We favor the portion dealing with the admissibility of coconspirators' statements. We favor it with some suggestion about the language there, noting that the statute moves generally further away from the theory of agency as between coconspirators and more into believability, because of several recent Supreme Court decisions which are discussed in our statement here.

On title VIII which increases the penalties for some offenses committed in the process of organized crime activity we favor its general objectives, which have noted objections to certain of its specific provisions which may be vulnerable on constitutional grounds.

S. 2022, the obstruction of Government provision, we favor.

S. 974, establishing the Assistant Attorney General for Organized Crime, we ask that consideration of that bill be withheld for a while pending some reorganization matters the Attorney General now has under consideration in the Department.

Senator MCCLELLAN. That is the one creating an Assistant Attorney General in charge of organized crime?

Mr. WILSON. In charge of organized crime, raising the present Organized Crime Section from a section of the Criminal Division to a separate division. It affects the internal organization of the Justice Department.

We ask that that be delayed for a while, until General Mitchell can come in with his comprehensive departmental reorganization he is working on.

Senator MCCLELLAN. Are we to understand, then, that this proposal is being considered by the Department in its overall evaluation of reorganization needs?

Mr. WILSON. Yes, it is under consideration-and what is the name of that body?

Mr. PETERSEN. The President's Commission on Organization of the Executive Branch of the Federal Government has that under consideration as the first priority in connection with the entire organized crime program as it affects several executive departments.

I think basically you would like to see that before we step off and simply take one aspect of the organized crime program, the Justice Department, and make that a division. That is basically our position. Senator MCCLELLAN. Well, I am not the author of that bill. I think Senator Tydings introduced it. I am not at the moment either opposed or supporting.

I do think, however, since we are going to cover such a broad aspect of this whole problem at this time, that we should give this idea consideration. I am not saying that we should adopt the proposal or recommend the legislation. Possibly it should be given consideration now, unless there is some good reason that you suggest for us to defer that question for a while without undertaking to incorporate it into any omnibus bill that may be reported. Perhaps this proposal should stand on its own for separate consideration as you suggest, pending the outcome of your studies and reorganizational proposal.

Mr. WILSON. If I may, Senator, I will have General Mitchell communicate with you on that subject, by letter or otherwise, shortly. I

am not entirely familiar with just where that is in his office, and I will have to

Senator MCCLELLAN. Let him do so, and let that letter, should he write one, be incorporated in the record at this point, so we will know the position of the Department of Justice with respect to that measure. Then the committee can consider either deferring it, letting it be considered on its own or making it a title to S. 30 or some other bill. Mr. WILSON. We will be in communication with you shortly. Senator MCCLELLAN. Very good.

(The following letter was subsequently received from the Attorney General :)

Hon. JOHN L. MCCLELLAN,
U.S. Senate,

Washington, D.C.

OFFICE OF THE ATTORNEY GENERAL,
Washington, D.C., August 5, 1969.

DEAR SENATOR: Your Subcommittee on Criminal Laws and Procedures is presently considering S. 974, a bill which would create a position of Assistant Attorney General for Organized Crime. As you will recall, I discussed the proposal briefly during my testimony before your subcommittee on March 18 of this year. Assistant Attorney General Wilson, during his appearance before the Subcommittee on June 3, 1969, presented additional department views on the

measure.

There are some very persuasive arguments in favor of the creation of an Organized Crime Division under an Assistant Attorney General. Such action would give emphasis, institutionalization, and added stature to the effort against organized crime. It would provide for an independent budget for the organized crime program of the Department. It would give some protection against a possible future deemphasis of Federal effort in this area of unique Federal concern. From a management view, the present size and anticipated growth of the Organized Crime Section would warrant elevating it to division status.

There are, however, also persuasive practical reasons for not creating a separate Organized Crime Division at this time. A decisive factor is the oranizational problem which would result. A Federal crime, regardless of whether or not it is committed as a part of organized criminal activity. If a separate division were created, there would be complex problems of determining which division, either the Criminal Division or the Organized Crime Division, should have jurisdiction. To resolve such problems it has been suggested that there also be created a new Deputy Attorney General for Criminal Justice. While this seems like a possible answer, the creation of such a position raises additional problems of the role of this new Deputy vis-a-vis the existing operation of the Deputy's office.

