Mr. LEV. I would appreciate it, Mr. Chairman, to have this letter read off, please.

The CHAIRMAN. Just a moment.

Mr. KENNEDY. In Mr. Shargel's testimony, Mr. Chairman, it was read off, when Mr. Shargel testified.

Mr. LEV. But I wasn't there.

Mr. KENNEDY. I am very sorry, Mr. Lev.

Mr. LEV. I am proud of such a document as that kind.

The CHAIRMAN. Just a moment. The Chair is going to rule on this. I think I will have full information in just a second and will be able to pass on it.

If the letter has been read, there is no occasion to read it again. If it has not been, the Chair will permit it to be read.

The letter, Mr. Lev, has been read in full, and appears at page 441 of the hearings, on June 1. It will not be necessary to read it again. It may be referred to. The letter has been read. The press has heard it read, the press that was here. There would be no point in us hearing it read again just for you.

Mr. LEV. I apologize for you, but in present what I want to bring it out is that I did not hear it. That is why.

The CHAIRMAN. All right. You did not hear it. You may be questioned about it. You identified the letter, and the letter has been read into the record once, and there is no occasion to duplicate it. Proceed.

Mr. KENNEDY. Mr. Lev, you were told by George Ernshaw, and it was verified by Captain Farnell and Colonel Shirley, that you could pack 2 hats to a box rather than 1 hat as specified.

Mr. LEV. As much as I can remember, yes.

(At this point, Senator Mundt withdrew from the hearing room.) Mr. KENNEDY. That is what you testified to. That you were told prior to the time the bids were awarded. You made up your bid based on this information, that you could pack two caps to a box?

Mr. LEV. That is correct.

Mr. KENNEDY. The Government wrote you on September 3, which I mentioned, stating that because you had packed two caps to a box. and there had been a savings of 0.0454 cents per cap, that you should pay the Government this money. You wrote back on September 26 and answered that letter.

Mr. LEV. That is correct.

Mr. KENNEDY. Would you explain to the committee why you state. that the 0.0454 seems reasonable, and you don't mention in there anywhere that you have been told that you could pack two caps to a box and, therefore, there wasn't any deviation?

Mr. LEV. I have been told to be packed two to the box before I was put in my bid.

Mr. KENNEDY. Therefore, there wouldn't be any savings, would there?

Mr. LEV. That is correct.

Mr. KENNEDY. Why did you not mention it in your letter?

Mr. LEV. Why mention it in the letter? I cannot recall why. I cannot recall why. I would like to

Mr. KENNEDY. No, Mr. Lev, I want to find out. You were told that, that it was going to save you some money. It was going to save you $15,000 on each contract, even at the low rate of 0.0454, on 2

contracts it would save you at least $15,000. When you wrote the letter, why didn't you put it in there, and you would not have to write 3 pages? You could put, "I was told prior to the time the contract was awarded that I could pack two hats to the box"?

Mr. LEV. Mr. Kennedy, my time is always in the factory to see production. When that letter has been wrote, at that time, maybe I just forgot about it, which is possible. I got thousands of things going on in the plant. I do the buying, I do the designing, I am over the foremen's, and any time I cannot accomplish during the day I am working there between 10 and 12 o'clock to make up all of my time as possible. It is possible I have slipped here, my memory.

(At this point, Senator Mundt entered the hearing room.)

Mr. KENNEDY. You spent all this time writing a letter almost 3 pages long when all you had to do was write a sentence?

Mr. LEV. So I made an error. I didn't dictate that letter to begin with. I only told them that.

Mr. KENNEDY. Who dictated it?

Mr. LEV. Did I dictate the letter? That letter? My son-in-law. Mr. KENNEDY. Who is that, Bernie Bloom?

Mr. LEV. Mr. Bloom, yes.

Mr. KENNEDY. Mr. Lev, it is still incredible to me that you could write a letter of 2 sentences or a sentence and save yourself $30,000 and instead you spent all the time and wrote 3 pages and nowhere in there --you gave all of this explanation about the 412 cents-and nowhere did you mention that you had been told prior to the time that you put your bid in that you could pack two hats to a box.

(At this point, the following Senators were present: The Chairman, Senators Mundt and Bender.)

Mr. LEV. I do not remember whether he read me off that letter. I just went ahead and signed it.

Mr. KENNEDY. Why back in June 1951 did you request permission to pack two hats to a box?

Mr. LEV. I can't recall that.

