Murray Waas » Justice Department

Exclusive: DOJ Negotiates with JP Morgan

murrayw — Mon, 28 Oct 2013 11:22:05 +0000

Have a new story up today at International Business Times (IBT) on DOJ’s negotiations with JP Morgan to end DOJ’s probe of the bank for its work on behalf of Bernard Madoff. The top of my story:

Federal prosecutors in New York are pushing for a guilty plea from JPMorgan Chase for allegedly turning a blind eye to Bernard Madoff’s Ponzi scheme, according to two law enforcement officials. They have informed their superiors in the Justice Department that they strongly oppose any settlement with the banking giant unless one of its subsidiaries pleads guilty to at least a single criminal charge.

Accused swindler Bernard Madoff enters the Manhattan federal court house in New York, March 12, 2009. REUTERS/Shannon Stapleton

JPMorgan Chase (NYSE:JM) had offered to settle the potential case regarding the work for Madoff in exchange for no formal criminal charges being brought against it. But top aides to Preet Bharara, the U.S. attorney for the Southern District of New York, as well as several senior career prosecutors in the Justice Department’s Criminal Division, have been adamant that such a deal is unacceptable, according to the sources.

Why have prosecutors taken such a tough stance?:

It is highly unusual for such a major bank to be pressured by prosecutors to admit criminal guilt. That pressure reflects the seriousness of what prosecutors consider senior JPMorgan officials to have done: Sources close to the investigation say investigators learned from the bank’s own internal, confidential records that even though senior JPMorgan executives suspected Madoff was running a Ponzi scheme, they never informed federal regulators of their suspicions, as is required by federal law.

Such a warning might have tipped off regulators — and more importantly, investors — years earlier. Said one federal law enforcement official: “If they had stricter controls in place, if they had stricter money-laundering standards, if they simply informed regulators of their suspicions … perhaps someone in government would have given Madoff a look, and shut him down earlier.” Billions of investors’ dollars might very well have been saved.

Prosecutors advocating a guilty plea might face an uphill battle, however:

The position taken by prosecutors who work for Bharara and others in the Criminal Division in Washington may once again pit them against the highest levels of the Justice Department, who have long argued that some banks that were once “too big to fail” are also too big to face criminal charges due to the potential impact on the economy. The long-running debate over the proper punishment for these misdeeds has long stymied the aides in the U.S. Attorney’s Office in New York. “It does feel a lot like Groundhog Day,” said one government official involved in the matter. This time, however, they have greater optimism that they — and to their mind, the public — will prevail.

Lanny Breuer, who headed the Criminal Division until March and was in charge of prosecuting Wall Street crimes, has said decisions as to which banks to charge were based on “sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects.” His boss, Attorney General Eric Holder, has echoed those comments: “The impact on the stability of the financial markets around the world is something we take into consideration.

On the positive side, however, as I report, Breuer left the Justice Department in March.

In addition, Preet Bharara, the United States Attorney for the Southern District of New York, has been pushing for a more aggressive prosecutorial approach towards banks and financial institutions involved in causing the financial crisis:

Bharara has at times appeared to openly signal defiance of that doctrine: “I don’t think anyone is too big to indict — no one is too big to jail,” he declared in a July 2013 speech. Prosecutors who work for Bharara and others in D.C. hope he will now powerfully advocate their position that JPMorgan must not escape criminal charges for its involvement with Madoff.

Ben Protess and Jessica Silver-Greenberg have even greater detail of this particular angle of the story in the New York Times:

For the government, [the case] would represent an extraordinarily rare show of force. Ever since a criminal indictment led to the demise of the accounting firm Arthur Andersen, Enron’s auditor, the government has been wary of imposing criminal charges on big corporations for fear that it would imperil the institution and have ripple effects on the broader economy. Under federal guidelines, prosecutors must weigh “collateral consequences,” like job losses and economic implications, in such an action.

HSBC, for example, paid $1.9 billion to settle a money-laundering case, but the Justice Department stopped short of indicting the British bank. The case reinforced concerns that big banks, having grown so large and interconnected, are too big to indict.

Yet Preet Bharara, the United States attorney in Manhattan whose office is handling the JPMorgan case, has disputed that theory. In a recent speech, Mr. Bharara said he rejected the idea from companies that “because we’re so big, to take action against us, the sky is going to fall.”

Also helping the faction in the DOJ that wants the Obama administrative and its Justice Department take a more activist stance in prosecuting Wall Street firms and banks has been a trio of Seantors: Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.) and Elizabeth Warren (D-Mass.). The thrree most recently flexed their muscles by torpedoing the nomination of Larry Summers to head the Federal Reserve Board. A demand by Eric Holder and DOJ that JPMorgan plead guilty would is just the type of tough behavior that the three Senators have been pressing for.

My entire story can be found here. The Times report is here. Matt Taibi’s take.

– Muray Waas

Save

The Big Stone Wall: Nine Bush Era Senior Officials Refused to Cooperate with DOJ probes

murrayw — Wed, 18 Feb 2009 22:22:26 +0000

New piece out on Talking Points Memo:

At least nine Bush administration officials refused to cooperate with various Justice Department investigations during the final days of the Bush presidency, according to public records and interviews with federal law enforcement officials and many of the officials and their attorneys. In addition, two U.S. senators, a congresswoman, and the chief of staff to one of them, also refused to cooperate with the same investigations.

