Barack Obama

Buying Obama Time, Congress Delays Rove Subpoena Deadline

Zachary Roth | January 30, 2009, 5:48PM

Justice delayed?

The House Judiciary committee has agreed to a request from Karl Rove's lawyer, Robert Luskin, to postpone the deadline by which Rove must respond to a subpoena issued by the committee.

Here's the letter sent by the committee, agreeing to Luskin's request and setting a new date of February 23 for Rove's testimony.

The hold-off serves the interests of the White House. The Obama administration is scheduled to file a brief on February 18 in the ongoing court case over the House's subpoena of two other senior Bush White House aides, Harriet Miers and Josh Bolten. At that time, it will likely indicate whether it intends to back President Bush's claim of retroactive executive privilege on behalf of his aides. So the committee's decision to agree to Luskin's request means the Obama administration has until then to formulate its position.

The ball, then, is still in Obama's court. And court is still exactly where the battle over Rove's testimony is most likely headed.

Todd Boulanger

Boulanger Pleads Guilty

Zachary Roth | January 30, 2009, 5:13PM

Goodbye Savile Row, hello orange jumpsuit.

Todd Boulanger, the fashion-forward former lobbyist and Jack Abramoff crony who was indicted earlier this week for bribing government aides, has pleaded guilty, reports the Associated Press.

Boulanger has been cooperating with the investigation, according to his lawyer. Under the terms of his plea deal, prosecutors are recommending that he spend 18-24 months in prison, with reduced time if he continues to cooperate.

Boulanger was an aide to Sen. Bob Smith, a New Hampshire GOPer, before working with Abramoff as a lobbyist.

Court documents suggested that Boulanger and other members of Team Abramoff had schemed to provide a staffer to Mississippi senator Thad Cochran with tickets for concerts, ice skating, and other events.

Separate court records suggested that Boulanger also helped arrange a an all-expenses-paid trip to the 2003 World Series for Trevor Blackann, a former aide to Missouri senator Kit Bond. In November, Blackann pleaded guilty to making false statements on his tax returns in an effort to conceal the gift.

Blackwater

State To Blackwater: It's Over Between Us (At Least In Iraq)

Zachary Roth | January 30, 2009, 3:36PM

Et tu, State Department?

Earlier this week, we told you that the Iraqi government had decided not to renew Blackwater's contract to operate in Iraq, thanks to a 2007 incident in which Blackwater guards opened fire in a Baghdad square, killing 17 Iraqis, among several other cases of excessive force. Five ex-Blackwater guards were charged with voluntary manslaughter and are awaiting trial in connection with the 2007 incident.

Now, the State Department, which depended on Blackwater as its biggest contractor providing security to US diplomats in Iraq, has followed suit, according to the Associated Press, declining to renew the controversial company's contract to protect department personnel in Iraq when it expires in May.

The decision was a result of the Iraqi government's move, according to a department official.

In the AP's words, the state Department is "still considering its options" as to how to proceed.

Barack Obama

Clinton Lawyer On Bush's Exec Privilege Claim: "There's Only One President At A Time"

Zachary Roth | January 30, 2009, 3:16PM

So does that letter Newsweek obtained, sent January 16 by the Bush White House to Karl Rove's lawyer, instructing Rove not to respond to any subpoenas that might be issued, change the state of play as to whether Rove will end up testifying on the US Attorneys firings? After all, President Bush is now on the record claiming the right to assert executive privilege even after leaving office.

Not according to Neil Eggleston, who specialized in executive privilege issues for President Clinton's White House. Eggleston told TPMmuckraker that, since President Obama has already issued an executive order that appears to take the view that a former president can't assert executive privilege, he's unlikely to back Bush's claim. And assuming things then wind up in court, Eggleston said he'd be very surprised if a court sided with Bush, ruling that executive privilege can be asserted retroactively.

"Remember what Obama kept saying during the transition: 'There's only one president at a time?'" asked Eggleston. "This is one where I think a court's going to decide there's only one president at a time."

Eggleston told TPMmuckraker last week that Obama's order seemed designed to help gain access to Bush White House documents and testimony that Congress has been seeking, including on the US Attorney firings matter.

Chris Dodd

Cuomo's Office Looking At Several Fixes For Merrill Bonuses

Zachary Roth | January 30, 2009, 2:06PM

As we told you earlier today, Bloomberg reported last night:

New York Attorney General Andrew Cuomo may demand the return of $4 billion in bonuses paid by Merrill Lynch & Co. just before it was acquired by Bank of America Corp.

But it turns out that may overstate the case a bit. A person familiar with the matter told TPMmuckraker that the investigation is considering several other possible remedies, including imposing fines and alleging violations of securities law -- as the Wall Street Journal reported yesterday.

The probe of Merill is still at an early stage. Depositions haven't yet been taken from former Merrill CEO John Thain, and Bank of America chief administrative officer J. Steele Alphin, both of whom have been subpoenaed to give investigators details on just when Bank of America learned about the bonuses, and about Merrill's massive fourth quarter losses.

If Cuomo doesn't try to get the money back, Congress might. Chris Dodd, who chairs the Senate Banking committee, declared at a press conference yesterday:

I'm going to be urging -- in fact not urging, demanding -- that the Treasury Department figures out some way to get the money back.

Bailout

Another Government Report Finds Treasury Is Screwing Up TARP

Zachary Roth | January 30, 2009, 12:08PM

Another day, another earnest report finding that the Treasury has messed up the bailout.

A new GAO report on issues of "transparency and accountability" in the TARP program finds that Treasury lacks "a clearly articulated vision" for TARP and "has made limited progress in ... communicating an overall strategy" for it.

