extended terms, insulated from improper judicial influence. These juries are authorized to return indictments, to issue grand jury reports, and to make legislative or executive remommendations. Bribery and corruption, nourished by illegal money from the underworld, could be largely circumvented by the establishment of these grand juries. By assigning responsibility for investigating illegal activities to a legal body at work across the entire Nation, official timidity and inaction, or bribery and corruption will fail to subvert extensive investigations into illegal activities that drain our communities across the country. Specifically, these grand juries would be empowered to issue special reports concerning noncriminal conduct, malfeasance, or misfeasance by a public officer or employee as a basis for recommendation of removal or disciplinary action. Prosecutors and judges who may be scared or susceptible to bribery would be jolted from indolence into action by the mere existence of these special grand juries. Properly empowered, the grand jury is a significant weapon against organized crime, public apathy, and private and public corruption. This bill also contains many other key features which I consider significant anti-crime weapons. For instance, I feel that one of the problems in prosecuting known criminals or those suspected of criminal activities is the inability to get witnesses to testify. Title II of my bill repeals all previous witness-immunity laws and authorizes legislative, administrative and judicial bodies to grant witness immunity from prosecution for any act mentioned in their testimony. Upon order of the court a witness may not be excused from testifying or producing evidence on the grounds it may tend to incriminate him, and evidence so obtained may not be used against the witness. However perjury and contempt while testifying still remain in force against the witness. Some of the most damaging testimony available against organized criminal activities comes from criminals themselves. If motivated by jealousy, fear or other psychological reason to turn on their colleagues in crime, the last barrier to testifying can be removed if immunity from prosecution for any acts which might be disclosed is extended a witness. Directly related to this provision in intent is the provision in my bill to provide for the protection of Federal or State witnesses in organized crime cases. For the first time this legislation treats the very real problem of protecting witnesses or possible witnesses and their families against criminal reprisal in cases dealing with organized crime. Never before have adequate facilities or protective measures been mandated by law for witnesses. This bill provides both, greatly enhancing the possibility of a reluctant or fearful witness to testify against organized crime. In addition to the provisions I have just mentioned, Mr. Chairman, my bill also delves into other areas such as depositions in criminal cases and the challenging of evidence obtained by the Government as illegal. The punishment for habitual offenders is materially increased, extending prison sentences for carefully defined categories of particularly dangerous special offenders. With a special maximum sentence of 30 years. the records and findings provided for in this section of the bill would dramatically improve our laws in one of its most sadly neglected areas-that of sentencing known criminals. In the interests of time I will avoid going into further detail about the provisions of my organized crime bill, with the exception of emphasizing that their importance in the fight against organized crime is paramount. I urge that they be retained in any bill that the committee might report out. Mr. Chairman, at this time I would like to turn to syndicated gambling, which is the subject of my Illegal Gaming Business Control Act of 1969. As I may have mentioned, this bill was included in title VIII of S. 30, as passed by the Senate January 23rd. Syndicated gambling has a great deal to do with the problem of drug addiction in this Nation. Just as drug addiction is intimately related to organized crime, organized crime utilizes the resources of illegal gambling in America to finance the illegal traffic in narcotics. The gambit from gambling to drugs to loan sharking to racketeering to the infiltration of legitimate business by organized crime is a vicious circle that begins with money from illegal gambling. In short, syndicated gambling is the largest single source of revenue for organized crime that grosses the underworld $20 billion annually. Gambling en ables organized crime to finance more expensive ventures, such as the importation and wholesaling of narcotics. The ultimate effect of such activity is reflected in the fact that narcotic addiction is the largest single source of street crime in the Nation, accounting for fifty percent of all the felonies in large cities such as New York and Newark. The city of New York alone has more than 100,000 known heroin addicts, most of whom steal to support themselves. Although organized crime steers clear of the resale of narcotics the petty