In large part because of that noncooperation, Justice Department officials sought criminal prosecutors in at least two cases so far to take over their investigations so that they can compel the testimony of many of those officials to testify through the use of a federal grand jury.

With the stakes now escalating for both sides — the possibility of grand jury subpoenas for recalcitrant witnesses and the specter of senior government officials invoking their Fifth Amendment right to self-incrimination — it remains unclear whether and how many of them will continue to defy investigators.

In one instance, an attorney for former Bush White House chief political strategist Karl Rove recently told TPMmuckraker that even though Rove had refused to cooperate with an earlier Justice Department inquiry into the firings by the Bush administration of nine U.S. attorneys, he would now fully cooperate with a federal grand jury that has been empanelled to hear evidence in the case. But most of the other former senior White House officials, as well as members of Congress and their staffs, declined to say for this article whether they have or will cooperate with the various federal criminal investigations.

Previously, two Justice Department watchdog offices, the Inspector General and Office of Professional Responsibility conducted investigations of the firings of the U.S. attorneys and the politicization by the Bush administration of the Justice Department’s Civil Rights Division. But those two offices do not have the power to compel the testimony of witnesses outside the department itself or to initiate criminal prosecutions. The Inspector General and OPR successfully sought the naming of a criminal prosecutor to take over their probes.

In a report that the Inspector General and OPR made public last September detailing the findings of their investigation of the prosecutor firings, they asserted that their investigation was severely “hampered… because key witnesses declined to cooperate with our investigation.”

In regard to the investigation of the politicization of the Civil Rights Division, investigators sought a criminal investigation in part because four Bush administration appointees refused to cooperate with their initial probe. Two other investigations by the Inspector General and OPR of the Bush administration’s warrantless eavesdropping program are also currently underway. It is unclear in those instances whether a criminal prosecutor might eventually take over those investigations as well.

In the case of the firings of the U.S. attorneys, Nora Dannehy, the acting U.S. Attorney for Connecticut, who took over the investigation from the Inspector General and OPR, recently empanelled a federal grand jury in Washington to hear evidence in the matter.

As TPMmuckraker recently disclosed, the federal grand jury probing the firings of nine U.S. attorneys is currently zeroing in on the role played by recently retired Sen. Pete Domenici (R-NM) and former senior Bush White House officials in the firing of David Iglesias, a former U.S. attorney from New Mexico, according to legal sources familiar with the inquiry.

Last week, the Associated Press confirmed that story, reporting that the federal grand jury had subpoenaed records from Domenici and that Dannehy is also about to interview former Rove aide Scott Jennings, whose lawyer said he is cooperating to the “best of his ability.” Domenici’s attorney, K. Lee Blalock, after originally refusing to comment, and then suggesting to the New Mexico media that the TPMmuckraker report was incorrect, confirmed that the records of his client had in fact been subpoenaed. He also told the Santa Fe New Mexican earlier this month: “The investigation exists, but it is not focused on Senator Domenici to the exclusion of all others.”

But despite the fact that Domenici has already been severely criticized by two internal Justice Department watchdog agencies for refusing to answer questions from the Inspector General and OPR, Blalack is refusing to say whether he will cooperate with prosecutors conducting the current federal grand jury probe. The subpoena of Domenici’s records suggests that Domenici may not have voluntarily wanted to turn them over to authorities. Blalack declined to comment regarding this.

Besides the members of Congress, Justice’s Inspector General and OPR said that their investigation was severely hampered because of the refusal of numerous Bush White House officials involved in the firings to cooperate with their investigation.

Among those named in the report who refused to cooperate with investigators, the report said, were Former White House political adviser Karl Rove, former White House Counsel Harriet Miers, Deputy White House Counsel William Kelley, and Associate White House Counsel Richard D. Klingler.

So will the four former Bush White House officials now cooperate with Dannehy or testify before the federal grand jury if subpoenaed?

Back to a favorite subject of this blog:

Another investigation by the Justice Department’s Inspector General has focused on misconduct by J. Robert Flores, the Bush administration’s former administrator of the Justice Department’s Office of Juvenile Justice and Delinquency Prevention (OJJDP). Although little known outside the Justice Department, the OJJDP doles out more than a quarter of a billion in federal grants each year to decrease the number of juveniles in dangerous facilities and to prevent juvenile delinquency. Flores came under investigation by the Inspector General for allegedly setting aside federal laws and government regulations to award federal grants to political allies of the Bush White House and for also allegedly using federal travel funds to play golf.

During that investigation, Flores’ then-chief of staff, Michele DeKonty, took the Fifth Amendment rather than answer questions from Congress about the awarding of federal grants for political reasons, and similarly refused to be interviewed by the Justice Department’s Inspector General — leading to her immediate firing by then-Attorney General Michael Muksasey.

The Inspector General’s probe has reportedly since transformed into a criminal investigation. DeKonty’s attorney, David H. Laufman, declined to comment for this article as to whether his client has since cooperated with the criminal inquiry.

And finally:

In another investigation in which Justice’s Inspector General and OPR faced uncooperative witnesses — regarding the Bush administration’s politicization of the Justice Department’s Civil Rights Division — they also sought a criminal probe to compel testimony of officials and also to determine if there was any evidence of any crimes committed.