From a summary of findings:

Treasury has continued to develop a system for detecting noncompliance with key requirements of the program but has not yet finalized its plans. Further, Treasury has made limited progress in formatting articulating and communicating an overall strategy for TARP, continuing to respond to institution- and industry-specific needs by, for example, making further capital purchases and offering loans to the automobile industry. In addition, it has not yet developed a strategic approach to explain how its various programs work together to fulfill TARP's purposes or how it will use the remaining TARP funds. While GAO does not question the need for swift responses in the current economic environment, the lack of a clearly articulated vision has complicated Treasury's ability to effectively communicate to Congress, the financial markets, and the public on the benefits of TARP and has limited its ability to identify personnel needs.

So it's not like we didn't know any of this. But it's worth being reminded, as often as possible, just what a mess of this program the federal government has made so far.

Barack Obama

UPDATED: Report: Cuomo May Demand Return Of Merrill Bonuses

Zachary Roth | January 30, 2009, 11:44AM

Bloomberg has a few more details about the developing investigation, conducted by New York Attorney General Andrew Cuomo, into the bonuses awarded last month by Merrill Lynch.

It reports, sourced to "a person familiar with the matter," that Cuomo may demand the return of the bonuses -- estimated at as much as $4 billion, and apparently awarded on an accelerated schedule just before the firm came under the control of Bank of America at the start of 2009.

Bloomberg adds that Cuomo is also probing what Bank of America Chief Executive Officer Ken Lewis knew about the bonuses, and about Merrill's huge losses in the fourth quarter, which appear to have ben revealed B of A around the time the bonuses were awarded.

More broadly, Bloomberg reports, the investigation is focused on "whether the companies' shareholders had all necessary information about Merrill's finances and whether federal bail-out loans to Bank of America were used properly."

John Thain, Merrill's former CEO, was ousted as a Bank of America exec shortly after news of the bonuses, and the losses, became public. According to reports, Cuomo has already subponaed Thain.

President Obama yesterday called Wall Street's awarding of billions of dollars in bonuses "outrageous." Congress is considering adding "claw back" provisions to the next round of bailout money, which would allow the Treasury to get back money it invested in banks that was then spent in ways that departed from the purpose of the government's investment.

We've got our own contact in to Cuomo's office, and will let you know what else we find out...

Late Update: Looks like Bloomberg's report may have overstated the case a bit.

Barack Obama

Newsweek Obtains Letter From Bush Lawyer, Asserting Retroactive Privilege

Zachary Roth | January 30, 2009, 9:52AM

Newsweek's Michael Isikoff has obtained the letter sent by White House counsel Fred Fielding to Karl Rove's lawyer Robert Luskin, just a few days before Bush left office, instructing Luskin that Rove "should not appear before Congress" in response to any subpoenas issued. The letter makes clear that Bush is continuing to assert a retrospective executive privilege over his White House years.

The Wall Street Journal had reported the existence of the letter -- which makes clear the lengths to wish the former president is wiling to go to keep a lid on what happened inside his White House -- earlier this week.

Earlier this week, the House Judiciary Committee issued a subpoena to Rove, ordering him to testify February 2 about the US Attorney firings, and the prosecution of ex Alabama governor Don Siegelman. Luskin told us he had forwarded the subpoena to the Obama White House, which must decide whether to back Bush's claim of retroactive privilege. If it doesn't, but Bush continues to assert it -- which it would appear from the letter he will -- the matter looks headed for the courts. There is no settled legal precedent to guide how a court might rule.

The Obama White House told Newsweek it's still studying the issue.

Fielding also sent a near identical letter to former White House counsel Harriet Miers, instructing her not to appear for a scheduled deposition in front of the Judiciary committee. The issue of whether Miers and another Bush White House aide, Josh Bolten, can testify is currently the subject of a court fight between the committee and the Bush White House.

The Obama White House is scheduled to file a brief in that case by February 18, in which it may make clear whether or not it intends to back Bush's executive privilege claim.

Interior Department

Interior To Take Another Look At Griles-Abramoff Ties?

Zachary Roth | January 29, 2009, 6:19PM

We noted earlier today that the new Interior Secretary, Ken Salazar, yesterday said he wanted to re-open investigations into ethical lapses at the department under Bush. And he specifically mentioned, among other scandals, the Steven Griles affair, in which the department's number two official was convicted in connection to his ties to super-lobbyist Jack Abramoff, becoming the highest-ranking administration official sentenced in the sprawling Abramoff probe.

So it's worth doing a quick refresher on what happened there.

In a nutshell, as we put it in 2007 before Griles was sentenced, he served for years as Abramoff's man at Interior. He provided the lobbyist with information that was useful to his tribal clients -- in return getting favors not for himself, but for his stable of girlfriends.

Abramoff gave $500,000 to a conservative group run by one of them, Italia Federici, a former aide to Interior Secretary Gail Norton. It was through Federici that Abramoff first gained access to Griles. Abramoff also interviewed two other Griles gal-pals for possible jobs. And Griles lied about all this to a Senate committee.

In 2007, Griles pleaded guilty to obstruction of justice and was sentenced to 10 months in prison.

Given the evidence against Griles and Federici, there was speculation that former Norton, who was cozy throughout her career with mining, logging and drilling interests, might also be of interest to investigators. (Abramoff once described Federici's group as "my access to Norton"). So if the Griles affair is indeed re-investigated, it'll certainly be worth watching where things lead.

We've put in a call to the department to get more specifics on what exactly Salazar might want to look at, and will let you know what we find out...

Blackwater

Iraq Won't Renew Blackwater License

Zachary Roth | January 29, 2009, 3:56PM

Are Blackwater's days in Iraq numbered?

The Iraqi government has said it won't be issuing a new operating license for the contractor, which is the prime security company for the US Embassy in the country.

It's hard to blame the Iraqis. Blackwater has several times been accused of using excessive force. In 2007, its guards opened fire in a crowded street, killing 17 civilians. The guards were charged with voluntary manslaughter and are awaiting trial.

According to Iraqi officials, it was this incident that prompted them not to renew the license, reports the Washington Post.

There's a bit of a catch though. The Post adds:

Blackwater employees who have not been accused of improper conduct will be allowed to continue working as private security contractors in Iraq if they switch employers, Iraqi officials said Wednesday.

