INVESTORS SAY BANKRUPT FIRM HAD CIA TIE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100700057-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: July 26, 2010
• Sequence Number: 57
• Publication Date: April 16, 1984
• Content Type: OPEN SOURCE

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A-71, - -7 C_Z L. =? i
I6 /,pri i loo-'
Investors
X-A-j aakraP4
B~ Ho: and Kura
rwt~ n Fret 5I&;1 u?;1 Le -
~zi rv :..''es C who lost mL)ons o? dollars in E
?F ')gin i^~ es meat f - now in banl ruatc-,'
have 1.:,L ged in lawsu is that the CIA helped
nE.nce and eperste the lrr-. to conduct LnLell)gence
operEtic:is Lin the Far Fast.
Ronald R. Rewald; a free-spending business.
man who ht-,6e6 the company, presided over its
bptn? a_nd later tried to commit suicide, has
b:en c a-rged by the Securities and Exchange
Commission with securities f and and by Hono
iu)u au horities with stealing the money of at least
two to-vestorS. O hers who put money into the,
,
,
eu
spen
a
f
fl= included senior i-..iiita_-v officer and two for-
a Role-
-Benzes
ts~o Mercede
Cadillac.
tn
i
;
_
;
ree
nc
mer CL
ien
1.i-ief5 in l:awaii: =
1
~. in a suit o Royce End a JagLar, $66.ON on boats; 552.000 on
,~
~?F=l ' :Jeragai s~ th. Ci ", in Feb- 1 jewelry and a. 5154 000 on travel' $10.2000 on
ruE_^i. S?1G n:' wa_c "E cover-, Efeot 1.f the CLri." lie --- -
E: J e a 270 5 G:: e-~_;on and that some of its sub-
sidea-ies were red ~mp)eteh? and exdusive)_v for
CLA cover. operations."
CIA spokesan Dale Peterson said the agency
iiad only "a slight invo)vemen:' witn'.`~je Hono!ulL'
fl. . , which is ca?led Bishop, Ba1nwir. Rewa)d,
Dilliagha= and Wong. "But I'm not at liberty to
go into details of via: the relationship was,' Pe-
terson said. "~~ e deny any. -Lerations that suggest
we had anti t:,-far to do F; h running t;ne compa-
So.me Hc'R'aiian officials have cuestioned?
whether Rewald is exaggerating his CIA connec-
tions in an effor to escape potential liability for
the SLrm's b`nl.--uptcy, in which at least $12 mil-
lion of inventors' money has been lost. Some of the
400 investors, who also included relatives of com-
pany officers, apparently knew little or nothing of
CLA ties. But more than a dozen investors, who
were attrac ed by promises of a'20 percent return
on their money, have joined in two damage suits
a` Ernst the CL A.
Tre Bri-ish Broadcasting Corp. repor ed re-
centy that it had obtained Bishop, Baldwin corn-
pony documents indicating that it was a CIA
"front' used to Father intelligence on the flow of
foals:) capital. to arrange attempted arms sales to
Taiwan. to obtain plans for a Japanese high-spoed -
t ain and to c'r'tiyate diplomats'
iplomats and businessmen
in ine Pri ippines and the Far East.
The saga of Bishop, Baldwin began in 1977
when Rewald, following a minor criminal comic-
tion and the bankrvptc' of a sporting-goods con-
cer-n in 111LJwaukee, moved to Hawaii to open the
ILnanciai consulting fi m. No one noticed at the
time that :.^ree of the pa7t,)ers-Bishop; Baldwin
and Dillintham-;lid not exist They were the
T.FTF( rr r,lr,-ling ~.:u:pia-, f:mil;Fc
Rewaid also brandished. a ;phony lav? degree?.
from Marquette University, according to his at-
torney, Robert A Sm h. The BBC reported that
the Degree was supplied by The CIA.-
Rewald, 41, hers, spending $250,000 a month
or. his lavish lifestyle in Honolulu. He ran the
Hawaii Polo Club and played host to visiting dig-
nitaries attracted by the duh.
According to repots by ban~upt.cy trustees,
Lncluo-
cars
000 on a fleet o
t $250
?
ld
R
reiatrves; 1.22:,.000 on Household help, Mciua)n_
tuiorE, and $541;000 on horses and other polo club
?experLses
It all fell apart last July, w=hen Hawaii reporters
Z overet, some of tree 'anus credentials of Re
wald's firm. 'Some "investors demanded their
money back. flays la`i#; ttevveld slit his wrists and
:.'1 t several pints of blood before he was found-in
-
`a ?room at the Sheraton Vvai iiih hotel.
.7n7_ following thcr, e, Rewald was a.-, e-it-, on
r' -
minor theft cartes and-held in Honolulu on a
'ace'd--S10 million bond. r fudge later reduced
t..hat'to-$140,000, and Rewald was released pend-
ing-trial The FBI and E federa ?-and jury also
began investigations
The first hint of CLA invol,ernent came at a
ban~uptcy hearing i. September, when it was
closed that the'CIA had paid 52,700 in phone
b)lls for several frets oilers out of Bishop,
? Saidw-iri's offices. CLA larva:. also persuaded L.S.
Dis'nict'Cou r Judge h Pence to sea) several
boxes of company il)eS; contend ng that the mE-
t.eria) was related -w national security.
' Nevertbeless, CIA attorney Robert L.aprade
said in an affldavvit. "The CIA did not cause Bish-
op Baldwin, P.eRfJd, D)1lingha and VV ong to be
created, nor has the agency at any time owned,
operated, controlled or-invest.ed in Bishop, Bald-
Win :.:?. The CIA :~?as :jot aw e of, and has.ab-
` so)uteiS' noting to do with. Ronald Rewaid's al-
leged appropriation to himself of the funds of (tile
ebmpany) or its investors."
Pence ruled that r ewall; through contacts
- with members and former members of the CI.=.,
considered himself a more i-Tnportent undisclosed
private associate of the CIA organization than be
was in fact.".
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The iudce likened the company to a "Ponzi
schemE,~ IT unjc from new i,vestors is
use- to pay old irnesto;~. and said he `saw no` .
ink ir, the dv t -rents to indimte that am' of Re-
a d s slig 7i involvements intelligence activ-
ltie~ e.?.ria.ned _^.v of the f nancial bolo.^.s of Bish-
op, baldwin, R.e', Dilllin_ham and ,','on?"
re r Ca lisle, an assistant Honolulu prosecu-
t r. also euestionmd whether charges of CIA in..
vo)yement might be designed to shift the blame
fa- defrauding investors. "Mr. Rewald is at E
Medlc.^.e man, and this could be One more trick in
his bags of snake oil,' he said.
bur others point to the firm's enensive `Fence fie5 along those who invested in Bishon,
Baldwin are Jaci: Tdndschi, a'fo'rmer CIA sta-tion
chief in Hawaii who later became a company con.
su:t n . and Jack Rardin, also a former CIA sta-
tion chief there. Kind_schi, who was given .back
S1, 5.000 of his invest-rent by Rewald just before
the 3'"L~'-uDttiy, a_zreed to return that money last,
v e-E1 and stand in line with other creditors.
Other investors included retired Gen. Arnold
morass els, former coy mender of the Pacific Air
Forces; Ger Hunter Hiris, former vice com-
mander of the St-a:egic Ai Command, and Rob-
Ertt W. 3inis, a California businessman who has
done work for the CU., according to his attorney)
P.oe. A Klein
In z lawsuit joined by 13 other investors. Jinls
said ReR al d told him that the CIA had started
the Bishop, Baldw~.n operation to infiltrate int.er-
~avo2l 1,Tg operations in order to discover,
t-ansfe- of capital to and from communist couc.-
t"ies Jib, who invested 5500.000 in the firm,
said the once bad a direct phone line to the CLA.
!' ,e also said he and Rewaid had visited Hong
Kor_r to assess the impact of E takeover of t)3e
colony by China when Britain's 99-year)ease ears
in 199 i.
Jin s told the BBC that E financial investment
firm provided an ideal-cover for intelligence'gatb-
erin.z. We could hard)y'imock? on' doors and -s,-V,
`I'm from the CL4, please tell me all you 1-mow"
he s.~ id. , .... .
Fewe_1d's SE-71 million shit, filed in federal court
in Hawaii, said the CIA `established an operating
bud'et for Bishop, Baldwin of several million dol-
lars, and the agency used Bishop, Ba)dwin-cbeck-
in, accou.-rts and reimbin-s.ed Bishop, Baldwin and
iu agents and employes their expenses for 'agency
work.
"The CIA put money into Bishop, Baldwinand
directed Bishop Baldwin in the use of such'CIA'
funds T Rew'ald sa=id in the suit, adding that COrn?'
pant' accx'unts LI-s o were used "to shelter r1-,onies of
'.gig ly placed foreigners"
Rewaid said_1_'1_t_he suit Lhat the CLA 'gave a5-
surances that prot.ec^..ion would be provided"
arainst investigations by other government aeen- -
cies, bt: the CI=A's multiple schemes "created in=
creased risk and likelih of covert operations
being -discovered . esr,c-cjzlh' in those oper -
tions which may or may not have violated Various
laws." ?
Klein, Jinks' at'?orney, said he is re')yine -on
novel legal theories to establh the CLA's liability.
But he said "If Jirik's and Rewald were taro ing
this -'Ponzi' scheme and liew it was going to col-
lapse,- they sure as beck wouldn't have recruited
friends and family and put their own money into
it
"'We v e got Over -'he1nJn--us s'-LIT; to Drove the
[CLA] connection, and that's t the garbage they
lei behind,' Klein said. "The CLA was probably
Bishop, - Baldwin's best -custother 'in
what-eve: Itnencial ?ai^s Bisnop, Baldwin intend.
ed to gel, for its investors, mostly through sales of
arms and otber'mate;ia s 10 foreir Countries?
Smith, ?Rewald's lawyer; said the CIA should be
forted to share; liability for ,hall r-uptcy with
Rewald, who he said has about 52 million in.asse'~s
tied up 'in -the litigation. Smith said his client
needs. am--s to the company documents the CIA
Uloe; 'Dour, seal k d 'E- himsel`
Tess'.Blac)- of 1'70n0)ulu, widow of E rettired Air
Force colonel invested all her insurance money,
SS2 000, in Bishop, Baldwin after her husband
and two sons were killed in a skydiving accident
Black 'said she. had been assured by a friend
"that one of the th=ings the company did was fund
.CLL operations I thought if the government was
ponce-rned with it, that would be fne .. , that it
was like buying savings bonds. I got involved in
something that's much larger than I'm capable of
handling. If you're going to play with the big boys,
you've got to have the money to do that"
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r.7_ -- \ LL STREET JO;.7R:;ma1
Ol :.G. 1 1~ Apr_1 1C)"
R,
Spy ~'tory
Suits Focus on Extent
Of CI A Involvement
In an Alleged Fraud
Bankruptcy in Hawaii Left
\Vido\',vs. Retirees Broke;
NN7as Firm Just a Front?
Suicide Try at the Sheraton
By JoNATI AY KwrriN
Sic!fRe,c'rterc!MFW..u.S,- .c rJouFLx^L
Bail : SIC Million
But a funny thine happened on the way
to the courthouse. CIA lawyers suddenly ap-
pe;:-ed in Honolulu and persuaded U.S. Dis-
trict Judge Martin Pence to seal every
scrap of evidence in the case on rational-se.
curity grounds. Relatively minor state fraud
charges, were filed, and Mr. Rewald was
jailed on an astounding Si0 million bail. For
six months, while the federal government
ran its own closemouthed and so far incon-
clusive investigation, state authorities held
him almost incommunicado: The few close
friends who were allowed brief visits with
him were forbidden to bring in written ques-
tions or take notes.
