From: Dries 'Doris' Bessels Date: Wed May 29, 2002 2:04pm Subject: Microwave mind control For more info on how to build a tin foil beanie to keep the rays out of your brain check out: http://zapatopi.net/afdb.html , the website about aluminum foil deflector beanies! Enjoy! Dries Dries 'Doris' Bessels Ride to work, work to ride Amsterdam, The Netherlands FLSTC '00 (Yellow) E-mail : Dries@D... http://www.driesbessels.com Cellphone: +31-6-4402-8346 http://www.flimm.com [Non-text portions of this message have been removed] 5524 From: Date: Wed May 29, 2002 5:33pm Subject: New file uploaded to TSCM-L Hello, This email message is a notification to let you know that a file has been uploaded to the Files area of the TSCM-L group. File : /chinesewaterskiing.jpg Uploaded by : graniteislandgroup Description : Chinese Water Skiing You can access this file at the URL http://groups.yahoo.com/group/TSCM-L/files/chinesewaterskiing.jpg To learn more about file sharing for your group, please visit http://help.yahoo.com/help/us/groups/files Regards, graniteislandgroup 5525 From: Steve Uhrig Date: Wed May 29, 2002 6:50pm Subject: Microwave TSCM LPA antennas for sale Hi all, I have some microwave LPA (log periodic antennas) for sale. These started with a commercial antenna, and I had special mounts machined to allow them to be used with a tabletop tripod. I have been using one in my own TSCM efforts on a Tek spectrum analyzer, and they are noticeably directional when you find a cordless phone base on 900 or 2.4. They also make a very noticeably stronger signal on 2.4 wireless signals when used on the receive end (not legal to use on the transmitter in the U.S.). Frequency coverage at 3dB down is 825 - 2600 megacycles, and the antennas have 6dBd of gain across the full frequency range. 6dB gain is the equivalent of quadrupling the transmitter power, and will double the range over the use of a unity gain antenna. If you are sweeping, this antenna will let you sniff a transmitter at double the distance of a whip, in addition to providing a bearing to the signal being inspected. Merely rotate the antenna on top of the tripod for strongest signal on whatever you are using for a receiver, and the antenna will be pointing in the direction of the transmitter or strongest reflection. The antennas are triangular shaped, about 6 inches to a side. They have 12 inches of captive feedline terminated in a male BNC. The antennas have been attached to a mount of my own design to permit them to be attached to a small tabletop tripod and pointed in any necessary direction. There is a standard female 1/4-20 threaded port, and an elevated portion to raise the antenna above the desktop so you can mount it on the desktop tripod. Of course, you can use a standard camera tripod just as easily. However, with a small tabletop tripod, this antenna and tripod easily can fit in a small Pelican case of about cigar box size. The antenna will work equally as well for transmit as receive. If you are doing either a 900 or 2.4 gig wireless video system, using one of these antennas at one end will double your range. Using one at each end will quadruple your range over unity antennas. Although I intended these specifically for TSCM, they will benefit nearly any wireless video application, or even data applications aka 802.11 type. These antennas are *not* preamped. A preamp introduces noise, significant potential for intermod, and precludes the antenna's use for transmit. I do not believe in preamps. Getting a little bit closer to the transmitter is more effective than preamping the signal and causing a lot of associated problems salesmen don't tell you about when pushing preamped antennas. Plus, you don't need to worry about batteries, power supply, or larger size. Only two are available. Price is $175 for the antenna. If you need a small tabletop tripod, inquire. I have several available which will work. Actually, I use a Minox camera tripod which is extremely high quality and packs up to about the size of a fat pencil and can be used with film or most camcorders as well. A tripod is *not* included. I imagine most in the business already would have a tripod of some sort. Holler if interested. Can ship anywhere in the world and we take credit cards for payment. Steve ******************************************************************* Steve Uhrig, SWS Security, Maryland (USA) Mfrs of electronic surveillance equip mailto:Steve@s... website http://www.swssec.com tel +1+410-879-4035, fax +1+410-836-1190 "In God we trust, all others we monitor" ******************************************************************* 5526 From: Date: Wed May 29, 2002 8:31pm Subject: A few tips on how the experts spot a terrorist A few tips on how the experts spot a terrorist Israeli security specialists say US system looks for the weapons while Israeli system looks for the terrorist. By Ben Lynfield | Special to The Christian Science Monitor JERUSALEM - For years, a T-shirt has been on sale in downtown Jerusalem that reads: "Don't worry America, Israel is behind you." It is a slogan whose time has come – at least for the Israeli government, which is translating American post-Sept. 11 security concerns into closer ties with the US, and for Israeli businessmen, who see an opportunity to market their army and secret-service experience. Israel's Shin Bet security service last week instructed a delegation from the New York Police Department on how to deal with suicide bombings. On Monday, eight senior law enforcement officials from Georgia arrived for a week of lectures, seminars, and scrutiny of an Israeli paramilitary border police unit. The bomb unit of the Los Angeles Police Department was here earlier this month. And Israeli police superintendent Shlomo Aharonishky met two weeks ago in Washington with Chief of Police Charles Ramsey and FBI agents to discuss how to handle suicide bombers. "There is no question the ties have gotten closer," says Gil Kleiman, an Israeli police spokes-man. "No other law enforcement agency has the experience we have in dealing with terrorism within the constraints of a Western system of law and court systems." By year's end, Israel will host a convention of police commissioners from across the US, Mr. Kleiman says. While Israel's security forces are widely reputed to be among the best in the world, not everyone in Israel agrees that the country offers a model of how to reconcile security measures with democracy. "Palestinian civilians need to prepare for their graves when they approach Israeli checkpoints," says Hashem Mahameed, a member of the Knesset for the left-wing Hadash Party. "I don't think the practices in the West Bank and Gaza are something Americans could take pride in." But Israeli security specialists say that the occupation of the West Bank and Gaza Strip, which began in 1967, as well as securing Israeli facilities in the Middle East, Europe, and Africa, have accorded decades of experience which can benefit the US. For example, they say, Israel has been grappling with how to stop suicide bombers since 1987, when the Iranian-inspired Hizbullah group began bombing Israeli targets in Lebanon. "We met with people from the World Trade Center who told us that they thought of everything except for an airplane crash," says Shlomo Dror, a security specialist who works with American clients. "I told them that we began thinking in 1983 about the possibility a plane could be hijacked and crashed into the Shalom Tower [in Tel Aviv]." Mr. Dror was spokesman for the Israeli defense ministry and before that the spokesman for an Israeli government agency responsible for Palestinians in the West Bank and Gaza Strip. He joined the Shin Bet 23 years ago, after his army service, and has been in charge of security for embassies and El Al airline on three continents. He was watching television in his office in the Defense Ministry in Tel Aviv on Sept. 11. "When I saw the second plane crashing I knew it was a terrorist attack. It made me realize that the United States is really in need of advice from Israeli professional people." "Israel has been some kind of laboratory to check how the suicide bombers work, and all the conclusions from our experience can be brought to bear in the United States," he says. Together with American partners with experience in the marines or CIA, Dror and two Israeli colleagues in January formed New World Security, a New York-based company to offer advice ranging from securing buildings to training travelers on how to protect themselves from kidnapping or abuse. No figures are available for how many Israelis have gone into security consulting for American clients since Sept. 11, but Zeev Schiff, defense correspondent for the daily newspaper Haaretz, says they are carving out niches in computer security and airport security. "These people have a lot of experience and know the tricks of the other side," he says. Dror says his company's clients include Wall Street firms and a municipality, but declines to be more specific. Israeli specialists have a low regard for American security searches. They say they tend to cause unnecessary discomfort for travelers, while being prone to missing potential assailants. "The United States does not have a security system, it has a system for bothering people," Dror says. "The difference between the Israeli and American systems is that we are looking for the terrorist, while the Americans look for the weapons," he adds. At the heart of the Israeli system is the questioning of the passenger, which Dror says is done not only to get answers, but also to gauge the passenger's behavior. "The reason we open the suitcase is to have another few minutes with the passenger, to ask some more questions," he says. The questioning also serves as a way to quickly decide who to send to the plane without probing more thoroughly, he adds. Dror advocates Israeli-style security clearances for all workers at the companies for whom he consults. They entail checking a person's history by interviewing acquaintances and family "We check the man himself, not documents." But Dror adds that Israeli methods, even if fully adopted, will not stop all attacks. "There is no 100 percent in security. If you want 100 percent security on flights, every passenger has to take all his clothes off, have his suitcase checked, and be handcuffed and tied to his seat. For sure this can never be. The idea is to enable people to continue their lives while making an attack less possible." from the May 29, 2002 edition - http://www.csmonitor.com/2002/0529/p01s03-wome.html 5527 From: D Patrick Date: Wed May 29, 2002 9:02pm Subject: Newbie Intro Hi all. Dean Patrick here. I have BS in biology and computer science. After working three years post undergrad I enrolled in law school. Following graduation I will remain in the Detroit area and most likely startup a patent firm. My interest in TSCM began way before I knew anything about the topic. A fourteen year old boy on the phone with his girlfriend. Little brother comes into his room to annoy him as ususal. No! Not this time. Little brother informed the boy that while he was in father's office he could hear his brothers' entire conversation. Father had spliced the line by the laundry chute and tucked the wires out of casual view. Evaluation of the line led the boy to behind his father's desk where a radio shack hookup of some type was activating the tape recorder everytime the phone was in use. Ouch. A crappy way to get interested, but here I am. D. Patrick ps when i go to the group page i can only post, i cannot read other messages. 5528 From: claim5 Date: Wed May 29, 2002 10:33pm Subject: Ok, I admit it, I'm a lurker.... I've been lurking in this group for many moons now, recently got state license for P/I work with a Russian and Israeli, and we're specializing in this area. (I did talk the russian out of bringing in a russian NLJD and certain other russian gadgets) Just for background, I graduated Ft. Devens in 79' did advanced signal search and development thru Goodfellow AFB, worked for ASA (N) 7 years and (in a second childhood) have obtained the entire shooting match from REI along with assorted items from ICOM, Lear and other stuff. It's an interesting living but we're making the best of it. I'm so ashamed, haven't had anything to contribute to date. Thanks, group for all the (lurked) advice, many have asked the same questions I've pondered and received stellar answers from so many, especially from the moderator without whom this group would probably not exist. Hope I haven't bored you all too much, just had to get it off my chest. Please feel free to contact me to admonish, etc.. Thanks again, Tim Van Driska Brentwood International Chicago claim5@y... (web page under development) 5529 From: Marty Kaiser Date: Thu May 30, 2002 10:45am Subject: here is the latest
FBI Vendetta Against
Martin L. Kaiser III



Initially this page consisted of a compilation of news magazine and newspaper articles.   I was under the impression that since  I  did not write these articles they would withstand the test of time.  I was wrong. Not too long ago I received a direct threat from a well known U.S. intelligence agency ordering me to remove their three initials from these articles.   Pointing out that asking me to remove their initials was essentially changing history didn't phase them...  somewhere in my argument I mentioned Adolph Hitler.

In the past I have purposely avoided making any personal observations and/or comments about these events and the stories surrounding them.  The time is now right to make those observations and comments.

The enormous damage caused to my family and me cannot be forgiven.   These events are an insult to all my friends and associates...  an insult to the United States of America...  and an insult to the world community.  Read on...

Marty

First some comments on format.  All my personal observations will be in BLUE while public records and direct quotations will be in BLACK.  Names will be mentioned, where harmless, but where mentioning them may cause problems I shall simply put either initials or XX.

Deciding where to start was the most difficult part of this story.  I decided to start at the beginning.

Born in 1935, my family and I lived in the the hard coal region of northeastern Pennsylvania.  We were surrounded by families from Czechoslovakia, Poland, Lithuania, Hungary and many other coal miner producing countries.  Having the Kaiser name didn't help me much while these countries were being torn to shreds before and during World War II.  The hatred expressed towards me by neighborhood children was enormous.  As a child I had no idea that their animosity was anything other than the norm.   My childhood obviously played a MAJOR role in what I became...  there also were some shameful events that hardened me in ways few will understand...  so I'll move on.

During my pre-teen and early teen years I was fascinated by U control model airplanes and had a large collection of them.  As radio controlled airplanes began to appear I found electronics more interesting.  Shortly after the end of WW2 I received my amateur radio license W3VCG and still hold those call letters today.