crime that comes from the "habit" the principals who control the illegal drug traffic are to be found in organized crime. My deep concern for this scourge has caused me to introduce several other bills dealing with the local and national problems of narcotics addiction and illegal drug traffic. Stronger law enforcement tools as well as realistic education, treatment, rehabilitation and research measures are proposed in legislation I introduced several weeks ago. Together with a strong and comprehensive organized crime law, these bills can provide our judicial and law enforcement and medical agencies with the legislative measures they need to control one of America's most serious domestic problems. If you can cut the original flow of illegal gambling funds into the revenues of organized crime, which finances much of the rest of their activities, then we would be one step closer toward curbing the drug problem in this country. The implementation of the intent of the Illegal Gambling Business Control Act would materially help accomplish this goal. This bill defines illegal gambing and makes it a felony for large scale gamblers and law enforcement officers or public officials to conspire to obstruct the enforcement of State and local gambling laws through the bribery of government officials. In addition, it makes the large scale business enterprise of gambling a Federal offense. Rather than making the elimination of illegal gambling a Federal effort, this bill is designed to aid local law enforcement and government in curbing and eliminating illegal gambling operations. In closing, Mr. Chairman, I would like to mention two other points which I feel are relevant to the issue at hand. While I would like to applaud the Senate Judiciary Committee for incorporating a very effective title IX in their organized crime bill, S. 30, which applies the Sherman Anti-Trust Act to organized crime as it relates to legitimate business activities, I would like to caution that we should also be thinking of ways to improve upon Government audits and controls over the flow of illegal funds into legitimate business from underworld sources. Largely untaxed, these vast sums from organized crime which flow into legitimate business enterprises can damage and cripple lawful competitors who are subject to the demands and expenses of the public marketplace. Audits and administrative controls by all Government agencies should be formulated and implemented to detect moneys from illegal sources. Controls in all types of programs run by the Government should be effective enough to uncover illegal activities perpetrated on the Government and its people. Lastly, if we are going to combat organized crime, then we must see it for what it really is and avoid the time worn cliches and meaningless labels which have been used indiscriminately in the past. Least of all is organized crime an "alien organization" whose franchise belongs solely to Americans of Italian, Irish, German, Polish or other ethnic origin or descent. It is purely and simply a conglomeration of diverse nationalities united by the common bond of crime for profit. Criminals live by and respect one law-the law of the jungle. Treat organized crime realistically and justice will prevail. Fail to recognize crime in America for what it is, neglect to arm law enforcement agencies with the legal tools they need to fight and overcome this pervasive evil-and organized crime will continue to poison and drain our society. The "Crime Conglomerate" employs thousands, nets billions annually and operates nationally and internationally. It possesses an efficient and disciplined organizational structure and wields a depressingly effective lobbying apparatus. Organized crime insulates itself against legal action and hurts billion dollar corporations and cripples smaller ones. In my opinion, it rates as one of the most serious long-term dangers to the security and principles of this Nation. We must pass effective laws which give judicial and law enforcement agencies the tools they need to wage a victorious war on organized crime, and the bills before us today are a necessary step in this direction. Thank you, Mr. Chairman, and members of the committee, for your time and attention today. AMERICAN BAR ASSOCIATION, Hon. RICHARD H. POFF, Committee on the Judiciary, U.S. House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR CONGRESSMAN POFF: Thank you very much for your letter of May 7, inviting testimony by the Section of Antitrust Law of the American Bar Association pertaining to S. 30, the Organized Crime Control Act of 1969. In order to testify concerning the provisions of pending legislation, the Section of Antitrust Laws must first secure the authorization of the Board of Governors or the House of Delegates of the American Bar Association, on the basis of a report and recommendations prepared by the Antitrust Section analyzing the pertinent legislative provisions of S. 30, which differ substantially from earlier proposals. In view of the scheduling of the hearings before the House Judiciary Committee beginning May 20, 1970, it appears impossible to complete the