Opinion ID: 536999
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 3 The government sought to prove that the seven defendants, acting through the National Caucus of Labor Committees (NCLC) (also known as the LaRouche Organization), fraudulently solicited loans from contributors. Specifically, the government alleged that the defendants promised to pay back borrowed funds at specific times and at stated interest rates when they knew such loans would not be so repaid, and that they promised the lenders that the funds would be used for specific purposes even though the funds were not to be so used. Furthermore, the indictment charged that LaRouche conspired to defraud the Internal Revenue Service.
4 LaRouche, a candidate for the Democratic Presidential nomination in 1980 and 1984 and an independent candidate for President in 1984, headed the NCLC. The NCLC supported various political candidates and initiatives and published numerous books and periodicals. The NCLC had offices across the country and carried out many of its activities through commercial corporations and political committees. 5 LaRouche controlled the NCLC, including its fundraising operations and its finances. Daily operations of the NCLC were governed by the National Executive Council (NEC), which consisted of 13 LaRouche associates. 6 William Wertz, a member of the NEC, was in charge of fundraising for the NCLC. Edward Spannaus, also a member of the NEC, helped the NCLC on legal matters. Michael Billington and Dennis Small were telephone fundraisers for the national office of the NCLC. Paul Greenberg was in charge of fundraising for the Chicago office. Joyce Rubinstein was a fundraiser in the New York office.
7 In 1983, LaRouche, who was becoming increasingly dissatisfied with the fundraising performance of some of NCLC's offices, promoted William Wertz, who had headed the successful West Coast fundraising offices, to the NEC and placed him in charge of national fundraising. LaRouche's dissatisfaction also precipitated aggressive fundraising tactics. 8 One former LaRouche associate testified that LaRouche, at an NEC meeting, expressed his dissatisfaction with fundraising and his belief that members of the organization were not getting tough enough with the general population. Allegedly, LaRouche characterized adequate fundraising as essential to get him to the White House and without his presence in the White House, there was no hope for mankind. Another LaRouche associate testified that LaRouche exhorted to NCLC members that the human race was on the verge of destruction or self-destruction as a result of its imbecility, its sheeplike quality, and that it lacked itself the moral fitness to survive. Because he needed funds to save humanity, LaRouche was said to have told NCLC members that any means short of thievery or thuggery [was justified] to raise that money. 9 Pugnacity apparently became the theme of the LaRouche Organization's fundraising tactics. A former LaRouche fundraiser testified that when he started on a phone team, he was told as follows: 10 You have to have only one thing on your mind. That is getting the money. No matter what the person you are talking to says, get the money. If you are talking to a little old lady and she says she is going to lose her house, ignore it. Get the money. If you are talking to an unemployed worker who says he has got to feed ... a dozen children, forget it. Get the money. Most of these people are immoral anyway. This is the most moral thing they have ever done is to give you money. 11 Fundraisers began working very long hours and complained of being driven into the ground. 12 LaRouche and Wertz set high fundraising goals for the organization, for each office, and for each individual fundraiser. LaRouche was said to have blamed the fundraisers' inadequacy on sexual impotence. Wertz and regional fundraising supervisors reacted angrily to fundraising shortfalls and the individual fundraisers, when failing to meet established quotas, became hysterical, distraught, and depressed. 13 Fundraisers began to take loans, as opposed to donations, from contributors in ever increasing amounts. In 1984 and 1985, the amount that the LaRouche organization borrowed from contributors increased dramatically; more than $25 million was borrowed from contributors in those two years alone.
14 It was the way that those borrowed funds were obtained that concerned the government prosecutors. The government alleged that LaRouche communicated to his organization a forgive and forget policy, whereby fundraisers would initially try to persuade individual lenders to convert their loans into contributions. Lenders who still demanded payment would not be repaid. One former LaRouche fundraiser testified that Wertz characterized lenders, who asked for the return of their money, as immoral. According to the government, the nonpayment policy did have two exceptions: (1) if alienating the lender might result in significant adverse political consequences; or (2) if the lender was going to file suit. 15 The government sought to prove that potential lenders heard quite a different story from the organization's fundraisers: they were told that their money would be safer with the LaRouche Organization than with a bank and that they would be repaid on specific terms, at specific rates of interest; the lenders were never told of the organization's financial difficulties; and even when some of the lenders became disgruntled, they were assured of repayment. Many lenders lost significant amounts of money. Furthermore, the government introduced evidence at trial to prove that the defendants knew of the falsity of the repayment and interest representations. 16
17 In addition, the government charged LaRouche with conspiring to defraud the Internal Revenue Service (IRS). It sought to prove that the LaRouche Organization compensated LaRouche by maintaining his lifestyle, including the costs of his housing, food, furniture, and clothing, rather than by paying him a salary. In addition, the government alleged, a variety of affirmative steps were taken by LaRouche and associates to conceal some of the payments and to characterize others as gifts. Among other things, LaRouche did not file income tax returns for the calendar years 1980, 1981, and 1982, the period during which the alleged conspiracy occurred.
18 An indictment was issued by a federal grand jury in Boston, Massachusetts, on October 6, 1986, against the LaRouche Organization and several of its associates. In July 1987, a second superseding indictment added LaRouche as a codefendant in the Boston case. The Boston indictment charged the NCLC, along with LaRouche, Spannaus, and others, with participating in a conspiracy to obstruct justice and to impede a federal investigation into fraudulent fundraising practices. The LaRouche Organization and thirteen LaRouche associates were also charged with scheming to commit credit card fraud and to obtain fraudulent loans. Jury selection for the Boston trial began in September 1987 and the Boston trial began on December 17, 1987. On May 4, 1988, after four months of trial, Judge Robert E. Keeton declared a mistrial due to severe hardships that would be suffered by four of the jurors if the trial continued. A retrial in Boston was set for January 3, 1989.
19 After the thirteen-count indictment came down in the instant case on October 14, 1988, Judge Bryan held arraignment on October 17 and scheduled the trial to commence on November 21. At arraignment, the defendants filed a motion to transfer the trial to Boston due to the similarity in parties, charges, and proof. According to the defendants, the Virginia indictment was very similar to the Boston indictment and was designed to achieve the same law enforcement objectives. On October 21, 1988, the district court denied the defendants' motion to transfer the case to Boston. The defendants filed many other pretrial motions, most of which were denied. 20 Trial commenced on November 21, 1988. Among other witnesses, ten disgruntled lenders testified at the trial. None of the defendants took the stand. On December 16, 1988, after a four-week trial, the jury returned verdicts of guilty on all of the counts with which the defendants had been charged. 21 LaRouche was sentenced to a term of imprisonment of five years as to each of the thirteen counts of conviction. The court ordered counts 1 to 4, 5 to 9, and 10 to 13 to run concurrently, so that LaRouche was sentenced to a total period of incarceration of fifteen years. Wertz and Spannaus were each fined $1,000 and ordered to serve five years imprisonment. Billington, Small, Greenberg, and Rubinstein were each sentenced to three years imprisonment and ordered to pay various fines.