Questions Arise on His Ties to FBI : Presser Case: Does Justice Process Work Properly?

For three years, while a federal strike force probed allegations that Jackie Presser had siphoned more than $250,000 out of a Teamsters Union local and into the pockets of Cleveland cronies, the president of the nation’s largest labor union appeared supremely confident. As a grand jury investigated him, Presser assured intimates that he had nothing to fear.

And indeed, despite the fact that three of his four immediate predecessors had gone to prison from a union long wracked by corruption, Presser’s self-assurance was well-placed: The FBI, it turned out, had secretly made a deal for him to act as an informant and had sanctioned the ghost payrolling scheme that defrauded the local. Prosecution was thus impossible.

But the collapse of the Presser case is more than the story of a bungled investigation that cost the government hundreds of thousands of dollars and deeply embarrassed the Justice Department, whose senior officials ultimately had to admit that they were not fully informed about the FBI-Presser relationship. While the complete story is the subject of inquiries before a federal grand jury, at the Justice Department and in the Senate, some law-enforcement specialists say the Presser affair raises questions about the federal government’s criminal justice process.

Among those questions:

--Is the government’s war on organized crime hampered by turf battles and lack of cooperation among law enforcement agencies, in this case the FBI and the Labor Department’s Office of Labor Racketeering, which pursued the Presser case and was kept in the dark even after it had inquired about a possible connection between the FBI and Presser?

--Does the FBI lean too heavily on informants in sensitive investigations such as this, and entrust them with so much leeway that effective control becomes difficult?

--Is the public interest ultimately well-served by a strategy that nominally follows the time-honored practice of using thievery to catch thievery but which ends up with government-sanctioned corruption at the top of a huge and powerful institution?

Indelible Political Tinge

There is also the indelible political tinge given to the Presser case by numerous statements from Reagan Administration officials defending the union boss both before and after the case was killed.

In addition, some Administration officials maintained public ties to Presser even after the White House counsel warned against such contacts because the union leader was the subject of a criminal investigation.

While FBI officials from Director William H. Webster on down will not discuss Presser because of their decision not to acknowledge that the Teamsters president has been an informant, sources in and out of government who have investigated the aborted case have provided key details to The Times.

The Presser affair began in the early 1970s, when Jackie Presser and his late father, William Presser, then the leader of Ohio Teamsters, first began to deal secretly with the federal government.

Fitzsimmons Involved

According to government memos first disclosed by Time magazine, the Pressers and the late Teamsters President Frank E. Fitzsimmons began helping Internal Revenue Service agents develop tax cases against their enemies in the union 13 years ago.

At the same time, a former federal law enforcement official told The Times, Jackie Presser, then a rising power in the Teamsters under his father’s tutelage, was cooperating with the FBI. “He told me he had friends keeping him informed in the FBI office in Cleveland,” the former official said.

The agreement was simple, other sources say: Presser told FBI agents about possible wrongdoing by rival Teamsters and mob figures; the FBI, in turn, fed him information about Teamsters’ activities that he might not know about.

Presser often met with federal agents in a restaurant parking lot in suburban Cleveland. Other meetings occurred when he traveled to Chicago, San Francisco and other cities.

‘Ghost Employees’

Exactly who in the FBI first approved Presser’s practice of putting “ghost employees” on the payroll of his hometown Cleveland local, No. 507, and what assurances were given to Presser is not yet clear. But investigative sources say that the FBI first condoned the hiring of Cleveland crime figure Jack Nardi, whom Presser put on his union payroll, as early as 1972.

Presser later added four other “ghosts” to the list, including his uncle, Allen Friedman, who was convicted two years ago of having received $165,000 from 1978 to 1981.

The Justice Department’s internal investigation has determined that Presser more than once raised the possibility of cutting off the payments. But his FBI control agents, or “handlers,” rejected the idea, one source says, for fear of “stirring up the pot” and endangering Presser’s life.

