NEW YORK — Former Secretary of Defense Clark M. Clifford, a confidant of every Democratic President since World War II, and Robert A. Altman, his principal law partner, were indicted Wednesday, charged with secretly helping the scandal-plagued Bank of Credit & Commerce International gain control of Washington's largest bank.
The coordinated state and federal indictments charged Clifford, 85, and his protege Altman, 45, with committing fraud by scheming to hide BCCI's ownership in First American Bankshares Inc., where both men were officers.
In return, according to indictments brought by Manhattan Dist. Atty. Robert M. Morgenthau, Clifford and Altman received bribes from the leaders of BCCI "in the form of sham loans and stock deals for themselves and money denominated as fees for their law firm."
Both men pleaded not guilty during their arraignment, where they were charged with fraud, conspiracy and receiving bribes.
If convicted, they could face fines and possible imprisonment.
In a statement, they said they "totally and categorically deny all charges."
In indictments made public in Washington, they were accused of conspiring to defraud the Federal Reserve Board and of concealing facts during the government's investigation of BCCI.
The three-count indictment returned in U.S. district court alleged that Clifford and Altman enriched themselves through loans and other agreements with BCCI, concealed the loan arrangements from bank regulators and breached their duty of loyalty to First American Bankshares.
Federal court papers charged the two conspired "to hamper, hinder, impede, impair and obstruct by deceit, craft, trickery and dishonest means the lawful functions of the Board of Governors of the Federal Reserve System."
Clifford was chairman of the board of First American Bankshares and Altman was its president. Both resigned last year under pressure from the Federal Reserve Board. BCCI collapsed last year amid allegations of laundering of drug money, the financing of terrorists and arms smuggling.
The indictment in New York charged that Clifford and Altman lied to regulators by saying that the BCCI banking group would have no role in the management of First American and another BCCI entity, Credit & Commerce American Holdings.
At his arraignment in Manhattan, the tall, impeccably dressed Clifford was helped by two of his defense lawyers to walk into a 15th-floor courtroom at New York State Supreme Court. When asked how he would plead, the silver-haired attorney who plotted President Harry S. Truman's reelection strategy and who played a major role as secretary of defense in persuading President Lyndon B. Johnson to wind down the Vietnam War, answered in a firm voice.
"I plead not guilty," Clifford said.
Altman repeated his mentor's words exactly.
State Supreme Court Justice John A.K. Bradley set a hearing for motions in the complex case for Aug. 5, and both Clifford and Altman were released on their own recognizance.
In the statement released after their indictments, both defendants sharply criticized prosecutors.
"The bringing of these indictments is a cruel and unjust abuse of the prosecutorial function," Clifford and Altman said. "Instead of these charges being based on reliable and credible evidence, they are the result of mean-spirited suspicion and unfounded speculation."
Clifford and Altman also charged that the indictments were the result of "an intense competition" that developed between Morgenthau, the U.S. Justice Department and the Fed--"each seeking public acclaim for their role in fighting BCCI corruption. . . ."
For over four decades, Clifford has been an \o7 eminence grise \f7 of the Democratic Party. The carefully spoken lawyer was a poker-playing partner of Truman and Winston Churchill. He counseled President John F. Kennedy and was sent on special diplomatic missions by President Jimmy Carter.
Clifford told the House Banking Committee last September that he had been duped by BCCI, that he had no idea it owned the controlling stock in the Washington bank he ran, that BCCI had no say whatsoever in how First American Bankshares was operated and that the millions he earned from stock in the Washington bank were completely above board.
Altman practiced corporate law and prospered under his mentor at their small Washington law firm. Until he became embroiled in the problems surrounding First American, he was best known as the husband of Lynda Carter, the actress who starred in the television series "Wonder Woman."
At the same time as he made public the indictments, Morgenthau announced that Saudi Arabian Sheik Kamal Adham had agreed to plead guilty to violating New York state banking laws and had agreed to pay a $105-million fine. Adham is a former head of Saudi intelligence and a major investor in BCCI. Morgenthau said pointedly that the defendant had agreed to serve as a prosecution witness against Clifford and Altman.