Four officials in that probe refused to cooperate with investigators as well– at least until a criminal prosecutor took over the probe and empaneled a federal grand jury.

Update: Since I originally posted this story on TPM Muckraker, I learned that a tenth former Bush administration appointee at the Department of Justice refused to cooperate with a Justice Department inquiry of their conduct: Monica Goodling, the former counselor to Attorney General Alberto Gonzales, refused to be interviewed by both the Justice Department’s Inspector General and Office of Professional Responsibility during their joint inquiry into the firings by the Bush administration of nine U.S. attorneys. Goodling’s refusal to cooperate with the two Justice Department watchdog agencies was mentioned in their public report on the firings– a reference I missed when I wrote the TPM story.

Karl Rove to Cooperate with federal grand jury probing firings of U.S. attorneys; As for Congress, that’s another story

murrayw — Tue, 03 Feb 2009 08:02:26 +0000

I have a story posted tonight on Talking Points Memo quoting Karl Rove’s attorney saying that Rove will cooperate with the federal grand jury probe of the firings of nine U.S. attorneys. The lede to the story:

Karl Rove will cooperate with a federal criminal inquiry underway into the firings of nine U.S. attorneys and has already spoken to investigators in a separate, internal DOJ investigation into the prosecution of former Alabama Gov. Don Siegelman, his attorney said in an interview.

Rove previously refused to cooperate with an earlier Justice Department inquiry into the firings. The Justice Department’s Inspector General and its Office of Professional Responsibility (OPR) said in a report released last September detailing their earlier probe of the firings of the U.S. attorneys that their investigation was severely “hindered” by the refusal by Rove and other senior Bush administration officials to cooperate with the probe.

Rove’s attorney, Robert Luskin, said that Rove, however, will cooperate with a federal criminal probe of the firings being led by Nora Dannehy, the Acting U.S. Attorney for Connecticut who was selected by former Attorney General Michael Mukasey to lead the investigation. Dannehy has recently empaneled a federal grand jury to hear evidence in the matter.

Luskin told me that Rove had earlier not cooperated with the Inspector General and OPR probe into the firings because “it was not his [Karl's] call… it was not up to us decide.” Luskin said that Rove was directed by the Bush White House counsel’s office not to cooperate with the Inspector General and OPR.

Regarding the more recent probe by Dannehy, Luskin said: “I can say that he would cooperate with the Dannehy investigation if asked.”

In recent days, according to legal sources, two former Bush White House officials, including one former aide to Rove, have been contacted by investigators working for Dannehy and asked for interviews. One of the two has agreed to be interviewed.

Regarding the decision to cooperate with Dannehy, Luskin said that Rove “has not and will not assert any personal privileges.” He also said that in regard to the earlier probe, Rove had not done so, but had rather only “followed the guidance of the White House.”

Click here to read the rest of the story.

Whether Rove will testify before the House Judiciary Committee, however, is another story.

As Dan Froomkin has reported:

Just four days before he left office, President Bush instructed former White House aide Karl Rove to refuse to cooperate with future congressional inquiries into alleged misconduct during his administration.

“On Jan. 16, 2009, then White House Counsel Fred Fielding sent a letter to Rove’s lawyer, Robert Luskin. The message: should his client receive any future subpoenas, Rove ‘should not appear before Congress’ or turn over any documents relating to his time in the White House. The letter told Rove that President Bush was continuing to assert executive privilege over any testimony by Rove—even after he leaves office.”

That letter, and a nearly identical one to a lawyer for former White House counsel Harriet Miers, reasserted the White House position that the two former aides have “absolute immunity” from testifying before Congress about anything they did while they worked at the White House — a vastly more extreme and legally unsupportable assertion than, say, a limited claim of executive privilege.

The letters set the stage for what is likely to be a highly contentious legal and political battle over an unresolved issue: whether a former president can assert ‘executive privilege’—and therefore prevent his aides from testifying before Congress—even after his term has expired.

“‘To my knowledge, these [letters] are unprecedented,’ said Peter Shane, an Ohio State University law professor who specializes in executive-privilege issues. ‘I’m aware of no sitting president that has tried to give an insurance policy to a former employee in regard to post-administration testimony.’ Shane likened the letter to Rove as an attempt to give his former aide a ‘get-out-of-contempt-free card’.”

Rove’s lawyer, Robert Luskin “said that he forwarded a copy of Fielding’s letter, as well as the subpoena he got from Conyers, to Obama’s White House counsel, Greg Craig, and essentially asked for the new president’s position on these matters.

“So far, he said, Craig hasn’t responded.

The Obama White House will soon weigh in. As Zachary Roth has reported, the Obama administration is due in court on Feb. 18 to argue the matter one way or the other.

I don’t ordinarily make predictions on my blog. (Oops, there goes my invitation to appear on the McLaughlin Group!) But in this case, I think I know what is going to happen.

The Obama White House will not invoke executive privilege for the chief political advisor for a Republican President, not because of politics, but for these reasons:

1. The federal judge who has been considering the Bush White House’s executive privilege claims– an ideological conservative who was appointed by Bush– has been scathing in his criticism of the claim in this instance.

