Arrests Reveal Valley Link in Arms Exports to Iran

‘There is no other country so persistent in its attempts to get American military hardware. Iran is desperate.’

Jeffrey Modisett

assistant U. S. attorney

Larry Remy was quite a salesman, and it sounded as if Hassan Kangarloo were chomping at the bit. The item for sale was a surveillance camera used on U. S. military aircraft. Remy told Kangarloo it was just what the Iranian army needed in its war with Iraq.

“It’s infrared,” Remy said in a telephone conversation taped on Sept. 28, 1983. “It’ll go through fog, smoke, clouds, whatever.”

Kangarloo, 27, an Encino businessman and an admitted military-arms broker for the Iranian government, told Remy he was interested in the deal. Kangarloo said he had offered to obtain the cameras for Iran at a cost of $1.2 million each, including his 10% commission.

But dealing in military goods going to Iran--a violation of the U. S. Arms Control Act--is risky business. Kangarloo told Remy he was fronting the money for the Iranian government, thus taking a chance of not getting paid.

“That doesn’t sound like, ah, the greatest way to do business,” Remy said. “It seems like they ought to take little chances, too, ‘cause when you’re trying to do something for them that’s definitely illegal.”

“Right,” Kangarloo said, adding that his motivation to take that risk was that “money is going to be involved.”

Kangarloo never got his money, nor, for that matter, the cameras.

The man Kangarloo knew as Larry Remy is actually U. S. Customs Service agent Larry Renault, posing as a weapons dealer. Because of the telephone call and other evidence, Kangarloo was arrested and convicted by a U. S. District Court jury of two counts of conspiring to violate export-control laws. He is being held at the Federal Correctional Institution at Terminal Island and faces up to 13 years in prison when he is sentenced Oct. 6.

Part of Crackdown

Kangarloo was targeted by “Operation Exodus,” a U. S. Justice Department crackdown on the growing illegal export of American military hardware to Iran. Since January, 1981, FBI and customs agents nationwide have broken up 32 illegal operations involving the smuggling of arms and other military goods to Iran, resulting in the indictments of 125 individuals and corporations, according to figures compiled by the Justice Department’s export-control enforcement unit.

Ten of those cases resulted in indictments against 38 individuals and businesses in Southern California, primarily in the San Fernando Valley, where a large number of Iranians have settled since the Ayatollah Ruhollah Khomeini rose to power in 1979.

The nearest rival to Iran, when it comes to illegal exportation of U. S. military arms and technology, is the Soviet Union. Since 1981, federal agents have uncovered 18 cases of individuals and businesses sending goods to Russia in violation of the Arms Control Act. Most of those cases involved the illegal export of computer goods and other non-military items.

“There is no other country so persistent in its attempts to get American military hardware” as Iran, said Assistant U. S. Atty. Jeffrey Modisett, who prosecuted Kangarloo. “Iran is desperate, and they’ll pay top dollar for whatever they can get.”

Iran’s demand for American weaponry is understandable. Federal officials say that, from 1970 to 1979, the late Shah Mohammed Reza Pahlavi purchased $17 billion in U. S. military supplies, including jet fighters, missiles, helicopters, tanks and sophisticated radar equipment. Virtually all of Iran’s military arsenal is American-made, and most of the equipment has fallen into disrepair.

Iran’s military might has been depleted by its six-year war with Iraq and, since the seizure of the U. S. Embassy in Tehran in November, 1979, the country has been barred from receiving any U. S. weaponry or scientific technology.

“They’re in desperate need of parts, particularly airplane parts,” said Joseph A. Charles, assistant special agent in charge of the customs office at Terminal Island.

Iranian arms suppliers sent to the United States, Europe and Asia with “wish lists” for American weapons must circumvent laws requiring that the export of items on the U. S. Munitions List receive government approval even for shipment to friendly nations. Licenses are granted only when the recipient government certifies that it will not re-export the arms without U. S. authorization.

As a result, Iran is forced to rely on black-market weapons to circumvent the U. S. boycott, often paying double to triple the standard prices. Nevertheless, customs officials say, the Iranian agents have been successful in obtaining military hardware, often from unwitting U. S. defense contractors who believe the arms are destined for friendly countries.

Many of the arms merchants have settled in the Los Angeles area, particularly the San Fernando Valley, Charles said.

“They like the climate, and that’s where much of the aircraft industry is based,” he said. “Many of the Iranians who fled the country were middle- or upper-class citizens, and they just picked that area as a place to live.”

Charles also said that the Valley is where many of the federal investigations involving arms smuggling to Iran have begun.

Among the more recent cases is that of Khosrow Shakib, 43, of Encino, who pleaded guilty in July to conspiring to illegally export $4 million in military radio parts to Iran. A former architect for the Shah, Shakib’s attorney said his client was attempting to recover some of the millions of dollars he lost when he was forced to leave Iran.

Shakib is scheduled to be sentenced in October and faces up to five years in prison. A co-conspirator, Hormoz Hezar, 51, of Beverly Hills, also pleaded guilty and faces a maximum nine-year prison sentence when he returns to federal court in November.

