You mentioned to Mr. Pickle that there was coordination between you and IRS at the time last year when IRS made the decision to issue the disqualifying order.

Were you advised prior to the time that order was issued?

Secretary MARSHALL. NO.

Mr. BAFALIS. Do they have the same responsibility with you that you have with them in coordinating?

Mr. SACHER. ERISA mandates coordination on both sides.

Mr. BAFALIS. Is there any reason you were not notified by IRS prior to their action?

Mr. SACHER. I can't speak for the Internal Revenue Service, Congressman.

Mr. BAFALIS. Did anyone in the Department of Labor appear to be upset about their unilateral action?

Mr. SACHER. We were taken by surprise.

Mr. BAFALIS. I don't have any further questions, Mr. Chairman.

Mr. GIBBONS. Unless there are questions, the Chair would ask you to please excuse yourselves temporarily while we ask the Justice Department witnesses to come forward. We will try-we understand your time is very limited, Mr. Secretary, and that you are a busy man-to expedite this matter.

[Labor Department panel temporarily excused.]

Mr. GIBBONS. Is there a representative of the IRS here today? I see the Acting Commissioner back there? Anything you want to say in open session? Do you have anything you want to say?

Mr. WILLIAMS. No, sir, we have nothing to say.

Mr. GIBBONS. All right. The next witness is Assistant Attorney General Benjamin R. Civiletti. Mr. Civiletti, we welcome you here this morning. We also recognize that you are a new member of the new administration, and we have been told by your staff that you are not personally familiar with the facts in this matter. But I assume you have been fully informed about it. We welcome you and we would ask you to proceed as you wish.

STATEMENT OF BENJAMIN R. CIVILETTI, ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF JUSTICE, ACCOMPANIED BY JOHN C. KEENEY AND JOSEPH J. ARONICA, DEPUTY ASSISTANT ATTORNEYS GENERAL, CRIMINAL DIVISION, AND PHILIP WILENS, SECTION CHIEF, GOVERNMENT REGULATIONS AND LABOR

Mr. CIVILETTI. Sitting at my right is John Keeney, Criminal Division, Deputy Assistant Attorney General of the Criminal Division, and seated on my left is Joe Aronica, member of the Labor Section of the Criminal Division.

Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you and outline to the extent that I can the Department of Justice's role and participation in the investigation of the Teamster's Central States Pension Fund.

I should point out at the outset that I am prohibited from revealing any of the particulars of any matters that may be under criminal in

vestigation both because of our concern for jeopardizing any potential criminal prosecutions and because of the restrictions of rule 6(e) of the Federal Rules of Criminal Procedure. I say this at the outset so that the committee will not misconstrue my inability to supply factual details as an attempt to conceal any facts from the committee which it deems relevant to its inquiry.

In the area of pension and employee benefit plans in general, there are a number of criminal statutes which are particularly germane. The first is 18 U.S.C. section 664, which makes it a Federal felony for anyone to embezzle the assets of a benefit plan. Another is 18 U.S.C. section 1954 which makes it a felony for anyone to offer, and certain categories of individuals to accept or to solicit anything of value to influence the operations of an employee benefit plan. Still another is 18 U.S.C. section 1027 which prohibits the filing of any false documents or statements with an employe benefit plan. The Employee Retirement Income Security Act of 1974 contained two criminal provisions. One prohibits the willful violation of the reporting and disclosure provisions of the act and the other prohibits the unlawful interference with individuals' pension rights. Besides these statutes which are directly applicable to benefit plans, a myriad of other criminal statutes including mail and wire frauds and interstate transportation and aid of racketeering enterprises found in title 18, United States Code, may become applicable when dealing with investigations into these benefit plans, or the actions in relation to them.

In the investigation of the Teamster's Central States, as in many other investigations into employee benefit plans, the responsibilities of the Department of Justice, the Department of Labor and the Internal Revenue Service are sometimes intermeshed; but yet they are quite distinct.

Because of these distinct rsponsibilities and areas of concern, each Department could set out on its own without coordination or consultation with the other Departments and carry on its own independent investigation. This would, besides creating an unnecessary duplication of effort in the information gathering stage of any investigation, be it civil or criminal, also run the risk of interfering with or jeopardizing the investigations of the other agencies.

