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WHITEY & THE FBI | PART 2: THE MAFIA MYTH

Agents gave Bulger starring role - but was it real?

Harry Angiulo and Whitey Bulger met in a garage on Lancaster Street in 1980.

File Photo

Harry Angiulo and Whitey Bulger met in a garage on Lancaster Street in 1980.

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

Hands clasped behind his head and cowboy boots plunked on a coffee table, a relaxed James "Whitey’’ Bulger awaited the start of a meeting called to see if he would be fired as an FBI informant.

It was November 1980, and top agents from the Boston FBI office had summoned Bulger to the secret meeting at the Hilton Hotel at Logan Airport to decide whether the gangster could continue his moonlighting job or would be cut loose because he had become more trouble than he was worth. As things played out, Bulger’s cocky nonchalance was not misplaced.

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But the four-hour session unfolded at a time of intense pressure for the Boston FBI, which was fending off corruption charges concerning Bulger while it was also assembling its D-Day case against the New England Mafia. For months, a score of agents had been working day and night on plans to wiretap Gennaro Angiulo’s headquarters at 98 Prince St. in Boston’s North End. Lives and careers were on the line.

And a cloud hung over the preparations: Whitey Bulger.

At the highest level, FBI brass was wrestling with complaints from top Massachusetts State Police officers about agents having been compromised in their dealings with Bulger’s Irish mob.

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Just three months before the hotel meeting, State Police had suffered the collapse of a gambling and loan-sharking investigation of Bulger’s Winter Hill gang and its loose affiliation with the Mafia. State Police were blaming it on the FBI, particularly FBI supervisor John Morris, who had blurted out classified information to a Boston cop that Bulger’s gang knew its garage on Lancaster Street near Boston Garden was bugged.

In the weeks that followed, as the FBI’s Mafia probe reached a critical stage, decisions had to be made within the bureau on whether to sever ties with Bulger over the garage debacle.

As a decision neared, Bulger, Morris, and agent John Connolly, Bulger’s day-to-day handler, teamed up to preserve the status quo. The result: Give Bulger a starring role in the Mafia investigation as it wound down, pinning a badge on his chest to deflect flak from Lancaster Street.

It proved to be a masterstroke. Whenever law-enforcement critics raised the issue of Bulger’s growing criminal network and FBI protection, bureau leaders would be reassured by Morris, Connolly, and others that it was all just petty rivalry and, besides, Bulger was the guy who had delivered the mob, the agency’s number one priority.

But did he?

Over the years, Connolly has made a mantra of Bulger’s contribution in taking down the local mob, calling it a "brilliant business decision’’ in which the government traded one bad guy for stone Mafia killers.

In a recent interview, Connolly again defended his relationship with Bulger, saying, "When you’re going after lions and tigers, you have to deal with lions and tigers.’’

But now, once-secret FBI documents, interviews with sources inside and outside law enforcement, and recent court testimony show Bulger deserves little credit for the biggest organized-crime case in Boston history: the fall of the Angiulo Mafia family.

Bulger’s billing as a Mafia slayer stands as the ultimate embellishment, the biggest in a series of exaggerated reports designed to prop up his shaky standing as a top-tier informant. And it also obscures a little-known fact -- that Bulger was far more involved in ratting out his own rivals within the Irish Winter Hill gang.

A new man in town

Lawrence Sarhatt may have been new to the Boston office of the FBI in May 1980, but as the special agent in charge -- the top official in a branch FBI office -- he quickly became concerned that things were not as advertised with Bulger.

When Sarhatt learned of the Lancaster Street problems and the complaints by the State Police, his initial reaction was to end Bulger’s five-year tenure as an informant.

That was a dire prospect for Connolly and Morris, who relied heavily on Bulger and knew how difficult it was to develop well-placed sources in criminal enterprises. They had bet their careers on Bulger and seemed to be losing. But they were also convinced Bulger was the most valuable informant the FBI had so they scrambled quickly to keep him, bombarding the brass with memos on Bulger’s sudden role in the Angiulo case and other matters.

Connolly started the damage control in October by writing in a report that Bulger claimed he learned about the garage bugs from a State Police source -- not the FBI. According to the report, Bulger complained that State Police were conspiring with political enemies of Bulger’s brother, then-Senate President William M. Bulger, to embarrass the family.

The next move belonged to Morris. In November 1980 -- shortly before the Logan Hilton meeting with Sarhatt -- Morris sent Bulger and his longtime partner, Stephen "The Rifleman’’ Flemmi, who was trusted by Mafia leaders, into Angiulo headquarters.

