CIA TIES REVEALED IN BANK FAILURES

opyright 1990 Alert International, Inc.

Money Laundering Alert

July, 1990

HEADLINE: CIA ties revealed in bank failures

Government records uncovered by Money Laundering Alert show that two failed

Midwest banks gave millions of dollars in loans to Farhad Azima, a shadowy

Iranian-born businessman with close links to the CIA. Utica National Bank and

Trust Co. in Tulsa, Oklahoma, and Republic Bank of Kansas City, Missouri were

those banks.

Azima’s involvement with the CIA is suspected of having played a role in the

1984 collapse of Indian Springs State Bank in Kansas City.

The failure of commercial banks, as opposed to savings and loans, has not

previously been linked to possible CIA money laundering to finance covert

operations.

The 1984 failure of Republic Bank was caused in part by the bankruptcy of

Global International Airways several months before. Global’s demise also

significantly “contributed to the failure of Indian Springs State Bank,”

according to The Houston Post.

A former senior CIA officer said that Global worked for the agency and that

agents of SAVAK, the CIA-supported intelligence arm of the deposed Shah of Iran,

also had ties to Azima.

According to former federal prosecutor Lloyd Monroe, the investigation of

Azima’s role in the collapse of Indian Springs was thwarted because of his

alleged ties to the CIA.

Monroe has said the CIA told the FBI that Azima was “off limits” because he

had “CIA connections.” The IRS had asked the Justice Department to probe Azima’s

role in the bank’s failure.

A preliminary investigation by the House banking subcommittee determined

early this year that there was validity to allegations that the CIA had impeded

the investigation of Azima.

Even after Global’s bankruptcy, a handful of other aviation-related Azima

businesses continued to receive loans from banks to buy jumbo jet aircraft,

according to Federal Aviation Administration records. Utica gave loans to

Global three years after Global declared bankruptcy.

Although Money Laundering Alert has been unable to confirm that he is the

same person, signatures on the loan documents appear identical. Officials at

F&M Bank, which took over Utica, said that Utica employee records do not show a

person named Ray Adams as having been a vice president of Utica.

In late 1985 and 1986, Utica vice president Ray Adams signed chattel mortgage

agreements with Azima for nearly $ 2 million for a Boeing 707 owned by Global,

and for a Boeing 727 owned by Azimals Aviation Leasing Group, Inc.

Adams is not listed on mortgage documents tied to Utica loans of an

additional $ 6 million for jet aircraft owned by Aviation Leasing Group.

Three years earlier, Adams was involved in loans to Azima. In October 1983,

he signed a repossession order for a Boeing 707 and other jumbo jets.

Facts on File World News Digest

March 23, 1990

HEADLINE: Savings & Loan Crisis;

Intelligence Panel Probes CIA Ties

The House Permanent Select Committee on Intelligence planned to investigate

reported links between savings-and-loan-association fraud and the Central

Intelligence Agency, a committee spokesman said March 1.

The decision to pursue the reports came after the committee received a letter

from Representative Frank Annunzio (D, Illinois), chairman of the House Banking

Committee’s subcommittee on Financial Institutions Supervision, Regulation and

Insurance. The letter urged that the allegations, which had appeared in a series

of articles in the Houston Post, be investigated.

The Post series began February 4 and ran initially through March 11. It

alleged that at least 22 now-insolvent thrifts (16 of them in Texas) had made

loans to individuals who had links to the CIA, organized crime or both, and that

18 of the 22 were either owned or controlled by such individuals. The reports

further alleged that the loans had been used to fund illegal activities that

included gunrunning, drug smuggling, money laundering and covert aid to the

Nicaraguan contra rebels.

Fraud was said to have been a key factor in the failure of all 22 thrifts,

and the cost to taxpayers was estimated at an eventual $13 billion in federal

deposit insurance. In some cases, the CIA, citing national security, had

intervened to prevent federal regulators from pursuing funds missing from

insolvent thrifts and prosecuting the individuals responsible, according to the

Post.

The Post said its eight-month investigation relied on law enforcement

records, sworn testimony, court documents and interviews with government

investigators and prosecutors. Despite its explosive allegations, the series

initially attracted little national press attention.

CIA Director William H. Webster February 5 was asked to testify before

Annunzio’s subcommittee concerning the assertions in the Post. The CIA turned

down the request in a letter dated February 14.

In his March 1 letter to the intelligence committee, Annunzio wrote, “The

refusal of the agency to respond to the subcommittee’s request and the initial

investigative work done by the subcommittee staff, have led me to believe that

at least some of the [Houston Post’s] allegations have validity. . . . NO agency

is above the law.”

The CIA, which had called the reports “scurrilous and unsubstantiated,” said

it would cooperate with any investigation.

