The CEO Who Came in from the Cold

Story of an entrepreneur who ran a legitimate shipping company that reserved one branch office for CIA business.

Ever wonder what it would be like to build your legitimate business while being a front for the CIA? When it worked, it worked well for Erwin Rautenberg. When it fell apart, it really fell apart

Wheeling his ding-free blue 1987 Brougham d'Elegance Cadillac onto the 405 North freeway ramp, Erwin Rautenberg watches as his odometer clicks past the 75,000-mile mark. "I suppose I should buy a new car," he says. In the rearview mirror, the main office of Rautenberg's Air-Sea Forwarders Inc. (ASF), a cavernous two-story, 42,000-square-foot building with an American flag out front, located on the outskirts of the Los Angeles International Airport, fades from sight.

This is a trip Rautenberg has made hundreds, if not thousands, of times before. "Now we are going to the scene of the crime," he says, settling into the comfortable leather seat as his features tighten slightly. "My personality always changed when I went over this hill," he says, pointing toward the vista that separates Los Angeles proper from the San Fernando Valley. "Here I am an entrepreneur, a free-enterprise businessman. When I went over the hill, I became a secret government worker, taking orders. When I came back, I became a businessman again. Two entirely different worlds," he says, slowing the words to emphasize the dichotomy.

Within minutes the car is parked in the other world, a now-abandoned warehouse on a dusty side street off Van Owen Boulevard in North Hollywood. Rautenberg walks around the building and points out the indentations where a tall security fence once stood. The windows, too dirty to see through, are held together with frayed masking tape. "This was a perfect location," he says, adding, "in those days, they needed me much more than I needed them."

The regular trips over the hill were necessary in part because none of Rautenberg's employees were authorized to visit ASF's San Fernando Valley facility. "We all understood that it was an account Mr. Rautenberg handled personally," recalls Lydia Rollins, 55, whom Rautenberg hired in 1966 as an export clerk and who now manages ASF's ocean-export department. Rollins processed most of the paperwork for Rautenberg's Valley branch office. "I had no idea it was the CIA," she offers, appearing, even now, more than slightly incredulous that her usually soft-spoken boss had been a front for the agency's activities. "It seemed like just another commercial account," she recalls, even though Air Asia, the ASF Valley branch's sole client, was unusually picky and demanding. "Mr. Rautenberg told us to have backup for everything we did for them, every invoice," she recalls.

For more than 30 years, German-born Holocaust survivor Erwin Rautenberg helped the Central Intelligence Agency conceal a clandestine packing, shipping, and freight-forwarding operation run out of a nondescript warehouse first in Burbank and then in his ersatz Valley branch office. By all accounts, the masquerade was a smashing success; to outsiders the CIA-owned operation looked like an offshoot of Rautenberg's legitimate freight-forwarding business.

The facility, with an ASF logo out front, was a site Rautenberg himself had helped select. It was chosen because it met conditions outlined by CIA operatives: it had to be of sufficient size, and, Rautenberg was told, it had to be hidden from the public, preferably on a dead-end street. "It's kind of hard to look for real estate when you are limited to dead-end streets," he says with a chuckle. "It's not so easy to explain to commercial real estate agents why you need a nice, quiet, out-of-the-way place to run a packing-and-sorting operation."

After signing the lease for the San Fernando Valley facility in 1957, Rautenberg drove back to his real office across town, never having received a set of keys. Hundreds of millions of dollars of government freight, mostly aircraft parts and related supplies, passed smoothly and unnoticed through the Valley branch of ASF to their destinations in Southeast Asia and, later, Latin America.

The arrangement between Rautenberg and the CIA had taken shape in stages over a period of many years. In 1948 Rautenberg had helped create ASF, as part of Los Angeles Consolidators and Trucking (LACT), where he had worked as a shipping clerk.

Rautenberg's boss, LACT owner Paul Williams, had backed the upstart ASF in hopes of capitalizing on his young shipping clerk's fluency in foreign languages, his interest in international business, and LACT's expanding business in Southeast Asia. Within months Rautenberg, whose accent and language skills helped convince customers of his capacity to understand foreign markets, was shipping Southern California's bounty to the hinterlands of Europe, Asia, and South America.

The incoming business soon enabled Rautenberg to move ASF into its own half-room office, with a single desk and two chairs, at Fourth and Main in downtown Los Angeles. The rent: $17.50 a month. "And when the airline salesman came in and sat down," Rautenberg notes, "the chair collapsed." Even so, ASF's clientele grew steadily, propelled by Southern California's postwar boom, which kept the young Rautenberg busy chasing down bills of lading, driving forklifts, and making deliveries.

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