Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 22, 2016
Document Release Date: 
June 30, 2011
Sequence Number: 
Case Number: 
Publication Date: 
July 28, 1985
Content Type: 
PDF icon CIA-RDP90-00552R000605490135-0.pdf300.07 KB
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