$Unique_ID{bob01022} $Pretitle{} $Title{Iran-Contra Affair: The Report Chapter 4C Channell-Miller Network - The Operation} $Subtitle{} $Author{Various} $Affiliation{} $Subject{north channell nepl miller fischer contras president o'boyle artiano money} $Date{1987} $Log{} Title: Iran-Contra Affair: The Report Author: Various Date: 1987 Chapter 4C Channell-Miller Network - The Operation White House Briefings and Hay-Adams Gatherings The North briefing in June 1985 served as the blueprint for other similar briefings during the next year for NEPL contributors or potential contributors. These group briefings occurred on October 17, 1985, November 21, 1985, January 30, 1986, and March 27, 1986. The White House briefings were meticulously planned by NEPL, IBC, North, and White House personnel. Internal White House memorandums obtained by the Committees show that North was the switching point for arranging and coordinating the briefings with White House liaison, White House Counsel, and White House security. NEPL prepared and sent invitations to persons selected by Channell and his associates. A typical invitation to a briefing stated in pertinent part: You are one of a small group of dedicated Americans who has stood by President Reagan . . . in support of his agenda . . . . It will be a pleasure to meet you in Washington on [date] when you attend our special security briefing followed by a working dinner . . . . Please be reminded that your accommodations at the Hay-Adams Hotel are taken care of and there is no expense to you. For those who attended, NEPL met them at the airport with a limousine and escorted them to the Hay-Adams Hotel, where all expenses were paid by NEPL. The group typically was taken from the Hay-Adams to a reception room in the Old Executive Office Building, where they were introduced to North and other White House personnel. Other than North, among those who participated in these briefings were Patrick Buchanan, White House Communications Director; Mitch Daniels, Political Assistant to the President; Linas Kojelis, Special Assistant to the President for Public Liaison; Linda Chavez, Deputy Assistant to the President and Director of the Office of Public Liaison; and Elliott Abrams, Assistant Secretary of State for Inter-American Affairs. For the January 30 briefing, David Fischer - a former Special Assistant to the President who became a highly paid consultant to NEPL and IBC - even arranged for a Presidential "drop-by." North always delivered the principal speech and slide presentation along the lines of the June 1985 briefing. While he was an effective speaker, North generally was careful not to ask for money, often telling the audience that he could not solicit funds because he was a Federal employee. He did, however, suggest that persons interested in contributing funds for the Contras should speak with Channell. At least one attendee at these briefings recalled North's stating that there were certain matters he could not discuss with them "on this side of Pennsylvania Avenue" but that Channell would raise later "on the other side of the street," a reference to the Hay-Adams Hotel. An account of North's presentation was provided at the public hearings by an eventual contributor in attendance at the March 1986 briefing, William O'Boyle: [North] described the military and political situation in Nicaragua. He had photographs of an airport in Nicaragua that had been recently built; the purpose of the airport was ostensibly commercial, but it was in fact a disguised military airport. One of the uses for which the airport was intended was to recover the Russian Backfire bombers after they made a nuclear attack on the United States. Another possible use of this airport was to fly a certain kind of mission that was currently being flown out of Cuba, up and down the east coast of the United States. Apparently every day a Russian plane leaves Cuba, as I recall, and goes right up the 12-mile limit, has some kind of large device on the outside of the plane . . . . This Nicaraguan air base would allow the Russians to fly the same kind of mission up the west coast to the United States . . . . He described the refugee problem . . . and we could look forward in the next few years to millions of refugees flooding across our borders as this happened . . . . He showed photographs which indicated that the Nicaraguan government officials were indicated in smuggling dope . . . . He also told an anecdote about some Nicaraguan agents that were recently caught with dope and money and so forth and disguised as American agents. O'Boyle indicated also that North furnished him with classified information designed to show that the Soviets were managing the diplomacy of the Nicaraguans before the United Nations. After the briefings, Channell, Miller, and their associates hosted a cocktail party and dinner at the Hay-Adams, often attended by Contra leaders and some U.S. Government officials. During the reception and dinner, NEPL and IBC employees attempted to determine which attendees were the most likely contributors. The enticement of purchasing lethal