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It's early morning on October 5th, 1986. An American cargo plane soars through the skies above Costa Rica, headed for Nicaragua. On board are two pilots, a radio operator, and a single passenger. The passenger checks the cargo at the back of the plane to ensure everything is secure. It's routine mission, but the cargo today is far from ordinary. In the back of the plane are 70 Soviet made AK47s, 100,000 rounds of ammunition, rocket propelled grenades, and other military supplies. The passenger thought his day's flying missions like this were over, but a call to fly over Nicaragua and drop boxes of cargo a few months back seemed like easy money. He's flown this route more than a dozen times. The passenger opens the cargo door and looks down. 2500 feet is a long way to fall. He tightens the straps of the parachute on his back. Then he looks down at the majestic Rios and Juan River, winding its way to the Caribbean Sea. It's beautiful, a vista he never tires to see. But there is something else below the passenger does not see, or someone rather. A teenage soldier named Jose Alamon, who's packing some military equipment of his own, a Russian made shoulder mounted surface to air rocket launcher. When Alamon sees a plane, he hoist the weapon to his shoulder, trains his sights up, and fires. As the plane knows dives toward the ground, the passenger closes his eyes and leaps, pulling the rip cord on his shoot. The plane continues downward in a trail of smoke crashing into the dense jungle. When the passenger touches down, he unhooks his shoot and keeps moving. Whoever was shooting at him would probably try to finish the job. For the next 24 hours, he creeps through the jungle, dodging his pursuers and hiding in the trees. Finally, out of sheer exhaustion, he rigs a makeshift hammock and falls into a restless sleep. When he opens his eyes at daybreak, the first thing he sees is a barrel of a gun. Behind the barrel is the face of a young man, in green fatigues, who says, what now, Rambo? The Sandanista National Liberation Front, or the Sandanistas for short, is a socialist political party in Nicaragua. They first came to power seven years earlier when they overthrew a dictatorship friendly to the United States. The Reagan administration has been vocally supportive of a rebel group called the Contras who are trying to regain control. The weapons on board the cargo plane were meant for them. The day after the crash, the Sandanista government holds a press conference and puts the captured man in front of a television camera to tell the world who he is and who sent him. My name is Gene Haas. I'm a man at the Spots. The crux of Eugene Haas and Fuss's statement is this, the CIA coordinated the mission to deliver weapons to the Contras in Nicaragua. And that is a big deal, because delivering weapons to the Contras in Nicaragua is illegal. The Sandanista officials hold up ID cards of the three Americans who died when the plane was shot down. They identify them as agents for the CIA. The US response is quick. Shortly after the Haas and Fuss press conference, Secretary of State George Schultz takes the podium in the White House press briefing room and denies what Haas and Fuss has said. I don't see that that has any particular rike of expin off to it. The people involved were not from our military, not from any US government agency and CIA included. So these are private citizens and it's not a governmental operation. But one man watching the conference from his office knows what Schultz said is true. The CIA is involved as our multiple White House officials and members of the National Security Council or the NSC. Lieutenant Colonel Oliver North knows this because he works for the NSC. And when it comes to the US Contra operation, codename Project Democracy, Oli is the man behind the curtain. When the Haas and Fuss shoot down happens, Oli is in Europe on National Security Business. When he hears the news, he gets on a plane and flies straight back to DC. Not long after he arrives, he summoned by Bill Casey, director of the CIA. North and Casey have been working together on Project Democracy for years. At the meeting, Bill Casey doesn't mince words. The operation is over, Oli. Shut it down. Oli doesn't have to ask why. He understands the implications of the capture of Haas and Fuss. But there's one question that's been spinning through his mind since the plane went down. So am I going to be blamed for this? Oli, if the truth comes out, this will go way above your head, buddy. Just shut it down. Clean it up. The Marine Corps motto is Semper Fidelis or for short, Semper Fie. It means always faithful. Oli was a platoon commander in Vietnam who earned two purple hearts and a bronze and silver star for his courage and leadership. When Bill Casey instructs Oli to shut down the