SUMMARY OF CIA CONTACTS WITH RONALD REWALD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R001903000014-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 76
• Document Creation Date: December 22, 2016
• Document Release Date: July 29, 2010
• Sequence Number: 14
• Publication Date: October 6, 1983
• Content Type: REPORT

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knowingly attempt to evade and defeat a large part of the income
tax due and owing by him and his wife to the United States of
America for the calendar year 1980, by preparing and causing to be
prepared, by signing and causing to be signed, and by mailing and
causing to be mailed, in the District of Hawaii, a false and
fraudulent income tax return on behalf of himself and his said
wife, which was filed with the Internal Revenue Service, wherein it
was stated that their taxable income for said calendar year was the
sum of $0.00, and that the amount of tax due and owing thereon was
the sum of $0.00, whereas, as he then and there well knew, their
joint taxable income for the said calendar year was the sum x?----
$414,160.85, upon which said taxable income there was owing to the
United States of America an income tax of $209,407.98.
(All in violation of Section 7201, Internal Revenue Code;
Title 26, United States Code, Section 7201.)
COUNT 99
THE GRAND JURY FURTHER CHARGES:
That during the calendar year 1981, the defendant RONALD
REWALD, a resident of Hawaii, had and received a taxable income of
about $621,112.20; that upon said taxable income he owed to the
United States of America income tax of $401,107.01; that he was
required by law on or before April 15, 1982, to make an income tax
return to the Internal Revenue Service, and to pay such income tax;
that well knowing the foregoing facts, the said RONALD REWALD on or
about April 15, 1982, in the District of Hawaii did willfully and
knowingly attempt to evade and defeat the said income tax due and
owing by RONALD REWALD to the United States of America for said
S'7
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1 calendar year by failing to make such income tax return to the said
2 Internal Revenue Service, and by failing to pay to said Internal
3 Revenue Service, said income tax and by:
5 Service;
(a) Making false statements to the Internal Revenue
(b) Causing and attempting to cause the concealment of
7 files and records of BBRD&W; and
8 (c) Causing and attempting to cause false entries to be
9 made on checks and other records of BBRD&W.
10 (All in violation of Section 7201, Internal Revenue Code;
11 Title 26, United States Code, Section 7201.)
12 COUNT 100
13 THE GRAND JURY FURTHER CHARGES:
14 That on or about April 13, 1983, in the District of
15 Hawaii, the defendant RONALD REWALD, a resident of Hawaii, did
16 willfully and knowingly make and subscribe an Application for
Automatic Extension of Time to File U. S. Individual Income Tax
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18 Return, Form 4868, for the calendar year 1982, which was verified
19 by a written declaration that it was made under the penalties of
20 perjury and was filed with the Internal Revenue Service, which said
21 Application for Automatic Extension he did not believe to be true
22 and correct as to every material matter in that the said
23 Application for Automatic Extension reported a total income tax
24 liability for 1982 of $37,479.00, whereas he then and there
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1 well knew and believed, his total income tax liability for 1982 was
2 substantially in excess of $37,479.00.
3 (All in violation of Section 7206(1), Internal Revenue
4 Code; Title 26, United States Code, Section 7206(1).)
Z~'- DATED: Honolulu, Hawaii, ,'t (-~' 0 , 1984.
FOREPERSON, GRAND JURY
unlLu )Lares t1LLVrney
District of Hawaii
Special Assistant
18 United States Attorney
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,,.. U. S. Department of7ustice
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24 J ETNESS
25 Special Attorney
U. S. Department of Justice
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U.S. Department of Justice
United States Attorney
District of Hawaii
Room C?242. United States Courthouse
300 Ala Moana Blvd.. Box 50183
Honolulu, Hawaii 96850
August 30, 1984
PRESS RELEASE
A Federal Grand Jury sitting in Honolulu has today
returned a second indictment arising out of an investigation
of the activities of the firm of Bishop, Baldwin, Rewald,
Dillingham and Wong, its officers, directors, employees, and
consultants.
Dan Bent, United States Attorney for the District of -
Hawaii, said that the indictment charges Ronald Rewald with
100 counts of mail fraud, securities fraud, making false
statements to the Securities and Exchange Commission and the
Internal Revenue Service, perjury, falsely advertising Bishop,
Baldwin accounts were insured by the Federal Deposit Insurance
Corporation, failure to keep records prescribed by the
Securities and Exchange Commission, interstate transportation
of stolen securities or money, and violations of the federal
income tax laws including tax evasion.
