CIA CASTS SHADOWS IN FRAUD CASE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100700193-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: July 26, 2010
• Sequence Number: 193
• Publication Date: December 30, 1984
• Content Type: OPEN SOURCE

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MILWAUKEE JOURNAL (WISC.)
30 December 1984
CIA casts
shadows in
,fraud case
By Jack Norman
of The Journal Staff
Richard and Susan Loppnow,
of Germantown, invested their
children's college trust fund,
$53,000, in the company. It's
gone.
They invested Susan's inherit-
ance, $28,000. It, too, is gone. .
Most of the company's assets
have vanished. Its 400 investors
- about 20 from Wisconsin -
may have lost more than $20 mil-
lion. The chairman of the board, a
native of Milwaukee's South Side,
is facing trial in- March on a 58-
page, 100-count federal indict-
ment for mail fraud, securities
fraud, tax evasion and perjury.
And yet, Richard Loppnow, 43,
is still spending money to defend
Ronald Rewald, 42, the ex-Mil-
waukeean the government says
fleeced Loppnow and his wife.
Why?
Because the company they in-
vested in was no.ordinary busi-
ness. The Loppnows believed -
and still do - that they were in-
vesting in a company organized
and directed by the US Central
Intelligence Agency.
And the astonishing part of the
story is that there is evidence to
support much of what they be-
lieve.
The firm was Bishop, Baldwin,
Rewald, Dillingham & Wong, a
Honolulu investment brokerage
company run by Rewald. Rewald
traveled in some of Honolulu's
highest social and business circles
-until a TV newscast on July 29,
1983, reported irregularities, at.
the firm. -
He was found the next morning
in a bloody bathtub at the Shera-
ton-Waikiki Hotel, his wrists slit
Ronald Rewald
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in what has been reported as a suicide attempt.
Few who knew Ronald Rewald in the 35 years he lived in and 'around
Milwaukee could have guessed that he would become the central figure in an
international drama of intrigue and finance.
His parents owned a bakery at S. 19th and W. Mitchell Sts. A graduate of
South Division High School, he was interfraternity -council president at Mil-
waukee Institute of Technology,(forerunnner of Milwaukee Area Technical
College). He had tryouts as a running back with several National Football'
League teams, was a gregarious but soft-spoken family man, an entrepre-
neur.
Now free on bail, he lives in Los Angeles 'with his wife and five children,
working for a movie production company and preparing for h;s court ap-
pearances.
The main lines of his defense were set -out in a once-secret but quickly
publicized affidavit written in 'the weeks after the firm's collapse - that be
is this defense plausible?
Consider these facts:
The CIA has confirmed that it paid at least $2,700 to use the firm's tele-
phones. Telex machines and worldwide mailing addresses.
CIA attorneys convinced judges to seal several hundred company records
for reasons of national security.
His attorneys have been denied access to many documents.
The chief of the Honolulu CIA station, Jack Kindschl, also a Wisconsin
native, left his job to go on Rewald's payroll.
Kindschi's successor, Jack Rardin, let Rewald believe that the CIA got the
Internal Revenue Service to call off a 1982 investigation of Bishop, Baldwin,
according to the transcript of a taped conversation between the two.
The government's main prosecutor, John Peyton, is a former CIA lawyer.
And Rewald has been silenced by two federal gag orders, the most recent a
15-page one issued by a federal judge Dec. 11:
Within days of his alleged suicide attempt; Rewald was arrested on theft .'
charges. His brother-in-law, Richard Loppnow - Susan is Rewald's sister
- was successful in getting Rewald's bail reduced from $10 million to-
$140,000, then bailed him out.
Loppnow says he has invested far more than the missing $81,000: for bail, -
122,000 in cash and the deed to Susan's lake cottage in Hubertus; for legal
=fees, $17,000; for long-distance calls, $14,000.
The Loppnow phone is disconnected; they can't pay-the $3,900 still owed. v~
-His trucking agency has been sold. Their Germantown house on three wood-
ed acres is in foreclosure. They are about to enter personal bankruptcy.
All in support of a man that Money Magazine called a small-time cheat.
Why?
Answered Loppnow: "I've spent the last year and a half using every re-
source I have, and of relatives, to see justice done and the truth out - that
Bishop, Baldwin is a CIA proprietary."
What was Rewald? -
Is Ronald Rewald CIA? Con man? Both?
Con man, answered David J. Baldwin, Milwaukee lawyer and owner of
the-Safe House, a downtown nightclub with an espionage motif. -
Baldwin said he joined the Bishop, Baldwin payroll - he is not the Bald-
win in the corporate name of the firm - after Rewald invited him in 1982 to
go to Honolulu to open a Hawaiian Safe House, a project still not completed.