Among the details cited in the Post:

* Federal prosecutors were currently investigating Houston developer Robert L. Corson in connection with savings and loan fraud, the Post reported February 4. He was described as a “known money launderer” with reputed links to the CIA and organized crime.

* Four of the largest borrowers at Silverado Banking, Savings and Loan Association, a failed Denver thrift, had links to Corson or to Herman K. Beebe Sr., a reputed associate of Louisiana Mafia boss Carlos Marcello, the Post reported March 11.

Three of the four — developers Bill L. Walters, Kenneth M. Good and Larry Mizel –were also said to have had business ties to Neil Bush, son of President Bush, who had sat on Silverado’s board from 1985 to 1988.

* The Post reported February 8 that U.S. authorities probing the collapse of a small Kansas bank in the mid-1980s had been told by the Federal Bureau Of Investigation to lay off a key figure because he “had a get-out-of-jail-free card” from the CIA. The suspect, Iranian exile Farhad Azima, had been the fourth-largest shareholder in Indian Springs State Bank.

Azima owned Global International Airways, which had filed for bankruptcy in 1983 and which had performed contract work for the Defense Department and the CIA. Global was allegedly linked to both the EATSCO (Egyptian American Transport and Services Corp.) fraud case and the Iran-contra scandal. Global was also said to have employed Heinrich Rupp, a self-proclaimed ex-CIA pilot who had been convicted Of defrauding a Denver bank.

The Associated Press

February 8, 1990, Thursday, AM cycle

HEADLINE: Iranian Airline Owner Alleged to be Link Between Failed Bank, CIA

DATELINE: HOUSTON

Federal authorities backed away from investigating an airline owner accused

of contributing to the financial failure of a Kansas City bank because he had

ties to the CIA, a newspaper reported.

Farhad Azima, a native Iranian and owner of Global International Airways, was

the fourth-largest shareholder in Indian Springs State Bank of Kansas City,

which failed in 1984, The Houston Post reported.

The Post said it was told by federal law enforcement sources, which it did

not identify, that the FBI did not investigate Azima’s and Global’s links to

Indian Springs because the CIA said Zaima was “off limits.”

“I was told by the FBI that Azima had a get-out-of-jail-free card,” a source

in the investigation told The Post in a story published Thursday.

The story is one of a series of Post articles suggesting possible links

between the CIA, organized crime and the failure of 22 savings and loans, as

well as Indian Springs.

Global International, based in Kansas City, MO., started in 1978 shipping

cattle to Iran. The fleet grew to 14 Boeing 707 jets.

Some federal investigators say Global was owned by the CIA; others say it

performed contract work for the agency, The Post said.

A cargo plane that the Federal Aviation Administration said was owned by

Azima was linked in 1986 to secret shipments of American military supplies to

Iran. Azima’s attorney said at the time the plane was leased to someone else and

Azima didn’t know how it had been used.

Global filed for Chapter 11 bankruptcy protection in 1983. It owed Indian Springs State Bank about $$280,000, according to a list of about $$15 million in Global’s debts to unsecured creditors.

Azima, who was a director of the bank and owned nearly 10 percent of its shares, was a defendant in a suit filed by the Federal Deposit Insurance Corp. seeking to recover some of the bank’s losses. The suit alleged that fraud and negligence on the part of Azima, as a bank official, contributed to the bank’s failure, The Post reported.

The suit was settled out of court, and no criminal charges were filed against

Azima in connection with the failure.

Global “certainly did contribute to the failure of Indian Springs State

Bank,” said Michael Manning, a Kansas City lawyer hired by the FDIC to

investigate the bank’s failure.

Asked about Global’s overdrafts at Indians Springs, Azima told the Post, “I

don’t get involved in the details of the operations. I have no idea about that.”

Azima, who now lives in London, told The Post in a telephone interview he

didn’t recall Global doing any work for the CIA, then said “As a matter of

policy we don’t comment on questions like this.”

The CIA, in response to a request from the Post under the Freedom of

Information Act, said it could neither confirm nor deny that any relationship

existed with Azima.

Proprietary to the United Press International 1990

February 8, 1990, Thursday, BC cycle

HEADLINE: Investigators say probe was blocked because of CIA link

DATELINE: HOUSTON

Federal authorities who investigated the failure of a small Kansas bank

during the mid-19806 were advised to back off a key figure because he had ties

to the Central Intelligence Agency, a newspaper reported Thursday.

In a copyright story, The Houston Post said the investigation centered on

Farhad Azima, 48, a native Iranian whose family had ties to the Shah. His name

is linked in court documents and other evidence to the CIA and a number of

organized crime figures.

