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WHITEY & THE FBI | PART 5: DRUGS IN SOUTHIE

FBI in denial as Bulger breaks drug pact in Southie

South Boston spent much of Whitey Bulger’s heyday awash in drugs from Broadway to Castle Island, with Bulger allegedly swimming in the proceeds.

AP File Photo

South Boston spent much of Whitey Bulger’s heyday awash in drugs from Broadway to Castle Island, with Bulger allegedly swimming in the proceeds.

This Spotlight Team 5-part series was prepared by editor Gerard O’Neill and reporters Dick Lehr, Michell Zuckoff, and Shelley Murphy. This installment was written by Zuckoff.

If James “Whitey’’ Bulger was keeping South Boston safe from drugs, somebody forgot to tell Patricia Murray.

At the height of Bulger’s reign, Murray awoke every day with three strikes against her: parochial school dropout, eight-year addict, veteran hooker. In 1987, the Southie native told a policeman she would continue selling sex to buy drugs -- despite having AIDS.

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“Do you think I like going out on the street? Well, I don’t,’’ Murray, then 29, declared at the time, a maze of sores covering her thin legs. But, she added, “I’m not going to be in physical pain for nobody on the face of this earth.’’

As it turned out, Murray’s AIDS claim was a ploy, calculated to win admission to a drug-treatment program. But there was a bigger, deadlier sham at work: It was the myth that -- thanks to Whitey -- people like Murray didn’t exist in South Boston.

The gangster might bankrupt a family with predatory loans, or commandeer a local business, or crush a few thumbs over gambling debts. And sure, rivals and suspected rats turned up dead, if they turned up at all.

But drugs? That, the myth held, was verboten. In exchange for closing its eyes to Whitey’s rackets, Southie’s sons and daughters would be protected from dealers and addicted acolytes.

Now, however, based on extensive interviews, previously secret documents, and recent testimony from law-enforcement agents during federal court hearings, a picture emerges that explodes the myth. South Boston spent much of Bulger’s heyday -- from his recruitment as an FBI informant in 1975 to his indictment 20 years later -- awash in drugs from Broadway to Castle Island, with Bulger allegedly swimming in the proceeds. It wasn’t that Southie was worse off than other parts of Boston during the 1980s, but neither was it an island apart.

The new information reveals in detail how Bulger allegedly made dealers pay “rent’’ on every gram of “Santa Claus’’ -- a Southie code for cocaine. They also show how Bulger foiled repeated attempts to indict him, despite a steady drumbeat of reports about his demands for a share of everything from nickel bags to kilos, loose joints to burlap-wrapped bales of pot. One dealer alone said he sold tons of marijuana with Bulger’s OK, then paid a half-million dollars in rent.

Bulger’s Teflon coating can now be firmly attributed to his FBI handlers, who treated his antidrug pronouncements as “evidence’’ of his honor and value.

The newly disclosed documents show that while Bulger and his partner, Stephen “The Rifleman’’ Flemmi, were tightening their noose on Southie drug dollars, their power was being downplayed by the FBI agents who protected them in exchange for intelligence on the Italian mob.

Former FBI agent John Connolly

Globe File Photo

Former FBI agent John Connolly

“Source stated that Bulger and Flemmi will occasionally ‘clout’ a drug dealer, but they are strictly after money and won’t handle drugs or have anyone around them that will handle drugs under any circumstances,’’ FBI agent John Connolly, Bulger’s longtime handler, reported in one confidential 1987 memo. FBI documents show agents repeating those lines over the years while admitting they did little to verify the information, as though Bulger’s word was proof enough.

In the largest sense, the new materials reveal the drug pronouncement to be a convenient fiction, with a dual purpose apparent only in hindsight: It bolstered the neighborhood’s self-image after years of busing pain, while helping the FBI to justify its cozy relationship with Bulger.

And so, the insular “Town’’ and the elite law-enforcement agency would spend years in shared denial, embracing the Bulger known to friends as Jimmy, ignoring the anonymous Patricias. No one would mention that narcotics cases were doubling at South Boston District Court from 1985-’90. No one would wonder why yearly drug arrests were tripling in Southie between 1980 and 1990.

Even when the troubles were under Bulger’s own roof -- a son of Teresa Stanley, his longtime companion, struggled with drugs -- the neighborhood would treat it as nobody’s business.

And while Patricia Murray was developing a $250-a-day habit and selling herself to support it, the South Boston Information Center would boldly declare that prostitution and drugs “are a way of life in other sections of the city, but they will not be tolerated in South Boston.’’

