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RESPONSES TO WRITTEN QUESTIONS FROM THE KANSAS CITY DIVISION

            Question. The summary submitted by the Kansas City FBI Office states, and I quote: "During the past ten years, the impact of criminal prosecution on the activities of the LCN in Kansas City has remained relatively unchanged. Although significant statistical accomplishments and high impact achievements have occurred resulting in these convictions at Kansas City of LCN bosses and members, it is the opinion of Kansas City that the 'beat goes on', e.g., replacement personnel have filled the vacuum left by conviction and the criminal enterprise continues."

Given that statement, is it the opinion of Kansas City that the war against organized crime is a no-win situation in the long run? If not, what else do we need to dc that we are not already doing?

            Answer. Even though our past accomplishments have not resulted in the total elimination of the LCN, the war against organized crime should not be considered a "no-win" situation. Instead, our past accomplishments should be considered the starting point in a long-term effort to achieve the goals set forth in the Organized Crime National Strategy. This strategy was implemented in December 1987. The Organized Crime Program Mission as set forth on that date states that the FBI will eliminate the LCN and other organized crime groups as significant threats to American society through sustained coordinated investigations that support successful prosecutive action. Congress has provided the legal tools to achieve this goal with electronic surveillance legislation and the criminal and civil provisions of the RICO Statute. With a sustained effort using our past successes as a springboard, we believe we can successfully accomplish our mission.

            Question. Both the FBI and the Labor Department's Organized Crime and Racketeering Section have jurisdiction over criminal investigations in the labor racketeering area. How many joint FBI/Labor Department investigations have been handled by your office in the last three years? Are you satisfied with the cooperation between your office and Department Agents in criminal investigations?

            Answer. During the past three years, Special Agents from the Kansas City FBI Field Office have participated in at least seven investigations with representatives from the Department of Labor's Office of Labor Racketeering. Each agency brought its respective strengths to the investigations and a high degree of cooperation was achieved. This has had a beneficial effect on both agencies and resulted in achieving investigative goals and objectives.

            Question. In your view, what should the role of the Labor Department Inspector General's Office be in the investigation of labor racketeering cases?

            Answer. In labor racketeering matters, the role of the Labor Department Inspector General's Office should be to investigate waste, fraud and abuse within the Department of Labor (DOL); and to investigate violations of Section 805(b) of the Comprehensive Crime Control Act of 1984, Section 504 of the Employee Retirement Income Security Act (ERISA), and Section 601 of the Labor Management Reporting and Disclosure Act (LMRDA), statutes which DOL is statutorily empowered to investigate. All other labor racketeering violations identified by DOL's Inspector General's Office should be referred to the appropriate criminal investigative agency. The DOL should continue to provide to investigations their expertise developed over years of administering various DOL programs where appropriate and applicable.

            Question. Currently, unlike other Federal law enforcement Agents, Agents of the Labor Department's Organized Crime Section do not have statutory law enforcement authority i.e., the authority to make arrests and to carry a gun. They receive this authority only on a case-by-case deputation basis, from the Justice Department. Do you know of instances where this lack of authority has delayed or impeded their ability to effectively investigate organized crime cases?

            Answer. Kansas City is not aware of any investigation in which the lack of any statutory law enforcement authority has impeded or delayed the effective investigation of any organized crime cases.

            Question. Do you believe that Agents of the Labor Department Inspector General's Organized Crime Section should have statutory law enforcement authority? Why or why not?

            Answer. No. The labor racketeering problem is substantial. However, the number of important organized crime influenced labor racketeers in a city is finite and usually readily identifiable by law enforcement. Past experience has demonstrated extraordinarily dysfunctional results caused by uncoordinated multiagency pursuit of the same subjects. In fact, some of the best organized crime sources of the FBI have been lost unnecessarily due to uncoordinated investigations.

            The FBI's "Organized Crime National Strategy," which has proven so successful against the La Cosa Nostra (LCN), mandates use of the RICO Statute in concert

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with Title III and undercover techniques. Indeed, the experience of the FBI is that all three techniques are essential to success against the LCN. Furthermore, the LCN is the major force in labor racketeering. Although additional resources to law enforcement to combat crime would be a much needed and welcomed augmentation to the law enforcement effort, it is incumbent that such additional resources be structured and marshaled in a coordinated and sell-defined manner to avoid inefficient, ineffective and duplicative activity. To empower numerous agencies and departments with full law enforcement powers under the direction of individual semiautonomous departments, without clear lines of jurisdiction and a clearinghouse entity to avoid duplication of effort would most assuredly be drafting a blueprint for inefficiency and conflict in future investigations.

