XI. THE BOUCHARD INQUIRY COLLAPSES

FRANK PEROFF "COOPERATING INDIVIDUAL"

Richard Dos Santos, working out an arrangement with the Queens County District Attorney's Office, got Frank Peroff out of jail July 25, 1973. On July 26, Peroff was given a DEA code number, SC1-3-0149, and a title. No longer a Customs Service or BNDD confidential informant, Peroff was now, in DEA terminology, a "cooperating individual." This was Peroff's first official designation with the Drug Enforcement Administration and it came 20 days after Peroff first informed the DEA of the possible involvement of Vesco and LeBlanc in the ongoing heroin inquiry.

The papers giving him this new identification were entitled "Establishment of Frank Peroff as a cooperating individual." They are dated July 26, 1973. The Subcommittee obtained a copy of this report and it was made part of the hearing record. Signed by Richard Dos Santos, the document noted that:

Peroff has been established as a Class 1 cooperating individual, supervisory authority for his utilization being approved by Group Supervisor John J. O'Neill as per Section No. 6612.1 of the Agents Manual.

Under the category of "motivation"-that is, Peroff's reason for being a cooperating individual-Dos Santos wrote that Peroff had been jobless for the past five months, was out of money and did not wish to return to a life of crime out of regard for his family.

John J. O'Neill told Senators that he did not consider Peroff to be a good informant (p. 625). He said Peroff was given the designation of cooperating individual merely for the purpose of enabling DEA to pay Peroff (p. 626).

But, according to DEA Administrator John R. Bartels, Jr., all Peroff was ever paid by DEA was $50 and that was nine days before July 26, on July 17, and the money was not meant to be payment but to reimburse Normand Chabot for the use of his telephone in Puerto Rico (p. 467).

Subcommittee Investigator Manuel, therefore, pressed the question of why did DEA give cooperating individual status to Peroff. Manuel asked, if the purpose of the new identification was to pay Peroff, what did DEA ever pay Peroff?

O'Neill replied, "For him to travel from Puerto Rico to New York and give him $50." Then O'Neill added:

If I would have known that there was an informant number in Paris on him we would have used that number for him to travel. But we couldn't get that number. So we had to do it that way (p. 626).

This assertion by O'Neill was an unexpected development in the Subcommittee's investigation. O'Neill seemed to be saying that as late as July 26, 1973, DEA had no knowledge of Peroff's undercover work in Paris for BNDD and Customs in the Solarik-Silverman case.

Manuel asked O'Neill if he had any information at all at the timeJuly 26-that seven months before Peroff had been a BNDD and Customs informant in Paris. O'Neill said he knew nothing of Peroff's informant activities in Paris (p. 626).

According to the hearing transcript, Manuel asked O'Neill:

You didn't know anything about him [Peroff] being established as an informant in Paris?

"No," O'Neill replied in a one-word answer (p. 626).

This response conflicted with O'Neill's own statement in the DEACustoms inquiry in which he said under oath that while Peroff was in jail that he, O'Neill, told Dos Santos to go to the Queens County District Attorney's Office and let the prosecutors know of "Peroff's cooperation in the past with Customs and BNDD in Paris . .

Thus, O'Neill found himself in the position of saying in one sworn statement (in the DEA-Customs inquiry) that during the July 22-25 period he knew about Peroff's Paris work; while saying in a second sworn statement (before the Investigations Subcommittee) that as of July 26 he knew nothing of Peroff's Paris work. Only one of the statements can be true.

Under further questioning, O'Neill said Peroff was made a cooperating individual so that DEA could "pay him for the trip from Puerto Rico and for anything that would happen in Canada.” (P. 626.)

O'Neill said another reason Peroff was given cooperating individual status was that his imprisonment in the Queens County jail had taught him the advantages of cooperating with DEA. Now, a free man again, Peroff would do as he was told, O'Neill said. O'Neill testified:

The fact that he was arrested, one of the reasons to arrest him was make him an informant to make him come over to our side. The old story: There is nobody that is an informant that wants to stay in jail (p. 628).

There was another factor emphasizing the inconsistency of O'Neill saying that as of July 26 he did not know of Peroff's informant work in Paris. It was language from the July 26 document itself which said:

Peroff has provided detailed information in Paris, France that led to the arrest of Solarik and Silverman in Paris on February 9, 1973 in possession of ten (10) kilograms of heroin.

