Deal With the Devil: The FBI's Secret Thirty-Year Relationship With a Mafia Killer

by Peter Lance

  Once the Feds identified KSM’s presence there, the FBI’s elite Hostage Rescue Team was dispatched to Doha, the capital, for the takedown, but were told to cool their heels in a hotel while the Qataris “put the handcuffs on” KSM. Then, a day later, when the agents finally went to a safe house where KSM had been hiding, he had already fled to the Czech Republic, using the alias Mustafa al Nasir.32

  The “Scarpa Materials”

  Despite the loss of KSM in Doha, as the Bojinka trial got under way in the Southern District of New York against Yousef and two of his co-conspirators, Greg Scarpa Jr. continued feeding Bureau agents a constant stream of intelligence. Among the many revelations contained in the FBI 302s was a plot disclosed by Yousef in which Osama bin Laden, whom he code-named “Bojinga,” would arrange the hijacking of a series of U.S. airliners in order to free the Blind Sheikh, Yousef, and his Manila cohorts.33

  That intelligence alone was considered so important that it turned up in the infamous Presidential Daily Briefing (PDB) delivered to George W. Bush in Crawford, Texas, five weeks before the 9/11 attacks.34

  The trove of intel contained in the dozens of FBI 302 memos memorializing Scarpa Jr.’s initiative from March 1996 through February 1997 was virtually self-authenticating. For example, in May 1996, Greg Jr. obtained this schematic of Yousef’s Casio-nitro IED from the Philippine Airlines bombing plot and passed it to the FBI.

  (Peter Lance)

  The drawing contained a detail that only the bomb maker could have known about at that time: the C106D semiconductor that Yousef had soldered into each of his “bomb triggers.” During testimony in the Bojinka trial, the Feds would later describe that as Yousef’s unique “signature.” But that information wasn’t disclosed by the Feds publicly until August 26, 1996, three months after Junior passed it to the FBI.35 Apart from Ramzi Yousef, there was simply no way that Greg Jr. could have come into possession of that singular intelligence.

  (Peter Lance)

  Any doubt as to the authenticity of the evidence can be dispelled by comparing the schematic to the photograph at left. It was taken from the FBI lab report on items seized in a search of Room 603 at the Doña Josefa apartments in Manila—Yousef’s bomb factory. The systems are virtually identical.36

  Discrediting Scarpa Jr.

  In his 1998 trial, Greg Scarpa Jr.’s defense would be that the RICO violations he was charged with were the result of crimes that had effectively been sanctioned by Lin DeVecchio.

  “At some point, personnel in the EDNY came to understand the significance of Scarpa Junior’s testimony,” says defense attorney Flora Edwards, who later used Greg’s admissions about his father and DeVecchio in her efforts to secure a new trial for Vic Orena Sr. “Greg Junior had to be discredited. Because once he became credible about Ramzi Yousef, then he’d be credible about what he was going to say in my hearing too.”37

  There’s no doubt that key officials tied to the prosecution of the war cases had direct knowledge of Greg Jr.’s intelligence initiative with Yousef. The 302 on the next page, from March 7, 1996, shows that Junior and his lawyer, Larry Silverman, discussed the sting with not only AUSAs Valerie Caproni and Ellen Corcella, and SA Howard Leadbetter II from the C-10 squad, but also Dietrich Snell, the Southern District AUSA who was about to prosecute Yousef in the Bojinka case with Mike Garcia.38

  Also present was Senior AUSA Patrick Fitzgerald, who was co-head of the SDNY’s Organized Crime and Terrorism Unit and thus straddled both the OC and counterterrorism aspects of the Scarpa Jr.–Yousef initiative.

  The reams of detailed intel Greg Scarpa Jr. extracted from the bomb maker over eleven months were not only genuine, they were unique to Yousef, and of such complexity that no Mafia wiseguy with Junior’s tenth-grade education could have fabricated them. On the other hand, Yousef had nothing to gain by leaking secrets if he knew that Greg Jr. was working with the Feds. The details he let slip—like the presence of his cell members in New York, the bin Laden plot to hijack planes, and the two death threats—could only have earned him additional criminal charges if the Feds had learned of them and decided to prosecute.

