Operation Greylord Read online

  OPERATION GREYLORD

  The True Story of an Untrained Undercover Agent and America’s Biggest Corruption Bust

  OPERATION GREYLORD

  The True Story of an Untrained Undercover Agent and America’s Biggest Corruption Bust

  Terrence Hake with Wayne Klatt

  Dedicated to

  Mort Friedman

  a lantern in the dark

  Contents

  PART 1: ENTRY LEVEL

  1 A GAME WITHOUT RULES

  2 THE CLOSED WORLD

  3 WEARING A WIRE

  4 THE FIXERS

  5 MONEY TRAILS

  6 THE BRASS KEY

  7 DISCLOSURES

  PART 2: ONE OF THE BOYS

  8 THE NEXT LEVEL

  9 THE BLACK BAG

  10 LISTENING IN

  11 SUSPICIONS

  12 SWITCHING SIDES

  13 WEB OF CORRUPTION

  14 BRANCHING OUT

  15 OUR CRIME ACADEMY

  16 ALL HELL BREAKS LOOSE

  PART 3: THE RECKONING

  17 THE LARGEST BRIBE

  18 THE WALL COLLAPSES

  19 JUSTICE ON TRIAL

  20 ON THE STAND

  21 REBOUND

  22 FINAL JUSTICE

  23 FULL CIRCLE

  EPILOGUE

  PHOTOGRAPHIC INSERT

  Cast of Characters

  These are the major people involved in Operation Greylord.

  The Investigators

  MICHAEL FICARO: an assistant state’s attorney who broke in Terry Hake and gave Operation Greylord a push at the earliest stage

  TERRY HAKE: an assistant state’s attorney who agreed to gather evidence in the felony courts and then as a fixer in the municipal courts

  LAMAR JORDAN: one of Terry Hake’s contact agents

  SCOTT LASSAR: an Assistant U.S. Attorney who helped guide Terry Hake

  BILL MEGARY: an FBI contact agent whose work ensured the success of Greylord

  DAN REIDY: an Assistant U.S. Attorney and the planner for Operation Greylord

  DAVID VICTOR RIES: an FBI agent who set up a law office and began gathering evidence in the municipal courts

  CHARLES SKLARSKY: an Assistant U.S. Attorney, who contacted Terry Hake about going undercover in operation Greylord.

  The Corrupt

  *BARRY CARPENTER: a two-bit fixer married to Terry Hake’s friend Alice, a fellow assistant state’s attorney

  *FRANK CARDONI: looking like a magazine ad, this defense attorney joined the BMW set by specializing in cases before Judge John Reynolds at a North Side police station

  *MARK CIAVELLI: Terry Hake’s best friend in the courts, who left the State’s Attorney’s Office to become a fixer with his law partner, Frank Cardoni

  HAROLD CONN: used his role as a deputy court clerk to pass bribes on to judges, sometimes in public

  JAMES COSTELLO: “Big Bird,” a hallway hustler in need of a friend who taught Terry Hake how the courts really worked

  JUDGE JOHN DEVINE: snidely called “Dollars Devine” for his open greed in Auto Theft Court

  JUDGE MARTIN HOGAN: another man you bribed if you were caught stealing an auto

  MEL KANTER: “Candyman,” one of the Traffic Court fixers known as “miracle workers”

  JUDGE ALAN LANE: so corrupt he hinted at it on his vanity license plates

  JAMES LEFEVOUR: “Jingles” and “Dogbreath,” a policeman serving as a bagman in the municipal courts under his cousin, Judge Richard LeFevour, whom he resented

  JUDGE RICHARD LEFEVOUR: in public he reorganized the municipal courts to end corruption, but secretly he packed the courts under him with equally grasping judges for a share in their bribes

  JUDGE THOMAS MALONEY: his pretense of being a law-and-order jurist collapsed when he became the first American judge convicted of taking bribes in murder cases

