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GAMBLING AND ORGANIZED CRIME

MONDAY, AUGUST 28, 1961

U.S. SENATE,
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D.C. The subcommittee met, pursuant to Senate Resolution 69, agreed to February 13, 1961, at 10:40 a.m., in room 3302, Senate Office Building, Senator John L. McClellan (chairman of the subcommittee) presiding.

Present: Senator John L. McClellan, Democrat, of Arkansas; Senator Henry M. Jackson, Democrat, of Washington; Senator Sam J. Ervin, Jr., Democrat, of North Carolina; Senator Karl E. Mundt, Republican, of South Dakota; and Senator Carl T. Curtis, Republican, of Nebraska.

Also present: Jerome S. Adlerman, general counsel; Paul J. Tierney, assistant counsel; Robert Emmet Dunne, assistant counsel; Joseph M. Mannix, assistant counsel; Philip W. Morgan, chief counsel to the minority; and Ruth Y. Watt, chief clerk.

The CHAIRMAN. The committee will come to order.

(Members present at the time of convening: Senators McClellan and Ervin.)

The CHAIRMAN. Call the next witness, Mr. Counsel.
Mr. ADLERMAN. Mr. Walter Shaw.
The CHAIRMAN. Mr. Shaw, come forward, please.
Be sworn.

You do solemnly swear the evidence you shall give before this Senate subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. SHAW. I do.

TESTIMONY OF WALTER H. SHAW-Resumed

The CHAIRMAN. State your name, your place of residence and business or occupation.

Mr. Shaw. My name is Walter Harvey Shaw. I reside at 19732 NE. 12th Place, Miami, Fla.

The CHAIRMAN. You are the same witness who appeared here Friday and took the oath and started to testify. I asked you if you desired an attorney and you said your attorney was not here; is that correct?

Mr. SHAW. That is correct, sir.

The CHAIRMAN. We said we would give you until today to get your attorney, if you would come back today at your own expense, and let you have the advice of counsel of your own choosing.

Mr. Shaw. That is correct.
The CHAIRMAN. You are now here. Do you have counsel today?

Mr. Shaw. My attorney was not able to appear. He suggested that since there is a pending situation in Miami, Fla.

The CHAIRMAN. Since there is what?

Mr. Shaw. A pending condition in Miami, that he feels I should not answer any questions.

The CHAIRMAN. Are you under indictment? Mr. Shaw. Yes, sir. The CHAIRMAN. Where is your attorney? I want to be sure, now, what we are doing. Where is your attorney? Why is he not here?

Mr. Shaw. My attorney was unable to make it because he had just come back from a vacation.

The CHAIRMAN. That ought to enable him to make it, if he is back from a vacation.

Mr. Shaw. Well, he had some other business to take care of that he had not finished prior to the time he left.

The CHAIRMAN. He could not send another attorney to take care of you today?

Mr. Shaw. No, sir; he did not.

The CHAIRMAN. Did he know that this matter had been adjourned over from Friday until today so you might get an attorney?

Mr. Shaw. He was notified; yes, sir.
The CHAIRMAN. He was notified of that?
Mr. Shaw. Yes, sir.

The CHAIRMAN. Since he could not come, you have elected not to secure other counsel ?

Mr. Shaw. No, sir; I have not elected.
The CHAIRMAN. You what?
Mr. Shaw. I have not elected. I am unable to elect.
The CHAIRMAN. You are unable to elect?
Mr. Shaw. Yes, sir.

The CHAIRMAN. Do you mean you don't have money to procure other counsel ?

Mr. Shaw. That is correct.

The CHAIRMAN. Is that the reason that your lawyer is not here, because you did not have the money? Is that the principal reason, not because he just got back from a vacation? Mr. Shaw. I do not know, sir.

The CHAIRMAN. I think you would have an idea. Have you paid him a fee to be here?

Mr. Shaw. No, sir.