Stephen "The Rifleman’’ Flemmi.

AP File Photo

Stephen "The Rifleman’’ Flemmi.

Bulger and Flemmi made their way to Prince Street, a narrow, North End street where outsiders were stared down in the old-world neighborhood long dominated by the Angiulos. All five Angiulo brothers once worked in the family’s grocery store that extended credit to those short on cash.

Bulger and Flemmi were asked to find out if there was an alarm system at 98 Prince St. that would interfere with covert entry. The pair found nothing useful about alarms, but Flemmi produced a drawing of Angiulo’s L-shaped office -- a sketch that was superfluous given all the other information the FBI had assembled about the mob headquarters. But it was enough to get both Flemmi and Bulger included as informants on the sworn affidavit the FBI used to persuade a judge to authorize a wiretap.

The strategy folded Bulger into the coup that toppled Angiulo. Since the bugs produced immediate evidence against Angiulo, Bulger’s status was salvaged. In a matter of weeks, he was once again regarded as the agency’s key informant.

And the gregarious and street-smart Connolly soon became established as the gatekeeper to what his FBI bosses would know about Bulger. It mostly boiled down to this: Bulger was invaluable because he was helping take down La Cosa Nostra, the agency’s top priority, with glory in it for all hands. Eventually, everyone fell in line.

But in the tense days of November 1980, the skeptical Sarhatt pressed forward, brushing aside the paper proclamations. He demanded a meeting with Bulger to satisfy himself that a bank robber from South Boston had not become the tail wagging the FBI’s dog.

One agent looks back on it with disdain, saying Sarhatt was "in over his head. He walks into Boston, this buzz saw, and everyone’s furious.’’

In any event, a room was booked at the Logan Hilton. In a meeting that lasted several hours, Bulger leaned back comfortably on a chair and told Sarhatt he learned about the Lancaster Street garage bugs not from a friend at the FBI, but from a State Police source he refused to identify, according to FBI documents.

To this day, that refusal to identify the source is viewed as a brazen breach of informant protocol that rankles former State Police officials who believe the tip came from Morris or Connolly, not one of their own.

"It was outrageous,’’ said Robert Long, a former State Police investigator who worked on the Lancaster Street case. "An informant who refuses to talk about leaks should be closed down immediately. Otherwise, you’re losing control of manipulative people who are always looking for an edge. You plug the leak or close the source.’’

Less than a week after the hotel meeting, Sarhatt’s threat to close out Bulger receded after he conferred with a key law-enforcement ally of Connolly and Morris, federal organized-crime prosecutor Jeremiah T. O’Sullivan. Moving quickly to counter the State Police, O’Sullivan told Sarhatt it was "crucial’’ that the agency retain Bulger as an informant because of his ongoing value in getting bugs into Angiulo’s office, FBI records show.

Globe File Photo

Federal prosecutor Jeremiah T. O’Sullivan

O’Sullivan, who would win racketeering convictions against the Angiulos in a career-building case in 1986, has insisted in the past that he never knew that Bulger was an informer while he was a federal prosecutor. His lawyer, Hugh Scott, declined to elaborate, saying it would be inappropriate because O’Sullivan may be a witness when hearings resume.

But while O`Sullivan was declining comment, Connolly raised the ante on the crosscurrents still flowing from Lancaster Street. In a recent Globe interview, he contended O’Sullivan tipped him off about the State Police operation -- even though Connolly says he already knew about it from Flemmi. "My point is,’’ said Connolly, "here is O’Sullivan [now] saying he never knew they were sources, [but] he was warning me to tip them off.’’

In any event, Bulger and Flemmi were just two of nine confidential informants or "CIs’’ used to obtain the bug, and by no means were they the most valuable. That distinction went to someone who couldn’t have been more different from the two South Boston gangsters.

A bookie evens the score

The key to getting inside the Mafia’s Boston boardroom was detailed information about Angiulo’s lucrative gambling and loan-sharking business, which was yielding $45,000 a day in gross receipts.

While Bulger worked closely with some Mafia soldiers, that was information he simply didn’t have.

That knowledge was supplied to the FBI largely by a Suffolk County bookie, an inconspicuous man who did most of the damage to the Angiulo crime network. The bookie had hard-earned intelligence about how gambling money was delivered and where it was kept. And that’s what paved the way for the devastating electronic surveillance at 98 Prince St.

A longtime informant for Morris, the bookie also knew the math behind the odds and payouts. He was in and out of 98 Prince St. often, observing the weekly coordination of the betting business.

