Dr. Murdock Head, founder and executive director of the Airlie Foundation near Warrenton, was indicted by a federal grand jury yesterday on charges of tax evasion, conspiracy and bribery of Rep. Daniel Flood (D-Pa.) and former Rep. Otto Passman (D-La.).
Head, 55, who is also a George Washington University physician and department chairman, is accused of securing federal grants for his 16-year-old nonprofit foundation by making cash payments to Flood, Passman and Flood's former aide, Stephen B. Elko.
After gaining nonprofit and tax-exempt status in 1963, the Airlie Foundation was transformed from what was once Head's bucolic private country home into a multimillion dollar enterprise that includes a movie-making company and other operations.
Head, who holds graduate degrees in medicine, law and dentistry, counts many of Washington's power elite among his close friends. He has long hosted them and other government officials at federally funded conferences held on the Airlie Foundation grounds, 45 miles southwest of Washington.
The 13-count indictment, returned in Alexandria, contains several allegations against Head which surfaced during previous congressional testimony and Flood's bribery trial earlier this year.
It also details several new charges involving Head's alleged juggling of the tax-exempt Airlie Foundation operations in order to avoid paying taxes on the ventures of another taxable corporation he supposedly controlled.
Head, who will be arraigned Monday, has denied all wrongdoing.
In addition to charges of bribery, conspiracy and tax evasion, Head is also accused of giving a gratuity to an IRS agent and aiding and abetting the filing of false income tax returns in 1974, 1975 and 1976.
Including in yesterday's 22-page indictment were charges that Head:
Conspired between 1967 through 1977 to bribe Flood, Passman and Elko into using their influence to award federal contracts, grants and other funds to the Airlie Foundation and an affiliated George Washington University department. The contracts and funds came from the Agency for International Development and the Department of Health, Education and Welfare.
Gave favorable terms on a $11,000 loan to former IRS** AGENT JESSE HARE BECAUSE OF HARE'S ROLE IN AUDITS OF AIRLIE'S TAX-EXEMPT STATUS AND OF RAVEN'S HALLOW, A FILM-MAKING CONCERN THAT HANDLED THE FOUNDATION'S MOVIE VENTURES;
MADE "FALSE AND FRADULENT ENTRIES ON THE BOOKS, RECORDS AND YEAR-END TAX RETURNS" OF RAVEN'S HOLLOW FOR THE YEARS 1967 THROUGH 1975;
". . . BY VIRTUE OF THE POWER AND CONTROL HE EXERCISED OVER THE AIRLIE FOUNDATION AND RAVEN'S HOLLOW" HEAD TRANSFERRED INCOME INTO THE TAX-EXEMPT FOUNDATION, ELIMINATING TAXABLE PROFITS OF RAVENS HOLLOW.
FOR EXAMPLE, THE INDICTMENT CHARGES THAT HEAD ENGINEERED THE LEASING OF A 20-ACRE LAKE FROM THE AIRLIE FOUNDATION TO RAVEN'S HOLLOW, ALTHOUGH RAVEN'S HOLLOW "HAD NO LEGITIMATE BUSINESS USE OR NEED" FOR THE LAKE.
HE IS ALSO ALLEGED TO HAVE LEASED A YACHT, THE AIRLIE III, from the foundation to Raven's Hollow, although the boat "was used by Head virtually as his own personal craft."
Head is accused of having backdated property leases between the foundation and Raven's Hollow so that the latter firm reported less taxable income for the years 1973, 1974 and 1975.
The indictment said Head "created a secret cash fund" in order to make direct and indirect payments to Passman, Flood, Elko and others. The fund supposedly was amassed primarily by generating fictitious and fraudulent travel expenses for Raven's Hollow employes.
Head allegedly directed Raven's Hollow to issue two checks totaling $25,600by the Mellon/Scaife family in Pensylvania. Headby the Mellon/Scaife family in Pensylyania. Head had the payments recorded as a consultant's expense on Raven's Hollow's 1974 tax return, "well knowing that said entry was false and fraudulent," the indctment said. The money, according to the indictment, actually went to repay a loan guaranteed by Head, it said.
The conspiracy count of the indictment lists 20 "overt acts" by the Airlie Foundation official, among them giving a total of $28,000 to Elko to be delivered to Flood and $12,000 to be delivered to Passman.
The bribery charge accuses Head of giving Flood $1,000 to buy his influence in getting grants from HEW and AID.
Spokeswomen for the Airlie Foundation and George Washington University said yesterday that Head would continue as executive director of the foundation and as GWU's Airlie professor of medical and public affairs and chairman of the medical center's department of medicine and public affairs.
The "Airlie chair" in the GWU department is an endowed professorship created and funded by Head's foundation.
"Dr. Head and his family have served the Airlie Foundation in a dedicated fashion since its inception," said a foundation statement. ". . . It takes seriously the legal doctrine that an indictment is only an accusation and not proof of wrongdoing."
Neither federal prosecutors in Alexandria nor Head's attorney would comment on the indictment.
Flood's case, in which detailed allegations of government wheeling and dealing by Head and others emerged, ended in a mistrial in February. The Pennsylvania congressman is awaiting retrail.
Passman has been acquitted on unrelated charges of taking bribes from South Korean businessman Tongsun Park in return for Passman's congressional influence.
Elko, convicted in an unrelated bribery case, is the government's key witness against his former boss and is likely to be a major witness against Head.
Former IRS agent Hare was indicted on a charge of accepting a gratuity but a judge has ruled the statute of limitations had expired in his case. The Justice Department is appealing.
If convicted, Head could face up to 15 years and a fine of $20,000 on the bribery charge and lesser jail terms and fines on the other charges.
Head, a native Texan who picked up his third degree, in law, at GWU in 1958 has been described as a man of unbounded optimism. He has made a career out of meeting and befriending influential politicians and academics.
When the Airlie Foundation, built on Head's sprawling 1,200-acre farm near Warrenton, was accused in 1967 of taking covert CIA funds, the executive director's close friend, Rep. Melvin R. Laird, later defense secretary, defended Head and the foundation on the House floor.
Head later won a $60,000 libel suit against The Washington Star for publishing the false accusation.
His contacts with Flood and Passman are said to have been formed because each man chaired powerful House appropriations committees that controlled the federal grants Head was seeking.
In 1974, when AID officials threatened to cut off funding for a multimillion dollar contract with Head, it was Passman who persuaded the agency to continue the project.
The Airlie Foundation has been known for its hosting of high-level conferences and involvement in medical and environment educational programs. Its documentary film production efforts have received nine Emmies from the local chapter of the National Academy of Television Arts and Sciences.
In all, federal population and movie-making contracts totaling more than $15 million were directed to the Airlie Foundation and the allied GWU medical department that Head runs.
When Head decided to make a film through the foundation on heart attacks, former President Eisenhower willingly agreed to sit for a long interview on his recuperation after his own attack.
Head's Airlie Foundation staff, which has numbered as many as 240 employes, has turned out such varied products as a Spanish-language film on Vasectomies, a conference for Latin American soap opera writers and planning sessions for Washington's Metro subway.
Candle-making hobbyists, civil rights groups and Fauquier County garden clubs also have used the foundation's conference center as a retreat.