The FBI was no better, turning a deaf ear to its own surveillance tapes. Nobody knew the geography of Boston’s underworld as well as Mafia boss Gennaro Angiulo. In 1981, Angiulo was recorded saying, “Whitey’s got the whole of Southie. Stevie has got the whole of the South End.’’

As cocaine dealer Thomas Cahill told an undercover Drug Enforcement Administration agent in 1988, that Mafia-sanctioned authority gave Southie drug dealers three choices: “You either pay Whitey Bulger, or you don’t deal, or you wind up dead.’’

Agent in denial

No one was deeper in denial than the FBI’s Connolly -- whose handling of Bulger eventually triggered the agency’s biggest crisis involving an informant. In a recent interview, he said flatly: “I don’t believe they were involved in drugs.’’ He later added, “I have never seen, and am still waiting to see, any credible evidence that they were involved in drugs.’’

Connolly’s statement -- coming three years after Bulger and Flemmi were indicted on drug-related extortion and racketeering charges, as well as other crimes -- reflects nothing so much as the convoluted logic of Bulger himself.

And therein lies the key to Bulger’s approach to drugs, and to some extent the key to his relationship with Connolly’s FBI: To the self-styled moral gangster and his loyal FBI handler, drug money was separate from the drugs themselves.

In this world view, Bulger’s hands were clean because he didn’t personally supply users; he simply made the world safe for dealers in exchange for a piece of the action. As ridiculous as that might seem, there was a revealing precedent: Bulger took the same approach to alcohol.

During two decades as Bulger’s companion, Stanley says he struck her on only one occasion: after she had stayed out late at a friend’s house, drinking wine. He hated to see people drink, she said in an interview. If she sipped two drinks he acted as if she had guzzled a dozen. “I almost got killed for drinking a couple of glasses of wine,’’ she said.

Even on St. Patrick’s Day, Bulger the fitness fanatic would complain about celebrants drinking at midday. In 1985, Bulger confided to a DEA agent that he “didn’t trust anyone who drank, because . . . they were weak’’ and might rat him out.

And yet, at the same time he was berating his girlfriend for wine-tasting and worrying about drunken rats, Bulger was his neighborhood’s biggest liquor supplier. He happily emptied the register at the South Boston Liquor Mart, which he controlled from 1984 onward. Questioned in late 1985 by Boston police about a wad of cash found in his car, Bulger teased: “We have the busiest liquor store around.’’

To claim Bulger was antidrugs because he didn’t personally deal cocaine would be like saying he was a Prohibitionist because he didn’t personally bag six-packs at his liquor store. When it came to both alcohol and drugs, he set aside personal distaste and found an equal opportunity to profit.

Some drug investigators saw through Bulger. “He might not sell them, but he profits from them,’’ Paul Brown, formerly second-in-command of Boston’s DEA office, said in the 1980s.

Even some FBI agents were uncomfortable. Robert Fitzpatrick, a former FBI agent, wanted Bulger cut off as an informant in the early 1980s, he testified in April at federal hearings on the legality of the 1995 indictments. In Fitzpatrick’s eyes, “a lot of the drug people may have been paying tribute to this guy . . . which is not something that I felt we should be involved in.’’

But with Connolly in Bulger’s corner, the favorite-son treatment continued, and Bulger avoided drug charges throughout the 1980s, despite two determined efforts to ensnare him.

The full story of those two efforts can only be told now.

A league of their own

Although Bulger and Flemmi were in their own league as FBI informants, they weren’t the only criminals talking to authorities. For more than a decade, a surprising number of people risked reprisal by telling local, state, and federal authorities of the pair’s drug activities.

There was DEA snitch “C-1,’’ who in 1981 said Bulger and Flemmi were demanding cash payment from all area drug dealers; there was “Smith,’’ a Massachusetts State Police mole who said Bulger and Flemmi had set up a pay-as-you-deal system where dealers could pay them a fixed fee or a percentage of their profits; in 1988 there was DEA informant “C-6,’’ who said dealers were complaining that the “rent’’ charged by Bulger and Flemmi was driving Southie cocaine prices through the roof, reaching $28,000 per kilogram, up from $20,000 previously.

Quincy police were hearing similar reports. One confidential memo says Flemmi was offering $75,000 to find people who owned small boats to off-load a large shipment of drugs. There were many more, like convicted drug smuggler Arnold Katz, who in 1981 told a DEA agent that fellow drug smuggler Frank Lepere routinely gave Bulger and Flemmi suitcases filled with drug money, to guarantee him protection from Salvatore Michael Caruana, a Mafia drug lord.

With reports like those swirling around, Quincy Police Detective Richard Bergeron sat at his typewriter on June 19, 1983, and banged out the words “Top Secret.’’ He would then go on to propose a sophisticated investigation of Bulger and Flemmi for alleged extortion of drug dealers, among other crimes.