It must also be noted that the creation of two divisions with similar and related jurisdiction would result in losing the existing advantages of having a single Assistant Attorney General supervising the criminal work of the United States Attorneys. This unity in supervision permits the Assistant Attorney General to achieve a priority for the organized crime work which might be more difficult if two assistant attorneys general were, in effect, competing to have the United States Attorneys expedite their criminal prosecutions. Finally, I must question the wisdom of creating a division through detailed legislation which would unnecessarily limit the administrative flexibility of such a unit in meeting contingencies that cannot be anticipated at this time. Legislation, in fact, is unnecessary to create an Organized Crime Division. The Attorney General presently has the authority to redesignate a vacant post of Assistant Attorney General (which formerly was designated for the Alien Property Division) as head of such a new division.

It is because of these competing advantages and disadvantages that I hope that the Committee on the Judiciary will defer action on S. 974. The questions raised by S. 974 and the entire question of improving the effectiveness of the executive branch in combating crime are presently under active review by the

President's Advisory Council on Effective Organization. The Deputy Attorney General and myself are personally working with this Advisory Council on these matters. Upon completion of that study appropriate recommendations will be made to the President on how to accomplish lasting improvements in executive operations, including the fight against organized criminal activity. With warmest regards, I am

Sincerely,

JOHN MITCHELL,

Attorney General.

Mr. WILSON. S. 975, which has an immunity provision compelling testimony of some witnesses, we favor with the modification suggested in the other immunity statutes, that they be consistent with the recommendations of the Commission.

The increased sentences for organized crime, we favor, with some amendments which we suggest or some change of language which would possibly make them less vulnerable to constitutional attack. S. 2122, we favor.

S. 1624, the wagering tax, we favor.

Mr. MCCLELLAN. With regard to S. 1624, I direct that the letter of May 16, 1969, from the Deputy Attorney General be inserted in the record at this point.

DEAR SENATOR: As you know, on April 23 the President apprised the Congress of his blueprint for combating organized crime in the United States. He indicated the administrative steps he was taking, the assistance to be made available to State and local governments, the expanded Federal budget being allocated for this essential work, and the new legislation which was required.

One of the measures endorsed by the President as warranting "swift enactment" is S. 1624, now pending with the Committee, a bill to amend the wagering tax provisions of the Internal Revenue Code of 1954.

Until recently, a factor of major importance in the fight against organized crime was the availability of the investigative expertise and man power provided by the Intelligence Division of the Internal Revenue Service. Acting under the jurisdiction afforded them by the wagering tax laws, special agents were able to make important inroads into gambling operations of all types in all parts of the country, and their activity, together with that of the Federal Bureau of Investigation, gave to the Federal Government an extremely effective weapon against the source of the great majority of the funds on which organized crime relies.

In January, 1968, the Supreme Court of the United States, in Marchetti v. United States, 390 U.S. 39, and Grosso v. United States, 390 U.S. 62, ruled that a defendant charged with failure to register and purchase the wagering occupational tax stamp as required by sections 4411 and 4412 of title 26, United States Code, or with failure to pay the excise tax required by section 4401 of title 26 could interpose, as a complete defense to such a charge, his privilege against self-incrimination. Those decisions have effectively precluded enforcement of the wagering tax laws by the Internal Revenue Service.

The bill presently before you would amend the Internal Revenue Code of 1954 to prohibit the use of information supplied through registration and payment of the excise tax except in connection with the enforcement of the wagering tax laws themselves. Such a modification is designed to eliminate the hazards of self-incrimination which underlay the Marchetti and Grosso decisions. In addition, the bill would raise the annual occupational tax from fifty dollars to one thousand dollars for principals and to one hundred dollars for their subordinates.

In its present form the bill provides that, upon the approval of the Attorney General or a designated Assistant Attorney General, a United States Attorney may compel the testimony of a witness in connection with any proceeding related to the enforcement of the wagering tax laws by seeking an order of the court granting such a witness immunity from prosecution "on account of any transaction, matter, or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence.' We would recommend that this provision of the bill be amended to prohibit only the use of any testimony given or evidence produced by a witness against him in any subsequent criminal proceeding rather than to bar completely his prosecution for the crime about which he testified. Such a provision would comport with the requirements of the Fifth Amendment as interpreted by the Supreme Court in Murphy v. Waterfront Commission, 378 U.S. 52 (1964).

The above recommended modification could be accomplished by changing the final sentence of proposed 26 U.S.C. 7351(a) (beginning at page 14, line 15 of the bill) to read:

"But, if the witness had claimed his privilege against self-incrimination, no testimony so compelled or evidence so produced, or any information or evidence derived therefrom, shall be used in evidence in any criminal proceeding (except prosecutions described in subsection (b)) against him in any court”.

