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THE FRANKLIN COVER-UP -- CHILD ABUSE, SATANISM, AND MURDER IN NEBRASKA

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CHAPTER 13:  THE WASHINGTON CONNECTION

In December 1990, Senator Schmit recalled an incident from almost exactly two years earlier, before the Franklin committee was officially established. "It was rather strange," Schmit said, "the first day that I decided to introduce the resolution [for a legislative investigation], while the resolution was being drafted, I was cautioned by an unknown person by telephone, that I was advised not to pursue the investigation, because it would lead, I was told, to the highest levels of the Republican Party. And I responded, that the investigation would go where it went."

Hard as the Omaha business community worked to distance itself from Larry King, there were even more strenuous efforts to insulate from the scandal anybody of national stature, with whom King had consorted. There was a lot to hide.

In the Republican Party, King had a meteoric rise. He sang the Star-Spangled Banner at a National Black Republican Council event in 1982, where President and Mrs. Reagan were guests of honor. By 1984, it was the GOP's national convention that heard the national anthem from Larry King. There in Dallas, he hosted his extravagant party at Southfork Ranch, where I saw Maureen Reagan draped over King all evening like a big blanket. In 1988, at the Republican national convention in New Orleans, King sang again. He made a ten-minute "get-out-the-vote" video on behalf of Bush, for the 1988 campaign.

The Omaha Star, newspaper of the city's black community, chronicled the rise in politics of Larry King. In his "Political Viewpoint" column of November 24, 1983, Ernest E. Bryant explained why King was unable to stand for re-election as chairman of the Nebraska Frederick Douglass Republican Council.

Chairman King has accepted a position in the Reagan/Bush re-election campaign. He was appointed by National Black Republican Council Chairperson LeGree Daniels, who was named Chairperson of the Black Voters for the Campaign, in the Reagan/Bush' 84 re-election bid. She has appointed King as coordinator of all the activities to bring out the Black vote. In brief this means that Mr. King will be responsible for meeting with the Party officials and the Black Republican leadership within each of the 17 targeted states. He will coordinate the efforts of these groups in support of the Reagan/Bush campaign. ... Mr. King will also be traveling to the 17 targeted states when President Reagan does, to draw state party officials and Black Republican leadership together.

Mr. King has also accepted the Chairmanship of the National Black Republican Council, Development Committee for Fund Raising.

Stepping inside the Franklin Credit Union, visitors were greeted by a four foot high picture of Larry King with Ronald Reagan.

King's backers in the Omaha business community have plenty of ties to Washington, since Nebraska has been a favorite stomping ground for the national GOP. Although its population is just 1.6 million, the concentration of corporate wealth in the state makes it a priority for fundraising, with the attendant political and business back-and-forth. Peter Kiewit and Sons, for instance, contributed $100,000 to elect Richard Nixon, and later got the contract to build the subway system for the nation's capital. During the 1990 gubernatorial campaign, George Bush called Republican Kay Orr's reelection bid the most important race in the country; Bush visited Nebraska three times. (Orr lost.)

On the morning of February 7, 1990, Larry King was making plans to attend one of those fundraising events in Omaha, featuring President George Bush. Out of the blue, U.S. Magistrate Richard Kopf suddenly ordered King to be taken to a federal psychiatric facility in Springfield, Missouri, for "tests."

Senator Chambers reacted to King's abrupt disappearance, as reported in the March 17, 1990 World-Herald: "State Senator Ernie Chambers said Friday that he believes that Franklin Community Federal Credit Union head Lawrence E. King was 'whisked' out of Omaha 'in a hasty, almost clandestine way' last month so he could not attend an event at which President Bush spoke. Chambers said that a trial of King could prove embarrassing to 'powerful people at the national level.'"

The notes of Franklin investigator Gary Caradori confirm the senator's suspicions. On February 19, 1990, twelve days after King was whisked off, Caradori wrote:

I was informed that LK was sent to Missouri for observation because the Secret Service had discovered that he had purchased a ticket to Governor Orr's breakfast with President Bush. LK was approached at a local floral shop, and was rushed to court by the Secret Service, or at their demand. This was so sudden, that LK's attorneys were unaware of what was going on.

The word in Omaha was that King, indicted in federal court May 19, 1989 on forty counts of financial wrongdoing, was planning to ask Bush for help.