supplies for the Contras was often used with potential contributors. Those persons who expressed a serious interest in contributing money for the Contras were offered the opportunity to meet one-on-one with North, and, if they gave enough, a meeting with the President. Large contributors to NEPL uniformly received thank you letters from North (and often from the President) for their support of the President's policies in Central America, although without specific reference to any contribution. North's Involvement in Solicitations Intended for the Purchase of Lethal Supplies In his public testimony, North testified that "I do not recall ever asking a single, solitary American citizen for money." He readily admitted, however, that "I showed a lot of munitions lists" to Contra contributors or potential contributors "in response to questions about the cost of lethal items." The Committees received evidence on North's activities that shed light on these statements. 1. "Big Ticket Items" and "Ollie's New Purchase" Lists. In the late fall or early winter of 1985, Channell asked Miller to have North prepare and provide a list of "big ticket items" to be used in soliciting contributions for the Contras. At Miller's request, North recited a list that included heavy lifting of cargo by aircraft (approximately $675,000 worth); training and outfitting of an "urban tactics unit"; the resupply of a Contra fighting unit known as the "Larry McDonald Brigade" (a Contra unit); and probably missiles of some kind. Miller typed the list onto his computer, printed a single copy, gave that copy to Channell, and deleted the computer entry. Channell used this list, which totalled approximately $1.2 million, to solicit contributions. An apparently different "big ticket items" list was prepared by North and used by him and Channell in a solicitation of Nelson Bunker Hunt. Handwritten notes produced by Miller indicate other conversations with North about fundraising for lethal supplies. A note dated September 18, 1985, contains entries reading "$415,000 - Weapons, C4, M79" and "520,000 MAUL." "C4" refers to an explosive, "M79" likely refers to a grenade launcher, and "$520,000 MAUL" refers to the cost of eight Maule airplanes. Miller testified that North provided this information to him with the understanding that it would be used for fundraising. Another handwritten note of Miller's contains the entry "Ollie's new purchase list." The note is dated February 5, 1986. Miller does not recall the derivation of this entry. 2. North's Special Appeals. As North testified publicly, he met with scores of potential contributors to convey the plight and needs of the Contras. Insofar as North's actual role, the more revealing of these meetings are those that were conducted in private. As the descriptions below indicate, North prepared potential large contributors for what Conrad termed "the call to the altar." a. Nelson Bunker Hunt In September 1985, Channell arranged a meeting in Dallas between North and Nelson Bunker Hunt, a wealthy Texas businessman who had contributed $10,000 to NEPL the previous July. Channell rented a private airplane for $8,000 to $9,000 to transport North to and from Dallas. [This was the first time North used an airplane supplied by NEPL; on one other occasion, NEPL chartered a plane to fly North and his family for a weekend visit to Barbara Newington's house in Connecticut. Channell Dep., 9/1/87, at 148.] The trip was worth the cost. In Dallas, there was a private dinner at the Petroleum Club attended by Hunt, Conrad, Channell, and North. North gave his standard briefing, without slides, and showed Hunt a list of various Contra needs. The list was divided about evenly between lethal and non-lethal items, and included Maule aircraft and a grenade launcher possibly described as an "M-79." The total price was about $5 million. According to Channell, after discussing the items on the list and their prices, North "made the statement that he could not ask for funds himself but contributions could be made to NEPL, or words . . . to that effect." North then left the room, a maneuver that had been "pre-arranged." Channell explained that the list was his idea because he wanted a "fundraising objective" to take to Hunt. He therefore had asked North to prepare a list totalling about $5 million for use in the solicitation of Hunt. Despite this evidence, Hunt has told the Committees that Channell never spoke to him about the Contras' need for weapons. According to Hunt, Channell told him that the Contras had "unpaid bills" for "[f]ood and shelter, medicine, [and] general expenses . . . ." Hunt testified that he does not recall any conversation he had with North at the dinner. Nonetheless, as a result of this dinner, Hunt made two payments to NEPL of $237,500 each. One of them was a contribution and one was a loan. The loan was evidenced by an unsigned promissory note because Channell would not agree to the loan (especially after he was unable to find a contributor to guarantee the loan on NEPL's behalf). Nevertheless, he held the $237,500 principal for 4 months, repaying