The Vatican connection : [the astonishing account of a billion-dollar counterfeit stock deal between the mafia and the church]

306 Pages·1982·1.269 MB·English

by  Richard Hammer, Joseph J Coffey

THE VATICAN
CONNECTION
The astonishing account of a billion-
dollar counterfeit stock deal between the
mafia and the church

RICHARD HAMMER

From 1971 to 1973, nearly a billion dollars' worth of stolen and forged securities
may have found their way into the international money market. Overwhelming
testimony indicates that at least $14 million of those stocks, and perhaps much
more, ended up in the Vatican of Pope Paul VI.
The Vatican Connection is an explosive expose of worldwide swindles involving
the Mafia in the United States, powerful business circles in Europe and South
America, and, at the end of the line, the Vatican in Rome. Along the way, we meet
racketeers and forgers and high-level dons; hit men and financiers; small-time con
artists and master swindlers; dope smugglers and Church dignitaries. It is a crime
story as full of color, suspense and high drama as it is true.
The many strands of this astonishing story were gathered over the course of a two-
year investigation. But no one, at the beginning could have woven a complete
garment from such disparate and scattered threads as these:
■ Playboy bunnies being turned onto drugs and into hookers by a couple of lower-
echelon Mafiosi in Mew York.
■ A contract for a beating and, if necessary, a killing, given by Mafia chieftain
Vincent Rizzo on California real estate dealer Jerry Marc Jacobs.
■ Two German financiers and housing developers meeting in a Munich hotel room
with Vincent Rizzo.
■ John Connally, then the U.S. Secretary of the Treasury, conversing in a Munich
hotel lobby with Jacobs's father, Ricky.
■ Archbishop Paul Marcinkus, the Vatican Minister of Finance, masterminding the
plot to purchase $1 billion in phony securities.
■ The subsequent collapse of several Italian banks, and the arrest of Michele
Sindona, a financier deeply involved with those banks, and a close associate of
Archbishop Marcinkus.
■ U.S. Attorney General Richard Kleindienst intervening to protect those at the top
when the investigation got too close.
With the publication of The Vatican Connection, the full story is finally being
told. At the center of this shocking tale is a dedicated New York cop named Joseph
Coffey. It was his hunch, and his dogged determination to follow up on it, that
eventually broke the case. This is Coffey's story, a story he knows, with all its
astounding participants and intricate details, better than any man. And his
knowledge is supported by transcripts, tape recordings, wiretaps, bugs, confessions,
and personal recollections, all of which he has made available for the writing of this
book.
Coffey's experiences with the Vatican investigation shook his faith in the Church,
and his belief in the justice system—but did not destroy that faith and belief. It is
indeed what led him to come forward and testify in this book.

