that a bank account in Switzerland was opened in 1966 by an American with strong underworld connections who was acting as a representative of several U.S. suppliers of service clubs and of a U.S. Government hotel and recreation center maintained primarily for Americans in Saigon.

Since that time, on a regular basis, the American suppliers have caused varying amounts to be deposited in this account. From time to time withdrawals were made by checks signed with a code name in favor of certain noncommissioned officers who were responsible for the purchases of the service clubs and in favor of the American civilian manager of the Government operated recreation center. The account was used as a kind of clearing house for funds being paid by the suppliers to the clubs' buyers. It is believed that hundreds of thousands of dollars have passed through this and similar related Swiss accounts. Also, we have reason to believe that corporations controlled by American citizens have engaged in extensive illegal trading in gold and have concealed transactions in secret foreign accounts.

Possible fraud on creditors in bankruptcy proceedings can also be perpetrated through the use of secret foreign accounts. Almost 3 months ago, an indictment was filed in the southern district of New York charging the president of a movie production concern with perjury when he testified, at a bankruptcy proceeding involving his company, that he did not have a Swiss account.

Another example of the enormous advantages to criminals in secret foreign accounts can be seen in an indictment filed this year which charges a number of bank employees with attempting to steal almost $12 million from the Chase Manhattan Bank by sending false authorizations to a Swiss bank to transfer the funds to another Swiss bank where the funds were to be picked up. Only because the recipient of the wire became suspicious did the scheme fail.

Each of these cases has involved countless man-hours spent piecing together thousands of documents and other disjointed sources of information: in short, proportionately far more investigative work than virtually every other type of prosecution.

This is so because in addition to the usual difficulties attending the detection of criminal conduct in financial transactions, we have here as well the added obstacle of the use of secret foreign accounts to avoid discovery of the underlying transactions by the U.S. Government.

I feel that where criminals have made such extraordinary efforts to cover their tracks, we must respond with equal vogor to uncover them. Nevertheless, it is self-evident that the ever increasing use of secret foreign accounts is proving a formidable obstacle to law enforcement. The cases I have referred to are but a small fraction of the crimes committed by persons through the use of secret foreign accounts. With the law as it now stands we cannot attack these law violators as systematically and successfully as those whose unlawful schemes take place exclusively in the United States.

The need for such an attack is compelling. The cases I have discussed demonstrate that secret foreign accounts are now available and are widely used by those who are in positions to cause grave

damage to our economic system and our society. Wealthy individuals and brokerage firms which seek and sponsor illegal credit extensions to Americans through secret foreign accounts abroad undermine our Government's attempt to control inflation. Those who engage in securities frauds and major stock market manipulations turn to the secret account as the means to carry out schemes that bilk the trading public and escape detection. Persons with large incomes and assets to conceal from taxation find the secret foreign account an indispensable adjunct to their evasion plans. And finally, the use of secret foreign accounts has become integral to a large number of diverse criminal activities, furthering the most pernicious and blatant violations of law. Of course, I will continue to make every effort to bring before the bar of justice those who use secret foreign accounts to further illegal activity. But if the administration of justice is to be truly evenhanded, all law violators must be equally vulnerable to the criminal process; no one should be allowed to place himself beyond it. I am confident that this committee, with its great knowledge and judgment, will act to insure that result.

Chairman PATMAN. Thank you very much, Mr. Morgenthau. These disclosures are shocking and disturbing. I think we can well afford to take plenty of time to go into this and make sure that we enact the very best bill that's possible to remedy these terrible situations.

You have rendered a great service to the people of the United States by making available this testimony and performing your duties in such a satisfactory way as you have. It is in the public interest.

I am glad to know that the Department of Justice is behind you and also anxious to make sure that these awful situations are cleared up and remedied and the people not be required in the future to be led into such awful frauds, international frauds, I guess you would call it, but they get down to the local level.