necessary study and recommendations and to secure the necessary approvals in time for such testimony to be prepared and presented. As your letter indicates, the Section of Antitrust Law in 1968 did prepare a report and recommendations on S. 2048 and S. 2049 (90th Cong., 2d Sess.), which were approved by the House of Delegates of the American Bar Association on August 7, 1968. I am pleased to enclose a copy of that report and recommendations for the record of your Committee's proceedings. Sincerely yours, Enclosure. FREDERICK M. Rowe, Chairman. AMERICAN BAR ASSOCIATION-REPORT No. 2 OF THE SECTION OF ANTITRUST LAW RECOMMENDATION OF THE SECTION OF ANTITRUST LAW TO THE HOUSE OF DELEGATES Be it resolved, that the American Bar Association endorses the principles and objectives of S. 2048 and S. 2049, 90th Congress, 2d Session, and all similar legislation having the purpose of adapting the machinery of the antitrust laws to the prosecution of organized crime, but recommends that any such legislation be enacted as an independent statute and not be included in the Sherman Act, or any other antitrust law. Be it further resolved, that the Section of Antitrust Law is authorized to present the views of the American Bar Association in this regard to the Committee on Judiciary of the United States Senate and to other appropriate committees and subcommittees of Congress. AMERICAN BAR ASSOCIATION-SECTION OF ANTITRUST LAW S. 2048 and S. 2049 are bills designed to combat and penalize organized crime, particularly in its attempt to infiltrate and take over legitimate businesses by means of money illegally obtained. PROVISIONS OF BILLS Both bills utilize the machinery of the antitrust laws to accomplish the desired end. S. 2048 is framed as an amendment to the Sherman Act and would replace S. 8 of that Act. S. 2049 is drafted as an independent piece of legislation, but includes in its provisions the discovery and enforcement procedures of the antitrust laws. S. 2048 amends the Sherman Act to make it a violation of the antitrust laws to invest intentionally unreported income in any business enterprise. In essence, S. 2049 makes it a criminal offense to apply the income received from enumerated criminal activities to any business enterprise. To aid in enforcement, S. 2049 authorizes the issuance of injunctions at the request of either the government or a private party. Persons injured due to the application of income derived criminally in legitimate businesses may bring treble damage actions, and a criminal judgment would be príma facie evidence in any treble damage action. S. 2049 also authorizes nationwide service of process and grants immunity from prosecution to witnesses testifying in proceedings instituted by the United States under this statute. NEED FOR LEGISLATION The evidence is clear that organized crime, which takes billions of dollarsmostly in cash and mostly untaxed-annually from the American public, has 'broadened its operations by infiltrating and taking over legitimate businesses. 'The President's Commission on Law Enforcement concluded, "The cumulative effect of the infiltration of legitimate business in America cannot be measured. Law enforcement officials agree the entry into legitimate business (by organized crime) is continually increasing and that it has not decreased organized crime's control over gambling, usury and other profitable, low-risk criminal enterprises." The Challenge of Crime in a Free Society, p. 190 (1967). Organized crime, therefore, is a major threat to the proper functioning of the American economic system, which is grounded in freedom of decision. When organized crime moves into a business, it customarily brings all the techniques of violence and intimidation which it used in its illegal businesses. The effect of competitive or monopoly power attained this way is even more unwholesome than other monopolies because its position does not rest on economic superiority. The magnitude of the problem makes it clear that all legitimate methods of combating organized crime must be utilized. According to the President's Commission on Law Enforcement, "law enforcement's way of fighting organized crime has been primitive compared to organized crime's way of operating. Law enforcement must use methods at least as efficient as organized crime's." The Challenge of Crime in a Free Society, p. 200 (1967). APPLICATION OF ANTITRUST PRINCIPLES TO ORGANIZED CRIME The time tested machinery of the antitrust laws contains several useful and workable features which are appropriate for use against organized crime. Thus, in addition to making combinations and conspiracies in restraint of trade, as well as monopolizations and attempts to monopolize, illegal and punishable by criminal penalties, 15 U.S.C. Sections 1, 2, the antitrust laws provide for civil enforcement. Private parties injured by conduct violative of antitrust laws may bring actions to recover treble their losses plus their attorney's fees. 15 U.S.C. Sec. 15. In a private damage suit, the fact of a prior government judgment involving the same conduct may be used as prima facie evidence that the antitrust laws have been violated. 