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Chapter Five The Civil Case...
Wasn't THIS an interesting turn of events.
London, England Tuesday, January 2, 1979 Bugged FBI Men with Hemorrhoids Sue for (GBP)11 Million (US$22,000,000) A telephone tapping expert who
supplied the Federal Bureau of Investigation with electronic eavesdropping
devices is being sued for alleged "bugging of two FBI agents." The agents,
Thomas Brereton and Zachary Lowe, are claiming eleven million pounds
compensation They say their right as private citizens were "grossly violated"
and they are suing Mr. Martin Kaiser and a bank in North Carolina.
They were investigating the bank's affairs after allegations that an
executive was misusing funds, and according to Mr. Kaiser a vice president of
the bank sought his assistance, wanting recorders installed to tape
conversations and interviews in the bank involving the officers.
Devices were provided, Mr. Kaiser said, on the understanding that the
equipment would be used legally with the consent of the agents.
The FBI men have now named him together with the bank in a lawsuit filed at
Greensboro, North Carolina. In a court deposition Mr. Brereton tells of finding
five bugging devices, including special transmitters and amplifiers, in the
building.
He recalled: "That night there was tremendous anger and frustration". He
remembered one of the bank's executives sitting "smirking at me when he pulled
all the mikes out of the wall. He went on: "You wouldn't believe the anger that
took place in here that night when I found out... you go home and all you do is
think about it." "You know you've been bugged... It keeps playing on your mind".
As a result he was humiliated and embarrassed as a special agent and
suffered, he said, increased hypertension and cysts in his eyes.
His colleague said in his deposition that after the incident his hemorrhoid
condition worsened. Fensterwald put forward an immediate response of abuse of power. His key motion was fought tooth and nail by the Government and the FBI but, in the end, the FBI was forced to give me ALL of my FBI files and the Government ALL of the Grand Jury testimony.
My team and I traveled to North Carolina to receive and review the documents/files. To my amazement, right on top of the stack were ALL 24 OF MY ORIGINAL LETTERS TO THE GRAND JURORS! Once the shock of seeing those letters dissipated my thoughts turned to anger. I thought... not ONE of those Grand Jurors had the guts to say to the FBI... Hey look, this letter was sent to ME and it is mine to keep. The FBI must have frightened them with a threat of criminal prosecution if they did not turn over the letters. I later learned that the U.S. Attorney did indeed try to indict me for tampering with a Grand Jury but, since my Grand Jury had long since been dismissed, that was a bunch of crap.
We also uncovered the fact that the two FBI agents asked for and received permission to sue me civilly THREE MONTHS before seeking my indictment. There was absolutely NO mention in the FBI files of CONFLICT OF INTEREST and absolutely NO mention in the thousands of pages of Grand Jury testimony covering all related defendants that the FBI agents intended to sue the defendants for a huge sum of money once convictions were obtained. To me, this was absolutely horrible! The FBI destroyed my business after the U.S. Recording fiasco and they now destroy the Constitution of the United States to further punish me. Where was this going to STOP! That is when I decided that the price of freedom is not "free" and I was going to do my best to expose the FBI as the bunch of trash that they were.
I also immediately noticed that the FBI files contained many, many green document sign out slips. Actually they approximated roughly one fifth or 20% of the total file. They were signed out by none other than one of the very FBI agents who was suing me for $22,000,000.00! In the end, we were NEVER able to recover those files. So THIS is the FBIs definition of "fair play."
My team now plowed into the thousands of pages of Grand Jury testimony covering not only my case but those of Duncan, Starr, the EVP and present and past employees of Northwestern Bank. We quickly learned that the Grand Jury was being run by FBI Agent XX and not the U.S. Attorney. Many of the statements made by the FBI Agent were patently untrue. For example, he presented my countermeasure equipment catalog with the comment "Here is Mr. Kaiser's catalog of illegal equipment." Absolutely NOTHING in that catalog was "illegal" and I could sell those products to whoever I wished... and I did; to Northwestern Bank.
Winston-Salem, NC Saturday, February 5, 1983 Defendants Claim Agents Abused Process GREENSBORO, NC - Two FBI agents abused the criminal process to
strengthen their position in a $22 million lawsuit stemming from the 1977
investigation and bugging at Northwestern Bank lawyers for defendants in the
suit charged in federal court yesterday.
