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FBIFederal Bureau of Investigation

# FBI Charlotte History

History

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# FBI Charlotte History

#### **Early 1900s**

Bureau agents have been working in and around Charlotte since the earliest days of the FBI. By 1924, the division was investigating more than six dozen matters—involving everything from interstate prostitution to automobile theft. That year, the office was headed for several months by acting Special Agent in Charge Charles R. Jordan. He was followed by Special Agent in Charge Denver H. Graham, who managed a staff of four agents and two stenographers.

In January 1925, the division was closed. It re-opened in February 1928 with Reed Vetterli at its helm. The division has been in continuous operation ever since; covering all of North Carolina. It also handled the western portion of South Carolina until the Columbia Division was opened in 1965.

In the early 1930s, the Charlotte Division lost two agents in line-of-duty accidents. On November 24, 1931, Albert L. Ingle was fatally shot when another officer’s weapon accidentally discharged when it fell to the sidewalk. Two years later, Special Agent Rupert Surratt died from wounds suffered in a car crash while he was engaged in his official duties.

Charlotte agents take target practice at the Spencer Mountain Range in May 1945. This firing range, located on land provided by the U.S. Army, was used by FBI Charlotte during the 1940s.

#### **1940s and 1950s**

National security became a more pressing Bureau priority in the late 1930s as war in Europe unfolded, and FBI Charlotte responded. In 1939, an agent was assigned to conduct counterintelligence investigations; the next year, two agents were tasked with conducting security inspections of local manufacturing plants with national security responsibilities. The division’s personnel complement grew rapidly as it worked to ensure that military-related industries were protected from spies and saboteurs.

The 1950s saw criminal investigations return to prominence. During this decade, Charlotte Division personnel worked extortion, deserter, and interstate stolen vehicle matters. The office also investigated bank robberies and embezzlement cases. Investigations of civil rights violations and of extremist groups like the Ku Klux Klan (KKK)—whose membership was growing in both the Carolinas—increased through the 1950s and into the 1960s.

 

One 1950s embezzlement case focused on Luther Clay Elrod, Jr., a branch vice president of South Carolina’s largest bank. Elrod was an esteemed Greenville resident who had once been named “man of the year.” His bank’s audits, however, revealed discrepancies, and agents discovered that Elrod was manipulating customers’ and the bank’s accounts. He had created fictitious notes and stolen almost $190,000. Some citizens refused to believe he took the money for personal gain, calling him a “Robin Hood” and raising donations for his defense, stating, “Help the man who helped Greenville.” Elrod’s bank employed a unique system that balanced individual departments by using interior debit and credit transfers. Agents first had to familiarize themselves with the system and then explain it in layman’s terms in court. They conducted numerous interviews and record reviews, gathering the evidence that would convict Elrod. In 1959, Elrod pleaded guilty. In 1963, he was paroled, and in 1973, President Nixon issued a pardon for him.

By 1959, FBI Charlotte employed 81 agents and 45 support employees. The office was handling 1,855 cases—1,292 criminal, 130 national security-related, and the rest involving applicants and other matters. The special agent in charge proudly noted that his division had more convictions that year than any other office in the Bureau.

#### **1960s and 1970s**

Tracking and capturing fugitives had long been a focus of the division. During the 1960s, the Department of State asked for the FBI’s help in locating Edward Lee Woods. Woods had been showing up at some military hospitals, claiming he was the crown prince of French Equatorial Africa; at others, he said he was the son of the king of Angola. Under false diplomatic guise, he scammed hospitals and other medical facilities out of potent narcotics. Using similar ruses, he also gave lectures for fees and engaged in fraud against the government. When the Charlotte Division received a lead that he might appear at a North Carolina hospital, they were ready, quickly arresting him when he appeared. Although he insisted that his name was Tchaka Cetewayo Balawayo, a check of his fingerprints told the real story—he was Woods.

In 1967, following a citizen’s tip, agents also arrested Ten Most Wanted fugitive Lynwood Irwin Mears in Winston-Salem. Mears was wanted for escaping from a state prison, where he had been serving a sentence for breaking and entering.

In the 1960s, the division also worked several illegal gambling cases. One investigation led to the arrest and conviction of Sparta resident Christopher (C.C.) Parker, widely known as South Carolina’s “kingpin gambler.” A newspaper columnist joked at the time that Parker shouldn’t have gotten “tangled up with the FBI. The agents probably knew more about Parker than the Spartan did himself...”

