The whole point of this is if we find these abuses, that may be down the road, but at the present time, this bill, mandating guidelines, would not create, expressly would not create a defense if those guidelines were, in fact, violated. I do not believe that this bill would change the law with respect to that.

Senator MATHIAS. You heard this morning when Mr. Jensen criticized Senate bill 804 because it established a higher threshold standard on cases in which the undercover operation may interfere with privileged relationships.

Mr. NEAL. Well, I think, Mr. Chairman, you are going to hear a great deal of objection to the fact that in that area we did not go far enough. It does, however, impose a higher standard.

In certain extremely sensitive areas of first amendment rights, for example, it requires a written, articulated finding of probable cause to believe that criminal activity is going on in this area and that this is the only way to detect and prosecute that activity before undercover activity is taken in that area.

Yes, it does impose a higher standard, but it is a standard that is, in my judgment, needed, and as I say, you will hear, I think, when my good friend Mr. John Seigenthaler gets up here, you will hear that we do not go near far enough in this area.

But I think that we do take impose a higher standard. I think it is necessary.

Senator MATHIAS. So what you are really saying is that if you have sort of a run-of-the-mill sting operation or a buy-and-bust drug operation, that that can be operated at a different level of sensitivity compared to an undercover investigation which is targetted at a newsroom, a church, or a judicial system.

Mr. NEAL. Yes, Mr. Chairman. If I might take just one moment, Mr. Chairman, to point out what I was looking for here. It says: When a government agent, informant, or cooperating individual poses as an attorney, physician, clergyman, or member of the news media and there is a significant risk that another individual will enter into a confidential relationship with that person, there shall be a finding that there is probable cause to believe that the operation is necessary to detect or prevent specific acts of criminalty.

And then another portion says that those findings must be made in writing, yes, on page 11:

All findings required to be made by this section shall be in writing and shall inclde a statement of the specific facts or circumstances upon which the finding is based.

That is a higher standard than is now in the law but one I think is absolutely required. At least that much is required and the Chair will remember the problems we had in the investigation that the requirement of a finding in writing of specific facts before somebody is offered an opportunity to commit a crime is one of the real frailties we found in the Abscam operation.

Senator MATHIAS. This morning we ran out of time before I had the chance to ask the Justice Department panel about their reactions to the news that the chief informant, chief prosecutor, and one of the FBI agents in the Abscam case had apparently collaborated to run a private undercover operation for a leathergoods concern that was investigating alleged counterfeiters.

Now, the counterfeit problem is a serious problem and we are considering it in this committee in another context. But do you

have any thoughts to add to the propriety of that particular enterprise and by the participation in it of both a former and a future FBI agent and of a character like Mel Weinberg, whom you and I remember?

Mr. NEAL. Yes. It certainly was a reunion for a number of people who spent a lot of time together in the past. The Chair knows and reflects and remembers with me that one of the problems of an undercover operation and one of the problems I think that will be encountered in every one is the fact that you sometimes have to operate with characters like Weinberg.

It is a frailty and it is a risk. It is one that sometimes must be undertaken, but can be undertaken only if it is severely monitored pursuant to guidelines. Two things surprise me about the article I read on that matter the Chair mentioned.

One is I was surprised that the court would get involved in investigating crime rather than refer that to the U.S. attorney, and second: I think it is very dangerous to have those kind of operations where there absolutely are not guidelines in respect to what is done.

Whether those guidelines are informal, legislatively mandated or not, but here there are none.

Senator MATHIAS. The select committee reconciled itself to the fact that the people that were going to be used in these operations were not always going to have impeccable reputations and pure life experiences because it is, in fact, the nature of their life experience that makes them usable and useful but there must be some limits. Mr. NEAL. There must be some limits, and it makes it even more imperative that these highly effectively and highly dangerous techniques be carefully controlled.

Senator MATHIAS. Since everyone who reads this record may not have read the news story on that leathergoods case, I will, at this point, put in the record the article from the New York Times, which appeared in the May 4 issue.

[The following was received for the record:]

[From the New York Times, May 4, 1984]

LEATHER GOODS CONCERN USED A STING OPERATION

(By Leslie Maitland-Werner)

WASHINGTON, May 3.-The Louis Vuitton leather-goods company hired a former Government informer as part of an undercover sting operation against suspected counterfeiters of its products.

The informer, Melvin Weinberg, played an integral role in the Federal Bureau of Investigation's Abscam operation, which led to the convictions of a Senator and six Representatives on a variety of corruption charges.

In this case, however, Mr. Weinberg's aim was to seek out those responsible for threatening the famous Louis Vuitton trademark.

The company's lawyers retained as a consultant Thomas P. Puccio, the former chief of the Organized Crime Strike Force in Brooklyn, who supervised the Abscam inquiry and has since gone into private law practice.

OPERATION UPHELD BY JUDGE

The unusual private sting operation came to light after a Federal judge in New York upheld the use of the sting operation by Louis Vuitton et Fils S.A. to gain evidence against suspected counterfeiters of its products.

Its undercover operation involved the same techniques that have been used with increasing frequency by Federal law enforcement agencies to unravel complex criminal conspiracies.

Gunnar Askeland, and F.B.I. agent involved in Abscam, helped run the operation, in which evidence against suspected counterfeiters was surreptitiously gathered on audio- and videotape. At the time, Mr. Askeland had left the bureau to run his own private investigation firm in Florida. He has since rejoined the F.B.I.