Although the CIA later cleared a small
pan of the evidence, and Judge Pence put it
or, the public record, most of the evidence in
the SEC and bankruptcy actions is still
sealed. And the CU persuaded the judge to
throw a sweeping gag order over the cases,
forbi a "all anti th '* t
i6b HC.NOLU L: - A. Central Intelligence p es erne et. orney.
and their agents ... from communicating to
Agency cover operation., in the movies and any, person ... by oral, written, or any other
spy novels at least, is the very essence of means ... Information relating to matters
stealth: cuiet men in drab topcoats slipping peraining to the Cent; al glntelhgence
in and out of a nondescript backstreet office Agency."
set up as a business front.
Forty-one-year-o)d Ronald R. Rewald, : Mr. Rewald's lawyers say those orders
however, doesn't fit the mold. During his six prevent him from asserting his defense:
years on this island gateway to the Far that Bishop Baldwin was created by and run
East, this CIA man flaunted his close con- as a front for the CIA. Mr. Rewald says-ii
nertinnc u-ith Inn 11 t intnllioonro anri mi)i. ! court papers and other statements made
terry officials. Far from courting obscurity,
he spent money with the abandon of an Arab
oil sheik: He owned a personal fleet of L
limousines and luxury cars (including an
Excalibur, two Mercedes-Benzes and a
Rolls), ranches, polo clubs and an ocean-
front villa with its own lagoon. He threw
eye-popping parties and, although married
with five children, surrounded himself with
gorgeous women, on some of whom he lav-
ished their own Mercedes-Benzes.
His business career as an investment
banker and financial counselor was equally
spectacular. Pr orriising interest rates of 275o
to )005r a year. Mr. Rewald lured invest-
ments of about 5 million to his company,
Bishop, Baldwin, Rewald, Dillingham &
Wong. When it was discovered last July that
there was no money to pay some 400 deposi-
tors, he slashed his wrists in what he said
was an unsuccessful suicide attempt.
At that point., Bishop Baldwin looked like
a classic Ponzi scheme. Initial testimony in
U.S. district court showed that Mr. Rewald
apparently didn't invest in any profitable
available by persons close to him-that he
himself was a "nearly full-time" coven
agent under contract to the CLA and that ev-
erything he did at Bishop Baldwin was on
CIA orders.
Tacit Concession
The CIA has denied that it controlled
Bishop Baldwin or knew that Mr. Rewald
was diverting funds. It won't elaborate. But
a relationship was tacitly conceded by CIA
counsel Robert X. L.aprade in papers he
filed with Judge Pence to obtain the secrecy
orders. Without those orders, he argued, Mr.
Rewald's lawyers "will divulge in detail
.Rewald's relationship to the Central Intelli-
gence Agency. It is the obligation of the Un-
ited States to act in accordance with appro-
priate executive orders ... whenever .. .
national security information may be sub-
ject to unauthorized disclosure."
hti . Rewald's case appears to be the )at.
est in a series raising the issue of whether
the CIA, in fulfilling Its foreign-policy mis-
sion, might be abetting crimes against U.S.
deals, had used cash from new deposits to ligence. Most notably, It is reminiscent of
pay interest or, the old ones and had spent Nugan Hand Ltd., an Australian-based bank-
most of the money he took in on himself and ing concern run by retired CIA and Penta-
his company. Bishop Baldwin was declared gon brass that financed heroin and arms
bankrupt-a ruling that Ni-. Rewald's law, syndicates and bilked U.S. investors of mi)-
yers are appealing-and the Securities and lions of dollars. The Rewald case, however,
Exchange Commission filed a civil anti- may be the first in which some of the wiped.
fraud action against Mr. Rewald and his out investors have filed suit against the CIA
firm. Money magazine wrote the case up to recover their money.
last fall as a warring to investors.
citizens, either intentionally or through neg-
Many investors put nearly even nickel
into Bishop Baldwin, and individual ac-
counts ran as high as S1 million. Mr. Rewald
persuaded some to give him power of attor-
ney to handle all their financial affairs. His
clients included retirees, widows and disa.
bled people who now are destitute.
Some of those clients have hired noted
lawyer Melvin Belli to represent them in
their claims against the CIA. Air. Belli says
he has also agreed to represent Air. Rewald,
who asserts that he relied on a secret CLa I
fund in the Caribbean to pay everyone off.
Air. Rewald says the CIA ruined his business
career by abandoning him, and he is asking
the CIA for 5571 million in damages and in-
demnification against the claims of his for-
mer clients.
'Ponzi Scheme'
Judge Pence has ruled, without elaborat-
ing, that from his reading of the secret docu-
ments, Mr. Rewald's CIA connection isn't
relevant to the bankruptcy or SEC cases. in
the SEC case, Judge Pence has already
ruled th.t Bishop Baldwin was a "fraud"
and a "Ponzi scheme," and that Mr. Rewald
simply.pocketed the investors' money. At
the SEC's request, he enjoined Ms. Rewald
and the firm from continuing such busi-
ness.
Questioned by a reporter, Judge Pence
declared, "The whole thing is under sea) be.
cause the CIA has not yet made their report
to me as to their involvement, if any, with
Rewaid. I cannot and will not release any
(of the files)."
Whether the CIA sanctioned Air.
Rewald's financial misdeeds may never be
known. But from the time he came to Ha-
waii in November 19777-with a prior theft
conviction and a persona) bankruptcy in
Wisconsin, generally unknown, under his
belt-Mr. Rewald worked hard to surround
himself with top CIA and FBI officials, mili-
tary brass and politicians. At his parties, he
would point out those dignitaries to potential
investors, confide that Bishop Baldwin was
pan of the CIA and stress that this mean
their t
money would be safe in his hands. "If
you can't trust the government, who can you
trust?" several clients say he told them.
Obvious)', it would be in Mr. Rewald's
interest now to exaggerate his CIA ties, and
most officials involved in the case believe he
is doing that, at least to some extent. But,
even if Mr. Rewald fails in portraying him-
self as a CIA pawn, his former clients will
probably argue that the CIA lent credibility
to his business dealings and that the agency
knew-or should have known-what was go-
ing on. Robert A. Smith, a Honolulu lawyer
working with Mr. Belli, says, "I don't have
to prove they ordered it. All I have to prove
is that they knew about it and allowed it to
happen."
f onbnud
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Desp:te the secrecy' thrown around the
case, dc*cumen?s that could be obtained and
i^te-, feu s with persons close to Mr. Rewald
and others establish at least this much:
-Canceled checks and correspondence
s` ov that the CLy helped Mr. Rewald set up
an investment business in Honolulu in 1976
by payinc some office expenses and giving
him wor}: as a cover for oDer atives. In a
sworn affidavit before the Honolulu federal
cour Mr. Deward says that the CLA first
hired hirr, when he was a student at Mflwau-
kee Institute of Technology, a two-year
school that he dropped out of in 2962. Mr.
Fewald says he was hired to spy on student
protesters, though he left school before the
protest groups he talks about were .active.
('. he CL-, won't comment.) He says his CM
contacts from student days gave him intro-
ducuons to CiA station chiefs in Honolulu
when he moved there.
-The station chiefs were close to Mr.
Rewald. One, John (Jack) Kindschi; actu-
ally became a full-time 546,000-a-year con-
sultant at Bishop Baldwin soon after his- an-
nounced retirement from the CIS in .1950.
(Mr. Kindschi, identified by police as a tar-
get in continuing federal and state grand-
jury investigations into the firm, declined to
comment) His CIA successor, Jack R.ardin,
was frequently seen by Bishop Baldwin em-
ployees and others at Bishop Baldwin's lux-
ury suite. In what appears to be a genuine
recording of a Rardin-Rewald meeting se-
cretly taped by. Mr. Rewald, Mr. Rardin of-
fers CLt help in derailing an infernal Reve-
nue Service investigation of Bishop Baldwin
and asks Air. Rewald to get more data on an
Indian arms deal that Bishop Baldwin
talked of financing. (The deal, for weapons
purportedly requested by Prime Minister In
di; as Gandhi's son, never came ofi.)'The CIA
says it has transferred Mr. Rardin but-won't
disclose his whereabouts.
-.4s cover for spying, CM operatives
in the Pacific told people they worked for
trading companies connected to Bishop
Baldwin, according to coup documents and
several interviews. W. Rewald and his staff
fielded inquiries about the companies with
data supplied by the CIA, took mail and
phone messages for the agents and even
passed messages between agents and CIA
supen*isors.
- Staff consultants, like retired Pan
Amencan World Airways chief pilot Edwin
(Ned) Avary, received lists of questions
from the CIA-passed through Mr. Rewald-
before they left on foreign trips. While osten-
sibly looking for investments for Bishop
Baldwin, they compiled what Capt. Avary
terms "damned good reports" for the CIA,
particularly, in his case, about the probable
outcome of last year's German election. Mr.
Rewald himself did CIA-requested research
in China about trade, in Japan about transit
designs and in Argentina about banking dur-
ing the Falklands crisis, according to court
records. Those costly trips were paid for
from the bank account containing client
funds. (Caps Aviary says he and other con-
sultants thought they were genuine business
trips at the time.)
-When the IRS demanded Bishop Bald- falsely claimed a long history of work for
win's books for an investigation in the fall of Congress and the White House.
]9S2, the CIA succeeded in suspending the The firm claimed in brochures to have
probe, thus apparently prolonging the fraud. two dozen offices ranging the world, but
The bankruptcy trustee, Thomas Hayes, most of the addresses were just mail
says the CIA merely delayed the investiga? drops-executive "front" firms that agreed
Lion a couple of months to sanitize the files. to rent Bishop Baldwin a prestige address
In any case, Bishop Baldwin was still thriv- with a telephone and telex.
ing 30 months after the IRS demanded is Even the firm's name was a shallow
records; then local investigators touched off hoax. The Bishops, Baldwin and Dii-
the bankruptcy. lirghams are old-line aristocratic families in
Bra2en- Clumsiness Hawaii. Mr. Rewald merely borrowed their 1
names, adding them to his own and that of
The fact that Bishop Baldwin was able to Sunlin "Sunny" Wong, a local real-estate
operate freely for three years under the eye agent who held 50 rb of the stock but who dis-
of CIA and other intelligence officials is puz-
zling because of the brazen clumsiness of claims knowledge of the company. Obsen~-
ers have likened M;. Rewald's phony use of
this fraud. prestigious names to starting a firm in New
Air. Rewald's brochures, sales pitches York City named "Rockefeller, Roosevelt,
1and press releases told the public that his ~ Rewald, Vanderbilt & Mellon." Mr. Rewald
uniquely high-interest accounts were "guar- ; says the ploy was ordered by the CIA.
anteed" by the Federal Deposit Insurance ! Most shocking of 211 to have escaped CA
Corp. for up to 5150,000 per account The ~? CI
FDIC, of course, insures only hanks-not scrutiny-ii indeed it did -was Mr. Rewald's
private investment firms-and only up to 1976 theft conviction in a state court in Wau-
5100,000 for each account sau, 1Vts. He and an associate were con-
Bishop Baldwin handed out two different vrcted of persuading two high-school teach.
financial statements, apparently aimed at ers to invest in sporting-goods stores under
differing levels of false pretenses. On conviction, Mr. Rewald
guIlibilin?. One statement, was ordered to 52000 restitution and
for example, put accounts receivable at pay
5157.9 million and weal assets at 5].4? bilspend a year on probation. That same year,
lion; another put accounts receivable at 1976, he and his sporting goods chain filed a
S]S. million and total assets at cei million . voluntary bankruptcy petition in federal
Neither statement contains a standard audi- court in Milwaukee; he lined persona] debts
's certification l- of 54,988 ae-anst assets of 52,430.
tor's
ere. union letter. t audited Bishop Bald- Mr. Rewald's transformation from Mid-
win. The company bankrupt to Honolulu high roller
pooled most client funds was astoundingly swift. He says his flashy
in one checking account, from which it also life was ordered up by the CIA so that be
paid its expenses. Bankruptcy trustee Haves i
says the checkbooks were never even bal? could atingle with-and spy on-wealthy for
anced. He told the court that Mr. even d's 1: eign potentates. He acquired title to his first
own 51.7 million account was written onto Honolulu home from former Cambodian
e
the books without benefit of a devosft, and prime )%iinister Ions Nol, and he spread the
Word that the house was really a CIA-owned
Mr. Rewald hasn't produced evidence to
it show otherwise.. "safe-house."
