Chasing Phil

by David Howard

  Jack turned to where the phone sat on the hotel-room desk and picked it up. He curled the wire in his hands and, with one yank, ripped it from the wall.

  “You want the phone, Phillip?” Jack said. “Here.”

  Phil stalked out, J.J. following to make sure he didn’t call from a pay phone. He was irked, but by the time the three of them replayed the scene the next day, it would be uproariously funny. Still, the incident made the agents think about the investigation, and the eventual endgame for their now six-month-old odyssey. They’d recently heard rumblings from Johnson that the operation wouldn’t last much longer. Couldn’t. The menace lurking on the organized-crime side of OpFoPen was too alarming to ignore.

  In private moments, Jack and J.J. sometimes talked about Phil, about how it would end. Oddly, Phil also talked about winding down, phasing out the promoter life. He talked about buying a restaurant in Hawaii and retiring there, to create a comfortable base of operations. He was a complicated guy, the agents now understood, and it was hard to hold all the different parts of him together in their minds at once, to reconcile them. They couldn’t help imagining different outcomes. In some unquantifiable but real way, they cared, and worried, and hoped that his life, after all he had done, might in some way be redeemable.

  Of course Phil was a criminal who needed to be stopped, needed to pay a steep price, though he didn’t think of himself in those terms. Years later, when a lawyer asked him about “stealing” $60,000 from Jimmy Kealoha, Phil objected: “When you say stole, sir, you make it sound like a stick-up with a gun.”

  The lawyer contended this: “There isn’t much difference.”

  “I gave letters of credit,” Phil countered. “I gave [him] some papers….They were worthless. He bought something worthless. Cheated would be a better word.”

  But the cheating inflicted enormous pain. When he fraudulently insured millions with the likes of American Allied, he suckered end-of-the-rope working folks who, after filing claims on their crumpled cars, ended up with two or three cents on the dollar. Even for people who survived the financial calamity he inflicted, Phil would remain a specter—the feeling of dread in the pit in the stomach of everyone who signed a contract after scanning the dreary, impenetrable fine print. He created a wilderness pocked with land mines you couldn’t detect until one blew your leg off.

  But it was also possible to look at him from a certain angle, to place him on the sliding scale of humanity and judge him differently. He didn’t abscond with senior citizens’ Social Security checks. He didn’t prey on veterans, or cancer patients, or charities. He was no Santini or Iuteri, traumatizing people with physical violence. His victims were mostly faceless: bankers and CEOs and developers who should have known better, who got greedy or didn’t do their homework, or both.

  “You think about, he’s not that bad a guy, maybe, but then he’s facilitating all this,” Jack said. “You have that internal battle.”

  They liked him, and they knew Phil reciprocated the sentiment. They also knew that he’d chosen them because he thought they were criminals, too, and he would possibly lay the blame on them if the FBI caught them selling First National Haiti paper. “That’s what we were destined for—to be the people left holding the bag,” Jack said. “Although it may not have happened that way, because of how our relationship changed with him.”

  These were the nuanced, contrary puzzles they struggled with as August plodded forward. Phil was a corrupt, sometimes morally bankrupt guy who could also be good—capable of empathy and loyalty and moments of grace. He was a Gordian knot of contradictions: a man of countless sexual escapades who ditched a family—but remained loyal, in ways, to his new wife and son. He was a criminal who deceived and swindled people, yet he paid the agents back if they covered one of his expenses. He was a companion who could be frank and open in the way people tended to be in a crucible of an unfamiliar city—when you’re disoriented and isolated and you lean a little harder on your friends—or in the gray light of a plane in a midnight sky, when a shared secret or an inside joke mark you as distinct from everyone else. He was that, too. But he also lied to them.

  His justification for the lies? “That was part of the business,” Phil said. That was because bankers lied, too, as a matter of routine. How many dreams had they crushed with their random deadlines and capricious decisions, their indifference?

