A former CIA agent who located the arms supplies in the Iran-contra scheme was convicted yesterday in U.S. District Court of tax charges stemming from his failure to report fully how much money he made procuring arms for the Nicaraguan rebels.
Thomas G. Clines, 62, could be sentenced to 16 years in prison and fined $1 million as a result of his convictions for underreporting his earnings in the 1985 and 1986 tax years and for falsely stating on his tax forms for those years that he had no foreign financial accounts. His sentencing is scheduled for Oct. 31 before Judge Norman P. Ramsey.
During the 10-day trial, attorneys for the Office of the Independent Counsel relied on hundreds of receipts and other financial records to trace the money trail left behind by Clines, retired Air Force Maj. Gen. Richard V. Secord, businessman Albert Hakim and others involved in the scheme to supply the Nicaraguan contras. That trail led prosecutors to foreign bank accounts, dummy corporations and the behind-the-scenes world of international arms dealing.
Clines, who lived in Middleburg, Va., was no stranger to that world. A 30-year veteran of the Central Intelligence Agency, he had helped in the 1961 Bay of Pigs invasion of Cuba and was a longtime friend of Secord. In fact, it was Secord who brought Clines into the Iran-contra scheme in 1985, after having problems with a Canadian arms merchant.
Over the next two years, Clines used his extensive contacts in Eastern and Western Europe to procure the rifles, hand grenades, shoulder-held surface-to-air missiles and ammunition that were later sold to the contras at markups of 20 percent to 30 percent.
For his efforts, Clines initially received 20 percent of the profits gleaned from the arms sales, but that figure was later increased to 30 percent. In all, Clines made nearly $900,000. But he reported earning only $265,000 in 1985 and $402,513 in 1986.
In addition to underreporting his earnings, government prosecutors argued, Clines withheld knowledge of a foreign account known as the "C. Tea" account, which was established to hold money earned during the Iran-contra scheme.
Clines testified that he had no signature authority over any of the foreign bank accounts and that he didn't know he had to report his earnings deposited in the "C. Tea" account. He also testified that when he found out there were problems with his 1985 tax return, he went to his accountants and filed an amended tax return.
"I told them whatever had to be done, let's do it the right way," he said during his trial.
Government prosecutors argued that Clines' efforts to correct his taxes were merely a cover-up.