it to Hunt in January 1986 without interest. Hunt subsequently paid $237,000 to NEPL in March 1986 as a contribution, making his total contributions to NEPL $484,500. In the case of Hunt's initial $10,000 contribution in 1985, he sent NEPL a personal check drawn pursuant to a "check request" and marked "contribution." He also itemized the $10,000 contribution as a charitable deduction on his 1985 tax returns. By contrast, each step in the later transactions was conducted with Hunt's law firm - Shank, Irwin & Conant (SI&C) of Dallas, Texas - acting as an intermediary, and issuing its own checks, backed by Hunt's funds. Hunt testified that he handled these transactions in this manner in an effort to avoid publicity in the "liberal media" over the contributions. He acknowledged that the NEPL gifts were the only ones he had ever made indirectly. Moreover, none of the check requests or check stubs for the three large checks has any entry in the section designated for "purpose." Documentation for other checks produced by Hunt consistently included this entry. Hunt indicated that he must have overlooked this omission on the three checks in question. Finally, Hunt did not itemize the $237,500 contribution on his 1985 tax return or the $237,000 contribution on his 1986 return. He explained that, because of large losses each year, he did not need the deductions. Nonetheless, numerous other contributions apparently were itemized by Hunt on those tax returns. In short, it seems that Hunt took great pains to keep his large contributions to NEPL "off the books." As indicated above, a note made by Miller 1 day after Hunt issued the checks for the contribution and loan to NEPL contains the entries "$415,000 - Weapons C4, M79" and "$520,000 MAUL," referring to munitions and airplanes. This same note refers expressly to Hunt in a different context. b. Barbara Newington Barbara Newington, a wealthy widow from Greenwich, Connecticut, had been a large contributor to Channell organizations (and at least one predecessor organization) for a few years. In 1985 and 1986, Newington contributed a total of $2,866,025 to NEPL. On June 25 or 26, 1985, she met privately with North because she was unable to attend the Channell group meeting arranged for the next day. She also met privately with President Reagan on two occasions. In early November 1985, North, Miller, and Channell participated in a solicitation of significant contributions from Newington. Miller's handwritten notes leading up to the meeting indicate that Channell prepared a proposed "pitch" for "Green" - the code name for North used by NEPL and IBC - to use with Newington. This "pitch" included statements such as "[you are] the most secure person we know in the U.S." and "[w]e are asking you to take on a project that requires your kind of person." Although Miller does not specifically recall, he might have relayed a somewhat softened version of this solicitation to North. In further preparation for the solicitation, Miller created a file folder that contained an unclassified photograph of a Soviet HIND helicopter on one side of the folder and a picture of a shoulder-held surface-to-air missile on the other side. He also included an article from The New York Times on the capabilities of the HIND helicopter. The critical meeting took place in Newington's suite at the Hay-Adams Hotel where Channell, Miller, and Newington were joined by North. At the meeting, North referred to the file folder prepared by Miller, placed The New York Times article in front of Newington, and described the capability of the pictured surface-to-air missile to counteract HIND helicopters. In response to a question from Newington, North indicated that he knew where to obtain such missiles, although Miller cannot recall whether North quoted any prices. North left the room shortly thereafter. According to Miller, North's absence was not specifically prearranged, "but it was his practice not to be in the presence of the donor when they were asked for money." Channell then solicited Newington for a substantial amount of money. Over the course of the next 4 to 6 weeks, Newington made stock contributions to NEPL worth approximately $1.1 million. Like Hunt, Newington has denied that she ever made a contribution intended for the purchase of lethal supplies. [Miller later heard from Calero that no missiles had been received by the Contras. North told Miller that the Newington money had been used to purchase "secure radios." R. Miller Dep., 8/20/87, at 237.] At some point in the spring of 1986, Channell and Newington decided to invite North and his family to Newington's house for a weekend of recreation and relaxation. Miller, North, and North's family travelled to Connecticut in a private plane chartered by Channell. It is unclear whether there was any discussion of Contra assistance that weekend. c. William O'Boyle William O'Boyle testified that he received several fundraising calls from NEPL in early 1986. O'Boyle, an independently wealthy businessman from New York City, had been referred to NEPL by a friend from Texas. In late March, he was