operation, Oli, always faithful, gets right to work. But no matter what Casey says, Oli knows the truth. If the whole story goes public and if the death of his involvement is revealed, Oli is going to find himself in the line of fire. American scandal is sponsored by the new ABC drama Alaska Daily. When an indigenous woman goes missing in Alaska, it sparks new questions about other missing and murdered indigenous women. And that's where the thrilling new ABC drama Alaska Daily begins and where it's headed will have you on the edge of your seat. Two time Academy Award winner Hillary Swank stars as Eileen, a veteran reporter who joins a team of local journalists working to bring the truth to light. From Academy Award winning screenwriter Tom McCarthy, Alaska Daily premieres Thursday, October 6th on ABC and streams next day on Hulu. We get support from Audible. We've all got busy schedules. 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That's Audible.com slash listening or text listening to 500 500 to try Audible free for 30 days. That's Audible.com slash listening. Some wonder a Imlindsey Graham and this is American Scandal. Two separate storylines converge to create Iran Contra, two covert operations in two countries, Iran and Nicaragua. In our previous episode, we followed Budmik Farlin in the Iran thread of the story, as he worked to advance one of President Reagan's top priorities, getting back U.S. hostages kidnapped by terrorists in Lebanon. In this episode, we'll go back to the spring of 1984 and follow another of Ronald Reagan's priorities, the Contra's and Nicaragua. We'll take a trip to Central America and trace the operations inception to the moment it converges with the Iran Arms Deal. If you haven't heard episode one, we suggest going back and giving it a listen. In the early 1980s, the Contras are one of President Reagan's personal causes. He sees the Contras as Patriots who are fighting for liberty against the Communist and the deserve America's full and unflinching support. Reagan gives it to them from day one of his presidency. Arms, weapons and CIA assistance. When Democrats in Congress don't share Reagan's zeal, they worry about starting another Vietnam. Many believe the United States has no business overthrowing governments, and many increasingly feel Reagan isn't being truthful about his intentions in Nicaragua. When Democrats sweep the House in 1982, two years into Reagan's first turn, Congress passes the Bolin Amendment. The Bolin Amendment basically says the government cannot use taxpayer funds to try and overthrow the government of Nicaragua. Congress's message to Reagan is clear. Don't go too far. We're watching you. That's a problem for Reagan, because he views supporting the Contras as a key to keeping America safe from the growing spread of communism in Central America. Not long after the Amendment passes, Reagan tells his National Security Adviser, Bud McFarlane, I want you to do whatever you have to do to help these people keep body and soul together. Bud is a soldier at heart who takes his job seriously. He needs a strong team to achieve Reagan's mission with strong leadership. The man Bud taps to get the job done is Lieutenant Colonel Oliver North. This is Iran Contra, Episode 2, Oli. It's late spring 1984 in Washington, D.C., two and a half years before the cargo plane is shot out of the sky over Nicaragua. Oli North sits at his desk in the old executive office building, an ornate structure just west of the White House. Oli is a career military man, and he looks the part, handsome, with a strong jawline and clear gray eyes. Oli is a workhorse who stays late every day, cranking out ideas for pushing Reagan's agenda. But today, his work is interrupted by a knock at the door. It's Bud McFarlane, head of the National Security Council, and Oli's boss. Bud, what can I do for you? Oli, I want you to have the Nicaraguan resistance open up an offshore bank account, so that foreign contributors can make direct deposits to the cause. The Nicaraguan resistance, or the Contras, is a collective term for Nicaraguan rebels fighting the Sandinista government. What Bud is asking Oli to do is flirting with a legal gray area. But Oli doesn't ask questions. He believes in the chain of command. I'll get right to it. Thank you, Oli. After Bud leaves, Oli walks down the hall to the office of CIA Director Bill Casey. Bill, do you have a minute? Yeah, close the door. What do you need? I've been told to have the resistance set up an offshore account. I can use them how. Casey chooses on a yellow pencil and leans back in his chair. After a moment, he picks up a secure phone and dials a number. This is Bill. Tell me. If a third party wanted to help our friends down south, who can we trust to handle the money? Right. Thank you. Adolfo Calero. Here's your man. Oli knows Calero well. Calero is