Braunsteiner case was not his first Nazi assignment. That dubious honor went to Nicolae Malaxa. And INS’s gross mishandling of his case left a bitter taste in Schiano’s mouth.
Malaxa was a Romanian industrialist and arms manufacturer whose only allegiance was to money, which he amassed with ruthless cunning. One of the fattest and richest cats in Europe, he was the eminence grise behind the Romanian Iron Guard. The fascist group was a pro-Nazi, anti-communist, and anti-Semitic brotherhood of young killers who specialized in murdering Jews. Malaxa was such an Iron Guard fan that he flew the Guardist flag over his factories and required his five thousand workers to wear the green shirts of the Iron Guard, according to recently declassified FBI and CIA files. The Displaced Persons Commission had found the Iron Guard inimical and barred its members from entering the United States.
Malaxa provided the Iron Guard with the cash, guns, trucks, and cannons it needed for its January 1941 military coup and pogrom, during which five hundred to one thousand Bucharest Jews were butchered in a three- day bloodbath. Malaxa’s stone mansion served as the Iron Guard command center and arms depot.
After the coup failed, Malaxa went to work directly for the Nazis. He partnered with Albert Goering, brother of Field Marshal Hermann Goering, who was later convicted of war crimes and sentenced to be hanged. The Goering-Malaxa enterprise produced hundreds of tons of Romanian steel for the Reich war machine, making an already rich Malaxa even richer. And when the Soviet Union occupied Romania, he sold steel to Stalin.
After the war, Malaxa bribed Grady McClaussen, head of the U.S. Office of Strategic Services (OSS) in Romania, to get him to America, according to recently declassified FBI and CIA files. With a renewable, three- month residence permit in his vest pocket, Malaxa entered the United States as a member of a Romanian trade commission whose mission was to convince the Truman administration to sell oil drilling equipment to Romania. Malaxa never went home. Too smart to seek U.S. citizenship, for fear that his Iron Guard-Nazi-Communist background would surface, he opted for permanent residency, which didn’t require such a rigorous investigation. What it did require was political juice. And Nicolae Malaxa had plenty of juice. An estimated $500 million worth (roughly $4.5 billion today).
Whispers rippled through the Romanian emigre community that if you needed help in the United States, the guys to see were Senator Richard Nixon, soon to be vice president, and Allen Dulles, a former OSS spy and future director of the CIA. Malaxa aimed his wallet at them. Then the Washington merry-go-round began to spin.
Malaxa hired Dulles’s New York law firm and Nixon’s old California law firm, which still bore his name. Dulles in turn recruited Congressman John Davis Lodge of Connecticut to introduce a bill granting Malaxa permanent residency. The Dulles and Lodge families had been friends for years. (Lodge was the brother of Henry Cabot Lodge Jr.)
Lodge introduced the save-Malaxa bill in the House in August 1948, while the Eightieth Congress was preoccupied with plans for its summer recess. Lodge was hoping the bill would sneak through without notice. He ran out of time and it died in committee. That suited the CIA just fine. The agency had been watching Malaxa from the moment his toe touched U.S. soil, and it had long since concluded he was a communist agent and should be expelled from America.
“As Malaxa is extremely clever, efficient, perfectly self-controlled, very discreet, of an unbelievable perfidy, and a master in the art of bribery,” the CIA concluded, “he must be considered as one of the most dangerous agents.”
Next, it was Richard Nixon’s turn. To sweeten the pot, Malaxa slipped Nixon one hundred thousand dollars, according to investigative journalist Seymour Hersh. In exchange, Nixon tried to do what Lodge couldn’t. Too smart to introduce a bill himself, he asked his red-baiting buddy Senator Pat McCarran, chairman of the Senate Judiciary Committee, to add Malaxa’s name to McCarran’s 1953 joint congressional resolution granting permanent residency to a list of displaced persons whose visas were about to expire.
The Justice Department joined Nixon and began to pressure McCarran to sponsor Malaxa as well. Almost overnight, the most “dangerous” communist in America became the darling of Washington. The only contrary voice was the CIA, which still viewed Malaxa as a smart, powerful, conniving communist agent.
