REWALD FIRM HELD BANKRUPT DESPITE CLAIM OF CIA TIE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100690072-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 22, 2016
• Document Release Date: August 10, 2010
• Sequence Number: 72
• Publication Date: September 21, 1983
• Content Type: OPEN SOURCE

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STAT
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newata farrh hetct
bankrupt despite
claim of CIA tie
By Walter .Wright
Advertiser Staff liriter
Ronald Rewald claimed yes-
terday that the CIA put money
into his firm and directed the
investment of the CIA funds.
And Rewald said he was
phasing out his clients' invest-
ment accounts in favor of other
investments when a television
station's "attack" on him and
his company started a "run."
Rewald's attorney, Robert A.
Smith, suggested that Rewald's
company. .was far from bankrupt
beCatise as Midi as $6 million
of the $12 million Invested had
come from sources other than
"legitimate investors" and
would never be claimed.
Smith appeared to be refer-
ring to the CIA and to "cover
funds from highly-placed for-
eigners."
4 put U.S. District Court Judge
Martin Pence ruled that Re-
lifE L-G41.4) Actkbek-11
wald's firm Is bankrupt no mat-
ter where the money came from
or went. Pence ordered that an
estimated $2 million in assets be
gathered and sold to pay back
some of the $12 million invested
by about 400 persons.
-
The judge also refused to 'lift
a freeze on Rewald's assets -..so
Rewald could pay legal fees. ;?Z,
For Rewald to ask for s?h
funds after fleecing the public
and looting thc company was
tantamount, bankruptcy trustee
attorney Don Gelber said. toff?a
person ednvieted? of murdering
his mother and father who'thn
begs for mercy on grounds bets
now an orphan."
Pence said there were no
documents to back Rewalers
claims about mysterious invest-
ments in "pie-in-the-sky" thiggs
like Indonesian tea plantations,
or that the CIA ordered .Ie
See Firm on Page A-4
Sigsfi /6 kit '31 ill
- '1??
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Trustee Wants to Step Down
(
Pewa d Settlement to Take Years 2, "3
By Chart Memminger
.5t,7r-Bulletin Writer
It will be some time before
Ronald R. Rewald's houses, horses
and heirlooms are auctioned off
to repay 'creditors some of the
Millions of dollars they invested
in Bishop. Baldwin, Rewald. Dill-
ingham & Wong even though the
company now is officially bank-
rupt.
Interim bankruptcy trustee
Thomas Hayes said there are at
feast two -solid- years of work to
;be done in the liquidation proc-
Css
' Before any of Rewald's person-
al ? ?-?ts fan be sold, however.
Ha.: orNl hoever is eventually
appointed the permanent trustee,
has to go back to' federal court
and ask that a constructive trust
in Rewald's personal items be im-
posed.
. Hayes said this possibly can be
.achieved through a court order
Mit that there ma' have to be a
trial on the matter.
THE ONLY OTHER way Ile-
wald's personal belongings, such
as his art collection. polo ponies
and house fixtures, can be sold is
if Rewald agrees to it.
The only things that can be
sold now are items belonging to
the company, such as office
furniture. Hayes said.
Although Rewald, in a court
_affidavit, claimed the furniture
was worth $2 million. Hayes that
the total amount he could get for
the furniture is about $150.000.
The company's total assets are
less than a million dollars. he
said.
Asked where he thought Re-
wald came up with the $2 million
figure as the value of the furni-
ture. Hayes said, "Fantasyland "
ONE OF THF.: first things to do
in the bankruptcy proceeding is
to appoint a permanent trustee.
Hayes said he told U.S. Judge
Martin Pence Tuesday he wants
to step down but offered his serv-
ices as an administrator.
"The bankruptcy code does not
contemplate the trustee being a
full-time person in matters of this
sort." Hayes said.
"It requires somebody on a sal-
ary basis to do the administrative
job that has to be done. A perma-
nent trustee is more of a caretak-
er, he can't afford to spend the
time that a job like this will
take."
Just how much work needs to
he done is not clear, but Hayes
said the process would take at
least "two years of solid work.
Who knows, we have just seen
the very tip of the iceberg."
THE TRUSTEE'S first duty will
be to make up a list of schedules
as to who is to be paid first with
the money raised from the sale
of company assets.
At that point, the total list of
investors, except for those who
specifically ask not to be named,
will be made public, Hayes said.
That could occur within 30 days.
The trustee will then look at
the "preferential transfers,- or
money or assets that were dis-
pursed to people up to a year
before the company collapsed.
