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July 3, 2010

The Understold Story: The Vatican, the Mob, Super Ponzi Schemes and MORE

By Gregory Paul

The Dan Brown novels do not come close to describing what the Vatican has been up. It's much worse, far more interesting, and it is time the press, media, politicians and public learned about the Roman Church and put a stop to it.

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In the 1980s American news media both print and broadcast began to report on growing evidence that an alarming number of Roman Catholic priests had engaged in serial sexual abuse of children and teens, and that the church hierarchy had not only failed to properly address the situation, but in many cases engaged in racketeering to protect accused clerics and thereby minimize scandal and financial losses. However, coverage and investigation by the media and by the authorities was intermittent and insufficient, so it was not until after the turn of the century that the issue became a major national scandal. In part because charges were not brought soon enough few clerics have faced criminal charges. Another wave of pedophilia charges in a number of countries has yet again inspired a wave of public concern about the ethics of the Vatican, this time focused in Europe.

What few understand is that the pedophile disgrace is just the tip of an iceberg of outrageous church activity extending back over history (click here). It is alarming that the body politic is failing to appreciate that the Roman church has been involved in a chain of illegitimate activities that expose the inability of the autocratic patriarchy to avoid a high level of chronic corruption. The lack of adequate appreciation can be attributed in part to a pattern of under reportage and inadequate investigation by the news media and press concerning an array of questionable and extraordinary church activities during the 20th century and continuing into the 21st. These often bizarre events would seem to be out of a Dan Brown novel if they had not been documented by the mainstream press (to the best of my knowledge this is the only effort to survey and outline the contents of all major newspaper articles from the 1970s on that cover the below criminal schemes.) Nor has a mainstream book documenting the extent of the problem been produced and received widespread attention, a remarkable lapse of the publishing industry considering the fascinating scope of the subject and best seller potential of such a work. Another problem concerns insufficient government actions against potentially illicit church activities. Prosecutions have been rare, and when pursued are usually thwarted by the special status of the Vatican.

This essay focuses on events in the last century, which rested upon events in the 1800s. When it constituted a national entity with large territories the Papacy was able to tap large governmental revenue streams. However, over the centuries the lands and peoples controlled by the Holy See dwindled. The last remnants were stripped from the Papacy as the Italian majority rejected a Papal nation still plagued by corruption and excessive power, reducing the institution to some property in Rome by 1900. The Vatican was correspondingly impoverished in the first decades of the 20th century. Alleviating and then preventing a return to this condition has obsessed the Vatican.

At the beginning of the 21st century the official budget of the Holy See city-state stems from limited sources including the charitable Peter's Pence and sales of merchandise amounting to about $175 million a year. But total Vatican revenues and assets must be in the many billions. The 1929 Italian-Vatican settlement described below should now be worth multi-billions assuming standard investment returns. The Vatican receives one tenth to one fifth of monies received by lower levels of the church hierarchy. German Catholics have been funding the church through income taxes since the early 20th century; according to tax data the current yearly amount is about 5 billion dollars. In America donations at the parish level on up amount to over 6 billion a year. Total global annual revenues must be in the tens of billions. The bulk of the assets received by the Holy See probably reside in accounts of the Institute per le Opero di Religione (IOR), or the Institute for Religious Works, commonly known as the Vatican Bank, which does not release information on its holdings and investments. Investigators have concluded that the Vatican Bank has extensive accounts in Switzerland and other nations and islands with minimal banking regulations. In 1979 Hoffman reported that "Papal finances are to this day enveloped in secrecy." According to Colby (1987) Vatican bank officials have "had their own political interest in maintaining the bank's independence. The profitable, discreet institution, with important holdings in publishing, regional banking and insurance, wield[s] much power in Italy." Because the Vatican is a sovereign nation it is not been accountable to any system of national law, rendering it effectively immune from investigation by national law enforcement organizations, legal suits, or the media. Nor does the Vatican have extradition treaties with other nations. In legal terms Vatican affairs are subject only to international investigation, although this may be changing (Anonymous 2005, Cooperman 2005, suit by Dawkins and Hitchens).

The events that led to the Vatican transforming from an impoverished church subject to Italian law to a wealthy, independent nation occurred in the 1920s and 1930s; the collaboration between fascists and the church that facilitated this rise in church fortunes has been well documented by historians (Scholdor 1988, Gellately 2001, Steigman-Gall 2003, click here).

Mussolini was not an absolute dictator because he served at the pleasure of the King (M was legally deposed in 1943 after the Allied invasion). Consequently the founder of Fascism sought the elimination of the Catholic political opposition in the 1920s. In 1929 Mussolini and Pious XI signed a concordat and other treaties which included a lump sum payment of nearly 100 million dollars (equivalent to a billion in current dollars), more in investments in Italian industry plus government salaries for the clergy, and the sovereign Vatican state. A few years later, in negotiations that grossly violated conflicts of interest, the German Catholic church members Hitler, Papen and Kaas negotiated with the Holy See a mutually beneficial concordat that the Protestant dominated Weimer democracy had refused. The Fuhrer's legitimacy was greatly enhanced, and the all German Catholic bishops were required by the concordat to swear loyalty to the Reich, rendering impossible direct clerical opposition to the existence of the regime. In exchange a provision of the concordat insured that the Reich Treasury transferred into church accounts the income taxes of German Catholics, amounting to about $1 billion from the beginning to the end of the Third Reich (equivalent to about 10 billion in current dollars)1. The tax income and contribution made at the time included money stolen from Jews by German Catholics, the Holy See has made no attempt to use the revenues it gained from Hitler's Reich to compensate the victims.

