May 29, 1995
Starr investigation targets law-enforcement complicityBy Jamie Dettmer and Paul M. Rodriguez
An ongoing money-laundering probe, led by independent counsel Kenneth W. Starr, is churning up details of possible state and law-enforcement ties to criminal misconduct in Arkansas.
In the late 1980s during the swirl of Iran-Contra allegations about narcotics trafficking and weapons shipments, senior officers in the Arkansas State Police began a methodical operation to destroy sensitive documents linking some of the state's most prominent political and business figures to illegal activities - spin-offs from Marine Lt. Col. Oliver North's covert arms-for-hostages deals.
Arkansas connections to Iran-Contra were, at the time, obscured nationally. Attention was riveted on Washington, Ronald Reagan and North's manic shredding of files detailing the "enterprise" that provided arms for the release of American hostages in the Middle East and guns for the Nicaraguan Contras. Arkansas seemed a long way from the action in the nation's capital.
Until Bill Clinton ran for president an Arkansas dimension to Iran-Contra remained ignored by mainstream news organizations and federal officials. Now though, what happened in Arkansas in the 1980s has moved to center stage. It's not just shady land deals surfacing, but widespread wrongdoing by the state politico-business establishment that behaved as though it was above the law - and with the help of police officers, was allowed to be.
The conspiracy theorists, of course, have run riot and attempted to pin all the blame for misdeeds in Arkansas on Clinton. But what slowly is unfolding is a far more complicated story of negligence, opportunism and rank exploitation by a one-party political system that bent the rules and turned a blind eye to alleged criminal activity when it was carried out by some of its own.
Enter Kenneth W. Starr. As the independent counsel pursues the money trail of Clinton and his wife, Hillary, in a land deal called White-water, the inner workings of Arkansas government and law enforcement are coming under the spotlight. What Starr is finding, according to a former senior federal official familiar with the probe, is a good-ole-boy network of "corruption and obstruction" in a state seemingly awash in narcotics money - some almost certainly of Iran-Contra origin and some from more homegrown enterprises.
Insight now has learned that Starr's team of more than 125 FBI and IRS agents and U.S. attorneys are investigating what appears, on the surface, to be unrelated aspects of the White-water deal. His investigators are delving heavily into Arkansas narcotics and homicide cases, some of which have remained unsolved for years. And what is being uncovered, according to federal and state officials who agreed to be interviewed, is layer upon layer of complicity by state and local law-enforcement agencies and a maze of allegations that has investigators widening their inquiries at every turn.
One of the most startling discoveries so far is an extensive and regular pattern of document shredding in the late 1980s on the orders of senior state police officials. According to law-enforcement sources in Little Rock, the shredded documents were federal and state intelligence records and police investigators' files on prominent Arkansans. Some, such as businessman Dan Lasater, were significant contributors to Clinton's gubernatorial campaigns. Also shredded was material on the murky drug-running and arms-smuggling operation based at the Mena Intermountain Regional Airport (see Insight, Jan. 30, 1995).
The shredding, which was conducted in a tiny office in the state police headquarters, was furtive and known only by a handful of officers at the highest levels in the Arkansas State Police - that is, until Starr's investigators recently received a tip. A state law-enforcement source, who spoke to Insight on the condition of anonymity, says: "I was startled by what was going into the shredder. There were Lasater files and Mena files" as well as files on other businessmen with close ties to Clinton personally. The destruction of documents was at its most intense in 1988 and 1989.
Col. Tommy Goodwin, former Arkansas State Police commander, says, "I am not aware of any documents that were shredded."
Former state troopers, who in the 1980s attempted to investigate prominent Arkansans allegedly involved in cocaine parties and drug sales, are not surprised by the disclosures of shredding. Julius "Doc" Delaughter claims he resigned from the state police in 1988 after his superiors blocked the mounting of certain inquiries. He recalls how documents concerning other cases, such as the Lasater investigation, would turn up missing. "A deposition I took from a friend of Lasater was stolen off my desk and was never seen again," says Delaughter.
The deposition Delaughter says he secured could have proved embarrassing for then-Gov. Clinton if it had been leaked. It dealt with a cocaine party allegedly organized by Lasater in a Hot Springs, Ark., hotel suite. The party hastily ended with the arrival of Clinton, who was scheduled to meet with Lasater. Lasater subsequently was convicted of cocaine distribution and sentenced to prison.
In another case, a state police captain was apparently so concerned by the regular destruction of potentially embarrassing material that he maintained for safekeeping a copy of a lengthy memorandum revealing that a Mena-based drug-running suspect was allowed to consult investigators' telephone records with the knowledge of Goodwin, who retired last June. According to the memo, a copy of which Insight has obtained, the suspect, a former state narcotics officer, learned from his search of the phone logs that state troopers were cooperating with FBI agents on a probe of Barry Seal, a notorious, confessed drug trafficker who claimed, before his assassination in 1986 at the hands of Colombian hit men, to have been part of North's Iran-Contra operations.
The 10-page memo provides a revealing look into the close-knit world of Arkansas law enforcement. Written on Jan. 9,1987, by Lt. Doug Williams (now a captain), the memo, which was sent to his superior officer, Capt. Doug Stevens, related how the suspect requested help in learning the nature of the investigations being mounted at Mena airport and into himself and his associates.
