[House Report 105-829]
[From the U.S. Government Publishing Office]
Union Calendar No. 471
105th Congress, 2d Session - - - - - - - - House Report 105-829
INVESTIGATION OF POLITICAL FUNDRAISING IMPROPRIETIES AND
POSSIBLE VIOLATIONS OF LAW INTERIM REPORT
----------
SIXTH REPORT
by the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
together with
ADDITIONAL AND MINORITY VIEWS
Volume 3 of 4
November 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
INVESTIGATION OF POLITICAL FUNDRAISING IMPROPRIETIES AND POSSIBLE
VIOLATIONS OF LAW--VOLUME 3 OF 4
Union Calendar No. 471
105th Congress, 2d Session - - - - - - - - House Report 105-829
INVESTIGATION OF POLITICAL
FUNDRAISING IMPROPRIETIES AND
POSSIBLE VIOLATIONS OF LAW
INTERIM REPORT
__________
SIXTH REPORT
by the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
together with
ADDITIONAL AND MINORITY VIEWS
Volume 3 of 4
November 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida PAUL E. KANJORSKI, Pennsylvania
JOHN M. McHUGH, New York GARY A. CONDIT, California
STEPHEN HORN, California CAROLYN B. MALONEY, New York
JOHN L. MICA, Florida THOMAS M. BARRETT, Wisconsin
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
DAVID M. McINTOSH, Indiana DC
MARK E. SOUDER, Indiana CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
JOHN B. SHADEGG, Arizona DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio ROD R. BLAGOJEVICH, Illinois
MARSHALL ``MARK'' SANFORD, South DANNY K. DAVIS, Illinois
Carolina JOHN F. TIERNEY, Massachusetts
JOHN E. SUNUNU, New Hampshire JIM TURNER, Texas
PETE SESSIONS, Texas THOMAS H. ALLEN, Maine
MICHAEL PAPPAS, New Jersey HAROLD E. FORD, Jr., Tennessee
VINCE SNOWBARGER, Kansas ------
BOB BARR, Georgia BERNARD SANDERS, Vermont
DAN MILLER, Florida (Independent)
RON LEWIS, Kentucky
Kevin Binger, Staff Director
Barbara J. Comstock, Chief Counsel
David A. Kass, Deputy Counsel and Parliamentarian
Lisa Smith Arafune, Deputy Chief Clerk
Phil Schiliro, Minority Staff Director
-----------
MINORITY STAFF MAJORITY STAFF
Kevin Binger, Staff Director Kristin L. Amerling, Minority
Barbara Jean Comstock, Chief Counsel
Counsel Kenneth M. Ballen, Minority Chief
James C. Wilson, Chief Investigative Counsel
Investigative Counsel Philip S. Barnett, Minority Chief
David A. Kass, Deputy Counsel and Counsel
Parliamentarian Courtney A. Cook, Minority Staff
Michael Bopp, Senior Investigative Assistant
Counsel Sarah Despres, Minority Counsel
J. Timothy Griffin, Senior Jonathan M. Frenkel, Minority
Investigative Counsel Counsel
Kristi L. Remington, Senior Harold W. Gossett, Minority
Investigative Counsel Professional Staff Member
Elliot S. Berke, Investigative Christopher P. Lu, Minority
Counsel Counsel
Robert J. Dold, Investigative Michael J. Raphael, Minority
Counsel Counsel
Jason Hopfer, Investigative Counsel Ellen P. Rayner, Minority Chief
John Irving, Investigative Counsel Clerk
Rae Oliver, Investigative Counsel Jessica R. Robinson, Minority
Jim Schumann, Investigative Counsel Staff Assistant
Michelle E. White, Investigative David Sadkin, Minority Counsel
Counsel Philip M. Schiliro, Minority Staff
Dudley Hodgson, Chief Investigator Director
Milt Copulos, Investigator Andrew H. Su, Minority Research
Kevin Davis, Investigator Assistant
G. Andrew Macklin, Investigator Amy R. Wendt, Minority Staff
John T. Mastranadi, Investigator Assistant
Matt Tallmer, Investigator Barbara A. Wentworth, Minority
Thomas P. Bossert, Assistant to Research Assistant
Chief Counsel Michael T. Yang, Minority Counsel
Jason Foster, Assistant Systems Michael J. Yeager, Minority
Administrator Counsel
Laurel Grover, Staff Assistant
Kenneth Feng, GAO Detailee
Roger Stoltz, GAO Detailee
Richard D. Bennett, Special Counsel
to the Committee
LETTER OF TRANSMITTAL
----------
House of Representatives,
Washington, DC, November 5, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: By direction of the Committee on
Government Reform and Oversight, I submit herewith the
committee's sixth report to the 105th Congress.