After the war Vatican elements operated the "ratline" that helped fascists subject to prosecution for war crimes flee the allied dragnet (Gowan and Caniglia 1947, Dedyer 1988, Manhattan 1988, Quetteville 2003). In many cases the escapees paid for the assistance. Among those who escaped were the ruthless Fuhrer of the Balkans, Pavelic, as well as Mengele, Barbie and Eichmann.

In response to the infusion of large funds from the Italian and German governments, the Vatican set up the IOR and put its accounts under the charge of Bernardino Nogara, an pious, noncorrupt financial genius. His strategy was to engage the church in extensive corporate investments. This required the regular charging of and receipt of interest, which violated the long standing church ban on usury (Vatican II endorsed charging interest).

Mussolini harshly cracked down on the Mafia. Consequently the U. S. military allied with the latter in the states and in Italy during the 1943-45 campaign (Rodney 1977). This, in combination with the long term refusal of J. Edgar Hoover to even acknowledge the existence of organized crime, plus a series of unstable Italian governments, allowed the Mafia to expand operations on an international basis, and more deeply entrench itself into American and especially Italian life at multiple levels (Rodney 1977, Hammer 1982, Arlacchi 1983, Gambetta 1993, Schneider and Schneider 2003).

To outline the case linking criminal elements and the Vatican we start with a

1972 Wall Street Journal article (Kessler 1972) that reported that "Michele [mick-ale-e] Sindona, one of Italy's richest and most influential financiers, is preparing to make a substantial increase in his American investments..... described as "Italy's Howard Hughes' because of his wealth and secretive nature.....[He] staged a lavish reception to celebrate his latest venture..... Among those attending were U.S. Ambassador Graham Martin, Rome Mayor Clelio Darada, cabinet minister Giuseppe Lupis and Bishop Paul Marcinkus of Chicago, president of the Vatican's Institute for the Works of Religion, commonly known as the Vatican's bank because it administers the church's vast funds. Bishop Marcinkus' attendance was taken as proof of Mr. Sindona's strong ties with the Roman Catholic Church."

Further linking Sindona to the Vatican is a New York Times article (Farnsworth 1974a) that notes in "1969 Mr. Sindona acquired one third of the shares of Generale Immobiliare2 from the Vatican's Institute for Religious Works, the body that manages the Roman Catholic Church's big investment portfolio. There were rumors at the time that Mr. Sindona had signed the final agreement with Pope Paul VI. Mr. Sindona is also in partnership with the Vatican in the Finabank of Geneva..... He also acquired another property from the Vatican, a company known as Codotte Dacqua, which supplies Rome with water..... Mr. Sindona was a friend of Jocolyn Hambro, managing partner of the Hambros Bank..... This London bank has had close ties with the Vatican for generations." Another 1974 NYT article (Farnsworth 1974b) further observed that as Sindona's "partner in some ventures, he had the Vatican's powerful Institute for Religious Works, the body that manages the Roman Catholic Church's investment portfolio." Numerous other newspaper articles recorded Sindona's ties to the Vatican, citing him as the Holy See's financial partner and/or adviser; Hoffman (1979) noted that Sindona "advised the Holy See and Bishop Marcinkus on how to handle its assets and investments, " the same year Lubasch observed that Sindona's "financial activities reportedly included advising the Vatican," and according to Dionne (1986b) "Sindona had also once served as financial adviser to the Vatican" (also see Lubasch 1980, Anonymous 1981a, Martin 1982, Raab 1982, Suros 1986, Dionne 1986a). But, as he publicly expanded his American interests none of the 1972-74 newspaper articles quoted specifically mentioned Sindona's ties with certain elements described below, although Kessler (1972) referred to SEC concerns about his mysterious financial dealings. Playing a game of global high stakes duplicity that left him chronically on the edge of ruin, Sindona was also mentally borderline3.

In his early years Sindona was recognized as a mathematical and accounting genius, and he worked his way to the top ranks of Italian wealth. The means by which he did so are well documented (Hammer 1982, Martin 1982, Arlacchi 1983, Fonzo 1983, Colby 1987, Tosches 1988, Gambetta 1993, Behar 1999, Schneider and Schneider 2003). Beginning as a wartime black marketer in association with quasi-fascist "Don" Vito Genovese of Murder Inc. as well as U.S. military ally Lucky Lucianco (Rodney 1977), Sindona soon became a leading banker for the Italian Mafia, and then moved to the international scene where he is alleged to have worked with the Italian Inzerillo crime family, related to the American Gambino organization. The FBI and Interpol cited Sindona as attending the famed 1957 Palmero mob conference that rationalized and expanded the international La Cosa Nostra for the heroin trade. Sindona, the "Godfather Banker," was one of the great Mafia criminals of the 20th century.

In the 1960's Sindona, who, with the exception of the 1972 party detailed above, usually avoided publicity, quietly developed ties with major figures in the Republican Party. Sindona also developed closer connections with the Vatican banking complex. Nogara had died leaving the IOR with insufficient guidance. This apparently was one link in a broad pattern of cooperation between two secretive, nondemocratic organizations in deeply corrupt post war Italian society. Initial links were made immediately after the war when organized criminal elements provided critical skills and contacts for operating the ratline. When (never fulfilled) moves were made to strip the Italian church of its tax privileges in the late 1960s, it appears that the Papacy sought out Sindona's assistance. As, according to the Fransworth (1974a) article quoted above, Paul VI probably directly engaged the services of Sindona, who already had major financial dealings with the IOR.

