J. Robert Flores

Flores Faces Criminal Investigation

Kate Klonick | June 20, 2008, 5:02PM

Another week, another DOJ investigation of itself.

The latest, reported this morning by the Washington Post, involves J. Robert Flores, the Administrator at the Department of Justice's Office of Juvenile Justice and Delinquency Prevention, who has been the subject of a recent series of articles by ABC News investigating grants awarded by his office.

Flores is facing a federal criminal investigation for questions arising from "his hiring practices, travel expenses, and personal ties to groups which he gave millions of dollars" the Post reports.

ABC documented several questionable grant awards by Flores. He gave the World Golf Foundation's First Tee Initiative a grant, after the group invited him on a trip and paid for him to play a round of golf. The group's honorary chairman is former President George H. Bush. Though Flores reimbursed the organization for the $159 in green's fees, he did so only yesterday -- hours before his Congressional testimony.

Flores awarded a half-million dollar grant to First Tee, despite it ranking 47th out of 104 applicants and being "not recommended" by staff who said they "didn't understand how funding this program would advance juvenile justice." The decision was openly rebuked by members of the committee.

"The foundation paid for your greens fees and then the next year you disregard the recommendations of your professional staff and award the foundation a half-million dollar federal grant. You have tainted the process," said Rep. Elijah Cummings (D-MD).

Of the 104 applicants ranked by the peer review process, Flores failed to award grants to any of those in the top five. Rather, Flores gave funding to five programs, not recommended by staff, including an abstinence education program called Best Friends, led by Elaine Bennett, the wife of Reagan administration Cabinet official Bill Bennett. Two faith based programs were also selected.

From Chairman Henry Waxman's (D-CA) opening statement:

Mr. Flores awarded a $1.1 million grant to the Best Friends Foundation, an abstinence- only organization, that ranked 53 out of 104 applications. The career staff who reviewed this application said it was "poorly written," "had no focus," "was illogical," and "made no sense."

Flores testified to the distribution of over $8 million in department grants. According to emails and testimony from Flores' own staff in the office of Juvenile Justice, as well as the peer review board that ranks the grants, the grant administration was distinctly slanted.

"Mr. Flores, it seems you're the only person at the Department of Justice who thinks your process was fair, transparent and served the interest of taxpayers," Waxman concluded.

EPA

EPA and OMB Give Oversight Committee Attitude

Kate Klonick | June 20, 2008, 3:51PM

The Bush Administration has had since March 12 to respond to the subpoenas from the House oversight committee requesting documents pertaining to the EPA decisions on greenhouse gas and ozone regulations. Yet it waited until this morning -- the day the Committee was scheduled to vote on their contempt for their failure to respond -- to assert executive privilege.

Time and again, that inveterate stonewaller, EPA administrator Stephen Johnson, has gone up against committee Chairman Henry Waxman (D-CA) and bobbed and weaved through his testimony, never quite answering questions but never quite invoking executive privilege either.

During a May 20, 2008, appearance before the committee, Johnson was specifically asked by Waxman whether he was invoking executive privilege. "Not at this time," Johnson replied.

Well that time must have passed.

More on "Stonewall" Johnson's evasive maneuvers after the jump.

Read more »

Waxman: "I Don't Think We've Had a Situation Like This Since Richard Nixon"

Kate Klonick | June 20, 2008, 12:04PM

The White House pulled out the old executive privilege trump card at the last minute today to avert a House government oversight committee vote to hold Administration officials in contempt of Congress.

Committee Chairman Henry Waxman (D-CA) has announced that EPA Administrator Stephen Johnson and Susan Dudley, administrator for information and regulatory affairs at the White House, have invoked executive privilege as the basis for not complying with subpoenas from Waxman's committee seeking documents about new smog requirements and a decision blocking California greenhouse gas limits.

Waxman postponed the vote on contempt in order to determine whether the statements of executive privilege were valid. "But," he emphasized, "to date I have not seen a valid instance of their executive privilege":

I don't think we've had a situation like this since Richard Nixon was president. When the President of the United States, may have been involved in acting contrary to law and the evidence that would determine that question for Congress, in exercising our oversight, is being blocked by an assertion of executive privilege. I would hope and expect this administration would not be making this assertion without a valid basis for it, but to date I have not seen a valid instance of their executive privilege.

