Psychological warfare is the employment of all moral and physical means other than orthodox military operations which tend to: destroy the will and ability of the enemy to resist; deprive him of the support of his allies and neutrals; increase in our own troops and allies the will to victory. This must be consonant with national policy and coordinated with orthodox military operations. The implements of psychological warfare include open propaganda, black propaganda, subversion, and sabotage, special phases of economic and political pressure, and cultural contacts. Since psychological warfare can be waged successfully only when supplemented by adequate intelligence, it becomes necessary that a flow of information regarding the psychological state of mind of groups and populations in both enemy and neutral countries, and their reaction to psychological warfare conducted by our agencies and those of our allies, be available to this office. Therefore, supplementary to your present activities, it is desired by the Director that you secure and send reports regarding the vulnerabilities of enemy groups, both civil and military, and neutral populations which can be exploited for psychological warfare.

Relatively accurate facts can be secured as to the activities of the civil government, and the parties or political groups exercising power at the moment, and these reports should be in considerable detail. The more difficult task of securing accurate information as to minority political groups and subversive political organizations constitutes a very real challenge to the Director. He must develop contacts within such groups, or place loyal agents in such groups as members. Such opposition forces should be assisted in every possible way in their aim to interfere with the functioning of the government in power. Financial support should be offered and, if accepted, should be given in such a way that that future actions of the group can be controlled. This can best be accomplished by requiring that one of our agents be given a high position in the organization and that he exercise control over the finances. ... Efforts should be made to foment social unrest in the hostile national by agitating the current social problems and pitting one class against the other. A sub-Director who is thoroughly acquainted with the history of the hostile nation and its peoples should be assigned to study this problem and direct a planned campaign. ... In studying his territory the Director will know the key points in the enemy installations but generally such points will be carefully protected and sabotage of such point must be the act of "desperate" men who have been especially selected and especially trained. ... Propaganda should be divided into two categories, one being the Propaganda Reconnaissance Agent and the other the Propaganda Distributing Agent...

Orders to employees must always be verbal, definite and understandable. It is best to repeat orders, and to have the employee repeat the order, until it is positive that it is clearly understood. Orders should never be given in writing... The disposition to be made of an employee who proves to be unsatisfactory or disloyal should be a part of the Director's plan. If the employee proves to be disloyal and is in possession of dangerous information, he should probably be killed...

Informers should be made available to known hostile agents and false or misleading information furnished. These informers may be either unwitting individuals or agents engaged (in a) deliberately planned campaign. The activities of known enemy organizations or agents might be embarrassed by rendering anonymous reports to police authorities and thus subjecting them to embarrassing inquiries. When possible their activities might be made the subject of reports to newspapers and thus secure them unfavorable publicity. The wives and relatives of known hostile agents should be given scandalous information, and embarrassing information of this type should be disseminated so that it reaches the ears of the superiors of a hostile agent.

Paul Helliwell was an American original, a master of the arcane craft of concealing secret business operations. A legendary hard-drinking OSS colonel in World War II, businessman, lawyer, and banker after the war, he became so successful that he should have made the cover of Fortune. The only problem: Helliwell was not a businessman at all. He was a CIA officer on assignment.

Helliwell pioneered the art of illegally financing intelligence activity to avoid bureaucratic accountability. He formulated techniques for creating banks and businesses to cover CIA operations. In the late 1940s, organizations like Brown Brothers Harriman and the Chase Manhattan Bank were happy to accommodate the young spy agency. But with the advent of covert operations where laws were broken, the CIA needed smaller banks and business fronts not subject to U.S. laws or SEC rules or the veto of nervous corporate executives.

Helliwell was well qualified for this task. He had, from the beginning, been in on one of the CIA's most closely guarded secret operations. Of the long, secret list of CIA wrongdoing that constituted the Agency's so-called "family jewels," Helliwell had the details of the most outrageous and long-running Agency crime.

Ever since 1949, the CIA had allowed the rebel armies and dictators it supported in Asia to deal in illegal drugs in order to finance their operations.

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 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 for other covert intelligence operations directed at countries in Latin America and the Far East."

So the CIA began supplying the KMT through two front companies: Civil Air Transport, headquartered in Taiwan, and Sea Supply Corporation, headquartered in Bangkok. Only a few people with top security clearance knew that both companies were covertly owned by the U.S. Government. They are important, not only for what they did in the 1950s, but also because they were precursors of organizations that touch directly on Nugan Hand in the 1970s.

After China was given up on, the focus of U.S. efforts in East Asia shifted to Indochina. Civil Air Transport was then transformed into (among several successor entities) Air America. That was the airline Michael Hand worked closely with as a CIA contract agent. Many of the CIA associates whose money first helped Hand get started in business in Australia were Air America employes.Sea Supply Corporation, for its part, was founded and run by a lawyer and CIA operative named Paul Helliwell. During World War II, Helliwell had been chief of special intelligence in China for the OSS. Colleagues from those days told the Wall Street Journal's Jim Drinkhall that Helliwell, then a colonel, regularly used to buy information with five-pound shipments of opium ("three sticky brown bars," one man said). Drinkhall also reported being told that Helliwell ran an operation code-named "Deer Mission," in which OSS personnel secretly parachuted into Indochina to treat Ho Chi Minh for malaria. After the heyday of Sea Supply in the 1950s, Helliwell moved to Miami and became an important figure in the Bay of Pigs invasion and the CIA's other battles against Castro. His Castle Bank both funneled money for the CIA and, privately, operated as a profitable tax-cheat business. Its unexpected demise in the mid-1970s directly coincided with the growth of Nugan Hand. Considering the gaggle of brass from the U.S. intelligence community who helped push Nugan Hand into orbit in the late 1970s, there has been understandable speculation that Nugan Hand was Castle Bank's successor.