According to bankruptcy laws,
the trustee has the right to de-
mand the return of some of lost
assets.
Two consultants. it is currently?
known: received $110.000 shortly.-. ?
before t he eompa ny collapsed1P*
That money apparently must be '-
returned.
One of those persons is Jack-
Kindschi, former head of the CIA,
office here. who N.%.as given $140,-....
000. The other was Killian Bode,
Haves said. who was given $70.-
The trustee then will begin
investigating company -wrong-
doers" and look at possible law-
suits against them. In the the
Holiday Mart bankruptcy. which
Hayes handled. more than 30 law-
suits were filed. he said.
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ewald asset 'r
t,
ty.s. 'District Judge Martin
, Pence ruled again yesterday
that no personal zissets held by.
jailed tinvestment counselor,
,ROnald Rewald may be used
td pay for his legal defense.
Pence 4enteti, a motion,
attorneys Brook Hart and
Peter Wolff for assets to be
released' to pay them for work' L,
it
e ea e
on Rewald a
Pence on Tuesday denied a
similar motion from attorney
Robert Smith. Rewald's firm
Bishop. t Baldwin. Rewald, -
Dillingham and Wong has
been declared bankrupt with
some. $650,006 in assets. .Claims
filed by investors so far, tOtal,
about $6 million. '
fi 0 rPN 41A ) r
y
. r
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Rewald Bankruptcy Case
Gets Key Hearing Today
By Charles Memminger
stiir.thaichn Wnter
Attorneys in the Ronald R. Re-
wald case were to square off in
federal court today in a signifi-
cant legal skirmish to determine
if Rewald's company actually is
bankrupt or not.
Interim bankruptcy trustee
Thomas Hayes. after reviewing
the company records for several
weeks, believes there is no ques-
tion that the company does not
have the money needed to pay
back creditors.
But Rewald's attorney, Robert
Smith. contends there are enough
questions about the solvency of
the company and the circum-
stances surrounding its downfall
to merit a Jury trial.
It will be up to U.S. Judge Mar-
in Pence to decide if there will
.be a trial or if the involuntary
bankruptcy will continue and a
permanent trustee will be ap-
pointed, as requested by credi-
tors.
' Also to be decided is Smith's
request that some of Rewald's
frozen assets be released to pay
attorneys 'fees in both his crimi-
nal and civil cases..
HAYES AND his attorneys, Don
Jeffrey Gelber and James Wag-
ner, are steadfastly opposed to
releasing any of Rewald's money
for his defense. Gelber laid out
their reasoning in a strongly
-W,orded memorandum that in-
eluded a quotation by a British
defense numstcr on the eve of
the Falkland Islands invasion:
The Aittlrglar must not be allowed
to keep the spoils'
lie said there has been a strong
showing that -Mr. Rewald system-
atically looted.' Bishop, Baldwin,
Rewald, Dillingham Sz Wong, that
"Ile should not now he allowed to
?
vt$e those funds for his personal
benefit - especially to gain con-
trol of the corporation's remain-
ing assets and to defend his own
ebrporate v,rongdoing."
:..Gelher also attacked Smith's
proposal to use classified materi-
als in Rewald's defense, this time
using a quotation from Samuel
johnson. "Patriotism is the last
refuge of a scoundrel."
SMITh WAS to ask Pence at
tbday's proceeding to allow him
access to classified documents
previously sealed by the court
and to use a confidential affidavit
filed by Rewald.
Gelber said in his memoran-
- 4:turn that he doubted if any "se-
*let papers- would have a bear-
(ng on the bankruptcy..
1 '7-When the Rewald fraud was
!' unmasked. many . . . depositors
Cirmanded their money back," he
? said. "The money wasn't there
aid the creditors weren't paid.
?No secret affida? it can alter that
ifr Wt."
Gelber went on to say that Re-
wald "is attempting to hide the
bankruptcy of his company' and
raftrami.;e0.-
(
In ..
Hawaii...
Honolulu Star-Bulletin A-3 ?
Tuesday, September 20, 1983
his own highly questionable con-
duct in a cloak of secrecy."
The involvement of classified
documents in the Rewald case
and Rewald's hazy connection to
the nit have been intriguing as-
pects of the case.
DESPITE the fact that the for-
mer head of the CIA office here,
Jack Kindschi, was one of Re-
wald's consultants and Rewald's
claims to other consultants that
he had some relationship to the
CIA, the allegation was dismissed
by investigators on the case. But
after some "classified" documents
were found in Rewald's company
files by CIA agents sent from
Washington. D.C., officials con-
ceded that Rewald may have
been a "bit player" for the CIA.