Following the passage of the Civil Rights Act of 1964, Charlotte’s investigations of racial matters and violence by extremist groups like the KKK grew considerably. In 1965, agents arrested a Klan leader and his associates in connection with the bombing of a business and several cars owned by integration activists in New Bern. Searches revealed incriminating KKK charters and meeting notes. FBI Charlotte hoped the arrests would deal a blow against the Klan in the area. By 1967, however, its territory had a higher concentration of KKK members—over 5,000—than any other division. The FBI had made progress fighting the Klan elsewhere in the South, so Charlotte set out to turn the tide—and was successful.

After years of monitoring the group and collecting evidence against its members, Charlotte agents soon arrested 12 Klan members for bombings and other violent acts, seizing a stash of stolen dynamite in 1967. Following the arrests, many KKK members fearing additional arrests dropped out of “klaverns,” forcing many groups to disband. The *Charlotte Observer* editorialized that the arrests “...could be one of the most important anti-terrorism developments in North Carolina history...it is obvious that the FBI, which does not make such charges lightly, spent months of persistent effort in putting its case together.” Case publicity also dealt a blow to the KKK’s self-image; one member allegedly asked, “What’s the use in having a secret organization when you can read about everything that happens to it in the newspaper?” 

Lynwood Irwin Mears

Special Agent Gregory W. Spinelli

The division’s protection of civil rights extended to other areas as well. In one 1966 extortion case, Charlotte agents found that several people—posing as law enforcement officers—were demanding payoffs in exchange for not exposing the sexual orientation of prominent or wealthy homosexuals. The division initiated 120 interstate racketeering cases out of this investigation, and the Bureau made more than 100 arrests in several states.

In March 1973, the Charlotte Division suffered its first line-of-duty death since the 1930s when Special Agent Gregory W. Spinelli died in a gun battle. Spinelli and other agents had been staking out Arthur Tilmer Mankins and Bonnie Lou Logan—suspects in a savings and loan robbery—at a local motel. As the fugitives left their room, Logan was quickly arrested, but Mankins fled to a wooded area behind the hotel, then to a nearby construction site. Spinelli ran to the rear of the site to flank Mankins, but the fugitive fired on him, fatally wounding the agent. Mankins again tried to escape, but another agent apprehended him. Mankins was sentenced to life in prison for Spinelli’s murder.

The early 1970s saw a sharp rise in bank fraud and embezzlement cases, as dollar losses grew from $369,000 to $2.5 million in a two-year period. FBI Charlotte also saw a significant increase in deserter cases arising from the Marine Corps base at Camp Lejeune near the end of the Vietnam War.

The division worked another high-profile civil rights case starting in the late 1970s. In Greensboro, an armed clash occurred in 1979 between members of the KKK, the Communist Workers Party (CWP), and the National Socialist Party of America. When the smoke cleared, five CWP members were dead, and several more wounded. Klan members openly criticized the Charlotte Division’s inquiry into the attacks, but the public praised its work. During their investigation, agents faced hostile witnesses and threats of physical violence. The situation continued to escalate: as preparations were being made for a funeral for the five slain individuals, agents learned about threats of more shootings, a potential KKK riot, and even the possibility that the National Socialist Party would drop bombs from the air. Agents worked 16-hour shifts for the first six weeks and afterwards—heading off more violence—to see that justice was done.

#### **1980s and 1990s**

Color of law (police misconduct) and political corruption investigations grew during the 1980s. In one investigation, a county sheriff was convicted of accepting bribes for 14 years to protect a prostitution and gambling ring operating between North Carolina truck stops. In another case, an alderman and a political consultant were convicted of extorting businesses for payoffs in exchange for favorable consideration of issues before the alderman. In yet another investigation in 1982, a Columbus County resident complained that he had been asked to pay local officials to protect his business from “harassment.” Agents uncovered not only political corruption in the county, but also illegal drug transactions, arson, counterfeiting, gambling, prostitution, and theft. Among those arrested were state congressmen, police chiefs, county commissioners, and a district judge. Due to the overwhelming evidence, many pled guilty.

The division also investigated corrupt police in Gastonia, where allegations had been made that officers were assaulting the homeless—throwing cooking and motor oil, wine, and even hot coffee on them. They were also accused of spray-painting homeless people sleeping on the street and assaulting them in an elevator that the assailants called the “ride on Space Mountain.” An investigation by Charlotte agents resulted in six Gastonia police officers pleading guilty or being convicted at trial for various abuses.

