Chasing Phil

by David Howard

  Meanwhile, Phil faced harsh living conditions in the Jefferson County Jail—significantly worse than in Miami. The place was overcrowded, with several men jammed into each cell, and it reeked of urine. Phil’s ulcers festered. Zeman visited him on November 21, almost five weeks after the arrest. Kitzer complained of a “severe, long-time stomach illness,” according to Zeman, and said that he “had not been able to eat for some nine days.” The attorney described his client, in a motion to the judge, as being “in an obvious deteriorated state of health.”

  Phil said he’d been denied medicine and care, and had become so ill that he’d been taken to Louisville General Hospital two days earlier for treatment and medication. But when he returned to jail, the corrections officers told him they’d lost his medicine and wouldn’t be able to replace it until he returned to the hospital, a week later. Zeman wrote that Phil “was in need of immediate medical treatment,” and that Zeman himself was writing to Johnstone because Phil was worried that his own letters to the judge might never be delivered.

  —

  Back in Indianapolis, J.J. and Jack knew little of Phil’s precipitous decline. The agents had to keep their distance while he contemplated his next move—if he refused a plea deal, after all, they would be adversaries in court. And anyway, the agents were as frenzied as ever. They were part of teams putting together more OpFoPen indictments while also preparing to testify in Louisville.

  They faced major life changes, too. The bureau had approved their transfers on October 27. Jack was astonished to learn that the FBI had agreed to ship him to Mobile, his hometown. Eager to deliver his newly expanded brood into the safety net of extended family, he packed up immediately, before some bureaucrat changed his mind about the transfer. His family relocated to the South before Thanksgiving. J.J.’s new orders were for Sacramento.

  When a month passed with no word, Jack and J.J. began to wonder whether Phil had decided to fight the charges. If that was the case, the government stood ready to unleash its full payload of legal artillery: The agents had made recordings of forty-six phone calls and eighteen meetings with Phil and others, and the collective effort of the two undercover agents and their support team had yielded six fat three-ring binders of 302 reports. In all, they counted about a hundred major frauds in which Phil, along with around fifty co-conspirators, had been involved.

  On November 28, Oliver mailed Phil a typewritten three-page letter. Finally receiving a missive from his old partner in crime might have momentarily heartened Phil—until he read Oliver’s assessment of his situation. “Your problems come to me in the middle of a long trial,” Oliver wrote. “While I have not done anything about them, other than to try to reach your ‘friends,’ I have thought about them for a good bit. My conclusion: I think you are being unrealistic.”

  Oliver had been worried for a while that Phil was “becoming less and less mindful of the consequences to you of what you were doing,” he wrote. “When we talked in Chicago at our last meeting I had the feeling that you did not give a damn anymore, and that I was talking to a man who almost hoped to be prosecuted. In that connection, I am relieved that the people with you were agents. They impressed me as being a couple of really shabby little con men, and I was dismayed to see you with them.”

  The attorney wrote that he had a “strong feeling that the two pending indictments are the tip of an iceberg….I suspect that if you survive these, there will be others popping up like spring flowers. How many can you survive? Three? Seven? Where does it all end?”

  Oliver advised Phil not to extend himself in defense of the other promoters. “Some of those,” he wrote,

  are desperados at best, riding with a gun in each hand, their reins in their teeth. In spite of your efforts to protect them they will be brought down….What you have told me of Fred Pro, for example, would not endear him to me as a man for whom I would walk through fire. Some of them appear to be wanted on two or three continents. Consider whether or not you would be willing to do four or five years for each of them.

  As matters now stand it seems to me that you have to make a choice. You can defend yourself against the present charges. You can plead guilty and stand mute. You can make a deal.

  On the first option, given Phil’s lack of defense funds, he would have to rely on a public defender, which was not a promising prospect, Oliver noted. As for the second option? “Pleading guilty and standing mute is like a ninety-year-old man visiting a whorehouse,” the lawyer wrote. “He gets nothing out of the excursion in the first place, but is there to be scooped up in the ensuing vice raid.”

