Copyright 1997 Phoenix Newspapers, Inc.
                              THE ARIZONA REPUBLIC

                     February 24, 1997 Monday, Final Chaser

SECTION: VALLEY AND STATE; Pg. B1

LENGTH: 1912 words

HEADLINE: AIRCRAFT PROBE REVIVES MYSTERY OF CIA IN STATE

BYLINE: By Paul Brinkley-Rogers, The Arizona Republic

 BODY:
   A lawsuit and a federal investigation have breathed new life into a lingering
mystery: Has the CIA been using Arizona aviation firms as fronts to conduct
illegal operations in foreign countries?

   A Washington state lawyer who claims he flew for the CIA says so, as do two
congressmen.
      Now, a Peoria man and a former U.S. Forest Service official are to go on
trial in Tucson in April in connection with a plane-swapping scheme, which the
congressmen claim was a ploy to aid the CIA.
   Federal prosecutors make no mention of the CIA in the case. But the Peoria
man, Roy Douglas Reagan, asserts that the U.S. government is making him and
co-defendant Fred Fuchs scapegoats to hide the CIA connections.
   The case involves 28 military transport planes, 27 of which were overhauled
during the swap at a Marana air park that contracts with the CIA to store and
repair planes. The air park, formerly owned by the CIA, now is owned by
Oregon-based Evergreen International Aviation Inc.
   CIA officials will not comment.
   "I had no problem flying for the CIA, but I had a lot of problems breaking
federal law to fly for the CIA," says Gary Eitel, the Washington lawyer,
adding that he flew CIA missions in the late 1980s.
   The illegal actions alleged by Eitel involve plane swaps from 1988 to 1991,
in which the federal government gave old military planes to private air-tanker
firms in return for antique aircraft. The antique planes were valued at far
less than the military ones, however, so the deal cost the U.S. government
tens of millions of dollars, Eitel and others maintain.
   Eitel and two congressmen also allege that the CIA arranged to have the
air-tanker firms' planes flown on covert missions overseas, which would
violate a law that prohibits ex-military planes from leaving the country
without approval from the Pentagon.
   One of the planes, a C-130, "ended up in the possession of drug runners,"
states an internal government memo filed in the Tucson case.
   Eitel's suit against operators of the swapped planes prompted the
government's criminal case in Tucson, Assistant U.S. Attorney Claire Lefkowitz
said.

CASE BEGAN IN 1987

   The roots of the case date back to June 1987, when Reagan first proposed to
a Southern California air-tanker operator that it upgrade its fleet of
dangerous old planes used to fight forest fires. Reagan, 56, specializes in
helping private companies acquire surplus military aircraft.
   It was a time of crisis for the air-tanker industry, which every year
contracts with the Forest Service and Bureau of Land Management to fight
forest fires. Many of the firms were still using old ex-military C-119s,
flying boxcars, that were crashing so often the government said it would no
longer hire them, both sides in the lawsuit agree.

TIME OF FRUSTRATION

It was also a time of frustration for the CIA which, deprived of its wholly
owned airlines like Air America and Southern Air Transport in 1975, wanted
access to aircraft for ferrying troops and munitions to small wars around the
world, according to Eitel.
   Many pilots and owners in the air-tanker industry are former military
aviators or had flown for the CIA during the Vietnam War. They are the types
that the CIA often uses for covert gun-running missions, Eitel says.
   Court documents show that Reagan persuaded Fuchs, 57, a former Forest
Service assistant director, to go along with a novel plan in 1987 that would
release to private firms 28 planes -- 23 Air Force C-130 Hercules and five
Navy P-3A Orion anti-submarine aircraft.
   In December 1987, the Forest Service told the Pentagon that there was a
real need to upgrade its contractors' air-tanker fleets. Reagan, who the
government says posed as a Forest Service employee or consultant, proposed to
the Air Force and the Navy that they swap old military planes for historic
planes suitable for museums.
   The plan called for the Department of Defense to release the airplanes to
the Forest Service, which in turn would transfer ownership to the air-tanker
firms. But the military, the government maintains, did not know the titles
would be transferred to the civilian firms. And it didn't know that Reagan
himself would get cash and some C-130s from these companies for his services,
the government says.
   Six months later, Hemet Valley Aviation, based near Riverside, Calif.,
obtained the first of the aircraft, seven C-130s worth at least $2 million
each, from Davis Monthan Air Force base near Tucson.
   Some had flown spy missions for the Air Force and were still equipped with
electronic warfare gear, such as eavesdropping and radar-jamming equipment.
   In return, Hemet gave the Air Force six C-119s, worth $10,000 each, and one
AT-11, according to prosecutors. Five other firms made similar exchanges.

