facturer of the phony money, his only link with the bills being his relationship with Solarik and the others. Martin said the Passaic plant was subsequently "suppressed.”

COZZI TESTIFIES ABOUT COUNTERFEIT CASE

Mario Cozzi, the U.S. Customs Attache at the American Embassy in Rome, testified before the Senate Permanent Subcommittee on Investigations May 30, 1974 (pp. 182-259). Cozzi said Peroff was referred to him in January of 1973 by Frank Leyva of the Secret Service in connection with a counterfeit inquiry. Cozzi said that Leyva warned him that Peroff was a "con man" and in dealing with Peroff, Cozzi should "proceed cautiously" (p. 183).

Cozzi said he asked the Federal Bureau of Investigation to give him a "complete pedigree background" check on Frank Peroff in early February of 1973. Cozzi said he was then advised that Peroff was the subject of two warrants issued in Florida for bad checks.

Cozzi said he "documented the receipt of this information in a telegram to our office in Paris." A copy of the telegram was obtained by the Subcommittee staff and made part of the hearing record. Cozzi said he also informed the Paris offices of the Secret Service and the BNDD of the two outstanding Florida warrants on Peroff. Copies of the February 1, 1973 telegram, No. 0816, were also sent to Customs, BNDD and Secret Service offices in Washington, Cozzi said (pp. 184201).

Cozzi said he then notified Antonio Delfino, assistant chief of the Rome office of Interpol, of the two warrants on Peroff. Interpol might receive a request from the United States for information on the whereabouts of Peroff, Cozzi explained, and he wanted Delfino to know that "I would produce him whenever they wanted him" (pp. 204, 205).

Cozzi said Peroff at first denied the existence of warrants but later, when confronted by them, he insisted "they weren't worth the paper they were printed on." Peroff vowed he would take legal action against the persons who had initiated the warrants against him (p. 202).

Senator Edward J. Gurney of Florida asked Cozzi if he had continued to point out to federal agencies the existence of the warrants when Peroff left Europe and became engaged in new undercover work in North America. He felt his notification of Customs, BNDD, Secret Service and Interpol was notification enough, Cozzi said, adding that therefore, he had done nothing further to promote the information. that warrants existed on Peroff. Cozzi explained:

I feel, sir, that once I put everybody on notice, my obligation in law enforcement is to put it right out and then whoever else had anything to do with it had to carry it from there (p. 203).

Cozzi said it was also learned in the background check that Peroff had at one time been suspected of trying to smuggle "instruments of value" and that he had once been searched for contraband when entering New York from abroad but that these encounters, coupled with his arrest record and the Florida warrants, constituted all the information he could gather on Peroff's past prior to 1973 (p. 219).

Finally, as a person willing to cooperate with law enforcement agents in pursuit of criminals, Peroff received low marks from Cozzi who told Senators:

you must realize in dealing with Mr. Peroff it was a rough situation. I got 32 years of law enforcement and in my career he was about the toughest source of information I have ever dealt with, and that is putting it mildly, sir (pp. 202, 203).

Howard J. Feldman, the Subcommittee chief counsel, reminded Cozzi that due to Peroff's informant work counterfeit money was recovered and heroin shipments seized.

"Sometimes the cure was worse than the ailment," Mario Cozzi replied (p. 235).

THE FALANGA REPORT OF INVESTIGATION

Customs Attache Mario Cozzi sent out a wire February 1, 1973 in which he identified Frank Peroff as being a wanted man in Florida. Richard Falanga of the Bureau of Narcotics and Dangerous Drugs wrote up a similar document for BNDD files February 12, 1973. The Subcommittee obtained a copy of the Falanga report.

Like the Cozzi cable, the Falanga papers were forwarded to BNDD Headquarters in Washington. In fact, the copy of the Falanga report obtained by the Subcommittee is the copy which was sent to BNDD Headquarters in Washington.

The purpose of the Falanga Report of Investigation was to establish Frank Peroff as a Class I BNDD informant. In requesting authority to give Peroff this status, Falanga noted that Peroff had "furnished valuable information which led to the arrest in Paris of three violators, and the seizure of 10 kilograms of heroin."

Falanga pointed out, however, that Peroff was "a practiced con man," an opportunist, a mercenary in the war on crime and "currently the subject of two outstanding warrants for bad checks in the state of Florida."