Azima was the fourth-largest shareholder in Indian Springs State Bank of

Kansas City, Kan. He and his companies, including Global International Airways,

borrowed more than $1 million from the bank.

The airline got its start in 1978 shipping cattle to Iran and filed for

bankruptcy five years later.

Global International, based in Kansas City, MO., started with one Boeing 707

aircraft. The fleet grew to 14 aircraft, making it one of the nation’s largest

charter airlines. Indian Springs records indicate that Global was overdrawn at

the bank by a daily average of $150,000.

Asked about Global’s large overdrafts at Indian Springs, Azima replied, “I

don’t get involved in the details of the operations. I have no idea about

that.”

When he was reminded that he had been a director and owned nearly 10 percent

of the bank’s shares, he said, I ‘Outside directors don’t get involved in the

operations of the bank.”

Several of Global’s creditors listed in its bankruptcy case had connections

to the CIA and the Contras, sources told the newspaper.

One Global creditor, Southern Air Transport in Miami, was a former CIA

proprietary that was later sold to James Bastian, a ex-CIA lawyer. Southern Air

Transport reportedly provided planes for the shipment of arms to Iran and to the

Contras.

Azima said he did not “recall” any work that Southern Air Transport did

for Global.

Van Geyso, a former Global pilot, said Southern Air did maintenance work on

Global’s planes when they were in Miami. Van Geyso said he would make hauls

from Maimi to Chile, Peru and Colombia with cargo including cars, computers,

refrigerators and televisions.

On one return trip from Bogota, Columbia, he said he brought back illegal

drugs.

A former FBI agent who investigated Azima said he had heard about Global

planes flying guns to different places and then coming back with drugs.

Azima denied any knowledge of Global aircraft carrying drugs.

Aviation Week and Space Technology

December 3, 1984

HEADLINE: Capitol Air Discontinues Flight Operations

DATELINE: Washington — Capitol Air discontinued flight operations temporarily

Nov. 25, furloughed more than 700 employees, and was attempting last week to

reorganize with new financing.

The company, headed by FarhadAzima, chairman, reported a $763,000 loss for

the first nine months of 1984. The loss was an improvement of $35,000 from the

same period in 1983.

Capitol recorded profitable summer operations but fell into a cash-flow bind

when traffic slipped in the fall season, causing a round of layoffs from its

employee work force, then numbering approximately 1,200.

Ihecompany failed to meet a Nov. 15payroll and encountered work slowdowns

and sick-ins that began to affect operations, a Capitol official said.

Four Teamsters Union employees, since joined by other Capitol employees,

filed a petition on Nov. 23 in bankruptcy court in the Southern District of New

York, claiming they were owed more than $5,000 in back pay. The Capitol official

said the petition has forced the company into involuntary bankruptcy.

Inc.

Newsday

February 3, 1991, Sunday, NASSAU AND SUFFOLK EDITION

HEADLINE: MY Little Town;

What’s a big-city mogul doing in Warren, Pa.? Good Question

BYLINE: John Riley

DATELINE: WARREN, PA.

MANHATTAN megamillionaire John Catsimatidis says he knew nothing. But some in

this quiet little Allegheny River town say different. They say he knew

everything, and escaped criminal charges only because of his money.

Catsimatidis, the hard-driving, Greek-born entrepreneur who built Red Apple

cos . into New York City’s largest grocery chain, took over the United Refining

Co. here in 1986. Rescuing the 84-year-oldfirm from the bankruptcy of its

corporate parent, Texas’Coral Petroleum, he promised to bring leadership and

innovation to United’s smoke-billowing riverside refinery and its chain of Kwik

Fill gas stations.

Last month, however, United’s 2,000-plus workers were surprised to learn of

one innovation from Catsimatidis’ regime that they couldn’t have expected: the

largest episode of criminal wiretapping in Pennsylvania history.

Appearing in the local courthouse on Dec. 11, lawyers for R.A. Security, a

division of Red Apple, admitted that for well over a year following

Catsimatidis’ takeover, phone lines at the refinery had been secretly and

illegally tapped and taped by the plant security staff. As part of a prearranged

deal, the firm pleaded “no contest” to 100counts of possession of eavesdropping

devices and agreed to pay a $ 1 million fine to settle the case.

eople who don’t like Catsimatidis much will poke fun at his deep devotion to

a now-deceased cat, who once had the run of Red Apple’s corporate offices and

reportedly wasn’t equally adored by some feline-phobic workers. Or they’ll point

to controversies involving slum properties and conditions at some of his stores.

And sometimes they’ll complain about his friends, such as Joseph Heilbrun, a

financial adviser who came to work for Catsimatidis after pleading guilty in

1984 to securities fraud in a massive corporate bribery scandal surrounding

Frigitemp Corp.

