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Even so, Peroff went on to say, Claude Lemoyne had made trips to Europe for Bouchard to pick up heroin before and could do it again. "So what it boils down to," Verklan said, "Bouchard isn't necessary anymore." Peroff agreed, pointing out that certain Canadian mobsters. had reached the same conclusion. Not surprisingly, Peroff said, Claude Lemoyne and Conrad Bouchard, friends for 25 years, were increasingly distant with one another. "Connie don't want me to talk in front of Lemoyne," Peroff said.

According to the transcript of the May 3 interview, Peroff said the problem between Bouchard and Lemoyne was reflected in a disagreement in Montreal at that time on how to divide up the profit from the sale of the five kilograms of heroin in Windsor. Verklan asked Peroff if he foresaw Bouchard and others getting killed in gangland violence in Montreal. Peroff said the RCMP had asked him the same thing. Peroff said that Bouchard had told him there was "a million dollar war going on" in Canada and "somebody is going to get killed."

Peroff said Giuseppe Cotroni's brother, Vic Cotroni, had no involvement in the heroin transaction. He said Vic Cotroni reportedly did not like to "touch junk with his hands." Giuseppe Cotroni did not mind dealing in drugs, Peroff said.

As for the split from the heroin transaction, Peroff said his understanding was that 100 to 150 kilograms of heroin would be bought at $3,000 a kilo. Peroff said Mafia operatives in Detroit would manage the heroin once it arrived in the U.S. and that proceeds would be divided three ways between Italian crime families in Detroit, New York and Chicago. From the transcript, it was not altogether clear what Peroff believed Bouchard's profit would be but Peroff seemed to be saving that Bonchard would be paid after the heroin was sold to distributors. Peroff said, for example, that Bouchard had told him that in New York heroin was selling for $30,000 to $32,000 a kilo.

Peroff said that Bouchard was not a member of the mob but was "strictly independent and spends a lot of money." Peroff said that owing to Bouchard's desperate financial condition, organized crime elements were hesitant to give him the cash to buy the heroin himself because they feared "he might run away" with the money.

IN MONTREAL, PEROFF, BOUCHARD DISCUSS HASHISH

Customs records reveal that Peroff made trips to Montreal from Puerto Rico April 25 and May 13.

Peroff's recollection of the April trip included a new element in the inquiry-hashish.

Peroff said that on this visit he flew into Montreal on commercial aircraft. He said Customs Agent Richard Dos Santos joined him. Peroff said he believed they stayed at the Martinque Hotel.

As in his previous trips to Montreal, Peroff said, the Royal Canadian Mounted Police wired his room with electronic surveillance equipment. RCMP and U.S. Customs agents also took rooms in the hotel, although on different floors than Peroff (pp. 32, 33).

Peroff called Bouchard to say he was in town. Accompanied by Claude Lemoyne, Bouchard came to Peroff's room. Bouchard got right to the point. He proposed that Peroff fly into Pakistan aboard his private jet, make a pickup of a large supply of hashish and smuggle it back into the U.S. or Canada.

Uncertain as to how he should respond to Bouchard's proposition, Peroff was noncommittal. He didn't know what to say since the original plan had been to bring in heroin, not hashish. Peroff, a Jew, testified that he did tell Bouchard that he did not like the idea of flying his private jet into a Moslem nation. Peroff told Senators:

I stalled Bouchard so I could relay this information to the agents and their first reaction was that they did not think it was possible-that the drug agencies were not concerned with hashish (p. 33).

The agents were surprised, then, when Customs headquarters in Washington and RCMP headquarters in Ottawa gave the hashish plan "a green light," Peroff said. He added, however, that the agents instructed him to tell Bouchard that he would not pick up the hashish in Pakistan but he would do it in Israel or Lebanon (p. 33).

New information may have been provided from the headquarters levels, for now the Customs and RCMP agents doubted that Bouchard truly wanted to smuggle hashish. Peroff said agents now believed the cargo would actually be a "morphine base covered with hashish." (p. 33.)

Peroff added that the Mounties were of the opinion that Giuseppe (Pepe) Cotroni was involved, that Cotroni planned to build a drug refining laboratory in the Laurentian Mountains, a low-lying range in Quebec Province (p. 33).

Bouchard and Peroff continued to discuss the hashish deal. Then, Peroff said, he told Bouchard he was leaving Montreal and would call him the next day. Peroff said he flew by commercial aircraft to New York. Customs Agent Richard Dos Santos had him check into the Hotel Lexington, Peroff said.

