In Munich, all Coffey knew was that Hollman and Aronwald had listened with such fascination and excitement to the tape he had made that they had bought their way into his case, and already the first steps were being taken to merge the investigations by Hogan’s office and the FBI. But he had his own concerns during those days. There was no assurance that Rizzo’s only reason for making the trip was to meet with Ense and Barg, and so Coffey had to stay until Rizzo left in case something else occurred. And there was a mountain of reports and documents to be interpreted with the aid of the Munich police; possibly they could help clear away some of the mystery and confusion that so overwhelmed him at the moment.
He had plenty of time for all that. Rizzo did little of any interest. He stayed close to the hotel the day after the meeting, wandering through the neighborhood window-shopping, observing the construction at the nearby site of the forthcoming summer Olympic games. By five-thirty, he was back in his room, waiting for the arrival of Ense. The German called a few minutes later. Rizzo, assuming he was in the lobby, told him to get on the elevator and come up to the room. But Ense was not in the hotel. He was, he said, at the Excelsior. He had been delayed by several urgent appointments and it would be impossible for him to keep the date that afternoon. But he wanted to assure the American that everything was progressing as Rizzo desired. Barg was still in Frankfurt, but one of the things he was doing there was trying to arrange for some letters of credit so that when he returned the following morning, they could all go to the bank, open an account for Rizzo and settle matters to everyone’s satisfaction. Rizzo should just be patient. Ense would call him about noon with word of the final plans.
Indeed, at noon the next day, Thursday, Ense called as he had promised, and asked Rizzo to meet him at four o’clock at Barg’s office at Tengstrasse 38.
Rizzo trusted the Germans no more than they trusted him. He decided to put a little extra pressure on them to make certain they were not giving him the runaround. He placed an overseas call to William Benjamin in Philadelphia within minutes after Ense had rung off. “Bill,” he said when he reached Benjamin, “there’s somethin’ you’ve got to do.”
“Anything you say, Vince,” Benjamin replied.
He told Benjamin of the pending meeting at Barg’s office. “I want you to call them fifteen minutes before I get there,” he said. “You tell them they’d better do the right thing and give me the money they owe. You tell them I’ve gotta get at least fifty thousand dollars, that it’d be better if they gave me a hundred grand to take back to New York right away or there’s gonna be trouble all over. You tell them they’d better get it right away even if they have to borrow it. You tell them I’ve got to make some notes good and I want that money. And you tell them that I’m only an errand boy and there are guys behind me who don’t like to be put off. Understand?”
“Don’t worry, Vince,” Benjamin assured him. “I’ll do just like you say.”
At precisely four o’clock that afternoon, Rizzo walked into Barg’s office. (The surveillance team of German detectives could only wait outside in the street in frustration.) Ense and Barg were waiting. It became apparent to Rizzo with the first words that the two were, indeed, trying to stall, trying to find a way to avoid paying up. Both Ense and Barg would later say that they had tried to explain to Rizzo that there was no way they could possibly come up with the amount of money Rizzo was demanding at that moment. They simply did not have it and had no way of getting it on short notice. Rizzo was enraged. His voice rose, became harsh and threatening, and the threats he uttered, Barg and Ense were convinced, were no idle ones. They were not sure that Rizzo would, not turn to physical violence against them if they did not find some way to placate him.
They played their one remaining card. Barg told Rizzo that arrangements had been made to set up a bank account in his name in Munich, and the following day they would go to the bank and complete the transaction. Rizzo had heard too many empty promises already. He wanted more than the word of Barg and Ense. With Rizzo standing over him and watching, Barg dictated a letter that Ense translated into English, a secretary typed and Barg signed:
Dear Mister Rizzo,
Referring to our last meeting, we herewith confirm, that the following sums agreed upon will be deposeded [sic] next week in your account Nr. 3745 at the “Otto Dierks & Co.” Bank. This is to say that DM 10,000—will be deposeded [sic] in cash and SFR. 46,000—in obligations of FINAG.
The remainder will be payed [sic] on a percentage basis on the sale of the real estate in BEL AIR.
Details will be negotiated in a separate contract, showing the possibilities of a write-off for the purposes of taxes in France and questions concerning your problem of taxes in the United States.