            Coordinating resource usage from independent agencies having concurrent jurisdiction was attempted under the Strike Force concept with less than favorable results. Political considerations as well as differing investigative strategies necessitated by the resource, intelligence gathering, and technical capabilities of each agency prevented coordinated efforts toward a common goal. No agency will unilaterally subjugate their personnel or responsibility to another agency leaving the alternative of management by committee for a particular investigative project. This has proven to be inefficient and ineffective in addressing a crime problem in a thorough and timely fashion.

            Question. Did your Division use any state or local law enforcement agencies in its LCN investigations? If so, what agencies cooperated in these investigations, and what was the level of that cooperation? If not, why not?

            Answer. The Kansas City FBI Division has effectively utilized the coordinated efforts of local law enforcement agencies to identify, investigate and prosecute those elements of the LCN involved in criminal activity. Due to the Kansas City LCN's involvement in and impact on both local and national criminal activities, the Kansas City Police Department was largely responsible for assisting in the investigation of those matters directly identifiable with the Kansas City metropolitan area. The Kansas City Police Department was a participant in the task force which consisted of the FBI and Internal Revenue Service.

            Question. Does your Division use the Task Force concept? If so, with whom, and what are the parameters of the Task Force?

            Answer. The Kansas City FBI Division has effectively utilized the coordinated efforts of both Federal and local law enforcement agencies to identify, investigate and prosecute those elements of the LCN involved in criminal activity. Task Force participants include the Internal Revenue Service, the Kansas City, Missouri Police Department and the FBI. Due to the Kansas City LCN's involvement in the impact on both local and national criminal activities, the Kansas City Police Department has been largely responsible for assisting in the investigation of those matters directly identifiable with the Kansas City metropolitan area while the national aspects of the investigation are handled by the Internal Revenue Service and FBI.

            Question. What is your Division's LCN family's involvement in drug trafficking, if any, and to what degree are they involved in the distribution of narcotics in your area?

            Answer. Our intelligence indicates that drug trafficking is not a criminal activity that is officially sanctioned by the Kansas City LCN Family. However, LCN members have been identified in individual acts of drug trafficking. We do not believe that these independent acts of drug trafficking by LCN members are highly significant in light of the overall drug problem. We are interested in pursuing these types of investigations in furtherance of our Organized Crime National Strategy.

            Question. What other industries and illegal activities are controlled or influenced by the Kansas City LCN family, and how does that control or influence affect the citizenry?

            Answer. While the influence exerted by the Kansas City LCN has significantly diminished in Las Vegas enterprises, there has been an emerging influence in the construction industry. This influence includes bribery, bid rigging, political corruption, kickbacks and infiltration of legitimate business. In addition to these nationally impacting cases, the Kansas City LCN continues to derive its vitality and its principal source of revenue primarily from illegal gambling, pornography and prostitution.

            Aside from its obvious impact on interstate commerce and a ripple effect on virtually every aspect of the community, Kansas City has a tradition of violence, intimidation, and destruction of property within the community attributed to the LCN.

            Question. What investigative techniques were used in your Division's investigations into the LCN, and which of those techniques proved most successful?

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            Answer. During the course of the Kansas City Division's investigation of the LCN, a number of investigative techniques have been employed. These include electronic and physical surveillance, witness interviews and the use of informants. Informants and cooperating witnesses have proven to be invaluable in the investigation of the LCN, particularly since the information supplied is frequently necessary to develop sufficient probable cause to support the Title III affidavit.

            Question. Is your Division fully committed to the Enterprise Theory of Investigation and the use of the RICO Statute.

            Answer. The Kansas City Division is fully committed to the Enterprise Theory of Investigation and the use of the RICO Statute. This is especially true in regard to those investigations involving significant criminal groups and/or any enterprise whose criminal activities have a major impact on society.

            Question. Does this commitment to the Enterprise Theory of Investigation include the use of the civil components of the RICO Statute.

            Answer. The civil sanctions of the RICO Statute are integral and indispensable elements of the FBI's Enterprise Theory of Investigation. The utility of the civil aspects of the RICO Statute cannot be overstated. The foremost objective of the LCN and other organized criminal groups is to generate revenue through illicit activities. This revenue is generated through a number of criminal activities, to include the infiltration of legitimate business and labor racketeering which frequently involves influence over or control of institutionalized entities such as unions. The FBI has determined that the conviction of prominent or influential organized crime group members, including bosses, does not necessarily create a void within the group. The civil RICO sanctions force organized crime figures out of union office and legitimate business, bar association between members of the organized crime group and the labor union or legitimate business and make possible the seizure of assets acquired by organized crime through criminal activity. Such action, coupled with the criminal convictions, can substantially disrupt or eliminate organized crime groups.

            Question. Does the LCN family in your Division use any non-traditional or emerging organized crime groups in the conduct of its illegal enterprises or activities?

            Answer. Investigation has determined that the Kansas City LCN has interacted with the Cuban Marielitos, primarily in regard to drug activity. The extent has been to allow the Cubans to use LCN-owned property to conduct drug business whereupon the LCN receives a portion of the ill-gained profits.