Nonetheless, Falanga said, Peroff had close ties to Conrad Bouchard and "the possibility of further development of the informant through Bouchard or his associates is being considered."

Falanga's February 12, 1973 Report of Investigation is significant to the Subcommittee's inquiry. It establishes that BNDD, as well as Customs, intended to have Peroff for future utilization in connection with Conrad Bouchard.

Moreover, the Falanga report, coupled with the Cozzi wire, demonstrated that the Washington headquarters of both Customs, BNDD and Secret Service were put on notice as early as February of 1973 that Frank Peroff was the subject of warrants in Florida. In testimony before the Subcommittee which will be reviewed later in this report, senior drug enforcement officials told Senators that they knew nothing about the warrants until the Secret Service discovered their existence in July of 1973.

V. PEROFF'S ROLE IN BOUCHARD INQUIRY EXPANDS

PEROFF IS SENT TO MONTREAL

On February 8, 1973, French police, acting on information from a U.S. Customs-BNDD confidential informant, seized 10 kilograms of heroin and arrested three key drug operatives in a raid in the Rome Hotel in Paris.

The informant was an American named Frank Peroff, BNDD code number SXA-3-0004. Peroff returned to his home and family in Rome immediately after the Paris arrests. But a week later, SXA3-0004 was operative again. This time federal law enforcement agents sent him to Montreal.

Peroff testified before the Investigations Subcommittee that Mario Cozzi, John J. Molittieri and Vernon Pitsker, all of Customs, and Richard Falanga of the Bureau of Narcotics and Dangerous Drugs (BNDD) wanted him to go to Montreal to be interviewed by the Royal Canadian Mounted Police (RCMP). Then, Peroff testified, the federal agents wanted him to call on Conrad Bouchard, the Canadian racketeer, and try to find out from him if the Solarik-Silverman narcotics seizure in Paris had wiped out the entire shipment. If there was more heroin than that which was seized, Peroff said, the agents wanted him to find out about it.

Peroff said he told the agents that he did not want to get involved in another narcotics case. "I explained that I was promised the Paris transaction was all that I had to do," Peroff said. But, he added, he was persuaded to continue to help out when the agents "pointed out to me that I would have a problem in relation to the counterfeit money" if he did not go along with their latest requests (p. 20). Peroff said the government used blackmail to force him to cooperate (p. 116).

Peroff said that he was soon on a plane and he was headed for Montreal. He stopped over in Paris where he met for about an hour and a half with BNDD Agent Falanga and Customs Agent Pitsker. Peroff said his flight connected to Montreal in Boston. In Boston, he was met by another Customs agent, Robert Bishop, who saw that he made the flight to Montreal, Peroff said (p. 20).

At the Montreal airport, Peroff said, two U.S. Customs inspectors directed him to the Customs office located in the airline terminal. There, he said, he waited for three hours. Finally, Peroff said, the Customs agent in Montreal, Sidney C. Bowers, arrived. Bowers was accompanied by BNDD Agent Ronald Swanson and Sergeant Paul Sauve of the RCMP, Peroff said. The four men held a brief meeting in the airport bar. Then, Peroff said, he was taken to the Sheraton Mt. Royal Hotel where a room had been reserved for him. Peroff said his room was electronically bugged by the RCMP, a practice the Mounties followed on each subsequent trip he made to Montreal.

Peroff said:

It is important to note that on all my trips to Montreal, I was always strategically put into a suite or room where the RCMP could and did maintain a listening post where they had my telephone wired and in addition, had, in effect, turned a wall into a microphone. I know this for a fact because on all my trips to Montreal I spent a considerable amount of time in the adjoining rooms where the equipment was located.

All of the conversations with Bouchard and his associates and anybody else, including RCMP agents or U.S. agents that took place in my room were on tape (p. 21).

The day after he arrived in Montreal, Peroff said, the American and Canadian agents told him to call Bouchard. He did. Bouchard came over to the hotel. Peroff said that Bouchard, when he arrived, "immediately insisted" that Peroff move to another hotel. Peroff checked into the Sheraton Fontainebleau (p. 21).

Peroff said he met again with Bouchard and that Bouchard was talking about a new narcotics transaction. In Bouchard's plan, Peroff was to fly to Marseilles, France and make a pick-up of drugs at a secret heroin laboratory. But Bouchard gave no further details of what he had in mind. Peroff said he remained in Montreal about a week, reported to Customs agent Sidney Bowers on his meetings with Bouchard and then returned to Rome (p. 22).