One defendant in the civil case also accused the FBI of tampering with
evidence. In an affidavit, defendant Martin L. Kaiser, an Electronics expert
from Cockeysville, MD., said bureau agents or employees altered two tape
recordings and switched tape recorders. He also claimed that one agent removed
documents from FBI files which have never been recovered.
The allegations were made during three hours of argument In U.S. Middle
District Court Federal Judge Frank W. Bullock Jr. held a hearing on numerous
motions pending in the case which began almost five years ago.
In July 1978, FBI agents Thomas J. Brereton and Zachary T. Lowe filed suit
alleging that their civil rights were violated and their privacy was invaded
when their conversations were electronically recorded during their investigation
of Northwestern Bank from April to July 1977. Brereton and Lowe charged that
Edwin Duncan Jr., then Northwestern Bank chairman, and Gwen E. Bowers, then bank
vice president, conspired to intercept the agents oral and telephone
communications.
They also claimed that Kaiser agreed to help Duncan and Bowers by possessing,
selling, transporting, and installing electronic surveillance equipment or bugs
to help them accomplish their sinister conspiratorial scheme." Northwestern Bank
and Northwestern Financial Corp., the bank's holding company, also are
defendants in the lawsuit.
The agents discovered they were being recorded while they were investigating
financial irregularities at the North Wilkesboro-based bank. Duncan was
convicted of misapplying bank funds and recording conversations of IRS agents
who were reviewing bank records in October 1977, and in November 1977, he
pleaded guilty to the bugging conspiracy against the FBI.
Bowers pleaded guilty to the conspiracy to record the FBI agents'
conversations and to the actual bugging. However, Kaiser pleaded not guilty to
charges related to the bugging and he was acquitted in federal court in
Winston-Salem in February 1978.
Since Brereton and Lowe's suit was filed, it has become one of the most
complicated civil cases ever in the U.S. Middle District. Three Greensboro
attorneys - Bynum N. Hunter, Michael R. Abel, and Ben F. Tennille, have been
released as defendants, and the remaining defendants and the plaintiffs have
filed pages and pages of motions' affidavits and cross claims. There also is a
similar case filed by former FBI agent Donald G. Wilson for $5.5 million in
damages from Duncan, Bowers, Northwestern Bank and Northwestern Financial.
Lawyers for Duncan and Kaiser yesterday said Brereton and Lowe used the
criminal investigation of their clients to prepare for their
multi-million-dollar civil suit. "They were given access and power of the
federal government they should not have been given," Stephen Spring, a Louisiana
attorney representing Kaiser said. Duncan's attorney, Ted G. West, claimed that
the former bank chairman Agreed to plead guilty to the bugging conspiracy during
a meeting with Brereton and a former U.S. attorney.
"We contend that Mr. Brereton and Mr. Lowe abused the process," West said.
"That's what it boils down to in instigating a guilty plea from Mr. Duncan so
they could have something to hang their hat on in this civil case."
He also said, "This court must and should look closely at a situation where
investigators of the U.S. government pursue their investigation knowing during
the entire course of the investigation that they have a civil suit in mind".
But Mike Bailey, one of Brereton's and Lowe's lawyers, said the agents were
only fulfilling their obligations by investigating and helping prosecute the
cases.
Kaiser filed a $720,000 counterclaim against Brereton and Lowe in 1978 and
last year he asked to add the FBI to his suit. He is seeking $10.7 million from
the FBI. Kaiser claimed the bureau "actually assisted and enabled... Brereton
and Lowe to gain access to Information and records while on bureau time and
through bureau resources of information directly bearing to the outcome of the
civil action."
Duncan also has asked the court to allow him to add the FBI, a former U. S.
attorney and a former assistant U.S. attorney to his cross-claim against
Brereton and Lowe. However, Bullock questioned whether the statutory limitation
on adding to the cross-claims has run out.
Kaiser made other allegations against the FBI in his affidavit. He accused
the bureau of fraudulently concealing and manufacturing evidence.
