by David Howard
Your Swiss people should be pretty happy. Now where do we go from here? Why don’t we get one big courtroom & try everyone at once? I can’t tell you how bad I want to get this all over with. It seems like it’ll never end. The thing that is hard is to be put in those rotten jails. I was in that city jail in Calif. for 14 days, with only 3 days for talking. It’s enough to drive you crazy. Have not heard from Jack. He said he would be in touch with me after I got back here. When are you going to come down? Put a bottle of Scotch in your pocket, I’m ready for a drink. I never went 14 months without a drink in my life. If we were to re-write that plea agreement I would put in a few “extra” things now that I have the hindsight! OK Jim, thanks again for the letter, will see you at the next stop. Phil.
—
A few weeks later, Phil testified in federal court in Kansas City. More than 90 percent of the criminal cases that enter the U.S. justice system never go to trial; agreeing to a plea deal often makes more sense, for various reasons, than attempting to win over a jury. Not with the promoters. They all wanted to try their luck.
An armed marshal stood three feet away as Phil sat on the witness stand while two other marshals kept watch nearby. When it was over, Armand Mucci, Bob Bendis, and Andy D’Amato all received five-year sentences for their roles in defrauding Bernard Baker out of $110,000.
Before the trial in Charlotte, Phil spent time with FBI agent Allen Ezell, whose pursuit of the con man had triggered OpFoPen. The night before Phil’s testimony, Ezell and Kitzer went shopping downtown at J. C. Penney’s and Sears, to buy a sport coat, slacks, and a collared shirt for Phil to wear in court. “I had never been out shopping with a subject before,” Ezell said with a laugh. “It was just such an unusual thing to do during a trial.”
The agent found his longtime target to be “a fun guy to be around.”
Like many people who encountered Phil, Ezell grew preoccupied afterward by thoughts of what might have been. “He was a sharp guy,” Ezell said. “If he’d have taken every one of his talents and channeled it in the right direction, he’d probably be a millionaire.”
Or a millionaire who didn’t end up in jail.
—
By the spring of 1980, Phil had fully settled in at Maxwell. That same year, the FBI created a formal set of guidelines for undercover agents and their supervisors. There were fewer trials by then, and when Phil traveled, a U.S. marshal loaded him on a commercial flight alone, to be retrieved by Jack and J.J. at the other end.
When he disembarked in Honolulu, the agents were waiting. They watched as Phil descended the stairs surrounded by a pack of people chatting with him and patting him on the back. “Bye, Phil!” they called out. “Enjoy your visit! Have fun!”
Grinning and waving, Phil strolled over to Jack and J.J. He said he’d flown with a Roadrunners Travel Club, and they’d all had such a good time—talking and laughing about all the same places they’d visited—that they’d made him an honorary member. Phil was wearing the club’s pin on his suit jacket. Someone asked which hotel he was staying at, and he shrugged and said, “I’m traveling on the government’s nickel.” He and the agents laughed and climbed into a car to head to the local jail.
The agents had requested that Phil be incarcerated on Molokai, a nearly uninhabited island southeast of Honolulu. Jack and J.J. figured it was an ideal place to focus on the task ahead, which was testifying against Mark Iuteri. The next day the agents checked him out of the tiny lockup and took him to a hotel on a far end of the island. They spent a couple of days preparing with Assistant U.S. Attorney Dan Bent of the Justice Department’s organized-crime task force.
One late afternoon, the agents took Phil for a walk along the cliffs over the Pacific Ocean. When they were on the road together, Kitzer had often dragged them to happy hour, with the gold lighter, the Scotch, the women. Instead there was just softening sunlight and the thundering surf. They sat, and Phil lit a cigarette and looked at the ocean as if he were seeing it for the first time. After a spell, he told them that sitting there on the crags, amid the beauty of it all, was almost enough to make him forget the stress and headaches awaiting in court. It was good to put all of that behind them for a few minutes, Phil said. For the three of them to be able to sit together and talk.
Bent was struck by the threesome’s dynamic—the tangible bonds between the men. “I got the impression that Kitzer was a very sharp guy, and he understood that they got him,” he said. “Kitzer respected them, too.”
