DOS SANTOS. Friendly forces were the only ones who were
aware that he was arrested. There is no information that
anybody who we were trying to conduct an investigation on
was aware of his arrest and, therefore, he was in good shape.
MANUEL. But specifically with respect to the Vesco-LeBlanc
aspect of this investigation, at that time it was still alive, is
that correct, from the investigative standpoint?

Dos SANTOS. There was nothing that militated against that.
MANUEL. At the time of Mr. Peroff's release from jail on
July 25, had DEA received any information from the RCMP
which would indicate that Mr. Bouchard was lying to Mr.
Peroff in relating the possibility that Vesco and LeBlanc may
be involved as financiers of the narcotics transaction.
Dos SANTOS. No.

MANUEL. There was not?

To your knowledge there was not?

Dos SANTOS. No, not to my knowledge.

MANUEL. So again that statement indicates that as of the 25th of July [1973] there was no adverse information from RCMP with respect to the possibility of Vesco and LeBlanc being involved in this case?

Dos SANTOS. That is correct (pp. 438, 439).

John R. Bartels, Administrator of the Drug Enforcement Administration in his testimony before the Subcommittee on June 11, 1974, also addressed himself to the question of whether Bouchard was lying to Peroff in July 1973.

In response to questioning by Senator Walter Huddleston, Bartels made the following statements:

There comes a point in time when you have to have some corroboration about this particular deal. What I gather from Mr. O'Neill was that there was information that he had received which indicated that this allegation that Mr. Vesco was involved and that it would take money, was not true and was not accurate..

... I haven't heard Mr. Peroff's testimony or Mr. Dos Santos' testimony but what I understand from Mr. O'Neill it is that the man who was not about to go to Costa Rica to pick up $300,000 nor was Mr. Bouchard in a position to arrange for such a transaction. So based on my information, which admittedly comes solely from Agent O'Neill's recollection, it is that the information Bouchard was giving to Peroff was not accurate. It was not being confirmed by the RCMP. Mr. Peroff indeed and Mr. Bouchard, indeed had every motive to flee. There was indication or information that Bouchard was not telling Peroff an accurate story, that there was, in fact, no deal there (p. 479).

Based on all of this testimony, it seems that group Supervisor O'Neill was the only one who received information from the RCMP while the investigation was in progress that Bouchard was lying to Peroff. O'Neill not only did not reduce any of this information to writing, but also he evidently did not inform anyone else in DEA at

the time. He did not inform Agent Bowers in Montreal, nor Agent Dos Santos who was under his command and was Peroff's control agent, of this most pertinent information.

The Subcommittee staff investigation corroborated the fact that Frank Peroff travelled to Montreal in November 1974 at the request of the RCMP to work on a counterfeit money case. At that time Peroff was successful in introducing two undercover Secret Service agents to Conrad Bouchard. As a result, Bouchard and several others were arrested and some $84,000 in counterfeit Canadian currency was recovered.

This arrest of Bouchard enabled Canadian authorities to revoke Bouchard's bail and remand him to prison pending final sentencing for his previous narcotics conviction. During the bail revocation proceeding. Peroff was exposed as a Government undercover agent and pictures of Peroff and Bouchard taken in March 1973 aboard the U.S. Customs-rented Lear jet were made public.

Since Peroff had caused Bouchard's arrest only a few weeks earlier, it can be logically concluded that Bouchard and his associates became aware of Peroff's undercover role only after Peroff was publicly identified as such.

On March 1, 1974, Bouchard was sentenced to two life terms in Canada and although Bouchard appealed the sentence, bail was denied and Bouchard remained in prison, pending appeal.

