Dos Santos went on to say that Vesco's presence in Montreal did not interest the Mounties necessarily in connection with narcotics. Moreover, Dos Santos said, there was still doubt among narcotics agents that Vesco intended to stake Bouchard's heroin deal.

In connection with the reported presence of Robert Vesco in Montreal in July of 1973, neither DEA nor the U.S. Attorney's Office, Southern District of New York, provided the Subcommittee with any documentation indicating that this undeveloped lead was pursued. If Vesco was indeed in Montreal, and if the Mounties knew it and had relayed this information to Dos Santos, then, the U.S. Justice Department could have had Vesco arrested and possibly extradited. Vesco was a fugitive and was being sought by Federal authorities under the indictments of May 10, 1973, against Vesco, Maurice Stans and John Mitchell.

XII. EVENTS FOLLOWING COLLAPSE OF HEROIN CASE

PEROFF GETS A NEW ASSIGNMENT

Richard Dos Santos testified that when Frank Peroff returned to New York from Montreal July 30, 1973 the Bouchard inquiry, including the alleged Vesco-LeBlanc involvement, was all but dead (p. 276).

But, Dos Santos pointed out, the demise of the heroin case did not end Peroff's career as an undercover informant. Dos Santos explained that Peroff and he still had a commitment to the Queens County District Attorney's Office. Peroff was obliged to work in Queens for a while, owing to the manner in which he had gotten out of jail July 25, Dos Santos testified:

In order to get him [Peroff] out of jail on the 25th, I had entered into a verbal understanding with the Assistant DA in Queens, Bornstein (p. 276).

Thus, for the next several weeks, Peroff worked undercover to help Queens County authorities capture 500 ounces of gold stolen in two recent thefts.

BORNSTEIN WORKS WITH PEROFF

In his June 6, 1974 Subcommittee affidavit, Carl M. Bornstein discussed his dealings with Frank Peroff while they had worked together on the gold investigation. Bornstein, the Queens Deputy Chief Assistant District Attorney, said he met with Peroff at least once a week and sometimes more during August as the gold inquiry progressed.

Bornstein said Peroff was a reliable informant who did the best he could in the gold investigation. Bornstein said the information Peroff "relayed to us in the course of the investigation was accurate."

The inquiry was not successful, Bornstein added, but he blamed the failure on "tactical problems rather than any shortcomings of Mr. Peroff's efforts."

PEROFF ALLEGES COVER-UP TO THE QUEENS COUNTY DA

As Bornstein and Peroff became better acquainted, Peroff began talking about his recent experiences with federal agents in the Bouchard case. Bornstein said Peroff told him about the tape recordings with Bouchard, the alleged involvement of Vesco and LeBlanc, the disagreements with John J. O'Neill as to how best to fly to Costa Rica, the complaints lodged at the White House and elsewhere in the Executive Branch and the allegation that DEA had set out to sabotage the case as soon as the name of Vesco surfaced.

The name Vesco in connection with the narcotics inquiry was not new to Bornstein. Bornstein said that Dos Santos had mentioned Ves

co's name to him in July of 1973 to indicate what an important investigation Peroff was being utilized in.

Bornstein said Richard Condon, then the Commanding Officer of the Queens District Attorney's Office Squad, was also present while Peroff described, from his own point of view, how federal agents had undercut a potentially explosive investigation.

At one meeting of the three men, Peroff played cassettes of conversations he had held with Conrad Bouchard. Hearing these tapes, Bornstein said, led Condon and him to bring Peroff and his allegations to the attention of the then Queens District Attorney, Mike Armstrong.

ARMSTRONG'S RECOMMENDATIONS

It was September of 1973 when Peroff told his story and played his tapes for Armstrong. Bornstein said Armstrong told Peroff the Queens County District Attorney's Office "had the most limited possible kind of jurisdiction in that the phone calls were made from Queens..." Armstrong did not think the Queens District Attorney's Office should take up the Peroff allegations. Bornstein and Armstrong recommended to Peroff that he take his story to the Office of the U.S. Attorney for the Southern District of New York.

This recommendation was made to Peroff, Bornstein said, because that office "already had an indictment outstanding against Vesco and because Peroff told us previously that he had some brief contact with John Wing." Wing was the Federal prosecutor in the government case against Robert Vesco, John Mitchell and Maurice Stans.

Bornstein made the point that in having Peroff take his story to Federal authorities he, Armstrong and Condon were not expressing a judgment on Peroff's conclusion that the Bouchard heroin inquiry failed because Federal agents wanted it to fail-and they wanted it to fail to protect Robert Vesco.

Bornstein said he, Armstrong and Condon made a "concerted effort" to "keep our own opinion out of it." Bornstein said the Queens County prosecutors encountered Peroff's allegations "on a professional footing" by treating his story as being accurate as to the facts only "but without giving weight or credence to the conclusion" Peroff drew. Bornstein added:

We believed the events that he narrated but we did not believe the investigation's end was a result of it having been deliberately quashed. We did not feel we were in that position. Bornstein said that the Queens County District Attorney's Office had neither the enforcement powers nor the jurisdiction to pursue an inquiry of this consequence. The U.S. Attorney's Office, Southern District of New York, with its Federal mandate and its existing case on Vesco, was the more appropriate place for the Peroff allegations to be presented. So, for the second time, an effort was made to try to interest John R. Wing and others in the U.S. Attorney's Office in Peroff's allegations. But this time, instead of Peroff trying to get Wing's attention, the Queens District Attorney's office made the attempt.