a prominent Nicaraguan businessman and a leader in the Contra Revolution. Oli has made several trips to Central America over the past few years to meet with Calero and to help and transport weapons and supplies. Have Calero set up an offshore account. The money shouldn't come all at once. Regular payments once a month. Here's how you run this. Pay attention. Oli takes out a pen and paper. Oli put that away. If you have to write everything down, you don't belong in this business. Now, the money should go from the foreign account directly into Calero's account. It shouldn't come into the United States at all. Right. Understood. Oli gets up to leave the room. Oli, wait. Is it the Saudis? I don't know. Come on, don't bullshit me. Honestly, I don't know. It's got to be the Saudis. How much are we talking about? I don't know that either. Bill's educated guess is spot on. The Boland Amendment makes it illegal for the United States to give money to the Contras, but it doesn't say anything about that money coming from another country. In the summer of 1984, Bud exploits that loophole and secures a promise to fund the Contras from a long time US ally, Saudi Arabia. Since the early 80s, the US has been selling the Saudis weapons. High tech weapons. Other US allies don't get access to. Now it was time to return the favor. The Saudis offer support for the Contras to the tune of $1 million a month. In June, three months after Oliver North meeting with Bill Casey, the President meets with a National Security Planning Group, or the NSPG, to discuss the situation in Nicaragua, the NSPG is made up of President Reagan's top advisors, some of the most powerful people in the country. But today, the situation room belongs to Oli North's boss, National Security Advisor Bud McFarland. Because of the Boland amendment, the Contras are running out of money and they're about to fail. The question is, how will the White House respond? One idea is floated. What if the US solicits money for the Contras from another country? At this point, Bud might have spoken up. He might have told the NSPG that Saudi Arabia has already pledged support for the Contras. He might have also told them that the operation is already underway. But Bud doesn't say a word. He sits back quietly and lets Reagan's top advisors hash it out. George Schultz, the Secretary of State, says obtaining funds for the Contras through a third party is an impeachable offense, and impeachable is a word no one wants to hear. Especially President Reagan. As usual, Secretary of Defense Casper Weinberger finds himself on the opposite side of Schultz's argument. Weinberger is all for obtaining money from a third party. It's perfectly legal, end of story, and CIA director Bill Casey agrees. Vice President Bush quietly takes it all in and then says, how can anyone object to the US encouraging third parties to provide help to the antiSandanieces as long as we're not giving them something in return? Schultz tells them that to move forward Reagan will need the approval of the Attorney General. Everyone in the room agrees to wait before making a final decision. During the meeting, Bud never says a word about the Saudi payments. Maybe it's because deep down, Bud knows what he's doing is wrong. Bud does say this. I certainly hope none of this discussion will be made public in any way. Everyone in the situation room turns to the President to see how he'll respond. If such a story gets out, Reagan says, we'll all be hanging by our thumbs in front of the White House until we find out who did it. Maybe Bud keeps his mouth closed because he knows Schultz is right. If this type of thing gets to the press, impeachment might be more than a forbidden word. Impeachment might very well be Reagan's new reality. But that fear doesn't stop Bud from moving forward. Violating the Bolin Amendment may be wrong, but supporting the Contras and stopping the spread of communism is right. And for Bud, the ends justify the means. In the late summer of 1984, Oli takes a flight to Teguci Galipa, the capital city of Honduras. From there, he gets into a car and drives to a Contra safehouse located in the residential area of the city. Oli is just a mid level guy at the National Security Council, but to the Contras, meeting with Oli is a big deal. The men share a meal together, beans, rice and chicken. They communicate through a translator, but Oli assures the men that even though Congress has cut off U.S. support, President Reagan promises he'll find a way around the ban. After dinner, Oli meets privately with Adolfo Calero, who is disappointed. The Contras need money and they need it now. Promises do them no good. And that's when Oli tells him he has more to offer than promises. There's a benefactor, but he can't say who. He instructs Calero to set up an offshore bank account and send him the account number, a