PART NINE: LaRouche, Inc.: The Underworld Connection

Inspector MacDonald smiled, and his eyelid quivered . . . "I won't conceal from you, Mr. Holmes, that we think in the C.I.D. that you have a wee bit of a bee in your bonnet over this professor [Moriarty]."
--The Valley of Fear

Chapter Thirty-four

The War on Drugs, So Called

LaRouche may not have originally intended to build an organization resembling an underworld enterprise, but he certainly took steps tending in that direction. First, he gathered a band of ruthless lieutenants, who acknowledged that he was the "boss" and defined their identities in terms of his approval. Second, he found out how the underworld actually works (money laundering and drug smuggling, for instance) from former government experts and by studying the careers of master criminals such as Meyer Lansky. Third, he constructed a good cover story that seemed to explain that what he was doing was quite legal. Fourth, he built up alliances with established organizations, such as the Teamsters union, which had the connections, resources, and expertise he lacked.

Like Sherlock Holmes's great adversary, Professor Moriarty--the fictional prototype of an intellectual underworld leader--LaRouche approached his activities with the mind of a strategist and grasped the key problem: how to develop an in-depth shield against prosecution, including a fail-safe system for times when the ordinary deceptions no longer suffice by themselves.

The solution he most favored was to associate himself with the U.S. intelligence community. It was well known that the CIA and other federal agencies had long collaborated with and protected crooks so long as the latter were useful in fighting communism (for instance, Santos Trafficante, Jr., against Fidel Castro). In The Case of Walter Lippmann, LaRouche observed that the most successful narcotics traffickers are those linked to government agencies responsible for investigating the drug trade. These agencies, to protect their criminal associates, use "the 'under investigation' fiction" to steer "regular, unwitting police agencies" away from any "interference with the drug-network operations." Although LaRouche buried this point in a critique of both the crooks and the intelligence community, he soon proceeded to hire as his adviser the often arrested but never convicted Mitch WerBell, who boasted of using his Langley connections to gain immunity. Years later, under investigation for credit-card fraud, LaRouche's followers would allegedly attempt a variation of WerBell's method--to persuade the CIA, through intermediaries, to quash a federal investigation of LaRouche.

The development of a smoke screen for LaRouche's activities can be traced back to the founding of the National Anti-Drug Coalition in 1978-79. The NADC's LaRouchian organizers talked tough. They were going to lead the American people in a campaign to "shut down the drug traffic" lock, stock, and barrel. They staged rallies and seminars at inner-city churches and high schools, lobbied state legislatures, held briefings for congressional aides, and published the monthly War on Drugs. The apparent sincerity with which they approached this crusade won them the respect of some law enforcement experts. An alliance was forged with Dr. Gabriel Nahas, the anti-pot expert who later became prominent in Nancy Reagan's crusade against drugs. Dope, Inc., a 500-page book written by three LaRouche aides, became a kind of underground bestseller.

The anti-drug rhetoric continued into the 1980s, with LaRouche hurling the epithet "drug lobbyist" at any reporter who criticized him. This was his most audacious deception. For while conducting his so-called war on drugs, he and his followers sought alliances with individuals allegedly close to the heroin and cocaine traffic, including Midwest racketeers and Panama's General Manuel Noriega. To facilitate such ties, the LaRouchians surrounded themselves with consultants, attorneys, business partners, and political allies from the underworld's fringes. For instance, when the Illinois attorney general began a probe of the National Anti-Drug Coalition's fundraising in the early 1980s, the LaRouchians hired Chicago attorney Victor Ciardelli, reportedly at the recommendation of the late Roy Cohn. Ciardelli was later indicted along with over forty co-conspirators for his involvement in a vast cocaine- and pot-smuggling operation in the South and Southwest, He was accused of being in charge of laundering the profits, but received only a year in jail after turning state's witness.