            Question. What influence does the LCN have in the labor unions in your area? Has your Division's organized crime successes had any effect on the LCN's influence on those labor unions?

            Answer. The Kansas City LCN was most prevalent nationally in the financial affairs of the Teamsters Union. As a result of the prosecution and removal of Roy Lee Williams as President of the Teamsters Union, the Kansas City LCN has lost its conduit and grasp upon the coffers of the Teamsters. Without access to the Teamsters through Williams, the LCN in Kansas City no longer has the influence or impact upon the Teamsters' fiscal policies and/or investments. This is subject to change, however, since the August 1987 death of John Couts, President of Teamsters Local 41. The opportunity now exists for the LCN to exert influence in forthcoming elections and thus regain control of the Local. The Kansas City LCN has exhibited an emerging influence in the construction industry particularly because their influence has been diminished in the Las Vegas enterprises as a result of the "Straw-man" investigation and prosecution. Influence in the construction industry has surfaced in the form of bribery, bid-rigging, political corruption and the infiltration of legitimate business.

            Question. What other investigative tools or Federal statutes are needed to aid law enforcement in its investigation of organized crime groups in your area of the country?

            Answer. Stricter labor racketeering laws are required which would provide the impetus for construction businesses to resist paying inflated union fees or "kickbacks" to corrupt union officials as a cost of doing business. Laws are needed to prohibit the corrupt receipt of things of value when paid by any person in return for another's "sale" of union membership, the use of union-sponsored work placement or the use of labor union property generally. Existing laws under Title 18, U.S. Code, Section 1954 and Title 29, U.S. Code, Section 186 need to be broadened to cover attempts to give or accept corrupt payments to influence the operation of employee benefit plans and labor organizations, to proscribe corrupt payments to persons exercising de facto influence or control over these organizations and to increase the penalty for bribery under Section 1954.

            Also needed are provisions which would permit the Internal Revenue Service to disclose certain financial information to the FBI regarding subjects of FBI investiga-

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tions. Such information would serve to enhance the understanding of the financial aspects of particular criminal enterprises.

            Question. Can you identify any emerging or non-traditional organized crime groups that will be able to challenge—or fill a void left by—the LCN family in your Division?

            Answer. There are no emerging or non-traditional organized crime groups that have demonstrated any ability to challenge or fill any void left by the prosecution and incarceration of the LCN in the Kansas City Division.

            Question. In what other cities does the Kansas City Family of the LCN conduct its criminal activities, and what is the extent of these criminal activities?

            Answer. Historically, the Kansas City LCN has had criminal relationships with the Milwaukee, Chicago and Cleveland factions of the LCN; however, since the convictions and incarceration of the defendants of the Strawman-Argent case on January 19, 1986, new associations have developed and given rise to more diversified criminal endeavors. Specifically, the Kansas City LCN has been engaged in criminal activities in Florida, California, Colorado and Washington, D.C. These activities include infiltration of the construction industry, extortion, kickbacks, bribery and bankruptcy schemes.

            Question. In the Bureau's briefing to the Permanent Subcommittee on Investigations staff, it was stated that the Kansas City LCN influence was most prevalent, nationally, in the financial affairs of the Teamsters Union. How is this influence exercised? And, what is the extent of the influence exercised?

            Answer. Since the prosecution and removal of Roy Lee Williams as president of the Teamsters Union, Kansas City's LCN lost its conduit and grasp upon the coffers of the Teamsters. Without access to the Teamsters through Williams, Kansas City's LCN no longer has influence or impact upon fiscal policies and investments of the Teamsters.

            Question. According to the Kansas City Office of the FBI, the Kansas City LCN Family has a hidden interest in several hotels in Las Vegas. Does the Kansas City LCN Family share this hidden interest with other LCN families? If so, what other LCN families receive benefits from these hotels?

            Answer. Historically, the Kansas City LCN shared a financial common interest in various Las Vegas hotels/casinos with LCN families in Milwaukee, Chicago and Cleveland; however, there is no evidence today to indicate the Kansas City LCN still has either income from or influence in Las Vegas operations.

            Question. Can you tell this Subcommittee through what illegal operations does the LCN receive benefits from these hotels?

            Answer. The prosecutions in the Tropicana and Argent trials revealed "skimming" income from gambling operations was being derived by LCN families from Las Vegas hotels; however, since that influence no longer exists, that benefit has terminated.

            Question. Specifically, what amounts are involved? Has anyone ever testified to the details of the buy-back clause? If so who?

            Answer. At the Argent trial, Allen R. Glick, owner of the Argent Corporation, testified that he sold those casinos for $70 million and that neither the Balistrieri brothers nor the LCN derived any profit from the sale of these casinos.

            Question. What is the estimated monetary loss to Nevada taxpayers due to this hidden interest?