telex code, and a wire transfer address. Calero asks how much they can expect. Oli tells him $1 million a month. It's not enough money to fund a revolution, but it's a start. Calero is pleased. But Oli leaves him with a warning. No one can know I'm involved in this. Over the next few months, Oli and Calero stay in close communication. They talk on the phone regularly. They discuss every aspect of the resistance operation from weapons to the Contras need for good doctors to military strategy. And just as the Contra operation looks poised for success, Congress delivers another blow. Oli says that between 1982 and 85, the Boland amendments were like an annual ritual. Each year, Reagan asked Congress for money to support the Contras. And each year, Congress says no, and responds with another Boland amendment. In October 1984, in response to stories in the press about the U.S. Contra operation, this passes another Boland amendment, the strictest one so far. The law essentially states that funding the Contras in any way, shape, or form directly or indirectly is illegal. No more money, no more weapons, no more support. But after the 1984 Boland amendment has passed in October, Project Democracy doesn't grind to a halt. It picks up speed. The monthly $1 million payments from the Saudi start in mid 1984 and continue through the end of the year. Then in early 1985, the Saudis doubled their commitment. In total, from 84 to 86, the Saudis will contribute $32 million to the Contra operation. Throughout 1985, Oli oversees everything. He reports to Budmik Farlin and Bill Casey. He supplies the Contras with valuable intelligence, military advice, and $11 million in arms. He even secures $2 million of additional funding from Taiwan. But in spite of Oli's best efforts, the money isn't enough. By the end of 1985, the Contras are losing the fight against the Sandinistas. If something doesn't change, the Contras will fail. Oli is floundering and not just with Project Democracy on the Nick Raghwin front. He's involved in another covert operation in Iran. A secret deal to trade arms for hostages. From November 17, 1985, Oli gets a panic call from the Israeli Defense Minister, General Rabin. Rabin's first words, we have a problem. Rabin talks so fast Oli can barely keep up. Something about the shipment of hawk missiles to Iran. Something about a plane not being allowed to land in Portugal. Oli cuts him off. He tells him, we can't talk about this on the phone. He tells him, we need to talk to Bud first. As Oli hangs up the phone, it rings again. Bud tells Oli the score. A large quantity of hawk missiles were on the way to Iran, but the customs official in Lisbon, Portugal wouldn't let the planes land. So the Israeli planes turned back and flew home to Tel Aviv. Bud is worried this snafu might upset the hostage negotiators and blow up the deal. Bud tells Oli to do whatever it takes to solve the problem and get the hostages back. According to Oli, Bud tells him something else too, President Reagan has approved U.S. involvement. Oli will later say he had his doubts about the Iran operation. He knew the arms for hostage's deal was wrong, but like Reagan, he wanted those hostage's back. So when Bud asks him to save the mission, he leaps into action and does his best to finish it with the help of the CIA. But his best isn't good enough. The shipment is a disaster, only 18 missiles are delivered and none of them were the kind Iran was expecting. The Iranians are convinced Israel sabotaged the shipment, and if the Iranians start to blame the U.S. for the deal going sideways, there's a chance they'll hurt the hostages. As 1985 winds to a close, two of Reagan's top priorities are in jeopardy. The hostages are still in the hands of terrorists in Lebanon, and the contras are losing their fight against the Sandinistas in Nicaragua. Oli is desperate to break the impasse and succeed on both fronts. In January 1986, he comes across a new plan, a plan that will bind the Iran and contra operations together, the diversion. The diversion might help Oli North achieve the Reagan administration's goals in Iran and Nicaragua, but it will also push the White House closer to the precipice of scandal, and it'll push Oli North even closer to the line of fire. What if your family was the victim of a home invasion, or you woke up in the morgue, or you were seriously injured miles from help? What would you do? 