The Catholic Sindona is also alleged to have been a Free Mason, which was infiltrated by the Mafia in Italy (Tanner 1981b, Raab 1982, Fonzo 1983, Suros 1986, Dionne 1986a, Tosches 1988). A 1981 NYT account (Tanner 1981a) covered the historic P-2 Masonic scandal in which lodge "members, according to the police, had sworn ultimate allegiance to their grandmaster rather than the nation. In a report to the government, the Milan magistrates wrote that "[Liccio] Gelli [a hardcore fascist with connections to Juan Peron] had constructed a very real state within a state,' using blackmail, favors, promises of advancement and bribes..... Italy has about 550 Masonic lodges. Membership is estimated at 15,000, including many Roman Catholics. But Flaminio Piccoli, the Secretary of the church-connected Christian Democratic Party, said a few days ago that membership in a Masonic lodge was incompatible with being a Christian Democrat because "the Masons are a force that attacks the church'"4. Raab (1982) reported that Sindona "denied in the [official] interview that he had been a member of P-2. But he conceded that he had "prepared all economic projects' for the lodge in Italy and South American countries..... The panel is investigating whether members of the lodge plotted to take over the Italian government through unconstitutional means." According to Dionne (1986a) "Mr. Sindona was also a financial advisor to the secret Propaganda 2, or P-2, Masonic Lodge, a group of prominent Italians accused of criminal activities and right-wing intrigue in Italy and South America. The discovery of the P-2 Lodge brought down an Italian Government in 1981." According to the accounts cited above the P-2 state within a state was used as an intelligence network to detect, detour or deter those who might interfere with its questionable, potentially revolutionary activities. It was soon banned.

At the lodge Sindona allegedly became close to the Bishop Paul Marcinkus mentioned in the 1972 WSJ article quoted above. The 6' 4" "Gorilla" had become the Popes' personal bodyguard and travel agent (Hoffman 1979, Anonymous 1981b, Reaves and Ettenborough 2003). Possibly at Sindona's request, Paul VI made Marcinkus President of the IOR in 1971 even though as the bishop acknowledged to the press "I have no banking experience." He is also quoted as often saying that "You can't run a church on Hail Marys" (Reaves and Ettenborough 2003).

In order to evade the threatened imposition of taxes upon the church Sindona divested to IOR of its extensive Italians holdings in favor of international investments, severely damaging the Italian economy. Yet the US ambassador to Italy labeled Sindona, who financially advised President Nixon, as "man of the year" in 1974. Meanwhile, the US Justice Department and Interpol caught American citizen Marcinkus dealing in forged securities. Nixon allegedly saw that the matter was not pursued.

Sindona's 1972 Roman party for the international press seems to have been part of a plan to become built on an international financial empire, probably in collaboration with a projected P-2 led Italian coup, and using the offices of the Vatican (whether the latter was fully aware of the ultimate intent of the lodge is not clear). However, the Mafia banker proved unable to run institutions in a legitimate manner, his skills involving the development of large-scale Ponzi schemes. Financial headlines of the time reported his investment in the venerable Franklin Bank of New York (e.g. Farnsworth 1974a,b), but such articles continued to fail to mention Sindona's Mafia ties. The situation deteriorated with remarkable swiftness as newspaper accounts reported major, inexplicable losses at the Franklin Bank, with Sindona promising to correct matters, but the institution soon going bankrupt as losses amounting to about two billion; the "collapse of Mr. Sindona's Franklin National Bank was the biggest bank failure in United states history up to that time" (Suros 1986). Eurobanks followed the same path to bankruptcy as more billions disappeared. Sindona' was repeatedly linked to the financial disasters, and the press finally began to discuss his criminal connections, often in association with his ties to the Vatican. For example Lubasch (1980) noted that Sindona "was called "mysterious Michele' because of his secretive financial operations, which included large investments for Italian politicians and the Vatican. He denied reports that he handled money for the Mafia." By 1986 Suros was more explicit when he explained that "Sindona..... was once an adviser to the Vatican Bank [and] a series of investigations have exposed his ties to the Mafia." With warrants being issued for his arrest Sindona, through the President's recent treasury secretary, sought the services of Nixon/Mitchell law firm to fight extradition5. A publicity firm obtained for him appearances with the mayor of New York, as well as speaking engagements at Columbia and the University of Pennsylvania where he denounced excessive government regulation in tune with Republican economic doctrine that was on its way to becoming dominant in the US. At the same time Johnny Gambino and other NY Mafiosi feted the banker, investigators and potential witnesses were murdered, and an outraged Italian press denounced the protection accorded Sindona.

Facing imminent arrest Sindona generated more headlines as he disappeared for weeks, leading to a massive, media attention grabbing international manhunt (Lubasch 1979). He then reappeared in New York and "was admitted to Doctors Hospital yesterday with a possible wound in the leg" (Treaster 1979) that he claimed was inflicted by terrorist kidnappers of Red Brigade ilk (Raab 1979). The wound appeared to have been self inflicted and his other false claims would lead to a conviction of fraud. Investigations indicated that Sindona actually fled to Palermo, probably with the assistance of Liccio Gelli, the two and John Gambino may have been plotting a coup in association with P-2. Unclear is why Sindona returned to New York and turned himself in, perhaps he failed to garner Mob support and may have even been under threat, leaving him no choice. In the end he was arrested, convicted and imprisoned for massive financial crimes in New York.