2. It would simply be bad case law to continue defending the claim of executive privilege, as Jack Balkin explains.

3. Nobody in the White House counsel’s office or DOJ will want to twist the law in any case. To consider the changes that have come to Washington, a former attorney for CREW, now works in the Obama White House Counsel’s Office. Norman Eisen who is the president’s special counsel for ethics and government reform, as a co-founder of CREW, had sued the Bush administration to recover and disclose missing White House emails. It would not seem that he is much of an advocate of radical expansions of executive privilege for presidential aides of former administrations.

And one of Jack Balkin’s former blogging partners at Balkinization now works in the Obama Justice Department’s Office of Legal Counsel.

Finally, there is President Obama himself: a former constitutional law professor.

Update: Buck Naked Politics’ take.

Exclusive: Bush appointees attempted to thwart US Attorney Probe

murrayw — Sun, 28 Sep 2008 23:02:57 +0000

A report to be made public tomorrow morning by the Justice Department detailing findings of its investigation into the firings of nine U.S. attorneys will say that the efforts of investigators were severely stymied in large part by the lack of cooperation by some Bush administration officials and others outside the Department, according to sources who have seen the report.

The investigation was conducted jointly by the Justice Department’s Inspector General (IG) and the Department’s Office of Professional Responsibility (OPR.) Both of those internal watchdogs have no potential prosecutorial power, but can make recommendations that career prosecutors take up their work after they finish their final report. It is unclear whether Attorney General Michael Mukasey will do so.

Despite the fact that its efforts were stymied in part by non-cooperation by witnesses, the report will say- not much of a surprise-that several of the firings were due to the politicization of the Justice Department by Bush administration appointees and that the White House played a role in some of them. Investigators did attempt to do as thorough job as possible in investigating the White House’s role in the firings and were assisted by being able to review some confidential White House emails that the White House had been withholding from Congress.

The report might also touch on efforts by senior Justice Department officials to intimidate several of the fired U.S. attorneys from talking to the press or testifying to Congress about their firings, according to five people interviewed by investigators– including three former U.S. attorneys. (Only one former U.S. attorney, Bud Cummins of Little Rock, would say this for the record. And I should aslo qualify what I just wrote regarding the intimidation issue that I am basing what I say in this one instance based on witnesses to the investigation, rather than to anyone who has read the report.)

The lack of cooperation by some former Bush administration officials with investigators probing the firings of nine U.S. attorneys is not the first time that former administration officials have thwarted investigators probing the politicization of the Justice Department by refusing to answer their questions.

As I first reported on the Huffington Post in August, several former political appointees of the Justice Department’s refused to answer questions posed to them by the Department’s Inspector General about the politicization of the Civil Rights Division.

As a result, a federal grand jury subpoenaed several of the former senior Justice Department attorneys to compel them to testify.

The grand jury had been investigating allegations that a former senior Bush administration appointee in the Civil Rights Division, Bradley Schlozman, gave false or misleading testimony on a variety of topics to the Senate Judiciary Committee.

Sources close to the investigation identified two former Justice Department attorneys, Hans von Spakovsky, who as a former counsel to the Assistant Attorney General for Civil Rights was a top aide to Schlozman, and Jason Torchinsky, who was also a Counsel to the Assistant Attorney General for Civil Rights. Torchinsky was subpoenaed only as a witness in the case.

The non-cooperation by some Bush administration officials in the broader investigation into the firings of the U.S. attorneys might have thwarted some efforts by investigators to determine the entire truth about the firings. But because of that non-cooperation, according to attorneys closely following the matter, Attorney General Michael Mukasey is much more likely to allow career federal prosecutors to continue on with the work begun with the Inspector General.

Update: What to look for tomorrow: Apparently, the Inspector General and OPR want a prosecutor with subpoena authority to continue their investigation along. That is for two reasons: The Inspector General and OPR do not have prosecutorial authority. And they have been unable to compel testimony from witnesses outside the Justice Department.

This story posted online today by the Washington Post asserts that Mukasey is likely to name a career prosecutor to continue on with the investigation. However, the story appears to be a preemptive move by senior political appointees in the Department to close down discussion of appointing a special prosecutor instead.

If the report goes into a lot of detail about involvement by White House officials in the firings– or more importantly says that there are a number of important unresolved issues about the role of White House officials or politically connected officials with ties to the White House in the firings– then the case for naming a special prosecutor would be more compelling. This leak to the Post tonight appears to be an attempt to close down that debate before the issue before anyone has even read a single page of the report.

Second update: The NYT has also since posted online a story about the forthcoming report. But unlike the Post, they do not entirely take the spin that all will be well if a career prosecutor takes over the matter of continuing on with the probe instead of a special prosecutor being named. In particular, this excerpt from the Times story is especially pertinent :

One central question is the role officials at the White House, including Mr. Rove and Ms. Miers, played in the firings. But Paul K. Charlton, who was fired as United States attorney in Arizona after clashing with supervisors in Washington over a number of policies and investigations, said he was concerned that the inspector general’s limited jurisdiction and the White House’s refusal to turn over key records might have stymied the investigation.

The inspector general and the Office of Professional Responsibility, which conducted a joint investigation, have kept their findings under tight guard before the public release, declining to discuss any details with central players in the investigation or their lawyers. “It’s been a lockdown,” one defense lawyer said.

To look for tomorrow as the day progresses: What Rep. John Conyers (D-Mi.), the chairman of the House Judiciary Committee, and Sen. Patrick Leahy, the chairman of the Senate Judiciary Committee, have to say about Mukasey most likely not naming a special prosecutor.