And according to Wired magazine, that's exactly what could easily happen. It reports:

The State Department has a contract for "Worldwide Personal Protective Services" with three firms: Blackwater, DynCorp, and Triple Canopy. If Blackwater is no longer allowed to operate in Iraq, a lawyer steeped in the field tells Danger Room, there's no legal reason why the other two firms can't scoop up Blackwater's employees. "State simply issues a new task order to DynCorp or Triple Canopy, who turn around and hire some or all of Blackwater's employees," he says.

So we may ultimately find out whether the string of violent acts we've seen from Blackwater guards were the result of the company's culture itself -- or the types of personnel they hired.

Barack Obama

Military Judge Rejects Obama's Request For Delay Of Gitmo Proceeding

Zachary Roth | January 29, 2009, 2:38PM

Last week, in one of its first moves, the Obama administration told its military prosecutors to ask for delays in the proceedings of 21 Guantanamo detainees who have been charged, so that their cases, and the military commissions process as a whole, could be reviewed.

Most military judges have complied with that request. But one judge, Army Colonel James Pohl, has now declined to do so, saying he found the government's reasoning "unpersuasive," reports the Washington Post.

Pohl wrote:

The Commission is unaware of how conducting an arraignment would preclude any option by the administration. Congress passed the military commissions act, which remains in effect. The Commission is bound by the law as it currently exists, not as it may change in the future.

Pohl is presiding over the case of Abd al Rahim al-Nashiri, a Saudi citizen of Yemeni descent accused of planning the October 2000 Al Qaeda attack on the USS Cole warship, which killed 17 service members.

The Pentagon may now be forced to withdraw the charges against Nashiri if it wants to impose the broader delay. It could bring them up again, but that would bring the case back to square one, costing the government time.

But the wider impact of Pohl's opinion isn't yet clear. It may be limited to this specific case, but it could also potentially throw a wrench into the new administration's plan to put the process on hold pending a review, and even complicate Obama's plan to close Guantanamo.

We'll keep you posted as things become clearer.

Late Update: The ACLU has called on Defense Secretary Robert Gates to withdraw the charges against Nashiri so that the charges can be tried in a legitimate court. In a statement, the group's executive director, Anthony Romero, said:

Judge Pohl's decision to unabashedly move forward in the al-Nashiri military commission case shows how officials held over from the Bush administration are exploiting ambiguities in President Obama's executive order as a strategy to undercut the president's unequivocal promise to shut down Guantánamo and end the military commissions. Judge Pohl's decision to move forward despite a clear statement from the president also raises questions about Secretary of Defense Gates - is he the 'new Gates' or is he the same old Gates under a new president? Secretary Gates has the power to stop the military commissions and ought to follow his new boss' directives.

Later Update: But the commander of the USS Cole, Kirk Lippold, who is now affiliated with Military Families United, a group that bills itself as a "the nation's premier military family advocacy organization", takes the opposite view. Lippold said in a statement:

Today's decision is a victory for the 17 families of the sailors who lost their lives on the USS Cole over eight years ago. This trial is a long overdue step toward accountability and justice for the attacks on the USS Cole. The seventeen American sailors who lost their lives on October 12, 2000, when we came under suicide terrorist attack by al Qaeda, were not just sailors. They were sons and daughters, husbands and wives, and friends to so many. The sacrifice of these sailors and all of our brave military service members who have died to protect this country and apprehend terrorists is a key reason why we should not close the detention facility at Guantanamo Bay precipitously.

By President Obama signing the executive order to close Guantanamo Bay within a year, he is not considering or addressing the impact on the families who have paid so dearly to defend our freedom.

Bailout

UPDATED: Obama: Wall Street Bonuses "Outrageous"

Zachary Roth | January 29, 2009, 2:35PM

President Obama has weighed in on the controversy over Wall Street bonuses.

Obama this morning called the bonuses "outrageous", according to White House Robert Gibbs, speaking at a press briefing moments ago.

A report released by the New York State comptroller's office and written up today by the New York Times found that Wall Street firms awarded over $18 billion in bonuses, despite the financial crisis that many of them helped trigger.

Yestrday, it was reported that AIG paid $450 million in bonuses to the unit that sold those disastrous credit default swaps.

And of course, New York Attorney General Andrew Cuomo is investigating Merrill Lynch's awarding of billions in bonuses, on an accelerated schedule, before it went formally went under the control of Bank of America.

Late Update: Obama went further in comments to reporters today after meeting with Treasury Secretary Tim Geithner. The presIdent said that awarding billions in bonuses "at a time when most of these institutions are teetering on the brink of collapse and they are asking for taxpayers to sustain them" is "the height of irresponsibility" and "shameful."

He added: "Show some restraint, and show some discipline, and show some sense of responsibility."

Interior Department

Interior Officials Could Still Face Prosecution For Ethical Misconduct

Zachary Roth | January 29, 2009, 1:08PM

The list of Bush administration officials who could now face prosecution for their misdeeds over the last eight years doesn't only include those who authorized harsh tactics in the War on Terror.

Yesterday, Ken Salazar, the Interior Secretary, said at a White House briefing that he planned to reopen probes into a web of ethical misconduct at the department's Minerals Management Service, which included employees accepting gifts from, and having sex with, representatives of the oil and gas companies they were supposed to be regulating.

Reports by the department's Inspector General recommended that two MMS managers implicated in the scandal be prosecuted. But the Bush Justice Department declined to bring charges, a decision that the IG, Earl Devaney, publicly criticized, telling a congressional committee last September: ''I would have liked a more aggressive approach, and I would have liked to have seen some other people prosecuted here.''

Devaney also complained during his testimony that his report had been incomplete because Chevron -- one of the companies charged with giving gifts to the staffers -- had hired lawyers for six employees implicated in the scandal who later refused to cooperate with the IG' investigation.

