In every one of its recent "sting" operations, the FBI has used a front man with a working knowledge of the seamier side of business life to bait the hook.
In Operation Brilab, which resulted in the indictment Tuesday of reputed Mafia chieftain Carlos Marcello of New Orleans and others, the bait was twice-convicted white-collar criminal Joseph Hauser.
According to the federal criminal indictment handed down in U.S. District Court in New Orleans, it was Hauser who arranged business dealings between two undercover FBI agents and Marcello, who has long been a target of federal investigations.
Brilab -- for bribery-labor -- was custom tailored to Hauser's record.
In 1977, Hauser was convicted in Los Angeles federal court of bribing union officials to induce them to place their memberships' health plans with an insurance company he controlled.
Last year, he pleaded guilty in U.S. District Court in Phoenix to charges that he misappropriated about $7 million in premiums from a Teamsters health and welfare fund.
Already serving a 30-month sentence in a federal penitentiary for the Los Angeles conviction and facing more prison time in the Phoenix case, Hauser was ready to bargain with the federal strike force.
On May 5, he was sentenced in the Phoenix case to two years in prison, which will run concurrently with the prison term he is currently serving. While details of the plea bargain were sealed from public view, it seems clear that Hauser's role in Brilab was the reason for the light sentence.
Hauser, who is 48 years old, is not the type of person to adjust easily to prison life. Until recently, he lived in a $750,000 Beverly Hills house with neighbors such as director Vincente Minnelli and actor Kirk Douglas.
Always tanned and favoring open shirts with gold chains hanging around his neck, Hauser was an inveterate gambler who reportedly had an unlimited line of credit at the Dunes hotel and casino in Las Vegas.
Asked about his gambling, Hauser once replied: "Look, whatever I did, I didn't do it in a small way. I never did anything in a small way . . . I blew over $60,000 on Sunday afternoon . . . I would blow $30,000 or $40,000 and it was nothing."
According to a 1979 congressional investigation into his dealings titled "The labor union insurance activities of Joseph Hauser and his associates," Hauser allegedly financed his high life by looting union pension funds.
But Hauser also used some of those earnings to support various charities, according to his attorney, Henry B. Rothblatt of New York City.
In a "pre-sentence memorandum" to the U.S. District Court in Phoenix, Rothblatt said of his client, "Joe has spent his life selflessly helping others."
According to Rothblatt, Hauser was born in Barnov, Poland, and was sent to Dachau concentration camp by the Nazis. He quotes his client as saying that he was "the only Jewish family to survive the Holocaust from our town."
Hauser arrived penniless in New York City after the war, says Rothblatt, and held a succession of jobs in a slaughter house, a jewelry factory and as a real estate and insurance salesman. Then, in the mid-1960s, he moved his wife and three children to a rented house in Van Nuys, Calif.
From interviews and documents on the West Coast, it's apparent that Hauser soon discovered that there was money to be made handling insurance for labor unions.
He became freindly with the late Sigmund Arywitz, who was executive secretary of the Los Angeles County Federation of Labor and the target of federal labor racketeering investigations.
But even as his new company, Labor Insurance of America, enjoyed a spurt of business from Arywitz and other new found associates, Hauser came to the attention of the California Insurance Commission in 1967 when his $15 check to take the state insurance licensing examination bounced.
Hauser made a fortune from scandal-ridden California prepaid health plans, which were introduced by then-governor Ronald Reagan to shift coverage to private enterprise to save the state money. Arywitz arranged for Hauser to get contracts to handle prepaid health insurance for local unions.
Hauser's insurance companies always seemed to end up the same way -- bankrupt. Authorities and former associates claim that Hauser looted the companies to finance lavish gift-giving to union officials and politicians, and his own opulent life-style.
In a sworn statement made in connection with a civil suit, the head of Century Medical Inc., a small chain of Los Angeles hospitals and clinics dependent on Medicaid business, claimed he paid Hauser a total of $243,000 over several years for his promise to bring in union members.
Hauser failed to deliver the promised business, but the executive, Marvin Ross, claimed he continued to make payments because Hauser threatened labor unrest at the hospitals if he didn't. In his deposition Ross quoted Hauser as telling him, "You are going to be blackballed. You are going to have pickets. You are going to have garages instead of hospitals."
In 1973, a Hauser company, National Prepaid Health Plan Inc., had 60,000 subscribers and was Southern California's fastest growing health plan. That same year it went bankrupt, owing creditors about $2 million. Probing Hauser's activities, the state attorney general found that more than 35 percent of the premiums paid into NPHP by unions were diverted to an administrative subsidiary, also controlled by Hauser.
In 1977, Hauser was convicted in a federal case of bringing union officials to induce them to sign up their membership with NPHP.
At the same time he was under investigation in California, Hauser was busily planning his biggest business deal yet -- a deal that would lead to his second conviction.
Hauser wanted to supply 185,000 members of the Teamsters union with accident and health insurance -- and collect annual premiums of $7 million.
To help handle the business, Hauser called on Thomas D. Webb Jr., a Washington attorney and former FBI official. He also enlisted Washington public relations man I. Irving Davidson.
Davidson was among those indicted Tuesday on fraud, conspiracy and racketeering charges in Louisiana.
Webb called on former attorney general Richard Kleindienst, who often played golf at Burning Tree Country Club in suburban Maryland with Teamster President Frank Fitzsimmons.
Kleindienst took Davidson's request directly to Fitzsimmons and he later quoted the union chief as saying, "Old friend, I'll look into it and call back."
Hauser got the business, winning out over eight other companies, many of them well known. For his help, Kleindienst collected $125,000 from Hauser for "five to seven hours work," by his own estimate. Another $125,000 was split by Webb and Davidson.
In the end, Hauser pleaded guilty to looting the Teamster premiums.
In 1977, U.S. District Court Judge Charles Richey jailed Hauser for contempt of the settlement order entered in a civil suit that had been brought against him by the Securities and Exchange Commission concerning the Teamster funds.
Hauser reportedly grew bitter because none of his former union friends, on whom he had lavished vast sums, would finance his bail.
A source close to Hauser speculates that this unpleasant memory may have helped Hauser decide to work on the Brilab operation.