Rewald's attorney has pointed
out, as did Rewald in an affidavit
filed last week, that Rewald has
made no public claim that he has
any relationship with the CIA.
"My only position thus far has
been one of no comment to any-
one in this regard," Rewald said.
It is ironic, however, that his
'attorney now is asking that Re-
wald's own classified affidavit
and other material under court
seal be allowed to he used in Re-
wald's defense.
The presence of CIA-related
documents has created some
confusion in court by the govern-
ment officials who want to keep
them under seal. Anticipating
Smith's filing of more classified
material last week, assistant U.S.
Attorney John Peyton sought and
was granted an order by Pence
sealing any documents mention.
ing the CIA. Federal court clerks,
however, said they did not have
time to scan each document filed
and said they would seal all docu-
ments related to the Rewald case
and let the court sort it out.
Pence amended his ruling yes-
terday putting the burden of hav-
ing appropriate documents sealed
on the attorneys filing them.
th
De
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? PACAF's,,,praswell retires today
maerece 7/4 73
Lt. Gen. Arnold W. Braswell, who has
commanded Pacific
Air Forces during
Its post-Vietnam
War moderniza-
tion, will retire
this morning after
35 years of active
military service.
Gen. Jerome F.
O'Malley, Air
Force vice chief of
staff, will preside
at Braswell's re-
tirement ceremony
at 9:30 a.m. at
Hickam Air Force
Base.
' 'Braswell, 57,
?,PACAF
- COM man der-in-
chief since July
1981, supervised
the rejuvenation of Braswell
U.S. air power in
the Far East that now boasts new F-16
fighter-bombers and A-10 anti-tank aircraft
in Korea, and F-15 fighter-interceptors and
AWACS radar planes in Japan. Important
strides also were made in the quality of life
at PACAF bases.
Braswell also worked toward better coop-
eration with the U.S. Navy in maritime
operations, and frequently emphasized in
speeches the importance of industrial
minerals to national security.
In keeping with the increased status of
Pacific Air Forces, the Pentagon is expect-
ed to name a four-star general as Braswell's
replacement. Until then, Maj. Gen. Fred
Haeffner will be acting commander-in-chief.
Braswell was caught in the glare of pub-
lic attention this summer for his personal
involvement and investment in the embat-
tled financial firm of Bishop, Baldwin, Re-
wald, Dillingham and Wong. He is expected
to file after retirement a claim for any
losses.
A 1948 West Point graduate, Braswell has
been a fighter pilot, staff officer and com-
mander in Korea, France, Germany, Viet-
nam, Turkey and Belgium. He was director
of plans and policy for the Joint Chiefs of
Staff in 1977 and '78, and came to Hickam
after commanding the Tactical Air Com-
mand's 9th Air Force..
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she replied when questioned by
foreign reporters at a press con-
ference.
She announced that she will -Mrs. Marcos said she is aban-
not run for re-election to the doning politics because in the
ose state-1
e received with'
ticism by members of the
political opposition.
Mrs. Marcos also said she
hopes President Reagan will
visit Manila in November as
planned. Calling Reagan an "old.
friend," she said a cancellation
would mean that the Philippines
is "not important" to the United
States.
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By Waiter Wriiht -,_< < But, Pence rieverthefess, ordered' Alitriestori novwbelieved to have pumped ,Marginal connections with government
Aiderrtiarr 5oft,trar -' ., -- the six envelopes remain sealed- , , .,,-",, - A2,matior,i into the 'company. -- ' _ 1,, agencies- and employees to gain the
44. ,- ?, , -, -, , 7, ', Now Revirjild's attorney, ' Robert A.-- , ----newald hopes his arguments about confidence of the public, enrich them- :
, Ronald Itewald is trying to, hide his Smith, says he has given Judge Pence;;,'" calittritik'ffnformatien will prevent the - Selves by defrauding investors, and ? ;
eemPaors bankruptcy and his own "a great deal Of information he did _nOt court from ruling today that, the firm az,....t.b. en_ -- when confronted --- seek to, , 1
'
"highly questionable ' conduct" behind have before" Arti the rlacgified area. _4 B.10P*,, Baltikvin, Rewald. Dillingham., absolve themselves of their criminal or..-
I' the'proteative shroud of 'national ,, It -includes 'I a ?-?confidential .affidavit , anti;Wo*. wkenkrupt- He also hopeell:*.f, --civil wrongs and ethical short-- '
- tieturity,-':' ' the interim i.: bankruptcy ? , from Rewild? 96 'corifIdential- exhibits: ' to get the court to release some froseny coming's by trying to conceal their de-
and a confide ? m of jaw :.aabeta 40 he can pay for his, defense .:plorable conduct behind the protective
':??;1?FusButteie,ssatddtrustYeSt:erdyh,omaes, ?the on the subject. against theft charges and in civil cases. s:it:Lod of 'national security.' 7 Gelber
-
The ? is whether Rewald` n--.f -- entitled to use some is ss ?
