Clines Charged With Failure to Pay Taxes on Arms Profits

A federal grand jury Thursday indicted Thomas G. Clines, a former CIA operative accused of arranging arms sales in the Iran-Contra affair, on four counts of failing to pay income taxes on his share of the profits from the covert operation.

Clines, 61, was a partner with retired Maj. Gen. Richard V. Secord and businessman Albert A. Hakim in the secret “enterprise” directed by former White House aide Oliver L. North that shipped weapons to Iran and channeled arms to the rebels in Nicaragua.

He became the ninth person to be indicted in the investigation by Iran-Contra independent counsel Lawrence E. Walsh into the clandestine sale of arms to Iran and the diversion of some of the profits to help the Contras.

The indictment, returned by a grand jury in Baltimore, accused Clines of under-reporting his gross income in 1985 and 1986 and of falsely denying that he had an interest in a foreign financial account totaling more than $100,000 during those years.

The indictment did not indicate the extent to which Clines’ income exceeded the $265,000 he reported for 1985 and the $402,513 he listed for 1986. However, the congressional Iran-Contra committees stated in 1987 that Clines received a total of $972,728 in commissions on weapons sold to arm the Contras during those two years.

If convicted, Clines faces maximum sentences of three years in prison and $100,000 in fines for each of the two counts of under-reporting income and 10 years in prison and $500,000 in fines for each of the two counts of concealing a foreign financial account.

Clines, who became a worldwide arms merchant after his retirement from the CIA, was not called as a witness in the congressional Iran-Contra investigation in 1987.

Presumably, evidence against Clines was provided by Hakim, who pleaded guilty to supplementing North’s salary and diverting government property as part of a plea bargain that required him to cooperate with prosecutors.

Hakim was sentenced to two years’ probation and fined $50, far less than the maximum of one year in prison and $600,000 in fines, after prosecutors said he had provided evidence that would result in additional indictments.

Sources said Clines allegedly helped coordinate North’s arms purchases for the Contras in Europe and oversaw an unsuccessful $2-million ransom of U.S. hostages in Lebanon in May, 1986.

After his retirement from the CIA in 1978, Clines was linked in court testimony with the activities of renegade former CIA operative Edwin P. Wilson, now in prison for smuggling arms to Libya. Clines was not charged in that case.