By STEPHEN MAGANIN

(c) McClatchy News Service

In the early 1980s, life and the CIA were good to Ronald Rewald. The baker's son from Wisconsin set himself up in a million-dollar beach-front spread on the outskirts of Honolulu. He dined with Hawaii Gov. George Ariyoshi. Jack Lord of TV's "Hawaii 5-0" called him "a dear friend." He played polo , badly - with Enrique Kobel and the Sultan of Brunei, two of the world's richest men. He owned Rolls-Royces, Mercedes, and Cadillacs, a Jaguar and an Excalibur. He drove Tom Selleck's red Ferarri.

As chairman of the board of Bishop, Baldwin, Rewald, Dillingham & Wong, a multimillion-dollar international investment and consulting firm that provided "light cover" for the Central Intelligence Agency, Ronald Rewald oozed wealth and power. His annual salary reached $250,000. He bought a cabin cruiser and named it Nancy after his wife. He spent $70.000 a year on tutors for his five children

. And when the soft-spoken, self-effacing Rewald wasn't cultivating the aristocracy in Hawaii, he was traveling firstªclass to Hong Kong, Taiwan, Singapore, Indonesia, Australia, London, Paris and Argentina. Upon his return, he would file reports with the CIA's field office in Honolulu. A CIA agen t called him a "genius." It was a remarkable transformation for the 43©year©old Rewald, a high school graduate who came to Hawaii in 1977 with a bankruptcy and a misdemeanor conviction for theft under his belt, and within five years found himself running a company that had taken in 100 million from investors. While Rewald was supposed to be managing the finances of more than 400 investors in the lofty corporate offices of Bishop, Baldwin, he was visiting at a nearby apartment ©© he called it a "safe house" ©© with a parade of women. According to testimony from nearly two dozen women at his trial, Rewald romanced the young and the matronly, models and secretaries, an insurance agent and a Playboy playmate --women who shared a common interest in Rewald and his Northern California, rich widows and poor widows and a widow dying of cancer. Rewald's closest relatives and in-©laws, including his sister and his father ,now deceased, invested nearly $1 million.

By 1983 Bishop, Baldwin's technicolor prospectus boasted assets of $1.5 billion and branches in Sydney, Singapore, Papeete, Hong Kong, Paris, London and Stockholm. Returns on investment ranged from 20 to 50 percent and Ronald Rewald, a self-described former halfback for the Cleveland Browns with a law degree from Marquette University, was the toast of Honolulu. He was appointed honorary sheriff. He made donations to the Boy Scouts, the Salvation Army and religious charities. He contributed money to the governor and lieutenant governor and t alked of running for the U.S. Senate.

But in the summer of 1983, Bishop, Baldwin, Rewald, Dillingham & Wong suddenly collapsed following a routine investigation by the Hawaii Department of Consumer Affairs.

By the time the state regulators, the Internal Revenue Service and a group of nervous investors converged on the firm's high-rise headquarters, the money was gone. Rewald was found on the 16th floor of a Waikiki hotel with his wrists slashed. When Rewald was released from the hospital a week later, the company had been forced into involuntary bankruptcy. Astonished investors learned that only $630,000 of the $22 million they had pumped into the Bishop, Baldwin company had ever been invested in legitimate projects. The rest had been used to pay an earlier group of investors (with at least a 20 percent dividend) ©© o r spent on cars, polo ponies, ranches, boats and trips abroad for Rewald and his colleagues at Bishop, Baldwin.

Rewald was arrested and charged with theft by deception. His bail was set originally at $10 million, the largest in Hawaii's history, and he was charged ultimately with 98 counts of fraud, perjury and tax evasion.

AP©NY©08©19©86 0044EDT A,A,1 © BC©REWALD(MNS) xx and tax evasion. xx Following a 11-week trial last summer, Rewald was convicted of 94 of those counts and sentenced to 30 years with little possibility of parole until 2014, when he will be 72 years old.

After a team of four of the U.S. government's finest attorneys got through with some 125 prosecution witnesses, the y made Rewald, a churchgoing family man, look like the smoothest, horniest, most unconscionable huckster in modern times. The law degree from Marquette, the Cleveland Browns football jersey, the Price-Waterhouse insignia on the Bishop, Baldwin prospectus, the $1.5 billion in assets-- everything was a fake. The government attorneys claimed the CIA, perhaps the world's most sophisticated intelligence agency, had been duped by a chump from the midwest.

