Castle Bank and Trust

Castle Bank and Trust Company of Nassau, with an office in the Cayman Islands, was "set up and principally controlled" by the Miami lawyer Paul Helliwell. "Castle had no guards, no tellers, and no vaults." It kept "virtually all of its assets" on deposit with banks in the United States and held about a quarter of a billion dollars for some 300 customers, among them, by one account, the actor Tony Curtis, the band Creedence Clearwater Revival, and the Pritzker family. A memorandum found among the effects of Howard Hughes reads: "Chester called and wants to discuss the accounts at Castle Bank and Trust. He thinks these will be under investigation sooner than anticipated." The bank closed its Bahamian and Cayman offices in 1977.¹²

The Briefcase

The Internal Revenue Service turned to the bank in 1972 in the course of Operation Tradewinds, when it learned that a suspected narcotics trafficker had an account. Special Agent Richard Jaffe of Jacksonville asked the private detective Norman Casper to find out what he could. In October 1972 Casper met the bank's president, Samuel Pierson, at the Miami airport and came away with a card reading "HMW: give this man anything he wants." HMW was the resident manager, Michael Wolstencroft. On January 15, 1973, while Wolstencroft dined at Key Biscayne with a woman Casper had introduced to him, Casper entered her apartment with her key, took Wolstencroft's briefcase to the house of an IRS agent, where some 400 documents were photographed, and returned it within an hour and a half. Jaffe had supplied a locksmith and cleared each step with his superior. Two weeks later the woman, Sybol Kennedy, stole a Rolodex from Wolstencroft's office in the Bahamas. The service paid Casper 8,000 dollars.³

The Courts

One of the depositors, Jack Payner of Cleveland, was indicted in 1976. Judge Frank Manos suppressed the evidence. "The activities of the Government agents Jaffe and Casper were outrageous. They plotted, schemed and ultimately acted in contravention of the United States Constitution and laws of Florida, knowing that their conduct was illegal." He found that "the Government affirmatively counsels its agents that the Fourth Amendment standing limitation permits them to purposefully conduct an unconstitutional search and seizure of one individual in order to obtain evidence against third parties." The Supreme Court reversed in 1980 by five votes to three, holding that Payner had no standing to complain of a search of another man's briefcase. Chief Justice Warren Burger wrote that this "should not be read as condoning the conduct of the IRS 'private investigators.'" Justice Thurgood Marshall, dissenting, wrote that the government "made a conscious decision to forgo any opportunity to prosecute Wolstencroft in order to obtain illegally the evidence against Payner and others." After congressional hearings in 1975 the commissioner, Donald Alexander, had called off Operation Tradewinds.³

The Agency

The Wall Street Journal reported on April 18, 1980, that "pressure from the Central Intelligence Agency, rather than a legal problem, was what caused the Justice Department to drop what could have been the biggest tax-evasion case of all," that "the government already had in its possession the same list, legally obtained," and that the bank "was the conduit for millions of dollars earmarked by the CIA for the funding of clandestine operations against Cuba." A former federal official said: "Castle was one of the CIA's finance channels for operations against Cuba." CBS said that August: "it seems that Castle Bank was a CIA bank in the Bahamas. And when it began to look as though U.S. investigators from the IRS were getting too close for comfort to some CIA secrets down there, the CIA told them to lay off, and they did." The agency declined to comment, and neither court opinion mentions it. An earlier account had attributed the collapse of the inquiry to Commissioner Alexander, whose former law firm had represented a company managed by the bank. The Chicago tax lawyer Burton Kanter, indicted as the designer of many of the bank's arrangements, was acquitted.¹²⁴