Mr: Rewald acknowledges that his finan- Spy Operations
cial statements were phony but says the CIA Because of its location vas a stop-off point
ordered and approved them. Although art
least two CPAs worked on Bishop Baldwin's
staff, they 'have told authorities they ban-
died only clients'. taxes, never the firm's
books. The.books were kept by Jacqueline
Vos, a Farrah Fawcett lookalike and former
horse trainer.. -
She was supervised by office manager
Sue Wilson, who had check-signing- author-
i sty. Miss Wilson, a 1966 semifinalist in the
Miss Teenage America pageant, joined
Bishop Baldwin after nine years of highly
classified secretarial work at the National
Security Agency, the CIA's high-technology
twin. Like Mr. Rewald, Miss Wilson consis-
tently invoked the Fifth Amendment -privi-
lege against sell-incrimination when she was
called to testify at bankruptcy
proceed-tgs'
False Claim
for most Pacific traffic, Hawaii is loaded
with military and spy operations. Pointing
out Soviet trawlers in pons and offshore, and
U.S. electronic listening gear protruding
from government buildings, lawyers in the
Rewald case say they believe every word ut-
tered in their offices can be picked up
equally in Washington and Moscow.
It is common for generals, admirals and
CiA officers to retire here, and many of
them acknowledge that they still take on
government assignments from time to time.
So it is hard to be sure who is acting offic-
ially,.and who privately. - .
The active-duty commander in chief of
the Air Force's Pacific Command, three'
star Gen. Arnold Braswell, began associat-
ing with Mr. Rewald during-an Air Force-
backed operation to cure the alcoholism of a
previous commander, retired four-star Gen.
(; Hunter Harris. Because Gen. Harris trusted
Though Bishop Baldwin opened shop in '; Mr. Rewald, whom he met at polo, Gen.
Honolulu in 1978, the firm advertised itself Braswell put Mir. Rewald in charge of get-
as "one of the oldest and largest-" in Hawaii ting Gen. Harris hospitalized for alcoholism,
and said its investment savings accounts
have enjoyed accordins to Gen. Braswell and others. Mr.
an average growth of over
20% per year for well over two decades." It CantnUad
.12
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3.
Re?~ aid Lse?d F:-shop Baldwin funds to pay
532.(OC o' Ger..arns's debts, according to
court documen's and interviews.
Gen. Harris also got M;. Rewa)d to do-
nate to i.,:. Cc'.. James "Bo" Gritzz's ph?
vate'.y financed commando raid to search
Laos for U.S. rnsoners of war in 1952. Mr.
Rewald used hs advance knowledge of the
widely publicize,; raid to convince potential
investors he was with the CIA.
He hired for his statt people with a mili-
tary-intelligence background, including the
off)cer who gave Gen. Braswell his daily in-
teingence briefing. Gen. Braswell says he
was discussing working for Bishop Baldwin
whey. he retired )as: fall), a fact that was
widely known at Bishop Baldwin.
Ni. Rewald lied that his clients were all
multimillionaires, appearing to condescend
to accept the money of smaller depositors.
He never advertised for clients ; they came
by word of mouth.
Political Asylum
Vella Van Asperen. a cliem whose fain-
DV apparently lost about 5.400,(00 in the
Bishop Baldwin, bankruptcy, says what
hooked her was her belief that Mr. RewaJd
was an impor an: CIA figure.
The arracnve, blond commercial artist,
then single, first met Mr. Rewald in 1979,
when she agreed to do some design work, for
a sporung-goods chain he was forming.
Then, in January 1960, she sought his help
when thing to obtair, political asylum for an
Afghan who had surfaced in Hawaii after
fleeing the Soy iet invasion of his homeland.
Mr. F.ewa)d, she says, "had told me he was
with the CIA, and 1 thought if anybody can
help he could."
Airs. Van Asperen remembers that Mr.
Rewald "perked up" at the news and said
the CLk wanted to see the Afghan. Fol)owing
instructions worthy of a Graham Greene spy
novel, she says, she escorted the Afghan to a'
designated table at an outdoor cafe, where
sbe'let him with Mr. Rewald-who was us?
ing the name "Anderson"-and two strange
men.
The Afgban-Abdul Shakoor Garden',
now a jeweler in San Diego-remembers be-
ing asked a lot of questions about chemical
weapons and Chinese arms. Then, he says,
Mr. RewaJd's close friend-he kep: her nude McKenna-', case because Of his lawyer client
photo in his desk-and frequent luncheon. relationship with Mr. Rewa)d. hiss Mc-
date. (She says he always excused himself Kenna says she thought Mr. Newland was
for what he said was his daily 3:30 p.m. CIA acting as her lawyer and trusted him as
briefing; she also says he wasn't present such. She lost all. Broke and forced to give
when she posed for the photo.) up therapy, she appears to be in great pain.
Mrs. Van Asperer, invested the proceeds She talks treouenuy of suicide.
from a property sale with Bishop Baldwin. Six F~gtmre Claim
and when monthly checks from the interest I
began rolling in, she says, she never again Aim Ves, now lining under another name
let money "sit idle" in bank accounts but w; h relatives in Mesa, Ariz., acknowledges
delivered it to Mr. Rewaid. She later mar- that commissions of up to i05o were credited
tied, and her husband turned his savings to her for Miss McKennz's account and oth
over to the firm as well.
Lost Savings
Her father, a retired Chicago business-
man, invested-and lost-several hundred "terrible" about what happened.to Miss Mc-
thousand dollars of retirement savings with
Bishop Baldwin. Mrs. Van Asperen confirms
that her parents now are living on Social Se-
curity and had to sell -their house. She her-
Some people were so impressed by the
guaranteed high interest rates and assur-
ances of FDIC protection that they borrowed
sell has had to return to work instead of money at lower commercial interest rates to
staying home with . her children as invest in Bishop Baldwin. Gen. Braswell and
planned. ! CIA station chief Kindschi have said they
"I'm going after the CU," she says. "I ['did. Gen. Braswell has filed a six-figure
figure .I own a tank somewhere in some claim with the bariltruptcy court. Mr. Kinds-
Third World county that says 'Nella' on the chi, records indicate, also put in his moth-
side of it" - er's money-about 5150,000-giving the fam-
To help spread the word about the firm, i)y a total investment of about 5300,000.-
Mr. Rewaid hired a staff of consultants who Mr. Rewa)d says those accounts and two
were paid commissions for bringing in cli- dozen others were just covers for funds the
ems, often on top of handsome salaries. One CIA -was hiding on behalf of foreign rulers,
major bank, Hawaii' National, is being sued but he doesn't offer any dQcumentation for
in federal court by three wealthy Indone-
siarts who allegedly lost more than S1 mil-
i lion with Mr..RewaJd. They say the officer
'the bank assigned them. Richard Spiker,
steered them to Bishop Baldwin, for which
.
be was secretly working. Mr. Spiker later !over the alleged FDIC insurance
.
joined Mr. Rewald's full-time staff. The
bank is contestingthe suit- Mr. Spiker'slaw? A state official tipped otf a local tele\~i-
yer says his client is commenting only for
the grand jury.
More typical was the experience of Mary
Lou McKenna, a blonde former Playboy
model who had .retired to Hawaii because of
devastating medical problems. At poolside
in her apartment -complex, she met the
Bishop Baldwin bookkeeper, Mrs. Vos. Mrs.
Vos_(who is divorced) learned that Miss Mc-
kenna {a' divorcee raising three children)
had put together a 5150,000 nest egg, mostly
.
"Air. Anderson" gave him a business card from insurance, to pay for living expenses'I rep's. check and sent to him. Mr. 'oneone d
and told him to take it to the U.S..immigra? and continuing therapy after her back was
lion office, where he would be says Aar. Ki chi requested themy;
given badly broken. 1`L . Kindschi has denied this. But be-cashed
asylum.
Mr. Gardezy says the immigration office Knowing all this, Mrs. Vos and Mr. the check, and now trustee Hayes has sued
seemed to recognize the card and gave him Rewald persuaded Miss McKenna that her Mr. Kindschi demanding the money back.
2 long-term visa. He says he never heard money would be safe with him, according to Also that Friday, Bishop Ealdwin sent
from the "CIA" men again. 5.0o0, ,000 to Dana Smith, a Reu a)d lawyer.
Miss McKenna and confirmed by Mrs. Vos.
Rober tt Jinks, a Bishop Baldwin lawyer Miss McKenna says W. Rew?a)d assured her That check-which would have emptied
who now is a subject of the grand-jury in "they were involved with the government, Bishop B it earl's account, even after a SOO,--OT
deposit earlier in the week by the Indon
vestigatiors in the case
says
hrough his i th
wh
t'
CIA, th
th
h
d
,
a
s
y
ey
a
so many genet
e
t
lawyer that he was with Mr. Rewald at the ais and FBI investing with them.
"
Afghan's debriefing and adds that he consid-
ered himself to be working for the CLk at
the time.
"It's hard for me to believe someone
would set all this up as a charade." says
Mrs. Van Asperen, who eventually became
A lawyer on Mr. Rewald's staff arranged
the sale of property Miss McKenna owned so
that this money, too, could be invested in
Bishop Baldwin. The lawyer, D.? Alden
(Dan) Newland, says he can't discuss Miss
ers that she brought in. But she says she left
the commissions, and all her other savings,
in a Bishop Baldwin account that was wiped
out with everyone else's. She says she feels
that contention.
The beginning of the end came last July
25, when the state department of regulatory
agencies suddenly subpoenaed all of Bishop
Ba
)dwin's books because of public queries
Sion reporter about.the subpoena; and on
Friday, July 29., the reporter went to the
Bishop Baldwin office. With Mr. Rewald out,
she stunned M:. Newland with questions
about the subpoena and about Mr. Rewald's
bankruptcy inWjsconsin (which the authori-
ties had also learned about).
Mr. Rewald was told of the interview
upon his return to the office. That afternoon,
a Bishop Baldwin check for 5140.000 was is-
sued to Mr. Kindschi, converted into a cash-
esian clients, -waS stopped by Mr. Hayes be-
fore it could be collected. Mr. Rewald also
sent his wife and children back to Wisconsin
that dav-without money, he says.
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At about 5:30 p.m., Bishop Baldwin's se-
curity guards began removing files from the
firm's offices. The\' took two dozen canon-
loads and hid them. Meanwhile, Mr. Rewald
checked into the Waikiki Sheraton hotel and,
he has said, watched the television expose
about his company.
Blood on the Walls
The next afternoon at four, the hotel's as.
sistant mahager entered Mr. Rewa)d's room I
during routine rounds. She found )ots of
blood on the walls and floor and fir. . Rewald
lying against the bathtub, his wrists and
forearms having been cut by a razor. He
spoke coherently. Police removed him to a
hospital, where doctors described the
wounds as "superficial."
