DOJ Office Of The Inspector General

DOJ Report On U.S. Attorney Firings To Be Issued Monday

Zachary Roth | September 26, 2008, 4:07PM

The Department of Justice's Office of the Inspector General will on Monday morning release on its website its report into the firing of eight U.S. attorneys, according to David Iglesias, one of the former U.S. attorneys whose firing is at issue.

Iglesias told TPMmuckraker that he had been notified about the report's imminent release by Mark Masling, one of the investigators on the case. Iglesias said Masling told him that the report, which has been in the works since March 2007, is "very long" but wouldn't offer further details.

The probe, which centers on the firing of Iglesias and seven other U.S. attorneys, expanded to address allegations that a DOJ official, Monica Goodling, illegally took party affiliation into account in the hiring and firing federal prosecutors.

In July, Iglesias made some predictions about the reports conclusions, telling Harper's:

I expect them to conclude that there is sufficient evidence to show that former Attorney General Alberto Gonzales and former Deputy Attorney General Paul McNulty committed perjury in their statements before Congressional committees and investigators.

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Topics: DOJ Office Of The Inspector General, David Iglesias, U.S. Attorneys

Ted Stevens

Construction Workers On Stevens' House Say They Worked For VECO

Zachary Roth | September 26, 2008, 3:27PM

At the center of the case against Ted Stevens, the Alaska Republican senator whose trial opened this week, are renovations to his home that the prosecution alleges were paid for by the oil-services contractor VECO.

And today, four construction workers testified that when they worked on Stevens' home, they either worked for VECO or reported to its staffers.

On of the workers testified that Stevens' wife, Catherine, once brought them muffins. On Wednesday, Stevens' defense lawyer seemed to try to shift responsibility onto Catherine Stevens, by claiming that she was the driving force behind the renovations and handled the project's finances.

Stevens is charged with failing to report gifts, of a value of $250,000, on Senate financial disclosure forms.

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Topics: Alaska, Ted Stevens, Veco

Report: Gonzo Told Investigators That Bush Directed Him To Ashcroft's Hospital Bed

Zachary Roth | September 26, 2008, 2:00PM

Murray Waas reports on the website of the Atlantic that Alberto Gonzales is now telling investigators that he was being personally directed by President Bush when, as White House counsel, Gonzales made a much-discussed late-night visit in 2004 to the hospital room of then Attorney General John Ashcroft, in order to get Ashcroft to certify that the Bush administration's warrantless wiretapping program was legal.

During Congressional testimony last year, Gonzales repeatedly refused to answer persistent questioning from Sen. Chuck Schumer as to whether the president, or Vice President Cheney, had directed him to seek out Ashcroft in the hospital.

Cheney himself told CNN's Larry King shortly afterward: "I don't recall that I gave instructions to that effect."

It's an important question, because its answer would shed light on the extraordinary lengths to which the president was willing to go to see the wiretap program reauthorized. At the time of the hospital-room meeting, Ashcroft, in Waas's words, "had been in intensive care for six days, was heavily medicated, and was recovering from emergency surgery to remove his gall bladder."

Waas adds:

Deputy Attorney General James B. Comey has said that he believes that Gonzales and White House Chief of Staff Andrew Card, who accompanied Gonzales to Ashcroft's hospital room, were trying to take advantage of Ashcroft's grievously ill state--pressing him to sign the certification possibly without even comprehending what he was doing--and in the process authorize a government surveillance program which both Ashcroft and the Justice Department had concluded was of questionable legality.

Gonzales' claim has come to light as part of an investigation being conducted by the Inspector General for the Department of Justice into whether Gonzales lied to Congress. In a separate story posted today, Waas reports that DOJ investigators are also looking into whether Gonzales created a set of fictitious notes to provide a rationale for the president's reauthorization of the program.

Gonzales had claimed during his testimony that at a 2004 meeting just prior to the Ashcroft hospital visit, Congressional leaders had given their support to the program. Four of those leaders have since denied that. President Bush had cited Gonzales' notes of the Congressional meeting as a rationale for reauthorizing the program. But the notes weren't written until days after the meeting, and after Bush and Gonzales had officially reauthorized the program. Gonzales has told the investigators that Bush personally directed him to write the notes, though it is unclear when. Investigators believe that, depending on when they were written, the notes could be evidence of an effort to provide a post-hoc justification for the reauthorization of the program.

Update: Evidence of Bush's involvement in Gonzales visit to Ashcroft's hospital room was previously reported by Barton Gellman, who wrote in his recent book, Angler: The Cheney Vice Presidency: "The phone rang at Ashcroft's bedside. Bush told his ailing cabinet chief that Alberto Gonzales and Andy Card were on their way." It had not been known, however, that Gonzales has told DOJ investigators of Bush's involvement.

