O'Neill testified as to his own thinking this way. He said, for example, that he preferred that Peroff come to New York alone and leave his family in Puerto Rico. That way, O'Neill said, Peroff could have been free to work long hours with Drug Enforcement Administration agents without having to concern himself with the needs of his family (p. 572).

But, that being said, O'Neill felt he had no right to keep the Peroff family in San Juan or in any other way constrict their movements. "I told him he could do anything he wanted with his family," O'Neill testified (p. 572).

However, O'Neill said, he did not believe the government should pay the family's expenses once they arrived in New York. O'Neill said he made that disclaimer very clear to Peroff but that Peroff chose to ignore it (p. 570). O'Neill explained:

I had no objection to his bringing his family. [But] I was not going to pay for his family or support them while here, which he had insisted I agree to (pp. 571, 572).

O'Neill said Peroff argued that his family should be supported in New York-and that O'Neill had made that promise. Since Peroff issued this declaration from the San Juan Airport, O'Neill said, it was like an ultimatum. O'Neill termed Peroff's methods as "a common tactic" informants use, a "blackjacking type of tactic." (P. 572.)

But the tactic failed, O'Neill said, adding that he refused to agree to Peroff's demands and that, at that moment--July 17, 1973-Peroff, of his own accord, retaliated by severing his relationship with DEA. "That was his decision," O'Neill testified. "He told me that he had no interest or desire in any way to continue his cooperation with DEA." (P. 573.)

But O'Neill, in referring to Peroff's "cooperation with DEA," acknowledged that the precise nature of Peroff's relationship with DEA-with the U.S. Government in general-was ill-defined. O'Neill was at a loss, in fact, to try to define it. As O'Neill put it, Peroff "hadn't really cooperated with DEA, but since he was a voluntary informant, I didn't know of anything that we could do to keep him" on the Bouchard case (p. 573). Peroff didn't owe DEA anything. DEA, for instance, wasn't paying Peroff expense money. John R. Bartels, Jr., DEA Administrator, testified that all the money his agency ever paid Peroff was $50-and that was for phone calls (p. 467).

In turn, as of July 1, 1973, Peroff was no longer a Customs informant because Customs was no longer in the drug enforcement business. Thus, from July 1 until July 17-the date of Peroff's socalled break with DEA-he was caught in a kind of informant's limbo, informing to an agency that felt no responsibility toward him, and promising mobsters the use of an airplane he did not have. Peroff was receiving no expense money-and the expense money owed him by Customs was not forthcoming.

O'Neill himself attested to the uncertainty of Peroff's role in life when he described for Senators how DEA authorized Peroff's airfare from San Juan to New York July 17. O'Neill explained that DEA had not given Peroff a code name or number. So Peroff's defunct Customs

number, D-73-1, was used. "The reason we did it that way is that you try all the time to identify anybody, any witness, as much as possible identify him by a number or code name rather than his name," O'Neill said, adding, however, that he had not yet decided to give Peroff a DEA code name or number or in any other way formalize his association with the agency (pp. 573, 574). O'Neill explained:

We wanted to get him up [to New York] to talk to him, to evaluate him. If it did look like there was something there, we would have made him an informant. If there was nothing there, we would have risked the whole thing of a round trip ticket to Puerto Rico. Talking to someone of the caliber of Bouchard a round trip ticket to Puerto Rico is an investment (p. 571).

It was, therefore, to O'Neill's mind, a testing period for Peroff, a time to determine whether or not DEA could use him. Yet, unfortunately for Peroff, nobody told him this was a tryout. Peroff was following the instructions of DEA personnel, working and living as if he were central to a major heroin inquiry. There is no indication by any of the government's witnesses in the Subcommittee's hearings that any drug enforcement agent or official ever informed Peroff that the Bouchard investigation was tentative or that his, Peroff's, role in it was in doubt.

In testimony before the Subcommittee, both Dos Santos and O'Neill said Peroff came to New York July 17 on orders from them. Yet O'Neill still persisted in informing Senators that Peroff was not a DEA undercover operative.

