Thank you, Mr. Chairman.
It is a privilege for me to testify before your committee today both
as the representative of the Commissioner of Customs, speaking for
the Bureau of Custorr s, and as the Assistant Commissioner who heads
the Office of Investig rtions which has direct supervision over the in-
vestigative field staff known as the Customs Agency Service. The Of-
fice of Investigations is charged, within the Bureau, with the respon-
sibility of all investigative activities.
The customs service is the oldest law enforcement agency in the
Federal Government. Its basic task is that of enforcing the Tariff Act
and related statutes which have been passed from time to time by
Congress. The vast bulk of the activities of the Bureau of Customs
relates primarily to tie routine of the proper assessment and collec-
tion of customs duties. Growing out of this, however, are the cases, both
criminal and civil, which arise from violations of the tariff and related
laws. Speaking of related laws, Customs, as the guardian of the
frontiers, is responsible for law enforcement in such diverse areas as
the export controls, I he foreign assets controls, the gold regulations,
the atomic energy cortrols, the neutrality laws, which brings it within
the field of enforcing the laws concerning the illegal international traf-
fic in arms and munitions of war, and many other Federal laws.
Mr. Chairman, at this point I would like to digress just a moment
and take this off the r( cord.
(Discussion off the :word.)
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TIIE'VEDERAL EPPORT AGAINST ORGANIZED CRIME 239
Mr. FLEISIIMAN. At one end of the scale of our law enforcement
operations is the individual who engages in petty smuggling or who
falsely describes a minor amount of merchandise, or undervalues it.
On the other end of the scale are criminal cases involving the smug-
gling and undervaluation of goods worth hundreds of thousands of
dollars or more, and smuggling efforts involving very large quantities
of narcotics and marihuana, and in recent years, the smuggling of so-
called dangerous drugs.
The subject into which your committee is inquiring today has to
do with the words "organized crime." In a sense, almost all of the
large cases which we handle, involve organized crime. Such cases
involve conspiracies between exporters and importers, and often our
completed investigations disclose the participation of many people,
some of whom by superficial indications, at least, appear to be highly
respectable. The sense of "organized crime" with which your commit-
tee is probably primarily concerned, however, involves the racketeer,
the member of the so-called Cosa Nostra or the person who makes a
business of crime. Many of these also come our way.
The basic approach of the Bureau of Customs is to apprehend and
deal with all significant violators of the laws which it is our duty to
enforce. In doing so, we, of course, come across many situations in-
volving crime by people who are not truly professional criminals.
On the other hand, our investigations of violations disclose many
situations where there is real involvement with "organized crime.'
The narcotics and marihuana traffic is the single area in which the
involvement with organized crime is the greatest. At this point, I
should inform the committee that the arrests and seizures which the
Bureau of Customs has been making during this fiscal year in con-
nection with the illegal importations of narcotics and marihuana
stand at an alltime high. We believe that this record of law enforce-
ment reflects well on the activities of our people. We feel that they
have been alert, efficient, and effective.
On the other hand, I should disclose that I, and those like me,
who are concerned with this matter, believe that the high rate of
arrests and seizures must also reflect an increased traffic in both
narcotics and marihuana.
Mr. FASCELL. Mr. Fleishman, right at this point, you disagree very
sharply and strongly with the previous testimony.
Mr. FLEISHMAN. I wouldn't say I disagree with it sharply. I would
say this past year we have had what I would consider to be outstand-
ing results. For example, in the field of marihuana alone, we have
had, last year, let's say approximately 6 tons which we seized. This
year up through the end of May we had over 12 tons. We feel that
by the end of June this will probably run around 13 tons or maybe
slightly more. Now this is on the Mexican border.
Mr. FASCELL. I don't know if anybody else is having trouble recon-
ciling the testimony but I am havinc, a little difficulty with the Bureau
of Narcotics saying that the number of addictions and the use and
traffic in the drug has dropped sharply and remarkably, and, with
your testimony, which says that you have the highest year of con-
victions and seizure of heroin which means that there is an increased
traffic in both narcotics and marihuana.
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240 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. FLEISHMAN. We have not got the highest volume of heroin this
year over previous years. There have been other years in which we
have gotten a greater ,Tolume but we have got a greater volume this
year than we did last ye ir, and we had an increased number of seizures.
Soins,k of the seizures were smaller but we have had some substantial
case.
MT. FASCELL. But you don't back down from your statement that
there is increased traffic in both narcotics and marihuana?
Mr. FLETSHMAN. From OUT point of view I would have to say this.
Mr. FASCELL. From your point of view. OK, go ahead.
Mr. FLEISHMAN. On of the well-known problems in narcotics and
marihuana law enforcement is that the person who is caught in the
first instance is likely not to be the person who is the ringleader in
the criminal activity. We find, for example, that very often the smug-
gler whom we arrest is a person who, for a small payment, has under-
taken the risk of carKing contraband across the border or into our
seaports or airports.
Because of our awareness that this is often so, the Bureau of Cus-
toms, working in coopnation with the Bureau of Narcotics, and fre-
que tly with the coop ration and assistance of other Federal as well
as State and local police agencies, has devoted a serious, persistent
effort toward following these shipments to their destinations. We have,
for example, been able to follow such narcotics or marihuana through
the hands of the smuggler to the person to whom he intended to make
delivery, and sometimes to trace them beyond that person to a second
or even to a subsequent recipient with ensuing arrests and convictions.
Illustrations of such cases involving persons in organized crime
include that of Joseph Stassi, Sr., a New York and New Jersey gang-
ster; and racketeer. Stassi's difficulties with customs resulted from our
arrest of a woman carrier who worked for him. She smuggled in 22
pounds of pure heroin. Stassi and five of his criminal associates were
convicted, receiving sentences up to 20 years. Moreover and of impor-
tance is the fact that even his 'French supplier was arrested in France.
Another case involved the smuggling of 76 pounds of pure heroin
by a group of French Canadians headed by Lucian Rivard, a Canadian
racketeer and gangster. In addition to the man and wife carriers,
Rivard and five of his coconspirators were convicted and sentenced up
to 20 years in jail. IV the way, I would like to state here that this
case originated again on the Mexican border. The two carriers came
down from Canada through the United States into Mexico, picked up
the stuff and were coming back and were caught at Laredo.
Still another case nvolved the seizure of 61/2 pounds of heroin
from an Air France steward. This brought about the carrier's convic-
tion and that of John S. Nuccio, a notorious leading figure in racket-
eering and gangster circles in and around New York and New Jersey.
We can detail a large number of similar cases, but these will illustrate
that many of our efforts at convicting the important criminal figures,
not merely the small 'Fry, have been successful. When we can do this,
iknow that we are making an impact on organized crime because at
these high levels, the ndividu als involved are truly persons of impor-
tance in the upper echelons of "organized crime."
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 241
For your information and ready reference, there is attached here-
to a description of each of the three above-cited cases.
Your committee has expressed an interest in the degree of coopera-
tion between our agency and other agencies. I am pleased to be able
to report to you that this cooperation has been excellent. Investigators
of the Bureau of Customs have been working in cooperation not only
with our fellow agencies in the Treasury Department, but also with
the agencies in other Federal departments. I should stress that we en-
joy mutual cooperation with State and local police authorities, par-
ticularly along our southern and northern borders and in the major
cities where a great deal of our investigative activities are centered..
This cooperation and mutual assistance has been both fruitful and im-
portant. Nor is the cooperation which we received limited to that of
domestic agencies. We are frequently indebted to the Royal Canadian
Mounted Police and other Canadian authorities, and to Mexican au-
thorities for significant assistance.
Your committee has asked that we advise you of the relationship be-
tween the Bureau of Customs and the Criminal Division of the De-
partment of Justice and its Organized Crime and Racketeering Sec-
tion. The Criminal Division, of course, coordinates all criminal actions
in the Federal courts. Our relationship with that Division has been
of the highest order. As the investigatory agency within our field, we
prepare the factual basis of the cases and the Criminal Division, to-
gether with the U.S. attorneys whom they coordinate, work hard and
well to secure criminal convictions. I have thought earnestly about
the question which you have put to us concerning the possibility of
improvement of our mutual efforts and I am frank to say that I know
of no significant suggestion which I can make. The principal difficulty
which occasionally does arise in connection with the prosecution of
criminal cases is that sometimes they are not brought to trial as
promptly as we could wish. I am confident, however, that this is the
same feeling of the Criminal Division and of the individual U.S. at-
torneys. I am sure, however, that the delays stem principally either
from the condition of court calendars, the heavy workload of a par-
ticular U.S. attorney, or delaying tactics by defense counsel, and do
not arise because of any failure of cooperation.
The Bureau of Customs has from time to time been requested to
act in conjunction with the Organized Crime and Racketeering Section
in particular matters. It has been happy to do so. Not long ago, for
example, making use of their unique position on the waterfront, cus-
toms investigators cooperating with agents of the Internal Revenue
Service participated in a lengthy investigation of waterfront gam-
bling... I am pleased to report, and I am sure the Internal Revenue
Service will agree. that the investigation from their point of view was
successful and led'. to the arrest of important violators.
In reporting these matters to you, I do not wish to display any
complacency. I can say, however, that we are working hard and
diligently, and I am proud to say that the result reveals a considerable
degree of success in seizing contraband, apprehending violators, and
securing evidence sufficient to lead to the conviction of those who
violate the laws which we are charged with enforcing.
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Z THE FEDERAL .EFFORT AGAINST oRGANizto
For your inforrnatioa, there is attached hereto pages 7 and 8 of my
annual report to the 'C ommissioner for the fiscal year 1966, showing
our cooperation with otaer agencies.
There is also attached hereto a set of comparative statistics showing
seizures and arrests for the fiscal years 1965 and 1966. We, of course,
do not yet have a compilation, for fiscal year 1967. However, I can
state that the results s rpass fiscal year 1966, in which year we had
obtained the best results up to that time. An example of the results
obtained during the ct rrent fiscal year is our seizures of marihuana
which, up to the end of May, were more than double those of the entire
fiscal year of 1966. T1-.8 actual figures are: Fiscal year 1966, 10,411
pounds; this is on the Mexican border primarily. Fiscal year 1967, up
to the end of the motif a of May, 22,350 pounds. During the month of
May, we seized approximately 3,000 pounds.
I will be glad to try to answer any questions you may have. Thank
you very much for your attention.
(The information mEntioned above follows:)
JOSEPH STASSI, AND OTHERS
On November 6, 1962, et stoats agents at McAllen, Tex., acting on information,
detected 22 pounds 8 ouncn (10.32 kilos) of 98-percent French heroin in a suit-
case which had been br( ught from Mexico by Adela Castillo de Gomez, of
Monterrey, and checked t) Houston by bus. The officers followed it there, and
when she made delivery the following morning to Milton Abramson, the two
violators were arrested. They both agreed to cooperate, and were protected over
an extended period.
A nationwide investigation identified the head of the ring as Joseph Stasi. Sr.,
a New York racketeer previously known as a gambling operator. With him were
associated Kenneth Latei , Vincent Ferrara, Antonio Granza, and others. His
supplier was identified as i.he notorious Paul Mondoloni, who had been condemned
to death in France in absentia for collaboration with the Nazis, and had later
organized the million-dollar jewel rplobery on the Riviera of the Begum Aga Khan.
Mondoloni had worked through a Mexican named Jorge Moreno Chauvet, who
in turn had used as mid(lemen a Cuban named Guillermo Oliveira and his wife
Emma, an American. Besiles Adela Castillo they had used as couriers a Mexican
named Oscar Hemkin, and several women.
Later disappeared fron. his usual haunts shortly after the seizure; in March
1967, his body was found in a secret grave in New Jersey. Adela Castillo was
sentenced to serve 3 years. She testified against Oliveira and his wife, who re-
ceived respectively a 20-3 ear sentence and a suspended 10-year sentence. How-
ever, she refused to testify against Granza and Ferrara, even though granted
immunity, and received an additional 00-day sentence for contempt. They were
nevertheless convicted in September 1964: at last report they were free on appeal
bonds. Another associate named Archie Randazzo was not prosecuted with them
because he had just bee i accorded a 15-year State sentence arising from an
earlier delivery. Abrams( n, who had been sentenced to serve 16 years, testified
against the other defendants.
Jorge Moreno remained beyond reach in Mexico, but was arrested there in
possession of 20 kilos of heroin. Mondoloni returned to France, but in 1966 the
French police sent an offier to the United States with a rogatory commission. A
French-speaking customs officer wr s commissioned by the court to take testimony
thereunder, and accompanied the French officer to various prisons, where lengthy
depositions were obtainee. As a result, Mondoloni was arrested in France about
6 months ago. The disposi ',ion of his case is unknown.
Stassi himself was fug.tive for about 3 years. Toward the end of that period,
in December 1965, and F( bruary 1066, his son Joseph, Jr., and two brothers were
twice arrested by the police in North Bergen, N.J., for running an abortion mill
which was handling 300 women a month. On January 25, 1966, the FBI arrested
Joseph, Sr., in a motel at Pompano Beach, Fin.; he posted $150,000 bail.
In subsequently searching those quarters, custom agents found lodged in the
toilet trap several incriminating documents, including a passport obtained by
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fraudulent representations and issued in a name he had sworn at arraignment
he had never used. This brought an indictment for perjury as well as that on
the narcotic charge. At his 4-week trial on the perjury charge, held in Miami
during January 1967, the evidence from the toilet was suppressed on the ground
that having paid 3 months' advance rent for the motel room, Stassi was still in
control of it, and the search was illegal, even though a relative had removed all
his possessions. IIe was nevertheless convicted, but his bail was continued pend-
ing appeal.
Shortly after the arrest, custom agents had learned that Stassi was urgently
expecting a letter from New York, and when it arrived they obtained it under a
search warrant, finding in it two safe-deposit-box keys. Checking of the cam-
ouflaged return address on the envelope revealed that the letter had been sent by
Joseph, Jr., who was thereupon arrested in his apartment as an accessory after
the fact. In the apartment the officers found $5,200 in cash and more deposit-box
keys. Five boxes were identified, and were opened under search warrants. One
held under Stassi's own name was empty, but the others contained a total of
$214,010 in cash. Both lots of cash were turned over to the Internal Revenue
Service against jeopardy assessments.
On February 27, 1967, Stassi went to trial in Corpus Christi on the heroin
conspiracy charge, and on March 14 the jury took only 37 minutes to reach a
guilty verdict. He remained on bail for sentencing on April 11, but just before
that date the verdict was set aside on the ground that deputy marshals maintain-
ing custody of the jurymen during the trial had been unduly friendly with them.
No date for a new trial has been set.
LUCIEN RIVARD AND OTHERS
On October 10, 1963, customs and agriculture officers at Laredo, Tex., found
76 pounds one half ounce (34.49 kilos) of substantially pure French heroin con-
cealed under the rear seat and in the door panels of a car driven by Joseph
Michael Caron, who was accompanied by his wife Ida and two children, all Cana-
dians. Although a lawyer was sent from Montreal to threaten him with death
if he talked, he was persuaded to cooperate. A major consideration was the pro-
tection of his family over an extended period; and following his own plea of
guilty it was also deemed necessary to shift him several times from prison to
prison.
Investigation disclosed that the leader of the gang was Lucien Rivard, a
Montreal gangster and political figure connected with the notorious Cotroni mob,
and also with top officials in the Canadian Government. He too had dealt with
Stassi's suppliers Mondoloni and Moreno, and had used as carriers Charles Emile
Groleau, Julien Gagnon, Raymond Jones, and Roger Beauchemin. Of several
previous deliveries, two were known to have aggregated 152 pounds.
Rivard, Groleau, Gagnon, and Jones were arrested, and an extradition order
obtained, but execution was stayed to allow for appeal. During the stay period
the executive assistant to the Commissioner of Immigration offered the Montreal
lawyer representing the United States a $20,000 bribe if he would withdraw his
objection to allowing Rivard release on bail. This offer was refused and reported.
Shortly thereafter Rivard and another prisoner engineered a jail break and disap-
peared. There ensued a lengthy investigation by the Chief Justice of Quebec,
leading to the resignation of the Minister of Justice, the parliamentary secretary
to the Prime Minister, and several other prominent officials. Raymond Denis, who
had offered the bribe, was brought to court, but a mistrial was declared, and sub-
sequent developments are unknown.
The appeal having failed, Gagnon, Groleau, and Jones were extradited on June
18, 1965. On July 16 Rivard, who had grown a beard and dyed his hair black, was
discovered at a resort near Montreal, and was likewise extradited. Information
developed in the case led to the arrest in Mexico of Jorge Moreno Chauvet, as
mentioned in the account of the Stassi case.
The trial of the four from Canada was held during September 1965 with Joseph
and Ida Caron and Roger Beauchemin, among many others, testifying for the
Government. After 2 hours 45 minutes of deliberation the jury found all defend-
ents guilty. Motion for a new trial was denied on November 12, following which
Judge Ben C. Connally imposed on Rivard two concurrent 20-year sentences, with
a $20,000 line. Gagnon and Jones received 15-year sentences, with fines of $10,000
each; Groleau, 12 years and $5,000.
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244 THE FEDERAI EFFORT AGAINST ORGANIZED CRIME
The recipient of the various lots of heroin had been identified as James J.
MillOr, operator of a beat ty parlor in Bridgeport, Conn. who was also a friend
of Jnseph Stassi. For technical reasons he was brought to trial separately, begin-
ning l on May 3, 1966. During the succeeding month testimony by Government
officers and the Carons deinonished several attempted alibis, and on June 2 a jury
found him guilty after deliberating 1 hour 8 minutes. He was sentenced to serve
10 years, but at last report was free on an appeal bond.
JOHN S. NUCCIO AND OTHERS
On January 29, 1965, a customs inspector at New York found 6 pounds 934
ounces (a little over 3 kilas) of 92-percent heroin under the lining of a suitcase
carried by Georges Henripierre, a:a Air France steward. He was persuaded to
cooperate, and over a 17-n.onth period was protected in hiding, As a result of his
assistance, customs agenth during the following December and January arrested
John S. Nuccio, a "don" of Cosa Nostra; Rosario Lupo; and Willie Wolfe, also
known as William Cucura to ; as well as two other persons who were not charged.
All were convicted following a 2-week trial in which Henripierre testified that
he had made 14 2-kilo deliveries to Wolfe and four or five to Lupo, and that on
15 or 20 occasions Nuccio had given him packages of cash in amounts of $20,000
to $70,000 to be taken ba2k to Paris. On June 10, 1966, Nuccio and Lupo were
sentenced to serve 15 years, with fines of $10,000 and $5,000, respectively: and
Wolfe to serve 12 years, -vith a $1,000 fine. In imposing these sentences, Judge
L. P. Rayfiel made scathing comments on the individual defendants.
At last report Nuccio and Lupo were free on appeal bonds of $100,000 each,
but Wolfe was afraid to post bail because the trial had revealed that he had
been stealing from the parcels of heroin; consequently he was in fear for his
life.: Henripierre, who hal pleaded guilty before the trial, was accorded a sus-
pended 2-year sentence, and deported to France.
COO ?ERATION WITH OTHER AGENCIES
The following table indicates in statistical form the extent of the cooperation
accorded to other agench s, domestic and foreign:
Cases
referred
by Customs
Cases in
which assist-
ance rendered
by Customs
U.S. Treasury Department:
Coast Guard
Foreign Assets Control
Internal Revenue
Narcotics
Secret Service
Miscellaneous
Other Federal departments and agencies:
.rriculture
ominerce
Defense
Health, Education, and Well: ,re
Ihterior
Jfistice
Post Office
state
Federal Bureau of Investigat:on
Ihamigration
Sundry agencies: Central Ini elligence, Civil Service, Federal Aviation,
Federal Communications, .1i'ederal Trade, General Services, Maritime
Administration, Maritime Commission, Panama Canal, Selective
Service
City, county, State police and sh miffs
Other State and local officers
Foreign customs, police, consuls, etc
80 71
30 66
242 199
373 366
156 142
4 5
145 48
47 81
133 245
54 29
3 11
75 332
64 61
39 111
284 311
250 382
79 114
680 506
508 436
394 779
Total 3, 640 4,296
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 245
Space permits the mention of only a few specific instances in which cooperation
was accorded. An unusual one, carried out by agents in Miami at the request
of authorities in Venezuela, was the checking of manufacturers' and State
registration records of motor cars, 1,500 of which were illegally imported into
that country during the past several years.
Investigating narcotic suspects, agents in El Paso obtained from three Black
Muslims the key to a bus station locker containing $11,760 worth of money orders
and stamps stolen from a post office in Philadelphia. In another instance an
undercover customs agent made a buy of $20,000 in counterfeit money which
a cafe proprietor in San Diego was keeping in the vault of a building formerly
used as a bank.
Cooperation extended to the German police by a customs representative in
Frankfurt resulted in the successful prosecution of a counterfeiting ring and
two gangs of burglars. The police acknowledged this assistance in a special letter
of appreciation.
Investigation at Douglas, Ariz., disclosed that a woman operating a customs
brokerage office under power of attorney was certifying false weights of im-
ported cattle, to the detriment of buyers. While there was no customs offense,
the Department of Agriculture suspended her license to operate under the
Packers and Stockyards Act, and her principal closed the brokerage office.
On April 22 customs agents at Nogales arrested Jack Lute, a well-known
"con" man, for smuggling two bars of "platinum," actually tin and lead, which
he had sold to a New Jersey lawyer for $52,000. On May 5 a Los Angeles customs
agent helped a police detective arrest three men in possession of 1,007 ounces of
silver bars legally imported from Canada, which they were trying to sell as
platinum smuggled from Mexico.
Other sections of this report describe many cases in which success was de-
pendent on the cooperation received from other organizations. A list of these
would be lengthy, but at the risk of a little duplication it is believed special
mention should be made here of the invaluable aid received from many police
departments in pinpointing narcotic smuggling suspects; of our close liaison
with Food and Drug authorities in efforts to suppress the smuggling of dangerous
drugs; of the indispensable assistance supplied by the Mexican authorities in
prosecuting Henry Brulay, the wholesale smuggler of dangerous drugs; of the
enthusiastic cooperation of the Japanese police in gold export cases and various
other matters; and finally, of the continuing and extensive aid rendered by the
Royal Canadian Mounted Police in such matters as the successful conclusion of
the Rivard heroin smuggling case, the campaign against pornographic material,
and the Empire Linens case which involved the wholesale smuggling of Com-
munist Chinese products.
78-508-67?pt. 2 8
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IN.REAU OF CUSTOMS-'-U. 2. TynAruP.v DEPARTMENT
OFFICE OF INVESTIGATIONS
FISCAL YEAR 1865
REGION IV
REGIOli 9
REGIONS
TI
III
IV
Net Expense
Average number of agents
Average number Of cust9os
port investigators
Cases closed
Criminal cases
$3,736,20;
3(14
6,554
11,2 047
35
107
,263.
R
-.1.4u4.oS7
50
42
0,355
3N7,350
26
17
1,968
Open 7-1-64
208
157
29
.
Total arrests
284
43
rued over to other agenci
139.
22
102
cutioos declined
29
6
189
24
Fa ores to indict
-
1
Co ctioos
34
REGION 42
258
19
Req.. and dismissals
8
III 4
44
5
Rolle Pros
2
12
1
Open 6-30-55'
.280
89
122
19
Seizures and forfe
narcotics and mar
Number of seizures
.407
706
. 394
161
Appraised value
Fines and penalties
2,01 31
6.702, 3
2.483,705
2,212,079
426,789
828.758
943,258
79,051
Recoveries
667, 6
?,604
318,508
0,079
Narcotic seizures (grass)
Rae opium
14,742
66
23
Prepared opium
399
10
Meroin
5.413
41
2
Other
15,402
543
5
Marihuana
49,317
.12,268
,079
129,230
55
76
4,571
355
VII'
TO
8;082
277
48.6
21,721
1,168
10,957;105
16,827,598
4
19.441.763
0,103
1;725,340
71
15,511
4,371
15,588
4,773
11,029
756
/6.706
3,710,003
4,339,877
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RE1I011 V
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BUREAU Or CUSTOMS U. S. TREASURY DEPARTMENT -
OFFICE or INVESTIGATIONS
FISCAL YEAR 1966 ?
REGION TV
REGIONS
Net Expense
Average nueber of agents
Average number of customs
port investigators
Cases closed
risinal cases
3,925,6::
/25
6,968
1,
5,508
34
.65
3,683
Open 7-1-65
280
tal arrests
198.
123
Tu A over to otberagencies
64
76
Pro stifles declined
33
? 1
rails s to indict
2
Ccnvic
78
REGION
28
Acquittals en-dismissals
.11
Il/.
12
Relic Prnsequis
2
1
Open 6-30-66
288
94'
Seizures and forfeitures
arcotics and narihuana)
Number of seizures
Aper4184d 941,1.
:180
1.787 .29
Tines ar.d penalties
11,219. 00
Recoveries
1.306.1 6
Narcotic seizures (prams)
Raw 6,niuo
249
Prepare 07,ium
39,915
Fercir.
:t1cr
9,660
lar1huane
20,057
511
7.332,578
16.647.017.
13,014
4513
9,64
705,260
riEGTON .1
$1,444,579 .$ 648,025 51,962031 5367
,27 61
41 20'
4,402 2,402
799
201
'215
290
42
13
157
-422
1,172,734
2.025.147
.100,609
1,730
679
707,589
72
5028.
/19 599
28 270
21, 78
0 12
13 685
6 55
9
20 823 REGIOA II .
982 .920
269 292
474,543 0,7 . 3.
.174.405
0 40
273
. 423,
24,605
1,109
2,522
639
348.
17
1,094
126
25
1,382'
20,060
420,852
1,792
14
6,176
1,311
3,959051
? 6,813
20,683.787.
44,953.111
2,345,181
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.2,494
34,936-
7.959
20.299
5,418,917.
FEDERAL EFFORT AGAINST ORGANIZED CRIME
k4=-
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248 TiE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. FASCELL. Mr. F: eishman, do you have any comparable figures
to the one you just quot ed with respect to the seizure ,of herion?
Mr. FLEISHMAN. Yes. I would have to find it, Mr. Chairman.
Mr. FASCELL. OK. We will give you a chance to do that and supply
it for the record, if you Will.
MT. FLEISHMAN. i Will supply it.
(The information re:!erred to above follows:)
Seizures at ports and borders
[1,000 gram 3=1 kilogram =2.2046 lb.]
Fiscal yea - 1965
Fiscal year 1966 Fiscal year 1967
(to Apr. 30)
N umber of
seizures
Grams
Number of
seizures
Grams
Number of
seizures
Grams
Heroin
Raw opium _
235
11
10,938
15, 511
182
7
7,959
2, 494
191
9
31, 554
2,016
Smoking opium_
16
15,
588
5
34, 936
5
2, 380
Other narcotics
232
16,
706
313
20,200
249
14, 688
Marihuana
685
4,
629,
745
699
4,
722, 481
841
8,
785, 886
Mr. FASCELL. Is it your opinion that the figures would follow the
same order of growth as with respect to the seizure of marihuana?
Mr. FLEISHMAN. No, sir. I wouldn't say that. I believe I stated
before that we have made additional seizures this year.
Mr. FASCELL. And they were up over last year?
Mr. FLEISHMAN. The number of seizures and the actual total quan-
tity was up over last year.
Now this may be be( ause--
Mr. FASCELL. But was not your highest year of all times?
Mr. FLEISHMAN. ND, sir; because a high year you might have one
extremely good case' for example, in the Rivard case where we seized
76 pounds in one load. Now 76 pounds of pure heroin is a tremendous
quantity.
We participated, for example, in a couple of cases a few years ago
in New York with the Bureau of Narcotics in one of their cases there
were a couple of hundred kilos seized in two separate seizures. When
you are getting into this you are getting into tremendous quantities
of heroin. The next -:.rear you might make as many or more seizures,
but you might not mkke even one very large substantial one.
Mr. FASCELL. Can ,Tou tell us about two of your patrolmen
Mr. FLEISII1VIAN. They were Bureau of Immigration.
Mr. FASCELL. Recently killed?
Mr. FLEISHMAN. Southern California.
Mr. FASCELL.
Mr. FLEISHMAN. The last killing we had was in Brownsville, Tex.
He was killed by a smuggler.
Mr. FASCELL. And most of the smuggling operation is through
Canada or Mexico berrtause of the border?