-r _lasue w s c? '-new inforination. And the public_ may ?
-: heetiOn to the CIA is enough to affect-,:i, never know the extent of Rewaid: - -Wirt' yesterday_ that the sole question-- ',. ne
bankruptcy proceedings against h s Sici4Lhefere ?the.,, cobrv is whether Rewaid.a ..?.. w? frozen by the court, for his de-
t, embattled company. It comes to a head '"'t? tile intelligence CoMMUnitY? fs company -,paying ns debts when ,f nseakiTo insist thahte
thaelleagssets aedly sretc;fet
,..._ Th CI hundreds f ,- s ? -4,--r?i-, _ 1' - ' ' ? - ? - ''' ' ,_?--- f. - - effectively convicts' ewal <
? - tv s cause
at 1:3a Pin' tpdaY # 0-&---.11^'-, '$.--.. hours poring.over-company hie; IA) ? '
Indup
131
dodge won't work." Only the judge and the governmentDon Gelber, attorney for bankruptcy ,?
know if any of the documents' Prtvvide-:& trustee Hayes' said in a filing with the Attorney
ofown Smith saldh'ilewaida was
-i-: Jud aw
ile. li:7_1?11:ill f_.,e!;'---,--;', 'frirr'?-,-i. -:-A',;$44pid,:iltioteo 'ciairilfisigitition*atogoitz. ' .....iii,..4.,?'i suicide attempt Smith said.
- "has 'A Rectrattrs (*ppm,* :--One. theory":*--'.thcit..-witeTer--ltewaskr4t-il and the -,':'-i', '.. ii:ii,ts? wc:rreiWpalil,,-G ,f..4,4septlEi; l'i::::r!l'ACsaiIIL) money, has already proth
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-'. apparently provided -*alter.: Such .. ? ,no
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--. 'AS a '",-!ConneetionM4Y have been, the-r.reillf?4'6 14. -
.: mailing 'address andlele:PhOnefor,:fiVe.:pr ?e*,',,I.1 a tilmallpieiss .-it 1:CLA,,:amforit17,r0NAT'sai4i.' ', ''i,- ,'.---: liee-eita,4ieet .6f . fiitejr.. , a String of, :-
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mg , six envelopes . of -classifiable docikt?Ilatetl!yotb fooliks Pc!ri:, , , .,1.,:,-,4?
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A-7santornis"-
.....ptember 21, 1983 The Honolulu Advertiser e
r
A4
Firm ruled bankrupt
from page one
company's study on the flight of
capital from Hong Kong.
And the judge said whatever
Rewald's CIA connections were,
they were irrelevant to the
issue of bankruptcy.
Pence had said earlier after
looking at other classified
material that Rewald, because
of his contacts with present and
former members .of the CIA,
"considered himself a more
important, undisclosed private
associate of the CIA organiza-
tion than he actually was."
But the hearing before Pence
yesterday left even more tantal-
izing questions than it answered
about Rewald's link with the
Central Intelligence Agency.
CIA attorney Robert M. La-
prade said in a carefully-worded
affidavit that "on the basis of
information that I am aware of
I state the following:
? "(1) the CIA did not cause
Bishop, Baldwin; Rewalk:pill-
ingham and Wong to be nfeated
nor has the agency at anYtime
owned, operated, controlled or
invested in" the company;
? and. "(2) the CIA was not
aware of and has had absolutely
nothing to do with Ronald Re-
wald's alleged appropriation to
himself of the funds of (the
company) or its investors."
But the CIA, with Pence's
blessing, nevertheless kept
scores of Rewald's exhibits seal-
ed for further "review."
And the agency censored
huge chunks of Rewald's confi-
dential affidavit in the case, all
in the name of national securi-
ty.
