Justice Official Tried to Prevent Agents From Searching Presser’s Office, Failed

The Justice Department official who made the crucial decision not to prosecute Teamsters Union President Jackie Presser on labor fraud charges tried early in the inquiry to prevent investigators from searching Presser’s office in Cleveland, The Times learned Friday.

David Margolis, chief of the department’s Organized Crime and Racketeering Section, was ultimately unsuccessful in blocking the search, which turned up crucial evidence in the now-closed case against Presser. But his attempt infuriated members of a federal strike force investigating charges of payroll padding in the labor leader’s hometown local.

Margolis, an award-winning career prosecutor, insisted through a spokesman that he acted purely “for professional reasons.” But the disclosure of his action adds to the many unanswered questions surrounding the handling of the sensitive Presser case, already the subject of a criminal inquiry within the FBI and of a Senate subcommittee investigation.

Legal Technicalities

Margolis refused to talk directly with reporters. But a Justice Department spokesman, John Russell, said the professional reasons behind Margolis’ decision involved legal technicalities.

“Any suggestion to the contrary is incorrect,” Russell said, although he declined to provide details.

Margolis has a reputation inside the Justice Department as a strong, innovative prosecutor-administrator. In 1982, he won a presidential meritorious executive service award of $10,000, and he has been given senior executive bonuses for outstanding performance five times during the Reagan and Carter administrations.

Absolved in Another Case

Margolis attempted to limit the search of the Cleveland headquarters of Teamster Local 507 on Oct. 8, 1982, shortly after the investigation had begun. Days earlier, he had written Presser’s lawyer absolving the Teamster chief of wrongdoing in a separate case involving alleged kickbacks from a Las Vegas public relations firm.

Under the payroll-padding scheme, Presser--at the time an FBI informant--allegedly authorized the payment of more than $250,000 to five “ghost employees” who received a salary but did no work for the union local. FBI agents allegedly learned of Presser’s participation in the scheme but did not force him to withdraw.

It was the FBI’s knowledge of Presser’s role in the payroll padding that led to Margolis’ decision last month to drop the case, Justice Department sources said. In contrast, strike force prosecutors had recommended that Presser be indicted for defrauding Local 507, of which he is still secretary-treasurer.

Law enforcement sources familiar with the 1982 search spoke about it only on condition that they not be identified by name.

Limits on Search Warrant

They said Margolis told strike force investigators--drawn from the Labor Department, not the FBI--that they could apply for a search warrant for the two-story office building housing Local 507 as long as they excluded the personal offices of Presser and Harold Friedman, the local’s president, who was another prime suspect in the payroll-padding investigation.

Investigators were puzzled and angered by the search limit, these sources said, because it appeared to run contrary to the purpose of the investigation and because Margolis offered no explanation of why Presser’s and Friedman’s offices should be off limits.

Several sources recalled that U.S. Magistrate Jack B. Streepy, a former prosecutor, sided with the strike force investigators and balked at signing a search warrant with such limits.

One quoted him as exclaiming in exasperation: “Do you want to search the building or not?”

Denies Comment

Streepy told The Times that he had no specific recollection of this search warrant, although he said he was certain he never made such a comment and never knew about any proposal to keep Presser’s office off limits.

But the search warrant in the public files at the U.S. courthouse in Cleveland is unlimited because, according to the sources, Margolis’ deputy, Paul D. Coffey, called the strike force later to give conditional approval to a full search. Presser’s office could be included after all, Coffey said--as long as it was searched after every other room in the building.

The search began at 7:15 a.m. Oct. 8 when a Labor Department team led by agent James F. Thomas entered union headquarters and secured the building. They allowed no Teamster official to enter any office and concluded with a search of Presser’s personal office shortly before 8 p.m.

Dozens of Files

Court records show that the search yielded dozens of significant files, including records from Presser’s office disclosing that such alleged “ghost employees” as Allen Friedman, who is Presser’s uncle, and Jack Nardi, an organized crime associate, had collected thousands of dollars as Teamster “business agents” without performing any work.

Four days before the search, Margolis had sent a letter to John R. Climaco, Presser’s lawyer, saying that Presser had been absolved of allegations that he had received $300,000 in kickbacks from a Las Vegas public relations firm with a $1.3-million Teamster contract.

That matter had been investigated for months by some of the same Labor Department agents who sought the search warrant in the payroll-padding case.

Ronald J. Ostrow reported from Washington and Robert L. Jackson from Cleveland.