Dan Burton,
Chairman.
C O N T E N T S
----------
Page
Preface.......................................................... 1
Chapter I: Introduction.......................................... 5
Chapter II: Unprecedented Obstacles to the Committee's
Investigation.................................................. 47
Chapter III: The Democrats' Failure to Return Illegal Campaign
Contributions.................................................. 149
Chapter IV: Unprecedented Infusion of Foreign Money Into the
American Political System...................................... 1185
Part A: The Riady Family and John Huang: Access and Influence
with the Clinton White House............................... 1185
Part B: Yah Lin ``Charlie'' Trie and His Relationship with
the Clinton Administration................................. 1347
Part C: Johnny Chung: His Unusual Access to the White House
and His Political Donations................................ 1671
Part D: The Sioeng Family's Contributions and Foreign Ties... 2131
Chapter V: The Failure of Government Agencies to Vigorously
Pursue Campaign Violations..................................... 2933
Part A: Jorge Castro's Illegal Campaign Contributions, and
Why They Were Never Prosecuted............................. 2933
Part B: FEC Enforcement Practices and the Case Against
Foreign National Thomas Kramer: Did Prominent DNC
Fundraisers Receive Special Treatment?..................... 2983
Chapter VI: The Hudson Casino Rejection.......................... 3111
Chapter VII: Procedural Background of the Campaign Finance
Investigation.................................................. 3863
VIEWS
Additional views of Hon. Dan Burton.............................. 3881
Additional views of Hon. Pete Sessions........................... 3920
Minority views of Hon. Henry A. Waxman, Hon. Tom Lantos, Hon.
Robert E. Wise, Jr., Hon. Major R. Owens, Hon. Edolphus Towns,
Hon. Paul E. Kanjorski, Hon. Gary A. Condit, Hon. Bernard
Sanders, Hon. Carolyn B. Maloney, Hon. Eleanor Holmes Norton,
Hon. Chaka Fattah, Hon. Elijah E. Cummings, Hon. Dennis J.
Kucinich, Hon. Rod R. Blagojevich, Hon. Danny K. Davis, Hon.
Thomas H. Allen, and Hon. Harold E. Ford, Jr................... 3923
Additional views of Hon. Thomas M. Barrett....................... 4878
Union Calendar No. 471
105th Congress Rept. 105-829
HOUSE OF REPRESENTATIVES
2d Session Vol. 3 of 4
_______________________________________________________________________
INVESTIGATION OF POLITICAL FUNDRAISING IMPROPRIETIES AND POSSIBLE
VIOLATIONS OF LAW
_______
November 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Burton, from the Committee on Government Reform and Oversight,
submitted the following
SIXTH REPORT
together with
ADDITIONAL AND MINORITY VIEWS
On October 8, 1998, the Committee on Government Reform and
Oversight approved and adopted a report entitled,
``Investigation of Political Fundraising Improprieties and
Possible Violations of Law.'' The chairman was directed to
transmit a copy to the Speaker of the House.
