That November, Coffey, this time accompanied by an FBI agent, Richard Tamarro, flew to Munich (the first time the FBI had ever sent an operational agent overseas to investigate an open case).63 Their assignment was to convince Barg and Ense to cooperate. They first met with Barg. Over a couple of bottles of Chivas Regal in their hotel room, the two strike team members pressed him hard. Since he was the only legitimate businessman among the conspirators, they were confident he would be the most likely to fear the consequences of not cooperating. It took ten hours before Barg reluctantly agreed to become a government informant in return for a grant of full immunity. Tamarro and Coffey next took Barg to meet with Ense. After another half day of heated negotiations, Ense also agreed to help the American investigators.64
Both Germans swore they were victims of the American mobsters, who they claimed were blackmailing them to sell counterfeit bonds and common stocks. But the real story, according to them, was what Ledl and the gangsters had been up to.65 The corporate bond and stock certificates held by the New Yorkers were near-perfect copies. Ledl had arranged a buyer: the Vatican. According to Ense, some high-ranking prelates in Rome—in partnership with crooked officials at Italy’s central bank—had agreed to pay $650 million for $950 million of the phony paper. The New York mobsters agreed to later kick back $150 million as a “commission” to the Vatican, still leaving the American mob with a profit of nearly half a billion dollars.66
As best the FBI could later determine, someone in the Vatican Bank intended to use the fraudulent securities as collateral for obtaining dollar-for-dollar financing (banks might finance $950 million or more for the church so long as $950 million in cash equivalents—the bonds and stock certificates—were pledged as escrow). Rizzo had already used stolen Coca-Cola and Chrysler securities as collateral to finance a luxury residential development in the South of France.67 Ledl later said that the IOR wanted to help fund Sindona’s ultimately unsuccessful hostile takeover of Bastogi, Italy’s largest holding company (a bid supported by both Calvi and P2’s Gelli, among others).68
The banks making the loans against the phony paper would have no idea the collateral was worthless. If the IOR’s investments were profitable, it would pay off the loans and no one would ever discover the bonds and stock certificates were fake.69 But if the IOR’s investments went sour, the lenders would demand the collateral to cover any unpaid balance. Only then would the counterfeits be unmasked and the entire plot collapse. The IOR could then claim that it had itself been an innocent victim of a complex fraud.70
When pressed for specifics, Barg and Ense claimed that during a telephone call, Ledl said the recently deceased Cardinal Eugène Tisserant knew the details and approved of the scheme.71 The previous July, Ledl went to Rome with $14.5 million in counterfeit AT&T, GE, Pan Am, and Chrysler bonds. Ense met him and was present when Ledl telephoned Tisserant’s private secretary to say they had samples of the securities for the cardinal’s approval (Vatican logs showed Ledl had signed in on several occasions, listing Tisserant as the person he was visiting).72
Ense also described a trip he took with Ledl to Turin. They drove to a monastery on the edge of the city limits. Ledl went inside while Ense waited in their rental car. A BMW soon pulled up, and a tall priest, wearing a long black coat, went inside the monastery. Aronwald’s strike team later came to believe the priest was Marcinkus, matching the car described by Ense to one used by the bishop. Ense also picked Marcinkus from a photo lineup.73
Back in the States, Aronwald’s squad worked to confirm whether the Austrian con man and the late Cardinal Tisserant had known each other. The U.S. investigators discovered that Ledl had frequently traveled to Rome, stayed in room 338 of the Vatican-owned Hotel Columbus, and met not only with Tisserant, but also with Cardinals Egidio Vagnozzi, chief of the Prefecture for the Economic Affairs of the Holy See, as well as Giovanni Cicognani, Dean of the College of Cardinals.74
Aronson dispatched Coffey and Tamarro to Vienna to offer Ledl the same immunity deal to which Ense and Barg had agreed. They stopped in Frankfurt on the way to convince Rudolf Guschall, a Frankfurt attorney they suspected of providing notary stamps for the securities, to cooperate. When they started questioning Guschall, he panicked, began crying, and yelled that he wished he were dead. He then ran to a large window and tried opening it before Tamarro restrained him. Once calm, he began talking, filling in some missing details for the investigators.75