  Then, on August 22, 1996, four months after his DeVecchio memo to Louis Freeh, James Kallstrom attended a high-level meeting in Washington with the FBI director. Another person in the room was Deputy Attorney General Jamie Gorelick, who went on to become one of the ten 9/11 commissioners.39

  (Peter Lance)

  Shortly after that meeting, the Feds began to seek another way to explain the Yousef intel without lending credibility to Junior, a witness whose testimony could impact the fifty-nine remaining war prosecutions.

  Since the evidence, now contained in dozens of FBI 302s, couldn’t be ignored, the Feds came up with a new story: that it wasn’t really evidence at all. Yousef and Scarpa had concocted it. That was the explanation given in a federal court ruling denying Ramzi Yousef’s appeal of the Bojinka case.

  “In late 1996,” wrote the court, “the government learned from two sources that Scarpa was, in fact, colluding with Yousef and others to deceive it.”40

  It didn’t seem to matter that those FBI 302s had documented death threats the terrorist made to Greg Jr. and his family, or that the wiseguy had risked his life for eleven months to “rat out” Yousef and his “people” in New York. The Feds were now taking the position that, together with Ramzi, Scarpa Jr. had made it all up.

  Undermining the “Hoax and Scam” Story

  The most detailed explanation of the fabrication story was contained in a June 25, 1999, sworn affirmation by then AUSA Patrick Fitzgerald. Though the affirmation remained under seal for many years, I was able to obtain a copy and published it in my previous book Triple Cross.* In the affirmation, Fitzgerald wrote that the government initially confirmed that some of Scarpa Jr.’s revelations “appeared to be accurate.”41

  However, Fitzgerald continued, “By late summer 1996, the government made an investigative decision that it no longer wished to pursue the investigation of Yousef using the ‘patch through’ telephone.” Fitzgerald then went on to declare that he had “since learned information which convinced [him] that Scarpa’s effort at ‘cooperation’ was a scam in collusion with Yousef and others. . . . In the latter part of 1996, Scarpa . . . told the government that an inmate, John Napoli, had even better access to Yousef and his colleagues than Scarpa himself.”

  Napoli, a former Gambino family associate who had been convicted of money laundering, arrived on the ninth floor of the MCC nearby Scarpa Jr. on December 17, 1996, more than nine months after Yousef started slipping kites through the cell wall to Junior. Now the Feds, through Patrick Fitzgerald, were claiming that Greg Jr. had confessed to Napoli that his work informing on Yousef was a fabrication.

  That position was accepted by a series of judges. In denying a motion by Yousef’s codefendant Eyad Ismoil in the second World Trade Center bombing case, Judge Kevin Duffy used the words “hoax” and “scam” to describe the 302s, which the Feds called “the Scarpa materials.”

  “It is now clear that Scarpa’s claims were actually a hoax concocted by Scarpa and the Defendants,”42 wrote Duffy, who concluded that “Scarpa’s allegations of Yousef’s threats were merely part of a ruse without any substance behind them.”

  In a motion opposing a new trial for Yousef, the government insisted that “Napoli understood that Yousef was aware of and a willing participant in [Scarpa’s] fraud on the government.”43

  But Larry Silverman, Greg Jr.’s lawyer at the time, argues that “it couldn’t possibly have been a hoax . . . because this information that [Junior] provided came forth in stages. And if at any point in any of the stages, the information that he was providing was inaccurate or a hoax, the government would have pulled the plug at that time. They would not have given him a camera to use in an institution, which is a highly unusual event. They would not have provided monies to put in Yousef’s account on Scarpa’s behalf to give him the credibility. They would not have allowed Scarpa to have Yousef mak
e telephone calls through an FBI source. All of these things . . . occurred in sequence; they all didn’t occur on one day. To say that all those things were a hoax really does injustice to what information he provided.”44

  Napoli’s Denial

  Because the quality of the Yousef-Scarpa intelligence is a crucial issue in determining whether federal prosecutors discredited potentially probative evidence, I sought out John Napoli. In 2006, the former Gambino associate was serving a term at the Big Spring Federal Correctional Institution, a minimum-security prison located between El Paso and Dallas, Texas. On February 11, 2006, I arranged for Napoli to call me while I was in the office of his attorney, Gerald LaBush, in New York City. With Napoli’s permission, I recorded the conversation—and what he told me was startling.