I can't say my school years were a shining beacon but at least I got through them.  In prep school XX became my co-dependent good buddy.  He was born without eyes but in spite of this I was able to get him involved in ham radio too.  I took the glass out of the meters of an old rig and XX was able to tune it by the pressure the pointer exerted.  He taught me how the loss of one sense is compensated for by the others.  We had lots of fun together with this incident being the funniest.  I had my Mom's hand-me-down 51 Caddy and would drive it to a long riverside park on the other side of the river from Wilkes-Barre.  Then I would allow XX to take the wheel and speed up and down the park usually with his left arm out of the window banging wildly on the side of the car while grinning from ear to ear.

In 1957, I was hired as a Research Technician by RCA Laboratories in Princeton,  New Jersey.  A group of 12 established scientists were my "bosses."  Dr. Morton,  co-inventor of television as we know it today...  Dr. Rudy,  inventor of many image conversion devices... one of our image intensifiers took the first pictures of the bottom of the polar ice cap and one took the picture of a single photon (one particle of light)... Dr. Forge,  co-inventor of the vidicon and other TV conversion tubes...  Dr. Sommers,  inventor of the Iconoscope,  the image conversion tube that made real time video possible...  Dr. Kleitman,  inventor of many high efficiency phosphors...  Dr. Ching,  inventor of many helical microwave amplifier tubes...  Dr. Nergard,  one of the people instrumental in the development of the Klystron oscillator that made radar possible...  Dr. Klensch (Dick),  (most of the work I did was for him)  did basic engineering on a variety of projects...  and many other truly brilliant minds.  My job was to be their "hands."  I designed and built much of the circuitry that permitted all of these men to continue with serious development.  In our group I remember four other technicians,  each with their own expertise.  We worked well together as a team and although I was always sticking my nose (comments) into many,  many projects other than mine it gave me the opportunity to be part of some incredibly interesting projects...  the end results of which became technology and products we take for granted today.

Obviously,  I turned my amateur radio interests towards amateur television.  I wrote extensively for technical journals, RCA in-house technical publications and radio amateur magazines and had my own ham TV station on the air.  Another amateur television enthusiast,  William Haldane (Bill),  and I became close friends.  He was part of RCA Service Company,  a group that put our ideas into the field for further trials.  At that time, Dr. Klensch and others, including me, were developing several schemes involving VVLF technology...  below 10HZ...  we used to call them "cycles" back then.

Since we were all pretty much playing it "by ear" we had more fun than anyone should have in one lifetime.  Here is a good example.  Several hundred yards behind the main building was a small pond.  A bridge crossed the pond and in the middle of the bridge was a small house for test equipment.  A hydrophone was lowered from the house into the pond.  Two hundred yards away a 10 foot long by four inch diameter rod was driven flush with the ground.  Next to it lay a small loudspeaker connected to a microphone in the pond house.   My job was to drop a 10 pound cannon ball onto the stake when Klensch yelled "go" and he,  in turn,  would measure the shock wave.  So there I was in the middle of a field repeatedly dropping a cannon ball on the ground.   Someone inside the main building noticed me and called authorities. Soon an ambulance was fast approaching across the field.  My explanation caused all concerned side splitting laughter.  After the ambulance left Klensch and I continued with the cannon ball dropping experiment.

One day Bill approached me and asked if I'd like to go to Trinidad. Neither he nor I knew where that was but it sounded interesting. When I got home I grabbed the Encyclopedia and found out.  After discussing it with with my wife I returned with a firm "YES."  A month or two later Bill again approached me and advised that Trinidad would not accept our presence and asked if I would like to go to Antiqua.  I didn't know where that was either but again said yes.  A month or two later he told me that Antigua wouldn't accept our presence.  He mentioned RCA had decided to set up the project on Barbados where there was a small U.S. Navy base and they simply would not tell the Barbadian government about the project.  He asked if I would go there and I responded in the affirmative even thought I had no idea what the "Project" was all about.  Finally I was given a briefing about a new high frequency (1 to 30 MHz)  "Over the Horizon Radar"  an RCA technician/ham had conceived.  My job was to see if it would work.  I later learned that the two islands had turned us down because it was during the Cuban missile crisis and they did not want to antagonize their friend, Cuba.

I was transferred to RCA Service Company and sent to Burlington,  Massachusetts to check out the hardware. When I got to Burlington,  to my astonishment,  NOTHING relating to the project was there!  Within three months I appropriated or stole (allocated but not yet delivered...  midnight raids, you know) and assembled all of the equipment needed in two 40 foot trailers. Inside of the Trailer Finally the two trailers were ready to put on ships headed towards Barbados and Jamaica.  My wife and I closed up the house and along with our 3 and 5 year old children flew, on probably one of the first 707's to take to the air, to Barbados.

As soon as we got settled I went to the Navy base to announce my presence.  The Captain of the base responded with total surprise.  No one had informed him of our intention to set up on "his" base (north coast)!  It turned out that the four RCA advance men never left Bridgetown (south coast), the capital city of Barbados,  but instead spent their time enjoying the wonderful Barbadian rum and the strikingly beautiful Barbadian women!  I was truly on my own.  After some serious negotiating,  the Captain gave me a few hundred square feet of space on which to set up my project.  The trailer finally arrived and, you guessed it, there was no tractor on the island with which to pull it.  Several trips to the junk yard solved that problem.  The tractor also had no brake release compressor so I constructed a small gasoline powered compressor to do just that.  The trailer was then towed,  without brakes,  over mountainous terrain!  My caravan consisted of myself in a 1958 VW waving a very large red flag out of the window followed by the tractor/trailer.  As I passed through villages many Barbadians ran out to the street clapping their hands and jumping wildly in joy thinking the island had been or was going to be taken over by Communist!

After the trailer was in place I began installing four HUGE log periodic antennas.  Two were 150 foot long 1 to 30 MHz vertical log periodic curtains and two were huge,  and very heavy,  3 to 30 MHz horizontal log periodic beams mounted on the 100 foot towers that supported the curtain.  They were to be supported by 1/2 inch nylon rope.  Nearly every night Barbadian fishermen would "liberate" some of my beautiful rope.  To solve that problem I made several meaningless medallions that my workmen had to hang around their necks while working at the antenna site otherwise they would become impotent.  When word got out about that, the thefts stopped IMMEDIATELY!  To see the antennas and trailers go to my NOSTALGIA  page.

My family and I settled into the wonderful Barbadian life but the peace didn't last long.  One day while working on the antennas I heard the drone of a four engine airplane.  Looking up I saw a Russian bomber at about 1,000 feet with its bomb bay doors open and a large camera sticking out.  Others obviously saw the plane too because it wasn't long before the American Ambassador was banging on my door.  Since my wife is the politician of the two of us I let her handle the incident.  Sure enough,  after a few of her special cherry-cheesecake pies we were back on track.  Those pies seemed to be the magical answer to the many other situations that would arrive.  In record breaking time I had the equipment up and running.  All of the equipment worked fine and we were ready for the next step. That phase was up to someone else.

A couple of years ago my copy of Microwave magazine arrived and lo and behold my project is STILL in operation.  Again see the NOSTALGIA  page for that article.

On my return to the U.S. I approached RCA Laboratories to change my title from Senior Technician to Associate Engineer in view of the fact that I had, under very difficult conditions and circumstances, acted as international diplomat and single handedly managed, designed, built, refined and operated a major project.  They essentially said that since I did not have an engineering degree I was a "certifiable dummy" and my title could not be changed.  That was the end of my career with RCA.

For a brief period I worked at Telerad Manufacturing, a division of the Lionel Corporation (toy trains), where I developed and oversaw the manufacturing of, among other products, the command receiver for the Atlas missile.

Petrovend Corporation asked me to develop possibly the worlds first dollar bill changer. They wanted to put the changer into all of their gas pumps. The unit worked great but soon credit cards made the scene. Petrovend dropped the project in favor of credit cards.

I returned to college to receive my degree in Business Administration.   Most likely with RCA's comment in mind along with being more mature, I totally surprised my wife and myself by spending all remaining semesters on the Deans List.  While at college I took up flying and on graduation looked for a job in the field of avionics. Narco Aviation Products hired me to work at their marine facility in Cockeysville, Maryland. The company, Enac Triton, was essentially a one man show. I eventually thought, if he can do it, so can I! That job lasted about three months.

One day, in 1964, I announced to my wife that I was starting my own company. Naturally, she went into a panic. Not knowing exactly how to start a company, I picked up the telephone book and called the maintenance department of the first industry listed... Armco Steel. They agreed to give me a try and handed me an inoperative Curtis Immerscope. An Immerscope is a device that ultrasonically looks through a steel ingot to find flaws or air bubbles. I took it home in my 57 Chevy, cleaned it up and replaced all high voltage wiring. The maintenance manager was ecstatic and told me to "sit" while he called his equivalent in other companies to tell them he had finally found the man they had been looking for. Within weeks I had over fifty industrial customers within easy driving distance. Initially, I was uncertain about how much to charge my customers. One day at 2:00 AM I received an emergency call from Armco. Their vacuum degassing furnace had been damaged by some molten steel in the wrong place. This furnace was thirty feet in diameter and forty feet deep. Its load cell system (scale) was accurate to within less than one pound at 100,000 pounds! I climbed down inside the furnace and found the burned wiring. A few quick repairs had it up and running in no time. I billed them $200.00. A few days later the maintenance manager called and asked me to stop by... I did. He told me that Armco would have lost roughly $2,000,000.00 (1965 $s) if the steel awaiting the degassing furnace had hardened were it not for my timely and prompt repairs. He handed the invoice back to me and told me to add another zero! I WAS ON MY WAY!!! Obviously, I was wrong in charging only an hourly rate for my time when I should be charging for the value of the service from the customers prospective.

My customers included steel mills, copper refineries, bottling companies, plastic companies, ice cream cone manufacturers, plastic and paper cup manufacturers, canning companies, veneer manufacturers, breweries and nearly 100 more. My 57 Chevy was a blue streak Earl Scheib Special (that was a "paint your whole car including the tires for $19.95" company... just kidding about the tires)! When called by my first brewery I learned very quickly that the "new" beer comes down the pipes very early in the morning and it is was mandatory for all employees, including me, to drink as much beer as possible while the machinery cooled down. I was on a first name basis with many famous cockroaches. In a brewery it impossible to get rid of those little critters even with soapy superheated steam. It was after one of those brewery trips that I got lost in downtown Baltimore (I can't imagine why!). I passed a gate that said "U S Army Intelligence, Fort Holabird." Hey, perhaps they too had something to fix. I drove around the property until I found a door that said "Supplies." A simple knock on that door put me into the "intelligence business." After repairing shelf upon shelf of equipment and noticing the allocation tag on each showing the value (price), I approached the powers to be and asked if they would consider my manufacturing for them exactly what they wanted... and at a greatly reduced price. My offer was immediately accepted and I was now in the intelligence equipment manufacturing business starting with the UAA-1 and 1059.

Miniature transmitters (eavesdropping/bugging devices) intrigued me and I manufactured a wide variety of them. It didn't take long after I got into the bug building business for me to see the potential danger of those little devices so I decided I'd better get busy and start manufacturing bug detectors or countermeasure equipment to find them. Marketing my products was a snap since I could walk into virtually every intelligence agency in the Baltimore/Washington/Virginia area. I also began teaching courses on bugging and bug detection at Fort Holabird and that gave me access to other good marketplaces.

By the mid-70's I had close to 200 customers (I know this because I put a list of them together for my trial). They included corporations large and small and foreign, federal, state and local governments. I did many high level sweeps that got lots of good press.

Once firmly established in the intelligence equipment manufacturing business several magazine, news magazine and newspaper articles appeared about my company. It was a VERY satisfying time but it invited many people who were mildly crazy and some who were totally insane. For those I contacted their spouses or relatives suggesting they be hospitalized... and many were. One character turned out to be a professional litigant who was seeking affidavits to incriminate the Baltimore City Police Department. He left by air route. I later learned that the City of Baltimore settled out of court with him for $33,000.00.

One sad fellow was convinced the Martians were following him. I built a Martian Ray Detector for him hoping that might ease his paranoia. He returned to my shop several times... each in a more depressed state. Finally, in desperation, he used a pair of ordinary gas pliers to pull out one of his molars thinking that was the homing device the Martians were using. He wrapped it in aluminum foil so the Martians couldn't track it and brought it to my shop. Out of curiosity I had my dentist X-ray the tooth and that revealed only a pin (antenna?). His wife joined him on his next visit and she and I decided on the obvious next step... the hospital.

