Michael Jon Hand, the son of a civil servant, was born in the Bronx on 8th December, 1941. According to Jonathan Kwitny in his book The Crimes of Patriots: A True Tale of Dope, Dirty Money, and the CIA: "Hand passed every class he took, and was noted for exceptional character, courtesy, cooperation, and appearance. His IQ registered an also exceptional 131."
In 1959 his mother died after falling or jumping from a third-floor window. Soon afterwards he attended a one-year course at the New York State Ranger School. This was followed by a year managing a sports school in Los Angeles.
In May 1963 Hand joined the US Army and started his training at Fort Bragg, North Carolina. During the Vietnam War he won the Distinguished Service Cross (DSC). According to the DSC citation he almost single-handedly held off a fourteen-hour Vietcong attack on the Special Forces compound at Dong Xaoi.
In 1966 he left the army to work "directly for the U.S, Government". Friends of Michael Hand have suggested that he was employed on undercover missions for the Central Intelligence Agency in Vietnam and Laos. One reported that he "helped train the mountain people - Montagnards - and worked closely with the Air America crews that supplied them". According to Jonathan Kwitny Hand worked under William Colby during the Vietnam War.
Michael Hand moved to Australia in September, 1967. At first Hand went to work selling development lots along the Australian coast. The company, Ocean Shores Development, was run by lawyer Fred Miller, a senior executive for the shipping empire owned by Sir Peter Abeles, the longtime business partner, Rupert Murdoch. One of the largest investors in this scheme was the singer Pat Boone. The registered directors included Boone of Beverly Hills, California and Patricia Swan of Sydney, Australia. Swan was Frank Nugan's secretary.
It was while working for Miller that Hand made contact with Bernie Houghton who had also moved to Australia in 1967. Houghton had established the Bourbon and Beefsteak Bar and Restaurant in Sydney. He claimed that he met Hand in the autumn of 1967. However, in one interview he admitted he had been told about Hand in 1964: "I had heard of Mike Hand's great combat exploits and courage, which was well-known in Vietnam."
Regular visitors to the Bourbon and Beefsteak Bar included two Central Intelligence Agency station chiefs in Australia (Milton Corley Wonus and John Denley Walker). Lieutenant Colonel Bobby Boyd, a Texan who was a former U.S. embassy military attaché in Latin America, also went to work for Houghton.
In 1969 Hand formed his own company called Australian and Pacific Holdings. His two partners were Clive Wilfred Lucas and John J. Foley. The plan was to develop an island off Australia's barrier reef. Hand and Lucas visited Vietnam where they raised $16,000 from members of the U.S. Army. On 16th January, 1970, the directors of Australian and Pacific Holdings decided to lend the $16,000 to Frank Nugan.
In May 1970 a list of Australian and Pacific's shareholders was filed with the government. Of the thirty-seven listed shareholders, four had the address c/o Air America whereas another had the address c/o Continental Air Service. Later both Air America and Continental Air Service exposed as a CIA front. Five shareholders were reachable through the U.S. Agency for International Development. This agency posed as a cover for CIA covert operatives such as David Sanchez Morales.
In the early 1970s Hand spent a lot of time travelling. A former CIA colleague, Douglas Sapper, claimed "Michael showed up in Laos a lot. I saw him in Phnom Penh (Cambodia) from time to time." Sapper also saw Hand with Houghton in Vietnam. Bernie Houghton later told the police that he was with Hand buying surplus U.S. war material for resale.
Houghton clearly had important contacts in Australia. When he applied for a new Australian visa in 1972, he gave the immigration officers the name of Leo Carter, director of the Australian Security Intelligence Organization (ASIO) in New South Wales, to support his application. Carter also arranged for him to get permission for unlimited re-entries to Australia in the future.
Allan Parks claims that Houghton was active in the drug trade in the 1970s. "There's no doubt about it, he'd fly anything. The Golden Triangle, that's where he got his opium from. There was one flight, he flew in slot machines. He did some deals over in India."
