REWALD SAYS HE GOT CIA SECRET JAPAN TRAIN PLANS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100700101-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: July 26, 2010
• Sequence Number: 101
• Publication Date: April 11, 1984
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
STAT
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
HONOLULU STAR BULLETIN (HI)
11 April 1984
;CIA Secret Japan Train
hS
?y Charles Memminger
Star-Bulletin Writer -
In a recent British television re-
port, Ronald Rewald talks about
obtaining for the CIA secret plans
of a Japanese high-speed train
still being developed.
But an official at Japan Air
Lines, the company that is devel-
oping the High Speed Surface
Train (HSST) said he can "guaran-
tee" that no such plans ever were
taken from JAL.
The reason Takao Matsusue,
JAL regional manager in Hawaii,
doubts Rewald's claim is that the
HSST project engineers welcomed
inquiries about the magnetic-levi-
tation train and actually were ag-
gressive in seeking attention.
The HSST is Japan's version of
a train that speeds along a track
while hovering only millimeters
off a rail through magnetic levita-
tion. Several countries, including
West Germany, France, Japan
and the United States, are testing
various designs of the train that
can travel more than 100 miles
per hour. The object is to provide
rapid mass transportation be-
tween destinations not served by
airplanes.
. The British Broadcasting Corp.
recently aired an investigative re- _
port on Rewald, in which it
claimed Rewald's company -
Bishop, Baldwin, Rewald, Dillmg-
ham & Wong - was a CIA front.
IT LISTED a number of things
Rewald allegedly did for the CIA,
including stealing the plans for
the HSST, supplying military
arms to Taiwan and spying on
Philippines President Ferdinand
Marcos.
While officials involved in the
investigation of Rewald and his
(company acknowledge that there
1was some CIA involvement, they
still do not know the entire scope
of the involvement. Federal
Judge Martin Pence has said that
t Rewald has tried to exploit minor
ties to the CIA
The BBC obtained a ;tape-
recording of a conversation be-
tween Rewald and his attorney
while Rewald was in prison in
which be discusses' the HSST
plans.
On the tape, Rewald says: "I'm
a little concerned about your use
of me obtaining the blueprints
for the HSST project in Japan in
that I don't want to end upp in
bigger trouble than I am. Obvi-
ously, I did acquire this for the
agency. It wasn't for personal
gain or anything else. It was for
the agency. I don't want to go to
jail for stealing secret plans."
ROBERT SMITH, Rewald's
attorney, acknowleges that it is
Rewald speaking on the tape, but
said he does not know how the
BBC obtained the recording. He
will not talk about the HSST, say-
ing he is barred from discussing
It-by a federal court order limit-
ing discussion on CIA matters.
Rewald also will not discuss the
HSST because of the court order.
JAL officials here, however, do
not see any reason to be secretive
about the HSST. In fact, they said
engineers were eager to show off
the prototype of the HSST even
back in 1979 when Rewald was in
contact with JAL.
"Many, people were invited to
the test plant," said John Hayasa-
ka, assistant JAL regional man-
ager who has taken rides on the
test train. Hayasaka said HSST
documents found in Bishop, Bald-
win files after Rewald's company
collapsed "were absolutely noth-
ing that anybody couldn't get."
Regional Manager Matsusue
said JAL knows of no secrets
-about the the HSST that ever
were lost to either government or
industrial spies. Hayasaka said
any parts of the HSST that were
"innovative" were protected by
international .patents.
HAYASAKA ALSO said that al-
e thouglj Japan and the United
States are highly competitive in
developing computers, there -is no
similar competition in the devel-
opment of high-speed trains.
Costakis Papacostas, a transpor-
tation engineer at the University
of Hawaii, said while parts of the
HSST project might have contain-
ed innovative features, "it was no
secret that (JAL) was working on
(the HSST)."
"A couple of years ago, people
here were invited to Japan to in-
spect the system," Papacostas
said.
Rewald's files, now. in the
hands of the bankruptcy trustee,
contain letters between Rewald
and Akira, Hayashi, developer of
the HSST. One letter from Re-
wald is written on CMI Invest-
ment Corp. stationery.
(CMI, which Rewald formed in
Wisconsin before he moved to
Hawaii, was the predecessor to
Bishop, Baldwin.)
Bankruptcy officials have deter-
mined that the CIA apparently
did use CMI as a maildrop and a
front from some CIA activities.
