RONALD REWALD AND THE CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605490135-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: June 30, 2011
• Sequence Number: 135
• Publication Date: July 28, 1985
• Content Type: OPEN SOURCE

Approved For Release 2011/06/30: CIA-RDP90-00552R000605490135-0
?7!r,.E 4rr'-rk1J MILWAUKEE JOURNAL (WI)
='1 PACE 28 July 1985
RonAld Rewald
and the CIA
Coming trial may shed light on shadowy ties
bet\Veen the Athletic Inc., an old-fine supplier of son, the former Wisconsin governor
2 sports equipment to schools and and senator.
teams. Nolan CAM ha didn't 4nnu, ahnnt
_.T 4V%0"MP%FV
of The Journal staff
The criminal trial of Milwaukee-born Ronald
Rewald Is scheduled to open in Honolulu Federal
Court on Aug. 5, two years to the week after he
was found in a Hawaiian hotel room, wrists
slashed.
The night before, he had watched a Honolulu
TV station expose some of the seamier side of his
lucrative consulting firm and his millionaire life
style. He feared his secret work for the US Central
Intelligence Agency would be exposed.
Rewald Is one of the most extravagant alleged
swindlers ever to come out of Milwaukee.
He certainly was one of the city's most unusual
home-grown secret agents.
In the trial, the government Is expected to
argue, In a presentation one prosecutor said would
take two to four months,-that Rewald defrauded
nearly 400 Investors of about $22 million and
spent millions of that on his lavish polo-club life-
style.
The defense Is expected to argue that he operat-
ed under orders from, and with the knowledge
and consent of, the CIA.
What's at stake in his trial on 98 counts of
fraud, perjury and other charges Is more than one
man's criminal guilt or innocence. At issue also is
how much the public will be allowed to learn
about the involvement of the CIA In International
finance.
There is no doubt that Rewald was involved
with the CIA, and that the CIA was Involved in
some of his international dealings.
The agency has confirmed, for example, that it
had him sign one or more of Its pledges to secrecy.
It acknowledged asking him In 1978 to set up two
dummy corporations which It used as covers for
covert operations in the Far East.
The CIA has said that the checks to Rewald
made out' by CIA Honolulu station chief John
Kindschl, another Wisconsin native, were to pay
the phone bills for the dummy companies, and that'
an undisclosed number of CIA agents operated out
of Rewald's worldwide offices. Kindschl himself
joined Rewald's firm as his top aide.
For two years, the agency has successfully
fought in the courts to keep Rewald's CIA claims
out of public testimony and to keep any of the
hundreds of CIA documents he has asked for out
of open court. His trial may be the last opportuni-
ty for public disclosure of the agency's involve-
ment in his financial dealings. ,-
Ronald Rewald, it appears, was a
man operating on the boundaries: the
boundary between legitimate busi-
ness activity and criminal fraud,
between private business dealing and
secret intelligence work. He and the
CIA were useful to each other.
Rewald had always been an ambi-
tious businessman. In Milwaukee, he
had risen from a sporting-goods
salesman to the owner of College
He had the idea of franchising his
store around the state, long before
the concept of franchised sporting-
goods stores took hold in, shopping
malls. Unfortunately, he sold a fran-
chise to two men In Wausau, Wis.,
without registering it with the state,
and pled guilty in 1976 to a misde-
meanor. His company failed, and.the
next year, after both business and
personal bankruptcies, he left Mil-
waukee for, Honolulu.
Within a year he had established
an investment consulting company.
Five years later, he had built the
Bishop, Baldwin, Rewald, Dillingham
& Wong firm into a million-dollar-a-
month operation. But several state
and federal agencies were investigat
ing him, and when this was reported
on Honolulu TV, Rewald attempted
suicide.
Among the business deals with
Wisconsin connections that he was
working on at-the time of his crash
were an attempt to open a version of
Milwaukeean David Baldwin's Safe
House bar in Honolulu; a $29 million
real-estate development project with
Milwaukee's Northwestern Mutual
Life Insurance Co.; a marketing ar-
rangement with Milwaukee's Rose
Co., which makes oil-production
equipment; and a plan to open a
Hawaiian version of Tommy Bart-
lett's water show.
