Chasing Phil

by David Howard

  Jimmy Kealoha asked for information about the trust, and D’Amato handed over a brochure detailing its background. Kealoha thought it sounded impressive. He turned to his wife. “What do you think of this?”

  “Well, Jimmy, we’re into this so far, what are we going to do?” she said. “We have no other way out.”

  In an article the Hartford Courant had published just three months earlier, two investigative reporters had looked into the Eurotrust and turned up “phony claims of connections to a famous Italian wine firm, an obscure Liechtenstein prince and supposed missionary investments that couldn’t be traced.”

  But there was no Google then, and the Kealohas had no time to commission a lengthier investigation.

  “Yeah,” Jimmy said. “Okay. Let’s do it. I finally want to get this thing done.”

  On paper, at least, the Kealohas did not appear to be easy marks. Jimmy had been chairman of the county of Hawaii before becoming lieutenant governor. But he was now close to seventy, had never translated his political success into the business arena and was now more desperate than ever. Kealoha was, in fact, the prototypical desperate man.

  He had sunk more than $400,000 into the project and had only a blank slab of beachfront land to show for it. He was too far in to extract himself cleanly, and the urge to move forward overwhelmed any semblance of common sense. In that mind-set, he wouldn’t blink at spending another $25,000 to get his hands on $10 million in financing.

  The Kealohas agreed to everything. Mama wrote down flight information for first-class tickets to Honolulu for Kitzer, D’Amato, and Iuteri. D’Amato asked to speak to Kitzer privately. “Let’s hit them up for a few days’ advance,” he said behind one of the bedroom doors.

  Kitzer shook his head. “No, Andy, that’s not fair. You just met these people, they’re going to lay out thousands of dollars right now for plane tickets, expenses. You can’t conceivably ask them to give you money here in Miami.”

  “Mark and I don’t have any walking-around money when we get to Hawaii,” D’Amato protested.

  “I have cash on me,” Kitzer said. “I can take care of that.”

  —

  While Kitzer reconnected with Kealoha, Wedick and Brennan had been busy with damage control in Indiana. They’d finally flown home from Los Angeles on Sunday, March 13, after two weeks on the road, then left Gary at five-thirty the next morning, battling bone-marrow-deep weariness, jet lag, and a monster Phil Kitzer hangover.

  As fatigued as they were, they wanted to get to Indianapolis before everyone else showed up for work. They hoped to avoid a scenario where the rest of the office was sitting there talking about the prodigal sons—how they’d been off doing who knows what in the Bahamas—when they walked in. Everyone arrived by nine, and Brennan and Wedick filed into a conference room with Johnson, Deeghan, Lowie, and a few others. Wedick started to explain what had happened, but Lowie held up a hand to stop him.

  “I’ve got my ass out hanging here,” Lowie said, “and there was a period of time where I didn’t know where you were. You know how that looks if headquarters calls me?”

  Wedick and Brennan nodded. Next time, Lowie said, they’d better wait on that phone line. The agents agreed that they would. They had been in an impossible situation, but in this moment they grasped the dynamic: The worst-case scenario for Lowie and Deeghan was to be asked what was going on and not be able to answer. People up the chain of command would seize on Brennan and Wedick’s disappearance to score points: Look what’s happening there. I was the one who said this would be a problem.

  The undercover agents spent the next fifteen minutes expressing contrition and letting Lowie and Deeghan vent. They promised to do things differently next time. They knew that these two supervisors were their most important allies, along with Johnson.

  Once Lowie felt adequately understood, the conversation shifted to the scams Brennan and Wedick had learned about. They added more index cards to the wall, officially turning the conference room into OpFoPen headquarters.

  Even though it was a tricky topic under the circumstances, Wedick felt he had to point out the high likelihood that Kitzer would again hijack their plans. Plotting out moves with him was like trying to steer a rudderless boat through a whirlpool. For Kitzer, the lack of scheduling was the point. His priorities were scamming money and spending it. He saw no point in planning for next week when tomorrow might bring a new customer paying cash for paper—if tomorrow arrived at all. In the days of open-return airline tickets—you didn’t need to give a date for the back end of your round trip—that sort of spontaneous travel was easier.