Arizona firm wanted in

    A lone Arizona company, T&G Aviation, which flies from a strip on the Gila
River Indian Community near Chandler, was not included in the deal by Reagan
and Fuchs.
   However, its owner, Woody Grantham, heard about the swaps, and lobbied the
Arizona congressional delegation hard to be included. Former U.S. Rep. John
Jay Rhodes said he made calls to the Forest Service in Grantham's behalf.
Grantham ended up swapping two helicopters and two planes for three C-130s in
1991, and in a private deal paid Reagan $688,000 for two C-130s.
   In April 1989, Eitel began flying DC-9s and Boeing 727s for Evergreen as an
employee. But when he found out about the swapped planes, he says he refused
to fly the missions. Evergreen declined to comment.
   Eitel contacted a Defense Department investigator and alleged that his
employers and the air-tanker firms were flying C-130s out of Marana and other
bases for the CIA under the guise of Forest Service contracts. The Defense
Department began an investigation.
   More airplane swaps took place, but it is uncertain where all the planes
ended up. A memo from a Department of Agriculture lawyer to a Forest Service
official says that one of the C-130s "ended up in the possession of drug
runners."

MUSEUM SHUNNED SWAPS

Problems with the exchanges eventually arose.
   The director of the Air Force Museum in Ohio shunned the swaps, declaring
that they were illegal. In December 1989, the Agriculture Department's Office
of General Counsel issued an opinion saying the Forest Service lacked the
authority to facilitate such swaps.
   Then, in May 1991, the National Air Carrier Association complained to the
Forest Service that two of T&G Aviation's C-130s had been spotted in Kuwait
transporting equipment.

   T&G, which is mentioned in the Tucson case and is a defendant in an Eitel
lawsuit in Oregon, did not return phone calls seeking comment.
   That complaint rang alarm bells because the law requires that ex-military
planes like C-130s cannot leave the United States without the approval of the
Pentagon.
   The June 1991 crash in Angola of a C-130 that had been obtained by Reagan
soured the deal further.
   Killed in the crash was ex-Navy flier Rob Weldon, a nephew of U.S. Rep.
Curt Weldon, R-Pa., a member of the House National Security Committee. The
congressman soon maintained that the ill-fated flight and the aircraft swaps
had all the hallmarks of a CIA scheme. He says he hopes the Tucson case
explores that issue and sheds light on the death of his nephew.
   Eitel, a former combat pilot in Vietnam who became a Texas lawman and an
aviation lawyer, already was busy researching the plane swaps.
   In December 1991, he filed a complaint with the Inspector General
maintaining that Reagan and Fuchs were conspiring to steal the C-130s and
P-3As. In March 1992, the Inspector General began a formal probe into the
Forest Service's role in the exchange.

MCCAIN ALSO APPROACHED

Sen. John McCain, R-Ariz., who like Rhodes had been approached by T&G to help
it acquire planes, also was having doubts.
   An aide to McCain said the senator did not lobby for the Chandler company
and that in October 1992 he wrote a letter to then-Defense Secretary Dick
Cheney urging a halt to C-130 transfers.
   In a court filing, however, T&G says McCain's office did go to bat for the
Chandler company and "the Forest Service then had a change of heart and
suddenly found planes."
   It was not until March 1994, according to court documents, that the
Pentagon made a move, the same month the Inspector General asked for a probe
of the scheme.
   Federal investigators were suddenly everywhere, interviewing Reagan, Fuchs,
Eitel and scores of others, even a Saudi Arabian prince.
   In April 1994, in a rarely used legal procedure, Eitel filed the suit in
Portland on behalf of the U.S. government seeking the civil prosecution of the
air-tanker firms and Reagan and Fuchs. He sought the return of all the C-130s
and P-3As, whose value he estimated at $80 million. His suit maintains that
the CIA blessed the transfers.
   The General Services Administration declared in September 1995 that the
swaps were illegal and told the Forest Service to recover all the aircraft,
but it has not done so.

INDICTMENT RETURNED

Reagan and Fuchs were indicted by a federal grand jury in Tucson last June
on charges that they conspired to steal government property. Reagan profited
to the tune of $1 million, prosecutors claimed, and Fuchs improperly upgraded
his pilot's license to be able to fly certain planes.
   The two men pleaded innocent. Their trial is scheduled to begin this fall.
   Neither Reagan nor Fuchs will comment. But in a December hearing, Reagan
testified that he was told by an investigator that Reagan and Fuchs would be
scapegoats for the illegal swaps.
   Former Arizona U.S. Attorney A. Melvin McDonald, Reagan's attorney, said he
believes his client is merely a fall guy.
   The real intent of the airplane exchanges was to help the nation with its
chronic shortage of first-rate firefighting aircraft, McDonald says. The
allegation that the CIA was involved is "laughable," McDonald says.
   But recent developments have added fuel to Eitel's argument.
   Rep. Charles Rose, D-N.C., has said in congressional hearings that he
believes the "footprint" of the CIA was stamped on the deal so the agency
could gain access to aircraft useful in the Middle East and Latin America.
   And on Dec. 29, the Justice Department lent credibility to Eitel's civil
suit by intervening.
   T&G has not been charged with any crime, although it also was sued by
Eitel. It has argued in court filings that although it paid Reagan $688,000
for two C-130s, it was convinced he had proper title. It acknowledges that
federal law restricted the use of former military planes to fight domestic
forest fires. But it says its use of C-130s in places like Kuwait and France
had State Department approval.
   The government since has moved to make it easier for air-tanker companies
to acquire surplus military aircraft.
   In September, President Clinton signed into law a bill giving the Defense
Department authority to transfer title of such aircraft to private firms. The
stipulation would be that they remain in the United States to fight forest
fires.

This document resides at http://speech.csun.edu/ben/news/cia/970224.eitel.html