            Answer. The hidden interest of the Kansas City, Chicago, Cleveland and Milwaukee LCN Families allowed them to skim millions of dollars from the hotels/casinos in Las Vegas during the period of approximately 1976 through 1984; however, there is no way to accurately assess the monetary loss in revenue to the State of Nevada and the benefit for its taxpayers.

            Question. What was Milton Rockman's connection with Kansas City, Las Vegas, Chicago, Milwaukee, Cleveland and New York?

            Answer. Milton Rockman was identified as the conduit and major liaison between Kansas City, Chicago, Milwaukee, Cleveland and New York LCN families. Testimony in the Argent trial accurately reflected Rockman's responsibilities with regard to the distribution of skimming proceeds from Las Vegas casinos. It was through the coordination of Rodman that each of the LCN representatives from the aforementioned cities was provided a "share" of these proceeds.

            It was Rockman's initiative which allowed Kansas City to secure the election of Roy Lee Williams to the Presidency of the Teamsters. Rockman was responsible for an approach to members of the LCN family in New York that allowed the endorsement and, therefore, guaranteed election without major opposition for Williams. In exchange for the election of Williams, Kansas City LCN, in essence, agreed that

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through Williams' control of the union, funds would be directed toward investments of the LCN in Las Vegas hotels and casinos.

            Question. Since the natural death of Nick Civella and the conviction of Carl Deluna, what is the state of the Kansas City LCN?

            Answer. Since the death of Nick Civella in 1984 and the conviction of Carl "Cork" Civella and Carl "Tuffy" Deluna, the Kansas City LCN was left without leadership for a period of approximately one year following the culmination of the Strawman-Argent trial on January 19, 1986. Internal struggle and identification of leadership within the LCN ensued until a definitive power structure has been identified. Currently there is a new boss and two underbosses. As a result of this emerging structure, the Kansas City LCN is again developing an aggressive and active role in criminal activities.

            Question. How have the convictions of Carl Deluna, Joseph "Joey" Aiuppa of Chicago, John Cerone of Chicago, Milton Rockman of Cleveland, Frank Balistrieri of Milwaukee, and others, affected LCN control and influence in the Las Vegas hotel industry and in the Teamsters Union? Has this influence decreased? If not, why not?

            Answer. The hidden interest of the Kansas City, Chicago, Cleveland and Milwaukee LCN Families in Las Vegas hotel/casinos was eliminated by the Tropicana/ Argent prosecutions.

            Question. In the Kansas City Division of the FBI, what was the monetary cost of that Division's effort against LCN?

            Answer. In terms of Agent manpower, investigative resources and trial expenses, the monetary cost was hundreds of thousands of dollars. We do not have an exact figure. It is difficult to put a price tag on a case of this magnitude.

            Question. The FBI has done fine work against La Cosa Nostra (LCN). The obvious question now is what is next? That is, who is filling the LCN void, and what are we doing about it?

            Answer. The void that was created as a result of the successful prosecution of the leadership of the Kansas City LCN family will be filled from within the ranks of the LCN. Younger LCN members who have been raised in the tradition of the LCN are now asserting themselves and taking on leadership roles. Through the use of fear and intimidation they are restructuring the organization in the form that preceded the recent prosecution. They have effectively prevented any other criminal organization from achieving any significant degree of control over organized criminal activity in the Kansas City area. The FBI will address this problem as it has successfully done in the past. That is, through an effective intelligence base; the use of sophisticated investigative techniques such as electronic surveillance and cooperating witnesses; and implementation of the Enterprise Theory of Investigation. We will coordinate our investigations with the appropriate Federal, state, and local law enforcement agencies whenever practical. We will sustain this initiative until we have fulfilled our goals.

            Question. In our 1984 Subcommittee Report on the Status of Organized Crime in the Mid-Atlantic Region, we concluded on page 67 of the Report that: ". . . emerging crime groups such as outlaw motorcycle gangs should be investigated fully by law enforcement and immobilized before they become entrenched." Do you agree with that assessment of the Subcommittee's? If so, what is your office doing about them? Specifically, how many cases have you brought, and what resources have you allocated to them? Where do you take such investigations for prosecution'? U.S. Attorney? Strike Force?

            Answer. The mission of the FBI's Organized Crime National Strategy is the elimination of the LCN and other organized crime groups as significant threats to American society. Should a non-LCN group be identified as sufficiently significant to warrant FBI investigation, it will be investigated using the same strategy as that employed to investigate the LCN. The Kansas City Division has experienced a rise in the organized illegal activities of two groups identified as Jamaican gangs and two Los Angeles street gangs, the Bloods and Crips. Both of these organizations have targeted Kansas City for the distribution of drugs and have posessed a significant threat to the stability of the community. Investigations directed at the illegal activities of each of these organizations have resulted in successful prosecutions in Federal District Court, Western District of Missouri. These prosecutions were handled by the U.S. Attorney's Office.