invited by mailgram to a private White House briefing on Nicaragua. He flew to Washington on March 27, was met at the airport by a limousine arranged by NEPL, and was delivered to the Hay-Adams Hotel, where he met Channell, Miller, and others. Channell escorted the group to a meeting room in the Old Executive Office Building, where North presented the briefing described above. After the briefing, the participants returned to the Hay-Adams for a cocktail reception and dinner attended by Channell, Miller, and other NEPL and IBC personnel. During the reception, O'Boyle indicated to a NEPL employee, either Cliff Smith or Krishna Littledale, that he was interested in making a contribution to purchase weapons for the Contras. He wanted to know what weapons were needed and how much they cost. The NEPL employee with whom O'Boyle spoke told him later that a Blowpipe antiaircraft missile could be purchased for $20,000. After dinner, Channell told O'Boyle that there was a small, select group of persons in the United States who contributed money for lethal supplies to carry out the President's policy in support of the Contras. Channell asked O'Boyle if he would meet with North at breakfast the next morning. O'Boyle agreed. Breakfast took place in the main dining room of the hotel. Before North arrived, the conversation between O'Boyle and Channell continued in the same vein as the evening before. Channell told O'Boyle that they had him "checked out" overnight to ensure that he (O'Boyle) was reputable enough to join the select group of Americans Channell had mentioned. When North arrived, Channell told him that O'Boyle was willing to contribute funds for the purchase of weapons. North immediately began to describe from a notebook the Contras' needs, including several million rounds of "NATO" ammunition, Eastern bloc ammunition, Blowpipe and Stinger anti-aircraft missiles, and Maule aircraft. North explained that Blowpipe missiles cost $20,000 each, but that they had to be purchased in packs of 10. He also mentioned that the cost of Maule airplanes was $65,000 each. According to O'Boyle, North stated that "he could not ask for money himself as a government employee." Either at this breakfast or the evening before, Channell informed O'Boyle that if he contributed $300,000 or more, a 15-minute "off-the-record" meeting would be arranged between O'Boyle and President Reagan. Channell indicated that other people who had contributed that amount of money had met with the President. O'Boyle understood that these meetings with the President were "off-the-record" because the subject matter was so secret and sensitive. O'Boyle told Channell that he wanted time to consider whether to make a contribution. After returning to his home in New York for a few days, O'Boyle decided to contribute $130,000 to NEPL for the purchase of two Maule airplanes. [The Committees have concluded from Enterprise records that O'Boyle's contribution was used for general Contra support, not for the purchase of two Maule aircraft.] He flew to Washington to deliver his check to NEPL headquarters and was taken to the Hay-Adams Hotel by a NEPL employee. Channell met O'Boyle at the hotel. O'Boyle then gave his check to Channell, who telephoned North to join them at the hotel. When North arrived, Channell showed him O'Boyle's check, which North acknowledged. North spoke to O'Boyle again of the Contras' military needs and corresponding costs, but indicated that Blowpipe missiles no longer were available. In North's presence, Channell again told O'Boyle that a larger contribution would warrant a meeting with the President and asked for more money. Despite a visit in New York from Channell and Conrad and another meeting with North in Washington in which North disclosed a purported "secret" plan as to how the Contras would prevail in Nicaragua, O'Boyle informed Channell that he did not wish to make further contributions to NEPL. [At the meeting in New York, O'Boyle expressed to Channell some concerns about the legality of using tax deductible contributions for weapons. According to O'Boyle, Channell told him that a lawyer had advised favorably on the question of legality, but that in any event the money could not be traced because contributions were being passed through a for-profit corporation and overseas. O'Boyle Dep. at 91.] In any event, in response to a subsequent mailing from NEPL, O'Boyle made one more contribution for $30,000. d. Ellen Clayton Garwood Ellen Garwood also testified at the Committees' public hearings. She had been a NEPL contributor on several occasions. She is a wealthy octogenarian widow from a well-known family in Austin, Texas. Garwood first met North in 1984 at a Council for National Policy meeting. She had been briefed privately by him on the Contras' needs at least a handful of times, including once at a small airport in Dallas when North flew there to solicit Hunt in September 1985. Garwood travelled to Washington in April 1986 to attend meetings of NEPL contributors. Prior to the trip, Channell told Garwood that she would be presented with an appeal for much more money