There is no doubt that Michael Hand and Frank Nugan were involved in promoting anti-socialist political causes. As Jonathan Kwitny points out in The Crimes of the Patriots: “By associating with the more hard-hat attitudes of the right wing of Labour, Nugan and Hand may have done more to help their cause than they could by sticking to the more right-wing parties. Certainly it is a standard ploy of the CIA to work less with the most openly anti-communist parties than with the anti-communist wing of the party on the borderline.”
In 1973 Michael Hand and Frank Nugan, an Australian lawyer, established the Nugan Hand Bank. Another key figure in this venture was Bernie Houghton, who was closely connected to CIA officials, Ted Shackley and Thomas G. Clines.
Nugan ran operations in Sydney whereas Hand established a branch in Hong Kong. This enabled Australian depositors to access a money-laundering facility for illegal transfers of Australian money to Hong Kong. According to Alfred W. McCoy, the "Hand-Houghton partnership led the bank's international division into new fields - drug finance, arms trading, and support work for CIA covert operations." Hand told friends "it was his ambition that Nugan Hand became banker for the CIA."
In 1974 the Nugan Hand Bank got involved in helping the CIA to take part in covert arms deals with contacts within Angola. It was at this time that Edwin Wilson became involved with the bank. Two CIA agents based in Indonesia, James Hawes and Robert Moore, called on Wilson at his World Marine offices to discuss "an African arms deal". Later, Bernie Houghton arrived from Sydney to place an order for 10 million rounds of ammunition and 3,000 weapons including machine guns. The following year Houghton asked Wilson to arrange for World Marine to purchase a high-technology spy ship. This ship was then sold to Iran.
By 1976 the Nugan-Hand Bank appeared to have become a CIA-fronted company. This is reflected in the type of people recruited to hold senior positions in the bank. For example, Rear-Admiral Earl P. Yates, the former Chief of Staff for Policy and Plans of the U.S. Pacific Command and a counter-insurgency specialist, became president of the company. Other appointments included William Colby, retired director of the CIA, General Leroy J. Manor, the former chief of staff of the U.S. Pacific Command and deputy director for counterinsurgency and special activities, General Edwin F. Black, former commander of U.S. forces in Thailand, Walter J. McDonald, retired CIA deputy director for economic research, Dale C. Holmgren, former chairman of the CIA's Civil Air Transport and Guy J. Pauker, senior Republican foreign policy adviser.
One of those that Earl P. Yates brought in to help the Nugan Hand Bank was Mitchell WerBell. Yates later told the Joint Task Force on Drug Trafficking he recruited WerBell as a consultant because he "had extensive experience in Central America".
On 27th November 1979 Michael Hand wrote to Ted Shackley. It concerned a meeting the two men had recently attended in Washington: "The opportunity of meeting you again on different terms was very enjoyable and I sincerely trust that something worthwhile businesswise may surface and be profitable for both of us."
Former CIA agent, Kevin P. Mulcahy later told the National Times newspaper "about the Agency's use of Nugan Hand for shifting money for various covert operations around the globe."
The investigative journalist, Jonathan Kwitny, became convinced that the Nugan Hand Bank had replaced the Castle Bank and Trust Company in Nassau, as the CIA's covert banker. The bank, run by Paul Helliwell, was forced to close after the Internal Revenue Service discovered that he Castle Bank was laundering CIA funds and drug profits.
On 7th January 1980, Robert Wilson (House of Representatives Armed Services Committee) and Richard Ichord (chairman of the Research and Development Subcommittee of the Armed Services Committee) had dinner with Bernie Houghton at the Bourbon and Beefsteak Bar and Restaurant in Sydney.
On 27th January, 1980, Frank Nugan was found shot dead in his Mercedes Benz. With his body was a Bible that included a piece of paper. On it were written the names "Bob Wilson" and "Bill Colby". Robert Wilson was a senior member of the U.S. House of Representatives Armed Services Committee and William Colby was a former director of the CIA.
Bernie Houghton was in Switzerland at the time and he immediately rang his branch office in Saudi Arabia and ordered the staff to leave the country. Houghton also visited Edwin Wilson's office in Geneva and left a briefcase with bank documents for safekeeping. Soon afterwards, a witness saw Thomas G. Clines going through the briefcase at Wilson's office and remove papers that referred to him and General Richard Secord.
