to raise money to stake the heroin deal (p. 30). Peroff and Bouchard were both knowledgeable about fraudulent securities schemes. Bouchard could have worked out either a heroin deal with Jimmy Legs or a bogus securities transaction, or both.

Bowers was questioned closely at the hearings on the possibility that U.S. Customs and RCMP agents doubted that Bouchard was serious about the heroin proposal. Bowers denied any such doubt existed. Subcommittee Investigator Philip Manuel asked Bowers if he believed that Bouchard was lying to Peroff. Bowers said there was no evidence that Bouchard was lying to Peroff. Manuel asked if the Bouchard case, therefore, was a "viable, workable investigation." Bowers said the inquiry was in "a holding pattern." (P. 770.)

Frank Peroff said repeatedly that his hotel room and phone were bugged on his trips to Montreal. Customs Agents Dos Santos testified that the RCMP had tapped Peroff's room and phone during the May 13-19 stay (p. 385). Customs Agent Bowers testified the same (p. 761). But Bowers added that he never heard any of the tapes played. In fact, he noted, it was his understanding that no tapes were made since either Bouchard never came to Peroff's room and never called him on the phone; or the recording equipment broke down. Bowers went on to say that had such tapes been available he was sure the Mounties would have played them for him (p. 765).

JOHN J. O'NEILL'S VERSION OF THE HASHISH DEAL

Peroff was a Customs informant at the time he and Bouchard were talking about smuggling into North America a large shipment of hashish. Customs was supposed to keep the Bureau of Narcotics and Dangerous Drugs (BNDD) informed of the hashish plan. But it was unclear just what information was passed. For example, John J. O'Neill, later to become Group Supervisor of the Drug Enforcement Administration in the New York area, was a BNDD official in May of 1973 when the hashish discussions were going forward. By his testimony, O'Neill revealed a distinct lack of knowledge about the hashish plan.

O'Neill's testimony before the Subcommittee differed sharply with the testimony and written reports of Customs Agents Bowers and Dos Santos. O'Neill was of the opinion that it was Peroff who initiated the hashish plan-and that it was Peroff who came up with the idea of Pakistan being the pick up point (p. 576).

O'Neill made it clear that, to his way of thinking, Peroff was an opportunist who came to federal agents with an inflated view of his own importance and proposed schemes that could not possibly be carried out.

Addressing his remarks to Subcommittee Investigator Philip Manuel, O'Neill testified:

. . Mr. Manuel, I don't know if you are aware of it but he [Peroff] wanted to get involved in a hashish smuggling thing from Pakistan and he wanted to bring a plane over to Pakistan during the middle of the Pakistani-Indian war. Manuel tried to say something but O'Neill went on:

Let me finish this because it becomes relevant to later. When

it was pointed out to him that Pakistan and India were in a war and where he wanted to go to was in the war zone, he suggested that he take the plane and we get two American jets to accompany him. They could pick up the hash and come back (p. 576).

Manuel informed O'Neill that the Subcommittee had received testimony regarding the hashish proposal and that this testimony was "at variance with what you just said." (P. 576).

While the Subcommittee did not pursue this difference in testimony regarding the hashish plan, John J. O'Neill's comments about Peroif in this regard took on added significance because on July 1, 1973, the new Drug Enforcement Administration (DEA) was formed and Richard Dos Santos and Frank Peroff became subordinate to O'Neill's authority. O'Neill testified June 11 and 12, 1974 (pp. 505-661).

BOWERS' REPORT ON MAY 13-21 EVENTS

John J. O'Neill testified as to what he knew about the hashish plan. So did Richard Dos Santos and Sidney Bowers. But the most comprehensive description about the hashish proposal-and related events was a report Bowers wrote May 25, 1973. The report traced Peroff's activities from May 13 to May 21. A copy of the Bowers report was made part of the hearing record.

Bowers said Peroff arrived in Montreal Sunday, May 13 and checked in first at the Airport Hilton where he met with Corporal Claude Savoie of the RCMP. The next morning Peroff was registered into the Seaway Motor Inn in downtown Montreal. The Seaway, at 1155 Guy Street, is only a few doors down from the Martinique at 1005 Guy.