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McCain Aide's Husband Headed Trade Group Lobbying on Bailout

Zachary Roth | September 26, 2008, 12:53PM

It looks there's another John McCain adviser with a personal background that doesn't exactly jibe with the candidate's recent effort to portray himself as a populist crusader for ordinary folks.

Last week in Green Bay, McCain declared: "At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac."

Of course, as Barack Obama has pointed out, McCain's campaign is a virtual who's who of former lobbyists for Fannie and Freddie.

But another McCain adviser has close personal ties to one of the industries that, like Fannie and Freddie, spent too long assuring the public that the housing market was in good health, and thereby forestalling efforts that might have protected homeowners and staved off a crisis.

Nancy Pfotenhauer, a senior economic adviser to McCain, has been all over the airwaves in recent days touting McCain's decision to "suspend" his campaign over the bailout. But her husband, Kurt Pfotenhauer, worked until late last year as the top lobbyist for the Mortgage Bankers Association, a trade group that in recent years downplayed fears of a housing bubble, only to be proved spectacularly wrong.

When MBA released a report in 2005 on the state of the housing market, its chief economist told reporters: "There are risks but they're far less dramatic than the hyperbole of recent months." An MBA vice president added: "We're trying to dismiss the overheated rhetoric on bubbles." Part of the purpose of the ho-hum rhetoric, it would appear, was to discourage government regulators from looking more closely at the problems in the market, and ultimately taking action to protect homeowners. And many experts blame that regulatory inaction in the housing market for the current financial crisis now shaking the country.

Since January, Kurt Pfotenhauer, who did not immeduately respond to a detailed request for comment, has served as the CEO of the American Land Title Association, a trade association representing the title insurance industry. But during the current crisis, his old employer, MBA, has been at the center of lobbying efforts -- successful it appears -- to oppose a provision, sought by Democrats, that would allow bankruptcy judges to modify mortgages on primary residents. The lending industry has long fought such measures, arguing that it would force lenders to increase mortgage rates. In a statement issued yesterday, the MBA asserted that the provision "would throw into question the value of the collateral that backs every mortgage made in this country -- the home." According to one Democratic lobbyist, MBA's current top lobbyist, Francis Creighton, has lately been "living in the halls" of Congress in an effort to influence lawmakers on the bill.

Allies of Kurt Pfotenhauer have lately been willing to tout his ties to the McCain campaign, through his wife, to bolster his professional credentials. An advanced notice of a speech Kurt was to give last week to the Indiana Land Title Association (ITLA), an ALTA affiliate, published in an Indiana newspaper and seemingly written by the ITLA, noted that he would "provide a public policy update from the nation's capital, with an emphasis on the housing and mortgage finance crisis." It added: "His wife, Nancy, is a senior advisor and national spokesperson for presidential candidate John McCain."

Of course, there's no reason why Nancy Pfotenhauer's career should be limited by her husband's lobbying work. But at the very least, Kurt Pfotenhauer's recent role as an advocate for banking interests that discouraged regulators from paying closer attention to the problems in the housing market raises questions about the backgrounds of the advisers John McCain surrounds himself with -- especially in light of the recent populist turn of his campaign rhetoric.

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Alaska

Alaska AG Files Suit to Quash Subpoenas

Zachary Roth | September 26, 2008, 10:55AM

The national press may have mostly left Alaska, but the legal maneuvering over Trooper-Gate continues. Yesterday, Attorney General Talis Colberg filed suit to throw out the subpoenas issued to witnesses in the legislature's investigation.

Colberg, who was a little-known assemblyman and private-practice lawyer until Palin tapped him for the AG job, argued that the Senate Judiciary Committee lacks the authority to issue subpoenas. Since early September, the Palin camp has maintained that the state personnel board, whose members are appointed by the governor, is the only appropriate body to conduct an investigation -- though that claim would appear to hold little water.

The list of witnesses currently defying subpoenas includes Todd Palin, and several of the governor's key aides. Nonetheless, the legislators running the probe have said that independent investigator Steve Branchflower will wrap up his report by October 11 and release a report soon after.

In response to Colberg's move, Sen. Hollis French, the Democrat overseeing the legislature's probe, told the Anchorage Daily News: "For over 200 years, legislatures have exercised their right to oversee the activities of the executive branch. Denying us that authority undermines the basic democratic process."