But wait, says Rewald. This is all a terrible mistake. It was the CIA that dreamed up the Bishop, Baldwin company in the first place to provide cover for secret agents working in the Far East. Nobody was supposed to lose money in Bishop, Baldwin. The CIA was supposed to keep it afloat with infusions of cash and the commissions on clandestine arms deals. Rewald says. The 400 investors who lost a combined $13 million, not counting interest due, would have been reimbursed, Rewald says, if he had been able to get his hands on more than $10 million sitting in a secret bank account in the Cayman Islands. The money, Rewald says, was the commission on the secret sale of M-60 tanks to Taiwan -- a sale that was made through the CIA because the Carter administration had signed an official agreement with mainland China promising to end shipments of offensive weapons to its capitalist adversary, Taiwan.

When the company had its cover blown in July 1983, Rewald says, the CIA liquidated the Cayman Island bank account, erased all evidence of the account, and tried to "cut and run," leaving Rewald to take the fall.

Portraying himself as a patriot, if not a hero, in the service of his country, Rewald says he was only following the orders of the CIA.

Rewald claims the company was used by the agency to monitor wars and revolutions, to orchestrate politically embarrassing arms sales to Taiwan and India, to divert literally billions of dollars from British to U.S. banks, and to provide a wide range of services for clients ranging from Ferdinand Marcos to Rajiv Ghandi. Rewald says it was the CIA that supplied him with the fake law degree from Marquette, the CIA that wrote the phony prospectus, the CIA that directed him to take cabbage from kings (or at least retired generals).

And, Rewald charged, it was the CIA that hired a former member of the Green Berets to assassinate him while he was waiting trial in prison.

The ravings of a delusional madman? The bilge of a desperate bunko artist? Perhaps. The government attorneys were able to minimize any evidence pointing to the CIA's alleged involvement in Rewald's phony company. They managed to persuade a jury that Rewald, a Gene Wilder look-alike, had masterminded a fraudulent pyramid scheme to underwrite his hedonistic, jet-set lifestyle.

Bishop, Baldwin had indeed been used by the CIA, the government acknowledged, but as nothing more than a mail drop and a phone contact. Rewald, far from the super-spy he held himself out to be, was a bit player in the world of espionage. The FBI, which investigated the Rewald case for the U.S. government, said the company's banking records showed no evidence of any multimillion dollar weapons deals.

But when Rewald tried to introduce a steamer trunk full of tapes and documents he claimed would expose the CIA's seminal role in the creation of Bishop, Baldwin, federal Judge Harold Fong reviewed the material and decided that nearly all of it was either irrelevant-or inadmissible as evidence in the interests of national security. CIA Director William Casey himself filed an affidavit with the court saying that much of Rewald's CIAªrelated evidence is "classified" and should be sealed.

Before the trial was over, the government admitted that at least half a dozen CIA agents used Rewald's company and it s subsidiaries as a "light cover,"which included business cards, telephone numbers, addresses, a desk and a telex machine. The government admitted that at least nine present or former CIA agents had money invested in Bishop, Baldwin. It admitted that the CIA had signed Rewald to a secrecy agreement in California five years before the collapse of Bishop, Baldwin-- an agreement that was approved despite background checks that revealed Rewald had been convicted of theft in Wisconsin.

When the IRS came after Rewald for $1.8 million in unpaid taxes, the CIA admitted it gave Rewald three separate stories to stall the IRS investigation while several CIA agents pulled several hundred thousand dollars out of their investment accounts.

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xx their investment accounts. xx

And, most intriguing, the CIA admitted it had sent a cable in May 1978 to the Hawaii field office that could be interpreted as a blueprint for the creation of a dummy company such as Bishop, Baldwin.

The cable suggested that CIA agent Charles Richardson, as a cover story, describe himself "as the principal in a major Hawaiian and West Coast investment firm which has major interests in Asia as well as the U.S. That partners in this firm are from some of the oldest, wealthiest and most influential families in Hawaii."

The cable went on to say that agent Richardson would tell "targets" he was a "special assistant" to the head of such a company, a person "with substantial political stature." Richardson admitted he later became the head of a company originally founded by Rewald.

Rewald, in a recent interview, said the CIA cable described "exactly what Bishop, Baldwin was in 1982-83. That was exactly what they wanted us to develop -and we did." If the cable was indeed a blueprint for the Bishop, Baldwin company, Rewald carried out his instructions beyond the CIA's wildest hopes--- or nightmares.

Ronald Rewald no longer wears monogrammed shirts, gold Rolex watches and $500 Navy-blue wool suits purchased from Andy Mohan. Hawaii's finest clothier. He dresses in Khakis and T©shirts and works as a suicide prevention counselor and librarian at Terminal Island, an all-male medium-security prison in Southern California. His wife and children no longer live in mansions but n what Rewald describes as "a rat infested, two-bedroom apartment in Los Angeles."

But the Rewald case is far from closed. Melvin Belli of San Francisco and Rodney Klein of Sacramento, two hard-ball attorneys who have made their millions and their reputations by slaying giants have filed separate civil suits against the CIA on behalf of several Bishop, Baldwin investors.