Richard Hammer (left) is the author of The Court-Martial of Lt. Calley, which was
nominated for a National Book Award, and The Last Testament of Lucky Luciano.
Joseph J. Coffey, Jr., is now Commanding Officer of the Organized Crime Homicide
Task Force, New York City Police Department.
"It was without a compeer among swindles. It was perfect, it was rounded,
symmetrical, complete, colossal."
-Mark Twain, Life on the Mississippi
CONTENTS
Author's Note xi
Munich, May 1972 1
ONE: The Playboy Bunnies 5
TWO: Operation Fraulein 59
THREE: Taps and Bugs 107
FOUR: Coca-Cola 157
FIVE: To the Vatican 199
SIX: Beyond the Vatican 239
SEVEN: The Last Pieces 263
EIGHT: Cover-up 279
Index 311
AUTHOR'S NOTE
The events described in this book are true and the characters are real. Except
for certain interpretations and conclusions, which are the author's
responsibility alone, the story is based on the recollections, files and records
of Detective Sergeant Joseph J. Coffey, Jr., commanding officer of the
Organized Crime Homicide Task Force and special assistant for organized
crime affairs to the Chief of Detectives of the New York City Police
Department.
It also relies heavily on wiretaps and electronic surveillance done under
court order in the United States and the Federal Republic of Germany, and
on reports, files, records and documents of the New York City Police
Department, the New York County (Manhattan) District Attorney's Office,
the Federal Bureau of Investigation, the United States Department of Justice
and its Organized Crime Strike Force in New York and elsewhere in the
United States, other government agencies, subcommittees of the United
States Congress, Interpol, the Munich Criminal Police and other investiga-
tive bodies in the Federal Republic of Germany and elsewhere in Europe,
court proceedings, and the recollections and statements of certain of the
participants in these events.
Those conversations that have been re-created are either taken directly
from transcripts of legal wiretaps and electronic eavesdropping devices or
are based on the recollections of one or more of the participants in them.
-R.H.
New York, February 1982
MUNICH, MAY 1972
Matteo de Lorenzo was in a mellow and nostalgic mood. It was late on a
warm spring night and he had spent the evening on the town. His aide and
traveling companion, Vincent Rizzo, had shown him the sights of Munich
and together they had toured the best of the Bavarian capital's night spots,
had perhaps eaten a little too much heavy German food, had washed it down
with a little too much good liquor. By midnight, back in their suite at the
Bayerischer Hof Hotel, they were flushed with the glow of satiety, and with
the anticipation of great financial success.
They paused for a nightcap and then went to bed. Despite the fatigue,
sleep did not come easily. All that good food and liquor, combined with jet
lag, sat heavily on the stomach and frayed the nerves. And, at least for Marty
de Lorenzo, there was a trace of homesickness. He was far from his modest
house in Bayside, Queens, and at sixty-one, like many men his age, he found
it hard to adapt to radical change, had grown accustomed to a regular
routine. His normal orbit did not usually include an expensive suite in a
deluxe European hotel. A short, somewhat overweight man, looking older
than his years, with a round, open and often smiling face, he would have
seemed more at home behind the counter in a small neighborhood grocery,
surrounded by a dozen grandchildren for whom he would always have had
an inexhaustible supply of pennies and candy, and by a group of old cronies
with whom he'd be trading an inexhaustible repertoire of tall stories during
idle hours.
To pass those hours that night in a strange bed in an unfamiliar city until
sleep came, he mused softly into the darkness, talked reflectively across the
night table that separated his bed from Rizzo's. He talked about the past,
about how things had been in the old days when he had been young and
ambitious. It was a monologue, broken
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THE VATICAN CONNECTION
now and then by some drowsy comment from Rizzo to indicate that he was
still awake and listening.
"It's always been a tough world to make money," de Lorenzo summed
up in those final moments before drifting into sleep. "Things has to get better
and, you see, we are using our heads. We started using our brains a little. Of
course, a lot of people never had the brains to use, so they . . . But some of
us .. . There was bootlegging, right. Then from bootlegging, we went into
numbers; numbers to horses. But you had to have a brain to go with it. It
goes from one thing to the other. Then into shylocking. Then legitimate
business. That means it took us a long time to realize that legitimate business
is the best thing. When I got into legitimate business, it was stocks."
Marty de Lorenzo was, indeed, into stocks and bonds, and a lot of other
things, too. Vincent Rizzo was overseer of many of those de Lorenzo
interests. He was the man who had put the portfolio together and was
charged with its safekeeping, with making it produce ever-increasing profits.
It was a portfolio that might have been the envy of any investor, of even the
sharpest Wall Street trader. It was worth close to a billion dollars and it was
filled with such choice blue-chip investments as United States Treasury bills,
bonds and notes, bonds of the Federal Intermediate Credit Bank and the
Federal National Mortgage Association, common stock and bonds in major
corporations such as National Aviation Company, Unishops, Inc., General
Portland Cement Company, International Business Machines, Beneficial
Finance Company, California Computer Corporation, First Union, Inc.,
Capital Holding Corporation, Coca-Cola Bottling Company of Los Angeles,
Occidental Petroleum Corporation, Norton Simon, Inc., Chrysler
Corporation, Pan American World Airways, Inc., American Telephone and
Telegraph Company, General Electric Corporation and more.
There was just one trouble. De Lorenzo and Rizzo were neither ordinary
investors nor sharp speculators. They did not watch the ticker tape,
calculating whether to buy or sell or hold on the movements of fractions of a
point. They had only a cursory interest in what happened to the price of their
shares on the stock markets. Their definition of stock trading and legitimate
business was unique to them, could be found in no dictionary unless it was
one they wrote themselves. They had not bought their stocks and bonds,
notes and bills in the ordinary manner, through brokerage houses or from
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Munich, May 1972
banks. They had accumulated them from the mail sacks of the United States
Postal Service, from private homes, from the vaults of such major banks and
brokerage houses as Manufacturers Hanover Trust Company, Bankers Trust
Company, Security Pacific Bank, Continental Illinois Trust Company, Blair
and Company, Shearson Hammill, Merrill, Lynch, Pierce, Fenner and Smith,
and a lot of others, and from the private engravings and printing presses of
their friends, allies and employees. They had never paid the going market
price for a single share in their portfolio; if they had paid anything at all, it
had never been more than a fraction of the market value.
What de Lorenzo and Rizzo were, in fact, were major figures in the
world of organized crime-men respected and honored by those at the very
top, and held in awe, and no little fear, by those below. They owed their
positions not so much to the use of the traditional muscle and force, though
they were not afraid to use violence when they thought it necessary (indeed,
Rizzo thought it necessary more often than not), but more to the fact that
they were prime earners. They had the instinct to smell where the main
chances lay and seize them. They knew how to take a dollar and turn it into
ten or more, and so enrich themselves and their organization. They had their
hands in everything. They were the men who controlled the distribution of
stolen and counterfeit American securities throughout the world. And that
was what had brought them to Munich that spring night.
De Lorenzo may have looked like everybody's kindly uncle (indeed, he
was known as Uncle Marty throughout the syndicate), but there was little
softness beneath that surface. He had climbed from the poverty of his native
Cerignola in Foggia Province and the slums of New York's Lower East Side,
had survived and even thrived during the internecine wars of the 1930s,
1940s and 1950s, to emerge as a capo in the crime family once ruled by
Charles "Lucky" Luciano and Vito Genovese. If he had not driven for the
very top, it was because he knew the perils of the throne; he was satisfied to
be a man close to the top, a friend to all, making money for all and so
cherished by all.
Twenty years his junior, Vincent Rizzo was smart, shrewd and ruthless.
His tensely coiled body seemed put together with steel wires; his
pockmarked face looked like the inside of an open can of
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