Lawrence E. Walsh, Independent Counsel // August 4, 1993, Washington, D.C. //
            Volume I: Investigations and Prosecutions ]

Part III

The Operational Conspiracy: A Legal Analysis


1 Count One charged a violation of 18 U.S.C. § 371. The bill of particulars in North stated that among the co-conspirators not indicted were National Security Adviser Robert C. McFarlane; CIA Station Chief Joseph F. Fernandez; Fawn Hall, North's secretary; and Robert Earl, North's assistant.
2 Memorandum of Law of the United States Filed by the Department of Justice as Amicus Curiae with Respect to the Independent Counsel's Opposition to the Defendant's Motions to Dismiss or Limit Count One (filed November 18, 1988).
3 U.S. v. North, 708 F. Supp. 375, 380 (1988).
4 Ibid., p. 377.
5 698 F. Supp. 300, 315 ("The grand jury transcript and exhibits reflect solid proof and ample probable cause to indict on each and every count.").
6 265 U.S. 182, 188 (1924) (emphasis added).
7 107 S. Ct. 2875 (1987).
8 Ibid., at 2881 n.8, quoting Curley v. United States, 130 F. 1, 7 (1st Cir.), cert. denied, 195 U.S. 628 (1904). See also Dennis v. United States, 384 U.S. 855, 861 (1966) ("It has long been established that this statutory language is not confined to fraud as that term has been defined in the common law. It reaches 'any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of government.' ") (quoting Haas v. Henkel, 216 U.S. 462, 479 (1910)); United States v. Johnson, 383 U.S. 169, 172 (1966); Lutwak v. United States, 344 U.S. 604 (1953); Glasser v. United States, 315 U.S. 60, 66 (1942).
9 See, for example, United States v. Keitel, 211 U.S. 370, 393 (1908).
10 See, for example, Curley v. United States, 130 F. 1, 9-10 (1st Cir.), cert. denied, 195 U.S. 628 (1904).
11 613 F.2d 988 (D.C. Cir. 1979), cert. denied, 446 U.S. 982 (1980).
12 Ibid., at 995, 998 (emphasis in the original). While the Supreme Court in McNally rejected the theory on which cases such as Diggs had been prosecuted, the Court emphatically did not conclude that the conduct in those cases was not fraudulent; rather, its holding was based solely on the history of the mail fraud statute, which the Court determined was "limited in scope to the protection of property rights." 107 S.Ct. 2875, 2882. As pointed out above, the McNally Court was careful to distinguish § 371 cases brought on the same theory that was rejected as to § 1341 in McNally. Mail fraud cases brought under this theory thus remain persuasive authority in interpreting § 371.
13 559 F.2d 31 (D.C. Cir. 1976), cert. denied, 431 U.S. 933 (1977).
14 Ibid. (quoting jury instructions).
15 Ibid., at 122 & n.255 (quoting jury instruction).
16 265 U.S. 182, 188.
17 Paragraph 13(a)(1) of Count One stated that the conspirators sought to defraud the United States:
by impeding, impairing, defeating and obstructing the lawful governmental functions of the United States, including compliance with legal restrictions governing the conduct of military and covert action activities and congressional control of appropriations and exercise of oversight for such activities, by deceitfully and without legal authorization organizing, directing and concealing a program to continue the funding of and logistical and other support for military and paramilitary operations in Nicaragua by the Contras, at a time when the prohibitions of the Boland Amendment and other legal restrictions on the execution of covert actions were in effect.
18 In that letter, North explicitly directed Rodriguez not to advise a particular CIA official of the proposed resupply project. North advised Rodriguez, "AFTER READING THIS LETTER PLEASE DESTROY IT." (Letter from North to Rodriguez, 9/20/85, AKW 022740.)
19 KL-43 Message from North to Fernandez, 6/16/86, AKW 004389.
20 PROFs Note from Poindexter to North, 5/15/86, AKW 021378.
21 Nevertheless, on June 10, 1986, Poindexter reminded North via computer: "I still want you to reduce you visibility." (PROFs Note from Poindexter to North, 6/11/86, AKW 021426-27.)
22 In addition to the various versions of the Boland Amendment, discussed below, see, for example, the congressional cut-off of funding for military actions in Angola (the "Clark Amendment," P.L. 94-329, Title IV, § 404, 90 Stat. 757 (1976), 22 U.S.C. § 2293 note) and Cambodia (P.L. 93-51, 87 Stat. 134 (1973)).
23 U.S. Senate Select Committee to Study Governmental Operations With Respect to Intelligence Activities, Final Report, Book I: Foreign and Military Intelligence, S.Rep. No. 755, 94th Cong., 2d Sess. 1, 425 (1976) (hereafter, "Church Committee Report").
24 Ibid., pp. 446-47.
25 P.L. 93-559, § 32, 88 Stat. 1804.
26 22 U.S.C. § 2422. (Repealed by 8/14/91, P.L. 102-88, Title VI, § 601, 105 Stat. 441.)
27 50 U.S.C. § 413(a)(1) (1982).
28 The version of this prohibition in effect at all times relevant to Count One is found in Part 1.8(e) of Executive Order 12333, 46 Fed. Reg. 59941, 59945 (Dec. 4, 1981). Similar restrictions have applied since President Carter promulgated Executive Order 12036, 43 Fed. Reg. 3674 (1978).
29 50 U.S.C. § 413(a)(1) (1982) (emphasis added).
30 P.L. 98-473.
31 P.L. 99-169.
32 In addition to the communication equipment and training, the 1986 Intelligence Authorization Act permitted United States employees to provide "advice" to the contras, including advice on the "effective delivery and distribution of materiel." (Senator Durenberger, 131 Cong. Rec. S16074 (1985).) However, the agencies could not "engage in activities . . . that actually amount to participation in the planning or execution of military or paramilitary operations in Nicaragua by the Nicaraguan democratic resistance, or to participation in logistics activities integral to such operations." (H.R. Rep. 373, 99th Cong., 1st Sess. at 16 (1985).)
33 130 Cong. Rec. H11980 (1984).
34 Hammerschmidt, 265 U.S. at 188.
35 L. Tribe, American Constitutional Law 256 (1988).
36 Article I, § 9, cl. 7.
37 6 J. Madison, Writings, 138, 147-50 (Hunt ed. 1910), cited in L. Henkin, Foreign Affairs and the Constitution, pp. 82-83 (1972). As Professor Henkin summarizes Madison's argument:

Basically, . . . Congress is the principal organ of government and has all its political authority, in foreign affairs as elsewhere, except that specifically granted to the President (alone or with the Senate). The determination of foreign policy and the control of foreign relations lay with Congress under the Articles of Confederation and, with particularized exceptions, the Constitution left them there. The powers of Congress are not limited to domestic "law-making," narrowly conceived: witness, to Congress is expressly given the most important foreign affairs power, the power to declare war. . . .
38 Art. I, § 8, cl.3.
39 Ibid., cl. 10.
40 Ibid., cl. 12.
41 Ibid., cl. 1.
42 22 U.S.C. § 2422 (Repealed by 8/14/91, P.L. 102-88, Title VI, § 601, 105 Stat. 441); 50 U.S.C. § 413 (1982).
43 Compare Report of the Congressional Committees Investigating the Iran-Contra Affair, pp. 395-410 (majority report; Boland Amendments violated "in letter and spirit") (hereinafter cited as majority report); Ibid., pp. 489-500 (minority report; Boland Amendments not violated) herein cited as Minority Report).
44 Government's Memorandum of Points and Authorities in Opposition to Defendant's Motions to Dismiss or Limit Count One (filed October 25, 1988), pp. 48-82.
45 There may be doubt about the peripheral coverage of the Amendments -- for example, as to whether the Amendment in effect in fiscal year 1986 barred provision of logistical advice to the contras.
46 Section 8066 of Department of Defense Appropriations for fiscal year 1985, as enacted in P.L. 98-473; Section 106 of the Intelligence Authorization Act for Fiscal Year 1986, P.L. 99-569.
47 For example, during the final debate on the Boland Amendment, Representative Boland stated that the Amendment "clearly prohibits any expenditure, including those from accounts for salaries and all support costs." 130 Cong. Rec. H11980 (1984).
48 The same Act also establishes the NSC staff. 50 U.S.C. § 402(c).
49 50 U.S.C. § 402(b)(1) (1982).
50 50 U.S.C. § 403(a), (d) (emphasis added).
51 Executive Order 12333, Part 1.2(a), 46 Federal Register 59941, 59942 (December 4, 1981), reprinted in 50 U.S.C.A., pp. 59-67 (1988 Supp.). The Church Committee had noted that the NSC had been an "effective means for exerting broad policy control over at least two major clandestine activities -- covert action and sensitive data collection." (Church Committee Report, p. 427.) The Committee recommended that the NSC should be given broad policy-making responsibility for all of "the intelligence activities of the United States, including intelligence collection, counterintelligence, and the conduct of covert action." (Ibid., p. 429.) It is precisely this recommendation that is taken up by Executive Order 12333.
52 In a pre-trial motion challenging Count One, North contended that the statutory language "agency or entity involved in the intelligence activity" had a particular technical meaning, one excluding the NSC. The legislative history of the Amendments, however, establishes that Congress intended no such technical meaning of "agency . . . involved in intelligence activities. . . ." Rather, Congress intended the definition of intelligence agencies to be sufficiently broad to accomplish its objectives. It cannot successfully be argued that the Boland Amendment applies only to agencies that "have operational responsibility for conducting intelligence activities." The statutory language -- "involved in intelligence activities" -- is much broader, and plainly is broad enough to cover an agency or entity "involved in" intelligence activities by directing and supervising them.
53 In the 1984 debates concerning the fiscal year 1985 appropriations act, there was, of course, no special reason for Congress to focus specifically on the NSC. Congress dealt with the problem generically, and, as indicated above, intended by their broad proscription of the use of funds for military- or intelligence-related agencies in support of the contras to cut off all United States funding for their activities.
54 Transcript at 7.
55 Transcript at 38 (emphasis added). In connection with the Fiscal Year 1986 renewal of Boland, the Senate Intelligence Committee chairman also received a staff memorandum stating that the NSC was covered by the Boland Amendment. (See September 23, 1985 Memo from Gary Chase and Bernard McMahon to Senator Durenberger at 9: "In the absence of clear legislative history indicating that the phrase 'involved in' was meant to be read narrowly as 'conducting' it is difficult to quarrel with the proposition that the NSC is 'involved in' intelligence activities".)