Yours sincerely,
INTERPROMOTIONS LTD.
Alfred Barg [signature]
The next afternoon, the formalities were taken care of, the account for Rizzo opened at the Otto Dierks Bank, the deposit made. Outside the bank, the three men talked briefly, then went their separate ways, Rizzo back to the Palace Hotel for dinner and a quiet evening. Within twenty-four hours, on Saturday afternoon, he was on his Lufthansa flight heading back to New York.
He did not know it, but when he got off that plane at Kennedy Airport, FBI agents and detectives from Hogan’s office were waiting. From that moment on, he would be tracked, and he would rarely be out of the sight or the hearing of his pursuers.
Coffey stayed on in Munich for another day to finish his own business—the cementing of contacts and friendships with Klaus Peter and the other German cops, reviewing with them the events of the previous week and steeping himself in the papers they fed him, and the theories they exchanged with him, trying to learn all he could about the international market in hot securities.
He could not have picked a better place to gain that education. Munich was the center of the pond into which were tossed the pebbles—stolen and counterfeit securities from all over the world, but most importantly from the United States—that spread in ever-widening circles across the Continent. If there was a center to this center, it was in the newly renovated Regina Hotel on Maximilianplatz, an establishment not quite on the level of the super-deluxe Palace or Bayerischer Hof, but no seedy fleabag, either. According to the Munich police, more than a million dollars’ worth of hot securities were likely to be stashed in rooms at the Regina at any one time. The cops were not only sure of that, they were also sure they knew exactly who had control of those securities, who was spreading them out to a waiting throng of customers across Europe. It was a combine of German swindlers and Americans who had once served in the military stationed in Germany or who were frequent travelers in and out of Munich.
And they knew just how the ring operated. They could explain to Coffey the discernible pattern of the illegal securities market, from the source of supply to the uses to which the ultimate customers put the merchandise. For all its secrecy, duplicity and illegality, the business is governed no less than any other by the classical economic dictates of supply and demand. There is, of course, almost no limit to the potential supply of those ornately engraved pieces of parchment, their value guaranteed by the might and stability of corporations and governments, the binding obligations to shareholders and creditors, which are among the foundations of Western capitalism. The securities can be counterfeited, providing a major font for those who deal in them. But counterfeits are only one source. There are the real ones, too. They rest in the vaults of banks and brokerage houses, in safes in private homes, in the pouches of messengers carrying them through the streets from one place to another, in registered parcels sent through the mails, in the sealed rooms of official printers and engravers, in the repositories of pension funds, in a hundred other places. Theoretically, they ought to be safe. But in fact they are prey to thieves, some in the pay of the organized underworld, some free-lancers hoping to make a killing for themselves, some dishonest employees of the firms that hold them. All have developed the means to break the supposedly unbreakable security systems, to make away with what they want almost at will. Even the pension funds are not secure. Avaricious trustees are sometimes willing to sell what they hold to friends in organized syndicates and then replace them with syndicate-supplied counterfeits, confident that the theft will never be discovered so long as the funds continue to collect their dividends and no one tries to sell the stocks, either the real ones or the counterfeits.
If the sources of supply are legion, the demand through other than legitimate channels is insatiable. For the certificates are bought at a discount and sold for close to their face value if the holder acts before the theft has been discovered and the securities can be listed on the hot sheets distributed to banks and brokers around the world. And even after they have been listed, they will have a considerable value, though not as great, perhaps, as when they are fresh. Shady brokers can still market them to unwary customers or to those who have a special use for the paper that does not depend on whether they are on the hot sheet. They can be used as collateral for bank loans. They can be used to inflate a corporate balance sheet; listed as assets, they make the corporation look a lot healthier and so may enable it to win contracts, float debentures, attract new investors, broaden lines of credit and so on. The uses are endless and those who swim in these waters are constantly finding new ripples, and so the demand constantly swells.
For those in the middle—those like de Lorenzo and Rizzo and their associates in the United States and their sometime partners in Munich, like Ense or the Regina ring, those who hold the stocks and so control the distribution—the potential for profit is mind boggling. The securities cost them almost nothing if their own people have come up with them, at most twenty-five percent of the market value if they buy them from free-lancers. But they can sell them for whatever the market will bear, fifty percent or more of the going price. And they can rent them out to those who need them for only a limited time for some special purpose, at a third of the market price, then reclaim them at the end of the lease and rent them again, and again, and again.