Bent also gained an appreciation for how the agents had pulled off the operation. “They were completely unpretentious guys,” he said. “They don’t try to be the smartest guys in the room….They had a real talent for it. They were two of the best federal agents I ever worked with.”
The trial featured what had by then become the familiar assaults on Kitzer’s character and history. Now a seasoned witness, Phil spent two days laying out the details of the Kealoha scam, including Iuteri’s fraudulent appraisal of the condo project. A newspaper described Kitzer as “dapper, tanned, and dark-haired” and reported that “he was turned out in a conservative blue suit and blue tie and looking capable of running a bank or a trust company again.”
After the jury convicted Iuteri, Judge Sam King imposed a fifteen-year sentence. “If ever a case required a maximum sentence,” he said, “this is the case.”
—
The FBI opened more than 130 cases as a result of OpFoPen, and federal prosecutors eventually convicted some fifty people. After about three years of trials, the government had taken down all the primary targets, including Sonny Santini, who in May 1981 was sentenced to eight years in prison. Jean-Claude and Pascal Cornaz and John Packman were the only key figures never to stand trial, because of extradition issues and because the elder Cornaz—whom Swiss officials described as “one of the main members of the Geneva financial underworld”—had a massive heart attack. But by then, the Fraternity had been fully dismantled.
Maybe more significant, though, was the culture change OpFoPen helped bring about.
In the four years after the operation, spending on undercover work more than quadrupled, and the number of investigations increased by more than 800 percent, to a total of 463. A congressional committee that studied this spike in 1982 termed the increased use of covert operatives a “sudden and dramatic change in the mix of investigative techniques used by this nation’s premier law enforcement agency.”
—
Under the terms of a typical ten-year sentence, Kitzer would have been eligible for parole in early 1982. But in May 1980, while Phil was testifying in Hawaii, his attorney, John J. Cleary, submitted a motion to modify his sentence.
“Since his arrest, the defendant has cooperated with the Government and its agents in the detection and prosecution of other large-scale financial frauds throughout the United States,” Cleary wrote. “The defendant has more than complied with the original understanding executed as part of the plea agreement in this case, and has, at great personal hardship because of the intermittent confinement in local and county jails as a result of his testifying in various federal courts throughout the United States, suffered deprivation not ordinarily encountered by a regular federal prisoner.”
The government signed on in favor of the motion, and soon after returning from Hawaii, Phil was released from Maxwell into a community treatment center. Meanwhile, Jack and J.J. talked about what would come next for Kitzer. Jack had been driving to Maxwell every few weeks to see him, to make sure he was staying out of trouble and didn’t feel isolated. They wanted to do the same after he got out—help him resettle somewhere nearby so they could keep an eye on him.
The question was where. Mobile wasn’t a giant metropolis, but there were plenty of big-city temptations. “We talked about, we gotta find a place for him where he’s not going to get into trouble,” J.J. said.
Phil had done well, but he was a threat to backslide. He’d been a con man for much of his adult life. The agents drove back and for
th along the Gulf Coast before settling on Gulf Shores, a town of about ten thousand people on the southern edge of Alabama, between Mobile and Pensacola.
There was another reason they wanted him nearby: They hoped to harness his unique talents. While serving his sentence, Phil had begun lecturing on financial fraud to FBI offices around the country, including at the academy in Quantico. Dan Bent, the prosecutor in Hawaii, watched Kitzer explain his former vocation to trainees. “These were straitlaced young men,” he said. “They weren’t street-smart. Being told by a world-class con artist how fraud works was invaluable. I’m sure most of the people in the room were just dumbfounded that anyone could do those things.”
Just before his scheduled release, in October 1980, after slightly more than three years in custody, Phil lectured at the FBI office in Birmingham, Alabama. That night, the accrued physical and psychic toll of his existence—the cigarettes, the booze, the lies, the stress, the mortal danger, the accusations, the jail, the verbal jousting in more than a dozen courtrooms, the ghosts of all the victims and his abandoned family, and the spectacular way that his parallel lives had collided, supernova-style, and merged back into one—finally toppled him. After his talk, a festering ulcer burned through the wall of his stomach.