One of the murdered victims was a noted Italian investigator charged with determining the full extent of Sindona global activities and connections. It was a contract hit traced back to Sindona. After extradition to his homeland Sindona was convicted of financial crimes and then the contract murder. Suros (1986) reported that "The end of the trial today resolved only a few of the mysteries surrounding Mr. Sindona....." Dionne (1986b) quoted Sindona as saying, "They are afraid I could reveal some very delicate information that they don't want divulged." Within days of the murder conviction, while in protective solitary confinement in Italy's maximum security prison Sindona partook of a cup of coffee and then came into the view of guards exclaiming, "They have poisoned me." before collapsing into a quickly lethal coma" (Dionne 1986a). His body was contaminated with cyanide." The poisoning of a man who was watched in a prison cell by television monitors and protected by 12 prison guards working in shifts was only the latest in a train of scandals. Italian investigators believe that if he had chosen to, Mr. Sindona could have thrown light on many criminal activities, including..... the laundering of Mafia money and the death of Roberto Calvi....." (Dionne 1986b). Not clear is whether it was suicide or murder. The former is possible because Sindona had slashed his wrists when jailed in relation to his New York crimes -- although it is not certain that was a serious attempt -- and because Sindona usually took his hot drinks in view of the guards, but this time drank privately. One way or another someone delivered the means to silence Sindona. Most consider it a mob hit.

With Sindona no longer available by the mid 1970s Paul VI appointed a replacement. According to Raab (1982) "Mr. Calvi replaced Mr. Sindona as a key financial advisor to the Vatican," in accord with other accounts (Cornwell 1986). Roberto Calvi was another notorious Mafia banker with long standing ties to the Vatican Bank, as well as a Mason (Cornwell 1986, Owen 2005).

After the death of Paul VI in 1979, followed by that of John Paul I in a few weeks, John Paul II was elected. A dedicated Polish anti-leftist who openly acknowledged he favored the absolute power of the papacy, he immediately became wildly popular and most consider him to have been a person of high ethical values (although the charges related to the post 2000 wave of sex scandals have degraded his image). It was expected that reforms would follow.

However, Calvi and Marcinkus retained their positions. One possible reason stemmed from JP II's dream of reviving EuroChristianity by funding the anti-communist movement in Poland. By 1980 the secure prosperity delivered by progressive socioeconomic policies had devastated organized religion in western Europe (gregspaul.webs.com/sciletter0415.pdf; www.epjournal.net/filestore/EP07398441_c.pdf). JP II imagined he could save the situation by overturning dictatorial atheism in eastern Europe, thereby inspiring a return to Catholic devotion in the west. There was also a desire to oppose leftist efforts in central America. The anti-communist Solidarity labor movement, for instance, needed large sums of money to be effective. This could only be done through illegal means, and it appears that JP II used the church's well developed ties with organized criminal elements, collaborating with Marcinkus, Calvi, Gelli and P-2, to deliver about 100 million dollars to Solidarity.

Doing so became difficult as Calvi and Marcinkus and the "Vatican Bank [were] caught up in the collapse [of Blanco Ambrisiano]..... The scandal has deeply embarrassed the Vatican and it has refused to disclose its full role in the affair....." (Dionne 1986a) which involved the billion-dollar plus bankruptcy of yet another major Italian bank (Cornwell 1986, Behar 1999). In this financial disaster the IOR's involvement "stemmed from its alleged direct or indirect ownership of Panamanian shell companies used to funnel the missing $1.3 billion; the archbishop [Marcinkus] running the Vatican Bank was found to have written dubious "letters of patronage' that appeared to back the loans, prompting a Milan prosecutor to accuse the bank of giving "systematic support to Calvi in many of his illicit operations'" (Behar 1999). In a major article in the WSJ Colby (1987) reported that evidence had emerged that "for more than a decade, Vatican bank officials played a more prominent role than previously believed in the tangled, fraudulent schemes of Roberto Calvi....." Investigating magistrates concluded that the Vatican Bank had been an umbrella for Calvi's operations. While officially denying wrongdoing the Papacy tacitly acknowledged involvement when John Paul II paid $250 million to Ambrisiano creditors (Cornwell 1986, Behar 1999) -- the ability to raise such a large sum contradicts chronic Papal claims of Vatican poverty.

Although Calvi appealed to the Pope in a letter (Owen 2005), he was convicted for his involvement in the matter. For obscure reasons free on bail during his appeal, he fled Italy leading authorities on another international manhunt. Some days later "Mr. Calvi, an associate of Mr. Sindona's and also a financial advisor to the Vatican was found hanged under Black Frier's Bridge in London in 1982" (Dionne 1986a, also Anonymous 1982). His suit was stuffed with stones and bricks Masonic symbols -- and $14,000 worth of bank notes. For decades the person/s responsible for the death of Calvi seemed as poorly understood as the latter death of his one time mentor Sindona. The police tentatively favored suicide, but the peculiar setting, and the presence of Mafia/Masonic signs indicated murder. The case remained under investigation, and seeming breakthroughs have resulted in persons, including a jailed Mafia boss, undergoing trial in Rome (McVeigh 2003, Hooper and Willan 2004, Owen 2005). The trial received no attention in the states. The defendants were found not guilty.