One of those who escaped prosecution was Greg Smith, who ran the Denver office of MMS's Royalty in Kind (RIK) program, in which the government forgoes royalties and takes a share of the oil and gas for resale instead. Smith was accused in the reports -- including one special report focused on him -- of coercing two subordinates into sex, doing cocaine with a subordinate, suggesting to other employees that they should lie to investigators, and taking $30,000 from a private company for marketing its services to oil and gas companies.

One employee told investigators that "Smith directed her to purchase cocaine for him during normal MMS business hours, and Smith used the term "office supplies" when discussing cocaine while at work."

Here's another good excerpt:

The RIK employee recalled that on one occasion in late 2004, Smith telephoned her repeatedly asking for drugs. She said she provided cocaine to him early that evening, but he continued to call her. Eventually, she said, Smith traveled to her house and wanted her to have sex with him. She said he also asked her if she had more cocaine, and she stated that she did not but that someone who was staying with her might. She said Smith obtained crystal methamphetamine from one of these individuals and she watched him snort it off the toaster oven in her kitchen. The RIK employee also said she and Smith engaged in oral sex that evening.

The other official who Devaney recommended prosecuting is accused of less tabloid friendly -- but equally serious -- misdeeds.

Lucy Dennet, a top official of the Minerals Revenue Management office in Washington DC, is accused of helping another MMS employee, Jimmy Mayberry, to create a lucrative MMS contract that benefited him after he left MMS. Mayberry and another former MMS employee, Milton Dial, have already pleaded guilty to creating the deal. Mayberry faces up to five years in prison.

One of the IG reports found:

In the matter involving Ms. Dennet, Mr. Mayberry and Milton Dial, the results of this investigation paint a disturbing picture of three Senior Executives who were good friends, and who remained calculatedly ignorant of the rules governing post-employment restrictions, conflicts of interest and Federal Acquisition Regulations to ensure that two lucrative MMS contracts would be awarded to the company created by Mr. Mayberry - Federal Business Solutions - and later joined by Mr. Dial. Ms. Dennet manipulated the contracting process from the start. She worked directly with the contracting officer, personally participated on the evaluation team for both contracts, asked for an increase to the first contract amount, and had Mayberry prepare the justification for the contract increase. Ms. Dennet also appears to have shared with Mr. Mayberry the Key Qualification criteria upon which bidders would be judged, two weeks before bid proposals on the first contract were due.

So it looks like Smith and Dennet may not be out of the woods yet.

Salazar also suggested that he'd re-open the investigation into the activities of Steven Griles, the former Deputy Interior Secretary who was convicted of obstructing justice in connection with the Jack Abramoff investigation. More on that to come...

Todd Boulanger

Boulanger: "I Work To Support My Wife's Christian Louboutin Addiction"

Zachary Roth | January 29, 2009, 10:16AM

You may not have known this, but before former Team Abramoff lobbyist Todd Boulanger got indicted for bribing government aides, he was something of a fashion icon -- at least for the staid city he lived in.

In October 2006, he appeared in Washingtonian magazine's "Men with Style" package. Some gems:

How would you describe your style? Savile Row meets Thrasher magazine.

Favorite labels? Duncan Quinn, Paul Smith, Theory, John Varvatos, and Ralph Lauren. But nothing beats a custom suit.

Biggest splurge? It probably wasn't for me--I work to support my wife's Christian Louboutin addiction.

There are a lot of places we could go here, snark-wise. Better to leave it, maybe.

Still, given Boulanger's apparent love of fine fashion, we couldn't help noticing the fact that, during his once-thriving career as a Republican talking-head on cable TV, he once opined: "Barack Obama is a total diva."

It's in this Daily Show segment (Boulanger appears at the 3:15 mark), which fingers Boulanger as one of the many no-name political pundits who appear above fancy-sounding but meaningless titles like "GOP strategist."

Jack Abramoff

Another Member of Team Abramoff Charged

Zachary Roth | January 29, 2009, 9:09AM

At last, the bell has tolled for Todd Boulanger.

In November, he quit his job as a lobbyist at Cassidy and Associates, amid the growing likelihood that he'd be charged in Jack Abramoff's corruption scheme.

And now he has been.

The Associated Press reports:

The government says Todd Boulanger gave government aides "a stream of things of value," including all-expense-paid travel, tickets to professional sports and concerts and nights out at expensive restaurants, to reward and influence actions that would benefit his clients. He was charged with conspiracy to commit wire fraud.

One of those aides, it appears, was Trevor Blackann, a former staffer for Missouri Republicans Roy Blunt and Kit Bond, who pleaded guilty last fall to having accepted an all-expenses paid trip to the 2003 World Series -- including limousine service and a visit to a strip club -- arranged by Boulanger and another member of Team Abramoff, James Hirni.

But the Associated Press has identified another of the aides who accepted gifts from Boulanger: Ann Copland, a former staffer for Sen. Thad Cochran, the Mississippi Republican.

According to the documents, in 2002 Kevin Ring, another Abramoff crony who was charged last September, forwarded to Abramoff and Hirni an email from "Staffer E" (identified by AP as Copland), above which Ring wrote: "Wow ... We already told her she was fine on McCartney, ice skating and Green Day -- although we need to let her know how many tix she can have for each. Also, please review the other requests and let me know what we can do there."

Copland was hired by Mississippi Public Broadcasting in May 2008 as deputy executive director for education.

Before working with Abramoff, Boulanager was an aide to former Republican senator Bob Smith of New Hampshire.

It looks like Boulanger will plead guilty. The AP notes:

The charge was outlined in a federal court document known as an information -- a document normally filed as part of a plea deal.

So it's possible we could we see yet more charges filed in this long-running saga...

Late Update: Boulanger says he is cooperating with the investigation. His lawyer sent the following statement to AP:

Mr. Boulanger regrets this situation and is accepting responsibility for certain past conduct.