The CHAIRMAN. Very well. We are going to ask you some questions. The Chair, with the aid of able colleagues on the committee who are lawyers, including one who is a lawyer and a former judge, will ask you a few questions. We will try not to trespass upon any privilege that is yours.

If you desire-it is a matter that addresses itself to you—if you can make an honest statement to the effect that

you

think an answer might tend to incriminate you, if you state that under oath, that you

honestly believe it, this committee will respect it.

But in the questions that are asked you, there will be the implication of what the facts are. You will know it.

You will know it. Those others who hear the

question will probably know it. So the decision as to whether you answer or take the fifth amendment, if you feel that you might tend to incriminate yourself, that decision is yours. I am not going to make that for you. But we are going to proceed and ask the questions that would elicit, if you answered the information that we think you have and could give.

Very well, Mr. Counsel, proceed.

I will admonish counsel, however, insofar as he can, to stay away from the indictment that is now pending. Do you have information as to what that indictment is, Mr. Counsel ?

Mr. ADLERMAN. Yes, sir.

The CHAIRMAN. Very well, try to stay away from that. Ask him questions about all other matters that you feel he has knowledge of.

Proceed.

Mr. ADLERMAN. Mr. Shaw, over the weekend did you discuss your appearance before the committee with your attorney? Mr. SHAW. Sir?

Mr. ADLERMAN. Over this past weekend, did you speak to your attorney about your appearing here today?

Mr. Shaw. I spoke to his associate.
Mr. ADLERMAN. And did he advise you what-
Mr. Shaw. Yes, sir.
Mr. ADLERMAN. So you have been advised by your counsel ?
Mr. Shaw. Yes, sir.
Mr. ADLERMAN. All right.

Were you formerly an employee of the Southern Bell Telephone & Telegraph Co. ?

Mr. Shaw. Yes, sir.
Mr. ADLERMAN. And what was your occupation there?

Mr. Shaw. Well, I had several positions with the telephone company, dating back to 1936 when I was first employed.

Mr. ADLERMAN. What was your last occupation?
Mr. Shaw. My last occupation was equipment engineer.
Mr. ADLERMAN. Equipment engineer?
Mr. Shaw. Yes, sir.

Mr. ADLERMAN. Did you work there until 1950, from about 1936 to 1938, and then again from 1941 to September 1950 ?

Mr. Shaw. That is correct.

Mr. ADLERMAN. And you are a telephone equipment engineer; is that right?

Mr. Shaw. Equipment installation, engineer department, yes. Mr. ADLERMAN. You can design and build telephone equipment ?

I might say this, that you are getting close to the point where you might have to consider the advice of your counsel.

Mr. Shaw. Well, when you say design and build telephonic equipment

Mr. ADLERMAN. The what?

Mr. Shaw. You asked me can I design and build telephone equipment. In the narrow sense, yes.

The CHAIRMAN. In a narrow sense?
Mr. SHAW. Yes.
The CHAIRMAN. Yes, is that right?
Mr. Shaw. It is

The CHAIRMAN. All right, proceed. Mr. ADLERMAN. Have you obtained any patents for several telephonic devices?

Mr. Shaw. Yes, sir.

Mr. ADLERMAN. And one of the devices is an automatic speaking arrangement ?

Mr. Shaw. That is correct.

Mr. ADLERMAN. You can have the telephone on the desk and be in other areas of the room, and without lifting the receiver you can talk over the telephone and listen to conversations?

Mr. Shaw. That is correct.
The CHAIRMAN. When did you invent that?
Mr. Shaw. I started on that in 1946.
The CHAIRMAN. You invented that in 1946!
Mr. Shaw. That is correct. I filed for patents in 1947.

The CHAIRMAN. Were you able to sell that, to market it and sell it to the telephone company or to any manufacturing producer of it?

Mr. Shaw. Well, after several years of perfecting it, I had several consultations with other inventors of various telephonic equipment, and they suggested that the best procedure to follow would be to try to set up your own company and get into actual development and production of it, and create a sales organization to supply independent telephone company users as well as industrial telephone users of this various type equipments.