The Subcommittee staff has also corroborated the fact that while he was free on bail following his narcotics arrest in January 1972, Bouchard waged a public campaign against certain RCMP narcotics officers, charging them with corruption and basing his defense on his claim that he was framed. The most conspicuous target of Bouchard's charges was Sgt. Giles Poissant, head of the RCMP narcotics squad in Montreal, who was also involved in the undercover activities of Frank Peroff as Peroff worked first for U.S. Customs and then DEA in what has been described as a joint investigation by U.S. and Canadian authorities. Poissant's subordinates, Paul Sauve and Claude Savoie, were the primary Canadian officers who worked with Peroff. On June 13, 1974, two days after his appearance before the Subcommittee and on the eve of the Subcommittee's final executive session in this case, John Bartels wrote a letter to Senator Jackson detailing a "new piece of information" which was brought to the attention of DEA as a result of an interview of Conrad Bouchard by RCMP officers Paul Sauve and Claude Savoie.

Bartels stated in his letter that "At some time within the last several days, Bouchard sought an interview with officers of the RCMP in an apparent attempt to mitigate against the possibility that he would receive a further sentence for other charges still pending."

According to the Bartels letter, the DEA resident agent, having been advised of the pending interview of Bouchard, requested that he be questioned in connection with the information originally given to Peroff regarding Vesco and LeBlanc.

Bartels stated in the letter that "we feel that this new information further supports the accuracy of my statement to the Subcommittee and of the representations which DEA personnel have made as a result of this inquiry" to the effect that Bouchard was lying to Peroff to retain his interest.

Mr. Bartels attached to his letter a copy of a cable received on June 6, 1974, at DEA headquarters. This cable reads as follows:

Subject Conrad Bouchard XA-71-0015

1) Following info received from RCMP Hqs on 6-4-74, S/Sgt. Sauve and Cpl. C. Savoie interviewed subject concerning possible relation between himself, Vesco, LaBlanc and Peroff. Subject categorically denied ever knowing Vesco or LaBlanc stating that he told Peroff that he knew both parties simply to stall Peroff. The evening Peroff had called him Subject had just read in the newspaper an article on Vesco and LaBlanc concerning a transfer of multi-millions of funds from the IOS to Canadian banks. Therefore, Subject used this to impress and also "con" Peroff.

PORTER.

Both Mr. Bartels' letter of June 13 and accompanying cables were made part of the hearing record.

Senator Jackson replied to Bartels in a June 25, 1974, letter, also made part of the hearing record. In that letter, Senator Jackson expressed the Subcommittee's interest in having its own investigators interview Bouchard.

In a July 31, 1974, letter to Senator Jackson, Bartels said DEA spokesmen had asked the RCMP if Subcommittee staff could interview Bouchard. Bartels said the Canadian Government was informed that DEA "regarded the arrangement of such an interview as desirable."

However, Bartels said, the RCMP official objected to the interview until Bouchard had exhausted his pending appeal in his narcotics conviction. Bartels said the appeals would "remain pending for several months."

Bartels added that should the "attitude" of the RCMP change DEA authorities in Canada would "advise me promptly."

The July 31, 1974, Bartels' letter was made part of the hearing record.

Subcommittee investigators never got the opportunity to interview Conrad Bouchard.

XIII. FINDINGS AND CONCLUSIONS

This staff study presents a chronology of Frank Peroff's role as a Government informant with particular emphasis on the period when he worked on the Bouchard heroin case.

The Bouchard case began in early January of 1973 and ended about August 1, 1973. The targets of the investigation were Canadian racketeers Conrad Bouchard and Giuseppe (Pepe) Cotroni. The investigation concerned the possible smuggling into the United States of 100 to 200 kilograms of heroin.

At the direction of the U.S. Customs Service and later the Drug Enforcement Administration (DEA), Peroff became involved with Bouchard as the heroin smuggling plan was formulated. Peroff's role in the drug scheme was to provide a Lear jet to transport the heroin from Europe to North America.

Bouchard also instructed Peroff to fly in the Lear jet to Costa Rica to pick up $300,000 from Robert Vesco, the fugitive financier, or from Vesco's Canadian associate, Norman LeBlanc. The $300,000 was to be used to finance the heroin deal, according to Bouchard.