In fact, it appears from what
was left in Rewald documents
which were released yesterday
that the CIA kept secret even
the tiniest reference to itself or
intelligence activities.
Pence himself pierced
the veil. twice:
Pence quoted from paragraph
21 cf Rewald's confidential affi-
davit. saying that Rewald had
claimed that "Bishop Baldwin's
account at Hawaii National
Bank, the main depository ac-
count, thus consisted of (1)
funds from legitimate investors,
consisting of their own monies:
(2) funds from the the CIA: and
(3) cover funds from highly-
place-i foreigners."
The money, the jtidge quoted
Rewaid as saying, was "com-
mingled," and used "fot the
purpose of (A) meeting the of-
fice overhead of Bishop Bald-
win. 13) in legitimate Bishop
Ba ri. n vestment transac-
(C) in CIA-directed
Paragraph 21 was among
those sea:ed by Pence at the
CIA 5 request.
At another point. Judge Pence
indicated Rewald had claimed
that the Hong Kong capital
; study was "brought about at
the request of the CIA.- But,
the judge said, the exhibit offer-
ed to support that claim "did
not in the slightest refer to any-
thing in Hong Kong."
What is not known is what
the exhibit did refer to. The
exhibit, along with 60 of the
other 94 exhibits submitted by
Rewald, was sealed at the CIA's
request.
According to a deposition filed
earlier in the bankruptcy pro-
ceeding, Rewald had made simi-
lar claims earlier. A deposition
signed by Tony Cabading. Re-
wald's former tax accountant,
quoted Rewald as saying. "the
money I am loaning, lending to
the corporation, are from the
CIA. All this money. But I ask
them, what should I do with
them. And they won't tell me."
Cabading said he was asking
Rewald how the company had
so much money to loan, when
neithes.Rewald nor the comps-
ny showed any income.
There has been some- specula-
tion ? but no hard evidence ?
that some foreign nationals may
have used Rewald's firm as a
vehicle for removing funds. from
their countries.
Sources said, however, there
are few depositors listed with
the company with foreign ad-
dresses.
Rewald's confidential affidavit
was heavily excised by the CIA
,before portions of it were
released yesterday. In all. the
CIA removed about 30 pages
from the 57-page document be-
cause of references to the CIA.
Much of what was left repeat-
ed the claims Rewald made in
another, "non-confidential" affi-
davit described in an Advertiser
story Sunday. That non-confi-
dential affidavit remains under
the court's seal because of the
interpretation placed on it by
the court clerks office.
It was what appeared to have
been taken out of Rewald's affi-
davit that was interesting.
Rewald starts out giving a
chronological story of his life,
and gets to the point where,
having married at the age of IS.
he attended a junior college,
Milwaukee Institute of Technol-
ogy, "in the early 1960s."
The next several paragraphs
are excised by the CIA, and the
story picks up again when Re-
wald started working for a
sporting goods company some
time later.
The missing portion appears
to coincide with that point in
his life in which Rewald has
falsely cliilmed he was earning
degrees fro,m Marquette Univer-
sity.
Later in the affidavit, Rewald
says .;:lhancledly that "of
course he had not obtained
Marquette. degrees ? a corn-
ment that suggests his Mar-
quette story was somehow
related to classifiable or CIA ac-
tivities.
The CIA excised material
from the story at a point when
Rewald moves to Hawaii, both
before and after his 1977 meet-
ing with Sunny Wong and their
establishment of an office on
the 15th floor of the Amfac
Building.
Whatever Rewald wanted to
say about his activities from
that point to the writing of the
Hong Kong capital flight study
in 1983 has been excised by the
CIA, a period covering 16 pages
in the narrative. The CIA also
excised eight pages apparently
dealing with matters from the
time of his July 29 suicide at-
tempt to the present day.
In between the censored por-
tions, Rewald paints a grim pic-
ture, of the plight of investors,
"many of whom were my
friends, family and relatives, all
the people I cared about the
most in the who!, world."
His wife and children. Revirald
says, are split Up, liVin,g with
relatives who had their life sav-
ings, in Bishop 'Baldwin. "My
oldest children (the Rewalds
have five children, daughters
aged 12, 13 and 17, and sons
aged 15 and 19) had to quit
school to get jobs. My wife is
working as a housekeeper,
trying to hold what's left of the
family together."
And Rewald also offers more
defense for the company's ac-
tivities.
It was true, he said, that
investors were once told their
accounts were insured up to
$150,000 by the Federal Deposit
Insurance Corporation, but that
was only because of an aborted
plan to deposit the money in
insured bank accounts and to
use those accounts as collateral
for loans.