Before getting to Vienna, the two Americans made one more detour, this time to Luxembourg. There, Ernest Shinwell, the black sheep son of a British lord, was in jail for having defrauded some banks in the duchy.76 Shinwell, it turned out, knew other elements of the plan. He talked to them for hours.77
In Vienna, Tamarro and Coffey discovered that Ledl was not at his turn-of-the-century office but instead at a local prison. Austrian police had arrested him, not for his role in any grand scheme, but on fraud charges related to the sales of the fake Burundi Honorary Counsel titles. When the Austrians had searched his office and home they found, among other incriminating items, stock certificates that turned out to have been stolen from a Petaluma, California, doctor two years earlier. They also learned that Ledl had been in possession of counterfeit IBM common stock.78
Gathered in a small interview room, Ledl asked that the Austrians not monitor the conversation, afraid that what he shared with the Americans might add to his legal problems in his native country. After the Austrians left, Ledl began talking. In his July 1971 visit to Rome, he said he met with Tisserant inside the Vatican. Tisserant directed him to bring the $14.5 million in the fake securities as a deposit for the overall deal to a monastery in Turin.79 There, Tisserant’s private secretary, and Monsignor Alberto Barbieri, a writer and lecturer for the Vatican’s publishing house, greeted him.80,II When Bishop Marcinkus soon arrived, said Ledl, they discussed the quality of the counterfeits and the next steps.82
Ledl refused the offer of immunity to testify in the United States about what he knew. He had told them enough, he said, and wanted to be left alone.83
Possibly the most important evidence Ledl directed them to were two letters, dated June 29, 1971, on original letterhead for the Vatican’s Sacra Congregazione dei Religiosi (the Sacred Congregation for Religion, a little known Curia division responsible for setting guidelines so bishops kept separate their religious and secular duties). The letters confirmed the IOR’s intent to buy the securities in five installments over several months.III
“These were very powerful charges,” says Aronwald. “We knew Ledl had a record for one con after another, so we weren’t going to rely on him unless we could independently corroborate everything he told us. And as for Ledl meeting with Marcinkus, we had only him and Ense vouching for it.”85
Aronwald wanted his two investigators to head to Italy to interview “Count” Mario Foligni. But the Italian police did not cooperate. Instead of just having them wait in Austria while the paperwork churned through the Italian bureaucracy, Aronwald called Coffey and Tamarro home.86
The FBI, meanwhile, confirmed that Marcinkus was in Turin the day that Ledl claimed to have met him in the monastery.
Aronwald had to get approval for the next stage of his investigation at the highest level of the Justice Department. The Attorney General, Richard Kleindienst, was preoccupied with the unfolding Watergate scandal. Kleindienst still had jurisdiction over the investigation into the just reelected president (a Special Prosecutor would be appointed the following May).
“It was time to approach the Vatican,” says Aronwald. “This was all very unusual, and highly sensitive, and especially since Marcinkus had become a target in the investigation.”87
Aronwald was worried that the case might stall at the swamped Justice Department. To his great relief, after a couple of weeks they got permission to move forward.
Aronwald and Whitney North Seymour Jr., the U.S. Attorney for the Southern District of New York, arranged a meeting with New York’s Cardinal Terence Cooke.88 B
ecause it was so sensitive—its details are set forth here for the first time—the government investigators and church officials did not meet at the archdiocese headquarters nor any government building, but at a private conference room inside the New York Public Library’s main research branch at 42nd Street and Fifth Avenue.
“We explained some of the details of our investigation to Cardinal Cooke,” recalls Aronwald. “It was very awkward because he was friendly with Marcinkus.”89
Cardinal Cooke agreed to contact the Papal Delegation in Washington, D.C. A few weeks later, the Papal Nuncio, Archbishop Jean Jadot, told the American investigators that he had arranged an off-the-record meeting with officials at the Vatican.