The circumstances underlying this situation arose more than five years ago, when Todd was employed by the law firm of Greenberg Traurig as a young lobbyist working under Jack Abramoff. Mr. Boulanger is cooperating with the Department of Justice in its investigation and looks forward to its complete and swift resolution.

Interior Department

Salazar Could Reopen Interior Probes

Zachary Roth | January 28, 2009, 3:16PM

Change may be coming to one of the departments of the federal government that was most damaged under the Bush administration.

Ken Salazar, the new Interior Secretary, said at a White House briefing this afternoon that he would undertake a top-to-bottom review of ethical misconduct at his agency, reports the Associated Press.

Salazar cited several of the department's lowest moments during the Bush years, and said that probes closed by the Bush administration could be reopened.

As we've noted at TPMmuckraker, Interior employees were found to have partied and had sex with employes from oil and gas companies they were supposed to be regulating. And Deputy Interior Secretary Steven Griles pleaded guilty to corruption in connection with the Jack Abramoff case.

CIA

Report: CIA Station Chief Accused Of Drugging, Raping Muslim Women

Zachary Roth | January 28, 2009, 2:40PM

This doesn't seem like the best way to win hearts and minds...

ABC News reports:

The CIA's station chief at its sensitive post in Algeria is under investigation by the U.S. Justice Department for allegedly raping at least two Muslim women who claim he laced their drinks with a knock-out drug, U.S. law enforcement sources tell ABC News.

Officials say the 41-year old CIA officer, a convert to Islam, was ordered home by the U.S. Ambassador, David Pearce, in October after the women came forward with their rape allegations in September.

The discovery of more than a dozen videotapes showing the CIA officer engaged in sex acts with other women has led the Justice Department to broaden its investigation to include at least one other Arab country, Egypt, where the CIA officer had been posted earlier in his career, according to law enforcement officials.

The details of the alleged rapes:

One of the alleged victims reportedly said she met the CIA officer at a bar in the U.S. embassy and then was taken to his official station chief residence where she said the sexual assault took place.

The second alleged victim reportedly told U.S. prosecutors that, in a separate incident, she also was drugged at the American's official residence before being sexually assaulted.

Investigators searched the station chief's residence and found videotapes of him engaged in sex acts, including with a woman "in a semi-conscious state."

The two women have both given sworn statements to federal prosecutors working on a possible criminal case against the agent.

This station chief appears to have a crucial intel task:

The officer in charge of the CIA station in Algiers plays an important role in working with the Algerian intelligence services to combat an active al Qaeda wing responsible for a wave of bombings in Algeria.

And the case may suggest a serious failure by CIA brass. Bob Baer, a prominent former agency operative, told ABC News that the alleged rapes could open the station chief up to blackmail charges, potentially compromising his mission.

"That's something the CIA should have picked up on," said Baer. "This is indicative of personnel problems of all sorts that run through the agency."

Late Update: ABC News updates its report, naming the suspect:

"[T]he suspect in the case is identified as Andrew Warren in an affidavit for a search warrant filed in federal court in Washington, D.C. by an investigator for the State Department's Diplomatic Security Service.

Barack Obama

Keying Off Obama, ACLU Asks For Bush Torture Memos

Zachary Roth | January 28, 2009, 12:13PM

Those directives issued by President Obama last week, reversing the Bush administration's policy of secrecy, have really shaken things up.

Earlier this week, the House Judiciary committee subponaed Karl Rove for testimony in the US Attorney firings matter. That move appears to have been in response to the Obama's moves, since Rove had long been claiming executive privilege backed by President Bush.

Now, McClatchy reports, the ACLU has asked the new administration to release Bush Justice Department memos justifying harsh interrogation methods, eavesdropping, and secret prisons.

The Bush administration had long refused to release them, citing national security concerns, among other things.

It's clear that Obama's moves -- specifically, his rescinding of a Bush DOJ memo that gave backing to agencies when they refused to disclose material, and his issuing of an executive order urging agencies to take a broader view of the Freedom of Information Act -- triggered the request.

"The president has made a very visible and clear commitment to transparency. We're eager to see that put into practice," an ACLU staffer told McClatchy.

Pro Publica has a rundown of the missing memos.

As McClatchy notes, Obama's nominee to head the Office of Legal Counsel, Dawn Johnsen, has written articles suggesting she thinks that in general, such memos should be released.

So this could be another set of crucial Bush records that will finally see the light of day.

Arlen Specter

Senate Committee Approves Holder

Zachary Roth | January 28, 2009, 11:42AM

Finally...

After weeks of delays, the Senate Judiciary committee has voted by 17-2 to send Eric Holder's nomination to the full Senate.

In a statement, committee chair Pat Leahy said:

Mr. Holder has demonstrated that he is committed to restoring the rule of law, and, as President Obama said in his inaugural address 'to reject as false the choice between our safety and our ideals,'" said Leahy. "I am more convinced than ever that Eric Holder is a person who will reinvigorate the Department of Justice and serve ably as a key member of the President's national security team. He will pursue the Justice Department's vital missions with skill, integrity, independence and a commitment to the rule of law.

The two "no" votes were from conservative Republicans John Cornyn and Tom Coburn.

Leahy's full statement follows after the jump...

Read more »

AIG

AIGers Who Sold Risky Deals To Get Millions In Bonuses

Zachary Roth | January 28, 2009, 11:31AM

What would you have to do not to get a bonus?

AIG, the insurance giant that was essentially nationalized in September, has confirmed to the Associated Press that it's paying bonuses to employees who sold credit default swaps -- the very deals that helped cause millions in losses, leading to the company's collapse.

According to news reports, the bonuses amount to $450 million -- or $1.13 million for each of the 400 staffers in the financial products unit.

In a statement, an AIG spokeswoman confirmed the bonuses, but not the dollar figure:

We adopted and disclosed this contractual retention program months before the government provided support to AIG. We did so because it was clear, given the market environment, that we would need to retain employees to manage the complex issues arising in our Financial Products business, which we are now unwinding.

