The FBI knew that Secretary of Labor Raymond J. Donovan had been mentioned on an organized crime wiretap at the time of Donovan's confirmation hearings, and withheld that information from the Senate committee considering his appointment.
Francis M. (Bud) Mullen Jr., who was FBI executive assistant director for investigations, said he made the decision on the grounds that the conversation was "not pertinent" to the bureau's Donovan inquiry.
That inquiry was aimed at determining whether Donovan had violated any laws or had ties to organized crime, as some informers had alleged.
Mullen, however, defended his actions by saying that the wiretapped conversation in question "didn't indicate any criminality on the part of Ray Donovan."
Mullen made his remarks during a lengthy interview last week in his offices at the Drug Enforcement Administration, where he is now acting administrator. His role in the Donovan investigation and his testimony about it before the Senate Labor Committee last year have come under increasing scrutiny as allegations concerning Donovan continue to unfold.
The FBI, it was learned from other sources, is sending out new instructions for background investigations in an effort to remedy some of the shortcomings of the Donovan probe and "clarify what is expected of the bureau."
But Mullen said he had no regrets over his actions in the case, and said he would withhold the information about the wiretap again if he had to do it all over.
The conversation in question took place in 1979 between William P. Masselli, a reputed Mafia soldier who was the target of an intensive FBI wiretapping and surveillance operation, and his son, Nat. It dealt with an invitation Masselli had gotten to fly to some According to informed sources, there are, in addition to the "Ray Donovan" reference, a number of other mentions of "Ray" on the Masselli tapes that turned up when special prosecutor Leon Silverman and his aides had them all transcribed this year. still unidentified social event with "Ray Donovan" and "Ronnie" Schiavone, Donovan's partner in the New Jersey construction business.
The agents in charge of the New York Masselli inquiry, which reportedly had produced 1,600 hours of recorded conversations, including many that had not been transcribed, notified FBI officials in Washington of the "Ray Donovan" conversation in January, 1981, on the eve of Donovan's first Senate hearing.
Mullen said he and aides in the Special Inquiry Unit (SPIN), which was conducting the Donovan background check, made the determination not to tell the Senate committee of the wiretap partly because it the Masselli inquiry was "an ongoing investigation."
He said some of the material it had churned up already had been presented to a grand jury and, under the Federal Rules of Criminal Procedure, could not be released outside law enforcement agency circles without a court order.
FBI officials here, however, made no effort to determine if the Donovan conversation was covered by the grand jury secrecy rule. Mullen said he discovered later that it was not. But he still defended the decision not to tell the Senate committee. FBI Director William H. Webster, Mullen added, was not involved.
"I made that decision consciously," he said in one exchange with three reporters present. "I didn't want to open up that whole area, because in my judgment that conversation was not pertinent."
Q: "Not pertinent to what?"
Mullen: "To the special inquiry we were conducting. It didn't indicate any criminality on the part of Ray Donovan."
Q: "Weren't you also investigating associations, Donovan's alleged associations with the mob?"
Mullen: "Yeah, that didn't . . . . pause To me at the time, the judgment was that didn't tie him to the mob."
Q: "But it wasn't even pertinent to the investigation, even though you're investigating associations? That reference wasn't pertinent?"
Mullen: "That's right."
In his prepared testimony before the Senate committee on Jan. 27, 1981, Mullen carefully confined his remarks about "electronic surveillances involving organized crime or labor-related matters" to "New Jersey," and said, "A review of the results of this coverage reveals no reference to Mr. Donovan or the Schiavone Construction Co."
But then Chairman Orrin G. Hatch (R-Utah) began the questioning, asking about FBI informers in the New York and New Jersey area who had been interviewed, then moving on to general questions about "the hundreds" of organized crime and labor-related wiretaps and electronic surveillances the FBI had conducted since 1969.
Hatch then asked: "Your unit has investigated every one of these wiretaps and the information and data on them, and is it correct to say you have found absolutely nothing pertaining to Schiavone Construction Co.?"
"That is correct, Senator," Mullen replied. "In each case when we do have a court-authorized wiretap, we must record the identity of every individual or company referred to. We maintained those records, known as overhears, and we located no reference to Mr. Donovan or Schiavone Construction Co."
Asked about that exchange in the interview, Mullen said he was still mentally limiting his remarks to wiretaps "in New Jersey," even though he didn't explicitly say so.
"Maybe I did it in my head, but I did it," he said, "because I specified New Jersey there at the beginning."
