P R I M A R Y S O U R C E S
What really happened
A 1991 deposition from a top IRS criminal investigator
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One of the great myths of the Clinton scandals is that Mena -- the major Contra training, supply, and drug running headquarters -- was a myth. One of those with solid evidence to the contrary is William Duncan, the former Special Operations Coordinator for the Southeast Region of the Criminal Investigation Division, Internal Revenue Service. In 1991, Duncan (who had lost his job trying to get to the bottom of the Mena story) gave a deposition to a joint investigation conducted by Rep. William Alexander and the Arkansas attorney general's office, represented by Winston Bryant. Here are some excerpts from the deposition -- giving a vivid snapshot of what was going on and what honest investigators such as Duncan and Arkansas state trooper Russell Welch were up against.
Q. Would you state your name, age, and address, please?
A. William C. Duncan, age forty-four, 513 Pine Bluff Street, Malvern, Arkansas.
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Q. You were a criminal investigator for the U.S. Treasury Department?
A. Yes, perpetually from December of '73 through June 16, 1989.
Q. And as a criminal investigator for the Treasury Department, did you have occasion to investigate matters surrounding activities in Mena, Arkansas?
A. Yes, I did.
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Q. Would you describe the nature of your instructions and the manner in which you carried out those instructions as they relate to activities surrounding the Mena Airport matter?
A. I was assigned to investigate allegations of money laundering in connection with the Barry Seal organization, which was based at the Mena, Arkansas airport.
Q. And can you -- how long a duration were you involved in this investigation?
A. I received the first information about Mena and illegal activities at the Mena Airport in April of 1983, in a meeting in the U.S. Attorney's Office, Fort Smith, Arkansas. Asa Hutchinson was the U.S. Attorney then. Also present at that meeting was Drug Enforcement Administration Agent Jim Stepp, S-T-E-P-P.
Q. Did you discover what you believed to be money laundering?
A. Yes, I did.
Q. Who was the object of your investigation, and what institution?
A. Rich Mountain Aviation, Incorporated based at the Mena Airport. Barry Seal was not actually a target. We had targeted the employees and cohorts of his which operated out of the Mena Airport.
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Q. What did you do with the evidence of money laundering that you gathered from your investigation?
A. Presented it to the United States Attorney's Office, Western Judicial District, Fort Smith, Arkansas.
Q. And what were your recommendations to the U.S. Attorney?
A. That those individuals and corporation -- the corporation be prosecuted for violations of the money laundering statutes, also there were some perjury recommendations and some conspiracy recommendations.
Q. Did you present to the U. S. Attorney a list of prospective witnesses to be called?
A. Yes, I did.
Q. For a grand jury?
Q. And do you have the names of those witnesses?
A. There were a variety of witnesses. There were some 20 witnesses. He called three witnesses. The witnesses including -- included the law enforcement personnel who had participated in the investigations, Barry Seal, members of his organization, people who were involved in the money laundering, and various financial institution officers who had knowledge.
Q. Mr. Duncan, the money laundering to which you refer, did that arise out of an alleged drug trafficking operation managed from the Mena, Arkansas airport?
A. It did.
Q. And it has been alleged that the Central Intelligence Agency had some role in that operation. Is that the same operation that you investigated?
Q. And when you submitted the witnesses, the names of the prospective witnesses to the U. S. Attorney in Arkansas, are you referring to Mr. -- what was the name of the U. S. Attorney?
A. Asa Hutchinson.
Q. Asa Hutchinson. And what was his reaction to your recommendations?
A. It had been my experience, from my history of working with Mr. Hutchinson, that all I had to do is ask for subpoenas for any witness and he would provide the subpoenas and subpoena them to a grand jury. His reaction in this case was to subpoena only three of the 20 to the grand jury.
Q. Now, of the three witnesses, who were -- what was the nature of the evidence that would have been elicited from those witnesses?
