by David Howard
“What do you think their opinion is gonna be about that?” Wedick said. “And tell them that as an SAC, you don’t really give a shit.”
Yes, Lowie replied, his voice rising. Of course that was a problem. It just wasn’t his problem.
Wedick slammed the table. “Who the fuck am I talking to, you idiot?” he blurted. The words hung through a moment of stunned silence.
Lowie growled, “It’s SAC Frank Lowie, idiot!”
Wedick mumbled an apology. Holy shit, did I fuck up today, he thought.
The incident quickly blew over—Lowie considered it one of Wedick’s New York moments. And Jim Deeghan remained a solid ally. Dark-haired and in his mid-thirties, he believed in the case enough to push the bureau’s comfort zone. The next time Brennan and Wedick were in Indianapolis, he pinned index cards to a conference room wall for each potential prosecution: Mucci’s stolen bonds. The Shaker House scam. Nick Carbone. For each open case, the FBI allotted $1,500 in expenses. If they kept opening cases, Brennan and Wedick would have money to travel with.
Laid out in this way, the Kitzer investigation looked convincing. Nobody wanted to be accused of ignoring repeated criminal activity. Brennan and Wedick also had Richard Hanning in the U.S. attorney’s office on board, which was key. After hearing that federal prosecutors believed that they had a good case, Lowie agreed to give them a chance.
They had flown off to their training in Quantico feeling excited. Wedick and Brennan even came up with a code name for the investigation. They called it Operation Fountain Pen.
—
Andrew D’Amato was forty-five, with a Mediterranean complexion and a head of curly black hair that spilled across his forehead. In contrast to Kitzer, who preferred business suits, D’Amato dressed casually, in looser-fitting, open clothes with wide lapels, as if he’d just arrived from Monaco. When he joined the others in Cleveland, he presented a card identifying him as chairman of the board of Hotel Fontainebleau International, Ltd.; he said he was in the process of acquiring the massive Miami Beach resort. He was also the U.S. representative of a large London-based trust run by the Martini family (of Martini & Rossi) that spread its largesse around underprivileged countries, often through long-term loans.
D’Amato claimed that the European trust, headquartered in Liechtenstein, was a masterstroke. He’d cooked up the idea with Alexander Martini, a con man with a criminal record going back two decades who was actually unrelated to the famous wine family. What’s this thing called? Kitzer asked.
The Euro-Afro-Asiatic Trust, D’Amato said.
Kitzer burst out laughing. You don’t want to do any deals with that, he said—the name is so bad. D’Amato said they called it EAAT or the Eurotrust.
“Wait,” D’Amato said. “Let me show you something.”
He opened his briefcase and took out copies of certificates of deposit. One Crocker Bank CD had a face value of $4.5 million. From First National City Bank, London, were CDs for $5 million and $1 million. All were made out to the Eurotrust.
Kitzer examined the CDs. “You’re renting the money,” he said.
This was an old game that required a friendly banker. You go to, say, Wells Fargo and ask your insider for a $20 million CD. You pay the banker an under-the-table fee, and he creates a CD. But it’s good for only five days.
You then go to the Bank of Hawaii to do Kealoha’s takeout commitment, and the banker there wants to check out the CD. He calls Wells Fargo, reaches a teller, and says, “We have a certificate here,” and gives the number.
“And she’ll say, ‘Okay, just a minute,’ ” Kitzer later explained. “And she hits her machine and it comes right up on her screen and she says, ‘Yeah, that was purchased so-and-so day. We have it here, no problem.’
“It’s confirmed. Now, if the Bank of Hawaii wants to go further and they say: ‘Well, now, listen, tell us more about this. We want to know: How did this come about?’ There’s no way that girl knows. But on that certificate it’s coded that this certain bank officer—the one that you paid off—is the one that handled the transaction. Normal course of business she says, ‘I got to refer you to Mr. So-and-so.’ She transfers that call into his desk. Bank of Hawaii says: ‘Did you issue this certificate?’ Well, this guy is in on the deal. He knows he’s going to get a call from Bank of Hawaii.” Your inside man confirms everything. “He never tells them,” Kitzer said, “that the thing is going to cash out in two, three days.”
