NEW YORK (Jul. 30)
Four Israeli arms merchants charged here with conspiracy to sell U.S. weapons in Israeli stockpiles to Iran without U.S. government approval face substantially reduced penalties after a U.S. District judge here ordered the dismissal of 46 of the 50 counts of the indictment Thursday.
The Israeli defendants, Guri and Israel Eisenberg, Gen. Avraham Bar-Am and William Northrop who is a temporary resident of Israel, are all in Israel awaiting their trial scheduled to begin here Oct. 19. Thirteen other people or companies are named in the indictment including alleged middleman, Samuel Evans, the British attorney for Adnan Khashoggi who the U.S. government relied on in conducting its own covert sales of arms to Iran.
The decision by U.S. District Judge Leonard Sand came only a day after Attorney General Edwin Meese testifying on Capitol Hill in the Iran/Contra hearing was specifically questioned by Sen. Warren Rudman (R. N.H.) about his knowledge of this case. But the reasons for the dismissal given had no connection to recent revelations about the case by investigators or the press.
Instead, a Supreme Court decision last month on an insurance scheme in Kentucky set a precedent which proved decisive in this case. The 46 counts which Sand dismissed charged the defendants with using the United States government or the U.S. mail to defraud the U.S. government. The 46 counts charged specifically wire and mail fraud in attempts to deceive the United States Munitions Department into approving the resale of American weapons which had been transferred to Israel.
America sells weapons to Israel on condition that any resale of the weapons be subject to U.S. approval. The indictment charges that the defendants attempted to misrepresent the country to which they wanted to resell the weapons in order to obtain U.S. approval for the sales.
ANALOGY WITH ARMS CASE
In the Kentucky case, McNally vs. State of Kentucky, the Supreme Court ruled that wire and mail fraud charges are predicated on depriving the government of money and/or property and not of some “intangible” property right such as the right to information.
The analogy in the arms case is that the property under question in the wire and mail fraud counts is the right of the Munitions Control office to approve the resale of weapons. But the 46 counts do not charge that the defendants defrauded or conspired to defraud the U.S. government out of money and/or property.
The defense counsel for Evans, Paul Grand and Lawrence Bader, filed the motion to dismiss the 46 counts on the grounds that no money or property was at stake in the fraud charges. Sand agreed with the argument in his ruling to grant the motion. “The issue presented is a close and novel one,” Sand said.
Although Sand granted the motion to dismiss on the basis of the McNally case, a good deal of compelling evidence has been presented during past months to support the main defense theory put forth by the defendants and their attorneys — that the U.S. government knew of and approved the arms deals in question in the indictment.
Thursday, Evans’ attorney Bader presented a declassified government document to the court which supported the defense’s theory. The document — written by the late C.I.A. director William Casey to former National Security Advisor to President Reagan Adm. John Poindexter — discussed a meeting between Casey and his close friend Roy Furmark. Furmark has emerged as one of a group of Canadian financiers of the early shipments of American-made weapons in Israeli stockpiles to Iran.
“The only doubtful answer he gave was in reply to a question as to whether some of the principals were involved in the sting operation,” Casey wrote to Poindexter.
“Principals” referred to the principal actors in the U.S. approved arms sales under scrutiny by the Congressional committee and the independent counsel currently. The “sting operation” referred to the case in New York which was developed with the help of Iranian-arms-merchant-turned-government-informant Cyrus Hashemi, who worked for the U.S. Customs Office posing as an Iranian arms dealer to “sting” the defendants.
“Roy (Furmark) said that none of the principals were involved, however one of the players, lawyer Samuel Evans, was the major indictee and is free on $4.5 million bond. Roy claims that Evans owes him $200,000,” Casey wrote.
The Justice Department has denied any connection between the New York case and the officially sanctioned arms sales to Iran. Wednesday, Rudman asked Meese testifying under oath if the Justice Department had misrepresented the facts to the U.S. District Attorney’s office in Manhattan. Meese said he only had a general knowledge of the case, although defense attorneys were led to believe Meese conducted the inquiry into whether the deals detailed in the indictment had received Administration approval.