The special prosecutor appointed to investigate allegations against Secretary of Labor Raymond J. Donovan reported today that there was "insufficient credible evidence" to warrant prosecution on any charge.
The prosecutor, Leon Silverman, announced his findings in a mammoth report that was edited to 708 pages for public consumption and released simultaneously here and in Washington along with an appendix of several hundred pages.
Appointed Dec. 29, 1981, under the Ethics in Government Act, Silverman addressed himself first to the charge that triggered his assignment: an accusation by an ousted New York labor union official, Mario Montuoro, that Donovan was present at a 1977 luncheon in Long Island City when another executive of Donovan's New Jersey construction company handed the president of Montuoro's union an envelope containing $2,000.
Silverman said he could not corroborate the claim despite "exhaustive efforts" to turn up supporting evidence. A federal grand jury in Brooklyn assigned exclusively to the Donovan investigation since January voted "no true bill" in connection with this allegation on June 8.
At a crowded press conference in his Manhattan law office, Silverman said that the investigation did turn up evidence supporting another of Montuoro's allegations: that there were "no-show" employes on one of the New York City subway projects undertaken by Schiavone Construction Co. of Secaucus, N.J., of which Donovan was executive vice president.
Silverman also said there was "evidence that perjury was committed before the special prosecutor's grand jury with respect to the no-show allegation," but he said he was referring that matter to the Justice Department for further action "because that perjury was not committed by Secretary Donovan."
The special prosecutor did not identify the perjury suspect, but later in the press conference he said it was not anyone from "the Schiavone management." Silverman said he had found "no evidence" that Schiavone executives knew the company was paying the salaries of employes who weren't showing up on the project, a subway extension in Long Island City.
Responding to a scattershot array of shouted questions, Silverman said he had come across a "disturbing number" of allegations linking Donovan "in one fashion or another to reputed organized crime figures."
"More than two dozen organized crime ties were alleged, many of them by more than one source," Silverman said in his report. However, he continued, "extensive investigation produced insufficient credible evidence upon which to base any prosecution that the secretary was untruthful in his denials, either before the Senate Labor Committee or the grand jury, of any and all such associations."
Donovan initially denied alleged ties to organized crime figures at his 1981 confirmation hearings before the Senate panel.
Silverman said he was leaving behind an "intensive investigation" that the FBI initiated at his request this month into the gangland-style slaying of Fred Furino, a onetime official in a mob-dominated New Jersey Teamsters local and an alleged Mafia "bagman."
Furino, who testified twice before the grand jury about alleged connections with Donovan, disappeared June 3 and was found dead in the trunk of his own car, with a bullet hole in his forehead, on June 11 in lower Manhattan.
The special prosecutor confirmed that Furino had failed a polygraph examination, which he had volunteered to take, on the question of whether he knew Donovan.
"Fred Furino was subjected to a polygraph test at his request," Silverman said today. "When asked in the course of that test whether or not he knew Secretary Donovan, he denied it. The polygraph operator reports that, in his view, that was not a true statement."
The FBI report concerning the test, which was administered on April 27, showed that Furino was given a preliminary interview concerning allegations that he had once picked up cash payments from Donovan for a now-dead New Jersey mobster named Salvatore (Sally Bugs) Briguglio. Furino "indicated that he did not know Donovan and if he had ever met Donovan, he did so without knowing who he was," the report said.
Furino was asked at length on the polygraph, first if he knew "one Raymond Donovan" among others, and then, after saying he did not, he was asked, "Did you lie when you said you never personally knew Raymond Donovan?"
Told that he had, in effect, flunked the test, Furino said he couldn't understand how that could have happened. "Furino was then asked that if he had any information concerning Raymond Donovan or if he had personally met Raymond Donovan, would he be willing to admit it, to which he replied he would not."
Furino was called back before the grand jury in May. Silverman said he asked the FBI on June 12 to launch an investigation under the obstruction-of-justice statute and, "since I am no longer involved in this investigation, to report its continuing efforts to the attorney general."
Asked again and again if his investigation had "cleared" Donovan or given him a "clean bill of health," Silverman declined to respond in those terms. Instead, he said repeatedly that there was "insufficient credible evidence" on which to base an indictment.
"I do not use words like 'exoneration,' " Silverman said. "I do not use those terms."
At another point, he was asked if he was "comfortable" with Donovan as a member of the Cabinet.
"My judgment on that score I'll share with no one," Silverman replied. "My private judgment is an irrelevancy."