The Panasonic tape recorder presented at his criminal trial played at
one-third normal speed, Kaiser said, but he said the recorder being used as
evidence in the civil case operated at one-fourth normal speed. He also said
tests showed that two tape recordings of Brereton and Lowe were not made on the
tape recorder provided to Northwestern Bank in 1977 and that the two tapes were
made on two different recorders, he said.
Kaiser said, "It is my belief based upon a review of tests that these
modifications or manufacturing of evidence was performed by agents and/or
employees of the Federal Bureau of Investigation as part of a conspiracy wherein
the FBI acted in concert with plaintiffs Brereton and Lowe by attempting to
convict me of a crime I did not commit ... and instituting the present civil
suit as a retaliatory measure designed to drain me of funds necessarily spent in
my defense."
Kaiser further charged that Brereton took documents out of the FBI files and
that the bureau claims those papers are lost. He also said Brereton made
misrepresentations to a grand jury which led to Kaiser's indictment on charges
related to the buggings Brereton did that Kaiser said, so he could use the
criminal trial to gather evidence for the civil case.
Duncan and Kaiser have filed motions for summary judgment and have asked for
dismissal of the actions against them. Yesterday, attorneys for Northwestern
Bank and Northwestern Financial Corp. also argued for summary judgment and
dismissal.
"The bank was the one who was losing from this illegal activity" not just the
customers, The bank," Richard Vanore, Northwestern attorney, said. "Because
(Duncan) benefited is not sufficient to say the bank benefited and should be
held responsible for his action."
He also charged that Brereton and Lowe are "seeking monetary damages as the
real fruit of their criminal investigation"
It was now time to add the FBI to my lawsuit because of the overwhelming evidence of a massive conspiracy.
Winston-Salem, NC Friday April 2, 1982 Bugging Expert Adds FBI To His Suit Against Agents GREENSBORO, NC - A Maryland electronics expert is asking for
more than $10 million in damages from the FBI, claiming that the agency as
assisted two of its agents who were planning a lawsuit against him.
Martin L. Kaiser specializes in electronic surveillance (bugging),
Countersurveillance and bomb detection equipment says in a document filed in
federal court here that agents Thomas J. Brereton and Zachary T. Lowe were
contemplating a lawsuit against him while they were involved in prosecuting him
on criminal charges.
The FBI "actually assisted and enabled... Brereton and Lowe to gain access to
information and records while on bureau time and through bureau resources of
information directly bearing to the outcome of their proposed civil action",
Kaiser claims.
He says in the document which is an amendment to an earlier counterclaims
against the agents, that the FBI's action represents a "malicious motive for the
institution and prosecution" of the criminal case against him "in violation of
federal statutes which require federal agents with a conflict of interest to
excuse themselves from such investigation".
Brereton and Lowe sued Kaiser in U. S. Middle District Court in July 1978,
five months after he was found not guilty of charges of bugging them while they
were conducting an investigation at Northwestern Bank in Wilkesboro in 1977.
The agents also sued the bank and its former president Edwin Duncan Jr.,
claiming that their right to privacy was violated by the bugging of the room
they were using at the bank head quarters. The agents claim a total of $22
million in damages.
Several months later Kaiser filed a counterclaim against the agents claiming
they abused the criminal process against him and asking for $720,000 in damages.
The agents responded by denying that they had acted improperly in the criminal
investigation and they asked for a dismissal of the counterclaim.
Kaiser's addition to the counterclaims filed this week asks that the United
States be brought into the suit to represent the FBI, and he asks for an
additional $10.7 million in damages.
U. S. Attorney Kenneth W. McAllister said this morning that "I certainly
wouldn't comment on any pending civil actions".
Duncan and the bank have filed motions for dismissal of the agents' suit, and
Duncan has asked the court for permission to file his own counterclaim against
the government and prosecutors in a 1977 criminal case against him.
Duncan pleaded guilty to charges of conspiring to bug the agents. He spent
several months in prison as the result of convictions on other charges stemming
from the agents investigation.
No trial dates have been set in the lawsuit, which has become one of the most
complex civil cases now pending in the district.