than had been requested of her before. During the last day of the NEPL meetings, Channell asked Garwood to meet with him and North that evening in the hotel lounge. At the evening meeting, North told Garwood that the situation of the Contras was desperate. With tears in his eyes, North explained to her that the Contras were hungry, poorly clothed, and in need of lethal supplies. He emphasized that the Contra forces might not exist by the time the Congress renewed Contra aid. Either North or Channell then produced a small piece of paper with a handwritten list on it. They discussed the list in hushed tones outside of Garwood's hearing. After North left the lounge, Channell showed the paper to Garwood. The paper contained a list of weapons and ammunition, with a price opposite each category of items. She recalls that the list included hand grenades, antiaircraft missiles, bullets, cartridge belts, and other items. Channell told Garwood that the items were what the Contras needed to sustain their efforts and requested her to provide the amount necessary to purchase the listed lethal supplies. Channell transcribed a copy of the list for Garwood to take with her. To supply the items on the list, Garwood immediately contributed more than $1.6 million to NEPL; she wired $470,000 in cash and transferred stock valued at $1,163,506. For this same purpose, she contributed an additional $350,000 the next month. All told, she contributed $2,518,135 in 1986. Garwood stated unequivocally that the principal purpose of these April and May 1986 contributions was to purchase for the Contras the weapons and ammunition on the list provided by North and Channell. * * * * * These descriptions of the Hunt, Newington, O'Boyle, and Garwood solicitations are not exhaustive. The Committees interviewed or deposed 13 of NEPL's significant contributors during the relevant time period, nearly all of whom reported personal contact with North. The Committees have received evidence that several of these contributors - including John Ramsey of Wichita Falls, Texas, and C. Thomas Claggett, Jr., of Washington, D.C. - made donations intended for the purchase of lethal supplies. Channell's records reveal that 12 contributors, including Newington and Garwood, accounted for slightly more than 90 percent of NEPL's contributions in 1985 and 1986. By giving to the tax-exempt NEPL, the contributors were able to claim tax deductions even though their contributions were intended for the purchase of lethal supplies. The Committees have received evidence that several of these contributors claimed tax deductions for their NEPL contributions. For taxpayers in the 50 percent tax bracket, this meant that the public in effect paid for half their gifts. The Role of the President In a May 19, 1986, PROF note to Poindexter, North wrote "the President obviously knows why he has been meeting with several select people to thank them for their 'support for Democracy' in Cent[ral] Am[erica]." In fact, what the President knew is a matter of some doubt. The President, in his March 19, 1987, press conference said that he believed that contributors he met had donated money for political advertising for the Contras. The minutes of the May 16, 1986, National Security Planning Group (NSPG) meeting reveal the same understanding on the part of the President. He stated, "What about the private groups who pay for ads for the Contras? Have they been contacted? Could they do more than ads?" Similarly, in preparation for the January 30 briefing, Linda Chavez wrote a memorandum to the President, stating that "ACT and NEPL spent in excess of $3 million supporting the President's programs through public awareness using television and newspaper messages." In fact, much of the $3 million was directed toward Contra support activities, including arms. Poindexter, however, testified at his deposition that "[t]here wasn't any question in my mind" that the President was aware that the contributors he was thanking were giving to the Contras. He added that "in the White House during this period of time that we were encouraging private support, we really didn't distinguish between how the money was going to be spent." North testified that in writing his May 19 PROF note, he assumed that the President was aware that the contributions were for munitions, as well as other things, although he denied ever discussing this with the President. The President met with and thanked several large contributors for their support of his policies. David Fischer, former Special Assistant to the President, arranged Presidential photo opportunities or meetings with at least seven major Channell-Miller contributors in 1986. Fischer and Martin Artiano, a Washington lawyer, were paid steep fees by IBC (which charged these fees to NEPL) for arranging these meetings (among other services). Channell's statement to O'Boyle that these meetings carried a $300,000 price tag is substantiated by Edie Fraser's cryptic note to North (mentioned above); at least five of the six contributors who donated more than $300,000 to NEPL were invited to meet with the President. The