Much of the career of Thomas C. Reed could be described in a series of bright snapshots: Reed as nuclear engineer, as millionaire developer, as secretary of the Air Force, as special national security assistant to President Reagan.
But prosecutors in his U.S. District Court trial here today offered a darker portrait of Reed: a married man who carried on two love affairs simultaneously, put one girlfriend on the Defense Department payroll, and backdated and forged documents so his girlfriends could share in the illicit profits from an insider-trading stock deal.
The image of an upstanding public servant, Assistant U.S. Attorney Charles M. Carberry, told the jury in closing arguments today, is "Thomas Reed the myth . . . . This is not a man who's a stranger to deception," Carberry said. "It's a way of life with him."
Carberry also described Reed, 51, as an opportunistic wine merchant who, by his own account, tried to persuade William P. Clark, then deputy secretary of state, and Michael K. Deaver, then White House deputy chief of staff, to serve his company's wine at White House and State Department functions.
Reed is on trial here on fraud and obstruction of justice charges involving a 1981 transaction in which he parlayed a $3,000 investment into a $431,000 profit in 48 hours.
The government charges that Reed bought highly speculative stock options in Amax Corp. after his father, a director of the company, told him Amax was the target of an impending takeover attempt, which sent its stock soaring.
Reed has maintained during the seven-day trial that he never received any inside information from his father and had merely been "gambling on behalf of some friends" in buying the risky stock options.
Reed's attorney, Edward Shaw, told the jury today that "the government has missed establishing Thomas Reed's guilt, not just by a reasonable doubt, but . . . by a mile." He said the case was based on "the wildest speculation" and that aside from Reed's quick profit, "virtually every other fact in this case dramatically demonstrates that Tom Reed did not buy on the basis of inside information."
Carberry argued that Reed initially failed to tell his father about the investment because "he was ashamed. He took information he received in trust from his father and he betrayed that trust."
Carberry focused on the morning of March 4, 1981, when Reed, then a California businessman, spoke twice by phone with his father, Gordon Reed, then 81, who had been summoned to a special Amax board meeting to consider a secret merger proposal from Standard Oil of California.
Three minutes after the second call, Reed phoned his broker in San Rafael, Calif., and bought 500 stock options in Amax, a mineral and natural resources company. In buying the options -- a particularly risky investment that exaggerates profits and losses -- Reed was betting that Amax' stock would jump sharply in less than three weeks.
The unsuccessful merger proposal, then the largest in history, pushed Amax stock from $38 to $57 a share when it was announced March 5. Reed sold his options the next day for a $431,000 profit.
Reed is the sixth high-ranking Reagan administration official to be indicted on criminal charges. Former deputy defense secretary Paul Thayer is serving a four-year prison term for insider trading; Thayer gave some of his stock profits to a girlfriend.
Reed included eight others in the deal without their knowledge, including the two girlfriends. He testified that he met one of them, Kay Riddle, when he helped manage Ronald Reagan's first campaign for governor of California in 1966, and that she later became an officer in his California real estate company. When he became an assistant secretary of defense in 1974 and Air Force secretary in 1975, Reed said, he made Riddle, with whom he was secretly living, his special assistant.
After he left the Pentagon in 1977, Reed testified, he began a second affair with his former secretary at the Air Force, Nancy Larkin, without Riddle's knowledge. Reed said he recently separated from his wife of 29 years and hopes to marry Riddle, now a vice president at Chase Manhattan Bank.
Prosecutors contend that Reed had had hints before March 4, 1981, that a merger was under consideration and that he had discussed with Riddle buying Amax options just two days before at a birthday and wine-tasting party in Virginia, where he gave samples of his wine to Clark and Deaver in an effort to promote it by having it served at official functions.
Carberry ridiculed Reed's contention that he did not know of the impending Standard Oil takeover attempt when he bought the 500 Amax options through his California company two days later.
He noted that in the previous month Reed had bought an initial 500 Amax options, and that these were then worthless because the stock had dropped in price. Reed acknowledged telling an associate that he had been "burned" on the purchase.
But after his first March 4 conversation with his father, Reed called his longtime corporate secretary in California -- at 5:22 a.m. West Coast time -- and asked her if any other friends or associates should be included in the new purchase.
"He never, never called her that early before," Carberry said. "He's burning with desire to use the information he got from his father . . . . He knew the stock was going up . . . through the sky."
Reed said he sometimes secretly bought securities for friends and colleagues and did not tell them about it unless he made a profit.
Reed said that after the stock price jumped, he took a stock-purchase form to Riddle and told her to backdate it so it would appear that she bought the options several days earlier.
Reed also acknowledged that he filled out stock-purchase forms for Larkin's twin sons, using black-ink printing for one and blue-ink script for the other so the handwriting would appear different.
Where he lacked information about the sons, Reed said, "I just made it up." He said he wanted the work done that day and was trying to act expeditiously. He said he had long known the boys and decided to press ahead with the investment after Larkin told him that one of them was very ill.
Shaw, Reed's lawyer, denied that Reed had tried to deceive anyone. He said that Reed's extensive private notes about the progress of the Amax options show that he regarded them as a gamble, not a sure thing. He said Reed "believed in the Reagan program" and thought that the new president's economic policies would give the stock market a boost.
Shaw also denied that Reed had lied to the Securities and Exchange Commission, which settled its 1981 civil suit against Reed with a consent decree in which he repaid the $431,000.
Despite the SEC charges, Reed was named to the National Security Council in 1982 -- and later made a presidential assistant and member of Reagan's MX missile advisory panel -- after White House officials decided he had done nothing wrong. Reed was indicted last year.
Reed testified earlier this week that the quick profit caused him "a lot of second thoughts" because he had always stressed ethical behavior. "And yet here I was, having made directly or indirectly an enormous amount of money in trading . . . in a company in which my father was a director," he said. " . . . I had been around Washington and the world long enough to know that when that sort of thing happens there is going to be a flap."
U.S. District Court Judge Robert J. Ward plans to send the case to the jury Friday.