***

When Larry King traveled the political circuit, he evidently had two agendas. To the public, he was the rising GOP star with the resonant baritone voice. Something else went on behind closed doors.

At the Dallas convention in 1984, King threw his splashy party at Southfork Ranch, remembered by me and many other delegates as an unparalleled extravaganza. According to several victim-witnesses, he also arranged some private events during the convention. They recall being flown to Dallas, to be sexually used by convention-goers. Gary Caradori mapped the recollections of the Webb foster children, in his notes of February 28, 1990:

During this visit [the children's aunt] Marcy informed [social worker] Joanie that [the youngest Patterson Webb sister] Kendra had told her she had been transported around the country several times, she thought to Texas and Louisiana. Marcy remembered Texas in particular, and a Republican Convention because one of the children, possibly Kendra, had a book of matches from Texas and that is how the children had known where they were at. Joanie stated she remembered that the children had been exploited sexually in Texas, and she indicated that it was [the] feeling this activity had been occurring for several years.

I was later to learn from Paul Bonacci, that he was also at the famed Southfork party. He described it for me in exact detail, some seven years after the party took place. He had been there for the purpose of providing sexual favors for people Larry King wanted to accommodate, satisfy, or compromise. Paul said he was one of a troop of teenaged boys and girls, whom King had shipped to Dallas for his purposes.

I have talked to Paul repeatedly about this party. I have listened to his description. Only by having been there, could someone describe the setting the way Paul did to me. Because I was there myself for the party, I am certain that Paul Bonacci was there and did not invent his story or his description of the party.

This was, it happens, just one of Paul's leads into matters surrounding Larry King and Franklin that I could personally check out and know the boy was telling the truth. Not because somebody told me he was telling the truth. Not because somebody said he passed a lie detector test on the subject. But because I was there and saw a part of it, and saw the exact same things this boy did.

Again in 1988, attendance at Larry King's party was virtually mandatory for any true Nebraska Republican attending the Republican National Convention, held this time in New Orleans. Most of the Nebraska delegation was transported to the party by bus. The theme of the festivities was Mardi Gras. With me was my 12-year-old daughter, Jennifer, who met a black youth named Prince at the party.

"Look, Daddy, that boy's name is 'Prince King.' Isn't that a funny name?" Jenny said to me, as she looked at the name tag of the son of the man sponsoring the party, Larry King. Everybody had a name tag pinned on, immediately upon entering the party.

I am sure that, again, Larry King had youth at that party, whose sexual favors were used as gifts for this or that politician or businessman.

King's parties were designed to bring in everybody, from the innocent to the top-ranking businessmen and politicians. I personally attended the two largest parties he ever threw, as did many Republican officials. As a guest at the party, you would not know from the outer glitter, what sordid activity was going on behind the scenes. I am sure that was the character of many of Larry King's parties, particularly the political events. Outwardly, they had the appearance of legitimacy, with prominent people in attendance, from mayors to presidents, from businessmen to congressmen.

So, when people say to me, "Well, I was at one of Larry King's parties and I did not see any of this sex or drug or pedophilia stuff," I understand that they may be speaking with honesty and accuracy. As to what really went on, I believe they are wrong.

***

Larry King spent his money far and wide, not just in Nebraska. One of the places he rented was a house for $5,000 a month, off Embassy Row in Washington, D.C., which formerly housed the Brazilian legation to the Organization of American States.

"When Larry entertained, it was a hot ticket," said a public relations man King hired, quoted by Rick Homung and Michael Casey, in the February 28, 1989 Village Voice. "Virtually every high-ranking black member of the Reagan Administration had been out to lunch, over for drinks, or at a dinner party. The food and drink were first rate, as was the mix of people -- black, white, Republican, Democrat, young, old." For King, the emphasis was on the young.

King acquired contacts in Washington's homosexual prostitution scene, one of whom was the late Craig Spence. A lobbyist and political operative, Spence maintained a call boy ring that catered to the political elite and, unlike most D.C. call boy rings, offered children to its clients.

Spence' s activities made banner headlines in the Washington Times on June 29, 1989: "Homosexual prostitution inquiry ensnares VIPs with Reagan, Bush." Spence's access was so good, that he could arrange nighttime tours of the White House for his clients. The Times added on August 9, 1989, that Spence "hinted the tours were arranged by 'top level' persons, including Donald Gregg, national security advisor to Vice President Bush. ..." Spence, according to friends, was also carrying out homosexual blackmail operations for the CIA.

