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FBI agent, informant draw 'dark picture' of how roles can blur


BOSTON - For 18 years, Denise Castucci waited tables at the Daily Catch restaurant on the south side of town and often served an affable, if swaggering, FBI agent named John Connolly.

They became friends and spoke often. But Connolly never let on that he knew what had really happened to Castucci's father, Richard, who was shot and killed, rolled up in a sleeping bag and stuffed in the trunk of his Cadillac in 1976. In fact, authorities allege, the agent played a significant role in the death.

"I feel betrayed and disgusted," says Castucci. "I knew John Connolly and trusted him. This is so unbelievable."

Two decades ago, on the rough and insular streets of South Boston, the FBI made a devil's deal with James "Whitey" Bulger and his chief lieutenant, Stephen "The Rifleman" Flemmi. That deal protected the pair as mob informants while allowing them to build an illegal drug and gambling empire and ruthlessly eliminate anyone who defied them.

It wasn't long, authorities allege, before Connolly tipped off Bulger and Flemmi that Castucci was a potential witness who could implicate them in crimes. Soon thereafter, the nightclub owner was killed.

Bulger is now a fugitive, a $1 million price on his head; Flemmi sits in a federal prison awaiting trial on murder and racketeering charges. Connolly was indicted in October for his complicity in three of the killings that Bulger and Flemmi are accused of orchestrating while under bureau protection.

Authorities are still struggling to sift through years of wrongs wrought by this alliance of FBI agents and criminals. "We've begun breaking through this shell they built," said Maj. Thomas Foley of the Massachusetts State Police. "We've peeled off layer after layer."

In all, Bulger is charged in 19 killings while doubling as a bureau snitch, and Flemmi is accused of killing 10 people. As recently as October, officials unearthed two of Bulger and Flemmi's alleged victims from sandy graves - one under a subway bridge; the other under a beach only yards from an expressway.

Earlier last year, officials dug up three victims in a gully, across the street from a popular banquet hall. Authorities are searching for other victims.

The relationship began in 1975, when Bulger was a leader of the Winter Hill Gang, a rival of Boston's Mafia family. Even as the agents extended protection, they also offered their friendship - a major violation of bureau rules.

The agents held dinner parties with the gangsters and exchanged gifts. One agent accepted $7,000 in bribes from Bulger and Flemmi, while Connolly is accused of accepting a diamond ring, according to federal authorities.

"This is more horrific and stranger than any fiction I have ever seen or read," said Jeffrey Denner, a lawyer representing the families of two homicide victims that Flemmi and Bulger are accused of killing.

"On some level, you expect this conduct from the mob," he said. "We are horrified and disappointed by the conduct of the FBI."

The Connolly indictment "fills out a dark picture of corruption and obstruction of justice by a former FBI agent," said U.S. Attorney Donald K. Stern after Connolly was charged in October. "The handler of criminals became one himself."

Last month, in response to the Boston debacle, the U.S. Justice Department announced new guidelines requiring agents to notify federal prosecutors when informants commit crimes or become targets of separate investigations.

Connolly was also indicted a year ago on racketeering charges. That came after his former bureau supervisor, John Morris, accepted an immunity deal and described the FBI's alliance with the gangsters in 80 days of court hearings in 1998. Also testifying was Flemmi, whose attorneys were seeking - unsuccessfully - to have the federal courts rule that the "Rifleman" had essentially been granted immunity by the FBI during his years as an informant.

Forty witnesses

More than 40 witnesses, including dozens of FBI agents, testified during those hearings, and hundreds of internal FBI documents were admitted into evidence.

Bulger and Flemmi were first charged with racketeering in 1995, and federal prosecutors have piled on other charges since then, including the murder counts.

But while Flemmi was quickly nabbed, Bulger, who is now 71, has eluded capture after being tipped off to his impending arrest in 1995 by Connolly, authorities say. He's on the FBI's Ten Most Wanted List; some wonder how aggressively the bureau is pursuing him.

"There's no massive manhunt," says Ralph Ranalli, a reporter for the Boston Globe who is the author of "Deadly Alliance," a book about the case scheduled to be published next year.

"It's just a reward," Ranalli says. "He is one of the most clever fugitives out there. He was planning for years to go on the lam, and they have had at various times only one or two guys looking for him. It definitely speaks to the fact that there is some serious ambivalence at FBI about wanting to catch this guy."

Few will talk about the case. Federal authorities declined interview requests, and defense attorneys did not return phone calls.

In South Boston, where Bulger ruled his criminal empire from a curbside liquor store and a rundown pub named Triple O's, most residents fear talking openly about "Whitey."

"I'm 37 and want to live to be 38," said one man, who works in a local pizza shop.

They also don't want to disrespect Bulger's family - Bulger's brother, Billy, is president of the University of Massachusetts and a former state Senate president.

Yet, some did talk on condition of anonymity. Their interviews, testimony during earlier court hearings, FBI documents and other court records reveal an amazing tale that began on the Boston waterfront.

There, Bulger entered Connolly's car one night in September 1975, sat down and listened to the agent's pitch - inform on the Mafia and gain FBI protection.

There was instant rapport. Bulger would later tell a federal agent that he became an FBI informant because he had "a close feeling towards ... John Connolly because they both grew up in the same neighborhood in Boston and had mutual childhood problems," according to an internal FBI report.

While Bulger did provide intelligence on the mob, the information quickly began flowing the other way.

In 1976, Connolly told Bulger that Castucci, a nightclub owner and bookmaker, was an informant for the FBI and was telling agents where they could find two fugitive associates of Bulger, federal authorities allege. Castucci was killed within weeks.

