by David Howard
J.J. apologized. “I was just trying to get the car back,” he said.
When the agents talked later, Jack would relate that Phil had come within fifteen yards of the Thunderbird. Another ten or so steps and he would’ve been close enough to see inside.
—
The Brits arrived, and they hunkered down for the rest of the day and into the next, the Fourth of July, in Phil’s hotel room. The goal was to cook the Seven Oak books—figure out a way to bolster the bank’s net worth so they could file the quarterly financial statement, which had been due in March. They needed to conjure some accounting black magic in order to convince Britain’s Board of Trade not to close or liquidate Seven Oak for another month or two. Packman produced a ledger that showed all the Seven Oak letters of credit Phil had issued.
The agents perused it, and J.J., who held an accounting degree, was amazed at the jumbled state of the records. The ledger showed the bank with a $300,000 balance—but Phil and Packman had long ago spent whatever money depositors had entrusted to Seven Oak. Meanwhile, the bank was, at least on paper, on the hook for millions of dollars in CDs and letters of credit. With all the fraud festering inside the bank, no one wanted to put his name on any government report.
When Packman left, Phil confided that he’d issued even more securities that he’d never told Packman about and that, as a result, weren’t in Seven Oak’s books. But soon the bank would be Pro’s headache. As the new owner, he would have a fresh opportunity to stall on the quarterly report, and he would be able to issue paper during whatever respite the British government offered.
—
Somewhere in a different part of the hotel, Bowen Johnson sat on his bed, trying not to think about his wife, nine-year-old son, and six-year-old daughter. Back home in suburban Indianapolis, they had fired up the grill without him for a Fourth of July cookout. The separation from his family for weeks at a time was the toughest part of Johnson’s role—that and traversing long tunnels of tedium. There was no sightseeing when Jack and J.J. were attending private meetings; Johnson had to be there if they called or knocked. All he could do was flip through the few channels the hotel made available, hoping for something diverting. He didn’t complain, though. His father had espoused the ethos that the job came first. “That was what you signed up for,” he said. “That was part of the game.”
Johnson couldn’t ask for backup, either. Requesting help from agents in another city—which was otherwise normal protocol—would require him to walk them through OpFoPen’s complexities. “I couldn’t just go into another division,” he said, “because I could not transmit the vastness of all that material.”
But the case’s recent revelations—in particular, the emergence of organized-crime figures—had galvanized the FBI. The next day, the bureau appointed three additional agents to travel with Johnson to help with surveillance, cover, communications, equipment, evidence handling, and whatever else he needed. They would coordinate with local FBI offices wherever Jack and J.J. followed Phil. These agents would send out daily teletypes, distributing background information about Operation Fountain Pen and forwarding leads. This was, in its own way, a remarkable development. Under Hoover, agents had rarely traveled beyond their own area. Now an entire backup unit was bouncing around America along with two undercover agents.
Things were just as frenzied back in Indianapolis. Brennan and Wedick had by now identified more than two dozen suspects around the world. Normally the FBI office would store information about a case in a single file. But OpFoPen spanned many dozens of cases involving shifting sets of promoters, victims, and paper. “It became a monumental nightmare,” Bowen Johnson said. “To wade into something as vast as this was and to get on top of it with the technology we had at that time….It was an incredible amount of paper.”
These complexities had prompted the Indianapolis division to develop an entirely new data-retrieval system; by late June, there were already more than twelve hundred references in the indexes. Computers would have helped. Brennan had minored in computer science, and he argued that the bureau would be better off digitizing the files. The agents had pitched the idea to Jim Deeghan in the spring. Deeghan, in turn, had asked headquarters—but had received no reply. On June 30, he’d pestered the higher-ups again as the demands of the case mushroomed, but he had yet to receive any answer. Instead, the FBI delivered more bodies. During the month of July, Washington would send the Indianapolis office eight special agents and five support staff on temporary duty.