Or Farhad Azima, an Iranian-born Catsimatidis gambling buddy and

one-time business partner, who has been identified in the book “Inside Job: The

Looting of America’s Savings &Loans” as the owner of a plane company involved

in the global arms trade during the 1980s and as a director at and borrower from

a Kansas City, Kan., thrift that collapsed amid allegations of mob-linked

improprieties. Azima’s lawyer says he has been smeared.

The Washington Post

July 12, 1979, Thursday, Final Edition *

HEADLINE: Tunis Halts PLO Aid to Sandinistas;

Tunis Halts PLO Arms for Sandinistas on U.S. Jet;

American Jet Used to Carry 50 Tons of Arms

BYLINE: By Dusko Doder, Washington Post Staff Writer

An American-owned cargo jet being used by the Palestine Liberation

Organization to transport 50 tons of arms to Nicaraguan rebels was temporarily

detained in Tunisia and released last night after its cargo was unloaded,

well-informed sources said.

The Boeing 707 owned by a Kansas City-based company, Global International

Airlines, was chartered by the PLO through a Belgian company, Young’s Cargo

Service of Brussels, the sources said.

While the plane’s cargo manifest showed that it was carrying medical and

relief supplies, the craft actually carried arms and ammunition, including three

artillery pieces. All the arms reportedly were of Chinese origin.

It was the first known instance of PLO weapons shipments to the Sandinista

had received PLO training in Algeria a few years ago.

In February, the PLO issued a joint statement with a part of the Sandinista

leadership condemning Israel.Israel has supported Nicaraguan President Anastasio

Somoza and has sold generous amounts of arms to his National Guard.

The Somoza family’s support of Israel goes back to 1948 when Nicaragua

supplied arms and passports to Jews seeking to establish their state in

Palestine.

The Tunisian government last night issued a statement saying that “a

chartered 707 belonging to a small U.S. company and under contract for the use

of the Palestine Liberation Organization landed in Tunisia to pick up military

equipment of non-Western origin belonging to the PLO.”

The statement said that “the decision was taken by the government of Tunisia

to unload the plane and return it to the care of the crew for departure” from

Tunis to Amsterdam.

The plan took off from Tunis early this morning without the cargo but with

the crew, American officials said.

Global International Airlines, in which several wealthy Iranians reportedly

have principal interest, was established about a year ago and owns two aircraft,

according to a company spokesman.

The spokesman, Stan Adler, said in a telephone interview that the Boeing was

hired to carry Red Crescent supplies from Beirut to Costa Rica, which the

Sandinistas use as a base for their struggle against Somoza.

Three Palestinians and a representative of Young’s Cargo Service boarded the

aircraft in Beirut after it was loaded with crates bearing Red Crescent symbols.

The Red Crescent is equivalent of the Red Cross in the Moslem world.

As the craft was approaching the Tunis-Carthage airport, Capt. Paul Marable

of Kansas City, MO., was ordered to land at a nearby military field at Bizerte,

about 40 miles from Tunis, according to Adler.

Marable and his three crew members, all Americans, were not present while the

aircraft was loaded with about 30 additional tons of crates and three pieces of

artillery. Adler said that when the captains saw the artillery, he refused to

fly the aircraft to Costa Rica.

Other sources said the pilot told officials that the craft had some

mechanical difficulties and would have to make a stopover at the civilian

airport in Tunis. Once he landed in Tunis, the pilot called the U.S. Embassy

seeking help.

State Department officials said that the crew held lengthy discussions with

U.S. Ambassador Stephen Bosworth, but these officials would not disclose any

details surrounding the three-day delay of the aircraft by Tunisian authorities.

Global officials said that the crew was held incommunicado for 24 hours at

Bizerta before they were allowed to phone the U.S. Embassy in Tunis and company

officials in Kansas City. The crew, all from the Kansas City area, reported

they were treated well.

Apart from the Tunisian government statement, there were no official Tunisian

explanation of the mysterious incident. The presence of PLO weapons at a

Tunisian military airfield also remains a mystery.

Mohamed Gherib, Tunisian charge d’affairs here, said he had no information

about the incident. He said that he was in contact with State Department

officials who were involved here and in Tunis in protracted negotiations to have

the plane unloaded and allowed to fly out of Tunisia.

After Tunisia announced last night that the plane was unloaded and would be

allowed to fly to Amsterdam, a State Department spokesman said that “legal

implications” involved in the incident were being studied.

The two top Global officials, chairman Farhad Azima and executive

vice-president Mansour Rasnavad, said that the plane was diverted to Bizerta to

be reloaded with arms without their knowledge or approval.