JP II did not just fail to purge the Vatican, he acted as a protector (Cornwell 1984). As explained by Colby (1987) Italian authorities "issued warrants for the arrest of three senior officials of the..... IOR [incl. Marcinkus].....who..... avoided arrest by remaining secluded within the walls of the Vatican..... Vatican bank officials may have had their own political interest in maintaining the bank's independence. The profitable, discreet institution, with important holdings in publishing, regional banking and insurance, wielded much power in Italy." When Marcinkus and other Vatican citizens were threatened with arrest the Holy See cited the 1929 treaties as barring police from entering the Papal state to pick them up -- investigators from the U.S. Justice Department, Italian police and other agencies were stopped at the gates. The legal precedent had been set when hiding fascists after the war. A NYT article (Anonymous 1981b) details that "Marcinkus, one of the most prominent American prelates in the Vatican, was made an Archbishop today and named the chief administrator of the Vatican city-state [i. e., the mayor] by Pope John Paul II. For the past ten years he has been the head of the Vatican Bank..... Since Bishop Marcinkus had been reported to be the official who had dealt most often with Mr. Sindona, it was widely expected that he would lose his position when Pope Paul VI died in 1978. But he was retained first by John Paul I, and then by John Paul II. The latter also put him in charge of all the practical arrangements, including security, for his trips around the world." As reported in the WSJ, JP II lashed out at accusers of Marcinkus saying "We are convinced that you cannot attack a person in such an exclusive and brutal manner" (Colby 1987).

A number of other Vatican officials were accused of being involved in the criminal activities described above, some did not escape capture. Rueters reported that " a top executive of the Vatican's private bank was arrested today and accused of taking part in a fraudulent bankruptcy linked to the jailed financier Michele Sindona, the police said. Luigi Mennini, chief administrator of the Vatican's Institute for Religious Works was arrested in Rome on the order of a Milan magistrate investigating Mr. Sindona's affairs. Mr. Mennini is the senior layman at the bank, which had a minority interest in the Sindona-controlled Banca Uniono" (Anonymous 1981a). Mennini and a Donato de Bonis had their property outside the Vatican seized. The Cardinal Vicar of Rome, Ugo Poletti, was another who cited Vatican immunity. So did Monsigner Donato de Bonis, who continued to operate as secretary of the Vatican Bank after an investigation began into a billion dollar tax evasion scandal. P-2's Gelli also did fairly well. After fleeing to Argentina, being captured and escaping by bribing a guard, and eventually turning himself in, the hopeful right wing revolutionary, occasional terrorist, contract murderer and high class thief served two months hard time and years in house arrest in his luxurious villa.

In a rare mainstream attempt to provide an overview of events up to 1982, Martin explained that "the man chosen to facilitate the transfer of funds and to guide other overseas operations was Michele Sindona. And by 1974, when il crock [the crook] Sindona was a [known] fact, large sums of money had simply evaporated. Reports placed the losses anywhere from $120 million (too low most authorities seem to agree) to $11 billion (a quite feasible figure many hold)..... Subsequent American investigators into the Sindona affair never cleared up its central mystery: How much money had disappeared and where it had gone. But many thought the answers involved the Vatican bank and its president, Archbishop Marcinkus [who were] associated with Mr. Sindona's Machiavellian scheme of fiduciary trusts, phony deposits and phantom holding companies. Near the end Mr. Sindona was left with only one major backer: the Vatican bank and Archbishop Marcinkus."

For many years numerous albeit narrowly targeted articles by mainstream reporters in a number of respected newspapers have strongly linked the Catholic church and the Mafia through documented connections between Marcinkus, Paul VI, John Paul II, Gelli, Sindona and Calvi, the two having probably been murdered, as well as many others. It has the potential to rank as one of the great scandals of history. Following the sex abuse and similar ethical disasters it is now apparent that the church is capable of creating and covering up major scandals that are revealed only by strong public and official exposure and pressure. Yet, despite the grave implications of the evidence published so far, no mainstream periodical has published a multi-page, in-depth investigative article or series on alleged relations between the Holy See and the underworld (Martin 1982 and Colby 1987 coming the closest), nor has a book on the issue by a qualified journalist appeared through a major publisher. No network news magazine has broadcast a story on the subject (I am not aware of the situation in Europe), and PBS and cable documentary channels have not presented programming documenting the evidence. As a result few people are aware of the issues. Despite the obvious story appeal, the only feature films that have attempted to portray the Vatican's underworld connections are the 1990 The Godfather III, a box office failure, and the 2002 God's Banker which focused on Calvi6.

Ultimately Archbishop Marcinkus left the Vatican. In or around 1991 he somehow evaded Italian justice and retired to Sun City AZ, where the now eighty something Archbishop has enjoyed golf and other leisure pursuits while remaining quiet (Reaves & Ettenborough 2003). The government of Italy attempted to extradite the cleric, but he had been issued a Vatican passport. Less clear is why the Chicago native was never dealt with by American authorities. Marcinkus is now deceased.

In 1999 twenty one members of the Sicilian Mafia were arrested in Palermo for executing a $100 million banking scam in alleged cooperation with the Vatican Bank. As usual, Italian investigators could not properly look into the bank because of its owner's sovereign status. Meanwhile, concerns grow over connections between the Mafia and the Polish mob that benefited from the church's means of assisting the overturn of communism. Perhaps diverted by the sex abuse scandal the American press did not direct attention to these ongoing international allegations. But a Washington Post report from Mexico (Jordon 2003) reported that a "federal money laundering investigation of Roman Catholic Cardinal Juan Sandoval Iniguez has reignited long-smoldering allegations of links between drug money and the Catholic Church..... Government prosecutors have long alleged.....that drug traffickers have given large donations to church leaders who were secretly baptizing their babies and attending their birthday parties..... Nightly updates on television have shown pictures and video of [Cardinal Sandoval] with the wealthy "czar of gambling,' Jose Maria Guardia..... Officials in the attorney general's office have said their investigation also involves Guardia, as well as a congressman from [Mexican President] Fox's political party and other members of Sandoval's family". In an analysis of global money laundering, Becket (2001) listed the "Top-scoring "cut-out' countries, which make it hard to trace the ill-gotten gains back to the getter" as including the Vatican City. Similarly Behar (1999) cites the institution's record of money laundering.