Nardi pleaded guilty two years ago to receiving illicit pay from the Teamsters and had been scheduled as a government witness against Presser. Friedman has been granted a new trial on grounds that prosecutors never disclosed that FBI agents may have approved or encouraged Presser’s payments to him--in effect making the government a party to the crime.

Tight-Lipped Approach

The department has told a federal judge in Akron, Ohio, that it will abandon its case against Friedman, who has already served 11 months in prison, rather than reveal details of Presser’s cooperation with the FBI.

This tight-lipped approach has made it difficult to answer the larger questions raised by the Presser investigation.

Clearly, however, the costly glitch in communications between the government agencies reflects a problem that is not confined to the Presser case. A retired IRS supervisor says that during his career the IRS repeatedly had to scuttle investigations because the FBI would not provide guidance on its informants.

“They’d never tell us in a timely manner,” he said. “Apparently their policy is non-disclosure, totally.”

Targeting a Suspect

According to the former official, the IRS would alert the FBI that it was targeting a suspect and ask if he were a government informant. “They’d deny it, so we’d go ahead and prepare a tax case for prosecution,” he said. “But the case would go down in flames. We’d find the bureau had gone to the judge or the Justice Department to say the man, indeed, was one of their informants.”

That appears to have been the pattern in the Presser case.

Federal prosecutors in Cleveland were never informed that the FBI had permitted Presser to pad his payroll with the ghost workers who had underworld connections. A federal grand jury and an internal inquiry at the Justice Department are seeking to determine if that breakdown in communications was accidental or deliberate and whether FBI agents misled their superiors about their long dealings with Presser.

Jurisdictional Rivalry

Senate investigators also are exploring the question of whether jurisdictional rivalry between the FBI and the Labor Department’s Office of Labor Racketeering contributed to the problem.

The Labor Department’s anti-racketeering office, created by Congress in 1978, performed all of the investigative work on the Presser and Friedman cases--an area reserved exclusively to the FBI before 1978. The FBI and the Justice Department’s criminal division, in fact, opposed the creation of the Labor Department unit.

California Rep. Don Edwards (D-San Jose), chairman of the House Judiciary subcommittee on constitutional rights, which has long concerned itself with the FBI’s use of informants, said:

“The Presser case illustrates the lack of cooperation” between the FBI and the strike force. “This appears to have been a classic case of the right hand not knowing what the left hand was doing.”

A Larger Question

On the larger question of using an informant like Presser and--in effect--giving him a license to commit fraud, the FBI’s defenders say that Presser’s alleged access to information from important organized crime figures outweighed prosecuting him for the comparatively “minor” crime that the labor investigators had uncovered.

In late 1976, then-Atty. Gen. Edward H. Levi moved to curb any abuses from the FBI’s use of informants by issuing guidelines that, among other things, barred informants from initiating any plan to commit criminal acts or to take part in them, unless the FBI determined it was necessary to obtain information for federal prosecutions. The guidelines were further tightened in 1980.

The Justice Department’s investigation of the case is focusing in part on whether FBI agents violated these guidelines in their handling of Presser.

“Control of informants is an ongoing problem for law enforcement agencies,” Edwards said in an interview. “There is always a risk that informants, if left on their own with no supervision, will use the shield of the FBI to set up their own scams or commit other crimes unrelated to the undercover operations, knowing their status as an FBI informant will protect them from prosecution.”

Informants Overused

One federal law enforcement official agreed: “A lot of us have thought the FBI overuses informants, a practice that carries a risk. But you’ve got to remember that when you’re dealing with complex cases, it’s difficult to make them with just a wiretap.”

Because the FBI refuses to acknowledge publicly that Presser has been an informant, it is difficult to assess what it got in exchange for what it gave up.

“That’s a management-policy decision,” commented one federal law enforcement official. “You have to make sure the fellow you’re giving a pass to is not as bad as the one you’re trying to get. But we really don’t know enough here to make that determination from outside.”