In the early 70's a disheveled man wearing mismatched jacket and pant and tennis shoes showed up at my door. Thinking he was just another unbalanced person I told him I had some sensitive material on my desk and asked if he would return in an hour. I used that time trying to figure out what to do with him. It was Edwin Duncan (now deceased) owner and President/Chairman of Northwestern Bank head quartered in North Wilkesboro, North Carolina. He told me he was having security problems at his bank and was afraid the IRS was bugging him. I agreed to train his security office, Jerry Starr (also now deceased), who in turn purchased a quantity of countermeasure equipment. Jerry eventually called me from the bank's home base in North Wilkesboro and asked if I would come to the bank and go through a sweep with him. He instructed me to go to the Baltimore/Washington International (BWI) airport and a company plane would pick me up and take me to North Carolina. I was impressed. Sure enough a twin engine turboprop showed up and ferried me to North Carolina.

On landing at their home airport in North Wilkesboro I noticed the pilot push a button on the instrument panel and the doors of the very LARGE hanger ahead slid open. Inside the hanger were at least six, and probably more, beautiful white airplanes each with the Northwestern Bank logo on the tail. They ranged in size from a four engine Fairchild turboprop down to a classic Twin Beech. I was very, very impressed but wondered... what is a small North Carolina country bank doing with all these airplanes? Jerry later revealed that one of them had been set aside for North Carolina Senator Sam Irvin of Watergate fame. We performed an extensive sweep of all buildings and did indeed locate a device in the locked office of the Comptroller. I left finding the actual device to Jerry and returned to Baltimore in the same airplane.

As years went by I learned a great deal about Duncan. He turned out to be a super patriot and used the banks enormous resources to fund various special operations conducted in foreign country's (most likely that is why he kept the IRS at bay). For example, in 1972, while visiting a friend with the Dade County (Miami) Bomb Squad I passed through the airport concourse and noticed a banner saying "Fly to the Cayman Islands... $62.00 round trip." Noting that I could get there and back in one day, I grabbed a flight. On landing in Cayman I knew that this is where I wanted to be. On my return trip I began scuba diving with XX. In time, I switched to a new company run by one of his dive masters. Several years later I again switched to a new dive operation that had a dive boat more to my liking. The dive master and I became very close friends. The 'Cork' One day we got into a conversation about my work and he revealed that when he was a youngster he and several of his friends were snorkeling in a small lake located on the inland side of the main road across from where Laguna del Mar Condominiums now stands and they stumbled upon a huge underwater cache of weapons. He, and each of his friends, put a machine gun on each shoulder and marched into town. Word of the incident swiftly reached Jim Bodden, the father of the Cayman Islands, and he knew exactly who to contact to solve the problem, Duncan. Duncan grabbed plans for one of his existing banks, filled in the lake with marle (crushed limestone) and stuck one of his banks on it. SOME CORK! The bank was put up with such speed there was no time to change the design and it wound up with the drive-in-window on the wrong side (they drive on the left in Cayman).

Feeling particularly spry one day I called FBI Director J. Edgar Hoover and told him I manufactured products that might be of interest to him. He promptly invited me to visit him at headquarters. Walking into his office I immediately noticed that his desk was on a four inch pedestal and the legs on the sofa had been sawed off. I sat on the arm of the sofa and looked at him eye to eye. I think he liked that. He passed me on to their intelligence support office where I met XX. XX took me to the U.S. Recording Company and explained how to do business with the FBI through that company. Business went along fine until the Omnibus Crime Bill (Title III) was passed in 1968. Upon reading it, I immediately saw that I could not deal with apparent commercial concerns such as U.S. Recording. The FBI gave me a rubber stamp that essentially said "This order complies with the provisions of the Omnibus Crime Bill." Seeing real problems with that arrangement, any equipment ordered through U.S. Recording was delivered DIRECTLY to the FBI with the invoice going to U.S. Recording. During one of my many visits to the FBI technical section I noticed one of my invoices sitting on XX's desk and it was marked up a substantial percentage. I thought that was strange but paid no further attention to it.

In 1972 a company called Audio Intelligence Deices (AID) made its appearance. Their catalog claimed they could make "off the shelf" delivery... an apparent violation of Title III (Omnibus Crime Bill... it is illegal to manufacture, assemble, possess or offer for sale any device primarily designed for surreptitious interception of oral communications UNLESS you are under contract with a federal, state or local government). I had been warned on numerous occasions that I could not manufacture any device unless I had the contract in hand first so immediately brought this apparent conflict to the attention of the U.S. Attorney General.

Built into the Omnibus Crime Bill (Title III) was an automatic five year review period. In early 1975 I was contacted by investigators XX and XX of the U.S. House Select Committee on Intelligence. They asked that I prepare a statement detailing my observations of the effectiveness of the Omnibus Crime Bill. During our conversation I mentioned how I was dealing with the FBI through U.S. Recording, the rubber stamp and the incident about the marked up invoice. I prepared a statement primarily asking why AID was permitted to inventory and market "off the shelf" equipment while I could not. After my statement was prepared I contacted the CIA and FBI to see if there were any problems with my appearing before the Committee. The CIA asked for a days delay (a huge snowstorm saw to that) and then gave me the O.K. The statement was turned over to the investigators and a day was set for my appearance before the Committee.

Upon taking a seat to read my prepared statement, to my astonishment, it had been completely rewritten! The new statement attacked the FBI and made no mention whatsoever of AID. I immediately told XX that I was NOT going to read that statement. He instructed me to go to an ante room and repair it where ever I felt it was needed. Not anticipating this level of deception I had not brought a copy of my original statement. If I had, I most certainly would have read that instead. Given little time to repair a non-repairable statement, I did the best I could. When I read the revised statement all of the Congressmen looked at each other, me and the paper in front of them, wondering what was happening. To this day I do not know which of the three statements was read into the Congressional Record and... quite frankly, I don't give a damn.

On returning to my office I telephoned FBI Director Kelly and requested a meeting with him. Two other high level FBI officials were present. I later read the internal FBI communications about that meeting. One of the men wanted to seriously deal with the U.S. Recording problem while the other wanted to execute me on the spot!

Shortly afterwards two FBI agents showed up at my plant and tried to get me to withdraw my testimony. Every half hour one agent would leave the room to go to the "bathroom" i.e. change the tape in his recorder. He didn't even have the common sense to flush the toilet, that was on the other side of the wall from my office, to cover his activities. They tried to force me to sign their statement. I initially refused but later agreed to sign it with the statement "I have partially prepared the above statement." That got them out the door.

Shortly after that incident a "private detective" called and asked if I would show him how to three wire a telephone. We met in a conference room at a local motel in Towson. He handed me a screwdriver and I handed it right back to him and told him if he wanted to learn the process HE would have to do the work. About that time I noticed the toes of a pair of wing-tipped shoes at the bottom of the curtain that separated the room. Finally that person entered the room and, along with the other, tried to force me to make the modifications. I declined and departed. What a bunch of nonsense.

In a few weeks just about every common criminal in the Baltimore area began showing up at my plant. None got in the door. The FBI must have covertly informed these scum bags they were being wiretapped by the FBI and Kaiser could fix their problems. This type of nonsense went on for years.

In the midst of all the various intelligence agencies efforts to do me in, I received a warning from a credible agency friend that the Government was going to charge me with an unspecified crime.  That warning resulted in this letter to Attorney General Levi. 

MARTIN L. KAISER, INC.
Countersurveillance . Bomb Detection . Surveillance Electronics

March 23, 1976


Hon. Edward Levi
Attorney General of the United States
Department of Justice
Washington, D. C.

Dear Mr. Attorney General:

It is with great hesitation that I write to you, however, I believe that I am in serious trouble and that you are the only person who will be able to assist me.

For over ten years, Martin L. Kaiser, Inc. has been a major supplier of electronic countermeasure, surveillance and clandestine bomb detection equipment to law enforcement agencies from the federal level downward. Among my customers, and these but a few, were the CIA, Department of Defense, FBI, State Department, Army, Navy and Air Force Intelligence, Coast Guard, etc. In June, 1975, the National Wiretap Commission, operating under a Congressional mandate, received my business records under threat of subpoena. These records were subsequently brought to the attention of the House Select Committee on Intelligence by the National Wiretap Commission. As a result, it became publicly known that the FBI purchased its electronic countermeasure and surveillance equipment through a front known as the U. S. Recording Company. This disclosure has been of extreme embarrassment to the FBI, but I can assure you it is not an embarrassment of my making. I am sure you are well aware of the media's treatment of subsequent events.

Since this fact became known, my business has fallen to virtually zero. No federal agency or, for that matter, local agency will even discuss purchases of equipment with me. I can only assume, but cannot conclusively prove, that the FBI has "passed the word."It is not however, this event and the subsequent economic loss which are of primary concern, for I do engage in other business activities which will carry me through this trying time. Recently, a person of known reliability has pointedly warned me that I am to be made a test case under the criminal wiretap provisions of the 1968 Omnibus Crime Act. Being thoroughly familiar with the complicated and often conflicting provisions of that Act, I am fully aware of the danger existing to anyone who has committed themselves to the manufacture of electronic surveillance equipment.

I have never knowingly violated and have always strictly insisted on compliance with the provisions of the Omnibus Bill. I am firmly convinced that I am not presently violating the Bill, either. However, because of its complexity, my vulnerability, the FBI's pique, the new media's pressure, and the warning relayed to me, quite frankly, I am indeed worried. Although I know full well, based on previous attempts to receive clarification of the Bill, it is not the normal business of the Justice Department to give a "clean bill of health" to a citizen, I indeed wonder if there would be some way for you to advise me whether, under the wildest stretch of imagination, I am contravening any provision of the Omnibus Bill. Although I am reconciled to being driven out of this business, I desperately hope that I will not have to go through a trial in the process.

As mentioned previously, I also manufacture clandestine bomb detection equipment, again, having done this for federal and local agencies. Through a rather lengthy chain of events, the FBI now heads the National Bomb Program. Attempts to contact the FBI immediately after the LaGuardia explosion (which occurred well after my Congressional testimony) resulted in the most callous response I have ever received to one of my offers of assistance. The implications are hideous and further support my desire to resolve the issues as promptly as possible.

As a citizen who has consistently demonstrated his support of the law enforcement community and, therefore, his country, I need your help. Any assistance will be sincerely appreciated.

Respectfully,


Martin L. Kaiser
President

MLK:nre

Basically, Levi responded by saying... You do what you think is correct... and if you're wrong, we'll arrest you. Not very comforting.

Within months of my testimony before the House Select Committee on Intelligence my business of manufacturing eavesdropping and countermeasure equipment fell to ZERO! Fortunately, I had the ability to shift into the manufacture of bomb detection and disposal equipment, a marketplace the intelligence community couldn't and wouldn't dare try to control. Heh, heh... was I wrong... again!


Even though it is slightly out of place time wise, I'm putting the Lou Panos Evening Sun article next. Events from roughly 1975 onward attach to the FBI criminal case and I'll pick up there.

The Evening Sun
Baltimore, MD
Monday, October 25, 1976

Witness's Business Suddenly Drops

When the House Select Committee on Intelligence invited Marty L. Kaiser to testify at its hearings on illegal wiretapping by government agencies, he did the statesmen a favor and accepted the invitation.

Now they can return it by helping him answer a question: Why is it that he averaged about $200,000 annual in business from these agencies before he testified just one year ago and has averaged zilch since then?

That's what has happened to Martin Kaiser since he went to Washington last October and startled the intelligence community. He offered evidence that prices for equipment he had sold to an FBI front had apparently been marked up by about 30 per cent before delivery from the front to the FBI.

Word later came that Edward H. Levi, Attorney General, ordered an investigation of links between several top echelon FBI officials and the head of the firm serving as the original recipient of the equipment.

Citizen Kaiser is the slightly stout little fellow from Timonium who has been called "the Michelangelo of electronics" because of his uncanny talent for making things out of juiced up wires and finding such things made by others to bug their fellow man. There was a time when his marvelous little devices - all assembled by his nimble brain and nimble fingers in a small block building next to Brooks Robinson's sporting goods shop - were the rage of the FBI, Secret Service, armed forces and private customers in the world of the super-duper snoop and counter-snoop. His developments in electronic eavesdropping for law enforcement and government intelligence had made him one of the most widely publicized and sought after specialists in the field.