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We started this podcast over 10 years ago to dissect some of the craziest and most notable murders, crimes, and conspiracy theories together, and we'd love for you to join us. Wondry Plus is one of the longest running true crime podcasts out there, and we are still at it, unraveling a new case every week. We break down infamous cases like the Evil Genius Bank robbery, and lesser known cases like the case of Kimberly Rico. Did she actually kill her husband after they took part in a murder mystery game? We cover every angle, breaking down theories, diving deep into forensic evidence, and interviewing those close to the case. And with over 450 episodes, there's a little something for every true crime listener. Follow the Generation Y podcast on Amazon Music or every listen to podcasts, or you can listen ad free by joining Wondry Plus in the Wondry app. All in North will later say the diversion is what put the hyphen in Iran contra. It's the moment in this story when two separate operations in two separate countries collide to become one scandal. Allie also says the diversion was not his idea, although he wishes it was, because he'd love to take the credit. Instead, it was Manager Gabbanafar, the Iranian arms dealer who lined his pockets after the failed Hawk Missile Delivery in November 1985. Allie calls him Gorba. But had warned Allie to stay away from Gorba. He told him Gorba was not to be trusted, and Allie knew he was right. And he knew Gorba was a shady character from the very beginning. He'd heard plenty of rumors. Gorba is only in it for himself. Gorba is a liar. Gorba has failed three CIA polygraph tests. But in early 1986, Gorba is the only option. Until someone better comes along, something, anything is better than nothing. Because like Reagan, Allie is worried about the hostages rotting away in the Middle East. If Allie has to bend the rules to get them back, or do business with a man he knows is untrustworthy. So be it. Here's how Allie tells it. In January 1986, nine months before the Haasimfras plane crash, Allie flies to London to meet with Gorba at his suite at the Churchill Hotel. The purpose of the meeting is to discuss an upcoming shipment of missiles to Iran. But during a break, Gorba pulls Allie aside and takes him into the bathroom, turns on the faucets to let the water run in case the room is bugged. When he tells Allie in a low whisper that he has an idea, one Allie will like. Gorba tells him there's a million dollars in it for you. This is the first time in his career that Allie's been offered a bribe. And that's not how he operates. He tells Gorba it's out of the question. So Gorba makes a different offer. Maybe instead we can make some money available to your friends in Nicaragua. Well now, Gorba has Allie's attention. After in the meeting, Allie gets on a plane and flies back to DC. The first thing he does is make an appointment with his boss, the new national security advisor, John Poindexter. Poindexter is an enigmatic figure known for his fierce intelligence. He graduated first in his class from the Naval Academy and then went on to earn a PhD in nuclear physics from the California Institute of Technology. He is also a thoughtful man who smokes a pipe and sees himself as a patriot. Like Allie and most of the characters in this story, Poindexter is a true believer in the Reagan doctrine that communism and terrorism are the two greatest threats to American security. When Allie walks into Poindexter's office in January of 1986, he gets right to the point. He says, I think we found a way to support the Nicaraguan resistance. Allie explains Gorba's plan. Instead of using Israel as a middleman, as they have been doing, the US will sell missiles directly to Iran, mark up the price and use the profits to fund the Contras. Two birds, one stone, the diversion. Poindexter likes the idea. It's a perfect way to benefit two of the president's policy priorities, getting the hostages back and supporting the Contras. Later that night, Poindexter calls Allie on a secure line and orders him to proceed with the diversion. What happened to lead him to that decision depends on who you ask. Did he take it to the president or run it by anyone else? Or did he make a unilateral decision on his own? Here's what we do know. On January 17, 1986, Reagan signs a presidential finding. This one ordering Vice Admiral Poindexter and the CIA to drop the Israeli middleman and negotiate a direct sale of arms from the US to Iran. This January 1986 finding is never delivered to Congress. In February 1986, the diversion is off to the races. After the next month, Poindexter oversees the operation and Allie handles the details. He gives the Contras military advice, coordinating directly with leaders on both sides of the deal. He runs point on everything from arms deliveries to negotiations with Iran to coordinating with the CIA for the Contra resupply effort. Soon 1,000 missiles are delivered to Iran. With Poindexter's blessing, Allie raises the price from $3.7 to $10 million. The extra $6.3 million are then diverted to the Contra program. So far so good, except that it's not because no hostages are released and the president doesn't understand why. His patience is wearing thin. With his back against the wall, Reagan