Thus, Subcommittee Investigator Philip Manuel asked O'Neill "If he [Peroff] wasn't a DEA informant at the time he travelled from Puerto Rico to New York, why did you get so upset when he brought his family?" (pp. 569, 570).

O'Neill replied, "Because he said we were going to pay for them." (p. 570).

O'Neill went on to say that even though Peroff announced July 17 that he was through with DEA he was not telling the truth. What Peroff was doing, O'Neill said, was trying to strengthen his own "bargaining position." Accordingly, O'Neill said, he, O'Neill, refused to acquiesce to Peroff's demands because he, too, was "setting up" a bargaining position for DEA (pp. 575, 576.)

The discussion on this issue covered the many points of contention which O'Neill felt were at stake in the July 17 dispute at Kennedy Airport. The O'Neill exchange with Manuel went like this:

MANUEL. On July 17 as a result of this telephone call between yourself and Peroff, was his relationship with DEA, whatever that was at the time, at an end?

O'NEILL. He terminated.

MANUEL. Whether he terminated or you terminated, was it at an end?

O'NEILL. No, I didn't think so. Again, I think he was trying to set up a bargaining position for himself.

MANUEL. Were you in a position of just waiting to see what his next move would be?

O'NEILL. More or less.

MANUEL, What was his next move?

O'NEILL. I sent Dos Santos out to the airport and he took the jet and told me on the phone that we were absolutely out of our mind, that he wouldn't go to Costa Rica, that Vesco had more money than we had, and he was willing to spend it and that we were crazy.

MANUEL. Did he say he wouldn't go to Costa Rica by com-
mercial jet?

O'NEILL. He said he wouldn't go to Costa Rica, period.
MANUEL. When did he first say that?

O'NEILL. The first time on the 16th, the second time on the 17th.

MANUEL. Did he refuse to go to Costa Rica anytime prior to that?

O'NEILL. My first recollection of it is on the 16th.

MANUEL. Had the subject of commercial jet come up?
O'NEILL. I broached it to him. Sure it had.

MANUEL. Was his refusal based on the commercial jet aspect of the proposition?

O'NEILL. It started with that part of it and then he expanded it to everything else; it included everything in his mind. Again, I think we were getting into the point now where he was setting up his bargaining position and I was setting up mine (pp. 574-576).

DOS SANTOS HOPED TO MEND FALLING OUT

In telling Peroff that he was not to bring his family to New York, Dos Santos said, he and O'Neill had "in the back of our minds" that if Peroff was made a paid informant they would consider having the Peroff family come back to New York. But, Dos Santos told the DEACustoms inquiry, no such commitment was made to Peroff; nor did he and O'Neill even discuss the possibility with him.

Dos Santos said that when O'Neill learned the Peroff family was in New York, O'Neill instructed him to go to the airport, pay Peroff the expense money owed him and make Peroff pay the cost of his own fare from San Juan. Dos Santos told the DEA-Customs inquiry he could not remember if at the airport he asked Peroff for any tapes of conversations with Bouchard or others.

A short time later, the Royal Canadian Mounted Police reported. to him that Peroff was calling RCMP agents, asking if they still needed him, Dos Santos said. Dos Santos said that he did not try to contact Peroff immediately because he felt Peroff should have the opportunity to calm down. Dos Santos was confident that an agreement could be reached, that this falling out could be mended. After all, Dos Santos told the DEA-Customs inquiry, "Peroff never severs his relationship with anybody."

43-085-75—7

O'NEILL EXPRESSES PHILOSOPHY ABOUT INFORMANTS

Group Supervisor John J. O'Neill was unconcerned about Peroff's financial situation and the circumstances which Peroff claimed made it impossible for him to leave his family behind in Puerto Rico. O'Neill said it was not his or DEA's responsibilty to take care of Peroff's family. O'Neill said it did not trouble him at all when he summoned Peroff to New York but made no provision for the family. O'Neill expressed a low opinion of informants as well. He said:

It is a nasty way to say it but you buy them as cheap as you can. If you can get them for $5 and not $50, you get them for $5 (p. 566).

