The Consortium

Earl Brian: Reagan's 'Scandal Man' Off to Jail

By Richard L. Fricker

Few ostensibly private citizens passed through as many controversies of the Reagan-Bush era as did Dr. Earl W. Brian, a decorated Vietnam War veteran and a longtime aide to Ronald Reagan. Even fewer found their credibility more aggressively defended by both Republicans and investigators whose job it was to get at the truth.

Brian's credibility was a sledgehammer knocking down two scandals in particular: the October Surprise case which held that Reagan's men sabotaged President Carter's Iran hostage negotiations to help win the 1980 election, and the PROMIS affair which purports that Reagan's team stole a valuable software program from a small company, modified it for intelligence purposes and let Brian share the profits.

Brian angrily denied any participation in these affairs and his veracity was accepted by government investigators. Relying in part on Brian's testimony, official inquiries "debunked" both scandals. Since then, the Washington news media has consigned the controversies to the fantasyland of bogus "conspiracy theories."

It is, therefore, not surprising that the powers-that-be in Washington have been virtually silent in recent months as Brian's credibility has crumbled. On Oct. 17, 1996, after a four-month trial, a federal jury in Los Angeles convicted Brian on 10 counts of criminal behavior, including conspiracy and commission of bank and securities fraud. He was ordered to report for the start of a four-and-a-half-year prison term on Aug. 18.

The evidence now shows that Dr. Brian -- Mr. Credibility in denying October Surprise and PROMIS allegations -- was a con man.

Brian's ultimate undoing resulted from his financial manipulations of Financial News Network and United Press International. In 1993, federal investigators found that Brian and other executives used false inter-office billings and lease back arrangements to collateralize loans totaling between $70 million and $100 million. The fraud was carried out, according to the indictment, to prevent FNN and UPI auditors from learning that both companies were broke. The manipulations puffed up stock values. Brian also made off with $300,000 in stolen funds.

Still, Brian might be marked down as just one more of the scores of Reagan-Bush insiders convicted of corruption from that 12-year era. But there is more significance here, given the weight put on Brian's credibility and the historical importance of the scandal allegations against Brian.

In 1992, congressional inquiries accepted at face value Brian's denial that he had flown to Paris in fall 1980 as part of a Republican plot to block Carter's desperate efforts to free 52 American hostages then held in Iran.

Israeli intelligence officer Ari Ben-Menashe said Brian spoke some Farsi because he had visited Iran in the 1970s when he was Gov. Reagan's state secretary of health and welfare. So Brian slipped naturally into the role of Reagan intermediary to the Iranian government in 1980.

Ben-Menashe, an Iranian-born Jew who served in Israeli military intelligence, claimed that in late January 1980, a Brian acquaintance, former Iranian Prime Minister Mehdi Bazargan, arranged passage from the Iranian embassy in Ottawa, Canada, to Tehran for Brian and Robert McFarlane, then a Senate staffer. Ben-Menashe asserted that Brian also was a Republican representative at later meetings in Madrid and then in Paris in October 1980. The Israeli claimed further that $4 million in CIA money was transferred into a Brian account in Phoenix, Ariz., as part of the pay-offs for the secret operation. [For details, see Ben-Menashe's Profits of War. ]

Separately, three of Brian's associates in Canada corroborated that Brian did travel to Paris in fall 1980 as part of a business trip supposedly to the Pasteur Institute. Brian denied acting as a secret GOP emissary and claimed that he made the Paris trip in April 1981, not fall 1980. Brian convinced October Surprise investigators that he had no valid U.S. passport in fall 1980, since the passport he turned in had expired before the alleged October meetings and was not renewed until after the election.

However, at least two U.S. government officials told me that Brian had a second passport under the name of "Thompson." Though this information was passed on to the House October Surprise task force which was investigating the Iran-GOP allegations in 1992, chief counsel Lawrence Barcella never pursued the lead, nor did he grill Brian about his alleged involvement in the GOP scheme.

Instead, Barcella and his Republican counterparts authored a report that dismissed Ben-Menashe and other pro-October Surprise witnesses as not credible. The denials of Brian and other Republicans implicated in the operation -- including convicted Iran-contra liar Robert McFarlane -- were accepted as truth. [For details on how those conclusions were reached, see Robert Parry's Trick or Treason, or The October Surprise X-Files. ]

Potent Software

The investigative pattern was similar in the PROMIS case. There, INSLAW, a Washington-based computer software company, was alleging that Brian had participated in theft of its valuable tracking software, called PROMIS. The company alleged -- and two federal judges agreed -- that Reagan's Justice Department had pilfered the proprietary software. (In late July 1997, however, another federal judge rejected INSLAW's claims that it developed the disputed version of PROMIS.)

INSLAW's founder William Hamilton claimed that Brian made a fortune marketing the product to overseas banks and foreign governments, with a "trap door" that allowed U.S. intelligence agencies to extract sensitive data. Hamilton alleged, too, that Brian was brought into the PROMIS scheme as a reward for helping on the October Surprise operation in 1980.

Brian denied any involvement with INSLAW. But former employees of both Brian and the Justice Department linked Brian to the administration's efforts to gain full control of the valuable PROMIS software.

In his book, Ben-Menashe wrote that Brian did sell a PROMIS program to Middle East countries as an anti-terrorism tool -- and that a "trap door" did allow information to be extracted. But Ben-Menashe could not verify whether Brian's PROMIS software was the version authored by INSLAW or another product with the same name developed by the U.S. National Security Agency.

In 1991, INSLAW's attorney Elliott Richardson wrote an Op-Ed piece for The New York Times which linked Brian to the alleged PROMIS theft. Brian responded by suing the former U.S. attorney general for slander and libel. The case was thrown out of court, but it served the short-term goal of chilling public inquiries into PROMIS and Brian's business activities.

Brian's credibility got more help when the Justice Department appointed former federal judge Nicholas Bua to investigate the INSLAW affair. Like the October Surprise task force, Bua accepted Brian's sweeping denials and declared him to be truthful.

But even as Bua was rehabilitating Brian, the Securities and Exchange Commission was preparing a report branding him a flim-flam man. In 1995, a U.S. attorney in Los Angeles presented the evidence to a grand jury which returned Brian's indictment.

At press time, Brian was trying to stay out of prison while his appeal goes forward. He has rebuffed repeated interview requests. But whether or not another one of Reagan's friends sees the inside of a federal penitentiary, Brian can no longer be portrayed as a man of unquestioned honesty. His testimony must be viewed more skeptically, given his proven history of deception.

Washington's conventional wisdom -- smugly dismissing the October Surprise and PROMIS cases as mere "conspiracy theories" -- might deserve another look. ~

(c)Copyright 1997

Return X-Files Index

Return to Main Archive Index

Return to Consortium Main Menu.