Lawrence A. Freeman was born in Washington, D.C., on January 5, 1939. He attended the University of Miami, getting a bachelor's degree in 1960 and a law degree in 1964. He joined the Air Force as a judge advocate, where he worked until 1969, and then he began work as an associate with the old CIA spook Paul Helliwell's law firm, Helliwell, Melrose and DeWolfe, in Miami.

In October 1988, Freeman was a witness in a federal court hearing in Denver, Colorado, in one of the longest-running IRS cases in history: the fight over more than $30 million in undeclared profits from the movie One Flew Over the Cuckoo's Nest. No taxes were ever paid on the profits that were funneled through a maze of offshore trust accounts at Castle Bank, with the assistance of Burton Kanter and Paul Helliwell.

Freeman was called to testify about the existence of the two imaginary Greeks whom Helliwell conjured up. During his sworn testimony, Freeman discussed some of his background.

Freeman said he first met Helliwell when he traveled to the United States for a funeral in April 1969. "I advised my dad that I intended to separate from the service and continue to live in Europe, and my father, being a consul for the country of El Salvador, recommended that I speak with Paul Helliwell, who by coincidence my father knew because Paul Helliwell was the consul of Thailand.

"I met with Mr. Helliwell, and Mr. Helliwell suggested that I contact his business associate in Zurich, who was Phil Barry." Barry was in the OSS with Helliwell, Freeman said.

Later that year, Freeman was in Zurich to see Barry about arranging financing for an Arab airline in Egypt. Helliwell was also there, he stated, as was a man named George Bebas, to whom Helliwell introduced him. (Bebas was one of the two imaginary Greeks.)

"The only other thing that I can recall that happened that day is, I had dinner that evening with Mr. Helliwell and Bill Casey-William Casey, who was also of the OSS, who I believe was then in private practice. The gentleman later became the head of the Securities and Exchange Commission and I believe sometime in early 1981 became the head of the CIA."

Freeman testified that he joined Helliwell's law firm in January 1970 and then six months later went to work as the in-house counsel for Castle Bank & Trust in Nassau, Bahamas. Castle Bank records show that Freeman was listed as a vice president in September 1970 and as a vice president and secretary in September of the following year. The previously listed secretary had been A. Alipranti (the other imaginary Greek).

Freeman said he returned to Helliwell's law firm in October or November of 1971, and then left to form his own firm in May 1972.

(Freeman's testimony in this case was abruptly halted by the judge after the IRS attorney, Gene Ciranni, asked Freeman about Jack DeVoe and Dr. Robert Freeman invoked attorney-client privilege and requested a private meeting with the judge, who afterwards would not allow Ciranni to question Freeman further.)

In a brief telephone conversation I had with him in 1989, just after he had gotten out of jail and could not practice law, Freeman refused to answer any questions. Asked if he had ever worked for the CIA, he replied, "I don't know." Then he caught himself and quickly said, "No comment."

In his 1991 book Masters of Paradise, Alan Block states that Kanter "had direct ties to organized crime," pointing to his connections with the La Costa resort, to mob associate and Teamsters Union pension fund guru Allen Dorfman, as well as to Cleveland mobster Morris Kleinman, who was probably one of the founding owners of Castle Bank.

Helliwell once reportedly told a Castle Bank colleague that they had to transfer some Kleinman accounts from a sister Caribbean bank to Castle Bank to protect them. "If you don't do it, Kanter will end up face down in the Chicago River," Helliwell said.

Block's book comes down stronger on the side of mob control and presence at Castle Bank than that of the CIA, but he does recognize the ground-breaking story in the Wall Street Journal by Jim Drinkhall in April 1980, which stated that the CIA was responsible for stopping a Justice Department investigation of Castle Bank. The CIA, it seemed, was using some Castle Bank accounts to fund covert activities.

Helliwell was identified by journalist Jim Drinkhall as being the reputed paymaster for the abortive Bay of Pigs invasion. Drinkhall also reported that Helliwell and the CIA used Castle Bank accounts to fund later anti-Castro activities.

According to author and journalist Jonathan Kwitny, "Amidst all the speculation that has swirled around CIA agents who were also involved in narcotics smuggling over the years, the one CIA career officer definitely known to have planned narcotics smuggling as an instrument of American foreign policy was Paul Helliwell."

Helliwell established one of the CIA's first proprietary front companies, called Sea Supply Corp., to funnel weapons to the anti-communist Chinese in Thailand in the 1950s. The Chinese manufactured heroin to help pay for their military needs, and the heroin was transported out of the isolated mountains on the pack mules of Helliwell's Sea Supply Corp.

Like Kanter and Helliwell, and like Walter Mischer and Robert Corson, Lawrence Freeman lived in a world where the distinctions between the CIA and organized crime become blurred. Not only did Freeman have direct business associations with Kanter and Helliwell, and indirect ties to Corson, he had other links to organized crime figures.