His equipment and techniques led to the discovery that bugs had been placed on telephones in the offices of Governor Mandel, at least four other governors, and Milton A. Allen, the Supreme Bench judge who was then state's attorney for Baltimore.

The big, red car in his driveway is known as his "President Sadat Cadillac" because he bought it after a lucrative service performed for the Egyptian chief, training his aides in electronic counterintelligence.

Such foreign work and private assignments like countering industrial espionage, says Marty Kaiser, have enabled his company to survive the withdrawal of government business.

"I'm still busy, but most of my business comes from other sources," he says. "I've tried to find out why I was dropped so suddenly. After all, I didn't ask to talk to the committee. They invited me and made it clear that I'd be subpoenaed if I didn't accept the invitation.

"I even went over and talked to (FBI Director) Clarence Kelley about it for an hour. I was only doing my duty, which is something the FBI certainly ought to understand, and he certainly seemed to understand.

At one point Citizen Kaiser brought suit against officials of several intelligent and military agencies under the Freedom of information Act in an attempt to get an official reason for his freeze-out.

"About the only thing I got out of that was word from the Army that they have no file on me. I told that they must have, became I was in the Army once. I even gave- them my Trial number, but they said my file must have burned up in a fire at the records center.

For Martin Kaiser, who is more at home in the microcosmic world of transistors and printed circuits than the mystical world of Washington politics, there is something familiar about it all.

Shortly before establishing his Timonium business 12 years ago, he helped develop a missile detection system heralded in 1964 by President Johnson using the bending beam principle in a device "seeing" beyond the horizon.

At the time, he says, he was making about $6,300 a year for Radio Corporation of America after starting at $3,900 about six years earlier. For his sterling work, he was rewarded with an assignment as manager of the anti-missile project when it was moved from Burlington, Mass., to Barbados, West Indies. But one day, be recalls, an Air Force officer asked him to compare RCA's efforts with Raytheon in similar work. "After evaluating their work against RCA, I really felt they were doing a better job, really outstanding. I said so, and the and the next thing we knew was that Raytheon had the project.

"I wasn't fired, because that wasn't the way they operate instead, they offered me a promotion - in Australia. "I said it was okay if they'd pay to move my wife and kids, too, but they said no, I'd have to pay. I calculated the costs and they came to roughly $14,000. So I didn't take the promotion."

There is something faintly similar between the Australia to which Martin Kaiser was to be assigned in 1964 for his compulsive candor with an Air Force officer and the Siberia of the intelligence world to which he has been relegated for speaking out before the House Select Committee on Intelligence in 1975.

For a man whose equipment may form the heart of the nation's defense and counterintelligence system, he seems to be getting short shrift.

The least the committee owes him in return for his service is a little help in determining why.

Obviously, I did NOT have a huge intelligence organization at my disposal so I did the best I could to uncover those who were liabling and slandering me.  I filed numerous suits under the Freedom of Information Act but, unfortunately, that was a total waste of time and money.  Here is a good example.  Note the date of my request and note the date of the response.

Central Intelligence Agency

Washington, D.C. 20505
14 March 1984

Mr. Martin Luther Kaiser III
115 Bosley Avenue
Cockeysville, MD 21030

Dear Mr. Kaiser:

This is in response to your attorney's letter, dated 29 September 1976, in which he appealed on your behalf the decision of this Agency, dated 8 July 1976, regarding your request for all Agency records which may exist concerning you.  While two documents have been released to you, we have informed you that we would not grant further access to any documents, if additional documents did exist, that might be responsive to your request.

Your appeal has been presented to the Central Intelligence Agency Information Review Committee. Pursuant to the authority under paragraph 1900.51(a) of Chapter XIX, Title 32 of the code of Federal Regulations, I, as Deputy Director for Administration have determined that the fact of the existence or nonexistence of any documents which would reveal a confidential or covert connection with or interest in matters relating to those set forth in your request is classified pursuant to the appropriate Executive order.  Further, I have determined that the fact of the existence or nonexistence of such documents would relate directly to information concerning sources and methods which the Director of Central Intelligence has the responsibility to protect from unauthorized disclosure in accordance with subsection 102 (d) (3) of the National Security Act of 1947 and section 6 of the CIA Act of 1949. Accordingly, pursuant to Freedom of Information Act (FOIA) exemptions (b) (1) and (b) {3) respectively, and Privacy Act (PA) exemptions (j) (1) and (k) (1), your appeal is denied to the extent that it concerns any such documents. By this statement we are neither confirming nor denying that such documents exist.

Material withheld under FOIA exemption (b) (1) encompasses matters which are specifically authorized under criteria established by the appropriate Executive order to be kept secret in the interest of national defense or foreign policy and which are in fact currently and properly classified. Exemption (b) (3) pertains to information exempt from disclosure by statute. The relevant statutes are subsection 102 (d) (3) of the National Security Act of 1947, as amended, 50 U.S.C. 403 (d) (3) which makes the Director of Central Intelligence responsible for protecting intelligence sources and methods from unauthorized disclosure, and section 6 of the Central Intelligence Agency Act of 1949, as amended, 50 U.S.C. 403g, which exempts from the disclosure requirement information pertaining to the organization, functions, names, official titles, salaries or numbers of personnel employed by the Agency.

Material withheld on the basis of PA exemption (j) (1) concerns intelligence sources and methods encompassed by those portions of systems of records which the Director of Central Intelligence has determined to be exempt from access by individuals pursuant to the authority granted by this sub- section and regulations promulgated thereunder (32 C.F.R. 1901.61). Information withheld on the basis of exemption (k) (1) in this instance encompasses those portions of all systems of records which the Director of Central Intelligence has determined to be exempt from access by individuals pursuant to the authority granted by this subsection and regulations promulgated thereunder (32 C.F.R. 1901.71) because the material is properly classified under the terms of the appropriate Executive order and subject to the provisions of Section 552(b) (1) of the Freedom of Information Act, as amended.

In accordance with the provisions of the Freedom of Information Act and the privacy Act you have the right to seek judicial review of the above determinations in a united States district court.

We regret that our response to your letter of appeal has been so long delayed and that we can not be of further assistance to you in this matter.

Sincerely,

[Signature]

Harry E. Fitzwater
Chairman
Information Review Committee

My success was, as you can see, limited and it wasn't until after my criminal trial that I uncovered one of the documents that provided the driving source for the incessant anger against me. As a Christian I found it difficult to believe that some individuals would continue a vendetta for such a long period of time... yet, it was true. Here is Attorney General Levi's report on the U.S. Recording scandal that Mr. Panos and I are referring to. Read it and weep.

STATEMENT BY ATTORNEY GENERAL GRIFFIN B. BELL
ON THE RELEASE OF THE U.S. RECORDING REPORT

I am today releasing a report on an investigation of allegations that certain individuals misused their official positions while employed by the Federal Bureau of Investigation. After careful consideration, I decided to issue a full public report.

When reporting on disciplinary actions taken against government employees, federal agencies have traditionally made public the administrative action taken and the nature of the conduct which caused the action to be taken, but have not always identified the particular individuals involved.

There are, however, certain instances of employee misconduct which call into question the integrity of the institution itself. If the agency's mission is particularly sensitive, the misconduct serious, or the officials of high rank, then the public interest is best served by more extensive disclosure.

It is this kind of wrongdoing which is described in the report I am releasing.

In cases such as this one, personal privacy considerations must give way to the legitimate interest of the American public in knowing how its government operates and how high-ranking officials have abused their official positions and neglected their official responsibilities.

High-ranking officials entrusted with public office simply cannot expect the same measure of privacy about the way they perform their official duties or use their offices as they could expect if they were private citizens. Moreover, the public has a legitimate interest in knowing and being able to evaluate how the heads of Executive agencies deal with official misconduct and take corrective action to ensure that similar, abuses of power and position do not recur. In this particular instance, it is my judgment that the public is entitled to know which officials engaged in the misconduct and which officials did not.

The misconduct summarized here, and reports in the news media about these allegations, have cast a shadow over a great institution and over those of its officials who engaged in no wrongdoing whatsoever. I am vitally interested in restoring public confidence in the Federal Bureau of Investigation. This report will confirm that very few individuals engaged in improper conduct. We should bear in mind that this small number of individuals in no way represents the thousands of FBI employees who are dedicated, honest public servants and whose personal and professional integrity is beyond reproach.

Today I asked Director Kelley to issue a bulletin to all Bureau officials in which it will be made clear that neither the Department of Justice nor the FBI as institutions, nor I, as Attorney General, will tolerate the kind of misuse of office or abuse of authority described in this report. I am pleased to note that Director Kelley has made the following structural reforms to prevent the recurrence of the kind of improper practices described in this report:

1. Reorganized the Inspection Division and renamed it the Planning and Inspection Division;' created the Office of Professional Responsibility, an Office of Inspections, and an Office of Planning and Evaluation; established within the Office of Inspections a separate Audit Unit, responsible for auditing all FBI funds and financial transactions; and organized the Division so that it reports directly to him, as Director.

2. Removed the Property Procurement and Management Section from the Division with budget responsibility, the Finance and Personnel Division, thereby making one Division head responsible for procurement and another responsible for the FBI budget and funds. Director Kelley has placed a Special Agent Accountant, a Certified Public Accountant, as Section Chief of the Property Procurement and Management Section.

3. Discontinued the use of the U. S. Recording Company as a "cover" or "cut-out" for confidential purposes and established controls to ensure that all purchases are made in accordance with government regulations.

4. Restructured the FBI inventory system, to provide built-in controls and audit trails, and initiated automation of the inventory system to provide better accountability.

5. Discontinued the FBI Laboratory and Exhibits Sections' practice of providing personal services to FBI officials. Director Kelley also has discontinued the use of the unauthorized cash fund once maintained in the Exhibits Section.

6. Reorganized the management and handling of the FBI Recreation Association (FBIRA) and its funds, so that FBIRA officers are aware of their responsibilities to prevent unauthorized expenditures. A new Treasurer of the FBIRA has taken office and is not responsible for any other FBI fund.

7. Replaced the FBI Confidential Fund with the Field Support Account, an imprest fund approved by the Treasury Department.

8. Developed and improved the FBI career development program for Special Agents to ensure that the best qualified individuals are selected for administrative advancement, substantially reducing the possibility that one person or group can control the selection of such candidates. In addition, Director Kelley assures me that the FBI has taken other steps to prevent the kind of misconduct described here. The Bureau has increased legal instruction within its training curriculum; held training sessions on the FBI guidelines for career agents; and issued detailed instructions to the field on legal questions concerning the legality and propriety of investigative techniques. In connection with the latter step, the FBI is seeking advice from the Department's Office of Legal Counsel with increasing frequency.

I have asked Director Kelley to bring to my attention any improper attempts to have FBI agents conduct investigations or undertake activities which are not within the Bureau's authorized jurisdiction. I have directed all Bureau personnel to bring reports of misconduct to the attention of appropriate Bureau officials and, when necessary, the Office of Professional Responsibility at the Bureau and Office of Professional Responsibility here at the Justice Department.

Recognizing the concern of Bureau personnel about threatened civil litigation., we have submitted legislation to the Congress which would protect FBI personnel against civil suits by substituting the government as defendant. I believe this approach will protect the rights of citizens without unfairly penalizing individual agents.

The release of this summary report is intended to assure the nation that the Justice Department can investigate and police itself. It will also put all officials of this Department on notice that they will be held accountable to the American people for the manner in which they discharge their official responsibilities while employed as servants of the American people.

# # #

THE DEPARTMENT OF JUSTICE REPORT
ON THE RELATIONSHIP BETWEEN
UNITED STATES RECORDING COMPANY
AND THE
FEDERAL BUREAU OF INVESTIGATION
AND
CERTAIN OTHER MATTERS
PERTAINING TO THE F.B.I.

JANUARY, 1978

THE DEPARTMENT OF JUSTICE REPORT
ON THE RELATIONSHIP
BETWEEN
UNITED STATES RECORDING COMPANY
AND THE
FEDERAL BUREAU OF INVESTIGATION,
AND
CERTAIN OTHER MATTERS
PERTAINING TO THE F.B.I.

This is a report on a Department of Justice investigation of alleged misconduct by certain past and present officials of the Federal Bureau of Investigation.

