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There was the "adopted son" of the Hudson County case -the investigation of Congressman Cornelius Gallagher, whose bond purchases had led to the discovery of the Whelan-Flaherty bank accounts.

In 1968, Life magazine, armed with some secret FBI files, made a series of startling disclosures about Gallagher's underworld connections-including the bizarre story of how a loan shark named Barney O'Brien had dropped dead (of natural causes) at Gallagher's home and how Gallagher, fearing to be linked publicly with the dead gangster, summoned Kayo Konigsberg and had him secretly dispose of the body. Life's revelations had little effect on the Hudson County voters: Gallagher was reelected easily in 1968 and 1970.

But the net was closing in on him. A team of IRS agents headed by Marvin Sontag and James Killeen started investigating Gallagher's dealings with Joseph (Joe Bayonne) Zicarelli as disclosed in the Life articles. As a result, Zicarelli was charged with evading taxes on nearly $916,000 in illegal income.

Almost by accident, the agents stumbled on the fact that Gallagher had been purchasing huge amounts of municipal bonds-all for cash. Pinning down the exact amounts required months of work. Stern called it "a monumental job -the most backbreaking kind of chores."

The agents discovered that Gallagher had purchased S942,000 in municipal bonds between 1961 and 1968, all but the earliest under phony names-"George E. Connors" or the initials "G.E.C.," the reverse of his own, or "Rickey," his wife's nickname, from her maiden name of Richter, or the initials "R.I.K." Gallagher had paid taxes on none of this money.

To seal off possible defenses to a charge of income-tax evasion, the agents had to prove that Gallagher was not acting as the agent for others but that he was using the money for himself. They were able to show that he had cashed some of the bonds, used others as collateral for loans and clipped the coupons on still others.

By 1972, Gallagher had cashed $201,000 of the bonds. Another $408,000 had been traced to the Whalen-Flaherty account in Florida. That left $333,000 still unaccounted for.

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