An expert tells AP that it's possible AIG was contractually obligated to pay the bonuses. But that points up a larger problem: the TARP didn't allow the government to invalidate those agreements, as a bankruptcy judge would have been able to do. Since AIG and other firms were essentially bankrupt, there's a good argument that the same rules should apply.

Former Merrill Lynch CEO John Thain has come in for criticism (by TPMmuckraker, among others) for signing off on billions in bonuses, on an accelerated schedule, despite seeing massive losses and a government assisted takeover by Bank of America.

Bernard Madoff

A Thousand Mini-Madoffs Bloom

Zachary Roth | January 28, 2009, 9:55AM

Call them the mini-Madoffs: Investment advisers accused of conducting Ponzi scams that echo the one allegedly pulled off by the disgraced Wall Street money manager.

In recent weeks, both the Wall Street Journal (sub. req.) and the New York Times report, a spate of mini-Madoffs has come to light

The Journal looked at SEC records and found an increase in cases in which the agency alleged Ponzi schemes. Last year, it brought at least 23 Ponzi cases, up from 15 in 2007. This year, it has already filed four. The paper explains why:

More schemes are emerging now, experts say, in part because of the economic downturn. Tough times have prompted people to seek to cash in their investments, only to find out their money is missing. New investment also dries up in slumps, making it harder for fraudulent funds to replenish their coffers and make the payments needed to keep their operations going.

Let's go down the list of the mini-Madoffs to emerge recently:

- Arthur Nadel, the missing Florida hedge-fund adviser, was arrested yesterday, accused by the feds of defrauding clients to the tune of millions of dollars.

- Nicholas Cosmo, a Long Island money manager, raised more than $370 million, promising eye-popping returns of 48 percent by funding commercial loans. But he lent little money and only about $746,000 remains, according to an affidavit. Cosmo surrendered to authorities Monday.

- Joseph S. Forte, an investment manager in Phildelphia, was accused by the SEC earlier this month of running a Ponzi scheme since at least 1995, claiming returns as high as 38 percent and raising $50 million.

- Darren Palmer, an Idaho Falls money manager, is being probed by state authorities, with investors claiming they lost up to $100 million in a Ponzi scheme.

- Marcus Schrenker, an Indiana financial adviser, was arrested in Florida earlier this month after apparently trying to stage his own death in a plane crash. He faces charges, in both states, of swindling investors.

- Rod Cameron Stringer of Texas is alleged by the SEC to have set up a Ponzi scheme that lured elderly investors, claiming annual returns of 61 percent.

- Robert C. Brown of California is accused by the SEC of using millions in clients' money "to pay for lavish personal expenses, such as upkeep on his Ferrari, limousine services and shopping trips."

- Anthony James of Florida set up a "classic Ponzo scheme", says the SEC, through which he got access to at least $2.4 million in client funds, which he used to pay for a six-bedroom home, a Porsche and season tickets to the Miami Heat.

There are more.

Sounds like the SEC's plans to beef up their enforcement unit can't happen quickly enough.

Barack Obama

Gibbs: We're Mulling Rove Subpoena

Zachary Roth | January 27, 2009, 4:21PM

White House Press Secretary Robert Gibbs was just asked at a briefing about Congress's subpoena, issued yesterday to Karl Rove, seeking his testimony on the US Attorneys firings.

Gibbs replied that the White House counsel's office "is studying those issues and will advise us when they have a recommendation."

As we reported earlier, the ball is now largely in President Obama's court as to whether Rove can continue to defy Congress's subpoena.

We'll keep you posted.

Arlen Specter

Specter Drops Opposition To Holder -- Leahy Pleased

Zachary Roth | January 27, 2009, 3:56PM

It looks like Arlen Specter, the ranking GOPer on the Senate Judiciary committee, has decided to support Eric Holder's nomination to be Attorney General after all, as Elana reports over at TPMDC.

Specter has put up roadblocks to Holder's confirmation from the start, first getting the hearings delayed a week, then getting the committee vote itself delayed another week, until tomorrow.

Here's a statement just put out by committee chairman Pat Leahy, who has led the fight to get Holder confirmed:

I am glad that Senator Specter has resolved his concerns and will support Eric Holder's nomination to be the next Attorney General. He joins the dozens of organizations and individuals across the political spectrum that for more than two months have praised the qualifications, integrity, and independence of this nominee. Tomorrow the Committee will move forward to report this historic nomination to the Senate, and I hope the Senate will debate and vote on Mr. Holder's nomination without further delay.

Joe Bruno

Gillibrand's Family Tie To Bruno Probe

Zachary Roth | January 27, 2009, 3:44PM

Last Friday, New York governor David Paterson announced that he had picked Rep. Kirsten Gillibrand to fill Hillary Clinton's Senate seat. That same day, Joe Bruno, the powerful GOP former New York state Senate leader, was indicted on corruption charges.

What's the connection? It turns out that, though Bruno and Gillibrand are from different parties, that indictment could end up bringing some unwanted publicity to New York's new senator. That's because, though it's remained largely under the press's radar, a business deal between Bruno and Gillibrand's father, Doug Rutnik, was a partial focus of the federal probe that culminated with Friday's indictment.

Let's back up:

By most accounts, Rutnik, a well-connected Albany Republican lobbyist and power-broker, has been the prime architect and fund-raiser for Gillibrand's political career.

Rutnik is tight with just about every powerful Republican in the state, including former governor George Pataki, and former senator Al D'Amato -- in whose office Gillibrand got her start as an intern, before running for Congress as a Democrat.

Rutnik is also close with Bruno. In fact, as the Albany Times-Union (via Nexis) has reported, in the 1990s, Rutnik and another lobbyist, James Featherstonhaugh, bought hundreds of acres of isolated swampland in New York's Rensselaer County, which they planned to develop. Bruno and his brother ultimately invested in the venture, known as the First Grafton Corporation.

