Documents

Itzhak (aa Yitzhak) Vardi's arrival in New York early in 1952 set off alarm bells at the FBI.   A twelve-page report documented his espionage activities "during the time he was Vice Consul of the Israeli Consulate in London in 1949 and 1950." The bureau mounted extensive round-the-clock surveillance of Vardi as he made visits from the Park Plaza Hotel to shops, museums and restaurants by taxi and bus.

Under a file titled "Espionage - Israeli, New York File #65-15961" the FBI compiled intercepts of Vardi's correspondence with Canadian philanthropist Jacob M. Lowy about the launch of Israel bonds and Alexander Sacks about gold transactions and convertibility of foreign currencies.   J. Edgar Hoover notes, "Jacoby Lowy, a British subject who formerly lived in Czechoslovakia, was operating a black market on materials shipped from the United States to the Austrian government under the Marshall Plan...to be used in the manufacture of tanks...it is possible that subject and Lowy were acquainted in Austria in 1949."

Vardi visited the Palestine Economic Corporation at 400 Madison Avenue.  An FBI report noted, "the Palestine Economic Corporation...has been described by reliable informants as a corporation organized by prominent men in American Jewry, specifically Marshall, Morgenthau and Brandeis, for the purpose of selling stock in the United States in ventures in Palestine...to enable Palestine to have an economic lifeblood by way of American investment in that country."

The FBI tracked Vardi and Joesph Rafelli on Israel bonds sales trips through Buffalo and Albany.  According to a March 13 letter, "Both Rafelli and Vardi are known espionage agents for Israel."  The FBI tried to determine whether there was a Palestine Economic Corporation branch in England.  The FBI tracked Vardi and Rafelli's visits to 37 contacts in March including Rabbi Jerome Lipnick, Temple Beth-El, General Electric employees and Maurice Diskin of the United Jewish Appeal. "Agents of the Albany FBI office reported that on several occasions both Rafelli and Vardi have apparently attempted to discover whether they were being surveilled..." The FBI determined that a phone number used for communicating with Vardi is registered by the United Jewish Appeal at 165 West 46th ST in New York.

On May 20, 1952 the FBI upgraded the classification of its Vardi report from "confidential" to "secret."  "This change was made so as no to unnecessarily reveal the extent of the Bureau's interest in and knowledge of Israeli intelligence activities which is considered secret by the Bureau.  Such a classification will restrict dissemination to a high level within other government agencies receiving copies of this report."

The FBI concluded that "Vardi is not actively engaged in Israeli intelligence work...he is employed by the Palestine Economic Corporation and travels various cities in the east for the purpose of selling bonds for that corporation."  The FBI wound down the investigation on June 10, 1952.

Archivist's note:  It appears that Vardi continued to serve Israeli intelligence as detailed in the book "Hunting Eichmann"  about Mossad spy Rafi Eitan and his Shin Bet team's 1960 rendition of Nazi Adolph Eichmann from Buenos Aires to Israel. "Aharoni called the only person he could think of who could get the jeep out of the ditch quietly and quickly: Yitzhak Vardi.  Vardi was an Israeli financier who had once worked in intelligence for the Israeli Foreign Ministry but who now led the United Jewish Appeal in South American and was based in Buenos Aires.  Vardi understood the critical nature of the situation.  Less than an hour later, he drove up to the bus station in his huge Chevrolet, with a tow truck following behind. If they left the jeep in the ditch, it would look very suspicious—Eichmann might even be able to trace Aharoni's alias through the rental agency..."  FOIA release letter.