            Question. In the same Report, our Subcommittee criticized the Department of Justice and the Organized Crime Strike Forces for focusing their attention almost exclusively on the LCN. We stated on page 67 of the Report: "For too long, the Strike Forces have addressed the subject of organized crime as if the problem were one limited almost exclusively to the LCN. The LCN is an important factor in organized

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crime, but it is not all there is to the problem." Do you agree with this 1984 assessment of the Subcommittee? Has it changed based upon your own experiences with your local Strike Force's and U.S. Attorney's offices?

            Answer. The LCN has historically been the focus of criminal investigations and prosecutions within the Organized Crime Strike Force office. It is felt to deviate from this course would effectively dilute the initial impetus for the Strike Force. For the most part, the Strike Force operates with limited resources. Within the Kansas City Division, they are totally consumed with investigations developed by the FBI. To deviate from this set course of action would detract significantly from the continued successful pattern established. However, the organized crime problem in the 80's is by no means limited to the LCN. Other significant groups from varied geographic, ethnic and racial backgrounds are involved in illegal and organized criminal activities. The FBI is committed to pursuing the investigation of these nontraditional groups utilizing the same strategy as that employed to investigate the LCN.

            Question. In our 1984 hearings on the status of organized crime in the Great Lakes region, the Subcommittee conducted a confidential survey of 30 past and present strike force attorneys and investigators. Twenty-six of the 30 respondents said they had firsthand, direct knowledge of instances in which they had gathered sufficient evidence to demonstrate a major organized criminal activity that was not part of or associated with an LCN family. But in each instance, their requests for Strike Force assistance were denied because there was no LCN involvement. (Page 13 of the Hearings, and page 3 of the Report.)

            Are such observations accurate, based upon your office's experience? In such a case, what does your office do with the investigation? Do you have problems taking it to a U.S. Attorney's office after it was rejected by the Strike Force? What should be done about this?

            Answer. Based upon the investigative experiences of the Kansas City Office of the FBI, there have been no such instances in which there has been a denial of either investigative or prosecutive action regarding any major organized criminal activities within this division. As cited above, the only three non-LCN organized crime groups have been identified as the Jamaicans from Florida and the Bloods and Crips gangs from Los Angeles. In each instance, the investigations were conducted and handled effectively and efficiently by the United States Attorney's Office.

ORGANIZED CRIME STRATEGY

            Question. In our Report on the Status of Organized Crime in the Great Lakes Region, we noted that there appeared to be no agreement within the Organized Crime and Racketeering Section of the Justice Department, which supervises the Strike Forces, as to what constituted organized crime. Do you agree with this assessment? How does your office define organized crime for prioritizing investigations? Do your priorities agree with the Strike Force's? U.S. Attorney's? If not, where do they differ? What do you do when they differ?

            Answer. Kansas City does not concur in the assessment that the Organized Crime and Labor Racketeering Section of the Department of Justice "appears" to lack an agreement as to the definition and structure of organized crime. It has been the observation of this division that the Organized Crime Strike Force functions with definitive purpose and direction at the field level as exhibited by the successful investigations and prosecutions conducted in concert between the FBI and Strike Force in Kansas City.

            Kansas City prioritizes its investigations concerning organized crime in strict compliance with the mission of the FBI's Organized Crime National Strategy. Specifically, Kansas City is presently directing its investigative effort toward the LCN's illegal activities utilizing the Enterprise Theory of Investigation. Targeting the various and independent activities of the LCN has demonstrated the cohesive criminal enterprise which binds these elements together. The identification and function of this enterprise is based upon informant information, criminal intelligence data from other law enforcement agencies, Title III coverage, and analysis of the overt investigation of known illegal activities associated with the LCN. These priorities are in direct concert with both the United States Attorney's Office, Western District of Missouri, as well as the Strike Force. To date, there have been no significant differences of opinion as to prioritization or identification of targets and prosecution of cases in what appears to be a viable and effective working relationship.

            Question. On the first day of the hearings, the General Accounting Office (GAO) recommended to the Subcommittee that our organized crime efforts need to be based upon "careful strategic planning" that establishes clear objectives, assigns re-

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sponsibilities, and allocates our finite law enforcement efforts. Do you agree with such an analysis, and if you do, who do you recommend should establish such a well thought out plan for all Federal law enforcement agencies involved in the fight against organized crime?

            Answer. Unprecedented investigative and prosecutive successes against the LCN and other significant organized crime groups have provided the FBI with the opportunity to implement a strategy which will enhance investigative efforts nationwide. By utilizing the Enterprise Theory of Investigation, expanding the FBI's national intelligence base and developing a multidivisional approach to coordinate and sustain investigations, the FBI can address the organized crime problems threatening American society. This strategy and approach has been presented in detail to representatives of the Organized Crime and Racketeering Section, Department of Justice.