To cover himself, the banker sets up the transaction as a loan. The money comes into a loan account, and from there it goes to a CD account, then to a collateral account. The money is like the pea in the classic shell game. D’Amato now appears to have opened a million-dollar account as collateral for his loan. The money never leaves the bank, and the banker will soon absorb it back into the coffers, but its movement through a CD account allows him to generate the carbon copy inside D’Amato’s briefcase. “Window dressing,” Kitzer said. “People see those types of certificates issued, they want to believe that it’s really true.”
A plan coalesced. D’Amato would go to a bank offering to provide a takeout commitment on Kealoha’s project—that is, the Eurotrust would commit to providing the $10 million long-term. The CDs were the collateral. “What does the bank have to check?” D’Amato asked. “We’ve got real money.”
“In real banks,” Kitzer said.
“In real banks,” D’Amato echoed.
“No Mickey Mouse.”
Kitzer suggested they charge Kealoha $80,000 for a Eurotrust takeout—a phony letter guaranteeing that the trust would cover the long-term cost of the project. If Kealoha managed to use it to get the $10 million short-term loan, Kitzer would write in loopholes—trick language—that would prevent the Bank of Hawaii from ever collecting from the Eurotrust. He would insert a line near the end of a long, wordy contract mandating that all work had to be done “to our satisfaction.” It sounded innocuous enough, but then D’Amato would endlessly ask for more paperwork, work orders, appraisals—and find fault with it. Not “satisfactory.”
Later, Kitzer said, “you use that with the victim, saying, ‘You didn’t do what you said you were going to do, and that’s the reason the deal didn’t work.’ And that is one of the best ways to cool a person down after they lost the money.”
Not only would the Bank of Hawaii be defrauded out of $10 million, but its officers probably wouldn’t say a word about it. “If they made a mistake and issued the funds,” Kitzer said, “and later the bank attempted to collect, when the bank’s lawyers got done studying that takeout, they would tell the bank: ‘Keep your mouth shut. Straighten it out, eat it. You were a fool, and don’t go to court and admit that.’ ”
Kitzer had another idea. They could create a shell corporation to acquire the project from Kealoha—then they could take the $10 million from the Bank of Hawaii. The group loved this. Bendis suggested a name for the new shell corporation: Island Investments. For the officers, Kitzer volunteered two new associates, Jack Brennan and Jim Wedick, who were en route to Cleveland.
As for how to “cut up” the money: Kitzer and D’Amato would split the fee and pay a share to anyone they brought in to help. The promoters routinely picked up people to play certain roles, like characters being written into a play.
Kitzer left to make a call. When he returned, he announced that everyone should book flights to Miami. Kealoha could meet them there the day after next.
8
The Junior G-Men
MARCH 3, 1977
The early-morning chill was beginning to lift on what would become an unseasonably warm day when Brennan and Wedick caught their flight out of the nation’s capital. Wedick quietly brooded. He was still furious about the way Jack had sprung this trip on him.
Brennan figured that once they got started, Wedick would forgive him. Jim’s heart is in this, Brennan thought. The agents boarded a train to downtown Cleveland and headed for the bureau office. Deeghan had helped by calling ahead to his buddy
in Cleveland to put in a last-minute request for surveillance help.
Still, Wedick hated the thrown-together nature of this trip. He, too, was happy to flout the FBI’s calcified ways—he found the organization maddening at times. He’d once received a letter of censure for failing to provide a six-month report on a fugitive case. Two months later, he collared the fugitive in a dramatic arrest involving a closed freeway ramp and received a letter of commendation. Same case. “In one letter I’m the stupidest asshole of all time, and in the next one I’m the greatest agent on the face of the earth,” he said. He framed both in his bathroom. But if he and Brennan were going to barrel ahead and ignore the usual protocols, he understood, they would need to do it thoughtfully. They needed to treat these rare opportunities with great care.
