In 1985 and 1986, Ronald Reagan sold arms to Iran, locked in a horrific war with Saddam Hussein’s Iraq, for cash and the release of U.S. hostages. The sales to Iran violated sanctions against Iran. But much of the money that came from the sales was diverted to fund the Contras, right-wing rebels fighting the left-wing Sandinista government of Nicaragua. was in violation of laws against helping the Contras.
The scandal began as an operation to free the seven American hostages being held in Lebanon by a group with Iranian ties connected to the Army of the Guardians of the Islamic Revolution. It was planned that Israel would ship weapons to Iran, and then the United States would resupply Israel and receive the Israeli payment. The Iranian recipients promised to do everything in their power to achieve the release of the U.S. hostages. Large modifications to the plan were devised by Lieutenant Colonel Oliver North of the National Security Council in late 1985, in which a portion of the proceeds from the weapon sales was diverted to fund anti-Sandinista and anti-communist rebels, or Contras, in Nicaragua.
All cases against President Reagan and his administration were dropped at the time due to the evidence being “classified information” and later pardoned by President George Bush. However it was common knowledge that Reagan was invovled and proved that the president is above the law.