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Party Crasher

Back from the abyss, Sam Zakhem campaigns for the forgotten man: himself

He soon hooked up with William R. Kennedy Jr., a precious-metals broker and former publisher of Conservative Digest, and conservative journalist Scott Stanley Jr. in a lobbying effort on behalf of American military intervention in the Perisan Gulf. The effort began under the auspices of an organization Kennedy had started, the Coalition for America at Risk, but it soon evolved into a group known as the Freedom Task Force. When asked, Zakhem's associates usually told reporters that the group was funded by citizen donations.

Zakhem says he gave 254 speeches and met with "numerous" members of Congress in support of the war effort. "I think it's one of my greatest contributions to this country," he says. "I did exactly what I did during Vietnam--rally support for the president. And despite all we did, 45 senators voted against the commencement of Desert Storm. Don't forget that. We did a tremendous service to this nation."

The Justice Department didn't look at it that way. The 1992 indictment charged that the Freedom Task Force was bankrolled by the government of Kuwait, and that Zakhem, Kennedy and Stanley had failed to register as foreign agents before lobbying government officials, as required by law. In addition, the indictment claimed that less than a third of the $7.7 million the Kuwaitis had shelled out for the "propaganda campaign" had actually gone to media advertising. The rest had been diverted to the patriots' own uses, including $1 million in "consulting fees" sent to Zakhem's brother Khalil in Lebanon. Zakhem himself had failed to pay sufficient taxes on his cut of the take, the government charged.

That spring, rumors of the grand jury investigation prompted two of Zakhem's top aides to resign from his U.S. Senate campaign. Against his attorneys' advice, Zakhem held a press conference to announce that the government was looking into his affairs, dooming his hopes of election. He still insists that the indictment was politically motivated, a charge that prosecutors have emphatically denied.

"I really think I was a viable candidate in 1992," Zakhem says. "Had I been left unfettered by those bogus, horrible, nasty, frivolous charges that they threw at me, I think I could have won. May God forgive them."

He sighs. Life is looking up for Sam Zakhem, no question about it, but he can't quite shrug off the memory of what he calls the "dark days," the three years it took to reach an acquittal.

"They threw at me a million tons of mud in hope that a trace would stick," he says. "But I said then, and I say now: Those who question the integrity of this grateful immigrant, those who question the patriotism of Sam Zakhem, are going to end up with so much mud on their faces. And they had the mud, and I had the last laugh."

It took the government more than four years to build its case against Zakhem and the Freedom Task Force. It took a Denver jury 28 minutes to decide the indictment wasn't worth the paper it was printed on.

The case that went to trial in 1995 was a faint echo of the original indictment. The lead prosecutor had left the U.S. Attorney's office months earlier, and his successor decided to dismiss charges that Zakhem had conspired to violate the Foreign Agents Registration Act and had lied to federal investigators. The obscure foreign-agent law has its share of loopholes, and Zakhem and his associates were hardly alone in ignoring it.

That left a convoluted tax case, based on Zakhem's failure to report $350,000 in Kuwaiti money on his tax returns; his shuffling of cash from account to account in what prosecutors charged was an attempt to conceal income; and the ambassador's alleged conversation with Keith Danley, a Kennedy associate, about how to beat the IRS.

Taking the stand in his own defense, Zakhem insisted that the $350,000 was a gift from former Kuwaiti ambassador Saud Nasir al Sabah, not a consulting fee. No different, really, from a steak dinner or a commemorative tiepin a fellow might receive from a grateful friend--in this case, a profoundly grateful, obscenely rich friend. He pointed out that he'd already paid nearly half a million dollars in taxes on a reported income of $1.5 million he'd received from the Kuwaitis, so why would he try to hide a paltry $350,000?

Zakhem also denied discussing tax-evasion schemes with Danley, whom he barely knew. As for the funneling of cash through a series of accounts, some of them set up in his brother's name, Zakhem's lawyers argued that the "silly and goofy things" their client chose to do with his tax-free gift had no bearing on the case at hand.

The jury agreed. They acquitted the former ambassador on two charges of failing to report income, and the government promptly dismissed the remaining eight charges. The charges against Stanley and Kennedy evaporated, too. (Kennedy, though, had already been convicted in an unrelated case of racketeering and money laundering, in which he'd bilked conservative, mostly elderly investors out of $37 million through bogus "crisis investing" schemes.)

Ringed by family and supporters, a jubilant Zakhem called a press conference at the State Capitol to celebrate his acquittal. He says now that the case should never have gone as far as it did. His activities on behalf of Kuwait had the blessing of senior Bush officials, he insists, and he even provided prosecutors with a letter from Ambassador Saud al Sabah, explaining about the $350,000 gift--but it wasn't allowed as evidence.

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