http://www.salon.com/2012/12/02/better_ ... nick_deak/Sunday, Dec 2, 2012 07:00 AM EST
James Bond and the killer bag lady
New clues and a powerful Wall St. skeptic challenge the official story of CIA financier Nick Deak's brutal murder
By Mark Ames and Alexander Zaitchik
Deak-Perera had been headquartered on the building’s 20th and 21st floors since the late 1960s. Nick Deak, known as “the James Bond of money,” founded the company in 1947 with the financial backing of the CIA. For more than three decades the company had functioned as an unofficial arm of the intelligence agency and was a key asset in the execution of U.S. Cold War foreign policy. From humble beginnings as a spook front and flower import business, the firm grew to become the largest currency and precious metals firm in the Western Hemisphere, if not the world. But on this day in November, the offices were half-empty and employees few. Deak-Perera had been decimated the year before by a federal investigation into its ties to organized crime syndicates from Buenos Aires to Manila. Deak’s former CIA associates did nothing to interfere with the public takedown. Deak-Perera declared bankruptcy in December 1984, setting off panicked and sometimes violent runs on its offices in Latin America and Asia.
If Nicholas Deak had never existed, Graham Greene would have tried — and failed — to invent him. Born and raised in Transylvania during the last decade of the Austro-Hungarian Empire, Deak received a Ph.D. in economics from the University of Neuchâtel in 1929 and held posts with the Hungarian Trade Institute and London’s Overseas Bank before taking a post in the economics department of the League of Nations shortly before World War II. He fled Europe for the United States in 1939, enlisted as a paratrooper in 1942, and was quickly recruited into the Office of Strategic Services (OSS), the wartime precursor to the CIA. Among his first assignments was developing a plan to parachute oil executives disguised as Romanian firefighters into the Balkans to sabotage Axis energy supply lines. (Sadly, it was never implemented.) He spent the final year of the war in Burma, where he recruited locals into guerrilla units to fight the Japanese occupation. Japan’s Burmese commander would surrender his samurai sword to Deak at the end of the war, a memento Deak later kept in his Scarsdale, N.Y., attic.
Following V-Day, Deak was stationed in Hanoi and headed U.S. intelligence operations in French Indochina. He assisted with the supply of weapons to French colonial forces and in dispatches to Washington recommended sending unofficial U.S. “advisers” into combat missions, helping set the course for U.S. involvement in Vietnam. His close colleagues at the OSS included future CIA directors William Casey and William Colby, as well as CIA counterintelligence chief James Jesus Angleton.
Deak was a unique talent at a unique time in American history. With Europe in ruins, the country emerged from the war as a true global power in need of imperial know-how. Within the ranks of the OSS, Deak stood out. The blue-blood Yalies that dominated the agency had little experience in global affairs and even less in global finance. And so they turned to the cosmopolitan half-Jewish foreigner to help move the nascent empire’s money around the strategic chessboard. Soon after the war ended, the American government provided the funds to found Deak and Co., a front that began as a global flower-distribution business in Hilo, Hawaii. It soon evolved into a proper bank with growing legitimate business as a broker of foreign currencies with branch offices all over the world, from Beirut to Buenos Aires. In the days of strict global capital controls, when banking was duller and more predictable, Deak’s firm attracted top talent and ambitious finance mavericks with its reputation as one of the most exciting white shoe firms on Wall Street.
But the company’s most important client was always the CIA. From its founding until the late 1970s, Deak’s firm was a key financial arm of the U.S. intelligence complex. Because it carried out the foreign-currency transactions of private entities, Deak and Co. could keep track of who was spiriting money into and out of which countries.
In 1962, for example, Deak warned the CIA that China was planning to invade India after his company’s Hong Kong branch was swamped with Chinese orders for Indian rupees intended for advance soldiers. Deak’s offices were more than observation posts. His company played a crucial role in executing some of the United States’ most infamous covert ops. In 1953, CIA director Alan Dulles tasked Deak with smuggling $1 million into Iran through his offices in Lebanon and Switzerland. The cash went to the street thugs and opposition groups that helped overthrow Iran’s prime minister, Mohammad Mossadegh, in favor of the U.S.-approved shah. Deak’s network also financed the CIA-assisted coups in Guatemala and the Congo.
Meanwhile, the sunny side of Deak’s business thrived. Its retail foreign currency operation, now reconstituted under new ownership and known to the world as Thomas Cooke, became a staple at airports, its multi-packs of francs and marks symbols of every American family’s European vacation. Deak’s retail precious metals business dominated the market after the legalization of gold sales. After a series of sales and reconstitutions, it is today known as Goldline, a major sponsor of Glenn Beck and subject of a recent fraud settlement.
Sen. Frank Church inflicted the first hit on Deak’s public image in 1975. During the Idaho senator’s famous hearings into CIA black ops, it was revealed that Deak’s Hong Kong branch helped the agency funnel millions in Lockheed bribe money to a Japanese yakuza don, political power broker, and former “Class A” war criminal named Yoshio Kodama. One of the most bizarre details involved a priest-turned-bagman who carried over 20 pounds of cash hidden under baskets of oranges on flights between Hong Kong and Tokyo, where he delivered the cash to Lockheed representatives.
