Appendix No. 2 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UNITED STATES OF AMERICA, PLAINTIFF, V. JOHN W. JENRETTE, JR., JOHN STOWE, DEFENDANTS. GOVERNMENT'S MEMORANDUM IN OPPOSITION TO DEFENDANTS' MOTIONS TO DISMISS AND MOTION FOR A NEW TRIAL Charles F. C. Ruff, United States District Attorney, District of Columbia John T. Kotelly, Of Counsel, Washington, D.C. Reid H. Weingarten, Trial Attorney, U.S. Department of Justice, Criminal Division, Public Integrity Section, P.O. Box 50168, F Street Station, Washington, D.C. 20004, (202) 724-7099 a In the early spring of 1978, the F.B.I. office in Hauppauge, Long Island began a small-scale undercover operation that had as its goal the recovery of stolen art and stolen or forged securities, bonds and stocks.1 "Abscam" was the code name for this operation, name derived from "Abdul Enterprises, Inc.," a fictitious, Bureau-created organization which allegedly was the source of enormous Arab wealth and which was interested in "investing" its money in the stolen art and illegal paper. The F.B.I. engaged the services of informant and convict Mel Weinberg in the Abscam investigation, to place Abdul in contact with persons who would be in a position to provide Abdul with what it was after. Weinberg was held out to be Abdul's "money man," while undercover F.B.I. agents manned other positions in the organization. John Good of the Hauppauge office was the field agent in charge of the undercover investigation. In the beginning of Abscam, Weinberg was contacted by many people who had heard that Weinberg had access to a virtually inex 'Throughout this response, we will make frequent references to the transcripts and exhibits generated during this litigation. We will use the following code: The Jenrette/Stowe trial transcript-TR. (page number). Trial Exhibits-Tr. Exh. Govt. or Def., No. Jenrette/Stowe due process hearing-D.P., date, (page number). N.Y. due process transcript-N.Y. D.P. (page number). Myers trial transcript-Myers Tr. (page number). The opening paragraphs of the statement of facts contain a summary of the early events in Abscam. Testimony on these events is found at TR. 899-942, 1451-1470; D.P., Nov. 12, 151-286; N.Y. D.P. 4424-4429. haustible source of Arab money. Some of these people proposed wholly legitimate financial transactions; others suggested or were willing to become involved in "deals" that indicated possible illegality. The former were turned away by the Abscam operatives. Weinberg was instructed to maintain contact with those in the latter category to see what opportunities for ferreting out crime would develop for the F.B.I. Simultaneous with his work in 1978 and early 1979 in the Abscam operation, Weinberg also worked for the F.B.I. in Florida in an undercover capacity in matters similar to but distinct from Abscam. (D.P., Nov. 12, 171, 174.) In both places Weinberg held himself out to be the agent for rich Arabs, but the interests in the two places were different. In New York, Abscam was interested in recovering property until Mayor Errichetti happened on the scene in December, 1978; in Florida, the undercover operation had focused on corrupt local politicians in South Florida earlier in 1978. (TR. 4031–4042; 4120-4122; D.P. Exh., Def. #7.) Weinberg was at all times now under discussion an F.B.I. informant; his work in Florida, however, was sometimes outside the control and knowledge of Good and the other Abscam operatives. This arrangement caused problems for the Bureau in the form of breakdowns in the flow of information between New York and Florida and in the use of Weinberg. The F.B.I. corrected this problem by assigning Agent Anthony Amoroso from the Miami F.B.I. office to New York in January, 1979. (Amoroso used the name "Tony DeVito" in the undercover operation and soon became "Chairman of the Board" of Abdul.) Subsequently, Weinberg was under the control of Amoroso in his Bureau work and Weinberg's activities were exclusively part of the Abscam operation. (D.P., Nov. 12, 176-178; May 18, 1978.) One of the people whom Weinberg was in contact with was John R. Stowe. This contact came about when two Florida "business brokers," Herman Weiss and Nola Skyler, communicated in the fall of 1978 and exchanged information that one knew of a source of finance (Weiss was then in contact with Weinberg and Abdul) and the other knew of a source needing finance (Skyler had been in contact with Stowe and knew of his interest in putting together a resort deal in the Caribbean islands). (TR. 