By the summer of 1984, the telephone calls from the LaRouche organization were coming more than 10 times a day to Carl Swanson of Lutherville, Md. The callers all asked for money for the presidential campaign of political extremist Lyndon H. LaRouche Jr., and most of them left Swanson "just listening and crying," his wife, Margaret, said later.
"He gets all befuddled if he has a problem he can't handle," Margaret Swanson said of her husband, a veteran of General Patton's Army who had retired a short time before as a result of a paralyzing stroke. His patriotic duty, Swanson was told, required him to help LaRouche.
"I had no idea he was giving consent for money until I heard him tell her that no more could be drawn on our MasterCard and Visa," Margaret Swanson said in a sworn statement last year. In all, the LaRouche group removed $5,000 from the couple's credit card accounts, including $500 they never authorized, she said.
The Swansons are not alone in their complaints against the LaRouche organization. A string of federal investigations, involving campaign law, tax law, fraud and other allegations, have targeted LaRouche and his followers. The probes include:
*A federal grand jury in Boston, investigating what federal prosecutors call "a massive pattern of credit card fraud" nationwide involving thousands of complaints that LaRouche's 1984 presidential campaign supporters used credit cards without authorization.
*A string of contempt citations against LaRouche organizations based on failure by some LaRouche-affiliated companies to answer subpoenas for documents for the grand jury. If the citations are upheld following appeals, federal authorities could try to collect up to $15 million in fines.
*A Federal Election Commission investigation of numerous complaints, including the Swansons', that the LaRouche fund-raisers committed improprieties, including removing more money than was authorized from contributors' credit card accounts.
*A Justice Department investigation of tax fraud. Federal prosecutors say they are investigating allegations of widespread income tax improprieties by LaRouche's followers and by at least one key corporation in his financial empire. One allegation is that his followers' income is not reported and thus little or no tax is paid.
*Probes by state and local law enforcement agencies. Among them, one by Maryland securities officials, who said last month that they ordered a LaRouche-related corporation to stop selling unregistered securities after a 79-year-old suburban Baltimore woman invested $100,000. The company is appealing the order.
No criminal charges have been filed in the federal probes.
LaRouche and his supporters said the investigations are the result of colossal conspiracies against him by the Federal Bureau of Investigation, the banks, narcotics dealers and others. His organizations have filed several lawsuits against federal officials and banks involved in the credit card transactions. Some LaRouche supporters have distributed leaflets describing a top FBI official as a homosexual, and have demonstrated against William Weld, the U.S. attorney in Boston, by chanting, "Weld is a fag."
Documents concerning lawsuits, the 17-month-long Boston grand jury and Federal Election Commission probes, and interviews with individuals related to the cases offer the most detailed look into the finances of the shadowy LaRouche organization.
LaRouche, a 1960s Marxist with an indefinable extremist ideology today, leads a worldwide organization of about 1,000 supporters. It gained new prominence when two LaRouche-affiliated candidates in Illinois captured the Democratic nominations for statewide offices last month. Former members and experts on the LaRouche operation say it is highly authoritarian, with LaRouche, 63, holding sway over members' personal lives. The LaRouche group denies that it is a cult.
Some pending criminal investigations and civil court cases involving the LaRouche group's finances have been stalled for months by what opposing attorneys and at least two federal judges have described as the group's delaying tactics and failure to abide by court orders.
A federal magistrate in New Jersey, noting one LaRouche organization's "continous efforts to delay and/or stymie discovery," has imposed $500-a-day fines for not producing documents. The LaRouche side is appealing the fine.
In addition, U.S. District Court Judge A. David Mazzone ruled in Boston a year ago that four LaRouche-related groups were in contempt of court for not responding to subpoenas and said that starting April 2, 1985, the four organizations each should pay fines of $10,000 a day.
In addition, Mazzone hit one of four groups with added $5,000-a-day fines starting last Jan. 23. The fines now total approximately $15.7 million. Of that amount, the judge has issued judgments -- orders allowing collection of a debt -- for only $430,000.