  As Phil framed it, his fraudulent paper could be a force for good—a way for the small guy to beat the banks, to get a loan he was denied and could very well pay back if given the chance. There was a Robin Hood quality to Phil; he believed he could help the desperate dreamer. Of one of his $30,000 letters of credit, he said, “[I]f somebody had a need for it, if it worked for somebody, it would have had a value of $30,000 or more.” In that scenario, as bizarre as it sounded, Phil and his phantom banks would serve as an engine of real economic growth.

  He would tell people: “We have letters of credit. These certificates and letters will stand up to a check. They can be put in a financial statement, given to a bank under certain circumstances; but at no time is it our intent to do an outright fraud on a bank.”

  A defense lawyer would later question him: “[W]hether it’s an outright or a slight fraud, a fraud is a fraud, isn’t it?”

  “Not quite,” Phil said.

  “No?”

  “No…not in our estimation.”

  Life did not resemble the set of hard and indiscriminate rules that banks created. Life was nuance, gray areas. Phil knew that if you took a black light to most people’s souls, you’d find cheating on a tax return or a spouse, the insurance check that came from imaginary hail damage to aluminum siding, the shoplifting episode, the walking into a movie without paying.

  Sure, these were minor episodes, mostly victimless—but, the agents pondered, weren’t they different only in scale? Get in on a deal, buy something, put your money in, earn lots more back, beat the system, beat the IRS by investing offshore.

  This was what Jack and J.J. wrestled with. Maybe everyone was part con man. Maybe everybody was in the game, and Phil just knew better than anyone else how to play.

  —

  When the phone rang the next day, the news was not good for Bernard Baker. His banker was calling to say that the $109,000 refund the Kansas farmer had extracted from Fred Pro had bounced. The check had been written on a closed account.

  Raging, Baker dialed Pro’s number. Predictably, Fred was out of reach or in conference and would call back. When Baker finally reached him, Pro proposed a five-year payout plan. Baker rejected this latest ploy and insisted that Pro send the entire amount. But Pro continued to stall and bluster, later explaining that he never returned the money because Baker “didn’t get nasty enough.”

  Baker had his own way of getting even, though: He called an FBI agent based in Kansas, then sent Pro a telex: “Return of escrow funds have not arrived First National Bank of Tribune, Kansas per our agreement. Authorities have impounded your ‘account closed’ check and are proceeding.”

  Baker relished the idea of Pro in handcuffs, but it was cold comfort. With no way to either pay back the $110,000 loan or go forward in acquiring the Idaho farm, Baker was trapped. His bank foreclosed on him and took his farm.

  —

  Bowen Johnson called in reinforcements the following morning, August 10, for that day’s meetings. Everyone in the OpFoPen contingent had been rattled by Santini’s eruption two days earlier.

  Other unsettling things were happening. Myron Fuller had subpoenaed a promoter named Harvey Greenwald to appear before a newly formed federal grand jury. Greenwald’s lawyer had negotiated for him to skip his appearance if he would agree to an interview. But as Greenwald headed to his meeting at the FBI offices, someone fired a shot at him, wounding him. Greenwald lived, but he never appeared for the interview.

  After two witnesses in Joe Trocchio’s trial turned up dead and Santini threatened to whack Fred Pro, the FBI leadership was no longer so blithe about letting
the undercover agents attend meetings without protection. If Jack’s and J.J.’s identities were revealed after all they’d heard and seen, the consequences could be dire. Santini had been unmistakable on Fuller’s wiretap—all curses and death threats.

  So when Gabe Cicale arrived to fetch Phil, J.J., and Jack from the Essex House that afternoon, Johnson had twenty-two agents scattered outside the hotel. It was by far the largest security blanket ever draped over Operation Fountain Pen. Everyone was armed. They were not just an impassive monitoring team; if something went wrong, these agents would have to take immediate action.

  Oddly, though, Cicale never came back out. Neither did Phil or the undercover agents. Puzzled, Johnson went up to Jack and J.J.’s hotel room, listened for voices, then knocked. Nothing. He checked back in his room—after the Santini incident, Johnson had rejiggered the schedule so that someone would be available around the clock—but no one there had seen them.