Prosecutor at Stevens Trial: “We reach for the Yellow Pages. He reached for VECO.”

murrayw — Fri, 26 Sep 2008 10:46:29 +0000

Opening statements from the Ted Stevens bribery trial:

WASHINGTON — The corruption trial of Alaska Sen. Ted Stevens began Thursday with sharply divergent portraits of the long-serving Republican.

In opening statements in the highly anticipated case, prosecutors accused Stevens of using his experience in the ways of Washington to “fly under the radar screen” and flout Senate rules requiring the disclosure of gifts and favors.

“This is a simple case about a public official who took hundreds of thousands of dollars worth of free financial benefits, and then took away the public right to know that information,” Brenda Morris, the lead Justice Department attorney on the case, told jurors.

But a lawyer for Stevens described a lawmaker who was so focused on his duties that he paid scant attention to financial matters and often deferred to his wife and others. The so-called gifts he got were often unwanted and gratuitous, and if they were never disclosed, it was only because he considered them a nuisance or worthless, the lawyer, Brendan V. Sullivan Jr., argued.

“Why all of a sudden, in his 75th year, did he decide to go out and become a criminal?” Sullivan asked. “The evidence will show that he did not file false statements.”…

Stevens, who was seated among a battery of lawyers at the counsel table in court, is accused of knowingly and repeatedly filing financial reports with the Senate between 2000 and 2006 that understated or omitted gifts or other benefits that he got from an oil executive and others.

Among the unreported benefits: an overhaul on his residence in Girdwood, Alaska; freebies including a sled dog and a $2,700 massage chair; and a sweetheart deal on a $44,000 Land Rover.

The government contends that Stevens never paid for more than $200,000 in labor and materials for the remodel supplied by a now-defunct oil field services firm, VECO Corp. VECO’s former chief executive, Bill J. Allen, allegedly showered Stevens with other perks.

“VECO acted as his own personal handyman service,” Morris said. “If the defendant needed an electrician, he would contact VECO. If he needed a plumber, he would contact VECO.”

“We reach for the Yellow Pages,” Morris told the jury. “He reached for VECO.”

Sullivan, Stevens’ lawyer, countered that the lawmaker and his wife paid every invoice they received for work on the house, and that the total amount they paid was in line with the current assessed value of the property.

While acknowledging that some bills may have gone unpaid, he offered two explanations that seemed intended to distance Stevens from the transaction, and raised the possibility that Stevens’ wife, Catherine, may have known more than her husband about the situation.

“The most important thing to know is that Catherine ran the financial part of the renovation,” Sullivan said. “She was the person who opened the account. She was the person who viewed the bills. She was the person who wrote the check.”

Sullivan also said that Allen, who oversaw the work and billed the Stevenses, withheld bills, not necessarily out of an attempt to enrich Stevens, but possibly because the bills were excessive or for work that was not done properly.

“You cannot report what you don’t know,” Sullivan said. “You can’t fill out a form and say what’s been kept from you by the deviousness of someone like Bill Allen.”

Stevens paid $160,000 for the renovation, “which is exactly or close to what it should have been,” Sullivan said.

Sullivan also attempted to explain away other items his client received, including a Viking gas grill, $20,000 in decorative lighting outside the Girdwood chalet, and the Land Rover, which Stevens got for his daughter in exchange for his 34-year-old Mustang and $5,000.

Sullivan said the gas grill arrived at the house for a charity function, was rarely used afterward, and was kept under padlock because it struck Stevens’ wife as dangerous. “Catherine was frightened to death of it,” Sullivan said. “She thought it would blow up the house, blow up the grandchildren.”

When the senator asked Allen to put up his Christmas lights, Sullivan said, Stevens came home to find an elaborate and gaudy new lighting system set up.

“Catherine hated the lights. It made the house look like Joe’s Bar & Grill,” Sullivan said.

“I suppose Ted Stevens, the senator, should go home and get some climbing shoes on, go up and take them down, and send them back to Bill Allen?” Sullivan asked.

Sullivan also said the Mustang-Land Rover swap “was absolutely fair.”

“You don’t have to report a trade that you believe is fair,” and Stevens “certainly had no intent to violate the law,” Sullivan said.

The trial before U.S. District Judge Emmet G. Sullivan is expected to last a month. Stevens asked for a speedy trial in the hope that the proceedings would be completed by the time Alaskans vote Nov. 4 on whether to return him to the Senate for the seventh time.

Extraordinary gambit by Stevens in demanding a speedy trial by jury– so that the verdict would be in before he ran for re-election. Brandan Sullivan largely got Iran-contra figure Oliver North off; he is about as good a defense counsel one could retain if charged with federal bribery. Would it be totally out of the question for Stevens to beat the rap– and even win reelction. The corruption reeks– but whether the Senator will be convicted of the charges is yet to be seen.

The gambit aside, however, and Sullivan’s skills also set aside, the Justice Department appears to have a strong case.

As to Stevens’ blame his wife defense, one wonders not only how well that one will go over with the jury but also at home.

I’m going to try and get over to the Stevens’ trial next week for myself– just a few subway stops away from home.