He soon turned Rewald on to another project involving a businessman from ?
India that Baldwin had known at the University of Wisconsin - Madison in
the 1950s.
The Indian connection illustrates the conflicting interpretations of Re-
wald's affairs. According to Rewald's affidavit, the Indian effort had. two
goals: to arrange secret arms sales to India, and to create a financial vehicle
so wealthy Indian Sikhs could secretly get money out of the country.
Baldwin denies that. Arms deals? India needed helicopters and C-130
transports for oil-field development, Baldwin said. Money laundering? Indi-
ans living abroad needed a way to invest in?India but still take thair profits
out in dollars, not rupees, Baldwin said.
a
c
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Ready with a defense
"Rewald was a very kind person," Baldwin said, "self-effacing, humble,
with beautiful blue eyes. In conversation he'd make you feel like you were
the important person."
But now, Baldwin said, Rewald is slinging as much mud as he can to mini-
mize his own guilt. All along, Rewald was setting people up in order to use
the CIA defense in case he ever needed it, Baldwin charged.
For example, there is the matter of the CIA secrecy pledge that Baldwin
signed Nov. 22, 1982. Baldwin said Rewald asked him to sign it just before a
trip to India.
Now he thinks it was a ploy, part of Rewald's scam, a way of impressing
him with a hush-hush atmosphere, laying the groundwork for a CIA defense.
"He had all the trappings," Baldwin remembered: a villa, a dozen luxury
automobiles, a polo club, bodyguards, the friendship of important people, in-
cluding the governor and lieutenant governor of Hawaii, US generals and
wealthy US and Asian businessmen.
"I think he had himself convinced," Baldwin said.
Did CIA get conned?
What about the CIA admissions?
"I think they got conned along with the rest of us," he answered.
Baldwin said he came out ahead financially in .tis dealings with Rewald,
losing about $10,000 in investments but picking up salary and consultant's
fees.
One item not in dispute is that Rewald at times pretended to be something
he wasn't. The Marquette University diploma on his office wall, for example,
was a phony.
In 1976 he pleaded guilty in Wausau to a criminal misdemeanor charge for
selling a franchise in a sporting goods store without registering the offering
with the state.
After his guilty plea, after the collapse of his business, Milwaukee's Col-
lege Athletic, and after a personal bankruptcy, Rewald and his family left
Milwaukee in 1977 for Honolulu and a new sporting goods venture.
But he paid little attention to the sporting goods company and soon orga-
nized Bishop, Baldwin. How did he so quickly leverage himself into social
prominence in Honolulu?
The answer given in Rewald's affidavit is that he was bankrolled by the
CIA.
How did he get started with the CIA in Hawaii?
Rewald maintains that he first worked for the CIA in 1963, when he
earned $9,000 for spying on anti-war activists in Madison. Relatives and.
longtime friends back him up, saying that as early as 1975 he told them he
once worked for the CIA.
His supposed CIA mission in Hawaii was threefold: to set up branch of-
fices around the world for CIA covers; to make business deals with certain
very rich foreigners who wanted a secret dollar stash for-their wealth; and
to cultivate friendships with influential foreigners who could later be used
by the CIA.
His ostentatious lifestyle, Rewald maintained, was supported? so he could
mingle with these wealthy individuals.
The indictment alleges that Rewald financed his luxuries from investors'
money.
Where did the money'go?
The indictment alleges that Bishop, Baldwin was in effect a Ponzi scheme,
a swindle in which money from later investors is.used to pay off earlier
investors, with enough left over for profit for the swindler.
A mistake, he said ? . _
It unquestionably looks like a Ponzi scheme.
What Rewald maintains, however, according to sources close to him, is
that it wasn't meant to turn out that way. `
The loss for Investors was a mistake, Rewald believes, brought about be-
cause once. the firm's CIA cover was blown, it became impossible to get
money out of the firm's investments without endangering influential foreign-
ers involved in those deals.
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V
-Journal Photo by Tom Lynn I
Richard_Loppnow lost $81,000 in Rewald's company
Even though much remains unknown, there.are some unsettling conclu-
sions that can be drawn about CIA activities.
If Rewald was a CIA front, then the agency has responsibility for the lost
investments..
If Rewald was a con -man on his own, then the agency knew about it and
allowed it to continue.
The CIA must have known about it because it is inconceivable that the na-
tion's leading intelligence bureau could. have had the close. contact that it did.
with Re' Wald without knowing what be was up to.,.
:,The CIA did not respond to The Journal's request for comment
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