  Johnson felt a flush of anxiety tinged with exasperation. Maybe they’d just been fortunate before, always somehow bumping into one another to exchange information. Recently, not so much.

  In one instance, Phil told Jack and J.J. they were heading to Denmark to work a scam—but then, in classic Kitzer fashion, he canceled the trip at the last minute. There was no way for Jack and J.J. to alert Johnson before he headed to JFK. Johnson went through customs and checked his luggage, including a suitcase with surveillance equipment and his gun, and boarded the plane, wondering why he hadn’t spotted the undercover agents yet. He was fastidious about OpFoPen travel. At baggage claim, he always let the suitcase with his gear circle the carousel unclaimed until everyone else was gone—just to be safe. Johnson had no idea how deep Phil’s—or the mob’s—connections ran, and the idea of being the one who exposed the operation after all that work haunted him.

  On the plane, Johnson walked the aisles, drawing the ire of fellow passengers and feeling tormented by the agents’ absence. Where were they? If he guessed wrong about their whereabouts, they would be without his backup for a day at least. He agonized over what to do. When the flight attendants prepared to lock the doors, Johnson couldn’t put off a decision any longer. He apologized, grabbed his carry-on, and darted to the exit. Only after he returned to Manhattan did he find that he’d guessed right—although his equipment flew to Denmark and had to be shipped back to Indianapolis.

  But this situation was even more absurd. With a team of seasoned New York agents standing watch, Wedick and Brennan had vaporized. “If something happened to them, as far as I’m concerned it’s my responsibility,” he said. “It’s a sick feeling.”

  Lacking a better idea, Johnson resorted to a door-to-door search: He walked the neighborhood around Columbus Circle, ducking into bars and restaurants they’d visited before. He feared that they’d been forced into a car for that ride up to the Bronx, and there was no way to help.

  —

  Becky Brennan jumped every time the phone rang. Ever since Jack had called with the news that he’d lost that scrap of paper, she’d wondered, Will this be the one? She always answered with a tentative hello.

  The agony of not knowing more ate at her. Being seven months pregnant was uncomfortable, and she was still living in the apartment with two toddlers. When Jack stayed there, their queen-sized bed felt so small that to turn over she had to climb out of bed, stand, and clamber back in, in the new position.

  With the high-energy boys and all the chores and bills, the last thing she needed was the free-floating anxiety the telephone now brought. The warmth of summer helped, but autumn was creeping in, followed by that full-throated midwestern winter. Jack was seven months gone now, and deeper in than ever, leaving Becky with no idea if it was ever going to end.

  —

  Cicale took a shortcut. After picking up Phil and the Junior G-Men and taking the elevator down to the lobby, he veered left in the lobby and pushed through a service entrance instead of heading out onto Central Park South. They walked through a vehicle bay that opened onto West Fifty-eighth Street. As they threaded through parked vehicles, Jack and J.J. shared a look that said, So much for the surveillance.

  The group walked south for five blocks until they reached West Fifty-third; then Cicale led them into the Hilton. Upstairs, they walked into a room packed with organized-crime types: Santini; Ron Sablosky; a character named Vince Orlando, who was working on a scam involving a gold mine in Costa Rica; and Ralph Cantone and his father. There was someone else, whom Cicale introduced only as “a good Italian boy.” The meeting began with a discussion of a scam involving a former pro football player who owned a failing cattle ranch but later veered into the subject of removing problem witnesses. Cantone’s father chimed in helpfully that he owned a farm in Ohio that was convenient for stashing bodies.

  Eventually Cicale stood up, saying he had something to take care of in New Jersey. From his demeanor, Jack and J.J. inferred that Gabe was going to shake someone down, or worse. It was hard to tell. All J.J. and Jack knew was that the usually gregarious Cicale seemed more menacing around Santini.

  As the meeting broke up, Santini approached Jack, J.J., and Phil and spoke again about partnering on First National Haiti. “If someone’s not paying,” Santini said, smiling at the Junior G-Men, “we’ll use this.” He reached into his jacket and produced a handgun with a silencer.