(2931)
=======================================================================
CHAPTER V, PART A
THE FAILURE OF GOVERNMENT AGENCIES TO VIGOROUSLY PURSUE CAMPAIGN
VIOLATIONS
JORGE CASTRO'S ILLEGAL CAMPAIGN CONTRIBUTIONS, AND WHY THEY WERE NEVER
PROSECUTED
=======================================================================
JORGE CASTRO'S ILLEGAL CAMPAIGN CONTRIBUTIONS, AND WHY THEY WERE NEVER
PROSECUTED
Introduction
In the course of the Committee's investigation, we learned
of another source of foreign money--South America. The
Committee learned that the New York District Attorney's Office
conducted an investigation into the banking activities of the
Castro family of Venezuela, and had uncovered evidence of
illegal campaign activities by that family. The District
Attorney's Office turned this investigation over to the Justice
Department, which failed to pursue any charges against the key
individuals involved. The Committee followed up on the New York
District Attorney's investigation, and brought to light the
facts of the Castro case.
I. The Key Players
A. Orlando Castro Llanes
Born in Cuba, Castro Llanes was head of a wing of that
nation's communist party until fleeing the island in 1959
following an alleged dispute with Fidel Castro.\1\ After
landing in Haiti, Castro Llanes went to Miami, and in 1961 or
1962, depending on the account, arrived in Caracas, Venezuela
with just $150 in his pocket.\2\ By the 1980s, Castro Llanes
had become an influential businessman in Venezuela, earning a
fortune in the insurance business. He began aggressively
expanding his financial empire, becoming active in banking,
real estate, finance companies, radio stations and
newspapers.\3\ Ultimately, his Grupo Impresas Latinamericanos
included among its holdings, the Banco Progreso in Venezuela,
the Banco Progreso de Internacional de Puerto Rico, and the
Banco Latinamericano in the Dominican Republic.\4\
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\1\ Ramon Maceiras, Orlando Castro: La Historia Apasionante de un
Coloso de las Finanzas Venezolanas, (1991) at 49-65.
\2\ Id. at 10.
\3\ See generally id.
\4\ Id.
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In March 1991, following allegations of money laundering,
U.S. Customs inspectors ordered the Banco Progreso accounts at
New York's Bank America International frozen, along with those
of a number of other banks.\5\ Castro Llanes turned to his
long-time legal advisor and business associate, Charles
Intriago, for assistance. Mr. Intriago had known Castro Llanes
for over a decade, and had acted as his principal legal advisor
on matters related to the United States. In fact, they were so
close that Castro Llanes provided $80,000 in start-up capital
for Intriago's Money Laundering Alert newsletter.\6\ In
addition, Castro Llanes was reportedly seeking to have Intriago
appointed U.S. ambassador to Venezuela.\7\ Intriago also
organized a defense team for the Banco Progreso matter which
ultimately convinced U.S. Customs to release the accounts.\8\
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\5\ Peter Truell, ``Too Close for Comfort?; Inquiry Touches Money
Laundering Expert's Backer,'' New York Times, Apr. 4, 1996, at D1.
\6\ Id.
\7\ Interview of James Kindler and Joseph Dawson, Dec. 26, 1997
(``Kindler-Dawson Interview'').
\8\ Id.
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In 1994, following the collapse of the Venezuelan banking
system, Castro fled to the United States and settled in Miami.
Venezuelan banking regulators seized Banco Progreso that
December. Castro was later charged in absentia with bank fraud,
embezzlement, and conspiracy by the Venezuelan government.\9\
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\9\ Id.
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On April 4, 1996, Castro Llanes was indicted in New York
along with his son and grandson on charges of a scheme to
defraud in the first degree. He was convicted on grand larceny
charges on February 19, 1997, and in April of that year
sentenced to a term of 1 to 3 years in prison. The larceny
involved defrauding depositors of the Banco Progreso
International de Puerto Rico of as much as $55 million. His
crime also cost the government of Venezuela more than $8
million.
B. Orlando Castro Castro
The U.S.-educated son of Castro Llanes, and uncle of Jorge
Castro Barredo, Orlando Castro Castro was president of the
Banco Progreso in Caracas, Venezuela. He was convicted along
with his father and nephew by the Manhattan District Attorney
on charges of bank fraud involving the theft of millions of
dollars from a Puerto Rican bank the family controlled. He was
sentenced to a term of 2\1/3\ to 7 years in prison.\10\
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\10\ Id.