It was also believed by Federal drug authorities that Bouchard might try to use Peroff's Lear jet to flee Canada should he conclude his narcotics trial would result in a conviction and a long prison term. Peroff first learned of the heroin scheme from Bouchard in face-toface meetings in Montreal. Peroff also met with Cotroni on at least one occasion. To win the confidence of Bouchard and Cotroni, Peroff provided a Lear jet to fly from Montreal to Windsor, Ontario to carry out a heroin transaction. The Lear jet was rented by the U.S. Customs Service. The meetings with Bouchard and Cotroni and the heroin transaction with the Lear jet were well known to Customs and later DEA agents.

Then, at the direction of the Customs Service, Peroff moved to Puerto Rico. He continued to discuss the 100- to 200-kilogram heroin plan with Bouchard in long distance telephone calls. Peroff recorded several of these conversations.

During his Puerto Rico stay, Peroff recorded two telephone conversations with Bouchard in which Bouchard said Vesco and LeBlanc would finance the heroin venture by putting up $300,000. Bouchard told Peroff he would have to fly the Lear jet to Costa Rica to get the money. Peroff received these instructions in July of 1973. He reported them to DEA agents. Due to a reorganization in the executive branch, the Customs Service was no longer involved in drug investigations and the new DEA had taken over.

It was shortly after Peroff taped the two conversations with Bouchard concerning Vesco and LeBlanc that serious problems developed between Peroff and DEA. These problems led to a temporary severance of Peroff's informant relationship with DEA. Accordingly,

no further information was developed concerning Bouchard's assertion that Vesco and LeBlanc intended to finance the smuggling effort.

Peroff believed the U.S. Government deliberately sabotaged the heroin scheme. He felt the Government sabotaged the case to protect Robert Vesco.

Peroff made his allegations to the Department of Justice and to White House personnel. Subsequently, on October 4, 1973, Peroff came to the staff of the Senate Permanent Subcommittee on Investigations with his story.

Meanwhile, Federal authorities and the Royal Canadian Mounted. Police (RCMP) reenlisted Peroff in informant work. The RCMP, however, in early November, precluded any future use of Peroff as an informant by revealing in public his true role in the Bouchard heroin inquiry. The public disclosure of Peroff's informant role also put Peroff and his family in danger of retaliation by criminals. This danger was evidenced by the fact that DEA agents began guarding the Peroff family at approximately the same time that the RCMP revealed Peroff's informant status.

Peroff admits to being a swindler and a confidence man. Subcommittee investigators listened to his charges but, knowing of Peroff's criminal background, were suspicious of him and what he had to say. However, important aspects of Peroff's story began to check out.

Subcommittee inquiry revealed, for example, that Peroff had been an informant for the Secret Service, the Customs Service, the defunct Bureau of Narcotics and Dangerous Drugs (BNDD) and the DEA. Peroff was shown to have been a reliable and effective informant. His undercover work had resulted in seizure of a large quantity of heroin, the capture of about $500,000 in counterfeit American currency and the suppression of a counterfeit money plant.

Peroff turned over to subcommittee staff taped telephone conversations between himself and Bouchard in which Bouchard said Vesco or LeBlanc agreed to finance the heroin scheme. Subcommittee inquiry established that the DEA believed the voice on the tapes to be that of Bouchard.

The subcommittee staff felt that too much of Peroff's story was true for the subcommittee to ignore his unproven charge of Government cover up. Senator Henry M. Jackson, the subcommittee chairman, approved the staff's recommendation for a preliminary investigation. The staff's investigation centered on (1) Peroff's history as an informant; (2) how Federal drug agents and officials managed Peroff as an informant; (3) how reliable Peroff was believed to be by drug agents and officials who worked with him; (4) how professionally agents pursued and evaluated information given them by Peroff; (5) how drug personnel performed once the names of Vesco and LeBlanc surfaced in the heroin inquiry; and (6) how Government witnesses explained and recalled their own actions in the Peroff matter when they testified under oath before the subcommittee.

The staff cannot support Peroff's primary allegation of Government cover up. Nor is there corroborative information supporting the allegation, made in the Bouchard-Peroff tapes, that Vesco and LeBlanc actually intended to finance the heroin transaction. But the staff does conclude that Peroff was right when he said federal law enforcement drug agents and officials conducted themselves in a man