There were downsides to gaining the attention of the bosses in D.C. By the Independence Day weekend, the FBI brass had handed oversight of the case to three different units. Calling headquarters, Frank Lowie had spoken to seven different supervisors. Each new unit and bureaucrat had to wade into a stream of information that was moving so fast they needed hours of briefings to fully grasp what had taken place before. Naturally, this caused delays in decision making. When Lowie complained, the bureau made a huge concession: He received permission to hurdle all midlevel management and go straight to Jim Adams, the assistant director in charge of the FBI’s entire criminal division.
But even this didn’t resolve all the quandaries Johnson faced. In some cases, Phil cooked up schemes that carried the potential to damage the economies of small nations, as in one case involving millions of dollars in counterfeit notes from Swaziland. In that instance, Johnson spent hours trying to reach someone in the State Department.
That summer, the FBI conducted its annual inspection of the Indianapolis office. This was strictly a bean-counting exercise—a holdover from the Hoover era meant to assess whether each bureau office was generating sufficient statistics for the dollars it was allotted. According to one published account, the “arrest quotas were used to dress up the FBI’s image at budget-crunching time in Congress” and led to jokes that the agents were really working for the Federal Bureau of Accountancy. It was, in other words, exactly the kind of exercise that would have, in the old days, set off klaxon sirens about Operation Fountain Pen, with its slow build and relatively high cost, and not a single arrest yet to show for it. But Assistant Inspector Tom Baker was new to the job, and he had never been indoctrinated into the mandarin sensibilities of the previous administration. When he called Brennan and Wedick in for interviews, they described hiding in restaurant bathroom stalls with a malfunctioning Nagra, taking notes on matchbook covers, sneaking out at two a.m. to call in reports. Baker had never heard anything like it. What particularly astonished him was the lack of “backstopping”—that the agents were doing this with no training or false identities.
“Really it just shocked me,” Baker said. “They were going by the seat of their pants. The pressure these guys were under, that impressed me very much.”
His report recommended that the bureau leave the agents alone to do their thing.
—
On their way through O’Hare, headed toward their flight to New York on July 6, J.J. spotted a caricature artist and had an idea. He walked up and handed the guy a twenty. Phil and Jack strolled over, curious. Phil tried to get J.J. to move along but stopped when he saw the image.
The scene showed a boat on a cerulean-blue sea with the words “Seven Oak Finance” printed on it. The boat was sinking, and there were three figures on it ready to leap off.
Phil smiled and said, “Oh, yeah, this is perfect.” He then commissioned his own illustration. The artist wrote the words “1st National City Bank of…” and then “Haiti” appeared as characters with clown noses and roller skates. Dollar signs and a palm tree were scattered around. Across the bottom were the words “Board of Directors” and the names “Phil,” “J.J.,” and “Jack.”
Phil took the cartoon, held it aloft, and smiled widely before they set off to catch their flight.
—
The first order of business when they reached New York was to close the Seven Oak sale with Pro, who handed over $17,000 as a first payment, saying he would deliver the other three grand s
oon. He also gave Phil a check for $14,000 from another deal, which led to a moment that rattled the agents. Phil no longer had Seven Oak available to launder the check, so he asked Jack to deposit it in his account. Jack tried to equivocate and change the subject, but Phil stopped him. “Now, come on,” he said. “I saw a deposit slip in your luggage.”
Jack stared at him. Five months they’d been traveling together, and Phil was still looking through their stuff. He’d discovered a mail-in deposit envelope in a crevice of Jack’s bag. Jack tried to be careful about what he carried around, but he couldn’t undo his nature—and at times, Phil was so companionable they could almost forget. Then something like the deposit-slip incident would happen. “There was always that tension,” Jack said.
Jack told Phil that he would think it over, and the agents conferred with Johnson. Phil hadn’t told the agents where the money had come from, so the FBI okayed the deposit.
Phil and Pro discussed an array of other deals, including one in Fort Lauderdale being spearheaded by Vinnie DiNapoli, a capo, or made man, in the Genovese crime family. DiNapoli was the leader of the organization’s 116th Street Bronx crew. (The DiNapolis were seriously mobbed up: His older brother, Joseph “Joey Dee” DiNapoli, was a soldier in the Lucchese crime family; his younger brother, Louis, was also a wiseguy.) DiNapoli’s idea was to open a place called the Lauderdale Beach Hotel and spread the word that it was gay-friendly. Operatives would surreptitiously take pictures or video of guests in intimate encounters, and the mafiosi would then extort payments from travelers eager to keep their activities secret. DiNapoli called his pet project the “fruit hotel.”