While Peroff could not remember the exact dates of this trip to Montreal, U.S. Customs Service records show the Peroff trip to have been from February 15 through February 27, 1973.

A BIG REWARD IS OFFERED PEROFF

In Rome, Peroff's news of the clandestine heroin laboratory in Marseilles sparked considerable interest among American law enforcement agents. Peroff said he talked about the heroin lab with John J. Molittieri of Customs and a BNDD officer he remembered only as Frank. Peroff said the agents explained to him that "a primary objective" of BNDD was to discover heroin manufacturing facilities outside the United States and the Marseilles installation would be an appropriate target for them (p. 22).

The agents then asked Peroff to return to Montreal and entice Bouchard into joining him in a new narcotics transaction, one that would lead them to the Marseilles plant. Peroff said he did not want to, protesting, as he had before, that he did not wish to get involved in more narcotics deals. But, Peroff said, the federal agents were persuasive. He said they offered him a $250,000 reward-and they reminded him. that the underworld does not look kindly on informants who are exposed.

Peroff told Senators:

Again, I was reluctant to continue and again it was pointed out to me I was considered a prime suspect by Bouchard and his people in the Paris bust. This time I was offered a quarter of a million dollars as reward if a narcotics lab could be found (p. 22).

While both Molittieri of Customs and Frank of BNDD made the big reward offer, Peroff said, it was understood that the money would be paid by BNDD. Peroff said he asked Customs Attache Mario Cozzi and Customs Agent George Corcoran if the reward offer was credible. Peroff said that Cozzi, a man "I had come to know and respect," and Corcoran both assured him he "was not being lied to" (p. 23).

Peroff agreed to accept the new assignment. He was told by Customs agents, he said, that a private jet aircraft and pilot would be made available to him in Washington, D.C. The private airplane would be an attraction to Bouchard who would require air transport for a large drugs shipment. Peroff said that he was told that from Washington he would fly in the private jet to Montreal. In Montreal, he was to display the aircraft to Conrad Bouchard, to Bouchard's associate, Giuseppe (Pepe) Cotroni, and other hoodlums. The purpose of showing the mobsters the aircraft, Peroff said, was to demonstrate to them his capability of transporting drugs (p. 24).

John J. Molittieri of Customs sent a cable from Rome to Washington and New York Customs officials March 8, 1973 in which he discussed the plan to use Peroff to locate the secret heroin plant in Marseilles. In the wire, Molittieri made reference to providing Peroff "with a Jet Commander piloted by an amiable undercover agent pilot" which would enable Peroff to "infiltrate the Cotroni group in Canada, locate a clandestine lab in Marseilles..."

The Molittieri cable was made part of the hearing record.

THE PEROFFS' EXPENSES

In mid-March of 1973, about two weeks after his February meeting with Conrad Bouchard in Montreal, Peroff and his family flew from Rome to New York. Peroff said Customs Agent George Corcoran accompanied them as far as Paris.

From Rome, Customs Attache Mario Cozzi and Customs Agent John J. Molittieri reported to their superiors in Washington on the departure of the Peroff family. Their cable went out March 19, 1973 and information copies were sent to Harris J. Martin of the Secret Service in Washington, Frank Leyva of the Secret Service in Paris, Customs Agent Sidney C. Bowers in Montreal and the Bureau of Narcotics and Dangerous Drugs in Washington. A copy of the wire was introduced as an exhibit at the hearings.

In the cable, Cozzi and Molittieri said the "C.I."-Peroff-left Rome on Pan American Airlines flight 119 on March 16, 1973. The C.I., the Customs men reported, was paid $500 per diem expense money to cover the period from March 1 through March 20. The cable went on to say that Mario Cozzi had paid Peroff "extra expenses" of $336 for costs incurred during Peroff's February 15 through February 27 visit to Canada and for the cost of an "undercover rental car" which Peroff used in Rome.

Another expense paid by Customs, the Cozzi-Molittieri wire said, was $1,323.50, the cost of air transportation back to the United States for Mrs. Peroff and the five Peroff children. This payment, the cable disclosed, had to do with "work he [Peroff] had accomplished for the Secret Service."