IT WAS IN RESPONSE to the
CMI letter that Hayashi sent Re-
wald a packet of detailed infor-
mation about the HSST. But it
was information JAL officials say
would be sent to anyone request-
ing it. -
At about the same time Rewald
allegedly received secret informa-
tion about the HSST, there were
plans to display the Japanese
train project at Chicago's kfu-
seum of Science and Industry, at
the Paris Air Show and a trans-
portation exposition in West
Germany, according to a HSST
brochure.
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
HONOLULU ADVERTISER (HI)
.28 March 1984
8iromei*s'eE
Revald. investors
By Walter Wright
IAduertiser Staff Writer
Eight of the 318 investors in
"Ronald Rewald's company were
CIA personnel, and they placed
.something less than $500,000
with the company, according to
an official familiar with the
case.
Two of the Central Intelli-
gence Agency investors are al-
ready known - former Hono-
lulu station chiefs John
Kindschi and Jack Rardin.
A third CIA investor is de-
scribed as a bona-fide CIA agent
who was not on the company
payroll but did use Rewald's
firm - Bishop Baldwin Rewald
Dillingham & Wong - as a
cover.
Five other CIA employees
were reportedly persuaded to
invest in the company by the
CIA agent.
They all are said to claim that
they thought they were making
wise investments of their per-
sonal funds, and were no
'brighter than the other 310
investors who lost close to $12
'million.
But Rewald, in a $671 million
!lawsuit against the CIA, is
`trying to prove that the money
from the CIA personnel. and
more. was just CIA funds pump-
ed into the company to finance
CIA operations. The CIA. Re-
wald insists, was his partner
and caused the downfall of his
company.
Rewald faces trial in June on
,state charges he stole investor
money. The bankruptcy trustee
in the case says Rewald divert-
ed $4.6 million from the $20
;.'million investor accounts to
'`himself for "personal spending."
Rewald says the CIA and its
representatives used Bishop
.Baldwin investment accounts
and other investments to shel-
ter the money of highly placed
foreigners and for the CIA's
own use.
"Bishop Baldwin's main de-
pository account ' Rewald's suit
:says, "consisted of.' (1) funds
from legitimate investors! (2)
~funds- from the.. CIA. and (3)
cover funds from highly placed
foreigners."
Rewald say+ the money was
Lused to. meet-,.,company :over-
head, to make legitimate invest-
1r ents , and for,;., "CIA-directed
._s. ~.,.-
projects `_-
The bankruptcy trustee says
that little or no investor money
ever was invested in anything
and that the only CIA money
he could find was $2,744 used to
reimburse Rewald for telephone
and Telex bills.
Rewald's Honolulu attorney,
Robert Smith. said yesterday
that he intends to follow inves-
tors' dollars back to their ulti-
mate source. "and there are a
number of names I can put on a
list of suspects." Smith's investi-
gator. Dirk Von Gunther, al-
ready has asked bankruptcy
officials for company records re-
garding the deposits of several
individuals.
The search puts the CIA in a
ticklish position, even if the in-
vestments were innocent, be-
cause it could lead to _ exposure
of employees and agents.
Some of the CIA personnel
who invested got their money l
back; others left it in.
Retired Honolulu station chief
Kindschi put. in $185,000 and
tivithdrew $175.000, including
$140.000 just before the compa-
ny shut down in August,
Kindschi had another account
jointly with Hazel Kindschi in
which S40.000 was, deposited
and withdrawn.
John Kindschi, after- retiring
from the CIA, was a $60-an-
hour "consultant" with Re-
wald's company. Rewald sar's
Kindschi was also a member:gf?
its board of directors. Kindschi;
was paid more than 568,000
the company for his services.
After the company closed, it
was Kindschi's complaints to
lauthorities that led to filing of.
state theft charges against Re-
wald.
Former Honolulu station chief
Rardin, transferred to another
CIA assignment recently, shows
up on the company books as an
investor of $1,500 who with-
1, drew-52,328 in May.'.
And the full-fledged CIA
'agent who invested also with-
drew not only his deposit but
also the "interest" which Re-
wald was promising all inves-
tors, an official said.
The agent withdrew the
money early last year after the
CIA discovered that the Inter-
nal Revenue Service was inves-
tigating Rewald and took steps
,to get its agent clear of the
=company, the official said.
Given Rewald's admitted con-
nections with the CIA, it is not
surprising that as many as eight
'CIA employees ended up as
investors in the company, ac-
cording to one for
of the agency.
"There are hun re s o
'personnel who come to Hawaii,"
this source said. "It's a perfect
base for operations into the
;Pacific and Asia."