In the Fall of 1975, the House Select Committee on Intelligence provided the Department with information that certain officials of the F.B.I. were allegedly profiting from the Bureau's business transactions with its exclusive electronics equipment supplier, the United States Recording Company of Washington, D.C. On November 3, 1975, Attorney General Edward H. Levi requested F.B.I. Director Clarence M. Kelley to investigate these allegations. Director Kelley appointed an Ad Hoc Committee to oversee an inquiry by the F.B.I.'s Inspection Division, the Bureau unit ordinarily responsible for internal investigations. Attorney General Levi found the report of the Inspection Division and the Ad Hoc Committee to be incomplete and unsatisfactory. On January 2, 1976, he directed the office of Professional Responsibility and the Criminal Division to review the Inspection Division Report and conduct an independent investigation. The Deputy Attorney General requested two Criminal Division attorneys to work with the office of Professional Responsibility in supervising a special team of F.B.I. investigators, who were carefully selected from Bureau field offices for their ability and experience. I.R.S. agents were also selected to investigate the tax implications of the allegations.

Hundreds of past and present F.B.I. officials were interviewed. Agent-accountants examined vast quantities of documents and records to determine the nature of the F.B.I. U.S.R.C. relationship and the FBI's procedures for purchasing electronic equipment. As the investigation proceeded and possible criminal violations emerged, a Federal Grand Jury in the District of Columbia, raided by the Criminal Division attorneys, began to review the findings of the Department's investigators.

The investigation was completed on November 11, 1976. The findings went beyond the original allegations into other areas of misconduct uncovered by the investigation. The Criminal Division investigative report examined the use of Government material and personnel services by F.B.I. officials for their personal benefit; the administrative mishandling and misapplication of appropriated funds; the misuse of funds of the FBI Recreation Association -- a private association of FBI employees; and improprieties in the FBI's dealings with contractors other than USRC.

PART 1

A. The Relationship Between the United States
Recording Company and the
Federal Bureau of Investigation

Joseph Tait has been owner and manager of the United States Recording Company (USRC) since 1938. Incorporated in 1969 in the District of Columbia, USRC sells and distributes electronic equipment, principally to the Federal Government. Mr. Tait started doing business with the Government in 1943, when Army Intelligence asked the Bureau's Laboratory Division, then interested in purchasing two Army microphones, to use USRC as a middleman. in the late 1940's, USRC contracted with the Bureau to service amplifiers, recorders and other technical equipment used by the Laboratory Division. From 1963 to 1975, USRC was virtually the sole supplier of electronic equipment to the FBI, and bureau purchase orders were frequently directed to USRC without open bidding as required by Government procurement statutes and regulations. _1/

FBI officials justified the exclusive relationship under a specific exemption for purchases that require confidentiality for security reasons. _2/  The following facts do not support this explanation, however. For instance, from 1971 to 1975, the Bureau made $500,000 worth of exclusive purchases from USRC which were not marked as confidential. Much of the equipment, including transmitters, receivers, and microphones, clearly fell into the "sensitive" category, but it was not clear why other "nonsensitive" equipment was purchased exclusively from USRC. Also, the Bureau took few precautions to insure the security and confidentiality of the FBI-USRC relationship. A number of electronic equipment manufacturers and suppliers were aware that the FBI used USRC as a middleman. The Bureau often purchased equipment directly from the manufacturer, but always paid its bills through USRC. USRC employees did not receive security clearances. The firm was broken into on at least two occasions. USRC made equipment deliveries to the FBI during working hours in a panel truck plainly marked "U.S. Recording Company."

Moreover, the FBI failed to follow proper procedures for such "confidential" purchases. Section 252(c)(12) of Title 41 of the United States Code requires an agency head to make a determination that the purchase of certain equipment should not be publicly disclosed before public advertising and open bidding regulations can be suspended. ado evidence was found that either the Attorney General or the FBI Director ever made such a formal determination. The procurement regulations were also evaded, and the scrutiny of the Department of Justice avoided, by the "splitting" of orders to USRC so that no single order exceeded $2,500, the limit above which all purchase orders had to be advertised for open bid. _3/

From 1961 to 1973, the Bureau purchased large quantities of tape recorders, playback units, closed circuit television systems, video tape machines, laboratory test equipment and FM radio equipment under confidential contract with USRC to the virtual exclusion of all other contractors. The costs to the Government of this special relationship were considerable. From Fiscal Year 1971 through 1975, 60 percent of USRC's total sales were made to the Bureau. Department investigators examined 1,339 USRC sales invoices, compared the cost of each item, where available, to USRC to the price USRC charged the Bureau, and found an average markup of 23.8 percent from Fiscal Year 1969 through 1975. Individual markups varied widely and were as high as 40 to 70 percent. In addition to high markups, by using USRC as a middleman, the Bureau was not able to purchase equipment at discount prices offered by manufacturers for direct sales on large orders. For example, in 1971 the Bureau paid USRC $147,261.50 for burglar alarm equipment which could have been purchased from a New York supplier for $81,357.00.

USRC asserted that its overhead costs amounted to 15 to 16 percent over the price it paid to the manufacturer. Department investigators found no objective evidence supporting a figure this high.

These findings essentially confirmed allegations made by a Special Agent of the FBI's Radio Engineering Section in 1973. He reported that the FBI paid too much for USRC equipment, that USRC markups were too high, that FBI employees were forced to buy inexpensive items from USRC when they were available elsewhere, and that the FBI-USRC relationship was not confidential. An Inspection Division inquiry was made into those allegations, but this investigation found that during that inquiry key witnesses were not interviewed. One Bureau official, now retired, provided Inspection Division investigators with palpably inaccurate information. The committees which reviewed the inquiry recommended the continued use of USRC as a "cutout" (i.e. a middleman used to conceal the Bureau's identity from outsiders) for confidential procurement without any sound basis for the conclusion. The agent who made the complaint was denied promotion and then transferred to the Tampa Field office, where the Special Agent-in-Charge was told the agent was not a good "team" player and did not get along with other employees.

The officials chiefly responsible for the proper implementation of procurement requirements and procedures were John P. Mohr, Assistant to the Director for Administrative Affairs; Nicholas P. Callahan, Assistant Director, Administrative Division; and G. Speights McMichael, Chief Procurement Officer. The investigation clearly established that these officials knowingly failed to apply required procurement procedures to purchases from USRC. Two possible motives were found for their actions.

No evidence of cash kickbacks or bribes was discovered. Rather, a pattern of social contacts and minor gratuities was revealed between Mr. Tait and various FBI officials, including Messrs. Mohr, Callahan and Mc-Michael. In the 1960's, Mr. Tait and a number of high Bureau officials would get together at the Blue Ridge Rod and Gun Club (Blue Ridge Club)_4/ to play poker. The poker parties would begin on Friday evening and continue until Saturday noon. (Each participant paid the host, a Bureau official, for the cost of food and lodging.)

Mr. Tait also entertained FBI officials on occasion at the Bethesda Country Club, Billy Martin's Carriage House in Georgetown, and the Rotunda Restaurant on Capitol Hill. There was no evidence of excessive drinking, associating with the opposite sex, payoffs, big winners or losers. Nor was there evidence that official FBI files were destroyed, as alleged, at the Blue Ridge Club.

Mr. Tait often gave Laboratory Division employees small gifts at Christmas time, such as tie clasps, wallets, manicure sets, and desk calendars. In 1971, Mr. Tait gave one FBI employee a stereo playback unit for his car after he retired from the Bureau. A former USRC employee stated that in 1969 Mr. Tait purchased and paid for the installation of an eight track tape player with two speakers in John P. Mohr's Cadillac at a total cost of $172.12. There was no other evidence of any personal benefit to any other FBI official.

The investigation also disclosed another possible reason for the Bureau's special relationship with Mr. Tait and USRC. Over the years, Bureau officials came to trust. Tait's willingness to keep the FBI-USRC relationship confidential, and especially, to keep Congress in the dark about FBI eavesdropping practices. In a March 14, 1963, memorandum to Laboratory Assistant Director, Ivan W. Conrad, M. Mohr ordered that:

...no recorders are to be purchased by the Bureau outside of USRC. The reason for this is because Mr. Tait of the USRC will protect the Bureau in the event questions are asked by a Congressional committee concerning the purchase of recorders by the FBI. Other companies will not do this for the Bureau.

On May 22, 1964, after learning that Mr. Tait had been invited to testify before the Senate Subcommittee on Administrative Practice and Procedure, Mr. Mohr wrote in a memorandum:

...Mr. Tait told me he does not know at this point just what he is going to do with the letter but he does not intend to furnish the Subcommittee with any specific information. It should be noted that the Bureau purchases virtually all of its electronic eavesdropping devices from the U.S. Recording Company. Over the years bite. Tait has been an excellent friend of the Bureau and would go to any lengths to protect our interests from any sources. He is a personal friend of mine and he told me that he would most certainly furnish us with any response that he makes to the Subcommittee's letter before submitting it to the Subcommittee._5/

According to past and present employees of the Radio Engineering Section, Mr. Mohr's March 1963 order initiated the Bureau's exclusive relationship with USRC.

The Department concluded that FBI officials showed an improper favoritism to Mr. Tait and USRC in violation of specific conflict of interest regulations of the Department of Justice._6/ However, no evidence was found indicating a fraudulent intent sufficient to make out a crime under Federal bribery or fraud statutes.

B. Tax Investigation

Mr. Tait was tried and, on June 20, 1977, acquitted of all tax evasion charges under Title 26, United States Code, Section 7201, for the years 1971, 1972 and 1973.

The Department found no evidence that Mr. Mohr violated any federal tax laws.

C. Conversion of Electronic Equipment

Ivan W. Conrad, former Assistant Director of the FBI Laboratory Division, was found to have taken a large quantity of FBI electronic equipment to his home, principally, between 1964 and 1966. Conrad liked to tinker with electronic equipment and was a "ham" radio operator. The equipment included voltmeters, watt meters, battery testers, stereo amplifiers, consoles, speakers, microphones, cables, sidewinders, mixers, tape recorders, transformers, and other sorts of electronic gadgetry. This equipment was evidently delivered directly from USRC to Mr. Conrad's office at FBI headquarters and he took the equipment home. No record was made on FBI inventory files that Mr. Conrad had possession of the equipment.

In late December 1975, after being questioned by investigators from the 1975 Inspection Division inquiry about unaccounted for equipment and after denying knowledge of it, Mr. Conrad, with Mr. Tait's assistance, shipped twenty-nine packages of electronic recording "ham" radio equipment and a large recording console from his home to the USRC warehouse in Southeast Washington. This included the equipment about which he had been questioned. A USRC employee made the delivery in a USRC truck. As much as eighty percent of the equipment had never been used and was in excellent condition. This equipment was subsequently recovered for the Bureau by this investigation. Purchasing documents revealed an acquisition cost of over $20,000.

Mr. Conrad, who retired in July 1973, was interviewed four times during this investigation. He admitted that the equipment once belonged to the FBI. While head of the Laboratory Division, he ordered the equipment from USRC and then used it on "special projects" for Director Hoover, he said. He serviced the Director's television, hi-fi sets, shortwave radio, and designed a portable recording system for him. The console recorder was delivered directly to his home by Mr. Tait, and he took the other equipment home after USRC delivered it to the Bureau. He said that most of the equipment was obtained between 1964 and 1966.

Mr. Conrad asserted that he never intended to convert this equipment to his own use. After Director Hoover died in 1972, he wanted either to buy the equipment from USRC or return it to the company. He said he was "tardy" in not returning it to Mr. Tait until late December 1975. In August 1976, in response to inquiries from this investigation, he delivered another shipment of electronic equipment to the FBI. He had signed this out of FBI Laboratory stocks in the early 1960's. Auto radios, control cables, heads, speakers, antennas, assorted accessory equipment, a stereo receiver, tape recorders, microphones, and a sound recording set were included in this shipment. It is believed that all FBI equipment that was in Mr. Conrad's possession has now been recovered.

D.  Goods and Services of the FBI's Exhibits Section

The Department also investigated the allegation that FBI employees were required to provide goods and services to their superiors. The Exhibits Section of the FBI is staffed with accomplished craftsmen and artisans. Their official task is to design and construct exhibits for use in Department litigation and displays, furniture, and other exhibits for internal FBI use. The Radio Engineering Section is responsible for maintaining and servicing FBI electronic equipment. Interviews with past and present employees of those sections and an examination of photographs and personal logs maintained by some of them revealed that services were provided to FBI officials during official duty hours and that goods were produced for FBI officials with Government property and equipment._7/ This constituted a misuse of Government time and materials, contrary to federal law and regulations. 18 U.S.C. 641; 28 C.F.R.§45.735-16. Prosecutions, where otherwise possible, are barred by the statute of limitations as virtually all of the following misconduct occurred more than five years ago. 18 U.S.C. 3282.