We'll have video of Waxman's statements coming shortly.

The Daily Muck

The Daily Muck

Kate Klonick | June 20, 2008, 10:59AM

The girlfriend of fugitive Samuel Israel III was arrested Thursday, for aiding and abetting his flight. Israel, recently sentenced to 20 years in prison for swindling his hedge fund clients out of almost $400 million, faked his suicide days before he was supposed to enter prison. His girlfriend told authorities that she had helped Israel pack a recreational vehicle, attach a motor scooter and then drove with him to a rest area, where the R.V. was left for later use. (New York Times)

Two former Bear Stearns senior executives were arrested on Thursday for securities fraud relating to the subprime mortgage fallout. The former hedge fund managers were among 60 people arrested this week in a sweep the Justice Department is calling "Operation Malicious Mortgage." Over 400 people have been arrested since March on charges of mortgage fraud. (New York Times)

Read more »

Don Young

"The A Team": Who Forgot to Invite Mr. T?

Kate Klonick | June 19, 2008, 7:27PM

Just who makes up Rep. Don Young's "A Team," the nine transportation lobbyists listed in Young's "Intern Survival Guide" who "can talk to whoever they want" when they call his congressional office?

We've put together a snapshot of each "team" member. Pictures, mysterious silhouettes and more after the jump.

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Brad Birkenfeld

Former UBS Banker Pleas Guilty to Tax Evasion

Kate Klonick | June 19, 2008, 2:02PM

Besides the sub-prime mortgage crisis, UBS has an entirely different set of problems to worry about: the criminal prosecution of their former employees and the possible public exposure of their massive wealth management business.

Bradley Birkenfeld, a former UBS banker in Geneva, pled guilty in a Florida court today, for conspiring to hide $200 million in client assets in order to avoid paying U.S. taxes. The plea is the latest in bad news for the bank, who has its wealthiest clients running for cover as authorities pressure bank officials to give up the names of over 20,000 of their high-net- worth clients.

And it's all because no one wanted to pay their taxes. Birkenfeld and colleague Mario Staggl, currently at large, helped billionaire American real estate developer and owner of Olen Properties Corp., Igor Olenicoff avoid almost $7.2 million in taxes between 2001 and 2006. Olenicoff was sentenced on April 14, 2008 and agreed to pay $52 million in back taxes.

In his statement today in U.S. District Court in Fort Lauderdale, Birkenfeld detailed how he, Staggl and other managers and bankers at UBS had concealed client assets.

From a Department of Justice press release earlier today:

Birkenfeld, managers and bankers at the Swiss bank, and U.S. clients prepared false and misleading IRS forms that claimed that the owners of the accounts were sham off-shore entities' and failed to prepare and file IRS forms that should have identified the true U.S. owner of the accounts.

To further assist U.S. clients of the bank in concealing their offshore accounts, Birkenfeld admitted that he, Mario Staggl, additional private bankers and managers at the Swiss bank, and others advised U.S. clients to place cash and valuables in Swiss safety deposit boxes, and purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas. Additionally, they advised the clients to misrepresent the receipt of funds from the Swiss bank account in the United States as loans from the bank; destroy all off-shore banking records existing in the United States; utilize Swiss bank credit cards that they claimed could not be discovered by U.S. authorities; and file false U.S. individual income tax returns that omitted income earned by the clients and fraudulently misrepresented that the clients did not have an interest in and signature authority over accounts held offshore.

. . . To circumvent the requirements of the agreement between the bank and the IRS, Birkenfeld and others conspired to conceal the American real estate developer's ownership and control of the $200 million of assets hidden offshore by creating and utilizing nominee and sham entities, including Bahamian corporations, Liechtenstein trusts and Danish corporations.

According to the DOJ, Birkenfeld and his co-conspirators actions were in direct violation of a 2001 agreement between UBS and the American government, which stated that the Swiss bank would "identify and document any customers who received reportable U.S. source income or would withhold and anonymously pay a 28 percent withholding tax."