The Justice Department, relying on advice from the FBI, selected as its team Aronwald, Tamarro, and William Lynch, the Washington, D.C.-based chief of the Justice Department’s Organized Crime and Racketeering Division. Coffey was furious he was left out. New York police detectives had started the investigation. Coffey knew it as well as anyone. But the order from the Justice Department was unequivocal.90
On April 25, 1973, Tom Biamonte, the FBI liaison officer at the American embassy in Rome, and a good friend of Marcinkus, brought the men to the Vatican. Archbishop Benelli, the martinet Deputy Secretary of State, greeted them.
“It was my first time ever to Europe,” recalls Aronwald, “and it was a little unnerving since I was a Jewish kid from Brooklyn.”91
“First, he told us the Cardinal Secretary of State was busy,” recalls Tamarro. “And although we were in a big chamber, we were all told to sit on one small couch, no table, nothing to spread out our documents.”92
Benelli introduced them to three monsignors on his staff. Eduardo Martínez Somalo, the assessor in the Secretary of State’s office (later a cardinal), led the Vatican delegation. The interpreters were Monsignor Justin Rigali (currently the cardinal emeritus of Philadelphia) and Karl Josef Rauber (later an archbishop and Nuncio to both Liechtenstein and Luxembourg).
“We started off by setting out the broad parameters of the investigation,” says Aronwald, “and what we were looking for. It pretty quickly became a contentious meeting. It was awkward in some ways because Bill Lynch—a great guy—is a Catholic in every sense of the word. And he did not seem very comfortable.”
Tamarro had the least seniority. But he was the one tapped to explain the details of the probe.
“I laid out some file folders on my lap,” he says. “Whenever I would say, ‘We need to know this or that,’ they would not really answer.”93
Tamarro asked Martínez to authenticate or debunk the letters on Vatican letterhead that Ledl had provided. He refused. When shown a list of some counterfeit bonds and securities, and asked if he had ever heard of any of them, Martínez demurred.94
“At one point,” says Tamarro, “I said we need to know something specific. Because we were there to get some help, but it seemed they had just come to listen. And this time he answered and I could make it out because it was so short and succinct. He said, ‘Absolutely no.’ And the translator told us, ‘We are here to assist you in any way we can.’ I was so fucking pissed. I slammed my folders and papers shut and started to get up to leave. But Lynch ordered me to stay put.”95
The standoff continued for only a few minutes.
“Then we were told very curtly that the meeting was over,” remembers Aronwald. “We could tell they were not at all happy because they knew this entire matter could be a great embarrassment to the Vatican. But the good news was that we were told we could meet the next day directly with Marcinkus.”96
“They had simply kissed us off,” says Tamarro. “And just as we were about to leave that room, Lynch said to them that he couldn’t go back to his kids unless he had a rosary blessed by the Pope. Rigali said that was no problem and asked Aronwald and me if we wanted one. Aronwald said, ‘Sure, I’ll have one.’ I said, ‘Absolutely not!’ I was so pissed off I didn’t want anything from them. That night, when we were back at our hotel, we all had a little too much to drink. I said to Lynch and Aronwald, ‘How could you take anything from them when they gave it to us up the ass today?’ ”97
The trio had to wait three days before they were summoned back to the Vatican. This time they were escorted past the Church of Sant’Anna dei Palafrenieri and the Swiss Guard barracks, toward the Apostolic Palace, and into the Tower of Nicholas V that housed the IOR. Vittoria Marigonda, Marcinkus’s secretary, led them into his large office. Marcinkus came around from his desk to greet each of them with a hearty handshake.