Meanwhile, Bugh Frazer, a general
agent for Hartford Insurance Co., watched
the TV expose in horror. He had put 550,0D0
into Bishop Baldwin on the guarantee of one
of his agents who worked pare-time for Mr.
Rewald. On' Monday morning, when 'he
called Bishop Baldwin and tried to get his
money out, he was told that Mr. Rexald,
from his hospital bed, had ordered all ac-
counts frozen for 30 days. He filed a crimi-
nal complaint with the Deparment of Regu-
latory Agencies and had his lawyers start
bankruptcy proceedings.
Mr. F razer's complaint, and another that
police say Mr. Kthdschi filed but that he has
denied filing, are the only two criminal
charges now pending against Mr. Rewald.
But state and federal grand juries are inves-
tigating.
After a week of stalling the Honolulu po-
lice, the Rewa)d security men relinquished
the files to a Rewald lawyer who brought
them to Judge Pence, who gave them to the
CIA. Mr. Rewald was remanded to prison on
the largest bail in Hawaii history.
in February. after months of tang, his
brother-in-law, Richard Loppnow, succeeded
in lowering Mr. Rewald's bail to S140,000,
and Mr. Reivald was free. He says he can't
talk about the case because it involves the
CIA. "The way the court order reads, I can't
even mention the three initials," he says. He
now is back in Hawaii awaiting trial, which
isn't expected. soon.
Yet another curiosity in the case con-
cerns the prosecutor himself. The U.S. attor-
ney in Hawaii, Daniel Bent, turned the case
over to John Peyton, an attorney who joined
his staff just a few days after Mr. Rewald
slashed his wrists. From about 1976 to early
1981, Mr. Peyton had been chief of the CIA's i
litigation section in Langley, Va Before
coming to the U.S. attorney's staff in Ha-
he worked on the government's narcot-
ics task force in Florida, which intelligence .
community sources say has been laden with
CIA operatives. Despite that background,
Mr. Peyton characterizes his current assign
merit in Hawaii as .'pure, utter coinci-
dence."
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AR.' I CZ,Fs APP `kFAREA HAWAII INVESTOR
QTi PAGE / .
MARCH 1984
The CIS played a
devious but leading
role the nbse and fall of
Bb.11hop, Baldwin
Ron Rewald's defunct consulting firm was a
front in the most embarrassing tradition.
It's beginning to look like Honolulu was under investigation by state
bankruptcy trustee Thomas Hayes consumer protection authorities and
took on more than he bargained for hinted that the firm's chairman, 43-
when, court appointment in hand, be year-old Ronald R. Rewald, may not
first strode into the offices of Bishop,
be the classy investment wizard that
Baldwin, Rewald, Dillingham & most everyone thought him to be.
Wong, Inc. The next day, Rewald was found in
That was early last August and a Waikiki hotel room with his wrists
Haves' takeover of the Honolulu slashed. Rushed to a hospital, he
investment counseling firm with the quickly -recovered from what the
staccato name capped a landslide of police said was an attempted suicide.
events that in less than a week had
toppled the company from
prominence to ruin.
On July 29, a local television station
aired a report that Bishop, Baldwin
Open-and-shut. The next day,
Tom Hayes stepped in as Bishop,
Baldwin's interim trustee and started
treating the company's collapse as an
open-and-shut case. Though Rewald
had ordered certain records removed
the day of his apparent attempted
suicide, Hayes immediately
announced that a quick check of the
company's files revealed that over
300 investors had entrusted about
$17 million to Bishop, Baldwin and
that the only sign of what had
happened to their money was that it
had been spent, not on the high-
yielding investments that had
attracted the depositors but on a
cornucopia of business and personal
expenses that, said Hayes, had
emptied the company's coffers.
Rewald, declared Hayes to a
stunned Honolulu business
community, had run an elaborate
scam. His words were echoed by the
bankruptcy judge. who labelled
Bishop, Baldwin a "Ponzi scheme"
wherein investor funds were
siphoned off for ulterior purposes and
paid back only as necessary to keep
up the pretence of legitimate
?, -_aJU WCJ Jllu m the investments.
hospital, the investment empire he'd i To no one's surprise, Rewald was
formed just five years before came arrested on his release from the
unglued. After a half-hearted attempt hospital on theft charges from two
at business as usual, Rewald's partner, ; investors. One of them was John C.
Sunlin "Sunny" Wong, promptly "Jack" Kindschi, a former Bishop,
resigned as company president and Baldwin consultant and close
declared his willingness to cooperate associate of Rewald's. Kindschi had
with any and all of the state and federal been one of Rewald's first visitors in
investigators suddenly gathering on ; the hospital. Before he joined Bishop,
Bishop, Baldwin's doorstep. The Baldwin in 198], he was the Honolulu
dapper, 34-year-old Wong wasquickly section chief for the Central
followed in his hasty exit by many of Intelligence Agency. Bishop,
the 30 or more attorneys, accountants Baldwin's records carried Kindschi as
and others that Bishop, Baldwin had
brought on board as well-paid
professional "consultants."
On August 4, a Honolulu federal
'court declared Bishop, Baldwin
involuntarily bankrupt and froze its,
assets, along with those of the
company's still-hospitalized leader,
Ron Rewald.
a $185,000 investor in the company.
They also revealed that on the day of i
Rewald's attempted suicide he
withdrew $140,000 from his account.
Subsequent disclosures show that
prior to his "retirement" from the CIA,
the 56-year-old Kindschi had written
personal checks to Bishop, Baldwin
and three associated companies
totalling about 82,000. The checks, all
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in relatively small amounts, were
recorded as payments for telephone
bills. Similar payments were made
after Kindschi joined Bishop, Baldwin
by his successor as the CIA's local
section chief. John Rardin.
Fanned rumors. Such revelations
fanned speculation that Bishop,
Baldwin had somehow been involved
with the CIA. The federal bankruptcy
court at first did little to squelch the
rumor when, acting on the federal
agency's request. It sealed many of the
Bishop. Baldwin files that Rewald had
first removed and after his arrest
surrendered to the court. The court
slapped a gag order on any discussion
of the matters contained in the sealed
documents, but interim trustee Haves
revealed that a letter missed in the
dragnet indicated that the CIA may
have halted an earlier Internal
Revenue Service investigation of
Bishop. Baldwin.
The letter, dated January 18, 1983,
was from Ron Rewald to the CIA's
John Rardin. It asked Rardin to
expedite an earlier request that the
CIA intercede in an IRS audit of
Rewald's personal finances because
they contained some relationships that
he would rather not explain. What
Haves didn' see was a letter written
just 10 days later by Bishop, Baldwin
attorney Dana W. Smith to IRS
Honolulu investigator Joseph A.
Camplone. The letter confirmed that
Carnplone'tad_ been instructed by-'
higher ups in the IRS to hold off on the
Rewald investigation.
Speaking with authority, however,
Haves declared that, at the most,
Bishop, Baldwin and its global
network of 17 offices-most of which
he described as no more than "a desk
and telephone"-served as innocuous
mail-drops for the CIA.
Haves hadn't changed his mind
about either Rewald or his company
when, in February, his office issued a
voluminous report detailing Bishop,
Baldwin'- finances. It showed that
between 1979, the company's first year
of operations, and August 4, 1983, the
date it was declared bankrupt, it took
in a total of $20.4 million in
investments. Deducting money paid
back or spent on behalf of investors,
the company ended up owing more
than 300 of its clients $12.6 million.
And it has no funds left to repay them,
unless the trustee can collect $2.3 in
overdrafts by 80 other investors or
take advantage of a clause in Hawaii's
bankruptcy law that makes those who
take money out of a firm 90 days
before its collapse put it back. The
trustee is trying to recapture funds on
both counts. But, so far, only ex-CIA
section chief Jack Kindschi has
responded. He has quietly given back
the 5140.000 he took out on July 29.
Further collections are unlikely.
Most of those investors who drew
more out of their accounts than they
put in are former consultants and
others associated with Bishop,
Baldwin who have had to adjust to
more modest lifestyles since the firm's
demise. Even so, the most that
investors would get back from such
repayments is about 20 cents on the
dollar.
Plethora of purchases. The trustee's
report makes Ron Rewald the biggest
culprit in this debacle. In accounting
"to the penny" what happened to the
missing millions, the report says that
Rewald took $4.7 million from what it
calls his "bogus investment
'counseling" concern and used it for
"personal spending." By the trustee's
reckoning, he spread money lavishly
over a plethora of purchases ranging
from a suit of armor to decorate his
waterfront home to veterinary bills for
his striric of polo ponies. Included was
over million spent on two ranches
near Honolulu, one in Waimanalo and
the other at Pupukea, and the Hawaii
Polo Club, which Rewald bought two
years ago.
The ranches and Polo Club were
among a long list of enterprises into
which the trustee's printout shows that
Rewald or his firm pumped close to $4
million. Also on the list is MotorCars
Hawaii, a classic auto emporium
where Rewald stabled his personal
fleet of sportscars. But the report
declar.ed that none of these were valid
investments. Reiterating a claim made'
by Haves since August, the report
concluded that Bishop, Baldwin had
made no legitimate investments. It had
spent all of its investors' money on
indulging Ron Rewald's fancies, on
giving his cronies a ready source of
cash. and on providing Bishop,
Baldwin's consultants jet-set careers
hopping from one exotic company
'office to another.
There was nothing particularly new
in the trustee's report; it simply
documented what Hayes and others
involved in picking up the Bishop,
Baldwin pieces had been saying for
months. The only dissent has come
from Rewald and some of his former
associates. Though muted by the
court's gag order and fear, of, other
repercussions, these survivors paint a.'-=
far different and more sinister picture
of Rewald and his mysterious
company.
Pieces fit. Placed against a different
backdrop than the one provided by the
court and trustee, the jigsaw pieces fit
as they never did for the public
officials. In the picture that emerges.
Bishop, Baldwin's globe-girdling
string of "offices" makes sense, its
multi-million dollar investor "slush
fund" has a more useful purpose, and
the company's otherwise whimsical
"investments" do produce a yield after
all. And, the key to it all, the man at the
center of the picture, Ron Rewald,
emerges as a loyal disciple of what has
been called the international cult of
intelligence.
On January 30, Rewald was released
from the Oahu Community
Correctional Center after his family
scraped together enough assets to meet
his 5140,000 bail. In the preceding two
months. the bail had been twice
reduced from an original S10 million.
The initial amount, unprecedented in
Hawaii, was set ostensibly to keep
Rewald in jail where he could neither
make good on his supposed suicide
attempt nor skip town with the
illgotten gains that trustee Haves and
others were claiming he had bilked
from investors. Rewald is now suing
Haves for such obstructionism and
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other alleged offenses. but that isn't
the first lawsuit he has filed since
getting out of jail.
Just days after his release, Rewald
sued the CIA for a whopping S671
million. The suit charges that the
federal agency was not only
extensively involved in Bishop,
Baldtwin's activities but that the
company, along with two others, was
specifically formed in the late 1970s on
instructions from the agency. The CIA
even picked Bishop, Baldw?in's name.
claims Rewald, because the firm was
intended to concentrate its "business"
in the Far East, where the names
Bishop. Baldwin and Dillingham-all
prominent in Hawaii and other Pacific
business circles-would give it
credibility. Rewald and his partner
Sunny Wong were the only principals
Ested in the company's title whc
.weren't bogus.
Rewald claims that he acted as a
full-time coven agent for the CIA
dating back to 197, when he moved to
Hawaii from his native Wisconsin. His
association with the agency goes back
even further. In the mid 1960s, while a
student at the Milwaukee Institute of
Technology, Rewald says that he was
recruneo by the agency and employed
par ,-time to spy on student activist
groups at the University of
NVIsconsin's Madison campus. Over a
nine-month period in 1967-68, Rewald
was paid 5120 a week for his efforts
and reported the results to the CIA's
Chicago office.