Both the Departments of Justice and Labor realized that a thorough investigation of the Central States Pension Fund would be a major undertaking in terms of both time and effort. In order to eliminate the unnecessary duplication of effort in the information gathering stage, we moved at the outset to establish procedures which would insure total cooperation in this investigation.

With this in mind, towards the latter part of the fall of 1975, discussions were held at several levels within the Department of Justice and with the Department of Labor in order to establish a coordinated or cooperative effort in investigating the Central States Pension Fund. This desire, on the part of both Departments, resulted in a Memorandum of Understanding signed by Deputy Attorney General Tyler and Secretary of Labor Dunlop on December 1, 1975. This agreement provided for a policy committee and for the establishment of a joint task force to actually conduct the investigation.

The memorandum establishing the task force envisioned a free ex

change of information between both Departments in the course of the investigation. It was understood at the outset that under the provisions of ERISA the investigative tasks would lie most heavily upon the Department of Labor, whose investigators are well trained in this area. These investigators were to gather the information collected from the books and records of the pension fund, analyze that information and prepare any recommendations that they saw fit. During this process, there was to be a free exchange of information.

The task force concept was designed because the primary thrust of the investigation was to develop the civil remedies available to the Labor Department under ERISA.

The policy committee was established to make determinations on what situations should be spun off for criminal investigations as opposed to civil investigations and the appropriate remedies which would be sought in any given situation.

The Department of Justice from the inception of this project assigned two attorneys from the Criminal Division to assist the task force and to analyze the information gathered by the Labor investigators to determine the potential for a criminal investigation. It was understood that once information warranting criminal investigation was uncovered and a decision made to spinoff a given transaction for criminal investigation, the personnel devoted to the project would be increased. The additional personnel would include Criminal Division attorneys, Assistant U.S. Attorneys in various districts, and FBI agents. Where appropriate, grand juries would be employed to pursue the criminal investigations.

When the Department of Justice entered into the Memorandum of Understanding, it was with the belief that in order for the investigation to succeed it was necessary for both Departments to come into the investigation at the ground level so that early on the full range of remedies available to both Departments could be considered for possible use. In the past, investigations of serious criminal activity have been harmed irreparably by law enforcement agencies acting unilaterally and without any assessment of the impact of what they are doing on the investigations of other agencies. This investigation was too important to have that occur. To the credit of all those individuals who have been working on this project at the operational level, there has been a free exchange of information. As a result of this exchange of information, five matters have been spunoff for criminal investigation. One of these investigations has resulted in the indictment of the Fund's former assets manager, one is currently the subject of a grand jury proceeding, and the other three are being actively pursued through the criminal investigative processes. I can assure you, as Mr. Giuliani assured the Senate Subcommittee on Labor of the Committee on Labor and Public Welfare on July 1, 1976, that this joint effort has been given and will continue to be given a very high priority and will receive the total and complete support of the Department of Justice.

I should note that the Criminal Division's role under ERISA is quite limited. As prior spokesmen for the Department have noted, the primary thrust of the statute is for the protection of beneficiary rights through civil investigative and litigative means. The Secretary of Labor is granted broad powers to enforce this mandate and I,

of course, am not in a position to comment upon the effectiveness of these aspects of the Act. However, it does appear that the more detailed reporting requirements of the Act in conjunction with the Labor Department's increased access to benefit Fund's operation has led to an increase in criminal investigative activity and potential. Mr. GIBBONS. Thank you.

Are there questions by Members of the subcommittee?

Mr. PICKLE. I have one.

On page 5, you said that, as a result of this exchange of information, five matters have been spunoff for criminal investigation, and you list them in general terms. Can you identify those cases?

Mr. CIVILETTI. I can identify the one in which there has been an indictment because it is a matter of public knowledge, and that is of the assistant manager, Mr. Alvin Barron, who was the former assistant manager of the Fund. He is indicted for mail and wire fraud, receiving kickbacks and income tax evasion on his receipt of $200,000 from a fund borrower.