Phil felt sudden, raging pain as the acid and digestive juices in his belly spilled into his abdomen. An ambulance sped him to a Birmingham hospital, where doctors awaited in surgical garb.
26
One More Thing
LATE SUMMER 1985
Jack watched as an FBI technician drilled a tiny hole through the shared wall of a beachfront condo unit in Gulf Shores, Alabama. The bureau had rented the apartment—along with the one on the other side of the wall—for his undercover investigation. The technician threaded a pinhole camera into the opening and masked its lens on the opposite wall with a decorative crock. The camera fed into a monitor that would allow Jack to watch a forthcoming meeting via a bubble-shaped video feed. Jack also hid a Nagra recorder inside a large ashtray in the middle of the room.
Hurricane season was gurgling to life over the Gulf of Mexico. The air crackled with an approaching storm.
Jack left to find J.J., who would be playing the role of Jim Gordon, a California-based racehorse owner, gambling figure, and general shady schemer. The staging was strikingly similar to a setup J.J. had overseen at the Holiday Inn in Hammond, Indiana, almost exactly nine years earlier, back when he was just twenty-six and an undercover novice eager to carve some notches in his belt.
And once again, Phil was at the center of the action.
—
Kitzer had been in a good place. After he recovered from surgery late in 1980, he was released into Jack’s oversight. The agent helped Phil and Audrey and their son, Jeffrey, settle into a condo near the beach in Gulf Shores. The doctors wouldn’t let Phil work at first, to ensure a full recovery, so he borrowed money from members of his extended family to pay bills. He liked the Gulf Coast, its weather and white-sand beaches, and felt overjoyed to have his freedom back. The following May, doctors recommended a follow-up operation.
Away from the prison and the trials and the road, Phil’s health gradually improved. That summer, Jack secured work for him: Phil provided expert testimony in fraud cases. Earning $50 a day plus travel expenses, Phil, ever the gifted talker, was a devastatingly effective witness. “He could go in and say, ‘This is how it works,’ ” J.J. recounted, “and the jury goes, ‘Yeah, that’s what these guys [on trial] did. Now I get it.’ ”
“Jim and I both have done expert testimony too,” Jack said, “but Kitzer was more effective because he could always say, ‘I did it. I know how it’s done because I did it for years.’ ”
There were more grueling stretches of cross-examination by defense lawyers intent on painting Phil as a long-game grifter who had conned the government, but he rarely got ruffled. “He liked sticking it to defense lawyers whenever they were trying to put words in his mouth,” Jack said. “He liked the U.S. attorney’s offices, he liked that he was respected. He was an expert in an area, a guy who could do stuff other people couldn’t do.”
All the while, there was a risk he could backslide. In one case where he provided expert testimony, he conceded, “I would be capable of doing it again today if I so chose.” The agents watched him carefully and tried to talk over the devil whispering in his ear, aware that Fred Pro and Norman Howard, among others, had been unable to go straight. “Phillip, don’t screw this up,” J.J. would tell him. “You fell far. There’s real value in what you have now.”
Phil gave lectures about fraud to groups of FBI agents and trainees. He spoke in Chicago, Denver, Mobile, and Charlotte. He addressed the Department of Justice and the Internal Revenue Service. He talked with bankers who once would’ve been his targets. He collected $500 per lecture and refused the protective services of the U.S. Marshals Services, believing that the dangers of his old life were behind him.
The world clearly needed him. Taking Phil out of circulation no doubt saved businesses, bankers, and entrepreneurs from being scammed out of millions of dollars, but the tide of financial fraud that he and the Fraternity wrought has scarcely ebbed. In March 1981, four and a half years after the Wall Street Journal article sounded the alarm on Phil’s Caribbean briefcase bank, the newspaper ran a lengthy story headlined “Paper Pirates: Con Men Are Raking in Millions by Setting Up Own Caribbean Banks.” And of course, still on the horizon were the innumerable financial-sector scandals, from inside and outside banks, in the decades to come.