By taat time, Rewald said,
the entire investment account
system had "mushroomed to the
point of being too time-consum-
ing and cumbersome to con-
troi.- He said the company de-
cided at a November 1982 board
meeting to discontinue the ac-
counts.
Among those listed as present
at the meeting, by invitation,
was Jack Kindschi, a company
consultant and investor and for-
mer head of the CIA's office in
Honolulu.
In April 1983. Rewald said, he
told all consultants that "suit-
able :nvestment alternatives
Would be found," but insisted no
clients be advised of the change
untli they were found.
Rewald said, he sent
out another memo on the same
point. and "we began turning
down, literally, millions of dol-
lars front potential clients who
wanted to place their funds
Ronald Rewald
Assets still frozen
with us."
He said hP turned down $4
million frc-,..1 some Big Island
investors, and turned down Cale
Carsor, who said he wanted to
Invest. Rewald said he under-
stood it was Carson who then
first complained to state authin.
.ities about Rewald's company.
Carson.'ecalld not be reache.
last night. - -
Rewald apparently claims Vie
company had $3.6 million in
assets which related to the CIA;
paragraphs covering such asscts
are excised from his affidavit.
Rewald said he was planning
an orderly transfer of client
funds from the investment ac-
counts to other investments
such as the "legitimate" busi-
ness opportunities coming his
way. He also apparently was
relying on some CIA connec-
tions as well: the CIA blanked
out the rest of the sentence.
But, Rewald said, television
reporter Barbara Tanabe's "at-
tack" on the company July 29
started a "run" on the firm.
"I did attempt to take my life
on July 29- following the televi-
sion broadcast, for two reasons:
? "First and foremost, the
disclosures made that day ? of
my previous bankruptcy, of
pending investigations by the
Department of Commerce and
Consumer Affairs, Interna'
Revenue Service and FDIC, and
charges that I had not play,
professional football (I had), or
received degrees from Mar-
quette University (of course I
had not) ? caused me shame,
humiliation and embarrassment,
beyond measure.
"This was not so much fp!.
myself as for my family. I want-
ed to shield them from this pub-
lic exposure of private and per-
sonal matters, and so I arranged.
that day for them to leave for
Wisconsin."
? Whatever Rewald's second
reason for attempting suicide
was, he must have claimed it
involved the CIA: the CIA ex-
cised it from the documents.
people.
Marc c
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Am.
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AMMIMINfonsw.
Wednesday, September 21, 1983 Honolulu Star Bulletin A-3
ge Orders
'E 11J
Firm
ankruptcy
By Charles Memminger rely heavily on Rewald's CIA con-
nections to ward off the bank-
Star-Bulletin Writer 'ruptcy, but pence issued his rul-
- Discounting Ronald R. Rewald's ing based on a harrow aspect of
,claims that there are secret assets U.S. bankruptcy law: Was the
1.4 cover some of the money owed company paying its debts before
Investors in his company, a leder- it was forced into bankruptcy
al, judge yesterday ordered the Aug. 4? Pence decided it was nOt.
company into bankruptcy. Authorities have conceded that
Rewald's attorney, Robert Rewald was a "bit player" for the
??as obviously .frustrated CIA, but said he made. more out
'hen 1,J,S. Judge Martin Pence of his involvement than there
said he would not consider any of actuallY was
-
the secret affidavits and exhibits
Smith- had Submitted in his at- ' UNABLE, TO argue the CIA in-
tempt to account for some of the volvement, Smith could only
ti.ing assets., .- point out that the situation the
company found itself in at the
secret documents apparent- end of July was most irregular."
'IV referred to Rewald's CIA con-
-Elections in an attempt to explain
why some Bishop, Baldwin, Re-
wald, Dillingham & Wong funds
were unaccounted for and why
some investments could not be
discussed with investors.
,k For the first time yesterday,
-the, CIA's position was stated
clearly in one of the secret affi-
davits that was unsealed at the
request of the U.S. Attorney's of.
fice.
, Robert M. Laprade, attorney
representing the CIA, said the
CIA did not cause Bishop, Bald-
;win, Rewald, Dillingham & Wong
to he created nor has the agency
at any lime owned, operated, con-
trolled or invested in BBRD&W
and the CIA was not aware
of and has had absolutely nothing
to do with Ronald Rewald's al-
leged appropriation to himself of
-j the funds of BBRD&W or its
investors.-
; PENCE MADE it clear early in
the proceeding that he found
nothing in any of the classified
documents. which had been seal-
ed by the court, that had any
I bearing on the creditors' motion
1 that the company be forced into
, permanent bankruptcy.