  JUDGE P.J. MCCORMICK: suggested Terry Hake lie about a case in his courtroom

  JUDGE JOHN MURPHY: his greed in Traffic Court made him one of the first targets of Operation Greylord

  JUDGE WAYNE OLSON: while presiding in Narcotics Court, he took bribes from fixers waiting in line

  JUDGE MAURICE POMPEY: a jurist so cautious that Greylord could not touch him

  JUDGE JOHN REYNOLDS: his side business was freeing defendants at a North Side court

  LUCIUS ROBINSON: this bagman for Judge Pompey seemed like an ordinary court clerk, but could outsmart some of the fixers

  JUDGE ALLEN ROSIN: hid his corruption from his family, but one day snapped, shouting in court, “I am God!”

  BRUCE ROTH: a fixer who tried to get his law license back after being convicted of bribery

  PETER KESSLER: this immigrant lawyer was a big money hallway hustler until he found his conscience

  BOB SILVERMAN: “Silvery Bob,” a dapper defense attorney who spread corruption wherever he worked

  JOE and JAMES TRUNZO: identical-twin policemen and bagmen in the traffic courts

  JUDGE FRANK WILSON: took a bribe to free mob hit man Harry Aleman, making him give up his career and live in disgrace

  CY YONAN: a fixer specializing in having judges throw cases out

  *indicates the name is a pseudonym

  Introduction

  “The judge is condemned when the guilty are acquitted”

  —Scottish proverb

  Today, crime victims and their families are fairly assured of seeing justice carried out, but it wasn’t always that way in Chicago. The system was so crippled by corruption when I became a young prosecutor that no one knew how to fight it. But then the U.S. Justice Department chose the city for an experiment in reaching the roots of judicial bribery. Although there would be a personal cost for me, I was privileged to have been inside Operation Greylord from the beginning.

  It used to be thought that lawyers corrupted judges, but we found that judges were pressuring defense attorneys for bribes and even setting their own rates. By freeing criminals, the judges were in effect taking part in their rapes, robberies, and murders. During our undercover investigation, we learned that perhaps half the judges in the nation’s largest circuit court system could be bought or made to comply. They were merely scarecrows draped in black robes. Those who refused to sell their ideals had their careers sidelined by being assigned to the lesser courts.

  Any case could be rigged, from a traffic ticket to a mob hit. There even was a rumor that some innocent people were being convicted just to make crooked jurists appear tough on crime.

  City hall and police headquarters were interlocked with the courts by corruption, with each protecting the other. It had always been this way, good people said with a shrug; but, as we learned, it hadn’t.

  For me the most shocking perversion of justice was the freeing of notorious mob killer Harry Aleman. On the night of September 27, 1972, truck dispatcher William Logan was leaving home for work when Aleman called out from the shadows, “Hey, Billy!” As Logan turned around he was cut down by three shotgun blasts.

  A neighbor walking his dog saw the short, slender gunman heading for a car, and a woman talking on the phone glimpsed the man’s face through a window. She shuddered because he looked so much like Aleman, whom she remembered from her old neighborhood.

  Law schools never prepare students for reality, and many honest prosecutors were quitting rather than either becoming tainted by the system or losing at every turn. I was just starting out in the State’s Attorney’s Office—known in some states as the district attorney’s office—when experienced prosecutors practically danced in delight over Aleman’s indictment, the first airtight case against a hit man in “Murder City’s” bloody history. We thought it was the start of a new era.

  All of us were stunned when the judge
ignored testimony and set Aleman free to kill again, and again, as the syndicate’s bogeyman. Just the mention of his name made people keep quiet or pay their debts.

  “Outfit” leaders grew so arrogant that they shrugged off fairly new federal anti-racketeering laws as if nothing could touch them. And so the Justice Department decided to make Chicago a test case for an experiment: a coordinated counteroffensive using wiretaps and moles in several capacities.

  No single person was involved in every aspect of what became the one of longest and most successful undercover operations in FBI history. I was involved in the criminal courts aspect. It began in 1980, when I was a twenty-eight-year-old prosecutor, just three years out of law school. I complained to my mentor in the State’s Attorney’s Office about the case fixing in the murder, rape, and child molestation court in Chicago.