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C. Jorge Castro Barredo
The grandson of Castro Llanes, Castro Barredo worked in his
grandfather's banking empire as president of the Banco
Latinamericano in the Dominican Republic. In 1992, Castro
Barredo made $25,000 in illegal foreign conduit contributions
to the Democratic party. According to his sworn testimony,
these contributions were made at the direction of family lawyer
and DNC Trustee, Charles Intriago. Bank documents show that the
contributions were reimbursed shortly thereafter by a
Venezuelan firm owned by his grandfather.\11\ Castro Barredo
was also charged in the Banco Progreso fraud case.\12\
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\11\ Id.
\12\ Id.
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The bank fraud case was precipitated when an insurance
company controlled by the Castro family overdrew its account at
their Dominican Bank, and local banking authorities required
the institution to increase its deposits by $3 million. Castro
Barredo improperly withdrew $3.26 million from the family's
Puerto Rican bank and deposited itin the Dominican Republic
institution, using a portion of the money to purchase a yacht.\13\
Castro Barredo provided testimony to representatives of the Justice
Department concerning his knowledge of illegal foreign conduit campaign
contributions and his testimony was corroborated independently by
documentary evidence obtained by the New York District Attorney's
Office.\14\
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\13\ Id.
\14\ Venezuelan Money and the Presidential Election, Hearing,
Committee on Government Reform and Oversight, Apr. 30, 1998 (``Castro
Hearing'') at 77-78 (Testimony of Joseph J. Dawson).
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Notwithstanding documentary and testimonial evidence, the
Justice Department chose not to bring any charges related to
the Castro conduit contributions.\15\ On February 19, 1997,
Castro Barredo was convicted on the unrelated bank fraud and
larceny charges. On December 15, 1997, he was sentenced to a
term of 3\1/2\ to 10\1/2\ years in prison.\16\
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\15\ See Letter from Lee J. Radek to Richard T. Preiss, Oct. 17,
1997 (Exhibit 1).
\16\ Castro Hearing at 9 (Testimony of Jorge Castro Barredo).
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d. Maria Sire Castro
Maria Castro is the aunt of Castro Barredo, and the wife of
Rafael Castro, another one of Castro Llanes's sons. She made a
$20,000 illegal foreign conduit campaign contribution to the
DNC, and a $5,000 illegal conduit contribution to the Maryland
State Democratic party in 1992.\17\
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\17\ Id. at 10, 14 (Testimony of Jorge Castro Barredo).
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E. Charles Intriago
The relationship between Castro Llanes and Intriago goes
back nearly two decades. After first meeting in 1980, Castro
Llanes soon became one of Intriago's clients.\18\ Jorge Castro
Barredo testified about his social ties with Intriago, making
reference to their attending Florida Marlins baseball games
together.\19\ Castro Barredo also told Committee investigators
that Intriago was paid a monthly retainer by Castro Llanes of
$20,000 to $25,000 per month and acted as his legal advisor on
all matters related to the United States. He further stated
that on one occasion, during the Venezuelan banking crisis of
1994, he was instructed to pay Intriago $100,000 by either
Castro Llanes or his associate Luzmenia Briceno.\20\ In 1989,
with the help of an $80,000 investment from Castro Llanes in
exchange for a 15 percent interest in the venture, Intriago
founded the Money Laundering Alert newsletter.
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\18\ Interview of Jorge Castro Barredo, Jan. 19, 1998 (``Castro
Interview I'').
\19\ Castro Hearing at 39 (Testimony of Jorge Castro Barredo).
\20\ Castro Interview I.