Bowers said Louis Cote and Claude Lemoyne paid Peroff a visit at the Seaway and told him that if he would smuggle in several tons of hashish from Morocco in small tin cans aboard his private jet for them they would pay him $200,000. The next day, May 15, Bowers said, Claude Lemoyne told Peroff that he would be expected to fly in the hashish in several trips over a period of months and the origin would be Pakistan, not Morocco. Bowers noted:

In view of these developments concerning the proposed hashish smuggling operation, it was decided in consultation with Desk Officer D. [Douglas] McCombs that the C.I. was to advise Bouchard, Lemoyne, et. al. that the C.I. would not participate in a hashish smuggling venture. The C.I. was to indicate that, number one, it was too dangerous to pick up in the Near East and number two, the sheer bulk of hashish made for more risks.

Bowers said Peroff told Bouchard on the phone late that night that he wanted a "face to face meeting" and that he was against the hashish deal. The face to face meeting took place May 16. Bowers said Lemoyne took Peroff to Bouchard's home. When Peroff said he would not go through with the deal unless he were paid $30,000 in advance, Bouchard, Lemoyne and Cote "became very upset," Bowers reported, adding that Bouchard threatened Peroff by saying it was too late to back out now and that "the Italians" would never stand for it.

Later on, though, Bouchard calmed down, Bowers said, and indicated that, while $30,000 was too high, he might be able to come up with $10,000. Bowers said:

Bouchard additionally indicated that the hashish venture

was in effect a test of the C.I.'s ability to successfully smug-
gle narcotics by aircraft.

Bowers said Bouchard explained to Peroff that he was working on a plan to avoid having to deal with the "rats” in France in future narcotics transactions. Bowers said Bouchard revealed that his group had been storing morphine base in Pakistan. Before the end of the year, Bouchard said, they expected to smuggle into Canada one and one-half to two tons of morphine base. Bowers said:

Bouchard went on to say that the proposed hashish venture was the C.I.'s test before they committed the C.I. to a shipment of morphine base. Bouchard told the C.I. that this plan had been working for several months and that there were over 35 people involved in the conspiracy.

Bowers said that Bouchard agreed to try to raise $30,000 to give to Peroff as advance money. Bowers said Bouchard also agreed to try to have the pickup point changed from Pakistan to Israel.

Bowers said he discussed the status of the case with Douglas McCombs of the Washington Customs headquarters and with the Royal Canadian Mounted Police the evening of May 16. It was decided to allow Peroff to continue to negotiate the transaction but that Peroff would have to adhere to his demands that he be paid advance money and that an acceptable pickup point, such as Israel, be found.

Peroff spent May 17 awaiting word from the Bouchard organization, Bowers said. Nothing happened. On the 18th Bowers said, Bouchard, Lemoyne and Cote came to the Seaway, picked up Peroff and took him to a tavern. There, Bowers said, Peroff was confronted by the nephew of Thomas Solarik. Bowers said the nephew accused Peroff of being the police informant in the arrest of his uncle. "A long rambling argument then ensued," Bowers said, "which eventually terminated with the C.I. successfully turning aside all accusations."

Following the confrontation in the tavern, Bowers said, Bouchard told Peroff he was still trying to come up with the advance money and have the location of the hashish pickup changed. Bowers said that on May 19 Peroff left Montreal, "supposedly to go to the U.S. and check on the progress of the alterations to his aircraft."

On May 21, 1973, Bowers wrote, Peroff "reportedly contacted" Bouchard and Bouchard told him the hashish plan was off and that his organization was reactivating the "original proposal... to smuggle 100 kilos of heroin from Europe and that the pickup point would be where the C.I. lived... Italy."

Bowers said that on the evening of May 22 Peroff spoke on the phone with Bouchard again. Bouchard was now talking about a 200kilogram heroin shipment and that it was to take place within the next two weeks. "Investigation continues," Bowers concluded.

HEROIN SMUGGLING PLANS GO FORWARD

Peroff, back with his family in Puerto Rico, stayed in touch by phone with Bouchard throughout most of June 1973. Peroff said that on about June 24, 1973 Bouchard won a three-month postponement of his trial. This was what Peroff had been hoping for since he believed it would enable Bouchard to devote more time to the heroin transaction (p. 36). Peroff said that with the postponement Bouchard began making specific plans for a big heroin buy in Rome. Peroff testified:

at this time... Bouchard informed his associates that he was prepared to go forth with the narcotics deal and it was then that I learned we would be transporting a total of 150 kilos of heroin from Rome to the United States by the use of the private jet which Bouchard believed I had access to (p. 36).

