EX-CIA OFFICIAL DENIES REWALD'S STORY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100710075-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: July 26, 2010
• Sequence Number: 75
• Publication Date: August 22, 1985
• Content Type: OPEN SOURCE

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The Honolulu Advertiser,
Thw lday, AWP* a, 1945
NOMMMOM
Ex-CIA official denies
Rewald's story
By Walter Wright
Adoertiaer Stiff Writer
Eugene W&ch
Sounded out Rewald
The former head of the CIA's
Honolulu field office said yes-
terday he once set up "safe
houses" for the CIA abroad, but
that he didn't create Bishop
Baldwin Rewald Dillingham &
Wong in Honolulu.
Eugene J. Welch denied Ron-
ald Rewald's charges that
Welch and the CIA directed
the creation of the bogus in-
vestment company, its fictitious
past and its offers of 26 percent
interest to investors.
Welch, who ran the one-man
overt CIA field office here from
1976 to 1978, said he met Re-
wald only twice after Rewald
telephoned and volunteered to
report about planned business
trips to Japan and China.
"He shows promise of devel-
oping into a productive source
of FI (foreign intelligence),
once he has been oriented
properly as to the agency's real
needs and interests," Welch
wrote on a "source/contact
information sheet" about Re-
wald after having lunch and
dinner with him on June 30,
1978.
But, Welch added, "he would
have to be cautioned not to let
his enthusiasm cloud his judg-
ment as to his real capabil-
ities."
Welch, now retired and the
owner of a convenience store in
southwestern Virginia, is a key
witness in the government's ef-
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474 Thursday, August 22,' 1968
of perjury foP sing un
oath that Wokh aid" 04A
set up Bishop Baldwin.
But Welch and the docu-
ments he identified yesterday
also provide the first hard evi-
dence of how Rewald gained
the confidence of the nation's
principle intelligence organiza-
tion, a situation that ultimately
exposed several agents and
some operations and tech-
niques.
Rewald says he is innocent of
defrauding millions of dollars
from investors because he only
took the money to maintain his
CIA "cover" as a wealthy busi-
nessman, believing the CIA
would reimburse him.
Welch said his 1978 estimate
that he would see "source/con-
tact" Rewald perhaps three to
four times a year meant he
considered Rewald an "aver-
age" volunteer of the kind the
agency often uses.
Welch, a calm, slow-talking,
deep-voiced man who looks
vaguely like movie star Gene
Kelly, said he joined the CIA in
1952 and that his contacts with
Rewald were among his last
duties before his retirement
Sept. 15, 1978, in Hawaii.
His "generic" description of
his 26 years in the agency sug
gested his career was a far cry
from James Bond.
His first Job was in "logis-
tics," which meant for two
years he got vehicles for a
European division of the Agen-
cy-
For the next four years,
Welch said, he worked in an
94 overseas location." initially in
logistics and vehicle control
and then in "operations support
- a real estate activity procur-
io atand managing safe house
A "safe house," he said, is an
apartment, house or other'
building, "not traceable to the
CIA and in some cases, not to
the US. government" and used
to house persons needing safety
and secrecy.
After another two years at
Washington headquarters for
the Eastern European division,
The Honolulu Advertiser i
Welch's career shifted to the
CIA's Domestic Collection Divi-
sion.
The division collects "foreign
intelligence from U.S. citizens
who voluntarily offer it," he
said, 'operating only in the
Upited States, at least "to the
best of my knowledge.," . The division maintains "field
offices." in several U.S. cities,
with public telephone numbers
listed in the directory under
Central Intelligence Agency, he
said.
Such "field offices" are distin-
guished from CIA "stations," -a
term which generally refers to
an overseas location maintained
by.the clandestine services, the
covert -side of the agency,
Welch said.
One of the ways a field office
gathers information is, when
"the U.S. citizen 'who feels he
? has some foreign intelligence of
a significant nature will call
and ask to have an interview in
the course of which he may tell
us what he knows."
Such .persons, "walk-ins,"
may become "contacts" or
"sources," Welch said, provided
they aren't -immediately dis-
missed as members of a large
category known as "nuts.
The ' information they, provide
usually comes from their own
contacts with ' foreign individu-
als,* Welch said, and typically
involves economic, political 'or
sociological information on -it
.foreign country.
Welch said he worked in the
division's Detroit and Pittsburg
field offices in the 1960s and
1970s, with two years of head-
quarters training as well, be-
fore .coming to. the small Ha-
waii office in 1976. in the hopes
.of retiring here.