Mr. FLEISHMAN. Most of our heavy operation is on the Mexican
border, because of the availability of the drugs and marihuana in
Mexico. We don't have too much trouble on the Canadian border.
Mr. FASCELL. Her )in is refined principally in France and brought
to Mexico for sraugging into the United States?
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Mr. FLEISHMAN. A great deal of it through that channel. But they
do raise a certain amount of opium in the Western States in the remote
valleys and on the mountain slopes, a percentage of which is refined
into heroin and smuggled or attempted to be smuggled into the United
States.
ME. FASCELL. MT. Edwards?
Mr. EDWARDS. Thank you.
I was looking over your two maps.
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. You have maps for fiscal year 1965 and fiscal year
1966.
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. Directing your attention to?
Mr. FLEISHMAN. These maps, by the way, Mr. Edwards, were merely
set on, superimposed over, these figures to show that these are the
five regions into which we are divided for enforcement purposes and
investigative purposes.
Mr. EnwAuns. All right.
Let's look at the average number of port investigators, that would
be item No. 3, do you see that on the map? Looking down your left-
hand column, you have net expenses, average number of agents.
MT. FLEISHMAN. Yes, sir.
Mr. EDWARDS. And then you have average number of customs port
investigators.
MT. FLEISHMAN. Yes, sir.
Mr. EDWARDS. I notice that in region one you have had a decrease
there from 244 to 225. Region two is about the same. Region three is
down a little. Region four is about the same. Region five is down some.
Is there any particular significance there?
Mr. FLEISHMAN. The significance is primarily in our difficulty in
recruiting.
Mr. EDWARDS. You mean you have positions open for which you are
unable to find investigators?
Mr. FLEISHMAN. We don't have any problem in filling customs
agents positions because that is the top echelon position. Customs in-
vestigator or customs port investigator is a new title for a position
which we adopted several years ago following the change that was
made in organization. They used to be called customs enforcement
officers. We still have a few remaining customs enforcement officers.
But they changed the title to customs port investigator, and they
raised the standards several years ago.
This is the prime recruiting ground for customs agents. We get them
primarily from the customs port investigators.
Now this year we have done a little bit better, and we were stopped
for financial reasons during the year for a very brief period of time
but we have renewed our recruiting of customs port investigators, and
our figures are going up again.
Mr. EDWARDS. If I am not mistaken, didn't you request an increase
in numbers of
Mr. FLEISHMAN. Positions, yes, sir.
Mr. EnwAnns. In numbers of positions? I don't remember what we
did on the floor. It seems we cut that back a little, didn't we?
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250 THE FEDERAL EFFORT AGAINST ORGANIZED CREWE
Mr. FLEISHMAN. I don't know, I haven't seen the bill this year but I
believe you were so rnewl tat Tiber al.
Mr. Enwmins. I suppose I speak for the chairman as well as myself,
coming from port cities, I think we appreciate the real great need for
good customs work.
Would you speak for a moment to the question of the structure of
your particular agency, :he upper echelon?
Mr. FLEISHMAN. The -whole thing ?
Mr. EDWARDS. Tile upper echelon. How is it structured?
Mr. FLESH1VIAN. We 11 ave, to start off with, a Commissioner of Cus-
toms. lie is appointed. We have one Deputy Commissioner. We have
four Assistant Commissioners, and under each of the four Assistant
Commissioners we have the various division chiefs. For example, my-
self, I have four divisions under me.
Mr. EDWARDS. Now, are any of these upper echelon people political
appointees?
Mr. FLEISHMAN. No, sir.
Mr. EDWARDS. They are all career people?
Mr. FLEISHMAN. Evei y one, including the Commissioner.
Mr. EDWARDS. In times past, in the port cities, you have had what,
a collector of customs?
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. Who W3re political appointees?
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. It is my recollection that all or some of those have
now been done away with?
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. Which is it, all Or some?
Mr. FLEISHMAN. We 1, some have been retained in various capaci-
ties. Some have been made district directors. Maybe I should go into
the structure of our field organization. As you point out we used to
have collectors of customs.
Mr. EDWARDS. That position has been abolished; is that correct?
Mr. FLEISHMAN. By t ae President's reorganization.
Mr. EDWARDS. Yes, sir.
Mr. FLEISHMAN. What were formerly known as customs collection
districts are now also customs districts, but we now have nine re-
gional commissioners, we have nine regions, each of which is headed
by a regional commissioner.
Mr. EDWARDS. Is he political or is he career?
Mr. FLEISHMAN. No, sir; it is entirely a career service.
There is one regional commissioner who is a former collector. That
is General Hu& at New Orleans. Regional Commissioner Stramiello
is the former U.S. appraiser at New York.
Mr. FASCELL. Will the gentleman yield right there?
Why do you have nine regional commissioners or districts?
Mr. FLEISTIMAN. Nine regional commissioners.
Mr. FASCELL. Right.
Mr. FLEISHMAN. UnC.er the regional commissioners we have 42 dis-
tricts.
Mr. FASCELL. OK.
But you only have five regions for investigative purposes?
Mr. FLEISHMAN. Yes, sir.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 251
Mr. FASCELL. So your investigation has no relationship to the regu-
lar operations?
Mr. FLEISTI1VIAN. No. We are a separate organization within the
Bureau of Customs for investigations and enforcement only.
Mr. FASCELL. Operating out of Washington?
Mr. FLEIsitmAN. Out of Washington with five regional offices in the
United States headed by supervising customs agents. In addition we
have two foreign regions.
Mr. FASCELL. Where does the regional commissioner, one of these
nine, fit in in this chain of command, if he does?
Mr. FLEISHMAN. He doesn't have any chain of command there. The
supervising customs agents report directly to me.
Mr. EDWARDS. Let's talk then
Mr. FASCELL. Thank you.
Mr. EDWARDS. Sure?about the relationship between the Justice De-
partment's Organized Crime Section and other agencies. You char-
acterized in your statement, as I recall it, the relationship was good
and I am glad to hear that. But I am interested in a little more depth
to that answer. What does transpire between your agency and the Jus-
tice Department on a regular basis? Do you exchange information and
if so, what? Just what do you exchange?
Mr. FLEISHMAN. Well, to start off with we have a liaison officer in
my office, he is one of my division heads, who is liaison officer to the
Organized Crime Section. Like most of the other Treasury?I think
like all of the other Treasury investigative agencies we have a man
assigned to the Organized Crime Section at the present time. He is also
one of my division heads.
Mr. EDWARDS. You mean he actually works in their office?
Mr. FLEISHMAN. On a task force which they have working at the
present time that you may know about.
Mr. EDWARDS. Yes.
Mr. FLEISHMAN. We also furnish Organized Crime any information
or intelligence which comes our way, and they frequently notify us
of matters of special significance or interest to us. They would imme-
diately notify us. We think we work very closely with Organized
Crime. We have
Mr. EDWARDS. Not with organized crime, but in trying to eradicate
it, I am sure you mean?
Mr. FLEISHMAN. Organized Crime Section of the Department of
Justice, sir.
Mr. EDWARDS. How long has the task force been in operation or in
existence?
Mr. FLEisitmAN. I think this thing has only been going on for about
6 months. I think it was more or less a pilot study they were making
as to the desirability and effectiveness.
Mr. EDWARDS. Is it a day-to-day operation?
Mr. FLEISHMAN. No, sir. It was on at least a 6-month assignment
when we put our man over there.
Mr. EDWARDS. And he is still over there?
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. And it is just about over?
Mr. FLEISHMAN. We expect that we are going to be asked to con-
tinue this cooperation.
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2oz. MIK FEDgRAL.EFFORT.AGAWST OrtuAriAw
? ? 4"4.2.444
Mr: EDWARDS. Have you seen any reports yet as a result of the
task force?
Mr..FLEISTIMAN. I haye not and I don't believe that it is completed
yet because I am sure that I would get it. If I didn't get it any other
way I would get it from my man and he would. certainly tell me.
Mn EDWARDS. Does the Bureau of Customs furnish reports to the
Attorney General on organized crime matters?
Mr. FLEISHMAN. We don't have a stipulated report or a special re-
port, Anything coming to our attention concerning organized crime
and especially you male mention of that list here this morning of
racketeers and organize I. crime, we, of course, have that list also, and
anything which comes to our attention or anything of an intelligence
value we furnish to then..
Mr. EDWARDS. I will y:old the floor now.
FASCELL. Mr. St C-ermain.
Mr. ST GERMAIN. Thank you, Mr. Chairman.
On page 4 of your testimony, you say you are pleased to report
cooperation with other agencies has been excellent.
Mr. FLEISHMAN. Yes, sir.
Mr. ST GERMAIN. And you point out the Bureau of Customs has
been working with the Treasury and also other agencies and other
Federal departments?
Mr. FLEISHMAN. Yes, sir.
Mr. ST GERMAIN. I am impressed by the fact thatyou don't mention
the. FBI in that particular statement.
Mr. FLEISHMAN. Well, we have no complaints about cooperation
with the FBI. The FBI regularly, and they have a set procedure which
they follow in furnishing us information, they will give us a memo-
random, and it is usually attached to a short transmittal memorandum,
of any matters which they think should come to our attention or come
within our jurisdiction. If it be a matter, let's say, concerning nar-
cotics smuggling they would send us a copy and they would state on
it that this is the original and a copy has been. sent to the Bureau of
NareoticS, or vice, versa. They may send us a matter which would be of
information to us and they say a copy of this or the original, as the
case may be, has been Bent, lees say, to the Bureau of Naturalization
and Immigration.
Also, the FBI has lifison officers who frequently call on us, if they
have any matter of spe:ial attention to bring to us. And if we have a
question on anything that comes up, which we think we would like
to find out what the FBI knows about it or what they can tell us, we
!yet in touch by telephohe with one of their liaison officers and he is in
our 6ffice within a m att?,r of a half hour generally or sometimes less.
Mr. ST GERMAIN. I nun very happy to hear that.
Tn other words, say, on a man like Stassi whose case you outlined---
Mr. FLEISHMAN. Yes sir.
`,Tr. ST 0-ERA:LAIN (C071IirMillg). In your appendix.
Mr. FIR-i-snmArNT. I would like to tell you that again.
Mr. ST GERMAIN. If ]: might?just one second.
Mr. FLEISHMAN. Yes, sir.
Mr. ST GERMAIN. If you were to call the FBI and say "We are in-
vestigating this man on a charge, on what we think is a smuggling
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 253
charge, what information do you have on him," they, in other words,
are very cooperative with you and provide you all the information
i
they have on this particular man that you're nvestigating at the time?
Mr. FLEISIIMAN. I won't say they would give us all theinformation.
There might be some reason why they might not give us all the infor-
mation. Let's say,i for example, we might look for a man on a smug-
gling case and it s conceivable that they might have something on the
same man and it might be, let's say an espionage case or a national
security case, in which they may be tied in with one of the other in-
telligence gathering agencies. In that case they would be precluded
from giving it to us. But if it was just an ordinary run-of-the-mill
case or ordinary run-of-the-mill matter we would get it.
Mr. ST GERMAIN. Ordinary criminal?
Mr. FLEISHMAN. We would get it, no question about it. As a matter
of fact in the Stasi case, Stassi was one of our fugitives and the FBI
apprehended him for us in Miami.
Mr. ST GERMAIN. I notice that.
On page 5 in the second paragraph, the middle of the page, "the.
Bureau of Customs has from time to time been requested to act in
conjunction with the Organized Crime and Racketeering Section in
particular matters." You mentioned in answer to a question by my
colleague a little earlier that as of about 6 months ago you had a man
assigned full time to the pilot project in progress.
Mr. FLEISHMAN. Yes, sir.
Mr. ST GERMAIN. However, I got the impression from the Organized
Crime Section when their representatives testified that there is sup-
posedly a constant liaison with all of the agencies including your own.
Mr. FLEISHMAN. Yes, sir.
Mr. ST GERMAIN. At all times, with respect to people suspected of
being members of the organized crime syndicate.
Mr. FLEISHMAN. Yes, SIT.
Mr. ST GERMAIN As listing of, what was it, 300 or 350 if not more?
Mr. FLEISHMAN. I would say closer to 3,000.
Mr. ST GERMAIN. All right.
And actually has this been going on, have you been working in con-
junction with them rather than from time-to-time as your testimony
states since the inception of the Organized Crime Section, has this
been going on, this informing you of which people they are interested
in and asking you for the information you have?
Mr. FLEISHMAN. We have been working with Organized Crime
and its predecessor, which dates back to the Eisenhower administra-
tion. In those days it was known as the Anti-racketeering Section and
their personnel have changed from time-to-time, but I remember when
this thing was first set up and I was the supervising agent in the
Northeast and I was in New York, in charge of New York at the time,
and we had meetings. I also remember having meetings in the T.T.S.
attorney's office in the southern district of New York on this very same
subject.
Mr. ST GERMAIN. Excuse me. Let's talk about the present, and what
I am concerned about at the present time is do you have a definite
procedure .and a definite arrangement?
Mr. FLETSTIMAN. Yes, sir; we do.
Mr. ST GERMAIN. What is that procedure?
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2061 THE FEDERAL EFFORT AGAINST
Mr. FLEISHMAN. Anything we get, we have a file in our office, and
anything we get of an intelligence nature, we furnish a copy of it, if
it be a report, ora letter, we furnish a copy of it with a letter of trans-
mitt4 to the Organized Crime Section, and this is done frequently.
MT.: ST GERMAIN. Have you issued to the members of your organi-
zation guidelines as to this procedure, the fact if John Doe
Mr.; FLEISHMAN. Yes, sir.
ST GERMAIN (continuing). Working in Corpus Christi, Tex.,
has reason to believe tha John Jones is involved in organized crime,
one of the cases he is investigating, then he immediately makes you
aware of this so you can then transmit this information to the Organi-
zed Crime Section?
Mr. FLEISHMAN. The:7 have this instruction and this is done on a
regular basis.
4r. ST GERMAIN. Onc other question: I have been given to under-
stand over the past 8 or 9 months or so, in actuality, you are having a
problem in covering some of your ports and in properly policing many
of the ports of entry. 0 le in particular, I understand, Puerto Rico is
giving us a problem or giving you a problem for lack of staff possibly.
Mr. FLEISHMAN. I wouldn't say that. I think we are doing pretty
well down in Puerto R: co. We have had a few vacancies down there
which we are filling as fast as we can, but I haven't heard, nobody has
ever reported to me, that there were any serious problems down there.
Mr. ST GERMAIN. SO you are not faced with the situation where the
workload is too large f ir the number of personnel and let's just re-
strict it to the number of personnel that you have.
Mr. FLEISHMAN. Well, I would say
Mr. ST GERMAIN. Covering your ports.
Mr. FLEISHMAN. I don't know, now you may be confusing the regu-
lar operational personnel with the investigative personnel.
Mr. ST GERMAIN. I al a just centering on the investigative personnel.
Mr. FLEISHMAN. I w ould say we have no particular problem.
Now from time-to-time when we run into a problem or where it ap-
pears that the workload would be overly large for the individual
agents or customs por: investigators, we would move personnel in
there.
Like, for example, we moved personnel down to the Mexican border
because of the increased workload, and this forthcoming year if we
have some additional positions we are going to distribute them
amongst?some of them we will make customs agents, some we will
make customs port inv3stigators, and the personnel in my particular
organization whom I h we always considered to be the hardest worked
and 'most overworked are our stenographic and clerical personnel.
They are batting it out all the time, and we intended to increase some
of that personnel.
Mr. ST GERMAIN. 'flank you. Nothing further, Mr. Chairman.
Mr. FASCELL. Mr. Flaishmar. the port investigators shown on these
two charts are not your people?'
MT. FLEISHMAN. Yes, sir.
Mr. FASCELL. They a:!e your people?
Mr. FLEISHMAN. Yes, sir.
We have under my jurisdiction in the Bureau of Customs approxi-
mately a thousand and fifty persons. At the present time we have
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FEDERAL EFFORT AGAINST ORGANIZED CRIME 255
around, let's say, 300 customs agents, about 450 customs port investi-
gators, and the balance would be clerical and stenographic and aux-
iliary personnel.
Mr. FASCELL. You said earlier that there were, a majority of the
gunrunning and smuggling was in the Miami area, that is region 2?
ME. FLEISHMAN. Yes, sir.
Mr. FASGELL. And yet there is a significant drop in port investi-
gators between 1965 and 1966 in region 2.
Mr. FLEISHMAN. This is also a place, that was also an area where we
increased our staff a few years ago very significantly, and increased
our equipment down there, and our radio facilities.
Mr. FAscALL. So the drop between 1965 and 1966 is not a significant
drop. You are getting down to a normal operational level from an in-
vestigative standpoint?
Mr. FLEISHMAN. No, sir. We had a little bit of difficulty recruiting
down there too, but we are making a comeback on that, too, at the
present time.
Mr. FASCELL. Is the increase in the gun smuggling and the opera-
tions there due to the lack of your personnel?
Mr. FLEISHMAN. No, sir.
Mr. FASCELL. Or increased traffic or what is it?
Mr. FLEISHMAN. No, sir.
I would say I don't think there has been an increase. We have been
very successful in our gunrunning and our arms, munitions cases.
This, our basis for success in this, you just don't walk out in the street
and catch them running guns. Your intelligence gathering is your
most effective weapon. You have to know what you are doing and
who you are dealing with and how you are dealing. The example of
this is the case you had down in the Florida Keys not too long ago
where we arrested, I think, 73 in one group, in an attempt to take a
couple of boatloads out. We seized a couple of boats, we seized a con-
siderable quantity of arms and munitions and we seized several cars.
Mr. FASCELL. You know there was a rumor attendant to that partic-
ular operation, which went something like the right hand of the Gov-
ernment didn't know what the left and of the Government was do-
ing._Is there any truth to that?
Mr. FLEISHMAN. Mr. Fascell, take my word for it, we knew what
we were doing.
Mr. FASCELL. How about the other agencies, did they know what
they were doing?
Mr. FLEISHMAN. I think they knew, too. But this particular opera-
tion you are talking about, it started and then it broke off again, and
we were on top of it and we knew that thing from every step of the
way.
Mr. FASCELL. I am glad to hear that.
Do you have any evidence that organized crime participated in vio-
lations concerning gunrunning and gold smuggling, import fraud,
things like that?
Mr. FLEISHMAN. That they had participated?
Mr. FASCELL. Yes.
Mr. FLEISHMAN. In the suppression of it?
Mr. FASCELL. Is organized crime in gun smuggling, is organized
crime in gold smuggling?
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256 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. Sr GEnmAiN. He titou gilt you said the section.
Mr. FLEISHMAN. No; I would think no.
Mr. FASCELL. Organized crime, is not in gun smuggling, gold smug-
gling, fraud imports?
Mr. FLEISHMAN. This gunrunning, so-called gunrunning, this illicit
traffic in international tmffic in arms and munitions of war, is mostly
made up by patriotic voups of citizens, let's say from Cuba, maybe
from Haiti, maybe the Dominican Republic, wherever it may be, there
are any number of splinter groups, and these are the people who are
most involved in this tyr e of activity.
Mr. FASCELL. But American organized crime is not involved in skim-
mina, the profit off of thft operation?
Mr. FLEISHMAN. There seems to be no profit in it. In fact it costs
them money all the time
Mr. FAsc-pur.,. The man who sells the guns must make a profit.
Mr. FLEISHMAN. Well, the odd-gun dealer, and they have to go
around picking up their guns when and where they can. An example
of this one is for the Iraqi sheiks, a case which we made in Miami,
if you recall that one.
Mr. FASCELL. You mean carrying guns?
Mr. FLEISHMAN. No; they had aught four trucks and they had pur-
chased approximately a $100,1)00 worth of arms, and munitions in
various parts of the "United States, took them down to Miami and
were going to have this all over on an Italian ship to take over to
Genoa and from Genoa transmit it someplace else.
Mr. FASCELL. Over to the Middle East and it didn't get there?
Mr. FLEISHMAN. This is right.
Mr. Edwards?
Mr. EDWARDS. Well, along the same general line, you seize nonnar-
cotic drugs, I suppose, occasionally on this?
Mr. FLEISHMAN. Yes, sir; WO do.
Mr. EDWARDS. Or perhaps which are misidentified in order to avoid
the tariff payment, tagged wrong and this sort of thing?
Mr. FLEISHMAN. We run into the problem again primarily on the
Mexican border in the so-called dangerous drugs, amphetamines, and
barbiturates, which are exported from the United States. They get
down the other side and swing around and are resold or maybe by the
same people who ship them out, attempt to smuggle some of, them back.
Now we get a lot of small petty seizures of this type of thing. But we
also get some substantial ones.
Mr. EnwAnns. Can you tie that into organized crime?
Mr. FrEisiimAx. No, sir; I cannot.
Mr. EDWARDS. You haven't been able to make any tie at all on the
non-narcotic-type drug?
Mr. FLEISHMAN. N), sir. These are small groups. They are orga-
nized, but it is not the organized crime of the nature that you are
looking into here today.
Mr. FASCELL. Right on that -point, is this same kind of traffic going
on with Cuba and the United States?
Mr. FLEISHMAN. NC.
Mr. FASCELL. In aler words, drugs being bought in the United
States and on reques; mailed to Cuba and then smuggled back into
the United States?
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Mr. FLEISHMAN. I have never heard of it, Mr. Chairman.
Mr. EDWARDS. Can you supply us with some figures on the smug-
gling of nonnarcotic drugs?
Mr. FLEISHMAN. We are attempting in our annual report this year
to go into this a little closer than we have in the past. It had not been
too significant because most of the seizures in the past have been
rather small, in which no arrests were made, they were merely seizures.
The value was rather small, almost insignificant, because you could
take, say, a hundred barbiturates or amphetamine pills, whatever it
may be, and you would not have a substantial value. It would be, we
would consider it, a petty seizure from our point of view.
But we have made some substantial ones. We had one recently in
southern California in which we seized a plane, and we were working
with the Los Angeles Police Department. We had the plane which
we seized, we made the arrest of the pilot and other occupant of the
plane, a substantial quantity of so-called dangerous drugs, and based
on what we got at that time, the Los Angeles Police Department were
able to pursue it further and they made a seizure of a substantial quan-
tity, I believe in a house and in a garage in the city of Los Angeles.
Mr. EDWARDS. Are you saying then that you really don't have any
good breakdown of figures on these seizures?
Mr. FLEISHMAN. Not on the so-called dangerous drugs we do not
at this time, but we are hoping to develop figures at this time and we
should have it in our annual report which will probably be available
sometime in August.
Mr. EDWARDS. I asked you a moment ago about your reports to the
Attorney General.
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. I noticed on May 5, 1966, that the President in a
memorandum to the heads of the departments and agencies participat-
ing in the Federal organized crime drive requested, and I will quote,
the agencies "to report periodically in detail to the Attorney General
on the progress of its organized crime investigations showing for each
current or proposed investigation the planned area of inquiry, the
number and type of personnel assigned, and the expected prosecutive
potential."
Do you do that through your agency?
Mr. FLEISHMAN. We would do that through the Office of the Special
Assistant to the Secretary of the Treasury for Enforcement.
MT. EDWARDS. And that is done?
Mr. FLEISHMAN. Yes, sir.
Mr. EDWARDS. I have no further questions.
Mr. FASCELL. Mr. St Germain?
Mr. ST GERMAIN. Thank you.
Have you noticed any significant trends in your enforcement activi-
ties with respect to the localities of violations and the types of persons
involved?
Mr. FLEISHMAN. Of course, each region in the United States has
its own particular problems. As I pointed out, the Southeastern part
of the United States is particularly?has this particular problem with
the international traffic in arms and munitions.
The southern border across the border is where we have noticed a
definite change in the trends.
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258 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
It used to be that southern Texas was our most productive area in
the nareritic and marihuana smuggling field. This has changed very
drastically in the past few years, and the traffic has increased, just
multiplied in southern California. In the past year I have noticed a,
Very definite change in the trend. It used to be that we got violators in
southern California pa :ticularly who were either Mexican or Mexi-
can extraction, and thy were delivering to people of Mexican or
Mexican extraction. Then there was a time there when we had a couple
of pretty well-organized Cubaa groups that were smuggling mari-
huana across the Mexican border.
But in the past year we have noticed a tremendous increase in the
number of Anglo-Saxon names of the violators rather than Mexican,
and they are young Americans.
Mr. ST GERMAIN. The ages?
Mr. FLEISHMAN. The ages, I would say we get them from, anywhere
from, 18 years of age on up. We had a case the other day where a
couple of girls, I don't want to exaggerate the poundage, but if my
recollection serves me correctly it was around 245 pounds of mari-
huana hidden in the car.
Mr. ST GERMAIN. And
Mr. FLEISHMAN. Thes 3 are two girls.
Mr. ST GERIVIAIN. If we could go one step further: Their occupa-
tions or vocations, is there any trend there?
Mr. FLEISHMAN. Son: e of them are college students.
Mr. ST GERMAIN. Do you have a big percentage who are college stu-
dents?
Mr. FLEISHMAN. I we uldn't say a big percentage, no, sir. Some are,
but I would say mostly tl ley are riot.
Mr. ST GERMAIN. Tell me, does your bureau use electronic surveil-
lance?
MT. FLEISHMAN. To a imited degree, yes, sir.
Mr. ST GERMAIN. And do you find that the recent Court decisions
tend to hamper your inv.stigations ?
Mr. FLEISHMAN. The recent w.'aat, sir?
Mr. ST GERMAIN. COU:t decisions with respect to the use of electronic
surveillance equipment.
Mr. FLEISHMAN. No, sir, I can't say that I have. We use them only in
the form of a pocket transmitter or receiver, and then only for the
purpose of protecting an agent or Government funds. We stay clearly
within legal limitations, Use of equipment is always with the knowl-
edge and consent of one or more of the participants. For example, we
might have a device in a room to pick up the conversation of a violator
but it would be in our room, never in his room. We are extremely care-
ful not to make any illep A use of this equipment.
Mn ST GERMAIN. Thank you.
Mr. FASCELL. Thank you very much, Mr. Fleishman. We have some
more questions which we will probably submit to you in writing so
that we can complete the record.
Mr. FLEISH1VIAN. Thank you sir.
Mr. FASCELL. And we appreciate your cooperation in making that
available to us. I want to thank you very much for cooperating with
the subcommittee on this study.
Mr. FLEISHMAN. Tha:ik you, sir, it is my privilege.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 259
Mr. FAscELL. Mr. Enright, Mr. Edwards has a few questions he
would like to ask you.
Mr. EDWARDS. One question, Mr. Enright : I noticed in the New York
Times earlier this month a rather unusual trial going on up in New
York where a court in Rome is carrying out part of its trial in the city
of New York. The New York Times reported that the Federal Bureau
of Narcotics submitted a 10-page report to that tribunal summarizing
a statement given to it by Vito Agueci who is a convicted narcotics
smuggler, according to the article. Could you make a copy of that
report available to this committee?
MT. ENRIGHT. Yes.
I question whether it is 10 pages long?the report.
Mr. EDWARDS. Whatever it may be.
Mr. ENRIGHT. Yes, sir.
Mr. FASCELL. If you would supply that we would appreciate it,
Mr. Enright.
Is that all?
Mr. EDWARDS. That was all.
Mr. ENRIGHT. Yes, sir, we would do that.
(The report referred to above is retained in the subcommittee's
files.)
Mr. FASCELL. Once again, thank you very much.
The subcommittee meeting is adjourned subject to the call of the
Chair.
(Whereupon at 12:05 p.m., the meeting was adjourned, subject to
the call of the Chair.)
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
TUESDAY, JUNE 27, 1967
TIGUSE OF REPRESENTATIVES,
LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
ashington,D.0 D.C.
The subcommittee met, pursuant to recess, at 10 :10 a.m. in room
2247, Rayburn House Office Building, Representative Fernand St
Germain presiding.
Present: Representatives St Germain, Edwards (Alabama), and
Vander Jagt.
Also present: Charles Rothenberg, counsel; and Millicent Y. Myers,
clerk.
Mr. ST G-ERMAIN. The committee will come to order.
This morning we again resume our hearings on the subject of the
Federal off ort against organized crime.
This is the third in a series of hearings relating to traffic in narcotics
and drugs.
The possible infiltration of the legitimate drug industry and the
increased activity in counterfeiting, and the trafficking in stolen drugs
by organized crime syndicates is a subject of concern to every man,
woman, and child in this Nation, as well as to the people of other
nations to which we export drugs and medicines. All of us, at some
time or another, depend on the purity and integrity of our drugs and
medicines for relief of pain and cure of diseases.
