Suddenly the central pivot was gone. Late in July, after ordering Amato and Neubert to do nothing with the securities in their care until they received further instructions, Ledl returned to Vienna to see to other business. He had hardly arrived home before he was warned that he should put everything else to the side. Something urgent had come up that he would have to deal with immediately. The police were closing in on him at last.
On August 11, the honorary consul Dr. Ledl was arrested by the Austrian police. They had not come after him for any of those vast enterprises that had carried him into the inner sanctums of high finance around the world. Ledl was arrested for fraud and extortion. Two of the Austrians to whom he had peddled that fictitious title of honorary consul of the kingdom of Burundi—a salesman who had paid $35,000 for his and a manufacturer whose $100,000 bought him an honorary doctorate from the National University of Canada in Toronto in addition to the diplomatic rank—had discovered to their dismay and horror when they applied to the Austrian government for accreditation as Burundian consuls that everything Ledl had sold them was worthless. The foreign ministry was incredulous and not a little amused when the applications were received for processing and told the two they were either trying to put something over on the government or they themselves had been taken. Enraged, the two would-be diplomats filed charges against Ledl for swindling them.
But that was just the start of Ledl’s troubles. After his arrest, his home and office were searched, a safe-deposit box opened and, while nothing was found about the Vatican operation or most of his other dealings, several intriguing and potentially incriminating things did turn up. There were stocks in several American corporations that had been stolen about two years before from the home of a Petaluma, California, doctor named Victor di Carli. These stocks had traveled a twisted path: one of the burglars and the original fence, both small-time operators, had been murdered, and a low-level punk in the New England syndicate controlled by Raymond Patriarca was in prison, convicted of one of those murders; some of the shares had turned up in Glasgow, Montana, others in Las Vegas, at Bache and Company in New York, at Franklin National Bank on Long Island. Just how Ledl happened to be in possession of more of those shares remains a mystery; it was one of the many things he refused to talk about, then or later, and nobody seemed very interested in digging to discover answers.
Other papers in Ledl’s safe-deposit box indicated that he had swindled First National City Bank of New York out of $17,900 by reporting the theft of traveler’s checks and receiving a reimbursement at the same time an accomplice was cashing those checks all over Paris.
Perhaps most fascinating, though nobody picked up on if then and if anyone later did, the implications were never explored, were papers that pointed to Ledl’s possession of several counterfeit one-hundred-share certificates of IBM. They had been turned over in a circuitous manner to Ledl’s Viennese lawyer, who eventually passed them on to authorities, who failed to explore the details of Ledl’s link to them. But what was particularly intriguing was that nine more of those counterfeit IBM certificates, in the same series, had turned up two months earlier, in mid-June, in Luxembourg. The man who had them was Ernest Shinwell. The man who gave them to Shinwell was Maurice Ajzen.
Soon after his departure from Panama, Shinwell, never idle, had devised a scheme to swindle a swindler, Robert Vesco, whose own operations were soon to collapse in disarray and scandal. It was a typical Shinwell maneuver. He had become friends with a Swiss lawyer, Italo Tresch, and a Luxembourg banker, Jacques Wollner, both associated with Vesco’s Investors Bank of Luxembourg—Tresch as the attorney, Wollner as a director. The scheme was simple. They would deposit counterfeit securities in Investors Bank and, using them as collateral for loans, would take the bank for millions and split the proceeds. With the arrogance that few but Shinwell possessed, the Englishman contacted Ricky Jacobs and asked him to supply part of the counterfeits; the balance Shinwell obtained from Alan Charles Levy and Stephen Berg, who were touring Europe trying to unload the stocks they had gotten from Kassap Rag Company in Los Angeles and which they had reclaimed from Jacobs when his attempt to turn them over to Shinwell in Panama had failed. Jacobs listened to Shinwell’s request, agreed to do what he could, did not even ask for payment up front despite his earlier experience.
In June, Shinwell and his aide, John Holmes, journeyed to Luxembourg to put the swindle into operation. They met Tresch and Wollner, went to the bank. Ajzen was waiting for them there with a package that contained the counterfeit IBM stock. He handed it to Shinwell and went his own way. Shinwell took those IBM shares and part of the Kassap haul and with the help of Tresch and Wollner deposited them in the bank as collateral and walked out with a $150,000 loan.
