3 Accused of Promoting War for Kuwait : Courts: A San Diego man is among those named in the indictment, which charges them with being paid by the country to push the U.S. into the Gulf War.

An indictment alleging that a former U.S. ambassador and two others were covertly paid by Kuwait to push the United States into the Gulf War claims they worked as hard at hiding the money as at urging U.S. intervention.

Sam Zakhem, ambassador to Bahrain from 1986 to 1989, was one of three men named in the federal indictment unsealed here Tuesday.

Besides chronicling how the defendants allegedly received and invested millions of dollars from Kuwait, the indictment also says that Zakhem served as an intermediary when the Kuwait royal family wanted to give two horses to former President Reagan.

The indictment does not link that proposed gift to the charges.

Zakhem; William R. Kennedy Jr. of North Falmouth, Mass., and Arlington, Va., and Scott Stanley Jr. of San Diego conducted an intensive national media, advertising and direct-mail campaign in late 1990 and early 1991 to marshal public support for U.S. intervention following Iraq’s invasion of Kuwait. Kennedy was arrested Monday in San Diego, where much of the money was stashed.

But the indictment says the three also lined their pockets with $5.7 million of the $7.7 million paid them by Kuwait, failed to divulge that they were representing a foreign government and broke federal tax laws.

Zakhem faces 11 counts of evading tax laws and one count of violating the Foreign Agents Registration Act; Kennedy and Stanley each face two charges.

Between Iraq’s invasion of Kuwait on Aug. 2, 1990, and Kuwait’s liberation in February, 1991, the three allegedly spent $2 million on a media and advertising campaign urging a military offensive to drive out the Iraqis.

They kept the additional $5.7 million given them by Kuwait and lied about the money to the Internal Revenue Service, the indictment says.

Working with representatives of the Keene, Shirley & Associates public relations firm, the men held news conferences and were interviewed by radio, television and newspaper reporters. They also conducted a direct-mail campaign, met with congressmen and members of the Kuwait royal family and held a seminar at the Institute for Geopolitical Studies in Washington, D.C.

According to the indictment, Zakhem in late November, 1990, advised former Atty. Gen. Edwin Meese that the Kuwaiti royal family wanted to give two Arabian horses to Reagan.

As the war approached, the men placed advertisements in national publications and paid for television ads promoting Iraq’s ouster from Kuwait.

But, according to the indictment, the defendants devoted a great deal of time to concealing money in 10 banking and investment accounts in the United States, in London and in Beirut, Lebanon.

The bulk of the $7.7 million paid by Kuwait, disbursed in amounts ranging from less than $50,000 to more than $250,000 from accounts at American Security Bank in Washington, first found its way into four accounts at First California Bank in San Diego, the indictment says.

From there, the defendants shifted it again and again among other accounts, the indictment says.

A total of $5.6 million at one point found its way into Gerald Limited, a commodities firm located in New York and London, the indictment says. Other investment firms and banks where investigators traced the money include the Bank of Denver; Hanifen, Imhoff Inc. of Denver; Charles Schwab & Co. Inc. of San Diego; Signet Bank in Washington and Wedge Bank in Beirut, where Zakhem deposited $1 million, the indictment alleges.

The direct-mail campaign produced a trickle of money that also found its way into the accounts--about $100 altogether, the indictment says. One donation was for $1.61.