The Spooks Who Fell for a Seedy Con’s Ponzi Scheme
Seedy as ever, Ronald Rewald falsely claimed that investors’ funds would be insured by the FDIC, and had 20% guaranteed annual returns. He simply used funds from new investors to pay the original ones, and splurged the rest on himself to live in luxury. A CIA check uncovered Rewald’s criminal conviction, but the Agency declined to dig in deeper because he asked them not to. Instead, CIA agents wrote rave reviews of Rewald, and recommended that his firm be used to furnish American spies with cover employment. CIA agents hired by the firm as cover were oblivious to the fraud all around them, and invested their life savings – and those of their relatives – in Rewald’s firm. Even the CIA’s station chief in Hawaii was taken in. When the fraudulent plot eventually fell apart, the Agency ended up with plenty of egg on its face.
The IRS eventually grew suspicious and opened an investigation in 1982. Rewald convinced the CIA to step in and get the taxmen to back off. Eventually, a dozen or more CIA agents were given cover jobs by Rewald. Some of them liked it so much, that after they retired from the Agency, they went to work for him for real. When the Ponzi scheme finally fell apart, one CIA agent was fired because he had gone out of his way to induce other spies to invest with Rewald. At least five CIA agents lost more than $300,000 – the equivalent of roughly $900,000 in 2022 – of their personal money. Rewald was tried and convicted on 94 criminal charges and sentenced to eighty years, but was released on parole after less than ten.