On the same day, Pro was also dealing with Bernard Baker, the Kansas farmer. Pro had met him in Idaho a couple of weeks earlier, during “a cross-country tour of appeasing a few customers.” The trip’s purpose was ostensibly for Pro to meet with an Idaho banker to discuss facilitating Baker’s loan. After returning to New York, Pro wrote a letter reassuring Baker that he would return the $110,000 deposit if the loan fell through. “I wish to again reaffirm to you that the unfortunate situation that has occurred in Cleveland has no effect to our transaction,” Pro wrote.
But the charade continued. Between meetings with Phil and the Junior G-Men, Pro informed Baker that the closing would be delayed until July 11; a few days later, he attributed another delay to Queen Elizabeth’s Silver Jubilee.
Pro gave Phil and the agents the same runaround on the $183,000 balance of the Seven Oak sale. They walked over in the afternoon for the money, and Pro said it was coming in the morning—but then it still wasn’t there the next day. And so on. They started calling it the Parade. To placate them, Pro sent Dorian Mangiameli to the Essex House bar with a small good-faith payment of $5,800.
Pro wouldn’t talk about the arranged hit on Mucci. J.J. and Jack still heard wisps of news about it, dropped comments. But no one knew for sure what was up.
The lingering specter of a mob killing added to the agents’ growing unease. When they were in New York, they felt their parallel worlds bunching up, clattering into each other. One day after work, the threesome headed to the East Side for drinks. After they sat down, J.J. looked across the bar and spotted Peter Vaira, the head of the Justice Department’s organized-crime strike force in Philadelphia, sitting with three or four FBI agents. Kitzer was unloading his Pall Malls and lighter when J.J. leaned over to Jack and nodded in Vaira’s direction. Jack glanced at Vaira, then back at J.J. The agents exchanged a look that said: Let’s get the hell out of here.
“Hey, Phillip, we’re leaving,” J.J. said, tugging at his arm.
There was another major development looming: The July 8 installation of a wiretap and bug in Trident Consortium’s offices. That day, Phil, Jack, and J.J. headed into the elevator in Pro’s building. Unexpectedly, the car went down and the doors opened in the basement, where two phone-company employees were working on the box. Jack glanced up and recognized a third utility worker as Rich Reeves, actually a fellow FBI agent, waiting to board the elevator. Brennan looked down, hoping Reeves wouldn’t blurt out “Hey, Jack!” Reeves stepped on, rode wordlessly to the first floor, and exited.
Phil and Jack headed home that afternoon, but J.J. stayed in New York in case Myron Fuller needed help on the inside bringing the wiretap online. Knowing the FBI would need to break into Pro’s office that night to install the microphone, J.J. offered to take everyone—Mangiameli, Sy Guthrie, Pro, and their dates—to dinner at the Essex House, then to a Lower East Side nightspot. He waved everyone out the door of Trident, then quickly twisted the knob so the lock popped open before he closed the door. They were all crowding onto the elevator when Mangiameli said, “Oh shit, I forgot my wallet.”
He walked back to the office, pulling out his key. “Huh,” he said when he found it unlocked.
“Dorian, what’s the matter?” J.J. asked, following him. “Let’s go.”
“Yeah yeah yeah,” Dorian said. “I don’t know how that door was unlocked.”
J.J. again positioned himself to leave last, and repeated what he’d done the previous time. But then they heard the phone ring inside the office. Mangiameli again left the elevator to answer it, and J.J. pretended to be baffled when Dorian again turned the knob and opened it. “I locked it,” J.J. said with a shrug.
This scenario played out a third time when Dorian darted off the elevator to double-check the door. “How the hell could this happen?” he said when he again found it open.
Shit, J.J. thought, I gotta stop.
If Fuller was going to bug the place, he was going to have to break in.