  Napoli said that while Scarpa Jr. had asked him to testify for him in his upcoming RICO case, and offered to cut him in on the Yousef intel in return—as a means of a currying favor with the Feds—the actual intelligence initiative itself was completely genuine.

  As a measure of his credibility, Napoli even cited Yousef’s Toshiba laptop, which the Feds knew contained cryptic references to Osama bin Laden, whom Yousef had code-named “Bojinga” in his communiqués to Scarpa Jr.

  My interview with Napoli, transcribed verbatim here, reads like dialogue from The Sopranos, complete with references to “Bojangles” (for “Bojinga”) and “Saddam” (for “Osama”). But the content of his account is extremely credible.

  Lance: John, when they concluded at Greg’s trial that the material was a hoax and a scam, they claim that you and one other witness corroborated that.

  Napoli: What happened was this: When I got there [to the MCC], Scarpa approached me. We became kind of friends, and he started telling me what he was doing about cooperating with Yousef. And he had this great plan that I could testify for him, and in return that he would give me information to bring to the Southern District about Yousef. I said, “What information would that be?” And he said, “Well, they found a computer with Bojangles and they don’t know the name. I never gave it to the Feds.” And he told me who Bojangles was and it was Saddam bin Laden.

  So I called [Assistant U.S. Attorney David] Kelly. I never said anything [to Kelly] about [Greg Jr.] giving false information. I never spoke to Ramzi. I never spoke to Ismoil. I never spoke to none of them. Zero. No conversations. Not one. And they [the Feds] said, after this is all done, that I came to them and I said that I was gonna go along with Scarpa’s plan. At no point did [Greg Jr.] have a deal with Yousef to give false information. Yousef had no clue what Greg was doin’.

  As far as my personal[ly] being there, hearing it, seeing it—anything that Yousef gave Greg wasn’t a scam. It wasn’t a hoax. He [Greg Jr.] wasn’t trying to do anything with Ramzi against the government. He was legitimately trying to help them. He was giving them information.

  Indeed, a timeline put together by Napoli’s attorney indicates that he met with AUSA David Kelly early in 1997, around the time Scarpa Jr. ended his intelligence initiative with Yousef. Kelly, who was then Fitzgerald’s partner as co-head of the Organized Crime and Terrorism Unit, went on to become the U.S. Attorney for the SDNY—the top federal prosecutor in New York City. In 2011, Fitzgerald became the U.S. Attorney for the Northern District of Illinois (Chicago) and later came to national attention as special prosecutor in the Valerie Plame CIA leak investigation.45

  During my research for Triple Cross, I sent a series of questions to Fitzgerald relating to his 1999 affirmation, but through his spokesman in Chicago he declined to respond. Then, beginning in October 2007, after Triple Cross was published in hardcover, Fitzgerald sent the first of four letters to my publisher, HarperCollins, totaling thirty-two pages, in which he claimed that I had defamed him in the book.*

  He not only demanded that we cease publication of the hardcover edition, but also that we kill the planned trade paperback edition.46 HarperCollins denied Fitzgerald’s claim, but we undertook a twenty-month review of my research during which Triple Cross was entirely re-vetted.

  Declaring the book “an important work of investigative journalism,” HarperCollins published the trade paperback in June 2009. The new edition included twenty-six additional pages, in which most of Fitzgerald’s allegations were published verbatim. His detailed assertions with respect to the 1999 sealed affirmation and John Napoli’s disclosures are contained in that edition and reproduced in the endnotes of this book.47

  The Significance of the “Hoax and Scam” Allegation

  For Larry Silverman, Greg Jr.’s lawyer at the time, the suppression of “the Scarpa materials” represented a massive counterterrorism setback. “I believe that if the Feds had played this out correctly,” says Silverman, “they would have had [an] Italian Mafia mole being accepted as somebody who these terrorists could rely on. By doing that the FBI would have been in a position to have identified and even followed members of the Yousef cell.”48

  “There’s little doubt that if the FBI had fully utilized this intelligence that was coming out of Ramzi Yousef through Scarpa Jr., they could have connected major dots on al-Qaeda’s strength in the summer of 1996,” says Lieutenant Colonel Anthony Shaffer, the Bronze Star winner who started investigating al-Qaeda for the U.S. Special Operations Command in late 1999. “As we found, Yousef and the Blind Sheikh’s cell in New York were directly connected to bin Laden and the al-Qaeda leadership.”49

  The decision by federal prosecutors and senior FBI officials to write off “the Scarpa materials” would have far-reaching counterterrorism ramifications in the years to come. As the clocked ticked down on Yousef’s “planes as missiles” plot, it would now be carried out by his uncle Khalid Sheikh Mohammed, who had twice eluded the FBI—first in Islamabad, Pakistan, in February 2005, and a year later in Doha, Qatar.