A. Direct evidence in the money laundering.
Q. And did those witnesses testify for the grand jury?
A. yes, they did.
Q. Were you present at the time of the grand jury?
A. No, I was not.
Q. You were not?
A. I was in the witness room, but I was not in the grand jury.
Q. I see. What was the result of the testimony given by the three witnesses to the grand jury?
A. As two of the witnesses exited, one was a secretary who had received instructions ~~~ and I think on some occasions had discussed with Barry Seal, the methodology. She was furious when she exited the grand jury, was very upset, indicated to me that she had not been allowed to furnish her evidence to the grand jury. ~~~ She was the secretary for Rich Mountain Aviation, who participated in the money laundering operation upon the instructions of Hampton, Evans.
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Q. And what did she say about the evidence that she was allowed to give the grand jury as it might have been different from the evidence that you wanted her to give to the grand jury?
A. She basically said that "she was allowed to give her name, address, position, and not much else.
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Q. And there were two other witnesses, I believe you made reference to, did you talk with them?
A. I talked to another one, his name was Jim Nugent, who was a Vice-president at Union Bank of Mena, who had conducted a search of their records and provided a significant amount of evidence relating to the money laundering transactions. He was also furious that he was not allowed to provide the evidence that he wanted to provide to the grand jury.
Q. And was there a third witness?
A. There was a third witness, I don't recall her name off-hand. She was an officer at one of the financial institutions in Mena, and she did not complain to me.
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Q. What was the result of the grand jury inquiry into the money laundering investigation which you had conducted?
A. There were never any money laundering indictments.
Q. There was no indictment?
Q. Did you have occasion to talk to any of the jurors that were impaneled on the grand jury that heard the evidence?
A. At a later date, I came in contact with the deputy foreman of the grand jury, who had previously given testimony to an investigator for the House Judiciary Subcommittee on Crime, concerning her frustrations as the deputy foreman of the grand jury.
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Q. And could you relate to us any other conversation you might have had with her concerning her appearance before the grand jury?
A. Well, she was perpetually involved in the grand jury as it heard evidence concerning the Barry Seal matter, and she related to me the frustrations of herself and the entire grand jury because they were not allowed to hear of money laundering evidence.
Q. Do you recall any statements that she made to you concerning that grand jury, her service on the grand jury?
A. .She stated to me that they specifically asked to hear the money laundering evidence, specifically asked that I be subpoenaed, and they were not allowed to have me subpoenaed.
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Q. Mr. Duncan, are you saying that the grand jury that was impaneled to hear your investigation, hear evidence of the investigation that you had conducted for the U.S. Treasury as a special investigator, was compromised?
A. The evidence was never presented to the grand jury. The evidence gathered during that investigation was never presented to the grand jury.
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Q. There were no indictments?
A. Never any indictments.
Q. There were no prosecutions?
Q. In effect, the evidence that you gathered has not been acted on by the U. S. Attorney's Office?
A. Not to my knowledge.
Q. Did you complain to your superior?
Q. What was his name?
A. Paul Whitmore, Chief of Criminal Investigation. I also complained to my group managers, Tim Lee, Charles Huckaby and Max Gray.
Q. And what did they -- what was their response?
A. They were very frustrated, also. Mr. Whitmore, in fact, made several trips to Fort Smith, Arkansas to complain to the U. S. Attorney's Office.
Q. Did he relate to you the conversation he had had with the U. S. Attorney?
A. On several occasions, and also related to me that the U.S. Attorney wrote him a letter telling him not to come to his office anymore complaining, that that was unprofessional behavior.
Q. What was the conclusion of Mr. Whitmore concerning your investigation and the manner in which it was handled by the U. S. Attorney in Arkansas?
A. That there was a coverup.
Q. Are you saying -- do you agree with his-with Mr. Whitmore's conclusion?
Q. Are you stating now under oath that you believe that the investigation in and around the Mena Airport of money laundering was covered up by the U. S. Attorney in Arkansas?
A. It was covered up,
Q. Would you state that succinctly for the record in your own words, so that we might -- to have the benefit of how you would state your opinion and conclusions as a result of your activities as a special investigator -- as to this investigation?