Violent crime was also a serious concern. In 1980, five members of the Outlaw motorcycle gang were shot to death in their Charlotte clubhouse. Their rivals—the Hells Angels motorcycle gang—were prime suspects. The Outlaws threatened revenge, and a gang war loomed. The Charlotte Division called together other area law enforcement agencies to share intelligence and explore solutions. Several agents with motorcycle skills went undercover, immersing themselves in gang culture and earning confidence despite the danger to themselves. These cooperative investigations and undercover operations led to 14 arrests and the recovery of $3 million in pirated recordings and equipment. Agents also uncovered a prostitution ring, illegal drug trafficking, stolen property sales, and one murder plot, which they thwarted.

Charlotte’s white-collar crime cases increased as well during this time. In a 1992 Ponzi scheme, investors bought promissory notes from a company called Cap Leasing, which supposedly was buying heavy equipment to rent to construction companies. Investors lost $21 million. FBI Charlotte’s investigation led to the conviction of six people involved in the scam, but it was only the tip of the iceberg —Cap Leasing managers had other scams going. They sold clients phony IRAs and took money for health insurance policies that failed to pay more than $1 million in claims. They were diverting these funds into their own gold mining operations instead. The case grew into a multi-state, multi-agency investigation with six spin-off health care/insurance fraud cases. The U.S. Senate Permanent Subcommittee on Investigations, examining fraud and abuse in employer-sponsored health benefit plans, later highlighted the Cap Leasing case as representative of an emerging widespread problem.

The division worked a major property crime case in 1997. That year, when Loomis Fargo employee David Ghantt left for the day, he didn’t secure the company vault or activate the alarm. A total of $17.4 million was soon reported missing. When surveillance footage was examined, it showed Ghantt loading money onto an armored truck. Authorities located the vehicle he abandoned; $3 million had been left behind, as it was too much to carry. Charlotte agents launched the CHARLOOT case, and most of the division’s personnel participated in the intense investigation. Ghantt was tracked to Mexico, and two major co-conspirators—Ghantt’s girlfriend and a man named Steven Chambers—were identified. Chambers promised to hold the cash and wire it intermittently to Ghantt “until the heat was off,” but the investigation revealed that he never intended to do so. Instead, he was plotting to kill Ghantt. Agents learned that Chambers had begun spending and depositing large sums of cash, and Charlotte Division’s suspicions were raised. With the help of Mexican authorities and our legal attaché in Mexico City, a Charlotte agent participated in the arrest of Ghantt in Mexico. As the field office concluded its case, 17 conspirators— among them an attorney and a bank employee—pled guilty to charges including interstate theft, money laundering, and conspiracy to commit murder. Over $13 million in cash and $1 million in assets were also recovered.

#### **Post-9/11**

Following the events of 9/11, the Charlotte Division joined the rest of the Bureau in making the prevention of terrorist attacks—both domestic and international—its top priority.

An FBI agent hunting for Eric Rudolph (inset) in the forests of North Carolina in July 1998 takes a sip of water. Reuters photo.

One domestic terror case came to a successful conclusion in the months following the attacks. Since the 1990s, the division had invested significant hours and effort in the challenging search for “lone wolf” bomber Eric Rudolph. Rudolph hated government, abortion activists, law enforcement, and many others. At the 1996 Olympic Games in Atlanta, Rudolph detonated a backpack bomb, killing two and wounding more than a 100. He later set off three other bombs—including one at an abortion clinic—injuring 39 more victims. In 1998, he was identified as a suspect and named to the Ten Most Wanted Fugitives list. He was a trained survivalist familiar with the North Carolina mountains, where he was last sighted before disappearing. Many believed Rudolph was dead or out of the country, but the Charlotte Division and the Southeast Bomb Task Force diligently pursued him for five years. In 2003, a Murphy police officer found Rudolph rummaging through a store’s trash and arrested him. Rudolph pled guilty in 2005, and received four life sentences.

FBI Charlotte has also continued to investigate a wide variety of criminal cases, working through task forces and various joint operations. In one recent Safe Streets Task Force case, division personnel joined with other agencies in a probe of a gang of importers and multi-level distributors of illegal drugs. By April 2010, more than 30 subjects had been convicted, effectively ending that gang’s ability to import and distribute a wide variety of illegal drugs ineastern North Carolina.

Lately, mortgage fraud has been a growing concern. In one case, crooked promoters recruited investors, inflated property values, and faked loan application information to defraud consumers. Dishonest attorneys also falsified documents and lied about down payments. The excess loan funds were diverted to co-conspirators, and some investors received kickbacks after the properties closed. When loan payments were not made, the properties foreclosed. Losses nearly reached $10 million. The Charlotte Division’s investigation ultimately resulted in the conviction of 14 individuals.

Even as the Bureau’s priorities change to face new and growing threats, FBI Charlotte continues to provide a wide range of investigative expertise and support to the citizens of North Carolina.

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