Testimony presented 2 weeks ago in this same room indicated the
existence of a grave danger to the lives and health of our population
from counterfeit, fake, contaminated, and altered drugs. We have
already heard statements which suggested weaknesses in our laws and
enforcement machinery with respect to control over the manufacture
and distribution of drug. -s and medicines.
The press is full of stories concerning LSD and other drugs classi-
fied as 'psychedelics" which are the subject of abuse and which are
being obtained illicitly and used with possibly serious harmful effects.
Our witnesses today are Dr. James L. Goddard, Commissioner,
Food and Drug Administration' and Mr. John Finlator, Director,
Bureau of Drug Abuse Control, We are very interested in the views
these gentlemen have on the incidence of drug counterfeiting, hijack-
ing, and alteration and the extent and scope of organized crime's
participation in these activities. We also want to know what the
capabilities of the Federal Government are, both in laws and in exist-
ing control machinery, to curtail and control these operations.
Another important aspect of our study is to identify problems,
1;4101116es, and obstacles which hinder effective enforcement of present
261
7S-OS-7---pt. 2 9
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262 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
laws, and to receive suggestions from those persons who are experts
in their fields for the improvement of existing laws or enforcement
procedures.
Dr. Goddard, we would be happy to have you proceed with your
statement as you so desire.
STATEMENT OF JAMES L. GODDARD, M.D., COMMISSIONER, FOOD
AND DRUGS, FOOD AND DRUG ADMINISTRATION, U.S. DEPART-
MENT OF REALM, EDUCATION, AND WELFARE
Dr. GODDARD. Mr. Chairman and members of the subcommittee,
with me is Mr. William Goodrich, Assistant General Counsel, Food
and Drugs, and Mr. John Finlator, Director of the Bureau of Drug
Abuse Control.
. I am pleased to appear before this subcommittee to discuss the
policies and progra ms of the Food and Drug Administration as they
relate to the Government's effort to combat organized crime in our
country. We are aware, as you are that organized criminal activities
pose a continuing threat to the are,
welfare. In the Food and
Drug Administratimi, we are also particularly aware that these activ-
ities pose a specifie threat to the public health. Your review, then,
of the Federal programs established to counter organized crime is
Certain to be helpf al, not only to the agencies concerned, but to the
public as a whole. I hope the testimony today will be useful to the
subcommittee in carrying out this work.
Among those ac-2,ompanying me is Mr. John Finlator, Director,
FDA's Bureau of Drug Abuse control. After I complete my state-
ment, Mr. Finlator will discuss details of his Bureau's operations,
which in many instances involve a direct confrontation with elements
of organized crimt But first I would like to make a few general
observations, if I may.
Although the B ireau of Drug Abuse Control is relatively new
within our organization, the Food and Drug Administration's con-
cern with organized crime has a longer history. Since 1958, when the
Justice Departmer t's first Task Force on Organized Crime was
formed, FDA has ooperated in this effort to sustain a coordinated
campaign against such criminals and racketeering.
Our agency, of course, is charged with the enforcement of the
Food, Drug, and Cosmetic Act and other consumer-protection meas-
tires. Our major re3ponsibilities include such regulatory activities as
evaluating the safety and efficacy of new drugs, reviewing prescrip-
tion drug advertisf ng, monitoring pesticide residues on food crops,
checking food products generally to assure their wholesomeness, and
carrying out the prpvisions of the Hazardous Substances Act and the
new Fair Packaging and Labeling Act. These responsibilities, I'm
happy to say, genei ally involve no contact with organized crime. For
the most part, we are dealing with reputable businessmen in the
various regulated industries. l'ut our jurisdiction also extends to
the counterfeiting and illicit sales of drugs, and here we do find the
professional crimm a at work.
The misuse, or abuse, of drugs?the social problem which creates
a market for the i.licit drug traffic?is not a new phenomenon. As
early as 1940, we-er countered the indiscriminate use, without medical
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 263
supervision, of the sulfonamides, the first of the so-called wonder
drugs. They were used in unsupervised treatment of gonorrhea. The
FDA responded with steps to curtail the illegal sale of prescription
legend drugs.
N'ire did not begin to encounter significant abuse of barbiturates until
the end of World War II. Widespread abuse of the amphetamines did
not become apparent until about 1950?though there had been some
abuse of this drug in various forms almost from the day it was first
marketed as the active ingredient in a nasal inhaler in 1932.
As amphetamines became available in other dosage forms?for appe-
tite suppression in obesity, mood elevation, and other legitimate pur-
poses?they also became popular in abuse circles. The early illicit traffic
in amphetamines?known as bennies, hearts, co-pilots, pep pills, and
by a variety of other names?developed primarily along truck routes;
drivers sought the drugs to permit them to stay at the wheel for longer
periods of time without rest. In the beginning, we were not aware of
any organization to this illegal distribution. Truck stops, filling sta-
tions, and other nondrug outlets catering to truckers generally han-
dled small amounts of amphetamines, usually illegally supplied by
local druggists or physicians.
The mushrooming market in both the stimulant and depressant
drugs, with its promise of lucrative profits, tempted not only the un-
ethical physician and pharmacist, but the hardened criminal as well:
Illegal traffickers sought out supply sources capable of diverting large
quantities of drugs from legitimate channels of distribution. They be-
gan to peddle the drugs on established routes covering many States.
They sought other outlets and began to supply illegal amphetamines
and barbiturates to bars and night clubs, pool halls, so-called weight-
reduction clinics, and street peddlers.
Despite our awareness of a growing problem we were handicapped
in meeting it because of the limitations of existing law. The Congres0
moved to strengthen the Agency's regultory and enforcement authoi'-
ity in this area with the enactment of the Drug Abuse Control Amen&
ments of 1965. In this legislation, the Congress recognized "that there
is a widespread illicit traffic in depressant and stimulant drugs" which
had "become a threat to the public health and safety . . ." These drugs
as defined in the amendments, include amphetamines, barbiturates, and
other psychotoxic drugs which have a potential for abuse because of
their depressant or stimulant effect upon the central nervous system,
or because of their hallucinogenic effect.
The amendments eliminated the necessity for the Government fo
prove interstate shipment of illegally distributed depressant or stimu-
lant drugs. This had been a particularly heavy enforcement burden
since such drugs, when found in illicit channels, are often unmarked,
unlabeled, and obtained from an unknown source.
The amendments require the registration of wholesalers, as well as
manufacturers, of controlled drugs. Drug manufacturers had been re-
quired to register with FDA since 1962, but the 1965 amendments also
provided for specific notification when a firm or individual is produc-
ing, or begins producing, depressant or stimulant drugs.
Under the amendments, detailed inventory and distribution records
of controlled drugs must be maintained at every level from production
to the point of retail sale. These records must be made available for
inspection when requested.
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264 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
The amendment prohibit any unauthorized manufacture, process-
ing, or compoundi ag of the designated drugs; they prohibit the dis-
tribution.of the drugs to unauthorized persons; the possession of the
drugs except for personal use, use by a family member, or use for pets;
the refilling of prericriptions for controlled drugs more than five tunes
or more than 6 mo Iths after initially issued; and the making, selling,
keeping, or conceal Mg of counterfeit drugs.
FDA agents wue authorized to carry firearms, to execute seizures
with or without labels of information, to make arrests, and to carry
out search warrants.
In summary, thf amendments were designed to provide the regula-
tory and enforcement authority to combat the illicit traffic in de-
pressant and stimulant drugs without stifling legitimate use or
research.
The amendment:3 did not become fully effective until February 1,
1966, approximately 18 months ago. The Bureau of Drug Abuse Con-
trol also became a going organization on that date and started to re-
cruit and train the agents necessary to carry out the new law. The
administrative prc cedures necessary to bring drugs other than am-
phetamines and barbiturates under the law took us into May of last
year; during that raonth, for example, LSD became a controlled drug.
Even before we were fully staffed to carry out the new legislation
there were suggest ions for a further strengthening of the law. These
suggestions are stir. being made. Should the law be strengthened to add
felony penalties for drug abuse violators? Should drug plants be li-
censed, rather than simply registered?
And, more basicilly, do we now have enough authority, if efficiently
used, to track down and eliminate the sources of illicit drugs? At the
present time, we believe we have sufficient regulatory authority to
meet the problems as we now know them. Of course, experience may
prove otherwise. I! so, we will propose necessary legislative changes.
In any case, we have no desire to impose regulations more stringent
than are necessary to deal with the problems.
Let me add, too, that the problem of illegally distributed drugs and
counterfeit drugs i3 not unrelated to the eood and Drug Administra-
tion's overall drug surveillance program. We have seen the need for a
closer monitoring the Nation's total drug supply, not merely as a
check for legality, but as a test of quality as well. On July 1, we are
setting up a new Division of Pharmaceutical Sciences, which will in-
clude a National Center for Drug Analysis, in St. Louis. This central
drug testing laboratory, utilizing sophisticated,, automated analytic
apparatus, will eventually handle 300,000 drug samples a year, com-
pared to the fewer than 40,000 drug samples now analyzed each year
in our 17 district laboratories.
. As we build a broader base of data on all drugs marketed in this
country and on the manufacturers of these drugs, I believe we also
will see emerging sharper profile of the illicit drug market.
Before closing, it me emphasize again that the Food and Drug Ad-
ministration is fully cognizant of the benefits of interagency coopera-
tion within the Federal Government in the fight against the forces of
-organized crime. In addition to the day-to-day interchange of infor-
mation between our enforcement personnel and those of other enforce-
ment agencies, thc- Director of FDA's Office of Policy Management
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 265
serves as the agency's overall liaison representative with the Justice
Department's Organized Crime and Racketeering Section.
We also believe that this cooperation must extend to and from State
and local governments to be fully effective. Since the first of the year,
I have named three regional assistant commissioners, and I will ap-
point six others in the months ahead, to strengthen the coordination
between the FDA and its counterparts at the State and local levels. In
the particular area of drug abuse control, we have established a Fed-
eral-State pilot cooperative program showing promising -results. Mr.
Finlator will tell you more, about that in his remarks. I will ask Mr.
Violator to present his statement now, if the subcommittee has no ob-
jection, and we will be happy to answer any questions later.
Thank you.
Mr. ST GramAIN. All right, Mr. Finlator, we will appreciate having
your statement now.
STATEMENT OF JOHN FINLATOR, DIRECTOR, BUREAU OF DRUG
ABUSE CONTROL, FOOD AND DRUG ADMINISTRATION, U.S. DE-
PARTMENT OF HEALTH, EDUCATION, AND WELFARE
Mr. FINLATOR. Mr. Chairman and members of the subcommittee, I
am happy to have this opportunity to describe to you the mission, pro-
gram, and operation of the Bureau of Drug Abuse Control, with par-
ticular emphasis on our efforts, in cooperation with other agencies, to
detect and attack organized criminal activities in this country and.
abroad.
As Dr. Goddard told you, the Bureau of Drug Abuse Control?
BDAC, for short?began operation with the Food and Drug Adminis-
tration on February 1, 1966. The overall- purpose of the Bureau is to
develop and carry out investigational, enforcement, analytical, and
educational programs to implement the Drug Abuse Control Amend-
ments of 1905.
While the Bureau is relatively new, I believe we have made great
progress in each of these areas. By the end of this month, we will
have 254 agents in the field. Almost all of the agents are working out
of the nine field offices opened since the Bureau was organized. These
are located in Atlanta, Baltimore, Boston, Chicago, Dallas, Denver,
Kansas City, Los Angeles' and New York. Within these nine geo-
graphical districts, we also have established resident offices in 24 cities,
including San Francisco, Detroit, Buffalo, Pittsburgh, Miami, San
Antonio, and St. Louis.
While the construction of BDAC's headquarters organization and
field network in a relatively short timespan has presented some chal-
lenging problems, I believe the very newness of the Bureau has given
us a distinct advantage in one important respect. Many of our agents
were recruited from within FDA, but others came to us with years of
experience in other enforcement agencies, including the Bureau of
Narcotics, Department of Labor, Bureau of Customs, Internal Rev-
enue Service, the Immigration and Naturalization Service, the FBI
and other .units in the Department of Justice. Through this infusion
of personnel, we have benefited from the experience of all these
agencies and have incorporated in our own enforcement program the
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THE FE.)ERAL EFFORT AGAINST ORGANIZED CRIME
techniques and practices that have been tested and perfected else-
where.
While my remarks here will be largely concerned with enforcement
activities, I would like to point out that the Bureau also gives major
attention to educational programs. We are seeking to provide accurate
information on Cie hazards of drug abuse to the general public?the
high school and eollege student, the truck driver, the housewife, and
other individualE at every social, economic, and professional level.,
In addition, we have been seeking through specialized educational
programs the voluntary compliance of the drug industry itself with
the spirit, as well as the letter, of the law. And there has been generous
cooperation from industry and. the pharmacy profession in this regard.
With your permi3sion, Mr. Chairman, I would like to submit for the
record at this point those groups with whom we have worked in this
regard. They hal, e been given to you, along with some other infor-
mation.
(The informat. on referred to follows:)
PHARMACY AND DWI? INDUSTRY GROUPS COOPERATING WITH BDAC IN EDU-
CATION AND VOLUNTARY COMPLIANCE
State boards of p iarmacy.
State pharmaceutical associations.
American Associalon of Colleges of Pharmacy.
American College of Apothecaries.
American Founda Ron for Pharmaceutical Education.
American Medical Association.
American Pharma:keutical Association.
American Society of Hospital Pharmacists.
Druggists' Service Council.
Drug & Allied Products Guild.
' Drug Chemical & Allied Trades Association, Inc.
Federal Wholesale Druggists' Association.
Metropolitan Pharmaceutical Secretaries Association.
National Association of Boards of Pharmacy.
National Associati m of Chain Drug Stores.
National Associati m Drug Manufacturers Representatives.
National Association of Retail Druggists.
National Council cf State Pharmaceutical Association Executives.
National Pharmacoutical Council.
National Wholesal3 Druggists Association.
Pharmaceutical Mimufacturers Association.
Pharmaceutical W aolesalers Association.
The Proprietary Association.
Wholesale Druggists Merchandising Association.
National Ethical Pharmaceutical Association.
Parenteral Drug Association.
National Association of Mail Order Pharmaceutical Suppliers.
Mr. FINLATOR. In addition, of course, BDAC has the responsibility
to regulate the traffic in controlled drugs, to prevent illegal sales of
these drugs, and t D prevent the counterfeiting of any drugs. As an
indication of the scope of the illicit market in drugs, I can report
that BDAC has taken various enforcement actions during the past
13 months involving many million dosage units of depressants, stimu-
lants, hallucinogens, counterfeit drugs, and other drugs in illegal
circulation.
- Our enforcement responsibility, as you know, includes investigating
the infiltration of the legitimate drug industry by organized crime,
Identifying crimint,1 figures involved in the illicit drug traffic, develop-
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
ing evidence against them, and relaying to other enforcement agencies
information we may obtain on organized criminal activities outside
the drug field.
We believe that the operating structure of the Bureau is well de-
signed to carry out our assigned responsibilities, including those
related to the effort against organized crime. While it is our field
force that is in the frontline in this continuing battle, field operations
are directed and closely monitored by our headquarters staff. The
Bureau has three divisions reporting directly to me. These are:
The Division of Drug Studies and Statistics, headed by Dr. James
Fox, which collects and monitors statistical and other data, plans
studies to increase our knowledge of the extent and nature of drug
abuse, and develops educational programs.
The Division of Case Assistance, under the direction of Mr. Lewis P.
Lasher, which develops guidelines for the presentation of cases and
monitors the progress of legal actions.
The Division of Investigations, under Mr. Edward J. Anderson,
who is with us today, which carries out accountability and criminal
investigations, including those involving organized crime.
I think it would be appropriate to confine the remainder of my
remarks to the activities of the Division of Investigations, the unit
most heavily involved in the area of direct interest to the subcom-
mittee. First, let me explain briefly, if I may, how the Division is
organized.
One of its major units is laboratory services, which handles all
liaison between FDA laboratory facilities and our investigative field
force to assure coordinated scientific support for our enforcement pro-
gram. This sometimes includes the identification and scrutiny of new
or bizarre substances with a potential for abuse or new techniques of
drug abuse. For example, you may recall the recent flurry of publicity
about smoking "mellow yellow"?the dried scrapings of the banana
peel. I must say I was happy about the negative results reported by
FDA scientists who tested the peels in various forms for hallucino-
genic substances.
Also within the Division is the Drug Accountability Branch, which
directs and supervises the continuing review of records of legitimately
registered manufacturers, wholesalers, repackagers, and so on, to deter-
mine possible diversion of legitimate drugs into illicit channels.
The third unit in the Division is the Criminal Investigations Branch,
which is responsible for formulating the plans, policies, and procedures
necessary to carry out systematic, efficient, and effective investigations
in the field. This branch also provides overall direction and coordina-
tion of criminal investigations of regional, national, or international
scope.
With this background, let me turn to the specific topic of organized
crime. As Dr. Goddard indicated, FDA has cooperated for many years
in the Government's overall program against organized crime. With
the early encouragement and continuing support of the Commissioner,
BDAC?since the time of its inception a year and a half ago--has
developed an orderly system of collecting, reporting, disseminating,
and utilizing information on organized crime's involvement in the
drug field and other areas that may come to the attention of our in-
vestigators. We have been fully responsive to President Johnson's
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268 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
letter of May 5, 1936, calling for a unified effort by all enforcement
agencies to combat crganized crime.
In March of this year, as the flow of information from our growing
field force continue:1 to increase, we established in the Criminal In-
v,estigations Branch of the Division of Investigations the position of
National Organized Crime Coordinator.
The Coordinator, Mr. Dennis Dayle, is responsible to my office,
through the Division Director, for directing, coordinating, review-
ing, and stimulating BDAC's program to combat organized crime.
He continually mor itors field investigations in order to identify any
participation in the illegal drug traffic or infiltration of legitimate
industry by elemenls of organized crime. He keeps up to date on the
organized crime programs of other agencies and serves as the primary
liaison officer through whom we exchange investigative data and
operational plans with these other agencies to coordinate our pro-
grams and eliminate duplication of effort.
Each of the nine BDAC field offices also has a full-time organized
crime coordinator and an assistant, who are responsible for reporting
to the field office director all instances of organized crime activity
Wiithin their specific geographic territory. This is a high-priority
endeavor and our field staff is fully aware of its importance. Every
field report on organized crime is forwarded to the Division of In-
vestigations at headquarters, where it is analyzed by the National
Coordinator. The overall review of these reports from the field enables
us to spot possible c Dnnections between the organized criminal activi-
ties in the separate fi31d territories.
FDA's electronic data processing system also is being utilized to
record all reports of organized crime activity that come to our atten-
tion. Through this system, bits and pieces of information which seem
to have no immediate value as evidence today can be readily retrieved
at some later date. -Viewed as a whole, this data may be invaluable
in sketching out the scope and form of a criminal organization and
possibly may provide the elements necessary to indict an organized
crime group. The el{?ctronic data processing system will improve our
ability to disseminate intelligence on organized crime activities to the
entire field organiza ;ion.
What is this reporting system telling us about the involvement of
organized crime in the drug field? For one thing, we have learned that
we are dealing with separate and distinct types of criminal orga-
nizations.
To most people, think the phrase "organized crime" brings to
mind the "syndicate," the Cosa Nostra, the Mafia-type organization
which is sort of a horizontal criminal trust that controls racketeering,
gambling, vice, narcptics' and traffic in other drugs in a city, a State,
a region, or nationally. And we do find elements of these hoodlum
organizations in the illicit traffic in depressant and stimulant drugs.
But we also find a different type of organization which concen-
trates exclusively on trafficking in abusive and clandestinely manu-
factured drugs. There may be, and often are, hoodlum elements in-
volved in these rings as well, but the leaders sometimes are a, different
breed from the oldrime "syndicate chief" with a lengthy criminal
record. I might add that identification of these operators is more
difficult, too. Some of these specialized organizations are often highly
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sophisticated in science. and technology. They employ physicists,
chemists, and other science professionals and equip large and sophisti-
cated laboratories. While operations of this type may not fit nearly
Within the stereotyped definition of organized crime, we certainly
treat them as such. When we cut off an illicit drug source in Chicago
and find that this has impeded illegal drug .sales in another area of
the country, we know .we are dealing -with an organization, and a
large one. .
Several of our field investigations also have documented the in-
volvement of organized crime hoodlums in the illicit druu. traffic.
Sometimes this includes involvement in seemingly legitimate drug
manufacturing as well. For example, in one case in Chicago, in which
members of the syndicate have been indicted for the illegal dis-
tribution and counterfeiting of drugs, one .of the defendants owned
and operated a .registered drug firm. As a further illustration of
organized crime's connection with drug trafficking, we also know that
certain of our undercover investigations have: resulted in the assign-
ment, of syndicate "hit" contracts against the agents involved?our
agents.
Certainly, the demand for depressant and stimulant drugs for non-
medical uses is a lure to the hoodlum who is looking for the "fast
buck" wherever .it may be. Often we find that known criminals are
dabbling in the illicit drug traffic as an individual sideline, rather
than as a syndicate operation. But criminal organizations, as such,
also are showing a growing interest in this market.
The hallucinogenic drug LSD is a case in point. As you know,
minute quantities of LSD have a tremendous effect upon the central
nervous system. The physical properties of the drug permit it to be
transported in the most devious methods and the margins of profit
in the illicit trade of the drug are staggering. We know there is an
extremely well-organized traffic in LSD functioning now. The sophis-
tication and technical capabilities of this group demand a most in-
tensive investigative effort. We have investigative intelligence that
this organization is affiliating with hard-core, Cosa Nostra-type
criminal figures. This burgeoning organization unfortunately, is the
benefactor of an overt promotional effort by those who would make
a so-called religion of the use of LSD. These apostles of mind distor-
tion have a growing number of disciples, and their efforts can only
bolster the illicit profits of the leading figures in this criminal move-
ment.
I alluded previously to the fact that there is an international aspect
to the traffic in depressant and stimulant drugs. As is the case. with
narcotics, we find that criminal -organizations dealing in the abusive
drugs also have overseas connections for supply and distribution. Our
international program also falls within the responsibility of the Na-
tional Organized Crime Coordinator. The purpose of this program
is to identify and investigate foreign participants illegally divert-
ing drugs from industry and to pinpoint international drug -sources.
-I might add, Mr. Chairman, that, I went to Europe twice on this
very purpose to look into the possibility of dealing with other sources
and other countries and Mr. Anderson, who is Director of Investiga-
tions, is planning to go to Europe this fall to visit with Interpol and
with other countries.
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THE k EDERA L EFFORT AGAINST ORGANIZED CRIME
At every level of our enforcement program, we have cooperated
closely with other agencies. We have conducted investigations of many
organized crime figures. Millions of dosage units of drugs have been
seized or purchased through our undercover operations. Some of these
cases involved close 2,00peration with other enforcement agencies?
Federal, State, and local. On occasion, our agents have assisted local
crim, e commissions by carrying out undercover assignments, as well
as by assisting in planning and conducting raids which led to arrests
of organized crime hoodlums.
We maintain close and constant liaison with the Bureaus of Nar-
cotics and Customs, with the Alcohol, Tobacco and Tax Division,
and with the Secret Service. In the course of our own undercover
investigations, we have at time provided introductions of agents of
those and other Fede al agencies in those cases when illicit commod-
ities other than drugs were involved. There has been a continuous
transmittal of investigative intelligence from the FDA to the Or-
ganized Crime Divis:on of the Justice Department.
At the State level, as Dr. Goddard mentioned in his statement, we
are conducting a cocperative pilot program in which 18 States are
now participating. Tinder our agreement, with these States, their
agencies have assumed primary responsibility for the regulation of
drug distribution at the retail level while BDAC field personnel con-
centrate on wholesab distribution and large-scale drug diversions.
The need for this kind of cooperative effort is readily apparent in
view of the fact that. there are more than 55,000 retail drug outlets
across the country, all of which must maintain accountability records
for controlled drugs. There has been a continuous interchange of in
between BDAC and the State agencies which has been
mntually beneficial. We have also sponsored training sessions for State
officials working in th .s program.
Apart from this program, we have initiated a training series for
State and local law cmforcement officials to make available to them
the technology we are using in investigations of the illicit drug traffic.
Three "schools" have been sponsored thus far for 136 participants, in-
cluding seven (lanai ian police officials. In addition, we have con-
ducted over 40 local E eminars in our field offices for local officials. We
intend to continue and expand these programs.
In conclusion then, we are conscious of the need for cooperation
among Government agencies at every level in the battle against or-
ganized crime. I beli(Te we have established the type of organization
that can make this cDoperation effective.
I would be pleased to join with Dr. Goddard in answering any ques-
tions the subcommittee may have. Thank you.
Mr. ST GERMAIN. Thank you, Dr. Goddard and Mr. Finlator.
I gather from the .bstimony you have given this morning, and more
specifically that of Mr. Finla tor, that the Department is in agreement
with the thinking of :he committee, which I think is prevalent at this
point, that we do ha ve a problem, and a serious problem, of the in-
fi4ration of organized crime into both the illegal or illicit traffic in
drugs as well as the manufacture of counterfeit drugs, or the illegal
manufacture of drugs. Is that a fair statement?
DT. GODDARD. Cert,inly, we would agree with the first part of your
statement, Mr. Congr3ssman.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 271
The second part, I think there is really a paucity of data for us
to be able to make a positive statement that such is the case.
Specifically, this is one of the things that we expect to come out of
our National Center for Drug Analysis in St. Louis, that by having
such a large quantity of samples available for analysis, samples com-
ing from the retail level each year, we can have good informatiton
as to the incidence of counterfeiting of legitimate drugs which are not
in the abuse series.
Now, there is no question we are encountering counterfeit drugs in
the area of those drugs in the abuse series, the amphetamines, depres-
sants, hallucinogenics.
Mr. ST GERMAIN. Committee counsel just presented me with the
FDA papers, dated April 1967, New York district?"for conspiring
to distribute nearly 700,000 counterfeit dexedrine and dexamyl
spansules?"
New York district. For conspiring to distribute near 700,000 counterfeit
Dexedrine and Dexamyl Spansules, Abraham Klein was convicted on 12 counts
by a U.S. district court jury on January 19.
Klein was accused of selling the misbranded drugs in late 1964 for a total of
$12,800 in the Newark, Elizabeth, and Jersey City, N.J., areas. No date was set
for sentencing; Klein faces a maximum penalty of 26 years in prison and fines
totaling $80,000.
The counterfeit pills were marked with the initials "SKF," the trademark for
Smith Kline & French Laboratories, Philadelphia, Pa.
Four other men have entered guilty pleas in connection with the case: Morris
Purer, Howard Press, James H. Taylor, and Lawrence D. Traina. They have not
been sentenced.
Now,
you will agree that that area?in that area there is counter-
feiting?
Dr. GODDARD. Yes.
Mr. ST GERMAIN. Your contention is that in the ordinary drugs there
are not abuse drugs and to date you have no evidence of any great
amount of counterfeiting.
Dr. GODDARD. I have to be careful and use a little bit of caution. I
don't think anyone b as any firm data on which to draw conclusions
in this area.
Mr. ST GERMAIN. Actually, have you had an opportunity to conduct
any extensive samplings in this area to date?
Dr. GODDARD. No; not of the magnitude that would be required to
draw these kinds of conclusions.
Mr. ST GERMAIN. Do you feel with the establishment of your new
centralized laboratory that there will be better opportunity and you
can do a more effective job in this area?
DT. GODDARD. Definitely.
Mr. ST GERMAIN. Would you agree, then, that the problem seems to
be a twofold one, one which would be the diversion of drugs, which
would include hijacking and possibly or probably importation of
drugs and the other facet being the illegal manufacture of drugs which
possibly could include the counterfeiting?
DT. GODDARD. Yes.
Mr. ST GERMAIN. I am interested, and I gather my colleagues may
go into this also, in your increased use of computerized data in the
area of controlling the distribution of drugs.
Tell me, Mr. Finlator, I wonder if I may go back a little bit and
ask you to give the committee a background prior to assuming your
present position?