Peroff said that in a conversation with Bouchard in late June of 1973 Bouchard mentioned Robert Vesco. Peroff said Vesco's name came up "casually" and there was no reference to anything illegal. This conversation, like the others, was taped, Peroff said, and replayed for re-recording over the phone to his control agent in New York, Richard Dos Santos (p. 37).

Peroff said the planned heroin buy seemed to be moving closer and closer to realization and that he, Bouchard, Dos Santos and RCMP agents were all enthusiastic and "activity was getting intense." (P. 37.)

Peroff's assertion that he played back his Bouchard tapes over the phone to Richard Dos Santos was confirmed by Dos Santos. Dos Santos testified that Peroff did play back "many" of the Bouchard tapes from Puerto Rico (p. 396).

Subcommittee Investigator Philip Manuel asked Dos Santos how many was "many"? Was it 50? Dos Santos refused to be specific, saying, "I decline to specify a number, but I think 50 is kind of high." (P. 396.)

Peroff also testified that it was his understanding that Dos Santos re-recorded the Bouchard tape play backs. Manuel asked Dos Santos if that were true. Again declining to be specific, Dos Santos said, "I recorded some, yes." (Pp. 396, 397.)

BOUCHARD CONSIDERS FLEEING CANADA

As preparations for the heroin buy progressed, Bouchard was living with the very real prospect that he might be found guilty in his narcotics trial and that he might receive a stiff prison term. Rather than run the risk of going to jail, Bouchard considered trying to flee Canada in Peroff's private jet.

Peroff said Bouchard mentioned that idea several times and that each time he reported it to Customs agents. On one occasion, Peroff said, Customs Agents Sidney Bowers and Richard Dos Santos instructed him to tell Bouchard that such a getaway flight was possible (p. 36).

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Following the agents' orders, Peroff said, he told Bouchard that if he wanted to flee, they could take the private jet from Canada into St. Croix in the Virgin Islands east of Puerto Rico. It was Agent Bowers' opinion, Peroff said, that St. Croix would be a site where authorities could readily monitor Bouchard's activities. Peroff said he and the agents also discussed the possibility of Peroff's "dealing directly" with Giuseppe Cotroni on the heroin deal should Bouchard escape (pp. 36, 37).

THE M'COMBS MEMORANDUM

Assistant Customs Commissioner George C. Corcoran testified that Douglas A. McCombs, "one of our senior Special Agents in Washington," coordinated all facets of the Bouchard case. Corcoran said McCombs coordinated the investigation at the Washington level "between our offices in Ottawa, Montreal, New York and San Juan." (Pp. 207, 208.)

On May 10, 1973, McCombs wrote a memorandum to J. A. Lund, head of the criminal division of the Investigations Office of the Customs Service. The memorandum was entitled "Progress on Bouchard Case." The Subcommittee obtained a copy of the May 10 document. The copy was made a part of the hearing record. The McCombs memorandum is significant in this Subcommittee inquiry because it addressed itself to the possibility that Bouchard might flee Canada and, at the same time, attempt to carry through on the massive heroin deal. In fact, McCombs pointed out in the memorandum that he and the Royal Canadian Mounted Police thought it altogether possible that Bouchard would enlist Frank Peroff and the Lear jet in both the heroin buy and his escape effort.

McCombs went on to say that should Bouchard try to escape, he, Bouchard, would be even more likely to want to go ahead with the big heroin deal. After all, McCombs said, Bouchard will be in need of money even more so when he is a fugitive. McCombs wrote:

The RCMP expect that Bouchard will attempt to flee if he feels he has lost the [court] battle. They hope that our informant [Peroff] will be in position to learn details as Bouchard has indicated he would want our informant to assist him under these conditions. It is also speculated that the load we are working on will materialize in any event-Bouchard will certainly need money in "exile."

The May 10, 1973 memorandum of Douglas McCombs took on a new dimension as this investigation developed. Later on, Drug Enforcement Administration officials claimed that Bouchard only wanted to use Peroff's private jet to flee Canada-and that the heroin deal was merely a fabrication to keep Peroff close at hand.

But, according to Douglas McCombs, Customs was well aware, as early as May of 1973, that Bouchard quite likely intended to use Peroff for both purposes-to escape and to transport heroin, and not necessarily in that order. The RCMP, McCombs said, thought the same thing.

In the May 10 memorandum, McCombs also apprised Lund that "our informant and his family" were living in San Juan and that