To develop their own financial operations, the LaRouchians needed detailed background knowledge. In 1978 over a dozen NCLC members did library research for the authors of Dope, Inc., studying the activities of criminal innovators such as Meyer Lansky and Robert Vesco, whose expertise included money laundering. But some things can't be learned from books and congressional reports. One of LaRouche's earliest gurus with direct knowledge of the drug underworld was WerBell. Although he was touted to the NCLC rank and file as a veteran government anti-drug fighter, this was a half-truth at best. His career as CIA contract employee, private spook, mercenary soldier, and arms dealer had brought him into tempting contact with criminal elements in the Caribbean and Southeast Asia's Golden Triangle. In the early 1970s he achieved notoriety as the manufacturer of the Ingram MAC-10, which became the preferred weapon of cocaine traffickers throughout the Western Hemisphere. In 1975 a federal grand jury in Miami indicted him as the kingpin of a conspiracy to smuggle 50,000 pounds of Colombian marijuana a month into Florida--to be distributed in Detroit, Cleveland, and Chicago. His co-defendants were John Nardi, a Cleveland Teamster official and crime boss; Morton Franklin, a Cleveland insurance man with close ties to organized crime; Gerald Cunningham, a Florida arms dealer; and William Bell, a former arms salesman.

The investigation began when Kenneth Burnstine, a major Florida cocaine smuggler facing a seven-year prison sentence, agreed to become a government informant and impresario of "sting" operations. Burnstine had formerly been an arms salesman for WerBell He offered to sell WerBell his smuggling business in return for a $100,000 commission on each 5,000 pounds of pot. WerBell expressed interest, and Burnstine introduced him to DEA agents posing as smugglers with Colombian connections. Thus began a seven-month operation involving twenty-seven federal agents with planes and yachts.

Although the DEA collected fifty-five hours of audiotapes and videotapes linking WerBell and his cronies to the smuggling plot, the government case was undermined by the mysterious death of its chief witness. Only weeks before the 1976 trial, Burnstine was killed when his private plane crashed during a Mojave Desert air show. The FBI suspected Nardi, but couldn't prove it. Without Burnstine's sworn direct testimony, federal and state prosecutors had to drop over sixty marijuana- and cocaine-smuggling cases. The result in the WerBell trial was a ruling that most of the DEA's tapes of conversations in which Burnstine was a participant could not be played for the jury.

The defense conceded that WerBell had recruited Bell, who in turn recruited Cunningham, who brought in Franklin and Nardi. However, the defense argued, the purpose hadn't been a smuggling conspiracy at all, but an anti-drug operation. The five defendants had played along with Burnstine in their capacity as drug busters for a government agency so secret that it had no name. (The LaRouchians used a variation of this defense in their 1988 Boston trial for credit-card fraud, claiming their activities had been directed by government agents so secret they were known only by code names.)

The brunt of the defense was borne by WerBell, whose connections with government agencies provided the hook on which to hang the drug-fighter argument. (His chief attorney was Edwin Marger of Atlanta, who would later represent LaRouche in a libel suit against Jack Anderson.) Franklin and Nardi offered no defense, preferring to rise or fall with WerBell. Former Nixon aide Egil Krogh was called as a defense witness, but testified that he'd never heard of the supersecret drug busters. Former CIA contract agent Gerald Patrick Hemming, called to attest to WerBell's commitment to the war on drugs, was himself arrested during the trial for allegedly smuggling cocaine and marijuana.

Still, the government fought a losing battle without Burnstine and the tapes. After ten hours of deliberation, the jury found the defendants not guilty. The drug-fighter defense was not the chief factor in this decision. As prosecutor Karen Atkinson told the jury: "There's not one scintilla of evidence that...any of these men were working for the U.S. government."

WerBell's attorneys said their client had been unacquainted with the Cleveland men prior to the indictment, but this argument was rendered dubious by a separate indictment of Franklin and Cunningham on gunrunning charges. The guns were Ingrams purchased from WerBell and were to be smuggled out of the country via a private Florida airstrip. Also indicted in the arms case were Cleveland mobsters Dominick Bartone and Henry ("Boom-Boom") Grecco. Bartone later became a suspect with Morton Franklin in an Ohio bank fraud case. Grecco, described in FBI documents as a "cold-blooded killer," was a close associate of Nardi.

