the conviction of a senator, six congressmen, the
mayor of Camden, New Jersey, and members of the
Philadelphia City Council. However, the controversy
surrounding Abscam was generated not only by the
corruption of the officials but also by accusations of
entrapment on the part of the agents.
The Iran-Contra Scandal During Reagan’s second
term, White House officials, at the suggestion of the
Israeli government, covertly sold weapons to Iran in
violation of the Arms Export Control Act (1976). In
turn, $30 million in profits were used to fund the
Contras, a group of right-wing guerrilla insurgents
against the leftist Sandinista National Liberation
Front in Nicaragua. The subterfuge was designed to
circumvent the will of Congress, which had explicitly
prohibited further support to the Contras. In No-
vember of 1986, a Lebanese newspaper exposed the
operation and claimed that the arms sales to Iran
were intended to influence Lebanon to release Amer-
ican hostages. President Reagan appeared on televi-
sion and vehemently denied that the arms sale had
taken place. A week later, he was forced to retract his
statement, but he continued to deny that the sale of
weapons had been intended to help secure the re-
lease of American hostages held in Lebanon.
The scandal gained strength when Lieutenant
Colonel Oliver North and his secretary Fawn Hall
shredded incriminating documents and U.S. attor-
ney general Edwin Meese III was forced to admit that
profits from the arms sales were indeed directed to
the Nicaraguan Contras. Faced with congressional
wrath, in December of 1986 Reagan was forced to
form a special investigative commission with former
senator John Tower at its head. In 1987, the Tower
Commission criticized Secretary of Defense Caspar
Weinberger, Deputy National Security Adviser Ad-
miral John Poindexter, and his deputy, Lieutenant
Colonel North, as well as accusing the president of
ineffectively supervising his aides.
The S&L and Insider Trading Scandals The S&L
crisis was accompanied by scandals when the depth
of the greed and mismanagement that led to it were
understood. By the early 1980’s, the government
had removed many federal regulations from the
banking industry in order to make banks more com-
petitive. This deregulation resulted in an increase in
the number of S&Ls, as well as a broadening of the
scope of their financial activities. S&Ls were allowed
to invest in commercial real estate and to issue credit
cards for the first time, and they were eager to do so.
The associations invested in high-risk properties,
many of which lost their value. Bankruptcies ensued,
and a great number of depositors lost their money—
many lost their entire life savings. S&L head Charles
Keating pleaded guilty to bankruptcy fraud after he
removed $1 million from Lincoln Savings before the
institution’s imminent collapse. In addition, five
United States senators were implicated in the na-
tional scandal for helping Keating. They became
known as the Keating five.
In 1986, the Securities and Exchange Commis-
sion (SEC) investigated Dennis Levine, Ivan Boesky,
and Michael Milken, among others, for willful viola-
tions of securities law and business ethics. The men
had set up the greatest insider trading ring in history
and in the process nearly destroyed Wall Street. Den-
nis Levine, a managing director at Drexel Burnham
Lambert, led investigators to Ivan Boesky, who had
made $200 million by betting on corporate take-
overs after acquiring information from corporate in-
siders. In turn, Boesky informed on Michael Milken,
who had developed a fast-paced market for junk
bonds.
Entertainment Scandals Although not nearly as se-
rious as the nation’s political scandals, show business
scandals during the 1980’s also captured the na-
tion’s imagination. In 1982,Saturday Night Liveactor
John Belushi died of an overdose of heroin and co-
caine. A year later, the Beach Boys’ drummer, Den-
nis Wilson, drowned in a drug-related accident, and
in 1984, popular R&B singer Marvin Gaye was shot
to death by his father during an argument. Actress
Zsa Zsa Gabor was jailed in 1989 for slapping a police
officer. The most scandalous crime of the decade,
however, was the murders that same year of Kitty and
Jose Menendez by their children, Lyle and Erik
Menendez, who shot their parents with shotguns
while the couple watched television. The brothers
were eventually found guilty of first-degree murder.
Impact The 1980 scandal that became known as
“Billygate” helped Ronald Reagan gain the presi-
dency, and the major scandals of the 1980’s—
Abscam, Iran-Contra, the S&L crisis, and the Wall
Street insider trading scandals—resulted in public
outrage that led to the enactment of legislation seek-
ing to ensure that crimes such as these would not
happen again. Deeply concerned about the possi-
bility of law enforcement officials entrapping indi-The Eighties in America Scandals 847