Role of David Fischer and Martin Artiano In late November or early December 1985, Miller asked Martin Artiano, an acquaintance from the 1980 Reagan Presidential campaign, to help him find someone "who had some Washington experience at a relatively senior level" to provide "consulting" assistance to IBC on behalf of NEPL. When Artiano learned of IBC's needs, he contacted David Fischer, who had been a friend since they worked together as advance men in the 1976 Reagan campaign. After the unsuccessful 1976 Reagan Presidential effort, Fischer worked as an employee of Deaver and Hannaford, a public relations firm that did extensive work for Mr. Reagan. Fischer was in charge of Mr. Reagan's advance operations and served on occasion as his personal aide during the years of preparation for another Presidential run in 1980. During the 1980 campaign, Fischer became the full-time personal aide to Mr. Reagan, travelling on the campaign plane with the candidate. After the inauguration in January 1981, Fischer was appointed Special Assistant to the President with an office adjacent to the Oval Office. For the next 4 years - until April 1985 - Fischer was in almost constant contact with the President. As President Reagan's second term began in early 1985, Fischer and his wife decided for personal reasons to move to Utah. By the fall of 1985, however, Fischer wanted to return to Washington and asked Artiano to let him know about employment or consulting opportunities. When contacted by Artiano about the IBC opportunity, Fischer authorized Artiano to pursue discussions with Miller on his behalf. When Miller decided to retain Fischer and Artiano, he sought Channell's concurrence because NEPL ultimately was to be the recipient of, and billed by IBC for, the "consulting" services performed by Fischer and Artiano. While all the participants recall that Fischer and Artiano agreed to act as subcontractors for IBC and provide services to Channell's organizations, there is sharp dispute over the terms of that agreement. This dispute is only sharpened by the absence of a written understanding. Channell and Conrad insist that they agreed to pay Fischer and Artiano $50,000 for each meeting Fischer scheduled with the President for a NEPL contributor. Conrad claims to recall a meeting in December 1985 in Miller's office attended by Miller, Artiano, Fischer, Channell, and himself at which Artiano broached, and Channell accepted, this proposal. Channell recalls Fischer and Artiano making this proposal but claims that he rejected it as too expensive. Instead, according to Channell, he opted for a straight retainer of $20,000 per month. Gomez recalls that Fischer and Artiano were to be compensated at least in part based on the number of Presidential meetings they could arrange for NEPL contributors. Fischer and Artiano vehemently deny that any such proposal was made or accepted. Artiano, who negotiated with Miller on behalf of Fischer, testified that they initially agreed to a 2-year consulting contract for a monthly retainer of $20,000 a month. When he and Fischer realized the amount of work Channell demanded, however, Artiano testified that he requested a $50,000 "acceleration" of their retainer. This payment was made to them on January 31, 1986, and was split evenly by Artiano and Fischer. Later, Fischer demanded and received another $50,000 "acceleration," which he did not split with Artiano. In July 1986, Fischer and Artiano recast their arrangement with IBC entirely, replacing the 2-year consulting contract with a formal joint venture between "David C. Fischer & Associates" and IBC. According to both Fischer and Artiano, they learned in early 1986 that Channell and Conrad were operating under the assumption that there was a straight fee-for-Presidential meeting arrangement. Artiano thereupon convened a meeting of all the principals and disabused Channell and Conrad of that notion. Miller's recollection lends some credence to everyone's account. He testified that the initial agreement, struck in December 1985, was a $20,000-a-month consulting arrangement. He testified, however, that this initial agreement did not contemplate Fischer setting up meetings at the White House. Shortly after striking the original deal, according to Miller, Channell began to make increased demands upon Fischer, one aspect of which was setting up meetings between the President and major NEPL contributors. In exchange for servicing those increased demands, Fisclier and Artiano demanded, through Miller, an acceleration of their retainer to $70,000 per month (that is, $50,000 per month more than the monthly fee of the original arrangement). When Miller relayed this demand to Channell, Channell suggested that, for such a sum, NEPL should get at least one meeting with the President each month. According to Miller, Channell ultimately did agree to this acceleration. All told, between December 1985 and February 1987, IBC paid Fischer $397,400 and Artiano $265,000. Artiano transferred $60,000 of his payments to Fischer. All of the payments were reimbursed to IBC by NEPL. When asked about allegations