CIA SHUTS DOWN HONOLULU OFFICE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605490106-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: June 30, 2011
• Sequence Number: 106
• Publication Date: July 17, 1985
• Content Type: OPEN SOURCE

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CIA shuts own HonoluffiThffke
51t Walter Wright Federal a.
s..u win. - As early ly as as 1954, the CIA
was active in Honolulu with a
The Central Intelligence AS- 16-month program opening mall
envy has sIWt doYwn its How- from Luna and other countries.
luhi Federal Building office,
saying it was not receiving
enough good information
through it to justify the cost.
Cathy Pherson, spokeswatwan
for the CIA, said the decision to
gore the office had no eorinsc-
um with the case of Ronald
Relrald. a Honolulu business-
man who claims his relstire -
ship with the agency Was the
reason for the coilspes of We
company two Teals
Nip-
But others famiiisr with both
the Rewaid case and CIA
operations suggest that the
publicity surrounding Rewald
pc+cbably dried up the flow of
Lewin to information to the
Hmolulu office and stimulated
naoy contacts by cranks and
Rewald. who faces 9S counts
of frawl, perjury. tax evasion
and securities violations in a
case set for trial Aug- 5, let the
CIA use his firm as a "commer-
`wt cover" - a mailing address
.ud telephone number -- for
,one CIA personnel He claims
'tie CIA created and operated
' he firm and caused its col-
;apse. a charge the CIA denies.
Persons interested in contact-
mng the CIA from Honolulu are
twtng referred to the agency's
.an Francisco or Los Angeles
dfic and, where appnopn*le.
a personnel office in South
linr.tF (`aitf
Thu ~ecist&r. .o (-lose the
Eimolula -'floe was "a resource
management problem, or solu-
tion." Pherson said. "We have
offices in (some) United States
cities for the purpose of talking
to U.S. citimna who might have
information of intelligence
value to offer," the said.
Such offices are "overt,"
public to the extent that they
have a listed telephone number.
Addresses are not nor ly
p
The Hono(i u office had been
located since at least 1960 in a
penthouse of the Dllllngham
Transportation Building m
'Whop Street. but an Jane I.
77, moved into the new,
ARTICLE APP "rD
Whether a city has an office
"depends on what the volume"
of information available there
is. Pherson said. Part cities and
financial centers often have
such CIA offices, which some-
times are also used to coordi-
nate rec'uiting efforts.
"It's quite a chore when
you're talking about making
people available for U.S. citi-
zens, who want to volunteer
information." Pherson said.
"Our main focus is to get infor-
mation overseas."
Another ofeial, who asked
not to be identified, said anal-
ysis of traffic at the Honolulu
office apparently showed it was
not worth the time and money
to maintain it
"For example, the agency is
interested in information about
foreign financial activity" and
there's better idormstion about
that from Mainland financial
centers than there is in Hozio-
lulu," the official said.
But one former head of the
office, John Kindschi. said in a
brief interview yesterday that
.'you don't have to throw darts
at a dart board to figure out
that there was an awful lot out
there" of interest to the CIA.
AL the same tape. Kindachd
said, be was not really sur-
prised by a decision to close the
ofte, coming in the wake of
the Rewald case.
Another official who request-
ed anonymity said that even
though Honolulu has not be-
come the financial hub of the
Pac flc some have envisioned. it
still offers intelligence oppor-
tunities because of the number
of persons who travel through
the state, the number of recent
immigrants here and the aun0-
ber of persons here with rela-
tives and personal and business
contacts in foreign countnes.
It was through the overt CIA
office here that Rewald initiat-
ed his contact with the CIA in
Hawaii shortly after his arrival
in 1977.
He says he earlier worked for
the CIA in Wisconsin in the
1960s. spying on college stu-
dents in the CIA's apparent ef-
fort to determine if student pa'
litical movements had foreign
support.
In Hawaii. Rewald worked
initially with Eugene Welch.
then with Welch's successor,
Kindsebi, and finally with a
third "station chief," Jack Rar-
din.
