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A 2011 biography, “Confidential: The Life of Secret Agent Turned Hollywood Tycoon Arnon Milchan,” claims Milchan was recruited into Israel's LAKAM economic espionage unit in his twenties, becoming a key operative for Benjamin Blumberg (LAKAM head) and Rafi Eitan (who also ran Jonathan Pollard and infiltrated NUMEC). Milchan, a confidant of Shimon Peres and Netanyahu, learned how to create front companies and secret accounts to move millions in commissions for LAKAM and Mossad operations. He encouraged Smyth in 1972 to incorporate MILCO to share profits with his Tel Aviv-based Milchan Brothers company. Milchan Brothers received purchase orders from Blumberg and relayed them via secure telex to Smyth. MILCO did 80% of its business with Milchan, transferring other U.S. technologies critical to Israel’s nuclear program - including gyroscopes, neutron generators, oscilloscopes, and flight control systems. (9)(10)🧵 After Smyth was ordered to appear before a federal prosecutor, Milchan claimed: “I felt bad, but I was ordered to cut all contact with Smyth.” He denies all knowledge of MILCO or krytron smuggling. The following FBI files reveal the bureau’s interest in Milchan after a confidential informant exposed his ties to Smyth in 1992. The declassified, heavily redacted “secret” communications show the FBI’s fascination with Milchan’s background, his entry in “Who’s Who,” and connections to figures like Robert De Niro and an Iran-Contra operative. (11)(12)🧵 The final FBI file page
Smyth and his wife fled the U.S., remaining fugitives until captured in Málaga, Spain in July 2001 after Smyth applied for Social Security benefits. He later pled guilty to violating the Arms Export Control Act. In November 2001, Smyth was sentenced to 40 years in prison and fined $20,000, though he was later paroled due to advanced age. (6)🧵 In 2016, Arnon Milchan received a 10-year U.S. resident visa after Prime Minister Netanyahu personally lobbied Secretary of State John Kerry to approve it, over objections from career State Department employees. (7)🧵 The FBI files detail how Richard Kelly Smyth, who was convicted of running a U.S. front company, met with Benjamin Netanyahu in Israel during the smuggling operation. At that time, Netanyahu worked at Heli Trading Company, the Israeli node in the network. (8)🧵
California-based MILCO International Inc. shipped 15 orders totaling 810 krytrons to the Israeli Ministry of Defense between 1979 and 1983. Israeli movie producer Arnon Milchan's Heli Trading Company brokered the transactions. A krytron is a gas-filled tube used as a high-speed electrical switch. Exporting them from the U.S. requires a State Department munitions license because krytrons can be used as triggers for nuclear weapons. The U.S. rejected multiple Israeli krytron export requests. MILCO obtained them from EG&G Inc. but listed them as “pentode” radio tubes before shipment to Israel. The ruse was uncovered by the FBI in 1983. (3)(4)🧵 A U.S. Attorney attempted to get MILCO President Richard Kelly Smyth to implicate Arnon Milchan during plea bargaining. Negotiations failed, and in May 1984, Smyth was indicted on 30 counts of smuggling and making false statements. In 1985, a Federal Grand Jury in Los Angeles was convened to investigate possible Atomic Energy Act and Arms Export Control Act violations - but no charges were ever filed against Milchan. (5)🧵
Netanyahu, who currently serves as Israel’s prime minister, recently issued a gag order that the smuggling network’s unindicted ringleader refrain from discussing “Project Pinto.” (2)🧵