And, he said, despite all the
mystique that surrounds them,
CIA employees are no strangers
to investment disasters.
"At least 150 CIA people in
one office I knew were invest
tors in Bernie Cornfeld's IOS
operation, and lost their shirts,";
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
HONOLULU' STAR BULLETIN (h_)
4 April 1984
S -E d P',,_-wb~C~~wa
Attorney' s ~,se I%ti
""~' : -Solicit money from investors matters. Smith claims that tmdet
By Charles mi
Memnger through false statements about the order he cannot even discuss.
Star-Buuetin Writer his business background, how the ~ CIA matters with his investigator..
Ronald Rewald has agreed in money will be invested, the PAY- who is trying to obtain evidence
an out-of-court settlement not to ment of commissions to salespeO? to support Rewald's contention:
violate federal securities laws, :ple, how the money is insured that the CIA pumped money into
bringing to an end the Securities and -the educational background the company.
and Exchange Commission's of corporate officers. Without, ruling on the merits of
investigation into Rewald and his -Publish or distribute any Smith's motion, Pence denied it,-
bankrupt company Bishop. Bald- advertisement containing false or saying it was incorrectly filed,
win, Rewald, Dillingham & Wong. misleading information. _ Smith said he will refile the mow
The U.S. attorney's office, bow- Engage in any scheme to-de- tion.
ever, still can pursue criminal fraud any client or prospective Thomas Hayes, bankruptcy'
charges against Rewald for al- client- administrator, said again yester~ .
le' ed violation of securities laws. ANITA NAGLER, SEC attorney, ' day that an of the evidence he
;Robert Smith, Rewald's attor- said that obtaining a permanent has come up with indicates than
ney, said he assumes a federal injunction-is as far as the SEC Rewald's personal assets were-
.grand jury that has been investi- can go to enforce its laws. Na- paid for with investors' money.
gating Rewald for several months glen, who works out of Los An- Even if someone were to accepptt,
still is considering SEC violations. geles, said the commission has no Rewald's contention that the C1A?
,He said he had anticipated an power to pursue criminal prose- had pumped money into hi-
indictment several months ago. cution, although the commission company, it would still not ex-'
But he now wonders whether Re- can turn over information to the plain why money invested b?,
wald will be charged with crimi- U.S. attorney's office. hundreds of legitimate investors
nal violations of SEC laws be. She would not say whether the was spent and not invested;-
cause of the length of time the SEC has turned over its investiga- Hayes said. -
grand jury has been meeting. tive reports on Rewald to the Rewald is suing Hayes for $153'
Rewald already has been charg- U.S. 'attorney's office here. million for invasion of privacy
ed in state court with two counts Nagler said the SEC has not and defamation of character.
of theft by deception and a state given up its right to try to force
grand jury also is continuing its Rewald to forfeit personal assets
if it can be shown those assets
investigation. were bought with investors'
YESTERDAY, U.S. Judge Mar- money obtained through fraudu-
tin Pence issued a permanent in- lent means. But she said the SEC
junction against Rewald and the is willing to let the bankruptcy
bankrupt investment company trustee pursue those claims on
ordering them not to violate se- = behalf of investors.
to
curities laws. The order was the Bankruptcy attorneys were
result of a deal between Rewald appear in court this morning to
and the SEC in which Rewald seek court approval to sell Re-
agreed not to oppose the perma- wald's polo ponies. Judge Pence
nent injunction but would not already has approved the sale of
admit to having violated securi- Rewald's $1 million waterfront
ties laws. house.
Bankruptcy attorney Timothy Attorney Smith told Pence yes-
Holzer said the "consent agree terday that many of Rewald's
-went" entered into by Rewald is personal assets were bought with
something like a "no-contest" plea money given to Rewald by the
CIA and not investors.
in a criminal trial, where the de- -pence lied Smith whether the
Pendant neither admits nor ' 'd for Rewald's_ the
denies committing- a crime horses an houses, Rewald's chil-polo
The agreement allowed the dren's $9,OOaa-month tuition and
SEC to get an order permanently the thousands of dollars that
stopping Rewald from violating went to Reward's relatives.
securities laws without having to
go to trial and prove its case - "YOU MEAN the CIA even paid
against the former investment for the waterfall in his office?"
adviser. Pence asked, referring to an
The SEC filed a complaint elaborate man-made waterwall
against Rewald last Aug. & that decorated one wall of Re-
Rewald specifically agreed not wald's 26th-floor office in down-
to: town Honolulu.
Smith said that he couldn't say
which specific items were bought
with CIA money.
