Opinion ID: 614361
Heading Depth: 1
Heading Rank: 2

Heading: Initial Meeting with Spielman

Text: Both Hawley and Chandler wrote memoranda describing their initial meetings with Spielman. Hawley's memorandum was sent to FBI Director Hoover [2] on January 2, 1962, and Chandler's memorandum was sent to the OIO on December 22, 1961. According to Chandler's memorandum, Spielman recounted that Stonehill and Brooks left the Philippines during the 1961 Philippine presidential campaign due to attempts by the administration to extort political campaign funds. Stonehill and Brooks gave Spielman more control of the companies during their absence. Spielman said that he then discovered a huge and evil fraud Taxpayers were perpetrating. [T]he extent of this infamy was a shock to him. Spielman realized that Stonehill would have enormous control over the regime of President Macapagal, who had just won the election. Stonehill had engineered the withdrawal of presidential candidate Rogelio de la Rosa, a candidate who had entered the race based on a bribe from then-President Garcia, who thought de la Rosa would take some of Macapagal's votes. According to Spielman, Stonehill had signed agreements from Macapagal permitting Stonehill to name three members of the incoming cabinet and guaranteeing him important business concessions relating to Stonehill's near-monopoly on the importation of Virginia tobacco into the Philippines. According to Spielman, when Stonehill and Brooks returned to the Philippines after Macapagal's victory, now-President Macapagal tried unsuccessfully to convince them to change their ways. Macapagal then told them they would have to leave the Philippines. At this point, according to Spielman, they realized how dangerous Spielman could be to them because of his knowledge of their illegal activities. Stonehill called Spielman to his suite on December 9, 1961. After Spielman told them he was upset about the extent of the illegal activity, Stonehill called in Brooks. According to Hawley's memorandum, Spielman said that Stonehill pulled a couple of pistols from his desk, ostentatiously played with them and mentioned what would happen to people who did not play ball. They then beat Spielman and knocked him unconscious. At the first interview with Hawley, Spielman had a very severe black eye, a swollen left cheek and side of his face, a bad cut inside his mouth, and a number of bruises on his chest and arms. Although the story of the beating is almost certainly true, Spielman's motivations for speaking with Hawley and Chandler were likely less altruistic than Spielman suggested. In other memoranda, Hawley and Chandler suggest that they believed that Stonehill attacked Spielman only after Spielman attempted to blackmail Stonehill into giving him greater control of the company. The district court made a factual finding that Spielman copied the records he eventually brought to Hawley to force the taxpayers to give him part ownership in their business enterprises. When Spielman proposed this, they first beat him and then fired him. Spielman became fearful of what else they might do to him, so he went to United States officials for protection and for vengeance. Stonehill III, 420 F.Supp. at 53. Hawley wrote that he told Spielman that most of what Spielman described were violations of Philippine law over which he had no jurisdiction. He said there could be tax law violations, and he encouraged Spielman to meet with Chandler. Spielman agreed. According to Chandler's memorandum, Spielman said he believed he was in considerable danger of being murdered. Chandler wrote, [W]e are inclined to agree that this is a very real possibility. Spielman, a Czech Jew and a Holocaust survivor whose parents were killed in concentration camps, said he was not afraid of Stonehill. He took the position that he faced death many times during the war years in Europe, spent much time in concentration camps and lived constantly in fear of death. He became an American citizen in the hope and expectation that he would thereafter be a free man and he cannot now see himself subject to the threats of the Stonehill group. He said he would thus stay in the Philippines despite the risk. Chandler noted in his memorandum that he had always suspected Stonehill of an enormous fraud, but that they had not had the manpower to pursue it. He wrote that based on Spielman's evidence, he recommended that the OIO send at least a Special Agent and a Revenue Agent. He further noted, We have also been given access to transcript[s] of telephone taps made by the local NBI and in part the information comes also from that source or has been confirmed thereon. Over the next several weeks, both Hawley and Chandler sent multiple memoranda to their respective domestic offices. Beginning with a January 9, 1962, memorandum describing the potential Bill of Lading Act indictment against Stonehill's associate Ira Blaustein, Hawley sent regular memoranda to Hoover detailing information provided by Spielman and updating Hoover on the progress of the investigation. He also sent a VERY URGENT memorandum on February 7, 1962, advising Hoover that Diokno had personally interviewed Spielman. Chandler wrote fewer, but more detailed memoranda. In a January 10, 1962, memorandum to OIO, Chandler described an encounter with Howard Parsons, the Economic Counsellor for the Embassy. Parsons stated that in the opinion of the Embassy it is imperative for American interests in the Philippines that some way be found to get Stonehill out of the Philippines and break his stranglehold here. Parsons suggested that Stonehill could undermine the entire American effort and perhaps destroy democracy here. Chandler informed Parsons that he had begun an investigation. Chandler told Parsons that he doubted the maximum IRS effort could accomplish what the Embassy wanted. Chandler again requested from OIO that agents be sent to Manila specifically to undertake this examination, but he realized that it was not easy to spare agents. Chandler emphasized, however, that tax compliance in the Far East generally is highly unsatisfactory, and that the Stonehill case would be a good way to create an effective and necessary enforcement image. A memorandum to file from an employee at OIO, dated February 13, 1962, recorded the permanent assignment of Sterling Powers, an IRS Special Agent, to Manila, and suggested there would shortly be a second person assigned. Chandler wrote a memorandum to OIO the same day. Chandler informed OIO that one agent was insufficient, and that in order to undertake this investigation effectively, he would need the undivided attention of at least a Special Agent and a Revenue Agent. The newly discovered documents from this period are more detailed than previously available evidence, but they are generally consistent with the testimony of Hawley and Chandler at the 1967 suppression hearing. Specifically, Chandler's discussion of wiretaps in his memoranda suggests that he and Hawley received these wiretaps only after speaking with Spielman, which comports with Hawley's deposition testimony that the NBI never gave him wiretaps prior to December 15, 1961. Furthermore, in Chandler's discussion of wiretap transcript[s] of telephone taps made by the local NBI, he does not suggest that they had in any way helped the NBI establish the wiretaps.