A. I was involved from April of 1933, really to this date, in gathering information, gathering evidence, until 1987-1988. I, on a perpetual basis, furnished all the evidence, all the information to the U. S. Attorney's Office. In January of 1986, a Special Assistant U.S. Attorney from Miami, I believe, who was a money laundering specialist, came to Fort Smith, met with then U. S. Attorney Fitzhugh and myself and drafted a series of indictments. I think there were 29 indictments, charging the aforementioned individuals and Barry Seal, as I recall, as an unindicted co-conspirator in the money laundering scheme. At that point in time I had every indication that the cases would go to the Grand Jury, that the evidence would be presented to a grand jury. We experienced a variety of frustrations, mid '85 on, not able to obtain subpoenas for witnesses we felt were necessary. I had some direct interference by Mr. Fitzhugh in the investigative process. Specifically he would call me and interrupt interviews, tell me not to interview people that he had previously told me were necessary to be interviewed.
Q. Did you have any interferences or interruptions from anyone within the U. S. Treasury Department that would interfere with your investigation?
A. They interfered with my testimony before the House Judiciary Subcommittee on Crime.
Q. Would you tell us about that?
A. In late December of 1987, I was contacted by Chief Counsel for the House Judiciary Subcommittee on Crime, Hayden Gregory, who told me that they were looking into the reason why no one was indicted in connection with the Mena investigations. The Internal Revenue service assigned to me disclosure litigation attorneys, which gave me instructions which would have caused me to withhold information from Congress during my testimony and to also perjure myself.
Q. And how did you respond to the Treasury Department?
A. Well, I exhibited to them that I was going to tell the truth in my testimony. And the perjury, subornation of perjury resulted in an -- resulted because of an allegation that I had received, that Attorney General Edwin Meese received a several hundred thousand dollar bribe from Barry Seal directly. And they told me to tell the Subcommitte on Crime that I had no information about that.
Q. What is this about Meese? Where did you get that information?
A. I received that from Russell Welch, the State Police investigator.
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Q. (BY MR. ALEXANDER) Mr. Duncan, prior to your resignation from the Department of Treasury, do you recall any other conversations you may have had with your superiors concerning the investigation of Mena?
A. With respect to what?
Q. With respect to the manner in which the case was attempting to be covered up?
A. We had continuing discussions because none of us, my managers nor myself, had ever experienced anything remotely akin to this type of interference. I had a very good working relationship with all the Assistant United States Attorneys and the U.S. Attorney's Office, Western Judicial District, never any problems. The office was open to me, and I visited with them every time I was in Fort Smith. And we couldn't understand why there was this different attitude. I had found Asa Hutchinson to be a very aggressive U.S. Attorney in connection with my cases, then all of a sudden, with respect to Mena, it was just like the information was going in but nothing was happening over a long period of time. Mr. Hutchinson did not directly interfere as did Mr. Fitzhugh. But just like with the 20 witnesses and the complaint, I didn't know what to make of that. Alarms were going off. And as soon as Mr. Fitzhugh got involved, he was more aggressive in not allowing the subpoenas and in interfering in the investigative process. He was reluctant to have the State Police around, even though they were an integral part of the investigation. For instance, when the money laundering specialist was up from Miami, Mr. Fitzhugh left Mr. Welch in the hall all day until late in the afternoon and refused to allow him to come in. We were astonished that we couldn't get subpoenas. We were astonished that Barry Seal was never brought to the grand jury, because be was on the subpoena list for a long time. And there were just a lot of investigative developments that made no sense to us. One of the most revealing things, I suppose, was that we had discussed specifically with Asa Hutchinson the rumors about National Security involvement in the Mena operations. And Mr. Hutchinson told me personally that he had checked with a variety of law enforcement agencies and people In Miami, and that Barry Seal would be prosecuted for any crimes in Arkansas. So we were comfortable that there was not going to be National Security interference.
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Q. Did you ever talk to a Mary Ann Curtin?
A. Yes, I did.
Q. What was her job?
A. She was the disclosure litigation attorney in Washington assigned to counsel me, provide legal advice with respect to my testimony before the House Judiciary Subcommittee on Crime.