According to a Washington, D.C. investigative journalist who researched the Spence ring, "The way we discovered Larry King and this Nebraska-based call boy ring, was by looking through the credit card chits of Spence's ring, where we found King's name." Another investigator, with personal knowledge of the call-boy rings operating in Washington, put it this way: "Larry King and Craig Spence were business partners. Look at two companies, 'Dream Boys' and 'Man to Man', both of which operated under another service, 'Bodies by God.'"

***

When Craig Spence turned up dead -- a suicide, police were quick to say -- in a Boston hotel room, in November 1989, it was the latest in the long string of deaths of persons linked to Iran-Contra covert operations and funding.

There is evidence that Larry King had Washington business in that area as well. "In the 6-1/2 months since federal authorities closed Franklin, rumors have persisted that money from the credit union somehow found its way to the Nicaraguan contra rebels," said a World-Herald article on May 21, 1989.

The first World-Herald reporter on the Franklin case, James Allen Flanery, apparently found more than rumors about the money-laundering. In late 1988, Flanery called Carol Stitt to discuss what he had learned. Their conversation is related in a February 21, 1989 report by Jerry Lowe:

Carol's notes also have a reference to Larry King running guns and money into Nicaragua. ... Carol's notes on Dec. 21, 1988 reflect that she talked with Flanery and in addition to the Nicaraguan info he was also now talking about CIA involvement and provided info that yesterday (Dec. 20) the FBI quit cooperating with him. ... Carol's notes next jump to Feb. 6. 1989, where she talked on the phone with Flanery and Flanery told her that the appropriate people didn't want to believe any of this and who was ever going to prosecute it. Apparently FIanery told Carol he was close to resigning and the reasons he didn't think anyone wanted to do anything was because of the possibility of a White House connection, the connections to a number of big people, and the fact that the investigators wanted badly to confine this all to the money. Also many white people made Larry King, he did not happen on his own.

Apparently Flanery told Carol he was uncomfortable on the phone, his editor was distressed, and things he had written were continually edited, he wanted to get his by-line off the article printed the 9th among other things. ... Flanery also expressed concern to Carol that if he didn't get off this story he worried about being compromised.

Soon Flanery was off the Franklin case, which continued for months to be the major news lead in Nebraska, and went to the University of Kansas on sabbatical. When he returned a year later, Flanery no longer wrote about Franklin.

***

Squelching interest in an Iran-Contra connection to Franklin was also a topic of the hour, in that phone call I received from National Credit Union Administration official Fenner, back in the early months of the legislative Franklin probe. "Why would the head of the NCUA be wanting to talk to me?" I wondered out loud, when my secretary said that Fenner was on the line.

The man on the other end of the phone said he knew I was a close friend of former CIA head Bill Colby, and that I also was Senator Loran Schmit's personal attorney. He quickly came to his point.

"I know there are a lot of rumors, that Franklin was being used as a front for laundering money for the Contras and that a lot of the money that is missing from Franklin actually went to finance the Contras."

I acknowledged that I had heard such talk, and told him, "I myself am one of those who wonder, if that is not a real possibility, in light of the way things have been shaking out on the Contra scandal."

Fenner then gave me a flood of details on the secret Franklin accounts, and where the missing money supposedly went. No destinations linked with Iran-Contra were mentioned.

"I know you recommended that Bill Colby be hired to investigate this matter," Fenner continued, "and that the committee rejected Colby. That was a big mistake. It is going to take someone of his ability and integrity, contacts and stature, to get to the bottom of this."

"So tell me," I said, "just what is at the bottom of it? If it is not laundered money involved in the Iran-Contra scandal, what the blazes is it? And how could Larry King get away with this, without you or somebody else knowing what was going on? Looks to me as if he had to have one heck of a lot of powerful political protection at the highest levels."

"Homosexuals," Fenner said, "Franklin financed the biggest group of homosexuals any state has ever seen. A lot of awfully powerful and prominent personalities involved. But probably not anything you can do anything about. As far as politicians go, it does not seem to go to the very top, as some of the rumors suggested."

"Are you telling me that the Franklin theft and scandal was just one big queer party, with a bunch of rich folk who do not want their involvement known?" I asked.