Deak’s firm was not penalized for its role in the scandal — bribing foreign officials wasn’t yet illegal in the U.S. — but the damage to his firm’s image was real. The scandal brought down Japan’s government and governments in Western Europe; it also led to the passage of the Foreign Corrupt Practices Act, the first serious attempt to criminalize overseas bribery. The damage to Deak’s public image was real. It was also quickly compounded by a subsequent New Republic expose that outlined Deak’s role in the Iran, Guatemala and Congo coups. According to those who worked with him at the time, by the late 1970s Deak understood the CIA had begun to see his high profile — matched with a growing business laundering underworld money — as a liability.
If his name was no longer synonymous with the all-American vacation, Deak emerged during the 1970s as a hero in an emergent libertarian gold-bug subculture. As Doomsday-obsessed gold hoarders built financial bomb shelters in the shadow of stagflation, Deak emerged as among the first proto-Libertarian gurus. A fawning profile in Reason magazine compared Deak to “Midas Mulligan or any other character ever conceived of by Ayn Rand.” A font of public lectures and provocative quotes for journalists, Deak drew admiration from fellow gold-circuit riders Ron Paul and Alan Greenspan. He corresponded with Friedrich Hayek. At one gold conference featuring George Will and Louis Rukeyser, the suave banker with the thick Transylvanian accent drew wild applause when he blamed inflation on “welfare” and declared, “I don’t see why the recipient of welfare should be able to vote, because obviously he can vote for more welfare.” Deak also embraced apartheid-era South Africa. “I love to deal with South Africa,” he once said. “Without the white population, the black people there would be in the same shape as west and east Africa.” The media was enthralled. Time tagged him “the James Bond of Money.” Merv Griffin interviewed him with barely concealed awe.
“Deak was incredibly charismatic, the ultimate old world aristocrat,” said Kuhlmann. “He had this imperial bearing and yet was very charming and equally comfortable with high financiers and arms dealers.”
* * *
As the hard-line conservative movement aligned behind Ronald Reagan, things couldn’t have looked better for Deak. His reactionary mix of Spenglerian pessimism, Social Darwinism and Austrian School economics was coming back into vogue. His buddy Bill Casey was put in charge of Reagan’s CIA with a mandate to resurrect the Old Boys Network. People lined up around the world to buy golden “Deak Coins” stamped with his aquiline mug and the motto “Internationalization of Sound Money.” It should have been the start of a grand second act. But it was not to be.
The House of Deak began its rapid collapse in 1983 when a federal informant accused the firm of laundering hundreds of millions of dollars in Colombian cartel cash. Leading the attack from Treasury was John M. Walker, a first cousin of the vice president, George Herbert Walker Bush, who served as CIA chief under Gerald Ford. Suddenly Deak’s decades-long relationship with Casey meant nothing. The knives were out. One of Deak’s executives, Theana Kastens, remembers dropping by 29 Broadway and seeing a freshman congressman named Chuck Schumer sitting in Deak’s office chair, his feet up on the desk, rifling through papers.
“He felt profoundly betrayed,” said Kastens, whose father, Pennsylvanian Rep. Gus Yatron, served on the House Foreign Affairs Committee during the Iran-Contra hearings. “He was bitter and despondent.”
When Reagan’s Justice Department established a presidential commission to investigate the charges, a furious Deak rejected participation in what he regarded as a show trial. He was summoned to testify in Washington and refused. Finally, on Nov. 29, 1984, the feds dragged him before the cameras under subpoena for a public dressing-down. Deak openly displayed his contempt for the proceedings. Sardonic and aloof, he responded to questions about his company’s Swiss-like policy of accepting all deposits by asserting that it was the job of law enforcement, not Nicholas Deak, to track drug money. His outrage at being singled out was understandable. At the time, CIA director Casey was working closely with Nicaragua’s contra rebels, who were funding their weapons purchases with cocaine profits in full view of the CIA, an old habit of the agency’s dating back to their drug transporting operations in the golden triangle. Of course, the exact justification for burning Deak didn’t matter. And as with the Church hearings, his company was never actually even prosecuted. The message to Deak and his underworld clients was more important: Deak-Perera had lost its protection and was in the cross hairs.
The fallout was immediate. Deak’s crime-commission appearance triggered a worldwide run on the company’s deposits. Crowds mobbed Deak offices in Argentina and Hong Kong. Millions of dollars in gray and black deposits vanished. Among the jilted clients were Macau Triads and Latin American drug cartels. A retired DEA official who worked in Hong Kong in the 1980s said, “Nick Deak screwed over a lot of people, including the Macau mob.” Philip Bowering, a Hong Kong correspondent for the Far Eastern Economic Review in the 1980s, said there’s no question Deak made a lot of enemies that year. “He crossed one of the Macau mafia,” he said. “But on what issue I have no idea.”
After a bankruptcy declaration in December 1984, Deak tried not to think about his new enemies and focus on sorting through his company’s remains. He spent 1985 traveling the globe with his son Leslie, trying ineffectually to revive the firm. Then one wintry afternoon, with the holidays approaching and the “Miami Vice” theme climbing the Billboard charts, a homeless woman from Seattle named Lang showed up at 29 Broadway and brought Nick Deak’s long and storied run to an end.