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After getting caught up in a bitterly contested hostile
takeover fight for control of the Banco de Venezuela in 1990,
Castro Llanes turned to Intriago for help. He soon faced
another potentially critical problem and again turned to
Intriago. In March 1991, U.S. Customs officials, suspicious of
transactions taking place in accounts held by a number of
Venezuelan banks in New York, moved to freeze the funds held by
those banks. Banco Progreso's account at the Bank America
International was among those affected. Intriago put together
what Jorge Castro Barredo described as a ``Dream Team'' \21\ of
attorneys and political operatives to obtain release of the
funds and was ultimately successful.\22\
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\21\ Interview of Jorge Castro Barredo on Sept. 15, 1998.
\22\ Id.
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After being subpoenaed to appear before an executive
session of this Committee, Intriago declined to answer
questions, invoking the Fifth Amendment to virtually all
questions posed.\23\ Intriago's attorney, did, however, submit
a letter on behalf of Intriago to the Committee, stating in
part:
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\23\ Deposition of Charles A. Intriago, Feb. 20, 1998 (``Intriago
Deposition'').
Mr. Intriago is not a government official. He has never
held a high elected or appointive government position.
He has never been an employee of, or consultant to, the
Democratic National Committee. He is not a ``friend''
or ``associate'' of the President, the Vice President,
or any other high ranking Democratic Party official. He
has not applied for, been interviewed for or considered
for a government job. He has never had or sought a
government contract. Mr. Intriago simply is a respected
private lawyer with a previously unblemished record of
conduct.\24\
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\24\ Castro Hearing at 36 (Statement by Robert Plotkin, Counsel for
Charles Intriago).
This statement, is at best, misleading. According to DNC
documents obtained by the Committee, Intriago is listed as an
``applicant'' for a Federal appointment. The documents indicate
that he was involved in the 1992 Florida Presidential campaign,
and that the recommendation was forwarded on December 16,
1992.\25\ It indicates his ``JOB PREF./AREA OF INTEREST'' as
``LEGL,'' likely indicating a legal job preference. It
indicates his ``AGENCY/DEPARTMENT PREFERENCE'' as ``Just,''
likely indicating the Department of Justice.\26\ The notation
also indicates under the title ``Job Level'', the initials
``SL,'' indicating a senior level position.\27\
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\25\ See DNC Document 076440, a review of applicants for political
appointments by the newly elected Clinton Administration (Exhibit 2).
\26\ Id.
\27\ Id.
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Similarly, the contention that Intriago has never been a
``high government official'' understates his actual employment
history. He was a senior congressional staff member early in
his career, and served as a Special Assistant to the Governor
of Florida, playing a major role in the development of that
state's racketeering laws. He also served as an Assistant U.S.
Attorney in Florida.
Mr. Intriago's name also is listed in another DNC document
which is a compilation of recommendations for a delegation to
attend the 1994 Salvadoran election. Intriago's name is first
on the list which also includes such dignitaries as Secretary
of Energy Bill Richardson, then mayor of Albuquerque Martin
Chavez, and prominent DNC donor Walter Kaye.\28\ The Committee
also obtained a letter dated December 2, 1992, from Intriago to
then DNC Chairman Ron Brown addressed ``Dear Ron,'' and
stating:
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\28\ Memorandum from Martha Phipps to Dana Wyckoff, Feb. 23, 1994
(Exhibit 3).
Just a brief note to tell you that I enjoyed meeting
you during the campaign in Little Rock and Middleburg.
Apparently, I am now a ``trustee'' of the DNC and am
looking forward to assisting you in any way I can.
* * * * * * *
So that you will know a little more about me, I enclose
a couple of recent issues of my publication, Money
Laundering Alert, together with some background
information. I think this is an issue on which
President Clinton can make some headway in dealing with
the drug and white collar crime problems.\29\
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\29\ Letter from Charles Intriago to Ron Brown, Dec. 2, 1992
(Exhibit 4).