That was only the beginning. In the late 1970s, members of a vending machine company complained to the FBI that Bulger was threatening its clients with violence if they didn't switch to his vending machines.

Instead of investigating the case, according to testimony at the 1998 hearing, Connolly met with employees of the vending company and told them their families might be harmed by Bulger if they pressed for an investigation.

In 1978, the Winter Hill Gang was being investigated in a horse-race fixing scheme that resulted in indictment of most of the gang's leaders, but not Bulger or Flemmi. Connolly and his new supervisor, John Morris, had gone to federal prosecutors and gotten them to drop Bulger's name from the indictment, according to testimony.

Growing power

With their former bosses in jail, Bulger and Flemmi began consolidating their power in Boston's underworld in bookmaking and loan-sharking. They also began entering the drug trade, charging dealers "rent" to sell their narcotics on South Boston's street corners, federal authorities allege.

But in 1980, their evolving empire nearly collapsed. The Massachusetts State Police installed a wiretap after learning that Bulger and Flemmi were using a garage on Lancaster Street, a narrow one-way road in North Boston, as their headquarters.

But after a few promising days, the tap picked up nothing - Bulger and Flemmi weren't talking about business. Suspicious of possible ties between Bulger and the FBI after he escaped the racing indictments, Massachusetts state troopers complained to the bureau higher-ups that their investigation might have been compromised by an FBI tip.

An FBI unit operating separately from Connolly and Morris was assigned to investigate. One agent even asked Bulger whether he worried about people finding out he was an informant."[Bulger] was not concerned with his personal safety because no one would dare believe that he is an informant," the FBI supervisor wrote in a report. "It would be too incredible."

To ward off pressure on their prized informants, Connolly and Morris continued to push Flemmi and Bulger to help them break the Mafia in Boston. They wanted to bug the Mafia's lair in a four-story, red-brick house on Prince Street in Boston's North End.

The pair delivered, providing crucial information and a detailed map showing agents how to enter the home, according to testimony.

Within weeks of recording crucial conversations from Mafiosos at 98 Prince St., Morris and Connolly did some celebrating at Morris' home - with Bulger and Flemmi, court testimony revealed. They even exchanged gifts; the gangsters gave Morris a champagne bucket.

In coming years, the 98 Prince St. bug would lead to the convictions of Mafia leaders, elevating the stature of Connolly and Morris in the bureau - even as other informants deluged other FBI agents with tips about drug dealing by Bulger and Flemmi, court testimony and FBI reports showed.

Besides heading off internal investigations, Connolly and Morris are accused of again tipping Bulger off to possible witnesses against him.

In the early 1980s, Robert Wheeler of Oklahoma took over World Jai Lai and began suspecting that his Boston-based accountant, John Callahan, was skimming money for the Winter Hill gang.

So Wheeler fired him. Two men then gunned down Wheeler outside his Tulsa, Okla., country club in March 1981.

Police and FBI agents initially suspected Bulger and Flemmi because of Callahan's ties, but the investigation stalled - until another informant, Brian Halloran, stepped forward. He told FBI agents in Boston that Bulger and Callahan discussed hiring him to kill Wheeler.

Morris, learning about Halloran's statement, passed his name on to Connolly, who in turn told Bulger, federal authorities allege. Morris confirmed that charge during his immunized testimony.

A year later, Halloran was gunned down outside a bar in South Boston. Callahan was killed in Florida three months later. Connolly's latest indictment accused him of complicity in both deaths. Later, when another informant approached the FBI, Morris testified that he told Connolly to make sure the gangsters didn't kill him. He "didn't want another Halloran," he said.

As the Mafia continued to weaken, Bulger and Flemmi came to control much of Boston's underworld.

"It was pretty obvious," says Richard Bergeron, a former police detective in neighboring Quincy. "Bulger was the guy controlling everything."

As Bergeron began to investigate Bulger in 1984, he thought he had hit the jackpot - a witness, John McIntyre, who spun an amazing tale.

Ships and weapons

McIntyre told Bergeron that Bulger was connected to a fishing ship that had recently been stopped near Ireland trying to smuggle weapons to the Irish Republican Army. The informant also told authorities that Bulger was involved in the drug trade. Bergeron quickly told the federal authorities about his new witness - and soon McIntyre disappeared.

His body was found more than 15 years later - buried in a gully across the street from Florian Hall, a popular banquet hall near South Boston.

Bergeron and the federal Drug Enforcement Administration would take another crack at Bulger, trying to install wiretaps in his car and home. But Bulger always seemed to know what was going on and even told Bergeron and DEA agents that he and his cohorts were the "bad good guys."

"They would tell you right up front that they had sources in law enforcement," Bergeron said. "'Why waste your time?'"

Yet, even as he directed his gang, Bulger was planning his escape. He began traveling extensively and, some officials believe, he started planting cash and fake identification documents in safe deposit boxes across the country.

In 1990, he lost his chief protector when Connolly retired.

Even in retirement, Connolly was plugged in well enough to hear about a pending racketeering indictment of Bulger and warned him to flee, authorities say.

Bulger has been on the run since, and sightings have been reported in Louisiana, New York, Wyoming and several other states. The FBI believes he is traveling with a female friend and using several aliases, including a new one: Mark Shapeton.

Connolly, 60, once boisterous and known for accepting any chance to be interviewed, no longer speaks to the media. His lawyers did not return phone calls seeking comment, though they have professed his innocence in the past.

In previous interviews, Connolly said that he did nothing wrong, that Bulger was a friend and that he felt the government was going back on its deal to protect the informants.

"Why should I be unhappy that Whitey Bulger wasn't caught?" Connolly asked the Boston Herald in 1998. "At least he kept his end of the bargain."

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