Mr. Bent said that the indictment charges that
Rewald was Chairman of the Board, Vice-President, and
Treasurer and 50 percent shareholder of Bishop, Baldwin,
Rewald, Dillingham and Wong from its incorporation on October
11, 1978 until its collapse in August of 1983. In its 59-page
indictment the Grand Jury charged that over a period of almost
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five years, Bishop, Baldwin engaged in a scheme to defraud
investors and succeeded in obtaining approximately $22 million
from over 400 investors in Hawaii, California, and elsewhere
in the United States.
In connection with the scheme to defraud the
Indictment charges that Mr. Rewald made the following
misrepresentations concerning Bishop, Baldwin, Rewald,
Dillingham and Wong:
1. That the firm had been in Hawaii for 20 years
and.that predecessor firms went back 65 years;
2. That the firm had global influence;
3. That the firm could not accommodate 90 percent
of those who applied to be clients;
4. That the firm had a two-year waiting list of
potential clients and investors;
5. That the firm dealt in "secured, safe, non-risk
investments";
6. That the investment savings accounts had
returned an average of 26 percent per year for the previous 20
years;
7. That the investment savings accounts were
insured by the Federal Deposit Insurance Corporation.
The Indictment further charged that Mr. Rewald
omitted to inform investors and potential investors of the
following:
-2-
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1. That Ronald Rewald had been charged and plead
guilty in the State of Wisconsin with a petty theft offense
involving franchises in 1976;
2. That Ronald Rewald had been adjudicated bankrupt
in Wisconsin in 1976 and that of approximately $22,000,000
taken in by the firm only approximately $600,000 was ever
invested.
The Indictment further charges that Ronald Rewald
spent approximately $5,500,000 of investor money for his own
personal benefit. The Grand Jury charges that among the items
which Mr. Rewald purchased with investor money were:
1. "Social and sexual intercourse" with women
at a cost of $270,000.
2. Expenses totalling $256,000 in connection
with the support of polo.
3. Expenses totalling $264,000 in connection
with the purchase and care of horses.
4. Expenses totalling $719,000 in connection
with the purchase of various residences.
5. Expenses totalling $784,000 in connection
with the purchase and lease of "ranches".
6. Expenses for the purchase of automobiles
totalling $467,000.
7. Expenses diverted from Bishop, Baldwin to
sporting goods companies owned by Ronald Rewald totalled
$669,000.
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The Grand Jury further charges that Ronald Rewald
committed perjury when he stated under oath and in a
declaration that the Central Intelligence Agency had directed
the founding of Bishop, Baldwin, Rewald, Dillingham and Wong
and had directed Mr. Rewald to make various misrepresentations
concerning that firm. The Grand Jury also charged Mr. Rewald
with perjury in connection with his statements under oath that
the CIA directed Mr. Rewald to misrepresent that BBRD&W
investments were insured by the Federal Deposit Insurance
Corporation, that the CIA had supplied Mr. Rewald with college
and law degrees from Marquette University and that the CIA had
supplied money to BBRD&W which permitted the firm to give
investors a high rate of return.
Further the Grand Jury charged Ronald Rewald with
evading income tax. The indictment charged that he evaded tax
on personal income for the following years in the following
amounts:
Year
Tax Evaded
Personal Income on
Which T
ax was Evaded
1979
$ 21,536.80
$111,790
1980
$209,407.98
$414,160
1981
$401,107.01
$621,112
If convicted Ronald Rewald faces a term of imprison-
ment exceeding his natural life and fines exceeding $500,000.
Mr. Bent commended the extraordinary efforts of the
Federal Bureau of Investigation and the Internal Revenue
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Service in connection with this extremely complex and time-
consuming investigation which has required interviewing
hundreds of witnesses and examining hundreds of thousands of
financial, bank and other records. Mr. Bent also commended
the assistance of John F. Peyton, Jr., Assistant United States
Attorney, Theodore S. Greenberg, Special Assistant United
States Attorney, David L. Katz, and Jeffrey B. Setness,
Special Attorneys, U.S. Department of Justice, for their work
on this case.
Mr. Bent stated that the investigation by several
federal law enforcement agencies is continuing.