Two days after Nugan died, Michael Hand held a meeting of Nugan Hand Bank directors. He warned them that unless they did as they were told they could "finish up with concrete shoes" and would be "liable to find their wives being delivered to them in pieces".
Michael Hand, Patricia Swan, Bernie Houghton and his lawyer, Mike Moloney, spent the next few days removing files from Nugan's office. They also began paying back selected clients. One estimate is that over $1.3 million was paid out in this way.
Frank Nugan's inquest took place in April, 1980. Testimony from Michael Hand revealed that Nugan Hand was insolvent, owing at least $50 million. Hand then promptly fled Australia under a false identity on a flight to Fiji in June 1980. Bernie Houghton also disappeared at this time and it is believed both men eventually reached the United States.
According to one witness, Thomas G. Clines helped Bernie Houghton escape. Michael Hand also left the country accompanied by James Oswald Spencer, a man who served with Ted Shackley in Laos. The two men traveled to America via Fiji and Vancouver. One report published in November, 1980, suggested that Michael Hand was living in South America. It claimed that he had managed to escape with the help of "former CIA employees".
An investigation by the Australia/New South Wales Joint Task Force on Drug Trafficking discovered that the clients of the Nugan Hand Bank included several people who had criminal convictions relating to drug offences including Murray Stewart Riley, Donald William McKenzie, James Lewis Williams, Malcolm Craig Lord, Charles Robertson Beveridge, Barry Graeme Chittem, Murray Don Newman, Bruce Alan Smithers, James Sweetman, James Blacker, Colin Courtney, Stephen Demos, John Brooking and John Ceruto. According to the records the bank was making $100,000 a year from tax advice. In reality, it was receiving it for money laundering.
One right-wing organization called Accuracy in Media defended the Nugan-Hand Bank claiming it was really an honest but hard-luck banking organization that had been maligned by an anti-military press.
The Australian government asked the Royal Commissioner D. G. Stewart to investigate the Nugan-Hand Bank scandal. The Stewart Royal Commission was published in June, 1985. It stated that the "Nugan Hand Ltd. was at all times insolvent... and flouted the provisions of the legislation as it then stood in that large volumes of currency were moved in and out of Australia".
Stewart went on to blame the dead Frank Nugan and the missing Michael Hand for the illegal activities of the bank. Rear-Admiral Earl P. Yates, William Colby, General Leroy J. Manor, General Edwin F. Black, Walter J. McDonald, Dale C. Holmgren, Guy J. Pauker and Bernie Houghton were considered blameless. Despite the evidence, Hand and Patricia Swan, Nugan's secretary, were accused of being the only ones "responsible for the shredding of documents".
Michael Hand was born in the Bronx, December 8, 1941. His father, a New York civil servant, still lives in a condominium in Queens, but absolutely will not discuss his son, or anything else, with reporters. Visitors are barred from the building by locked doors and security guards. A sister, reportedly severely handicapped, is also said to live in the New York area. Hand is said to have sent home money for her care regularly over the years.
The old Bronx neighborhood is now a slum, but when Hand was young it was upper middle class, and his high school, De Witt Clinton, was considered one of the city's best. He graduated 248th in a class of 695, won a scholastic achievement award, was appointed student prefect, and was starting receiver and defensive back on the football team. He passed every class he took, and was noted for exceptional character, courtesy, cooperation, and appearance. His IQ registered an also exceptional 131.
Graduating in 1959, he stated that his ambition was to become a forest ranger. Shortly afterward, his mother died in a fall from a third-floor window; the question of accident or suicide was never resolved.
Mike Hand turned into a bearish man, with thick layers of muscle that melted largely to flab in later years. On the one hand, he developed an aggressive, macho, locker-room image that put more sensitive men off; on the other, he was known as a devout Christian Scientist and regular churchgoer, who rarely drank.