The CHAIRMAN. So it was to use it primarily for a legitimate purpose to begin with?

Mr. Shaw. To begin with and 100 percent, all the time.
The CHAIRMAN. To begin with, 100 percent?
Mr. SHAW. All the time.

The CHAIRMAN. The intention was that it would be a legitimate instrumentality all the way and used for legitimate purposes? Mr. Shaw. 100 percent; yes,

sir. The CHAIRMAN. Very well, proceed.

Mr. ADLERMAN. Was a corporation known as Shaw-Tel formed to manufacture and produce that equipment ?

Mr. SHAW. That is correct.

Mr. ADLERMAN. Was that financed in New Jersey and around that area?

Mr. Shaw. Yes, sir.

Mr. ADLERMAN. Were you later extradited to the State of New Jersey and charged with misappropriation of the funds of that company?

Mr. Shaw. That is correct.

Mr. ADLERMAN. Did they get a judgment against you in a civil court?

Mr. Shaw. I do not know. I was served a paper when I entered the court area, but I don't know whether there has been a judgment.

Mr. ADLERMAN. You have no knowledge of whether or not they obtained a judgment?

Mr. Shaw. No, sir; I do not.
Mr. ADLERMAN. The criminal case against you was dismissed?

Mr. Shaw. It was not dismissed, as I understand. I could be wrong. But I think the records would show completely 100 percent exonerated.

Mr. ADLERMAN. I think I could state for the record that he was acquitted on the charge of conversion of the money of the corporation.

The CHAIRMAN. On that charge he was acquitted.

That is where you set up a company to produce and market this particular device you had invented ?

Mr. SHAW. That is correct.

Mr. ADLERMAN. While working on some types of equipment, did you find that you could make a device which could be attached to a telephone in such way that it would not register as a toll charge but would show the busy signal, and you would be open to a line making a long-distance call without the knowledge of the telephone company, without any toll charges or tax being paid to the Federal Government

I would like to warn you again, this is an area where you might consider the advice of your counsel.

Mr. Shaw. I appreciate that. Thank you. This is where my counsel advised me I must refuse to answer on the grounds it might tend to incriminate me.

The CHAIRMAN. Very well. We have had the proof here that you did invent such a device, that this was the character of the device which has been used and has been seized in raids made by law enforcement officers. They found such a device, and the testimony before the committee is that you are the inventor of it. You say on that you want to take the fifth amendment?

Mr. Shaw. I have to follow counsel's advice in this.
The CHAIRMAN. You have to follow counsel's advice on that?
Mr. Shaw. Yes, sir.

The CHAIRMAN. You do invoke the fifth amendment as to whether you were the inventor of such a device?

I am not trying to trick you. I am trying to make a record that will reflect the implications already in the testimony that we are asking you about. I am asking you, is it your purpose to take the fifth amendment? Do you feel that it might tend to incriminate you if you answered truthfully the question : Are you the inventor of such a device?

Mr. Shaw. Yes, sir, I am the inventor.
The CHAIRMAN. Very well. Proceed.

Mr. ADLERMAN. Did you hear the testimony of the assistant district attorney for Westchester County, Mr. Arthur Spring, the other day?

Mr. Shaw. Yes, sir.

Mr. ADLERMAN. Did you hear the statement that he made concerning the fact that you had invented these machines, the cheese boxes, and this other device that answered a telephone as I just described, and that you were financed on the manufacture of this type of equipment by Mr. Gianunzio, a well-known gambler in Westchester County? I would like to know: having heard that testimony, do

you want to make any comment on it?

Mr. Shaw. I heard the testimony.
Mr. ADLERMAN. Do you want to make any comment on it?
Mr. SHAW. No, sir.

The CHAIRMAN. If he commented on it, such comment as he might make might tend to incriminate him, so I am going to respect his position in that area of the testimony.

Mr. Shaw. Thank you.

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