Steven Sanett, 33, of Hidden Hills, owner of Aero Electronics in Venice, admitted selling the parts to Shakib and Hezar. In addition, he and two of his employees--F. Linda Shambrum, 39, of Van Nuys and Steve Edward Argubright, 31, of La Crescenta--pleaded guilty in August, 1985, to illegally exporting to Iran electronic tubes used in a ground-based radar defense system.

Customs agents said the three purchased the items from Hughes Aircraft Corp. for $60,750 and then, knowing that the shipment was destined for Iran, sold them to a Swiss corporation for $89,000. Sanett, who cooperated in the federal investigation of Shakib and Hezar, was sentenced to six months in prison. Shambrum and Argubright were placed on probation.

Kangarloo first entered the United States as a visitor in 1980. A year later he represented himself to potential arms dealers as a director for General Commodities Ltd., a British firm with offices in London, according to court documents. Customs officials alleged in court documents that Kangarloo was actually a broker for the Ground Forces Logistics Command, the purchasing arm of the Iranian Army.

3-Year Investigation

Customs agents began investigating Kangarloo in 1983 and searched his luggage when he entered the United States from London on April 12, 1985. According to court records, they found “a number of documents pertaining to the purchase and sale of ammunitions, military radios” and other items that required licenses, including bombs, rockets and rocket launchers.

They also discovered a notebook with the Simi Valley address for COMSPEC, a supplier of military electronic equipment. A week later, customs agents interviewed COMSPEC’s president, Abraham Trujillo, who said Kangarloo wanted to buy radio parts but did not reveal where they would be shipped, according to court documents.

In August, 1985, U. S. Customs agents in London intercepted a shipment of radio parts purchased from COMSPEC by Kangarloo and destined for Iran. When the agents paid Trujillo a return visit, Modisett said, the dealer acknowledged selling the parts to Kangarloo and agreed to cooperate with the investigation. Trujillo, who has since resigned from COMSPEC, pleaded guilty to one count of wire fraud and is scheduled to be sentenced Monday.

Kangarloo, meanwhile, left the United States for London in September, 1985. He was arrested in April while attempting to cross the U. S.-Canada border at Blaine, Wash.

Kangarloo testified at his trial that he was unaware that export licenses were required to ship arms to Iran. During the trial, U. S. District Judge Stephen V. Wilson called Kangarloo’s testimony “patently incredible.”

Although the government could prove only that Kangarloo exported $100,000 worth of military radio parts to his homeland, transcripts of taped conversations on file in U. S. District Court in Los Angeles show that Kangarloo boasted that he exported $81 million in U. S. military hardware to Iran from 1981 to 1984.

Based on the taped conversations, Modisett said, it is believed that Kangarloo was involved in the exportation of M-60 tank parts, reconnaissance cameras and jet aircraft parts.

Kangarloo also was linked to a group charged with attempting to illegally export 1,140 anti-tank missiles to Iran. He was not arrested in connection with the case.

The conspiracy to export anti-tank missiles was uncovered in August, 1985, when federal agents arrested seven people, including a U. S. Army lieutenant colonel assigned to the Pentagon. Although the case was investigated and tried by federal authorities in Orlando, Fla., six of the defendants were from California, including three from the San Fernando Valley.

One of them, Charles St. Claire, 53, a Granada Hills commodities broker, was convicted by a jury and sentenced to 18 months in prison for his role in the conspiracy. Another, Paul Cutter, 48, of San Jose, a free-lance writer of articles for military and science magazines, received a five-year sentence.

Case Proves Flawed

But the prosecution’s case, dubbed “Iranscam ‘85” by the defendants’ attorneys, was largely a failure. A jury in December found four of the defendants innocent, and a judge dismissed charges against the Pentagon official, Lt. Col. Wayne Gillespie, 48, of Alexandria, Va., before the case went to trial.

Prosecutor Stephen Calvacca said in an interview that the major problem with the case was that the government’s main informants were tied to the Mafia and lacked credibility. Also, some undercover agents posed as Mafia figures with access to stolen military weapons. Defendants argued in court that they feared for their lives if they backed out of the deal, Calvacca said.

Among those exonerated by the jury were a wealthy Calabasas couple, Fadel Norman Fadel, 55, a Lebanese citizen, and his wife, Farhin Sanai, 52, an Iranian citizen.

Neither Fadel, a commodities broker, nor his wife could be reached for comment. But Sanai told the Orlando Sentinel that she thought Cutter was working for the U. S. government.

“I knew I was innocent,” she told the Sentinel. “I really believed Paul Cutter was an agent for the government.”

Kangarloo’s attorney, Don Marks, said Kangarloo testified in his trial that he began exporting military supplies to Iran in 1981, when he was introduced to Sanai and Fadel. At the time, Kangarloo was working for an Encino bakery.

Kangarloo was a novice when it came to the exportation of military supplies, Marks asserted. He said customs agents “did everything possible to try and ensnare him.”

Modisett disagrees.

“He knew what he was doing,” the prosecutor said.