Mr. KENNEDY. Did that happen while you were in the factory supervising these people?

Mr. LEV. I cannot recall exactly. If I did, you would know better than I am.

The CHAIRMAN. We know from the records, Mr. Lev.

Senator BENDER. On this one bid, didn't the bid provide that you pack one hat to a box?

Mr. LEV. The bid?

Senator BENDER. Yes, the bid.

Mr. LEV. Evidently.

Senator BENDER. And did not Mrs. Hort write you a letter saying that, because of this deviation, you owed the Government money, and you never replied to that letter?

Mr. LEV. If it has been wrote to me a letter of that kind, it has never been called to my attention.

Senator BENDER. You never replied?

Mr. LEV. I do not know whether we did or whether we didn't. If I would tell you that, I would not know, so I cannot remember anything of her letter writing, because nobody called my attention.

Senator BENDER. Isn't it a fact that that is what you talked to the contracting officer about on these long-distance calls, when you talked

on the telephone for so long a time? Was that not one of the items that you discussed?

Mr. LEV. No; I discussed this in here when I was there, at 111 East 16th Street. I usually make frequently trips to Research and Development, which I have developed for them a fur, felt officer cap, I developed the Air Force cap

Senator BENDER. I am not interested about your development. You know you were doing wrong when you were packing 2 hats to a box when the bids said 1 hat to the box.

Mr. LEV. But

Senator BENDER. You knew you were getting away with murder; didn't you?

Mr. Lev. I was trying to get away with murder?

Senator BENDER. Yes.

Mr. LEV. Otherwise, Senator Bender, you stamped me out that I am a chiseler. That is what it amounts to.

Senator BENDER. You, on your own statement, say that the bid provided one hat to a box. Is that not true?

Mr. LEV. That is correct.

Senator BENDER. And you put two hats in a box.

Mr. LEV. Okay.

Senator BENDER. Is that an honorable thing to do?

Mr. Lev. It is an honorable thing to do?

Senator BENDER. I didn't call you a chiseler. You are calling yourself a chiseler.

Mr. LEV. What they should have done in the first place is putting two to a box. It would save the Government 50 percent storage.

Senator BENDER. But it saved Lev. Instead of saving the Government, it saved Lev. It made Lev some more money. You are a man who understands seven languages, and you understand one more language, which is money. I am sure you understand that language. The CHAIRMAN. The Chair presents to you a telegram for identification. I will ask you if you can identify it.

[Document handed to witness.]

(Witness conferred with his counsel.)

The CHAIRMAN. After examining that photostatic copy of a telegram which has been presented to you, do you identify it as a telegram you sent to the Government regarding one of these contracts? Mr. LEV. It is signed by the company.

The CHAIRMAN. It is signed by your company?

Mr. LEV. By the company.

The CHAIRMAN. The Chair will read the telegram. It is dated May 28, 3:15 p. m., 1951, from Chicago, Ill., May 28, 11:35 a. m., New York, QMPA, Attention contracting officer:

Re our contract, QM 13915 9116858 service, blue, request permission to pack two caps to a box same as granted on previous contracts.

Signed "Mid City Uniform Cap Co."

Did your company send that wire on May 28?

Mr. LEV. It must be.

The CHAIRMAN. Then it will be made exhibit No. 71.

I will now ask you to examine another photostatic copy of a wire which purports to be a wire to you in reply to your telegram. I will ask you to identify it and state whether you received that wire. (Document handed to witness.)

(Witness conferred with his counsel.)

Mr. LEV. We must have.

The CHAIRMAN. Wait a minute. I will let you make an explanation in a moment. You must have received this wire. The Chair will read the wire into the record. It is addressed to Mid City Uniform Cap Co., 2330 West Cermak Road, Chicago 8, Ill., a collect wire: Reurtel 28 May 1952. Permission granted to pack two caps to a box, contract QM 13915 01 16858. Savings revert to Government.

You say you received that wire?

Mr. LEV. Personal, the company received the wire, yes.

The CHAIRMAN. All right. That may be made exhibit No. 72. The Chair would like to ask you, Mr. Lev, if your previous testimony is true, that you had an agreement and understanding with this agency of the Quartermaster Corps there, the procurement services there, that you had this agreement from Mr. Ernshaw, Captain Farnell or Major Farnell, whichever he was at the time, and Colonel Shirley? Why would you be wiring a request in on the 28th of May following the letting of the contracts in January and March, at which time you had had these conversations? Why would you be wiring a request for permission to do what you had previously been told, according to your testimony, you would be permitted to do?

