Broker, Trader, Lawyer, Spy (10 page)

That technique became a hallmark of Peloquin’s later career: charging clients fees to run background checks on people, and then using former work connections to dip into government files to make the checks. It was a great business model. And the U.S. taxpayer never knew that government money was paying for agents to run background checks on behalf of millionaire owners of Caribbean resorts.

Peloquin spent much of the rest of his career charging private clients for access to their own government’s enormous security files. “We capitalized on private industry,” he recalls. “But we depended on the government to give us the poop.”

As long as secrecy was protected, it was a lucrative business. Asked what outsiders should make of his techniques, Peloquin replies, “I’m not that hung up on invasion of privacy, but a lot of people are. It depends on how you look at it. If you’re in business,
there’s nowhere for you to turn to find out what the hell is going on. What do you do?” Peloquin says he has no qualms about the private spy industry that he helped to invent: “I think it’s a legitimate thing. I don’t lose any sleep over it, that’s for sure.”

The new industry—charging companies for access to secret information for which the government had already charged them via taxes—took off after the first Resorts International casino in the Bahamas opened in 1970. The casino magnate Crosby was impressed by Peloquin’s work, and, ever the entrepreneur, he had an idea. Why not spin off the investigative effort into a stand-alone company? With Crosby’s financial backing, Peloquin formed International Intelligence, Inc., or Intertel, hiring former colleagues right out of the anti-Mafia strike forces of the Department of Justice. He opened offices at Seventeenth and H Streets NW, across the street from the tony Metropolitan Club of Washington, where he and his colleagues soon became regulars. Intertel was just three blocks away from the White House, and a short walk from the Department of Justice. The place felt almost like an outpost of the federal government. Situated among so many sober gray government buildings, it was a secret spy service for the private sector.

In 1978, a former CIA agent turned author, George O’Toole, described Intertel in his book
The Private Sector
:

Before long, Intertel’s staff included a cofounder, the former FBI agent John O’Connell; a former IRS investigator, William Kolar;
and a former director of investigations at the National Security Agency, David Belisle. O’Toole called it “the greatest collection of recycled brass ever assembled in the private sector.”

Peloquin believed in the power of connections. Along with the others, he hired Herbert Hoover’s only nephew—since Hoover never married, his nephew was in many ways his heir. “That brought in a lot of business,” Peloquin says. “When you can say, ‘I’ll have Hoover’s nephew look into it for you,’ it’s surprising.”

J
UST THREE MONTHS
after opening the doors of the new company in 1970, Peloquin got a call from Chester Davis, the general counsel for Howard Hughes.
*
Davis reported that Hughes had decided to force out his long-serving loyal consultant, Robert Maheu.

Actually, Davis and another of Hughes’s lieutenants, Bill Gay, were waging a power struggle against Maheu, who they felt had come to exert too much control over Hughes and his sprawling business interests, which included not only Trans World Airlines but Hollywood productions and Las Vegas casinos, among others. The increasingly paranoid Hughes had dropped almost entirely out of sight, living in his apartment atop the Desert Inn with the windows curtained against the sunlight, and communicating only through scrawled notes. Most of the people working for Hughes had never seen him in person.

Hughes now had long, scraggly hair, and he refused to trim his fingernails and toenails, which had grown into curled yellow claws. He was taking a staggering quantity of painkilling drugs, feeding an addiction that had begun when he broke his back in an airplane crash in 1946. Hughes had brought his struggling XF-11 reconnaissance airplane down in a crowded residential area in Beverly
Hills. Thanks to the quick thinking of a passing Marine Corps sergeant who pulled him from the wreckage, Hughes survived. But after he began taking the painkilling drugs, he was never quite the same.
*
For Maheu, Davis, and Gay, control over Hughes meant domination of one of the biggest corporate empires in America, and millions of dollars in potential income for themselves.

