Carl ”Spitz” Channell, a little-known political fundraiser who had access to President Reagan, Vice President George Bush and other White House officials, is emerging as a crucial figure in the investigation of the diversion of funds to support the Nicaraguan contras.
Lawrence Walsh, the special prosecutor, and the FBI plan to scrutinize Channell`s financial records to determine whether he violated tax, election and other laws in lobbying Congress for aid to the rebels, according to well- placed sources.
These sources said investigators also are seeking to confirm whether Channell funneled money he raised directly to the contras and whether there have been violations of election financing and neutrality laws.
The Internal Revenue Service already is auditing the books of Channell`s extensive Washington-based fund-raising network, Channell`s brother, Samuel Ward Channell, said in an interview.
And two congressional committees are expected to examine his ties to Marine Lt. Col. Oliver North, the former White House aide who played a key role in secret arms sales to Iran and the alleged diversion of profits to the rebels trying to overthrow Nicaragua`s leftist Sandinista government.
Channell, 41, who became involved in conservative political fund raising more than a decade ago with Reagan political confidant Lyn Nofziger, first gained notoriety in the Iran affair in December. A Massachusetts newspaper reported he received $5 million from the proceeds of arms sales to Iran and used it in political campaigns against opponents of aid for the contras, a charge he has denied.
But the West Virginia native, who has dazzled other conservative fundraisers with his uncanny ability to attract six-figure donations, now faces an array of new questions about his work for North and the White House. A former Channell associate charged Thursday on ABC that Channell and North stressed the need for weapons over humanitarian concerns in briefing the wealthy donors at the White House last year and implied that their contributions were being used to buy arms.
The ex-associate, Jane McLaughlin, said she was told Channell funneled nearly $5 million in private donations through a Washington public relations firm and that she ”was led to believe it was going directly to the freedom fighters.”
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The fund appeal, code-named the Toys Project, came at a time when Congress had banned U.S. military aid to the contras and had prohibited administration officials from soliciting lethal aid from individuals or other countries.
Legal experts said any such donations also might have violated the Neutrality Act, which prohibits Americans from waging war against countries at peace with the U.S.
Channell declined to comment on McLaughlin`s allegations or to be interviewed for this story; other news organizations have been unable to corroborate her charges.
But Channell`s aunt, Eleanor McManus, confirmed that Channell raised money for the contras from private donors while sitting at Bush`s table at a dinner held by other conservatives in April, 1985.
She said he told her the money was for nonlethal aid and not for weapons. She also attended the dinner and was seated nearby.
The group sponsoring the $250- to $500-a-plate dinner, which featured an appearance by the President, raised only $3,000 after expenses to aid anticommunist Nicaraguan refugees.
But McManus said: ”All I know is Spitz got his money from his fundraisers and those checks were sent directly to Nicaragua.
”I don`t know how much he got,” she said, ”but he felt very good about what he got.”
McManus, who said Channell had denied any wrongdoing, said she didn`t know to whom or to what groups the checks were made out. But legal experts said that if Channell had accepted them on behalf of any of his numerous tax- exempt foundations, political action groups and lobbying organizations, it would have been illegal for him to use the money for purposes other than voter education or financing of political campaigns.
Extensive interviews with Channell`s relatives, friends and associates also provided new details about his fund-raising techniques and about the extent of his apparent contacts with top government officials.
Relatives said Channell had boasted that he attended meetings with Reagan on contra fund raising three times between January and March, 1986, and that he brought groups of donors to the White House for 15-minute meetings with the President on several occasions.
Channell has told friends and relatives that Reagan had sent him 12 letters thanking him for raising funds for the contras in the last two years. McManus said Channell also told her that he had met several times with Bush in early 1986 at the White House and with ”some committee Bush was on to verse them on Nicaragua.”
According to McManus, White House Chief of Staff Donald Regan met with at least one set of Channell`s donors, and a Channell associate who asked not to be named said Elliott Abrams, assistant secretary of state for Latin American affairs, addressed another group.
In addition, relatives said Channell told them he had met with North a total of 12 times and that he had obtained pamphlets and slides about contra activities from North and turned them over to an advertising agency in Baltimore that made a series of pro-contra television commercials for him.
McManus said Channell invited North and his wife to a Nov. 4 election night party last year at the Willard Intercontinental Hotel, along with about 70 other people who had supported congressional candidates who favored contra aid. At that buffet supper, where a dozen television sets were tucked into the three-room suite, North presented Channell with one of the 12 letters Reagan wrote him, thanking him for his support in winning the $100 million in contra aid from Congress.
But Channell`s brother Sam, who is associate director of emergency medical services for the West Virginia Department of Health, quoted Channell as saying he told the FBI that none of his meetings with North lasted more than 15 minutes.
` ”How well would you know someone?` ” Sam Channell said his brother told the FBI about North. ` ”He`s got a whole staff over there at the White House. Why don`t you go ask them?` ”
Nonetheless, McManus said some of Channell`s donors sent him checks to start a legal defense fund for North shortly after North was fired Nov. 25 for his alleged role in diverting funds from the Iranian arms sales.
”Several of them sent checks right away,” McManus said, ”but then they found out that legally they could only send $10,000 apiece, which Spitz turned over to North.”
McManus said one of Channell`s biggest contributors, Ellen Garwood, an elderly widow from Austin, Tex., was one of the first to suggest the defense fund because she was ”so concerned” about North.
ABC said Garwood has given almost $2.5 million to Channell`s groups. Attempts to reach Garwood for comment were unsuccessful.