Breaking in. After a hiatus of several
years, Rewald began taking more
ambitious assignments from the CIA.
He worked for a sporting goods
company in Milwaukee and made
several buying trips to the Far East.
While there, he carried out relatively
minor intelligence-gathering chores
for the agency and made some contacts
that would later prove useful. One of
the friends he cultivated was a
Japanese sporting goods manufactur-
er whose son worked for that country's
Ministry of Transport.
In 1976, Rewald formed a company
called CMI Investment Corp., a
counseling firm that furthered his
excuse for travel. That year. the
sporting goods firm he had risen to
head went bankrupt and so did
Rewald. In the entanglement, Rewald
got into a scrape with Wisconsin
authorities for violating the state's
franchising laws. He was also
concerned about post-Watergate
federal investigations then being made ;
of the CIA's domestic spying
operations, an activity prohibited by
the agency's charter. Rewald
expressed his worries to his contact at
the CIA's Chicago office and said he
was thinking about relocating to
Hawaii. The agent encouraged him to
do so and gave Rewald the name of the
agency's man in Honolulu, chief of
section Eugene J. Welsch.
After Rewald, his wife and five
children moved to Honolulu, Rewald
re-established CMI Investment, took
in local real estate broker Sunny Wong
as a partner and looked up Welsch. It
was Welsch who gave Rewald his first
major assignment for the CIA.
Impressing the agency. Working
with the Japanese Ministry of
Transport, Japan Air Lines had
developed what it called a high speed
surface transportation system, or
HSST for short. Using a top secret
magnetic propulsion technique, the
system was intended for use on trains
that would cam, passengers between
Japan's Narita International Airport
and Tokyo at speeds of close to 200
miles per hour, slicing travel time from
the usual 90 to about 15 minutes. The
system works, but the problem was
and still is enabling passengers to ride
safely at such break-neck speeds.
Nevertheless, the CIA wanted the
HSST plans to pass on to U.S. industry
and sent Rewald to steal them.
Through the son of his former sporting
goods contact he suceeded in doing so
and the agency was impressed with his
work.
Other Far Eastern assignments
followed. In 1978, just before U.S.
relations with the Peoples Republic of
China were normalized, Rewald
visited mainland China under the
banner of his CMI Investment Corp.
He made the trip to assess trade
prospects and make contacts for the
CIA. Because Rewald succeeded
where many others had failed, he won
high praise from section chief Welsch,
who was about to be replaced in his
Honolulu post by another agency
veteran, Jack Kindschi.
Under Kindschi, Rewald's
involvement with the CIA moved into
high gear. Late in 1978, Bishop,
Baldwin was formed to spearhead two
other cover operations already
established at the CIA's direction,
Hawaii-registered companies called H
& H Enterprises and Canadian Far
East Trade Corp. With Bishop,
Baldwin in place, Rewald's old firm,
CMI Investment, was all but
abandoned.
Rewald says that the CIA not only
gave, Bishop. Baldwin its name but an
operating budget of "several million"
dollars to eel, it underway. The claim
differs sharply with the bankruptcy
trustee's report, which purports
through the five Honolulu bank
accounts it analyzed to account for
98%%c of all funds flowing into Bishop,
Baldwin since its inception. The report
attributes only 52,700 o'r so in
telephone bill payments to the agency.
Any other CIA contributions, if they
occurred, must have come in under the
guise of investor deposits, says the
report. And James Wagner, an
attorney for the trustee, scoffs at that
notion. To produce the amount of CIA
support claimed by Rewald "would
require that a large portion of the
investors had to be agents," he says.
Rewald, who despite the massive
odds against him has maintained a
steely composure throughout his
ordeal, is unruffled by the trustee's
claims. He maintains that Haves, who
is now Bishop, Baldwin's
administrator, Reynaldo Graulty, an
attorney and state legislator who was
named permanent trustee, and the
lawyers and staff helping them are no
closer to the truth today than they were
in August.
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Co-mingled funds. Rewald says that
the five Honolulu bank accounts on
which Hayes and his associates base
their analysis reflect only part of what
were Bishop, Baldwin's real finances.
Millions more, he insists, were buried
in overseas accounts in which, as in the
Honolulu banks, innocent investor
funds were freely co-mingled with
deposits from the CIA and other,
not-so-innocent "investors."
Haves acknowledges the existence
of the overseas accounts, but says they
are all but empty. Rewald agrees, but
he claims that that wasn't the case at
the time of Bishop, Baldwin's collapse.
He says that there was then enough
money in the company's foreign
accounts to repay the SlO million that
the trustee now says is owed to
investors, and much more. But the
funds quickly disappeared when
Bishop. Baldwin's operations
disintegrated, leaving a trail that grew
cold while Rewald sat in jail.
But evidence of these accounts and
their intended use is murky. obscured
by the court's order against revealing
the contents of Bishop, Baldwin's
still-sealed files and, if the claims of
Rewald and a few others are to be
believed, an elaborate and well-oiled
mechanism with which the CIA and
others in the country's intelligence
network bury their mistakes.
Characteristically, the CIA has
steadfastly denied any role in and
refused further comment on the
Bishop, Baldwin case. Even the clear
involvement of three of its former
Honolulu section chiefs, Jack
Kindschi and, to a lesser extent,
Kindschi's predecessor Eugene Welsch
and his successor John Rardin, has
failed to shake the agency's policy of
silence. The most that it has said came
in response to Rewald's recent damage
suit, when a spokesman contacted at
the CIA's Langley; Va. headquarters
referred a questioner to the ruling
made last September by Bishop,
Baldwin's bankruptcy judge that
the company's sealed documents had
no bearing in its financial affairs.
Yet the jurist concerned, veteran
federal judge Martin Pence, has
privately admitted that he didn't
personally inspect the reams of
documents before, acting on the advice
of the CIA, he sealed them in August.
Nor did the judge read a lengthy
affidavit submitted by Rewald to
explain his CIA involvement before he
scaled that, too.
And Rewald hasn't had much luck
in getting a rise out of his alleged
former employer. A response of sorts
that did come was the reassignment by
the CIA of the head of its litigation
division, John Payton, to the post of
assistant U.S. Attorney in Honolulu.
What might otherwise seem a
demotion for the agency's top lawyer
indicates the importance it places on
Rewald, But so far it has kept that
concern to itself.
Shortly after his imprisonment,
Rewald had his civil attorney, Robert
A. Smith, write a letter to CIA
Director William Casey asking for 510
million in commissions that he said
were due Bishop, Baldwin on an arms
deal it had arranged for the agency in
Taiwan.
Pandores box. There has been no
direct reply to the letter, but, if the
claim is accurate, it blows wide open a
Pandora's box of covert activities that
Smith's letter and a crazyquilt of other
evidence indicate that Rewald and
certain of his associates performed for
the CIA. Those activities ranged from
selling huge quantities of military
hardware to such strategically touchy
countries as Taiwan and India to
laundering money for political leaders
like Indira Gandhi and big money men
like Philippine banker Enrique Zobel
and the Sultan of Brunei.
It's in this shadowy context that
many of the loose ends left by the
trustee's explanation of Bishop,
Baldwin's affairs fall into place: like
the 5600,000 spent on a seemingly
useless network of overseas offices;
nearly 5800.000 lavished on two Oahu
ranches that were never really used;
5300.000 pumped into a Hawaii Polo
Club that was about to lose its polo
field; 5260,000 for a stable of ponies
and show horses that were rarely
ridden; and nearly $2 million in
salaries and fees paid to a small army
of investment consultants who never
made an investment.
The trustee attributes this wild
spending to Rewald's extravagance.
But it would seem that a master
swindler capable of bilking hundreds
of investors out of 520 million would
be more frugal with his ill-gotten gains.
And he would surely have taken better
care of himself than nearly dying. then
spending six months in jail and coming
out looking for work. For nowhere in
the trustee's exhaustive study of
Bishop, Baldwin's affairs is there the
slightest hint of hidden booty for Ron
Rcwald. As Hayes has said from the
start, "He spent all the money."
If such behavior is out of character
for the super-stammer that Rewald
has been made out to be, it is much
more in keeping with the CIA's pattern
of using private U.S. businesses and
institutions as fronts for a potpourri of
clandestine activities.
Nugan Hand. A case in point is the
Nugan Hand Bank, whose spectacular
demise four years ago is still
embarrassing the CIA. The rise and
fall of the Sydney-based bank bear a .
striking resemblance to the
rollcrcoastcr history of Bishop,
Baldwin.
ontinuing investigations by an
irate Australian government indicate
that Nugan I-land was set up with CIA
backing in 1973 to carry out an
assortment of covert tasks and dirty
tricks. One of them seems to have been
helping to topple the Labor
government of Prime Minister Gough
Whitlam, who had irked Washington
with his stand-offish attitude toward
the U.S. Whitlam was sacked late in
1975 after a well-aimed misinforma-
tion campaign had scandalized his
government. The CIA calls the
technique "disinformation," which is
the lacing of truth with deliberate lies.
Though they're not certain, the
,ontinued
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Australians now sec the CIA's imprint
on what happcncd to Whitlam and
they suspect that Nugan Hand helped
launder the
fall.
Typically, the CIA's financial
support of Nugan Hand Bank went
little beyond providing seed money to
Oct it started and standby funds, none
of which was easily traceable. For
appearance sake as well as for more
practical reasons, agency fronts, called
"proprictories," are supposed to be not
only self-supporting but highly
profitable. . Nugan Hand earned
millions on illicit drug trafficking,
arms deals and running a laundrortiat
for money used for a variety of shady
purposes. Part of the bank's income
went to support the "legitimate-side of
its operations, paying big yields to
unsuspecting investors whose funds
were co-mingled with other income
and high salaries and expenses to both
innocent employees and covert agents
who used the institution's 22-branch
international network as a cover. The
rest of the earnings were channeled to
other CIA fronts, contributing to a
vast funding network that is the
backbone of the agency's global
operations.
Officially, the size and budget of the
CIA are limited by law and scrutinized
by both the federal administration and
Congress. But for years the agency has
gotten around these restraints through
the use of front operations and
contract agents whose existence never
shows up on the official records. The
dodge. paid for through and by
hundreds of agency proprietories.
swells the CIA's size far beyond its
legal limits and makes it almost
invulnerable to budgetary squalls in
Washington.
Contract agents. The
Three years later, though both were,
just out of their 20s. the}' formed
and the need, and they may wait for Nugan Hand Bank. which was quickly
years between jobs or be employed to become a major conduit for
steadily. The contracts are recruited by transporting CIA funds worldwide.
control officers or other agency Things went smoothly for Nugan
professionals who are likely to be, Hand for several years. Attracted by
knowingly, the only regular agents interest rates that were higher than any
they ever meet. The less its contract others around, deposits flowed into
agents ' know the better, the CIA the bank by the millions. Fueled by its
figures. pan in torpedoing the
That and the usually limited amount successful Whitlam government, the bank's
of training they are given make the coven activities also blossomed,
contracts a calculated risk for the
agency. Though when they are given a
job the agents sign a secrecy pledge,
involving it in projects all over the
world.
But in the late '70s Frank Nugan ran
"'"' ""`?" ` "" "' ' ? afoul of the Australian authorities. He
result, pan-time agents are frequently was accused of cheating shareholders
recruited from retired military in his family-owned food business in
careerists, especially high-ranking Sydney. There was talk of pay-offs
officers who are accustomed to
handling classified information.