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272 THE FEDERA:11. EFFORT AGAINST ORGANIZED CRIME
Mr. FINLATOR. Surcly. Immediately before assuming this position I
was Director of Adm itistration at GSA. Prior to that I was head of
a management office it, GSA. Prior to that I was the regional manage-
ment officer at the Pat Office Department. Prior to that I was exectt-
tive officer of the Sect.rity Office in the Department of State. Prior to
that I was a Division Director in the AID program. Prior to that I -
was an executive officer in the Personnel Office, State Department.
Prior to that I was an went in the State Department.
Mr. ST GERMAIN. Let us ask the question in a different manner.
I believe you mentioned being a security officer with the State Depart-
ment?
Mr.. FINLATOR. Yes.
Mr. ST GERMAIN. II ave you done security work in other areas?
Mr. FINLATOR. I was an investigator with the Civil Service Com-
mission. I was an ageiat in the State Department, and I was also the
Executive Officer of die Security Office in the State Department.
Mr. ST GERMAIN. As far as civil service, as an investigator there
you were investigating people?potential postmasters and such things?
Mr. FINLATOR. And 3overnment employees.
Mr. ST GERMAIN. Do you have any educational background or ex-
perience in chemistry, pharmaceuticals, or in the medical field?
Mr. FINLATOR. No s .r.
Mr. ST GERMAIN.iVith respect to
Mr. FINLATOR. I may add, if I may, Mr. Chairman, I think the rea-
son that I took this job and the reason Dr. Goddard selected me is
because I did not have these backgrounds and because I had a man-
agerial background and we were going to build around us the technical
ability.
Mr. ST GERMAIN. We understand that. I understand that from the
ba0kground you gave on your division heads. I felt it important that
we -get your qualifying?your background and qualifications into the
record.
With respect to the registering of plants, I think you gentlemen are
probably aware of the fact that I have a deep interest in this.
On page 3 of your statement, Dr. Finlator, the third paragraph,
you say, 'Also within the Division is the Drug A_ccountability Branch,
which directs and supervises continuing review of records of legiti-
mately registered mEnufactuvers, wholesalers, repackagers' and so
on.. to determine possible diversion of legitimate drugs into illicit
channels."
Would you kindly explain to me what you mean by legitimately
registered manufactmers or could you tell me what an illegitimate
registered manufactuing firm?illegitimately registered firm might
be?
Mr. FINLATOR. The ast is easy. There are none.
The registered are those who register with the FDA to deal with
these controlled drugs.
Mr. ST GERMAIN. S ) that all registered firms are legitimately regis-
tered?
MT. FINLATOR.
Mr. ST GERMAIN. And they register by filling out as of now, the
1967 registration .of drug establishments, a form approved by the
Budget Bureau. No. 5Y?R017.2 ?
(See app. p. 309.)
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 273
Mr. FINLATOR. I am not sure of the number, but I think you are
correct.
Mr. ST GERMAIN. As I say, this is merely a requirement, they fill out
the form?
Mr. FINLATOR. Right.
Mr. ST GERMAIN. How soon after they fill out this form does one?
before we go into that?you mentioned that you have 251 agents in
BDAC. Are these agents?what are their duties, let us put it that
way?
Mr. FINLATOR. Well, they are doing the same type of work that you
would expect an agent from the Bureau of Narcotics to be doing. They
are dealing in drugs and undercover work. They are also making the
drug accountability investigations.
Mr. ST GERMAIN. Who inspects the plants? Would it be the same
people?
Mr. FINLATOR. Yes.
Mr. ST GERMAIN. Tell me, Dr. Goddard, you are head of the Food
and Drug Administration. Are the food processing plants, meat proc-
essing plants, let us say, and food manufacturing plants, are they in-
spected by you people or are they inspected by the Department of
Agriculture?
Dr. GonnArtn. The meat processing plants are inspected by the De-
partment of Agriculture and food processing plants, aside from those
producing meat and poultry products, which are under the Depart-
ment of Agriculture, do come under FDA inspection, as do all drug
manufacturers.
Mr. ST GERMAIN. This would be different agents, other than the 254
that the BDAC has?
DT. GODDARD. Yes.
Mr. ST GERMAIN. How many agents do you have under FDA, ex-
clusive of the 254?
Dr. GODDARD. Approximately 1,000 personnel who carry out investi-
gations.
Mr. ST GERMAIN They are not investigators, mainly inspectors?
Dr. GODDARD. They do carry out special investigations upon assign-
ment from the district director or headquarters. They carried the ma-
jor burden of drug abuse investigation beginning in the early fifties.
Mr. ST GERMAIN. Since the establishment of BDAC you have added
the 254 to the approximately 1,000 that were working with the De-
partment?
Dr. GODDARD. That is correct.
Mr. ST GERMAIN. Do you also inspect the processing plants for cat
and dog food, or would that be Department of Agriculture?
Dr. GODDARD. That is USDA.
Mr. ST GERMAIN. Are you aware of whether or not these plants are
constantly inspected, also?
Dr. GODDARD. Continuous inspection is at the request of the firm
wishinG, to engage in interstate commerce, as I understand it, in the
USDA 7 program. If a firm chooses to remain intrastate, they quite
often are not under USDA.
MT. ST GERMAIN. Let me put the question to you this way. And Pm
not trying to give a commercial for anyone, but there is one name that
looms up because it has been around a long time?"Puss-in-Boots Cat
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274 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Food." If they sholi d request inspection because they are in interstate
commerce, they have an inspector assigned to them on a continual
basis?
Dr. GODDARD. Thu's coned.
Mr. ST GERMAIN. Yet, if I am correct in my figure, we have 1,600
registered drug man afacturing plants now?
. Dr. GODDARD. Yes.
Mr. ST GERMAIN. There we do not have people assigned full time?
Dr. GODDARD. No, sir.
Mr. ST GERMAIN. So we are more concerned, not of FDA, but the
Federal Govermnen appears to be more concerned with the manu-
facture of, let us say, cat and dog food than with the manufacture of
drugs.
.Dr. GODDARD. If you want to make that interpretation.
Mr. ST GERMAIN. It is a logical conclusion, is it not?
Getting back to the registration of the firms, how soon after a firm
registers is it inspectod ?
,Mr. FINLATOR. There is no given time for this, Mr. Chairman. We
naake the inspections on the basis of information that we have. We did
start out with the in aj or manufacturers of these drugs, but with the
small amount of manpower that we have, we have had to work out a
program of those that are of a priority basis to us. That might mean
whenever we have a cad from them or whenever we have information
we make that inspection.
, Dr. GODDARD. We are obligated, Mr. Chairman, to inspect these firms
once every 2 years.
Mr. ST GERMAIN. Once every 2 years?
Dr. GODDARD. Yes. We do recognize the present method of registra-
tion for firms involved in the production, sale, distribution of drugs
coining under the Drug Abuse and Control Amendments, could afford
a loophole, so we are seriously considering at this point in time the
implementation of a program which calls for immediate inspection
upon receipt of the application.
Mr. ST GERMAIN. Of the application?
. Dr. GODDARD. Yes.
? Mr. ST GERMAIN. In other words, a number would not be issued until
the inspection was concluded ?
. Dr. GODDARD. 'Yes.,
? Mr. ST GERMAIN. As far as criteria are considered for the registra-
tion, under section 510 of the act I find a reference to the inspection
pursuant to section "04 which should be .accomplished once every 2
years; however, in this particular section on registration the Federal
Food, Drug, and Cosmetic Act as amended in May 1966, I find no
reference to the criteria for fae drug manufacturing plants.
? Dr. GODDARD. We do have' established criteria that are 'followed in
the inspection of drug manufacturing plants. Embodied in our in-
spection program are checks to see it good manufacturing practices
are followed. We also check specifics?how incoming raw products are
handled, whether they are placed in quarantine. The records aspect,
which is extremely important in the manufacture of drugs, is care-
fully checked. Are the records such that they can account for the Ilan-
dliing of various ingredients at all stages? The master formula has to
be 'checked in terms o whether or not it is being used in the production
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 275
of the various batches. A firm's quality-control activities are scruti-
nized with care. Checking of the general sanitation is required during
the course of the plant inspection.
The inspector generally will require several days to do a small-sized
plant and up to 2 to 3 weeks to carry out an inspection on a major
drug firm. So it is a very comprehensive, detailed investigation of
how they meet their responsibilities.
Mr. ST GERMAIN. Dr. Goddard, in the same "FDA Papers" that
I referred to earlier for April of this year, there is given a laistory of
the FDA's inspection procedures for drug plants that were included
in the instructions. It goes on to say that at that time compliances
with these practices were not mandatory./ Are they now mandatory
under the present amendments to the act?
Dr. GODDARD. I am not sure I understand your point.
Mr. ST GERMAIN. "III 194849 FDA held a series of conferences to
develop procedures and techniques for drug inspections."
Dr. GODDARD. Based on the survey
Mr. GOODRICH. I understand now.
Mr. ST GERMAIN. Yes.
Mr. GOODRICH. In 1962 the Congress gave us a provision which made
a drug adulterated if it was produced under conditions that did not
conform with current good manufacturing practices, and we have, as
Dr. Goddard has explained in detail, specified the minimum conditions
for performance. If companies do not perform in that way their prod-
ucts are adulterated, they may be seized, the firm may be enjoined or
criminally prosecuted.
Mr. ST GERMAIN. When does the firm get the instructions? In noting
the application, for the registration of drug establishments, it is a
rather short form. Is there a supplementary form that goes with this?
Mr. GOODRICH. The registration is an identifying device. All Con-
gress required, and this is the point that you are inquiring about?
Congress simply required the companies to identify themselves to us
by name and address, identify all of their places of business and in
the 1965 drug abuse law, to specify that they were handling drug
abuse type odrugs. This is an alerting device to us to put into oper-
ation our general inspection authority and the other controls that are
applicable across the board to drug manufacturers.
Mr. ST GERMAIN. Do you not feel in an industry as important as the
manufacturing of drugs, that this particular initial application should
be a great deal more complex, because my heavens, if you want a job
as a GS-5 you have to fill out a form 57 that goes about six pages, plus
addenda if you so desire. And yet for something as important as this
is a rather brief application form.
Dr. GODDARD. Yes; this is in fact in back of my earlier remark that
we were revising our procedures in terms of providing registration to
firms wishing to enter into the production and distribution of drugs
under the Drug Abuse Control Amendments. I would agree with you
that it has been rather simplistic. I think the important thing is
whether or not we will have the capability to get a man into that plant
and carry out a brief investigation to see if the manufacturer has the
1Article entitled "Good Manufacturing Practice" published in "FDA Papers," vol. 1,
No. 3, April 1967. See app. p. 313.
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276 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
capability to produce, ind it is a legitimate operation before the regis-
tration is provided.
Mr. ST GERMAIN. Would you not agree, Doctor, that this particular
profession of manufacturing drugs, is important enough to warrant
that if somebody wants to go into the manufacture they should be in-
spected prior to their letting loose on the market these drugs, and the
thing that concerns mo, Doctor, I mentioned in a previous hearing is
that a Government registry number that says FDA Registration No.
12345 is issued to the manufacturing firm?he has toput this number
on every label, does he not?
Dr. GODDARD. He has to put it on the invoices so people will know
they are buying from t-, registered firm.
Mr. ST cl-ERATAIN. So the individual buying from a registered firm,
a firm that has a regiEtry number issued by the Federal Government
is lulled into a sense of security, is that not a fact?
Mr. GOODRICH. As a matter of fact he is required to be sure he buys
from a registered firm and we have an obligation which we recognize
to be sure that all these firms are manufacturing under current good
manufacturing practi 2es.
Mr. ST GERIVIAIN.Y3u. do not mean that, MT. Goodrich.
Dr. GODDARD. We have the obligation.
Mr. ST GERMAIN. Within 2 years you get to inspect the plant.
Mr. GOODRICH. This is a minimum condition. We have contacts. Of
course we don't have nearly enough people to go into these companies
at the regular interva; s we would want to. We recognize that, but we
are operating on a brand new basis of going into those places where
we know there are the greatest problems, and we do have strong means
Of being sure that thc companies are measuring up to the standards
that we all would expc.ct from our drug producers. This doesn't mean
everyone is in compliance. We would be the last to say they were. We
hope we are using our resources in the places where they are most
needed and we are urging Congress to give us more authority as we go
along and identify mo-.7e problems.
Dr. GODDARD. Congressman, I would have to agree with you. This is
an area we have been uneasy about. That is why we are currently
stu4ying it, trying to revise these procedures so we can effectively pre-
clude the entrance of e firm that is not qualified or seeks to do business
for illegitmate purposes only. This is important, and I can assure you
that we are taking positive steps to seal off that loophole that has
existed.
As Mr. Goodrich points out, it has been a matter of priority?we
have given the highest priority to the Bureau of Drug Abuse Control
in the assignment of n3w positions by Congress. Also, when there have
been cutbacks througa the Bureau of the Budget ceilings, we have
made every effort to Lrotect the Drug Abuse Control activities to the
exclusion of others, because we recognize the seriousness of this prob-
lem in our society.
Mr. ST GERMAIN. Taft:Ilk you, Doctor. I yield to Mr. Edwards.
Mr. EDWARDS. So that while you are inspecting these plants be they
new plants or reinspec tion of old plants, in addition to quality control
and this sort of thing you have certain procedures that you assume
you follow that would detect illicit operations in these particular
plants?
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 277
Dr. GODDARD. Yes. These are largely related to the examination of
invoices, of purchased material and the amounts produced in terms of
their shipments and the records which they are required to maintain
under the drug abuse control amendments. This does not mean that
occasionally equipment that is in place for the legitimate production
of drugs cannot be used at night for illicit production of drugs using
basic materials that fall outside of the control program. This has
happened. Materials obtained through hijacking or through other
sources have been used to make tablets of drugs in this series.
Mr. EDWARDS. You stated in your statement, as I understand it, gen-
erally you are pleased with the law that is set up under which Mr.
Finlator is operating You are still going through a period where you
are gaining experience under that law. I gather from your statement
that you do not have any recommendations as such for amendments
to that law at this time.
Dr. GODDARD. That is correct.
Mr. EDWARDS. I have on my desk here a proposed draft of a bill for
initial inspection amendments for 1967 which was sent to the corn
mittee.
Mr. ST GERMAIN. That is the one that I requested after that prior
hearing when I asked the committee counsel.
Mr. EDWARDS. Was this drafted at the request of Mr. St Germain?
Dr. GODDARD. That is correct.
Mr. EDWARDS. This is nothing you originated in your own mind?
Dr. GODDARD. No, sir.
Mr. EDWARDS. I was about to inquire why your cover letter was some-
thing less than enthusiastic.
Dr. GODDARD. Well, sir, we do think this problem can be handled
in the fashion that we have tried to outline. We are looking at the
process of inspection prior to the award of registration as a means
of strengthening and closing outside loopholes.
Mr. EDWARDS. This is one time where legislation at some future
time may very well be necessary.
Dr. GODDARD. We believe we have the authority to carry this out
now. However, should this be challenged and found wanting, we may
come back and ask you for it.
Mr. ST GERMAIN. It is not a question of the authority. I think it is
a question of its being mandatory. In other words, a prohibition against
the registry number being given out prior to inspection, and I got the
impression from our colloquy that you were coming around a little
bit to my thinking.
Dr. GODDARD. Coming around
Mr. ST GERMAIN. That it is hopeful.
Dr. GODDARD. Coming around to the thinking that we will carry it
out as a routine practice.
Mr. EDWARDS. One of the major aspects of our hearings is to inquire
into the economy and efficiency of these operations in Government and
in that regard I am concerned about what seems to be two generally parallel courses taken by your investigators, Mr. Finlator'sinvestiga-
tors and the Bureau of Narcotics' investigators. In your opinion, is
there a need for dual agencies, dual investigative units when you are
approaching very similar problems ?
Dr. GODDARD. I feel that although there might be some outward sim-
ilarities, there are some marked differences in the problems in drug
78-508-67?pt. 2-10
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278 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
abuse as contrasted to narcotics addiction. The problems of drug
abuse are broader in scale, involve a different strata of society, involve
some rather fundamental problems within society. Our research ac-
tivities, along with those of the National Institute of Mental Health,
will hopefully provide us with the basis for sound future educational
programs.
Aw, one could peril aps say these same things about the narcotics
problem.
Mr. EDWARDS. What strata do you see drug addiction in and what
strata do you see narcotics?
Dr. GODDARD. Drug s buse involves all strata of society to a greater
extent than narcotics addiction, I am told. In narcotics addiction, gen-
erally, and this is sub ject to the weakness of generalizations, most
of the addicts come frcm the lowest socioeconomic group in our soci-
ety. This is apart from the professionals, physicians, and nurses who
are often addicted in the course of their work?not often in terms of
total numbers, but in ccmparison they stand out as a professional risk.
Mr. EDWARDS. Is there a relationship between the use of drugs and
the use of narcotics. Cbn you trace any pattern of movement from a
drug user who slips into the problem of?heroin, for example?
DI GODDARD. There is remarkably little evidence upon which to
base sound conclusions at this point in time. There is no question that
this pattern has been demonstrated for at least a few people. How-
ever, I would have to observe that a great many more people probably
experiment with these drugs and never go any further. The ampheta-
mines, barbiturates, LSD, whatever you will.
Mr. EDWARDS. Let I113 ask you, what you are saying is based on 18
months' experience, in which case we might have to argue that it
might be incomplete.
Dr. GODDARD. Indeed, I would have to say it is.
Mr. EDWARDS. If it is complete, is there any effort being carried out
to secure complete information on the relationship between drugs--
between heroin and the drugs that you fellows deal with?
Dr. GODDARD. Yes. I would stress that this is very incomplete. I
would underline the lack of really valid data to draw sound con-
clusions.
Mr. Finlator ?
Mr. FINLATOR. I thirk it is interesting, Mr. Congressman?talking
about the different strata in society that we are dealing with in nar-
cotics and dangers?of the 336 people that we have arrested, 54 of
them were high school graduates, 62 had some college and 32 were
college graduates. It is an entirely different group of people that you
meet than when dealing with narcotics.
Mt. EDWARDS. Well, now, one?the ATU folks who testified not too
long ago?the Alcoholic Tax Unit people?I thought they had a really
good ongoing progrart of public relations, educating the people as
to what they were really getting into when they started with moon-
shine. What kind of campaign, if any, does your Department have
along this same line ?
Dr. GODDARD. If I may, I would like to begin these remarks on our
educational activities.
First of all, we feel that there needs to be a better understanding
of the role of drugs in our society and to promote this we are in the
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 279
process of writing curriculum material for use of elementary, junior
high, and high school teachers. This is being prepared by some of the
best science teachers in the United States. This material will be made
available throughout the school systems of the country, so that teach-
ers can begin as early as the third grade to give to students a rather
simple introduction to pharmacology?to provide children with the
respect for drugs which seems to be lacking in our society today. This
we think is an important step forward, to have a broad scale program
of education in the public schools.
The kind of material we are talking about, to the extent that it has
been developed, is warmly received by the educators. This activity
is taking place under the direction of Mr. Cron, our Assistant Com-
missioner for Education and Information, working with various bu-
reaus of FDA, including the Bureau of Drug Abuse Control.
In addition to that, there are specific educational activities?the
production of a film on LSD and the production of the film last year,
"Bennies?Goofballs" which has proven to be one of the most popular
films that is being distributed by a Federal establishment at the pres-
ent time. I believe we have purchased 65 prints of this film and they
are continuously out on loan to educational organizations and various
civic groups throughout the country. This film was specifically de-
signed for the lay public.
In Mr. Finlator's organization Mr. James Fox heads up a major
division, the Division of Drug Studies and Statistics, which has the
dual responsibility of carrying out research and gathering from re-
search information that can provide the basis for educational pro-
grams, Mr. Finlator may wish to add to this.
Mr. FINLATOR. Well, Mr. Congressman, we think that education is
probably one of the most important answers as far as the drug abuse
is concerned. Actually, we are trying to build a program of four big
pillars: enforcement, training, education, and scientific studies and
gathering of statistics. Some of us think that an answer is education
and it may be the answer. We are trying to devote a great deal of
time toward an educational program. We do a lot of things?we are
diverting enforcement money into it to do it. But we are doing it.
For instance, in BDAC we make an average of 60 speeches a month
and that may be at high schools, colleges, churches, service clubs, and
national organizations. We do put out a bulletin that goes to all of the
law enforcement people in this country and to the 2,300 colleges in
the country, the deans of the colleges. We write letters to the phar-
macies and converse with them, to the actual 55,000 pharmacists in
this country. We are encouraging them to get involved in educational
programs themselves, because they are the men who know a great
deal about drugs. They have affinity toward it. Some will, of course,
and some will not.
These are some of the things we are trying to do.
Mr. EDWARDS. Do you have any exhibits or copies of material, pub-
lic relations type materials that the public itself sees, or is available
to the public that could be made available to the committee or for the
record, depending on the size and length of it?
Dr. GODDARD. Yes, we have included some of this material in the
folders which were provided to Mr. Rothenberg.
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280 THE FEDERAL EFFORT. AGAINST ORGANIZED CRIME
Mr. EDWARDS. I hay3 looked over that material but my impression
just- briefly was that it was more aimed at law enforcement people
than it was at the youngster or person who may come in contact with
these drugs, and I thin. they are very good, but that is my impression.
Dr. GODDARD. Let me go back, Congressman Edwards, and look
through the materials and have additional ones forwarded to you,
particularly on "Ilennies?Goofballs." This is, as I mentioned, one of
the best sellers we have in the Federal Establishment. We will provide
that material for the committee.
Mr. EDWARDS. All right.
(The material refer' ed to is printed at pp. 290-292, 316-319.)
Mr. EDWARDS. Let rr.e ask you this. Has the academic community,
educational community, been generally responsive to what you are pro-
posing that we bring to the children?
Dr. GODDARD. Yes. Tlis work has been carried out with the coopera-
tion- and active assistance of the National Education Association and
the Office of Educatior of the .Department of Health, Education, and
Welfare. The subject is one of great interest on the part of the teach-
ers, and educators, for example, at the college level. Mr. Finlator has
an established working relationship with the Association of Deans.
They solicit assistance and information on materials that they can use,
because they are grappling with the problem on a day-to-day basis.
We do need as a Nation, to put more resources into this area.
Mr. ST GERMAIN. If I may interrupt, Mr. Edwards.
Doctor, when you w ere testifying about the educational program
you sort of stopped?I: found you stopped at the high school level.
You mentioned from ;he third grade to the high school. Now, you
mentioned the college level. So there are two things I believe the
committee would be inlerested in as part of the record. As far as your
PR ',sheets are concerned, Mr. Edwards and I, I am sure, have the
same idea. We have gotten some material from some of the other agen-
cies that we thought w as rather striking. It is pictorial, graphic and
you know, a picture is better than a thousand words. We would like
examples of that if you have it, not just as far as bennies and goof-
balls?would you send its a general sampling?
Dr. GODDARD. We will be happy to do that.
(The information requested is printed in the Appendix at pp. 316-
319.)
Mr. ST GERMAIN. No. 2, as to the cooperation you are getting on the
college level, if you could?you say the association of the deans of the
colleges are interested. Could you give us any statistics on the number
of colleges that are cooperating with you in this educational program?
You call submit it later for the record.
Mr. FINLATOR. Yes, Si r.
(The material referred to fol:ows :)
During February, March, and April 1967, approximately 1,500 college deans
participated in conferences sponsored by the Bureau of Drug Abuse Control.
These conferences were both national and regional and as a result approximately
26 individual college cord n'ences on drug abuse have been held since March.
We are currently preparing for distribution this fall of a handbook for college
counselors on drug abuse.
Mr. EDWARDS. I am interested also in the general structure of FDA
at the top; that is, as -;o the upper echelon people, whether they are
what you would call political employees or men trained in the jobs that
they have. Can you just give me a general statement?
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Dr. GODDARD. Yes; I would say categorically that we have no politi-
cal employees. These men at all levels are selected for their profes-
sional qualifications and their demonstrated ability. The bureau
directors all have had experience in their selected areas or brimg to
their assignment the kind of background possessed by Mr. Finla7tor,
who was selected for his management capabilities, plus his background
with respect to security at the State Department.
We tend to be a heavily weighted professional organization with
Ph. D.'s, M.D.'s, and scientists in all the categories at the top levels.
The Deputy Commissioner, for example, has degrees both in phar-
macy and chemistry. The Bureau Director, Bureau of Science, holds
the Ph. D., Master's, et cetera. The Director of the Bureau of Medicine,
has degrees of M.D. and M.P.}-I.
Every one of these people were selected for their professional quali-
fications.
Mr. EDWARDS. Mr. Finlator, back in my younger days I tried over
100 cases having to do with bananas in a period of a year. I never
heard of "mellow-yellow" or anybody smoking bananas. You say that
happily your scientific studies have shown up negative as far as some
of these pictures these people are supposed to get. What is it about
the bananas that makes them enjoyable to smoke?
Mr. FINLATOR. I don't think them is any, sir. You may recall some
months ago some people let a story out from the west coast that the
hippies had a certain way of taking bananas and stripping the peel
and getting a hallucinogenic effect of this. The Associated Press picked
this up and spread it all over the country. The very next day it was
everywhere and we started getting calls and everybody got interested
in it. We had a responsibility, I think, to .determine well, is there some-
thing dangerous in the banana, so we went to work on it and we found
out there wasn't. I think we were being put on.
Mr. ST GERMAIN. Maybe we would have been better if they hadn't
publicized this study. Everybody would have been going to smoking
banana peels and we would have been in better shape.
Mr. EDWARDS. The banana industry is in bad trouble now.
Along that line, and I think this is pertinent?we all believe in
freedom of the press, and I expect it is one of the freedoms that has
really made this country great, and yet, I wonder if playing up such
things as this or playing up LSD as has been done is good or bad?
I suppose in the last year we have seen millions of words on LSD and
its use. I wonder if that is good, if it has the effect of perhaps bringing
the problem of this drug to the attention of the people, or whether it
has had the effect of causing people to go out and try something new.
Arr. FINLATOR. I don't think one could actually answer that question,
but from my point of view, I think the press has done a good lob. It is
part of the total education and knowledge of our society. Whether it
is good or bad, it gives us an opportunity to make our own decisions.
However, it is true that about a year ago the press was making a
number of sexy stories about some of .the psychedelic drugs, but the
responsible press is now leaning more toward factual stories. They
come to see PS quite often and from *here I sit the stories now are
More responsive, more responsible, and are better. You are always
going to have a magazine or paper that wants to sell copy. But from
where I si.t they seem to be better and more factual.
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282 THE FEDERAL EFFOR7 AGAINST ORGANIZED CRIME
Mr. EDWARDS. I am glad to hear that. As the chairman pointed out
to me, neither one of m ever went around sniffing glue, but after read-
ing 'about it in the paper I will have to admit when my young son
was building a model lirplane I did take the tube to see what there
was to it. But I am glad to hear that.
Mr. FINLATon. Did :mu get an effect from it, Mr. Congressman?
Mr. EDWARDS. Yes, niter they picked me up off the floor.
One final question having to do with the Justice Department and
your relationship with ;hem and they with you.
Mr. Finlator said on page 6 of his statement that there had been
a continuous transmiti al of investigative intelligence from the FDA
to the Organized Crime Division of the Justice Department.
My question is: How about vice versa. Do you, as a matter of prac-
tice; exchange informition both ways and how is that handled?
Mr. FINLA'POR. Yes, we do. It is handled on a personal basis--as
a matter of fact at a protty high level in the Bureau brought Mr. Eddie
Anderson, who is Director of Investigations.
ATT. EDWARDS. You said you have a liaison?
Mr. FTNLATOR. We have a liaison at the policymaking level. But
Dr. Goddard has below him the operational work in kind which is
almost a day-to-day type of relationship that we have with Mr. Peter-
son and his people.
Dr. GODDARD. I would like to supplement Mr. Finlator's remarks
and say that we have had and enjoyed excellent relationships, good
cooperation from the Justice Department in every aspect?not only
that, but I think they feel the same way. We have received numerous
letters from their agents commending our personnel for their cooper-
ation in cases that in volve both agencies. This has been the pattern
right from the beginning. But it goes far beyond that and also can be
said to be true of our relationships with State and local authorities.
We recognize that tho job is so large that we have to involve all of
the other enforcement activities in their daily work and have them
concerned about this problem, as well as utilizing to the fullest our
limited field staff. So, Mr. Finlator's personnel and he, himself, have
set this pattern of ODCI at ions right from the very beginning.