It was so simple that a few days later they decided to up the ante. Another $7 million of the Kassap paper was taken to the bank, deposited and a request made for a bank credit of $3 million to be put into an account for Shinwell’s Agricultural and Industrial Management Company of Panama and a new firm he was then establishing, the Zurich International Holding Company, of Luxembourg. Unfortunately, the size of the deposit in a bank whose own structure was extremely shaky created a little suspicion in the mind of one of the officers. He did a little quiet checking and what he discovered sent him to the police and sent the police to the bank in time to meet Shinwell on his next appearance.
And so Ernest Shinwell’s career as an international swindler was brought to a sudden, if temporary, halt. And perhaps Ricky Jacobs and Dominic Mantell had a few smiles and a sense of vindictive satisfaction. Shinwell was tried in Luxembourg for swindling the Investors Bank with the counterfeit IBM and Kassap stocks and was convicted, as were Holmes, Tresch and Wollner, and sent to languish for the next four years in the grand duchy’s ancient, decrepit and forbidding dungeons that some have said make Devil’s Island seem like a vacation spa.
If the Austrian authorities seemed unconcerned with Ledl’s ties to those counterfeit IBM shares, his swindle of First National City Bank, and his tenuous link to the di Carli robbery, they were very concerned, indeed, about the way he had taken his fellow Austrians and had used fake titles and degrees. These were particularly heinous crimes in their eyes. They announced that he would be prosecuted to the full for these actions, and for the next year, most of Ledl’s time—some of it spent in jail and the rest free on bond under surveillance and restricted to his home in Maria Anzbach and his office in Vienna—was devoted to seeking a way out. But he could find no way and in September 1972, after a month-long trial, he was convicted of fraud and extortion, and of posing as something he wasn’t, and sentenced to three years in prison.
So, Ledl was preoccupied during those crucial months of late summer and fall of 1971, unable to play a role in the Vatican operation. A sense of uncertainty seemed to overcome his friends in Rome. Amato was holding a suitcase with $14.5 million in counterfeit bonds in his apartment. Within six weeks, if all went according to schedule, enough additional bonds would arrive to make up the initial $100 million delivery, and a month later still another $850 million. Ledl had been the pivot, the link between the American suppliers and the Vatican customers. Who would replace him?
The man who attempted to fill the vacuum was Mario Foligni. He summoned Amato and Begni to a meeting, informed them that Bishop Marcinkus had passed word to him indirectly (Marcinkus, Foligni declared, never stepped into the open himself, always used others as emissaries and covers) that he and the others in the Vatican wanted to float a trial balloon to test how far they might go with the securities. They had decided, Foligni said, that he should take about $1.5 million of that counterfeit sample held by Amato to Switzerland, open an account and see if the bonds would pass inspection.
On July 27, Foligni, Amato and Neubert flew to Zurich. Outside Handels Bank, to which Foligni had an introduction from his attorney in Rome, Amato turned over to Foligni the sample—10 bonds each of American Telephone and Telegraph, Pan American and Chrysler, and 128 bonds of General Electric. Foligni went into the bank, met with an officer, Lino Buzzolino, deposited the bonds with him and opened a joint account in his name and that of Monsignor Mario Fornasari. With those bonds as collateral, Foligni requested a loan of five percent of their face value to his Nuova Sirce company, a relatively minimal amount chosen to give an aura of legitimacy to the transaction yet not so large as to make the bank want to take a close look at the securities. Buzzolino said the bank would be glad to accommodate Foligni and Fornasari, would lend the sum without interest for eighteen months. But, he said, the normal banking procedures would have to be followed, of course, and the authenticity of the bonds would have to be verified before the loan could be made.
Naturally, Foligni agreed. He expected no less, was prepared for that. He told Buzzolino to immediately Telex the serial numbers of the bonds to Handels Bank’s correspondent institution in New York for verification. Those serial numbers would not be on any hot list and so Foligni had no reason to be concerned. Indeed, the next morning the Swiss banker reported that the Hanseatic Bank in New York had confirmed that the bonds were authentic and were not stolen. If Foligni would drop by, he could pick up a checkbook in his name and Fornasari’s, for the account was now officially open.