Gay and Davis may have sensed an opportunity in the power vacuum created by Hughes’s mental instability. For years, Maheu had served as an outside consultant to Hughes from his perch at his investigative agency in Washington, D.C., Robert A. Maheu and Associates. He’d become Hughes’s go-to man for sensitive missions of all kinds, including compiling dossiers on the relationships between powerful figures in foreign governments, surveillance and investigation of Hughes’s own executives, hiring actors who looked like Hughes to use as doubles in schemes to throw off process servers in court cases, and overseeing the distribution of political campaign contributions.
²
Hughes knew that Maheu had been a contractor for the CIA since the early 1950s, and that his firm was a front for some of the CIA’s most covert activities. For a power-hungry paranoiac like Hughes, Maheu was a handy man to have around.

But most of all, Hughes valued Maheu because he knew the veteran spy’s deepest secret—that in 1960 and 1961, Maheu had served as the CIA’s point of contact with the underworld tough Johnny Roselli and the Mafia boss Sam Giancana in its failed plot to assassinate the Cuban leader Fidel Castro on the eve of the disastrous Bay of Pigs invasion. In August 1960, Maheu flew to Los Angeles to meet with Roselli at the Brown Derby restaurant. Surrounded by Hollywood executives and actors, the two discussed the murder of Castro.

At first, Roselli was incredulous. “Me? You want me to get involved with Uncle Sam?” he asked. “The feds are tailing me wherever I go. They go to my shirt-maker to see if I’m buying things with cash. They go to my tailor to see if I’m using cash there. They’re always trying to get something on me. Bob, are you sure you have the right guy?”
³

Maheu assured Roselli that the offer from the CIA was real. And he explained the conditions: no one could ever know that the government had worked with the Mafia to kill Castro. Maheu told Roselli that if the matter ever became public, he’d deny it. If Roselli accepted, he would be on his own. The mobster hesitated and then agreed. The CIA and the mob were officially business partners.

At a meeting in 1961 at Miami’s Fontainbleau Hotel, Maheu’s CIA controller handed him a white envelope containing several poison pills. The plan called for Maheu to pass the pills to the Mafia figures, who would use their connections from the prerevolutionary days of the Cuban casino business to pass the pills to someone in Castro’s entourage to slip into the dictator’s drink.

The problem was that all the time Maheu was dealing with the Mafia on behalf of the CIA, agents from the FBI were tailing both him and the mobsters. After all, the FBI had been trying to prove its case against the mob for years, and had detailed surveillance under way on the very men Maheu was meeting. The FBI wanted to know:
why was a veteran agent and known CIA contact suddenly palling around with the mob?

One night, during a dinner meeting with Roselli, Maheu spotted two FBI tails in the restaurant. After Roselli left to go to the men’s room, Maheu cornered the men and pulled them into the kitchen, trying to get them off the case. Roselli hadn’t noticed them, but if he did spot the federal agents spying on his dinner meeting, he might get too spooked to go through with the plot against Castro. Back in his hotel room, Maheu called the CIA from the hotel phone—which he knew would be tapped by the FBI—and let the FBI’s agents listen in on the conversation, just so they
could figure out what was going on, and why they ought to leave Roselli alone for the time being.
*
⁴

Maheu said later that he never got the “go-signal” from the CIA, even though there were reports from the Mafia that they were ready to deploy their end of the assassination plot. When the Bay of Pigs invasion ended in disaster, Maheu walked away from the mess. He said he was never again involved in the agency’s attempts to kill Castro.
†

Hughes knew this dark tale because he was trying to get Maheu to come to Los Angeles to work for him at the same time Maheu was in Florida plotting with the Mafia. Maheu, eager to curry favor with his most lucrative client, stepped out into the street and called Hughes back on a pay phone, saying that he couldn’t come to work that day because he was in Miami working on a secret CIA plot to kill Castro. Hughes, though, wouldn’t be put off, and talked Maheu into flying to Los Angeles to work on his project for a day or two. Hughes was impressed by Maheu’s involvement in the scheme—unsuccessful though it was—and spent much of the next decade figuring out how to use Maheu’s CIA relationship to his own advantage. Hughes, too, was connected to the CIA, and many of his companies served as fronts for CIA operations over the years.

