Dipping into the Cookie Jar

Bit by bit, J. Edgar Hoover's image as an incorruptible crimebuster has crumbled since his death in 1972. Congressmen and journalists have exposed the late FBI director as a petty tyrant who conducted vicious personal vendettas, trampled on citizens' rights and all too eagerly carried out requests from Presidents to investigate their political rivals (TIME cover, Dec. 22). Now federal investigators have found that Hoover and his cronies in the bureau improperly dipped into FBI funds for private parties, vacation trips and other personal expenses.

Hoover's fingerprints on the cookie jar turned up during a probe into charges of corruption in the FBI's purchases of equipment. Following leads supplied by low-level FBI employees--including carpenters and other blue-collar workmen--investigators soon found evidence that Hoover and some of his closest aides had misused two FBI accounts:

> The $85,000 treasury of the FBI Recreation Association, which collects $2.50 a year from 17,000 of the bureau's 20,000 employees. A former FBI official told TIME that Hoover looked on the association fund as "nothing more than a tax dodge." According to the ex-official, Hoover ordered that the proceeds (about $75,000) from his books, A Study of Communism in 1962 and J. Edgar Hoover on Communism in 1969, be turned over to the Recreation Association. "Then," said the former official, "Hoover tapped the tax-free money in the treasury for his personal expenses." Some of the money paid for Hoover's vacations in Florida and California and Christmas gifts to FBI executives.

> The $10 million "confidential fund," which is supposed to be spent on informants. Hoover's top aides sometimes drew on the fund for lavish dinner parties, costing up to $500, at the Carriage House, a Georgetown restaurant. The only informing that took place at the blowouts was done by the agents themselves--no actual informants ever attended. Recalling one of the dinners, an agent told TIME: "It started with cocktails and crab meat, then there were oysters, followed by steak and wine and French pastries and brandy. When I got home, I was woozy. My doctor believed that I was having a heart attack and put me in the hospital. But I was only overstuffed." Government investigators consider the payments to have been a misuse of money.

The investigators also learned that the FBI's exhibit section, which is supposed to assemble models of buildings for use as evidence in trials, refurbished houses for Hoover and other bureau officials free of charge. In the 1960s, for example, the section's carpenters added a porch worth several thousand dollars to Hoover's home.

Black-Bag Jobs. Because the investigators suspected that high FBI officials were covering up further wrongdoing, they took the case to a federal grand jury in Washington. A second grand jury is probing "black-bag jobs"--burglaries --conducted by FBI agents over the past five years. Meanwhile, FBI Director Clarence Kelley has started cleaning house. He fired Associate Director Nicholas P. Callahan, 62, the bureau's No. 2 executive, two weeks ago. During the last 13 years of the Hoover era, Callahan supervised both the "confidential fund" and the FBI Recreation Association treasury. "No one has said that I profited personally," Callahan declared. According to his defenders, he only carried out Hoover's orders.

Last week Kelley appointed Richard G. Held, 65, as Callahan's successor. In charge of the FBI'S Chicago office for the past three years, Held is highly regarded by associates. Perhaps most important to Kelley, Held has spent most of his 35 years as an agent in the field, far from the snake pit that was the FBI's Washington headquarters during the Hoover years.

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