  Jack and J.J. nodded. There was no reason to believe that Santini suspected that they were FBI agents, but he always seemed to be making implied threats. It was unsettling.

  On the way out, they asked Phil about the gun. “He’s crazy,” Kitzer said with a shrug. “What can I tell you?”

  That night, Johnson took a break and walked past groups of New Yorkers hugging and cheering. The NYPD had arrested David Berkowitz, the Son of Sam, ending a reign of terror that had stretched across the summer.

  There was a sense of things winding down. Jack and J.J. attended a few more meetings with Phil the next day, August 11, before all three of them headed back to their respective homes. They’d been together for twenty-three straight days. They hugged at the airport but made no plans. Typically, one of them would call the others and get everyone together. Phil would say he needed to go back to Ellendale to dry out, and Jack and J.J. never pried for more details; they didn’t want him asking questions in return. That day the agents said they’d get back together soon. But they suspected that by the time they did, nothing would be the same.

  —

  Things happened fast. There was consensus throughout the FBI’s chain of command that Operation Fountain Pen had gone far enough and the bureau was fortunate that everyone involved was—so far—unharmed. But that was it. The idea of sending Wedick and Brennan back to New York was now untenable. Too many people in too many FBI circles knew who they were, and at this point, with so many wiseguys involved, any slip could be fatal. The promoters knew their names and knew that they lived in western Indiana. Finding them wouldn’t be hard.

  The bureau had taken belated steps to provide additional measures of protection. Frank Lowie made sure that anyone who answered the phone at the office in Indianapolis denied knowing anyone named Jack Brennan or J.J. Wedick.

  The nation writhed through a fever dream of a summer. In Oregon, a lunatic made national news by driving a pickup truck over two college girls sleeping in a tent and then assaulting them with an axe; they had been riding their bicycles across the country. The assailant was never caught. Five days after the agents parted ways with Phil, Elvis Presley turned up dead in Graceland.

  On August 23, the bureau convened an OpFoPen conference in Indianapolis aimed at moving toward arrests and prosecution. Agents from around the country pursuing various cases—Fuller from New York, Hanlon from Los Angeles, and others from Memphis, Charlotte, Louisville, Miami, and Honolulu—joined an assortment of U.S. attorneys, prosecutors from organized-crime strike forces, and investigators from the fraud division of the Department of Justice. They identified thirty cases to move forward on, and a s
econd tier of possible indictments to come later. They discussed whom to serve with search warrants, which suspects would be charged, and which might be flipped into government witnesses. Brennan and Wedick had unearthed so many potential cases involving so many characters, some prosecutors could have filled dockets for years.

  The FBI issued a directive that “all leads set out in this matter be covered immediately.” And because the OpFoPen cases were so complicated, and required so much prior knowledge, the bureau cleared agents to fly as needed around the United States to pursue them. But until arrests were made, agents were ordered not to make any reference to Wedick and Brennan. “Interviews conducted should protect the Indianapolis undercover operation,” the memo said.

  As the summer wound down, Assistant U.S. Attorney Glen Garland Reid Jr. of Memphis sent a memo to prosecutors in New York indicating that he was about to charge Fred Pro with interstate transportation of stolen property—the Presley airplane. Soon after that, Santa Ana police served a search warrant on Vince Carrano, who had been a suspect in the Swiss Vaults robbery virtually from the beginning.

  The chief OpFoPen suspects would be searched next. Starting with Phil.

  22

  The Game Is Rigged

  SEPTEMBER 20, 1977

  FBI agent Donald Schlaefer pulled up just off Interstate 35 in Ellendale, Minnesota, and gazed at the farmhouse that matched the address on his paperwork. It was an unlikely place for an international con artist to call home. Paint was curling off the clapboards, and the chimney appeared close to surrendering in its struggle against gravity. It was a pleasant Indian-summer Tuesday, temperatures rising into the mid-sixties, but someone had heaped straw bales against the north side of the house to block the icy winds that would soon start screaming down over the plains.