Periodically, my anger would boil over and I would send off a letter or two expressing my displeasure with the treatment I was getting. Here are two of those letters. Countersurveillance · Bomb Detection · Surveillance Electronics
9 July 1983
The White House Attention: Mr Ronald Reagan, President
My Dear Mr President:
You certainly had no difficulty understanding the seriousness of the
potential conflict of interest concerning the Carter briefing books so I
am at a loss to understand why you failed to see just as obvious a
conflict as outlined to you in my letter of 15 February, 1983.
First, let me state that your response placed me right back in the
hands of my enemies and you certainly get no thanks for that.
Let me again cite some of the events that have occurred in my action
against some corrupt FBI agents.
During the civil process one of the agent/plaintiffs revealed that they
had been given my national security file. Check this out! Here I am
fighting a corrupt group of FBI agents blindfolded, my hands tied behind
my back, my cards being dealt face up and the bastards, in spite of that
tremendous advantage, are dealing themselves from the bottom of the deck.
No conflict, eh?
Every step of the way I have had to file subpoena after subpoena (at
great expense) to obtain whatever material I needed to proceed with the
case. When the FBI agent (the one with the sty in the eye) was pressed for
an answer as to how many subpoenas he had issued for material in the case
he responded "What do I have to worry...I'm the author. I know
what's in those files...my God, I wrote 80 percent of everything in those
files. I've done probably 60 percent of the work, and Mr Lowe (he's the
one with the hemorrhoid) the rest of it... I know what's in the files. I
wrote them."!!! No conflict of interest, eh?
Bullshit!
Encl:
Countersurveillance · Bomb Detection · Surveillance Electronics
27 July 1983
Federal Bureau of Investigation Attention: William Webster, Director
It seems ludicrous that I should be sending you a portion of the FBI
manual of "Activities and Standards of Conduct" but since everyone else
involved in the matter described in the attached article has forgotten
about it I thought it best not to take any chances.
We now have a ruling from the Federal Court in North Carolina on my
charges and they agree that your agents did indeed abuse both the
criminal and civil process while acting under color of federal law.
Granted they have the right of appeal but the issues raised fall within
regulations covered by the manual of "Activities and Standards of
Conduct."
I would like to call your attention to the following sections that I
feel were violated by your agents. First, however, let me point out that
the page enclosed is the first substantive one in the manual and is titled
"Section I" so I must conclude that someone must have thought these issues
important.
1-1(1) The agents did not conduct themselves in such a manner that
created respect for the Government.
1-1(3)(a) The agents did create the appearance of using public office
for private gain.
1-(3)(d) The agents did create the appearance of losing complete
independence or impartiality.
1-(3}(f} The agents did conduct themselves in such a manner as to
adversely affect my confidence in the integrity of the Government.
The remainder of 1~1(3) concerns conflict of interest and is revealing.
1-2 The agents did engage in dishonest and disgraceful conduct which
was prejudicial to the Government.
In view of the incredible expense and loss of business reputation these
agents have put me through along with their causing me to loose my
confidence in the integrity of the Government I am herewith demanding that
they be summarily fired. I'm sure you can find a way to do this without
interfering with the civil suit. After all it has been you all along that
has said this is a purely private matter.
I shall press all issues raised by this case to conclusion by the court
of law but it's up to you whether or not my confidence in government is
restored.
Encl.
cc: President Reagan
Here are the rules of conduct referred to in the above letter.
1-1 INTRODUCTION
Regulations concerning the conduct and activities of employees are published in the Code of Federal Regulations (CFR), Title 28, Section 45.735. Their source is found generally in Departmental Order 350-65 dated 12-28-65 which provides that employees shall:
(1) Conduct themselves in a manner that creates and maintains
respect for the Department of Justice and the U.S. Government. In all their activities, personal and official, they should always be mindful of the high standards of behavior expected of them.
(2) Not give or in any way appear to give favored treatment or advantage to any member of the public, including former employees, who appear before the Department on their own behalf or on behalf of a nongovernmental person.