In addition to Burnstine's death, an extraordinary amount of violence surrounded these two cases. One midnight in July 1975, while the sting operation was in progress, WerBell's partner in the arms business, retired Army Colonel Robert Bayard, was found dead in an Atlanta shopping center. He had been executed with a single shot to the head. The murder was never solved. In May 1977, Nardi was killed by a dynamite blast in the parking lot of the Cleveland Teamsters' joint council. Local media attributed the slaying to mob infighting. That same month Boom-Boom Grecco was gunned down in his car after visiting the Italian-American Citizens Club in Cleveland. (Convicted of the crime was Joseph Bonarrigo, who had killed Grecco after the latter declined to help him make a bomb to blow up a local businessman who had ordered a mob vending machine taken off his premises.) In 1984, Morton Franklin was arrested in Cleveland after paying $28,000 to an FBI undercover agent for a kilo of cocaine. Before pleading guilty to the narcotics charge, he forfeited bail because he allegedly attempted to hire a hit man to kill the FBI agent, offering to supply plastic explosives and a silencer as well as to pay $10,000. If LaRouche planned to associate with such circles, it was no wonder he felt he needed round-the-clock bodyguards!

A window on WerBell's Southeast Asian and Caribbean connections was opened in the early 1980s after the collapse of Australia's Nugan Hand Bank, the suspicious death of one of its two founders, and the disappearance of the other. Australian authorities launched several probes uncovering links between Nugan Hand and the CIA, organized crime and heroin traffickers. The March 1983 report of the Commonwealth-New South Wales Joint Task Force on Drug Trafficking listed twenty-six alleged traffickers, several of them former U.S. military officers and intelligence agents. Like WerBell, they had been active in the Golden Triangle during the Vietnam War,

When task-force investigators traveled to Washington they interviewed WerBell about a consulting fee he had received from Nugan Hand in 1979. WerBell told them he had met with Earl Yates, a retired admiral and president of Nugan Hand International. They had discussed a plan to resettle Meo tribesmen from Laos on a small island off Haiti. The Meo, famed as poppy growers and anti-Communist fighters, were to become peaceful fishermen. (Tom Naylor in Hot Money suggests they really would have become the equivalent of Gurkhas for the cocaine traffic.) WerBell said he refused to get involved because the scheme was "unrealistic."

The LaRouchian inner circle was well aware of WerBell's checkered past. A 1977 Security staff dossier outlined his involvement with fugitive financier/cocaine trafficker Robert Vesco and speculated about his possible ties to Florida drug kingpin Santos Trafficante, Jr. The dossier described his smuggling trial and speculated that one of the attorneys had CIA ties. The Security staffers were doubtless well aware of the boast made by WerBell (after the government dropped an earlier case against him for violation of neutrality laws) that the Company looks after its own.

For the LaRouchians WerBell became a fount of tall tales as well as tips about the drug traffic. He also opened doors. On visits to his Georgia estate, they could meet key personalities of the violent, semi-psychotic world of gunrunners, drug smugglers, and CIA rogues--men like Gerald Hemming, who summed up the WerBell milieu to author A.J. Weberman as "nigger killers in bed with the Mafia and the Mafia in bed with the FBI and the goddamn CIA in bed with all of them."

In 1978 LaRouche commissioned the writing of Dope, Inc., which purported to be a study of how the drug traffic worked. Over a dozen NCLC Security and intelligence staffers were assigned to the project, which furnished a rationale for gathering as much technical information as possible about smuggling and money laundering, WerBell personally provided much of the background on Southeast Asia. The LaRouchians also drew on the knowledge of Walt Mackem, a WerBell crony and former CIA narcotics expert. Mackem regarded the LaRouchians as crazy but was willing to take their money.

Another tutor in the late 1970s was Mafia drug banker Michele Sindona. After the collapse of his Franklin National Bank, he talked to many reporters about his woes. Members of the Security staff would stroll down the street from NCLC headquarters to chat with him at the Pierre Hotel, where he lived while awaiting trial. Vivian Syvriotis, LaRouche's former mistress, was the NCLC member delegated to meet most often with Sindona. "To the [NCLC] leadership," writes Kevin Coogan, a former member of the intelligence staff, "Sindona was the very model of a 'pro-development banker.' They continued to tell us he was a good guy even when it became obvious he was involved in the heroin trade." (In 1980, Sindona was found guilty of fraud and embezzlement and was sentenced to twenty-five years in prison. Extradited to Italy on a murder charge, he died in his cell of cyanide poisoning. The Sicilian Mafia is widely believed to have ordered his death.)

