Walsh Held Sure to Ask for Indictment of North : Sources Say He Will Seek Charges Against Other Key Figures Also; Conspiracy Counts Seen Likely

WASHINGTON —  Despite the outpouring of public support for former White House aide Oliver L. North, there is no doubt that independent counsel Lawrence E. Walsh will seek to indict him and other principals in the Iran- contra case, sources familiar with Walsh’s probe said Wednesday.

Now that the congressional investigating committees have concluded their public hearings, the spotlight is shifting to Walsh’s effort to bring criminal charges. And the sources predicted that the independent counsel will ask a grand jury to return indictments for conspiring to defraud the United States, the same charge for which some Watergate figures were convicted.

Misappropriation Issue

The specific fraud in the Iran-contra affair, according to the sources, could be misappropriating the profits of the Iranian arms sales for such private uses as aiding Nicaragua’s contras. And, more generally, it could involve disrupting normal governmental processes.

The sources include attorneys for prospective defendants and witnesses and others acquainted with the investigation of the independent counsel. Walsh’s office, citing the federal rules of grand jury secrecy, refused to discuss the investigation.

Problems with gathering evidence, such as copies of Swiss bank records on the arms sales, and obtaining handwriting samples from North and other major figures, are delaying the major charges until the fall, the sources said. North’s constitutional challenge to the law under which Walsh is operating also has slowed the prosecution.

But there could be quicker indictments in lesser cases with ties to the alleged central conspiracy, the sources said. Conservative fund-raiser Carl R. (Spitz) Channell and public relations executive Richard R. Miller have pleaded guilty to conspiracy to defraud the government in connection with their tax-exempt scheme for raising private donations to the contras, and both named North as a co-conspirator.

In addition to North, the targets of Walsh’s investigation include former National Security Adviser John M. Poindexter and retired Air Force Maj. Gen. Richard V. Secord, who helped operate the private arms airlift to the contras and the arms sales to Iran. In legal terms, a target is someone who, in the prosecutor’s judgment, is likely to be indicted.

It could not be determined whether Albert A. Hakim, Secord’s business partner, and Robert C. McFarlane, Poindexter’s predecessor as national security adviser, have been targeted by Walsh, but no source interviewed would rule out the possibility.

Other Possible Charges

Beyond conspiring to defraud the government, other possible criminal charges include lying to Congress, obstructing justice and destroying government property, according to the sources. Poindexter admitted to the congressional investigating committees that he withheld information from Congress, and North said that he had shredded important documents.

The “core conspiracy,” the sources predicted, will involve the law prohibiting two or more persons from conspiring “to commit any offense against the United States or to defraud the United States or any agency thereof.”

A 1909 Supreme Court case held that the law “is broad enough in its terms to include any conspiracy for the purpose of impairing, obstructing or defeating the lawful functions of any department of government.” Maximum punishment for violating the law is five years in prison and a $10,000 fine.

North, a Marine lieutenant colonel detailed to the White House National Security Council staff under first McFarlane and then Poindexter, recruited Secord to establish a private network to provide the contras with arms after Congress had forbidden direct governmental assistance, according to congressional testimony.

This activity could provide the basis for a criminal charge of conspiring to violate the congressional ban on arming the contras, the sources said. But the ban itself carried no criminal sanctions, and the sources said that they believe Walsh would be reluctant to indict North for conspiring to evade a non-criminal law.

North, Poindexter and some other major figures in the Iran-contra affair testified to the congressional committees under a guarantee that their testimony would not be used to prosecute them. Walsh’s office has taken elaborate precautions to ensure that it can demonstrate that it gathered its evidence independently of the witnesses’ testimony.

Public Support for North

At the same time, the sources said, Walsh is aware of the public support North seemed to muster during his six days of testimony last month. For that reason, they said, he is sensitive about indicting him for lesser offenses than the conspiracy charge.

Several polls found that North’s dramatic congressional testimony favorably impressed the public. A mid-July survey by the Los Angeles Times Poll, for example, found 67% of respondents favorably impressed, with 74% considering North a convincing witness and 68% believing his assertion that he acted only under orders from superiors.

With any indictments on the central charge still at least two months away, Walsh’s plans could change if prospective defendants agree to plead to reduced charges and cooperate with investigators in hopes of lenient treatment.

There is no indication of such cooperation from any of the central figures at this point, the sources said. But Walsh already has granted immunity from prosecution to several lesser figures, including Fawn Hall, North’s secretary; Robert W. Owen, a courier for North, and Lt. Col. Richard B. Gadd, an associate of Secord.

One major source of delay has been North’s continuing efforts to derail Walsh’s inquiry on grounds that the law he is operating under is unconstitutional and that Walsh’s parallel appointment as a special counsel by the Justice Department was made improperly.

North’s attorneys made these arguments Wednesday to the U.S. Circuit Court of Appeals for the District of Columbia, in appealing a contempt citation by Chief U.S. Judge Aubrey E. Robinson Jr. over North’s refusal to supply handwriting samples and other subpoenaed evidence.