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ABC WORLD NEWS TONIGHT
19 September 1984
INVESTIGATION/ JENNINGS: We have a fascinating story tonight which
CIA involves 22 million missing dollars, a host of investors
who lost their money, a man who's accused of swindling
them and the CIA. Last July in Hawaii, an investment
banker named Ronald Rewald was charged with what
investigators said then was a classic scam, hundreds of
investors putting millions of dollars into a phony
investment plan. At the time, most people concentrated on
the people who had lost their money. There is a good deal
more to the story. ABC News has been investigating, and
now Gary Shepard reports on Ronald Rewald and the CIA
SHEPARD: It was just over a year ago that Ronald Rewald
was arrested in Honolulu and thrown in jail, accused of
swindling 400 investors out of $22 million. His
investment firm, Bishop, Baldwin, Rewald, Dillingham and
Wong, was declared bankrupt. But then the story took a
strange twist. Rewald claims he was really working for
the Central Intelligence Agency. RONALD\REWALD: I
certainly don't deny the fact that I was a covert agent,
and I don't deny the fact that I was running that portion
of Bishop, Baldwin that involved the agency.
SHEPARD: The CIA won't say whether Rewald was an agent,
but admits it had, quote, 'slight involvement' with the
Bishop, Baldwin Company. The man appointed by the court
as the firm's bankruptcy trustee confirms the CIA
connection. THOMAS\HAYES (bankruptcy trustee): Clearly
it was a commercial cover operation for the Central
-Intelligence Agency. One or more agents used it for that
purpose. But that doesn't justify stealing $22 million of
someone's money.
SHEPARD: But Rewald denies the money is missing at all.
He says it's in several different banks under other names.
And as far as slight CIA involvement is concerned, ABC
News has learned the agency was heavily entrenched in
Bishop, Baldwin, running a number of foreign and domestic
intelligence operations, one of which violated an
international agreement, others in direct violation of
U.S. law. ROBERT\JINKS: I saw personally some
documentation of undercover operations that were being
carried on under the covers established by Bishop,
Baldwin.
SHEPARD: For the CIA? JINKS: For the CIA.
SHEHARD: In a sworn deposition, Bishop, Baldwin
consultant Robert Jinks says he too was a CIA agent. He
once went to Hong Kong with Rewald, he says, on a
clandestine mission. It's purpose to spread scare stories
Contirwed
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about the financial impact of China taking over when
Britain's lease runs out in 1997. The firm even released
a lengthy report which encouraged investors to move their
money elsewhere. (GRAPHIC: Report titled Capital Flight
from Hong Kong and How Hawaii Can Benefit.) REWALD:
Certainly we were doing our part just like everyone else
was to keep that money flowing towards the United States
as opposed to Europe or some other country.
SHEPARD: To fuel the panic in Hong Kong? REWALD: That's
right.
SHEPARD: Bishop, Baldwin was also involved in arranging
secret shipments of military hardware to countries like
Syria,.India and Taiwan. 'Another agent, Russell Kim, in a
sworn statement, says the Taiwan deal involved such items
as laser sighting devices for M-16 rifles, armored
personnel carriers and M-60 tanks. This multimillion
dollar back door deal enabled the CIA on behalf of the
U.S. government to circumvent its agreement with mainland
China not to supply certain offensive weapons to Taiwan.
REWALD: I don't think any of us really doubted that we
owe an obligation to Taiwan, that we willing to support
them on an ongoing basis; however, that's not something
that could be overtly.
SHEPARD: Among the 400 investors in Rewald's firm were
Gen. Arnold Braswell, commander of the entire U.S. Air
Force in the Pacific, and to former CIA station chiefs in
Honolulu. This man, Jack *Kinceny, was one of them. Both
the Securities and Exchange Commission and the Internal
Revenue Service have filed charges against Rewald. But an
earlier confidential SEC report obtained by ABC News shows
the SEC found no violations in the firm's investment
activities, and evidence from several sources confirms the
CIA was able to stop an initial IRS investigation. One of
Rewald's lawyers, Melvin Belli, says the CIA is involved
in a massive coverup. MELVIN\BELLI: They said, number
one, 'He's not a CIA man, and it's not a CIA operation.'
On the other hand, they got through telling me one thing.
Then they tell me, 'Someday he's going to have to pay for
this. You know, he took a loyalty oath when he joined the
CIA.'
SHEPARD: The House Oversight and Investigation
Subcommittee is now scrutinizing Bishop, Baldwin and its
CIA connection. ABC News has learned the CIA has admitted
to the subcommittee Rewald was an agent with a signed
secrecy agreement. Even so, he's been indicted by a
federal grand jury on 100 counts of fraud, tax evasion and
perjury. Gary Shepard, ABC News, New York.