  I was ready to quit in disgust because these were the most serious cases in our criminal justice system. My mentor decided to forward my complaint to the State’s Attorney and his Special Prosecutions Unit, coincidentally as the federal government was planning its experimental investigation. When the Justice Department decided to take the State’s Attorney into its plans, my name came up as a person the FBI might want to talk with. No one knew at the time how massive Operation Greylord would become, leading to an overhaul of the entire system, as well as three suicides and more than 103 individuals being charged, seventy by indictment.

  I spent three years passing myself off first as a crooked prosecutor and then as a fixer, a defense lawyer with connections to certain judges. But when I served as a defense attorney, all my “clients” were undercover FBI agents who had faked minor crimes so that they might appear before targeted judges.

  I think only someone as hopelessly naive and optimistic as I had been would have volunteered to put himself in such danger and, in effect, give up his law career. I found myself a sheep wandering in a wilderness of wolves.

  This is the first inside account of the takedown that involved several unprecedented steps, beginning with bugging a judge’s chambers to pick up conversations about bribes. Then for the first time in America, a judge was convicted of taking bribes in murder cases.

  And finally, Aleman was tried a second time for the same killing. In the furthest-reaching decision arising from Greylord, the Illinois Supreme Court ruled that double jeopardy protection does not apply when the outcome of the first trial is predetermined, and the U.S. Supreme Court did not take the appeal. It took twenty years, but justice finally won out, Aleman was sent to prison, and the mob was no longer invincible.

  You are about to see what it was like to move among sleazy and dapper fixers in courts, restaurants, and even the race track, and to talk in bribery code to judges and bagmen. The burden of playing this game without rules came close to wearing me down. When I testified in one of the trials, a top defense lawyer tried to break me on the stand by attacking my most vulnerable point: my guilt over making friends among the shysters so that I might betray them. That is the agonizing necessity for anyone working undercover. I recovered on the stand, and federal judges banned any mention of Greylord to avoid giving prosecutors an edge in the corruption trials.

  I was honored to be part of the investigation, even though my life has never been the same. Our investigation was conducted simultaneously with the Justice Department’s assault on the Chicago mob hierarchy, based on information from a gambler who had been shot and left for dead. The evidence showed how the crime syndicate paid off Chicago politicians with money skimmed from Las Vegas casinos, using Kansas City mobsters as middle men.

  I was not part of the crime syndicate probe, but watched with pleasure as the two crackdowns—occasionally involving the same people—exposed and crushed the old-line mob. The two-pronged assault on what had seemed an impregnable fortress helped establish a framework for investigating corruption anywhere in America. But as long as there is a feeling that lawyers should never gather evidence against their colleagues, there will be a need for investigations like Operation Greylord.

  All conversations in this book are drawn from my memory, testimony, secret tape recordings, court transcripts, and FBI reports. Events involving crooked lawyers and judges have been reconstructed from thousands of pages of transcripts from the major trials. Persons represented by fictitious names are marked with an asterisk (*) at first reference.

  PART 1

  ENTRY LEVEL

  1

  A GAME WITHOUT RULES

  June 1980

  There had to be a way of infiltrating the systemized corruption in Chicago courts, of sneaking through the wall that had protected shysters and judges for more than half a century.

  In the early 1970s, three people in the New York City District Attorney’s Office were convicted of taking fifteen thousand dollars to quash a weapons charge against an undercover agent posing as a street criminal. But the evidence had been gathered by having agents commit perjury before a grand jury and judges. A shocked appeals court sided with the defense and held that the investigators had allowed their contempt for bribers “to spill over into disdain for all participants in the system.”

  The Justice Department realized that any future investigation of corruption in the United States would have to work within the integrity of the system as a whole, and that meant never tape recording in courtrooms and grand jury chambers. It absolutely needed a mole, like me. But initially I had gotten nowhere despite weeks of trial and error.