Silverman's report to the panel of federal judges who appointed him consisted of 1,025 pages, but it was edited to eliminate grand jury testimony and "certain informant information--including entire allegations--which, if disclosed, could jeopardize the lives of the informants."
What was disclosed still amounted to a boggling compilation of assertions, some popping up repeatedly with slight variations in different segments of the report, some published before, some not.
One lengthy segment dealt with William P. Masselli, a reputed member of the Genovese family of the Mafia and head of an excavation company, Jopel Trucking and Construction, which served as subcontractor for Schiavone on a number of city subway projects.
At his confirmation hearings, Donovan denied knowing of Masselli's organized crime ties. Months later, the FBI disclosed that it had overheard mention of Donovan, in a social context, in the course of a wiretapped conversation between Masselli and his son, Nat.
Silverman disclosed today that while Donovan's voice was not overheard on any of the 857 tapes compiled during an extensive 1979 investigation of Masselli, Donovan's name was mentioned six times.
"There was nothing incriminating in any of the references to him, nor anything suggestive of a relationship between Mr. Donovan and Masselli," the report said.
One heretofore undisclosed conversation occurred on June 4, 1979, between Masselli and Jack Frost, a purchasing agent at Schiavone Construction and reportedly a distant relative of Donovan. Masselli had placed the call, apparently in response to an earlier attempt by Frost to reach him about contributions to the 1980 Reagan campaign.
Masselli: "What do ya need?"
Frost: "Here's what we're doing. . . . We got a club going. Ronnie and ah, ah, Ray Donovan have a club going." The president of Schiavone was Ronald Schiavone.
Frost: "Called the Reagan for President Club."
Masselli: "Ronald Reagan for president."
Masselli: "I like that."
Frost: "Okay. Ronald Reagan is coming to Ray's house on Monday. . . . I'm not invited and you're not invited and nobody else is except those people who are in the Republican Party in the state and so forth."
Frost: "But what inaudible we are going to do . . . is give this guy here, you know, a wad we're going to give him."
Frost: "Green . . . The Ronald Reagan for President . . . is a thousand-dollar club."
Frost: "There are 16 people that I'm involved with . . . and you're one of them."
Frost: "And it's legal. There's no problem with the legality of it. You can make a thousand-dollar donation to Ronald Reagan for president, legally . . . . And I'm not bull-----ing ya . . . . "
Masselli: "I understand. Don't say no more . . . .Count me in."
Frost: "I got, I got one problem which is a time problem."
Masselli: " . . . You'll have it by Wednesday . . . . I'll give it to somebody to give to you."
At his press conference, Silverman said his investigation included an effort to determine whether Donovan "had committed any violations of the Federal Elections Campaign Act in connection with the secretary's campaign efforts on behalf of Ronald Reagan during the presidential campaign of 1979-1980."
The special prosecutor gave no details in his summary statement beyond declaring that the inquiry into Donovan and Schiavone's campaign activities "produced no evidence of violations sufficient under the established guidelines of the Department of Justice to warrant the recommendation of a criminal prosecution."
But he also added that "the matter is being referred to the Federal Election Commission to determine whether any action within its jurisdiction is appropriate." He did not elaborate.
Silverman said he and his staff, which included three fulltime FBI agents, also looked into an allegation that in 1978 Donovan made an illegal payoff to a union leader in connection with "The Trib," a short-lived New York City newspaper, but the investigation "produced no evidence that an illegal payoff had in fact been made."
Three other allegations of Taft-Hartley Act violations came under scrutiny, but there was no evidence for two of them, and Silverman said, the third "did not involve the payment of money to any union officials, but, rather, the entertainment of union officials at the Fiddler's Elbow Country Club," a Schiavone subsidiary in New Jersey.
The prosecutor said he saw no reason to press charges on that score "although an arguable, technical violation may have been committed." He said he determined "that no prosecution was appropriate under settled Department of Justice prosecutive guidelines."
Silverman also dismissed an allegation by an old business associate of Donovan's from New Jersey, James Donelan, to the effect that he used to have lengthy conversations with Donovan about bid-rigging on New Jersey Turnpike Authority projects.
"The allegation included a charge that Mr. Donovan received inside information from the Turnpike Authority's executive director. The investigation revealed no evidence of bid-rigging, provision or receipt of inside information or any other wrongdoing on the part of Secretary Donovan," the report said, "and the special prosecutor determined that no prosecution was warranted."