Nugan Hand had several former
military brass working for it. One was
its president, Earl P. "Buddy" Yates, a
retired Navy admiral and former chief
of staff for strategic planning with U.S.
fo c' A dth P if A h
es in s
a a
t
didn't seem to bother the easy-going
Nugan, however, except that he
increased to almost daily visits to his
church. And he kept on spending
money at a dizzying rate, including
5500,000 to remodel his Sydney
t
n a ac c. no
er waterfront home. And on the day that
was retired Army general Edwin F. he died, Nugan was completing
Black, who once commanded U.S. negotiations to buy a 52.2 million
troops in Thailand and served as country estate.
Nugan Hand's representative in Ignored evidence. Nugan's body was
Hawaii. Such former professionals not found early one morning in January,
onl brought experience and discipline 1980. He was slumped on the front seat
to their job, but an old-boy network of of his Mercedes, parked on a country
contacts that could be useful to the road near Sydney. Nugan was shot
CIA. through the head. Beside him was a
Not too many contract agents, rifle that was later discovered to be
however, can be star-studded veterans. Wiped clean of fingerprints. A
The bulk are less seasoned and are coroner's jury ruled the death a
picked for their potential. They have to suicide, dismissing police arguments
prove their mettle before being given that because of its angle it would have
more sensitive assignments. been nearly impossible for Nugan to
Frank Nugan was such a person and have fired the fatal wound.
so was his partner, Michael Hand. Three months later, the Nugan
Nugan was a fast-talking, goodlooking Hand Bank collapsed amid a barrage
Australian who moved easily in of official investigations that continue
Sydney's financial there in circles when he met
Hand to this day. Depositors and investors in
American, was Tug1an'970s.an Hand,tithesis, aa the bank stand to lose millions as
n authorities hit one blank wall after
burly, tough-talking ex-Green Beret another in their search for assets. The
ho had already done contract work CIA has denied any involvement in the
for who'
the CIA in Southeast Asia. The Sydney bank and it and other U.S.
pair started an investment counseling S agencies have been cool to the
business in Sydney, specializing in Australians' requests for help in sifting
advising former L.S. servicemen. the bank's tangled affairs. The one
person who might help them the most,
Nugan's partner Michael Hand,
disappeared shortly after Nugan's
Continutad
agents are a key ingredient in this huge
subterranean network. They are a
pan-time army of amateurs who join
up for the pay, the excitement, or-an
argument frequently used on U.S.
recruits-the patriotism. Their
assignments may he innocuous or
dangerous, depending on their skills
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death and hasn't been heard from
since.
Though they've been mentioned, the
similarities between Nugan Hand and
Bishop, Baldwin have largely gone
unnoticed since the Honolulu
company's demise. The swift dismissal
of a CIA connection by those in
authority, the court gag order and the
silence of the company's survivors,
including most investors, have
discouraged pursuit of the parallel. So,
too, has the departure or submergence
of those most directly involved in
Bishop. Baldwin's covert activities.
Jack Rardin, the CIA's section chief
in Honolulu during Bishop, Baldwin's
final two years, quietly left his post
soon after the company's collapse. An
item planted recently in a Honolulu
Adverriser gossip column revealed his
re-emergence in Florida.
Multiple "retirements". Jack
Kindschi, Rardin's predecessor who
supposedly left the agency to become a
Bishop. Baldwin consultant, has
"retired" and gone to ground. This
isn't Kindschi's first retirement from a
CIA cover that was blown. In the early
1970s he was an executive with Robert
R. Mullen & Co., a New York
public-relations firm that was deeply
involved in the Watergate scandal.
When the firm folded, Kindschi
submerged and later resurfaced as the
CIA's Honolulu section chief.
Sunny Wong, Bishop, Baldwin's
former president, has similarly slipped
out of sight. So has Russell Kim,
another BBRD&W consultant who
played a key part in the firm's Far
Eastern money laundering activities.
Kim is listed by the trustee as owing the
company nearly S500,000 in
over-Withdrawals from his investment
account.
Bishop, Baldwin's contingent of
former military brass was less
developed than Nugan Hand's, but it
was getting there. Retired four-star
general Hunter Harris. once deputy-
commander of the Strategic Air
Command, was a sometimes
BBRD&\\' consultant. Concern over
Harris' heavy drinking and
talkativeness caused Rewald to sound
an alarm that cancelled a CIA-backed
expedition to Laos in search of U.S
MIAs led by ex-Green Beret officer
James "Bo" Gritz.
Lt. Gen. Arnold Braswell, who
retired in September as the Air Force's
Pacific commander, was an investor in
BBRD&W and has admitted that he
was "considering" joining the firm at
the time of the collapse. Those close to
the company say, hoever, that the
association was more of a certainty
than the general lets on and that he
had, in fact, done some work for
i Bishop, Baldwin before his retirement.
General Braswell provided the
company with the names, private
phone numbers and introductions to
three former Air Force generals who
hold key positions at major U.S.
aerospace manufacturers. The
contacts were to be used for placing
orders for such sophisticated hardware
as AWACs and L-1011 transport
planes, part of a huge covert arms deal
that Bishop, Baldwin's contract agents
were negotiating with the government
of India.
The transaction was being handled
for Bishop, Baldwin by S. S. Pasrich, a
well-connected Indian national who,
acting as a company consultant, had
established a New Delhi office for
BBRD&W in the former Soviet
embassy building. His chief contact in
the talks was Rajiv Gandhi, the only
surviving son and a top aide of India's
prime minister, Indira Gandhi. But the
big arms sale, which would have
generated millions in commissions for
Bishop, Baldwin, was still in the works
when the company folded.
Money-laundering. As part of the
arms deal, Bishop, Baldwin was to
shelter funds for the Gandhi family,
including kickbacks to be paid out of
its commissions, and invest them in the
U.S. This arrangement was one of the,
paramount reasons for handling the
transaction under-the-table and
characterizes not only some of the
CIA's money-laundering activities but
its efforts to stockpile markers from
key foreign leaders. The hefty
commissions paid to intermediaries
like Bishop, Baldwin-amounts
usually built into the arms' purchase
price-also provide a convenient way
for suppliers to pay the bribes that are
common in some parts of the world,
but taboo for U.S. companies since the
Lockheed scandal of a decade ago.
One arms sale that was completed
before Bishop. Ba)dwin's collapse was
the one to Taiwan on which Ron
Rewald's attorney tried to collect the
SIO million commission. That sale,
which involved such deadly gadgets as
infra-red sights for 1`11-16 rifles.
illustrates vet another purpose of the
CIA's underground arms business: the
avoidance of political repercussions, in
this case in the U.S.'s fragile relations
with mainland China.
But all of Bishop. Baldwin's coven
activities weren't to be as lucrative, at
least at first. Using its impressive name
and a growing list of happy investors
as entres, the company made friends
with a number of wealthy CIA-
targeted foreigners whose benefit to
the agency was to be long-range.
On the surface. BBRDd:W offered
them the same bait it used to lure
legitimate investors. tvpicaly a 20r/-c,
minimum annual return on
investments that, the company
claimed to some., were guarameed by
the Federal Deposit Insurance Corp.
for up to S150.000 per account.
'nobody challenged the claim. which
had limited use, until just before
Bishop. Baldwin closed down. The
insurance incentive. which was clearly
beyond the FDIC's scope, was devised
for certain foreign investors and there
Continual
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were. i fact. funds set aside for such a good contact to have in keeping tabs
purpose. The ,FDIC had nothing to do on the oil production plans of OPEC.
with Bishop. Baldwin, but the federal of which his country is a member.
agency had been primed to say that it The sultan also offered the agency
did if zsked. and its business allies more tangible
When the insurance claim spread attractions. Brunei has a S4.5 billion
beyond its intended use the FDIC investment portfolio that before its
Cautioned the company in a letter independence was managed by the
addressed to its Napa. Calif. office. British. With independence. the purse-
Napa manager Robert Jinks assured strings passed to the sultan. In one of
the agency that the claim was the biggest banking coups in years.
employee error that wouldn't happen New York's Morgan Guaranty Bank
main and the matter was dropped. and Citibank have replaced London's
This was last June and the error bankers as managers of the Brunei
symptomized a serious problem that i portfolio, a job which at the yen least
Bishop, Baldwin was then having in will produce about 530 million a year
controlling the growth of its in fee income.
investment accounts. Normal money To Bishop, Baldwin and, in
market interest rates had fallen well particular, its silk-smooth chairman
below the high returns promised on the Ron Rewald goes at -least part of the
company's accounts and the firm's credit for this triumph. It came about
innocent but hard-charging consultant through the sultan's close friendship
were straining the proprietorv's cover with Enrique Zobel, the ties that
by bringing in more investment clients Rewald forged with the Filipino
than it could comfortably handle. The banker. and the rabid interest all three
company was, in fact. then trying 10 showed in the gentlemanly sport of
phase out all investment accounts polo.
except those that were needed for its The polo connection. Polo was, in
money-laundering activities. And the fact, in many ways the most successful
CIA was pushing for more action on of the fronts that Rewald ran for the
that front. CIA in Hawaii. He used the sport to
Top of the Iis;. At the top of theagency's
target list of rich foreigners was Enrique give him and his associates ready
ZobcL the Philippine financier who is access to the world's elite in an
reputed tobcamong thelOwcalthiestban- unguarded atmosphere that they
kern in the world. Zobel is alone-time con might never have enjoyed as mere
investment counselors.
fdantc and key backer of~ President Early in 1972, Rewald paid S30.000
Ferdinand Marcos and has powerful for the Hawaii Polo Club, a shoestring
political and business ties around the operation that was about to lose the
_globe. He was thus not only a good
man to know for his clout in the use of its only tangible facility, a polo
field on Oahu's north shore. But the
strategically sensitive Philippines. but. 530,000 was only the down-payment
properly coaxed. Zobel and his super- .
affluent friends could have become on a succession of related investments
major contributors to the CIA's that were to exceed 51.3 million. Over
underground money machine. the next year or so, Rewald and his
One of those friends is the Sultan of company poured nearly S300,000 into
Brunei. the supreme ruler of a tiny, oil- the operations of the Polo Club itself.
rich country on the northern coast of elevating its Sunday afternoon
Borneo which recently gained its matches from sandlot status to lavish
independence from Britain. Since one major-league events.
of the ways that the CIA pleases its Closely related, about 5800,000 was
high-placed allies among the U.S. spent by the company on its ranches at
business and political communities is
by providing them with useful
inteilicence. The sultan was reckoned a
Pupukea and Waimanalo. The
company had agreed to'buv the
Pupukea property for 53.5 million on
highly leveraged terms. It had an
option to buy the Waimanalo ranch
for 5500.000. The arrangements
enabled the company to spend most of
its money on sprucing up the
properties. To add to the
windowdressing. and Rewald's image
as an international sportsman. an
additional 5260.000 in company funds
was lavished on a string of 17 polo
ponies and show horses.
But there was a method to this
seeming madness, even though
Bishop, Baldwin's trustee chalks it all
up to Rewald's frivolity. The gala polo
matches and the showcase ranches, as
well as Rewald's fleet of fancy
sportscars and high-rolling lifestyle.
were really parts of an elaborate
scheme to enhance Bishop, Baldwin's
image of legitimacy. an image that was
further fed by the fact that not more
than a dozen of its 115 worldwide
employees were involved in anything
other than bona-fide investment and
estate management work.
In his dual roles as sportsman-
financier, Rewald visited Buenos Aires
during the 1982 Falkland crisis.
Outwardly. he was there to discuss
investments and socialize with
Argentine polo enthusiasts. But the
real purpose of his trip was to assess
for the CIA the safety of the billions
that U.S. banks have loaned to
Argentina. Secondarily, he helped
other CIA agents trace the
sophisticated weaponry that the
Argentines were using against the
British in the Falkland war. One of the
trails led to some of Bishop. Baldwin's
contacts in Taiwan.