  Chapter 39

  JUNIOR’S SECOND STING

  On May 20, 1996, while Greg Scarpa Jr. was still at work betraying Ramzi Yousef for the FBI, Lin DeVecchio took the stand in a hearing before Judge Jack B. Weinstein to determine whether Vic Orena Sr. should get a new trial.

  “On advice of counsel . . . I cannot answer your questions because of my Fifth Amendment privilege,” DeVecchio said.1

  But Orena’s lawyer Gerry Shargel kept questioning him. “Did there ever come a time when you met a man named Gregory Scarpa?” he asked.

  “My answer is the same as the previous one,” said the supervisory special agent.

  After two more questions, Judge Weinstein stepped in, asking DeVecchio if his answers would be the same for the rest of the examination. When he replied, “Yes, Your Honor,” Shargel tried to press on, but Weinstein halted the questioning.

  “I don’t want to make a circus of this,” he said. “Nothing is to be gained by your asking him . . . one hundred questions or so forcing him publicly to reiterate his constitutional privilege.”2 So Shargel asked the judge to “draw the adverse inference from DeVecchio’s taking the Fifth Amendment that he did leak information and that it affected the outcome of Orena’s trial.”3

  A few days later, Weinstein ordered the Feds to release more than one hundred pages of FBI 209s and other files detailing the FBI’s secret relationship with “34.”4 And by November, Weinstein made it clear that he would grant Shargel’s “adverse inference” motion if DeVecchio didn’t step out from behind the Fifth Amendment.

  By December, the Justice Department announced that it would consider granting Lin immunity a second time.5 In late January 1997, under growing pressure, DeVecchio’s attorney Doug Grover promised, “If he gets immunity, he’ll tell the truth.”6

  “How many times have you heard that a former FBI agent took the Fifth Amendment?” asks Larry Silverman. “The government was forced to grant him immunity—otherwise he wouldn’t testify.”7

  A month later, Judge Charles P. Sifton, who was then chief judge in the EDNY,8 threw out the murder convictions of Anthony and Jo Jo Russo and Joseph Monteleone for the pastry shop murders of John
Minerva and Michael Imbergamo.9 Noting that the Feds had failed to disclose Greg Scarpa Sr.’s pattern of blaming others in his FBI reports for murders he himself had committed, Judge Sifton strongly criticized the relationship between “34” and his handler, Lin DeVecchio, calling it

  a highly reprehensible trading of information between a law enforcement official and a criminal. . . . Scarpa emerges as sinister and violent and at the same time manipulative and deceptive with everyone including DeVecchio. DeVecchio emerges as arrogant, stupid or easily manipulated but, at the same time, caught up in the complex and difficult task of trying to make the best use of Scarpa’s information to bring the war to a close.10

  Now, on February 28, 1997, after finally getting immunity a second time—and after his lawyer promised he’d tell the truth—Lin DeVecchio took the stand and Gerry Shargel finally got a chance to question him about his alleged “unholy alliance” with Greg Scarpa Sr. Asked if he was Scarpa’s “law enforcement source,” DeVecchio snapped, “That’s nonsense. That’s absolutely incorrect.”11 Then, insisting that William Doran, his boss in the FBI’s New York Office, “was well aware the informant committed acts of violence,” Lin seemed to get amnesia.

  In response to more than fifty questions from Shargel, he responded, “I don’t recall,” or words to that effect.12

  “Lin had promised to tell the truth if he got immunity a second time,” says Andrew Orena, “and now he was dodging Gerry Shargel’s pointed questions. Most of us watching this in the courtroom were amazed.”13 Among the spectators were a number of FBI agents, two federal judges, and Allie Boy Persico, whose release was due in part to Greg Scarpa Sr.’s dying declaration.14