tions. Some of these transactions were tied to organized crime figures. In addition, there was information that linked Conrad Bouchard to similar transactions. However, no evidence was developed to show that Bouchard or any of his associates actually entered into a fraudulent securities deal to finance a heroin purchase involving Frank Peroff.

However, Customs records show that on several occasions Peroff reported to Dos Santos and Bowers that Bouchard wanted to join him in stolen or fraudulent securities transactions. These Customs reports were made part of the hearing record.

CUSTOMS PAYS PEROFF OWED EXPENSE MONEY

Putting himself up, his wife and their five children at the New York Hilton was getting expensive. Peroff said, pointing out to Senators that he and his family had been living there for nearly three weeks with what he considered insufficient expense money being provided by the U.S. Customs Service.

Peroff testified that from January of 1973 to April of 1973 he had spent $12,000 of his own money while serving as an undercover informant for the government. When he could get no satisfaction from federal agents that the money owed him would be forthcoming, Peroff went to Washington and took the matter up with Vernon D. Acree, the United States Commissioner of Customs, and the most senior official in the agency. Peroff said that Acree arranged for him to receive $7,900 in expense reimbursements (p. 31).

Peroff said the money issues were settled, however, only after he agreed to continue to serve in his undercover capacity on the Bouchard case. He also had to agree to have his family move out of the Hilton and take up residence in San Juan, Puerto Rico, Peroff added.

Peroff said that Customs officials told him to "forget about the heroin laboratory" objective, that the government's interest had shifted away from locating a secret drug manufacturing facility in Marseilles. Now the thrust of the inquiry, Peroff said, was "fully directed at Conrad Bouchard and Giuseppe Cotroni." Peroff said he was also advised by the Customs officials that the reward of $250,000 no longer applied since the effort to locate the Marseilles heroin lab had ended (p. 31).

In his testimony before the Subcommittee, Peroff did not go into detail about what frame of mind he was in at the time he vowed to see Customs Commissioner Acree. But inquiry by the Subcommittee staff shed light on what was going through Peroff's mind and the events leading up to Peroff's meeting with Acree.

BACKGROUND ON PEROFF'S MEETING WITH ACREE

From February 15 through February 27, 1973, Frank Peroff was in Montreal meeting with Conrad Bouchard and others concerning a plan to have Peroff, in a private jet, fly into Marseilles, visit a secret heroin laboratory, pick up a shipment of the drug and smuggle it into the U.S. or Canada.

When he returned to Rome, Peroff said, federal agents were enthusiastic about the Marseilles trip and offered him a $250,000 reward if he would help them locate it. Peroff said he didn't want to get involved

but he did. He and his family moved to New York March 16, 1973 and, when they would not stay in an apartment selected by the Customs. Service, the family moved into a $66 a day suite at the New York Hilton.

Peroff continued contact with Bouchard, made one trip to Montreal aboard a Customs-sponsored Lear jet and by early April of 1973 had penetrated the Bouchard drug conspiracy. But, it was during this period, Peroff said, that the interest of federal agents changed. No longer was shutting down the Marseilles plant an objective. What mattered was obtaining evidence that Bouchard and his associate, Giuseppe (Pepe) Cotroni, were smuggling drugs. And, with the shift in emphasis, Peroff said, also came a disclaimer. The quarter of a million dollar reward no longer applied. Peroff began asking, if the $250,000 reward is gone, what did he get out of this? He answered his own question, concluding he was to get very little.

According to an April 4, 1973 memorandum written by Richard Dos Santos, Peroff was angry at the new turn of events. Peroff was demanding to know why he wasn't told in Rome, before he uprooted himself and his family, that the $250,000 reward was not in his future. The Subcommittee obtained a copy of the April 4 memorandum and it was made part of the record.

Dos Santos wrote that during the last week in March of 1973 Peroff was becoming "increasingly disenchanted" and highly critical of the way federal agencies were treating him. Dos Santos said:

He [Peroff] now claimed that his efforts were being directed at certain individuals in Canada while he could be making a huge sum of money by going for a lab.

Dos Santos said Peroff was insisting that since the government had enticed him into this effort with a lure of a reward of a "huge sum" it was now incumbent upon the same government to make some "ironclad guaranties" that he be rewarded for his contribution to the investigation. Dos Santos said Peroff was demanding assurances that he would be paid for his work on the Bouchard case and that he and his family would be protected when this was all over.