Q. What was her advice to you?
A. Told me not to offer any opinions, even if specifically asked for my opinion by the Subcommitte on Crime. Told me not to volunteer any information. Basically did not want me saying anything that would reflect badly on the U.S. Attorney's Office in the Western Judicial District of Arkansas.
Q. What was your conclusion from her instructions to you?
A. It made no sence for me not to give full and complete testimony to the subcommittee on Crime.
Q. Mr. Duncan, do you get the impression that she was ordering you to cover up the investigation?
Q. If you were asked to state that in your own words, what would you say?
A. I would say that we had conducted textbook investigations of all the individuals at Mena, there were a variety of legal issues involved, which I had always had them in loop on. We had proceeded very soundly. There was nothing for us to be ashamed of. The investigations were thorough, to the extent that we could conduct the investigation without subpoenas. And I would have thought that the Internal Revenue Service would have wanted a complete disclosure to Congress about the problems that we encountered, but quite the opposite was true. They obviously did not want any negative testimony coming from me concerning the U.S. Attorney's Office. At one point when we were arguing about the Meese allegation, she told me that she had discussed my frustrations with the personal assistant to the Commissioner of Internal Revenue, who was Larry Gibbs at the time, and the personal assistant's name was Bryan Sloan. And that Bryan Sloan told her, "Bill is just going to have to get the big picture."
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FURTHER EXAMINATION BY MR. BRYANT:
Q. Bill, let me ask you a few questions. I want to take you back to your investigation at the Mena Airport. How many federal agencies were involved in that investigation at the time you first went there?
A. I was aware that U.S. Customs Service was involved..I was aware that the FBI was involved, the Drug Enforcement Administration. Those were federal agencies. The Arkansas State Police was involved. The Polk County Sheriffs Office was involved and also the Louisiana State Police was involved in investigating a link between Louisiana and Arkansas.
Q. In your opinion, were those agencies actively involved in the investigation of the Mena operation and specifically Barry Seal at that time?
A. Actively involved since at least 1982.
Q. And when did you first go to Mena?
A. In May of 1983.
Q. And after you were involved in the investigation, when did you make your presentation to the U.S. Attorney for the grand jury laundering allegation that you had prepared?
A. The reports, the prosecutorial reports went to Mr. Fitzhugh in December of 1985.
Q. At that particular time were all federal agencies still actively involved in investigating the Barry Seal matter or had they--had their interest cooled, or how would you describe it?
A. It was a very strange thing, because we were dealing with allegations of narcotics smuggling, massive amounts of money laundering. And it was my perception that the Drug Enforcement Administration would have been very actively involved at that stage, especially along with the Arkansas State Police. But DEA was conspicuously absent during most of that time. The FBI appeared on the scene intermittently. Usually when Russell and I were going to conduct some credible interviews, Tom Ross, from the Hot Springs FBI Office, would suddenly appear on the scene. He would make some trips to Baton Rouge with us. U.S. Customs was conspicuously absent, also. It was primarily just Russell Welch and myself.
Q. Regarding the allegations of drug running and weapons running and any other things that you might have heard, what information do you have to, number one, substantiate that there might have been drugs brought to the Mena Airport?
A. We were receiving information from a variety of sources that Barry was doing some work for the United States Government, but that be was smuggling on the return trips for himself. We knew from his modus operandi in Louisiana that he many times dropped the rugs in remote areas and retrieved them with helicopters. He had helicopters in the hangers at Mena and a variety of aircraft, smuggling type aircraft on the ground in Mena. And we heard, you know, all the time that he was making on return trips -- Terry Capeheart, a Deputy at Polk County Sheriff's Department, had received information from an informant on the inside at Rich Mountain Aviation that drugs were actually brought into Rich Mountain Aviation, and on one occasion guarded with armed guards around the aircraft.
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Q. What specific physical evidence did you observe at the Mena Airport that would indicate to you, that in your professional opinion, drugs were brought to Mena or that Mena was being used as a base for drug smuggling?