Moreover, he was the classic informant with the usual motive -- revenge. And, he was the antithesis of Bulger -- a nonviolent snitch who had no interest in expanding his modest crime base in exchange for well-received FBI informant reports.

In a Globe interview several years ago, the bookie, speaking on condition he not be identified, said he hated Angiulo for his greed and crude ways, his lack of loyalty to the real money men -- the bookmakers. He said he was nostalgic about older Mafia leaders he had worked with because they had "a live and let live [attitude] as long as they got what they got.’’ Not so with the Angiulo regime: "They take your money. They take everything from you.’’

The bookie’s help is what allowed six agents to enter Angiulo’s office in the early hours one night in January 1981. They planted two microphones at the top of the walls and put log-sized battery packs above the ceiling. For four months, the bugs transmitted incriminating mob talk to a Charlestown apartment where tapes rolled as agents monitored the conversations.

Before it was over, 23 mobsters would be convicted in the fall of the house of Angiulo: three brothers convicted of racketeering; their lawyer for obstruction of justice; henchmen and runners for gambling.

If there was any doubt about the preeminent value of the bookie’s information in bringing down Angiulo, it was removed in 1984. That was the year the bookie was given a presidential pardon on gambling crimes -- with the support of top federal officials, including Bulger-booster O’Sullivan, who praised the bookie’s critical contribution.

Even Morris -- who admitted taking $7,000 in bribes from Bulger -- now concedes to inflating Bulger and Flemmi’s value in the Angiulo case. When he testified at an extraordinary federal hearing on possible FBI misconduct in April, Morris said Bulger and Flemmi were helpful, but not necessary, in obtaining court approval for the Prince Street bugs and that his organized-crime squad could have done the job without them.

So why include them? "They had provided some information of value, and I wanted to make sure they got credit,’’ Morris testified. But there was another, less altruistic reason.

Including Bulger would help Connolly’s career. Once Bulger’s information was added to the affidavit, Morris said he rewarded Connolly with a meritorious "stat’’ for his file in an organization obsessed with developing informants and known for keeping close tabs -- and giving bonuses -- on "CIs’’ in wiretap affidavits.

But even after the microphones went into the walls at 98 Prince St., the issue lingered within the FBI, to say nothing of the State Police: Had someone tipped Bulger about Lancaster Street?

That contretemps was finally put to rest with a long "justification’’ memo from Morris and Connolly in April 1981 that recited a litany of matters on which Bulger purportedly provided vital information, chief among them the highly productive Angiulo bugs.

In the same memo defending Bulger’s continued use as an informant, Morris went a step further, making a claim that was bogus at best. He proclaimed the death of Bulger’s Winter Hill gang, saying it had been devastated by a series of prosecutions and was no longer "a significant criminal enterprise.’’ And so, it "does not merit further targeting at this time or any time in the foreseeable future,’’ he wrote. In short, a pass from the FBI’s top organized-crime agent.

But on the contrary, the Winter Hill gang, in the persons of Bulger and Flemmi, was alive and well.

In the early 1980s, aided by the Mafia takedown, Bulger was able to steadily expand his criminal network. In fact, the elimination of the Angiulos allowed Bulger and Flemmi to change the way they did business. The pair were able to mimic the Mafia itself, shifting from running a gambling and loan-sharking operation on the periphery to extorting monthly "rents’’ from a host of bookies and drug dealers. Just like Angiulo.

Bulger pulled back a safer distance from the front lines and skimmed off the top, letting others take the risks of collecting debts and selling dope.

And his expansion was abetted by federal investigations of Bulger associates. An extensive review of bureau documents filed in federal court shows Bulger’s specialty was informing on his rivals within the Winter Hill mob. Memos on his information -- called "209-inserts’’ -- deal with where to find fugitive Tommy Nee in South Boston, John Martorano in Florida, and Joe McDonald, on his way with IRA guns to New York, where he was arrested with his cache as he got off a train.

As for Mafia doings, Bulger served up mostly minutiae about who was mad at whom over money. He would whisper tidbits to Connolly: Sonny Mercurio hates Jerry Angiulo; Johnny Cincotti rubs people the wrong way at Winter Hill card games; Skinny Kazonis drives a white Ford; Bobby Carrozza is back in town.

But over the past 20 years, trouble frequently followed the friends of Whitey Bulger in the wake of his informant files. One by one, his closest underworld associates in the Winter Hill gang landed in jail for years. Howie Winter, the gang’s leader, was jailed in 1979 for race fixing, and again in 1992 for selling cocaine. Pat Nee was busted for gun smuggling and Joe Murray for marijuana smuggling in 1987. Jimmy Sims and Joe McDonald went away for race fixing and other crimes in 1983. All were prominent entries in Connolly’s snitch reports from Bulger.