The guilty plea is the latest in what has been an ongoing and dramatic investigation of UBS and its Geneva bankers. In April of 2008, Martin Liechti, head of UBS' international wealth management business for the America's was briefly detained while passing through Miami airport. Birkenfeld, who has been talking to prosecutors for over a year regarding this matter, was arrested on May 7 upon entering the U.S. at Logan Airport for a high school reunion.

Staggl, co-founder of New Haven Trust Company Ltd. in Liechtenstein is considered a fugitive and is still at large.

Laura Richardson

Ethics Watchdog Group Requests Investigation of Rep. Richardson

Kate Klonick | June 19, 2008, 1:11PM

Rep. Laura Richardson (D-CA) has money troubles. She's had her homes fall into default five times in the last 13 months (seven times total), all while lending over $175,000 to her campaigns.

Maybe that's why the ethics watchdog group, Citizens for Responsibility and Ethics in Washington (CREW), called her a "deadbeat Congresswomen," and filed a request yesterday for a congressional investigation into shady looking mortgages and foreclosures.

Richardson responded through her spokesperson, who called the investigation request slim-pickings. From the LA Times:

William Marshall, a spokesman for Richardson, called the complaint "pretty mean-spirited. It rehashes old news." He said the House ethics counsel last week met with the congresswoman and said her ethics statement met House rules.

Don Young

Don Young Intern Initiation Memo Calls for Special Treatment of Lobbyist 'A-Team'

Kate Klonick | June 18, 2008, 6:05PM

Rep. Don Young (R-AK) has had his share of federal investigations, scandal and legal bills, but he may now have a new problem: "The A Team."

In a document obtained today by TPMmuckraker.com, entitled 'An Intern's Survival Guide,' new interns in Young's office are given various instructions on how to thrive and excel working in Young's office. The document was distributed to new interns by a paid member of Young's staff.

The advice and rules range from the jocular to the mundane. But the most striking is the section on phone duty. The 'Guide' refers to an "A-Team" of nine lobbyists who should immediately be connected to any member of the staff they ask to speak with.

The A Team: Rick Alcade [sic], Colin Chapman, Randy DeLay, Billy Lee Evans, Jack Ferguson, Mike Henry, Ducan Smith [sic], CJ Zane or Jay Dickey. These people can talk to whomever they want, normally Mike or Sara. Tell them who it is and transfer over unless they say otherwise. I recommend looking up who they are.

Most notable on the list is Rick Alcalde, the lobbyist at the center of the "Coconut Road" earmark scandal, which the Senate, in an unprecedented move, has formally asked the Justice Department to investigate.

For readers (and interns who may have fallen behind on their duties), we've done the work for you. What do these nine all have in common besides being the perfect number for a baseball team? They're all transportation lobbyists.

Young was Chairman of the House Transportation and Infrastructure Committee from 2000 to 2006.

As we mentioned, there's Rick Alcalde who besides organizing the Coconut Road earmark debacle for Young, is a lobbyist for wealthy Florida developer Daniel Aronoff.

Jack Ferguson, is the former Chief of Staff for Sen. Ted Stevens (R-AK), another of Alaska's scandal ridden representatives, and an Administrator for Midnight Sun PAC.

Randy DeLay, lobbyist brother of former House Majority Leader Tom DeLay.

Billy Lee Evans, the former Georgia congressman turned lobbyist.

Mike Henry, a former Young legislative assistant turned lobbyist.

Jay Dickey, a former Arkansas congressman turned lobbyist.

Duncan Smith, a former Young staffer and Alaska Fisheries Marketing Board member turned lobbyist.

CJ Zane, a former Young Chief of Staff, turned lobbyist.

and Colin Chapman, another former Young Chief of Staff, turned lobbyist.

At first glance, seems like an All-Star lineup.

A statement release late this afternoon by Young's congressional office claims that 'Guide' was unofficial and "outdated":

"Rep. Young has welcomed dozens of interns into his office over the years and finds their assistance in the office invaluable. But interns are not staff. This incredibly outdated "survival guide" was pieced together by several former interns and not by staff. This "guide" in no way reflects the official policies of Rep. Young's office.