Wedick was pretty sure that their FBI colleagues in Cleveland wouldn’t be impressed with Brennan’s aw-shucks southern mannerisms—not with the two of them storming in at the last minute, asking for the world. They needed recording equipment and a surveillance team of five, including two women, so they could blend in at a bar. Those agents would have to push aside their own cases and cancel their Thursday-night plans. All for some white-collar case from Indiana no one even understood.
I wouldn’t like us, Wedick thought.
Sure enough, they arrived in late morning to an icy reception. Brennan and Wedick recognized agent Walter Setmeyer from their trip to the Cleveland airport two weeks earlier, but no one else. Someone gave Wedick a Nagra and pointed toward an empty stenographers’ room where he could take his clothes off so he could put on the recording rig.
“This does not feel good to me, Jack,” Wedick said, closing the door behind himself. “How could you think that this was a good idea?”
“I had an afternoon to kill,” Brennan said, shrugging, not wanting to engage.
“Then you put your name on this thing. Let them know you’re the son of a bitch.”
Wedick had just dropped his pants when a female steno walked in; he stammered an apology. They moved out into a back hallway, behind a filing cabinet. Wedick, now flustered, told Brennan that since this was his idea, he should wear the Nagra and held the recorder out to him.
Brennan threw him a look that said Fine, whatever, and stashed the recorder inside the breast pocket of his sport coat. He was brawnier than Wedick and figured the device would be visible on his back. He also dropped a wireless transmitter into his shirt pocket, similar to the one Wedick had worn in the airport. Setmeyer would sit in his car and record the transmission—both as a backup for the recorder and for security. If someone pulled a gun, he could alert the others.
When Brennan and Wedick met the Cleveland team for a briefing, the lack of enthusiasm for Operation Fountain Pen was palpable. There were no conference rooms available, so they all wedged into a hallway cul-de-sac, the undercover agents and a semicircle of unfamiliar faces wearing blank or annoyed expressions. After walking through the plan, Wedick and Brennan asked where they could store their guns. In Washington they’d just been issued Walther PPKs—the handgun James Bond used in the 007 movies—and they realized by the reaction that their colleagues hadn’t seen the new weapons yet. This added to the impression that they were divas. Now they were flashing their special new toys.
Wedick, rattled, couldn’t get out of there fast enough. None of this was going to help him feel more comfortable with Kitzer. It was like trying to stretch a twin-sized sheet over a king-sized bed. There were so many places where they might be exposed.
—
The agents arrived at the Sheraton Beachwood by midafternoon and tried to check in. But here was their first speed bump: In their rush, they hadn’t made reservations, and the hotel was full. Unsure what else to do, they called Kitzer’s room and headed up.
Kitzer, resplendent in a fitted suit and tie, greeted them warmly, then excused himself to answer the phone. While he was talking, there was a knock on the door, and Wedick answered it. Armand Mucci stood outside next to a smiling, curly-haired man, and Wedick stepped into the hall to meet Andrew D’Amato while they waited for Kitzer to finish his call. Eventually Kitzer hung up and asked Wedick to invite everyone in.
D’Amato peppered Brennan and Wedick with questions: where they were from, what deals they’d done. Brennan said that he was in commodities and had a source who gave him tips to come out ahead—a fictional college buddy who possessed inside information on certain commodities. This was the story he and Wedick had come up with to explain where their money came from and provided the financial engine for Executive Enterprises. The agents felt that it was important for their credibility to establish that they had their own angle they were playing. And this story was ideal in that in addition to linking Wedick and Brennan to illegal activity—which helped them fit in—it was also hard for any of the promoters to confirm, in the event they wanted to find out more about the two newcomers.
But they were still novices at this, and the stress of meeting someone new—enduring the scrutiny and the initial waves of natural curiosity—was as intense as when they’d met Kitzer. Each introduction was a fresh test. Wedick felt they had to be rock solid as young promoters, or one of these guys would sniff them out.
He mentally ticked through the safeguards they had in place, much like the way his mother rubbed her rosary beads. They had Howard and now Kitzer vouching for them, and the Executive Enterprises business cards. The promoters had no reason to expect the FBI to send agents to live among them. There was no precedent for that. The longer they hung in, the easier it would get. Or so Wedick hoped.