The Price of Political Favoritism and Cronyism: Lost Lives and Teenage Suicides

murrayw — Wed, 18 Jun 2008 21:27:39 +0000

In the broader scheme of things, the Justice Department’s Office of Juvenile Justice and Delinquency Prevention (OJJDP) is a fairly obscure agency. By law its core missions are to decrease the disproportional numbers of minority children incarcerated, prevent teenage delinquency, and act to remove children from adult jails, where they are at high risk for both sexual assault and suicide. But the agency also doles out more than a quarter of a billion dollars in federal grant money every year-with little congressional oversight or attention from the public. But instead of the money being spent for what Congress intended it, the agency’s funding more recently flowed to programs with political, social or religious connections to the White House. The agency’s new priorities include encouraging teenage abstinence and promoting golf to inner city kids.

The favoritism and politicization in the awarding of grants by OJJDP would ordinarily be unremarkable compared to such higher profile examples of what congressional critics describe as cronyism by the Bush administration– except for the staggering human consequences. To fund his new priorities, J. Robert Flores, the administrator of OJJDP has cut funding for the training of corrections officers to prevent the physical and sexual abuse of incarcerated children. He has cut funds for a program to counsel rape victims that had been praised by President Bush. He has cut funds to prevent the incarceration of mentally ill or mentally retarded children. And he has cut funding for programs to prevent the suicide of gay and lesbian children.

Flores’ tenure as head of Justice’s OJJDP and the favorism and cronyism which at least a half dozen subordinates and superiors have alleged was the subject of a recent Nightline broadcast which I helped report with ABC chief investigative correspondent Brian Ross and reporters Anna Schecter and Maddy Sauer. Tomorrow morning, Flores will be questioned under oath about all of this before the House Committee on Oversight and Government Reform.

And my colleague Anna has a story out this afternoon disclosing that Flores is also the subject of an investigation by the Justice Department’s Inspector General:

The DOJ Inspector General has launched an investigation into fancy trips around the world taken by J. Robert Flores, the Administrator of the Office of Juvenile Justice and Delinquency Prevention, which always included golf and/or tennis…

“Flores would golf during the day while on official travel around the country on tax payer funds,” said Scott Peterson, a former staff member at OJJDP who traveled with Flores on various occasions.

An OIG investigator questioned one staff member about Flores’ travel and about an ex-Colonel in the Honduran army hired by Flores who at one time ran for president of Honduras.

The staffer said the Human Resources Department [of DOJ] was concerned that giving access to the DOJ computer system to a non-US citizen and a former Honduran Colonel could be dangerous for security reasons.

Fonseca, whose Honduran military career spanned three decades, was contracted to work on faith-based and gang issues…

Fonseca attended Church with Flores, according to DOJ staffers, and is married to Deborah Lynne De Moss, a major GOP contributor. Fonseca himself donated $2,000 to Bush in 2004, the same year he was hired, and reportedly raised about $50,000 more on behalf of the president…

In a farewell to his colleagues in July of 2007, Fonesca wrote in an email: “It is my hope and prayer that the joy and peace of Jesus Christ will be real to each on of you.”

Historians are already arguing whether the Bush administration has engaged in cronyism and favoritism at the expense of professionalism and competence. Presidents of both political parties are routinely accused by those in the opposition of stacking the government with their ideological or political loyalists. But the Bush administration’s handling of Katrina and the reconstruction of Iraq, the firings of nine U.S. attorneys, and the nomination of Harriett Miers to the Supreme Court raise questions as to whether during the Bush presidency, as Paul Krugman has written in the New York Times, “politicization and cronyism have become standard operating procedure throughout the federal government.”

Setting aside its traditional mission, Flores’ office awarded a $500,000 federal grant last year to the World Golf Association. In explaining why he overrode his career staff in awarding the grant, Flores explained: “We need something… to engage the gangs and the street kids. Golf is the hook.” Flores awarded the grant despite the fact that the group’s grant proposal rated 47th best out of 104 applicants. The honorary chairman the Golf Association’s First Tee program is former George Herbert Walker Bush.

In a draft of his testimony to be given to Congress tomorrow, Flores has decided to come out swinging against those who criticize the grant to the World Golf Association, claiming that they are “biased against the wealthy.” Flores wrote in the draft testimony that he believes that the grant has been “pilloried because it was tied to golf, and I assume for those who are biased against the wealthy, because it has historically been a sport of the well-to-do.”

Flores also overruled his professional staff and awarded a million dollar grant to the Best Friends Foundation, an organization that promotes sexual abstinence. Best Friends ranked 53rd out of 104 grant applicants. Additionally, the organization refused to participate in a congressionally mandated study into the effectiveness of abstinence programs for teens.

In assessing Best Friends’ grant application, one reviewer later said that their “application was illogical. Its approach made no sense. And it didn’t have a coherent theme to it.”

How then did Best Friends obtain its grant? The founder and president of Best Friends is Elayne Bennett. Her husband, Bill Bennett, had been, respectively, the Secretary of Education during the Reagan administration and the drug czar for the first Bush administration. Now at days, of course, Bill Bennett spends most of his time as a cable television personality supporting the policies of the current Bush administration Moreover, funding sexual abstinence for teenagers has been a priority for the White House.

While Best Friends and the World Golf Association received their grants, more than forty other organizations that had received higher ratings from Justice Department reviewers received no federal money at all. Those denied grants included organizations that train youth corrections officers, counsel rape victims, and work to prevent suicide among gay and lesbian youth.