1. Director J. Edgar Hoover

Exhibits Section employees painted Director Hoover's house each year when he visited California during the summer. They built a front portico onto his house and dug a fish pond, equipping it with water pump and outdoor lights. They constructed shelves, telephone stands, and an oriental fruit bowl. Home appliances, air conditioners, stereo equipment, tape recorders, and television sets, and electric wiring were serviced and repaired by Radio Engineering. Section employees. Exhibits Section employees serviced his lawn mower and snow blower, maintained his yard, replaced sod twice a year, installed artificial turf, and planted and moved shrubbery. The Exhibits Section built a deck in the rear of his house, a redwood garden fence, a flagstone court and sidewalks. A power window with sliding glass doors was also designed and constructed. Clocks were reset, metal polished, wallpaper re touched, firewood provided, and furniture rearranged. Employees were on call night and day for this work.

Mr. Hoover employed one grade 15 Bureau accountant to give him tax advice, maintain his tax records, and prepare his annual Federal tax return. His secretary or two associates would generally make the work requests. Exhibits Section employees were called upon to build gifts for Director Hoover every year for Christmas, his service anniversary and other special occasions. These gifts included furniture such as tables, display cases, cabinets, a bar and valets. Assistant Directors chipped in to pay for cost of materials. Employee labor, however, was not compensated.

FBI employees called upon to perform these services did not think them proper, but felt compelled to follow orders for fear of losing their jobs, or of arbitrary transfers or promotion delays.

2.  John P. Mohr

Mr. Mohr had car radios repaired, the body of his son's MG repaired and re painted, and an elaborate dental exhibit constructed for his son, a dentist. At his home, Exhibits Section employees shaved doors to accommodate new carpeting, and Radio Engineering Section employees repaired his television numerous times, and installed phones, stereo hi-fi speakers (Mr. Mohr's property) and a burglar alarm system which required frequent servicing after installation (FBI property). They repaired his stereo and purchased and installed a new FM radio tuner in an existing cabinet which was modified by Exhibits Section employees. Mr. Mohr also received certain gifts made by the Exhibits Section, including a coat of arms, a dresser top valet, and an oak portable liquor cabinet in the shape of a wine case.

Exhibits Section employees painted a desk and made a drawing board for Mr. Mohr. They made, at his direction, a walnut cigar box, a walnut tape-cartridge rack, a walnut wine rack cabinet whose value has been estimated at $2,000, and two walnut gun cases with glass front doors.

Mr. Mohr had employees mount snow tires, wash, and transport his personal automobile to commercial garages for repairs. A battery was installed in his car and a turn signal lamp was replaced by Exhibits Section employees. Mr. Mohr also received tapes of record albums which were copied and distributed by Radio Engineering Section employees at the direction of former Assistant to the Director Cartha D. DeLoach.

Mr. Mohr received services even after he retired in June 1972. Radio Engineering Section employees were sent to his home, at his request, to repair electrical switches, televisions, and the burglar alarm system which had been . installed earlier. Mr. Mohr also asked a Radio Engineering Section employee to repair his electric blood pressure machine. At Mr. Mohr's request to former Exhibits Section Chief John P. Dunphy, the Exhibits Section built a birdhouse according to plans he provided.

3.  Nicholas P. Callahan

For Mr. Callahan, Exhibits Section employees silk screened a felt cloth used for table games, cut doors at his house to accommodate new carpeting, printed maps showing the location of his beach home and finished Styrofoam nautical objects to decorate it. They made walnut fishing rod racks for his beach home, assembled a lathe fence to prevent sand erosion at his beach home, and built a picket fence for his residence._8/ He had walnut shelves cut by section employees during official hours (he supplied the material), had a piece of plywood covered with weatherproof material for a shed roof, had Exhibits Section employees make a sign for his daughter and son-in-law with their name, and had former Exhibits Section Chief Leo J. Gauthier make a fuse box cover for the basement recreation room in his home. At his request, the exhibits section cast a desk memento in plastic for him to give to a friend and make him a set of stack tables which duplicated a set which had been made for Director Kelley (see below). Radio Engineering Section employees diagnosed troubles with his televisions and Exhibits Section employees framed his personal photographs.

Mr. Callahan also received various gifts. He received a framed plaque which recited an Irish prayer, a plaque bearing his coat of arms, a dresser top valet, a portable oak liquor cabinet in the shape of a wine cask, a decorative Christmas tree ball and a gold medallion and chain for Mrs. Callahan into which a gold-disc with the FBI seal was set by the Exhibits Section (Mr. Callahan bought the medallion and chain). The valet and liquor cabinet were duplicates of gifts given to Director Hoover, Mr. Mohr and Mr. Dunphy.

Mr. Callahan also received considerable services to his automobile. Employees test drove his personal car, did diagnostic work on it, took it out for washes, fill-ups, snow tire mounting, and servicing at garages and muffler shops. Scratches on his car were touched up. (Some employees, however, recalled that the whole trunk lid on Mr. Callahan's car was painted.)

Mr. Callahan states that Mr. McMichael provided him with a Polaroid camera which he used for personal photographs.Film for the camera was also provided at FBI expense. He has since returned the camera.____9/

4.  John P. Dunphy

On August 13, 1976, Mr. Dunphy pleaded guilty to a misdemeanor charge under Section 641, Title 18, United States Code, as part of an agreement with the United States as a result of which he voluntarily tendered his resignation from his position as Chief of the Exhibits Section and cooperated with this investigation.__10/

5. Director Clarence M. Kelley

on directions from Mr. Callahan shortly after Director Kelley and his wife moved to Washington, two sets of valances were made and installed in Director Kelley's apartment by the Exhibits Section and two television sets were purchased and installed by the Radio Engineering Section. After this investigation began, Director Kelley paid for the estimated cost of the valances. Director Kelley admitted he knew, after the job was done, that the Exhibits Section installed the first set of valances. when they proved unsatisfactory, he requested a second set to be built and installed. This set was also built and installed by Exhibits Section employees. The television sets were ordered returned by Director Kelley after this investigation revealed their source. Although Mr. Callahan said he directed that the televisions be loaned to Director Kelley, the sets were not entered on FBI equipment inventory until after their return from Director Kelley's apartment on February 19, 1976.

The Exhibits Section also built a walnut table, a set of stack tables, and a jewelry box which were given to Director Kelley as gifts from the Executive Conference. He was unaware that the Exhibits Section made the gifts, he said. The Conference, by donations from its members, paid for the materials used in these gifts.

Director Kelley's personal automobile received occasional servicing by FBI employees and his FBI-provided chauffeur performed personal errands for him. Section employees repaired a broken cabinet for Director Kelley, and mounted the FBI seal on a gold disc as a charm for the Director's wife.

6. Miscellaneous

The practice of providing FBI goods and services to high Bureau officials was not limited to the above individuals.

Clyde Tolson, long-time Associate Director under Hoover, had FBI employees develop several patented devices during official hours. These included a reusable bottle cap and a power window opener. These patents were assigned to the FBI. There was no evidence that Mr. Tolson personally benefited from the development of these devices. one of the power windows was installed for President Johnson in the White House. A second unit, designed and intended for President Johnson's ranch, was never completed.

E.  Imprest Fund

There was evidence that an FBI official received reimbursement from the FBI Imprest Fund (petty cash fund) for personal purchases.

G.  Speights McMichael, Chief Procurement officer, denied that Imprest Funds were used for the personal purchases of Bureau officials. He stated that he did not check to see whether the purchases were proper. Under Federal law he was required, as the Bureau's chief procurement officer, to certify that each disbursement was proper and correct. Each voucher reads, in part: "I certify that the disbursements claimed herein are correct and proper..." Many of the personal purchases could have been used by the Exhibits Section and, therefore, could have escaped Mr. McMichael's attention. He admitted being derelict in his responsibilities as the Imprest Fund's cashier, disbursing and certifying officer.

F.  Confidential Fund

Part of the FBI's annual appropriation is specified "not to exceed $70,000 to meet unforeseen emergencies of a confidential character to be expended under the direction of the Attorney General and to be accounted for solely on his certificate." The most common use is for payments to informants. Contrary to the appropriation language and to Federal regulations, this money was drawn from the Treasury by travel vouchers that failed to reflect the actual expenditures. Top FBI administrative officers were, therefore, able to maintain in cash form these monies over which they exercised custody and control. Field offices were given separate funds for payment of informants which were maintained in separate accounts in addition to the so-called "Confidential Fund" which was kept at headquarters. Also contrary to Federal regulations, the unspent portion of the yearly appropriation was accumulated. By 1974, the headquarters "Confidential Fund" totalled $34,000.

Nicholas P. Callahan controlled the Fund from 1946, when he was Number One man to the Assistant Director of the Administrative Division, until July 1973, when he became Associate Director. John P. Mohr, Clyde Tolson, and Director Hoover could also authorize disbursements. A 1974 inspection of the Fund concluded that "no written guidelines exist pertaining to the utilization of this fund" and that separate records for this fund were kept by FBI administrative units apart from the FBI's normal accounting system and were not subject to Treasury Department audit. This investigation revealed uses of the "Confidential Fund" maintained at headquarters by FBI administrative officers that were not within the scope of the appropriation. _l2/

This investigation revealed that between August 1956 and May 1973 the Bureau purchased over $75,000 worth of electronic equipment with money from the Confidential Fund. No memoranda, purchase orders, requisitions, vouchers or similar documentation were located indicating why the equipment was purchased or who requested it.

Mr. Callahan acknowledged that Mr. Mohr and he decided to use Confidential Fund monies to purchase electronic equipment. This was not done to disguise the nature of the equipment, he said, but to expedite large purchases of equipment.

The Confidential Fund was also used to pay for public relations expenses. Between 1961 and 1975, $23,399.15 of Confidential Funds were spent on room rentals, food, drink and gifts for the liaison officers of foreign and domestic law enforcement and intelligence gathering organizations. Mr. Callahan approved disbursements for liaison functions. There was also evidence that Mr. Mohr, and, to a far lesser extent, Assistant Director Eugene W. Walsh, and Deputy Associate Director Thomas J. Jenkins also authorized such disbursements. Director Kelley recalled such an authorization by himself on one occasion.

One of these officials stated that any expenditure which in any way aids "the detection and prosecution of crimes against the United States," including liaison functions, is justified under the FBI's total appropriation and that the Confidential Fund was used only to expedite reimbursement. He admitted, however, that the Confidential Fund had been obtained on the representation to Treasury that they would be used for "unforeseen emergencies of a confidential character." Congress had not been informed that the Bureau was incurring public relations and liaison expenses and paying them out of the Confidential Fund. The Bureau had never submitted a formal request to Congress or the Office of Management and Budget for the proper budget authority to make these Confidential Fund expenditures. Title 31, United States Code, Section 551, which prohibits the use of appropriated funds for lodging, feeding, or providing transportation to an assemblage, can be interpreted specifically to prohibit the use of the Confidential Fund for public relations and liaison purposes.

This investigation also revealed that FBI officials used the Confidential Fund to cash personal checks. This practice was stopped after Mr. Welsh was questioned about the practice on May 21, 1976.

No evidence was found indicating that any senior official applied these appropriated funds to his own use.

G.  The FBI Recreation Association

The FBI Recreation Association (FBIRA) was founded in 1931 for the purpose of promoting and encouraging athletic, social and welfare activities among its members. The FBIRA is an independent and tax exempt organization whose membership is voluntary. The Association's funds were spent on athletic and social functions, group travel, clubs, hobbies, art shows, and publication of The Investigator, a monthly magazine reporting on FBIRA activities. Its constitution and bylaws provide for the election of officers and a five-member Board of Directors.

This investigation revealed that between September 1951 and June 1972, Nicholas P. Callahan obtained $39,590.98 from the FBIRA designated for the "Library Fund." The Association's records contain no explanation or authorization for these disbursements. No disbursement requests or vouchers were found. Mr. Callahan was the Library Fund's only recipient and maintained the only records of its expenditures. Mr. Mohr periodically reviewed the records. Shortly after Mr. Hoover died, Mr. Callahan and Mr. Mohr discontinued the Fund and destroyed its records. Neither of the two FBIRA treasurers who served during this period knew why the fund was named the Library Fund in the FBIRA Disbursements Journal. The treasurers understood that these "Library Fund" disbursements were for Director Hoover's public relations expenses, such as office flowers, condolence telegrams, and for unspecified office expenses, such as books and newspapers.