As Foligni was leaving the bank a few hours later, prepared to report back to Rome that all had gone without a hitch, he was brought up short. Buzzolino told him something that he had hoped his careful planning, the use of Fornasari’s name, and thus the Vatican imprimatur on the account, would have forestalled. The bonds, Buzzolino said, were about to be sent to New York for a physical examination; it was normal banking procedure and certainly Foligni would have no objections.
Foligni had plenty of objections, but he was afraid to voice them. He knew exactly what would happen in New York when the experts took a close look at those bonds, no matter how beautifully they had been fabricated. But if he were to object now, to close the account in order to prevent those bonds from crossing the ocean, he knew it would only arouse great suspicion, might even cause considerable unpleasantness in Switzerland, where bank swindles are not taken lightly. He agreed, but promptly rushed back to the hotel, collected Amato and Neubert and, without a pause, headed south across the border back into the safety of Italy.
It did not take long for the Bankers Association in New York to recognize that the bonds were forgeries. Foligni, back in Rome, tried to devise ways to meet that problem. He sent Fornasari to Marcinkus to find out what to do. The monsignor returned, Foligni said, described Marcinkus as not overly alarmed, as saying, “We made a mistake in Switzerland. We’ll have to be more careful in the future.”
That was not precisely what Foligni had hoped to hear. He was going to receive no protection and not even any advice from the bishop, would have to rely on his own wits and resources. But, then, that was what he had been doing for years. When Handels Bank called early in August to tell him the bonds were counterfeit and it would like him to appear in Zurich to discuss the matter, he blandly agreed to make the trip, even set a day and Hour for the appointment. He simply did not bother to show up, certainly not when he knew his appearance was very likely to lead to no little inconvenience, and considerable trouble from the Swiss authorities. Instead, he composed a careful letter, explaining how he had become innocently involved, had been duped by a pack of apparent swindlers, and handed that letter to Interpol in Rome.
An old friend, he wrote, had introduced him to a stockbroker in Rome named Remigio Begni, a man with a sterling reputation. Begni told him that a client, a wealthy German heiress named Marina Neubert, owned a number of American corporate bonds. For reasons neither Begni nor the heiress specified at the time, she wished to remain in the background and keep her identity a secret. She was seeking a discreet person who might deposit those bonds in a Swiss bank where she could use them as collateral to obtain larger advances than were possible in Germany. If Foligni agreed to handle the arrangements, he could expect a sizable commission. Begni showed him a document notarized by a Frankfurt attorney named Rudolph Guschall confirming the heiress’s right to dispose of the bonds as she wanted. Based on the document and an expert’s opinion that the bonds were authentic, Foligni agreed to the proposition.
He met Neubert for the first time, he wrote, in front of Handels Bank in Zurich on the day of the transaction, was handed an envelope containing the bonds by a young man who was her companion. The heiress, who identified herself as Marina Neubert, “declared that she did not intend to appear in the deal and that is why she had contacted other people. She stated that her motives were of a purely personal nature and had to do with her relations with other heirs.”
When he received the alarming phone call from Buzzolino, Foligni continued, “I was surprised and concerned. I informed Mr. Begni about it and phoned my lawyer who was on vacation. The lawyer told me to forward immediately a written statement to Interpol.” Finally, Foligni wrote, he was going to file a criminal complaint with the Italian authorities against Neubert, Tomasso Amato and Begni for having involved him in such a deal. He was informing Begni of his intentions, though he was sure Begni had been only “an innocent go-between.”
Interpol forwarded Foligni’s letter without comment to Switzerland, then turned over a copy of the letter and a Swiss report about the Handels Bank affair to an Italian assistant attorney general in Rome to see if he thought any action was warranted. He read the reports, asked Interpol for information about several people, including Leopold Ledl, Maurice Ajzen, Rudolph Guschall and Jerry Marc Jacobs, as well as the Evans Import Trading Company of New York. What little information Interpol had was promptly supplied. A few days later, the assistant attorney general quietly revealed his findings. Since no crime had been committed on Italian soil, there was nothing the Italian authorities could or were prepared to do about the affair or about anyone who might have been involved in it.