reaches out to a former employee, a man who resigned when he thought Reagan wasn't listening to his advice. But Reagan is ready to listen now. He calls on Budmick Farlin. It's May 1986. Five months before the plane carrying Eugene Haasenfuss has shot down. A group of Americans, a flight crew, sits in a hotel room in Tehran. But this isn't a bunch of vacationing pilots. The armed Iranian guards standing watch outside make that abundantly clear. A few days back, these men flew to Tehran with fake Irish passports and a plane load of spare parts for hawk missiles. They brought something else too. Well, I guess they didn't like the cake. No, guess not. It's a kosher cake in the shape of a key to be exact. The cake is meant to symbolize a new opening to Iran. They also brought a Bible with a handwritten message inscribed inside, signed by Ronald Reagan. But the cake and the Bible don't have the effect the Americans hoped for. Instead of receiving a warm welcome, they promptly put on house arrest. We should offer them the equipment. No. We're not giving them anything until we get what we want. But we're not exactly in a position to negotiate, are we? If we offer them something, then I said no. We wait. And just then, the door to the hotel room opens. An Iranian man in a dark suit enters. He doesn't say a word. He walks directly to the telephone, picks it up and dials a number. He holds out the receiver, as if to say, it's for you. One of the American stands, and takes the phone in his hands. Hello? Yes, I'll hold. The Americans exchange nervous clanses. Then, Mr. President, I'm sure I'm glad to hear your voice. These men, captives in an Iranian hotel room, are high level officials in the Reagan administration. Part of the secret U.S. delegation sent to Tehran to negotiate for the release of American hostages. Among them are two men of particular importance, Ali North and Bud McFarland. Eventually, Bud, Ali, and the other officials are let go, but they're going back to Washington empty handed. That story is based on claims made by the Iranian government, claimed reported on by major American news outlets. But the truth is, it's impossible to know what exactly happened in Iran. That's because the people involved tell a story very differently, even about the smallest details. In Ali's version, there was no Bible, but there was a cake, a cake he bought at a bakery in Tel Aviv on his way to Iran. But Ali swears it was not in the shape of a key. Bud says there was no cake at all. Then later he walks that back, abiding yes, there was a cake, but adding the strange caveat, I didn't bake it. But both men agree that Tehran trip was supposed to be a simple transaction, fly to Tehran with a plain full of hawk missile parts. When the Iranians released the hostages to the Americans, give them the hawk parts and fly back home. Both men also agree the negotiations went horribly wrong, but they disagree on why. Ali blames Bud. Ali says in the middle of heated negotiations, the Iranians offer up two hostages in exchange for the parts, and Bud blew his top. The deal was for all the hostages, not two. Ali says Bud stormed out of the room, and he had to chase after him and beg him to reconsider. Two hostages were better than none, he told him, but Bud refused to listen and cut off the negotiations. Bud McFarland tells it a different way. He says when the president called and asked him to go to Tehran, he couldn't refuse. Resigning his post as national security adviser was the hardest thing he ever did, and he still wanted to serve. He would later tell the Washington Post that he started the arms for hostages, mess. In Bud's mind, going to Tehran was the only way to convince the president once and for all that the Iran initiative would never work. And from the moment their plane landed on the tarmac, Bud says it was obvious the Iranians were not on the up and up. No one was there to greet them, and they were forced to wait for two hours in a holding area until Gabbanafar finally showed his face. From there, Gorba escorted them to a hotel and told them to wait for the Iranian officials to arrive. Two days went by, and no one showed up. While waiting in the hotel, Bud learned that the Iranians had already violated the deal, they had unloaded the weapons without permission. Then when the Iranians finally did show up, they only offered two hostages. In Bud's view, these men were not acting in good faith, so he killed the deal. It's not that these discrepancies about keys and cakes matter, but they are emblematic of a greater issue with the Iran contra of fair. The characters don't always remember things the same way. They're unreliable narrators, which makes the truth difficult to wrestle to the ground. On the way back to Washington, Bud and Ali have a layover in Tel Aviv. On the tarmac at Bengalian Airport, Bud orders the CIA