19
The Blackout
JULY 10, 1977
J.J. was back in Chicago when he saw the headlines out of Southern California. A sensational daytime armed robbery had taken place at Swiss Vaults Inc., a private safe-deposit firm and gold and silver exchange in Santa Ana. News accounts said that police had found Vincent Carrano, the business’s rotund forty-six-year-old co-owner and president, taped to his chair in a back office.
Carrano told a harrowing tale. A man who identified himself as Mr. Pena had telephoned at ten-thirty that Saturday morning asking to deposit twenty bags of silver coins—about $70,000 worth. That afternoon, a dapper man carrying a black blazer over his arm and wearing a wide-brimmed straw hat appeared at the door. Carrano was showing Pena toward the vault when the visitor growled, “Keep moving and don’t say anything.” Pena brandished a .380 automatic pistol. He walked Carrano past display cases and ordered him to open the locked rear doors, then they headed to the office. “The gun looked nine feet long,” Carrano told a reporter.
The vaults, secured by bank-safe doors, harbored more than a hundred customers’ valuables—coin collections, mostly. Carrano heard other voices and the sounds of heavy things being dragged. Eventually an accomplice peered into the office and told Pena, “Take care of that fat son of a bitch before you leave.”
“I was so scared,” Carrano later recounted, “I wet myself.”
Carrano’s captor cut strips of surgical tape and bound his arms and legs to the chair. When Carrano was sure everyone was gone, he worked at the tape until he was able to free his right hand. Then he scooted the chair across the room to a silent-alarm button. After pressing it, he lost his balance and toppled, hitting his head on a credenza and knocking himself unconscious. Police arrived to find the vaults emptied of three to four tons of gold and silver ingots, bullion, and coins; Carrano’s cream-colored Lincoln Continental was also missing. The total loss: $1.1 million.
The chances of recovering any precious metals seemed virtually nil, because they could be melted and recast. “Silver and gold, no problem,” Carrano’s business partner, Jack Fulton, said. “Melt it down. It has no memory.” (Fortunately, Carrano’s insurer covered theft for amounts up to $750,000.)
Almost immediately, however, Santa Ana detectives seemed more interested in Carrano than in Pena. Parts of his story struck them as curious. And it turned out that in 1970
, he’d been indicted on twenty-seven counts of mail fraud and conspiracy in the manipulation of stock in a Massachusetts railway company. He’d pleaded guilty to three of them.
—
Just as Myron Fuller’s team was installing the wiretap at Trident, his informant Mel Weinberg received a call from mob-connected Joe Trocchio with a question: Did Mel know any hit men in Cleveland? Trocchio explained that Pro was looking.
Weinberg, who had roots in Pittsburgh, replied that he would call a guy named Jim Pagett, who went by J.P. Then he called Fuller at the FBI.
Fuller, not knowing that Wedick was already on it, came up with an idea. A short time later, Trocchio’s phone rang, and the caller identified himself as J.P. It was actually Weinberg, disguising his voice. He said he could do the job for $10,000—with half up front. Trocchio agreed to send the cash through Weinberg.
With the wiretap live, Fuller listened in as Pro coordinated the hit. Referring to “getting lumber and hammers for the construction job” on the “Cleveland project,” Fred said he planned to ride his limo to Trocchio’s Long Island house with a dossier on Armand Mucci, including a map of the Shaker House and handwritten notes about Mucci’s car and his preferred restaurants.
Weinberg, serving as the go-between with the fictional hit man, visited Trocchio to collect the contract money. But Trocchio gave him only $2,500—half the advance fee. Weinberg waited a week, then told Trocchio that J.P. wouldn’t do the hit until he received the other $2,500. Trocchio grew angry. “I’ll send out a hit on him,” he said.
Weinberg, now enjoying the role, called Pro playing the part of Pagett, the hit man. “Pro, you didn’t keep your promise,” he said.
Fred swore he’d given Trocchio $10,000, leaving Weinberg convinced that Trocchio had skimmed some of it. “That’s the kind of people these are,” said Weinberg, the longtime con man. “There’s no honesty anymore.”