Mr. EnwAnns. They have a list of some 3,000 names of suspects, I
suppose in the organi zed crime arena. If you are like the other agen-
cies, you have a copy o E that list.
DT. GODDARD. That S correct.
Mr. EDWARDS. I presume, then, in your normal operations when you
run across a prospective organized crime operation you refer to that
list, you try to correlate what you find with the Organized Crime
Section and that this is a continuing routine process.
Dr. GODDARD. That's correct.
MT. EDWARDS. Thank you, sir.
MT. ST GERMATN.111-r. Vander Jagt.
Mr. VANDER JAGT. Thank you. Mr. Chairman.
On the fact sheet from the Bureau of Drug Abuse Control, Fact
Sheet 2, you estimate that 10 billion capsules of dangerous drugs were
produced in the Unite d States last year and that more than half of this
quantity found their ways hato the hands of drug abusers through
illegal channels. Is that an accurate statement?
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Dr. GODDARD. That was a statement that was made by my predeces-
sor and it was based on the 1964 production levels for drugs of this
particular series that come under the Drug Abuse Control Amend-
ments. This statement was introduced in testimony related to the hear-
ings that finally produced the Drug Abuse Control Amendments of
1965. I would have to say that we would regard this as an estimate.
There is no question that the traffic was very widespread, that there
were significant quantities being diverted. I would hate to have my
feet held to the fire in saying that 5 billion dosage levels got into
illicit traffic, however.
Mr. VANDER JAGT. This was an estimate based on the year 1964?
Dr. GODDARD. That is my recollection.
Mr. VANDER JAGT. And of the 10 billion capsules, more than half
went into drug abuse?
Dr. GODDARD. Right.
Mr. VANDER JAGT. Through illegal channels?
Dr. GODDARD. Yes.
MT. VANDER JAGT. Do you think there has been a dramatic reduc-
tion since 1964?
Dr. GODDARD. I don't believe we have the data that would substan-
tiate such a statement. We know that we are making an increasing
number of buys and we have a substantial number of cases now being
worked on, but our surveillance system is not such that one could make
a categorical statement of that nature.
Mr. FINLATOR. Right.
Mr. VANDER JAGT. Was it in May of last year that LSD was put on
the control list?
Dr. GODDARD. That's correct, sir.
Mr. VANDER JAGT. So that under those amendments and under the
laws that exist, it would be a misdemeanor to possess LSD today for
distribution?
Dr. GODDARD. Yes, it is a misdemeanor to sell and cause to be distrib-
uted or manufactured and hold for sale LSD or its precursors?they
are also under control.
Mr. VANDER JAGT. It would not be a misdemeanor under any Federal
law to possess LSD for personal use?
Dr. GODDARD. No, it would not.
Mr. VANDER JAGT. And until May of last year it was no crime under
Federal law to possess LSD for distribution, is that correct?
Mr. GOODRICH. LSD is an investigational drug and there are other
controls over it. Now, the only legitimate distribution of LSD is under
an investigational plan which we are monitoring very closely with the
U.S. Public Health Service Mental Health Groups. Any LSD found
outside those very limited areas of investigational use is illegal. Even
if we couldn't do anything about the mere possession in a criminal way,
we do have the authority and we do seize and take illegal LSD out of
that channel.
Mr. VANDER JAGT. Was this true until May of last year?
Mr. GOODRICH. Yes. LSD was introduced some years ago. It was put
under investigational use in 1962, after the drug amendments, the
Kefauver-Harris amendments in 1962. There were additional controls
over investigational drugs in that year following the thalidomide
episode and LSD was caught in that in a very tight way and has been
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monitored quite closely throughout the period since 1962. Prior to 1962
the, controls over investigational drugs were looser but they have been
tightened up since tint time and as of today LSD is under the closest
kind of control.
Dr. GODDARD. However, I should add that contrary to what some of
the, critics have said, -there is scientific. experimentation being carried
out using LSD, expbring its potential usefulness in a therapeutic
fashion and such research is not being hampered or prevented. There
are about 40 such studies, as I recall, now actively being carried out by
the scientific community.
Mr. ST GERMAIN. I was going to ask?you said there are 40 studies
now going on. Have some studies been discontinued? Because we have
some correspondence on this.
Dr. GODDARD. Yes, there have been some studies discontinued be-
cause of lack of a good scientific plan. The individual who proposes to
use LSD, or any other drug in the investigational field, must submit a
i
protocol which s evaluated by the Food and Drug Administration.
With LSD, recognizing the special nature and problems surrounding
it in our society we Jointly, with the National Institute of Mental
Health, did establish this past year a special review committee. This
committee is a group of peers of those who would carry out such re-
search. They review the proposals and then recommend to the Com-
miSsioner of Food and Drugs, and the Director of the National Insti-
tute of Mental Health, approval or disapproval. The drug is supplied
from the National Institute of Mental Health which holds the legal
surmly.
MT. ST GERMAIN. SO, it is your opinion that in all probability those
people who are corresponding with the committee complaining about
the: fact that research was not being allowed in this area, could very
possibly be unhappy a oplicants whose applications were turned down?
Dr. GODDARD. That's one possibility: and of course, one has to keep
in mind that there are always those scientists who feel there should be
no control over any of their work. It is fine for somebody else, but not
for them.
Mr. VANDER JAGT. When you discover that someone is illegally
manufacturing a drug, counterfeiting a drug, what is the penalty for
that?
Dr. GODDARD. Mr. Goodrich, is there a fixed penalty?
Mr. GOODRICH. No; the penalty arises out of the distribution of the
product and each distribution is a misdemeanor with a maximum of
1 year, $1,000, with some exceptions. But there seems to be adequate
penalty for handling the problem.
DE. GoDDARD. May I ask, ConoTessman, Were you limiting your
questions to the. drugs under the drug abuse control law?
Mr. VANDER JAGT. "? es.
Dr. GODDARD. Counterfeiting of legitimate drugs.
Mr. VANDER JAGT. Right. Have you any kind of studies as to what
the average penalty handed out by the Federal judges would be?
Mr. FINLATOR. No, We haven't, but we are making a study on that at
present.
Dr. GODDARD. There is variance in terms of penalties meted out by
the ,various courts who hold these cases under their jurisdiction.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 285
Mr. GOODRICH. We receive a report on every one of them and we can
accumulate that data for analysis. We are doing that now for our own
information.
Mr. VANDER JAGT. You indicated that you thought probably the
penalty was adequate now. We heard testimony here 2 weeks ago that
when counterfeiting of a drug was discovered, there generally was a
fine and that the maximum as a misdemeanor would be $1,000, and
since organized crime is moving into this field the $1,000 fine means
almost nothing. Would you care to comment on that testimony?
Mr. GOODRICH. A thousand dollars on each count of distribution.
So that will build up into a much larger figure on any substantial
distribution.
Mr. FINLATOR. I would like to say the word is out?what you say
is true, that some of the big boys are interested in getting into this
field for many reasons. It is lucrative. The laws are new. They don't
have the stiff penalty that they have under the old one and I am not
saying this is yet good or bad. For instance, to willf ally defraud, intent
to defraud willfully is 3 years and we have had cases, cases where
three or four counts have run consecutively, so haven't always been
just 1 year.
Mr. VANDER JAGT. But you do not have any studies or estimates as
to what the avera_ ge penalty has been?
Dr. GODDARD. Not as yet. We are attempting to derive this data. Our
experience literally has been about 1 year as far as our cases being
carried to the courts are concerned. We do not feel this experience
provides enough of a basis to make a really sound evaluation of
whether or not the penalties are sufficient. We will be continuing to
analyze this, however, and as I assured the Congress on at least one
previous occasion, if we find this to be a significant problem we will be
back and ask for additional legislative penalties.
Mr. VANDER JAGT. If you discover a firm that is counterfeiting a
drug can you revoke their registration?
Mr. GOODRICH. No; but we can enjoin them from continuing in busi-
ness. We put them out of business through the injunctive process. This
is in addition to exacting criminal penalties.
Mr. VANDER JAGT. If they cease and desist from this counterfeiting
can the injunction be removed?
Mr. GOODRICH. Yes; this is part of the genius of our system of equity,
and this is an equitable remedy. They can be modified when changed
conditions occur. But the remedy is also strong enough to assure that
an illegal, illegitimate counterfeiting operation would not be allowed
to continue.
Mr. VANDER JAGT. In fact, the judge would have to remove the in-
junction if they ceased and desistea from the illegal activity.
Mr. GOODRICTT. If they show that they have brought themselves into
compliance and there is no reasonable likelihood of a recurrence, he
would let the plant go back into operation. It would still be under our
surveillance for a while, I can assure you.
Dr. GODDARD. Yes.
Mr. VANDER JAGT. You mentioned in your educational program your
work with the high schools and colleges. Do you have any public rela-
tions program or educational program with the State boards of phar-
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macy or the pharmac mitical colleges and what are your efforts in that
area?
MT. FINLATOR. Wel, we deal pretty closely with the State boards
of pharmacy. I write to them personally myself. I have been through
all:of the original meetings of the National Association of Retail Phar-
macies at which these men gather. I have met most of them. We do have
a good relationship with them.
We are trying to ge ; them involved in an educational program along
with us, and most of t 'aem, I think, if we can give them some guidance,
will do it. You must understand, Mr. Congressman, that we are just
about neophytes so far, trying to get off the ground and the basic rea-
son why Congress put us here, we think?but we are leading toward
an educational program that involves not only the secretaries of the
boards of pharmacy, hut also the associations, the State pharmaceuti-
cal' associations. All 50 all 100 we do deal with and write to and
carry on correspondence and try to get them involved in the drug
abuse problem.
Dr. GODDARD. I think Mr. Finlator mentioned earlier as well, that
in 18 States we do have a pilot program and in most of these instances
it is the State board of pharmacy that has the contractual arrangement
with the Food and Drug Administration to carry out under our super-
vision and our guide .ines the inspection of recordkeeping practices
of local pharmacies. 'Are would hope that we could enhance this ac-
tivity, and enlarge it in scope?because the job of maintaining sur-
veillance over 55,000 pharmacies in these United States is a considera-
ble one and we think very properly could be carried out by the State
agencies with the proper training available. We do have in this area
a need for training airlority, we believe, in order to not only carry out
the, surveillance activity, but also the cooperative training efforts. Mr.
Finlator described thE se, involving other Jurisdictions, State and local
police activities.
Mr. VANDER JAar. That leads to my final question, the job of super-
vising or keeping an eye on the 55,000 registered 'pharmacies and co-
opdration with State and local enforcement agencies.
In addition to your helping to train them and make them aware of
the problem is there an attempt made at a division of labor?do they,
supervise the legitimate operations whereas you concentrate on the
illicit traffic?
Dr. GODDARD. Of course, that's the purpose of these 18 pilot-projects,
to attempt to have States assume this responsibility and to be able to
assure us that these people are engaged in legitimate business and are
maintaining proper :7ecords as required by Congress under these
amendments.
Beyond that, the division of labors, as I indicated, we do cooperate
very closely with the State enforcement and local enforcement agen-
cies. We are aware, however, that we do need to provide more training
activities?they are interested in securing the training. But as I men-
tioned, we do lack specific congressional authorization in this area.
The professional training amendments which we proposed last year to
Congress, unfortunately were lost in the last days of the session. We
could submit to you fo the record, Mr. Chairman, two statements rela-
tive to this matter of training of State and local authorities and its
significance.
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Mr. ST GERMAIN. Without objection they will be put in the record.
(The information referred to follows:
STATEMENT OF THE FOOD AND DRUG ADMINISTRATION REGARDING PROFESSIONAL
TRAINING AND COOPERATION AMENDMENTS
The Professional Training and Cooperation Amendments of 1906, introduced
as H.R. 13884 in the 89th Congress, unanimously passed the House of Represen-
tatives too late in the session for Senate consideration. An identical bill has
been introduced in the 90th Congress (H.R. 3912) by Representative Donohue,
of Massachusetts.
The bill would amend the Federal Food, Drug, and Cosmetic Act for the
purpose of strengthening and facilitating mutual cooperation and assistance,
including training of personnel in the administration of the Food and Drug Act
and of State and local laws relating to foods, drugs, devices, or cosmetics.
In reporting the bill to the House in 1966, the Committee on Interstate and
Foreign Commerce stated clearly the need for this legislation:
"NEED FOR LEGISLATION
"In the past, FDA has provided formal training opportunities for State and
local food regulatory officials but many of these officials were unable to attend
these courses because of a lack of funds in many States providing for use of
State travel. This bill authorizes the payment of travel expenses and a reason-
able per diem to State personnel while receiving training under this bill.
"A study of State and local food and drug programs conducted by Public
Administrative Services of Chicago which was completed in 1965 made the
following recommendation on personnel:
"'Although there is much that State and local agencies and universities can
do for themselves and for each other, important advances in the area of train-
ing can be better achieved by a coordinated national effort. A concerted effort
to overcome training deficiences is a necessary element of a needed operational
coordination that combines Federal, State, and local efforts. Advantages of such
coordinated planning for training of food and drug workers across the country
are clear. .
"'The reported bill would help work toward the coordinated national training
effort referred to above.
"'Existing law authorizes the FDA to utilize State or local personnel without
reimbursement to aid in the enforcement of the Food and Drug Act. The bill
would complement this existing authority by specifically authorizing the Secre-
tary to accept assistance in the administration and enforcement of the Food,
Drug, and Cosmetic Act from State and local authorities to pay for the reason-
able cost of such assistance.
"'The bill also grants specific authority for cooperation between FDA and
State and local authorities in the administration and enforcement of their laws
and regulations relating to food, drugs, devices, or cosmetics, and also enacts
into permanent law provisions contained in appropriations acts authorizing
contracts for the special tests and analyses and for information furnished to
him by hospitals or other institutions (other than information required by law
to be furnished) bearing on the safety or effectiveness of drugs or other articles
covered by the Federal Food, Drug, and Cosmetic Act.'"
STATEMENT OF THE FOOD AND DRUG ADMINISTRATION ON TRAINING OPPORTUNITIES
FOR STATE AND LOCAL REGULATORY OFFICIALS
In 1962 FDA initiated a formal training program for State and local food regu-
latory officials. Success in this initial training effort led to the almost immediate
adoption of training courses for State personnel in the field of drug abuse fol-
lowing passage of the drug abuse control amendments in 19435.
In conjunction with the development of a pilot project for State participation
in drug abuse control with the Bureau of Drug Abuse Control (BDAC), FDA
developed a 4-day training course in retail drug inspection for the benefit of drug
Inspectional personnel of the participating State agencies. The course will ulti-
mately be made available to all the States having an active interest in drug
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288 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
abuse control. The course provides instruction in community pharmacy inspec-
tion and drug accountability auditing techniques. The primary objective in this
training program is to improve the skills of State drug-control inspectors for
their role in the joint Fed( ral-S tate drug abuse control project wherein the par-
ticipating State agencies will assume responsibility for the control of drug abuse
at the community pharmac,7 level. Four training courses have been held in fiscal
year 1967 attended by 95 drug-control officials representing 32 States and one
metropolitan drug-control agency selected for initiation of this coordinated Fed-
eral-$tate program. A cad re of BDAC field agents serve as instructors in this
course with assistance by the Office of Legislative and Governmental Services.
At the request of State and local officials participating in the pilot program,
FDA has agreed to augmebt the formal training course with on-the-job training
through joint fieldwork particularly in the areas of drug accountability investi-
gatiobs. This program alsr) calls for periodic work planning sessions with the
coopd.rating agencies. In fis al year 1968 the Food and Drug Administration plans
four Similar training courses.
In addition, three drug training programs of 1 week duration have been held
in Washington for State aid local :law enforcement officers, and some O. 1- to
2-day drug institutes or se-ninars have been held in the field. Similar institutes
are being scheduled throughout the country by our field office directors in con-
junction with schools of pharmacy in their areas.
With additional legislative training authority, more and varied courses for
State and local officials involved with regulatory drug abuse work could be un-
dertaken by FDA. In his 'February 9, 1967, message transmitting the National
Crime Commission report, the President recommended "* * * funds to enable
the Federal Bureau of Narcotics and the Food and Drug Administration to en-
large their existing enforcement training programs, so that they can reach a far
greater number of local and State enforcement officers." We have been gratified
at the overwhelming response to our efforts to date, and feel sure that an ex-
panded program would be extremely beneficial to both the Federal Government
and to State and local participants.
Dr. GODDARD. May I also add, an important ally in this area has been
the national organizations related to pharmacy. They have been a
good channel of distrib ition of information detailing what is required
by the pharmacies. These organizations have worked very closely with
us to make certain that all of the pharmacists receive the information
with respect to their is dividual responsibilities. Without their assist-
ance our job would have been indeed immeasurably difficult.
Mr. VANDER JAGT. Thank you. Thank you, MT. Chairman.
Mr. ST GER1VIAIN. I would like to go on to a series of questions here.
Do you have any smcific cases that you can point out to us that
would illustrate the cooperation that you have had, let us say, with the
Organized Crime Section of the Department of Justice wherein the
information they receive from you has been helpful to them or the in-
formation you received from them has been helpful to you?
Mr. FINLATOR. Yes, we do. I wonder if it would be more advisable if
we submitted this to yoq at a later date for the record.
Dr. GODDARD. We hE,ve provided, for example, data on about 300
organized crime individuals or situations that have come to the atten-
tion of the Bureau of Drug Abuse Control to the organized crime
group at the Departmelt of Justice.
Mr. ST GERMAIN. Do you have in the alternate, where you have
supplied information?
Mr. GODDARD. This is .77hat I am referring to.
Mr. ST GER1VIAIN. Do you have a listing of those, where, as a result of
information supplied tc you--
Mr. FINLATOR. They -have given us leads and requests for assist-
ance?this type of thing, and any time we request something of them
we get it. Our best relationship actually is at the field level where our
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nine field chiefs have a personal and close contact with the FBI people
themselves.
Mr. ST GERMAN-. Does this find its way up to your office, also ?
Mr. FINLATOR. Yes.
Mr. ST G-ERMAIN. SO, you do have records on these cases?
' Mr. FINLATOR. Yes.
Mr. Sr GERMAIN. If you would, we would appreciate your submit-
ting them for the record at this point.
(The information requested follows:)
STATEMENT OF TIIE FOOD AND DRUG ADMINISTRATION REGARDING COOPERATION
BETWEEN THE BUREAU Or DRUG ABUSE CONTROL AND OTHER FEDERAL AGENCIES
Our close cooperation with the FBI is exemplified by two recent investigations
conducted by BDAC. During the course of negotiating for the purchase of illicit
drugs, a BDAC undercover agent attached to our New York field office received
information pertaining to a burglary involving over $125,000 worth of goods,
which had occurred 2 years prior to this June 1967 investigation by BDAC. This
information was immediately transmitted to the local FBI headquarters. The
subsequent investigation, conducted jointly by the FBI and BDAC, led to the
arrest of four individuals and the recovery of the stolen merchandise.
Another recent case documenting close cooperation between BDAC and the
FBI involved a BDAC agent in New York. This agent learned of a quantity of
merchandise highjacked from an interstate shipment. The BDAC agent was
joined in his undercover activities in the investigation by the FBI. This joint
investigation resulted in three arrests and the recovery of some of the loot in-
volved in the theft. In each of these two episodes, the FBI forwarded letters com-
mending the BDAC agent.
BDAC personnel have assisted other Federal agencies in similar fashion.
Among these agencies are the U.S. Secret Service. In one instance, a BDAC under-
cover agent negotiated with a group of violators who offered a quantity of coun-
terfeit U.S. currency. Our agent introduced an undercover Secret Service agent
to these violators. The resulting joint Investigation culminated in the arrest of
the criminal group and the seizure of illicit drugs and counterfeit currency.
On another occasion, a BDAC agent, working under cover, provided an intro-
duction to an organized crime syndicate member for an IRS undercover agent.
The cooperation afforded the FBI by BDAC is a two-way street. We have re-
ceived in excess of 15 informational and investigative transmittals from the FBI
outlining instances of possible illicit drug activities. Further, the FBI supplies
BDAC with a lecturer for each BDAC training school and each advanced training
session.
A further service offered to us by the FBI is use of their laboratory facilities.
At present, we have a number of tableted compounds in the FBI laboratory for
neutron activation analysis.
Mr. EDWARDS. You mean examples of these?
Mr. FINLATOR. I understand.
Mr. ST GERMAIN. In line with the question on the dates, I wonder
if you would care to comment and possibly illustrate for us how this
cooperation has increased since the initiation or establishment of the
Organized Crime and Racketeering Section of the Department of
Justice?
Dr. GODDARD. Mr. Chairman, could we provide that information for
you? It is not immediately available.
Mr. ST GERMAIN. Yes, all right.
(The information referred to follows:)
Since the establishment of the Organized Crime Task Force at the Department
of Justice, the FDA has intensified and become more aware of its investigations
which may have a bearing on organized crime. Most of the involvement of or-
ganized crime in areas regulated by this agency has come since the early 1960's.
It is thus difficult to measure or give examples of such increased cooperation.
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290 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. ST GERMAIN. Ifave you found that you have had to follow a
hands-off policy with respect to certain individuals that you felt you
could make a case against because of a request from another Federal
agency that you do st ty away from these individuals because of cer-
tain affiliations that they have and certain aids they are giving to those
other agencies?
Mr. FINLATOR. Only if we agree to it and we in turn have requested
the same thing.
Mr. ST GERMAIN. Yyti mentioned a film on LSD. Did this particular
film illustrate the posE ible effects?some of those that have occurred?
I think I recall a few :rnicide cases, as a result of people going through
the, experience.
Dr. GODDARD. Yes, I am told that this will illustrate some of the
effects, some of the artcomes. The film is in the final stages of pro-
duction. I haven't even seen it?we haven't had the first screening of
it yet.
Mr. ST GERMAIN. II0 you have a statement on the deleterious effect
of drugs? This is in line with your educational program. Does this
include the deleteriou 3 effects of the drugs, rather than just what they
will do for you ?
Dr. GODDARD. Oh, yes, indeed, it tends to emphasize this point, Mr.
Chairman.
Mr. ST GERMAIN. Would you submit that for the record, also ?
Dr. GODDARD. Yes.
(The information requested follows:)
[From the Bureau a Drug Abuse Control, August 1966
PACT SHEET 4
DEI RESSANTE, (SEDATIVES-HYPNOTICS)
This group includes a number of drugs, such as the barbiturates, the most
widely abused among the depressants.
Medical use
Barbiturates depress the centrrl nervous system, and are prescribed in small
doses to induce sleep. T ley are also valuable in cases of acute anxiety, hyper-
thyroidism, and high blopd pressure. Because of their sedative, but nonanalgesic
effects, barbiturates are ased in treating both physical and mental illnesses.
Abuse
Continued and excessive dosages of barbiturates result in slurring of speech,
staggering, loss of balan:e and falling, quick temper, and a quarrelsome disposi-
tion. Overdoses, particularly when taken in conjunction with alcohol, result in
unconsciousness and dea:h, unless given proper medical treatment.
While an unsteady gait and speech problems may be signs of neurological dis-
orders, such as multiple sclerosis, such diseases are uncommon among young
men. Usually, the appearance of drunkenness without an alcoholic breath indi-
cates barbiturate intoxication.
Although physical dela ?.ndence Coes not develop with the dosages normally used
in medical practice, it does occur with the excessive doses used by drug abusers.
Tolerance is also an important characteristic. Withdrawal symptoms usually are
far more dangerous thar those resulting from narcotics withdrawal.
The barbiturates
Barbiturates are known to drug abusers as barbs, candy, goofballs, sleeping
pills, or peanuts. Specific types are often named after their color or shape; for
example:
1. Pentobarbital sodit ra (in solid yellow capsule form) is known by abusers
as yellows, yellow jackets, or nimbies (after a trade name of this drug).
2. Secobarbital sodium, in red capsule form is called reds, pinks, red birds, red
devils, soggy, and seccy (after trade names).
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 291
3. Amobarbital sodium, combined with secobarbital sodium, in red and blue
capsule form, is known as rainbows, red and blues, double trouble.
4. Amobarbital sodium (in solid bine capsule form) is known by abusers as
blues, bluebirds, blue devils, or blue heavens.
[From the Bureau of Drug Abuse Control, August 1966]
FACT SHEET 5
HALLUCINOGENS
This group includes among other drugs mescaline, a chemical taken from the
peyote cactus; psilocybin, extracted from Mexican mushrooms, and LSD-25,
a lysergic acid derivative that is the best known of the hallucinogens.
Effects of LSD
Eating, inhaling, or injecting even as small a quantity of LSD as 1/280,000
of an ounce causes symptoms ranging from hallucination, distortion, and in-
tensification of sensory perception to panic, impulses toward violence, suicidal
acts, and psychosis. These effects, totally unpredictable and varying widely from
person to person, may last from 8 to 10 hours, and recur without taking the drug
again.
There are also physical effects associated with the use of LSD. There is an
increase in blood pressure, heart rate, and blood sugar, accompanied by nausea,
chills, flushes, irregular breathing, trembling, and sweating of the hands. Sleep
becomes virtually impossible until at least 8 hours after the LSD episode is over;
pupils are so widely dilated that the user has to protect himself against the
light with dark glasses, even at night.
Hallucinogens do not produce a physical dependence; however, the user may
develop a psychological addiction, but this is not yet certain.
Medical use
After nearly 20 years of clinical research and 2,000 papers published in scien-
tific journals, no medical use has as yet been found for LSD. Together with other
hallucinogens, it is considered an investigational drug; indeed, its action on the
body and nervous system is not yet understood.
LSD as a therapeutic adjunct in the treatment of various mental disorders,
alcoholism, or autistic or psychotic children and adults is being tested and
evaluated.
Abuse
The use of hallucinogens as "mind-expanding" drugs was first suggested by
Aldous Huxley in the early 1950's; it has lately become something of a vogue
or cult in "beat" circles and on college campuses as the result of the publicity
engendered by Timothy Leary, who, several years ago, was dismissed from
? Harvard University.
The use of LSD can have disastrous consequences and frequently requires
extensive psychiatric treatment to restore the individual.
Because of the growing abuse of LSD, the only licensed manufacturer and
investigator of the drug voluntarily ceased manufacture in April 1966.
Since the government has taken steps to curb the illegal traffic in lysergic
acid and lysergic acid amide, chemicals from which LSD can be made, drug
abusers will be using LSD of untested purity and strength. Experimentation with
bootlegged "bathtub" LSD, peddled to the abuser in a sugar cube with an un-
known dose of the drug, may be even more dangerous than the use of legally
manufactured LSD has been.
[Prom the Bureau of Drug Abuse Control, August 1966]
PACT SHEET 6
STIMULANTS
This group of drugs, which includes the amphetamines, directly stimulates
the central nervous system, producing excitation, alertness, increased initiative
and activity, and an ability to go without sleep for protracted periods of time.
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Medical 'use
Aniphetaraines are prescribed for overweight patients, to reduce their appetite;
in cases of narcolepsy, a disorder characterized by an overwhelming desire for
sleep; for Parkinson's disease; and in some cases of minor mental depression.
Abuse
Because the body develops a tolerance to amphetamines, abusers increase
their dosages gradually, which wiLdly exaggerates the normal effects of these
drugs and results in end ;ability, talkativeness, tremor of the hands, enlarged
pupils, and heavy perspiration. In serious cases, there is a drug psychosis re-
sembling schizophrenia, delusions, and hallucinations, both auditory and visual.
These effects are particularly dangerous when amphetamines are taken by long
distance drivers to ward aff sleep, for they are unaware of their fatigue until
it okiercomes them and es ch year causes serious accidents on the highways.
Athphetamines are frecuently used by criminal elements to increase their
courage and alertness duri ag their exploits.
While amphetamines do not cause physical addiction, abusers develop a psychic
or emotional dependence on these drugs. Continued abuse of amphetamines can
cause high blood pressure abnormal heart rhythms, and even heart attacks.
The amphetamines
Amphetamines are known to drug abusers as pep pills, wake-ups, eye-openers,
copilots, truckdrivers, or lefinies, after a trade name of this drug. As with other
dangerous drugs, the slaaig names applied to them by abusers frequently are
derived from the shapes a ad colors of capsules and tablets, their effects, or their
use. Some examples are:
1. Amphetamine sulfate , in rose-colored, heart-shaped tablet form, is known
as peaches, roses, hearts, o : bennies.
