LaRouche Convicted of Mail Fraud

Washington Post/December 17, 1988
By Caryle Murphy

A federal jury in Alexandria convicted political extremist Lyndon H. LaRouche Jr. and six associates yesterday of conspiracy and mail fraud in his group's solicitation of $34 million in loans since 1983.

LaRouche, a four-time presidential candidate who has promoted his controversial ideas internationally for almost 20 years, was also convicted of conspiring to hide his personal income since 1979, the last year he filed a federal tax return.

"I'm amazed, absolutely amazed," LaRouche said shortly after the jury left the courtroom. The 66-year-old political leader, who called his indictment last October "a piece of garbage," had stared impassively at the panel as its verdict was read out.

The essence of the government's case was that LaRouche, who founded the National Caucus of Labor Committees in the late 1960s, and his staff solicited loans with false assurances to potential lenders and showed "reckless disregard" of the facts by failing to mention the organization's already severe financial difficulties.

The jury's findings, reached after a little more than 11 hours of deliberation, is a major blow to LaRouche's Leesburg-based organization and marks the first criminal conviction for its leader. He faces a possible maximum penalty of 65 years in prison and $3.2 million in fines at sentencing, set for Jan. 27 by U.S. District Judge Albert V. Bryan Jr.

LaRouche is also facing a retrial, due to begin in February in federal court in Boston, on a charge of conspiracy to obstruct justice.

"We're gratified. We think it was the proper verdict," said Assistant U.S. Attorney Kent Robinson. He and fellow prosecutor John Markham said they believed the key to the jury's verdict was the "strong testimony" by lenders, many of them elderly retirees, who had lost thousands of dollars in loans to LaRouche that were never repaid.

"We only wish we could get their money back," said Markham. "That's the true tragedy here. Their dreams went up in smoke."

In addition to LaRouche, who was found guilty on 11 mail fraud counts, his chief fund-raiser, William Wertz, was convicted on 10 mail fraud counts; his legal adviser, Edward Spannaus, on nine counts; fund-raisers Michael Billington and Dennis Small, on three counts, and Paul Greenberg and Joyce Rubinstein, on two counts.

All were found guilty of one count of conspiracy to commit mail fraud.

In a news conference last night, LaRouche denied any wrongdoing, called his conviction "an all-out frame-up by a state and federal task force," and charged that the federal government intended to take not just his freedom but his life.

"The purpose of this frame-up is not is not to send me to prison. It's to kill me," LaRouche told reporters. "In prison it's fairly easy to kill me . . . . If this sentence goes through, I'm dead."

LaRouche admitted that some of the people who lent his organizations money lost it, but said: "Everybody knew exactly what they were walking into. They were supporting a political movement with a very risky kind of loan. If the government hadn't shut the organization down, these loans would have been reduced . . . . The government took their money."

LaRouche said that unless Bryan sets aside his conviction he would appeal.

The verdict followed a four-week trial in which the LaRouche organization was exposed to rare public scrutiny. Several of the 51 witnesses were current LaRouche followers who testified for the government under immunity from prosecution.

In addition to the false assurances, the prosecution also contended that the defendants had a policy of not repaying loans, solicited at higher than market interest rates and with promises to repay in a year. In many cases, evidence showed, lenders were urged to forgive loans when they came due.

While lenders were being told there were no "discretionary" funds to repay their loans, the group spent $4.2 million on real estate in Virginia and thousands more on "improvements" for LaRouche's 200-acre Leesburg estate, according to testimony. The improvements included a $97,000 pond, swimming pool and horse riding ring.

Nine lenders, who said they were attracted by what was described as LaRouche's "war on drugs," testified that they gave a total of $661,300 to the organization and were repaid only about $10,000. Those loans are "just a very small portion of unrepaid borrowing" by the group, prosecutor Markham told the jury in his closing argument.

Of the $4 million collected for LaRouche's 1984 presidential campaign, only half was repaid, and by early 1987, $25 million of the $30 million collected for noncampaign purposes had not been repaid, according to testimony.

The LaRouche organization had relatively stable income, mainly due to contributions and sales of its publications, from 1981 to 1983, evidence showed. Revenue shot up in 1984 as LaRouche, again running for president, pushed his troops to meet higher quotas on loans.

At the trial, the defendants denied there was a policy not to repay loans and said they were solicited in good faith.

Loans were not repaid, the defense team said, because revenue was not as great as expected from the group's business ventures and because of financial ineptitude. "If they'd had a good office manager this might not have happened," said defense attorney Kenly Webster.

Defense witnesses also testified that the group was under siege from enemies waging "financial warfare" against LaRouche. Contributions and business revenue fell drastically in 1986 due to a raid on the Leesburg headquarters by federal investigators and negative media coverage after two LaRouche candidates won places in the Illinois Democratic primary in March 1986, the defense said.

In any event, defense witnesses said, when repayments became a problem, the organization imposed a loan ceiling and set up a repayment plan, budgeting $80,000 a week for paying off lenders in 1985. However, this target was not always met, they testified.

LaRouche's tax conviction stemmed from what Robinson called his attempts to "hide how much money he made" by having his companies pay his personal expenses.

According to testimony, LaRouche, who maintains he received numerous death threats because of his antidrug efforts and critical stand against the Soviet Union, lived in "safe houses" paid for by his organization and ate food provided by it. Personal items such as wine, clothing and haircuts were paid for out of an account earmarked for "security," testimony showed.

LaRouche's attorney, Odin Anderson, said his client had not filed returns because he had no income.

The defense attorneys, who had complained to Bryan on the first day of trial that they were not ready to go forward, nevertheless presented a vigorous defense against the charges.

"Given the constraints imposed" by Bryan on information the defense sought to introduce, the judge "gave us an extremely fair hearing," Anderson said. Bryan barred the defense from going into details about alleged "infiltration {or} financial warfare" against the LaRouche organization by the federal government.

Most of the defense lawyers took the tack in court that the defendants were being prosecuted because of their political ideas.

Jury foreman Buster Horton said last night that the "evidence collectively" led to the convictions, but the testimony of the nine lenders "was one of the major considerations. There was a lot of money lost."

Horton, of Lakeridge, Va., said the jury "all agreed {LaRouche} was not on trial for his political beliefs. We did not convict him for that. He was convicted for those 13 counts he was on trial for."