In Munich, the Regina group was a major mover of those securities. Winfried Ense was not part of that organization. He operated on a more elevated stratum—his hangouts the Bayerischer Hof and the Excelsior, his friends men of considerable standing. But, despite his guise of respectability, Ense was not completely unknown to the German police. At forty-seven, the son of a prosperous and respected physician in prewar Berlin, he had lived since the end of the war, having served with the German army in Italy, in that shadowy gray area along the borders between legality and illegality. Except for an arrest for smuggling right after the war, he had moved in that shifting world with some impunity, had gone his way with little official notice. He maintained a surface of probity and standing as the owner of two small but apparently fairly profitable concerns—F. Bobinger, of Munich, an importer of sanitary equipment from Italy, and Winfried Ense House of Confections, a lingerie and textile house in Sindelfingen. It was only later, when Ense came to the attention of the authorities, that they began to suspect that those two companies were no more than covers for his real business.
The German police had taken their first close look into his affairs when he had a friend cash a stolen $100,000 United States Treasury bill in Brussels for Ricky Jacobs. They interrogated him several times and twice searched his house for evidence, which they did not find. Though he escaped them with only the temporary loss of his passport, the episode was enough to make him the subject of considerable official interest, and the closer the police looked at him and his affairs, the more they became convinced that Winfried Ense was actually a rather accomplished swindler and dealer in stolen securities, a funnel through which these securities were spreading throughout Europe on a loftier and grander plane than the one occupied by the Regina group. The Munich police in particular were watching him, trying, though without much success, to trap him and bring him to trial.
The conversation in the Palace Hotel was, for them, vital, for it was the first solid evidence they had tying Ense to the securities racket. It also put a light for the first time on Alfred Barg.
Until then, except for his excessive drinking, Barg’s image had been that of the prototypical hardworking German businessman and entrepreneur, always on the verge of a major success and while often falling just a little short, still an honest man, a good family man. He was thirty-eight when this new and darker side of him was suddenly revealed, and it seemed a shocking revelation, for his fortunes were on the rise as never before. He was doing well enough to own an extensive home in a wooded estate area on the outskirts of Munich, to drive a big Mercedes sedan, to dress in custom-tailored clothes. He owned a large and profitable warehouse in Offenburg that was used by a number of foreign companies to store merchandise they planned to market in the Federal Republic. More important for his career, he was managing director for German affairs of Interpromotions, Ltd., and of its parent company, Finag Akhiengeselschaft of Rathausgasse/Glarus, Switzerland. With $20 million in assets, a president, Jules Landolt, who was district governor of Glarus, and an attorney who had been attorney general of Switzerland, Finag was a rapidly growing industrial and investment firm whose interests and holdings were expanding across Europe. One of its wholly owned subsidiaries, Ferienstadt Bel Air, of which Barg was a major officer, as he was of other Finag subsidiaries, owned more than a million and a half acres of land, near Montpellier in southern France, on which it was building more than five thousand expensive vacation homes, some for sale and others for rent. One of Barg’s functions through Interpromotions was to find and negotiate with suppliers, contractors and others on the Bel Air project.
The more Coffey learned in those days in Munich about Barg, his background and his position, the more confused he became as to why a man with such credentials and such promise of even greater success would ever get mixed up with a swindler like Ense, and, through Ense, Rizzo. Just what had driven Barg into the stolen securities market? Coffey turned to Peter and his German hosts for help, but they were just as bewildered. Ense they could understand, and so, too, the gang that operated out of the Regina Hotel. But Barg was something else. It would take months and more digging before the explanation came to the surface.
Coffey, during his ten days in Munich, learned enough about the international market in stolen and counterfeit securities to know that, when he boarded his Pan American flight for the return to New York, he’d been given a searching glimpse into a world he had hardly realized existed, and a world in which, over the next years, he would come to move with increasing confidence and knowledge, would come to know and understand as well as any man and better than most.