That memo from a cop in Quincy -- where Bulger was living at the time in a luxury waterfront apartment -- set in motion “Operation Beans.’’ It eventually would involve Quincy police, the DEA, the Massachusetts State Police and the US Attorney’s office in Boston. But it would end in mid-1985 amid disappointment and, later, embarrassing revelations.

At the outset, Bergeron displayed prescience about the risks involved: “The success or failure of the mission depends on strict compliance with security provisions which must be developed and adhered to without exception,’’ he wrote.

Bergeron, who has since become police chief in Webster, was well aware that an attempt by State Police to catch Bulger and Flemmi in a loan-sharking and gambling probe in 1980-’81 had failed; rumors abounded that the two had been tipped off to a bug in a North End garage that was their headquarters.

And just two months before Bergeron wrote his memo, federal agents seized 10 tons of marijuana from a cinder-block warehouse on D Street in Southie. An FBI agent testified this year that Bulger was tipped off in advance of that bust; afterward, Bulger supposedly used the knowledge to demand that the Charlestown dealer pay him $90,000 for using Southie as a storage site without permission.

Despite Bergeron’s precautions, Bulger and Flemmi’s luck held true during Operation Beans. Public and confidential documents, as well as interviews, suggest that the two gangsters benefited from what Connolly’s former FBI supervisor John Morris said was an expectation that they would get “a head start’’ on investigations against them. Flemmi himself said in a sworn statement: “Both in 1984 and 1989, the FBI made Mr. Bulger and I aware of a number of drug investigations.’’

There is no doubt that in the months after Quincy police and the DEA teamed up to target the pair, the FBI got wind of the investigation.

In April 1984, an anonymous teletype was sent from the FBI Boston office to the agency’s Washington headquarters, reporting that FBI informants Bulger and Flemmi had been targeted in a probe of a “large-scale cocaine and marijuana trafficking organization, controlled by the `Irish mob’ in Boston.’’

The primary purpose of the memo was to convince Washington FBI officials not to cut loose Bulger as an informant. In part, the memo stressed that, “at present, DEA allegations are unsubstantiated and DEA has furnished no specific information relative to involvement of [Bulger] in criminal activities.’’

The memo worked, and Bulger remained an FBI source. The lingering question was: When the FBI was discussing the investigation, did someone spill Operation Beans to Bulger?

Did tip-off derail probe?

In December 1984, while the investigation was still moving forward, Assistant US Attorney Gary Crossen successfully won a court’s permission to wiretap Bulger. But Bulger was never caught making incriminating statements or seen in any compromising positions; soon, the probe would end. Badly.

On March 11, 1985, Bulger and his friend Kevin Weeks drove Bulger’s bugged car into a garage on Old Colony Avenue in South Boston. DEA agent Steven Boeri was monitoring the bug -- which had only been in place a few days -- when Boeri realized that Bulger and Weeks had found the listening device.

Boeri and other flustered agents rushed into the garage to retrieve the expensive equipment. They soon found themselves chatting with Bulger, who said he was impressed the DEA was able to bypass his car alarm; later, Flemmi would playfully promise not to reveal the DEA’s surveillance methods.

Two days after the bug was blown, Boeri and Bergeron were following Bulger. The gangster spotted the tail and waved the lawmen over to him. Bulger complained the removal of the bug had created a draft in his car; Boeri showed him how to fix it.

At the time, the lack of success seemed like simple bad luck for the DEA and Quincy police. But unknown to those investigators, on the same days Bulger was chatting with Boeri, he also was talking to the FBI’s Connolly.

On March 11, 1985, the day Bulger found the bug, Connolly wrote a confidential one-page memo saying Bulger had spotted Quincy police watching him; two days later, on the same day Boeri helped Bulger fix his car, Connolly wrote another memo, saying Bulger told him about finding the bug.

In Connolly’s memos, the information always seemed to flow one way: from Bulger to Connolly. But recently, questions have arisen about whether it was really a two-way street.

In April, former Boston FBI agent Rod Kennedy testified that in 1984, a high-ranking Washington FBI official was told of DEA plans to bug Bulger and Flemmi. Troubled that another federal agency was targeting FBI informants, he called the Boston FBI office for an explanation. As it happened, Kennedy testified, the only person in the squad room was Connolly, who by answering the phone received advance knowledge of DEA bugging plans.

Connolly has repeatedly denied using his knowledge to tip off Bulger and Flemmi. But others have voiced doubts.

“We never determined why the investigation failed,’’ Crossen, the former federal prosecutor, testified in May. “It clearly, in my mind, had been compromised.’’ Crossen said he did not know who to blame, but when asked if he suspected it was related to Bulger and Flemmi’s FBI relationship, he said icily: “That was one of a bunch of different scenarios that occurred to me.’’

