Founders of the U.S.-based sales corporation for Israel bonds included the unindicted ringleader of the Sonneborn network of conventional arms smuggling fronts, Rudolph Sonneborn, and the North America financier for Israel’s clandestine nuclear weapons program Abraham Feinberg, along with former U.S. Treasury Secretary Henry Morgenthau Jr.. Morgenthau’s role in conventional and nuclear smuggling for Israel is alleged, but unconfirmed since the FBI has censored nearly every page of his lengthy FBI file.
The FBI kept a close watch on the “American Financial and Development Corporation for Israel” (AFDCI, incorporated in 1950) to determine whether it was acting as an unregistered agent of the Israeli government.
On June 27, 1951, the FBI chartered an investigation to discover “connection between subject corporation and the Government of Israel, the extent to which the corporation is subsidized directly or indirectly by the Government of Israel, and extent to which the Government of Israel in any way exercises control of the policies or operations of the corporation.”
After one FBI inquiry, the Chief of Foreign Agent Registration at DOJ (who later enforced the registration order against AIPAC’s parent, the American Zionist Council) determined that “Bonds for Israel” was “entitled to ‘Commercial Exemption’ under the Registration Act for the reason that funds raised by this organization are to be used for economic purposes…” [Nathan] Lenvin “pointed out that Israeli Government representatives and military personnel who tour the U.S. for ‘Bonds for Israel’ would be required to register with the Justice Dept. if their talks and speeches include any political propaganda. He added that, in his opinion, it would seem most difficult for these speakers not to interject some political propaganda in their speeches.”
FBI ordered that confidential informants be developed within the sales network and that public source material be collected to determine whether “‘Bonds for Israel’ have been engaged in activities requiring their registration under the Registration Act.”
On November 13, a 1956 FBI bulletin, copied to NSA and CIA, reported that a secret November 9, 1956 Development Corporation for Israel (successor to AFDCI) meeting took place over concerns that Israeli funds would be frozen over Israel’s attack on Egypt.
However, U.S. presidents never used their leverage on ballooning Israeli bond sales across the United States to pressure Israel to comply with international law. Although bond sales have expanded to over a billion dollars a year (2013) as Israel’s supporters enact laws to efficiently place them in a wide variety of state government holdings, the record reveals that the Justice Department has never engaged in a serious review of compliance with the Foreign Agents Registration Act. File.