A separate lawsuit filed by five Alaska legislators aims to stop the investigation, which was initiated by a 12-0 bipartisan vote, entirely.

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Topics: Alaska, Sarah Palin, Todd Palin, Trooper-Gate

Bailout

Davis Still an Officer at Lobbying Firm, Docs Show

Zachary Roth | September 25, 2008, 11:15AM

We knew we hadn't seen the last news report on McCain campaign manager Rick Davis' ongoing ties to the lobby firm he founded, Davis Manafort.

Newsweek has taken a look at annual filings made by the company to the Virginia state government. Those filings, the most recent of which is from April of this year, list Davis as one of two officers and directors of the firm.

As the magazine notes, that information suggests that in recent days, the campaign "appear[s] to have overstated the extent to which Davis had severed his relationship with his lobbying firm." A statement posted on the McCain campaign website by a spokesman Wednesday morning -- in response to reports that Davis's firm was being paid by the home-loan giant Freddie Mac as recently as this month -- asserted that Davis "separated from his consulting firm, Davis Manafort, in 2006." And a campaign spokeswoman wrote in an email to Newsweek Tuesday that Davis "left" the firm that year.

Of course, the fact that someone is listed as an officer on a corporate filing doesn't prove that he was involved in the day-to-day running of the company during the period in question. But Newsweek's find will certainly keep the heat on Davis, who yesterday skipped lunch with reporters, at a time when McCain would prefer the focus to be on his own efforts, belated and vainglorious as they may be, to help avoid a financial meltdown.

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Topics: Bailout, John McCain, Rick Davis

Nancy Pelosi

House Dems' Bailout Plan

Zachary Roth | September 24, 2008, 5:21PM

A source just sent us a copy of the working draft of the bailout plan circulating, as of about two hours ago, in the House.*

Based on our quick look, it includes a strong provision for congressional oversight, limits executive pay, and would allow bankruptcy judges to adjust mortgages in order to help homeowners, among other items. In other words, the major Democratic priorities.

Things have been changing so quickly on the Hill -- even before McCain's dramatic announcement -- that there's no telling what's occurred in the intervening period.

The source, who's a well-connected Democratic lobbyist, added in an email to TPMmuckraker that "the deal on the "bail out" is 98 percent done. Treasury has capitulated on almost every point. A draft is circulating on the Hill now. No one needs McCain to help do the remaining 2 percent."

Late Update: As we should have mentioned earlier, the draft plan also contains a provision designed to "maximiz[e] taxpayer benefits" by requiring that the Treasury "obtain warrants" (i.e. stock futures) if it makes a direct purchase of a company. That's intended to ensure that taxpayers get a share of any future profits, and it's another element Democrats have been insisting on.

*Ed. Note: A well-placed Hill source subsequently tells us that this version has actually been circulating for a couple of days, and that while it's still mostly operative, it is not the latest iteration of the alternative to the Bush plan.

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Topics: Bailout, John McCain, Nancy Pelosi

John McCain

Questions Linger on McCain Campaign Manager Tied To Freddie Mac

Zachary Roth | September 24, 2008, 5:10PM

Last night, The New York Times -- followed by a slew of other outlets -- reported that the lobbying firm of Rick Davis, John McCain's campaign manager, has been collecting $15,000 from mortgage giant Freddie Mac. On Monday, The Times had reported that Davis had been paid to run Freddie Mac's advocacy group, the Homeowner's Alliance, until 2005.

But there's a set of questions that still remain unanswered.

The McCain campaign told the Times that Davis had stopped taking a salary from the firm, Davis-Manafort, by the end of 2006. (Davis took a leave of absence from the firm to work on the campaign.) But the Times points out that, as an equity holder, Davis continues to benefit from his firm's income.

But it's unclear exactly what the Times means by that.

Let's stipulate, first of all, that since Davis is an equity holder, he has a long-term interest in Davis-Manafort's success. The McCain camp hasn't disputed that.

But could Davis be benefiting in a more direct sense?

For instance, could Davis' agreement with Davis-Manafort allow for his share of profits to simply be deferred until he rejoins the firm? Nothing that the McCain camp has said on the subject -- including this lengthy response to the Times story from the campaign's in-house blogger -- has ruled that possibility out.

We also know that in 2007, the McCain campaign did not have Davis on the payroll, and was paying Davis Manafort for "consulting" services. Did none of that money make its way back to Davis?

It's also worth noting that the McCain camp hasn't offered any backing for its claim that Davis did indeed stop getting paid by his firm in 2006. The campaign declined a request from TPMmuckraker to provide such backing.