Family members also said Channell told them that after the Massachusetts newspaper story appeared in December alleging that he had received some of the diverted Iranian funds, his office near the White House on Pennsylvania Avenue was broken into and his contributor list was stolen.
About three days later, the relatives said, Channell received an anonymous phone call telling him he could have the list back for $250,000.
”He told them, `Forget it, it`s listed with the FEC (Federal Election Commission). I don`t have to pay a thing to get it back,` ” one relative said.
Last May 30, Channell took his aunt on a three-week ”first class” trip to France and Italy and during their stay in Paris, the fundraiser met twice with a group of Frenchmen interested in donating funds to Channell`s antiterrorism efforts, especially those focusing on Europe, McManus said.
Associates said Channell`s fund-raising network was centered on the National Endowment for the Preservation of Liberty, a tax-exempt foundation formed in 1984, according to his written statements to the IRS, to ”educate members of the general public on American political systems and societal institutions.”
His eight other groups include two political action committees, the American Conservative Trust and the Anti-Terrorism American Committee; a lobbying group, Sentinel; and a political consulting outfit, Channell Corp.
It was the pro-contra television ads, which cost $1.3 million and ran shortly before Congress voted to restore aid to the rebels last summer, that first brought Channell to attention here.
Democratic legislators called on the IRS to investigate whether the partisan tone of the ads violated laws restricting the political activities of tax-exempt organizations.
Several Democrats also complained last fall after Channell used money raised by his political action committees to pay for ads that branded as communists specific legislators who had opposed the contra aid package.
Contra sources said Channell also has paid many of the expenses of the contras` lobbying office here, underwritten a 36-city speaking tour by contra leaders and given several hundred dollars in cash to visiting contras in need of expense money.
Associates said Channell, who has been known as Spitz since birth, raised much of his money from wealthy elderly Americans, particularly in the South and Southwest.
Many of the donors routinely gave to other conservative causes as well, but associates said the short, mustached Channell always snared their largest donations.
For Channell, fund raising is ”a science,” said McManus, who still lives in Channell`s hometown of Elkins, W.Va.
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”Last year, Spitz and I flew down to Palm Beach for the weekend,” she said, ”and that Friday night there`d been a big $1,000-a-dinner fundraiser for Bush. The Sunday paper had a special section on everyone who was there, who they were and where they were from. Spitz stayed up the whole night looking up phone numbers for everyone on the list. He knew they were Republicans; obviously they were wealthy. He called 15. He said either eight or nine of them gave him money, each between $50,000 and $100,000.”
A longtime friend who asked not to be named said Channell typically would send roses to his elderly women donors and provide limousines when they came to Washington for briefings.
He also had a flair for dramatics. An associate said Channell once invited contra leader Adolfo Calero, along with a rebel soldier who had lost a leg in the war and a teenage fighter dressed in full battle gear, to address some donors at a posh Washington hotel.
The donors were so mesmerized, the associate said, ”you could hear a pin drop.”
Despite such rapport with his conservative donors, however, Channell himself is not even registered to vote, according to records in the District of Columbia, where he lives. His brother said he did not think Channell had voted in some time.
Friends said another key to Channell`s apparent success came sometime in 1985, when he decided to depart from conventional fund-raising philosophy and target broad issues rather than trying to aid individual candidates.
”The fact that Spitz generally backs issues Congress has balked on is what gets him attention,” said his brother. ”If somebody calls the White House and says, `I raise money and would like to support your causes,` you take help wherever you can get it.”
It was a phone call to the basement of the White House, to Oliver North, that opened the communications pipeline between Channell and those on the President`s staff committed to winning support for the contras.
According to Channell`s brother and his aunt, the fundraiser didn`t know North until sometime in late 1985. The two were ”sympatico” from the start, according to a longtime family friend, especially when it came to Central American affairs.
McManus, Channell`s 83-year-old aunt, described her nephew`s relationship to North as ”casual.”
But last summer, Channell was hoping to take the Norths and their children to Elkins for a weekend getaway from Washington. The visit never took place.
For Channell, the ”trappings of the White House are heady, heady stuff,” his brother said.
Channell got into conservative fund raising through a chance meeting at a Washington restaurant with National Conservative Political Action Committee
(NCPAC) founder John T. Dolan around 1975. Channell and Dolan, who died late last year, saw eye-to-eye on domestic and foreign policy issues, and Channell went to work for the ultra-conservative organization.
At first, Channell volunteered for the group, but by 1980, as NCPAC`s biggest fundraiser, he was put on commission.
By 1983, Channell decided Dolan`s tactics were a ”little too nasty,”
according to his brother. At the urging of a few close associates, Channell left NCPAC.
For a while, he remained on contract with NCPAC, continuing to raise funds for it while he built up his own contributors list.
Today, Channell earns between $100,000 and $150,000 a year, his brother said. He owns a large art-filled condominium in Washington`s exclusive Kalorama Triangle and he recently purchased his aunt`s rambling ranch house in Elkins.
He travels to Europe two or three times a year. Just last week, he was in Germany and London.
Channell`s brother is concerned. Leaning against the glass-top desk in his Charleston, W.Va., office, Sam Channell draws tight his lip and says: ”I hope this doesn`t destroy his business. He`s worked hard for what he`s got and I`d hate to see someone say, `Well, it`s too bad we accused him and now we find out there`s nothing to it and it`s too late.` ”
But then again, as Channell`s aunt says, ”We may just have to ride this thing out. It could be a long time before someone comes up with the answers here.”