Today's Must Read

By Kate Klonick - June 5, 2008, 9:35AM

As the Bush years wind to a close, and administration officials slink back to jobs in the private sector, the road ahead of Daniel Gonzalez, the chief of staff for Kevin J. Martin, chairman of the Federal Communications Commission, seems bleak.

From the New York Times:

Hoping to pursue a career in an entirely different field from telecommunications, Mr. Gonzalez invested in a small energy company three years ago and then joined the company's board in 2006. The company, law enforcement officials say, turns out to have been a fraudulent venture that took more than $54 million from investors.

In what looks to be a Ponzi scheme, Gonzalez personally guaranteed bank loans to the company of over $10 million, even though his personal worth was only in the hundreds of thousands, the banks allege. Gonzales disputes that allegation.

The energy company, MCube Petroleum, was founded by Robert Miracle, who appears to have a more checkered past than he presented to investors. Gonzalez's involvement with the company, began when he was introduced to Miracle by a childhood friend.

Mr. Miracle, who was born in 1960, represented himself as a seasoned businessman. In a company overview, he said he had more than 20 years of experience at Toyota and NASA and served as an adviser to Frank G. Wells, the former president of Disney.
But an affidavit by a criminal investigator for the Internal Revenue Service said that Mr. Miracle had never worked for Mr. Wells, and that in 1994, Mr. Miracle had been convicted of felony theft in Oregon for stealing textbooks from a community college. The affidavit said that, rather than working at Disney, Mr. Miracle might have been involved in reselling textbooks from universities.

Through his lawyer, Miracle denies any wrongdoing:

Mr. Miracle's lawyer, Greg Hollon, denied that his client had committed fraud. "We are confident that when the whole story is heard, and all of the facts of this matter properly understood, he will be vindicated," Mr. Hollon said. He added he could not discuss the details of the case because of the pending criminal investigation.

While it seems possible that Gonzalez was the victim of a con by Miracle, the question of why he would ever personally guarantee $10 million in company loans remains unknown.

Friends and colleagues are puzzled about why he took such a large risk. Asked why his client would guarantee a promissory note of $10 million when his net worth was so much smaller, Mr. Willey said, "I cannot give an answer."

9 Comments

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Hmm . . . stupid or venal, or both?

Posted by Jack Russell
June 5, 2008 10:46 AM | Reply | Permalink

Asked why his client would guarantee a promissory note of $10 million when his net worth was so much smaller, Mr. Willey said, "I cannot give an answer."

Because he believed in Miracles?

Posted by commie atheist
June 5, 2008 10:57 AM | Reply | Permalink

Robert "Miracle?"

Even I could have seen that coming.

Posted by Citoyen92
June 5, 2008 11:00 AM | Reply | Permalink

If Gonzalez were a bank or broker, the Fed would be bailing him out.

Do we know if the Fed is working on it?

Posted by Lars
June 5, 2008 11:40 AM | Reply | Permalink

Couldn't happen to a better group of people, because Bush bamboozled Americans – why can’t Bushites be bamboozled?

What goes around comes around - it's probably why Scott McClellan wrote his a tell-all book – because promises of high paying positions didn’t’ materialize – Scott was fired so Bush loyalty is very much a one-way street.

I suspect the job scrambling scenario is going to get really nasty in the final months of the great Bush FINALLY that shows every sign of become an “every man for himself” brawl. I bet it gets pretty ugly in the next few months.

Posted by Me_again
June 5, 2008 11:41 AM | Reply | Permalink

When you're a tool, you're a tool. So sayeth I (with apologies to Popeye).

Posted by serge
June 5, 2008 11:57 AM | Reply | Permalink

Well, this helps explain why the FCC seems to be such a mess these days. Very sad.

Posted by readerOfTeaLeaves
June 5, 2008 1:18 PM | Reply | Permalink

Here's Gonzalez's bio from the FCC Website:

Daniel Gonzalez - Chief of Staff Mr. Gonzalez previously served as Chairman Martin's Senior Legal Advisor and Legal Advisor for common carrier matters. Mr. Gonzalez rejoined the Commission, where he began service in 1990, after a period at XO Communications where he served as Vice President, External and Regulatory Affairs.
During his tenure at the FCC, Mr. Gonzalez served as Legal Advisor to Commissioner Rachelle B. Chong. He was principally responsible for advising the Commissioner on common carrier issues. Mr. Gonzalez joined the Commission in 1990 as an attorney in the Policy and Program Planning Division of the Common Carrier Bureau, and has subsequently served as an attorney in the Common Carrier Bureau's Accounting and Audits Division, and Legal Advisor to the Common Carrier Bureau Chief. Mr. Gonzalez is a graduate of Hofstra University School of Law and earned his B.A. from the State University of New York. Mr. Gonzalez is a member of the New York and Florida Bars.

And here's Wikipedia on XO Communications:

XO Communications (previously Nexlink Communications and Concentric Network Corporation) is a United States telecommunications firm and one of the largest Competitive Local Exchange Carrier (CLEC) in the country. It is owned by XO Holdings, Inc OTCBB: XOHO. XO provides voice, data and IP services to businesses and other telecommunications companies in 75 metropolitan markets across the United States. Its customers include small and medium-sized business, large enterprises, cable companies, content providers, telecommunications companies and wireless service providers.

All of this tells me that Mr. "I believe in Miracles" Gonzalez should have stayed in a field that he knew about. It also makes me think that the NY and Florida Bar Associations might want to reconsider his membership, if only because they might not want someone this stupid to be a member.

Posted by The Facilitatrix
June 5, 2008 1:20 PM | Reply | Permalink

You know... the common, almost universal rattiness of the Bush Administration couldn't have dragged on this long without a pliant media relentlessly propping up its tawdry facade year after year, shell game after shell game. Too many times, I think, the traitorous and incompetent nature of White House foreign policy tends to blur just how crooked it is. We now see the country as it would be run by... Benny the Dip. Or any of the stick-pin-baubly shysters who made Florida and the Southwest almost synonomous with land fraud. We should think of Bush and his minions the same way we view the Grant and Harding administrations - as seedbeds of graft and corruption. But do we get this from the mainstream networks and dead-tree rags? In a term that should sum up the media's current M.O.: Not A Peep...

Posted by San Fernando Curt
June 5, 2008 1:25 PM | Reply | Permalink