But the biggest single target of
Rewald's polo ploy was Philippine
banker Zobel and his global
connections. Zobel provided,a window
on the inner workings of the Marcos
regime that was unparalleled and the
CIA had grown concerned about the
dictator's plans. Through intermedi-
aries, Marcos had purchased two
estates in Honolulu's fashionable
Makiki Heights and the agency
wondered if he was planning an early
retirement.
Continued
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That wasn't the limit of Zobel's
usefulness. With the CIA's help,
Rewald was sched,.iled to accompany
President Ronald Reacan on a visit to
the Philippines last 'all. Zobel had
arranged for Reward to meet privately
will Marcos while he was in Manila.
But Reagan's trip was cancelled and
Rewald couldn't have gone by then,
amvay. He was in jail.
Looming profits. When its roof fell
in. Bishop. Baldwin was about to sell
its interest in the'Aaimanalo ranch to
Zobe! for S1.5 million, which would
have given it a respectable 200rc profit
on that investment. The company's
Pupukea ranch was being groomed to
sell to Zobel's buddy. the Sultan of
Brunei. Bishop. Baldwin figured to
clear about SI million on that deal.
Ever, the Hawaii Palo Club was
slated to turn a profit. Northwestern
Mutual Life Insurance Co. had
acouired the land under and around
the Mokuieia field as part of plans to
develop the area into pricey homesites.
A big reason for turning the Polo Club
into a showcase operation was to
convince 'Northwestern that it should
use the club as a centerpiece for its
Mokuleia development. Rewald had
worked out a deal with the giant
insurance company. to relocate the
Polo Club to posh permanent facilities
near its present makeshift site. The
new site would have been deeded over =
to the club by Northwestern at no cost,
giving it an asset worth close to $3
million. Rewald figured.
While these negotiations were going
on. Rewald was also using the Polo
Club to cement his ties with fellow-
sportsman Enrique Zobel. Last June,
the pair formed Ayala Hawaii Corp.
for the purpose of engaging in
unspecified land developments. But
Ayala Hawaii. whose ownership was
split 50-50 between Zobel and Rewald,
actually had some very ambitious
objectives.
It's namesake, Manila-based Ayala
Corp., is Zobel's vehicle for a wide range of
international business ventures. One
of these was to be a big resort
development at Soto Grande, on
Spain's Costa del Sol. Zobel's friend
the Sultan of Brunei was supposed to
have put up $7 million to get the
project rolling and millions more were
to follow. Both the money invested in
Soto Grande and the profits from its
sales to wealthy ? Europeans-an
expected $20 million or more-were to
be channeled through Ayala Hawaii
Corp., where the proceeds would be
split between Zobel and Bishop,
Baldwin. And if that venture worked
successfully, other profitable
partnerships were to follow.
At about this time, Rewald also
formed two other joint ventures that
had ulterior motives. These were called
Hawaiian-Arabian Investment Co.
and U.S. and United Arab Emirates
Investment Co., both registered in
Hawaii. These were ventures with
Indri Gautama, a wealthy Indonesian,
and Saud Mohammed, a crown prince
of the United Arab Emirates. The
companies were to be involved in
investments ranging from tea
plantations to resorts, but never got far
off the ground.
Hong Kong project. But potentially
the biggest project of all those that
were nipped in the bud by Bishop,
Baldwin's collapse focused on Hong'
Kong, where the company had picked
up the pieces left by the earlier
.explosion of the Nugan Hand Bank.
Hong Kong was one place where the
covert activities of Nugan Hand%and
Bishop, Baldwin didn't just run
parallel, but converged. It was
primarily to penetrate this market with
its untold billions in the hands of
nervous investors that Bishop,
Baldwin was devised.
In the weeks just before it closed,
Bishop, Baldwin published a
handsomely bound volume entitled
"Capital Flight from Hong Kong and
How Hawaii Can Benefit." The 300-
page study had been nearly a year in
the making and purportedly had
involved extensive on-the-scene
research by Bishop, Baldwin
consultants. Included were dozens' of
interviews with those who control the
Crown Colony's fortunes, all
conducted under Bishop, Baldwin's'
familiar-sounding banner and in the
name of legitimate research.
The basic premise of the study. as its
title implies. was that the smart money
is leaving Hong Kong by the planeload
in anticipation of its takeover by
China-an event that's technically still
13 years away, when Britain's lease on
most of the colony's real estate is due
to expire. The Bishop, Baldwin report
matter-of-factly accepted that this will
spell the end of Hong Kong as a center
of international investment and went
on to describe how Hawaii can cash in
on the resulting capital exodus. The
real purpose of the report, however,
was not to describe an event that was
happening. but to help cause it.
To its chagrin, the CIA has largely
been, unable to penetrate China's
power structure and influence its
strategic decisions. In its drive for
industrialization, China badly needs
foreign exchange and a Hong Kong
under its direct control could give it a
major, established source of such
currency-providing, that is, that the
huge tradinng center maintains _ its
prominence in world commerce. If
Hong Kong were to lose that position,
it could force China to make
concessions to the West it might not
otherwise make. Hong Kong is thus
seen by the CIA as a weak link in
China's otherwise impenetrable
armor. If the agency could trigger,
even at this early date, a panic among
the colony's already uneasy investors it
might deny the Asian superpower a
valuable pawn in the Third Kingdom
role it's trying to play between the U.S.
and the Soviet Union.
Typically, most of those consultants
involved in preparing the Bishop,
Baldwin study saw it as a legitimate
undertaking, accepting without
question the data and key contacts
provided them in Hong Kong by years
of CIA spadework. One of the
consultants, who like most insists in
anonymity, says that he thought that
the Hong Kong report was aimed
primarily at the Hawaii Legislature
Cortinu?d
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9.
because of the changes in state laws it
recommended to make Hawaii more
attraeti\c to Ovcrscas investors.
Indeed, most of the report was devoted
to describing flaws in the state's
business climate and the improve-
ments that it said arc needed. But
underlying the criticism was the
implication that if Hawaii didn't get its
act tngcthcr it would miss its share of
Hong Kong's he morhaginginvest ment
dollars.
Spark in 2 tinderbox. Although
Bishop, Baldwin's contribution can't
be proved. Hong Kong definitely
experienced a major economic crisis in
1982-83 that toppled stock and real
estate prices and caused a flight of
investment capital. While the outflow
scenes to nave siowco-in part necausc
of hasty assurances from Peking. the
colony's economy remains shaken and
jittery, a tinderbox that another spark
like the Bishop. Baldwin study could
ignite once again.
Even though the report appeared to
be tailored for Hawaii consumption,
its distribution reveals its true intent.
Of the 800 copies printed, less than half
remained in Hawaii, including about
100 that arc now in the hands of the
trustee. Most were distributed
overseas to the financial press,
investment houses and other opinion-
shapers.
Since his release from prison, Ron
Rcwald has been busily preparing his
defense against the two token theft
charges on which he was jailed and
other complaints that may be in the
wings. among ttie many ironies in Inc.
case. Rewald has done his work in the
downtown Honolulu offices of his civil
attorney, Robert Smith. Next door to
Smith is the office of BBRD&\V
administrator Tom Haves. When
Hayes and Rewald meet in in the hall,
they don't speak.
Platoons of FBI and other agents
have been using Hayes' office on and
off since August to work on what may
be federal charges against Rewald,
even though an earlier securities fraud
comptatnt nas occn quietly uruppeu.
No trials? And there is speculation
that none of the charges against
Rewald Will ever go to trial. On the
theft counts, the prospect of Rcv,?ald
facing in an open courtroom his
former close associate Jack Kindsehi,
the major complainant, might produce
more embarrassment than the CIA
could tolerate.
In fact, everybody seems
cmbarrased by the Bishop, Baldwin
debacle except the even-tempered
Rewald. Hawaii's news media, after
spotlighting the Hong Kong report
when it first came out quickly
condemned it when the company fell
from grace. Big-league publications
like Time and Money magazines
jumped on the bandwagon and
.labelled Rewald a swindler, echoing
the line that the local media had picked
up from interim trustee Hayes and the
courts.
But now the anti-Rewald chorus hay
grown silent and it may be the
he says. "We had a meeting and
nobody even suggested that the
company was in danger. The next day,
there was almost nobody in the office
and one of the older consultants
suggested I go home and stay there.-
A lot focuses on what happened to
Ron Rewald. A la Nugan Hand,
Bishop, Baldwin's covert activities
were, as much as possible, shunted to
other CIA proprietories. The handful
of agents involved either followed
them or, like old pro Jack Kindsehi,
simply retired.
The other company activities have
either quietly folded up or, as in the
case of the two Oahu ranches, reverted
to former owners. Enrique Zobel is
still interested in buying the
Waimanalo ranch, but now he wants
to get it for S 1 million instead of 51.5
million. The Hawaii Polo Club isn't
having much of a season this year.
BBRDBcW s trustee has given up the
lease on the company's once-spacious
offices in Honolulu's Grosvenor
erstwhile financier's turn at bat. Center and sold off its furniture and
Rewald is filing lawsuits against Time equipment. A floor-to-ceiling
and Money and against his nemesis waterfall that once decorated Rewald's
'Tom Haves. He has even turned down private office has been donated to
an oblique payoff overture from the charity. Rewald's former waterfront
CIA that would have given him the residence, which he
510 million he asked for last August.
That's not enough, Rewald figures, to
repay Bishop, Baldwin's investors and
make tip for the other losses suffered.
He has retained famous trial lawyer
Melvin Belli to help him 1 't alot more
in what could be a turnabn'tt that will
make his old company's cash flow look
modest by comparison.
What emerges as the most ir*riguing
aspect of Bishop; Baldwin's whole
tangled tale, however, is the
suddenness and completeness of the
company's . collapse. It left both
investors and employees bewildered.
"What happened to Ron?" One
brand new consultant who reported
for work on August 1, the first
workday following Ron Rewald's
attempted suicide, recalls the
confusion of that day. "Everybody was
guessing what had happened to Ron,"
bought fort
5950,000 in 1980 and figured was
worth 52.4 million, is being put up for
sale at an undetermined price. So is his
fleet of sportscars and his stable of
polo and show horses, though the
former have weathered their inactivity
since July far better than the latter.
Worse-off, however, is Bishop, {
Baldwin's human debris. The
company's 300-plus investors have
been left empty-handed. Their only
hope for recovering more than a
fraction of their lost millions is in.
getting the CIA to own up to some .
responsibility for their predicament..
The courts won't allow the investors to
join in Rewald's suit against the
agency. Ted Frigard, a retired
chiropractor who lost 5300,000, is
leading a band of them, in a separate
action, through Melvin Belii. So is
Robert Jinks, who. is the only former
BBRD&W consultant who openly
claims that he worked for the CIA._.
Continued
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Jinks, a California attorney, virtually
moderated the first segment of a
television series being done by the
British Broadcasting Corp. about
Bishop. Baldwin.
Out of Hork. Most of the company's
ex-ernployees are having a tough time
finding work. Tnose who have
relocated feel that they're lucky. They
don't talk about their previous
employer. partly because their new
employers don't want them to,
Ron Rewald is one of those still
looking for a job. He thought he had
one lined up through Honolulu
Teamsters boss An Rutledge, but that
fell through. The other offers he's had
called for use of his selling skills, but he
says he's no salesman. He's not sure
anybody would buy from him,
anyway. Meantime, Rewald is living
with friends. driving a borrowed car
and mooching quarters to feed the
parking meter. A year ago, he was
making: S20.000 a month and
expenses.