An embarrassing postscript to Operation Beans was written by Boeri, who acknowledged under oath that after the investigation failed, he sent Bulger and Flemmi a congratulations card. He also sent a tape of military marches to Flemmi, a former Army paratrooper, and gave both men cigars after his wife gave birth.

The reason for his largesse? “I was trying to schmooze them,’’ Boeri said outside court, “so they would become [DEA] informants.’’ But he had been a decade behind the FBI.

Despite the failure of Operation Beans, the informant reports kept arriving about Bulger and Flemmi’s drug doings.

In 1989, Boston Police detectives James P. Carr and Frank Dewan were part of a team that tried to put it all together. Carr wrote a 118-page affidavit seeking permission to bug mobile phones belonging to Bulger and Weeks. Its chief conclusion: “Informant information gathered during 1984 and during 1987-’89 confirm that persons engaged in illegal activity in South Boston must pay James Bulger in order to operate.’’

Particularly revealing was the work of an undercover DEA agent named Bonnie Alexander, who repeatedly purchased cocaine from Thomas Cahill, a dealer who couldn’t seem to stop talking about the influence Bulger exerted over the drug trade.

During one drug buy after another at a hotel bar, Cahill outlined the hierarchy of the South Boston drug distribution network, and each time Bulger would come out on top. “Cahill said `Whitey’ Bulger controls South Boston, and the power to do that was worth anything,’’ Alexander said.

The investigation would result in the August 1990 indictments of 51 persons on drug charges. Among them were the lieutenants and soldiers in four Southie drug rings that law-enforcement officials said operated under Bulger’s authority; one indictment even outlined Bulger’s alleged extortion of drug dealers, based on Cahill’s claims.

Though the investigation stopped short of assembling enough evidence to indict Bulger and Flemmi, the DEA was almost giddy about the prospect of quickly nailing the two men and debunking the myth. Paul Brown of the DEA even claimed that the indictments would spell the end for Whitey.

But it would take nearly five more years for that to occur. And it would come only after the retirement of John Connolly from the FBI, after Bulger was “closed’’ as an informant, after several of those indicted in 1990 turned on Bulger and Flemmi, and after the FBI finally accepted the view of its law-enforcement colleagues that Bulger and Flemmi were far more trouble than they were worth.

Bulger’s late payment penalty

In the end, the clearest illustration of how Bulger did business under FBI protection comes from a series of related events in 1989, later described in affidavits and indictments.

Cahill, the drug dealer, had been robbed of $125,000 while trying to buy cocaine in Florida. Tough luck. Upon his return to Boston, he was told he still owed Bulger $40,000 in “rent.’’

Cahill lacked “product’’ to raise the money, so Bulger’s crew told him to see a former Southie bar owner named Timothy Connolly, who was working as a mortgage broker. Though he was reluctant to process a loan to repay a cocaine debt, Tim Connolly eventually helped Cahill obtain a second mortgage. But Bulger considered himself a preferred customer, and he expected faster service.

Soon after the loan closed in August 1989, Tim Connolly was summoned to the Rotary Variety Store -- next to the South Boston Liquor Mart -- and escorted to a back room by Bulger and Flemmi.

Spewing expletives, Bulger pulled a long knife from a sheath on his leg and repeatedly stabbed nearby liquor boxes. Then he put the knife to Connolly’s shirt and said he could buy his life. The price: $50,000. Over time, he paid $35,000, and the debt was deemed to have been settled.

As it happened, the federal and state investigators who were targeting Bulger on drug charges learned of the Cahill mortgage -- though they were unaware of the knifepoint collection efforts. Looking for information on money-laundering by Bulger, they subpoenaed Connolly before the federal grand jury.

But Connolly -- who sources say was willing to cooperate -- never appeared before that grand jury. Rather than making him part of the DEA drug investigation, sources said, federal prosecutors turned Connolly over to the FBI, which used him in a different drug probe. That move effectively steered him away -- and kept Bulger safe -- from the August 1990 indictments.

It took five more years, but Connolly’s allegations were ultimately part of the 1995 racketeering indictment.

To this day, DEA officials maintain they would have had enough evidence to charge Bulger and Flemmi in 1990 if Tim Connolly had been made available to them. The plan, they said, would have been to fit him with a body microphone and catch the gangsters making incriminating statements.

But nothing was ever so simple when it came to Bulger and Flemmi. Last year, Flemmi claimed he and Bulger had been warned in advance that Tim Connolly was cooperating with investigators and might be wearing a wire.

The tip, he said, came from the usual source: the FBI.

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