Only Messrs. Hoover, Tolson, Callahan, Mohr, and the treasurers knew about the "Library Fund" and disbursements were made to the Fund without the authorization of FBI-RA officers whose approval is required under the FBIRA charter. Mr. Callahan asserted that the disbursements were for official public relations and liaison functions for which appropriated funds are unavailable under law and that they were proper under a broad interpretation of the FBIRA constitution's "general welfare" clause because money spent promoting the FBI's general welfare is in the best interest of its employees.

The investigation also revealed that $55,849.77 of FBIRA funds were expended on receptions for National Academy students and guests between April 8, 1958, and June 20, 1972. The National Academy is an FBI operated training and education facility for local law enforcement personnel around the country. The receptions were not FBIRA activities and they were not open to FBIRA members. About half the cost of the receptions was borne by those attending the receptions so that net cost to the FBIRA after offset by these donations was $29,443.67. The FBIRA constitution and bylaws do not provide for expenditures for such functions as National Academy receptions.

From July 1952 to December 1975, another $12,219.90 of FBIRA funds were spent on miscellaneous or liaison expenses and on receptions, luncheons, retirement parties, and gifts for foreign law enforcement liaison officers, and senior FBI officials. The funds also covered the cost of FBI press receptions and other public relations expenses. Director Hoover, Mr. Callahan, Mr. Mohr, Mr. DeLoach, and Mr. Walsh, not the FBIRA Board of Directors, approved these disbursements, according to the records.

The above facts established that, from 1951 to 1975, high officials of the FBI obtained funds from the FBIRA for public relations and other uses not authorized by its charter and without obtaining the approval of its Board of Directors. There is no evidence that these Bureau officials converted the money to their own use and, therefore, no evidence of criminal intent as required under Title 18, United States Code, Section 654.

H.  Special Agents Mutual Benefit Association (SAMBA)

SAMBA is an unincorporated association designed to provide life and health insurance to FBI employee members. The Prudential Insurance Company has been SAMBA's underwriter since SAMBA was founded in 1948. SAMBA is independent of the FBI, with private offices at 1325 G Street, N.W., Washington, D.C.

This investigation uncovered questionable expenses from SAMBA books and records. The amount of $635.21 was withdrawn from the SAMBA account to pay for a retirement party and gift for Mr. Mohr. $310.22 of this withdrawal covered the price of a Sears Roebuck fishing boat, which was delivered to Mr. Mohr by FBI employees. One SAMBA officer admitted that SAMBA funds were used, in disregard of its charter, to pay for retirement parties, luncheons, and gifts for outgoing SAMBA officials and Directors. Other questionable expenses included two professional football season tickets for the use of a SAr4BA official, Saturday work charges, wedding and anniversary gifts, and annual Christmas parties.

Director Kelley and his wife, along with Mr. and Mrs. Mohr, Mr. and Mrs. Thomas Jenkins, and SAMBA President Thomas J. Feeney, Jr., and his wife, attended a weekend meeting in New York City with officials of Prudential Life Insurance Company, which underwrites the SAMBA policy. Director Kelley's travel from Kansas City, Missouri, to New York and return to Washington, D.C., was by Government Travel Request (GTR). Travel for Mrs. Kelley and the others was paid by SAMBA. Prudential paid all other expenses. Director Kelley subsequently reimbursed Prudential for these expenses.

I.  FBI Officials' Relations with Firearms Suppliers

The Remington Arms Company, which bids on arms and ammunition contracts with the FBI, maintains a 300-acre working farm and game preserve in Chestertown, Maryland, called Remington Farms. On January 3 and 4, 1972, Remington hosted three FBI officials at Remington Farms and paid for their room, board, hunting licenses and stamps at a cost of $203.50. Twelve other FBI officials were hosted at the Remington Farm on three subsequent occasions, costing the arms dealer an additional $1,168 in room and board.

Remington also paid for liquor, ammunition, guides and game shot on these four weekends. Although a breakdown by individual is not available for these costs, Remington spent a total of $2,013.96 for forty seven individuals for the four weekends. Fifteen of the forty seven guests were then active FBI officials.

FBI records show that the Remington Firearms Company has not been awarded a firearms contract since 1971. The hunting weekends mentioned above all occurred after 1971. Six ammunition (not firearms) contracts have been awarded to Remington since fiscal year 1971, but each of these contracts was solicited and awarded after open bidding by the Justice Department. Although several of the FBI officials who attended the hunting weekends were in a position to influence the awarding of arms contracts, no arms contracts were awarded to Remington during the 1970's. Nor were arms contracts awarded during this time to Winchester Firearms Company which hosted a hunting weekend for three Bureau officials in 1973.

The Federal illegal gratuities statute, Title 18, United States Code, Sections 201 (f) and (g), requires that the gratuity shall be "for or because of" an official act. This investigation found no evidence that the recipients of the gratuities did anything for Remington or Winchester, and therefore, there was no evidence warranting prosecution under this statute. The evidence does indicate that the Departmental regulation prohibiting the accepting of gifts or entertainment from those having or seeking a contractual relationship with the United States was violated. 28 C.F.R. §45.735-14(a). Moreover, the evidence shows that these employees also violated the general Departmental prohibition against conduct creating the appearance of impropriety. 28 C.F.R. §45.735-2. The Attorney General has referred this matter to the FBI Director with instructions to take appropriate administrative action against these employees.

J. Miscellaneous Allegations

1.  Financial Dealings Between Joseph C. Palumbo and John P. Mohr

This investigation received information from the House Select Committee on Intelligence that John P. Mohr and Joseph C. Palumbo of Charlottesville, Virginia had had improper financial dealings. Mr. Palumbo and Mr. Mohr entered a financial arrangement in late 1972, after Mr. Mohr had retired from the FBI. The transaction was entirely lawful and at arms length and no evidence was found that Mr. Palumbo ever discussed the FBI or its activities with Mr. Mohr.

2.  Official and Confidential Files

During 1975, an investigation was conducted into the disposition of the "official and confidential files" of J. Edgar Hoover following his death in May 1972. The inquiry determined that the files were turned over to Assistant Director W. Mark Felt by Miss Helen W. Gandy, Executive Assistant to Mr. Hoover, on May 4, 1972, and now are located at FBI headquarters. No evidence was found that official FBI files of any kind were removed to Mr. Hoover's home following his death.

A. PART II Summary and Actions Taken Against Principal Subjects

1. John P. Mohr

(a) Mr. Mohr was Assistant Director for the Administrative Division of the FBI and the Assistant to the Director. He was primarily responsible for using USRC as an exclusive supplier of electronics equipment to the FBI. His conduct toward§,USRC violated 28 C.F.R. 045.735-2(b) and (c)(2) (prohibiting employees from giving preferential treatment to any person outside the Department). He received a few gratuities (tape deck, Christmas gifts) from Mr. Tait. No evidence was found that he was bribed, but he violated 945.735-14(a)(1), which prohibits employees from accepting gifts from those doing business with the Department. (b) FBI employees provided goods and services to him as described above. This arguably violated 18 U.S.C. 641 (conversion of government property to his own use), (prosecution barred by the statute of limitations), and 28 C.F.R. §45.735-16 (misuse of federal property). (c) Mr. Mohr was also responsible, along with Mr. Callahan, for using FBI Recreation Association and Confidential Fund monies for unauthorized public relations purposes. This matter has been referred to the Department's office of Management and Finance for appropriate action (see footnote 12 above). In 1972, he attended an expense paid hunting weekend at Remington Farms, an FBI arms supplier. This is a violation of the Department prohibition against accepting gifts from those doing business with the Department, 28 C.F.R. §45.735-14(a)(1). (d) No action has been taken against Mr. Mohr. He retired on June 30, 1972. Criminal action under all of the above federal provisions is barred by the five year statute of limitations.

2.  Nicholas P. Callahan 

Mr. Callahan was Assistant Director for the FBI's Administrative Division and later Associate Director. In 1976, pursuant to Attorney General Levi's order, he was asked to resign as a result of this investigation. He did resign.

(a) Mr. Callahan was responsible for improperly diverting thousands of dollars of FBIRA and Confidential Fund monies to official FBI public relations activities. The funds were not authorized or appropriated for public relations activities. There was no evidence that he converted these funds to his personal use, and therefore, no evidence warranting prosecution. This matter has been referred to the Department's Office of Management and Finance for appropriate action. (See footnote 12 above.)

(b) Mr. Callahan admitted receiving FBI goods and services. FBI employees decorated his beach house, built a fence, walnut shelves, and other furniture for his residence. The statute of limitations bars prosecution of Mr. Callahan for receiving government property in violation of 18 U.S.C. 641.

(c) No evidence was found that Mr. Callahan was bribed or that he received illegal gratuities.

(d) No further action has been taken against Mr. Callahan.

3.  Ivan W. Conrad

Mr. Conrad was employed by the FBI Laboratory in many positions from 1934 to 1973. He retired on July 12, 1973, as Assistant Director of the Laboratory.

(a) Mr. Conrad took many pieces of electronic recording and amplifying equipment home with him and used them for his own benefit. Mr. Conrad asserted he had the equipment for legitimate purposes. The Department recovered all equipment, and Mr. Conrad tendered a $1,500 cashier's check to pay for his use of the equipment.

(b) No further action has been taken against Mr. Conrad. Prosecution was barred, in the judgement of the Criminal Division, by the statute of limitations and because of the lack of evidence showing criminal intent on the part of Mr. Conrad.

4.  Clarence M. Kelley

Director Kelley received the limited amount of goods and services described above. He was not involved in any of the other matters which are the subject of this report. Attorney General Levi and Deputy Attorney General Tyler determined that no disciplinary action was called for, but that Director Kelley should reimburse the Bureau for the goods and services he received. That has been done and no further action against him has been taken. Director Kelley should be given credit for putting an end to the improper practices described in the report. His cooperation greatly assisted Departmental investigators in uncovering the facts. His cooperation made this report possible. It should also be noted that Director Kelley was primarily responsible for bringing about the internal reforms set forth in the final section of this report.

5.  G. Speights McMichael

Mr. McMichael is no longer in charge of, but continues to work in, the FBI's Property Procurement and Management Section. He is no longer cashier of the Imprest Fund, a petty cash reimbursement fund.

(a) Mr. McMichael clearly neglected his responsibilities in managing the Imprest Fund. There is some evidence that he permitted violations of procurement procedures to favor USRC in the purchase of electronic equipment. 41 U.S.C. 252(c)(12). There is no evidence of bribery.

(b) While serving as the FBI's chief procurement officer, he attended an expense paid hunting weekend at Remington Farms. This is a probable violation of the Department regulation prohibiting the receipt of gifts from those doing business with the Department. 28 C.F.R. §45.735 14 (a) (1) .

(c) The evidence that Mr. McMichael knowingly approved Imprest Fund reimbursement for the personal purchases of an FBI employee is not substantial. There is no evidence that he converted government money to his own use. 18 U.S.C. 641 and 643.

(d) McMichael clearly failed to meet his responsibilities as the FBI's Chief Procurement officer and probably violated 28 C.F.R. 945.735-13 (misuse of official position) and 945.735-16 (misuse of federal property). His attendance at Remington Farms probably violated §45.735-14 (gifts from Department contractors). He failed to assist Department investigators. The statute of limitations bars criminal action against Mr. McMichael. These matters have, however, been referred to the Director with instructions to institute appropriate administrative action against him.

6. Joseph X. Tait

(a) On June 20, 1977, a jury acquitted Mr. Tait of. charges that he understated his income in 1971, 1972 and 1973, in violation of 26 U.S.C. 7201.

(b) A jury acquitted Mr. Tait on all counts of charges that he violated 18 U.S.C. 287 (false claims on the United States), 371 (conspiracy to defraud), and 1341 (mail fraud).

(c) Further comment regarding Mr. Tait is considered inappropriate because, unlike the other subjects of this report, he is not a government official.

B. Possible Civil Actions

1.  U.S. Recording Company

The Department is considering taking civil action to invalidate USRC contracts and recover the excess profits obtained from the Bureau. The basis of such a suit would be the clear breach of applicable government procurement regulations. The Civil Division is now evaluating the relevant facts to determine whether the Department should institute a civil recovery action against the United States Recording Company or its president.