Rewald's appeal is being handled by Brent Carruth, a tenacious attorney from Van Nuys who recently broke new ground when he won the acquittal of former CIA agent Richard Craig Smith on charges of selling agent lists to the KGB.

Carruth says a lot more is at stake in Ronald Rewald's appeal than the fortunes of Rewald himself. Carruth says the government deprived Rewald of his right to a fair trial b preventing him from introducing the CIA-related evidence that could have exonerated him.

Carruth says the entire U.S. system of justice will be called into question if a man's right to a fair trial is superseded by the omnipotence of a shadow agency that has put itself beyond the law of the land in the "interest of national security." Does the CIA's cover story absolve it of all xresponsibility for the 400 people ---greedy and gullible, but victims nevertheless ---many of whom lost their life savings in a cardboard company that was being used, to whatever extent, by the CIA?

What follows--- based on thousands of pages of court documents and dozens of interviews--- is the story of how Ronald Ray Rewald, a little guy with a major-league imagination, lived out a fantasy worthy of James Bond with the help, if not the blessing, of the CIA.

Rewald, descended from a long line of German bakers, grew up in Milwaukee. At 18, he married Nancy Imp and enrolled at M.I.T.- Milwaukee Institute of Technology, a two-year junio r college. There, Rewald says, he was recruited by the dean of students for a CIA project that may have been a forerunner to "Operation CHAOS," an illegal CIA domestic spying operation involving radical student groups.

Rewald claims he was given the code name "Winterdog" and paid $100 a week to grow his hair long and spy on Students for a Democratic Society and the Black Panthers, radical groups the CIA believed were being financed or infiltrated by foreign communists--- a claim the CIA denies.

After a marginal career as an NFL running back, Rewald ways he went into the sporting goods business with several professional football players.

Patricia Ann Ebert, a neighbor of Rewald's in Mequon, Wis., whose family lost $192,787 in Bishop, Baldwin, testified, "He was certainly the flashiest in the neighborhood. He drove a yellow Corvette. His children had the latest in extravagant toys, gas-powered motor cars, trampolines and he put a swimming pool in." Ebert said that even then, Rewald claimed CIA ties and a law degree from Marquette. Ebert admitted she later had an affair with Rewald in Hawaii.

Despite Rewald's well-to-do facade, the sporting goods venture went bankrupt in 1976 and Rewald pleaded guilty to misdemeanor theft for collecting $2,000 for the sale of a defunct sporting goods franchise.

Rewald, ever-resilient, activated yet another company, Consolidated Mutual Investments Corp., with $25,000 belonging to a Milwaukee mortician, and registered it with the U.S. Securities and Exchange Commission as an "investment adviser."

Rewald now had a wife and five small children, a criminal record and a record of failure as a businessman. He figured h e could improve his prospects by moving to Hawaii.

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So in 1977 the would-e spy moved out to the beach. Rewald, who prosecutors say "didn't have two nickels to rub together" when he landed in Hawaii, began scouting the country clubs of Oahu. On a tennis court Rewald met Sunlin (Sunny) Wong, an ambitious young real estate salesman who was licensed to sell securities. Wong was to become the president of Bishop, Baldwin, Rewald, Dillingham and Wong.

Wong helped Rewald buy a seven-bedrooom home from former Cambodian president ,Lon Nol. Then Rewald; moved into Wong's offices on the 15th floor of the Amfac Building in Honolulu and opened a couple of sporting goods stores, all of which lost money.

Then in June 1978, Rewald telephoned Eugene Welch, the CIA s tation chief in Honolulu. Rewald told Welch of his days as "Winterdog," added he had advanced degrees from Marquette and M.I.T. and volunteered to file reports on business trips to China and other Far Eastern locations. "My sporting goods business was going down the tubes and . . . I really had an interest in getting more involved with the CIA," he says.

Welch testified that Rewald came off as "a genius. He had a great deal of charm. I couldn't probe his intellect."

Welch, who was in charge of the CIA's Domestic Collections Division, which collects "foreign intelligence from U.S. citizens who voluntarily offer it." filed the following "DCD source/contact sheet" on Rewald:

"Source was a walk-in who volunteered his services, moved, he said, to this action in sympathetic reaction to the years of criticism and slander leveled against the U.S. intelligence community. He claims a past association with the agency during his student days . . .

"He shows promise of developing into a productive source of FI (foreign intelligence), once he has been oriented properly as to the agency's real needs and interests . . . he would have to be cautioned not to let his enthusiasm cloud his judgment as to his real capabilities." According to court documents, Welch said the CIA could use Rewald as a good source of information on economic issues in the Far East. Soon after Welch filed his report, CIA headquarters in Langley, Va. issued Rewald a security

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