  Wedick and Brennan felt as if they were shuttling between two planets that loomed just out of each other’s field of view. They understood why the FBI would be reluctant, as well as flummoxed. The bureau wanted numbers: How much money was Phil stealing, and how much could they recover? But Kitzer didn’t plan any one huge heist. He’d taken $60,000 from Kealoha and might swindle the Hawaiian out of $80,000 more—and that was just one deal. There were dozens of others at any given moment, only some of which Phil had told them about.

  Then there was the loss-recovery problem. The agents recounted how Kitzer had spontaneously decided to spend the $8,000 from Seven Oak. There was no stockpiling cash to buy weapons for the IRA or to prop up some idealistic cause. Kitzer mostly seemed interested in partying and traveling and showcasing his powers to whatever audience he could find.

  And all of it right now. It was the ideology of dopamine.

  This confused everyone as much as one of his complex deals did. Who takes all that money, then just burns right through it? Jack and J.J. could see that the bureau’s befuddlement made it ill-equipped to pursue him. “The average person, you have your mortgage, your car payment, your whole list of things you need to take care of,” Wedick said. “He has no list. All he has is, Where do I have to go to make money? That’s it. Otherwise, he’s going to do whatever he wants, whenever he wants.”

  Brennan thought about his early twenties, his own focus on making money just so he could burn through it, the full-on sprint toward the next experience. He’d grown out of that life within a few years and now instead had mountains of paperwork awaiting him: transcriptions and reports and expense vouchers. In a certain mind-set, it wasn’t so hard to see why Kitzer did what he did.

  And those were just Brennan’s responsibilities at the office. Back home in suburban Gary, Becky delivered her news that Jack was about to become a father for the third time. He spun through a whorl of conflicting emotions—confusion and excitement and fear and anxiety and joy, all of which he worked to compartmentalize. Jack took pride in his serenity, in his ability to focus on the next most urgent thing. The baby was due in October. Between now and then, he was going to have to be able to focus. When they weren’t with Kitzer, Wedick wanted Brennan in Indianapolis, dictating reports and catching up on paperwork and talking to the U.S. attorney’s office. So even when Jack was home, he often wasn’t home.

  In the meantime, Brennan had absorbed an important lesson: When he left to travel with Kitzer, he would no longer try to guess for Becky when he’d be back. If that seemed cruel, it was better than the alternative, which was making promises that Kitzer would almost certainly force him to break. It was better not to disappoint.

  —

  After locking down their Hawaii plans, the promoters spent the next couple of days in Florida on other business. Sitting in on a meeting on March 24, Wedick and Brennan caught something important: Kitzer said he wanted to introduce them to a promoter named Jean-Claude Cornaz in Denmark the following week.

  The agents huddled on this development. In Indianapolis, Frank Lowie had won the authority to approve the agents’ travel anywhere in the United States—a hard-fought victory. The only thing the headquarters disliked more than FBI employees traveling was having their power decentralized. The higher-ups essentially told Lowie: You want that authority? Fine. But when they fuck up, we’re coming after you.


  Foreign travel was a whole other matter. To travel to Copenhagen, Brennan and Wedick would need the U.S. ambassador and the FBI’s legal attaché to Denmark to sign off, and they would have to obtain permission from a high-ranking Danish government official—preferably someone in law enforcement.

  The Copenhagen request triggered calls up and down the chain of command and into the diplomatic community. Some officials were concerned about trusting Danish authorities with the case’s sensitive banking and financial components. But the FBI’s legal attaché in Denmark knew someone trustworthy who could secure permission for them to travel without being classified as government agents.

  Working steadily over the next few days, slipping away to make calls, the agents lined up the necessary approvals. The promoters checked out of the Sheraton Four Ambassadors on March 26 ahead of the next leg of their journey, to Hawaii. In the lobby Kitzer chatted up a woman named Candy and convinced her and her friend to join them on their ride to the airport. At the check-in desk at Miami International Airport he cashed in his first-class ticket for two coach tickets, one of which he pressed into Candy’s hands.