ACCUSED OF CRIMINAL CONTEMPT

In order to run the operation, two of the company's lawyers, J. Joseph Bainton and Robert P. Devlin, were designated by the Federal Judge Morris E. Lasker of Federal District Court in Manhattan to serve as Government prosecutors, both to conduct an inquiry and to present evidence to a trial jury. Mr. Bainton and Mr. Devlin are with the firm of Reboul, MacMurray, Hewitt, Mynard & Kristol.

"To the best of my knowledge," Mr. Bainton said, "this is the first time in which specially appointed private attorneys have been authorized by a court to conduct an undercover sting-type investigation."

As a result of the evidence collected in the operation, Judge Charles L. Brieant of Federal District Court in Manhattan charged seven defendants with criminal contempt.

They were charged with the crime because two of the same defendants, in an earlier civil case brought by Louis Vuittin, had agreed to a settlement including a permanent injunction that barred them from producing or distributing goods made with the Company's distinctive material. The other five were charged with aiding and abetting the original two in violation of the court's permanent injunction.

The Vuitton material-brown vinyl with a gold insignia bearing the initials L.V.-is used to produce expensive handbags, accessors and luggage. A typical sachel-style handbag for women costs about $180, while counterfeit models of the bag may be sold at prices ranging from $30 to $180. The quality, however, is often inferior to the real thing, and the company contends this has damaged its reputation.

A decision last month by Judge Brieant rejected the defendants' contention that the company's lawyers had been granted overly broad jurisdiction when Judge Lasker designated them as temporary government prosecutors.

SUFFICIENT AUTHORITY

In his decision, Judge Brieant said Rule 42 of the Federal Rules of Criminal Procedure "confers sufficient authority upon the court to authorize a special prosecutor to undertake the activities performed in this case."

Judge Lasker's order permitted Mr. Weinberg, using the name Mel West, to masquerade as a gambling-casino owner who wanted to join the counterfeiting business. In secretly videotaped meetings with some of the defendants in the Beverly Wilshire Hotel in Los Angeles and the Plaza Hotel in New York City, Mr. Weinberg helped gain evidence of the enterprise and even visited one of its factories in New Haven, according to information presented to the court.

Mr. Bainton and Mr. Devlin were ordered by the court to inform the United States Attorney's office in Manhattan of their operations. They were also required to enlist the assistance of the District Attorney's office in Los Angeles in order to conduct electronic surveillance there.

In a telephone interview, Rudolph W. Giuliani, the United States Attorney in Manhattan, said: "I think it's a mistake generally for private people to be conducting sting operations. Citizens affected by the operation don't have the same protection as do those affected by the Government, where the Bill of Rights applies."

He added that this case was somewhat different because it was "done under the auspices of a judge."

Senator MATHIAS. I am very grateful to you for being here, but doubly grateful that you inconvenienced yourself to stay for an afternoon session, and the fact that you have carried the load without Malcolm Wheeler. We regret that he is ill, and I will put his prepared statement in the record.

[The prepared statement of Mr. Wheeler and the response question from Senator Denton follow:]

PREPARED STATEMENT OF MALCOLM E. WHEELER

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:

I greatly appreciate your invitation to appear before this Subcommittee to testify regarding S. 804, the Undercover Operations Act.

In 1982, while serving first as Deputy Chief Counsel and then as Chief Counsel to the Senate's Select Committee to Study Law Enforcement Undercover Activities of Components of the Department of Justice, I had the opportunity to examine in depth the policies and practices of federal law enforcement undercover operations. In particular, I had the opportunity to review confidential and public documents prepared in connection with six undercover operations, to interview numerous representatives of law enforcement components of the Department of Justice who conducted those operations, and to participate in the examination at Select Committee hearings of several of those representatives. I also had the

opportunity to study, and to interview and examine Department of Justice representatives concerning, the Attorney General's Guidelines on FBI Undercover Operations, on FBI Use of Informants and Confidential Sources, and on Criminal Investigations of Individuals and Organizations.

Against that background, I concluded that there existed, and I still believe that there exists, a critical need for legislation expressly authorizing, but carefully circumscribing the scope of, undercover operations by law enforcement components of the Department of Justice. I also believe that S. 804, if enacted, would achieve those two goals in a manner that would strike a proper balance between effective law enforcement and the pre

servation and nurturing of civil liberties. In support of that opinion, I offer the following specific comments

about portions of S. 804.

SECTION 3801:

DEPARTMENT OF JUSTICE GUIDELINES

Section 3801 (b) would require the Attorney

General to issue, maintain, and enforce guidelines governing the initiation, extension, renewal, expansion, and termination of undercover operations of law enforcement components of the Department of Justice. There already exist guidelines issued for the Federal Bureau of Investigaion by the Attorney General that would comply almost fully with Section 3801 (b). The existing Drug Enforcement Administration guidelines (at least as of mid-1983), however, are less complete and would have to be further developed; and the Immigration and Naturalization Service (at least as of mid-1983) has no guidelines that apply to the entire Service.

Given the intrusive nature of undercover operations, the threat they present to civil liberties, and the problems of management, review, and oversight inherent in their nature, it is important that there be clear and encompassing guidelines governing all such operations.

Former Attorney General Civiletti promulgated undercover guidelines while he was in office on January 5, 1981; and the Attorneys General who have succeeded him have maintained those guidelines. Nevertheless, the fact remains that some other Attorney General at some future time could, absent a provision such as Section 3801(b), conclude that the guidelines are an undue hindrance to effective law enforcement and could withdraw them in whole or in part; and the further fact remains that the guidelines applicable to the FBI