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December 22, 2016
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June 30, 2011
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July 17, 1985
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Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 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. Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 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" Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 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 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2 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. Sanitized Copy Approved for Release 2011/06/30: CIA-RDP90-00552R000605490106-2