Bornstein said Peroff turned over his taped conversations with Bouchard to Queens County prosecutors September 26, 1973. These were the tapes in which Bouchard asserted that Vesco and Le Blanc would finance the heroin buy. Bornstein said he and Inspector Condon took Peroff's tapes to the U.S. Attorney's Office that afternoon. There they met with Paul J. Curran, the U.S. Attorney for the Southern District of New York, and two Curran assistants, Arthur Viviani and Walter Phillips. Bornstein said he could not be certain but he thought Assistant U.S. Attorney John R. Wing also attended the September 26 meeting. Peroff was not invited to this meeting.

PEROFF TAPES ARE NOT PLAYED AT MEETING

The meeting lasted about an hour and a half, Bornstein said, and issues such as legal jurisdiction were discussed and "one of Curran's assistants" indicated he knew who Conrad Bouchard was.

Bornstein said he and Condon told the Federal prosecutors "everything that had been told to us by Peroff." Bornstein said he brought along the Peroff tapes and "a small machine" on which to play them. But Curran and his assistants said they would rather listen to the tapes some other time. Bornstein said in his affidavit:

The meeting ended with Mr. Curran and his staff thanking us for bringing this to their attention and with the clear understanding that they would be in touch with Mr. Peroff and me to set up a meeting between Peroff and members of the United States Attorney's Office and that they would listen to the tapes at that time.

About a week after the September 26 meeting Bornstein received a telephone call from either Walter Phillips or Arthur Viviani; he could not remember which. Bornstein said he was informed that the Federal prosecutors had either "eventually set up a meeting" with Peroff or that they were having "some problem getting in touch with Peroff." Bornstein could not remember which he was told.

That phone call-coming to him sometime in early October of 1973was the last time he heard from Federal prosecutors in connection with Peroff while he was working for Queens County, New York, Bornstein said. In January of 1974, Bornstein quit the Queens County post and on March 11, 1974 he went to work for the U.S. Department of Justice as a Special Attorney in the Organized Crime and Racketeering Section.

BORNSTEIN'S SUBCOMMITTEE INTERVIEW

Bornstein noted, in swearing to this statement for the Subcommittee, that he was authorized to provide information to the Subcommittee by his superiors, William S. Lynch, Chief of the Organized Crime and Racketeering Section of Justice, and Henry E. Petersen, Assistant Attorney General in charge of the Criminal Division of the Justice Department.

At the session when Subcommittee Investigator William Gallinaro interviewed Bornstein, also present was William I. Aronwald, As

sistant Attorney in Charge, Joint Strike Force, Southern District of New York. Aronwald was present at the request of William S. Lynch.

In addition, Bornstein said in his affidavit that before being interviewed by Gallinaro June 6, 1974 he was directed by Aronwald to talk to Arthur Viviani. Of his talk with Viviani, Bornstein said:

I told him [Viviani] that I would be giving some form of testimony to the [Senate Investigations] Committee. He stated to me and helped me fix the date of September 26, that he recalled the meeting, he remembered my presence and Inspector Condon's presence, but that he did not remember Condon's name, he recalled being there with Mr. Curran and Mr. Phillips, he was not sure that Mr. Wing was there until I mentioned it and then he had some recollection of that. He said he remembered that we had told him of the incident at some length, we had told him about Peroff at some length, that we had the tapes with us, that they were not played then, I don't remember right now whether he remembered the brief reference to possible venue-I think he did-and his recollection as to the understanding we had when we left the meeting was the same as mine as I indicated before.

CURRAN INITIATES INVESTIGATION

Paul J. Curran, the U.S. Attorney, Southern District of New York, testified before the Subcommittee June 13, 1974. Curran testified that following the September 26 meeting, he designated two areas which he felt should be investigated by his office in connection with the Peroff allegations.

First, Curran said, he wanted to determine if the Robert Vesco lead could be "resurrected" in the Bouchard heroin case (p. 741).

Second, Curran said, he wanted to determine if there was any truth to Peroff's allegation that federal agents had set out to deliberately "cover-up" the Vesco angle (p. 741).

To check out both of these areas of inquiry, Curran assigned Arthur Viviani, an Assistant U.S. Attorney working on narcotics cases.

THE VIVIANI INVESTIGATION

Viviani conducted the inquiry. It began September 27 and ended apparently November 13, 1973.

Viviani's findings were as follows: First, there was no possibility of resurrecting the Vesco lead. And, second, there was no effort by DEA to protect Vesco by sabotaging the heroin case.

Viviani came to both these findings without independent inquiry of his own or of U.S. Attorney's Office investigators. To arrive at his first conclusion, Viviani accepted the word of Frank Peroff. To arrive at his second conclusion. Viviani rejected the word of Peroff and accepted the word of DEA and Customs officials and agents.

This staff study will now review Arthur Viviani's procedures as he conducted his investigation.