"Yes," replied Fenner, "and I am not sure we know who all was involved. Larry King did very clearly have contacts at the highest levels, that made it possible for him to prevent proper audits. Otherwise, this could never have happened. But the money was not used for Iran-Contra purposes."

Reviewing that conversation from the vantage point of nearly three years later, I think that on both counts -- where the money went, and the involvement of high-level political figures -- I was hearing something short of the real story from Fenner, to put it charitably.

***

Independent investigations confirm that there are ample grounds to question the conclusion of the NCUA-hired firm, FAG, that the nearly $40 million gone from the credit union was all squandered by Larry King on limousines, flowers, gold watches for his lovers, and the like.

Former political associates of King, sources on Capitol Hill, and intelligence specialists suggest that Larry King was one of dozens of owners and directors of savings and loans and other financial institutions, used by the CIA to help finance covert operations. From their information, a picture takes shape.

S&L managers, allegedly including King, would secretly lend CIA operatives bundles of depositors' money, supposedly on a 30-day basis. In some instances, hundreds of thousands and even millions of these dollars would be flown out of the United States, to destinations such as Switzerland and the Bahamas. The money would be invested for profit in short-term high-yield financial instruments or other overseas hot-money schemes. Before federal auditors could notice any money missing, it would be returned. Some of the profit would be used to payoff the cooperating financial officer and other intermediaries. The rest was funneled into slush funds for covert operations.

But the CIA would not always return the money. In 1990, a U.S. Congressional committee was forced to investigate allegations that the CIA's financial machinations had been a factor in the collapse of several S&Ls. In an explosive series of articles in the Houston Post, investigative reporter Pete Brewton wrote that during "an eight month investigation into the role of fraud in the nation's savings and loan crisis, the Post has found evidence suggesting a possible link between the Central Intelligence Agency and organized crime in the failure of at least 22 thrifts, including 16 in Texas."

One of the S&Ls named by Brewton was the Denver-based Silverado Savings & Loan, on whose board sat Neil Bush, son of the president. Sources have alleged that Silverado and Larry King's Franklin Credit Union had financial dealings with one another, but no independent confirmation has been obtained.

U.S. House of Representatives Banking Committee hearings on the Franklin Credit Union, held in 1989, did place Larry King in the right locations for covert operations. They established that during the 1980s, King traveled several times to Jamaica, where Lt. Col. Oliver North and other Iran-Contra principals transacted a lot of banking. They heard testimony that Franklin's chief accountant, Tom Harvey, together with his mother Mary Jane Harvey, made several trips to Switzerland, in the time period millions of dollars disappeared from the credit union.

In a memo dated June 18, 1989, Jerry Lowe noted that Larry King often received phone calls from Switzerland, that the staff at Franklin Credit Union had heard that King took money to Jamaica, and that Tom Harvey took money abroad, on numerous trips to Spain.

***

Direct ties of Larry King to persons and institutions active in Iran-Contra are a matter of public record. In 1987, according to the World-Herald, King donated $25,350 to Citizens for America, a group that sponsored speaking tours for Oliver North and Contra leaders. CFA was a key public relations group for Iran-Contra; King was a founding member and one of its largest contributors.

According to his May 22, 1989 interview with Omaha radio station KKAR, King was trying to bring North to Nebraska. A former security guard for King has sworn that he saw North attend at least one of King's parties, a party at which children were also present. Since he was stationed outside, he has no knowledge of what might have happened inside. "I just thought it seemed kind of curious, the whole set-up," he said.

The head of CFA, David Carmen, was a partner in Carmen, Carmen and Hugel, the public relations firm hired by Larry King to help set up one of his other projects, the Council for Minority Americans. It is alleged that Carmen, Carmen and Hugel was one of King's direct links to the CIA.

Another of the PR firm's partners was Max Hugel, formerly deputy director in charge of covert operations, under the late William Casey at the CIA. Hugel earned the post for services rendered to the 1980 Reagan-Bush campaign. Larry King met Hugel back then, since one of Hugel's responsibilities for the campaign committee was out-reach and liaison work with minority groups. Brought to the agency by Casey in 1981, Hugel lasted only a few months at the CIA and was forced out under a cloud of scandal.