that Fischer was paid $50,000 for each meeting arranged with the President, Donald Regan, the President's Chief of Staff, testified that he had no independent knowledge of such an arrangement, but, if true, the allegations would be a "real embarrassment." According to Regan, "we thought he was doing it out of his concerns for the contras and the goodness of his heart, a public pro bono type of thing." He continued: "To find out he was being paid for it was a real shock . . . . [A]nyone getting paid to get a group into the White House, we tried to block that." Fischer, however, contends that Regan knew by the first meeting between the President and Channell supporters - in January 1986 - that Fischer was acting as a paid consultant to the Channell organization. When he raised the subject with Regan, according to Fischer, Regan responded, "I hope you're being compensated for this." North's Other Fundraising Efforts Separate from his Channell-related efforts, in the fall of 1985, North enlisted Roy Godson - a consultant to the National Security Council - to assist in raising funds for a humanitarian organization involved with Nicaragua. Godson's efforts led to a deposit to the I.C., Inc. account through first the Heritage Foundation and then the Institute for North-South Issues (INSI), a non-profit organization controlled by Miller and Gomez. This deposit originally took the form of a $100,000 grant from the Heritage Foundation to INSI. The Heritage Foundation received the money for the "grant" from a private contributor arranged by Godson and Clyde Slease, a Pittsburgh attorney and friend of Godson's. Godson had arranged for Slease to meet privately with North and McFarlane on the need to raise funds for the humanitarian organization. The true objective of this "grant" was disguised in correspondence between Miller (as Treasurer of INSI) and Edwin J. Feulner (as President of the Heritage Foundation) with whom Godson had met previously. Miller sent an INSI "grant proposal" to the Heritage Foundation in September 1985 proposing the preparation and dissemination of public information materials in Central America. This proposal requested $100,000. On October 15, the Heritage Foundation sent INSI a check for $100,000, with Feulner stating by letter that "[m]y colleagues and I have discussed your proposal in some detail, and are pleased to respond in a positive way." INSI passed to I.C., Inc. only $80,000 of the $100,000 Heritage Foundation "grant," and retained the $20,000 balance as an administrative fee. The ultimate distribution of the $80,000 forwarded to I.C., Inc. was made to an entity which, according to Miller, North represented was an account controlled by the humanitarian organization. INSI misrepresented on its 1985 IRS Form 990 the nature of the activities supported by this money. Godson also arranged for John Hirtle, a stockbroker in Philadelphia, to meet with North in Washington. Following this meeting, Hirtle and North met again in Philadelphia with two prospective contributors. One subsequently donated $60,000 by check dated December 13, 1985, directly to INSI. Shortly thereafter, this amount was then transferred by INSI directly to a Lake Resources account in Switzerland. What Happened to the Money Just as only a small fraction of the Iranian arms profits was used for the Contras, so only a small part of the money Channell raised for the Contras reached them. Fischer and Artiano received more than $650,000 or more than five percent of the total money raised, and Miller, Gomez, and their companies retained a large percentage of the $5 million that IBC received from NEPL. A total of $2,740,000 was transferred by IBC to I.C., Inc., and $430,000 directly to Lake Resources. After deducting the payments to Fischer and Artiano - which eventually were reimbursed by NEPL - the balance, approximately $1.2 million, was retained by IBC for fees-for-services and expenses on NEPL's behalf. [During the relevant time periods IBC received $356,472 under its contract with the State Department, $39,000 from Calero for services, $180,000 from affiliated entities, and $407,304 from other individuals or organizations. In other words, the amount retained by IBC from NEPL accounted for nearly 60% of IBC's income in 1985 and 1986.] This amount, however, is not all that Miller and Gomez received from the venture. Miller testified that North agreed in late 1985 that he and Gomez could begin to collect a 10 percent commission on the payments funneled to the Contras through IBC and I.C., Inc, Miller stated that North said that the 10 percent was reasonable since "most of the other people in the business of providing assistance to the Contras were taking 20% to 30%." North, in his testimony, denied that he had agreed to any specific percentage, but rather stated that he had approved "fair, just, and reasonable" compensation to Miller and Gomez. Nonetheless, North's notebooks contain an entry for November 19, 1985, which states "IBC - 10%." Miller and Gomez formed another Cayman Islands corporation in early May 1986, World Affairs Counselors, Inc. (WACI) to