The only people on either side of the Atlantic who seemed at all concerned when an item appeared in the Paris edition of the Herald-Tribune were Jerry Jacobs in Los Angeles and Winfried Ense in Munich. Ricky Jacobs seemed thoroughly blasé when he was told, and Vincent Rizzo acted as though the news were of no importance to him. But Jerry Jacobs, perhaps because no one confided in him or in anyone on the lower echelon of the Vatican operation, was sure that something terrible must have gone wrong. He called Ense in Munich. Ense echoed his concern, said he would try to find out something and get back to Jacobs. A little later, Ense met Amato in Munich. Amato told him to calm himself. “Our people know everything,” Amato said, “and they’ll find a way to make everything okay. We’re still working with those people in the Vatican and the deal’s still on.”
A month after the fiasco in Zurich, Foligni and those above him decided to make one more try with the samples. This time it would be much closer to home, at the Banco di Roma, in which the Vatican Bank had a major interest, and whose chief executive, Mario Barone, was very close to both Marcinkus and Michele Sindona. (Barone’s Banco di Roma poured hundreds of millions of dollars into Sindona’s grab for an international financial empire, some as late as the eve of the collapse of the Sindona fortunes. A few years later, Barone was arrested by Italian authorities for trying to conceal just how deep his and the bank’s involvement, and losses, had been.)
Early in September, just as Rudolph Guschall was finally being released from the hospital in Frankfurt where he had been recuperating all summer, he received another call from Neubert. His legal expertise and notary’s seal were needed once more, this time in Rome. Guschall boarded a plane, was met at the Rome airport by Neubert and Ajzen and driven to Amato’s apartment. Amato and Foligni were waiting for him. Over the next two days, there were a series of meetings at the apartment and at the Ritz Hotel. According to Guschall, he had no idea what was being discussed, though he was present at all those meetings. They were conducted entirely in Italian and French, and he spoke only German. About all he managed to understand were repeated references to the Vatican.
Then Guschall was informed that the moment had arrived to put his skill to use. He was driven by Neubert and Amato to the Leonardo da Vinci Hotel. Foligni arrived about the same time, greeted them, told Guschall they were going to “meet with a very rich and powerful man who owns this hotel.” Foligni led them to the private suite of Alfio Marchini, the millionaire of the left, the special friend and emissary of Bishop Marcinkus.
Within moments, Marchini and his son, Sandra, entered the room. Neubert passed the ubiquitous suitcase, which she had been carrying, to Sandra Marchini. He opened it, removed the stacks of bonds and spread them on a table. Guschall was then put to work. He prepared a letter in German, which Neubert translated into Italian, listing the bonds by name and serial number, stating that they were the same ones he had vouched for in July, were owned by Neubert and were authentic. He then affixed his notary’s seal to the letter in German and to the Italian translation. His next task was to draw up an agreement between Neubert and Marchini, turning over control of the bonds to Marchini and giving him the power as trustee to do with them as he wished.
From those stacks on Marchini’s table, another selection was culled, a representative sample worth $2.5 million. The rest of the bonds were put back into the suitcase. Sandro Marchini closed it and carried it away, to some other part of the suite. When he returned, he no longer had the suitcase.
The loose bonds chosen at random were turned over to Foligni. He carried them to the Banco di Roma, deposited them into a new account he opened in his name and that of Alfio Marchini. No one had any doubt that Marchini’s name, position and reputation would successfully constrain the kind of check that had been made at Handels Bank in Zurich; after all, who would want to take a step that might embarrass a man of Marchini’s standing? They were depending on that, and on Barone’s ability to circumvent anything more than a Telex to New York verifying that these bonds were not on the American hot list.
What they were not counting on was an overzealous bank official who, seeing a deposit of such magnitude, took measures of his own without talking to Barone. He followed the normal banking routine and sent the bonds to New York for examination.
The distressing results were passed on to Marchini. He declared himself appalled, declared that he must have been duped by unscrupulous swindlers.
