Part 1-History of the Narcotic Traffickers Tax Program [From the Chicago Tribune, May 27, 1973] INTERNAL REVENUE SERVICE PLAYS THE SECRET AGENT GAME FOR KEEPS (By George Bliss and John R. Thomson) For seven years Dave Rocco has led a double life. As an undercover agent for the Internal Revenue Service, he poses as a 40hour-a-week, white collar worker. The job is his cover as he works after hours to gather information that may explode someday into newspaper headlines and national TV reports. The cover job periodically gives him legitimate reason to leave town for a few days. He uses this time to resume his real life, which includes his wife and married daughters and grandchildren in other cities. Only six persons in the entire country, including his wife, know his secret life. If others knew it, his life wouldn't be worth a nickel. Dave Rocco (not his real name) is engaged in what the IRS calls "penetration" intelligence. He has penetrated deep inside a criminal organization suspected of major tax cheating. With the help of information that Dave provides, the IRS hopes to be able to prove its case in court. When the time comes, the people arrested and their associates probably will undertake a major search for the source of the information leak. The background of every person fairly new and accepted in the tight little community of tax cheats and criminals will be explored. Dave is "buried" so deep that the IRS feels confident he could stay there forever without being detected. The chances are, however, that Dave will be transferred when the case is straight, and possibly earlier. IRS intelligence chiefs have found that an undercover agent who remains too long in a criminal environment tends to take on the hue of criminals, to act and think like them. Until his job is finished, Dave's only contact with the IRS will be the telephone call he makes daily to his contact agent in the IRS district where he's working. The contact agent is the only IRS agent in the district who knows Dave personally. Having established himself in the gang, Dave is safe as long as he is not exposed. Sometimes the IRS has found, an undercover agent creates his own problems and puts himself in danger by going beyond the task assigned to him. Undercover penetration is a dangerous job. Dave Rocco will never receive acclaim from an admiring public. If fame comes to him, it will be fame limited to his bosses and fellow agents in IRS intelligence. It is a life for which few persons are suited, and like all others in it. Dave volunteered. The IRS is one of the few government agencies that engages in intelligence work, and reportedly is the only one that engages in penetration intelligence as opposed to "fringe" undercover work, which may last only a few days. The penetration agent is following a great tradition established by the fabulous Mike Malone, who, posing as a hoodlum on the lam, cemented himself inside the Al Capone gang and its headquarters in Chicago's old Lexington Hotel so solidly that he attended the going-away party for Al when Capone finally went to prison for income tax evasion. Malone, using the name Mike Leopto, didn't come out from under cover until the fourth day of Capone's trial in Federal District Court. He did so only because he discovered that Capone's bodyguard, Phil D'Andrea, was carrying a handgun under his coat in court. He and another agent disarmed D'Andrea, who was later imprisoned for contempt of court. Malone relished penetration work. He went on to establish himself deep in the Huey Long organization in Louisiana as the IRS sought to trace the flow of cash between organized crime and politics that went unreported in income tax ( 157 ) returns. When he died in 1960 he was buried in Arlington National Cemetery. Few outside the IRS and those few were mostly hoodlums and politicians ever knew that Mike Malone existed. The IRS carries on penetration intelligence only in dealing with organized crime. Periodically, reports arise that the IRS has an undercover agent in City Hall or some other government office. That's just not done, say IRS officials. The spate of indictments involving top aides of the Cook County Assessor's office, sometimes attributed to the work of an undercover agent, actually resulted from information furnished voluntarily to IRS intelligence by a "walk-in” informant. The informant, of course, wanted something, something he didn't get, but when he found out he wasn't going to get it he kept on talking. Agents checked out some information and found it true. The informant, they discovered, had an amazing knowledge of the inside political workings in Cook County-of who was getting away with what. That informant is still talking, incidentally. Until he runs down, only IRS intelligence and the United States attorney's office in Chicago, thru which it funnels the information when it nails down a case, will know where the grand jury lightning may strike next. The first information that resulted finally in the trial and conviction of former Gov. Otto Kerner and Theodore J. Isaacs, Kerner's one-time campaign manager and state director of revenue, came not from IRS intelligence work but from one of the principals involved-Marje Lindheimer Everett, former owner of Arlington Park and Washington Park race tracks. She got irritated at Kerner and Isaacs and told the IRS about it. That's when IRS intelligence agents went to work and nailed down the case. The case against Edward J. Barrett, former Cook County clerk facing prison following his conviction for taking kickbacks in the purchase of voting machines, was a spin-off from an investigation started in Philadelphia by intelligence agents seeking to trace the cash flow from a business woman to a labor union official. The business woman refused to talk. She had paid tax on the money, or at least on part of it. Part was eaten up by losses reported for several corporations she controlled. IRS wents to banks and obtained records for her and her corporations and discovered she was the recipient of hundreds of thousands of dollars from Shoup Voting Machine Corp. Shoup records, obtained by the