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The Iran Deception : REAGAN'S GREATEST CRISIS : CHAPTER 9 : The Money Winds Up With the Contras

December 28, 1986

After six years of magic, President Reagan broke the spell. By deceiving the nation, he and those around him badly damaged his presidency. This traumatic tale is still unfolding, with no end in sight. This is how it developed.

One of the early signs of trouble came in Central America.

On Oct. 5, 1986, Sandinista soldiers shot down an aging C-123K cargo plane filled with weapons for the contras. Three crew members died: Capt. William H. Cooper, Wallace Blaine (Buzz) Sawyer Jr. and an unidentified Nicaraguan. One man had parachuted to safety. Bewildered and bedraggled, the sole survivor was led away from the wreckage with a rope.

"My name is Eugene Hasenfus," he declared at a crowded press conference in Managua two days later. In subsequent interviews, he described in all-too-credible detail what he and his colleagues had been doing.

On the day of Hasenfus' press conference, there was another sign of trouble, although it was hidden from public view. Roy Furmark, a New York businessman and consultant to arms merchant Adnan Khashoggi, flew to Washington to keep an appointment with an old friend, Bill Casey.

Furmark, his thick, dark hair combed back and his goatee neatly trimmed, climbed the long gray stone steps of the Old Executive Office Building, where Casey, as CIA director, kept a hideaway office down the hall from Oliver North. A small brass plate with Casey's name marked the huge oak doors. Inside, Casey greeted him warmly.

"Bill," Furmark told him, "we need your help."

Furmark's connection to Casey was New York industrialist John M. Shaheen. A former Navy captain, Shaheen had worked for Casey during World War II when Casey headed secret intelligence in Europe for the Office of Strategic Services, forerunner of the CIA. Over the years, the two friends and staunch Republicans had kept in touch.

Shaheen had built an empire on oil. Furmark had joined him in 1966 as an accountant and soo rose to be Shaheen's top lieutenant. Casey had occasionally provided them with legal advice.

Furmark, 55, gruff and burly, and Casey, 73, rumpled and abrupt, had much in common: both grew up in blue-collar sections of New York, Furmark in Brooklyn, Casey in Queens.

Furmark still lived in New York, in a high-rise cooperative apartment in wealthy Brooklyn Heights, an area with vintage New York views of the Statue of Liberty shimmering in the distance and the dazzle of lower Manhattan's skyscrapers. His work as an energy consultant--"an oil and gas man," one associate put it--took him from Dallas to Dubai.

Casey too had made a fortune in New York, as a tax lawyer and author of specialized manuals on tax, real estate and investment law. From these books, he once joked, he "earned more royalties than Ernest Hemingway." He had joined the government under Richard M. Nixon in a series of posts that included the chairmanship of the Securities and Exchange Commission. Still, New York--especially a rambling Victorian house called "Mayknoll" on Long Island's North Shore--was home for Casey too.

Now, in a 30-minute conversation--and over the course of two more meetings--Furmark told Casey about a problem that made the Hasenfus crash pale by comparison:

Two wealthy Canadians, he told his friend, had backed Khashoggi in the Iranian arms deal. The investors were now threatening to "blow the lid" off the secret arms shipments by suing both Khashoggi and the U.S. government to get their money back. Khashoggi had sent Furmark to Washington to run interference because he had known Casey so long.

According to Casey's subsequent testimony before Congress, the conversations with Furmark provided the CIA director with his first hint that a money connection existed between the Iranian arms shipments and the contras-- a connection that was in danger of becoming public knowledge.

Furmark told Casey that a cigar-chomping Toronto real estate developer named Walter (Ernie) Miller and his associate, Donald Fraser, a secretive Toronto accountant and financier with homes in Monaco and the Cayman Islands, had become involved when Khashoggi needed help financing the aborted July and August Iranian arms shipments, which were financed as one.

"The Iranians would not pay for anything until they received it," Furmark later explained. "The Americans would not ship anything until they were paid in advance. Someone had to have the courage to pay in advance for the goods, and Khashoggi had the courage to do that. So he provided the bridge financing."

Actually, the Canadians helped Khashoggi get $10 million from a Cayman Islands bank, Furmark said, along with another $5 million from investors in Europe and the Middle East. On May 15 the $15 million was placed in an account at Switzerland's third-largest bank, Credit Suisse in Geneva. The account was registered to Lake Resources Inc., a company apparently controlled by business partners Richard Secord and Albert Hakim.

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