Paper chase

William Morgan says he's just an innocent document dealer snared in a campaign finance scandal. And if you believe that, he has some old railroad bonds he wants to sell you.

In a recent case, a California lawyer and several of his clients were convicted of fraud for attempting to sell financial instruments allegedly issued by the Dai-Ichi Kangyo Bank in Japan. The prosecution's theory was that the lawyer and his clients "deliberately closed [their] eyes to the fact that these financial instruments were worthless" because they were fake. The defendants had a fantastic story about a secret fund administered by Gen. Douglas MacArthur after the war, which was supposed to be used to rebuild Japan but instead was returned to Japan by President Nixon in a secret deal to get elected.

The instruments seem to be the same ones that some of Morgan's associates are peddling. Indeed, after showing the copies of the CDs, Morgan launches into the same fantastic historical tale.

Told about the the case of the California lawyer, Morgan responds that his associate's Japanese instruments are different from the fraudulent ones. When it is pointed out that there do seem to be many fraudulent documents floating around in his business, Morgan first panics. "I never represented they were real," he says of the obvious frauds, such as the alleged Panetta letter. He then points out that he sells all documents with no representations other than as to authenticity. Finally, he results to emotional manipulation: "I came to you with the open palm of friendship," he says, "and now you're gonna bushwhack me."

And while Morgan seems to genuinely believe in the validity and worth of his instruments, he does ignore a lot of red flags.

For example, Morgan produces a blatantly fake New York Times story parroting the party line about the Weimar bonds. The story, which Morgan's "Vatican representative" purportedly got "killed" through his connections, carried a dateline of April 28, 1995, and the byline of one George Preston.

The New York Times has never had a correspondent named George Preston.
Meanwhile, even the man who says he smuggled many of the Weimars through Checkpoint Charlie fears that the gold-clause madness is simply a means of perpetrating fraud.

"The worst part of this is that there are people selling these things based on the gold equivalents," says D'Angelo. "I think that's probably illegal, and I'm pretty concerned about that sort of thing." He cites the Peruvian bonds as an example. "The going price for the Peruvians now is $3-$5 million in cash. There are a lot of scams being played, a lot of people using these as collateral at inflated values and putting them on the balance sheets of companies."

Indeed, last spring British authorities shut down an insolvent insurance company whose primary asset was the Weimar bonds--carried at calculated gold values, of course.

"It's just like P.T. Barnum said," says D'Angelo. "There's a sucker born every minute." But perhaps none bigger than those inhabiting the DNC.

When Tennessee Sen. Fred Thompson wrapped up campaign finance hearings this fall, what followed from Meddoff's phone call was legend--at least among those who followed the campaign finance scandals.

On the evening of October 22, 1996, Meddoff, by day a vice president and "director of government affairs" for a Danish-owned corporation, by night a historical document dealer and financial consultant to third-world republics, attended a $1,500-a-plate campaign dinner at the Biltmore Hotel in Coral Gables, Florida. After the president spoke, Meddoff made his way to the front of the ballroom and handed Clinton a card. On the back was a succinct message: "My associate is prepared to donate $5 million to your campaign.

The "associate," of course, was Morgan.
According to Meddoff's testimony before the Senate Committee on Governmental Affairs this fall, the president took "two steps, looked at the card, turned around," and then came back to Meddoff. "Let me have another one of those cards for my staff," said the president. Two days later, Clinton's deputy chief of staff, Harold Ickes, dialed Meddoff from the White House. It was the opening serve in a furious courtship of phone calls and faxes between Meddoff and Ickes, during which time the number Morgan was to donate grew from one payment of $5 million to $5 million per payment--a breathtaking total of $75 million.

This panhandling process climaxed on October 30 and 31, with Ickes placing a desperate phone call to Meddoff. "They had an immediate need for funds," as Meddoff later recalled the conversation, "could we possibly send [them] out within the next 24 hours. He asked for, you know, a million and a half."

Meanwhile, back in Dallas, Morgan had his own problems: Bayvest had defaulted on the contract.

"Warren's calling me, saying he's getting calls from Ickes at 10, 2, and 4, they're throwing bolts of lightning at him from the White House,'" Morgan recalls. "So I said, maybe we can get an advance."

Morgan believed that if he could demonstrate he had White House connections, Bayvest might be encouraged to push through its dealings with the Saginaws.

"Warren says, 'The White House wants to know how they can help.' So I said, 'Maybe they could write a letter.' Then Warren said, 'Would you like one signed by the president himself?' And I said, 'Yeah, that'd be nice.'"

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