When Hand became a prominent banker in Australia, he told the world he was a graduate of Syracuse University, and mentioned to some that he had taught school in California before joining the army. The record shows instead that in 1961 he completed a one-year course at the New York State (forest) Ranger School. The school was attached to Syracuse University but hardly the equivalent of its B.A. program.
Hand's teacher, David Anderson, says Hand finished thirty eighth in a class of forty-nine, though Anderson has a lasting impression of Hand as extremely personable. He must have been that, just to be remembered after all these years. Anderson says that Hand wrote from California in 1962 that he was managing a swim and sports school in the swank Los Angeles suburb of Palos Verdes Estates. The next year, Hand wrote back that he was taking Green Beret training at Fort Bragg, North Carolina. The record shows he enlisted in the army in May 1963.
In Vietnam, Hand won a Silver Star, a Purple Heart, and the Distinguished Service Cross, second only to the Congressional Medal of Honor as the nation's highest military award. On June 9, 1965according to the Distinguished Service Cross citation-he almost single-handedly held off a fourteen-hour Vietcong attack on the Special Forces compound at Dong Xaoi.
The Nuran Hand bank collapsed, owing some $50 million. None of the deposits were secured because they were used for illegal activities. These included defrauding American military personnel in Saudi Arabia out of nearly $10 million. The bank sent out "investment counselors" to installations where Americans were working in Saudi Arabia and told them to invest their salaries in Nugan Hand's Hong Kong branch in secured government bonds.
The Australian government eventually investigated the collapse of the bank and found that millions of dollars were missing and unaccounted for. It discovered that the main depositors of the bank were connected with the narcotics trade in the Middle East and Asia, and that the CIA was using Nugan Hand to finance a variety of covert operations. Government investigations revealed ties between Nugan Hand and the world's largest heroin syndicates. The reports said that the Bank was linked to at least 26 separate individuals or groups known to be associated with drug trafficking.
In 1983 the Australian Joint Task Force on Drug Trafficking released a report on Nugan Hand's activities to Parliament which said Shackley, Secord, Clines, Quintero, and Wilson were people whose background "is relevant to a proper understanding of the activities of the Nugan Hand group and the people associated with that group."
The pattern of events surrounding this expansion indicates that Michael Hand may have realized his dream of becoming the "CIA's banker". Both Sydney police and Wall Street Journal reporter Jonathan Kwitny came away from their long investigations of Nugan Hand convinced that there may well have been some connection between the bank's sudden rise and the antecedent demise of a CIA proprietary, the Castle Bank and Trust of Nassau. After retiring from the CIA, Paul Helliwell, founder of such agency "proprietaries" as SEA Supply Inc. of Bangkok and Air America, opened a law office in Miami and formed Castle Bank offshore in nearby Nassau to cover the agency's covert money movements. In 1973 agents of the Internal Revenue Service were able to photograph the Castle Bank's customer list while a bank executive dined in a posh Key Biscayne restaurant with a woman described as an IRS "informant". Reviewing the purloined documents, IRS investigators found that the 308 Castle Bank customers on the list had moved $250 million to foreign numbered accounts. Depositors included Playboy publisher Hugh Hefner, Penthouse magazine publisher Robert Guccione, and some major organized crime figures - Morris Dalitz, Morris Kleinman, and Samuel A. Tucker. Elated by the find, investigators formed Project Haven to make "the single biggest tax-evasion strike in IRS history." Suddenly, the IRS announced that it was dropping the investigation because of "legal problems". According to a later investigation by the Wall Street Journal, "pressure from the Central Intelligence Agency ... caused the Justice Department to drop what could have been the biggest tax evasion case of all time." The CIA invoked "national security" since it was using the Castle Bank "for the funding of clandestine operations against Cuba and other intelligence operations directed at countries in Latin America and the Far East." By the time Helliwell died from emphysema on Christmas Eve, 1976, Castle Bank had been liquidated.
Simultaneous with the closure of Castle Bank's Nassau office, Nugan Hand Bank launched its formal "banking" operations in the nearby Cayman Islands. The opening of Caribbean branches, a new area for Nugan Hand, and recruitment of retired CIA officers gave it a corporate structure similar to the collapsed Castle Bank. Indeed, a former CIA agent named Kevin Mulcahy, a key witness in the Edwin Wilson case, gave details to the National Times of Sydney "about the Agency's use of Nugan Hand for shifting money for various covert operations around the globe".