56 Count One, ¶ 13(a)(2).
57 PROFs Note from North to Poindexter, 1/15/86.
58 Memorandum from Poindexter (prepared by North) to the President, 1/17/86, AKW 001919.
59 In an ex parte<>/I statement to Judge Harold H. Greene, filed September 20, 1988, Poindexter claimed he told President Reagan that Secord was a "middleman" acting in a private capacity. This was inconsistent with contemporaneous note that he briefed the President from North's memorandum, which described Secord as an agent of the CIA.
60 The transfer of the first 1,000 TOWs did not result in the release of the American hostages as expected and further negotiations with Ghorbanifar ensued.
61 Memorandum from North to Poindexter, 4106, AKW 004352-59. The discovery of this memorandum by the Department of Justice in November 1986 led, in part, to the Attorney General's announcement of the Iran/contra diversion on November 25, 1986.
62 PROFs Note from North to Poindexter, 5/16/86, AKW 021383.
63 PROFs Note from North to Poindexter, 10/10/86.
64 See, for example, United States v. Lane, 765 F.2d 1376 (9th Cir. 1985) (upholding conspiracy to defraud United States charge based on agreement of defendants, state administrators of job training program, to channel federally-funded contracts to each other); United States v. Burgin, 621 F.2d 1352, 1356-57 (5th Cir.), cert. denied, 449 U.S. 1015 (1980) (upholding conspiracy to defraud United States charge based on state legislator's agreement to direct federally funded state contracts to entity that, in turn, agreed to funnel part of profits to legislator); United States v. Johnson, 337 F.2d 180, 185-86 (4th Cir. 1964), aff'd on another issue, 383 U.S. 169 (1966) (upholding conspiracy to defraud United States charge based on Congressman's agreement to exert influence on Department of Justice to win dismissal of pending indictment in exchange for payments characterized as campaign contributions); Harney v. United States, 306 F.2d 523 (1st Cir.), cert. denied, 371 U.S. 911 (1962) (upholding conspiracy to defraud charge based on a scheme pursuant to which state official arranged a federally-funded land condemnation at an inflated cost in exchange for seller's agreement to channel a portion of the proceeds to state official, among others); United States v. Sweig, 316 F. Supp. 1148, 1155-56 (S.D.N.Y. 1970) (upholding indictment charging that aide to House Speaker entered into scheme by which co-conspirator took fees from people with matters before federal agencies with the promise that he would use the influence of the office of the Speaker on their behalf).
65 107 S.Ct. 2875 (1987). Justice Stevens collected more than a dozen examples of such cases in his dissent in McNally. 107 S.Ct. at 2883 n.1. As previously noted, although McNally rejected the theory on which those cases had been prosecuted, it did so as a matter of interpretation of the mail fraud statute. The Court specifically approved § 371 cases brought on the same theory.
66 613 F.2d 988 (D.C. Cir. 1979), cert. denied, 446 U.S. 982 (1980). It was also alleged and proved that defendant had diverted some of the money to pay his personal expenses, but because the indictment had charged in the same counts both personal and congressional uses of the funds, the Court was required to consider whether the use of the funds for expenses which, though incurred for legitimate governmental purposes, were not authorized to be paid from the funds in question. (Ibid. at 994.)
67 Ibid., p. 994.
68 The bill of particulars specified that the deception involved in this aspect of the agreement was directed at both Congress and the Executive branch, and that the conspirators' "own purposes" toward which the Iran initiative was diverted were: (1) "providing support of military or paramilitary operations in Nicaragua by the Contras;" (2) "providing radios to an entity" in a foreign country; (3) "purchasing and operating the [ship] Erria;" and (4) "providing profits to defendants Secord and Hakim."
69 The conduct constituting the corruption of the Iran initiative also served the conspiratorial goal charged in ¶ 13(a)(1) of Count One (the secret war objective), since the money obtained from the diversion of profits from the arms sales to Iran was used to support the conspirators' illegal Enterprise in support of the contras.

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