"It's always interesting to see how students view their intern experience. It appears that some of what they have written is tongue in cheek, some to help relieve the daily stresses of working on Capitol Hill. At the end of the day, our goal is to ensure that all interns have the best experience possible.

"As for those listed, they include either former staffers (who represent Alaskans) or close friends and former colleagues of Rep. Young, whom he has known for many years."

Contrary to this account, TPMmuckraker.com has learned that the 'Guide' and other initiation materials were distributed by a paid member of Young's staff.

Oil

The Great Red Scare: Take II

Kate Klonick | June 18, 2008, 10:03AM

As we reported yesterday, the China-drilling-off-Cuba story that has been a talking point for high level Republicans for the last few weeks is an urban legend. And the GOP is slowly acknowledging that:

From Roll Call:

"We're not using the China talking point anymore, but we will continue to point out that it is absurd that Cuba is developing its deep-water energy resources while Democrats are blocking America from doing the same," said Michael Steel, spokesman for House Minority Leader John Boehner (R-Ohio).

Must Read

Today's Must Read

Kate Klonick | June 18, 2008, 10:00AM

Yesterday we learned about the CIA's larger involvement in developing torture techniques at Guantanamo Bay -- techniques previously thought to have been developed primarily by the military.

In an epic eight-hour, three-panel hearing, the Senate Armed Services Committee examined dozens of documents and grilled former Pentagon officials involved in developing the interrogation methods introduced in 2002.

(Among several good articles on the hearings, a good place to start isSpencer Ackerman's article at the Washington Independent.)

Key to the hearings were the minutes of a meeting between CIA counter-terrorism lawyer Jonathan Fredman and a group of military and intelligence officials who convened at the base in Cuba to discuss the use of harsher interrogation techniques on detainees at Guantanamo Bay. The techniques derived from a training regimen U.S. Special Forces troops used prepare troops to withstand torture --Survival Evasion Resistance Escape, or SERE.

The SERE program -- first introduced to many by a 2005 article by the New Yorker's Jane Mayer -- is not an interrogation program. Nor is it an intelligence-collection program. Instead, it's an obscure program across the different military services' special-forces wings that teaches troops how to withstand torture if captured. Instructors subject students -- under the rigorous watch of psychologists and physicians -- to various torture techniques, including waterboarding, prolonged stress positions, sleep deprivation and sensory manipulation. Waterboarding "is an overwhelming experience that induces horror, triggers a frantic survival instinct," Malcolm Nance, a former Navy SERE instructor who was himself waterboarded, testified to Congress in November. "As the event unfolded, I was fully conscious of what was happening: I was being tortured."

On July 25, 2002, the Defense agency that oversees the SERE program, known as the Joint Personnel Recovery Agency, or JPRA, was contacted by a representative of Pentagon General Counsel William Haynes for information about SERE practices for the "exploitation process" -- that is, getting detainees to cooperate with their interrogators. The next day, JPRA's chief of staff, Air Force Lt. Col. Daniel Baumgartner, sent Haynes a lengthy memorandum explaining how the program worked.

. . . Baumgartner's memorandum was not the last time SERE techniques were introduced into the interrogation bloodstream. On the week of Sept. 16, 2002, JPRA officials invited a contingent of senior Guantanamo-based officers to a briefing session at Ft. Bragg, N.C. Haynes and his legal counterparts at the Central Intelligence Agency, Justice Dept. and the vice president's office visited Guantanamo the following week for an update on interrogations. The minutes of that meeting record that the commander of the detention facility "did take Mr. Haynes and a few others aside for private conversations."

Just the week after that, a senior CIA lawyer, Jonathan Fredman, instructed Guantanamo officers on various SERE-pedigreed torture methods, including waterboarding. "If the detainee dies," Fredman said, "you're doing it wrong." In response, the chief Guantanamo Bay attorney, Lt. Col. Diane Beaver, said, "We will need documentation to protect us."