Next is a case that when it broke received extensive coverage in some respects, but in a critical regard was under reported. High school drop out Martin Frankel was a small time hustler and con artist who wanted to become extremely wealthy (Behar 1999, Johnson 2002, Pollack 2002). The only way he could achieve his goals were through criminal means. Despite being permanently banned from trading in securities by the SEC in 1991, in the 1980s and 90s Frankel escalated his activities by leveraging ever larger pyramid schemes into the tens of million needed to initiate what Fortune Magazine (Behar 1999) characterized as "what may be the biggest -- it certainly is the strangest -- scandal in the history of the [American] insurance industry" by setting up and then draining a shell insurance empire. Enjoying oversized housing, mistresses in multiple countries (see www.theaawarenesscenter.org/Frankel_Martin.html), and regularly attending the notorious NY sex club The Vault, Frankel's fantastic project inevitably crashed. In an eerie replay of the chases of Sindona and Calvi, Frankel generated headlines as international authorities chased the fugitive across international borders as the FBI and IRS seizing Frankel's

Greenwich CT
mansions.

Congressional hearings were held to examine how a person like Frankel executed a colossal, multi-state Ponzi scheme. It mostly focused on lax insurance regulations, any Vatican connection was ignored. This brings us to a crucial document. Five state insurance commissioners filed in federal court a suit titled Dale, Pope, Laken, Fisher and Pickens versus Colagiovanni, Collins, Corbally, Endurance Investments Ltd.; The Holy See a/k/a Vatican CityState and Monitor Eccleiasticus Foundation [MEF]7. The suit -- which I quote at length to present the insurance regulators' compelling case in depth as well as provide a better sense of operations in the Vatican, alleges under RICO statutes that between "at least 1990 and 1999, Martin Frankel assisted by Defendants and others, devised and implemented a scheme to defraud insurance companies by acquiring them while concealing Frankel's involvement, of misappropriating the companies assets and laundering the ill-gotten gains. Through this scheme, seven insurance companies were defrauded of more than $200 million [under RICO potential penalties total $600 million]. The defendants participated in activities that furthered and facilitated Frankel's fraudulent scheme."

Himself Jewish, Frankel decided that the Catholic Church would provide ideal cover as well as support for his operations, and he sought out helpful church members. It proved remarkably easy. After American prosecutor, friend of President Reagan, and devout Catholic Thomas Bolan received a letter through Thomas Corbally8 from "Rosse" [Frankel's cover name] outlining his plan in terms as innocuous as could be managed considering the plan's breathtaking nature, Bolan "traveled to the Vatican and, with Colagiovanni9, proposed the plan to Bishop Francesco Salerno in a meeting at the Vatican. At that time Salerno was the Secretary of the Prefecture for the Economic Affairs of the Holy See..... [and] was also on the board of MEF. The parties discussed the proposal, informing Salerno specifically that "Rosse' would be the source of the funds, and would retain control of the $50 million even after it was donated to the Vatican Foundation. On August 18, 1998, Salerno approved the plan, saying it was "a good idea.'.... Afterwords the [Vatican] Secretary of State had misgivings..... Under a new plan [that better covered the Holy See's complicity], Frankel would form St. Francis of Assisi Foundation to Serve and Help the Poor and Alleviate Suffering [a shell charity actually used to purchase insurance companies] [that] would be able to state that it was funded by the Vatican, so that St. Francis..... In actuality [it] would be funded entirely from looted funds held in Frankel's Swiss bank account. Colagiovanni then agreed to allow MEF, the Vatican-related organization of which he was President, to be held out as the "settler' of St. Francis..... MEF was used to create the impression that the funding for [St. Francis] had come from the Vatican."

The suit lists others who knew of the plan. They include Giovianni Battista Cardinal Re, who as Sostituto head of the First Section of the Vatican Secretariat of State was the 3rd highest ranking official in the Holy See. Pio Cardinal Laghi, former Vatican Ambassador to the U. S. and head of the Congregation for Catholic Education in the Vatican who, after receiving a $100,000 hospital donation from Frankel, was warned not to directly thank "Rosse" and therefore sent a less indicting modified letter instead. Archbishop Alberto Trcarico, Nunzio Apostolico a disposizione in the Second section of the Vatican's Secretariat of State. And Father Giovanni D'Ecole, Capi Uffico in the First section of the Vatican's Secretariat of State who visited Frankel in Connecticut and accepted a donation for his charitable order.