The bottom line is that none of the reports have fully fleshed out Davis' relationship worth Davis Manafort, and how his compensation agreement actually works.

Seems like that might be worth looking into.

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Topics: John McCain, Rick Davis

John McCain

McCain Camp Won't Talk About Ersatz Trooper-Gate Probe

Zachary Roth | September 24, 2008, 1:16PM

The McCain-Palin campaign is now refusing to answer questions about the one Trooper-Gate investigation they're cooperating with.

That's the investigation, of course, that's being conducted by the state personnel board, whose members are appointed by the governor.

Referring to the state's investigator, Timothy Petumenos, campaign spokeswoman Meg Stapleton told reporters Tuesday: "He has asked to keep things confidential, so we will respect those wishes."

The McCain-Palin camp's tight-lipped approach stands in contrast to its willingness to talk freely about the state legislature's independent investigation, which the campaign has refused to cooperate with.

In recent weeks, the campaign has sent a team of lawyers and PR pros to Alaska to badmouth the probe as politically motivated -- despite a bipartisan 12-0 vote to launch the investigation. McCain aides, including Stapleton, have publicly questioned the impartiality of Hollis French and Kim Elton, the Democratic legislators overseeing the investigation, as well independent investigator Steve Branchflower. They have disparaged the record of Walt Monegan, the veteran and widely respected former public safety commissioner whose firing is at the heart of the case. And they have argued that the legislature lacks jurisdiction to pursue the matter -- an argument that appears to have little legal standing.

It's also worth noting that CNN has been taken in a bit by the McCain camp's spin. The headline and lead two paragraphs of the CNN story fail to make clear that the investigation in question is the state probe -- which likely won't be completed until after the election, and is being overseen by state employees ultimately answerable to the governor -- rather than the independent investigation being conducted by the legislature. A CNN story from Monday fell into a similar trap.

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Topics: Alaska, John McCain, Sarah Palin, Trooper-Gate

Alaska

AK Lawmakers Fire Back on GOP Bid To Shut Down Trooper-Gate Probe

Zachary Roth | September 23, 2008, 4:52PM

The Alaska lawmakers overseeing the Sarah Palin Trooper-Gate investigation have hit back at the GOP-led effort to shut down the probe.

Last week, Republican legislators filed suit to halt the investigation, arguing that it had been inappropriately politicized by Democratic senators Hollis French and Kim Elton. This afternoon, Peter Maassen, an attorney representing French and Elton, as well as independent investigator Steven Branchflower, announced in a press release that he will be asking a judge to throw out that lawsuit.

The press release points out that the investigation was launched in July after a 12-0 bipartisan vote of the legislative council. And it asserts that the original GOP complaints "suggest that Alaska legislators with open political views should be prohibited from participating in any legislative function that might -- might -- reflect badly on Governor Palin."

The release refers to "powerful and increasingly heavy-handed national interests" as being opposed to the investigation's continuance.

And in a bid to fight back against Republican efforts to remove French from his position overseeing the probe, the release adds: "The legislature is allowed to decide for itself what it will investigate, who it will employ as investigator, and which of its members will oversee the investigation."

Maassen is with the Anchorage-based firm Ingaldson, Maassen & Fitzgerald.

It appears all but certain that the investigaiton will go forward, and that Branchflower will release a report on or aorund October 11th, as scheduled. However, it's unclear how comprehensive the report will be, thanks to efforts by the McCain-Palin campaign to ensure that Branchflower won't be hearing directly from several key witnesses, including Sarah and Todd Palin.

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Topics: Alaska, John McCain, Sarah Palin, Trooper-Gate

Bailout

Conservative GOPers Release Alternative Plan on Financial Crisis

Zachary Roth | September 23, 2008, 4:22PM

The Republican Study Committee (RSC), a faction of small-government House conservatives led by Rep. Jeb Hensarling of Texas, has released an alternative plan for dealing with the Wall Street crisis, in opposition to the $700 billion bailout being proposed by the Treasury Department.

The stripped-down plan advocates a two-year suspension of the capital gains tax and calls for pull privatization of Fannie Mae and Freddie Mac, which were taken over by the federal government earlier this month.

The RSC's opposition to the bailout -- coupled with concern among progressive Democrats that the measure doesn't do enough to help homeowners -- could complicate efforts by House leaders to quickly pass legislation.

According to The Hill, the RSC argues that the bailout plan "fundamentally alters the nation's free-market system in that it broadly socializes firms' money-losing mortgage assets and places the U.S. on a slippery slope whereby profits will also be nationalized."

