The LaRouche criminal trials in the mid-1980s stemmed from federal and state investigations into the activities of American political activist Lyndon LaRouche and members of his movement. They were charged with conspiring to commit fraud and soliciting loans they had no intention of repaying. LaRouche and his supporters disputed the charges, claiming the trials were politically motivated.
In 1986, hundreds of state and federal officers raided LaRouche offices in Virginia and Massachusetts. A federal grand jury in Boston indicted LaRouche and 12 associates on credit card fraud and obstruction of justice. The subsequent trial, described as an "extravaganza", was repeatedly delayed and ended in mistrial. Following the mistrial, a federal grand jury in Alexandria, Virginia, indicted LaRouche and six associates. After a short trial in 1988, LaRouche was convicted of mail fraud, conspiracy to commit mail fraud, and tax evasion, and was sentenced to prison for fifteen years. He entered prison in 1989 and was paroled five years later. At the same trial, his associates received lesser sentences for mail fraud and conspiracy. In separate state trials in Virginia and New York, 13 associates received terms ranging from one month to 77 years. The Virginia state trials were described as the highest-profile cases that the state Attorney General's office had ever prosecuted. Fourteen states issued injunctions against LaRouche-related organizations. Three LaRouche-related organizations were forced into bankruptcy after failing to pay contempt of court fines.
Defense lawyers filed numerous unsuccessful appeals that challenged the conduct of the grand jury, the contempt fines, the execution of the search warrants and various trial procedures. At least ten appeals were heard by the United States court of appeals, and three were appealed to the U.S. Supreme Court. Former U.S. Attorney General Ramsey Clark joined the defense team for two appeals. Following the convictions, the LaRouche movement mounted failed attempts at exoneration.
Background Beginning in the late 1960s and early 1970s, Lyndon LaRouche formed a variety of political organizations, including the U.S. Labor Party and the National Democratic Policy Committee. These organizations served as the platforms for presidential campaigns by LaRouche starting in 1976, and by his followers in scores of local races. According to one candidate, supporters viewed LaRouche as "the greatest political leader and economist of the 20th century, and they're proud to be associated with him. They feel he's leading the battle to save Western civilization." The Survey of Jewish Affairs, 1987 called the LaRouche movement one of the two most prominent "extremist political groups" of 1986.Frankel (1988), p. 202.
The movement's greatest electoral success came in 1986 when two supporters, Janice Hart and Mark J. Fairchild, won the Democratic Party nominations for Illinois Secretary of State and Lieutenant Governor. Both lost in the general election. Also in 1986, the "Prevent AIDS Now Initiative Committee" (PANIC) got an initiative on the California ballot, Proposition 64 (also known as the "LaRouche Initiative"), which attracted widespread opposition and was defeated that November.
Investigations Early 1980s According to arguments made by LaRouche's attorneys in later appeals, the government investigations were started under the FBI's COINTELPRO in the 1960s. Edward Spannaus, a defendant in the trials, further notes that there was a memorandum written on January 12, 1983, by former FBI chief William Webster to Oliver "Buck" Revell, head of the Bureau's General Investigative Division. It requested information on the funding of LaRouche and the U.S. Labor Party, including whether the U.S. Labor Party might be funded by hostile intelligence agencies. The LaRouche organization asserts that this formulation was specifically tailored to enable FBI "active measures" against LaRouche under Executive Order 12333, which permits such measures if a political movement receives foreign funding. The memo was eventually obtained by LaRouche's attorneys and submitted as an exhibit in the 1987 trial of LaRouche and co-defendants in Boston.
In August 1982, former Secretary of State Henry Kissinger sent a memo to Webster requesting an investigation of the LaRouche movement due to their "increasingly obnoxious" harassment of him, which was raised later at a meeting of the President's Foreign Intelligence Advisory Board by senior member David Abshire.Spannaus (1989), p. 306. Revell replied to Kissinger that there was sufficient evidence to proceed with an investigation. The FBI conducted an investigation but did not find evidence of a violation of Kissinger's civil rights. The investigation was closed in late 1983.
Mid-1980s In the mid-1980s, the U.S. government and eleven states began investigations into alleged financial improprieties by LaRouche groups. A federal grand jury reportedly began investigating "an extensive nationwide pattern of credit card fraud" by LaRouche organizations in November 1984. That same year a New Jersey bank froze the accounts of LaRouche's 1984 presidential campaign due to allegedly fraudulent credit card charges.
In January 1985, a grand jury in Boston subpoenaed documents from the National Democratic Policy Committee (NDPC) and three other LaRouche organizations: Caucus Distributors Inc., Fusion Energy Foundation, and Campaigner Publications Inc. Seven weeks later, on March 29, 1985, a federal district court judge, A. David Mazzone, held them to be in contempt and fined them $45,000 per day. The fines for all the organizations eventually totaled over $20 million. The same grand jury subpoenaed Elliot I. Greenspan, an official of Caucus Distributors Inc., to appear but he pleaded the Fifth Amendment and refused to testify. He was granted immunity and compelled to testify but only did so after being jailed for contempt for two days. A spokesman for LaRouche called the investigation "a political terror operation".