The research for Dope, Inc. also enabled the LaRouchians to gather insights from law enforcement experts and to profile them in the process. One such source was Jack Cusack, former head of international operations for the Drug Enforcement Administration. Cusack had numerous meetings and phone conversations with the LaRouchians, especially with Marilyn James of the Dope, Inc. project, between 1978 and 1981. He recalled them as being "well informed" about the narcotics traffic, with excellent law enforcement contacts. "Sometimes they told me things I didn't know, but it turned out it was true," he said.

As a result of their research, the Dope, Inc. authors zeroed in on Resorts International, the leisure conglomerate best known for its casino in Atlantic City, New Jersey, and its Paradise Island resort in the Bahamas. "Resorts International equals big-time drug trafficking," alleged the 1979 first edition of Dope, Inc., which also attacked Intertel, a Resorts-linked private spook outfit headed at the time by rivals of WerBell. Some of the research was turned over to New Jersey state investigators. Willis Carlo's Spotlight, which carried the NCLC findings in a 1978 series, boasted that the material had helped to persuade the state attorney's office to issue findings sharply critical of Resorts (although the LaRouchian allegation of links to the drug traffic were never substantiated).

When New Jersey authorities were considering a permanent license for the Resorts casino in 1979, the NCLC staged a protest rally in Trenton and vowed a statewide campaign. This effort petered out after the NCLC-controlled Computron Technologies Corporation landed a contract with Resorts to design software for its development division. A Resorts spokesman, contacted in 1980, said Resorts had been unaware of Computron's connection to LaRouche and that the contract was in no sense a payoff. Yet a number of individuals involved in the Computron contract (or their spouses) had previously been involved in the anti-Resorts publicity campaign and intelligence gathering. Gus Kalimtgis, founder and chief stockholder of Computron, was the senior author of Dope, Inc. and had been the keynote speaker at the Trenton rally. Yoram Gelman, the Computron systems analyst who wrote the programs for Resorts' Wang VS-2200 computer, was the husband of LaRouche campaign treasurer Felice Merritt Gelman, who co-authored a purported expose of Resorts ("Organized Crime Goes Legit") in the December 12, 1978, Executive Intelligence Review. The article attempted to prove that Resorts controlled many top politicians in New Jersey. Mark Stahlman, a Computron vice president and its registered agent in New Jersey, was formerly the NCLC Security staff's electronics specialist. He was thanked in the acknowledgment section of Dope, Inc. for unspecified "contributions" to the book. Fletcher James, Computron vice president in charge of systems, was the husband of Marilyn James, Jack Cusack's contact. Dope, Inc.'s authors listed her as one of three key researchers who "supplied the core" of the book.

But the main benefit of the Dope, Inc. research perhaps lay not in finding out juicy facts about this or that corporation but in learning the methods of organized criminal activity--methods that could be useful in building a white-collar empire. For instance, the year after Dope, Inc.'s publication, one of its authors, NCLC staff economist David Goldman, published a New Solidarity article based on information not included in the book. It was a technical discussion of how drug money is supposedly passed "directly through the commercial banking system," and how the intelligence community allegedly participates in covering up such practices. "The international narcotics bosses' agents-in-place in the wire transfer and computer rooms of major banks 'switch' the funds into special 'dummy accounts' at these banks," wrote Goldman. He added that "we know the names of these agents at several large banks, but choose not to name them at this time."

Goldman described the techniques of wire transfer fraud as being "simple-mindedly easy." Curiously, the LaRouche organization had previously been sued by the Bank of Nova Scotia and Chase Manhattan Bank because of mysterious errors in wire transfers between various LaRouchian accounts. In each case the decimal points had been shifted to the right, transforming hundreds of dollars into tens of thousands of dollars. The error happened twice with Chase in a four-day period. The litigation involved instances in which the LaRouchians withdrew the money from the receiving account before the bank discovered the error, and then refused to return it. An affidavit by LaRouche aide Warren Hamerman indicated that many such wire transfer glitches had occurred to LaRouchian accounts across the country, Hamerman said the NCLC should not be required to repay the money, because the errors were really donations by individuals who did not wish their identities known. He also charged that the lawsuits were political warfare against his organization instigated by powerful persons. The political wrapping to LaRouche's financial manipulations was already coming in handy.