Rose Co. owner R.J. Rothen
learned that something was going
wrong when he got a phone call
shortly after the suicide attempt. The
call was from Singh Pasrich, Re-
wald's Indian associate.
Remembers Rothen: "I got a call
from Pasrich In New Delhi saying,
'Don't worry about what's happening
in Hawaii, we still have a deal.' "
Rothen, who had been negotiating
for Rewald's firm to represent his in
India, Indonesia and other places
with oil-field development potential,
took his business elsewhere.
Some of Rewald's other business
deals are murkier.
The Fund of India, for example,
supposedly a stock fund investing in
Indian companies, was described by
Rewald as designed to allow wealthy
Indians to smuggle money out of the
country.
On the fund's board of directors
were Rewald, Baldwin, Pasrich, Pas-
rich's daughter, then a Marquette
University student, and Gaylord Nel-
the fund, and first learned about it,
and Rewald's problems, in a phone
call from Baldwin in 1983.
"Mr. Baldwin is the first one that
notified me, saying that my name
had been used," recalled Nelson, who
now heads the Wilderness Society in
Washington, D.C. "Baldwin called
me saying that Pasrich was con-
cerned that I might be embarrassed."
Baldwin has denied Rewald's
claim that the fund was a money-
exporting scheme, as well as Re-
wald's claim that Baldwin, Rewald
and Pasrich were negotiating a secret
sale of military equipment to some
Indians. Baldwin said the aircraft
under discussion were for oil-field
1.
The Indian arms deal was dis-
cussed in a 1982 conversation be-
tween Rewald and Jack Rardin, then
CIA Honolulu station chief. Rewald
taped the conversation, having begun
to worry about an Internal Revenue
Service investigation and the possi-
bility that the CIA would abandon
him.
Other International dealings were
under CIA direction, Rewald claims.
Among the documents retrieved for
him from his office and home before
government agents swept through to
remove CIA-connected items are lists
of questions about the economic and
political situation in Argentina, Indo-
nesia and Thailand, lists he claims to
have been given by the agency.
Rewald traveled to Argentina
while that country was at war with
Britain, pretending to be interested in
buying a bank. All the while, he says,
he was obtaining information on the
effect of the crisis on the Argentine
banking system.
As The Journal earlier reported, a
Rewald associate, Robert Jinks, told
the Securities and Exchange Com-
mission that while in Argentina,
Rewald used CIA intelligence to en-
gage in real-estate speculation, buy-
ing properties being dumped by
wealthy Argentines who feared a
British invasion.
At the time of his collapse, Rewald
was preparing to hire onto his staff
one John Sager, whose resume de-
scribes him as a CIA specialist on
Soviet and Middle East affairs, in-
cluding a tour as "senior CIA repre-
sentative In Moscow."
Approved For Release 2011/06/30: CIA-RDP90-00552R000605490135-0
 Approved For Release 2011/06/30: CIA-RDP90-00552R000605490135-0
The CIA has saia that it learned
early in 1983 that some of its agents
who were working with Rewald
were in a conflict of interest, mixing
personal investments with agency
business. The agency investigated
only after Rewald brought his IRS
problems to the CIA's attention with
repeated pleas for them to call off the
IRS to avoid blowing his cover.
One CIA agent working for Re-
wald since 1979, going by the name
Richard P. Cavannaugh, wrote Re-
wald in June 1983, after receiving
orders from CIA headquarters to
clean up his Bishop, Baldwin activi.
ties. "Thanks for getting everything
closed out for me," Cavannaugh
wrote. "Unfortunate, from my view,
but it at least clears the air with my
home office who are now seemingly
satisfied that there is no 'apparent'
conflict of interest. '
"They were not arguing that there
was any 'real' conflict of interest, but
[agents] must be Simon pure," he
wrote. "I also assume your 'tax prob-
lem' has also been taken care of,"
Cavannaugh added.
In its 1985 report, the US House of
Representatives select committee on
intelligence wrote: "The committee
as a practice does not publicly com-
ment on cases currently being tried,
but the Rewald case In Hawaii re-
quires some mention.
"The committee can find no evi-
dence that the CIA Instructed Mr.
Rewald to engage in the financial
activity that has brought him before
the bar of justice. The committee is
concerned, however, that one or
more CIA employes may have acted
in an unprofessional way, endanger.
ing their own and others' cover, in
their eagerness to make what they
thought would be enormous profits
by investing money with Mr. Re-
wald."
