Cash money millionaire

Back when he was still just an anonymous can-do marine slaving in the Old Executive Office Building next to the White House, Lt. Col. Oliver North routinely chased down supervisors, cadging a few bucks for "lunch money" or "cash to go home." So said one of those supervisors at the Iran-Contra hearings. Her testimony suggested that back then Oliver North was desperate. His finances were a mess, his credit cards maxed out. At one point, reimbursing himself for expenses paid out of his own pocket, the junior aide on President Reagan's National Security Council staff used $4,300 in government traveler's checks to buy himself snow tires and groceries.

Even back then, though, Oliver North was a master at raising money. In March 1985, North wrote a top secret memorandum to then National Security Adviser Robert C. McFarlane detailing ways to fund the Nicaraguan Contras by using "several existing nonprofit foundations" he had established. Lawrence Walsh, the special prosecutor appointed to investigate the Iran-Contra scandal, wrote this in his final report on the matter last year: "[Oliver] North used political fund-raisers ... to raise millions of dollars from wealthy Americans, illegally using a tax-exempt organization to do so."

Those days are long gone now. Today, instead of raising money for others while struggling by on the $23,100 annual pension he received from the Marine Corps--after he was fired from his White House post--North makes upwards of $20,000 for a one-hour speech. Instead of the modest suburban home he once lived in just outside Washington, D.C., North and his family today reside on a sprawling, 194-acre estate in the picturesque foothills of Virginia's Shenandoah Mountain. The spread cost $1.17 million. In 1992 and 1993, North made $1.7 million from speaking fees and book contracts. His total assets are now estimated at about $3 million and may well exceed that. His biggest stakes: $1 million in stocks and similar investments and $1 million in equity in Guardian Technologies International, a bulletproof-vest company North founded with Joseph Fernandez, a former CIA station chief in Costa Rica who was indicted but never brought to trial for alleged crimes related to the Iran-Contra affair.

North raises still more money--tens of millions more--for tax-free fund-raising foundations he helped establish. Since November 1986, he has raised $32.4 million for his legal defense trust, his political action committee, a nonprofit organization and, most recently, his campaign for the U.S. Senate. A U.S. News examination, however, of North's financial affairs disclosed the following allegations:

* "Vote buying." Earlier this month, three Republican law-school students from the University of Virginia filed a suit against the Oliver North for U.S. Senate Committee, charging that the campaign has been involved in "vote buying." They claim that a North campaign coordinator paid $45 in cash to one of the students to cover his registration fee as a delegate to the Virginia Republican nominating convention, to be held this week; the student's understanding was that he was expected to vote for North. Such a payment, the complaint claimed, would constitute a violation of federal law. A North spokesman denied any campaign involvement but said that lending money to friends to cover the convention fee is not unusual.

* Questionable solicitations. Freedom Alliance is a nonprofit group North founded to help advocate "a return to traditional values and strong families" while seeking "to encourage political morality in government." In 1991, Freedom Alliance failed to register with the Virginia State Division of Consumer Affairs for six months, making it illegal for the group to solicit contributions in Virginia during that time. Nevertheless, U.S. News has documented four separate instances during this six-month span in which Oliver North wrote to at least one potential donor in Virginia asking to "continue to give generously" to Freedom Alliance "by sending a tax-deductible gift" to the organization. "If they were soliciting in Virginia from May 15, 1991, to Oct. 15, 1991," says J. Michael Wright, manager of the Office of Registrations at the Virginia State Division of Consumer Affairs, "they were doing so in violation of the law." Violators of that statute are subject to a $5,000 fine for illegal solicitation, but Virginia regulators plan to take no action against Freedom Alliance. E.J. Bronars, the retired Marine Corps general who chairs Freedom Alliance, says the delay in filing the "registration documents in 1991 was an innocent oversight." In 1991, during the period in which the four solicitations occurred, Freedom Alliance claimed $2.7 million in contributions nationwide.

* A tangled web. As a nonprofit organization, Freedom Alliance is banned from political activities, and General Bronars strenuously rejects any notion that it has engaged in political affairs or financed any of Oliver North's political activities. This may be true, but critics claim that a tangled web of corporate connections and personal ties among North's nonprofit, for-profit and political entities blurs the distinction between political and nonpolitical groups.

Different North corporate entities, for instance, have used the services of the same security and fund-raising consultants. Several of these entities are run out of the same office building in Sterling, Va. Freedom Alliance subleases space to Guardian Technologies and North American Partnership, an outfit created by North to manage his speaking fees and book tours. Freedom Alliance and North American Partnership once shared a secretary. Freedom Alliance also used to sublease space to the North defense trust.

More interesting than this is the way North's nonprofit operations appear to support his political interests. "The wishes of the people donating to Freedom Alliance may or may not include promoting the Ollie North for U.S. Senate campaign," says Matthew Freeman, research director for People for the American Way, a nonprofit organization that supports liberal causes. "But virtually every piece that has come out of Freedom Alliance has been a puff piece on Oliver North. It is a bad mixing of personality and politics."

This mixing is not limited merely to support for Oliver North. Freedom Alliance employees have worked for North's political action committee, V-PAC, and for his Senate campaign. General Bronars, the Freedom Alliance head, has also served as treasurer and chairman of V-PAC. Two other former Freedom Alliance employees now work for the North for U.S. Senate Committee. General Bronars sees no conflicts in these relationships. "During my involvement with V-PAC, I provided my services on my own personal time and received no monetary or other compensation," he says. The other two employees, says Bronars, "severed all ties with Freedom Alliance well in advance of the date when Oliver North declared his candidacy." North resigned as president of Freedom Alliance in September 1993 to run for the U.S. Senate.

* Conflicts. Freedom Alliance raised $11.4 million from 1989 to 1993 and provided its board members with $696,299 from 1990 to 1992 in the form of salaries, fees to members' law firms and accounting businesses and grants to one member's nonprofit organization. Voluntary standards established by two separate private groups that set guidelines for nonprofit organizations limit financial arrangements in which members of an organization's board are directly or indirectly compensated for their services. Freedom Alliance appears to exceed those standards. Alan P. Dye, Freedom Alliance's legal counsel, notes that those standards are not legally binding and that some notable nonprofit organizations fail to comply with those standards because they are controversial. All payments to Freedom Alliance board members are "proper and legal," says Dye, and often less than the fair market value of the goods and services provided.

* Misleading statements. Claims of false statements have marred some of North's business and political organizations. A recent North for U.S. Senate Committee solicitation asserted that North had "served two tours in Vietnam." In fact, he served one. North later sent out a "priority express" letter that stated: "The mailing you will receive incorrectly indicates that I served two tours [in Vietnam]. Although this is a small mistake, we are in an election year, so I wanted to notify you about it as soon as possible."