Bruno's son Kenneth Bruno, and his girlfriend Theresa Russo, both of whom were lobbyists at the time, bought parcels of the land, as did the wife of Jared Abbruzzese, a local businessman and friend of Joe Bruno who has received hundreds of thousands of dollars in state grants approved by the former Senate leader.

But the venture turned out to be a bust. Rutnik's corporation bulldozed the land and built a road without the necessary environmental permits, prompting federal and state lawsuits that delayed development.

And according to a court document obtained by the Times Union, (via Nexis) in his 2004 divorce proceedings, Kenneth Bruno was accused by his wife of hiding commissions on land deals related to First Grafton "brought to the table by his father Joseph L. Bruno."

In the end, Rutnik and Featherstonhaugh lost $100,000, Featherstonhaugh has said. First Grafton was dissolved in 2005.

And in December 2006, the Associated Press reported (via Nexis) that Featherstonhaugh had complied with a request from federal investigators looking into Bruno's business dealings to turn over First Grafton's records.

"I did receive a request for some records and those records have been provided," Mr. Featherstonhaugh told the AP.

It's not known what aspect of First Grafton the feds were interested in. And neither Rutnik, Featherstonhaugh, or First Grafton are named in Friday's indictment agasint Bruno -- though Abbruzzese is central to it.

Still, the fact that the prime architect of the career of New York's new senator has ties to the state's indicted former Senate leader -- and specifically, that the two teamed up on a business deal that has attracted scrutiny from federal investigators -- deserves more attention that it's yet gotten.

And it's worth asking whether Paterson considered the connection before he named Gillibrand.

Barack Obama

Ball In Obama's Court On Rove's US Attorney Testimony

Zachary Roth | January 27, 2009, 1:04PM

On the question of whether we'll get to the bottom of the Bush White House's role in the US Attorney firings, it's starting to look more and more like the ball is squarely in President Obama's court.

Yesterday, as we noted, House Judiciary chair John Conyers issued a subpoena to Karl Rove, ordering him to testify about the affair February 2nd and declaring ominously: "It's time for him to talk."

(Rove, making a claim to executive privilege backed by President Bush, had defied a subpoena issued by the last Congress. That Congress ended before the full House could vote on contempt charges against Rove.)

And just now, Rove's lawyer, Robert Luskin, told TPMmuckraker that he had already forwarded Conyers' subpoena to the Obama White House, asking them to give an opinion as to whether President Bush retains his ability to assert executive privilege.

In other words, the Obama White House will decide, essentially, whether to back Rove's claim of privilege, or to deny it. (And given that Rove is supposed to appear February 2, that decision from the White House should come soon.) In the latter case, said Luskin, a negotiation would ensue between the Obama White House, President Bush, and Rove. That would likely result in the matter going to court.

That's not the only strand of the effort to uncover information about the firings on which Obama will likely have a major say. Conyers is also seeking testimony on the matter from former White House officials Harriet Miers and Josh Bolten, who, like Rove, are relying on Bush to claim executive privilege. That case is in court, and the Obama White House is scheduled to file an appeal brief February 18th. That brief may make clear whether it backs the privilege claim for Miers and Bolten, and could help determine the case.

Obama's executive order on presidential records, issued last week, suggests that his White House believes that former presidents do not retain their right to assert executive privilege. But that doesn't mean it's a sure thing that Obama won't uphold Rove's claim, and/or Miers and Bolten's. Either way, we should soon find out.

Timothy Geithner

Treasury Issues New Rules On Bailout Lobbying

Zachary Roth | January 27, 2009, 11:43AM

On his first day on the job, Treasury Secretary Tim Geithner has issued new rules designed to curb lobbyists' influence over the bailout, limit conflicts of interest and increase transparency over the department's investment decisions.

From a Treasury statement:

Combating lobbyist influence in the EESA process: The Treasury Department will implement safeguards to prevent lobbyist influence over the program, including restricting contacts with lobbyists in connection with applications for, or disbursements of, EESA funds.

Keeping politics out of funding decisions: The Treasury Department will ensure that political influence does not interfere with EESA decision making, using as a model for these protections the limits on political influence over tax matters.

Certification to Congress on objective decision making: In reporting to Congress, the Office of Financial Stability (OFS) will certify that each investment decision is based only on investment criteria and the facts of the case.

The investment process will be transparent and based on objective criteria:

-Only banks recommended by the primary bank regulator will be eligible for capital investments.

-OFS will publish a detailed description of the investment review process undertaken by the regulators and OFS.

-The Treasury Department will ensure adequate resources exist to process applications as quickly as possible with priority to the date of the application as received by OFS and will formulate procedures to ensure integrity and regularity in the application process.

Over the weekend, the New York Times reported that many of the banks receiving bailout funds continued to lobby the government -- including on the bailout itself.

The devil, of course, will be in the details -- and those details don't yet appear to be forthcoming. What sort of safeguards, for instance, will limit the lobbying and political influence? How will OFS guarantee that investment decisions are on the level? Etc. Etc.

Still, combined with Geithner's assurance in his confirmation testimony that Treasury will insist that banks do more to track the funds they receive, we can at least hope that the second half of the bailout will be slightly better run than the first.

John Thain

Report: Cuomo Subpoenas Thain On Bonuses

Zachary Roth | January 27, 2009, 11:11AM

CNBC's Charlie Gasparino just reported that New York Attorney General Andrew Cuomo has subpoenaed former Merrill Lynch CEO John Thain for testimony about Merrill's awarding of billions of dollars in bonuses in December.

Cuomo has been investigating the decision by Merrill to award the bonuses -- and in particular, the allegation that they were made on an accelerated schedule, before Bank of America took control of the company January 1.

Gasparino added that Bank of America chief administrative officer J. Steele Alphin, who Thain has claimed was aware of the bonuses, has also been subpoenaed.

Gasparino suggested that Cuomo could ultimately bring charges of criminal fraud against those involved in the payouts, under the Martin Act.

This looks like it could get should get interesting...

Late Update: CNBC has now posted a written story.