  Oliver said he wasn’t encouraging Phil to make a deal, but, he wrote, “I just can’t see any other way for you to come out of it.”

  He concluded:

  Phil, I repeat that a time has come for you to get your thinking into an orientation of total, cold reality….[N]o one is going to come riding in with a verifiable CD that can be funded at the closest bank. Nothing magical will happen. The government will grind and grind. And when you think you have saved something of yourself, it will grind some more. If you are prepared to face that as your future for a few years, then face it. But for god’s sake, face it without pretending that one day you will awake to learn that it is all over and was just a bad dream.

  I am genuinely sorry for your troubles and wish that I might wave a wand and make them all disappear. If I had the resources to come to your assistance and to provide for you the best fight of your life, I would hope to have the good sense not to do so, for I think I might do more harm than good. But please be assured of my continuing regard for you, and my desire that you should now do what is in your own selfish best interest.

  —

  Oliver’s letter had the intended effect. On Sunday, December 4, within a day or two of receiving it, Phil sent a telegram to Jack and J.J. saying that he wanted to meet with them and the prosecutor, David Everett, alone. No other attorneys. He had no one representing him at the moment anyway; Zeman and Heideman had resigned because of non-payment.

  On December 11, Jack, J.J., and Everett visited Phil at the jail. The agents found the overcrowding and the stench horrifying. Some inmates walked around barely dressed. “It was disgusting,” J.J. said. “There was no sense of decency anywhere in there.”

  Phil appeared diminished. His skin was ashen, and dark shadows encased his eyes; he looked like he’d slept little and eaten less since they’d last been with him. He seemed relieved to see them—they were familiar, friendly faces, even under the circumstances. He grimaced when talking about the jail. Every inmate received Scope—a dental rinse composed of about 20 percent alcohol—in his toiletry kit. Some were so desperate for even a momentary high, they guzzled it.

  Despite the bleak conditions, the old Phil was still very much alive and well. When they sat down to talk, he informed his visitors that if they wanted him to cooperate, they had to meet his conditions. He wanted to be released from jail by Christmas. He wanted all the indictments against him dropped, and no prison time. He wanted Everett to clear up his problems with the Internal Revenue Service. (Kitzer’s troubles with the IRS—audits, assessments, penalties—dated back to the 1960s and the American Allied case. By one of his own estimates—almost certainly a conservative one, spelled out on a financial-disclosure form during his incarceration—he owed the government $1.5 million.)

  Everett rejected each condition. Phil would face indictments in at least five jurisdictions, totaling more than a dozen felonies, the prosecutor said. There was no way Kitzer could escape a significant prison sentence.

  Phil stood. He was done talking. The agents, who had watched him negotiate his way through countless deals over eight months, had expected such posturing. Phil being Phil.

  J.J. flashed back to his work as a lifeguard at Coney Island’s Bay 15. One packed Sunday afternoon, after spotting two swimmers floundering, he blew his whistle and sprinted into the water. The ocean was swollen and fitful, and as he swam the swells kept blocking his view of
the flailing pair. By the time he reached one of them, he realized that he’d misjudged his approach. He’d been taught to always approach a rescue from behind, to keep the panicked swimmer from lunging for him and endangering both of them.

  It was too late. J.J. rode a wave right into a wild-eyed man, who clawed at him. Fortunately, J.J. had also learned how to survive this worst-case scenario: He gulped in a breath and yanked the man down with him into the gray-green depths. Instead of a savior, he became an anchor. The gambit worked: The desperate swimmer pushed free and popped to the surface again, at which point J.J. grabbed him from behind and calmed him.

  That was how it had to work with Phil, too. To save him, they first had to drag him under.