Mr. PICKLE. With respect to Mr. Barron, where did the information that led to the Barron indictment come from?

Mr. CIVILETTI. I don't know that.

Mr. Keeney?

Mr. KEENEY. It was information provided to the Labor Department by the Fund, and then was provided to the U.S. attorney in the northern district of Illinois.

Mr. PICKLE. Mr. Shannon had given testimony that he had supplied that information.

Mr. KEENEY. That is correct.

Mr. PICKLE. I take it from your information that you implied it had resulted from a Government investigation. It primarily came from Mr. Shannon; is that correct?

Mr. KEENEY. That is right. In that particular instance, that came primarily from the Fund representatives.

Mr. PICKLE. Can you identify any of the others?

Mr. CIVILETTI. I don't believe so, because one is pending in the grand jury, and the others are hopefully leading to the grand jury. Mr. PICKLE. Thank you.

Mr. GIBBONS. Mr. Rangel?

Mr. RANGEL. Can you tell me how long the Justice Department has been criminally investigating the Teamsters Union?

Mr. CIVILETTI. Twenty-five years, I guess. I know when I became an assistant U.S. attorney in 1962, things were hot then.

Mr. RANGEL. This is for the specific purpose of the negotiations, or does Justice still maintain its own integrity and ongoing investigations of the Teamsters? Is the whole thing now a joint effort?

Mr. CIVILETTI. No, Congressman Rangel, I think the agreement referred to in my testimony is an agreement that deals specifically with the massive investigation of the Central States Fund. There are independent investigations being pursued by strike forces in various cities

Mr. RANGEL. This ongoing investigation by Justice generally does not have to be reported by Labor except as it relates to the pension fund, is that correct?

Mr. CIVILETTI. The agreement relates to the pension fund, and in those areas where we receive allegations of improper activities, I am sure there is cooperation with Labor; but not with respect to that specific agreement.

Mr. RANGEL. We would hate to see Justice fall back on the same lines as Labor. You are not impeded by these arrangements with Labor, are you?

Mr. CIVILETTI. No, sir. We are hopeful that they accelerate the process.

Mr. RANGEL. Did Justice participate in the negotiations that led to the tentative agreement between Labor and the trustees of the pension fund?

Mr. CIVILETTI. The agreement that has been referred to in the form of a press release?

Mr. RANGEL. Yes.

Mr. CIVILETTI. No, we were advised, but we did not participate. Mr. RANGEL. Did Justice ever offer immunity or amnesty to anyone that was participating in the agreement that was reported as a press release?"

Mr. CIVILETTI. Not to my knowledge.

Mr. RANGEL. And if anyone in Justice made this type of offer, they could not do it without first informing you; could they?

Mr. CIVILETTI. I think it would be highly unlikely since I have been sworn in, which was 3 weeks, and I don't think it happened before then, or it would have come, probably, to my knowledge.

Mr. RANGEL. Do some people believe this agreement was made under the cloud of preventing criminal prosecution?

Mr. CIVILETTI. From everything I had heard and know, that is in error. We are not impeded and our hands are not tied in the Criminal Division of the Department of Justice in any manner, shape or form by the agreement.

Mr. RANGEL. Then I cannot understand why Justice would need to go into executive session with this subcommittee as relates to questions that we find unanswered. If the matters that we are making inquiry into do not relate to tax matters, and if no offers were made to principals involved in the negotiations that would grant immunity or amnesty to those that were involved, I can't for the life of me see why Labor would have to go into executive session to talk about a legal, moral agreement that they made for the protection of the trust fund.

I ask you as the country's lawyer to advise me as to why am I having such a problem in understanding Labor's request?

Mr. CIVILETTI. I can only speculate, since I wasn't there, but speculate from some wisdom from the criminal point of view, that there may well have been disclosures, facts, and discussions with the Department of Labor is free to pass on to Justice for criminal prosecution, which are very relevant to such a prosecution, which could be damaged or compromised by disclosure in the press.

Mr. RANGEL. Labor told me they can't tell me why the trustees are so anxious to resign. Now, they didn't promise that they are going