15 U.S.C. Sec. 16. Witnesses testifying before a grand jury about antitrust violations are given immunity from prosecution for offenses discussed in his testimony. 15 U.S.C. Sec. 32. The antitrust laws also provide for discovery of facts by means of the grand jury process in a criminal investigation and by means of a civil investigative demand by the Justice Department in civil actions. 15 U.S.C. Sec. 1312. Some of the conduct of organized crime in legitimate businesses can be, and has been, reached by the existing antitrust laws. Thus, for example, in United States v. Bitz, 282 F. 2d 465 (2d Cir. 1960), the Court of Appeals sustained an indictment under Sec. 1 of the Sherman Act. In this case, the antitrust laws were used to combat activities of racketeers who were engaged in an unlawful combination and conspiracy in restraint of trade in the wholesale distribution and sale of newspapers and magazines in the metropolitan New York area. The conspiracy operated by means of strikes and strike threats to coerce distributors to pay the conspirators sums of money. Those who refused had their shipments of newspapers and magazines interfered with. Convictions were subsequently obtained and the defendants sentenced to jail terms. See also, e.g., United States v. Pennsylvania Refuse Removal Association, 357 F. 2d 806 (3d Cir.), cert. denied, 384 U.S. 961 (1966) (Criminal convictions of conspiracy to restrain trade in refuse removal by means of the coercion of non-conspirators affirmed); Los Angeles Meat and Provision Drivers Union v. United States, 371 U.S. 94 (1962) (Antitrust laws used in a civil proceeding to attack and enjoin a conspiracy in the sale of yellow grease which was enforced in a coercive manner). Other activities of organized crime in legitimate businesses may or may not be subject to the antitrust laws. Thus, some extortion tactics and business takeovers by organized crime might not be reached under the antitrust laws, particularly if they affected only the victimized business rather than resulted in a lessening of competition in an entire line of commerce. Still other activities of organized crime in connection with legitimate businesses are clearly not subject to the existing antitrust laws. These include such techniques as the loan of money on condition that a racketeer be appointed to the recipient's board of directors, or an investment of concealed profits acquired from illegal activity. As described above, S. 2048 and S. 2049 extend the use of the antitrust machinery as a weapon against organized crime. The Antitrust Section agrees that organized crime must be stopped. It further agrees that the antitrust machinery possesses certain advantages worthy of utilization in this fight. It therefore supports and endorses the principles and objectives of both S. 2048 and S. 2049, and similar legislation. However, it prefers the approach of S. 2049. By placing the antitrust-type enforcement and discovery procedures in a separate statute, a commingling of criminal enforcement goals with the goals of regulating competition is avoided. S. 2048, on the other hand, by inserting in the Sherman Act a provision which does not have as its primary objective the establishment or maintenance of free competition, may result in an undesirable blending of otherwise laudatory statu tory objectives. Criminal conduct which violates existing antitrust laws can be proceeded against under those laws. Additional conduct sought to be reached should be attacked under separate legislation. Moreover, the use of the antitrust laws themselves as a vehicle for combating organized crime could create inappropriate and unnecessary obstacles in the way of persons injured by organized crime who might seek treble damage recovery. Such a private litigant would have to contend with a body of precedent-appropriate in a purely antitrust context-setting strict requirements on questions such as "standing to sue" and "proximate cause." Conversely, the placing of this legislation in the body of the antitrust laws could have an undesirable and inappropriate impact on the administration of the antitrust laws in their normal context. Thus, faced with litigation between private citizens and members of the organized criminal hierarchy, there may well be a naural inclination to weight the balance heavily in favor of the private citizen. Such an imbalance, while defensible in this context, is inappropriate in the normal antitrust litigation context. For the foregoing reasons, the Section of Antitrust Law recommends that the House of Delegates adopt the attached resolution endorsing the principles and objectives of S. 2048 and S. 2049, and all similar legislation having the purposes of adapting the machinery of the antitrust laws to the prosecution of organized crime, but recommending that any such legislation be enacted as an independent statute and not be included in the Sherman Act, or any other antitrust law. The CHAIRMAN. That will conclude the hearings today. We will meet tomorrow morning at 10 o'clock. (Whereupon, at 11:55 a.m., the subcommittee was recessed to reconvene at 10 a.m., Thursday, May 21, 1970.) |