Customs Agent Dos Santos described his role with the Peroffs at this time as being that of a babysitter. But, as events developed, Dos Santos was getting involved in the case more and more. He reported to Washington Peroff's unhappiness. Accordingly, Paul Boulad, a Customs agent working out of headquarters in Washington, called Dos Santos at 5:30 p.m. April 3, 1973 and spelled out for him the terms of the relationship the Service would have with Peroff. Dos Santos wrote up the substance of what Boulad told him in a memorandum to his boss, Albert Seeley. The Subcommittee obtained a copy of the memorandum. It was made part of the hearing record.

Dos Santos, quoting Boulad, said Customs would pay the cost of flying Peroff's family to Puerto Rico and would pay for lodging them. for one month. Then "if the anticipated case is successful," Customs would relocate the family.

In addition, Peroff would be allowed to take out "travellers insurance" on himself to protect his family during his travels for Customs. But, Dos Santos said, Customs would not assume responsibility for

Peroff's furniture or art works, a reference presumably to belongings left behind in Rome. Moreover, Peroff was forbidden to return to Italy. The final assertion in the seven-point memorandum noted that:

If the CI [Peroff] refuses to continue his services on behalf of the Customs Agency Service, he will not be utilized by any other federal agency and the federal government will not intercede with any local authority in his behalf.

Dos Santos gave this information to Peroff at his hotel at 6:30 p.m., an hour after his telephone conversation with Boulad. Peroff told Dos Santos the seven points were unacceptable. In turn, Dos Santos reported, Peroff demanded to know who was going to pay his bill here. at the New York Hilton. Dos Santos said he then advised Peroff that it was up to Peroff to "meet his financial obligations with the hotel management."

Dos Santos, in his memorandum, said that he spoke with Peroff again the next day, April 4, and that Peroff advised him he had been in touch with three men that day-Conrad Bouchard, the Canadian racketeer; Vernon D. Acree, the Commissioner of Customs; and Jack Anderson, the syndicated Washington columnist.

Dos Santos said Peroff reminded him that the Hilton Hotel management was after him for payment and that he "intended to call all the local press and the White House and give them the entire story.

Dos Santos reported that the Customs headquarters then informed him to tell the hotel management that Customs would pay the hotel bill but Dos Santos was instructed to tell Peroff that "we assumed no further responsibility for him or his bills."

To that, Peroff told Dos Santos that he was meeting with Customs Commissioner Acree in Washington "to renegotiate a new agreement." Dos Santos wrote in his memorandum that Peroff said his meeting with Acree would be at 11 a.m. Friday, April 6, 1973.

VERNON D. ACREE TESTIFIES

Testifying before the Investigations Subcommittee, Customs Commissioner Vernon D. Acree said he met personally with Frank Peroff at 11 a.m. April 6, 1973 (pp. 179, 185).

Acree said in his May 30, 1974 appearance (pp. 177-259) before the Subcommittee that Peroff began calling his office in early April of 1973. Peroff told Acree's secretary that the Customs Service owed him money. The secretary tried to refer him to the Customs' Office of Investigations, Acree said, but Peroff would have none of that. Peroff claimed to be "at his wit's end," Acree said, and insisted that the only way to resolve the issue was to meet with the Commissioner himself. Acree said he agreed to the meeting (p. 185).

Acree said the meeting was "very brief" and was the first and only time he faced Peroff (p. 179). Acree said that as a result of the meeting

... I arranged to have Mr. Peroff meet with appropriate personnel from our Office of Investigations in order that any financial obligations between the Customs Service and Mr. Peroff could be settled (pp. 179,180).

Acree said the head of the Customs' Office of Investigations at the time of the April 6 meeting was Assistant Commissioner Harold

Smith. Acree said Smith attended the meeting. Afterward, on Acree's direction, Smith took Peroff to his office "and thereafter worked out the financial settlement."

Acree said Smith voluntarily retired from Customs shortly thereafter. Acree said he welcomed Smith's retirement as he "was less than enthusiastic about" Smith's management of the Office of Investigations. Acree said Smith's retirement had nothing to do with the way the Peroff matter was handled by the Office of Investigations (pp. 218, 219). But Acree did make this observation:

At that time, very frankly, I was concerned over the management and direction and supervision of my Office of Investigations which prompted me to see Mr. Peroff personally... and hear for myself firsthand from him whether there was any validity to his assertions that, using his terms, he was being given "a bad time." I heard that which Mr. Peroff had to say and I directed that any financial obligations due and outstanding owed Mr. Peroff by the Customs Service be immediately worked out, and the then director of our Office of Investigations took Mr. Peroff in tow (p. 186).