OTHER CONSIDERATIONS IN THE JULY 26 DOCUMENT

Manuel said that his recollection of a previous interview with O'Neill was that O'Neill had explained that the July 26 cooperating individual status was conferred on Peroff at the request of the Royal Canadian Mounted Police. O'Neill denied that he ever made such a statement (p. 627).

O'Neill testified:

I think it was of Region 5 [Miami-Puerto Rico], that they could not under the new, under the DEA Administrative sections of the Manual, that they could not cover his traveling from Puerto Rico to New York unless they had a CI number to ascribe the TR and the $50 (p. 627).

Manuel pointed out that Peroff paid back in cash the cost of his July 16 flight from Puerto Rico to New York. "You got that money back, though, didn't you?" Manuel asked. O'Neill replied that DEA got the money from the airfare back but not the $50 (p. 627). Manuel asked:

It was just $50 that was in question here? That is what it amounted to as far as making Peroff a confidential informant? O'Neill replied:

There was that part, and the part-if you are going to be using a guy, the best way to do it is to get an informant number out. That makes him the world's number one informant (p. 627).

PEROFF RETURNS TO MONTREAL

Frank Peroff flew back to Montreal July 27, 1973. Sidney C. Bowers, who had been transferred to DEA from Customs, met with him in Montreal, Peroff said. Bowers instructed Peroff to tell Bouchard that he needed $10,000 before he would go through with the heroin deal, Peroff said. Peroff testified that he tried to explain to Bowers that Bouchard was strapped for cash due to the cost of his legal defense. Peroff said he told Bowers that he and Bouchard had already agreed that Peroff could take $20,000 of the $300,000 he was to pick up in Costa Rica. The $20,000 was to take care of Peroff's airplane and other expenses. Peroff tried to make the point that this was simply not the right time to make new financial demands on Bouchard (p. 88).

But Bowers was adamant, Peroff said. What Bowers wanted was for him "to do exactly as he said." Peroff testified. Peroff took another approach. He said he tried to point out to Bowers that Bouchard did not want him in Montreal in the first place. But Bowers did not budge. Peroff was to demand $10,000 from Bouchard and that was that (pp. 88, 89).

A change had come over Bowers, Peroff said. Where before they had had a "very casual friendly relationship," Peroff said, now Bowers treated him in an "extremely businesslike" manner and addressed him with "an official air that was not like him at all." Peroff said he got the same icy treatment from Corporal Claude Savoie of the Royal Canadian Mounted Police. Peroff said the RCMP, as usual, had wired his room and telephone at the Martinique Hotel but Savoie was vague about "what was happening and, more importantly, why this was happening." (P. 89.)

Questioning Savoie did not elicit clear responses from the Mountie, Peroff said, as all Savoie would reply would be cryptic observations such as, "This isn't the only case we have to work with DEA" or "Vesco is an American-go ask them." (P. 89.)

One thing Savoie did provide him with, Peroff said, was a description of the jet Peroff purportedly had access to. Peroff said Bouchard

and others had been pressing him for specifics about his executive aircraft. Learning of this, Richard Dos Santos located the kind of plane needed and phoned Savoie with the details. Savoie gave Peroff a handwritten note describing the aircraft. Peroff saved the note and gave it to the Subcommittee. It was made part of the hearing record. Savoie's note indicated that the plane, a 1967 Lear jet 23, was white with a gold stripe. Peroff was to say that he made a down payment of $30,000 on the plane February 27, 1973 in a lease payment agreement wherein he paid $8.250 a month with an option to buy the plane at the end of one year. The owner was Jet America of Washington. D.C. The plane was said to be at the Fulton County Airport in Atlanta where it was being serviced by Mobley Aviation.

The Subcommittee also obtained handwritten notes Dos Santos made while he was taking down a description of the Lear jet. These notes were also made part of the hearing record.

