Justice Department officials refused to explain yesterday why they dropped a 32-month labor fraud probe of Teamsters union President Jackie Presser, a decision that has prompted several members of Congress to investigate the handling of the politically sensitive case.
Sources confirmed that the department's decision to close the investigation of Presser -- despite the recommendation of federal prosecutors in Cleveland that he be indicted -- was related in part to the fact that Presser has been an informant for the FBI for a number of years. The sources confirmed a report in yesterday's Los Angeles Times that the Justice Department is reviewing allegations that the FBI unnecessarily delayed telling department officials about Presser's role for months.
The sources said the Justice Department was making no comment on the case until at least next week to avoid jeopardizing unspecified aspects of the probe that have not been completed. They did not rule out the possibility that charges may still be filed against someone other than Presser.
Sens. William V. Roth Jr. (R-Del.) and Sam Nunn (D-Ga.) yesterday ordered the Senate permanent subcommittee on investigations, which they head, to look into the handling of the case, which Nunn said "raises serious questions about the government's ability to effectively combat labor racketeering."
Sen. Joseph R. Biden Jr. (D-Del.), ranking Democrat on the Senate Judiciary Committee, demanded an explanation in a letter to Deputy Attorney General D. Lowell Jensen, who decided to end the probe.
Biden questioned whether Jensen had met with Presser or his representatives and whether Presser was offered immunity. He also sought a copy of prosecutors' recommendations in the case and asked for a complete description of Presser's relationship with the FBI, which was first revealed by The Los Angeles Times in June 1984.
Presser, whose 1.8-million-member union is one of the country's richest and most powerful, was instrumental in making the Teamsters the only major union to endorse President Reagan in 1980 and again last year. He has maintained close ties to the administration, and has been invited to several White House functions, at least once to meet with Edwin Meese III -- now attorney general -- when he was an assistant to the president.
On several other occasions, Meese met Presser outside the White House, once at a June 1983 "welcome to Washington" party for Presser at the Georgetown Club. Meese has also defended Presser publicly. The Wall Street Journal quoted him as saying of Presser, "Not only has he never been convicted, he's never been indicted, not even subpoenaed."
But a senior Justice Department official went out of his way to dispute the idea that political influence figured in the case, noting that Meese had removed himself from the investigation.
The official said that Meese "wanted to avoid any appearance of political influence, given the fact that Presser had been a supporter of the president and Ed Meese had been at the White House."
"Thank God it's over," Presser, 58, said through a spokesman yesterday. "I'm happy with the outcome."
An FBI spokesman declined comment on whether Presser was an informant. FBI officials have said that they must protect the confidentiality of their informants, but that such people must be held accountable for any major criminal activities. Sources said some FBI officials were angry that the bureau was being blamed for the outcome of the Presser case.
Officials at the Justice Department's Organized Crime Strike Force in Cleveland recommended in February that Presser and two associates be charged with illegal payment of union funds to "ghost" employes of Teamsters Local 507. Presser is secretary-treasurer of the Cleveland local, a post he took over with the sponsorship of his father, William, a longtime Teamsters leader in Cleveland. Presser's two associates also have been dropped from the probe.
It is not unprecedented for senior Justice Department officials to overrule recommendations by prosecutors in the field, particularly in an investigation as complex and sensitive as the one involving Presser.
Robert A. Reading, foreman of the Cleveland grand jury in the case, said last week that he was "gravely concerned" about the pace of the inquiry and that it appeared to be "bottlenecked somewhere in Washington."
The criminal investigation centered on allegations that Presser arranged payoffs in the form of "no-show" jobs for several union officials who helped him build his power base in Cleveland. Investigators focused on the charge that Presser had approved payment of more than $250,000 in union funds to "ghost employes" who collected salaries of up to $1,000 a week without working.
Two Teamsters officials, including Presser's uncle, Allen Friedman, were convicted in 1983 and 1984 of receiving payments approved by Presser. Labor Department investigators testified at Friedman's trial that he had told them Presser promised him "$1,000 a week for life" in exchange for arranging the 1976 merger of an independent union into Presser's Local 507.
Friedman, now serving three years in a Texas prison for embezzling $165,000 in the Local 507 case, has been described as a potential key witness against Presser. But Friedman's lawyer, Dennis Levin of Cleveland, said yesterday that prosecutors failed to entice Friedman to testify against Presser.
"They offered him a deal in exchange for testimony against Presser, but he said he didn't have anything," Levin said. He said Friedman denies he was a "ghost" employe or that he had implicated Presser to Labor investigators.
The other Teamster official convicted in the case, Jack Nardi, a union business agent and the son of a slain organized crime figure, pleaded guilty to receiving $109,000 in a no-show job, and has cooperated with prosecutors in exchange for a lighter sentence.
The potential case against Presser included his testimony at a 1983 Senate hearing that he reviewed all checks issued by Local 507.
Presser, an 8th-grade dropout who is now a millionaire, rose from jukebox delivery boy to become the highest-paid and perhaps most powerful union official in the nation. He became Teamsters president in 1983 with plans to improve the tarnished image of a union three of whose last four presidents ended up in prison on corruption charges. Presser hired the Washington public relations firm Gray & Co. and planned to mount a media campaign to improve the union's image.