Smith was in federal court to
ask Pence to. modify a gag order
limiting discussion of CIA-related
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494RO01100700101-7
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494R001100700101-7
HONOLULU STAR BULLETIN (1
15 March 1984
ipId
_ Can't Press CIA Suit
.
on,
Star-Bulletin Writer
in suing the CIA.
'
J.S. Judge Martin Pence yesterday denied
Ronald Rewald's request that the administra-
tol of Rewald's bankrupt investment company
give up his claim to sue the CIA and transfer
that.rjgbt to Rewald.
,Rewald's attorney. Robert Smith, told Pence
that-the- suit against the CIA was the inves-
to,rs'-;'!only hope" of recouping their invest.
rr~enjs_ ;an'i that Rewald has "the greatest
interest'_, of any parties involved in pursuing
the claim.
)-Ie -lso pointed out that administrator
Thomas- Hayes has said publicly he thinks
there--is no basis for a suit against the CIA.
-rut bankruptcy attorney James Wagner
said Hayes still is investigating the possibility
of- a suit against the CIA and does not want
to-give up the right to file such a suit.
twald is pursuing his claim against the
CIA anyway, Smith said. He has filed a $671
million claim against the CIA as a third-party
plaintiff - in another civil case related to the
bankuptcy.
=Smith =said Rewald also is pursuing a per-
sonal-claim against the CIA alleging mental
anguish and distress. That suit currently is in
REWALD ALSO had
wanted to sue the CIA
on behalf of the bankrupt company, but can
only do so if the bankruptcy trustee gives up
his right to sue the CIA. Wagner said trustee
Reynaldo Graulty does not want to give up
that right and Pence refused yesterday to
order him to do so.
Rewald contends in court documents that
be was a covert CIA agent and that the CIA
propped up his company with large infusions
of money.
Hayes has said be's found no documents to
support that contention.
Smith said Hayes has not made an effort to
trace company checks to the original source
of their funds to confirm the alleged CIA
involvement. Smith said such an effort would
cost at least $500,000, which Hayes does not
want to spend.
Smith said Mainland attorney Melvin Belli,
who is representing an investor in the bank-
rupt company, has agreed to bear that cost to
pursue that contention.
Rewald met with Belli on his recent visit to
the Mainland and said Belli is still anxious to
pursue the CIA claim.
Belli is scheduled to come to Hawaii next
th in connection with the claim.
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494R001100700101-7
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494R001100700101-7
HONOLULU STAR BULLETIN (H.
28 March )984
,RewaTc~~uing
agazines,
[Administrator
By Charles Memminger
Star-Bulletin Writer
Ronald Rewald yesterday filed a $10 million
Ftiefamation suit against Time Inc. for articles
twritten about him that appeared in Time
Magazinejanli,loney magazine last year.
Another $10 million suit is to be filed
again4t'kbankruptcy administrator Thomas
t Hayes, according to attorney James J. Good-
win, of the law firm of Rodney A. Klein in
Sacramento.
Rewald, during a recent trip to the Main-
land, hired Klein to represent him in civil
cases.
..Kleit was unavailable for comment, but his
t associa1, Goodwin, said the Time Inc. suit
was fife : in San Francispo Superior Court and
charges that the articles defamed Rewald and
were an invasion of privacy. The articles de-
tailed the rise and fall of Rewald and his
compa::y - Bishop, Baldwin, Rewald, Dilling-
,ham & Wong.
GOODWIN SAID a second suit has been
sent to Honolulu to be filed in Circuit Court
here charging Hayes with defamation and
invasion of privacy. -
"My response is I have no comment until I
get to see the suit," Haves said after being
notified that the legal action is being taken. "
r Goodwin said his firm initially was hired by
obert .links, a former Rewald business as.
Mate?to file suit against the CIA on behalf
. ame investors.
The investors contend Jinks told them Re-
uvald's ('mpany was associated with the CIA
and tht ' funds were protected, Goodman
Said.
Klein alto will be filing a suit against the
CIA on It Ewald's behalf, Goodwin said.
Rewald said the "only purpose" of the suits
;as to raise money to pay back investors who
lost .:iillions of dollars in his company. Re-
aval6 said he will do anything to raise the
money, including selling the book rights to
the rise and fall of his company. He said he
,currently is "talking to some people" about
selling the book rights to his story.
Rewald said, however, he "definitely" is not
planning any suits against the local news
-media for its coverage of him and his bank"
rupt company.
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP90-00494R001100700101-7