            Question. GAO recommended that the current Strike Force planning vehicle, the National Organized Crime Planning Council (NOCPC), be expanded and intensified to accomplish this goal. NOCPC was established in response to prior criticism by this Subcommittee that the Justice Department's organized crime program lacked ". . . formal standards to measure effectiveness, lacked a national strategy and definition of organized crime." Although NOCPC is supposed to annually visit every Strike Force and discuss local problems with the various law enforcement agencies, it is our understanding they rarely do so. Do you get any guidance from NOCPC? When was the last NOCPC meeting in your town? I understand, for example, that there hasn't been a NOCPC in Cleveland for three or four years? What is the system in existence in your city to discuss and lay out local strategies and allocate resources between agencies? When was the last time you met? Who attended? Who chaired the meeting?

            Answer. The Kansas City FBI most recently participated in a NOCPC conference held at Kansas City on May 4-5, 1988. The Chairman for this meeting was Richard J. Marien, Attorney in Charge of the Kansas City Strike Force. Also in attendance were David Margolis and Michael DeFeo, Department of Justice, Washington, D.C. At this meeting, each attending agency presented its perspectives and objectives regarding the strategies for future investigations and prosecutive efforts of the Strike Force. In each instance, these cases were discussed in general terms. All Federal agencies, as well as representatives from state and local law enforcement attended the conference.

            Continued liaison is maintained on a regular basis between investigative agencies on all levels of government (i.e., Federal, state, local) wherein investigative concerns and priorities are discussed. In addition, Kansas City maintains an excellent working relationship with the Organized Crime Strike Force and the representatives of the various agencies. These efforts have resulted in a mutual awareness and a sharing of information to better facilitate investigative priorities. Although there are no formal organizations or meetings, the liaison maintained between agencies functions as a means of communication and coordination of investigative efforts.

            Question. As you know, on January 2, 1988, Attorney General Meese signed an "Order Directing New and Expanded Initiatives in the Federal Organized Crime Effort." As I read the order, it really addresses only the division of authority between the United States Attorney and the Justice Department's Organized Crime Strike Forces. As I understand it, prior to this order, the Strike Forces, under the direction of the Strike Force Chief in Washington, exercised control of their investigations, while keeping the U.S. Attorney advised of their activities in order to avoid possible conflicts. By contrast, this new order apparently gives the United States Attorney principal control of Strike Force investigations and prosecutions. The order even names the U.S. Attorney, as opposed to Strike Force superiors in Washington, as the "rating official" for the performance rating of the local Strike Force chief. Now, the FBI has obviously worked organized crime cases with both the Strike Forces and the U.S. Attorney's Offices. Do you feel this order was necessary and, if so, why? What is its impact in your city?

            Answer. It is the experience of the Kansas City FBI that regardless of the specific evaluations by either the United States Attorney's Office or the Department of Justice, Organized Crime Strike Force, there has been little noted or significant variation in performance and work product produced by the Kansas City Strike Force. Simply stated, Kansas City has participated in a unified and consistent approach with regard to the investigation and prosecution of organized crime and has not been impeded in any manner by either the United States Attorney's Office or the Strike Force. The Kansas City Strike Force has continued to operate without undue influence from any outside interest. Prosecutively, the Kansas City Strike Force has performed in an exemplary manner and it is anticipated it will continue to do so regardless of the rating official.

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            The immediate impact of the Attorney General's order has not produced noted significant operational or procedural policy changes which in any m negatively impact the investigations(s) of organized crime. Kansas City does not foresee any such negative impact in the immediate future.    

            Question. What is the current procedure for coordinating labor cases with the Strike Force and Labor Department? How can we be assured those problems won occur again?

Answer. The Kansas City FBI continues to maintain an open and frank relation- ship with both the Strike Force and the Labor Department.

            The Strike Force is made aware of all investigations at the earliest practicable moment for preliminary prosecutive opinion(s).

            The fundamental procedure for ensuring adequate disclosure and exchange data of mutual investigative interest is accomplished through routine discussion and candor. Through the coordinated efforts of the Strike Force, an avenue for continued communication is significantly enhanced.

            Question. Angelo Lonardo testified that the Cleveland family obtained an FBI formants list from the Cleveland FBI Office. How did that occur and was anyone prosecuted for that?

            Answer. Over an extended period of time, an FBI employee's assistance was enlisted by a LCN associate to provide the associate with certain documents regarding Cleveland Organized Crime Investigations. A thorough investigation was conducted of this incident. The persons responsible were prosecuted, convicted, and incarcerated. Administrative controls and procedures were revised to avoid a recurrence. 