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II. Castro's Illegal Contributions
On September 15, 1992, Charles Intriago called Jorge Castro
Barredo at his office in the Dominican Republic, and asked him
to make several contributions to the DNC.\30\ Castro Barredo
recalls that Intriago said either that ``we are going to make
some contributions to Clinton's campaign,'' or that ``your
grandfather wants to make contributions to Clinton's
campaign.'' \31\ Intriago told Castro Barredo that he and his
uncle, Rafael Castro, should make the contributions, because
they were U.S. citizens.\32\ At this point, Castro Barredo told
Intriago that Rafael did not have a bank account, but that
Rafael's wife, Maria Sire Castro, had a bank account, and was a
U.S. citizen.\33\ Intriago then told Castro Barredo that he
should write one check to the DNC for $20,000, and another
check to the Ohio State Democratic party for $5,000.\34\
Intriago also told Castro Barredo to have Maria Castro write a
check for $20,000 to the DNC, and a check for $5,000 to the
Maryland State Democratic party.\35\ After Castro Barredo's
telephone conversation with Intriago, he requested that his
uncle have his aunt draft the two checks that Intriago had
requested.\36\
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\30\ Castro Hearing at 13.
\31\ Castro Interview I.
\32\ Id.
\33\ Id.
\34\ Id.; see Checks of Jorge Castro Barredo to Ohio Victory Fund,
DNC Victory Fund '92, and Kentucky Democratic party (Exhibit 5).
\35\ Id.; see Check of Maria Sire Castro to DNC Victory Fund
(Exhibit 6); Check of Maria Sire Castro to Maryland Victory Fund
(Exhibit 7).
\36\ Id.
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Castro Barredo was slightly confused, however, by
Intriago's instructions, and he asked Intriago to send a fax
with written instructions for how to draft the checks.\37\
Castro Barredo received the fax the following day. On the fax,
Intriago listed out each contribution that Castro Barredo and
Maria Castro were supposed to make. At the bottom of the fax,
Intriago wrote in Spanish: ``I want you to send me these today
by Federal Express.'' \38\
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\37\ Id.
\38\ See Committee Exhibit of fax cover sheet (Exhibit 8); see also
Fax Message from Charles Intriago to Jorge Castro, Sept. 16, 1992
(original) (Exhibit 9).
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At the time that he made the contributions, Castro Barredo
knew that he and his aunt would be reimbursed.\39\ Castro
Barredo had no interest in politics, had never voted, and had
no interest in giving $25,000 to support any political
party.\40\ Most importantly, during their telephone
conversation about the contributions, Intriago assured Castro
Barredo that he and his aunt would be reimbursed by ``one of
his grandfather's companies.'' \41\
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\39\ Castro Hearing at 12-13 (Testimony of Jorge Castro Barredo).
\40\ Castro Hearing at 12.
\41\ Castro Hearing at 12-13.
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Several days after Castro Barredo sent the requested checks
to Intriago, Intriago called him and requested that he send a
new check. Intriago told Castro Barredo that he was not going
to use the $5,000 check Castro Barredo had written to the Ohio
state party, and instead, asked Castro Barredo to write a new
$5,000 check to the Kentucky State Democratic party.\42\ On
September 29, Castro Barredo did so, and sent the check to
Intriago. However, days later, Intriago called again, and told
Castro Barredo that he would not use the Kentucky check, and
instead, asked Castro Barredo to draft a $5,000 check to the
Florida Democratic party.\43\ Castro Barredo, exasperated,
asked why he had to keep writing new checks.\44\ Intriago
responded ``that's the way they want it.'' \45\ Castro Barredo
did not ask for any further explanation, and sent the requested
check to Intriago.
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\42\ Castro Interview I; see Exhibit 6.
\43\ Id.; see Check from Jorge Castro Barredo to Florida Democratic
party (Exhibit 10).
\44\ Castro Hearing at 26.
\45\ Id.
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On September 24, 1992, Castro Barredo received a wire
transfer to his account for $24,990.\46\ Records indicate that
the wire transfer came from Inversiones Latinfin, a company
owned by Orlando Castro Llanes.\47\ Castro Barredo testified
that Inversiones Latinfin does no business in the United
States.
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\46\ See Account Statement of Jorge F. Castro, International Bank
of Miami, September 1992 (Exhibit 11); Wire Transfer Information,
NationsBank, Sept. 24, 1992 (Exhibit 12).