THE NEED FOR A COVER STORY ON THE JET

Group Supervisor John J. O'Neill testified that he never had much confidence in Bouchard's plan to have Frank Peroff fly to Costa Rica to pick up the $300,000 to finance the heroin purchase. O'Neill said he discounted the story almost immediately. The Costa Rica trip, as well as the Bouchard heroin plot itself, O'Neill said, "was a figment of Bouchard's imagination to keep Peroff on the string." (Pp. 543, 544, 522, 617.)

Yet when Peroff was sent to Montreal July 27, 1973, the flight to Costa Rica was still very much a part of the Bouchard inquiry—and the Bouchard heroin inquiry seemed to be very much alive. In fact, Richard Dos Santos telephoned to the RCMP the description of the Lear jet which was purportedly the one Peroff would pick up the $300,000 in. And it was John J. O'Neill who ordered Dos Santos to obtain the description of the Lear jet and relay it to Peroff in Montreal (p. 618).

O'Neill explained to Senators his reason for giving this order. O'Neill said he told Dos Santos to tell Peroff to demand $30,000 from Bouchard. This money, O'Neill said, was needed for repair work on the plane at least that was what Peroff was to tell Bouchard. O'Neill testified:

I told Dos Santos to tell Peroff the reason they needed the money was to keep the plane going, that they were losing money with the plane being down, that they were holding the plane for Bouchard, therefore, he needed the funds to keep the plane going (pp. 618, 619).

Subcommittee Investigator Philip Manuel showed O'Neill the copy of the description of the Lear jet which Peroff said was given to him by Corporal Claude Savoie of the RCMP. Manuel asked:

Is this the cover story that was supposed to be used for the plane which Mr. Peroff was going to use to fly to Costa Rica? Was that Mr. Bouchard's belief?

O'Neill replied:

You would have to ask Bouchard. I would presume that, if Savoie [of RSMP] got together with Peroff on this, yes. The answer is yes (p. 621).

BOUCHARD WAS ANNOYED AT PEROFF'S PRESENCE IN MONTREAL

Bouchard brought Louis Cote with him when he came to see Peroff at the Martinique Hotel in Montreal July 28 at about 10 or 11 a.m. Peroff said the three of them talked for about five hours (p. 89). Bouchard was apprehensive about Peroff being in Montreal and warned him, Peroff said, that this visit "could kill this whole deal." Peroff testified:

I countered this by explaining that without financial assistance then and there, there was no deal. Without financial assistance I would not move an airplane to Costa Rica (p. 90). Bouchard wanted to come up with the $10,000, Peroff said. Bouchard claimed he knew where he could buy seven kilograms of heroin at the "very reduced" rate of $10,000 a kilo, Peroff said, adding that the drugs were being brought into Canada from Paris by a man and woman who were indebted to Bouchard. If Bouchard could buy and then sell this heroin, he could make enough money to give Peroff the front money he was demanding (p. 90).

Peroff said Bouchard, Cote and he sought to find somebody to finance the seven-kilo purchase. Bouchard did not want to go to Giuseppe Cotroni for backing on this effort, Peroff said, for fear it might "interfere or endanger the larger deal which, at that time, involved Vesco and LeBlanc." (P. 90.) Calls were made to various potential backers of the seven-kilo buy, Peroff said. But they could find no one willing to invest in them. Finally, Bouchard concluded that their only hope was borrowing from a loan shark. Peroff said Bouchard declared he would contact a loan shark immediately (p. 91). Peroff reminded Senators that the Royal Canadian Mounted Police had wired his hotel room and telephone so that these discussions and phone calls were all on tape (p. 91).

Peroff testified that sometime after Bouchard and Cote left his room he received a phone call from a man who identified himself as a loan shark. The man wanted details about the Lear jet, Peroff said (p. 91).

The next day was Sunday, July 29, and Peroff stayed in contact with Bouchard by phone. Peroff said in a telephone call on Sunday Bouchard claimed to be having trouble raising $10,000 but was "fairly certain" he could come up with $5,000 by noon Monday, July 30. "At the very least" Bouchard felt he could get hold of $3,000, Peroff said. Peroff said he and Bouchard agreed to meet Monday at noon (p. 91).

At 10 a.m. Monday, Peroff said, he was awakened by Corporal Claude Savoie of the Royal Canadian Mounted Police. Peroff said Savoie told him to pack his bags because he was leaving Montreal "right away." (P. 91.)