CIA IN SHADOW OF FIRM'S COLLAPSE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605490172-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: June 30, 2011
• Sequence Number: 172
• Publication Date: October 14, 1984
• Content Type: OPEN SOURCE

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CHICAGO TRIBUNE
14 October 1984
in Shadow o
Sc
By Douglas Frantz
Chicago Tribune
HONOLULU--shortly after 6 p.m.
on Jul), 29, 1983, Ronald Rewald
walked into the bathroom of his room
at the Sheraton-Waikiki Hotel, swal-
lowed 12 pain pills, slit his wrists with.
a razor blade and began to read the
Bible.
Semiconscious and covered with
blood. Rewald was found the next day
by a hotel employee in time for doc
fors to save his life. But his flamboy-
ant lifestyle on this sunny island par-
adise was over and, in its place, a
dark tale of sandal and espionage
Was about to unfold.
It his been 14' months since that
Jury nignt when, Rewald says, he
tried to take his own life after
vie in,g a television newscast about
i -17 u'ariiti~s at his investment firm,
which was placed in involuntary
bankruptcy three days later.
wring those months, federal inves-
ti at lrs pieced together what they
describe as a classic swindle that
bilked 400 investors. including many
from the Midwest, of $22 million.
THEY SAY REWALD used cash,
from new investors to pay off old
ones and spent the rest on such ex-
Iflapse
operation for agents. Perhaps strangest of all, a Cali-
Yet numerous court documents fornia man has claimed in a sworn
and interviews, many of which in- statement that the CIA hired him to
volved promises of anonymity, de- kill Rewald while the businessman
tail stronger links between the CIA was in prison in lieu of $10 million
and Rewald that began seven years, bail, a charge the CIA denied as
ago. totally false." California law en-
Three successive CIA station forcement authorities say the man,
Scott T. Barnes, is a former police-
chiefs met frequently with Rewald, man who is "completely unreli-
and one later went on his payroll as able."
a $48,000-a-year consultant, accord- Barnes' claims, which were aired
hg to records and former em- 'by ABC News last month, are only
military Rewald. some of the oddities that make
cials op invested in brass Rewald's CIA business of ss Rewald's story more bizarre than
d and the usual swindle.
and socialized with him, once invit-
ing him to meet with Vice President THOMAS HAYES, the court-ap-
George Bush at Hickam Air Force pointed administrator of Rewald's
Base in Honolulu. bankru t firms, said the CIA used
WHEN REWALD'S empire col- Rewald's businesses as a broader
lapsed, two of his consultants were acknowledcover oppeergation than the agency has
ed.
negotiating the sale of military "There's more CIA involvement
hardware to Taiwan, including here than they'd like you to be-
tanks and laser-sighting devices for lieve," Hayes said in an interview.
Al-16 rifles, documents show. The "The CIA has a all over its face."
sale would have circumvented a But Hayes sad Rewald has exag-
U.S. agreement with mainland gerated his 'CIA ties to protect
China not to supply certain weapons himself from the. fallout of a
to Taiwan.
The CIA scheme that Hayes said had nothing
has admitted to congres- to do with the CIA.
sional investigators that in 1982 the Testimony last year in the bank-
agency recruited Rewald's son, ruptcy case indicated that Rewald
James, a college student in Honolu-
lu had lured investors with promises
polo club and a string of ponies, two, at the from to spy The of big returns but didn't invest their
ranches and a villa with its own students from China. The domestic money. Instead he allegedly used
lagoon. The boyish, 42-year-old spying may have been illegal, but cash from ne
Rewald . w deposits to pay in-
charges awaits trial on 100 federal the agency has said it was merely terest on old ones and spent the rest
charges of fraud, perjury and tax . targeting students for potential re- of the money on himself, leaving no
evasion. cruitment when they returned to money when authorities closed the
Even more intriguing is evidence C There igso alsom evidence cthatlthe operation on Aug. 3, 1983.
that Rewald was in ved deeply with CIA delayed at least one Internal Rewald has said that he mixed
the CIA during his spectacular rise in Revenue Service investigation of investor funds with CIA money and
business and social circles here. Rewald's business in 1982 that the agency looted his com-
Evicence indicates that Rewald's prolonging the fraud but warning its pany's accounts when the operation
businesses were used as a cover for agents to withdraw their invest began to go under that day in July.
CIA agents, that he was involved in ments. ANGRY INVESTORS, some of
international arms deals and that the. Certain events also point A o a whom lost their life savings, have
agency recruited Rewald's son to spy deeper CIA involvement. echoed Rewald's claims in lawsuits.
on Chinese students in Honolulu: a WHEN REWALD'S bodyguards. They contend that the CIA is re-
possible violation of the CIA charter. took critical files out of his office in the a ble for their losses because
The first whiff of CIA links came the hours after the lid blew off, the the agency helped finance and oper-
Sept. 14, 1983, when a federal udge CIA and FBI rushed in to help ate Rewald s investment firm, to
here sealed bankruptcy court files at Honolulu police retrieve the docu- conduct intelligence operations.
the request of a CIA lawyer, Robert ments, according to an internal po- The CIA station in Honolulu as-
the who said national-securr y lice report. sumed the guise of and this invest
. ion may be subject to unau- A former CIA attorney with a ment company, n and this is how
thorized disclosure" by their release. military-intelligence background various Hawaiians were inveigled
showed up in Honolulu as an assis into investing in it," said Melvin
edged` only THEN th acment" tant U.S. attorney in early August, Belli, a is many noised attorney who
1983 and took over the case. The p ? t investors in a suit
with Rewald, admitting paying $3,000 John Peyton, said his against the government. "The CIA
fora telephone and telex in his down- prosecutor, has lied about their involvement
town offices and for printing business appearance was a coincidence. with Rewald."