On June 30, 1978, 'a few
,months before his retirement,
Welch said, he ' got a telephone
STAT
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call from Rewald, whom he had
never heard of.
Rewald indicated he had re-
cently returned from the Peo-
ple's Republic of China, a visit
which Rewald thought 'would
be of intelligence interest, ac-
cording to Welch.
"I suggested we meet for
lunch for a more lengthy dis-
cussion of what he had in
mind," Welch said. At the res-
taurant in downtown Honolulu,
he said, Rewald told him he
was involved in retail and
wholesale sporting goods sales,
and planned 'to.travel to a Far
East country and establish
.manufacturing sources for
sporting goods.
Welch said Rewald disclosed
to him in that first meeting
that his Wisconsin company,
CMI, had failed there but had
been transferred to Hawaii
where Rewald hoped to rebuild
it.
Rewald also said he had been
a professional football 'player
with the Cleveland Browns,
and that he had graduated with
bachelor's and master's degrees
after -six years at Marquette
University, and a Ph.D. after
two years at the Massachusetts
Institute of Technology, Welch
said.
Rewald actually attended the
Milwaukee Institute .of Technol-
ogy, a junior college.
Asked if he wasn't puzzled by
Rewald's two-year doctorate,
Welch suggested it might have
appeared that Rewald was "a
genius. He had a great deal of
charm. I couldn't probe his
intellect."
Welch said Rewald gave him
that information even A hough
he must have known it could
be checked in one telephone
call:
After that first meeting,
Welch said, he returned to his
office and filled out the custom-
ary "source card."
Under cross-examination
which will continue today,
Welch tried to explain why
that document listed Rewald's
CMI Corp. at an address at
Grosvenor Center which Re-
wald didn't move to until later.
Welch said he assumed a
secretary had whited out the
original address and put in the
new one after the business
moved.
He acknowledged that some
typing on some documents
looked the same, despite differ-
ent dates for the entries, but
suggested it was because it was
done on the same typewriter in
Honolulu or different typewrit-
ers of the same brand and vin-
tage at CIA headquarters.
STAT
"Source was a walk-in who
volunteered his services,
moved, he said, to this action in
sympathetic reaction to the
years of criticism and slander
leveled against the U.S. intelli-
gence community.
"He claims a past association
with the agency during his stu-
dent days ... when one ele-
ment was attempting to trace
the foreign roots of student un-
rest in the U.S."
(On cross-examination, Welch
said he believed Rewald was
confused and must have been
thinking of the FBI, because
the CIA has no authority for
domestic spying on U.S. citi-
zens. But Welch said he was
unaware of Operation Chaos, an
alleged CIA attempt to infil-
trate student groups.)
Rewald, Welch continued,
showed promise, and "has
visited the People's Republic of
China once in the recent past,
and seems to have laid the
groundwork for continuing
good access there."
Rewald's potential expertise.
Welch indicated, related to
Japanese sporting goods and
footwear manufacture, import
and export; Chinese industrial
development needs; and China's
import-export trade.
Rewald, Welch noted at the
time, "would very likely be
receptive to operational re-
quirements."
But Welch insisted that the
CIA "source card" notation on
the original June 30, 1978,
meeting as dealing with "plans
and operations" was a refer-
ence to Rewald's personal plans
and business operations, not to
some CIA plan or operation.
The next meeting, the dinner
at the Rewald home with
Kindschi, was described on the
same card as dealing with
development of Rewald's "FPI"
or "foreign positive intelli-
gence" potential, Welch said.
Welch said he made a re- -
quest for 'a check of Rewald's
name for derogatory informa-
tion in files maintained by gov-
ernment agencies in the United
States, primarily the FBI.
That initial name' check re-
quest, sent to headquarters too
late for the answer to come
back before Welch left town,
apparently did not turn up Re-
wald's 1976 Wisconsin theft
conviction, and Rewald shortly
received a "secret" security
classification valid for the next
five years.
A subsequent check did turn
up the theft conviction, but the
CIA by that time had been
dealing with Rewald for some
time and decided to continue to
do so, according to officials
close to the case.
Before he left Honolulu,
Welch said, he introduced Re-
wald to his successor in charge
of the field office, Jack
Kindschi, at a dinner at the Re-
wald home.
After that second meeting,
Welch prepared a confidential
"DCD source/contact informa-
tion sheet" on Rewald.
The sheet, introduced in evi-
dence, contains this initial as-
sessment by Welch:
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