From the hotel room, Peroff said, he called Bouchard. With Dos Santos recording the call, Peroff and Bouchard talked. Peroff testified about their conversation:

It was this phone call that I was told, in fact, there was a firm narcotics or heroin deal made. Bouchard said to me, "They will deal in the powder-forget about the hash," and that the pickup spot because he believed I also had some special talents in this city, would be Rome (p. 34).

Peroff said Customs Agent Dos Santos then directed him to return to San Juan. Back in Puerto Rico, Peroff continued his frequent telephone contact with Bouchard and "reported all pertintent information" from these conversations to the Customs office in New York (p. 34).

DOS SANTOS TESTIFIES ABOUT HASHISH DEAL

Peroff's control agent. Richard Dos Santos, testified that on May 14, 1973 Peroff was sent to Montreal to confer with Bouchard. Dos Santos also went to Montreal on this occasion (p. 371). Dos Santos said the Royal Canadian Mounted Police had Peroff's hotel room and telephone under electronic surveillance. Customs records reveal Peroff actually was sent to Montreal May 13.

Dos Santos said Bouchard proposed to Peroff that they employ Peroff's executive jet to fly into Florida with a ton or a ton and a half

of hashish which they would pick up in Morocco (p. 372). Dos Santos said:

Florida was chosen primarily because Frank was more knowledgeable about flying into Florida airfields that possibly were not watched by government officials (p. 373). Dos Santos said the proposed hashish plan was to be financed by "a large number of individuals in Canada," although Peroff was to take on the cost of the plane. The RCMP believed that Giuseppe Cotroni was involved, Dos Santos said, recalling that the Mounties thought Cotroni "prefers dealing in hashish rather than some other type of narcotics." (P. 374.)

Dos Santos said he and other agents were opposed to Peroff picking up the hashish in Morocco. There were no U.S. Customs officials there, Dos Santos said, and no way, therefore, to provide protection to Peroff (pp. 374-375).

Bouchard's people put forward a counter proposal, that Peroff pick up the cache in Pakistan, Dos Santos said. But problems developed in that plan as well, Dos Santos testified, pointing out that the drug was "stockpiled" in Pakistan and there did not seem to be a way to successfully take it out of that country. Dos Santos explained:

There was no way that we could go into Pakistan and tell the Pakistani officials to, "Yes, load up the plane. We want to make a case in the United States." (P. 376.)

There was yet another obstacle. Dos Santos said Customs still had to come up with an executive jet for Peroff capable of making the long haul from Morocco or Pakistan to Florida (p. 376).

On the plus side, however, there was reason to believe that the hashish deal was "to be merely a trial run" in which Peroff would have the chance to prove to Bouchard and his associates that he had the plane and the experience required to carry out a big smuggling venture, Dos Santos said. Dos Santos went on to say that Bouchard also proposed bringing in morphine and heroin (p. 377).

Dos Santos said he never once doubted that Peroff was doing everything he could to make the deal go through. Moreover, Dos Santos said:

There was nothing that developed that indicated to us that it was not a bona fide offer and a proposal by Bouchard (p. 375).

Dos Santos said that Sidney Bowers, the U.S. Customs agent in Montreal, had direct control over the case on the scene in Montreal. Dos Santos said Bowers ordered Peroff to bow out of the hashish deal since neither Morocco nor Pakistan was an acceptable pickup point. Dos Santos said Bowers told Peroff to use his religion as an excuse to back off. Dos Santos testified:

Mr. Peroff told [Bouchard], "I am Jewish. That is a Moslem nation. It will be kind of hairy. I don't think we can use that." (P. 376.)

Dos Santos said Peroff cancelled out on the hashish job but that Bouchard made clear to Peroff that he wanted him to stay in Montreal for a while. But Customs Agent Sidney Bowers would not let Peroff

stay, Dos Santos said. Bowers wanted Peroff out of Montreal, Dos Santos said, testifying:

we felt that under these circumstances we didn't know exactly what Bouchard was planning and it was best for him to leave at that time on some pretext. He [Peroff] goes back to New York (p. 377).

While describing it as Bowers' final decision, Dos Santos said he supported it. Subcommittee Investigator Philip Manuel asked if it was premature to take Peroff out of Montreal when he seemed so close to becoming actively involved in a drug deal. Dos Santos said Peroff was sent away for his own protection, unsure, as the agents were, of just what Bouchard might do next (pp. 378, 379).

Dos Santos said that just before leaving Montreal, however, Peroff was instructed to present Bouchard with a demand for money. Dos Santos said the "money request", as he understood it, was to, first. serve as a "roadblock" toward the Canadian's plans to import hashish; and, second, to use the money, if Bouchard paid it, as evidence of a conspiracy (p. 379).

Subsequent testimony indicated that Peroff made the money demand to Bouchard on the pretext that it was needed to equip the executive jet for the smuggling project (p. 767).