The suit continues. "Frankel was also interested in securing the involvement of the [IOR], popularly known as the "Vatican Bank' [controlled at the time by Cardinal Sodano]. As a Vatican entity, the IOR is beyond the reach of regulatory scrutiny other than the Vatican's own supervision..... Colagiovanni assured Frankel that any fund or donation given to the MEF would fall under the protection of the "very strict confidentiality and secrecy' laws that apply to any entity linked to the IOR. The IOR was involved in a number of ways in Frankel's scheme." After explaining how the MEF's IOR account was used by Frankel et al. the commissioners claim that "as part of the scheme, Frankel had Colagiovanni obtain a letter from the IOR [which after checking his credit with Frankel's Swiss banker was issued by Salerno] confirming MEF's "uninterruptible relation' with IOR, which was signed by the IOR's director, Dr. Lelio Scaletti and by another IOR official, Dr. Anthony Chiminello. This letter was used to bolster MEF's and St. Francis' credibility with insurance regulators and others. For example, when lawyers and officials connected with one of the insurance companies Frankel targeted questioned the Vatican's connection to St. Francis, the IOR letter was presented as proof of the association..... Once the Vatican connection was in place, Frankel established St. Francis as a British Virgin Islands trust. The St Francis documents were backdated to August 10, 1998..... in part to coincide with astrological events Frankel considered favorable..... [the Vatican] knew, threw Colagiovanni, that Frankel was to be the source of any funds allegedly contributed to either foundations. It knew, through Colagiovanni, that Frankel controlled St. Francis, even though Jacobs, Bolan and Collins were listed as members of the Board of Trustees. Colagiovanni's position within the Vatican was an essential element of the scheme because it gave a patina of legitimacy to St. Francis, and Colagiovanni used his position in furtherance of the scheme. High-ranking officials of the Vatican authorized or ratified the plan whereby MEF would be used as a conduit for the flow of Frankel's money to St. Francis to purchase U. S. insurance companies, while St. Francis claimed a "Vatican tie.' Colagiovanni had actual authority to act as the Vatican's agent in connection with Frankel's scheme by virtue of his position as a member of the Curia [and] as a prelate auditor emeritus..... high ranking officials with the power to bind the Vatican in financial matters were aware of, did not object to, and explicitly or tacitly approved Frankel's plan..... Because of the involvement of these high-ranking officials, Colagiovanni had the Vatican's actual authority to assist Frankel in his scheme." The commissioners detail Colagiovanni's intimate physical connections with a willing Vatican, and continue that high-ranking "Vatican officials -- including Re and Caccialvillan -- knew of, and failed to repudiate, certain of Colagiovanni's misrepresentations, when presented with the opportunity to do so. This refusal to repudiate or comment was in complete contrast to the Vatican's efforts to distance itself from Colagiovanni, MEF and St. Francis in June 1999, after the Frankel scandal drew the attention of the international media..... When presented with Sandifur's pointed inquiries about MEF's and St. Francis' funding clearly premised on misrepresentations, Re did not deny that the Vatican had given $190 million to MEF for St. Francis, a fact which Re knew was false..... His silence..... enabled the scheme to continue. [After doing much the same thing] Cacciavillan agreed to forward to Colagiovanni or someone more familiar with the scheme any future inquiries about the MEF, St. Francis or about the Vatican's connections to either..... In 1998 and 1999, Colagiovanni, MEF and the Vatican knowingly conducted, participated in, controlled, manipulated, or directed the enterprises' affairs through a pattern of racketeering consisting of violations of the federal mail and wire fraud statutes, in violation of 18 U. S. C. 1962(c)."

At best Catholics laity and clergy involved with the Frankel project appear to have been financially and ethically slack and opportunistic. As Fortune Magazine "s Behar (1999) excellent summary explains, Frankel requested "that the Vatican front for him as a money launderer in return for a 10% cut of the funds (looted from U.S. insurance companies) [using the remaining 90%] to buy progressively larger insurers..... Given Bolan's extensive credentials as a prosecutor and judicial adviser, Rosse's letter should have set off all kinds of alarms". But, as the agreed percentages illustrate, the driving motive behind Catholic complicity was probably criminal, because as FM continues, "[MEF] would provide [Frankel] with just the kind of immaculate connection he needed to cover his tracks; meanwhile the Church itself could sit back at a safe distance--eyes wide shut--and gather the promised millions skimmed from Frankel's nascent empire. There was just one catch: Doing so would require lies and false affidavits, not only from Frankel but from Rome as well." Court TV (www.crimelibrary.com/notorious-murders/classics/frankel) likewise observes that there "was something for everyone in this arrangement: Frankel had purchased the "immaculate" connection that should keep the regulatory community from looking too closely at his insurance empire and the church would benefit from a safe distance in the fruits of Frankel's crooked dealings. It was almost too clever". As per standard Vatican procedures, aside from their brief denial of guilt, the church not responded to the suit, or attempted to publicly present exonerating evidence.

The argument can be made that the suit by five state insurance commissioners against the Holy See -- and in effect against JP II since he is the person ultimately responsible for all activities within his domain -- qualifies as one of if not the most extraordinary and disturbing documents in U. S. and Catholic legal history. If verified the scandal arguably matches the American sex abuse scandal. Despite the involvement of state officials, and coverage of the affair by qualified journalists, the case and even the suit has received unsettling little coverage from news sources, to the point that the suit is essentially unknown to all but a few Americans, and has initiated no discernible activity by the Federal government in its relations with the Papacy, or the commentary of politicians.

Taking an overall view of events over the decades, note the repeating patterns. The Frankel scheme incorporated the same modis operandi utilized in the Ambrosiano scam, high Vatican officials writing questionable letters of patronage to back ill conceived loans in collaboration with high rolling criminals. The schemes of Calvi, Frankel and Sindona were increasingly grandiose and bound to explode in the face of themselves and the church. When exposed Sindona, Calvi and Frankel desperately led officials on international manhunts. According to Behar (1999) the law firm of one of the players cited in the suit, Bolan (but not himself he claims), represented Sindona in his case.