Was the CIA guilty only of allow-
ing some of its employes to become
too greedy? Or was the agency itself
too greedy in the use it made of
Rewald?
The real fight at the upcoming
trial will be between the govern-
ment's attempt to restrict testimony
and evidence to non-agency matters,
and the defense's desire to bring out
as much as it can about the connec.
tion between Ronald Rewald and the
CIA.
2
Per
1 a
flor
~,? -Y men
Pr+
"Me. s'porting
rru 1'y C -
P ^ Ctisn
BMW, BWd**%
guilty in ' Wausau, Wis., to misda-
masnrs.r
..Abitr d wtitA' 'pie tt fir .ar.,
' t Cf -for $071 MONO",'
Ctria#ge W 1 10lerat C0urts tn' con-
neoion with alleged $22 milkn I 1>
coun!ds ttter dro ped on teeny
in+trttents~ _ `
ear
,
ed.-e? y
up to $150,000 by a fed-
l
icurittes fraud (38 counts) ;
^. Mail fraud (37 counts);
^ Perjury (4 counts) ;
^ Income tax evasion (4 counts) ;
^ Interstate transport of stolen funds (3
counts) ;
^ False statements to federal agencies (4
counts) ;
0 Misrepresentation concerning Federal
Deposit Insurance Corp. insurance (6 counts) ;
^ Improper behavior as investment adviser
(2 counts).
Indictment says only $623,000 of $22 million
went into business deals. Remainder allegedly
went:
It To maintain Rewald's "exceptionally lav-
ish lifestyle;"
^ To "maintain a false facade of legitimate
investment activity;"
^ To pay back investors who asked for
money, creating "the illusion that investments
had been made which produced earnings."
Indictment says Rewald spent $5.58 million
of investors' money on women, polo, horses,
houses, ranches, cars, and other personal ex-
penses.
Also says he lied in sworn-, statements when
claiming firm created and operated under in-
structions frorn'CIA.
Is' scheduled for
tie charmed- $22 mil-
He` fled to them, indict-
his was old-lIne invest-
ft
king safe but lucrative short-term
L-A
Approved For Release 2011/06/30: CIA-RDP90-00552R000605490135-0
 Approved For Release 2011/06/30: CIA-RDP90-00552R000605490135-0
Rewall's clef s ~:x ., , ,
"I am, and fdr the past five years have been,
a covert agent for the Central Intelligence
Agency"
This Rewald claim, in sworn 1983 affidavit for
US Bankruptcy Curt, is basis for his defense.
CIA confirms using firm and some subsidi-
aries as cover for secret agents; confirms Re-
wald signed employe secrecy pledge; denies
responsibility for firm's activities.
Rewald says CIA suggested setting up Bish-
op. Baldwin in 1978; suggested using names of
old-line Hawaiian families in company name;
suggested false story about its history and size.
Rewald says CIA in 1980 "began using the
Bishop, Baldwin investment account as a vehi-
cle in which to place funds ... to be used in
foreign operations overseas ... to shelter mon-
ies of highly placed foreign diplomats and busi-
nessmen."
By 1983, Rewald says, CIA work included
economic intelligence in Chile, Argentina; arms
deals in India. Taiwan; prisoner-of-war search in
Cambodia; illegal currency transfers in Greece.
CIA funded polo-club lifestyle, Rewald said,
to help cultivate-relationships with Asian, Arab
billionaires; also provided forged Marquette di-
plomas to give him academic respectability
(see accompanying story). To help run intelli-
gence activities, he says, Honolulu CIA chief -
Wisconsin native John Kindschi - 'left' agency
to join firm.
Access to international investments now
blocked, he says;.by danger to influential pea
pie from exposure of QWies.
CIA affiliation begIR-Tnid-1960s, he. says;
when he was hired to spy on protest activities
at University of Wisconsin - Madison.
Can Rewald prove charges? Government has
tried to keep CIA documents from him. Prose-
cutors tried to drop perjury charges - relating
to CIA claims in affidavit - to avoid introduc-
tion of CIA material as evidence.
Unknown how much CIA information will be
allowed at trial.
3
Approved For Release 2011/06/30: CIA-RDP90-00552R000605490135-0