Here are copies of four checks that were stolen and forged from the Human Resources Agency, a poverty agency, in New York. They are dated on the same date in amounts ranging from $105,000 to $466,000. As you can see, the payees are questionable and the signature is ambiguous. These checks were deposited in the Banque Populaire. The bank accepted them and routinely forwarded them to the Chase Manhattan Bank for collection.

These checks, together with two New York Times articles are inserted in the record at this point, without objection.

There are four checks, one for $340,063.38, dated October 9, 1968, and it required the signature of two people. Only one was presented. Therefore, it was discovered.

The other one is $466,179.24. They are all on the Chase Manhattan Bank, but the Chase Manhattan Bank refused to cash them because they did not have the required two signatures. They only had one, I want to add the man whose name does appear on the checks was found not to be implicated in any manner with this scheme.

The other one is $105,366.80, and the last one is $106,005.59. We will make them a part of the record.

(The checks and articles from the New York Times referred to follow:)

[From the New York Times, Jan. 15, 1969]

AMERICAN SEIZED IN NETHERLANDS IN PLOT ON HRA

ADMITS LINK TO AN ATTEMPT TO SHIFT $1-MILLION TO BANK IN SWITZERLAND

The 40-year-old naturalized American has been arrested in the Netherlands and has admitted he was involved in a complicated plot to transfer more than $1-million from accounts of the city's Human Resources Administration to a bank in Switzerland.

The police in Venlo arrested a man identified only as G. F. Cöeppicus when he attempted to collect $137,000 in cash at the Amsterdam-Rotterdam Bank. A second man is still sought by Interpol, the international police organization in connection with the attempted theft of $1,017,651.01 in four fraudulent H. R.A. checks.

HOGAN HAS THE CHECKS

The four fraudulent checks are now in the possession of the New York County District Attorney, Frank S. Hogan. Two to three months ago, according to a statement released by his office yesterday, he notified the Chase Manhattan Bank to watch for checks drawn on the account of H.R.A.'s Manpower and Career Development Agency.

Payment was stopped on the checks-four of seven stolen from an H.R.A. checkbook-when they were presented to Chase Manhattan for collection last Dec. 23. As yet there is no indication whether or not Mr. Cöeppicus is in any way associated with the Human Resource Administration.

The arrest last Friday added an international aspect to the problems of the superagency. Other situations involving H.R.A. include:

The House Education and Labor Committee announced yesterday that a bipartisan "task force" of committee members-headed by Representative Hugh L. Carey, Brooklyn Democrat-will investigate the city's antipoverty program. The Office of Economic Opportunity, one of the Federal organizations that largely finance local antipoverty programs, said that its staff of three inspectors for New York and the New England region could not effectively monitor all antipoverty programs in eight states.

United States Department of Labor monitors studying the city's Neighborhood Youth Corps, which provides jobs for slum teen-agers, reported that major failures of the program included a lack of supervision and that agencies of the Human Resources Administration find "very few" permanent jobs for members. Secretary of Health, Education, and Welfare, Wilbur J. Cohen, said yesterday that all antipoverty programs should be improved by "politically insulating" proved programs, by transferring them from the Office of Economic Opportunity to older Federal departments.

In the Netherlands yesterday, the police in Venlo said Mr. Cöeppicus opened an account under analigs with the Banque Populaire Suisse in Zurich last Dec. 12. In German, the bank is called the Schweizerische Volksbank.

The police said the checks amounted to $1,017,615. They refused to confirm that these checks were the same ones that are now in the possession of District Attorney Hogan, but the checks Mr. Hogan has are for the following amounts: $340,063.38; for $105,366.80; for $106,005.59; and $466,179.24. These add up to $1,017,615.01.

Some time after the account was opened, the Zurich bank led Mr. Cöeppicus to believe that the checks had been presented for collection without problems, the Venlo police said.