It appears, in any case, that Mullen's testimony was not quite complete even in speaking of New Jersey wiretaps which, he said, contained "no reference" to Donovan or Schiavone Construction. In fact, Mullen acknowledged during the interview, the FBI's summaries or indexes of the New Jersey surveillances, in line with standard procedure, list only the participants in a conversation and rarely mention "references" to others.
It was those indexes, not the tapes themselves, that the FBI consulted in making its report to the Senate committee. Donovan, Mullen said, could have been "referred to 50 times" on the New Jersey tapes and his name would not have been indexed unless some criminal conduct was ascribed to him and he was identified clearly.
The Masselli tapes, by contrast, represented a departure from standard procedure, Mullen acknowledged, in that the agent in charge of the case considered them so important that "everybody mentioned" and every company, eventually 24,000 references, were put on a computerized index.
As a result, Mullen said, "it seems to me that I did know" at the time of the confirmation hearings "there were other references" to other Schiavone officials and mentions of "a lot of business dealings between Schiavone and Masselli" on the Masselli tapes.
Mullen did not mention these at the hearings. He shrugged them off during the interview as unimportant because, as he understood it, they concerned only "business dealings, legitimate business dealings."
Now in prison as a result of other evidence obtained from the tapes, Masselli was head of Jopel Construction and Trucking Co., which, sources say, muscled its way into business as a subcontractor for Schiavone Construction on a New York City subway project in 1977.
Masselli took over the assets of another subcontractor, Louis Nargi, who reportedly had fallen into heavy debt to Masselli, and he subsequently built Jopel into a multimillion-dollar business. The takeover, sources say, set off recriminations that resulted in a Mafia "sitdown," but the dispute was resolved in Masselli's favor.
Mullen said he "could well have known" at the time of Donovan's confirmation proceedings of the reports that Masselli had muscled Nargi aside, since that was what a good part of the investigation targeted at Maselli "was all about." But he indicated that he still saw no reason to bring that up in the context of the Donovan inquiry.
As for the taped allusion to a possible social trip with Masselli, Mullen emphasized several times that there was only that "one time" reference.
"One time! One!" he said. "Hell . . . , you hold one trip against a guy? If you said he was frequently in their company or something, that's different. And he may not have even known he was referred to on there."
According to informed sources, there are, in addition to the "Ray Donovan" reference, a number of other mentions of "Ray" on the Masselli tapes that turned up when special prosecutor Leon Silverman and his aides had them all transcribed this year.
The FBI also was told just before Donovan's first Senate hearing that a bureau informer had alleged that Donovan was in a party arranged by Masselli that had gone to Miami for the 1979 Super Bowl. Mullen dismissed that, however, on the grounds that it had been "proven to be incorrect."
Masselli and his colleagues, he said, were under intensive investigation at the time of the 1979 game. "The people who went to Miami with Masselli were photographed getting on and off the plane and surveilled and the manifest was checked." Donovan, he said, "wasn't in the photographs" and his name didn't show up on the manifest.
But when asked if the agents conducting the 1979 surveillance would have known Donovan if they had seen him, Mullen replied: "I doubt it."
A few days before its final hearing on the Donovan nomination, the Senate Labor Committee was told of allegations from informers that Schaivone Construction was "mobbed up" through Masselli, but not of the extensive wiretaps that might have been checked.
At one point, Sen. Donald W. Riegle Jr. (D-Mich.) began asking about what kind of a record Masselli had. Mullen interrupted in mid-sentence and told the senator: "I do not have any background whatsoever on him."
Mullen defended that response vigorously. "I didn't have it at the time," he said. "I The FBI also was told that a bureau informer had alleged that Donovan was in a party arranged by Masselli that had gone to Miami for the 1979 Super Bowl. Mullen dismissed that, however, on the grounds that it had been "proven to be incorrect." just didn't have it . . . . It wasn't in my head. I don't know every organized crime figure in the country."
Still executive assistant FBI director as well as acting DEA administrator, Mullen said he decided on the interview to try to lay to rest mounting questions about his testimony and his role in the Donovan investigation.
He acknowledged that there were some relevant allegations in FBI memos and interviews that were buried in bureau files until recently, but Mullen said: "I testified honestly, forthrightly and to the best of my knowledge at the time."
"You learn to testify," he said. "I've always been of the opinion that when you go before a congressional committee, you're positive, you don't hedge, you don't dance around answers. You just come on, and hit it hard and be up front. And that's what I thought I was doing. And I still believe that's what I did at the time."