  Wedick parked the car and reached the terminal after Kitzer and the others had boarded the plane. He found Candy standing alone, gazing at the ticket, trying to make sense of what had just happened. Wedick sometimes played along on Kitzer’s pursuits, but Candy looked to be in her twenties and she was considering flying halfway around the world to meet Kitzer. Wedick waved her over to a quiet spot near a phone bank. “Look,” he said. “This is going to sound strange: You need to forget that you ever met us and hope that you don’t meet us again. You don’t want to get involved with us. Trust me.”

  He took the ticket out of her hand, ripped it up, tossed it in the trash, and headed for the gate.

  —

  The itinerary included an overnight layover in Los Angeles. The group checked into the Marriott Airport Inn and settled in at the rooftop bar. Iuteri was excited to order a Coors, a beer about which he’d heard lots of buzz but couldn’t find back home in New Haven.

  Iuteri puzzled the agents. He didn’t sound or dress like a promoter. He wore gold chains and was far less verbally gifted than Kitzer and D’Amato; there was too much street in his sentence construction. Wedick had instantly picked up a New York accent.

  As he sipped from his bottle of Coors, Iuteri mentioned an odd coincidence: That morning, at the Miami airport, he’d spotted the owner of a boatyard where he’d once stored a thirty-foot cabin cruiser. In 1969 he’d burned the boat for insurance money, he said, and the fire raged out of control and razed half the boatyard. This was a surprise because he’d firebombed other places—including a few factories—but firefighters had knocked those down quickly.

  Still, Iuteri recounted this as if it were the funniest pratfall he’d ever heard of. He also described his connection to a northeastern drug ring and asked Brennan and Wedick whether they might want jobs in that organization.

  They drank and gabbed until two a.m., a chill gradually descending on the California night. Wedick, who tended to get cold quickly, shivered. Kitzer offered his fashionable thigh-length leather jacket. Wedick shook him off, but Kitzer insisted: “Come on,” he said. “I’m telling you to wear it.” The jacket fit pretty well even though Wedick was six inches taller.

  —

  Everyone overslept the next morning. After hustling through a shower, Brennan called Deeghan and was updating his boss in Indianapolis when he heard a knock. Wedick opened the door to find Kitzer outside with Iuteri. Jack abruptly hung up, and Kitzer strolled in and asked who he’d been talking to. Brennan pawed at his sandy hair, still wet from the shower, and blurted out that he’d been making arrangements with his commodities broker.

  Kitzer didn’t question this, and anyway, they were running late. By the time the men reached their departure gate, their flight to Honolulu had left, so they jogged to catch the next plane. As they boarded, Kitzer asked Iuteri, who was sitting in first class, to bring some champagne back to them. Iuteri delivered a bottle once they were airborne, and the three of them toasted the day and all that awaited them in Hawaii.

  Brennan and Wedick sipped the bubbly—they had no way to dump it out—and tried to relax. Wedick thought about how Kitzer had handed over his jacket. As a threesome, they had started to develop a certain rhythm and cohesion. The agents now knew not to check out of hotels too early; Kitzer routinely flouted the checkout times when they had a later flight. Brennan and Kitzer both had stomach issues on occasion and passed rolls of Tums back and forth. Kitzer had started calling Wedick by his nickname, J.J. They sometimes called Jack “the Golden Bear” because he was burly, the sun had lightened his sandy-colored hair, and he often wore a light blue Jack Nicklaus golf shirt with an ursine figure emblazoned on the breast. One of them was always making the other two laugh.

  As the champagne took hold, Kitzer explained Iuteri’s presence. Iuteri was a “button man for the Outfit”—a made man in the Mafia. Kitzer said that several months ago, D’Amato had borrowed money from a crime family and hadn’t paid it back on time; he had subsequently been called to a sit-down.

  “Andy,” the mafioso had said, “when you wanted the money, we told you we would give you the money at three o’clock, and we gave it to you at three o’clock. But a payment was due at four o’clock.”

  Apparently, D’Amato didn’t know the time.

  “You don’t have a watch, Andy—you didn’t know it was four o’clock,” the mobster said. “We’ve got to give Andy a watch. Andy, here’s your watch.”