TRANSFER ORDER ALLEGED

Mr. Coeppious is alleged to have then ordered the bank to transfer $137,000 to the Amsterdam-Rotterdam Bank in Venlo-to the account of a local businessman who was detained by police when he inquired about the money last Thursday. of The police said the businessman, into whose account the money was supposedly transferred, was released the same day when he proved to their satisfaction that he had acted in good faith in the attempted transaction.

However, the next day, last Friday-Mr. Coeppious, accompanied by his sevenyear-old son and his brother, a German who lives in Siegen, Germany, was arrested when he allegedly attempted to pick up the money.

[From the New York Times, Jan. 15, 1969]

AMERICAN SEIZED IN NETHERLANDS IN PLOT ON HRA

ADMITS LINK TO AN ATTEMPT TO SHIFT $1-MILLION TO BANK IN SWITZERLAND

The 40-year-old naturalized American has been arrested in the Netherlands and has admitted he was involved in a complicated plot to transfer more than $1-million from accounts of the city's Human Resources Administration to a bank in Switzerland.

The police in Venlo arrested a man identified only as G. F. Cöeppicus when he attempted to collect $137,000 in cash at the Amsterdam-Rotterdam Bank. A second man is still sought by Interpol, the international police organization in connection with the attempted theft of $1,017,651.01 in four fraudulent H.R.A. checks.

HOGAN HAS THE CHECKS

The four fraudulent checks are now in the possession of the New York County District Attorney, Frank S. Hogan. Two to three months ago, according to a statement released by his office yesterday, he notified the Chase Manhattan Bank to watch for checks drawn on the account of H.R.A.'s Manpower and Career Development Agency.

Payment was stopped on the checks-four of seven stolen from an H.R.A. checkbook-when they were presented to Chase Manhattan for collection last Dec. 23. As yet there is no indication whether or not Mr. Cöeppicus is in any way associated with the Human Resource Administration.

The arrest last Friday added an international aspect to the problems of the superagency. Other situations involving H.R.A. include:

The House Education and Labor Committee announced yesterday that a bipartisan "task force" of committee members-headed by Representative Hugh L. Carey, Brooklyn Democrat-will investigate the city's antipoverty program. The Office of Economic Opportunity, one of the Federal organizations that largely finance local antipoverty programs, said that its staff of three inspectors for New York and the New England region could not effectively monitor all antipoverty programs in eight states.

United States Department of Labor monitors studying the city's Neighborhood Youth Corps, which provides jobs for slum teen-agers, reported that major failures of the program included a lack of supervision and that agencies of the Human Resources Administration find "very few" permanent jobs for members. Secretary of Health, Education, and Welfare, Wilbur J. Cohen, said yesterday that all antipoverty programs should be improved by "politically insulating" proved programs, by transferring them from the Office of Economic Opportunity to older Federal departments.

In the Netherlands yesterday, the police in Venlo said Mr. Cöeppicus opened an account under analigs with the Banque Populaire Suisse in Zurich last Dec. 12. In German, the bank is called the Schweizerische Volksbank.

The police said the checks amounted to $1,017,615. They refused to confirm that these checks were the same ones that are now in the possession of District Attorney Hogan, but the checks Mr. Hogan has are for the following amounts: $340,063.38; for $105,366.80; for $106,005.59; and $466,179.24. These add up to $1,017,615.01.

Some time after the account was opened, the Zurich bank led Mr. Cöeppicus to believe that the checks had been presented for collection without problems, the Venlo police said.

TRANSFER ORDER ALLEGED

Mr. Coeppious is alleged to have then ordered the bank to transfer $137,000 to the Amsterdam-Rotterdam Bank in Venlo-to the account of a local businessman who was detained by police when he inquired about the money last Thursday.

The police said the businessman, into whose account the money was supposedly transferred, was released the same day when he proved to their satisfaction that he had acted in good faith in the attempted transaction.

However, the next day, last Friday-Mr. Coeppious, accompanied by his sevenyear-old son and his brother, a German who lives in Siegen, Germany, was arrested when he allegedly attempted to pick up the money.