The suspect complained to Williams that the "local sheriff's office had started watching the airport." He mentioned he had visited a senior state police officer, Maj. Richard Rail, "which he did often," and that they had talked about how investigators charged long-distance calls to state credit cards. According to the Williams memo: "He [the suspect] stated that he took most of the day at the capitol building checking these [telephone] records and that the gentleman that was helping him there told him he could not copy these records; however, he could sit down with the records and make hand notes from them and that Colonel Goodwin had been advised of his being there and periodically checked back to see if he was still there and each time the colonel checked back, the man would walk in and say Mr. Goodwin just called back to see if you were still here and how you were doing."
Rules governing public access to state police phone records and credit cards should have restrained the suspect. According to Wayne Jordan, a spokesman for the Arkansas State Police, records connected with active intelligence operations and ongoing probes are strictly off-limits. Only when cases are closed, according to Jordan, are records available for public inspection; then any inspection requires a Freedom of Information Act request and approval by the head of the Arkansas State Police.
The complex events surrounding Mena - the clandestine flights of guns and drugs in the dead of night; the peculiar stifling of local investigations as well as probes mounted by federal agencies, including the IRS; and evidence of serious money laundering in the town's banks - have been dismissed years as having little to do with Reagan's anti-Sandinista effort and even less to do with Clinton. But Starr's investigators seem to be convinced, based on their questions to witnesses and requests for documents, that the flow of drug profits and the alleged diversion of that money into businesses in Arkansas and even into Clinton's campaign finances warrant major investigation.
In his bid to trace donations to the then-governor's election coffers, the independent counsel's FBI agents have reviewed thousands of pages of case files connected to suspected narcotics operations and money laundering by reputed criminals in Arkansas and surrounding jurisdictions. Starr's investigators also have begun questioning the Mena pilots responsible for air-dropping sturdy duffel bags full of Central American cocaine and cash at prearranged sites in Arkansas.
"The Feds were primarily interested in money-laundering activities," say Joe Evans, one of the pilots interrogated recently "The questioning had to do with where the money was coming from, where the money was going They asked me from which banks in the U.S. or internationally the money originated. They asked me how frequent were the flights and how large were the shipments."
During the interview with Evans, Starr's investigators also were interested in a mysterious and as-yet-unsolved double homicide near Little Rock in 1987 that has been the subject of considerable local controversy. Again,it is money laundering that seems to be foremost in the minds of Starr's investigators as they review the cold-case files concerning the murders of teenagers Don Henry and Kevin Ives, who were found stabbed and bludgeoned on railroad tracks along the Pulaski-Saline county line on the outskirts of Little Rock.
Insight has learned that the double homicide also is the subject of a separate FBI investigation and that a grand jury has been impaneled in Little Rock to take testimony in the case. The targets of that investigation, according to sources, are a handful of suspected drug dealers from northwest Arkansas, a Little Rock prosecutor and several former members of the sheriff's departments in Pulaski and Saline counties. Two of the alleged drug dealers under suspicion in the murders were mentioned regularly in Arkansas State Police intelligence files, that were not shredded. Those files, copies of which Insight has obtained, contain raw and unsubstantiated allegations about wrongdoing by a number of prominent businessmen in Arkansas.
There have been many theories put forth to explain the murders of Henry and Ives. A persistent one argues that the teenagers stumbled upon a Mena narcotics drop site shortly before drugs were due to be unloaded. This theory appears to have caught the attention of Starr's team. Mena pilots have been asked about a drop site code-named "A-12" by the smugglers. They also have been asked about "Flight 50" - all Mena flights were numbered - which coincided with the date and time of the boys' deaths.
Starr's investigators have interviewed several convicted drug offenders in Arkansas prisons who are believed to be connected to the homicides of Henry and Ives.
Current and former members of Congress and law-enforcement officers who have looked into the Mena drug and money-laundering operations long have suspected that there was - and continues to be - complicity by people at both the state and federal levels to keep a lid on the events in Arkansas during the 1980s and early 1990s. They believe that what began under the guise of national security involving Iran-Contra blossomed into an extensive, tangled conspiracy to hide the links between Mena and nonfederal corruption throughout the region.
"Starr should be investigating the Arkansas police," says a former high-ranking federal official who worked behind the scenes to put together pieces of the Mena puzzle. "What is coming to light now is that there was a broadbased conspiracy to hide the truth about corruption at the highest levels of Arkansas and at the Justice Department, and it is still ongoing."
"This is about money, pure and simple," adds a federal law-enforcement official familiar with Mena, the drug Conspiracies and the latest turns in the Starr inquiry.
"I could never understand why no one went down this path before," says Bill Duncan, a former IRS agent and congressional investigator who for three years tried to secure indictments in connection with Mena drug smuggling.
In a confidential memorandum to the House Judiciary subcommittee on crime dated Oct. 8, 1991, Duncan wrote: "On this date I received a telephone call from Paul Whitmore concerning a conversation which he had just overheard at the El Paso Intelligence Center. Whitmore related that, just minutes ago, he heard the Central Intelligence Agency EPIC Resident Agent tell the US. Customs EPIC Resident Agent that the CIA still has ongoing operations out of the Mena, Ark., Airport, but that some other guys' are still operating out of the airport also, and that one of the operations at the airport is laundering money." Whitmore was the IRS agent stationed at EPIC, formally called the El Paso Intelligence Center. It is a clearinghouse for federal law-enforcement and intelligence agencies.
Duncan's memo concluded: "The CIA agent then told the Customs Agent that if the laundering of cash was a part of Customs Operations, he wasn't going to worry about it. According to Whitmore, they also discussed checking the registration of various aircraft which are currently at the Mena, Ark., Airport."
For Duncan, the memo is just one more piece of evidence pointing to "a bizarre mixture of drug smuggling, gun running and money laundering."
© COPYRIGHT 1995 Washington Times Corporation