JENNINGS: There is even more to this story, and we'll
continue telling it tomorrow.
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In just a moment: an ABC News invosti ;at ion:
did the CIA try to kill P. particular investment ban'.:er?
APO9 INVESTIGATIONT/ JENNIi~GS: Last night we began to tell you the fascinating
CIA story of a man named Ronald E:ewald. lIe was an investment
banker in Hawaii who now faces charges of swindling his
investors out of $22 million. Well, Rewald says the money
isn't missing and that he was working for the CIA. La--t
night we reported on established links between the CIA and
Rewald's firm. Tonight Gary Shepard continues our
investigation of the CIA connection.
5UEPARD: Did the Central Intelligence Agency try to have
Ronald Rewald killed to keep him from talking?
RONAi,D\REWALD: At first I didn't believe it. I thought
it was total nonsense, and it took a lot of convincing and
a lot of evidence and a lot of the facts to be checked out
before I recognized that it was, in fact, what was going
on.
SHEPARD: Rewald has been indicted by a federal grand jury
on 100 counts of fraud, perjury and tax evasion in
connection with the bankruptcy of his Honolulu investment
company. He claims, and ABC Mews has evidence, he was a
covert agent for the CIA and his firm, Bishop, Baldwin,
Rewald, Dillingham and Wong, was a front for a major CIA
intelligence operation. It was last November, while
Rewald was in jail in Honolulu, that this man, Scott
Barnes, who sources say has extensive intelligence
background, got a job at this sane prison as a guard for
one month. Barnes says he was sent in by the CIA.
SCOTT\BARNES To do a profile on Ron, find out who he's
talking to, what he is saying and do a psychological
makeup on him and see what his mental, emotional status
was.
SHEPARD: Then one day Barnes says he was called to a
meeting at this hotel with. this CIA contact. 3ARNES:
Then all of a sudden we're sitting down at the Royal
Hawaii and he says 'We've got to take him out.' You knew,
kill him.
SHEPARD: Did they tell you why they wanted you to get rid
of him? BARNES: That he was a company problem and he
obviously knew some things in regards to national security
and, you know, he was no longer an asset, he's now a
liability.
SHEPARD: Barnes says he quit the assignment and left
Hawaii. Brent Carruth, a defense attorney in another CIA
case, says that story doesn't surprise him at all. He
recalls a threatening conversation he had with one of the
government lawyers who are prosecuting Rewald.
APC ''or lei N is Tonight 009/2,0/34
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uncertain terms, that they would take, they would take any
step; that were neces:;ary to protect a particular agent
and that they were going to cover people. And once that
was done, then they were going to go after Ron Rewald, not
before.
yuu?ru speaxing oT is wnom-.
--t--CARP,U'Tif : Central Intelligence Agency.
SHEPARD: The CIA denies it ever tried to kill Rewald and
refuses to say whether it tried to buy off any of the 400
investors in Rewald's company, investors who lost $22
million. A number of them have filed lawsuits against the
CIA to recover their missing money. Ted Frigard, who lost
$287,000 is one of them. He says the government offered
him a payoff if he'd drop his lawsuit against the agency.
TED\cRIGARD (investor): Their offer was that they would
pay me $350,000 in triple A, unregistered, municipal
bonds. And then as we got up to leave, the man said, 'You
know, if you become too big of a pain in the arse,' he
said, 'they will Shoot you through the heart. They will
report it as a heart attack. Your body will be cremated
by mistake and all that will be left will be the coroner's
report that you had a heart attack.'
SHEPARD: Frigard says the CIA never came through with the
money and he's still suing. 'Why so much agency concern
with the Bishop, Baldwin story getting out? ABC News has
learned that Rewald's company provided the cover for some
of the CIA's most sensitive and potentially embarrassing
operations. Not only was Bishop, Baldwin involved in
selling arms to Taiwan, India and Syria and promoting
financial panic in Hong Kong, it was also fueling capital
flight from two allies, Greece and the Philippines,
countries with destabilized economies, in exchange for
intelligence information. And, according to Ron Rewald,
the agency was conducting illegal domestic operations,
spying on foreign students on college campuses and
planting domestic propaganda. But despite his CIA
connection, Rewald still faces 100 federal criminal
charges. His trial is scheduled to begin on Nov. 7. Gary
Shepard, ABC News, New York.
JENNINGS: We'll be back in just a moment.