A program to help troubled teens in San Diego, Vista, was ranked number two by the staff out of 202 applicants in its category of prevention and intervention but was turned down for a grant to help deal with inner city teen violence in San Diego. Why was its grant turned down? Justice Department employees said Flores did not like the fact that group distributed condoms to the kids the program serves.

Often times, effective programs had their funds curtailed for ideological reasons. Even the Girl Scouts was not immune. When one of Flores’ superiors wanted to fund a Girl Scouts program to serve girls whose mothers were incarcerated, Flores objected because the group had ties to Planned Parenthood.

Another program, designed to train adult guards to deal with teens in custody, also was denied federal money even though it was ranked by the staff number 2 out of 104 in its category.

“What Flores did in this situation is he just stomped on the heads of kids who are very much at risk and in trouble in this country,” said Earl Dunlap, who runs the guard training program for the National Partnership for Juvenile Services.

Another group that was turned down for an OJJDP grant– despite the strong recommendations of career Department employees that it be awarded one was the Rape Abuse and Incest National Network (RAINN), a Washington D.C. based advocacy group for victims of rape and sexual assault.

Among other things, RAINN runs a telephone hotline for victims of rape and sexual assault, which has put hundreds of thousands of victims together with local rape crisis centers. RAINN ranked 14th best among 104 prospective grantees in the category in which it applied. The group directly competed against the World Golf Association, which was ranked 47th in the competition, and Best Friends, which ranked 51st.

Flores has refused to answer questions about why he turned overruled his staff in funding RAINN. One OJJDP employee said Flores expressed concerns to him that some rape victims might possibly be counseled as to how to obtain abortions by rape counseling centers which RAINN refers those who contact the organization’s telephone hot line. President Bush, however, has publicly praised the organization, as have conservative Republicans on Capitol Hill.

But most importantly, Flores’ office is by law supposed to take a leading role in removing kids from adult jails, where they are sexually assaulted and at high risk for suicide. Indeed, that policy objective was central to the OJJDP’s creation during the Carter administration.

In 1986, the Reagan administration’s Administrator of OJJDP, Al Regnery resigned after being confronted with allegations that he, like Flores, had disregarded the recommendations of his career staff and federal regulations to award grants for political or ideological reasons. Regnery awarded grant money to the dean of the late Jerry Falwell’s Liberty College to devise a high-school course on the Constitution. He awarded $789,000 to a former songwriter for “Captain Kangaroo” to study pornographic cartoons.

Regnery had also been asked by then-Attorney General Edwin Meese III to informally spearhead the Regan administration’s anti-pornography campaign. Regnery provided the initial funding to the President’s Commission on Pornography with OJJDPF funds diverted from juvenile crime prevention programs.

But most of all, Regnery ignored the federal law to act to remove children from adult jails. Regnery and his boss, then-Attorney General Edwin Meese believed that jailing children with adults was a deterrent to crime. The Reagan administration purposely did little to urge state governments to comply with the law.

The consequences to children were devastating. When incarcerated with adults, children are subjected to physical and sexual assaults, raped, and even murdered. According to the Justice Department’s Bureau of Justice Statistics, for the year 2005, 21% of sexual assault victims in jails were juveniles even though kids only constitute less than 1% of the nation’s incarcerated population.

But even more tragic, locking up children with adults in jails and prisons often leads a significant number to commit suicide. According to one federal study, children incarcerated in adult jails and prisons commit suicide at 36 times the rate that they do when they are locked up with other juveniles.

With Regnery’s resignation, OJJDP returned to its mission of removing children from adult jails. But during Flores’ current tenure under President Bush, the removal of children from adult jails has once again become less of a priority and children are again at risk. Grant money and staff resources have instead been devoted to programs to encourage abstinence, golf and further other political priorities of the White House.

In the meantime, we have the testimony of at least one victim to the consequences. A teenager held in a county jail wrote a local district attorney saying he did not want to be exposed to adult criminals because of their bad influences:

“A wise person once told me it is not our mistakes in life that define who we are, bur rather how we recover from those mistakes. With that I would just like you to know that I’m going to use this situation to make me a stronger person and a better person.”

Two and one half months later, the boy committed suicide.

New story out on ABCNews.com on favoritism in Justice Department’s grants program

murrayw — Thu, 12 Jun 2008 11:00:23 +0000

I have a new story out this morning on ABCNews.com about the politicization of the awarding of grants in the Justice Department’s quarter of a billion dollars juvenile justice and delinquency prevention grants program. My story this morning focuses on how favoritism was shown towards a grant award to an abstinence program run by Elayne Bennett, the wife of Washington conservative political activist and insider Bill Bennett. (The above picture is of her at a benefit dinner for her organization, Best Friends.)

The entire story can be found by clicking here. Much of it also appears just below:

An organization that promotes sexual abstinence for teens received a federal grant of over a million dollars, twice what it had requested, despite the fact that it refused to participate in a congressionally mandated study and skepticism of Department of Justice staffers. So why did the organization, the Best Friends Foundation, receive the grant from the Justice Department’s juvenile justice office even though dozens of competing organizations were rated higher by the office’s own reviewers? Current and former staffers say it was because of the Best Friends’ powerful president and founder, Elayne Bennett.

Not only is Bennett the wife of Bill Bennett, a former Reagan and Bush administration official and conservative political commentator, but she is also personally close to the chief administrator of the Office of Juvenile Justice and Delinquency Prevention (OJJDP), J. Robert Flores. Bill Bennett had been Secretary of Education during the Reagan administration and the drug czar for the first President Bush.