Working through Houghton, moreover, the Nugan Hand Bank deepened its contacts with the network of ex-CIA officials surrounding Edwin Wilson. After helping Hand informally with the bank's operations for the previous five years, Houghton finally joined Nugan Hand's staff in late 1978 and opened a branch in Saudi Arabia to collect deposits from American contract employees. Under Houghton's management, the Saudi branch ran the bank's biggest - and simplest - fraud. With introductions from Beck Arabia of Dallas, a leading engineering firm with major Middle East contracts, Houghton flew into Saudi Arabia in January 1979 and rented a villa at Al-Khobar to serve as both office and residence for the bank. Over the next twelve months, Houghton and his aides circulated through the U.S. construction camps along the Persian Gulf, issuing bank receipts for cash deposits from American contract workers. Paid in cash and unable to make deposits in Saudi Arabia's backward banking system, American expatriate workers needed the deposit-taking service that Nugan Hand pretended to provide. Houghton then bought bundles of Thomas Cook traveler's checks and sent them off in commercial courier parcels to Michael Hand's new office in Singapore. Through this simple system, Houghton and Hand collected collected at least $5 million from their fellow Americans - all of which simply disappeared when the bank collapsed a year later.
Concerns over bank's questionable accounting processes began to circulate by the late 1970s as investors attending Nugan Hand AGM's were prevented from asking questions by the bank. These concerns turned into panic for bank investors in the early hours of 27 January 1980 when Nugan (who was facing charges of stock fraud) was found shot dead by a .30 caliber rifle in his Mercedes Benz 100 miles west, outside of Lithgow, New South Wales; it is said that a hand-written list was found on his body with a list of substantial loans Nugan Hand had extended to various notables, such as William Colby and Bob Wilson. The following police investigation returned a verdict of suicide. Suspicions of the bank's activities grew in subsequent days as details emerged of the contents of Nugan's car (including the business card of former CIA director William Colby) and news that Nugan's house and office had been ransacked by Hand and Yates and important company files destroyed or stolen.
The official inquest into Nugan's death in June 1980 made front page news amid testimony from Hand that Nugan Hand was insolvent, owing at least A$50 million (and as much as hundreds of millions), including $20,000 rent on their Sydney headquarters. He then promptly fled Australia under a false identity on a flight to Fiji in June 1980, after destroying Nugan Hand's remaining records. Hand has not been seen since; it is generally assumed that Hand, as a CIA operative, re-entered the US and was given a false identity. A subsequent Royal Commission of inquiry into the activities of the Nugan Hand Group revealed money laundering, arms shipments, drug dealing, theft (including US$5 million from US military personnel in Saudi Arabia) and large-scale tax avoidance by Nugan Hand throughout its brief but eventful existence. One Commission witness, a former Nugan Hand director, stated that Hand warned Bank executives "If we didn't do what we were told, and things weren't handled properly, our wives would be cut into pieces and put in boxes and sent back to us."
Australia's Joint Task Force on Drug Trafficking compiled a report on Nugan Hand in 1983, determined that, above and beyond the revelations of the Royal Commission, Nugan Hand had acted as a CIA front to finance a war in Laos by laundering drug money (particularly via the Nugan Hand Chang Mai branch) participated in the covert sale of an electronic spy ship to Iran and weapons shipments to southern Africa. The CIA's use of Nugan Hand as a front appears to have been more extensive than merely enriching certain people or supporting the heroin drug trade.
In his otherwise admirable fight against the scourge of drugs, fraud, illegal arms sales, and abuse of government power, Mr. Kwitny has maliciously maligned and assassinated the character of some truly great American heroes and in so doing has besmirched the reputations of the military and intelligence services of this nation. My purpose here is to defend the honor of those men and the services they represent.