(3) Avoid any action which might result in, or create the appearance of-
Departmental Order 350-65 further provides that an employee shall not have a direct or indirect financial interest that conflicts, or appears to conflict, with his Government duties and responsibilities. Such a conflict exists whenever the performance of the duties of an employee has or appears to have a direct and predictable effect upon a financial interest of such employee or of his spouse, minor child, partner, person, or organization with which he is associated or is negotiating for future employment. A conflict of interest is deemed to exist even though there is no reason to suppose that the employee will in fact resolve the conflict to his own personal advantage rather than to that of the Government. The order also provides that no Department of Justice employee shall participate personally and substantially as a Government employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation or otherwise, in a judicial or other proceeding, application, request for a ruling or other determination, contract, claim, in which, to his knowledge, he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner, or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest, unless authorized to do so by the Deputy Attorney General. This prohibition includes such financial interests as ownership of securities of corporations or other entities which may become involved in Bureau investigation. The prohibited actions include supervisory decisions and recommendations, as well as investigative activities. Any employee receiving an assignment involving any matters in which he has a direct or indirect financial interest as defined in the departmental order shall immediately advise his superior and shall be relieved of such assignment. Should there be a strong reason for requesting the Department's approval for the employee to participate in the assignment, the matter should be submitted to FBIHQ for consideration regarding presentation to the Department. In any event the employee should not participate in such assignment until the Department's authorization has been received. The departmental order specifically exempts from the above prohibition the stock, bond, or policy holdings of an employee in a mutual fund, investment company, bank, or insurance company which owns an interest in an entity involved in the matter provided the fair value of the employee's holding does not exceed one percent of the value of the reported assets of the mutual fund, investment company, or bank. In furtherance of the above, the Bureau expects its employees to so comport themselves that their activities both on and off duty will not discredit either themselves or the Bureau. Copies of Departmental Order 350-65 are furnished to employees during their indoctrination on entering the Bureau's service. Failure by an employee to follow these regulations will result in appropriate disiplinary action including possible dismissal. The rules and regulations regarding official and personal conduct which govern the granting of individual access to and use of Bureau crypto materials appear in the COMSEC Custodian Manual (Section II, A, 5, pages 7-7c). 1-2 PERSONAL CONDUCT Employees should never cause themselves to be mentally or physically unfit for duty. They are not permitted to consume alcoholic beverages during working hours, including that time allotted for meal periods or any period of leave taken if the employee intends to return to work before the termination of working hours. The use of illegal drugs or narcotics or the abuse of any drugs or narcotics is strictly prohibited at any time. They must not, at any time, engage in criminal, dishonest, immoral or disgraceful conduct or other conduct prejudicial to the Government. 1-3 GOVERNMENT PROPERTY All Government property, automobiles, supplies, equipment, telephones, and facilities are to be used solely for official purposes and are not to be converted to any employee's personal use. In this regard, however, the use of equipment such as cameras for training and practice during non work hours shall be considered "official purposes." Any loss, misplacement, theft or destruction of Government property issued to any employee must be reported to his superior immediately. 1-3.1 Bureau Vehicles Bureau vehicles are to be used for official business only. In connection with the use of Bureau vehicles, transportation and related services for other than Bureau employees are to be restricted to individuals and their families, or aides accompanying them, who are traveling to attend Bureau sponsored or related functions or have other direct business to transact with Bureau officials and officials of the Department of Justice traveling on official business.
As mentioned earlier, NOWHERE, repeat NOWHERE, in the thousands of documents I reviewed did I find ANY mention of conflict of interest.
FBI Reports on Agent Misbehavior
Date: January 1983 Pages: 43 File size: 1.7 meg
Date: 08 July 1985 Pages: 12 File size: 580K
Date: 15 March 1990
Scope: This report examines 75 incidents which occurred during calendar year 1988. It focuses solely on incidents in the category
"unprofessional conduct/misuse of the SA position/conflict of interest," which is a catch-all that includes "homosexual acts, misuse of firearms (nonshooting), improper management techniques, civil disturbance, and improper relationship with the criminal element," as well as "accessing computerized criminal history information for personal use, making traffic stops, inappropriately involving local law enforcement agencies in domestic disputes, or being arrested for criminal sex offenses."
A Summary of Dismissals Involving FBI Agents and Egrerious Behavior" Date: June 2000
Side Bar A Bomb Story Chapter Two The U S Recording Scandal... Chapter Three Bugging the FBI... Chapter Four The Criminal Case... Chapter Six Repercussions... Chapter Seven My personal observations...
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