ARTICTLE APPEAR)
01 PAGE 1, Sec: 1
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D11n#inued
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House subcommittee has higher prcfile on orders from the.
cnened an investiga~ion into the af- CIA to attract wealthy international
fair, and a federal grand jury in businessmen who could provide in-.
Honolulu is continuing its p.obe of telligence information.
the collapse of Rewald's empire. Rewald bought the Hawaii Polo.
REWALD'S RISE to prominence Club and a string of polo ponies. He
here began in late 1977 when he owned 12 cars, including a Rolls-
arrived from Wisconsin, where his Royce, a Jaguar and three Cadil-
fortunes had taken a decided down- ' lacs, and a home on a private la-
turn.
At Milwaukee's South High School
in the late 1950s, Rewald was a
football star, and he played on three
National Football League taxi
squads after junior college. But his
extracurricular activities in college
were more unusual.
In court papers, Rewald said he
spied on students in Wisconsin for
the CIA, trying to learn whether the
Soviets were financing antiwar or-
ganizations.
After leaving college and football,
he tried to parlay his sports back-
ground into a livelihood by fran-
chising sporting goods stores. But
the firm went bankrupt in 1976, and
he leaded guilty to misdemeanor
p
goon near the ocean.
He threw lavish parties at the
polo, club, where guests included
Prince Charles, the sultan of Brunei
and international financier Enrique
Zobel. Though married, with five
children, P.ewald surrounded
himself with gorgeous women.
He also surrounded himself with
top military officers and CIA offi-
cials. Among his frequent social
companions and investors were
Gen. Arnold Braswell, who retired
last year as chief of the Air Force's
Pacific Command; Jack Rardin,
CIA station chief until last year;
and Jack Kindschi, who was Rar-
din's predecessor until he quit to
lt
nt
t
b
f
ll
ti
me consu
a
a
ecome a
u
-
theft charges in Wausau, Wis., for Baldwin.
persuading two high school teachers Bishop,
to invest in one of the stores under REWALD lend FLAUNTED these
his
false pretenses. friendships to
These blemishes were generally operation, according to several in-
unknown in Hawaii when Rewald vestors.
'
began to set up several companies,
including the investment firm Bish-
op, Baldwin, Rewald, Dillingham &
Wong.
SIINLIN WONG was a local real
estate man who became Rewald's
partner and recently was sentenced
to two years in prison after
pleading guiltyy to fraud charges in
the firm's collapse. But the names
Bishop, Baldwin and Dillingham
were taken from prominent old-line
Hawaiian families, which had no
connection with the firm.
In his $571 million damage suit
against the government, - Rewald
said the CIA ordered him to set up
the investment firm and provided
him with "several million dollars"
in seed money. He said the agency
used the company to shelter money
One of those investors was Mary
Lou McKenna, a former Chicago,
model, who `moved to Hawaii to
recuperate from severe injuries suf-
fered in a car accident. She met a i
secretary from Bishop, Baldwin be-!
side the pool at her apartment in !
1982, and they became friends.
The secretary learned that
McKenna had $75,000 from the acci-
dent settlement to pay for her medi-
cal therapy and introduced her to
Rewald.
"Be was a very charming man,
and when he sent limousines to take
you to parties at the polo club with
all these military people and CIA
guys, he seemed like an upstanding
citizen," McKenna said.
for "highly placed foreigners" and She invested the full $75,000 with
finance covert operations. Jtewald and said she was persuaded
Rewald claimed the CIA knew its
funds were mingled with those of
the private investors who had begun
to flock to Bishop Baldwin because
of its promise of high returns.
Bishop, Baldwin flourished be-
cause it guaranteed 20 percent in-
terest and promised a_7 percent
annual bonus. Brochures said in-
vestments of as much as $150,000
were backed by the Federal Deposit
Insurance Corp., a claim the FDIC.
later said in court papers was un
true.
AS THE MONEY flowed in,
Rewald's lifestyle became more ex-
travagant. He said he developed the
by an attorney on Rewald's"staff to
sell land she owned in California
and invest the proceeds. An addi-
tional $75,000 from the land sale
was turned over-to Bishop, Baldwin
two weeks before the bankruptcy.
"THEY KNEW IT was every
penny I had and they took it," said
McKenna, .47, who suffers from
chronic pain because she had to
discontinue therapy when she lost
her money and can't work because
of her injuries.
Carole Myers, a former Lake For-
est resident, was among those who
invested with Rewald after hearing
about his government connections,
from friends.
"When I heard that he was in-
volved with the CIA, I rushed to put
in my money," said Myers, who lost
more than $100,000. ~'I thought,
what better protection than the gov-
ernment?? "' .
Myers is also one of a handful of
people who remain loyal to Rewald,.
directing their anger instead at the
CIA and backing his story that the
investors' money was transferred to
secret CIA accounts at the first sign
of trouble.
The first outward sign of trouble
was the local television report on
July 29, 1983, which said state regu-
lators were investigating Bishop,
Baldwin' and revealed Rewald s
Wisconsin conviction and bankrupt-
cy.
Rewald said through friends that
he was tipped about the news report
a few hours before it aired. Using
an assumed name, he checked into
the Sheraton-Waikiki on Honolulu's
famed beach and watched the
broadcast. He said he was "shamed
and humiliated" and sought to
spare his family by committing sui-
cide.
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