June 13, 2014

Retired FBI Agents Talk About OPFOPEN Case

SACRAMENTO–In a salute to Wall Street Journalist JONATHAN KWITNY, in February 1977, the FBI’s Indianapolis Division initiated OPERATION FOUNTAIN PEN, an investigation code named “OPFOPEN, Major Case #1,” that targeted professional White Collar Crime [WCC] thieves pedaling “bogus” securities in both the United States and Europe.   Having ripped off millions, relying on jurisdictional disputes and problems collecting evidence overseas to thwart a number of criminal investigations, the conmen had become embolden conducting their scams–convincing several juries the complicated transactions were not fraudulent acts, but financial disputes between business parties.  But agents thought differently, however, telling courtroom observers the trial juries simply got it wrong.  And meeting with prosecutors, they suggested using an “insider” to get the evidence.  Spearheading the effort, the Indianapolis Division launched the OPFOPEN probe.  Because KWITNY penned, “THE FOUNTAIN PEN CONSPIRACY,” which is recommended reading for fraud investigators looking into the murky underworld of international bank swindlers, the operation was code named OPFOPEN, an acronym for the operation.

But critics suggested scheming bank swindlers and jurisdictional disputes were only half the problem, like Organized Crime in years past, they claimed the FBI was slow investigating White Collar Crime [WCC] because “numbers” dictated how the Bureau investigated some violations.  Because increased year-end totals concerning arrests made, cases opened and property recovered meant more funding, these critics maintained the FBI historically ignored or shied away from the more complicated WCC investigations–deciding instead to work investigations more inclined to result in an increased budget.  But following J. EDGAR HOOVER’s death and later committee hearings on agency abuses, the critics could no longer be held in check and Congress insisted the FBI realign its investigative priorities—demanding agents pursue a “quality” versus “quantity” approach conducting investigations.   Told about criticisms, which included allegations agents worked car cases to inflate recovery amounts and chased military deserters to boost fugitive arrests, the FBI reorganized its case management system and executives seized the OPFOPEN initiative as evidence the Bureau was complying with Congress’ mandate.

Seeking travel authority for investigators, the Indianapolis Division explained the OPFOPEN probe concerned “undercover” agents meeting with known swindlers using “bogus” offshore banks to sell securities.  Stealing millions, the conmen were using the British West Indies—in particular the islands of Montserrat and St. Vincent—as clearing houses for numerous ongoing fraud schemes.  Unlike tourists seeking the comfort of trade winds for vacation, the conmen were using the islands to establish phony banks like the Mercantile Bank & Trust, in Kingstown, St. Vincent—selling “bogus” Letters of Credit [LC], Certificates of Deposit [CD], and/or other fraudulent instruments to individuals looking to stall foreclosure or bankruptcy proceedings, and/or sell another scam artists trying to fleece Wall Street.

Targeted in the OPFOPEN probe, agents explained PHILLIP KARL KITZER was “fingered,” when he approached a Bureau confidential informant claiming he had “paper” for sale. Looking into his background, agents discovered KITZER was a principal architect behind many of the offshore bank scams.  Wanting to make a case, the Bureau authorized Special Agents [SAs] JOHN E. BRENNAN and JAMES J. WEDICK to meet with KITZER to collect evidence.  A professional thief, KITZER had numerous organized crime connections and was known to enjoy litigating cases with Justice Department lawyers.  Accordingly, the Bureau authorized BRENNAN and WEDICK to travel with KITZER—anywhere in the United States and overseas—in order to build a prosecuteable case against him, and make others against a select group of conmen financiers whom agents discovered were called,  “The FRATERNITY.”

Visiting places like Paradise Island, Nassau; Tokyo, Japan; Hong Kong; Athens, Greece; Geneva, Switzerland; Frankfurt, Germany; and London, England; agents worked closely with authorities overseas to identify cases that could be prosecuted.  As a result of the OPFOPEN probe, cases were prosecuted both in the United States and Europe, including several that involved a dozen individuals being “indicted” by separate Federal Grand Juries [FGJ], in Louisville, KY and Memphis, TN attempting to defraud $5.5 million from six [6] banks in the United States using fraudulent securities issued by KITZER doing business as [dba] Seven Oaks Finance Ltd, in Kent, England.

Agents said during the undercover phase of the investigation ALFREDO PROC, aka Freddie Pro admitted swindling ELVIS PRESLEY’s Lockheed JetStar and later using it as collateral in yet another scheme.   Meeting in New York—shortly after PRESLEY’s death—PROC admitted his role in the scam telling undercover agents, “Wheels-up,” he telephoned KITZER using the plane’s sky phone bragging he took the jet.  Acknowledging the call, KITZER said PROC took the jet.

Cooperating in the OPFOPEN investigation, admitting the evidence was overwhelming, both KITZER and PROC pled “guilty” to federal violations in exchange for 10-year prison sentences, resulting in numerous individuals being convicted on both racketeering charges and White Collar Crime.   Contrary to press reports speculating about PRESLEY’s involvement in the OPFOPEN case, agents said he did “not” know anything about the undercover investigation and was never an undercover operative.  Asked about VERNON PRESLEY–acknowledging his trial testimony–agents said he cooperated in the investigation which was covered by the local news media.  They also said the case helped spawn the ABSCAM investigation.