The LaRouche groups are appealing the contempt orders, and the federal appeals court in Boston is expected to rule in a few weeks. Justice Department lawyers say they expect to win the appeal and according to sources, U.S. marshals could attempt to collect the fine by seizing cars, computers and other property from the LaRouche groups, and maybe file judgments on the groups' extensive real estate holdings in Loudoun County, Va., and elsewhere.
One snag in any collection effort, the sources said, could be the LaRouche group's assertion that it is decentralized and that its corporations are unrelated. Under that reading, the government would be able to collect only from the specific organizations fined.
But prosecutors say the LaRouche groups are intertwined. "Each of these entities is closely related," Daniel Small, assistant U.S. attorney handling the case in Boston, said in federal court. "Each of them funnel money back and forth between others of the different entities."
A March 1985 affidavit by FBI agent Richard Egan said that one corporation under investigation, Campaigner Publications Inc., "passes funds to and through other LaRouche-related entitities." Egan said the corporation had three accounts at one New York bank and that in a four-month period in 1984, one of those bank accounts had deposits of $4.5 million.
The federal tax investigation focuses on allegations that LaRouche followers and at least one LaRouche-affiliated company, Caucus Distributors Inc. (CDI), do not report income for tax purposes, officials said.
Small said in court documents that CDI pays LaRouche followers "under the table." CDI pays the salaries, rent, utilities and personal bills of LaRouche followers, but it refers to them as corporate "consultants," Small said. "This is apparently done in an attempt to encourage and/or justify the failure of both employer and employe to report or pay taxes to the IRS."
Under the law, corporations generally must withhold income taxes for employes ut not consultants.
CDI's lawyer, Lawrence Aronson, said that CDI's fund-raising "consultants" are paid only about $100 a week. "We get paid very little for our work," one CDI "consultant," Elliott Greenspan, said in grand jury testimony last December. He added that the meager CDI payments are the LaRouche followers' sole or primary source of support and that CDI had even paid for his bedroom furniture.
LaRouche lives on a $1.3 million estate outside Leesburg, Va., but he said in a 1984 trial that he has almost no income and has paid no income taxes since the early 1970s. He said he has no idea who pays his phone bills, travel expenses or lawyers' fees.
LaRouche's 1984 presidential campaign records show that he raised $6.1 million, including $494,000 in federal matching funds. According to ex-members and other sources, the most intense fund-raising pressure on members occurs during presidential elections.
To raise funds, the group gathers intelligence for corporations or individuals for a fee, and seeks donations and loans, sometimes as large as $200,000, from its members. But the main device is telephone solicitation. In recent depositions, LaRouche followers have described about 12 regional LaRouche offices, where up to 30 supporters raised money over the telephones.
Most cases under investigation by the grand jury started with LaRouche supporters asking people to subscribe to a LaRouche magazine or make some other purchase, and to pay for the purchase on a credit card. Small said when the purchasers got their credit card bills, the charges often were not the $15 to $25 they expected but $500 or $1,000 or more.
Prosecutors declined to say how much money had been amount allegedly raised improperly, but pointed to civil suits between the LaRouche group and its former bankers. Lawsuits against the First Fidelity Bank of New Jersey and Chemical Bank in New York show that contributors have disputed more than $1 million in credit card charges, either in money taken without authorization or in campaign loans not repaid.
The Swanson family said in statements to the FEC that LaRouche representatives called every five minutes, and the family stopped taking calls except from friends who were given a phone-ringing code.
"I didn't want to hear constantly about how disaster was about to strike any moment unless they had money for this or that," Carl Swanson said.
Ordel Bradley of Modesto, Calif., said in her FEC complaint that she was "harassed" by LaRouche callers in the summer of 1984 until she agreed to loan them $950 with her credit card. She said they then talked her into making two loans totaling $30,000, "my life's savings." When the first installment was not made, she demanded all $30,950, she said, but has thus far gotten $450, friends say.
Carmen Canns of Vermont outlined her experience in a deposition in a New Jersey case: She said that in 1984 she met a LaRouche follower in an airport and subscribed to a LaRouche magazine for $25, using her credit card. A short time later, the phone calls started, but she refused to contribute more.