King had a third friend at Carmen, Carmen and Hugel-Ambassador Gerald Carmen, the father of David. "What was Larry King doing with Ambassador Carmen?" reflected a Washington intelligence specialist, "It was the diplomatic pouches. ... Larry had even been lobbying for his appointment as an overseas ambassador." According to a Washington Times report of December 15,1988, King did seek an ambassadorial appointment. One source specified that he wanted to represent the United States in Jamaica, where his wife, Alice, was born.

During the height of Iran-Contra activities, 1984-86, Ambassador Carmen was in the right place to have served as bag man. He was U.S. Ambassador to the United Nations in Geneva, Switzerland from 1984 through August 1986. The United States ambassador to Switzerland in that period was Faith Whittlesey, who was depositioned by the congressional committee investigating Iran-Contra. Oliver North's multiple secret bank accounts were located at Credit Suisse. When Carmen left the diplomatic service in 1986, Carmen, Carmen and Hugel was and remained deeply involved in Nicaragua. According to the intelligence newsletter Unclassified (December 1990-January 1991), "the Carmen group under a National Endowment for Democracy contract, handled the U.S. activities of the Violeta Chamorro campaign in the Nicaraguan elections."

If King was involved with CIA money laundering, that jibes with a report from a member of Concerned Parents: "I heard from two different black people in North Omaha that King used to send limousines down to Offutt Air Base [home of the Strategic Air Command] to pick up CIA personnel for parties."

The sometimes expansive Larry King used to talk fondly about his friends. In a Sept. 7, 1988, interview with the Metropolitan King said, "I know some of the people I admire aren't very popular. Ed Meese. The late Bill Casey of the CIA. And I love former Chief Justice Burger. Those are the people I really like to talk to. Bill Casey. ... I just thought so very highly of him."

***

Larry King adored Bill Casey, but what about one of Casey's predecessors at Central Intelligence -- George Bush? Ever since July 23, 1989, when the lead editorial in the World-Herald said that "one child ... is said to believe that she saw George Bush at one of King's parties," King's connection with Bush has been a frequently asked question about the Franklin case. Anxiety on this account has run especially high in Omaha's black community, where in December 1990, one young lady stood up at a public meeting and proclaimed, "I think George Bush is involved in this child abuse case, and that is why all these people have been dying."

Inside investigators of Franklin, and the Webb case before it, know that Bush's name came up at the very beginning, and it came up more than once. The July 1989 World-Herald column, in an attempt to discredit this and other victim-witness testimony, attributed the mention of Bush to a person "under Psychiatric care," meaning Loretta Smith. In reality, the report was from Nelly Patterson Webb.

Nelly first brought up Bush in 1986, when she told Julie Walters about the sex parties she was flown to in Washington and Chicago. She saw Bush at two of these parties, she said, one in each city.

Nelly also told Walters that one frequent party-goer with King was a boy named "Brent," the one who was "flown to another city somewhere" after a falling out with King. Walters did not have the resources to cross-check this information with the life of Brandt Thomas, the Boys Town resident who had moved in with Larry King. Franklin credit union files contained a letter signed by King, in his capacity as Youth Affairs Committee advisor for the National Black Republican Council, listing Thomas as one of two national contact people for NBRC campus chapters.

Three years later, with an investigation of abuse by King and the Webbs finally under way, Nelly was interviewed again. Speaking to Franklin committee detective Jerry Lowe, she repeated her account of the Chicago party, and said that Bush and the two men he arrived with appeared to have left the affair with a young black man she called "Brandt."

Of course, as I have made clear, mere attendance by a politician, be he the president or any other office-holder, at a Larry King party does not mean that person knew of or was involved in Larry King's sordid activities. Almost every top Nebraska Republican, including myself, attended the two largest parties King ever hosted, the ones at the Republican national conventions in 1984 and 1988.

Bush's name surfaced again in Lowe's May 1989 review of reports by Thomas Vlahoulis from the state attorney general's office:

Sorenson told Vlahoulis that both Kimberly and Nelly brought up the name of George Bush and indicated that they had both met him. ...

On June 10, 1989, Lowe received a letter from a citizen:

There is a psychologist in Omaha who used to work for the CIA. In response to a direct question by an Omaha psychiatrist regarding George Bush's private life, this psychologist reported hearing rumors when Bush was head of the CIA, that correspond directly with one of the inferences made by Nelly Webb, and commented to the psychiatrist, "But how do you investigate your boss?"

Whether or not a Bush presence at King's parties were confirmed, he certainly backed key Nebraskans tied to King.