radio men to get John Point extra on the line, so he can give him the bad news. Ali taps Bud on the shoulder as he passes. Don't worry Bud, it's not a total loss. At least we're using some of the Itoll's money in Central America. Ali is referring to the diversion, where money from armed sales is being funneled to the contrast, but Bud is confused. He has no idea what Ali is talking about. But if what Ali just said is true, then Bud knows the mess he started has grown into something worse than he'd ever imagined. Before Bud can ask Ali any questions, the CIA radio man hands him the handset, point extras on the line. Bud's message to the man who replaced him as national security adviser is brief. We did not get the hostages back. Tell the president I'm sorry. Ali says the flight back to Washington is a quiet one. He says that when they land at Delus Airport, he and Bud go to the White House together to brief the president in the Oval Office. Bud says he tells the president the same thing he told him before he resigned. Stop negotiations. They will never work. But Bud doesn't say anything to Reagan about Ali's comment on the tarmac about using Iran's money to support the Contras. It's not hard to imagine why, because it's not hard to imagine that in May of 1986, Bud sees the righty on the wall. If money from the armed sales is going to the Contras instead of the United States Treasury, then that's a serious crime. And if this information were ever to go public, the fallout would be catastrophic. Investigations, hearings, impeachment. After the failed negotiations in Tehran, Ali is angry. Bud should have at least asked permission to get the two hostages back. Ali's certain Reagan would have given Bud the go ahead to make the deal. But in the meeting with Reagan, Ali doesn't say a word. Instead, he resolves to do what Bud could not. The hostages back. Ali North has always been something of a loose cannon. Depending on who you ask, he's either stark raving mad or a mad genius. Ali didn't balk when Bud attacked and managed the Iran in contra operations. He didn't question the legal ramifications of either. He dove right in and he took charge. Maybe that's because Ali sees himself as something of a dark knight, a hero who will do whatever it takes to keep America safe. He is more than willing to fight the bad guys, even if it means breaking the law. Or maybe, Ali didn't think the Iran and contra operations were illegal. Or maybe he didn't think it mattered because he believed he was operating with President Reagan's blessing. But there is no doubt Ali sees himself as a patriot, and a man who doesn't back down from a fight, especially if it means protecting the country. And in the late summer of 1986, Ali has a big fight on his hand. His opponent, the United States Congress. It's August 6, 1986. Two months before the Hassanfuss plane crash, Reagan has finally commenced Congress to loosen up the Bolin Amendment and support his goals in Nicaragua. Now, there's a $100 million appropriations bill for the Contras pending in Congress. While most of the Republicans in the room want to start funding the Contras as soon as possible, the Democrats are not going to fund anything until they get some answers. Ali North sits in the President's chair in the situation room across from several members of the House Intelligence Committee. There have been rumors in the press about Ali's contra activities, potentially illegal activities. Mood in the room is tense. Lee Hamilton, a Democrat and the chair of the Intelligence Committee, leads off the proceedings. Mr. North, thank you for meeting with us today. I'm happy to do it, sir. But that's not true. Ali's not happy to do it. The only reason he is here at all is because his boss, John Poindexter, ordered him to sit down with the congressman. Ali told Poindexter he would have to bend the truth. You can handle it, Ali. Poindexter told him. But today, sitting across from these congressmen, Ali isn't so sure. Mr. North, all we ask is that you tell us the truth. Of course, sir. The congressman fire off a slew of questions about Ali's alleged contra activities. But Ali knows the contra operation is just the tip of the iceberg. The congressman don't know about the diversion. They don't know about arms for hostages. And they don't know that after his failed trip to Tehran, Ali ditched Gorbanafar and opened up a second channel to Iran to keep the operation alive. Ali has to be very, very careful about what he says next and how he says it. Mr. North, did you give the congress military advice? I'm a military man, congressman. When I sit down with military people, it's inconceivable that we don't talk about military things. But even if I thought I could give him advice, you and I both know this war can't be run for Washington. It's a nonanswer, and that's by design. It's also a lie. Ali has