AP10 LEBANON/U.S. JENNINGS: Since this broadcast begin, we have learned the
EMBASSY ATTACK identity of the second American killed today. He has been
4 identified as Navy Petty Officer Michael Ray *Wagoner of
Zebulon, N.C. And as we said at the beginning, the other
American death in Beirut was Army Chief Warrant Officer
Kenneth *Welch of Grand Rapids, Mich. At least six
Lebanese civilians have also died and at least 18 other
Americans are among the 70 injured. That is our report on
MEDIASCA`! - ABC World News Tonight 09/20/84
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26 September ABC News:
Last week on this broadcast we told you the story of a
man named Ronald Rewald and about his undercover work for
the CIA. During our investigation of the CIA connection,
one man that we identified as working for the Agency said he
was asked by his CIA contact to kill Rewald. The Agency
denied any such thing and repeated requests by ABC News for
more comment on what we knew about the Rewald story were
denied. Well, the CIA has now made a public statement and
it says, in part, that we, ABC News, wrongly accused the
Agency of attempted assassination and other improper practices.
Our report, says the CIA, contained false and distorted
statements. We stand by the story and the investigation
continues.
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CENTRAL INTELLIGENCE AGENCY
PUBLIC AFFAIRS
Phone: [phone]
David W. Burke, Vice President
and Assistant to the President
ABC News
7 West 66th Street, 4th Floor
New York, NY 10023
Dear Mr. Burke:
26 September 1984
Mr. Sporkin and I appreciate you and your colleagues seeing us last
Monday. I do not need to repeat how dismayed we are with the two-part series
on Hawaiian businessman Ronald Rewald and the false and distorted accusations
contained in the report.
As Mr. Sporkin and I said, we fully favor ABC's undertaking a complete
and thorough investigation of the accuracy of the series and the circumstances
surrounding its production. We intend to continue to follow the inquiry
closely and look forward to receiving your findings and learning about the
remedial action you intend to take. Since the investigation apparently will
take some time for ABC to complete, we advised you at our meeting that we
consider it imperative that a statement be issued promptly giving the CIA's
views on the totally misleading nature of the report and the irresponsible
investigative work. We provided you with a statement which we hoped ABC would
broadcast to present our views. We were disappointed to learn the day
following our meeting that ABC declined to issue our statement and offered
instead to use a softened version tied to ABC's defense of its original
report. This, of course, in CIA's view compounds the harm and unfairness we
already have suffered.
As we explained to you, the most outrageous and disturbing of the
numerous false statements in the report is the allegation that CIA
participated in a plan to "kill" Ronald Rewald. We are shocked that you would
accuse the CIA of an activity that is expressly prohibited by law and that you
do so on the basis of unverified statements by a source who has been
discredited by a number of news organizations, including your own. We believe
ABC has been professionally irresponsible and has maliciously libeled the CIA
and its employees. Your refusal to retract any of these unfounded accusations
or even to broadcast our statement presenting the Agency's position on the
broadcast leaves us no alternative in the interest of the CIA and its
employees but to pursue other avenues of redress.
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David W. Burke, Vice President
and Assistant to the President
So that the record in this matter can be complete, we have enclosed
another copy of the statement Mr. Sporkin and I left with you. We are certain
that our position will be borne out by a careful investigation of the matter.
We again ask that ABC retract its report and that it take all other remedial
action necessary to repair the ham done to this Agency and its employees.
Sincerely,
Georg Varick Lauder
Director of Public Affairs
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We regret that ABC has chosen to air a series of reports
wrongly accusing the CIA of engaging in an attempted assassina-
tion and other improper practices. These accusations were made
by certain persons interviewed in connection with ABC's series
on Ronald Rewald, a Honolulu businessman now awaiting trial
under a 100-count federal criminal indictment. The ABC report
contains false and distorted statements which one-local Honolulu
newspaper following the case closely has refused to print
because of a lack of any substantiation. The Agency obviously
is constrained from responding to the series because the) case is
in, litigation. CIA believes, however, that it is important the
public know that the report issued by ABC is an example of
irresponsible journalism. The report contains unsubstantiated
assertions, facts that have not been fully investigated and
conclusions that ignore relevant court documents. The ABC
report does a great disservice to the many dedicated men and
women who work selflessly without seeking the recognition that
is duly theirs in protecting this Nation's security. We ask
that the network retract its report ;and conduct a thorough and
impartial investigation to determine who is responsible for
the report and what corrective measures must be taken.to
prevent a recurrence.
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