FAwald also knew Rick Wat-
kins. Welch's predecessor. and
Watkins wifer both CIA em-
ployees. W atkills was preceded
by a Michael Todorovich as
head of the office.
Kindschi and Rardin both
wrote checks to pay telephone
bills for at least one cover
company operated through Re-
wald's firm. and both Kindschi
and Rodin eventually depos-
ited personal funds in invest-
ment accounts at Rewald's
firm.
Kindachi pined Rewald's firm
when he retired; Rardin was
shipped off to Florida after the
Rewald scandal broke; his
successor, never publicly identi-
fied, has since left-
In addition, Rewaid dealt
with other CIA personnel. in-
cluding a Col.. Richardson, who
also operated from San Francis-
co, Los Angeles and Washing-
.on, D.C., addresses.
Richardson and a number of
other CIA employes around t^e
world also made personal n-
vestments with Rewald's
company, Bishop Baldwin Re-
waid Dillingham & Wong.
The CIA maintains liaison,
analysis and communications
personnel at or near most ma;cr
military commands and is be-
lieved to have such personnel
in Hawaii, although not associ-
ated with the overt CIA office.
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Z
As the public relations man
cedicted. the Rewald story was
1111ed with "fascinating grist."
BECAUSE REWALD survived.
there were hundreds of ques-
tions to be answered. Who was
this mysterious man and just
what essctly did his, company
do? More importantly, where did
the money got
Law en orcement agencies
moved quickly against Rewald
and the courts moved quickly
against what was left of
BThe state charged Rewald with
two counts of theft and locked
him in prison on 810 million
bail. The federal bankruptcy
court froze all of his personal
assets and declared his company
bankrupt.
Within days, bankruptcy trust.
ee Thomas Hayes broke the bad
news to investors and the court:
At least 817 million had been
Invested in the company and it
all was spent. It went, Hayes
said. to pay for Rewald's expen?
sive lifestyle and to create a
healthy corporate appearance.
In reality, Hayes said, the
company was a sham. There
were no assets and there had
been no substantial investments.
U.S. Judge Martin Pence
labeled the company a Ponzi
scheme, In which new money
was brought in to pay fictitious
interest to earlier investors.
All the money investors en-
trusted to Rewald went into a
"pot bowl" account in Hawaii
National Bank. From that bowl
Rewald frequently dipped. not
with two fingers, but with both
hands.
REWALD. LOCKED away at
the Oahu Community Correction-
al Center, was unabe to defend
himself In public. Still sufferin
from the depression that had
driven him to attempt to take
his life. Rewald brooded. But as
his health returned, his confi-
dence grew and Rewald plotted
his defense.
In a conversation with his
attorney, Robert Smith. Rewald
described a side of himself and
his company that few knew. He
was not the mild.mannered buss.
nesatnan who had stolen from
widows. He was "Winterdog." a
CIA agent with a long history of
association with the agency.
"Winterdog" was a code name
given to him by the agency long
ago. Rewald has said.
He spoke of secret arms deals
and clandestine meetings and
stealing secret plans from for.
elgn countries.
The contents of the confiden?
tial attorney-client conversation
fell into the hands of John
Ke11y, a self?proclalmed CIA epe?,
clalist. freelance news researcher
and editor of a fittie?known pub-!
Iication called "Counterspy;
si azine."
Kelly also obtained a number
of other. documents that had
been in Rewald's files and was
instrumental in disseminating
them to other news or aniza-
tions. He worked for the British
Broadcasting Corp. on a docu-
mentary which described Re-
weld is a "spy left out in the
cold."
He also provided information
to a Wall Street Journal reporter
and showed his documents tc
other national news organiu?
tions., -.
SOON, THE public was saturat-
ed with the CIA side of the Re.
weld saga. -But disclosures about
the CIA.raised many questions-
Much br. thetlnformatlon about
Rewald's 'connection with' the
agency came from his own tiles
and was obviously self 'serving.
One letter displayed by some
news organizations to show CIA
involvement was addressed to
CIA head William Casey and
stamped confidential and heavily
"blacked out." What the public
was not told is that the letter
actually was written by Rewald's
own attorney after Rewald had
been charged with fraud.