The relevant headings on pages 13 and 15 should then be conformed as follows: (a) Section 4 heading (page 13, line 17), change "IMMUNITY FOR WITNESSES IN TAX MATTERS" to "RESTRICTIVE USE OF CERTAIN INFORMATION".

(b) Subsection 4(a) heading (page 13, line 18), change "Grants of Immunity" to "Use Restriction".

(c) Subchapter E headings (page 13, line 21 and page 15, below line 6), change "Immunity" to "Use Restriction".

(d) Section 7351 headings (page 13, below line 21 and line 22), change "Immunity for Witnesses" to "Restrictive Use of Certain Information".

In addition, subsections 2(b), 2(c), 2(d) (1) and 3(c) were substantially enacted as sections 203, 204, and 205 of Public Law 90-618 and should, therefore, be deleted. Also, section 206 of Public Law 90-618 renders subsection 3(d) (1) unnecessary.

The Department of Justice recommends the enactment of this legislation, amended as suggested above.

The Bureau of the Budget has advised that enactment of this legislation, amended as suggested, is in accord with the Program of the President. Sincerely,

RICHARD G. KLEINDIENST,
Deputy Attorney General.

Mr. WILSON. S. 1623, which prohibits the investment of income from organized crime in some businesses, we favor the principle of the act. We have some suggestions on the language to broaden its impact somewhat, and we would ask you to consider the suggestions we have in the statement on that, including the addition of civil remedies and of certain antitrust-like remedies. We favor those with some suggested alternatives.

The bill S. 1861, which deals with infiltration or management of legitimate business, has been under study and we are not prepared at this time to take a departmental position on that. We certainly like the idea. We are trying to examine all of its ramifications, and we will have a separate report on that one in about 3 weeks, if we may (see p. 404).

Senator MCCLELLAN. Well, that will be very good. We appreciate that.

I introduced that bill, and it is a bill with a novel approach, I think. It needs study. We will be glad to have any suggestions you have. I know if it can be done it is a step in the right direction.

Mr. WILSON. It is a bill that certainly is worthy of intense consideration and effort.

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I might say here that, as you know, the vast bulk of the revenues from organized crime are not reached by the Internal Revenue statutes. They don't pay any income tax on it, and that permits the accumulation of capital by people who shouldn't be in charge of capital, who haven't either the character or the patriotism to properly administer the capital of the country.

Senator MCCLELLAN. That is what we are trying to do, to keep them from using that to infiltrate legitimate businesses and pollute the stream of commerce.

Mr. WILSON. That is correct, and that is a very laudable purpose, and we certainly wish, on behalf of the Department, to encourage you in that endeavor.

Senator MCCLELLAN. We realize it is plowing into new ground, so to speak, and we need all the best counsel we can get.

Mr. WILSON. If I might, I would like to call your attention to a particular part of this statement for the purpose of discussion-it is just several pages.

Senator MCCLELLAN. That is your statement?

Mr. WILSON. Yes, sir. I would like to read it in order that we might have a little fuller discussion of it.

Senator MCCLELLAN. What page?

Mr. WILSON. On page 12, the discussion dealing with Senate bill 2022. Senator MCCLELLAN. Yes, sir.

Mr. WILSON. Before you is a bill which is designed to bring to bear on the vast business of illegal gambling a substantially increased effort on the part of Federal law enforcement officers. Title I of the bill would make it a Federal crime to devise or participate in a scheme to obstruct the enforcement of State and local criminal laws in order to promote an illegal gambling business, and title II would make it a Federal crime to participate in such an illegal business.

It is not the intent of this bill to preempt local law enforcement, but it is vital, in the judgment of the Department of Justice, that we expand the available forces in the fight against this pervasive and pernicious enterprise. To this end we have defined, for purposes of both titles, an illegal gambling business as one which is in violation of State or local law, which involves five or more persons who operate. participate in, or derive revenue from it, and which either has been in operation for longer than 30 days or has a single day's gross revenue of $2,000 or more. We believe that this standard will insure that the Federal effort is directed only at the more important gambling_operations those in which there may clearly be said to be a strong Federal interest.

Now, I might insert here, Mr. Chairman, that while that seems to be maybe a cumberstone and perhaps technical definition, the purpose of it is to free local government to do its job. It is not the intent of this bill to relieve local government of the enforcement of gambling laws, but quite the contrary, to make it more effective. The reason local gov ernment generally is not effective in this area is, more often than not, bribery or something like it.

In my enforcement career I have encountered situations in this area where they have such weak officials that they didn't even find it necessary to bribe them; they simply elected someone who would be entirely subservient to the racketeering interests.