3862-3865.) Skyler, on her own, without prompting from any government agent, suggested to Stowe that he contact Weiss to pursue this financing. (TR. 3871.) Toll records reflect that Stowe had contact with Weiss on September 17, 1978. (TR. 1271, Tr. Exh., Def. Stowe, #3.) Soon thereafter, Stowe was in contact with Weinberg. Weinberg taped part of a telephone conversation he had with Stowe on October 17 or 18, 1978. (Tr. Exh., Def. Jenrette, #2B.) (Several conversations were placed by Weinberg on the same tape over the two-day period.) While there is some ambiguity on certain parts of the conversation, the following is unmistakenly clear from the tape: 1. There is a discussion about Stowe bringing in bank documents from Switzerland for Weinberg with the help of a Congressman friend of his in return for 7% of the face value of the documents; and 2. Stowe tells Weinberg that his Congressman friend is 'as big a crook as I am." Weinberg taped another conversation with Stowe on October 20, 1978. (Tr. Exh., Def. Jenrette, #2C.) From this conversation we learn that: 1. There is now a discussion between the two men about certificates of deposit from an "island bank;" and 2. Stowe was discussing bringing in $300 million worth of certificates of deposit to be purchased by Weinberg for 7% of their face value ($21 million) of which Stowe was to receive one-half of 1% ($1.5 million). Weinberg taped another call with Stowe on October 30, 1978. (Tr. Exh., Def. Jenrette, #3B.) It is a brief conversation in which Stowe tells Weinberg that an attorney named Fisher, "with some connections over in the island," will be in contact with him. There is talk about a financial proposal of Stowe's and Weinberg promises to be in contact with Stowe in the future. Between October 10, 1978 and January 31, 1979 there were many telephone conversations between Weinberg and Stowe and one meeting involving the two men that were not recorded by Weinberg. These occurred when Weinberg was shuttling between the F.B.I. projects in New York and Florida and pursuant to the F.B.I. instructions to Weinberg to listen to all proposals and to maintain contact with those who appeared willing to engage in criminal conduct. None of these conversations involved discussion of C.D.2 deliveries and instead involved a variety of business propositions from Stowe. (TR 1312-1328.) In January, 1979, after Amoroso joined the investigation, the focus of the operation shifted dramatically. The agents were then in contact with Mayor Errichetti and, because of representations made by the Mayor, a decision was made to direct Abscam's activities almost exclusively into corruption in the casino industry in Atlantic City. (D.P., Nov. 12, 170-172; N.Y. D.P. 4321-25.) This decision dominated the course of events in the investigation in the next months and the toll records reflect that there were no calls between Weinberg and Stowe from January 31, 1979 until April 18, 1979. (Tr. Exh., Def. Stowe #3.) As Amoroso became more familiar with Weinberg and the operation, he learned of some of Weinberg's contacts in Florida, including his relationship with Stowe. In April, 1979, Amoroso reviewed the tapes Weinberg had made with Stowe, including calls recorded on April 18, 1979 (Tr. Exh., Def. Jenrette #4B), April 20, 1979 (Tr. Exh., Def. Jenrette #4C), and April 25, 1979 (Tr. Exh., Def. Jenrette #5A). (Tr. 277-278, 408, 911.) Weinberg did not tape the beginning of his April 18 call with Stowe. During this unrecorded portion Stowe mentioned the name of his Congressman friend, John Jenrette, for the first time in the Abscam investigation. Weinberg, hearing the name of the Congressman from Stowe, put his recorder on the phone and repeated 2 Certificates of Deposit will hereinafter be abbreviated as "C.D.'s." the name to preserve it on tape. (Tr. 1316-1317.) The seven minutes of the April 18 conversation that were recorded reveal that: 1. Stowe mentioned American Gear and Pinion, a South Carolina plant that makes detonators for bombs, apparently for the first time; 2. Stowe indicated an interest in running the detonators through a dummy corporation in Africa to avoid U.S. restrictions on the shipment of arms; and 3. Stowe told Weinberg of Jenrette's financial difficulties with a resort property and Weinberg offered possible help from Abdul "so long as later on I can ask him a favor." Weinberg made this tape in Florida and delivered it immediately to Agent Askeland of the West Palm Beach F.B.I. office. (TR. 1326.) On April 20, 1979, Weinberg and