Dos Santos said he and Peroff flew to New York. At Dos Santos' direction, Peroff called Bouchard. Dos Santos said he heard the tape recording of this discussion and that, while he could not remember for sure, he, Dos Santos, may have been the one who taped it. In any event. Dos Santos described Peroff's conversation with Bouchard this way:

He calls Bouchard and he is informed by Bouchard that Bouchard recognizes that they could not go through with the hashish deal insofar as the Near East was concerned, but that an alternate source was going to be made available. I think it was at this time that we got back to at least Bouchard identified another country as being a depository for a large amount of heroin (p. 380).

Dos Santos said the site of the pickup was assumed to be Italy, although Bouchard did not say so specifically. This Peroff-Bouchard conversation occurred on about May 19, 1973, Dos Santos said. He added that Peroff was then sent back to Puerto Rico to await further instructions from Customs and news from Bouchard (p. 382). Customs records reveal that Peroff did fly from Montreal to New York May 19 and from New York then returned to San Juan.

Summing up the hashish-to-heroin discussions, Dos Santos said he thought one important factor was working against Bouchard in his desire to bring off the venture. It was, Dos Santos said, that Bouchard was tied up in his own legal defense in the narcotics charges he faced. But this was not Peroff's responsibility, Dos Santos said, acknowledging again that Peroff seemed to be doing the best he could under the circumstances (pp. 382, 383).

There was a second consideration in the failure of Conrad Bouchard to move his dope smuggling scheme off dead center. It was that Frank Peroff left Montreal at a time when Bouchard wanted him there. Dos Santos said Sidney Bowers made the decision to have Peroff leave.

The Subcommittee wanted to know more about how Bowers made that decision.

BOWERS EXPLAINS PEROFF DECISIONS

Sidney C. Bowers kept a diary of his daily activities as a Customs agent in Montreal. Copies of excerpts of the diary were obtained by the Subcommittee and made part of the hearing record (p. 428). For May 15, 1973, the entry in Bowers' diary said, "Back at office, talk w/McCombs opposed to any sort of hash deal-advise Poissant. Go to Seaway talk to Frank, tell him hash deal is no go." (P. 765.) McCombs was Douglas McCombs, the senior Customs agent in Washington who was coordinating the Bouchard inquiry. Giles Poissant was the RCMP drug unit supervisor in Montreal. Frank was Peroff. Bowers said picking up a ton of hashish in Pakistan was an "unacceptable" project for Peroff to undertake. Bowers told Senators that McCombs vetoed the idea because Customs was not able to provide protection to Peroff or the aircraft pilots. Bowers said he suspected that McCombs and others at the Washington level felt that American relations with Pakistan were "not of a sufficient caliber" to enable the two nations to work out a secret, cooperative effort involving so large a supply of hashish (p. 766).

The May 16, 1973 entry in the Bowers diary said, "Meet w/Savoie, Sauve, Poissant decide its best that Frank pulls out-call him and tell him to shut the case down (pp. 766, 767). As a "fallback" strategy, Bowers testified he now instructed Peroff to ask Bouchard for money to ready his private jet for some future smuggling deal (p. 767).

But the fallback strategy that is, the ploy of demanding money to divert attention from having backed out of a firm proposal-did not divert the attention of the Bouchard group. They told Peroff he was already in too deep to walk away now (p. 767).

Bowers said Bouchard and his people "had come on pretty strong" when Peroff told them he wanted out of the hashish plan. Bowers said Peroff feared for his life because Bouchard had warned him that "the Italians aren't going to let you back out." It was when he heard Peroff repeat that veiled threat that Bowers decided to get Peroff out of town. (pp. 767, 768).

According to Bowers, Peroff's reneging on the hashish effort and his subsequent quick exit from Montreal did not diminish his value in Bouchard's eyes. Bouchard still wanted to do business with him. Refreshing his memory from the May 21, 1973 entry in his diary, Bowers testified that Dos Santos called about 9 p.m. that night to report that Bouchard and Peroff had agreed to discard the hashish plan altogether and were now returning to their original idea, that of bringing in a large shipment of heroin. The pickup point Bouchard had in mind seemed to be Italy, Bowers said (p. 768).

Citing his diary again for reference, Bowers said that on May 23, 1973 Bouchard was now saying that the heroin "deal ready in two weeks for twice original amount." The diary entry also recorded that "Connie [Conrad Bouchard] asks Frank to contact Jimmy Legs in New York." (P. 769.) Jimmy Legs is a nickname for James Episcopia, a known trafficker in stolen and bogus securities as well as illicit drugs. Peroff himself testified that it was during this period that Bouchard asked him to pursue the possibility of entering into a securities fraud

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