Oh, what a Tangled Web

By James Kelly

When Robert Vesco practices to deceive

He lives in a sprawling green and white house overlooking the Atlantic on New Providence Island in the Bahamas. He is much devoted to his wife Pat and their five children. By all accounts, he lives simply, though he does indulge himself occasionally. At his private dock are moored a 60-ft. motor cruiser, a 27-ft. fishing boat, three small motorboats and a sailboat,and his yard is crammed with expensive equipment for them.

For fugitive Financier Robert Vesco, 44, however, boating is only a pastime. He devotes his main energies to trying to quash federal indictments that charge him with looting an estimated $224 million from Geneva-based Investors Overseas Services, Ltd., in the early 1970s, and then trying to stifle an SEC inquiry into his activities by illegally donating $200,000 to Richard Nixon's re-election campaign. (Former Attorney General John Mitchell and Campaign Finance Chairman Maurice Stans, who were indicted along with Vesco, were acquitted in 1974. Though Vesco is safe from extradition from the Bahamas, where he fled in 1978, he is eager to resume his career as a globe-trotting financier. U.S. investigators have already tried to collar him: last winter in an operation of questionable legality, the FBI made plans to seize Vesco on a commercial flight between Costa Rica and the Bahamas and divert the plane to Florida. Vesco was tipped off and avoided the trap.

From his palmy refuge, Vesco has been busy spinning an elaborate web of bribery plots that he hopes will somehow enmesh the Carter Administration and result in getting the charges against him dropped. The Justice Department, the FBI, the SEC, a Senate subcommittee and a federal grand jury in New York City are investigating his activities. Vesco's goal, says a high Justice Department official, "is to embarrass the Administration so that he can come back home with immunity from his legal problems."

Federal investigators divide Vesco's schemes into two phases.

In the first, dubbed Vesco I by Government lawyers, he offered four Georgians $10 million in late 1976 if they could persuade the incoming Carter Administration to fix his legal problems. The group in turn paid W. Spencer Lee IV, a lawyer from Albany, Ga., $10,000 to talk with his longtime friend and Carter confidant Hamilton Jordan about Vesco's plight. Lee met first with Carter Aide Richard M. Harden, who, claims Lee, persuaded him not to see Jordan. Lee says he then dropped the scheme entirely. After investigating Vesco I for 18 months, a federal grand jury in Washington, D.C., disbanded without returning any indictments. But Justice Department lawyers, in a memo to Assistant Attorney General Philip Heymann, recommended that Harden be further investigated by a special prosecutor; both Lee and Harden were suspected of lying when they claimed they never approached Jordan. But Heymann turned down the lawyers' proposal. Explains a top Justice Department official: There's something there. We have contradictions that can't easily be explained. But in terms of developing information of criminal wrongdoing, forget it. There just wasn't enough evidence."

In the financier's second scheme, Vesco II he agreed in mid-1978 to help Libya obtain eight C-130 military transport planes that were bought in 1973 but impounded by the Nixon Administration. Vesco's price: $30 million, which he planned to share with Administration officials who aided him. But Vesco also hoped to strike a bargain: once he ensnared an Administration official with a bribe, he planned to offer his testimony in return for getting the indictments against him dropped.

Vesco first won the help of James C. Day, a former Texas state legislator who claimed that he could gain White House aid in releasing the planes. Another participant in the scheme was James Feeney, a New York financier and convicted swindler. He was found guilty in New York of stock fraud in 1974 and of making a false statement to a bank in 1979 and would soon face charges of fleecing five banks in Denver of $600,000. Feeney signed on with Vesco, but instead of helping him, he went to the U.S. Attorney in New York, told him of Vesco's plan and offered to serve as a Government undercover agent in hopes of winning a light sentence in his 1979 New York conviction. The authorities accepted his offer and outfitted him with a hidden tape recorder.

Throughout the first half of 1979, Vesco, Day and Feeney met several times to plot the Libyan plane deal. According to Day, Democratic Party Chairman John White, a self-described "political acquaintance" of Day's, agreed to accept $1 million for his help; White vehemently denies the charge. On June 20, 1979, White did meet with Day and the Libyan U.N. Ambassador Mansur Rashid Kikhia in a Washington restaurant. The FBI photographed the meeting but did not record the conversation. According to Day, the topic was the Libyan planes; White denies this and claims he met with Kikhia only as a "courtesy" to Day. White testified before a grand jury in New York City in October 1979 and is now being investigated by the Justice Department on possible perjury charges.

Reverberations from Vesco II are still being heard. Senators Dennis DeConcini of Arizona and Orrin Hatch of Utah visited Vesco separately last July and later claimed that the Justice Department was dragging its feet on the case in order to protect high Administration officials Federal Judge Fred Winner, who is hearing Feeney's case in Denver, seems to share that impression. Winner accused the department last month of a "stonewall" for not allowing Feeney to testify about the contents of the 60 hours of secret tapes he made as a Government informant in the Vesco investigation; Feeney claims that he took part in the Denver fraud only to hide his role in the Vesco inquiry. Justice Department officials say this is nonsense and adamantly deny charges of foot dragging.

Vesco claims he is so eager to tell his side of the story that he proposed to the U.S. Attorney's office in New York that if it allowed him to testify before a Senate subcommittee investigating Vesco II, he would stand trial on at least some of the federal charges against him. Said Vesco to TIME last week: "The time for games has come to an end." Justice Department lawyers scoff at the offer. His real motive, they insist, is to trick the committee into giving him immunity from prosecution for whatever he says in the hearing room -- and then talk about every charge against him, no matter how irrelevant to the committee's probe. He then more than likely could not be prosecuted. Says a Government lawyer:

"He's trying to use politicians to let him rule the world."

-- By James Kelly

Reported by Jonathan Beaty and Evan Thomas/ Washington

With reporting by Jonathan Beaty, Evan Thomas

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