2. Amphetamine sulfate, in round, white, double-scored tablet form, is called
cartwheels, whites, or beniles.
3. Long-acting ampheter nine sulfate capsules, found in many colors, are known
as coast-to-coasts, L.A. turnabouts, copilots, or browns.
4. Amphetamine sulfate, in oval-shaped tablets of various colors, are called
footballs or greenies.
5. Injectable amphetamine, in the jargon of the abuser, is bombido, jugs, or
bottles.
6. DeXtroamphetamine sulfate, in orange-colored, heart-shaped tablet form,
is known as hearts, orances, or dexies (after a trade name of this drug).
Mr. ST GERMAIN. Pr or to the formation of the Organized Crime and
Racketeering Section did you have a coordinating, a coordination pol-
icy with the other ag( ncies that are dealing with the same problems
that you are dealing with, especially in the area of organized crime?
Mr. Finlator might have difficulty with this in that his agency has
been organized for a short period.
Dr. GODDARD. I would, too, because I only came to the Food and
Drug Administration in January 1966. However, Mr. Goodrich, who
has been involved in this for some 28 years, can comment more effec-
tively.
GOODRICH. We have always operated in the Department of
Justice through the Criminal Division. All of our cases have been
handled there. They have been. civil cases. We have had close relation-
ship with the Bureau cif Narcotics for many years, with Mr. Anslincr,er
and all of their peop. e. The first proposals in connection with bar-
biturates, as you remember back in 1948 was to place them under the
narcotics controls and we did coordinate with the Bureau of Narcotics
at that time in developing what became the Drug Abuse Control
Amendments of 1965. But, throughout all these years as we became
more involved with the criminal element in the distribution of drugs,
after we, moved from the drugstores as the prime outlet into the truck
stops and other areas, we maintained contact with other law enforce-
ment agencies, not with the intensity that Mr. Finlator now has and
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not with the results he is now getting. But we recognized for a great
many years the need to coordinate with the Bureau of Narcotics and
others.
Mr. ST GERMAIN. How about your coordination with the FBI, Mr.
Finlator ?
Mr. FINLATOR. We have a very close coordination with the FBI for
several reasons. No. 1, because I think it is rather stupid for federally
investigative outfits not to cooperate with each other and if I have
seen a lack of it I have gone out for it myself. I have gone out to try to
develop this type of coordination myself, rather than sitting back as a
new organization and letting them come to me.
I believe in the principle of working together and cooperation as a
great management principle and I know that if you believe in that
principle then you take steps to get involved in it, which we have on
a very affirmative basis. I assure you. Six of my nine field chiefs are
former FBI agents and I chose them on purpose because I wanted that
type of discipline on the Bureau and I wanted that type of coopera-
tion in the field.
Conversely, we have from the Bureau of' Narcotics, to somewhat the
disgruntlement here, some 30 of their best agents and who are now
working with BDAC who applied for jobs with us. We have a number
of disciplines and a number of good relationships with all of them.
Dr. GODDARD. I do not have any bad relations with a single one of
them.
Mr. ST GERMAIN. I took note of the fact that you illustrated in your
testimony the people that you had been able to recruit -from other
agencies and I am wandering what the motivating factor was that
you employed in order to convince these people to come over to
BDAC
Mr. FINLATOR. I don't know. It is a series of things, I suspect..
Mr. ST GERMAIN. Would it be a new agency?
Mr. FINLATOR. That would be part of it.
MT. ST GERAIAIN. Or are the levels a little better?
Mr. FINLATOR. Many of the people came to us horizontally and you
would be surprised?not a large number, but a considerable number
came at a lower grade to come with us. I think it is the newness of
the new outfit, plus the fact that the drug abuse problem is an excit-
ing one for the investigator.
Dr. GODDARD. I would have to add that another factor which would
relate to the newness of BDAC. Recruits from other agencies would
perceive the opportunities to move ahead perhaps more rapidly than
they could in their own organization because of age comparability and
other factors.
From the point of cooperation, the other agencies have extended
real cooperation in our training programs, as well as in other ways.
I don't think that there is anymore disgruntlement than the normal
one would expect when you lose some of your agents to a new ac-
tivity; because these people have cooperated and have helped Us get
into. business.
Mr. FINLATOR. May I add that we have just completed this past
-week a case in New York, a hijacking case in which we were working
with the Federal Bureau of Investigation in close cooperation with
them.
78 508 67 pt. 2 11
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. ST GERMAIN. You bring up hijacking and that was the ques-
tion I had.
In your testimony, I think both of you illustrated or mentioned
the controls that you Ise over drugs. But I am wondering, what hap-
pens once a shipment of drugs is hijacked?then where are your
controls?
Dr. GODDARD. They cease to exist. This puts us in the undercover
activity in the investiative field. This is where the past training and
experience of these a 4ents that we have recruited has proven to be
extremely valuable. This is also where it is important to work very
closely with other Federal, State, and local agencies.
Mr. ST GERMAIN. Have you found any high incidence of the hi-
jacking of brand namos or generic drugs as opposed to the other types
of drugs?
Dr. GODDARD. No. Aside from the drug abuse drugs?I am sure you
are asking across the board--most of it tends to concentrate on the
drugs under the contiol amendments, because the profit margin is so
great at the street Sale level for these drugs. But in the other area,
no, there is no substantial evidence that this has occurred.
Mr. FINLATOR. Whea there is a hijacking, they've got a fence some-
where and we meet (id ChaAie some night and we buy from him
and we find out about it fairly soon. They've got to get rid of it.
Mr. ST GERMAIN. W ith respect to the infiltration of organized crime
into its operations, I believe you mentioned one instance in Chicago.
Could you at this ti:ne mention any other instances or examples,
specifically ?
Mr. FINLATOR. Yes. We have had a number of them in which orga-
nized crime was invol?ed. If I may mention?we had one in Chicago
which I mentioned to you. We had another one in Michigan in which
a company was invol-Ted.
Mr. ST GERMAIN. Was this a registered firm?
Mr. FINLATOR. Yes. sir.
Mr. ST GERMAIN. Had this company been inspected?
Mr. FINLATOR. They had been audited.
Mr. ST GERMAIN. Fad been audited. Is there a difference between
an audit and inspection?
Mr. FINLATOR. Not a 3 far as we are concerned.
Dr. GODDARD. Just a minute. Yes, indeed. The audit goes to the
recordkeeping practic,s with respect to the drugs that fall into the
drug abuse amendments. I ten .d to use the term inspection in connec-
tion with our routine kind of inspection of the drug manufacturing
establishment.
Mr. ST GERMAIN. Who is in charge? Who are the principals? Who
is charged with seeing that it is in sanitary condition, proper potency
and what have you?
Dr. GODDARD. Yes.
Mr. ST GERM Ansr. A:i audit had been carried out. This had not been
carried out?
Dr. GODDARD. I cannot answer it specifically?I cannot answer this
specific question on thB firm without referring back to the records.
Mr. ST GERMAIN. We would appreciate it if you would submit it
for the record.
Dr. GODDARD. We will.
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(The information requested follows:)
The Michigan pharmaceutical firm referred to had previously been inspected
by FDA, prior to the organization of BDAC.
Subsequent to legal action against the firm, an accountability investigation of
the firm was immediately initiated by BDAC. A short time later, a confirming
accountability investigation was accomplished and discrepancies were noted
along with serious deficiencies in the required recordkeeping. BDAC, through
the U.S. attorney's office in Detroit, requested a court order to seize the controlled
drugs located in the firm's premises based on the accountability investigation.
Mr. ST GERMAIN. This firm you say had been audited and you later
found that this firm was involved in the illicit traffic of drugs and you
had reason to believe that there was an involvement with organized
crime, is that correct?
Mr. FINLATOR. That is correct.
Mr. ST GERMAIN. Now, this information came to you later, subse-
quent to the audit?
MT. FINLATOR. Right.
Mr. ST GERMAIN. flow long after the audit, if you have that infor-
mation?
Mr. FINLATOR. It was about a month and a half.
Mr. ST GERMAIN. Did this information come to you as a result of
the audit or as a result of other investigations?
Mr. FINLATOR. It was other?undercover, not as a result of the audit.
However, we have had cases where it has been a result of the audit.
Mr. ST GERMAIN. You mentioned the Chicago case and you men-
tioned this case. Could you mention some of the other cases?
Mr. FINLATOR. I would prefer if you do not mind, giving you a
rundown on that at a later time. I think there are about?these would
illustrate what you want.
Mr. ST GERMAIN. And if you would give us?I do not expect you
to be terribly factual because this might violate or be harmful to your
work. But where you can, let us know whether it is as a result of an
audit, inspection, or undercover work or other information.
Mr. FINLATOR. Very well. We will do that.
(The information referred to follows:)
There are several instances documenting the involvement of organized crime
figures in BDAC cases. One example is a recent case in the Middle West. An
undercover BDAC agent met a violator at Chicago, Ill., and negotiated for the
purchase of 1 million amphetamine tablets for a price of $23,000. This violator,
himself a member of Chicago's syndicate and related to a top Mafioso, intro-
duced the agent to his illicit drug supply source who, besides having been pre-
viously involved in a high jacking, was an organized crime figure and affiliated
with members of the Cosa Nostra. He also owned and operated a registered drug
firm in Chicago.
During the negotiations for the amphetamine units, 175,000 dosage units of
drugs were purchased from this criminal group. Ultimately there was active
participation by live of the group's members. However, one of the purchases
consisted partially of caffeine rather than amphetamine when an attempt was
made to dupe the purchasing agent into accepting counterfeited merchandise
which had considerably less value in the criminal market.
Another BDAC agent, initially acting with a second agent and then con-
tinuing alone, met members of this organized crime group under the guise of a
syndicate loan shark racketeer.
During the second undercover phase of this investigation, the undercover
agent was offered the chance to buy a high jacked truckload of pharmaceuticals
and sundries worth well over $125,000. The group of hoodlums believed
that in consummating the fraudulent sale of caffeine tablets a war between two
criminal groups would result. Thus, they returned the money involved in that
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.296 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
purchase to one of the undercover agents and in return demanded the return of
the counterfeited drugs. Naturally this could not be done. As a result, this or-
ganized crime group re;orted to the assignment of a known Chicago under-
world "enforcer"- who came armed to several meetings with the undercover BDAC
agents. Subsequently, the group acquired a "hit contract" calling for the murder
of the two BDAC agents who were thought to be "juice" racketeers. This con-
tract was arranged for b?,tween the traffickers and an extremely high level Mafia
leader in the Chicago ar3a.
About 2 months after the initial undercover contact, the criminals involved
were arrested by BDAC agents in Chicago and approximately 1 million addi-
tional units of amphetan.ine and barbiturates were seized. This case is currently
involved in litigation in the Federal courts. While the defendants were released
on sizable bonds, the bodr of the hoodlum who took most active part in the trans-
action was found floating in the Chicago River with a strand of wire around one
wrist. There is presently in active investigation of this death.
This investigation wa;; initiated through a combination of intelligence data,
undercover investigation and previous Food and Drug Administration records.
Earlier PDA inspections of the firm owned by one of the defendants documented
the fact that the firm owner had trafficked in controlled drugs in the past.
Another case, currently involved in prosecution, began in one section of the
country where BDAC agents were purchasing large quantities of amphetamine
tablets from the owner of a drug firm. In an undercover conversation with this
violator, the owner of tl e firm stated that he was falsifying records of alleged
large shipments of amphetamine tablets to a location in the Far East and that
he was making paymens to foreign nationals from that area of the world. These
foreign nationals are associated with a U.S. exporting firm.
Investigations further disclose that the plant owner-violator arranged for the
shipment of an extremel7 large quantity of amphetamine tablets to be shipped
from the United States :n large drums which were destined for the Far East
and which were docume:ated as containing amphetamine tablets.
Upon examination of the drums after their seizure, they were found to con-
tain cement, covered by a thin layer of amphetamine tablets. By falsifying rec-
ords indicating that the total shipment consisted of amphetamine tablets, the
violator hoped to channcl the balance of the amphetamine units into the illicit
traffic.
Another investigation showing the participation of organized crime in the
illicit traffic of drugs began when, in an undercover capacity, an agent of the
Bureau of Drug Abuse Control negotiated with a registered distributor for the
clandestine manufacture and illegal sale of controlled drugs.
The registered distributor sold the undercover agent over 100,000 dosage units
of amphetamine tablets which were being produced in a clandestine laboratory.
The distributor was a:Tested by BDAC agents when he delivered 800,000 of
these clandestinely manufactured amphetamine tablets to the undercover agent.
Subsequent investigation led to the arrest of the clandestine manufacturer
and the seizure of his eqtt pment.
Mr. ST GERMAIN. Now, as of this date how many registered firms do
we have?
Mr. FINLATOR. We have a registration?the people who registered is
5,700.
Mr. ST GERMAIN. Cif these, how many have been inspected?
Mr. FINLATOR. 647.
Mr. ST GERMAIN. 1-1-ave been inspected. Do you feel you are going to
be able to cover the 1,alance within the 2-year period as required by
your own regulation?
Mr. FINLATOR. No, hr. When I say no, it depends upon?
Mr. ST GERMAIN. LA us be honest. The figures speak for themselves.
Mr. FINLATOR. The figures speak for themselves; 647 out of 5,700?
and we are devoting?we have a policy to devote 40 percent of our time,
of the agent's time to the records accountability program.
Mr. ST GERMAIN. If I may understand this clearly, the inspection
is carried out by the 254 agents in BDAC. And 40 percent of the time
of these agents is sperr; in inspecting?
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 297
Mr. FINLATOR. I say our policy is to reach 40 percent of the time.
Mr. ST GERMAIN. how are we going to solve the problem, Mr. Fin-
lotor ? You need more agents, correct?
Mr. FINLATOR. It is pretty obvious.
Mr. ST GERMAIN. Or less manufacturers.
Mr. FINLATOR. Or take them off the street from the criminal work
and put them full time on the record accountability program. We
made an administrative decision that at present seems to be a good
one, 40 percent of the accountability work and 60 percent criminal
work. This work that we are doing here is not an inspection of the
plant, you understand that. This is an accountability record check
of the records of the company.
Mr. ST GERMAIN. HOW about the inspections of the plant?
Dr. GODDARD. These are carried out by our district office inspectors.
The cycle there will vary according to the past records of the plant.
Generally they try to accomplish this within a 2-year period. Every
2 years, each firm is visited at least once by an inspector who goes
into the broad inspection.
Mr. ST GERMAIN. Sanitary conditions?who is in control?whether
or not they have criminal backgrounds?
Dr. GODDARD. Yes.
Mr. ST GERMAIN. How do you stand at the present time in this area.
of inspection?
Dr. GODDARD. Our district offices are meeting their responsibility of
inspection every 2 years.
Mr. ST GERMAIN. One inspection every 2 years?
Dr. GODDARD. Yes.
Mr. ST GERMAIN. Of all 5,600?
Dr. GODDARD. Mr. Finlator was referring to the auditing which
covers a broader group of firms that the inspection of the nature we
are talking about.
Mr. ST GERMAIN. Now we are talking about manufacturing plants.
Dr. GODDARD. He has to look at wholesalers as well. That's why the
number is at odds with the number of 1,800 producers.
Mr. ST GERMAIN. You have 1,800 producers?
Dr. GODDARD. 1,800, 1,600 firms producing drugs.
Mr. ST GERMAIN. Of these how many are?you say you are current
with your 2-year inspection.
Dr. GODDARD. Yes.
Mr. ST GERMAIN. You testified as to the type of inspection?
Dr. GODDARD. Yes.
Mr. Sr GERMAIN. You feel that is the complete inspection that satis-
fies you, Dr. Goddard?
Dr. ,GonnAttn. No, it doesn't. We are making an extensive analysis
of how we conduct our inspections, what factors we look at. We have
employed Booz, Allen & Hamilton for the past year to work with us
as our management consultants because we are up against the prob-
lem of manpower shortages in the general area, of food, drug, and cos-
metic work. Some of the inspection cycles in food plants are now up
into 6 and 7 years between inspections. This is because of the workload
that has grown at a disproportionate rate with regard to our inspec-
tion force. Now, rather than simply employing more inspectors, we
are looking at the method of inspection to see if we can identify what
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298 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
are the critical elements of inspection in order that an individual
inspector can cover more plants with the same kinds of outcomes.
It will raise our efficie ncy level, if you will. I am not overly optimistic,
I must say. The disparities are so great?we have 30,000 food process-
ing firms and 70,000 3stablishments in that category alone. We have
about 6,000 to 8,000 drug firms?these include repackaffers, relabelers,
et cetera. We have a c ouple thousand cosmetic firms. Also we have all
the imports to inspect. Last year, in the import area alone we detained
8,994 imports and that was 10 percent of what we had sampled. We
only sampled one-third of the total imports. So the disparities are
indeed great and we have to seek some other solutions.
Mr. ST GERMAIN. With respect to the legislation, I think you may
have seen that I've asked to have prepared, and it was referred to by
Mr. Edwards?actua:ly, this would require inspection prior to the
issuance of a registry number. The thing that then occurred to me
and troubles me, it doss nothing for those firms already registered but
not inspected. Would you provide me with what you think would be
a fair amendment to that amendment, proposed amendment that
would cover, and that would be practicable for the agencies as far as
inspection of those films already in possession of a registry number?
Dr. GODDARD. Yes, sir.
Mr. ST GERMAIN With respect to LSD, how many people are now
manufacturing LSD?
Dr. GODDARD. None in this country. The entire supply of LSD which
is legally being used for research purposes was turned over to the
National Institute of Mental Health by Sandoz Pharmaceuticals last
year.
Mr. ST GERMAIN. The next question is?evidently it is a patented
process?
Dr. GODDARD. I clon'i; believe it is.
Mr. ST GERMAIN. Lt us ask the question in a different manner. Is it
difficult to manufacture?
Dr. GODDARD. No. Of course, this is where the other world that we
are concerned about comes into the problem. We have attempted to
control the precursors, the chemical precursors of LSD as well as the
compound itself. But it is not that difficult to manufacture. A chemist
in a matter of 4 or 5 hours with the proper equipment in a garage,
loft, or wherever you will, could produce significant quantities of it.
Mr. ST GERMAIN. Have you apprehended any illegal manufacturers
of LSD?
Mr. FINLATOR. Yes sir.
Mr. ST GERMAIN. Would your people have any statistics for us?
Mr. FINLATOR. Yes; if I might say we have knocked off 17 clandes-
tine laboratories which were making LSD and we picked up over a
million dosage units of it.
Mr. ST GERMAIN. YCII used the term "clandestine laboratories." Have
there been any registered plants manufacturing LSD?
Mr. FINLATOR. No.
Mr. ST GERMAIN. I:1 each and every instance this was nothing but
where LSD was manufactured by certain individuals who had the
knowledge and abilit:7?
Mr. FINLATOR. They were making DMT or something else along
with it, but they wen LSD labs.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 299
Mr. ST GERMAIN. It is a violation of the law in the District of
Columbia for an individual to be in possession of or to use LSD?
Dr. GODDARD. No, sir; it is not.
Mr. ST GERMAIN. Some of these people that you have come
across using it or in possession of it, have they been helpful to you
as to identifying the source?
Mr. FINLATOR. In some instances; yes, sir.
This is really the guts of our work, to try to get somewhere else,
other than the man you are buying from.
Mr. VABER JAGT. If it were a violation of law to be in possession
of it in the District of Columbia. would you be inclined to get greater
cooperation from them in revealing the source?
Mr. FINLATOR. Not necessarily.
Dr. GODDARD. We have certain States, Congressman, where posses-
sion is a felony. And I do not believe that there are any differentials
that have come to light in terms of an advantage in those States versus
the others. Here again I would emphasize that the experience is
miniscule.
Mr. VANDER JAGT. Just in general, if an individual has the viola-
tion of the law hanging over his head, does that not tend to make
him a little more cooperative than if he is in violation of absolutely
no law?
Mr. FINLATOR. Yes; it does in some cases.
DT. GODDARD. You have to balance this with the other side of the
problem.
Mr. FINLATOR. It depends upon the individual, too, and whether
he will cop out and become an informer. It depends upon many things.
MT. VANDER JAGT. It "WORM certainly remove one of the incentives
to cooperate, the fact that it is not a violation of any law.
Mr. FINLATOR. I don't know how to answer that one. It could be,
yes. But, I don't think I could categorically say "Yes."
Mr. VANDER JAGT. Thank you.
Mr. ST GERMAIN Mr. Rothenberg.
Mr. ROTHENBERG. As a matter of fact, possession is a violation if
the FDA can establish that the person does not possess it for personal
use?
DT. GODDARD. That is correct.
Mr. ROTHENBERG. For a member of the family or for an animal?
Dr. GODDARD. That is correct.
Mr. ROTIIENBERG. How would you go about establishing that?
Dr. GODDARD. That is basically on the quantities involved and what
we have uncovered in the investigation of the individual. In other
words, a college student is found in possession of let us say, one dose,
of 125 micrograms of LSD, and our investigation does not reveal that
he is peddling this to the other students on campus. This comes under
the possession of the individual for his own use. If, on the other hand,
we find under similar circumstances, the student in possession of 100,
150 doses, then there is a reasonable assumption one could make that
this is being offered for sale by the individual.
Mr. FINLATOR. We lust arrested someone in Texas with 100,000
peyote buttons on him for possession?no sale.
Mr. ROTHENBERG. Is not the statute unrealistic on that? You couldn't
prove your case.
Mr. GOODRICII. We haven't had any difficulty so far.
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300 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. ROTHENBERG. In proving possession to be a violation?
Mr. FINLATOR. Where you have 100,000
Dr. GODDARD. Or eveii 100.
NIE. ROTHENBERG. PI i talking about a user.
Mr. GOODRICH. We found very few cases, if any at all, where the per-
son had it solely for his own use.
Mr. ROTHENBERG. How do you make your case? What I do not under-
stand is
Mr. GOODRICH-. We make our case generally by having purchased
from him. This is the most direct and best evidence and gets at the
major source of the trouble.
Dr. GooDARD. I think this is important. As the Federal agency with
limited resources, we concentrate our efforts in trying to identify the
initial source of the drig, not who is using the drug illicitly as an indi-
vidual. We think that is appropriate?that we should concentrate on
trying to ferret out the producers and knock out the elements in the
distribution line of the drug, rather than worrying about an individual
in the pool hall or in a barroom. We should leave this to the States?
and this is why it is important that we cooperate with them, with the
activities at the local hvel which are not related to finding the ultimate
source of the drug.
Mr. ROTHENBERG. ii 3w effective is this in the District of Columbia?
Mr. GOODRICH. We ]?ust completed prosecution here in the District
of Columbia under our law that was publicized in the newspapers. We
were able to prove to fie satisfaction of the jury that these young peo-
ple were in possession the product for purposes other than for their
own Use.
Mr. ST GERMAIN. Excuse me. If they are brought into court, do they
not have to indicate that it was for their own use?
Mr. GOODRICH. We hive to prove it was not.
Mr. ST GERMAIN. The burden is on the Government.
Mr. GOODRICH. Congress wrote that in the legislation. We willingly
accepted that burden. We felt we were concerned with commercialism
in these drugs. This was our major problem, we would have our hands
full: regulating commercialism. We believed we would be in a position
to prove possession for sale in 99 out of 100 cases. We also had a means
of seizing the LSD even if it were in possession of a person for his
own use: we had a civil remedy. This was different than making pos-
session of a few barbitirates or a few amphetamines that you got from
a pharmacy without a prescription, against the Federal law. This was
the iudgment Cortgres, reached. We concurred in it.
Mr. ST GERMAIN. Of the 17 firms that you, as you put it, have
knocked off to date, ch,ndestinely manufacturing LSD, have you iden-
tified a tie-in with organized crime with any of them, with some of
them, or with all of them?
Mr. FINLATOR. With some of them.
Mr. ST GEamAiw. kaproximately, or would you rather not state it?
Mr. FINLATOR. I would say with some of them, but not with all of
them.
Mr. ST GERMAIN. TT ive the FDA had any occasion to investigate or
take any action against any members of the Neo-American Church who
use LSD and other hallucinogenic drugs?
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 301
Dr. GODDARD. Yes, we have. One of the boo hoos has been identified
in one State and four others have been arrested and brought to trial
by the Bureau of Drug Abuse Control.
Mr. ST GERMAIN. Are you aware, or do you have any information as
to the present activities of Boo Hoo Kleps ?
Mr. FINLATOR. Yes. We know him very well. We know of him.
Mr. ST GERMAIN. Has he been indicted at this point?
ME. FINLATOR. NO. Not by the Federal Government.
Mr. ST GERMAIN. Are you aware of his whereabouts at this time?
Mr. FINLATOR. In New York.
Mr. ST GERMAIN. Has he been further south recently?
Mr. FINLATOR. Yes.
ME. ST GERMAIN. Specifically?
Mr. FINLATOR. Alabama.
ME. ST GERMAIN. What was that last one?
Mr. FINLATOR. In Florida, too.
Mr. ST GERMAIN. Do you know what area in Florida?
ME. FINLATOR. Sarasota.
Mr. ROTHENBERG: Was he not also in southwest Miami?
Mr. FINLATOR. Yes.
Mr. ROTHENBERG. Did he not have a church in southwest Miami?
Mr. FINLATOR. Yes. We arrested the boo hoo of Florida and he was
tried and convicted.
Mr. ROTHENBERG. What was the violation?
Mr. FINLATOR. Selling LSD to one of our agents.
Mr. EnwArtns. You just raised a whole series of new questions. What
do you know about him in Alabama?
Mr. FINLATOR. Ostensibly to set up a church in Birmingham. We
think that his modus operandi is to have a church in every State with
a boo boo in charge of each State or area.
Mr. EDWARDS. Is boo hoo sort of a trademark or something?
Mr. FTNLATOR. It is the high priest.
Mr. EDWARDS. Do you know whether he, in fact, was able to set up
anything in Birmingham?
Mr. FINLATOR. We don't know yet.
Mr. EDWARDS. I hope he was just passing through on the way to
Florida.
Thank you, Mr. Cha
Mr. ST GERMAIN. If we might identify for the record what actually
is the Neo-American Church? What is it that they would worship or
believe in?
Dr. GODDARD. We will provide that for the record.
(The information requested follows) :
STATEMENT OF THE FOOD AND DRTJG ADMINISTRATION REGARDING THE
NEO-AMERICAN CHURCH
The Neo-American Church purports to be a religious organization which
utilizes psychedelic substances as sacraments. At present, its movement is be-
lieved to be confined to the United States. It maintains that psychedelic sub-
stances are sacraments. That is, divine substances, no matter who uses them
or for what reason they are used.
The patriarchs of the Neo-American Church claim it to be one of the three
major religious organizations in the United States using psychedelic drugs as
sacraments. The other two are the Native American Church (which has for
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centuries used peyote in religious rites, a function which has been exempted
by regulation from the r quiremertts of statutory law as set forth in the drug
abuse control amendments), and the Church of the Awakening.
The Neo-American Church considers itself to the "left" of the other two
churches, for it does not employ set rituals, make conditions for membership
other than full agreemen ; with its principles, or regulate the frequency or in-
tensity of the sacramental experience. It does not place emphasis on regular
public meetings or the maintenance of places of worship at special locations but
takes the view that the important places in the Neo-American world are the
lodges located away from the usual population centers, staffed by its clergy and
other activities. The followers may visit these lodges for days, weeks, months,
or years at a time.
The clergy of the chureh are referred to as boo boos and at this time there
are approximately 21 located throughout the United States. They include such
publicized persons as Tin othy Leary, Lisa Bieberman, Arthur Kleps, and Judy
Kuch. Kleps is the patriaeh of the East and James Boudreau is the patriarch of
the West.
The structure and fund ion of each lodge is the responsibility of the boo-hoo in
charge. The appointment of boo hoos is the responsibiilty of either patriarch.
The use of property owned by the boo boo may be given over entirely to the
church or property may be sold or rented by the church. Other arrangements are
used depending on local circumstances. A boo boo without a congregation is not
recognized as a boo hoo. f he does not maintain a lodge to which members may
come for "sacramental Experience" and/or does not hold meetings to which
members may come for prayer and the exchange of ideas, such boo boo will be
removed from office and a new boo hoo appointed in his place. Each boo hoo is
granted a certificate of o ?dination by the church and those boo hoos who func-
tion as primates, encouraging and coordinating the activities of boo hoos in a
given geographical area, :ire issued a certificate of consecration. The patriarchs
are the only officers of I he church with the authority to issue certificates of
ordination or consecratio or with the power to cancel them. There is but one
chief boo hoo, Arthur Kleps, who has supreme authority in the Neo-American
Church, restricted only by its bylaws.