IRS, also showed large sums of money going to various individuals thruout the country. Intelligence agents called on two men who had received Shoup checks. They wouldn't talk, and the agents went back to Philadelphia to pore over Shoup's records. The two men who wouldn't talk thought things over and went voluntarily to the IRS. They said they had cashed the checks, kept part of the money, and returned the rest to Irving H. Meyers, president of Shoup Voting Machine Corp. When intelligence agents called Meyers in, he did not hesitate to tell them that the money went into a cash slush fund and that one of the public officials he paid from that fund was Barrett. Like most tax cases, these did not involve undercover work. In the whole IRS structure there are only about 2,500 intelligence agents to cover the entire nation. Including clerks, there are only 475 persons in intelligence division in the eight state regions of which Illinois is a part. With about 150 agents in Chicago, this district, which takes in 26 counties in Northern Illinois, ranks as the biggest intelligence office in the country. The Manhattan and Brooklyn offices and New York are separate offices, but together they have more agents than the Chicago district. Agents who engage in undercover penetration make up a miniscule percentage of the entire intelligence force. Perhaps that is why they are so successful in their work. They are successful up to the point where they might be required to do something illegal. The IRS does not permit an undercover agent to take part in any law-breaking activity that might result in physical harm to anyone. He can, however, get deeply involved in gambling. In 1965, the IRS planted an intelligence agent undercover in a hoodlum gang that operated a large part of the gambling in Cleveland. Posing as an accountant— all agents must have accounting skills-the undercover man set up a small office in the right area. He haunted the right taverns, got to know the right people, and dropped some accounting hints. "He got to know everyone, and if they wanted to evade taxes or set up a double bookkeeping system or open hidden bank accounts, they consulted him," an intelligence official said. "They trusted him so much he kept their records of gambling on a day-to-day basis. We had to pull him out because income tax time was coming up and they wanted him to prepare false returns for them. We found a reason for him to disappear until after the filing deadline, and then he went back." Sometimes an agent is too successful. The IRS wanted to penetrate a West Coast betting center, and it assigned an undercover man to the job. After he had established himself, he bought a partnership in a handbook. The bookie involved was hitting the bottle and didn't want to be bothered too much with business details which he left to his new partner. The handbook zoomed from a $80 net a day to $1,600 a day, half of which went to the IRS through the undercover agent. "He was a bookmaker about seven months and wound up running the biggest handbook in that part of the city," said the undercover agent's superior. “We pulled him out and just let the handbook collapse. The other partner had drunk so much from the increased profits that he wasn't interested in it any longer. "But we learned what we wanted to know-the flow of the cash, where it went, and who got it." Spread thin though they are, the intelligence agents cover a lot of bases. One Chicago agent doing fringe undercover work was assigned to investigate a racing wire room on the Southwest Side. He found the bets were taken at a cleaning shop nearby, and he established himself as a bettor. "I went in one day to settle my account and while I was there, a Puerto Rican came in with his money in his hand," the agent recalled. "Right behind him was a fellow who was looking for a company about a block away. The bet taker quickly directed the second guy to the place he was looking for, and then he proceeded to give the Puerto Rican hell for talking about making a bet while a stranger was there." After the Puerto Rican had left, the bet taker resumed his conversation with the undercover agent, saying, "You can't be too careful. These days you don't know who you might be talking to." Indeed, one never knows. [From the Chicago Tribune. May 28, 1973] IRS GIVES WITNESS NEW IDENTITY (By George Bliss and John G. Thomson) If it has to, and it sometimes does, the Internal Revenue Service intelligence division can provide a man with everything except a new face and new finger prints. It can provide a man or a woman with a new name, a new home in a far-away community, a new Social Security card, and a complete new set of credentials similar to the true ones. The IRS has done this for years for witnesses who have cooperated in criminal prosecutions and who then faced possible retaliation. Altho this job has been taken over largely by the U.S. Marshall Protective Service, under the Department of Justice, the IRS has some cases in which it still does the job. "A witness may refuse to place complete trust in anyone except the agent with whom he has dealt," said Robert J. Bush, IRS assistant regional commissioner for intelligence. "The agent has brought him safety thru a period of investigation and trial, and he wants that agent to handle his new life. In that case, we will do the job." It is no small task to set up a new life for a man and his family, and IRS intelligence therefore strives to prove its case in court without exposing the identity of an informant, Bush said. Only if it needs him on the witness stand will the IRS call the informant into court. Once the witness is there, government lawyers make every attempt to prevent defense lawyers from eliciting his or her new address. The need for such security is obvious. The witness or his family-gets threats. His girl friend may be threatened. And those making these threats are not the kind of people you fool around with. In a tax exasion trial a few years back of Sam Battaglia, then the ruling kingpin in the Chicago area crime syndicate, and of his west suburban rackets chief, 80-321 O-77-14 |