  The Justice Department had shown me a list of people almost certainly on the take, and Narcotics Court Judge Wayne Olson was one of the most notorious for taking bribes in drug arrests. Although murder is worse than drug peddling, most killers don’t have the connections and money that cocaine dealers have. Bug-eyed Olson had been canny enough to protect himself from investigations for years, yet I had to get evidence against him if I was to reach any more important judges.

  Knowing Olson’s volatility—in a fit of temper he had once accidentally killed a man—the chief judge of the criminal courts kept him in the lowly job of deciding whether evidence in hundreds of drug arrests was strong enough for trial. This allowed Olson to arrange regular payoffs from defense attorneys, who sometimes even stood in line to pay their respects. They were bound to relay any suspicions to Olson. How could I fool them all? All I had been told was, “Don’t worry, Terry, you’ll find a way.”

  I could tell early on that some judges were in with the fixers from the way they continually ruled for the defense, and I was sure everyone at the marketplace of justice was laughing at my naïveté behind my back.

  During this hazing period, I was doing my best to look as if I had already come around. My contact agent had offered a few suggestions—mainly that I grow a mustache and wear flashy clothes. I thought my mustache only made me look like someone trying to look tough, and I stuck to my conservative suits. If I was going to change my public life, I would need to keep enough of the real me to remember who I was.

  One way I came up with for making myself look less like a choirboy was being seen shaking hands with defense lawyers. I also pretended to look the other way as attorneys paid off court clerks for favors, and from time to time I went to bars and restaurants with Olson. But so far no one had made me an offer.

  In fashionable society long ago, you were not accepted until someone introduced you to the proper circles, and so it might be in the underworld of courthouse payoffs, I thought. What I could use was an established fixer who would go up to Olson and say something like, “This guy is all right.”

  I wondered who among the dozens of lawyers working in the gray aging courthouse might take me under his wing. I considered each of the attorneys standing beside their clients or riding with me in the elevator. The one I needed would have to be a small-timer who was both dishonest and yet trusting.

  The person who kept coming to mind was loud-mouthed James Costello. He was held in such low regard that no one ever took him seriously, and yet I probably never made a bet
ter choice in my career. Jim stood six foot three, and his unwieldy hair looked like a fright wig. Derisively called “Big Bird” after the Sesame Street character, Costello could be friendly and abrasive at the same time. He never tried to hide the vestiges of the tough South Side neighborhood where he grew up. Although Jim wore dark glasses to seem professional, he spoke like a street punk and kept pushing himself where he wasn’t wanted.

  About all I knew at the time was that if Jim happened to be scraping for clients, he would slip twenty dollars to a court clerk for the names of people who were due in court but did not have a lawyer. Even clerks assigned to decent judges would sell the lists. With a photocopy under his arm, Costello would inch his way through the crowded first floor hallway by Narcotics Court and boom out the names.

  Suspects posted ten percent of their bonds to be freed until their preliminary hearing, and the amount was refunded when their case ended. But hallway hustlers like Costello charged that ten percent for what amounted to a few minutes of routine work.

  Most of the defendants waiting outside the court were African-American, and Costello thought he had a natural rapport with them. He would adopt a white man’s imitation of black speech, glad-hand a few, and say things like “Hey, my man, how yuh doin’?” Sometimes he would address men he had never seen with a black handshake and ignore their look of scorn or bewilderment. Jim thought he was cool. Others thought he looked ridiculous.

  Jim would practically press himself against a potential client and rapidly say, “You got a lawyer? You got one now. I’ll handle your case and you pay me your bond, and that’ll be my fee. Is it a deal? Don’t worry, you’ll beat this thing, I know the judge. Just don’t say anything, leave it to me.” All his hustling was done inches from a wall sign stating: SOLICITATION OF BUSINESS RELATING TO BAIL BONDS OR TO EMPLOYMENT AS COUNSEL IN THE COURTHOUSES IS PROHIBITED.