In August 1990, Bush appointed Ronald Roskens of Nebraska, to head the Agency for International Development (AID). Roskens had been fired the previous year as chancellor of the University of Nebraska, where Larry King was a member of his "chancellor's advisory committee."

Gary Caradori's daily notes for Feb. 19, 1989 record:

I was informed that Roskins [sic) was terminated by the state because of sexual activities reported to the Regents and verified by them. Mr. Roskins was reported to have had young men at his residence for sexual encounters. As part of the separation from the state, he had to move out of the state-owned house because of the liability to the state if some of this sexual behavior was "illegal." Upon Roskins vacating the house, he was provided a house by Joe Seacrist [sic) of the Lincoln Journal-Star.

The leadership of AID is the kind of sensitive job -- AID assignments have been used as a "cover" by CIA agents, for instance -- for which appointees undergo a background check that would have to turn up what Caradori also heard. Nevertheless, George Bush appointed Roskens.

When Harold Andersen's reputation sagged in the fall of 1989, due to his unconcealed association with Larry King, his friends at the Nebraska Society of D.C. staged an awards dinner in Washington to polish his image. George Bush sent a testimonial letter in praise of the adviser to the U.S. State Department and occasional horseshoes-player at the White House. Bush Wrote about Andersen and his wife: "These two outstanding individuals have spent countless hours serving the city of Omaha and the state of Nebraska. Throughout Harold Andersen's career with the Omaha World-Herald, he has made that fine paper an example of journalistic integrity. In addition, he has been a vigorous promoter of efforts to improve the quality of life in his community."

***

Like George Bush, Harold Andersen moves in the upper circles of the U.S. intelligence community. The career of another Nebraskan, Robert Keith Gray, illuminates that milieu and why it would be so congenial to a person like Larry King.

Gray is the chairman and CEO of Hill and Knowlton, one of the two biggest public relations firms in the world, with such blue-chip clients as AT&T, IBM, Xerox, and DuPont. CBS-TV's 60 Minutes has called Hill and Knowlton "by far, the biggest, most influential PR firm in Washington," adding that "critics accuse them of being an unelected shadow government."

Gray first came to Washington, D.C. during the Eisenhower Administration, as Ike's appointments secretary and then secretary of the cabinet. He went to Hill and Knowlton in 1961.

Gray played a role in Ronald Reagan's 1976 presidential campaign and, in 1980, he was deputy director of communications, reporting directly to Bill Casey. On the strength of his connections in the new administration, he left Hill and Knowlton to set up his own PR firm. Within a year, Gray and Company secured over $9 million in billings from a clientele including Warner Communications, NBC, GTE, Mutual of Omaha, the American Trucking Association, the American Iron and Steel Institute, and the governments of Canada and Turkey. In 1986, Hill and Knowlton bought out Gray and Co.; Gray became chairman and CEO of Hill and Knowlton.

Said to be Harold Andersen's "closest friend in Washington," Gray is also reportedly a specialist in homosexual blackmail operations for the CIA.

Gray's own sexual proclivities were the subject of an article in the July-August 1982 issue of The Deep Backgrounder, entitled "Reagan Inaugural Co-Chairman Powerful 'Closet Homosexual'?" The Deep Backgrounder tabloid featured exposes of homosexual networks in Washington, D.C.; its contributing editor was former senior CIA official Victor Marchetti.

During the Watergate era, Robert Keith Gray served on the board of Consultants International, founded by CIA agent Edwin Wilson. When Wilson and fellow agent Frank Terpil got caught running guns abroad, Gray tried to deny his connection with Wilson. "Yet ten years before," according to Peter Maas' book Manhunt, "in a top secret Navy review of Wilson's intelligence career, Gray described Wilson as a person of 'unqualified trust,' with whom he'd been in contact 'professionally two or three times a month' since 1963." 

Author Jim Hougan, in Secret Agenda, reported another aspect of Wilson's work for the CIA:

According to fugitive ex-CIA officer Frank Terpil, CIA-directed sexual blackmailing operations were intensive in Washington at about the time of the Watergate scandal. One of those operations, Terpil claims, was run by his former partner, Ed Wilson. Wilson's base of operations for arranging trysts for the politically powerful was, Terpil says, Korean agent Tong Sun Park's George Town Club. In a letter to the author, Terpil explained that "Historically, one of Wilson's Agency jobs was to subvert members of both houses [of Congress] by any means necessary. ... Certain people could be easily coerced by living out their sexual fantasy in the flesh. ... A remembrance of these occasions [was] permanently recorded via selected cameras. ... The technicians in charge of filming ... [were] TSD [Technical Services Division of the CIA]. The unwitting porno stars advanced in their political careers, some of [whom] may still be in office."

