The FBI was accused today of hoodwinking the Justice Department and a federal judge into authorizing the organized-crime surveillance that led to indictment of former labor secretary Raymond J. Donovan.
Lawyers for Donovan and his codefendants charged at a hearing in Bronx Supreme Court that two FBI agents assigned to the case kept the criminal activities of their key informer, ex-convict Michael Orlando, secret from higher-ups in charge of the investigation.
As a result, the lawyers maintained, tapes obtained during the 1979 surveillance -- now the principal evidence in the Donovan case -- are irrevocably tainted and must be suppressed.
"They knew they had a renegade informant on their hands and . . . I suggest, two renegade agents," said Theodore V. Wells Jr., attorney for Joseph DiCarolis, the president of Donovan's firm, Schiavone Construction Co. of Secaucus, N.J.
DiCarolis and four other Schiavone executives were overheard on the tapes, the court was told.
Chief Bronx prosecutor Stephen Bookin acknowledged that some "misstatements" were made in federal court during the FBI surveillance but said none was important enough to make it illegal.
Bookin said the investigation, code-named Operation Tumcon, produced evidence of so many crimes that "there is overwhelming probable cause, apart from the misleading statements," to justify use of the tapes in criminal proceedings.
Confronted with conflicting accounts about the facts, Bronx Supreme Court Judge John P. Collins said he will decide by April 12 whether to conduct evidentiary hearings on the legality of the six-year-old surveillance. He said he wonders why the issue was not raised previously in federal courts.
Defense lawyer John Nicholas Iannuzzi said the reason is that government prosecutors learned of the problem in mid-1979 and managed to keep the tapes secret by offering "sufficiently attractive" deals to those indicted in the only two federal cases that grew out of the $1 million investigation.
Iannuzzi, who represents William P. Masselli, the reputed member of the Genovese crime family who was the prime target of the 1979 investigation, charged that the government tried to make sure "that the filth in the Tumcon surveillance would never see the light of day. That's what they hoped."
Bronx prosecutors and U.S. officials have acknowledged that informer Orlando showed up on the tapes in March 1979 as a hijacker in a truck-hijacking conspiracy operating out of Masselli's South Bronx warehouse. FBI agents dealt with the problem for several weeks by listing Orlando as "Mike LNU [last name unknown]" in periodic surveillance reports to U.S. District Court Judge Henry Werker.
Bookin said the Federal Bureau of Investigation's left hand did not know what its right hand was doing. He said agents who knew Orlando wanted to protect his identity and so did not tell Benjamin Purser, the FBI agent in charge of reports to the judge.
Bookin said this was not the kind of intentional falsehood that would justify suppression of the tapes. But Wells argued that suppression is required because neither Judge Werker nor then-Assistant Attorney General Philip Heymann had been given sufficient information about Orlando at the beginning of the surveillance in January 1979.
Defense lawyers contended that Orlando had participated in a truck hijacking on Nov. 30, 1978, and that the FBI knew it.
"Orlando was not involved in any of the hijackings prior to Jan. 4, 1979," Bookin said.
Masselli, under indictment for murder as well as in his capacity as a subcontractor for Schiavone Construction, seemed upset. "I'm telling you he [Orlando] was a hijacker," Masselli said from his seat, drawing a reprimand from the judge.