And here's Cuomo's statement on the subpoenas.

John Thain

Downbound Thain

Zachary Roth | January 26, 2009, 6:32PM

The John Thain rehabilitation campaign continues.

He hasn't been on The View yet, but the chair-throwing ex-Merrill CEO did the next best thing this afternoon, talking to Maria Bartiromo of CNBC about his departure last week from Bank of America, why he's not to blame for Merrill's multiple billion dollar losses, and the whether it was a good idea to spend $1.2 million of Merill's money redecorating his office suite. (Short answer: No, but it was a "different economic environment.")

Thain said he was "surprised" by his ouster at the hands of B of A CEO Ken Lewis, saying that results from the first 20 days of the merger, which went into effect January 1, were "very good."

He blamed Merrill's losses on positions the company held before he took over in 2007, and the larger market meltdown. "Over the course of the year I was at Merrill, I was constantly sheding assets," he said, referring to toxic mortgage assets. "We were in a position of owning very illiquid things that could not be sold and had to be marked down."

And he denied that Merrill's continued buying of mortgage assets into the fall were at the heart of the massive fourth quarter losses. "Did we continue to trade? Yes. Did we put on big risk positions ...? No... The vast majority of loses in the fourth quarter were from positions that had been there since I started."

As for the claim that Thain wasn't open with B of A about Merrill's losses, Thain said:
"They were seeing exactly the same info that we saw. We gave them complete access to everything we had."

Those billion dollar bonuses Thain signed off on? "If you dont pay your best people, you will destroy your franchise. Those best people can get jobs other places, they will leave."

And about that redecoration, Thain said it was a "very different economic environment." He added: "It is clear to me in today's world that it was a mistake. I apologize for spending that money on those things."

Asked by Bartiromo why he couldn't have left the office as it was when his predecessor as CEO, Stanley O'Neal, took off, Thain replied:

"His office was very different than the general decor of Merrill's offices. It would have been very difficult for me to use it in the form that it was in.

Watch the video of that exchange:

John Conyers

Conyers to Rove: Time to Talk About US Attorneys

Zachary Roth | January 26, 2009, 6:25PM

Last week, we talked to a number of experts who said that President Obama's executive order on presidential records might well affect the ongoing effort to get information about the Bush White House's role in the US Attorney firings.

And it looks like John Conyers is of the same mind. The House Judiciary chair this afternoon issued a subpoena to Karl Rove to testify before the committee on February 2.

Rove had claimed immunity from an earlier Conyers-issued subpoena, citing executive privilege. As a press release accompanying today's subpoena points out, "[t]hat "absolute immunity" position was supported by then-President Bush, but it has been rejected by U.S. District Judge John Bates and President Obama has previously dismissed the claim as 'completely misguided.'"

In other words, although Obama's order on records directly addressed only the question of a former president's material docuement -- not testimony from his aides -- there's reason to think that the principle of openness over secrecy that Obama has outlined both in the order and elsewhere could strengthen Conyers' position on this issue.

Said Conyers:

I have said many times that I will carry this investigation forward to its conclusion, whether in Congress or in court, and today's action is an important step along the way. Change has come to Washington, and I hope Karl Rove is ready for it. After two years of stonewalling, it's time for him to talk.

We'll be watching this very closely...

Alberto Gonzales

Gonzo: They Won't Prosecute Me For Torture

Zachary Roth | January 26, 2009, 3:37PM

Lately, there's been rampant speculation that Bush administration officials might face prosecution under Obama for ordering or approving torture. But it looks like Alberto Gonzales isn't sweating it.

In an interview with NPR, written up by the Chicago Tribune, Gonzo was asked about the issue. His response:

I don't think that there's going to be a prosecution, quite frankly. Because again, these activities.... They were authorized, they were supported by legal opinions at the Department of Justice.

In his confirmation hearings to be Attorney General, Eric Holder declared flatly that "water-boarding is torture," a determination that could leave key Bush officials, not least Gonzales, facing legal jeopardy -- though President Obama has expressed a desire to "look forward as opposed to looking backwards."

A special prosecutor ha also been appointed to look into whether DOJ officials committed crimes in connection with the US Attorney firings of 2006. And there have been some signs that the probe is circling Gonzo.

John Thain

You're So Thain: Ousted Ex-Merrill Chief Defends Record, Offers To Pay For Office Redecoration

Zachary Roth | January 26, 2009, 12:04PM

John Thain is fighting back.

The former Merrill Lynch CEO was ousted last week as a Bank of America exec after Merrill posted massive losses in the last quarter before its takeover by B of A. In December, Thain had approved billions of dollars in bonuses before the takeover went into effect. He also spent $1.2 million redecorating his office suite last year. (We catalogued our Top Ten Thain Moments here.)

Now CNBC has obtained a memo written by Thain to his former colleagues in which he defends his record, and offers to reimburse B of A for the redecorating spree.

Thain says that Merrill's 2008 bonuses totaled only 41 percent of 2007's, and that Bank of America was involved in the decision.

As for the fourth quarter losses, Thain calls them "very large and unfortunate" but adds that they "were incurred almost entirely on legacy positions and were due to market movements." In other words, not his fault.

That appears to run counter to the New York Times report that a substantial part of those losses came from Merrill's disastrous decision to continue buying mortgage assets into the fall, in the belief that the market had bottomed out.

Thain also says B of A knew about the losses as soon as Merrill did:

We were completely transparent with Bank of America. They learned about these losses when we did. The acting CFO of my businesses was Bank of America's former Chief Accounting Officer. They had daily access to our p&l, our positions and our marks. Our year end balance sheet target (which we more than met) was given to us by Bank of America's CFO.

Thain refers to "several topics that have been inaccurately reported in the press" but doesn't specify what the inaccuracies were.

CNBC is also reporting that in an exclusive interview, set to air at 4:15 today, Thain argued that the bonuses were necessary to retain top staffers.

The full memo follows after the jump...

Read more »