receive the compensation approved by North. Miller instructed his Cayman Islands agent to deduct automatically for WACI 10 percent of all funds transferred to I.C., Inc. A total of $442,000 was taken by Miller and Gomez pursuant to this commission arrangement. Miller never told Channell that he and Gomez were receiving a 10 percent commission approved by North. Both Miller and Gomez believed that once the Contra assistance money left NEPL, it was subject to North's total discretion and control. Including these commissions, IBC, Miller, and Gomez received more than $1.7 million from the money raised by NEPL for the Contras. Channell's take was also substantial, though apparently not of the magnitude of Miller's and Gomez's total compensation. He furnished his offices extravagantly and was lavish in his expenditures. He drew compensation for 1985 and 1986 totalling $345,000, while Conrad and his organization received more than $270,000, extraordinary earnings for nonprofit fundraisers. Out of the money raised by NEPL, the Contras and their affiliated entities received only $2.7 million, with approximately $500,000 going to other persons and entities engaged in activities relating to the Contras. The money was routed through IBC and I.C., Inc. and disbursed at the direction of North to Lake Resources, Calero, and the other persons and entities. In virtually every case, Miller would tell North when money was available and North would then instruct him on what to do with it. In addition, as described in the next section, more than $1.2 million was spent on political advertising and lobbying for the Contras. Political Advertising for the Contras Apart from financial assistance to the Contras, the major project of the Channell and Miller organizations in 1985 and 1986 was a "public education" and lobbying program in support of U.S. Government aid for the Contras. The major vehicle in the "public education" campaign was a series of television advertisements prepared by the Robert Goodman Agency in Baltimore that cost NEPL $1 million. Adam Goodman of that agency, following the Senate's approval of the Contra funding bill in 1986, wrote a letter to Channell describing their achievement: By design, we launched the four-week national television ad campaign in Washington, DC, in late February. This reflected the economy of reaching all 435 Members of the House (and 100 United States Senators) in one sitting. Beginning with Week 2, and running through the first decisive House vote in late March, we also aired spot commercials in 23 additional television markets across the country. These targeted markets, covering the home Districts of nearly thirty Congressmen experts considered to be at the core of the key 'swing vote' on Contra funding, added scope and credibility to the ad campaign. In fact, N.E.P.L.'s national television spot series was ultimately seen by more than 33 million people, or one out of every seven Americans. Supplementing the television programs were press conferences and speaking tours by persons supporting the Contras. These were arranged by IBC and another public relations firm, Edelman, Inc., retained by Channell, which was paid $92,000 by NEPL. NEPL paid $115,000 for extensive polling by the Finkelstein Company as an aid to selecting areas where television advertisements and speaking tours would most likely have a favorable effect on a Congressional vote. He also retained two companies, Miner & Fraser and the Lichtenstein Company, to generate letters to Congressmen supporting Contra aid, and he paid two lobbyists for their services in support of this effort: Dan Kuykendall, who concentrated on undecided Republicans and conservative Democrats, and Bruce Cameron, who focused on liberal Democrats. Another organization, Prodemca, which had concentrated on Central American issues, also received payments from Channell. Its representatives apparently participated in strategy sessions about enlisting Congressional support. Finally, it appears that Channell engaged in advertising targeted to defeat Representative Michael Barnes's bid for a Senate seat in Maryland. Representative Barnes had been a vocal opponent of military assistance to the Contras. Channell's Anti-Terrorism American Committee ran a series of television advertisements opposing Representative Barnes during the primary campaign. When Representative Barnes was defeated in the primary, Channell and his associates (Cliff Smith and Krishna Littledale) sent a telegram to North exulting in this result: We have the honor to inform you that Congressman Michael Barnes, foe of the freedom fighter movement, adversary of President Reagan's foreign policy goals and opponent of the President's vision for American security in the future has been soundly defeated in his bid to become the Democratic candidate for the U.S. Senate from Maryland. His defeat signals an end to much of the disinformation and unwise effort directed at crippling your foreign policy goals. We, at the Anti-Terrorism American Committee (ATAC), feel proud to have participated in a campaign to ensure Congressman Barnes' defeat.