Gray's associate Wilson was apparently continuing the work of a reported collaborator of Gray from the 1950s -- McCarthy committee counsel Roy Cohn, now dead of AIDs. According to the former head of the vice squad for one of America's biggest cities, "Cohn's job was to run the little boys. Say you had an admiral, a general, a congressman, who did not want to go along with the program. Cohn's job was to set them up, then they would go along. Cohn told me that himself."

The first president of Tong Sun Park's George Town Club, where Wilson's sexual blackmail operations were reportedly  run, was Robert Keith Gray.

Gray maintained his intelligence connections during the Reagan Administration, according to an affidavit filed with the Southern District of Florida Court on December 12, 1986, by Attorney Daniel Sheehan for the Christic Institute. The affidavit states that when CIA chief Casey, national security adviser Robert McFarlane, and NSC staff member Lt. Col. Oliver North were devising a method to circumvent a congressional ban on arming the Contras, they turned to Gray and Company.

Gray employee Rob Owen set up a private group to solicit funds for the Contras. Owen was called before Congress, to testify on how he delivered bags of cash to the Contras.

In February 1989, Hill and Knowlton's Charles Perkins rushed to New York, for a fraction of the firm's usual fee, to help with public relations for Covenant House. The youth organization's director, Father Bruce Ritter, was alleged to have molested youth who took refuge with him.

Lauded by the Reagan and Bush Administrations as a showcase for the privatization of social services, Covenant House had expanded into Guatemala as a gateway to South America. According to intelligence community sources, the purpose was procurement of children from South America for exploitation in a pedophile ring. The flagship Guatemalan mission of Covenant House was launched by a former business partner of Nicaraguan dictator Anastasio Somoza, Roberto Alejos Arzu, who had ties to the CIA, according to the Village Voice of Feb. 20, 1990. The Voice quoted Jean-Marie Simon, author of Guatemala: Eternal Spring, Eternal Tyranny: "It's like having Idi Amin on the board of Amnesty International."

A top source of money for Covenant House has been Robert Macauley, founder of Americares, a service organization implicated in channeling funds to the Contras. A close friend of the Bush family since Connecticut, Andover and Yale days, Macauley has George Bush's brother Prescott on the Americares' board. Father Ritter was a vice president of Americares, at least until he had to resign from Covenant House in February 1989, and spent weekends at Macauley's estate in Connecticut, according to a former Covenant House employee.

As in New York, also in Nebraska an institution that sheltered child abuse could count on protection from Washington. The attitude of federal agencies towards Larry King' s Franklin Credit Union fits the mold.

All the way back in 1984, a Franklin teller named Edward Hobbs tried to blow the whistle about the embezzlement of funds from the credit union. He addressed a memorandum to his employers, and traveled to Lincoln, the state capital, to brief state banking officials on its contents. National Credit Union Administration (NCUA) examiners saw Hobbs' memorandum later that year. The memo covered evidence of embezzlement, and information Hobbs had, that promotions at Franklin were based on doing homosexual favors for its manager, Larry King.

The only visible result of his initiative was that Edward Hobbs lost his job.

Between 1985 and 1988, Franklin skipped the annual audit, required by federal law for institutions of its type. The Legislature's Franklin committee was told that when an audit was called for, King would pick up a special phone, call someone in Washington, and the audit would be called off.

I got the whiff of a Washington connection, when I first inquired about Franklin. As I explained it at a public meeting in December 1990, "I first noted something a little funny with the credit union when a good friend of mine and sometimes adversary on occasion, named Ernie Chambers, complained that the major financial institutions weren't making loans into the black community, that they were red-lining, in other words making sure the financing couldn't go into the black areas. As I began to investigate, I tried to find out information on ... [Franklin] -- what was it doing to get loans there? ... I found out that all the king's horses and all the king's men couldn't  get information because, I was told, that was none of my business and if I didn't like it, to talk to the Feds and if you talk to the Feds you could find out nothing."

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