Pence said the "classified
lk assets- referred to in the secret
t.,
document,s are "pies in the sky"
d have-no- bearing On the bank-
After Rewald's suicide attempt
on July 29 the company shut its
doors to avoid a -run" on the
institution.
"No financial institution can be
expected to have a run," Smith
said.
But Robert Smolenski, repre-
senting .the group of creditors
who filed the bankruptcy petiton.
said that did not matter.
'"Investors put in funds with
the understanding that they were
fully accessible," he said. When
they demanded their money, they
did not receive it. He pointed out
that at least one investor had
asked for his money before the
suicide attempt and did not get
it.
Smolenski said Hayes has put
company assets currently at
about $650,000, while investors
put at least $12 million into the
company.
Don Gelber. attorney for Hayes,
echoed Smolenski's remarks, say-
ing that the debts were not paid.
"and no secret affidavit can
change that."
SMITH SAID that although $12
million may have been put into
the company, only about $6 mil-
lion has been claimed so far by
creditors. Smith implied that the
remaining money was connected
to the CIA and said the fact that
no one has going_ forward to
.r.?,., trftftlee:41?+A-Iii4?.1iii-itcs., claim the,.,reit,,!..:Ctit, t to ya a -
- ues ion,-._ ,,-,,,-,--v..,*.p- ,.--? -?
-iequest that some of Rewald's :,:-1
.:,.....-;,:: Smith argued-_thaCaolnir? - Re-
be
SCOZ,Ur Pte0OgikhalosP.Pk-riPAS.'"-:','Avald's asseta,jbou.14,,)?0, telkik'0 '
r
for titelti`'....41vderense''' After tkev;011T?.1-iii. his 'e it,tOVA?Ys
:...tfearing, Smith said he could not:,
i,';''Continue to represent Rewald because Rewald PO up.. his -own
money as a down payment on his
Oniment on how long he will
1 m1111?11
without b * king paid. paicV , _ ,ald,,. he ? $'1. homel--" X-4 an?le
..
, Highwiyvifear Kul.00,11-
,T
,: will appeal Pt-flees to the.,.1-le said Rewald. has 40P11..
9th U.S. Circuit Cgti-rt of Appeals. "able to defend himself because Of
i, Pence's ruling clears the -way ,
i for , a permanent ' bankruptcy , the coifiC orders freezing his!.
'to begin so investors can . Smith said. ';',,:'.--.'".
:
,,,. man 'IS 'eniitled to a deferise, .:
' "Pt:, our legal system, a ? ,, trustee to be appointed and for assets.
.the liquidation of company assets
get al '', But Smolensk' 'pointed out thaV;,,
,. least part of their money back. i. ?Rewald - Is responsible for .sorile?
; IvrEizim TRUSTEE Thomas creditors' not having the money
said he probably will not needed to prosecute their claims
; be the permanent trustee. 'Trust- against the company and that, in
:
''es get paid I per(ent of all the effect. Rewald is asking for a
' monk.% ilii, thimIle. But with few loan from them to defend him-
lit in the company, self
Hayes has said it is not feasible "We don't like his credit," Smo-
. to continue the work needed to, lenski said.
i sort out the company's finances.-Gelber likened Rewald's re-
It is possible he' Will be hired on uest to a 'person who kills his
a salary by the permanent trust- parents and then throws himself
ee. on the mercy of the court be-
Smith apparently planned to cause he is an orphan.
Very Little Revealed
in 'Edited' Affidavit
By Charles Memminger
star-Milletin Wruer
For a few moments yesterday,
it appeared that the public would
eet a peek at some of the secret
claims made by Ronald R. Rewald
in his sealed affidavit filed in
, federal court.
Assistant U.S. Attorney John
Peyton allowed Rewald's confi-
dential affidavit and a confiden-
tial mornorandurn by Rewald's
attorney. Robert Smith, to be. un-
sealed.
However. the previously secret
material was a document riddled
with large w hite areas, places
. where words, lines and whole
paragraphs, apparently with
references to the CIA, obviously
were covered up before being
mechanically reproduced.
The affidavit nevertheless sheds
some light on Rewald's back-
ground and his feelings about
what has happened to him. The
whited-out gaps between differ-
ent parts of his testimony provide
intriguing pauses.