Stowe continued their discussions about Abdul lending money to American Gear and Pinion and Weinberg continued to express interest in the financial affairs of Jenrette. On April 25, 1979, Stowe and Weinberg talked specifically about the possibility of a financial arrangement between Abdul and Jenrette: MW: Yeah and I like to meet with the Congressman up in, ah, is his property's where, in Myrtle Beach. JS: Yeah, but I won't do that Mel until the, one thing at a time, ah, that guy is a very close personal friend of mine and, ah, ah, I, I don't know whether I want him to get involved in this or not. MW: Well, if he wants it fine, it's up to you. JS: Let me call John. I have held off talking with John, he has been out of town, ah, then I'm at, I am in West Virginia right now. I am in a hotel in West Virginia. Ah, what do you have in mind for the Congressman, may I ask. MW: Well you said you want, he has, ah, some property he wants financing. JS: Well he, he has it financed, he may want to refinance it, depends on, you know, what the heck, ah, what else can be worked out. Let me talk to him and see what he has got. MW: I can get, let me, let me, tell you something, alright. JS: Yeah. MW: I can give him any kind of deal he wants. JS: Well, I, I, know that and I, I, know there's going to be a, you know you're going to want a favor in return and I don't know whether I want to put him on the hook or not. MW: Ah, I, I don't want to, ah, when I want a favor, alright, I'll pay for the favor. I don't want nothing for nothing. JS: No, I, I understand that. I, I know that Mel. MW: Alright. JS: Right. MW: Ah. JS: I understand that. MW: I mean even if, if we want anything from him, alright. JS: Yeah. MW: We'll pay for it. We don't want it free of charge, so you won't have to worry about that. JS: I know, I know, I know that. It's just that, ah boy, let me contact him and see. (Tr. Exh., Def. Jenrette #33, p. 1–2.) Stowe also discussed with Weinberg the possibility of an Abdul loan to American Gear and Pinion for Jim Neal, the plant's owner and Stowe's friend, and his own plans for the future: JS: Well, I'd like for you to go. I got to run, I want to raise some capital here. I want to get back in business, Mel. I want to go back into the real estate business and get these, these contacts going again. There is a lot of money to be made and a lot of good, I think there are a lot of good deals floating around. So, I plan to be back in Myrtle Beach on my own again within the next, well I'll say within the next nine months. (Tr. Exh., Def. Jenrette #33, p. 4-5.) Amoroso's response when he reviewed these tapes was to instruct Weinberg to continue his conversations with Stowe and to encourage him to discuss the financial affairs of Jenrette. (TR. 278.) This relationship was not to interfere with the ongoing Abscam probe in Atlantic City. (TR. 278, D.P., May 18, p. 1377-78.) After Agent Askeland received word from Weinberg of the contents of the April 18 conversation, he sent a teletype to Bureau Headquarters describing the call and emphasizing the identification of Jenrette. (ITR. 4040, p. 56, Def. Joint Appendix.) A copy of this teletype was transmitted to the F.B.I. office in Columbia, South Carolina, Jenrette's home state. That office responded to Askeland's teletype with a teletype of their own, directed to Bureau Headquarters, the Miami office and the Brooklyn-Queens office. (D.P. Exh., Def. Jenrette #23, p. 105, Def. Joint Appendix.) This teletype described in detail the prior investigation into Jenrette's activities in Heritage Shores, a resort property in South Carolina, Jenrette's prior relationship with Stowe, and the financial difficulties of both men. The South Carolina teletype also notified the rest. of the Bureau that there was a connection between Jenrette and Keith Jones and Jack Morris, two who had been involved in an Abscam-related, C.D. "buy-bust" at LaGuardia Airport seven months before. Some of the contents of these memos were known contemporaneous with their production by Amoroso (TR. 604, 605) and Good (D.P., May 15, 904). By May, 1979, the Abscam investigation had produced some tangible results. Two payoffs had been made in connection with the Atlantic City probe and a case involving Senator Harrison Williams was proceeding apace. Agent Good decided to submit a recommendation to his superiors for a bonus of $15,000 for Weinberg. This recommendation was dated May 14, 1979, was authored by Good, and it described Weinberg's activities in New Jersey. (D.P., |