John Connolly (left) with Francesco Angiuloin 1983.

Globe File Photo

John Connolly (left) with Francesco Angiulo in 1983.

After the arrest of the Angiulo brothers in 1983 and the imprisonment of top Winter Hill figures, it was clear sailing for Bulger as he and Flemmi filled the power vacuum.

After a while, even Morris realized it. "The more we worked on the Mafia,’’ he testified, "the less the threat the Mafia was to them.’’

Factions force fragile alliance

But because the Mafia always had the upper hand in manpower and money, Bulger’s Irish gang was more a wary partner than a foe of the Italians in Boston during the 1980s.

Largely through Flemmi’s connections, the two factions had worked out a fragile alliance in which gambling, loan-sharking, and drug territory were bold bright lines on the underworld map. Debts were to be honored, turf respected, encroachments arbitrated.

Because State Police saw the joint enterprise in action in early 1980, it kept pursuing Bulger and Flemmi in the face of increasingly strained relations with the FBI. But the investigators went forward not knowing that the federal agency had decided to retain Bulger as a prime informant and confine its organized crime work to Angiulo’s North End office.

As a result, both agencies were working simultaneously but independently in the North End, with State Police tracking Bulger and Flemmi in their black Chevy Caprice and FBI agents using surveillance cars on Prince Street with video cameras hidden in the grille work. At times, there was the possibility that agents and troopers would crash into each other on Hanover Street.

But the State Police were seeing what the FBI was denying -- Bulger and Flemmi working hand-in-glove with lower-level Mafia figures in a joint venture, starting their nocturnal workdays between 1 and 4 p.m.

They watched mobster Ilario Zannino pull up to the Lancaster Street garage in a blue Lincoln, get out and kiss Bulger on the cheek, in the old-world greeting of friendship. They watched East Boston mob associate Nick Femia drive Bulger around and do business with him in the back seat of a car outside Giro’s Restaurant. They listened to several informants tell them that the garage was a front for a bank where "big boys’’ go to deliver money from illegal gaming operations, a place where accounts were settled with Bulger on Tuesdays.

And they watched the evidence mount that Bulger and Flemmi were dipping into the drug trade as major mob dealers such as Michael Caruana and Frank Lepere and Kevin Dailey showed up at the garage, sometimes with briefcases.

Finally, the State Police watched Bulger move his Winter Hill "office’’ from Lancaster Street after the blowup within law enforcement over leaks, first to a bank of pay phones off the Southeast Expressway and then back to the North End, working out of a car in a space in front of Giro’s.

The State Police surveillance started in April 1980 and ended in March 1981 with investigators finally abandoning efforts to get a bug into the black Chevy being used as Bulger’s office.

Meanwhile, one of the hat-in-hand visitors to Lancaster Street was renowned bookie Burton "Chico’’ Krantz, the first of the major "independent’’ bookmakers coerced into paying Bulger monthly "rent’’ to stay in business in 1979. A high roller, Krantz trekked to the garage to pay Bulger a special mediation fee of $5,000 for Bulger’s settling of a financial dispute between Krantz and another bookie, according to court records.

Largely because of persistent work by State Police detectives, Krantz is now in the witness-protection program, a key witness against Bulger in the multi-faceted racketeering case that began to emerge during the State Police surveillance in 1980-’81.

Krantz is at the heart of the 1995 racketeering indictments that allege a joint venture by Bulger and Flemmi with other organized-crime leaders. From the beginning, the State Police saw the big picture; the FBI wore blinders.

Throughout the 1980s, the issue festered at the bottom of what had become law-enforcement’s poison well, with the State Police and FBI circling each other with disdain instead of sharing information and collating evidence.

The case that finally emerged about organized-crime collusion between Bulger’s gang and the Mafia could fill a record room of its own in the Post Office Square courthouse.

But it was summed up succinctly nearly 20 years ago in a lecture by an inebriated Ilario Zannino in the bugged back room of a North End garage at 3:53 in the morning.

Pressing his case for an underling to make fast payment on an $80,000 gambling debt to Bulger and Flemmi, Zannino warned him in April 1981 that "you don’t [expletive] them because they’re with us.’’ Turning to one of his henchmen for emphasis, he asked Johnny Cincotti "Are they with us? Are they with us?’’

Cincotti: "A thousand percent.’’

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