            Question. You stated that the "Strawman-Argent" cases, which concluded in 1986, destroyed the rank-and-file of the Kansas City family. Yet, you also told us that, not only have LCN activities continued unabated in Kansas City, but that the "Outfit' is expanding into new businesses. It appears that these major criminal prosecutions have had little impact upon the LCN in Kansas City. Why is that the case? How have they been able to restructure their organization so quickly without suffering decline in effectiveness?

            Judge Sessions explained that the primary advantage of the enterprise theory of investigation, which the FBI has used successfully in recent organized crime cases including the Strawman-Argent cases, is that it enables law enforcement to build a case against an entire criminal organization, rather than just its leadership. Apparently, this has not worked as well in Kansas City as it has elsewhere. What are the reasons for that?

            Have your investigations in Kansas City revealed any problems with the use of the enterprise theory in these cases? If so, what are they and do you have any suggestions for ways in which these problems can be overcome?

            Answer. To the contrary, the utilization of the enterprise theory of investigation has proved to be extremely successful in creating disarray within the LCN family at Kansas City. A number of high-ranking figures and soldiers were incarcerated as a result of the convictions obtained in the Strawman-Argent investigation. The Kansas City Outfit, as with other LCN enterprises, has a substantial network of associates and other members who conveniently "fill the void" created by the prosecution of their superiors and who carry out the criminal activity, frequently at the direction of the incarcerated bosses. This does not imply that the enterprise theory of investigation if not effective. Additionally, the LCN universally is constantly seeking new avenues through which to profit. The Kansas City LCN Family is no different in this regard.

            Question. The electronic surveillance conducted in the "Strawman" investigation gave rise to the Pendorf investigation which, in turn, triggered the Argent case; all of which resulted in successful organized crime prosecutions. This is an excellent example of what can be accomplished through a coordination of information and efforts. Using these cases as examples, can you explain how the FBI coordinates information in organized crime cases nationwide.

            Answer. The FBI's Organized Crime Section is responsible for coordinating all organized crime matters. On a day-to-day basis, the case Agent is the field office with guidance from his squad supervisor is responsible for disseminating information and setting forth leads based upon the investigation which the Agent is conducting. This information is then used by auxiliary FBI field offices to "spin-off' into other related investigations. One of the ways that this process is accomplished is through use of the FBI's Organized Crime Information System (OCIS). OCIS is a computerized information retrieval system designed for the rapid retrieval, collation, and analysis of up-to-date information gathered in the FBI's organized crime investigations throughout the country. Conferences between FBI-HQ and field offices are held whenever necessary to insure that information developed from ongoing investiga-

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tions is used to its maximum effect in developing quality high impact "spin-off' investigations.

            Question. Does this network make this information available to other Federal, state and local law enforcement agencies?

            Answer. Information gathered by the FBI relative to organized crime matters is shared extensively with other Federal, state and local law enforcement agencies. One of the primary methods whereby this information is shared is through the task force concept. Virtually, every FBI field office where a strong LCN presence is felt (even if an LCN family, is not headquartered there) is involved in joint investigations with other Federal, state or local law enforcement agencies, or with a task force. In every one of these situations, the participating law enforcement agency has access to the FBI's most recent organized crime information.

            Question. Is it true that in 1979 the boss of the Kansas City family continued to run the Outfit from his prison cell in Leavenworth? If so, how did he accomplish this?

            Answer. Kansas City acknowledges that in 1979 then boss, Nick Civella, continued to participate in the operation of the "outfit business" from his prison cell in the United States Penitentiary, Leavenworth, Kansas. Nick Civella was kept abreast of the functions and operations on the LCN, Kansas City; however, as incarceration continued, his dominance and control diminished. Civella's influence was gradually reduced to a point of mere advisor and did not afford day-to-day direction to the Kansas City LCN.

            Due to the proximity of the United States Penitentiary, Leavenworth, Kansas, to Kansas City, Nick Civella was permitted to have visitors on a routine basis. These visitors became couriers for information to and from Kansas City, and the nearby confinement allowed routine telephone conversations from the penitentiary to associates in Kansas City.

            Question. Is this practice still a problem today? If so, do you have any suggestions as to how it can be eliminated?

            Answer. Communication between inmate and outside associate(s) continues to provide some problem insofar as the incarcerated individuals are not held in a totally sterile environment so as to prevent routine communication. These communications are frequently transmitted through family members and past business associates and provide a conduit to the "outside world." The Government cannot, without just cause, infringe on the rights of confined individuals. When ranking LCN members are incarcerated the FBI recommends to the Bureau of Prisons that they be housed in a facility distant from their prior criminal activities and associates.

            Question. It is true that leverage which the LCN utilized to maintain the "skimming" of gambling revenue from certain Las Vegas casinos was illegal "buy out contracts." If so, what were the purported "buy out" terms and which LCN family held these contracts?