Mr. LEV. In my explanation, I could only say one thing. I must have failed to tell my son-in-law, and after he was reading the contract he just wanted it clarified. That is all I can see in it. He wants to clarify it. I can't see any other reasons.

The CHAIRMAN. All right, you were trying to clarify it. When you got the answer, the wire which I have just read which has been made exhibit 72, you were advised that you might do it, providing that the savings should revert to the Government. Would that not be something to alert you and your company, or whoever was carrying on this correspondence, to the fact that the agency was contending that no such previous agreement had been made, and that if you elected to do that, to accept this deviation and pack 2 hats instead of 1 to the box, then the Government was to get the benefit of the savings? Would that not cause you some concern if you had actually placed your bid on a basis of two hats to a box? Just as a businessman, would it not have caused you some concern? It evidently involved somewhere from thirty to fifty thousand dollars in cost.

Mr. LEV. What year was it?

The CHAIRMAN. I believe it was 1951.
Mr. LEV. 1951?

The CHAIRMAN. Yes.

Mr. LEV. Well, it wasn't called to my attention. If it would be called to my attention, I would clarify it and I would tell them that, exactly what I stated before, that Colonel Shirley and Mr. Farnell has told me to pack two to the box.

Senator MUNDT. Wait a minute. Was it the same Farnell that signed this telegram, that said that the savings go to the Government? Mr. LEV. I don't know why he signed it.

Senator MUNDT. Regardless of anything he might tell you orally, when he puts it in writing in the form of a telegram, you are bound by the wire.

Mr. LEV. Maybe the reason why was he wanted to clarify himself and stick to the contract and forget about it orally.

Senator MUNDT. All right. But this means that you owed the Government the $30,000, does it not?

Mr. LEV. I am still not saying I owe them, because earlier they told me to figure two to the box.

Senator MUNDT. No matter what they told you verbally, you had a written contract that did not provide that, and you have a wire that says specifically the savings revert to the Government, after you made your request.

Mr. LEV. Okay, but at the same time, Senator, I still remember the instance with Major Farnell and also with Ernshaw, Mr. Ernshaw, and also with Colonel Shirley.

Senator MUNDT. It doesn't make any difference what any of your friends might have told you, here it is in writing.

Mr. LEV. I wouldn't say they were friends of mine.

Senator MUNDT. Well, sturgeon eaters. They belong to the sturgeon eating club anyhow. They have been on the sturgeon list for a long time, so I thought they were friends of yours.

Mr. LEV. Any time, Senator, if a Government employee could bought for a piece of fish a sturgeon, then you should recommend to dismantle the entire services.

Senator MUNDT. No, we are just checking on the ones that might have been bought. We are not checking on all of them.

Mr. LEV. You know, there are a lot of things in the services. The way I could see that you picked up all of the bad things about the procurement, especially by the Quartermaster, all of the bad things, the good things isn't here.

Senator BENDER. Was this a sneaky thing for him to do, to send this telegram?

Mr. LEV. I wouldn't call him he is sneaky. I would not.

Senator MUNDT. There it is over his signature, the telegram.

Mr. LEV. What he was doing is trying to clarify himself as far as orally is concerned, and that is all I could see in it.

The CHAIRMAN. Let me ask you this further: You and your company accepted this wire, and at the time you wrote this letter on September 26, the letter that we were discussing a few moments ago, September 26, 1952, at the time they made claim on you for the 42 cents per cap, you did not at that time gain a certain understanding that you had been told prior to the contract that you might pack 2 hats to the box?

(At this point, Senator Mundt withdrew from the hearing room.) Mr. LEV. That is correct.

The CHAIRMAN. All right. Now, then, after you got this letter, you did get busy trying to get confirmation of an understanding prior to the time the contract was awarded, that would relieve you from the payment of these savings to the Government, did you not?

Mr. LEV. Mr. Chairman?

The CHAIRMAN. Yes.

Mr. LEV. When the letter has been written, it has been written to that extent whereby it looks to me, according to the telegrams, that orally what they have told me they were trying to, I would say, deny or I would say to-I cannot express myself which way would they be to clarify themselves and forget about orally.

The CHAIRMAN. Your request for deviation in the packing of 2 hats instead of 1 to the box, made by your telegram, the telegram from