The general comments herein concern only those people for whom I had some measure of responsibility for their involvement in Nugan Hand and for whom I can speak with great confidence. Their names are: General Edwin Black, General Erle Cocke, General LeRoy Manor, Mr. Dale Holmgren, Dr. Guy Pauker, Mr. Donald Beazley, Mr. William Colby, Mr. Walter McDonald, Mr. Robert Jantzen, and Mr. George Farris (hereinafter, THE TRUE PATRIOTS).
I specifically exclude all others, not because I consider them guilty or care any less about their fair treatment, but because I do not have the time, space, or knowledge to defend them against the alleged crimes. I use the word "alleged" advisedly, for as of this date, more than seven years after the collapse of Nugan Hand, no crimes have been proven.
Before addressing the general reader, I direct my first comments to the Nugan Hand employees and investors, who were the principal victims of the bank failure. Each of THE TRUE PATRIOTS has expressed to me a most genuine distress for your losses, particularly those of you whom they might have influenced to invest in Nugan Hand. Most of them lost significant sums of their own. For example, I never received any pay due me and personally lost over twenty-five thousand dollars in unreimbursed business expenses. We are, therefore, able to share both your agony and your anger.
Having devoted their lives to the service of their country and having often risked those lives in dangerous missions, THE TRUE PATRIOTS highly treasure the morale and reputation of those who are taking the same risks today in our national defense. They are distressed over any damage done to that morale and reputation by such warped and distorted viewpoints as found in this book.
Each of them deplores the injury done to the relationship between the United States and Australia, a long, strong, and mutually important relationship, which the Soviet Union and its KGB Disinformation Service would dearly love to destroy.
For the above reasons they unanimously regret any distress that their association, however innocent, might have contributed to others. I add to these regrets my own remorse for having induced THE TRUE PATRIOTS to join Nugan Hand. I must take full responsibility for that. They associated with Nugan Hand largely because of their trust in my assurances that I had gone to extraordinary lengths to determine the integrity of that organization and found no evidence whatsoever of a shortfall.
I informed them that my assurances were based on my personal interviews with a wide range of highly respectable, knowledgeable people and agencies, many of whom had a recognized duty to know the bona fides of Nugan Hand. These included: the managing directors of the two largest banks in Australia, which held Nugan Hand accounts; an agent of the Reserve Bank, which has responsibilities similar to our Federal Reserve Bank; the Premier of New South Wales, whose private office was adjacent to the Nugan Hand offices; two prominent Australian lawyers who had worked closely with Mr. Nugan; an agent of the Australian Tax Department, who was familiar with Mr. Nugan's tax work; the managing director of the Sydney subsidiary of Citicorp, who traded securities with Nugan Hand; a partner of the accounting firm that certified Nugan Hand records; vice-presidents of two large international banks that had accounts with Nugan Hand; the U.S. Consul General in Sydney; the desk officer in the Department of Commerce who publishes financial reports on Australian firms; agents of the Treasury Department; agents of the FBI; some highly satisfied clients of Nugan Hand; and several employees. Of all these, none gave any unfavorable information, and most had high praise. General Black and others interviewed similar groups, including prominent newspapers, with comparable results.
In recruiting THE TRUE PATRIOTS, I explained the substance of my lengthy conversations with Mr. Nugan and Mr. Hand about their ultimate objective to build an international "one-stop business shopping-center" organization to make it easier for small businesses to compete in the international marketplace against the multinational cartels. They liked the concept and the opportunity to pursue it. They believed, as I did, that their employment was honorable, that Mr. Nugan and Mr. Hand were honorable, successful, and reliable businessmen, with the highest sense of personal integrity and genuine concern for their clients.
In response to queries about how the firm made money, Mr. Nugan gave me an extensive mathematical dissertation, supported by genuine money market documents, on how to "gross-up" the interest yield on money by buying and selling discounted bills of exchange on the lively Sydney market. He later held a conference of other employees to explain this important aspect of Nugan Hand's money market operation. He further informed me and others that his law practice yielded four to twelve million dollars per year (a false claim, nevertheless substantiated by two other lawyers and a CPA) and that the money was always available as a drawdown to protect our client's deposits.