            Answer. There were two documented instances of skimming from Las Vegas casinos during the "Strawman" series of investigations. In the Tropicana case, the infiltration of the casino—which allowed the skimming to occur—was a very subtle change brought about by Joseph Agosto, who successfully purchased the Folies Bergere Extravaganza at the Tropicana. Agosto's relationship with the operators and certain key employees at the Tropicana allowed him to direct the skimming of cash from the casino without the specific knowledge of the owners. The Tropicana Hotel and Casino did not have a loan from any Teamsters' affiliated pension fund.

            Allen R. Glick, the owner of the Argent Corporation, testified that he obtained the loans from the Central States Pension Fund to buy the Argent casinos through Frank Balistrieri, boss of the Milwaukee LCN family, and that he gave Balistrieri and Balistrieri's two sons an option to purchase a 50 percent share of the casinos (for $25,000) in exchange for Balistrieri's influence with the Pension Fund's trustee. Glick was personally confronted by the Kansas City LCN Boss Nick Civella and told that the Kansas City LCN family shared in the Balistrieri's sons option and that he definitely had "partners" in the casinos. The skimming was controlled by the Chicago representative in Las Vegas. Glick learned that even when he terminated that employee from the Argent Corporation's payroll he continued his control over the skimming of money from the casinos.

            Question. Describe the relationship between the Outfit and other non-LCN organized crime groups in the Kansas City area. What types of businesses has the Outfit gotten involved in because of its relationship with those other groups?

            Answer. The LCN, Kansas City, has not demonstrated any significant relationship between itself and any other non-LCN organized crime groups.

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            Question. It was reported that the primary criminal enterprise of the Kansas LCN family is gambling and that it has increased during the past ten years. What types of gambling operations are run in Kansas City by the LCN?

            Street crimes, like gambling, are most often prosecuted on the state and local levels. Do state and local law enforcement agencies have sufficient resources to effectively handle this problem or should these cases be afforded a higher priority by Federal law enforcement authorities?

            Answer. The LCN, Kansas City, has continued to rely heavily upon sports bookmaking as one of its basic means of revenue.

            For the most part, state and local law enforcement have been powerless against gambling since local judicial sanctions have been without significant impact. In view of this fact, gambling has gone unabated and has intensified in scope and volume of business. Local law enforcement has actively solicited the assistance of the FBI to produce a coordinated effort against gambling. Specifically, gambling in and of itself produces tremendous revenues, but it also provides a seedbed for hostility. Since September 1987, there has been one murder and one attempted murder by bombing as a result of "free-lance" gambling activities which attempted to operate without LCN sanction. The LCN's response was swift and posed as a dynamic lesson to those who were not willing to "play" the LCN way. The statutes of the State of Missouri do not provide any means for electronic surveillance, which is frequently the only investigative tool to effectively identify and obtain evidence in such illegal activities where witnesses are reluctant to cooperate for fear of personal safety.

            Question. Another primary criminal enterprise of the Kansas City family which the FBI reported increased during the past decade is its involvement in the entertainment industry. What is the nature of the Outfit's involvement in the entertainment industry? What kinds of criminal activities are being carried out?

            Answer. The Kansas City LCN has recently attempted to gain inroads into the theatrical booking agencies of the entertainment industry. Since this is an on-going investigation, further comment could seriously impair or disrupt the investigative objectives of this case.

            Question. You described an attempted bombing of a Teamsters' official's car which occurred within the past year as an example of the LCN's continued efforts to regain control of the Teamsters Kansas City local. Do you think the Teamsters' should be placed under trusteeship to purge organized crime's control of the union and return it to its members?

            Answer. It is the opinion of the Kansas City FBI that organized crime's control of the leadership of the International Brotherhood of Teamsters (IBT) should definitely be eradicated. It is believed that this can be accomplished through Kansas City's participation in the FBI's civil RICO investigation which is attempting to return control of the union to its legitimate members. Through utilization of this Civil Rico action, one of the primary remedies sought would be directed toward permanent injunctive relief barring those individuals identified as having LCN membership or association from any participation in union operation and activities.

            Question. Does the evidence of the Outfit's increased involvement in drug trafficking link the LCN with any emerging criminal groups? If so, what are the groups involved and describe the nature of their relationship with the LCN? Is this alliance between the LCN and emerging criminal groups in Kansas City limited to drug trafficking or does it extend to other activities? If so, what other activities are involved?

            Answer. In Kansas City we have not identified any links between the LCN and any drug-trafficking organizations or any other emerging criminal groups. Our intelligence indicates that drug trafficking is not a criminal activity that is officially sanctioned by the LCN. This is not to say however that members of the LCN are not engaged in individual acts of drug trafficking. The FBI is extremely interested in investigating any such activities and bringing them to a successful prosecution. We will also monitor our intelligence base closely in order to identify any links that may develop between the LCN and any drug-trafficking organization or emerging criminal group. We will also closely monitor and investigate any drug-trafficking activity by the LCN.