As for Mario Foligni, the scrupulously honest Count of San Francisco, he was later to claim that it was actually he who had alerted authorities the moment he learned from Begni that a second attempt was going to be made to deal those counterfeit securities. He had done so, he said, in order to protect not just the Banco di Roma but, more importantly, to protect the Vatican. He was convinced from all that he had heard that if the deposit had gone undiscovered, millions of dollars in counterfeit bonds and stocks would then have flowed unchecked into the Vatican Bank, with disastrous consequences for the Holy See. In good conscience, he could not let that happen. Indeed, the only reason he had participated in the operation in the first place, and had urged that ever-larger numbers of bonds be allocated to that deposit, had been to make certain that as many of the forged certificates as possible would be seized and thus not be available to taint the Vatican’s reputation.
The authorities in Rome, however, had no record of any report by Mario Foligni prior to the discovery that counterfeit bonds had been deposited at the Banco di Roma. Even so, no charges were ever brought against Foligni, Marchini or anyone else.
In Zurich and Rome, then, some $4 million of that sample package of $14.5 million in counterfeit bonds turned up. Of most of the rest of those bonds, the last anyone would say he saw of them was the moment that Sandro Marchini closed the suitcase and walked out of that room at the Leonardo da Vinci Hotel. And the bonds in that suitcase vanished from public view.
But what the Marchinis, father and son, and those in Europe and the United States who conceived, carried forward and directed the operation did not know was that the suitcase the Marchinis took control of that September morning in Rome was missing additional bonds. At some points during the summer, while the suitcase was in the possession of one or another of them, the foot soldiers—Tony Grant, Maurice Ajzen, Tomasso Amato—fearing that the deal was collapsing and, along with it, their expectations of any financial gain, all dipped into it. When they heard no more of the Vatican arrangements after that day at the Leonardo da Vinci, they all, individually and on their own, decided to use what they had and so make at least a little profit.
On February 15, 1972, Edoardo Cattaneo, the surveyor from Milan who five months later would try to palm off four thousand shares of Coca-Cola Bottling Company of Los Angeles stock on the Union Bank of Lugano, claiming they were an inheritance from the estate of his father, appeared at the Commercial Credit Bank of Muralto, Switzerland, bearing bonds of American Telephone and Telegraph Company, Pam American World Airways and Chrysler Corporation, with a face value of $25,000. He desired, he told the bank’s Elio Colombi, to sell them. But a check by Colombi showed that the bonds were counterfeit. “In my opinion,” the bank official said, “Mr. Cattaneo and the persons whom he represented were cheated.” Cattaneo was permitted to return to Milan.
Two days later, an Italian named Stefano Colombo presented three more of those bonds to Bonea Commerciale Italiano in Milan and asked that they be sold. The bonds were turned over to Merrill, Lynch, Pierce, Fenner and Smith for trading, but when they were examined in New York, there was no doubt that another $25,000 of the bogus issues had surfaced. Back in Milan, Colombo was questioned, said he had received the bonds from an attorney in Milan named Oswald Pedroni. Pedroni said he had received them as payment for services from a client named Adriana Radaelli. She said she had gotten them as a guarantee for a financial deal from someone named Ulysses Bifani. He said he had obtained them from someone he preferred not to name in Switzerland. It had become such a tangled and confusing affair that the authorities in Milan decided to drop the matter and not press charges against anyone since the securities had been confiscated.
About a month later, John Michael Devereaux de la Pena, Tony Grant’s friend and the man Peter Raia had chosen to replace Ricky Jacobs in dealing securities in Europe, arrived in New York from Paris in time to keep a prearranged business date. He sat down at a table in the French Quarter of the Americana Hotel with his contact, someone he thought was named Joe Morgan, but who was really an undercover FBI agent named John E. Houlihan. When Houlihan asked if de la Pena had the merchandise with him, de la Pena gestured to a briefcase he had set on the floor close to his chair, said the securities in it were so beautifully done they could not be told from originals. Houlihan said his man was in the bar at that moment and offered to bring him over to the table. De la Pena agreed.
A few minutes later, Houlihan returned with somebody he introduced as Jim, but who was actually FBI agent John J. Hauss. Hauss sat down, said he understood de la Pena was asking fifteen percent of the face value for the merchandise.