Acree was also critical of the way the Customs Service Office of Investigations kept its files under Harold Smith. Senator Huddleston asked Acree if there was a central file at the headquarters office in Washington where Customs maintained its records on activities in the field. Acree said there was no such central file, explaining that "much to my amazement" there was no centralized filing system at Customs when he took over in 1972. Acree said files were literally scattered out" throughout the various Customs field offices. He said Customs was developing a central file system now (pp. 193, 194). Acree said that former Assistant Commissioner Smith was now a consultant for the new federal Drug Enforcement Administration (p.

217).

Customs officials turned over to the Subcommittee records which showed that they paid Peroff $7,900 on April 12, 1973 for "verified expenses incurred" while working as their informant. According to an April 12 receipt, Peroff was paid $7,900 in 20 $20 bills, 14 $50 bills and 68 $100 bills. The money was given to Richard Dos Santos. He turned it over to Peroff. Peroff signed the receipt for the money. In addition, a $2,847 bill of Peroff's at the New York Hilton was also taken care of by Customs, records showed.

THE 20-POINT AGREEMENT DESCRIBED BY BOULAD

Customs Agent Paul Boulad, working out of Customs headquarters in Washington, wrote a memorandum for Assistant Commissioner Harold F. Smith April 16, 1973. The Subcommittee obtained a copy of that document and it was made part of the hearing record. In the memorandum, Boulad said that on April 11, 1973 a 20-point agreement was reached between Customs and Peroff "clarifying several points of misunderstanding regarding the conditions of his [Peroff's] service."

Boulad wrote that attending the meeting at which the agreement was reached were himself, Peroff, Smith, Acting Deputy Assistant Commissioner George C. Corcoran and Special Agent Richard Dos

Santos. Nowhere in the Boulad memorandum is there any indication that Peroff signed the agreement or that he formally approved it in any other way. Boulad said simply that the points were "discussed at great length and agreed upon."

Also lacking from the memorandum is any reference to per diem expense money to be paid Peroff. Boulad did say that Peroff vowed to "resume his role in the [Bouchard] case." Boulad said Peroff promised to "proceed to Canada in a catalytic capacity to generate a speedier movement of the case."

Boulad said Peroff acknowledged that in the future he would demand no expense reimbursements except those specifically authorized ahead of time by Customs officials. But, Boulad said, Peroff would be paid "all expenses incurred by him subject to verification of certain expenses, such as tolls." Boulad said Peroff agreed that any claims for expenses incurred while working undercover for other enforcement agencies would be filed with the affected agencies-and not with Customs.

In addition, Boulad said, Peroff agreed he would testify in court at the conclusion of the Bouchard case but "only if his testimony would be required in the successful prosecution of the case." Boulad said Peroff accepted the arrangements for the storage of his furniture left behind in Rome. These arrangements had been made by Customs Attache Mario Cozzi. Boulad said Peroff absolved Customs and Cozzi of "any responsibility with regards to the informant's furniture storage." Boulad said it was also understood that Peroff's family would be moved from New York to Puerto Rico.

In turn, Boulad said, the Customs Service also made a series of promises. Customs officials agreed to pay Peroff $7,900 for past expenses and his $2,847 bill at the Hilton. Next, Customs officials said that after the "successful completion" of the Bouchard case they would absorb the expense of relocating Peroff and his family-"wife, 5 children, 1 canine"-anywhere Peroff desired to live in the territorial United States. But, Boulad said, it was also understood that "the defendant"—presumably Peroff—would have to take the steps needed to change his identity legally, although he would be given advice by the Justice Department.

Boulad wrote that Customs officials said after the "successful conclusion" of the Bouchard case and after the Peroffs were relocated the government would "assume financial responsibility" for moving the family's belongings from Rome to their new home in the U.S. Customs Service officials went on to agree to pay for "adequate lodging" for Peroff's family while the Bouchard inquiry was open but for no longer than two months and for no more than $550 a month. But, Boulad said, Peroff had to promise to "supply his family with money for their support while in Puerto Rico" during this time.

Other promises Customs officials made to Peroff, Boulad said, included an agreement to reward him "only" $500 per kilogram of heroin seized in the Bouchard investigation; to grant Peroff protection if "the circumstances warrant it;" and to consider, at the conclusion of the inquiry, the possibility of rewarding Peroff with a "supplemental payment," depending on the "merits of the case." It was asserted by Customs, Boulad said, that the Customs Service