McCarran buckled under the pressure. Like Nixon, he was too smart to add Malaxa’s name to his resolution. He asked his friend and fellow senator William Langer to do it for him. “Wild Bill” Langer was no stranger to dirty work. The beloved son of North Dakota had spent two years in a federal prison for taking bribes as the governor of the state. Langer offered Malaxa’s name as an amendment to the McCarran resolution. Both the resolution and the amendment passed the Senate. It looked like Malaxa was in.
When the McCarran bill reached the House with the blessing of the Justice Department, however, Congressman Emanuel Celler spotted Malaxa’s name tucked in near the end of the list. A Jew from Brooklyn, Celler was outraged. The guy was a Nazi collaborator and a communist to boot, and no matter how much money he had, he would never find a home in the United States of America if Celler could help it. As chairman of the House Subcommittee on Immigration, Celler legislated Malaxa’s name off the list.
It was time for plan B. Malaxa would approach the government with a proposal to build a factory in Whittier, California (Nixon’s hometown), to manufacture seamless tubes for oil wells. The timing couldn’t have been better. The United States was embroiled in the Korean War and oil was in great demand. At the same time, Senator Nixon himself would argue that Malaxa was critical to the success of the factory and, therefore, should be a “first priority” candidate for permanent residency.
The plan worked. Malaxa got a rush order to build the factory, a fat tax break, and permanent residency. Malaxa took the tax break, but never built a factory. He never hired an architect to design one. He never bought or leased a building site.
A few years later, Malaxa made an extended trip to Argentina, a hotbed of Iron Guard activity that he had continued to support. Malaxa went to Argentina to seek government approval for a munitions plant he wanted to build there. The trip raised a problem that neither he nor his handlers anticipated. Under pressure from a chorus of anticommunist and anti-Nazi congressmen, the INS reluctantly revoked Malaxa’s reentry visa on the grounds that he had fraudulently obtained his permanent residency by not disclosing his ties to the Iron Guard, the Nazis, and the communists.
During the sixty-day INS trial that followed, Malaxa refused to answer a single question Vincent Schiano put to him. He broke his silence only once, when he lost his characteristic cool and threatened to have Schiano fired.
While Malaxa was giving Schiano the legal finger, his money was hard at work. An anonymous Romanian dropped in to say hello to Schiano. He told the prosecutor he had some loose change—around $200,000. “What would it take to dispose of the problem?” Meanwhile, Malaxa’s son-in-law offered $20,000 to a witness on Schiano’s trial list to disappear in California, all expenses paid, according to recently declassified FBI documents.
When the courtroom circus finally ended, the immigration hearing officer found Malaxa guilty on all counts and ordered him to be deported. Malaxa took his case to the Board of Immigration Appeals. BIA overturned the ruling because, it claimed, the evidence was insufficient to support alleged Nazi-Guardist ties and the hearing officer had inferred too much from Malaxa’s silence.
Nixon, now vice president, didn’t want to take any chances. What if the INS challenged the BIA ruling? What if Malaxa was deported after all and leaked the hundred-thousand-dollar bribe out of revenge? Nixon knew the scandal would kill him politically. To protect his presidential ambitions, he asked his friend and advisor, Attorney General William Rogers, to intervene. As final arbiter in INS cases, Rogers upheld the BIA ruling.
Insulated with a warm blanket of cash, Nicolae Malaxa lived out the rest of his life in his luxurious Fifth Avenue apartment. He took his hundred-thousand-dollar secret to the grave in 1965. The INS didn’t fire Schiano as Malaxa had predicted in his courtroom outburst. Instead it ordered him to report to his new assignment—the INS regional office in Alaska. Schiano quit in disgust. To him, the Malaxa legal fiasco was about more than losing a case he had clearly won. Something smelled terribly rotten. Washington was protecting Malaxa, a Nazi collaborator living illegally in the United States. Why?
There was no way Schiano could have known in the early 1950s that Malaxa was a double agent. He was working for communist Romania’s interests in the United States. As a 1953 U.S. Navy communique to the FBI put it: “Mr. Malaxa is undoubtedly one of the top communist agents in the country.” At the same time, Malaxa was operating undercover for the Naval Intelligence Agency on a project so sensitive that the navy hid it from both the CIA and the FBI.
When J. Edgar Hoover got wind that Naval Intelligence had a valuable Romanian source, the FBI director