2. Conversion of Government Property by Bureau Officials

Civil actions may not be instituted because: the actual amounts involved are small compared to the expense of litigation; there would be substantial difficulty in fixing the government's loss with any appreciable accuracy; and, much of the government's property has already been returned. In addition, civil action may be barred by the statute of limitations.

3. Imprest Fund

Approximately, $1,700 was diverted from that fund for clearly improper purposes. The property obtained with Imprest Fund monies has been returned to the Bureau. This matter has been referred to the Department's Office of Management and Finance to review the facts, and to take necessary administrative action.

4. Confidential Fund

Approximately, $75,000 was spent to purchase electronic equipment and $23,000 was spent over a fifteen year period on public relations type matter. This matter has also been referred to the Department's Office of Management and Finance for appropriate administrative action.

5. FBI Recreation Association

Monies from the FBI Recreation Association were improperly diverted. According to the Civil Division, the Government lacks standing to initiate any civil action, except under a somewhat strained theory of parens patriae. Accordingly, no civil action will be instituted regarding this matter.

C. Action Taken to Prevent Recurrence

Within the last fifteen months, Director Kelley has taken the following corrective measures to prevent the recurrence of the improper practices described in this report.He has:

1. Reorganized the Inspection Division and renamed it the Planning and Inspection Division; created the office of Professional Responsibility, an office of Inspections, and an office of Planning and Evaluation;' established within the office of Inspections a separate Audit Unit, responsible for auditing all FBI funds and financial transactions; and organized the Division so that it reports directly to him, as Director.

2. Removed the Property Procurement and Management Section from the Division with budget responsibility, the Finance and Personnel Division, thereby making one Division head responsible for procurement and another responsible for the FBI budget and funds. Director Kelley has placed a Special Agent Accountant, a Certified Public Accountant, as Section Chief of the Property Procurement and Management Section.

3. Discontinued the use of the U.S. Recording Company as a "cover" or "cut-out" for confidential purposes and established controls to ensure that all purchases are made in accordance with government regulations.

4. Restructured the FBI inventory system, to provide built-in controls and audit trails, and initiated automation of the inventory system to provide better accountability.

5. Discontinued the FBI Laboratory and Exhibits Sections' practice of providing personal services to FBI officials. Director Kelley also has discontinued the use of the unauthorized cash fund once maintained in the Exhibits Section.

6. Reorganized the management and handling of the FBI Recreation Association (FBIRA) and its funds, so that FBIRA officers are aware of their responsibilities to prevent unauthorized expenditures. A new treasurer of the FBIRA has taken office and is not responsible for any other FBI fund.

7. Replaced the FBI Confidential Fund with the Field Support Account, an imprest fund approved by the Treasury Department and administered in accordance with Treasury and Justice Department regulations.

8.  Developed and improved the FBI career development program for Special Agents to ensure that the best qualified individuals are selected for administrative advancement, substantially reducing the possibility that one person or group can control the selection of such candidates. In addition to these administrative measures, the FBI has increased legal instruction within its training curriculum; held training sessions on the FBI guidelines for career agents; and issued detailed instructions to the field on legal questions concerning the legality and propriety of investigative techniques. The FBI is also posing such questions to the Department's Office of Legal Counsel with increasing frequency.

On January 3, 1978, the Attorney General referred the entire U.S. Recording Company matter to the FBI and instructed the Director to initiate administrative proceedings against G. Speights McMichael and other FBI employees whom the Director considers to be appropriate, subjects for administrative action. The Attorney General requested the Director to keep him advised by informing the Department's Counsel on Professional Responsibility of all administrative action taken.

Finally, the Attorney General has asked Director Kelley to bring to the Attorney General's attention any improper attempts to have FBI agents conduct investigations or undertake activities which are not within the Bureau's authorized jurisdiction. The Attorney General has also directed all Bureau personnel to bring reports of misconduct to the attention of appropriate Bureau officials, and when necessary, the office of Professional Responsibility at the Bureau and at the Department of Justice.


_1/ 41 U.S.C. 252 (c) and regulations promulgated thereunder.

_2/ 41 U.S.C. 252 (c) (12) .

_3/ The limit was raised to $10,000 by statutory amendment in 1974.

_4/ The Blue Ridge Club burned down on November 23, 1975, just before House Select Committee investigators were scheduled to interview Club employees. This investigation revealed that an eight-year-old child caused the fire while playing with matches. The child "confessed" to Department investigators. The testimony of other witnesses corroborates the confession.

_5/ A search of the transcripts of committee hearings revealed no evidence that Mr. Tait actually testified before the referenced subcommittee or any other subcommittee.

_6/ 28 C.F.R. §45.735-2(b) and (c) prohibit the giving of favored treatment or advantage to any member of the public and any action which might result in, or create the appearance of: preferential treatment, the use of public office for private gain, or an adverse effect on public confidence in the integrity of the Government. 28 C.F.R. X45.735-14(a)(1) prohibits the acceptance by public officials of gifts or gratuities from those doing business with the Department of Justice.

_7/ No official documents, memoranda, or work orders were found which account for the work performed, the materials used, or the goods produced by Exhibits Section employees for the personal benefit of Bureau officials.

_8/ Contrary to the evidence obtained from Exhibits Section employees, Mr. Callahan stated that he paid for the material for the fences and installed them himself on personal time.

_9/ Mr. Callahan testified that agents are allowed to take home cameras for personal use to maintain their proficiency with them. Agents assigned to this investigation verified that this is the case, but indicated that the practice is intended to maintain familiarity with cameras more complex than the Polaroid.

_10/ A further term of the agreement was that he make restitution for the goods he received in an amount to be determined later between his attorney and attorneys for the United States. On September 28, 1976, Dunphy was fined $500 and placed on probation. He returned all government materials to the Bureau, in accordance with the plea agreement.

There was no footnote _11/

_12/ Title 31 U.S.C. 628, a noncriminal statute, prohibits the use of appropriated funds for a purpose not specified in the appropriation. The Counsel on Professional Responsibility has requested the Department's Office of Management and Finance to review these facts, to take necessary administrative action to prevent the recurrence of this conduct, and if appropriate, to refer the matter to the Comptroller General for possible recovery actions against responsible disbursing officers.

DOJ-1978-M

02/02

In mid 1978 an Executive Vice President (EVP) of Northwestern Bank requested a visit to my facility.  I had never dealt with this particular person but I knew Duncan was involved with other more pressing matters. The EVP told me that the FBI had replaced the IRS as Duncan's chief antagonist and the FBI was totally disrupting the functioning and operations of Northwestern Bank. The FBI was using the old "divide and conquer" routine to demoralize and frighten the employees. The FBI started at lower level employees and were working upwards towards management. Duncan felt it would be a good idea if every manager carried a pocket recorder to recorded any and all conversations with the investigating agents. The language of his intent was clearly within the confines of the law, i.e. one party consent. He also purchased three 1/3rd speed cassettes to record conference room confrontations. The EVP left my facility with one of the 1/3rd speed recorders and I ordered the remaining two for him.

Several weeks later the EVP telephoned and indicated that there was one scenario they weren't prepared for... that being the making of recordings in a Northwestern Bank office controlled by the FBI. I told the EVP that regardless of the surroundings the same one party consent rule would apply.

A few days later a Northwestern aircraft arrived at BWI airport to ferry me to North Wilkesboro.  That Sunday I was taken to the main bank building and shown the office the bank wanted to monitor. It was near a corner of the building that had glass windows all around. There was a roughly 40 foot by 40 foot open area in the corner that contained no furniture whatsoever. To the left was an office with the door open. Just outside the office were several knocked down cardboard boxes and tubes from vacuum cleaners. The inside of the office was absolutely sterile. One desk, one chair, one telephone (sitting the floor). As usual, I had brought some countermeasure equipment with me to do a quick check of any new and unfamiliar surroundings. I felt, after seeing the room, that it most likely was bugged so I set the countermeasure equipment aside. A quick glance out of the window revealed an automobile pointing directly at me in the parking lot across the street. The EVP showed me the proposed listening post and I could see that the length of the run would need a preamplifier at the microphone end of the system. Based on the EVP's earlier description, I had taken only a microphone and hank of RG-174 coaxial cable. Back at the motel I pulled a couple of resistors, capacitors and a 2N3391A out of one of my countermeasure preamps and constructed a microphone preamp. On my way back to the bank building I stopped by the car I had seen earlier. The car had no tires and was sitting on four cinder blocks. It was covered with dust and debris and obviously had been sitting somewhere for a long time... but not there. There was no drip line around the car! Out came my contact microphone and when placed on the car I heard the unmistakable sound of a time lapse camera. I thought... and probably said out loud... C'mon you guys, you can do better than this!

On returning to the target room I installed the microphone and preamp inside the telephone jack cover. In an office on the other side of the building I connected my preamp to the designated wires... turned up the volume... and I could hear myself as clear as a bell. A sense of pride came over me and I was satisfied I had earned my money. I packed my bags and left town on one of Northwestern's airplanes.

Shortly afterwards Duncan was indicted for misapplication of several hundred thousand of the banks money. He was convicted of misapplying $675.00! Thanks to one of the idiotsyncrasies of our legal system, the sentencing guidelines are base on what you are charged with, not what you are convicted of, and Duncan was given an 18 year sentence. He was now a broken man and the vultures came to feed.... and feed they did.

To thank him for all he had done for them 15,000 people came to Duncan's send off party. Do you have that many friends? Duncan was a giant of a man in North Carolina and had helped hundreds of thousands of people during his term as Chairman. Now, that was all to end.

Shortly afterwards Duncan, Starr and the EVP were charged with bugging the FBI. They had extremely bad counsel. Rather than stick with their lawful position of one party consent, counsel came up with all kinds of rinky-dink defenses and got them all convicted. I followed the trial closely and was more than slightly pissed that they did not come to me for advice and guidance.

In early December, 1978 I was subpoenaed to appear before the Grand Jury that had indicted Duncan, Starr and the EVP. My attorney, Bud Fensterwald, Para-legal Marc Feldman and I headed to North Carolina. Before leaving, I typed up two 3 X 5 cards with the fifth amendment statement on them (for you foreigners, the fifth amendment of the U.S. Constitution gives a citizen the right NOT to answer a question). Before going into the Grand Jury room Fensterward instructed me to give them my name, rank and serial number and then "read the card." I must have read the first card 60-70 times before I ceremoniously set it aside and pulled out the second card and started reading it. Of course it had on it the exact statement and one of the Grand Juror's joked that the first card must have run out of gas or something. In total, I must have taken the fifth 150-175 times. Periodically, whenever I got tired I excused myself to converse with my attorney... i.e. get a breather.. and when I reentered the room Fensterwald would say "read the card."

Immediately after I was dismissed from the Grand Jury, Marc Feldman grabbed me by the arm and took me to an empty room. He asked me to tell him exactly what I had seen in the Grand Jury room. I started to my immediate right with the U.S. Attorney, then the stenographer, then the Grand Jurors... one by one... and finally the jury foreman's table at which sat two men. One was a gray haired fellow and the other FBI Agent XX. Feldman gasped and told me to go over that part again... which I did. A couple of days later I received a copy of a motion from Fensterwald to the Court asking that the charges be dropped due to improprieties by the FBI. This was a serious issue. It is a violation of federal law for an investigating agent to be present when a witness is questioned.

The Court requested a hearing. It stood to reason that I would take the stand and say he was there and he, knowing he had violated federal law and been caught, would most certainly say he was not. The only way to solve that dilemma was to put a couple of Grand Jurors on the stand under oath and ask what they saw. To help me to decide which of the Grand Jurors we would use the court was forced to give me a list of the names and addresses of the Grand Jurors... and here are twenty of them. You will hear more about these people later.

BERNICE C POOLE
BX 8694
2159 CHARLES ST
DURHAM, NC 27707
 CARL F. SPAUGH, JR.
2441 W CLEMMONSVILLE
WINSTON-SALEM, NC 27107
 JARIUS J. WATSON
GENERAL DELIVERY
EFLAND, NC 27243
 MS HILDA J WEAVER
1008 TWYCKENHAM DRIVE
GREENSVILLE, NC 27408
DOROTHY R MC DOUGALD
P.O. BOX 471
BROADWAY, NC 27505