Soon the attention in the case
shifted from possible Investment
fraud to whether the CIA was
heavily involved In BBRD&W as
Rewald and Kelly claimed.
A Sporting Chance
Rewald was born in Mllwau? suiting work: Rewald would do
kee in 1942. and grew up in management and investment
heartland America. lie was consulting and Wong would do
somewhat athletic, having played real estate consulting,
football in high school and also. ACCORDING to court records,
he says, in a NIL Although Wont was reluctant, saying that
he bad signed contracts with he didn't know snjjhiqg about
two or three NFL tams, he was consulting. But Rew d con.
not listed on any players roster. vinced Vv ong to become his part.
He married his wife, Nancy, net.
when he was 18 and eventually p er coming to Hawaii, Re-
%b live children. In thew-ald also Introduced himself to
lpgL, be attended a tworyeu Eugene Welch, the CIA bureau
college and became one of a chief.
number of students who, on be- The CIA office was set up to
ins wie the CIA, attempstedvho snake contact with people like
g p Rewald: people who felt.-they
were active in protests. might have inforttution useful
In an affidavit, Rewald claims to the agency. Anyone could
that `bbee was paid 8190 a week by walk off the street and "file m
ports" with the CIA office about
After his first child was born, their foreign travels.
Rewald decided to end his Stu- Whether the CIA actually used
dent CIA Job and get "regular them was another matter.
work close to home." according
to the affidavit.
It was natural for someone at.
tracted to athletics to get into
the 4. ~Colege gAthle lc wInc. c. By
going well and Rawald had bin
in a WLiCOnsia newspaper arti.
cle, he described plans to sell
sporting good franchises
throughout the countryy-, includ-
ing In Hawaii, and for building a
sports complex.
BUT SELLING franchises
proved to be tricky. In March
1974 be was charged with Illegal-
ly selling a franchise and even-
tually pleaded no contest to a
lessor charge of petty thoft. His
first exper,erce at high-finance
failed and he fired forbankrupt?
cy In the summer of 14"18.
After his sporting goods stores
failed, he forme a company
called CMI, a financial consult.
inq firm.
Rewald, who registered with
the Security and Exchange Corn-
mission in 1978 as an investment
advisor, used the company to
solicit investments from friends,
family members and 'others.
Rewald moved CNII to Hawaii
a year later.
On a tennis court be met a'
real estate man, Sunlln "Sunny"
Wong. Wong even
tualt helped
Rewald buy his first house in
Hawaii. Sometime later, Rewald
approached Wong about forming
a business together. He already.
had moved together.
real estate
business into the CMI offices In
the Amfac Building at no cost to
Wong.
Rewald said the purpose of
the new company would be con.
a"
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In RAwald. the CIA here found
a patriot with a track record of
cooperation. It is unknown it
background checks on Rowald
were made other than to con.
firm his previous CIA Involve-
ment.
But if Rewald was successful
in business here, the agency
might have a use for him.
f(ewsld claims that to 1978
Welch asked him to set up two
cover operations for the CIA
which would be backdrona 9^-
People calling H&H - Enter.
prises and Canadian Far East
?raging. which existed on paper
only in the Cl1I offices, would
be told that two agents did In.
deed work for one company or
the other. The two companies
would be a place where mail
could be sent and information
forwarded to the two agents.
IN FALL 1670, a new company
emerged In Havraii as a world.
wide financial institution with
roots allegedly going back to the
state's territorial days. Rewald
claims in his affidavit that
Welch suggested the firm be set
up and that they use names
"synonymous with Hawaii."
"Sunny and I considered some
names at the direction of the
station chief such as Castle,
Cooke, Cassiday ... and finally
we came up with a combination
called Bishop. Baldwin, Rewald,
Dillingham b Wong."
The Rise of BBRD&W
Rewald's company was never
intended to operate as a Hawaii
company, Revyald says in his
affidavit.
"We would have been stupid
to develop a name like Bishop,
Baldwin, Rewald, Dillingham h
Wong if our purpose was to do
business in Hawaii." he says.
