Castle Bank & Trust

Establishment and Operations

Castle Bank & Trust was a Bahamian bank founded in the early 1960s by Paul Helliwell, a former Office of Strategic Services (OSS) officer and later CIA operative, and Burton Kanter, a Chicago-based tax lawyer. Headquartered in Nassau, Bahamas, with operations later extending to the Cayman Islands, the bank was established as a financial institution catering to wealthy clients seeking offshore accounts for tax advantages. Its client base included celebrities like John Fogerty of Creedence Clearwater Revival, Tony Curtis, Hugh Hefner, and Penthouse magazine, as well as prominent business families like the Pritzkers (Hyatt hotel chain) and reputed organized crime figures such as Moe Dalitz, Morris Kleinman, and Samuel A. Tucker.

The bank facilitated tax evasion by providing anonymous numbered accounts, allowing clients to shield income from U.S. tax authorities. Beyond its role as a tax haven, Castle Bank became a conduit for covert financial operations, particularly for the Central Intelligence Agency (CIA). It was used to funnel funds for clandestine activities, including anti-Castro operations staged from Andros Island in the Bahamas, a key hub for CIA efforts against Cuba during the 1960s.

CIA Connections

Paul Helliwell, a key figure in Castle Bank’s founding, was deeply tied to the U.S. intelligence community. During World War II, Helliwell served in the OSS, the precursor to the CIA, and later worked as a CIA operative, managing covert operations in Southeast Asia and the Caribbean. He was instrumental in setting up offshore banks and front companies to support CIA activities, including the movement of funds for operations against communist regimes. Castle Bank was one such proprietary, a business secretly controlled by the CIA to facilitate covert funding. Helliwell’s other ventures included the Mercantile Bank and Trust Company and the American Bankers Insurance Company, both used for similar purposes. The CIA leveraged Castle Bank to channel money for operations in Latin America, the Far East, and particularly anti-Castro efforts in Cuba. These operations included funding paramilitary activities and possibly laundering proceeds from illicit activities, such as drug trafficking, to finance covert missions.

IRS Investigation and CIA Intervention

In 1973, the Internal Revenue Service (IRS) launched Operation Trade Winds to investigate tax evasion through offshore banks, targeting Castle Bank. That year, IRS agents obtained a list of 308 account holders by covertly photographing documents from a bank official’s briefcase in Key Biscayne, Florida. The list revealed a mix of high-profile individuals, organized crime figures, and CIA-linked accounts, with an estimated $250 million moved through the bank. The investigation promised to be the largest tax evasion case in IRS history, dubbed Project Haven.

However, the investigation was abruptly halted in 1977. A federal judge ruled that the evidence, obtained through the “briefcase caper,” was illegally acquired, undermining prosecutions. More significantly, reports indicate that the CIA intervened, citing national security concerns. The agency argued that exposing Castle Bank’s operations would compromise sensitive intelligence activities, including funding for anti-Castro operations and other covert programs in Latin America and Asia. The Washington Post reported that the CIA’s Office of General Counsel, including attorney John J. Greaney, pressured the Justice Department to drop the case, as certain Castle Bank accounts were directly managed by the CIA.

Legal Fallout and Bank Collapse

Burton Kanter faced trial in 1977 for tax evasion related to a Reno, Nevada hotel sale involving a Castle Bank account but was acquitted. His law partner, Roger Baskes, was convicted in the same case, and another partner, Calvin Eisenberg, was convicted in 1982 for advising on false tax returns tied to the bank. Castle Bank collapsed in 1977, with operations in the Bahamas and Cayman Islands shuttered amid the IRS probe and financial instability. By this time, the bank had reportedly managed $25.1 billion in assets, much of it untraceable, leading to significant losses for clients like Creedence Clearwater Revival. The CIA reportedly shifted its covert funding to other institutions, such as the Nugan Hand Bank in Australia, which was similarly linked to CIA operatives.

Legacy and Controversy

Castle Bank’s history remains a controversial chapter in the CIA’s use of offshore financial networks. The bank’s collapse and the quashed IRS investigation fueled speculation about CIA involvement in shielding illicit activities, including potential drug money laundering. A 2016 Freedom of Information Act request by MuckRock yielded no responsive CIA documents, suggesting either limited declassified records or continued sensitivity around the bank’s operations. Posts on X amplify claims of Castle Bank’s role in laundering drug proceeds and funding CIA operations, but these lack primary source verification and should be treated as inconclusive.

The bank’s story highlights the CIA’s historical reliance on financial fronts to support covert operations, often at the expense of transparency and legal accountability. Its connections to figures like Helliwell and the broader intelligence community underscore the complex interplay between finance, espionage, and organized crime during the Cold War era.

Sources

• The Washington Post, “CIA Helped Quash Major, Star-Studded Tax Evasion Case,” April 24, 1980 • Wikispooks, Castle Bank & Trust • Wikipedia, Castle Bank & Trust (Bahamas) • Spartacus Educational, Paul Helliwell • HandWiki, Castle Bank & Trust (Bahamas)