The Washington Post today emphasized that the meeting records, specifically Feldman's statements, revealed the CIA's larger involvement in advising on the torture techniques, the creation of which was previously thought to fall mainly under the purview of the Defense Department.

Baumgarten and Beaver testified about their involvement:

Before the Senate panel, Baumgartner said he did not realize that Haynes wanted to use SERE techniques on enemy combatants. "I had no idea how it would be used," he testified. "When tasked by my higher headquarters... I can't really turn around and tell the flag officers and the senior executive service people no."

Beaver testified today for the first time since Haynes declassified her guidance in mid-2004. She said she intended for the techniques to be used under supervised and restricted circumstances. It turned out that not a single other military lawyer submitted written guidance in support of the SERE-derived techniques. "In hindsight," Beaver told the Senate panel, "I can only conclude that others chose not to write on this issue in order not to be linked to it. For me, that was not an option."

Meanwhile, Haynes attempted to distance himself from the policy.

Haynes, who retired from the Pentagon in April, after his nomination to the federal judiciary foundered, pled ignorance. "No, sir, I don't remember it at the time," Haynes said when asked if he had received Baumgartner's memorandum. "But I saw it a long time ago... it's possible I saw it at the time."

Pressed by Levin on how he could not have seen a memorandum concerning terrorism detentions and interrogations, Hayes replied, "the recipient is the Office of the Secretary of Defense General Counsel, which [was] not my precise title."

For more coverage, also see Ackerman's live blog of the hearing as it took place.

Lisa Murkowski

Murkowski Reveals Two More Murky Deals in Financial Disclosure Amendments

Kate Klonick | June 17, 2008, 1:07PM

Senators released financial disclosure forms last week, and among them were a series of amendments to earlier years' disclosure forms from Sen. Lisa Murkowski (R-AK).

You might remember Murkowski for the sweetheart deal she failed to disclose in her forms last year. Murkowski had purchased a piece of property along the Kenai river from Bob Penney, a politically-prominent local developer connected to the Sen. Ted Stevens (R-AK) investigation, for about $120,000 under market-value. Murkowski failed to disclose the purchase, and later claimed it was for "personal use," though this still did not make it exempt from disclosure. She later amended her disclosure forms to reflect the sale and finally reversed the sale, selling the property back to Penney for the purchase price.

She has now amended her 2004, 2005 and 2006 disclosure documents to reveal roughly $100,000 of as yet-undisclosed income in the latter two years and some $60,000 of undisclosed income in 2004.

In all three years, Murkowski was receiving $60,000 a year in payments on a promissory note, stemming from the sale of her 50% share of 313 E. Street, a property that was held by New Frontiers Ventures, LLC, which was co-owned by Murkowski, her husband and her parents, Gov. Frank and Nancy Murkowski. The property was sold to Garcia Investment Group, LLC in 2003.

A note on the disclosure forms state that New Frontiers Ventures was later dissolved on December 31, 2006.

In 2005, Murkowski sold her 'Alaska Pasta Company' to Hope Nelson, a member of the Alaska Federation of Republican Women who, in May 2007, also helped organize a birthday party for Sen. Murkowski. Nelson made a down payment of $45,000, and has since paid $40,800 a year on a promissory note.

Samuel Israel III

Suicide Really Is Painless for Convicted Hedge Fund Manager

Kate Klonick | June 16, 2008, 5:11PM

Last week, we wrote about Samuel Israel III, the former hedge fund manager sentenced to a 20-year prison sentence for fleecing his clients out of $400 million.

At first, authorities thought Israel may have committed suicide when he disappeared on June 10, just days before the start of his prison term. They found his car near Bear Mountain Bridge with the words, "suicide is painless" scrawled in the dust on the hood.

But the enigmatic quip, the title of the theme song from the hit TV series M*A*S*H, was just part of a ruse to avoid incarceration, though authorities did not state why they had ruled out suicide.

From the AP:

U.S. Marshal Joseph Guccione said Monday that investigators now consider the case of Samuel Israel III to be solely a fugitive investigation.

