CLEVELAND — The Justice Department on Wednesday agreed to set free an admitted felon rather than submit to a new trial at which it might be forced to detail Teamsters Union President Jackie Presser's role as an FBI informant.
Immediately after the extraordinary court proceeding, the defendant, Jack Nardi, reiterated that he had taken $109,800 illegally in a "ghost employee" scheme engineered by Presser.
"He put me on the payroll," Nardi charged. "It's obvious now that I was set up. I never knew about any connections with the FBI."
The sudden freeing of Nardi, 43, marked the third time the government had suffered a loss in the three-year-old investigation because the Justice Department failed to disclose that Presser was a longtime secret FBI informant.
In July, the government decided to drop the labor fraud probe without bringing charges against Presser after it was learned that FBI agents had condoned the payroll-padding scheme to enhance Presser's abilities to provide them with information on organized crime.
In addition, another ghost employee--Allen Friedman, Presser's uncle--was freed last week in Akron after the Justice Department requested that charges against him be dropped. Friedman, who was convicted on embezzlement charges, had requested a new trial and sought extensive information on Presser's service as an FBI informant.
On Wednesday, Justice Department officials refused to explain why they had rejected an apparent offer from Nardi's attorney to agree not to seek material on the Presser-FBI relationship if the government asked only that he not be sentenced to prison.
But Stephen H. Jigger, a prosecutor with the federal strike force in Cleveland, said that if a new trial had been granted Nardi, the department would have had to turn over Presser-related documents that would "undermine the principles of the informant system and disclose confidential relationships."
Nardi pleaded guilty two years ago to the payroll-padding scheme and a related extortion count. He was seeking to have his plea set aside on the grounds that the government's failure to disclose Presser's ties to the FBI constituted a misrepresentation.
In entering the plea, he had agreed to provide the government with testimony against Presser if the Justice Department indicted the Teamster chief. He faced a potential 20-year prison sentence Wednesday from U.S. Dist. Judge John M. Manos.
Asked Wednesday if he had ever given Presser any information that might have proved valuable to the FBI, Nardi replied: "I never saw the man (Presser) for all the years I was on the payroll of (Cleveland Teamster) Local 507, from 1972 to 1978. I think Presser wanted to maintain a good relationship with my father."
Father Was Slain
John Nardi Sr., the leader of a Teamsters Union vending local in Cleveland and a reputed organized-crime figure, was murdered in 1977.
"About a year after my father died, I got a phone call that my services were no longer needed by (Local) 507," Nardi said. "I was supposed to be a business agent and union organizer, but they had never called me to do any work."
Besides serving as national president of the Teamsters, Presser also has kept his longtime post as secretary-treasurer of Local 507.
In another development, sources on Capitol Hill said Wednesday that interest in the politically charged Presser case has broadened.
The House Judiciary crime subcommittee is moving to obtain documents that include the 100-page memorandum in which strike force prosecutors recommended that Presser be indicted, these sources said. So far, the Justice Department has refused to turn over the material.
FBI Hampers Inquiry
The Senate Permanent Subcommittee on Investigations is already investigating the Justice Department's handling of the case--an inquiry that has been hampered by the FBI's refusal to publicly acknowledge that Presser has been an informant.
In a separate inquiry, Sens. Strom Thurmond (R-S.C.) and Joseph R. Biden Jr. (D-Del.), the chairman and ranking minority member of the Senate Judiciary Committee, have been briefed on the case by FBI Director William H. Webster and Associate Atty. Gen. D. Lowell Jensen.
Those briefings have not been completed and committee members said they plan to wait until a federal grand jury completes its investigation before going further with the probe.
Robert L. Jackson reported from Cleveland and Ronald J. Ostrow from Washington.