Rituals, prayer form, 'eligious music, et cetera, are left entirely up to the
invention and inspiration of the local boo hoo and his congregation. However,
the suggestions of Timothy Leary and the writings of Allan Watts are considered
more seriously by the church than the works of any other individuals.
Morning Glory Lodge located in the eastern shore of Cranberry Lake in the
Adirondack Mountains of New York State consists of a house and four cabins
on 2 acres of land, comp etely isolated from other private holdings. This lodge
has a dock, beach, boats, refrigeration, electricity, plumbing, et cetera. "Pilgrims"
are implored to bring thdr own bedding, food, and camping equipment. Children
under the age of 14 are rot allowed. Pilgrims are told that they probably must
do their own cooking and housekeeping and a "donation" of $40 to $50 a week
is expected of those who lave exclusive use of a cabin. In a publication inviting
such pilgrimages to the lc dge, the Latter requirement was tempered by the state-
ment, "But we can usual y find a place for you to sleep if you are only able to
take care of your own eYpenses and are willing to do some work."
Boo Hoo Lisa Bieberrna a is the church's top activist in its position with regard
to the law. Constant solid tations are made of members encouraging a forwarding
of contributions to Boo Hoo Bieberman who in turn provides methods for making
peyote and morning glory seeds palatable. Solicitations for contributions are also
made for the defense of members of the church and one such fund is known as
the "Timothy Leary Psychedelic Defense Fund, 886 United Nations Plaza, New
York City." Membership .n the Nee-American Church involves a $5 fee.
To avoid enforcement action, the sale of the "true host" (LSD) takes place in
the "temple." The churcli suggest that marihuana is the best psychedelic for
group meetings but that 10 or 15 micrograms of LSD will "usually produce a
similar withdrawal of the outer curtain."
An extremely inaporta it item is the recognition of SPIN, the supersecret,
highly trained defensive arm of the Neo-American Church. According to the
church's own definition if SPIN ( Society for the Prevention of Injustice to
Neo-Americans) the unit is "made up entirely of young men of fanatical and
paranoid dispositions" and serves to insure a supply of the "true host" to mem-
bers "held by the enemy and to carry out special assignments designed to pre-
vent further persecution of our religion." The church invited new members in
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 303
SPIN by circulating the following: "If you happen to be a little paranoid, why
not be constructive about it? Join SPIN through the chief boo hoo. Please ob-
serve rigid security precautions."
Two of several strategic concepts of the chief boo hoo are:
(1) To make a special effort to reach young people, poor people, and criminals
(adding "every prison should have a congregation.") and,
(2) To turn over police informers to SPIN for "appropriate action."
In further connection with SPIN, the following is taken verbatim from a pub-
lication which was circulated under the name of ''The Neo-American Church,
Morning Glory Lodge, Cranberry Lake, N.Y."
"If psychedelic people are deprived of their religious liberty by force, and,
God forbid, all legal steps to redress our grievances are exhausted, it would seem
that civil war is inevitable. It is difficult to imagine the present Supreme Court
acting to suppress our church, but one cannot entirely dismiss the possibility of
some future change in the entire structure of American Government, away from
our traditional freedoms and toward militarism, authoritarianism, and thought
control.
"Of course, honorable men would rather risk death in combat than surrender
their freedom. Fortunately, although we would risk death and imprisonment our-
selves during such a conflict, it might be possible to fight it in such a way that
few casualties would occur on the other side, that is, with psychedelic "weap-
ons?clouds of dust sprayed over cities, LSD in the water supply, et cetera.
Psychedlic 'assassinations,' perhaps with a spray of DMSO and LSD, could be
carried out against those politicians or military figures responsible for over-
throwing the Bill of Rights.
"It is unfortunate that we should be obliged to even consider such possibilities,
which are naturally repugnant to anyone of decent sensibilities, but the power-
holders of our age grow increasingly arrogant; they are given to imagining that
they hold sway over a corral of sheep rather than act as servants to a free people.
Better to remind them of the facts of life now than to allow them to maintain
a fantasy of unbridled power."
A list of the Neo-American Church's clergy and a copy of the membership ap-
plication of the church is attached.
LIST OF CLERGY AS OF THIS DATE
Arthur Kleps, Patriarch of the East and Chief Boo Hoo of the Neo-American
Church, Morning Glory Lodge, Cranberry Lake, N.Y.
James Boudreau, Boo Iloo of Salem, Primate of Oregon, Patriarch of the West,
850 Thompson NE., Salem on the Willamette, Oreg. 97301.
Lisa Bieberman, Boo Hoo of Boston and Cambridge, Primate of Massachusetts,
26 Boylston Street, No. 3, Cambridge, Mass. 02138. ( Send a stamped envelope for
Psychedelic Information Center newsletter.)
Walter Bowart, Boo Hoo of Manhattan, the Other, 147 Avenue A, New York
City 10009 (Send $3 for subcription of 24 issues.)
Ben Osterberg, Boo Hoo of St. Petersburg, Primate of North Florida, 2626
Emerson Avenue, St. Petersburg, Fla.
Richard Bird, Boo Hoo of Miami, Primate of South Florida, 1518 Monza
Avenue, Coral Gables, Fla.
Curtis Kubiak, Boo Hoo of Philadelphia, Primate of Pennsylvania, 1623
Haworth Street, Philadelphia, Pa. 19124.
Fred Lenherr, Boo Hoo of Watertown, Primate of Connecticut, Taft School,
Watertown, Conn.
William Bullard III, Boo Hoo of Chapel Hill, Primate of North Carolina, Post
Office Box 222, Chapel Hill, N.C.
Ron Kelleher, Boo Hoo of Long Island, 16 Eatondale, Bluepoint, N.Y.
J. D. Kuch, Boo Hoo of Washington, Primate of the Capital Area, 2323 Ne-
braska Avenue, Washington, D.C. 20016.
Adele Angier, Boo Hoo of the Bronx, 2032 Creston Avenue, Bronx, N.Y. 10453.
Timothy Leary, Boo Hoo of Millbrook and Protector of Mexico, Castalia Foun-
dation, Millbrook, N.Y.
Tord Svenson, Keeper of the Divine Toad, 40 Tulle Street, Dorchester, Mass.
Thomas N. Thompson, Boo Hoo of Buffalo, 109 Ashland Avenue, Buffalo, N.Y.
D. A. Levy, Boo Hoo of Cleveland, Primate of Ohio, c/o Asphodel Book Shop,
465 The Arcade, Cleveland 14, Ohio.
Kent Taylor, Boo Hoo of Lakewood, Lakewood, Ohio.
Victor Pasnick, Boo Hoo of Chicago, 9700 South Avalon, Chicago, Ill. 60628.
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304 THE FEDERAL EFF ORT AGAINST ORGANIZED CRIME
Susan Bennett, Boo Hoo of Gainesville, 411?B NW. 15th Street, Gainesville, Fla.
Dae Andress, Boo Hoo of Troy; 261 Liberty Street, Troy, N.Y.
James Perry White, Boo Hoo of Tampa, 5604 9th Street, Tampa, Fla.
Kimberli Harrison, Boo Moo of Pani. Beach, 601 27th Street, West Palm Beach,
Cleve Gallia, Boo Hoo of Boca Raton, Florida Atlantic University, Boca
Raton, Fla.
Al Freitas, Boo Hoo of ,5,-acramento, 641 Sunset Avenue, Bryte, Calif.
Daniel Doll, Boo Hoo of .aartford, Box 725, Trinity College, Hartford, Conn.
MEMBERSHIP APPLICATION
THE NEO-AMERICAN
Morning Glory Lodge, Cranberry Lake, N.Y.
Arthur Kleps, Patriach of tie East and Chief Boo IIoo
James Boudreau, Boo Hoo of Salem, Primate of Oregon, Patriarch of the West
Members of the Neo-Anerican Church subscribe to the following principles:
(1) Everyone has the right to expand his conciousness and stimulate vision-
ary experience by whatev3r means he considers desirable and proper without
interference from anyone;
(2) The psychedelic substances, such as LSD, are the True Host of the
Church, not "drugs." They are sacramental foods, manifestations of "the Grace
of God," of the infinite imagination of the Self, and therefore belong to everyone;
and
(3) We do not encourage the ingestion of psychedelics by those who are un-
prepared.
If you agree with these principles, and wish to join the Church, fill out the
following spaces, sign., em lose $5, and turn in this application to the nearest
Boo Woo (leader) of the Church.
Name .Address
Date Phone_ Occupation
Local Boo Hoo should return this application to either Patriarch for filing.
Mr. ST GERMAIN. I do not suppose that you, Dr. Goddard, or any-
one with you would be aware of how many inspectors the USDA
has?
Mr. GOODRICH. No, w?, don't.
Dr. GODDARD. My in.pression is of the order of magnitude of 4,000
or 5,000.
Mr. ST GERMAIN. I would ask committee counsel if he could obtain
those figures for our record. I think he knows what information we
want to establish a comparison with. We would insert it in the record
at this point.
(The information referred tc follows:)
U.S. Department of Agrictlture?Food inspectors and graders as of June 30, 1967
(except as noted)
Number of
Meat:
inspectors
Meat inspectors
14,
076
Meat graders
489
School lunch meat aceptance inspectors
39
Animal food inspectm s (eat ar.d dog food)
16
Total meat
4,
------
610
Poultry :
Poultry inspectors
12,487
Poultry graders
.635
Total, poultry
3, :122
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 305
U.S. Department of Agriculture?Food inspectors and graders as of June 30, 1967
(except as noted)?Continued
Number of
Fruits and vegetables: inspectors
Fresh fruit and vegetables 148
Processed fruits and vegetables 857
Raisins 227
Total, fruits and vegetables 1, 232
Dairy product graders 146
Grain inspectors 271
Total, USDA 9,381
'As of May 31, 1967.
Mr. ST GERMAIN. I would like to leave one question for you to an-
swer for the record and that is: Do you have any recommendations
which would make the Federal effort against organized crime more
effective in any areas in which you have responsibilities?
Now, if you want to go into the lack of your authority at this point
to use any electrical devices or anything whatsoever this would be help-
ful to the committee and the committee would appreciate it.
Mr. Rothenberg?
Mr. ROTHENBERG. There is 110 resolution on the question of whether
marihuana should be the subject of law enforcement or whether it
should be treated medically, and this relates to the question : If it could
be determined that marihuana should not be the subject of law en-
forcement, then all those forces which are used for that purpose could
be directed to matters that might be considered more important.
Would this help in the fight against crime?
Dr. GODDARD. Your question gives me great difficulty because, first
of all, I don't know in depth what percentage of the Bureau of Narco-
tics agents' time is devoted to marihuana, versus seeking out the sources
of hard narcotics. So I am really not in a position to say whether or
not it would materially aid in the efforts of the broader issue of drug
abuse.
Mr. ROTHENBERG. What about the first question, whether or not it
should be. handled as a medical problem or law-enforcement problem?
Dr. GODDARD. I don't like to seem to seek refuge behind the plea
that we don't have enough information, but I must say I have reviewed
the scientific literature on marihuana, and I am impressed by the
paucity of data, the. need for a great deal more research and factfinding
before such conclusion could be drawn.
If you are asking for my opinion today, I don't think it. would be
acceptable to our society to condone the use of marihuana in the fashion
that many suggest. However, I would caution again by saying that we
don't really know much about chronic use of marihuana. We know some
of the acute hallucinogenic effects and that's where it stands. We have
been talking with the National Institute of Mental Health and others
in the scientific community about this?every one in the scientific com-
munity is concerned about this.
Mr. ROTHENBERG. Is anybody making an effort to answer this
question?
Dr. GODDARD. I think efforts are being considered. I can't say realis-
tically that anyone is making an effort to answer it immediately. But
such studies that are indicated are being actively considered.
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306 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
Mr. ROTHENBERG. Tim National Crime Commission reported recently
that they did not have time nor facilities to do this research in depth.'
Dr. GODDARD. Yes.
Mr. VANDER JAGT. Mr. Chairman. I would like to ask just one last
question that seems to summarize the whole session.
This estimate for wh eh you do not claim authorship, but of 10 bil-
lion drugs manufactured each year, over half of which find their way
into drug abuse through illegal channels, what do we need to do to
stop that? Evidently you feel that you have enough authority and
power. What do we need to do? This strikes me as a very startling
situation.
Dr. GODDARD. ASSUMing these figures are accurate for purposes of
the discussion, then I think the most effective step is to bring the manu-
facturers in compliance in terms of the recordkeeping practices, pre-
ventive diversion from wholesale establishments, making certain that
there is an inspection carried out prior to issuance of registration?we
think this is an importc.nt step to be followed through?and the retail
level; should involve the State boards of pharmacy and licensing au-
thorities throughout the, States in improving the recordkeeping prac-
tices, of the pharmacists?holding that source of diversion to a mini-
mum. These are the oby ious steps. I think there is a much more funda-
mental kind of issue ti at we haven't solved, and this again is what I
was alluding to earlier. We need badly to carry out studies to find out
why people are willing to risk their health by using drugs that are
Produced for legitimate purpcses. What is there in society that can
be altered? What educational programs can be developed by us to
bring us back a little more to where we were 20, 30 years ago when
drug abuse was a minimal problem in our society?
This thing is burgeoning today and mushrooming. I think this lat-
ter, although it sounds deceptively simple, is extremely complex, but
it is extremely important to us, otherwise we would turn into a hedon-
istic:society that worships through the use of drugs and some advocate
this. as you well know.
Mr. ST GERIVIAIN. Eoctor, however, in line with your concluding
statement, as to bringir g us back to 20 or 30 years ago, 1. think that this
is just one of the---coufd we not consider this one of the ills of a fast-
moving, fast-progressing society with so many improvements and life
changing so rapidly fiat people unfortunately are looking to these
other areas with utter abandon, looking for escape that they did not
have as much to escape from probably 30 years ago. I do not know
what they are trying to escape from now. But it is also important, I
would think, Doctor, t3 see that we have the necessary controls.
Dr. GODDARD. Yes.
Mr. Sr GERMAIN. Because that probably would be the easiest solu-
tion right now?that last one may take a long time to figure out.
Dr. GODDARD. I agree, it seems easier, but I submit in terms of our
problems of society, unless we do both we are going to continue to have
trouble. The narcotics nroblem is with us today to a greater extent ap-
parently than it was 30 or 40 years ago. I don't disagree that these are
expressions of societa ills ar.d we are turning the clock back and
1 See "The Challenge of Cri Ile in a Free Society." an. 223-225; and the task force report
on "Narcotics and Drug Abuse" of the President's Commission on Law Enforcement and
the Administration of Justice p. 14.
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changing our living conditions?and all of the other associated fac-
tors. But I do suggest we badly need to develop something that will
help us have the proper attitude toward drugs in society, that we de-
velop proper kinds of outlets for escape, if escape is indicated.
Mr. ST GERMAIN. Doctor, to follow up on what Mr. Vander Jagt
brought up and what you responded to, would you agree, unfortu-
nately, in many of our States, our boards of pharmacy, and regulatory
agencies are not taking the proper steps they should be taking ? In fact,
unfortunately, as far as some of the legislation with respect to phar-
maceuticals is concerned, in some States you have members of the
legislature who are also involved in the pharmaceutical industry and
they want to look the other way and want as few controls as possible.
I say this from looking at the results of legislative sessions in the past
few years where legislation that I think would have been very helpful,
and the case of codeine, at the last minute was killed by individuals
who had a conflict of interest.
Dr. GODDARD. Well, Congressman, earlier I alluded to the desirabil-
ity of changing our methods of operation; that we are looking today
at how we conduct our affairs. It strikes me and my associates that
one of the major changes which has to occur is greater involvement
of the States in these areas of the control of drugs, et cetera. There are
some proper divisions of labor that can be made. We are handicapped
both on the Federal and State levels by the lack of legislative author-
ity. I am sympathetic with the problems faced by the State adminis-
trators, the Governors on down, because of the problems of the tax
being so fixed at the State level. We need to have a program aimed at
improving capability of the States, No. 1 to require the improvements,
and there are very sophisticated ones involved; No. 2, to train per-
sonnel who can operate these things and carry out the kind of inspec-
tions that would be most effective and productive; and, No. 3 to estab-
lish the general working relationship so there is a proper division of
labor.
We are involved with the medicated feed manufacturers. There are
12,000 of those in the United States. We are involved with pesticides.
Many others could be effectively implemented at the State and local
level if we did have a program from the Food and Drug Administra-
tion which would provide moneys to the States to have people em-
ployed, get the equipment and carry out certain activities.
Mr. ST GERMAIN. With respect to the involvement of organized
crime in the hallucinogenic drugs and other abused drugs it is to the
advantage of organized crime to have this loose condition in the States.
Mr. FINLATOR. Very much so, yes, sir.
Mr. ST GERMAIN. So the States should keep this in mind when look-
ing at this legislation.
Mr. FINLATOR. I think, Mr. Chairman, the States are taking a better
look at it through the encouragement of the President in his crime
speech and our encouragement, too. As a matter of fact, 28 States in
the last 2 years have now considered and have laws on the hallucino-
genic drugs. There are another 10 or 11 that are presently considering
such laws. You can see with the problem that we have, if those sta-
tistics are right, and I don't know whether they are or not. If there
is anything close to it you can see with the few people the Federal
Government has, the 254 we have?we've got two men in Detroit, two
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308 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
men in Buffalo, three men in Philadelphia. We don't even scratch the
surface.
Mr. ST GERMAN. DO you have any in Rhode Island
Mr. FINLATOR. No, but we get there once in a while.
Dr. GODDARD. We corer that from Boston.
Mr. FINLATOR. The stretch here is such that we are embarking on get-
ting everybody involved that we can. The reason that our arrest record
is low is the fact that we turn over a number of cases to State and
local people because we want to get them involved and it multiplies
us. If we are going to stay at the level we are we have to do more and
more.
Mr. Enwmins. I jus; wanted to say this has been a very productive
morning and I appreciate all you gentlemen coming. It has been one
of the best hearings wa have had along this line.
Mr. ST GERMAIN. I, too, on behalf of the committee would like to
thank you gentlemen for coming and your associates and personally
congratulate them and commend them on the testimony they have
given, the frankness with which they have admitted to the difLulties
involved because cert:iinly these problems cannot be solved unless we
all recognize they exist and I am sure the people with whom we are
concerned, with whose welfare we are concerned are all very grateful
to each and every one of you here for this morning's hearings.
Thank you.
The committee will be recessed until the call of the Chair.
(Whereupon, at 12 m. the hearing adjourned, subject to the call of
the Chair.)
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APPENDIX
FEDERAL BUREAU OF INVESTIGATION,
U.S. DEPARTMENT OF JUSTICE,
Washington, D.C., July 5, 1967.
HOD. DANTE B. FASCELL,
House of Representatives, W ashington, D.C.
MY DEAR CONGRESSMAN The testimony of Mrs. Margaret Kreig given before
your Subcommittee on Legal and Monetary Affairs on June 13, 1967, has come to
my attention. Certain statements made by Mrs. Kreig on this occasion are inaccu-
rate and I would like to set the record straight.
Mrs. Kreig inferred the FBI prevented the Food and Drug Administration
from interviewing Carl Austin Hall and Bonnie Brown Heady, the subjects in the
Greenlease kidnaping case. She indicated that had these interviews been con-
ducted the drug abuse problem today throughout the Midwest would be much less.
Actually, Roy Pruitt, agent in charge of the St. Louis Office, Food and Drug
Administration, interviewed both Hall and Heady on two occasions: First on No-
vember 27, 1953; and again on December 15, 1953. Hall furnished him a signed
statement on the first interview disclosing where and how he obtained drugs he
had been using.
In addition, all information developed in this case pertinent to the respon-
sibilities of the Food and Drug Administration was furnished to that agency. It
has always been the practice of the FBI to dissseminate information we develop
concerning matters under the jurisdiction of other agencies, whether Federal,
State or local, to those agencies.
Sincerely yours,
J. EDGAR HOOVER.
DEPARTMENT OF HEALTH, EDUCATION AND WELFARE 1967. REGISTRATION
FOOD AND DRUG ADMINISTRATION
WASHINGTON, D. C. 20209 OF DRUG ESTABLISHMENT
FORM APPROVED
BUDGET BUREAU No. S74017.2
AIL Instructions are on the last page. Detach hitt page and read carefully
111, before completing this form. Furnish all attachments in QUADRUPLICATE.
I FDA ESTABLISHMENT REGISTRATION NO. 2. REASON FOR SUBMISSION El NEW REGISTRANT
(For FDA use on(y)
Lion. LI OWNERSHIP CHANGE
rj BUSINESS ACTIVITY CHANGE LOCATION CHANGE
4. NAME AND LOCATION OF ESTABLISHMENT
3 TYPE OF
OWNERSHIP
El INDIVIDUAL
PARTNERSHIP
LI Z'SErAME
Ej CORPORATION
(flnd Dale Ti
OTHER
(S/vobi
5 0,,T,H,EX,N,AME,SZED BY ESTABLISHMENT IN DRUG-PRODUCING OR RUG-HANDLING ACTIVITIES
6. NA IE OF OWNER OR NAMES ASO TITLES
Al PARTNERS OR CORPORATE OFFICERS
AND DIRECTORS OF ESTABLISHMENT
7. DO YOU HANDLE DEPRESSANT, STIMULANT, OR HALLUCINOGENIC R S? (IMPORTANT ? See eldinaiwa ander inamtiora)
YES El NO Check type of operalion only if "YES." 1]=2PO'RER'LLAREI ER 001EZRIMERSALET
8. SIGNATURE OF AUTHORIZED INDIVIDUAL TITLE
[ANTE COMPLETED
NOTE: VALIDATION OF THIS FORM IS NOT TREE CONSTRUED AS FEDERAL GOVERNMENT ENDORSEMENT OR APPROVAL OF THE ESTABLISHMENT OR ITS PRODUCTS.
309
78-508-137?pt. 2---12
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AgybovedgartREerlur ?9,9gq,5/24,Aipik-Rizog (y11%000200020001-3
INSTRUCTIONS
THIS REGISTRATION IS MADE IN ACCORDA NCE WITH THE REQUIREMENTS OF SECTION 510 OF THE FEDERAL FOOD, DRUG, AND COSMETIC
ACT AS AMENDED TY THE DRUG AMENDM INTS OF 1962 AND 1965. FAILURE TO REGISTER IS A VIOLATION OF SECTION 301(p) OF THE
ACT AS AMENDED.
WHO MUST REGISTER. Owners or opeators of all &Lig
establishments not exempt under Sect on 510(g) of We
Federal Food, Drug, and Cosmetic Act Dr Part 132.51 of
the Code of Federal Regulations, thc t engage in the
manufacturing, preparation, propogc tion, compound-
ing or processing of a drug or drugs or in the whole-
saling, jobbing, or distributing of any depresscnt,
stimulant or hallucinogenic drug Ire required to
register EACH such establishment, whether or not The
.output of the establishment enters intr mutate commerce.
Ownlers or operators of establishmer ts who are 'sub-
mitt/ng new drug applications or antibiotic forms,
F0-1675 and/or FD-1800 preparator} to engaging in
the manufacture, preparation, prtpogation, com-
pounding or processing of a drug sr drugs are re-
quired to register before the new drug application or
antibiotic forms are approved. ?No r.gistration fee is
required.
TIMES FOR REGISTRATION. The owner or operator of an
- establishment entering into the manufacture, prepara-
tion, propagation, compounding, processing, repack-
aging or relabeling of drugs or the wholesaling, job-
bing, or distributing of depressant, stimulant or halluci-
nogenic drugs must register such establishment within
5 days after the beginning of such operation.
Owners or operators of all establishments so engaged
must register annually between November 15 and De-
cember 31 for the succeeding calendar year (i.e.,
mdura(ion grhkh ii areompinbed between blaventher 15 and De-
cember 31, /966 ir so/id fee the calendar year 1967).
TI/IS FORM REGISTERS ONLY THE ISTABLISHMENT WHOSE NAME AND ADDRESS APPEAR IN ITEM 4, AND OTHER
BUSINESS NAMES USED BY THE ESTABLISHMENT IN DRUG PRODUCING OR DRUG HANDLING ACTIVITIES AT
THAT ADDRESS AS IDENTIFIED IN TEM 5. FOR REGISTRATION OF ANY OTHER NEW OR ADDITIONAL ESTABLISH-
MENT, REQUEST FORM FD-1597 FROM DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, FOOD AND DRUG
ADMINISTRATION, DRUG REGISTRATION, 200 C STREET, SW, WASHINGTON, D. C. 20204, OR THE NEAREST FDA
DISTRICT OFFICE.
SEC REVERSE )F THIS SHEET F 3R INSTRUCTIONS FOR COMPLETION AND MAILING.
INSTRUCTIONS (CONTINUED)
NOTE: THIS I ORM HAS CHEMICALLY TREATED PAPER: NO CARBON IS REQUIRED
Item I. FDA Establishment Registration N. This is the ettob.:
lishment registration number assigned by FDA to the dstoblishment
listed in Item 4, and to the Other names used by the establishnent
as lis,led in Item 5. ?
Item 1. Ream-dim Submission. Place an X in he
opprepriate box.
Item 3. Type, of Ownership. Place an X in the apprapria le box to
dicate type of ownership. lithe eoablishment is acurputalico, enter
the State inhere incorporated.
llama. Name and Location of Establishment. If there has beer, any
change in name and/or address as printed on he farm, type or print
necessary changes. Please mill!! add pml _
Item S. Other Names Used by Ettablishmen in Drug.fraducinum
Orr___,g,,tiandling, Activities at Thi. Location. List 311 names under which
your establishment conducts drug activities a the location shown in
Item-4. If names have been added or deleted since lost registrction,
type: or print necessary changes, If firm has -to other names, write
Item 6. Name of Owner Sr Names and Titles rt Partners el_C_aponale
Officers and Directors af Establishment. .nter the appropriate
names and titles. If addltional space is reqt.. red, attach shee.(s) in
quadruplicate.
!tarn 7. Do you Handle Depressant, Stimulant or Hallucinogenic
laugel Place an X in the appropriate box or boxes.
DEFINITION: The term "depressant or stimulant drug" means any
drug which contains any quantity of:
a. Barbituric acid or any of the salts of barbituric acid.
b. Any derivative of borbituric acid which has been desIgnated
by the Commissioner under Section .502(4) of she our as
habit-formmg.
c. Amphe,amine or any of its optical isomers.
d Any son of amphetamine or any salt of an optical isomer
of amphetamine.
e. Any substance which the Commissioner, after investigation,
hos found to be, and by regulation designated as, habit
forming because of its stimlani effect on the central nervous
system.
I, Any substance which the Commissioner, after investigation,
has found to have and by regulation designates as having
o potential for obuse because of its depressant or stimulant
effect on the central nervous system or its hallucinogenic
effect
Item B. Signature of Authorized Individual, Title', and Date
Col_npleted. The individual authorized to sign documents for the es.
lablishment should enter his signature, lisle, and data svned.
DETACH THE INSTRUCTION SHE IT AND RETURN THE REMAINING FOUR COPIES INTACT TO:
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
FOOD AND DRUG ADMINISTRATION
DRUG REGISTRATION
200 C STREET, SW
WASHINGTON, D. C. 20204
A VALIDATED COPY OF II IS REGISTRATION FORM WILL BE RETURNED TO THE LOCATION ADDRESS SHOWN IN ITEM 4.
DEPAI TMENT OF HEALTH, EDUCATION, AND WELFARE,
FOOD AND DRUG ADMINISTRATION,
Washington, D.C.