A. primarily I was reviewing evidence gathered by the law enforcement agencies, surveillance logs, their representations to me. I was focusing on the money laundering and financial analysis end of it, and did not conduct a lot of physical surveillance myself. But we had a lot of intelligence reports and surveillance reports of various airplanes in there being refueled, leaving in the middle of the night, N numbers being changed, typical modus operandi of a smuggling. We also had testimony that his aircraft had been plumbed with longer range tanks and bladders, that illegal cargo doors had been installed in the aircraft. And there was a lot of evidence of that. And I was seeing on some of the cashier's checks, Barry Seal's name on cashier's checks. The secretary ~~~ stated that when Barry would come in in his airplanes, the next morning many times there would be stacks of cash to be taken to the bank and laundered.
Q. In connection with your investigation into the laundering activities, what -- how much money was laundered in your opinion through the Mena bank?
A. At the time we couldn't proceed any further because of the lack of subpoenas. I would have to review the records, which the Internal Revenue Service has now. But it seems like there was a quarter of a million dollars, $300,000, something like that that we had documented, that had been laundered through the Mena banks, just the Mena banks.
Q. And when you say "laundered," what specifically do you mean; what happened?
A. They were obtaining cashier's checks in amounts of $10,000 or less at a variety of financial institutions in Mena and some further north from Mena or sometimes different tellers in the same banks to avoid preparation of the Currency Transaction Report. Kathy Corrigan testified that her instructions ~~~ were, that they were to do this to avoid the Internal Revenue Service knowing about the money and to avoid payment of taxes on the money.
Q. Now, are you saying the' someone from Rich Mountain Aviation would appear at a local bank with $10,000 or less in cash, and then give that to the bank in exchange for a cashier's check, was that the typical arrangement, or what was the typical arrangement?
A. They would go with, say, $9,500, or they might go with $30,000, but they would break it up in increments of $10,000 or less. And on one occasion Freddie Hampton personally took a suitcase full of money, I think it was seventy some thousand dollars, into this bank officer, and the testimony of the tellers revealed that the bank officer went down the teller lines handing out the stacks of $10,000 bills and got the cashier's checks. Those cashier's checks, in that instance, went to Aero House of Houston for the building of Barry Seal's hanger. This, as I recall, was November of '82.
Q. Do you have any doubt in your mind that Mena was used as a base for drug operation. headed by Barry Seal?
A. Do I have any personal doubt?
Q. Do you have any personal doubt in your mind that that is not the case -- that that was not the case?
A. I very much believe that was the case.
Q. You had an occasion to interview Mr. Seal yourself, did you not?
A. That's correct.
Q. Now, when was this?
A. This was December of '85.
Q. Was this prior to the laundering grand jury or after?
Q. After. Was there any particular reason why Barry Seal was not called to testify at the grand jury?
A. I never received an explanation from the U.S. Attorney's Office as to why he was not called. Because we were given assurances that he would be called to the grand jury. He was on the witness list, and I issued him a subpoena at the time I interviewed him for appearance at the grand jury. You've already stated you, as a law enforcement official did not testify?
A. That's correct.
Q. Did any law enforcement official testify before the grand jury, to your knowledge?
A. It's my understanding that Larry Carver with DEA testified before the grand jury sometime maybe in '87 or '88. Russell Welch testified before the grand jury, and also Terry Capaheart testified before the grand jury.
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Q. In your professional opinion as a law enforcement official with extensive experience, is that -- wouldn't it be highly unusual in extreme cases where law enforcement officials who investigated the case would not be called to testify?
A. Every grand jury case that was ever presented where I conducted the investigation, I was the law enforcement officer who summarized the evidence before the grand jury. I find it highly unusual.
Q. And isn't it highly unusual that Barry Seal was not called to testify in view that he was - - in view of the fact that he was the principal involved in the investigation?
A. We found it highly unusual.
Q. You had an opportunity to interview Mr. Seal. Did Mr. Seal make any admissions regarding drug operations that he headed?
A. I would have to review a copy of that transcript. he basically admitted that he had been a smuggler, that he had smuggled drugs. he told -- he said that he told the people at Rich Mountain Aviation that they were guilty of money laundering and should be prepared to plead guilty to it. That he provided instructions to them that resulted in them getting involved in money laundering. "Not to put his business on the street," I think is the way he put it.