been giving a dolphin calero and other contra leaders military advice for years. But if Ali tells the truth, he'll be admitting he violated the Bolin Amendment. Though there's no criminal penalty for such a violation, Ali could lose his job, not to mention be publicly disgraced, dragged in front of Congress for hours of public testimony. But even more importantly, telling the truth could spell disaster for President Reagan. And for the Contras. One last question, did you personally ever raise money for the Contras? No sir, I did not. Well, thank you for your time, sir. Ali leaves the meeting at peace with his decision. Yes, he lied. But he lied for the right reasons. He lied to protect the President and preserve the Contras body and soul. Two days after the meeting, on August 8, 1986, John Pointextra sends Ali a private message. Two simple words that say it all. Well done. The House Intelligence Committee is also satisfied. The inquiry into the contra operation is closed. Over the next two months, the $100 million appropriations bill makes its way through Congress and passes in both the House and the Senate. The final step is the budget committee reconciling the funds. And then the bill will be ready for the President's signature. But then, on October 5, 1986, playing carrying 70 AK 47s, 100,000 rounds of ammunition and rocket propelled grenades is shot out of the sky over Nicaragua. And when the sole survivor, Eugene Hosenfuss, is paraded in front of the press, he tells the world the CIA coordinated the flight. Sometime after the crash, Ali gets his orders from the CIA Director Bill Casey. Shut down the operation, clean it up. So Ali gets to work. He picks up the phone and calls his people on the ground in Nicaragua. He orders them to leave the country and return to the United States immediately. The CIA gets down to business too. Agents fly all US planes and equipment in Nicaragua to a remote airfield. The agency's bulldozers to dig a massive ditch and fill it with explosives. Then they push the entire fleet into the hole and blow it to bits. The remaining scraps are doused with fuel and incinerated in a fire that burns for days. A few days after the crash, Eugene Hosenfuss's captors grant him an interview with Mike Wallace to air on 60 minutes, where he describes a clandestine network that ferries tons of supplies to the rebels. In a scandal where the key players often lie, disemble and change their stories to serve themselves, Hosenfuss is one of the only people who tells the truth. Throughout the month of October, Congress investigates the plane crash, but repeated denials from the White House, as well as from the CIA and the State Department, stymie the inquiry and the issue is put to bed for the time being. On October 21, 1986, Reagan signs the budget bill bringing an end to the need for the diversion. The Reagan administration can now fund the Contras out in the open. Mission accomplished. At least for a fleeting moment. As less than two weeks after the budget is enacted, in early November of 1986, the other shoe drops. Al Shira, a Lebanese news magazine, publishes a bombshell. A story the American people know nothing about, an exposé that blows the Iran scandal wide open. Al Shira claims the United States sold arms to Iran. The article also outlines Budmik Farlan and Oli North's secret trip to Tehran to trade arms for hostages. The stories picked up by news media in the U.S. and papers all over the world. The details are confirmed by a high level official in the Iranian government. This presents a major problem for the Reagan administration, and it leads to questions with potentially impeachable consequences. What did President Reagan know and when did he know it? Almost immediately, Reagan's cabinet builds a wall of protection around the president. Someone must take the blame for this, but it won't be Reagan. Instead, the scapegoats chosen include Budmik Farlan and his right hand man, Oli North. From Wondry, this is episode two of six of Iran's contra for American scandal. On the next episode, we follow Don Reagan as he walls off the president. He yields him from a media firestorm and goes looking for a head to put on a spike. If you'd like to learn more about Iran contra, we recommend a book, Iran contra, Reagan's scandal on the unchecked abuse of presidential power by Michael Byrne. This episode contains reenactments and dramatized details, and while in most cases we can't know exactly what was said, all our dramatizations are based on historical research. American scandal is hosted, edited, sound assigned, and executed produced by me Lindsey Graham for airship. Additional production assistance by Derek Barrett's. This episode is written by Stephen Walters, edited by Andrew Stelser, our consultant is Malcolm Byrne. Our producers are Stephanie Gens, Marsha Louis, and Renon Lopez for Wondry.