  —

  Everett and the agents returned the next day with a new proposal: If Phil pleaded guilty and testified, they would cap his sentence at ten years. Final offer. If he turned it down, they would try him in federal court in Louisville within a month. If he was convicted there, and in the multitude of cases to come, he could wind up in prison for much, if not all, of the rest of his life.

  Phil knew the government was trying to make him as miserable as possible in order to strong-arm him into cooperating. The message was clear: Join us or suffer. He hated to lose, but he was a realist and had little leverage. Oliver was right: The government would pound away at him, year after year, case after case. If he had any decision to make, it was a Hobson’s choice: He could take what was offered or nothing at all. The agents warned him: “There’s no half measures here, Phil,” Jack said. “You go halfway, you’re done. You gotta go all the way. You gotta tell it just like it is in detail, and if you did it, say you did it.”

  Phil negotiated as hard as he could. Later, a defense lawyer attacking Phil’s deal with the government would say, “You had conned a lot of folks, but you could only con them down to ten, is that right?”

  “They conned me up to ten,” he would reply. “I was trying to con them down to five.”

  By the next day, they had a deal. Jack and J.J. met him at the jail and shook his hand and asked, “Okay, who can you give us?”

  They wanted the names of people he could testify against. Phil wrote out a two-page list: Andy D’Amato, Armand Mucci, Bob Bendis, Mark Iuteri—though he could never remember that last name. (“The guy who traveled around with Andy,” he said.) Harold Silverkur, the promoter in Switzerland. The Cornazes. Fred Pro.

  Phil signed the plea deal on January 4, 1978. He agreed to plead guilty to the three counts filed against him in Louisville and testify truthfully at all OpFoPen-related trials. He would provide “independently corroborative” information. In exchange, the government would not pursue further prosecution or seek more jail time. Phil could not, per the agreement, request a reduction of sentence, but Everett agreed to supply letters reflecting the nature and extent of his cooperation to appropriate parole boards, should his testimony merit such a step. And Everett would provide protection for Phil and his family. He also agreed to recommend that Phil be sentenced to a minimum-security prison camp—“a deviation from normal policy of the Federal Bureau of Prisons [that] is agreed to only on the basis of the uniqueness of this particular case and defendant.”

  —

  Audrey Kitzer was baffled. When a reporter from the Minneapolis Tribune made the drive to Ellendale to ask about the drama surrounding her husband, she professed to know nothing of his fraudulent banks and laughed in disbelief at an article about his exploits. “Listen to these names,” she said. “They sound like they’re out of a bad novel….I never heard of any of them.”

  She deflected questions about their marriage. “I just wish he wouldn’t have given Ellendale as his hometown,” she said. “If he would’ve said Chicago or Minneapolis, nobody would care less. But Ellendale—then everybody wonders why he was here.”

  The time after the arrest had been hellish, she said. Some folks told her that she’d “brought disgrace” on the town and should leave. But she had no plans to pull up stakes with their son, Jeffrey, almost finished with the first grade.

  “I wish the whole thing would go away,” she said.

  Some folks claimed to have suspected Phil all along. “Everybody in town knew he must’ve been in some kinda funny deal because he took all these trips and he had all this big money,” one resident confided. “You had to suspect something. But nobody thought he was into it that big—millions of dollars. I mean, geez, what’s going on in a little dinky-assed town like this?”

  —

  As the Louisville trial of John Kaye and John Calandrella edged closer, the government secretly moved Phil to a lockup south of Louisville, in rural Hardin County. Though he didn’t change his name, he was now in the federal witness protection program.

  The new surroundings helped. Phil had a cell to himself, decent food, medicine. And just before he was due to take the witness stand, Jack and J.J. secured the sheriff’s permission to remove him from jail. They needed to go over his testimony, and it wasn’t safe for him to be seen having long conversations with FBI agents in his cell.