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Q. Mr. Duncan, we've talked about -- you have testified that a one Barry Seal, in your judgment, laundered money from -- that was derived from the sale of drugs --
Q. -- in several banks in and around Mena, Arkansas. He had to get those drugs -- "he," Barry Seal, , had to get those drugs from somewhere. Do you know the source of those drugs?
A. The specific drugs in the Mena operation?
Q. Well, Barry Seal got drugs that he sold for money. Are those the drugs that came to Mena from Central America?
A. I don't have direct evidence of that.
Q. Do you have any evidence as to where Barry Seal might have gotten the drugs that he sold for money that was laundered at Mena?
A. I believe that he testified that he had a history of smuggling narcotics, marijuana and cocaine, from Central America.
Q. Did Barry Seal have a connection with the so-called Mena operation, drug smuggling operation?
A. The evidence that we have indicates that his entire base of operation moved from Baton Rouge to the Mena Airport in approximately 1982, late 1982.
Q. Mr. Richard Brennecke testified earlier today that he was a former contract employee with the CIA, and that as a pilot he transported guns and munitions from Mena, Arkansas to Panama. And that on the same airplane returned with a cargo of drugs, mostly cocaine but some marijuana, that was brought back to Mena and delivered to one Hampton, Freddie Hampton, and to representatives of the Gotti New York crime syndicate operation, the Mafia from New York. Do you know whether or not any of those drugs that were described by Mr. Brenneke went to Mr. Seal as well and were sold in the United States in exchange for the money that he laundered at Mena?
A. I have no personal knowledge of that.
FURTHER RE-EXAMINATION BY MR. BRYANT:
Q. Even though, while you do not have personal knowledge of that, Bill, would Mr. Brenneke's scenario, based on what you personally know happened at Mena, be consistent?
A. What Mr. Brenneke has related concerning the Mena operation would be consistent with testimony from a variety of individuals and additional information that we received concerning the method of operation at Rich Mountain Aviation. For instance, Kathy Corrigan related that on numerous occasions they would be forced to stay inside their offices because airplanes would land and strange faces would be around, Central American or Mexican, Spanish origin folks would be around that they had not seen before. But on those occasions they were given instructions by Hampton and/or Joe Evans to stay in the office and make no contact with those individuals. Airplanes landing in the middle of the night, hanger doors opening, the airplanes going in, then leaving out before daylight, numerous, dozens and dozens of accounts like that. Great secrecy surrounding the entire operation at Rich Mountain Aviation.
Q. So if everything that Mr. Brenneke stated regarding his relationship with the Mena operation were true, it would fit into the overall picture as you understand the situation at Mena, would it not?
A. Yes, It would. With respect to the training at Nella, we had numerous reports of automatic weapons fire, of people in camouflage in the middle of night, low intensity landing lights around the Nella Airport, twin-engine airplane traffic in and about the Nella Airport. Reports as far as 30 something miles away of non-American type of troops in camos moving quietly through streams with automatic weapons, numerous reports like that from a variety of law enforcement sources. Also, reports that -- from the Arkansas Game and Fish Commission people that they found vast quantities of ammunition hulls secreted in shacks around the Nela Airport. On one occasion the Game and Fish officer was warned away from the Nella Airport by someone who purported to be an FBI agent and exhibited a badge, On and on and on.
Q. Regarding the Nella Airport, have you been there personally?
A. Yes, I have.
Q. And so there is another airport not far from the Mena Airport?
A. Yes, there is, approximately ten miles north.
Q. And would there be any other reason for the Nella Airport other than clandestine activities, paramilitary training, use by planes to bring in drugs, illegal contraband and so forth?
A. Not to my knowledge. There are no hangers out there. The type of reports that we had from individuals living around the airport would indicate that type of an operation. Some of those people said that there were frequent visits by people from Rich Mountain Aviation basically asking what they were seeing and hearing. There was a large expenditure of money in preparation of the strip by Freddie Lee Hampton. The type of expenditure that you wouldn't make just for an out-of-the-way little country airport.