Subcommittee Investigator Philip Manuel reminded O'Neill that Peroff was owed more than $1,000 in back expense money. "That was between him and Customs," O'Neill replied. Manuel asked O'Neill if it had an impact on the Bouchard inquiry to treat Peroff in this manner. O'Neill answered, "I don't see how it does, no." (P. 566.) Manuel then asked:

Did you reasonably expect Mr. Peroff to leave his family to be evicted in the streets in Puerto Rico and come to New York?

O'Neill replied:

I told him to come to New York, that we could sit down and figure it out and work it out and once we had an evaluation, once I evaluate him, then I will make a decision. It is a tough decision that you make sometimes, but those are the decisions that you have to make. Those are decisions that are made by Group Supervisors. . .

O'Neill said he did not discuss the question of Peroff's family with any of his superiors at DEA. He said it was his decision to make. "I am very jealous about me making my decisions," O'Neill said (p. 577).

O'NEILL WAS CERTAIN VESCO WAS NOT INVOLVED

Underlying O'Neill's attitude toward Peroff was the Group Supervisor's contention that there was no 100- to 200-kilogram heroin transaction in the offing, that Bouchard had made the whole thing up. including using the names Robert Vesco and Norman LeBlanc. O'Neill believed Bouchard fabricated this story just to keep Peroff interested. The only true use Peroff was to Bouchard, O'Neill said, was that Peroff could provide the executive jet should he choose to flee Canada to avoid going to jail. O'Neill testified:

From July 6 to July 16 I had also fixed in my mind that Vesco was a creation of Conrad Bouchard to string along and to titillate the imagination of Frank Peroff (p. 567).

O'Neill said he did not believe there was any possibility that Vesco and LeBlanc were involved with Bouchard. O'Neill said he came to that conclusion based on information he was given by Royal Canadian

Mounted Police and by other drug agents. He also relied on his own knowledge of Bouchard in deciding that the Canadian racketeer was lying to Peroff. Of his decision-making process on this point, O'Neill testified:

A lot went into it. It wasn't something plucked out of the air based on one thing. It was an amalgamation of many things (p. 568).

Subcommittee Investigator Manuel said that if O'Neill was convinced there was no heroin plot and no Vesco involvement, then there was no reason for Peroff to go to Costa Rica, by commercial aircraft or executive (p. 568).

O'Neill replied:

No. You are jumping from A to B. If there came a time when it was the best thing to do to send Peroff to Costa Rica then he would have gone to Costa Rica with very, very tough, tight administrative controls (p. 568).

This exchange between Manuel and O'Neill then ensued:

MANUEL. But if you never believed that Vesco and LeBlanc were involved in this thing in the first place, why would you send him at all under any circumstances?

O'NEILL. That would have been the thing. If we had come to the point where we thought Vesco and LeBlanc were involved or they were involved, then we would have pursued

that.

MANUEL. The point is, when did you make the determination that they were not involved?

O'NEILL. Let me fix it this way: I made the determination in my mind that they were not. However, we still had the man sitting in Puerto Rico. I want to sit down and talk to him. I want to get my evaluation of him. I want to see if it is worth making him a DEA informant. The only way to do thatyou can't do that on the telephone. There are too many things get lost on the telephone. When you hit a man with the question, you can't see how he answers, whether he shifts his feet, does his mouth get dry, does he look around, does he get

nervous.

There are a bunch of things that you have to see the guy doing. That is what we wanted to do. That was the purpose of bringing him into New York, to, one, see what happened with Vesco and LeBlanc even though I didn't think there was anything to it, but the big thing was Conrad Bouchard (pp. 568, 569).

Manuel asked O'Neill if he told his superiors at DEA that the VescoLeBlanc issue was a fake. O'Neill said:

I probably did. I might have. I don't know. I have no recollection of sitting down and going through it like that (p. 562).