  They checked into a Louisville hotel, where Phil took a shower, and they gave him some clothes and fed him. Then they hunkered into one room as they had done so many times the previous year, to talk business, only this time Phil faced a task unlike anything he’d tackled previously. From the questions defense attorneys had asked during cross-examinations in the trial earlier, it was clear that they were hoping to convince the jury that Phil duped Kaye and Calandrella into handling phony paper. (The government had been unable to extradite John Packman from England or Jean-Claude and Pascal Cornaz from Switzerland.) They tried to block Phil’s appearance as a witness, claiming his many years as a con artist extraordinaire rendered him unreliable. Pondering this motion, Judge Allen was astonished to read transcripts of the recordings Jack and J.J. had made. In chambers, he characterized Phil as “a rip-off artist with the greatest dreams, and I shouldn’t use the word ‘great.’ Most sordid dreams of any man I’ve ever read about.”

  Allen ruled that Phil could testify, but he told the lawyers that they had “a right to say that Mr. Kitzer is a massive con artist….The gold mine deal, the Hawaii deal, my goodness. We could spend three or four months here if we talk about those.”

  —

  Jack took the stand a day before Phil, on February 16. He described Phil as being “at the top level” of a con game involving banks that peddled phony paper, and he described how Phil operated, how he built in defense mechanisms. “We would travel,” Jack said. “Kitzer did not believe that it was safe to stay in one location because…any law enforcement organization in particular who wanted to know where you were would always be able to locate you and keep easy track of you, what you were doing. So he was a believer in mobility.”

  Defense attorney Paul Redmond began his cross-examination by asking Jack whether “a great many of the things you have testified to here are things that Kitzer told you.”

  “That is correct.”

  “Now, Kitzer, I am asking you from your experience, is a congenital liar, is he not?”

  “I would characterize him as a person who lies when it is convenient for him.”

  “A psychopathic liar?”

  “I wouldn’t be in a position to make that statement.”

  “A man who does not know the truth from falsity but, rather, uses it any way he wants for his own benefit?”

  “He does make statements which are false when it serves his purpose.”

  “Habitually?”

  “When it’s convenient for him.”

  “He even makes them to associates of his, does he not?”

  “That’s correct.”

  “And over the period of time that you were with him, you saw him habitually and continuously lie to people who were supposedly his associates, is that not true?”

  “He frequently lied to everybody,” Brennan conceded.

  The next defense attorney, Kenny Grantz, questioned Jack about
Phil’s drinking.

  Kitzer “consumed a lot of alcohol and could handle it,” Jack said. “He could stay up until four in the morning and get up at eight the next morning and attend a conference with individuals.”

  “Still drinking?”

  “He would start drinking at nine-thirty or ten in the morning.”

  “I mean, we could say he was a constant drinker from morning till night?”

  “Well, frequently, yes.”

  The question for the government was whether, after all this, Kitzer would be someone a jury of Kentuckians would believe.

  —

  J.J. and Jack tried to prepare Phil for what lay ahead—to expect to be called a liar and a thief and a drunk, and worse. They hammered him on the importance of being honest about what he’d done, regardless of how it sounded, and reminded him that the government would add prison time if he committed perjury. “Phil, no freaking monkey business,” J.J. told him.

  As the first trial spawned by Operation Fountain Pen, this one carried an outsized significance. If a jury rejected Phil’s testimony and acquitted Kaye and Calandrella, prosecutors in the other trials lined up over the next year or two might waver.

  J.J. took a certain odd comfort from the resumption of their old habits: going to fetch stomach meds, picking up Phil’s dry cleaning, their verbal swordplay. It was a relief to no longer have to hide in plain sight; now they only worried about Phil being discovered. After reading transcripts of one of the FBI’s recordings, one of the defense attorneys had said he expected “they would have him under deep cover.”

  The next morning, they all walked out of the hotel and into the frigid air, toward the next chapter of their lives. Phil’s first appearance as a government witness came on February 17, 1978. Exactly one year and two days after they’d met for the first time at the Thunderbird.