But by 1970, Hughes’s relationship with Maheu had begun to crumble. Hughes’s paranoia and his increasing insanity had
something to do with this, but Maheu and Hughes also had disagreements over important issues. For one thing, Hughes wanted to intertwine his operations ever more deeply with the CIA, and Maheu resisted the idea. In 1975, in top-secret testimony before a Senate committee investigating wrongdoing by the CIA, Maheu told investigators of Hughes’s plan.

“From time to time during conversations with Mr. Hughes, he would beg of me to try to help him set up a huge, the way he described it, a huge covert operation involving one of his companies,” Maheu said.

“Why,” asked a Senate investigator, “did he want you to set up a large covert operation under one of his companies?”

“His answer to the very same question when I put it to him,” replied Maheu, “was that he wanted to be put in a position that if he ever became involved in any serious problem with the U.S. government, that they could not afford to prosecute him.”

Maheu said he “categorically refused” to help Hughes set up the plan.

In 1968, Maheu said, Hughes asked him for help with an even more ruthless plot: to extend the Vietnam War. Two years earlier Hughes had begun selling a light observation helicopter, the OH-6A Cayuse, for which the army placed an initial order of 1,468 units.
⁵
It was a lucrative project, and Hughes was afraid the Vietnam War might wind down before he could make up some earlier financial losses. Peace would be bad for business.

“He was fearful that the Vietnam War would come to an end,” Maheu told the Senate investigators, “and asked me if I would help him to conceive some plan whereby the Vietnam War would be extended.”

Maheu added, “And I frankly told him to go to hell.”
⁶

It’s possible, of course, that Maheu’s description of Hughes’s machinations is the self-serving account of a fired contractor; but whatever the truth, it was clear that Maheu and Hughes were growing apart.

It was bad timing for a rift. Hughes’s insanity made him
vulnerable to a palace coup, as Maheu later told the journalist Jim Hougan. “The old man was a perfect target, isolated like that,” Maheu said. “Whoever controlled the palace guard, the Mormon mafia [most of the half dozen aides who had physical access to Hughes were Mormons], controlled him. And he knew it. He didn’t trust them, whatever anyone else may say. Howard and I knew they were manipulating him.” Despite all the years he spent as Howard Hughes’s consigliere, Robert Maheu never once laid eyes on Hughes. His only contact with Hughes was by telephone or through a series of scrawled notes passed between the two men by personal aides loyal to Bill Gay. Gay’s total control of information going into and out of Hughes’s office gave him the upper hand in the power struggle against Maheu. By this point, Hughes knew only what Gay allowed him to know.

When Gay and Davis teamed up to push Maheu out, they turned to Intertel to do the deed. For Peloquin, it was a huge boost for his tiny company. And the Hughes organization paid well: “Hughes was a wonderful client,” Peloquin recalls. “We’d send a bill in on Monday, and on Thursday, that check would come right back…. I didn’t have any money problems at all,” he says, waving his arm in the direction of the soybean field. “That’s why I’ve got this farm.”
*

Under pressure from Gay and Davis, Hughes fired Maheu. But now the challenge was to get Hughes out of Las Vegas, where Maheu might still have influence over him. Intertel made a logistical plan for moving Hughes. But on the night before Thanksgiving, Davis and Gay decided that the move needed to happen instantly—perhaps to take advantage of Maheu’s decision to take a Thanksgiving vacation. Intertel junked its elaborate plan and sent a few agents whom it could scrape together on short notice to Las Vegas. There, Intertel men stood guard as Hughes’s assistants carried the thin,
sickly Hughes in a chair down the back stairs of the Desert Inn.

While the escape was in progress, Peloquin took up a position in the lobby, waiting to see if the operation would set off an alarm that would summon Maheu. He knew that if Maheu arrived on the scene, there wasn’t much he could do other than stall for time. Even though it was Maheu’s job to provide security for the hotel, he never discovered that Hughes was being slipped out the back door. The Intertel operation was so thorough that it was days before Maheu would know what had happened to Hughes. And although journalists through the years have wondered whether or not Hughes himself was aware of the move, since he was frequently delirious with drugs and paranoid fantasies, Peloquin says he was awake and aware that he was being moved to the Caribbean.