In fact, BBRD&W really didn't
do much business in HawalL But
bankruptcy administrator Hayes
contends it was because Rsw aid
was too busy spending investors'
money to actually do business.
According to court records,
shortly after BBRD&W was
incorporated, and unknown to
Yong, Rawald began soliciting
money from Investors, mostly
from people he knew in Wiscon-
sin.
Rewald had several s rting
goods stores In Hawaii but all
were losing money. u they bad
in Wisco0ain. To keep the stores
going. Rawald sold stock and at-
tracted investors. according to
.
court records. vii. -
but the financial problems star. Wilson's "Intelligence back-
rounding the stores didn't keep ground" actually involved work-
3
Rewald from making oig plans. fug as a secretary in NSA begin.
In summer 1076, be convinced ning when she %as 18.
Wong that their company should ter quitting that job, she
be moved to more expensive of. bounced around. holding a nu:n?
fires in Grosvenor Center. ber of odd Jobs. She distributed
Wong had been working Al- Amway products and Tupper.
most exclusively u.the principal ware, she was a hotel secretary,
broker in Sunny Wong Realty a "Kelly girl" and finally a secre?
and didn't think he could afford tary for a realty company.
the move. But Aewald, according
to records, assured Wong that The Fall
he would not have to pay any What actually was oing on in.
additional overhead. g
Wong continued his real estate side of BIIftD&sv from 1980 to
business and had little to do 1983'
with the running of BBRDVW According to Rowald, the
although he was lifted as preel? company was a beehive of secret
dent. activity. Welch had moved on
and been replaced at the CIA
MEA.ti"WHILE. Rewald contin? office by Jack Klndschl. When
ued to attract Investors with Kindschl retired, he joined the
claims that BSRD4W was one of Rewald firm as one of the many
the oldest and largest privately consultants.
held investment companies In Rewald kept in contact with
the state. He said the company the new bureau chief, Jack Rar?
was involved In only high-return. din.-
no-risk investments and that the Some consultants, like retired
-average - investor ??wu worth $4 Air Force pilot Ned Avary were
mutton. t , I I ? sent to various parts of the
? 1 Gaudy, overstated brochures world purportedly to take put
were distributed offering invee' In clandestine amts deals.
tors numerous financial services. Rowald saw his role for the
It was strange activity for CIA as an undercover business
someone who would later claim leader who " ould travel around
BBRD&W was a CIA front that the world making contact with
never was intended to operate In "wealthy and well-placed busi-
l{awail. nessmen and government ofti-
Rewald continued to build the cials."
company's facade. He hired He says the CIA supplied him
numerous "consultants": lawyers, with fake diplomas from Mar-
accountants and real estate peo- quette University - which he
ple. They Mere paid well but did later turned into metal plaques
little wore k. - to add to his credibility.
If Rewald actually wanted the It is curious, if true. that the
company to keep a low profile, U ,S. government would use
he went about It In a strange someone with Rewald's lack of
financial expertise to to gath-
wa
He hired a public relations er information about t e stabil-
ftru .which began sending out ity of foreign banks,
financial reports to the news FOR INSTANCE, Rowald. v-ho
media. He bought the Hawaii novor graduated from college
Palo Club and began hobnobbing and has no specific background
with the Island's elite and some in banking. claims he was sent
of the world's wealthiest jet-set. by the CIA to Argentina in 1682.
ters. ust prior to the Falklands Is.
All the while. be continued to ;ands war, to study banking and
try to build up his importance to economic conditions.
the local CIA office here. One Rewald's purported goals were
addition to his staff that be identical to those reported In a
thought would help was the hir' newspaper wire story about an
ing of Sue Wilson. earlier trip to Argentina by
WILSON WAS brought into Chase Manhattan Bank Chair.
the company by Wong, who was man David Rockefeller.
impressed by the fact that she Rewald claims that from 1980
used to work for the National to 1982, the CIA began using the
Security Agency, a large investment accoun4 the so-called
lntelll$ence-gathering agency. "poi bowl" bank account, to
Rewald was Impressed, too. place funds which were then to
"Wilson was brought In by be used in foreign operations.