Kitzer explained the Kealoha plan, and D’Amato seemed enthused about Brennan and Wedick. They always needed more operators, he said, and these guys were so young and fresh-faced, they would make solid front men. Kitzer recalled that, in fact, the first time they’d met, he’d said they looked like FBI agents because they were so clean-cut.
Everyone chortled, and D’Amato bellowed, “They’re the Junior G-Men!”
The room exploded in laughter, and Wedick and Brennan gamely joined in, even as they both pondered how surreal this was. They were surely the first undercover operatives ever to be teased by their targets for their uncanny resemblance to undercover operatives.
Fortunately, as with the other promoters, D’Amato didn’t cede the spotlight for long. He handed them a Fontainebleau Hotel business card and explained about acquiring it. Warming up, D’Amato launched into a round of strenuous name-dropping. He was friends with Spiro Agnew, who’d been Nixon’s vice president, and Chuck Colson, the Watergate lawyer. Did they know Sophia Loren and her husband, Carlo Ponti? They were D’Amato’s friends, too. And he knew powerful people in Italy. In fact, his daughter was one of very few people on a list to get married in the Vatican.
The men peeled off their jackets and settled in to talk business around the small hotel room table. Brennan hesitated. The Nagra was in his coat. He decided it would be worse to be conspicuous than to lose the recording—plus, the transmitter still sat inside his shirt pocket, looking like a pack of cigarettes—so he peeled his jacket off and hung it up with the others. Bob Bendis arrived, and Kitzer made his announcement about entering into a conspiracy and unpacked the Hawaii deal. The promoters loved the idea of taking the $10 million loan, maybe even building part of the complex and selling all the units before bailing out with the rest of the cash.
When happy hour arrived, Kitzer popped up and herded the others toward the lounge. Brennan walked past the jackets in the closet, stanching a geyser of anxiety over whether someone would rifle through his pockets. He hadn’t even had the chance to turn the machine off.
Wedick, meanwhile, mentioned that they’d been unable to get a room, and D’Amato said that as chairman of the Fontainebleau, he would speak to the management. He marched off as everyone took seats in the lounge and ordered drinks: Scotch for Kitzer, Jack Daniel’s on the rocks for Brennan and Wedick. Mucci sat next to them and repeated the Junior G-Men joke, and everyone smiled and nodded
. Apparently the nickname was going to stick.
Around then D’Amato reappeared and, with a triumphant flourish, presented Wedick with a room key. He had somehow induced the sold-out hotel to find an available room. Then Bendis piped up: If the Junior G-Men were playing a role, they would have to be able to pass a credit check.
Brennan replied that this wouldn’t be necessary; their credit was fine, he said, smiling, laying on the southern accent. The word came out fahn. But Bendis insisted. As an attorney, he could easily run a check—because what was the point of putting them out front only to learn later that they’d declared bankruptcy five times? Brennan nodded. This was ripe with irony, that a group of con artists were concerned about their credit scores, but he and Wedick were unamused. If Bendis researched their Social Security numbers, he would unearth personal information: home addresses, and maybe their employers.
Wedick and Brennan exchanged looks. They needed to call Deeghan. But then the promoters dropped that topic and launched into a discussion of how they would defend themselves if questioned about the Hawaii scam. This was part of orchestrating any deal, Kitzer explained.
The promoters turned to Brennan. As a front man, he would tell the FBI that he’d had no idea what was going on. He was a legitimate businessman and hadn’t intended to defraud anyone, and his lawyer, Bendis, had told him the deal was legitimate. To prosecute him, they pointed out, the government would have to prove that Brennan “willfully and knowingly” conspired to defraud.
D’Amato chimed in that all Brennan had to say was “I don’t know nothing.”
Worst case, if they were prosecuted, Kitzer continued, federal white-collar prisons were cushy. An acquaintance had recently been sentenced to three years at the facility in Danbury, Connecticut. “He calls me [from prison]: ‘You can’t believe, they got a gymnasium, a swimming pool…’ ”