  And he pointed at Iuteri. Now, wherever D’Amato went, Iuteri went. Any money D’Amato scammed, Iuteri took a cut for his bosses.

  Kitzer, who appreciated a good nickname, had come up with one for Iuteri: He called him the Watch.

  —

  As the sun cracked the horizon over the yawning Pacific Ocean, Brennan lowered himself to his knees in room 1011 of the Ala Moana Hotel. The previous night they had checked into the massive Honolulu property, where the Kealohas had made reservations for everyone. Brennan gazed under the bed, then studied the walls and ceiling.

  The Junior G-Men weren’t sharing a suite with the promoters, but they were just down the hall on the tenth floor—and Kitzer’s presence permeated their days. He now treated Wedick and Brennan as buddies, constantly entering their space. The agents wanted him to trust them, but these newfound invasions of privacy created stress and presented pressing logistical challenges. Kitzer burst in with no notice and pawed through the agents’ possessions, asking to borrow Wedick’s nail clippers or wanting to check out Brennan’s new shirt.

  They reacted cautiously to this newfound familiarity. They didn’t want to seem upset, which might suggest they were hiding something. But Kitzer’s behavior made gathering evidence a challenge. Concealing a recorder was already out of the question; everyone in Hawaii wore bathing suits and aloha shirts. Wedick and Brennan were left to write notes by hand late at night, then mail them to Indiana at their first chance. But it was almost impossible to keep up—and Kitzer always wanted them to go out with him at night.

  Still, the agents resisted asking for surveillance help. Too many risks and complications. At the Ala Moana, they brainstormed another solution: They bought a mini recorder that used tiny cassettes; they could dictate reports into it at night or whenever they could slip away. Brennan’s inspection eventually brought him to the room’s thick, heavy curtains. He found a hem at the bottom, which he carefully cut open and probed. The fabric formed a pocket just large enough to hide the recorder.

  —

  Kitzer knew plenty about hiding things, about moving in shadows. His early-life bail-bond work and the bank kickbacks—all of it fed into the narrative that the system could be manipulated behind the scenes, that people who seized the controls of a business ought to pull the levers for their own gain.

  In 1961, Kitzer and his father and brother formed their new insurance company, which they called Adequate Mutu
al. From there, Junior talked the others into starting up a second firm, Bell Casualty, in Chicago, to reinsure part of Adequate Mutual’s risk. The father and brother largely left the operations of both companies to Phil. Though still only in his twenties, he took to the leadership role without hesitation.

  In 1962, they took over American Allied Mutual Insurance Company in Minneapolis, a floundering high-risk car-insurance firm, acquiring it for $25,000 in cash and a car worth $1,200. And in a flash, the Kitzers’ business metastasized. They added more firms with nearly identical names—for example, American Allied Insurance Company on top of American Allied Mutual Insurance, and Bell Mutual Casualty to go with Bell Casualty.

  Within a few years, they controlled a spiderweb of fifteen businesses: eight insurance companies in Illinois, six in Minnesota, and a reinsurance firm across the Atlantic in London. They employed more than twenty-five thousand brokers and took in many millions in premiums. What had started with a single low-six-figure bank loan had morphed into a conglomerate in which a single firm was taking in $180,000 in premiums in a single month.

  The sudden influx of money triggered profound changes in Kitzer. Helen had already sensed something when he’d come home and announced that he and his father and brother had bought an insurance company in Minnesota. “I had a very bad feeling about that,” she recalled. “I said, ‘Don’t do that—it’s going to break up our family.’ ”

  By the time his fourth child, Richard, was born in 1963, Phil was traveling constantly and had become flamboyant with cash and evasive about where it had come from. “They started making a lot of money,” Helen said, “and he was Superman. He could do no wrong.”

  He started coming home less, until his appearances dwindled to once a month. “He would say, ‘I have to leave again in a couple of days, I got a lot of business going on,’ ” she said. “I didn’t know where he was, and he never discussed any type of business with me. I was in the dark all the time, and he would always say, ‘You’ll never have to worry about that.’ ”