DOJ staffers were deeply skeptical when Best Friends applied for a grant of around a half-million dollars last summer. For one thing, the organization had backed out of a congressionally mandated study to examine whether or not abstinence programs are effective. Staffers questioned giving federal money to a group that refused to be a part of the government study.

Then there were the DOJ staffers own internal reviews, which placed Best Friends behind dozens of other competing organizations. Out of 104 grants in their category, Best Friends ranked 53rd.

But those other organizations didn’t have Elayne Bennett. Bennett, said current and former DOJ staffers, often spoke on the phone with Flores and had access to him and his aides that other juvenile organizations ordinarily wouldn’t have.

And then there were the parties. When Best Friends held their pricey society fundraisers, Flores was often in attendance, as were some of his top aides, albeit with permission from the DOJ ethics officers.

Former DOJ staffer Scott Peterson, who left the office in disgust over Flores’ handling of the grant process, told ABCNews.com that the parties didn’t have much to do with assessing whether or not the group deserved government funding.

While still at the DOJ, Peterson had recommended that funds be withheld from an earlier grant awarded to Best Friends because the group had not complied with federal regulations that it report how it was spending taxpayer money. When faced with a possible cut-off of their funding, the group did belatedly comply and provided the information.

And then there was the matter of Best Friends having earlier backing out of the congressionally mandated study even after it had agreed to participate.

In an interview with ABC, Bennett said she believed that other federal agencies had denied Best Friends further grants because of its pulling out of the study, conducted by the Mathmatica Policy Research, Inc., of Princeton New Jersey. But Bennett said that Best Friends was justified in pulling out because the “research design changed” after her group first agreed to participate and the new requirements would have placed onerous demands on the schools Best Friends works with.

Despite backing out of the study and the poor reviews, Best Friends received a $1.1 million grant from the juvenile justice office. They had requested $550,000…

At a recent fundraiser, Elayne Bennett told ABCNews.com that her organization is all about good friendships.

“We’re really about positive friendships. And a good, solid friendship is a beautiful thing,” she said.

She said of the career Justice Department employees who are now speaking out about their allegations of favoritism: “They say that others are playing politics. But they are doing this because of politics. They don’t like the politics of our group and others. That’s where that nastiness comes from.”

She added: “Inside leaking. You have to be careful of that.”

Meanwhile, competing with Best Friends for a federal grant from the OJJDP was a Washington non-profit, the Rape Abuse and Incest National Network (RAINN), an advocacy group for victims of rape and sexual assault.

Among other things, RAINN runs a telephone hotline for victims of rape and sexual assault, which has put hundreds of thousands of victims together with local rape crisis centers. In the category of OJJDP grants for which both organizations applied, Best Friends ranked 51st, while RAINN came in at 14th. RAINN did not receive a grant from the OJJDP.

A spokesman for RAINN declined to comment for the story. Meanwhile, others in the juvenile justice arena continue to question why Flores would ignore the advice of his own staffers and award grants to lower-ranked organizations.

“Under Flores, his office has abandoned its core mission in favor of peripheral issues with ineffective programs,” William Treanor, executive director of the American Youth Work Center, told ABCNews.com. “The office has abdicated respect and leadership in the juvenile justice field.”…

Although administrators of OJJDP have some discretion under the law to award grants to whomever they want, in the case of Best Friends, Flores had to convince his superiors to award a grant to the organization.

But because of Best Friends’ low ranking, 53rd out of 104 grant applicants considered, his superiors might have overruled him, if they knew of the group’s poor standing, according to Justice Department officials involved in the process.

Moreover, several OJJDP reviewers, while considering Best Friends’ grant proposal, were dismissive in their appraisals of it. One wrote that Best Friends did “not provide evidence of successful implementation other than anecdotal references.” Another simply concluded that date supplied in support of its proposal was “insufficient.”.

To make sure that a grant to Best Friends was approved, officials say, Flores simply created an entirely whole new category which the organization’s grant proposal would be considered.

The category, Flores wrote in a memo to then-Assistant Attorney General Regina Schofield, who oversaw the awarding of Justice Department contracts and grants was for grantees “utilizing school based outreach efforts directed at preventing high-risk activity (out-of-wedlock pregnancy).”

Flores went on to write Schofield regarding Best Friend’s proposal: “This application has the highest score that met the criteria under the administrator’s priority area.”

What Flores left out of the memo was that Best Friends had the highest score because by manipulating the categories, Best Friends was the only organization that qualified at all in that particular category.

In its original category, some fifty organizations were given higher scores by Justice Department reviewers. Forty of them, despite having higher rankings than Best Friends, would receive no money at all from the government.

Some who have worked with Best Friends praise the organization and its work. Wanda Fox, the principal of a Washington D.C. public school, Brighton Elementary School, said: “None of the girls we have had in the program have gotten pregnant. They don’t drop out.” Best Friends, Fox says, “empowers young people to take control of their lives.”

But four current and former career Justice Department officials question whether it was appropriate for Flores to show favoritism in awarding grants to Best Friends and why their reservations about the group were set aside.

Peterson, the former OJJDP official, simply says of the grant for Best Friends: “The administrator made sure the fix was in on this one.”