In their first descriptions ever of that encounter, Aronwald and Tamarro told the author they found the bishop “disarming, totally charming,” “a regular guy,” and “very cool” about why they were there.98 They thought he looked more like a “bodyguard than a bishop,” and one of the first things he did was offer them a drink. He talked nostalgically about America. And he regaled them with stories about Rome and the Vatican. But when the talk got to the criminal investigation, Marcinkus became guarded. For a moment he changed his congenial tone: “Look, I don’t have to tell you anything!” Then, after a long pause, he again smiled. “But I will, because I want to cooperate with the FBI.”99 He dismissed the charges as “wild” and said those who had instigated them were likely enemies inside the Curia who were jealous that he, an American at that, had risen to run the IOR and had such a close personal relationship with the Pope. He told them that Ledl’s friend, “Count” Mario Foligni, and Monsignor Mario Fornasari had tried to interest the IOR in two large deals.100 After he passed, Marcinkus claimed, Foligni had started spreading rumors about corruption inside the Vatican Bank.101 As for Sindona, Marcinkus admitted knowing him and told the U.S. investigators that he thought the Sicilian financier was “ahead of his time as far as financial matters were concerned.”102 The bishop denied ever meeting Ledl.103
Marcinkus answered many questions with a general denial, dodged pointed ones, and at times claimed he could not provide any information because of banking secrecy laws and fiduciary obligations. When asked about specific securities, he produced a list he had prepared, purporting to show those owned by the church. Of course, it included none that were on the Justice Department list, which had been shown just a few days earlier to the uncooperative monsignors from the Secretary of State’s office.104 Near the end of the meeting, he leaned forward and assured the trio that he would never be part of a conspiracy to deposit counterfeit securities into the IOR.105,IV
“We left without any conviction whether there was truth to the allegation or the other way around,” Aronwald told me. “We didn’t leave the Vatican with evidence that added to our case, and we didn’t have any exculpatory material either. All we had was Marcinkus’s protestation of innocence. We had laid out to him a lot of what we knew, wanting to judge his reaction. Our hope was that he might be able to explain things or that he would slip and say something that would help us. He didn’t do either.”107
The men knew the investigation was stalled. There was little they could discover without Marcinkus’s cooperation. The bishop was not willing to let the American investigators have access to the IOR’s records. Tamarro felt that Marcinkus had done what he set out to: charm the investigators without providing any information that would help them.108
Back in the States, the prosecutors put the finishing touches to their probe. Aronwald presented the government’s case to the grand jury.V On July 11, 1973, sixteen defendants (nine Americans and seven Europeans) were charged in a twenty-page indictment with conspiring in “a pattern of racketeering activity” to distribute stolen and counterfeit securities in Italy, Switzerland, Germany, Belgium, Panama, and California.110 Ledl, Rizzo, and “Count” Foligni were all named (by the time the indictment was issued, Rizzo had been sentenced to twenty years on an unrelated cocaine-trafficking case).111
Conspicuous by his absence was Matteo de Lorenzo, the Genovese crime captain. The investigators did not produce enough evidence to charge him. The
same was true of Marcinkus.112 On background, Aronwald told a Wall Street Journal reporter that an unindicted and unnamed “man of the cloth” inside the Vatican was suspected of having a material role in the illegal scheme.113
“In the end, we just didn’t have enough to indict Marcinkus,” says Aronwald. “Our investigation never cleared him, but it also never proved it. The allegations were just left hanging out there. . . . We could never give Marcinkus a clean bill of health.”114
Inside the Vatican, Marcinkus’s detractors used the investigation’s potential embarrassment to lobby for his ouster as the IOR chief. The Pope refused even to contemplate it, instead assuming that since he was not indicted, the Americans had cleared him of all the scurrilous rumors.
* * *
I. A congressional committee at the time estimated the size of the black market in counterfeit and stolen U.S. securities to be about $50 billion. Large blocks of Coca-Cola stock were stolen in late 1970 in New York and Los Angeles. Two years later, around the time of Rizzo’s German meeting, some of the missing Coke stock started surfacing in Europe, Lebanon, and Panama.53
II. Barbieri was well known around Rome for his vintage Maserati and tailor-made vestments. He also kept a secret mistress. The Vatican later defrocked him.81
III. The FBI later compared the signature in the letter to that of Marcinkus. While it was similar, it was too illegible for a conclusive match. The bureau did not ask for signature samples of anyone inside the Sacra Congregazione dei Religiosi. Nor did the FBI ask for permission to test typewriters to see if they could locate the one used to type the letters. The name of the congregation on the letters had been modified in 1968 to Sacra Congregazione per I Religiosi e gli Istituti Secolari. But Curia departments sometimes used existing supplies of letterhead until they were exhausted, even after a name change. This congregation produced so little paper correspondence that investigators concluded the letters could be authentic.84
God's Bankers: A History of Money and Power at the Vatican Page 29