FOR EXAMPLE, at one point
Rewald doscribes his college
education. Ile does not claim to
have attended Marquette Univer-
sity or Marquette Law, School, as
he had in the past. Instead, he
said he attended a two-year jun-
ior college. 'Milwaukee Institute of
Technology. hi his list of the dif-
ferent activities he was involved
while in college, the first
white space appears. Sources
have said that Rewald had been
affiliated with the CIA while in
college, as one of the students
used to infiltrate student radical
groups to determine if they were
financed by foreign governments.
Another large white area
apparently refers to a report pre-
pared by Bishop, Baldwin, Re-
wald, Dillingham & Wong on the
flight of Hong Kong capital 'be-
cause of the pending takeover by
China.
TWO FINANCIAL experts who
reviewed the report at the re-
quest of the Star-Bulletin, de-
scribed it as a lightweight piece
"that could have been put togeth-
er by high school students."
Rewald, in his affidavit, said
the report is worth $2 million in
potential. investments.
,Judge Pence disagreed.
The affidavit describes the ef-
fect that Rewald's troubles and
the collapse of his company are
having on his family.
"My wife and children are split
up, living with relatives who had
their life savings in Bishop, Bald-
win." he said.
"I am in prison on $10 million
bail and couldn't raise $5,000 if
my life depended on it. My oldest
children had to quit school to get
jobs. My wife is working as a
housekeeper, trying to hold
what's left of the family together
The sentence is left incomplete,
followed by a white space.
--n.'titagg"-magatuarsgmranthaaattatettililaWrA
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By Waiter Wright
Adter'ti?er Staff Writer
Ronald Rewald is not entitled o
have the public pay for his defense
because he is not indigent, accord-
ing to the state public defender.
Public Defender Barry Rubin said
in court this week that his office
has "made a preliminary determina-
tion" that Rewald's assets have to
be counted on any personal balance
sheet, even though they are under
a federal court freeze.
Rubin suggested attorneys Brook
Hart and Peter Wolff be ordered to
continue as Ronald Rewald's crimi-
nal defense counsel, at a fee not to
exceed $6.000, because of all the
free publicity- they'Vd gotten ? from
the case.
Rewald's own civil attorney has
estimated it would cost $300,000 to
$500,000 to defend the embattled in-
vestment counselor.
Rubin warned that dumping the
rn
case on his shoulders would "crip-
ple" his office "and undermine its .
ability to effectively represent the
remainder of its clients."
Rubin's views were contained in a
brief he filed this week as a "friend
of the court" on the question of
whether any of Rewald's claimed
personal assets should be released
from a federal court freeze so Re-
wald can pay defense attorneys.
U.S. District Court Judge Martin
Pence turned down that request
Wednesday.
The issue bounces back into state
court Thursday. when Circuit Court
Judge Robert Won Bae Chang will
consider Hart and Wolff's request
to be allowed to withdraw as coun-
sel for their penniless client.
Rubin said his office believes Re-
wald's assets arc his own, even if
the Court won't release any of
them. and Rewald therefore does
not qualify- as an indigent- entitled
to be represented by the public de-
fender.
The federal court's refusal to re-
lease any assets would therefore
leave Rewald "without recourse for
obtaining counsel," Rubin said.
One alternative would be for a
court to order the public defender
to represent Rewald, Rubin said,
but that would cripple the office.
Rubin urged the court to release
$6,000 ? the maximum allowed by
law for payment of court-appointed
counsel in such a case.
Rewald is charged with two
counts of felony theft in state court
for which fees of $1.500 each are
allowable; the law also allows the
fees to be doubled for good cause.
Rubin nominated Hart and Wolff
to work for those fees.
"Since present counsel for Re-
wald has already begun the process
of becoming familiar with the
numerous documents and the many
complexities of this case, counsel's
continued representation would
clearly be the most effective and
efficient means to reach a just re-
sult," Rubin said.
"Furthermore, present counsel
has already availed themselves of
the prodigious amount of publicity
that has surrounded this case."
Unless some money is released to
pay them, Rubin said, Hart and
Wolff "would in effect be permitted
to profit from the initial publicity
and then extricate itself in time to
avoid the costs and hardships of
proceeding further by unloading the
burden on this office."
Claims against Rewald's bankrupt
firm, Bishop, Baldwin, Rewald, Dill-
ingham and Wong, yesterday reach-
ed more than $8.9 million.
A federal grand jury continued
yesterday to hear testimony from
employees of the firm.
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