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Topics: Bailout

Nancy Pelosi

Source: Pelosi Focusing Bailout Plan on Exec. Pay, Bankruptcy

Zachary Roth | September 22, 2008, 6:15PM

According to a senior House staffer, Speaker Nancy Pelosi is likely to insist that any Wall Street bailout bill contain two specific items from the Democrats' wish-list: limits on executive compensation, and a measure to protect homeowners by allowing mortgages to be renegotiated in bankruptcy proceedings.

Things may not go smoothly on those fronts, however. House Republicans have signaled their firm opposition to executive pay limits. And the Blue Dogs, a faction of fiscally conservative Democrats, may be "uncomfortable" with changing bankruptcy laws, said the staffer.

There are a number of Democratic proposals circulating right now aiming to attach strings to the Treasury Department's $700 billion Wall Street package.

In the Senate, the draft legislation being offered by Banking Committee chair Chris Dodd appears, which would give the federal government an equity stake when it helps banks with debt, (and which Paul Krugman describes as "a big step in the right direction) appears to be the most prominent.

But in the House, things are a bit more chaotic. Rep. Barney Frank, who chairs the Financial Services committee, has circulated his own proposal, which is slightly closer to the Treasury Department's own, though, like Dodd's, it aims to limit executive pay.

Rep. Brad Sherman this afternoon released to TPMmuckraker an outline of his own plan, which goes further than either Dodd's or Frank's.

And an unlikely coalition of conservative deficit hawks and liberal populists may be taking shape to oppose any bailout at all.

Pelosi's office did not immediately respond to a request for further information.

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Topics: Bailout, Nancy Pelosi

New Democratic Bailout Proposal

Zachary Roth | September 22, 2008, 4:26PM

There are various plans being circulated right now by Hill Democrats, laying out alternative frameworks for a Wall Street bailout.

We just obtained one from Rep. Brad Sherman (D-CA), a member of the House Financial Services Committee. According to Sherman's press secretary, the congressman just presented this proposal at a meeting with other members.

Sherman's plan covers all of the major points that Democrats have been insisting on -- strong Congressional oversight of any agreement, limits on executive pay, protection for homeowners. It also adds some more provisions, including an economic stimulus, and a measure to make it easier and quicker for Congress to enact future corporate governance reform.

This morning, Rep. Sherman told The Hill, referring to the Bush administration's bailout proposal: "This is a bill for Wall Street, not a bill for Main Street."

He added: "Wall Street and the administration are going all out to tell constituents, 'Make your congressman vote for our bill, or your 401(k) [retirement plan] is toast.' "

Sherman's complete proposal follows after the jump...

Read more »

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Alaska

Trooper-Gate: For Now, GOP Mission Accomplished

Zachary Roth | September 22, 2008, 11:22AM

As the flurry of news breaks over the Trooper-Gate investigation slows, at least for the time being, it's worth making a point that may have gotten lost in the shuffle:

The McCain-Palin camp appears to have been successful in its all-out effort to stifle the probe at any cost.

By preventing Steve Branchflower, the independent investigator in the case, from speaking with many of the key witnesses -- including Sarah and Todd Palin, and several of the governor's top aides -- the McCain campaign has severely limited the amount of information the investigation will have access to.

In the view of the Associated Press: "Although the Legislature's investigator still plans to issue a report in October, the probe is effectively killed until January, when Sarah Palin will either be vice president or return to the governor's mansion in Juneau."

That assessment may turn out to go too far. Branchflower has succeeded in questioning several of the witnesses, including Walt Monegan, the former public safety commissioner whose firing is at the center of the case, and John Bitney, formerly a top Palin aide. Branchflower also has access to the cell phone records of Frank Bailey, the Palin aide who earlier this year was recorded pressuring a trooper official about Mike Wooten. So it's possible that his report, even lacking input from crucial players, may yet prove damaging.

Palin may also pay a political price for her abrupt shift from pledging co-operation to out-and-out stonewalling. Over the weekend, the LA Times reported that Palin's "political capital at home is eroding," as a result of the hardball tactics used to stop the probe -- a subject we got into on Friday. If nothing else, her stonewalling -- along with the slew of reports about Palin's checkered record on seeking federal earmarks -- has significantly complicated the McCain-Palin campaign's effort to present her as a reformer who will help bring a more accountable form of government to Washington.

Still, it's hard not to conclude, at least for now, that the McCain camp has used its muscle to significantly limit the damage that Trooper-Gate could do to Palin. Which doesn't exactly bode well when it comes to the approach a McCain White House might take on issues of openness and transparency.

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Topics: Alaska, John McCain, Sarah Palin, Todd Palin, Trooper-Gate