Rewald's fortune might change once
again, of course, if he forces the CIA to
relent. Rewald has steadfastly refused
to discuss his role with the CIA. as well
as the covert chores performed by his
company. But his recent lawsuit
against the agency and a welter of
records and comments of others that
have gradually surfaced say a great
deal for him. They paint Rewald as a
,all guy in the Nugan Hand tradition.
The big question is, who meant him
to fall?
Whose fall guy? Was it the CIA? Did
it fear that a routine state investigation
would blow Bishop, Baldwin's
elaborate cover and thus abandoned
the company and its leader in the
prescribed manner? Did the agency
feel that it couldn't stop or divert state
investigators where it could so easily
manipulate federal probes? Are
proprietory companies and their
agents and victims so expendable that
they are dumped no matter what the
cost at the first hint of trouble? Is the
CIA's skin that thick? Is it above the
law?
Or was somebody else behind
Rewald's downfall and the CIA forced
to react to a situation suddenly sent
out of control by the flood of publicity
attending Rewald's apparent suicide
attempt and his company's spectacular
collapse? Rewald's meteoric rise and
aristocratic lifestyle invited plenty of
critics who were only too happy to
condemn him when the roof fell in.
He may also have had some
downright enemies. Rewald kept a
squad of bodyguards on his payroll
and one was never far from him or his
family. When he was in jail, there was a
man who tried repeatedly to see
Rewald, posing first as a minister and
then as a prison guard. He was
reputedly an associate of Bo Gritz who
had gone on the aborted Laos mission.
.Acting on a tip that the man was more
than he pretended, state authorities
intercepted him before he could reach
Rewald and deported him to the
mainland.
There is a theory about Rewald's
downfall that could have been lifted
from a Robert Ludlum thriller. It goes
like this: It was the Chinese who
fingered Rewald: They wanted to
discredit the I-long Kong study and
fi,pured that exposing the man behind
it as a crook would do the trick. And
It ewald was an easy mark. He had a lot
of critics who would believe the wo,-st
of him. A push in the right place would
bring down his house of cards:'The
CIA would do nothing to protect him
once his cover was threatened because
that's its policy with contract agents.
In fact, it would help discredit him by
jerking what was left of his cover.
Vanished records. On a wall in
Rewald's former office at Bishop,
Baldwin hung two diplomas from
Marquette University. Both were fakes
but up until last Jul), Rewald was
carried on the Milwaukee institution's
alumni roster. After July, the school
told inquiring reporters that it had
never heard of a Ron Rewald.
Then there was Rewald's
professional football career. Though
that was part of an earlier cover and
seldom mentioned in Hawaii, Rewald
claimed that he had once played for the
Cleveland Browns, the Kansas City
Chiefs and the Baltimore Colts. Media
inquiries last summer produced no
confirmation, though Rewald has
copies of contracts signed with all
three clubs during the mid-1960s.
Other probes into Rewald's past
yielded similarly damaging
revelations. A purported high school
chum and football coach., interviewed
by a TV reporter in Milwaukee,
portrayed Rewald as a mediocre
achiever who fantasized a good deal.
Rewald denies knowing either the
coach or the "friend."
The most damaging of all the
revelations, of course, were the
trustee's statements that Bishop,
Baldwin had never made a legitimate
investment and that P.ewald had
squandered millions of its funds
without a thing to show for them. The
records of Bishop, Baldwin's
involvement in over 50 companies and
partnerships have either been lost or
discounted completely, just as have the
records of its two dozen or more
foreign bank accounts.
As it claims, the trustee's accounting
is probably accurate as far as it goes. It
will likely never be known what
Bishop, Baldwin's records would have
looked like prior to August 4. Possibly
little different, since large quantities of
cash moved in and out of its global
operating accounts in mysterious
ways. And there was no separate
ledger kept for what was legitimate
and what wasn't. The CIA doesn't
observe normal accounting practices
in keeping track of its investments and
their returns.
Nev weekend. A mystery that's even
more intriguing because it seems more
solvable is what happened to Ron
Rewald on the end-of-July weekend
that his hall of mirrors shattered. Was
his supposed suicide attempt part of
whatever it was that brought him
down. or the cover-up that resulted?
Rewald won't say. In fact, he says
even less now about the events of that
C^ntinu;d
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F-ica', and Saturday than he did at the
tfme
A hotel employee on a routine room
checl, found Rewald lying on the
bathroom. floor of Room 1632 of the
Sh,7L,on Waikiki Hotel at 4 D.M. on
Saturdav, July 3C. There was blood
spattered on the floor and fixtures of
the bathroom. The shocked employee,
helievinc Rewald might be dead.
immediately left the room and
summoned hotel security. When
security officers arrived they found
Rewald not only alive but conscious,
his arms held above his head. They
covered him with a blanket and called
for ar, ambulance and the police. From
a driver's license and two credit cards
found in the room. 2 security officer
identified Rewald. While waiting for
the police and ambulance, the security
risen talked to him. Rewald told them
that he wished he was dead; he said
that a television, report, the night before
about the state investigation of his
company had ruined him.
When the police arrived, they too
questioned Rewald. After some
prodding. he said that he'd tried to.kill
himself. The investigating officer
noted in his report that aside from the
blood in the bathroom and a farce
stair. and two blood-soaked towels on
the bed. the hotel room appeared to be
in order. There was no sign of a
struggle. Rewald's business clothes
were draped neatly over two chairs. his
shoes placed side-by-side under one of
them. Next to the license and credit
cards stacked carefully on an adjoining
table were five S20 bills. Rewald's
wristwatch. wedding band and an
envelope addressed to his wife.
The envelope contained two notes
written on hotel stationery in a barely
legible scrawl. The notes asked for
forgiveness. One said that "I started
out working for our country" and
concluded "it never dawned on me that
I would be left alone and unprotected."
The only other item found in the
hotel room that didn't belong there
was a cartridge of Gillette Platinum
Plus razor blades lying next to the
bathroom sink. One of the blades was
partially protruding from the cartridge
and was stained with blood.
Doctor's theory. At Queen's
Hospital in Honolulu. Rewald also
told staff doctors that he had tried to
kill himself. He was put in intensive
care and given eight units of packed
red blood cells to replace the estimated
four pints of blood he had lost. There
were lacerations on each of Rewald's
wrists and a long gash on the inside of
his left forearm. A doctor estimated
that the wounds on the left wrist had
occurred several hours before the
others. He theorized that Rewald had
inflicted the first wounds, wrapped his
arm in towels, lay down on the bed and
lost, consciousness. He then later
awakened and made the other slashes.
The doctor said that before cuttinc
himsc]f the first time Rewald had
taken about a dozen Tylenol and
codeine tablets, commonly prescribed
for pain relief but not in such quantity,
J
Although Rewald was kept under
close ':.surveillance in the hospital-
coma. o n practice in suicide
attempts-the staff psychiatrists who
attended him reported that from the
beginning Rewald denied any further
suicidal intent. In fact, the patient's
spirits as well as health appeared to
improve rapidly. Though he knew it
would mean his immediate arrest,
Rewald chose to be released from the
hospitcil rather than being admitted to
its psyc'hiatrie ward, an alternative that
was offe?,red him.
On AuFust.4, the same day that a
federal i,ourt declared Bishop,
Baldwin L,ankrupt, the Honolulu
police closed rheir file on the event at
the Sheraton Hotel and declared
Rewald an attempted suicide.
The only evidence besides that
found in the hovel room that was
described in their report was the
registration card for the room. The
name shown on the card was Ron Imo.
of a Milwaukee address, The room had
been paid for in advance for one night
at the time of check-in on July 29. And
the payment had been it i cash. which
required no identification. A police
handwriting expert wat asked to
compare the writing on the
registration card with that on the two
notes found in Rewald's roam. but he
said that the writing on the card was
insufficient for a compariscsn. It was
assumed that the "Ron Inzp" who
registered was really Ron Rewald
using his wife's maiden name and the
home address of her parents.
Big questions. What happened in
the Waikiki hotel room in the us much
as 24 hours that Rewald occupied it
holds the riddle of his "attempted
suicide" and perhaps much more.
Did Rewald act alone? The evidence
indicates that he did. If he had been the
intended victim of a professional
killer, even one wishing to make his
work appear like a suicide, the assassin
or assassins would surely have been
more thorough. And there was no sign
of a struggle in the room.
Did Rewald intend to kill himself?
For weeks after his discovery he claim-
ed that he did. He said that he was
"crushed" by the seeming personal
attack of the television report
revealing the state investigation of his
company. But such a drastic reaction
to what Rewald also described as a
routine probe seems out of character
for a man who has since then
demonstrated superb self-control.
Unless he was reacting to much more.
Between September 1982, when
Rewald claims he went into semi-
retirement at Bishop, Baldwin, and
last July, there were occasions when
Rewald expressed doubts about his
support from the CIA. He worried
about the agency's slowness to block
the IRS's investigation of his personal
taxes. And he complained that too
many covert assignments were being
given to his company, increasing the
risk of exposure. One of Rewald's
"suicide" notes spoke of being "left
alone and unprotected."
Contnuad
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Late in 19S2, Rewald began to
secretly record conversations between
himself and those whom he felt would
help prove his CIA invovlvement. He
also started collecting a private file of
similarly significant correspondence.
This material now forms a key part of
his defense. Some say that the
material. though authentic enough,
resulted from circumstances that were
staged by Rewald to prove his point
and is therefore misleading.
Their implication is that Rewald
played a far less significant part in the
CIA's use of Bishop, Baldwin than he
now maintains. In short, they argue
that Rewald used the CIA more than it
used him and his company. A
mainstay of the lawsuits by Rewald
and his investors against the CIA is
that the agency at least knew of
Bishop, Baldwin's purloined
investment accounts and is therefore
responsible for them. Some of these
investors are saying that they knew
about hte agency, so it must have
known about them and what was
happening to their money. On proof of
that may hang the investors' case.
Master manipulator. One of Bishop,
Baldwin's unsuspecting consultants,
who now says that he doesn't know
what to make of Rewald, describes his
ex-boss as the most disarming person
he ever met. "Ron was a master of
manipulation," he says. "He had an
uncanny sense of people's feeling, of
saying the right thing at the right
time."
Was Bishop, Baldwin a CIA front
that got out of control? Was it the
agency, and not some more sinister
force, that brought it down? And what
of Rewald's "attempted suicuide"?
Was that the agency's idea. or his? Was
it real, or was it a perilously convincing
ruse? Was Rewald's life-saving
discovery accidental or planned?
Since that late July afternoon,
Rewald has complained bitterly about
the plight of his family, most of whom
now live in Milwaukee. He says that
their abandonment by the CIA is a
major reason for his lawsuit against
the agency. Ile says that he counted on,
the agency to take care of his family
should anything happen to him. He
had S3 million in life insurance, but
that has lapsed and it's doubtful that it
would have gone to his family anyway
had he died on July 30 because of
Bishop, Baldwin's ensuing
bankruptcy.
Rewald also professes deep concern
about the welfare of Bishop, Baldwin's
former- investors -and employees.
blames the CIA for letting them down
too. Who did the letting down is, of
course, what the whole sordid tale or
Bishop, Baldwin is about.
One of the few ex-employees who
did avoid being bruised in Bishop,
Baldwin's fall was a man from Seattle
who had just been hired because of
some very special qualifications. Or,
his resume, which not many saw. he
described himself as a professional
"intelligence officer" who among
many former jobs had once been the
"senior CIA representative in
Moscow." He listed among his honors
the Career Intelligence Medal, which
had been awarded him by the Director
of the Central Intelligence in May 1981
for "exceptional achievement." HI
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