The standard response of the church to queries and legal actions over criminal relationships and activities has been to either ignore the charges, or issue rote denials of culpability, sometimes associated with pleas that they were the ethical and financial victims of criminals, or naively unaware of the criminal intent of their associates. Those involved in making or supporting charges are frequently denounced as unjustifiably anti-Catholic by Catholics, and the Church is portrayed as a victim. Handling of questions is almost invariably reactive rather than proactive. In no case has the church offered a detailed explanation of why the church is innocent or a victim in the specific affairs detailed above. In The National Catholic Reporter Allen (2002) slighted the Frankel affair as well as the WW II and pedophile suits against the Vatican by titling his column "Lawyers Target the Holy See" and stating that despite "the fact that the Holy See is a sovereign state and hence theoretically immune from being sued in the courts of other nations, that of course doesn't stop enterprising lawyers from trying" as though it was a matter pushed by aggressive attorneys who should cease their misguided harassment of the Holy See. Allen's report included no expression of concern over possible victims or clerical guilt. Nor has the Vatican opened its files of accounts to outside investigations by journalists or law enforcement agencies that could either clear them of guilt, or establish culpability. Instead, the Holy See has stoutly defended and exploited its sovereign status in all respects, maintaining tight secrecy and prevented authorities from arresting suspects either in or outside the Vatican. To date there has been no major effort to break through the Vatican's legal sovereignty barrier, although recent attempts have been making the Vatican nervous (www.timesonline.co.uk/tol/comment/faith/article7094310.ece, www.washingtonpost.com/wp-dyn/content/article/2010/06/28/AR2010062805003.html, Anonymous 2005, Cooperman 2005)10.

1. Hitler paid his annual Catholic tax until the end.

2. Immobaliare owned Paramount Studios, where The Godfather was shot at this time.

3. For example, in Kessler's (1972) otherwise sober WSJ account of the Sindona party in Rome it was reported that "Mr. Sindona himself relishes anonymity..... On those rare occasions when he has met privately with a journalist, he has confounded the interviewer by skillfully making a dozen or so tiny paper boats while rapidly fielding some questions, parrying others, and declining to answer still others."

4. Membership in a Masonic lodge is a grievous violation of Catholic canon law.

5. In an unusual act of political sanity the 1972 Nixon campaign declined a $1 million dollar donation from Sindona, as revealed by post Watergate investigations. That Sindona made such an offer exposes both how big and how delusional his schemes were.

6. In The Godfather III the Michael Corelone character is a vehicle to present a somewhat sanitized variation on the Michele Sindona persona. In the film Corelone tries to finally become legitimate by investing in "International Immobilaire" in association with corrupt Vatican clerics, some of whom are murdered. No factual portrayal of the life of Sindona or Marcinkus has been produced. In TGIII the Frederick Keinzig character is a much altered stand in for Roberto Calvi. The more realistic God's Banker news.bbc.co.uk/2/hi/

entertainment/18625998.stm was widely distributed only in Italy, where the publicity may have assisted in the attempt to legally solve his violent death as mentioned in the text.

7. George Dale [MS state insurance commissioner], Anne Pope [TN], Scott Laken [MO], Carroll Fisher [OK] and Mike Pickens [AK] versus Monsignor Emilio Colagiovanni [Vatican representative6], Edward Collins [associate of Frankel and Trustee of St. Francis], Corbally [well connected businessman], Endurance Investments Ltd. [controlled by Corbally]; The Holy See a/k/a Vatican City State and Monitor Eccleiasticus Foundation [MEF, a Vatican organ that Colagiovanni described as a "channel and instrument in fulfilling the will and wish of the Supreme administrator," i. e. JP II (a view supported in Behar 1999]. The full suit can be found at www.thememoryhole.org/states-v-vatican.pdf. After Hurricane Katrina Dale warned insurance companies to honor their policies with MS clients.

8. 2004 Associated Press and NYT obituaries list international playboy Corbally's history as a Spitfire pilot, OSS spy, involvement in the infamous Perfumo prostitution affair that brought down a British government as both the sponsor of the contributing orgies and the whistleblower, high placed friends such as the king of Jordan and Mother Teresa, and proclaimed innocence in the Frankel debacle.

9. A Vatican judge emeritus, unfortunately for him he is a U. S. citizen, which left him vulnerable to prosecution.

10. These stories report that the Vatican approached the Bush II administration without much success with the request that the Vatican (as a state) and Pontiff (as a head of state) be declared immune from civil suits related to the sex scandals. This is part of a broader effort to maintain general immunity for the Holy See. A number of suits in the hundreds of millions to billions range stemming from WW II to the 21st century are pending against the Vatican, and the fall of the wall of immunity could prove financially devastating, as well as open files to public view that have so far remained secret.

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Submitters Bio:

Gregory Paul is an independent researcher interested in informing the public about little known yet important aspects of the complex interactions between religion, secularism, culture, economics, politics and societal conditions. His scholarly work has appeared in Evolutionary Psychology, Journal of Religion and Society, The Journal of Medical Ethics, Philosophy and Theology. Popular essays are at Los Angeles Times, Wall Street Journal, Washington Post/On Faith, Edge and one of the most widely read Washington Post op-eds (5/29&30/11). Coverage of Paul's research has appeared in Newsweek, USA Today, The Guardian, London Times, LA Times, MSNBC, FoxNews.

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