Then she got her credit card bill, with three charges to the LaRouche campaign totaling $850. "I panicked, because I have never, ever had such a big amount on my credit card," Canns said. Soon she received statements from the LaRouche campaign that she had loaned it the $850, as well as another $150. When the LaRouche people called to ask her to subscribe to a magazine for $395, she angrily refused. She then started writing letters to the group demanding her money back and insisting it not charge her for the subscription.
That's when she received a credit card bill for $396 for the magazine, and then a second for $396, as well as a $25 charge to another LaRouche group. She started writing the credit card company demanding they remove the charges -- which the company did -- and then resumed writing the LaRouche organization, saying she was "in desperation" financially.
After her numerous letters of complaint, the group in February 1985 started repaying Canns $100 a month. She also received a letter signed by LaRouche saying that there had been "no intent" to remove money without authorization and that problems were a result of "clerical error."
Anne Cresson of Princeton, N.J., says she remembers getting the first phone call last August from a woman who told her that donations would help President Reagan. "It sounded like as if I was doing a very patriotic thing," she said, and told the LaRouche caller that she had a coin collection.
The coins, valued at more than $100,000, became a center of dispute between her and the LaRouche-affiliated Caucus Distributors, Inc. After she gave a representative the coin collection on what she thought was a loan, she had second thoughts. Unable to get the collection back, she went to local police who filed theft by deception charges against two CDI workers. CDI returned the coins in an agreement negotiated by local officials. The LaRouche people deny the charges, and one filed a false arrest complaint against police.
Complaining to the Reagan administration about the Boston grand jury investigation, LaRouche wrote an eight-page letter to the president in November 1985, saying that his campaign finances were "clean as a whistle" and that the complaints came from only "a tiny fraction" of his contributors and were generated by "massive pressure" on donors to complain. LaRouche added that the federal probe of his finances showed that the Justice Department was "the witting accomplice of the international narcotics-trafficking interests."
His supporters have made the same argument, saying in their literature that the FBI's behavior in the case is "a scandal bigger than Watergate." They have distributed "wanted" posters for the president of First Fidelity Bank of New Jersey, which had frozen some funds because of mounting credit card complaints. LaRouche followers said he was guilty of "grand larceny."
In addition to their tactics outside the courtroom, the LaRouche group has slowed criminal and civil proceedings. Prosecutors speak with frustration about their case.
"They have flooded the courts with pleadings and have done everything possible to frustrate the grand jury investigation and avoid compliance," Small told the judge.
LaRouche followers, asked in depositions about the LaRouche group, frequently refused to answer, citing their rights to privacy. Often, when asked in depositions to support LaRouche claims, such as saying that Chase Manhattan is a "dope bank," they claimed they were reporters for LaRouche publications and cited journalists' protection against revealing sources.
U.S. marshals tried four times in early 1985 to serve subpoenas on the LaRouche groups, but were met by locked doors at its Manhattan headquarters, and by group workers who said they couldn't accept the papers. The LaRouche lawyers say the subpoenas still have not been served.
When each of four LaRouche-affiliated companies found in contempt was finally required by the court to bring forward a "keeper of the records" to produce subpoenaed documents, individuals appeared before the grand jury with scanty, mixed-up records that revealed little, prosecutors said. The so-called corporate record-keepers said they had gotten their jobs one day before and were unfamiliar with their groups' records.
Lawyers for the LaRouche groups said they have answered all questions and largely complied with subpoenas. The documents handed over "are in the hundreds of thousands and go back three years," attorney Matthew Feinberg said.
The latest dispute involves important subpoenaed documents -- thousands of index cards LaRouche fund-raisers filled out for each contributor, noting the amount of money given and political interests. Attorneys for the LaRouche group argue that fund-raisers were self-employed "consultants" and that the cards are their private property so they cannot be subpoenaed. Attorney Aronson said that handing over the index cards would be "devastating" to CDI's operation and a violation of the First Amendment's protection of privacy in political association.