One official pointed out that one issue of prime concern during some of the time that Presser worked with the FBI was the “Hoff-ex” investigation, the effort to determine who killed former Teamsters President James R. Hoffa.

A Footnote to History

It would seem to take more than information about what is fast becoming a footnote to history, however, to justify the government’s countenancing of corruption at the top of a major union.

“It’s one thing to tolerate low-level offenses to get a Mr. Big,” said James Fyfe, a former New York City police lieutenant and now an associate professor of justice at American University in Washington. “But it’s another when you’re dealing with Mr. Big.”

“The investigative principle is you use a little fish to get a big fish, but there’s a great deal of controversy over that,” Fyfe said. “If you’re using low-level hookers and dope dealers to get information on robbers, there’s an ethical question about condoning hookers and dope dealing.”

“Here, the major question is why use a top guy as an informant to get the underlings,” Fyfe added.

Administration Ties

There is also the question about appearances raised by the ties between Presser and high-level Administration figures up to and including President Reagan. As the only major labor leader whose union endorsed Reagan in both 1980 and 1984, Presser has had regular access to top Administration officials--and has been warmly praised by them--throughout the course of the investigation.

Soon after Reagan’s election, Presser was named to the President-elect’s transition team, an appointment that was criticized because the then-Teamsters vice president was a defendant in a federal civil suit against the union’s scandal-plagued pension funds.

Edwin Meese III, then head of the transition office, dismissed the criticism, saying: “The government is no more reliable than any other plaintiff.”

During the 1980 campaign, Presser and his late father, William, staged a lunch for Reagan in Ohio where the candidate was wooing blue-collar voters. When it was pointed out that William Presser had been convicted of destroying subpoenaed records and contempt of Congress, Meese said: “We’re not about to tell a fellow he can’t invite his father to lunch.”

Courtesy Call

As President-elect, Reagan and Meese, who is now attorney general, paid a courtesy call on Presser at Teamster headquarters in late 1980 and posed for photographers. In April, 1983, after Presser was elevated to president from union vice president, then-White House counselor Meese attended a celebration at union headquarters. President Reagan personally telephoned his congratulations to Presser.

White House counsel Fred F. Fielding circulated a memo to presidential aides in the summer of 1983 suggesting that they give a wide berth to Presser because he was the target of a federal criminal investigation, but Presser continued to enjoy easy White House access. In October, 1983, he had a two-hour meeting at the White House to express his opposition to trucking deregulation. Meese, again, was among those attending.

Meese, through a spokesman, said that his contacts with Presser amounted to only three meetings in 4 1/2 years.

Inaugural Post

Last fall, just three months before federal prosecutors in Cleveland formally recommended Presser’s indictment, Vice President George Bush flew to Columbus, Ohio, to accept endorsement of the Reagan-Bush ticket from Presser and his 1.9-million-member union. After Reagan’s reelection, Presser was named co-chairman of the Labor Inaugural Committee.

Apparently reflecting sensitivity over Meese’s ties to Presser, high Justice Department officials went to unusual lengths in July when the Presser case was dropped to emphasize that Meese had taken himself out of the case, leaving the decision to subordinates.

Meese later explained that he had two grounds for the action. One was that the case had been going for a long while before he took command of the Justice Department and the other was that as a recent arrival from the White House, he wanted “to avoid the appearance of political interference.”

Offered Support

Presidential aides, however, have offered support or congratulations to Presser in recent weeks on the dropping of his case.

Edwin J. Rollins, Reagan’s political adviser, congratulated Presser in a speech Aug. 2 at a Teamsters convention at Dearborn, Mich. “I want to congratulate you on having that tremendous burden on your head, unjustifiably, for five years, finally put to rest for good,” Rollins declared.

Two days earlier, Linda Chavez, the President’s assistant for public liaison, spoke before the same convention. Said Presser: “We thank you for all of the support that you’ve given us, and we look forward to more of the same.”