. . . Federal marshals issued a wanted poster Thursday for the man convicted of cheating investors out of $450 million in his Bayou hedge funds. They said he should be considered armed and dangerous.

John Ashcroft

Supreme Court to Decide Whether Sept. 11 Detainee Can Sue Ashcroft, Mueller

Kate Klonick | June 16, 2008, 12:19PM

Following the Justice Department Inspector General's report on the FBI role in Sept. 11 detainee interrogations, high-level administration officials have been implicated in the debates over torture tactics. Now, besides the DoJ's investigation, former Attorney General John Ashcroft and FBI Director Robert Mueller are facing private suits from the detainees.

From the AP:

The Supreme Court says it will decide whether former Attorney General John Ashcroft and FBI Director Robert Mueller must face a lawsuit that claims prisoners detained after Sept. 11 were subject to ethnic and religious discrimination.

The lawsuit was filed by Javaid Iqbal, a Pakistani Muslim who spent nearly six months in solitary confinement in 2002. Iqbal, since deported from the United States, says Ashcroft, Mueller and others implemented a policy of confining detainees in highly restrictive conditions because of their religious beliefs and race.

A federal appeals said the lawsuit could proceed, but the Bush administration says the high-ranking officials should not have to answer for the allegedly discriminatory acts of subordinates.

Must Read

Today's Must Read

Kate Klonick | June 16, 2008, 12:01PM

Brad Schlozman, the former Justice Department official who left the Department in August 2007 after he openly admitted to "boasting" about his hiring of conservative Republicans, is the focus of a new turn in the DOJ's investigation into the 2006 U.S. attorneys firing scandal.

You might remember Schlozman as the head of the DOJ's Civil Rights Division-cum-U.S. attorney in Kansas City, and most recently, his work at Main Justice. Schlozman famously talked of replacing Clinton appointees with "good Americans" and keeping tabs on a lawyer who he had heard, "didn't even vote for Bush."

The Wall Street Journal reports today that lawyers have filed for a grand jury referral, which could lead to criminal charges, in order to investigate Schlozman's involvement in improper prosecutions during his time running the DOJ's civil-rights division in general. The referral appears specifically tied to possible perjury in his 2007 congressional testimony.

The Journal, summarizes Schlozman's past role in the investigation:

In testimony before the Senate Judiciary Committee, Mr. Schlozman conceded boasting to associates about the number of Republicans he managed to hire at the department. The allegations against him helped feed months of scandal that eventually forced the resignation of Attorney General Alberto Gonzales in August.

. . . At a Senate hearing last June, Democrats zeroed in on allegations that Mr. Schlozman was part of an effort by Republican political officials to pursue vote-fraud investigations in important swing states as a way to gain electoral advantage.

Mr. Schlozman's promotion to the U.S. attorney's office in Kansas City came after the department asked his predecessor, Todd P. Graves, to resign. Mr. Graves was among several U.S. attorneys who had shown reluctance to bring vote-fraud-related cases, according to testimony and documents gathered by Senate investigators last year.

After Mr. Schlozman's arrival in Kansas City, prosecutors filed charges against workers from a left-leaning activist group, Acorn. The workers eventually pleaded guilty to violations related to voter registration. The timing of the indictment, five days before a close Senate election, drew criticism from Democrats.

Schlozman filed a clarification of his Congresional testimony, in which he had first stated that he was "directed" to pursue the timely prosecution of the voting group by superiors. In his later revision he took "full responsibility" for prosecutorial discretion:

"I want to be clear that, while I relied on the consultation with, and suggestions of, the Election Crimes Branch in bringing the indictments when I did, I take full responsibility for the decision to move forward with the prosecutions related to Acorn while I was the interim U.S. Attorney," he said in the clarification.

DOJ inspectors are hoping to complete the investigation in the coming weeks:

Separate investigations into the department's handling of the prosecutor firings and related issues, which are being conducted by the Justice Department's Office of Professional Responsibility and the Inspector General, are expected to be completed within the next few weeks, lawyers familiar with the probe said. Both want to abide by department guidelines aimed at clearing up politically sensitive investigations well before the elections, to avoid accusations they could influence the outcome.