De la Pena said he knew that had been the agreed price, and it would stand in any future deals, but for this initial purchase he had to get eighteen percent. The additional three percent, he said, was a tax in England. Whatever the price, he added, Jim would agree it was well worth it once he saw the merchandise. He picked up his briefcase, put it on his lap, opened it a crack and withdrew two pieces of parchment—an orange Chrysler Corporation bond and a blue American Telephone and Telegraph bond. They were just a sample, he said, of what was in the briefcase and what was available to him from his sources. If things worked out, “this may be the beginning of a beautiful friendship.”
Whatever it was, it was not the beginning of friendship. As de la Perm was retrieving the bonds and putting them back in his briefcase, Hauss gave a signal. Other FBI agents stationed around the room moved toward the table, surrounded it, arrested de la Pena and seized the briefcase. Inside, they found twenty bonds each of Chrysler, American Telephone and Telegraph and Pan American, worth $500,000 at face value.
De la Pena decided that the better part of valor was to become a federal informant and tell the American authorities what he knew about the illegal securities market. Unfortunately, he said, he really knew very little about those particular counterfeits. About all he could say was that he had gotten them just before leaving Paris from a friend and business associate, Sylvaire Galardi. Where Galardi had gotten them, he did not know.
But when Galardi’s name was fed into the FBI computers, the information that spewed out sent the agents back to de la Pena, for on the print-out were the Coca-Cola stocks that had surfaced in Lebanon the previous year to fuel the Middle Eastern arms race. De la Pena, though, said he could add nothing to what they already knew about that. He knew a lot of the people involved, but knew nothing about that particular project.
It was not until five months later that more of those counterfeits surfaced. Early in August, a lawyer from Biasca, Italy, Francesco Bignasca, telephoned a young Swiss stockbroker, Giovanni Mahler, in the Lugano offices of Loeb Rhoades and Company. He had some clients, Bignasca said, who owned about $100,000 worth of American bonds they wanted to sell. Mahler had been recommended to him as a broker who could handle the transaction.
Mahler asked Bignasca to forward to him either the securities themselves or photocopies for shipment to the main office of Loeb Rhoades in New York for authentication. Once that was done, the sale could proceed. Bignasca dispatched the photocopies—one American Telephone and Telegraph debenture, four Chrysler and seven Pan American.
According to Mahler, a few days later, the New York office of the brokerage firm sent him a message that the photocopies were not sufficient, that the originals would be needed for examination. He telephoned Bignasca with the news and within a few days, the lawyer arrived in Lugano with two men he said were his clients and the owners of the securities, Virgilio Lucchetti and a lawyer from Rome, Dario Pietrantoni. The bonds were turned over to Mahler and he was told that once they were authenticated and sold, the funds should be deposited in Bignasca’s name at the Swiss People’s Bank of Lugano and Bignasca notified so that he or Lucchetti could draw on the account. Nothing was ever deposited, of course, for Loeb Rhoades in New York quickly realized the securities were bogus. “I am not in a position to say whether or not Lawyer Bignasca was aware of the fact that the securities were forged,” Mahler said, “but he displayed an intense and continuous interest, not only at the time of the transaction, but also after he had been informed by me as to the fact that they were forged securities.”
Bignasca had a slightly different story. The whole affair, he said, was a terrible shock because he had known Pietrantoni for years and had implicit trust in him and so had no reason for suspicion when Pietrantoni brought Lucchetti to him. Further, he said, Mahler’s actions surprised him and were contrary to his instructions and expectations. The Swiss stockbroker had told him that the photocopies were sufficient and that New York had raised no objections to them, and so when the securities were delivered to him in Lugano it was with the anticipation of an immediate sale.
The affair never went much beyond the filing of charges in Lugano against Bignasca, Pietrantoni and Lucchetti for attempted fraud. They were Italians and had no intention of appearing in Lugano to respond to and fight those charges, and without the cooperation of Italian authorities, who did nothing but take a statement from Bignasca, there was nothing the Swiss could do.
On four separate occasions in 1972, then, a total of $650,000 of those counterfeit bonds that had been secretly lifted from the suitcase appeared in relatively small amounts in Switzerland, Italy and the United States. Whether there were attempts to deal more, attempts that were successful, no one can say, for after the aborted try in Lugano, there was only silence—a silence that has remained unbroken.