INSTRUCTIONS FOR FORM FD-1597, INITIAL OR AMENDED REGISTRATION OE' DRUG
ESTABLISHMENT
(Read ,!arefully before completing the form)
A. GENERAL INFORMATION
1. Registration of a new establishment
Registration with the l'ood and Drug Administration is required within 5 days
following the beginning cf manufacture, preparation, propagation, compounding,
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 311
or processing of a drug or drugs within an establishment or the wholesaling, job-
bing, or distributing of stimulant, depressant, or hallucinogenic drugs. Registra-
tion is also required within 5 days after the submission of a new drug application
or antibiotic forms FD-1075 and/or FD-1800, whether or not such operations
have been initiated. Thereafter, forms for accomplishing the required annual
registration will be mailed directly to the establishment by the Food and Drug
Administration,
2. Definition of drug establishment which should register
A drug establishment is a place of business under one management group and
at one physical location. At this place of business, drugs, (including medicated
feeds) are manufactured, prepared, propagated, compounded, or processed; or
stimulant, depressant, or hallucinogenic drugs are wholesaled, jobbed, or dis-
tributed.
One establishment doing business under several names at the same physical
location and under the same general management should register only once,
under the principal name. Report the other business names under item 5, "Other
names," or lists on a separate sheet and attach to the registration form. These
names also will be recorded under the registration number for the establishment,
provided drug activities are conducted under these names at the address shown
in item 4.
When a firm has establishments at more than one physical location, each such
establishment must be registered on a separate registration form.
"Drug establishment" includes those which repack or relabel drugs in bulk of
dosage form (or modify labels or labeling by addition to or subtraction from) as
part of a wholesale distribution activity. For example, an association of several
pharmacies which buys drugs in large quantities and repacks them for distribu-
tion to two or more retail outlets must be registered. The term also includes
those who distribute, wholesale, or job stimulant depressant, or hallucinogenic
drugs.
The term "depressant or stimulant drug" means (1) any drug which contains
any quantity of barbituric acid or its salts, or any derivative of barbituric acid
which has been designated by the Commissioner as habit forming; (2) any drug
which contains any quantity of amphetamine, its optical isomers, salts, or any
substance which has been designated by the Commissioner as habit forming be-
cause of its stimulant effect on the central nervous system; or (3) any drug
which contains any quantity of a substance which the Commissioner has desig-
nated as having a potential for abuse because of its depressant or stimulant effect
on the central nervous system or its hallucinogenic effect.
Consulting laboratories, which operate independently of drug manufacturers
or repackers, but engage in drug control activities for other registered drug
establishments, must register.
A drug control laboratory which is operated by a drug manufacturer or
repacker for its own purposes but is physically in a location different from iis
registered manufacturing or repacking operation must be registered separately.
Drugs include: Prescription and nonprescription drugs in dosage forms:
veterinary drugs; medicated feeds; vitamins intended for therapeutic use :
crude drugs or botanicals intended for therapeutic use; bulk drugs or medical
chemicals; viruses, serums, toxins, or other biological products for human or
animal use; and components of these drugs.
3. Drug establishments not required to register
Establishments which should not register include: ?
(a) Pharmacies or medical practitioners licensed by law, who do not
manufacture, prepare, propagate, compound, or process drugs for sale other
than in the regular course of their business of dispensing or selling drugs
at retail, or used in the course of their professional practice.
(b) Hospitals, clinics, and public health agencies maintaining establish-
ments in conformance with local laws regulating the practices of pharmacy
and medicine; and regularly engaged in dispensing prescription drugs upon
prescription of practitioners licensed to administer such drugs for patients
under their care.
(c) Drug warehouses, wholesalers, brokers, jobbers, and distributors
who do not handle stimulant, depressant, or hallucinogenic drugs and who
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312 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
do not change, subtra3t from, or add to labels or labeling of drugs handled,
and do not repack tht se products from bulk to other containers for sale by
themselves or others.
(d) Business or saes offices of drug firms at a location or address differ-
ent from the manufacturing or repacking establishment and which do not
wholesale, job, or dis':ribute stimulant, depressant, or hallucinogenic drugs.
(e) Drug control laboratories physically located with and controlled by
the drug manufacturer or repacker registered at that location.
(f) Drug research and development establishments engaged solely in
research and development, or in providing consultative services only.
(g) Carriers receiving, carrying, holding, or delivering a drug or drugs in
the usual course of business as carriers.
(70 Officers, emploiees, and agencies of the United States, a State govern-
ment, or a political liubdivision of a State, while acting in the course of
their official duties.
If I after reading the drug establishment registration requirements in the
Drug Amendments of 196i and the Drug Abuse Amendments of 1965, the regu-
lations issued under them amendments, and the explanation above, you are
still uncertain whether you should register, you may write to Drug Registration,
Department of Health, Ecucation, and Welfare, Food and Drug Administration,
200 C Street, SW, Washington, D.C. 20204 for an opinion. State the nature of
yomb business, the kinds of products made or handled, and the reasons you
believe you should not register.
4. Dru7 establishment registration number
A drug establishment registration number is assigned by the Food and Drug
AchOnistration to each registered establishment. For a firm with establish-
menits at more than one location, a different number is assigned for each differ-
ent location. This number will be shown on the validated copy of the registration
form returned to your esi ablishment. Future correspondence with FDA relating
to the establishment or ii:s products should bear the establishment registration
number.
5. Amendment to registration
Changes in individual ownership, corporate or partnership structure, loca-
tion; other names used by establishment, or drug-handling activity must he
subttnitted on Form FD-1597 as amendment to registration within 5 days after
such changes. Changes in the names of officers and directors of corporations do
not require such amendment but must be shown at the time of annual regis-
tration.
R. COMPLETION OF THE ITEMS ON THE REGISTRATION FORM
Complete the registration form as described below. Type or print clearly.
The form has chemically treated paper and no carbon paper is required.
Item 1?Establishment registration member
Leave blank if this is initial registration. If submitting an amendment to
registration, enter the establishment's FDA registration number.
rtem 2?Reason for submission
Check applicable box as follows:
Neu) registrant.--Establishment identified in item 4 is being registered with
FDA for the first time.
Annita/ registration.?Establishment previously registered with FDA, is re-
registering.
Ownerrship change.?Any change in individual ownership or corporate or
partnership structure.
Location change.?Any change in street, city, or State location.
Business activity chame.?(a) Entering into or withdrawing from manufactur-
ing, wholesaling, or distributing of depressant, stimulant, or hallucinogenic
drugs; (b) change in type of operation concerning the above drugs; (c) addition
or deletion of other names used by establishment in drug-producing or drug-han-
dling activities.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 313
Item 8?Type of ownership
Check the appropriate box to indicate type of ownership. If your establishment
is a corporation, also name the State where incorporated.
Item 4?Name and location of establishment
Enter the official name of the establishment, including plant designation if a
multiple establishment company.
Location.?Enter the address of the actual physical location of the establish-
ment.
If the establishment is located within the legal boundaries of any city or town,
give the street address, city or town, State and ZIP code.
If the establishment is not located within the actual boundaries of any city or
town and does not have a street address, enter the road name or highway number
upon which the establishment is located, the distance and direction from the near-
est town or city, State, and ZIP code.
If mail is delivered to a post office box in another city, indicate the mailing box
number and city as "in care of" (c/o) following the location address.
Item 5?Other names used by establishment in drug-producing or drug-handling
activities
List all names under which the establishment conducts drug activities at the
location shown in item 4. If none, write "None."
Item 6?Name of owner or names and titles of partners or corporate officers and
directors of the establishment
Enter the name of the owner or the names and titles of the partners or corpo-
rate officers and directors as of the date this form is certified as correct. If more
space is required, attach sheet ( s) in quadruplicate.
Item 7?Depressant, stimulant, or hallucinogenic drugs
Please refer to the definitions on page 5 of the registration form (FD-159T),
then check the appropriate box to indicate whether or not you handle these types
of drugs. If "Yes" also check the box describing type of operation.
Item 8?Certification
An individual authorized to execute documents for the establishment should
enter his signature, title, and date signed.
C. COMPLETION OF REGISTRATION PROCEDURE
Return the completed four copies of the form intact to: Department of Health,
Education, and Welfare, Food and Drug Administration, Drug Registration, 200 C
Street, SW., Washington, D.C., 20204.
The Food and Drug Administration will return a validated copy of the form
to the registering establishment.
GOOD MANUFACTURING PRACTICE
The Food and Drug Administration is convinced that most, if not all, of the
problems of drug quantity can be solved by compliance with the minimum re-
quirements of the current good manufacturing practice regulations.
Drug makers who have and utilize the good facilities, personnel, and control
procedures required by the regulations will produce good drugs. Those who do
not, will produce bad drugs, sooner or later. Therefore, compliance with the GMP
regulations by all drug firms must be achieved.
The GMP regulations were promulgated in 1963 under one of the important pro-
visions of the Kefauver-Harris Drug Amendments of 1962: Section 501 (a ) (2)
(B) states that a drug is deemed to be adulterated if "* * * the methods used in,
or the facilities or controls used for, its manufacture, processing, packing, or hold-
ing do not conform to or are not operated or administered in conformity with cur-
rent good manufacturing practice to assure that such drug meets the require-
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314 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
ments of this act as to sa rety and has the identity and strength, and meets the
quality and purity characteristics, which it purports or is represented to possess."
Ccingress enacted this a:. nendment to prevent the development, production, and
distribution of faulty drugs which, inevitably, result from faulty manufacturing
practices. The idea was to provide authority to correct faulty operations before
faulty drugs resulted from it.
From the moment the i-AlP regulations became effective FDA took the view
that, it was to the indust,T's best interest to comply; that compliance could be
achieved through a cooperative educational effort.
This FDA attitude grew out of the agency's experience with drug manufactur-
ing problems beginning with the limited inspection authority granted under the
1938 act. In the early 194)'s FDA observed a great improvement of good manu-
facturing facilities and controls Which were introduced by a significant propor-
tion of the pharmaceutical industry,
In 1948-49 FDA held a series of conferences to develop procedures and tech-
niques for drug inspections. These were based on a survey of those practices
whieh the industry had thveloped and which were labeled by the more progres-
sive-manufacturers as "go )d manufacturing practices."
Thus, FDA's inspection procedures for drug plants included instructions to
look: for the conditions an practices currently accepted as the best in the indus-
try. At the policy level dee, sions were made on the same basis.
Since compliance with these practices was not mandatory, there were great
discrepancies between the excellence of facilities and operations from plant to
plant, and within plants under the same management. Without. some common
rules and definitions therm could be no common agreement among industry as to
what actually constituted "good manufacturing practices."
The 1962 amendment was intended to provide the rules. The GMP regulations
provide general guidelinei. setting minimum requirements defining "Current good
manufacturing practice." These minimum standards are supplemented by addi-
tionnl requirements imposed through the new drug and certification procedures.
In brief, these guideline 4 say:
1. Buildings shall be o:! suitable design, size, and construction to provide for
adequate manufacturing, l.aboratory, and storage facilities.
2.. Key personnel respo asible for production and control operations should be
appropriately qualified b:, education, or experience, and a history of competent
and: reliable performance to insure the integrity of drug products.
3. Raw materials shall be properly stored, appropriately tested before use, con-
tainers clearly identified. and records maintained on each lot of raw material
showing its origin, control, and disposition.
4.- A master-formula re2ord shall be properly maintained with explicit instruc-
tions as to the steps in pr ?paring drugs. Batch records shall be properly prepared
and maintained, to show ,Nacli phase of production, including check weighing and
other controls necessary to avoid mistakes and errors. Each batch record shall be
identified with a suitable identification number by which it should be possible
to trace details of manufacture and. control.
fl Processing equipment shall be cleaned between batches to prevent cross-
contamination.
6. All in-process materials and equipment shall be identified as to product,
batch number, and date of manufacture, etc., to prevent mixups.
7. Special precautions essential in the manufacture of parenterals are required,
including facilities for aseptic filling in sterile areas.
8. Quality control unt:s must have adequate facilities, and make necessary
checks and tests to maintain the identity, strength, purity, and quality of each lot
of each product.
9. Controls shall be miintainecl for packaging and labeling. This shall include
an accounting for the labels issued and used, as well as disposition of reject units.
10. Adequate records covering distribution shall be maintained by code number
of products to facilitate tracing lots in the event of injury or other circumstances
necessitating recall.
11. Complaint files are required for all products.
12. Reserve samples of drugs should be maintained for 2 years after distribu-
tion has been completed.
When the regulations were prdoosed in 1963, there were comments which ac-
counted for improvements incorporated in the final regulations. After 3 years
there is general acceptance of the GMP regulations. The questions that have
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 315
arisen are thoseposted by members of industry and answered by their colleagues
and FDA experts in the open discussions that have been created through FDA's
educational effort.
This has been an enormous and well-publicized undertaking. There have been
conferences, seminars, workshops, visitations, correspondence, demonstrations?
at the national, regional, and local levels. The general guidelines of the regula-
tions have been discussed, analyzed, explained, tested, but not challenged. FDA
has found that there are many techniques and practices which meet the mini-
mum requirements and many that excel. The agency has concluded that the
regulations fairly apply to the small manufacturer as well as the giant corpora-
tion.
FDA will continue the GMP workshops and seminars, along with other educa-
tional efforts, because the agency sincerely believes that manufacturers want to
find the means for voluntary compliance. However, as everyone knows, there
comes a time in the educational process when the state of knowledge and the
ability to use it must be tested.
One of the tests is the incidence of drug recalls due to manufacturing errors.
And this incidence must be viewed in the perspective from 340 in fiscal year 1965
to 446 in fiscal year 1966 (July 1, 1965, to June 30, 1966). Analysis of the
fiscal year 1966 recalls shows that 351, or 78 percent, were for reasons which
could be related to a failure to observe the GMP regulations. These include po-
tency variation, cross-contamination with other potent drugs, nonsterility, label
mixups, decomposition, adulteration, such as contamination of ophthalmic oint-
ments with metal particles, and substandard qualities, such as failure to meet
all requirements of the official compendia.
Another test was FDA's so-called potency survey in the early part of 1966.
While the results from this "survey" should not be projected for the industry,
the fact remains that of the 4,600 samples examined from some 250 manufac-
turers approximately 8 percent were found to be significantly under or over the
declared potency.
A. third test is analysis of establishment inspection reports which show "In-
adequate manufacturing control procedures" at the top of the list of poor con-
ditions which were observed in one out of four of the drug plants inspected dur-
ing fiscal year 1966. Further analysis shows these to occur in prescription drug
plants in the following order: (1) Packaging and labeling, (2) Master for-
mula and batch records, (3) Components, (4) Laboratory controls, (5) Distri-
bution records, (6) Production controls, (7) Buildings, (8) Complaint files, (9)
Stability, (10) Product containers, (11) Equipment, and (12) Personnel.
By these and other tests, FDA is disappointed in the apparent lack of appli-
cation of the lessons learned in the educational effort. There is some evidence
indicating that cross-contamination by penicillin has been reduced through ap-
plication of GMP techniques; the incentive for other voluntary improvements has
not been sufficient.
The incentive must be provided. The public is demanding not only proof of
drug safety and effectiveness before marketing, but proof of quality during
marketing. That demand can be satisfied by compliance with the requirements of
the GMP regulations. If compliance can be achieved, the public interest will be
served, and each firm meeting or excelling the standard will justify its posi-
tion in the marketplace. If compliance cannot be achieved, the public is at
risk, and such firms cannot be allowed to cause a public health hazard.
The incentive for compliance will be provided, through enforcement of the GIMP
regulations. FDA has decided that ample time has been given to the educational
process ; that every firm in the business has had an opportunity to decide what
must be done, and to do it.
During the past 3 years, each drug manufacturer has had the opportunity to
evaluate his buildings and other facilities in terms of what is "suitable" and
"adequate." Ile has had time to make the judgments necessary for a state of com-
pliance.
The time has come to bring court actions, as the law provides, against those
not in compliance. FDA has issued instructions to its field offices to recommend
appropriate action (seizure, prosecution and/or injunction) when material vio-
lations of the GMP regulations are found. The charges are to be made under
section 501(a) (2) (B) ; the recommendation need not include charges under
other sections of the act.
FDA intends to discharge this enforcement policy fairly on a national basis
with the objective of achieving compliance by all drug manufacturers.
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316 THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
PUBLIC HEALTH SE RVICE AUDIOVISUAL FACILITY-FILM RELEASE
TITLE
FDA special report: Drug abuse?beanies and goofballs, AM-1362 16 milli-
metell, black and white, sot nd, 20 minutes, 1966, cleared for television.
PURPOSE
To i discourage human experimentation with drugs without supervision of a
physician by dramatizing the perils of such experimentation.
CONTENTS
This film is a hard-hittin; documentary report narrated by Paul Newman with
commentary by Dr. James L. Goddard, Commissioner, Food and Drug Adminis-
tratiqn, on the proper use?and mf.suse?of two major classes of prescription
drugs?the amphetamines and barbiturates. Based on interviews with four
actual victims of pep-pill :tad sleeping-pill abuse, the film dramatically details
the dangerous psychological and physiological effects of "pill popping," and ex-
plains how the new drug a Juse control amendments will help control this explo-
sive Sociological trend.
AUDIENCE
Gelieral public, with par :icular emphasis on high school and college students.
PRODUCTION
Praiduced by the Food and Drug administration, U.S. Department of Health,
Education, and Welfare.
AVAILABILITY
Free short-term loan froti. Public Health Service Audiovisual Facility, Atlanta,
Ga. 36333, attention of distribution unit.
Purchase from Precision Film Laboratories, 21 W. 46th Street, New York 36,
N.Y.
The following educatimu 1 materials are available or in process of production.
I. Movies
it. LSD: Insight or Insanity
This film documents the e angers of unsupervised use of LSD and explains what
we know about its physiological and psychological actions. It is designed to
counter misinformation tha: exists about LSD.
Th 4 film 16 millimeter so ind, in color, and runs 18 minutes long. It cost $200 to
purchase and 3-day rental is $15. It is available from Bailey Films Inc., 6509
DeLotigpre Avenue, Hollywood, Calif. 90028.
Preview prints are available without charge for purchase consideration. Schools
can uSe NDEA title III and ESEA funds for purchase of the film.
B. LSD-25
This film is particularly appropriate for college age persons and those who may
be in a high risk group. It poses a very balanced point of view about the use of
LSD and gives the viewer I n insight into the kinds of changes in the abuser that
may e brought about by ta-cing the drug.
The running time is 27 minutes for this 16 millimeter color film and the price
is $275, plus tax. It is avail Ole from Professional Arts Inc., Post Office Box 8484,
Universal City, Calif. 9160.
C. The Mind Benders
This film attempts to get the interest of young people by using modern themes
and by avoiding preaching. It is presented through an experienced and respected
narrator who shows wisdom and authority without pedantry. It presents the
issues and the risks of hallucinogenic drug taking so that young people may make
their own decisions about d ?ugtaking on a more informed basis.
It is a 16 millimeter, black and white, and color film produced by Vision Asso-
ciates, 680 Fifth Avenue, New York, N.Y.; it will be completed under contract
with FDA by September. It will be available from the Public Health Service
Audiovisual Facility, Atlanta, Ga. E0333, Attention: Distribution Unit.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME 317
D. FDA Special Report: Drug Abuse?Bennies and Goof balls
The purpose of this film is to discourage human experimentation with drugs
without supervision of a physician, by demonstrating the perils of experimenta-
tion. The film is a documentary report narrated by Paul Newman with com-
mentary by Dr. Goddard, Commissioner of Food and Drugs. It describes several
types of misuse of amphetamines (bennies) and barbiturates (goofballs). Inter-
views with for abusers of pep pills and sleeping pills dramatically portray phycho
logical and physiological effects of drug abuse. The audience for this film is the
general public. This film has been shown in Australia, Canada, New Zealand, and
India, as well as being used extensively in this country. Approximately 800 copies
of the film have been sold. Each BDAC field office has six copies for loan and the
film is shown on an average of 40 times a month in this country. It is available on
free short-term loan from: Public Health Service Audiovisual Facility, Atlanta,
Ga., 30333, Attention: Distribution Unit. The film may be purchased from: Preci-
sion Film Laboratories, 21 West 46th Street, New York 36, N.Y.
II. Educational projects
The Food and Drug Administration has a contract with the National Associa-
tion of Student Personnel Administrators. The overall purpose of the contract
is to promote an educational program in the area of narcotics, marijuana, and
dangerous drugs. The amount of the contract is 1$86,000 and the period covered
is September 1966 through September 1967. Specifically, the purpose of the project
is:
1. To develop a program that will improve the awareness and understanding
of student personnel workers with regard to problems associated with barbitu-
rates, amphetamines, LSD (and other hallucinogens), marijuana and narcotics,
so that they may in turn communicate more effectively with students and the
academic community about such problems.
2. To bring about a sharing of such information and experiences associated
with these drugs among all student personnel educations, i.e., those with assign-
ments in counseling, student health and related special areas, as well as the gen-
eral administrators.
3. To search for effective means of educating students concerning the facts
regarding such drugs and narcotics.
4. To prepare professionally "readable" written materials for use by personnel.
5. To establish regional seminars, conferences, programs, and meetings. During
February, March, and April, approximately 1,500 college deans participated in
these conferences, both national and regional. An evaluation of the effectiveness
of these means of educating the deans is now being carried out. Results of the
evaluation are expected late this fall. As result of this approach, approximately
26 college conferences on drug abuse have been held across the country since
March 1967. Enclosed for your information is a copy of the material that each
of the deans who attended the conferences received. By the time college starts
this fall a handbook for college counselors on drug abuse will be available to
complete the contract. The handbook will be approximately 100 pages and will
contain information that will help the college counselor deal more effectively
with questions on drug information and drug abuse as they arise on the indi-
vidual campuses. Approximately 10,000 copies of this handbook will be available
for distribution.
MATERIAL USED BY FDA To FILL REQUEST FOR INFORMATION ON DRUG ABUSE
BDAC fact sheets.
The BDAC Bulletin.
"The Menace of Drug Abuse," by Dr. James L. Goddard.
"The Medicated Man," a speech by Dr. Goddard.
Phtimplet?"Drug Abuse Is a Growing Problem."
Map showing location of BDAC field offices.
Preliminary identification of certain restricted drugs.
Speakers kit.
"Drug Abuse Control": reprints of article in the FBI Law Enforcement Bulle-
tin. Story submitted by I3DAC.
"Attack on Drug Abuses": Published in Smith Kline & French Hospital Phar-
macy News. Story submitted by BDAC.
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THE FEDERAL EFFORT AGAINST ORGANIZED CRIME
The National Edu.catior Associai.on magazine will carry an article prepared
by BDAC, in their September or Oc:ober issue on drug abuse on campus. Circula-
tion is 1,250,000.
Look magazine is coming out with a major article in August on drugs and drug
abuse. FDA papers will carry articles on drugs and drug abuse two to four times
a year. Reprints from EDI.. papers are sent to each field office and used for limited
handout material.
Anrangements have beer made with the National Committee on Discussion and
Debate, Eugene, Oreg., to furnish material to 12,000 high schools throughout the
country to use next school year in the debate programs. The material includes:
Fact- sheets; "Outline on .Drug Abuse"; speech, "The Medicated Man"; and the
article in American Educ Won by Dr. Goddard. This material is being mailed
110W.
"Drugs and Driving": I I a new pamphlet that is presently being prepared and
will be used as a general randout item. Arrangements have been made with the
American Automobile Association to allow them to use this in their drivers' edu-
cation program throughout the Nation.
A "Dear Pharmacist" letter is printed approximately once a month and sent
out to 55,000 pharmacists explaining the drug abuse control amendments and
other aspects of the pharmacists obligations concerning controlled drugs.
Assistance has been givm by BDAC to media for the preparation of TV and
radio programs and written articles that have appeared in newspapers and
magazines.
Din G ABUSE CS A GROWING PROBLEM
Mist adult Americans have long thought that only the narcotics?opium,
morphine, and heroin--leml to abuse ; but in fact, many therapeutically useful
medicines have become a menace through medical misuse and social abuse.
When young people are in% olved, drag abuse is especially tragic.
-What 710/Marcoties are abused?
Barbiturates, such as phenobarbital, pentobarbital, amobarbital, and secobar-
bital are valuable in inducing sleep or sedation. They are misused by those xvho
take them to hide from the pressures of life or to give a temporary feeling of well-
being. They are often takm with alcohol to boost the effect. The consequences
may include drowsiness and confusion, inability to think clearly, and inability
to coordinate muscular ac ;ion when standing or walking. The individual may be
depressed, irritable, morose, and .quarrelsome. He may show poor judgment,
and find it difficult to per!orm simple tasks. Barbiturates may cause more con-
fusion mentally and emotionally and cause poorer muscular coordination than
opium, and when taken in excessive quantities at frequent intervals over a period
of time, are addicting li re narcotic drugs. Sudden, complete withdrawal of
barbiturates from an addicted person usually results in convulsions and often
mental disturbances resen bling those in delirium tremens. Death may follow in
extreme cases. In additior, , barbiturates lead all other drugs as a cause of acci-
dental death. But before the problem reaches this stage, there may be loss of
ability to hold a job, delinquency, criminal involvement, and a serious health
problem.
Amphetamines are used under a physician's direction, with other measures,
in the treatment of mild depression, obesity, and alcoholism. They are abused by
some motor vehicle operatns who drive too long without sleep; by athletes who
are unaware of the barna al effects involved; by test-cramming students who do
not know that writing co vdination may be impaired ; and by unstable people
seeking thrills. Abusers of amphetamines may become nervous, restless, and
highly talkative. Sympton s of abuse include : rapid pulse, sweating, heightened
blood pressure, muscular tremors, spasms, and sometimes mental disturbanes.
Increasingly large doses become necesary to produce the original effect a toler-
ance to the drug grows. E::cessive daily doses may "hook" the user to the habit,
and produce weird halluci lations with devastating results. Drivers under the in-
fluence of "pep pills'' may see "ghosts," or collapse from exhaustion, and cause
highway accidents. Habitultion to either barbaturates or amphetamines may lead
to use of marijuana and other narcotics.
What you can do
If a drug abuse problem arises in your family, there is immediate need for
a forthright attack on the problem. Get help first from your doctor. Sudden with-
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drawn" may not be advisable, especially from barbiturates. If you suspect that
pills are being peddled at your school, or sold illegally anywhere in your neigh-
borhood, notify the school authorities or the police. They will take it from there.
Narcotics are not the only drugs that can be habitforming, addictive, and highly
dangerous.
Many so-called nice drugs, if misused, call cause crime, broken health and fatal
accidents. In this group: Amphetamines (pep pills, bennies) and Barbiturates
(sleeping pills, goofballs).
Teenagers, youg adults, or anyone else who "experiments" with these drugs?
or who uses them carelessly for medical purposes?is asking for real trouble.
MAIMONIDES MEDICAL CENTER,
MAITIONIDES HOSPITAL,
Brooklyn, N.Y., June 20, 1967.
HMI. DANTE B. FASCELI?
Representative from Florida,
House Office Building,
Washing ton, D.C.
DEAR REPRESENTATIVE FASCELL : I am pleased to hear that your subcommittee
is investigating the attempts of the criminal underworld to take over the illicit
market in LSD and similar drugs. This issue is an extremely important one;
unfortunately, the Government's actions to date have assisted rather than
hampered the criminal underworld.
In 1966 I attempted to elicit the interest of Senator Robert F. Kennedy in
this problem. I wrote him, in part, the following statement:
Legislation and directives at the Federal and State level concerning LSD
and other psychedelic drugs are both unwise and harmful. The number of
individuals using LSD increases daily. The casualty rate is, by and large, the
result of emotional instability coupled with impure "black market" in-
gredients and fear of police arrest.
When the restrictive legislation went into effect, I predicted that the
criminal underworld would soon move into the LSD "black market." I regret
to state that my latest information supports this prediction.
At the present time, there is no public official of national stature who
calls into question the rash of ill-advised governmental activity pertaining
to LSD. As a result, research activity has diminished, illegal usage of LSD
is producing unfortunate results, and the criminal underworld is coming
into contact with citizens who were previously law abiding.
For several years, I have favored the expansion of research projects so that
mature individauls who, for one reason or another, desire to have an LSD ex-
perience can have such an experience legally and safety. Such LSD researchers
as Robert Mogar, Willis Harman, Jean Houston, and Robert Masters guided
over 500 individuals through the LSD experience before their research projects
were terminated due to governmental restrictions. At the present time, it is im-
possible for any American to have a legal LSD experience unless he is an al-
coholic, a psychoneurotic, or terminal cancer case being treated in one of the
six remaining research centers.
Therefore, I applaud your decision to hold hearings on this topic before the
criminal underworld makes even greater inroads into the illegal traffic of these
drugs.
Very truly yours,
STANLEY KRIPPNER, Ph. D.,
Senior Research Associate.
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