Eventually he started a business, working as a kind of concierge for people in other countries trying to fill out paperwork to obtain visas or import or export products. In certain ways, he remained essentially Phil. He bought a thirty-foot powerboat with twin diesel engines and took Audrey and Jeffrey out for high-speed rides. Then he called Jack one day and said his boat had sunk in about eight feet of water and he’d sold it to the marina owner for $3,000. Jack, who was both frugal and a lifelong boat fanatic, and was storing a sailboat with Phil, tried to convince Phil to back out of the deal: Each of the boat’s twin diesel engines was worth thousands, and they could easily be recovered.
But Phil waved him off. He was done with it, no regrets. He wasn’t one to hold on to things.
Just before Christmas the year after J.J. got married, a deliveryman showed up at the agents’ houses. Becky Brennan described the bouquet that arrived as “the largest, most beautiful arrangement of flowers I have ever seen in my life….It was like something you see in a hotel lobby.” Bewildered, she opened the card. It was from Kitzer.
Jack and J.J. were happy to watch him build a new life out of the smoldering shrapnel of his old one. More than eight years after they’d first met, the three of them together had clawed through a dark forest where most people get separated and lost. That they emerged on the other side of that wilderness closer than ever hinted at the mysteries and boundless possibilities of human friendship.
Somehow, an unthinkable breach of trust had become an unbreakable bond.
—
Everyone in the condo waited as Robert Eggleston and William Myers knocked on the door of the adjoining unit. The two men had served time with Kitzer at Maxwell when they’d all had less than a year left on their sentences and were cutting grass and tackling other jobs to ease their transition back into the world. Phil’s movements had still been restricted by the witness protection program, but he’d become friendly with these two, entertaining them with stories about his life as a promoter.
Myers and Eggleston had been largely unmoved by the rehabilitative powers of the federal corrections system. Myers, of Fort Hunter, New York, was in his late thirties and had a bushy red beard and a powerful build, from years of construction work and prison weight rooms. By contrast, Eggleston, a New York City resident who wore dark-rimmed glasses, was a couple of decades older and professorial. He claimed to possess an advanced degree in chemistry. He had been working as a self-employe
d electrician after getting out of prison—but he and Myers figured they could make far more money manufacturing drugs.
Eggleston calculated that they could pull down about $4 million cooking crystal meth if they created their own operation, which meant they would need to round up the necessary chemicals and find a relatively isolated location where the ghastly exhaust from the processing could dissipate unnoticed. As Eggleston and Myers discussed how to check off these boxes, they had a revelation: Phil Kitzer. They knew that after leaving prison, he’d moved to Alabama’s Gulf Coast—a place sprinkled with remote outposts exposed to steady offshore winds that would help disperse the noxious fumes. The two men targeted Fort Morgan, located on a peninsula that poked out across the mouth of Mobile Bay. They also knew from their conversations at Maxwell that Phil was resourceful and well connected.
After receiving the call from his Maxwell buddies, Phil hung up and called Jack, and they formulated a plan.
—
Phil answered the door, and Myers and Eggleston entered. The condo unit was decorated as if it were Phil’s home, sprinkled with furnishings and photographs. Next door, everyone tensed. Jack thought it likely that the two men would be armed, so he’d summoned a SWAT team, which was with him in the adjoining apartment. They all watched on the monitor as the two visitors made their way inside.
Phil introduced his good friend Jim Gordon, who, he said, had worked with him on deals before prison and who would be an excellent source for meth-cooking supplies. A photograph of Gordon standing with his prize horses and jockeys in Hollywood Park sat on Phil’s bookcase. (J.J. had recently spearheaded a California-based operation in which he’d created the character and, in classic Wedick fashion, convinced the FBI to let him purchase two racehorses.)
Eggleston and Myers shook Jim’s hand and sized him up. They asked typical background questions—where was he from, what else had he done, where had he served prison time—and didn’t seem particularly satisfied with any of the answers. When they were done talking, the two would-be drug dealers nodded at each other, and Myers produced an RF detector—a small wand-type instrument capable of detecting radio waves emitted by, among other things, wireless surveillance devices. They told Jim they needed to scan him. Nothing personal, they just had to be cautious.