Sunny Wong for her intelligence The account also was used to
background in the hopes that we shelter money of highly placed
might attract more Agency foreign diplomats, Rewald Claims
' Rowald says in his affida- in his affidavit.
work
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He lists 21 names used to hide
funds for foreign clients. includ.
ing Sue Wilson and two of his
security guards.
He also Ilsts Charles Richard.
son. a CIA agent who did use
BBRD&% for cover. But in June
1983, with the IRS probe
progressing. Richardson. also
known as Richard Cavannau h,
wrote a letter to Rewald explai.
ing why he had to withdraw his
money from Rewald's company
because of a possible "conflict of
interest."
RICHARDSON later was fired
from the agency for helping re.
crult five other CIA enspployses
to Invest money with Itewald.
Together, they lost up to 1300;
Review of all of the accounts
Rewald listed shows no large
amounts of unexplained money
coming into or leaving the ac.
counts.
Government attorneys have
another explanation for what
was happening in the company
around this time.
In court records, they charge
that Rewald was luring more
investors into giving him mone
byanpromising high Interest and
pltiag glowing articles In the
news meats about his company.
To encourage his consultants
to seek additional money from
prospective clients, he paid
many of them finder's tees and
commissions.
By early 1983, the company
not only had attracted the atten?
tion of the IRS but also of the
SEC and the Federal Deposit
Insurance Corporation..
An attorney working for Re.
Wald warned him that the In.
vestment savings account Was a
security being offered and sold
in violation of federal laws, ac-
cording court records. Rewald
was tol411;y several of his attor.
neys that the account must be
closed and that all of the money.
Including interest, had to be re-
turned to Investors. The closing
date was set for Aug. 10. 1093.
BUT REWALD ? knew things
had gone too far,.Therq.wu not
nearly enough money in the
bank to pay oft investors.
He continued to take in new
money and pay commissions to
his consultants, chile assuring
the SEC that such commissions,
which are illegal, were not being
paid.
By the time the company cot.
lapsed. Rewald had taken in 132
m !lion from about 400 investors.
Of that money, about $10 mil.
lion was paid back to earlier
inventors. About $5.3 million
went to running the company
and paying salaries. And about
$3.5 million, government atter?
aneyyss halm. Aewald spent on
According to an audit of an of
the BBRD&W financial transac-
tlona, about $250,000 went to Re.
wild's polo-related interests.
.Another_.17g0,000 went to the
horns be owned About 11.4 mil.
lion 'went to house and ranch
expenses. Some $800,000 was
sunk into the sporting goods
stores which never made money.
And some 8U million went for
h1w personal expevAm.
The End, New beginning
It was about-4 p.m. on July 30,
1963, when Marilyn' Yee Llu, as-
sistant manager of the Sheraton
Wa9dki Hotel opened the door
to room 1639 and was met by a
bloody sight A man was crum.
agadinst the ub.bathroom floor
She called for security people
to meet her at the room. An
ambulance was called.
Accordin to a police report,
two security guards tried to
make Rewald more comfortable
while the ambulance was on its
wayY.
"1 wish I were dad." Rewald
told them.
Stay with us,' one of the se?
curtly men said.
Neatly nuked on a round
table by the hotel room window
then were some credit cards.
$100 in cash, a g01d wedding
ring, a watch and an envelope
ad to Rewald's wife.
"I know how bad everything
must look -to all of you and
everyone time." Rewald had writ.
ten to his wile. "1 want to
know I never did as so to
hurt asyone. Someda~lr pray the
truth wDI be known.
W J Noes walk Intoha
federal courtroom and pleaded
fwilt to mail and securities
ut ~. ~..._.~........__
The 0 year-old real estate man
and president of ?BBRD&W
admitted that the company had
concocted a scheme to defraud
investors out of = million. He
Is serving a two.yer Sentence In
a federal prison.
On Aug. 30, 1968. Rewald was
Indicted by a federal grand jury
on a hundred counts of mall
fraud, securities fraud, tax eve.
sion and perjury.
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