Investigations by a separate federal grand jury in Alexandria, Virginia, along with state agencies in New York, California, Minnesota, Illinois and Washington were also underway. The FBI, IRS, FEC and personnel of other federal agencies were conducting separate investigations. The Internal Revenue Service revoked the tax-exempt status of the Fusion Energy Foundation in September 1985, and a year later the State of New York sought to dissolve the corporation, alleging that it used "persistently fraudulent and illegal" means to solicit donations. U.S. Attorney William Weld announced in January 1986, that he would convene a national conference "to coordinate a prosecutive and investigative effort" against LaRouche. The conference was held the following month in Boston.Spannaus (1989), p. 236. Three states, Alaska, Indiana and Maryland, banned fundraising by Caucus Distributors Inc. in May 1986, due to the sale of unregistered promissory notes. The Illinois Secretary of State began civil proceedings against Caucus Distributors Inc. in June 1986, seeking an injunction to bar deceptive business practices. Minnesota officials banned "Independent Democrats for LaRouche" from fundraising, an order that was affirmed on appeal to the U.S. Supreme Court.
LaRouche lawyers filed a series of related civil suits against individuals, agencies and businesses. They sued Weld and former Attorney General William French Smith to try to stop the FBI investigation of the credit card case. They sued the New Jersey bank that had frozen their credit card merchant accounts; and they sued Chemical Bank in a similar suit. Edward Spannaus, a treasurer for LaRouche campaigns, filed complaints with the state bar and the U.S. Justice Department against one of the Assistant U.S. Attorneys in the case.
Raid and indictments
Beginning October 6, 1986, the Leesburg, Virginia, headquarters of the LaRouche organization was searched in a coordinated, two-day raid by hundreds of officers of the FBI, IRS, other federal agencies, and Virginia state authorities, supported by armored cars and a helicopter. The agents also surrounded LaRouche's heavily guarded estate for the duration of the search but did not enter it."Brief for the United States in Opposition", National Democratic Policy Committee v. United States, 493 U.S. 918 (1989). While surrounded, LaRouche sent a telegram to President Ronald Reagan saying that an attempt to arrest him "would be an attempt to kill me. I will not submit passively to such an arrest, but ... I will defend myself". He later assured that he would comply peaceably with any warrant. LaRouche offices in Quincy, Massachusetts, were searched as well. US Attorney Henry E. Hudson held a press conference to say that the searches had recovered subpoenaed materials, including notebooks and index cards.
Warren J. Hamerman, Chair of the NDPC, said the searches "conducted by Donald Regan's associate William Weld's forces against presidential candidate Lyndon LaRouche's headquarters coincides with Don Regan's desperate attempts to maintain the cover-up on AIDS". LaRouche later said that the Soviet Premier had ordered the raid as part of an assassination attempt. "The man with the mark of the beast on his head, Mikhail Gorbachov, has demanded my elimination", said LaRouche. In his 1987 autobiography, he wrote that the raid was ordered by Raisa Gorbachev, whom he described as outranking her husband in the nomenklatura due to her leadership of the Soviet Cultural Fund.LaRouche (1987), p. 309.
On the same day as the Leesburg search, the Boston grand jury handed down a 117-count indictment that named ten LaRouche associates, two corporations, and three campaign committees. Authorities charged them with making unauthorized credit charges that defrauded $1 million from over 1,000 people. The charges also included a scheme to raise funds by soliciting loans with no intention of repaying them. The National Caucus of Labor Committees was charged, along with others, of conspiring to obstruct justice. Prosecutors charged that defendants had burned records, sent potential grand jury witnesses out of the country, and failed to provide subpoenaed evidence. The indictment quoted LaRouche telling an associate that, in reaction to legal problems, "we are going to stall, tie them up in the courts ... just keep stalling, stall and appeal, stall and appeal". Three of the indicted associates remained at large for over a year, and investigators were allegedly given false information. On June 30, 1987, the U.S. grand jury in Boston indicted LaRouche on one count of conspiracy to obstruct justice.
Meanwhile, the state cases were progressing. On February 16, 1987, the Commonwealth of Virginia indicted 16 LaRouche associates on securities fraud and other felonies. On March 3, 1987, the State of New York indicted 15 LaRouche associates on charges of grand larceny and securities fraud.
Involuntary bankruptcy
In early April 1987, the government charged in court that LaRouche organizations may have been trying to sell properties for cash to more easily conceal their assets and avoid paying $21.4 million in contempt of court fines. The U.S. Department of Justice filed an involuntary bankruptcy petition on April 20, 1987, to collect the debt from Caucus Distributors Inc., Fusion Energy Foundation, and Campaigner Publications Inc. In a rare procedure, the companies were seized before the bankruptcy came to trial. Assistant U.S. Attorney S. David Schiller wrote in a brief that the debtors had a "pattern of transferring or commingling substantial corporate assets to their members and other insiders for little or no consideration and for non-business purposes". The trustees later reported they were only able to locate about $86,000 in assets.