\47\ Wire Transfer Statements (Exhibits 13-14). See also Trust
Statement for Banco Industrial de Venezuela (listing Inversiones
Latinfin as one of Orlando Castro Llanes' companies).
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A. The Castros' Red Carpet Treatment
After his family contributed $50,000 to the Democratic
party, Castro Llanes received red carpet treatment from the
Clinton Administration over the coming year. Immeditaely after
Bill Clinton's election in 1992, Castro Llanes told Castro
Barredo that they were hopeful that Intriago would be appointed
as ambassador to Venezuela.\48\ While this goal did not come to
fruition, Intriago did give the Castro family increased access
to Washington, DC, after President Clinton's election.
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\48\ Castro Interview I at 4.
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Castro Llanes, Intriago and Castro Barredo all attended the
January 1993 inauguration of President Clinton.\49\ In October
1993, Castro Llanes, Intriago, Castro Barredo, and Castro
Castro returned to the United States. The first day that the
group was in Washington, Castro Llanes and Intriago went to the
White House for a reception for DNC donors.\50\ At this event,
Castro Llanes had a picture taken with President Clinton.\51\
Castro Barredo was not invited to this event, even though it
was he, not Castro Llanes, who had contributed $25,000 to the
DNC.
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\49\ Castro Hearing at 29.
\50\ Castro Hearing at 29-31.
\51\ Photograph of Orlando Castro Llanes and President Clinton,
Oct. 14, 1993 (Exhibit 15). A set of photos of Charles Intriago and
Orlando Castro Llanes were sent to Intriago by the DNC. See Letter from
Eric Sildon to Charles Intriago, June 21, 1995 (Exhibit 16).
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The following day, the Castro group traveled to the State
Department, where they met with State Department officials
Perry Ball and Monica Adler.\52\ It was Castro Barredo's
understanding that Intriago had set up the meeting at the State
Department.\53\ The purpose of the meeting was to discuss the
ongoing investigations of the Castro family and the various
allegations that had been leveled against the family about
money laundering.\54\
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\52\ Castro Interview I.
\53\ Id.
\54\ Id.
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B. Intriago's Ties to the Democratic party
Intriago himself made over $52,000 in contributions to the
DNC during the 1992 election cycle. These include contributions
to the Democratic State Central Committee of Maryland, the
Democratic Congressional Campaign Committee (``DCCC''), the
DNC, the Colorado Democratic party, Senator Tom Harkin, the
Illinois Democratic party, the Nebraska Democratic Future Fund
Committee, and the Ohio Democratic party.\55\ After raising
more than $10,000 at a Miami dinner honoring Vice President
Gore in 1993, Intriago became a member of the DNC's Business
Leadership Forum.\56\
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\55\ See FEC website, www.tray.com/fecinfo.
\56\ See Memorandum from Team Florida to Nancy Jacobson, Laura
Hartigan, Jan Hearst, Sam Newman, May 7, 1993 (Exhibit 17).
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In the course of attending various DNC fundraising events,
Intriago had the opportunity to come into close contact with
other members of the DNC's elite. One of the most important of
these was Charles ``Bud'' Stack, a DNC Trustee, who, along with
Intriago was a major donor to an April 29, 1993, dinner
honoring Vice President Gore. Intriago received help from Stack
in arranging a meeting between Castro Llanes and President
Clinton.\57\ Intriago became a DNC Trustee in 1992, evidenced
by a letter written by Intriago on December 2, 1992.\58\
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\57\ Truell, Peter, ``Too Close For Comfort,'' the New York Times,
Apr. 4, 1996.
\58\ Exhibit 5.
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III. The New York District Attorney's Investigation
In December 1994, the Latin American banking community was
rocked by the collapse of three major financial institutions,
the Banco Progreso in Venezuela, the Banco Progreso
Internacional de Puerto Rico, and the Banco Latinamericano in
the Dominican Republic. These institutions were all part of
Group Impresas Latinoamericanos, Orlando Castro Llanes'
financial empire.\59\ Following the collapse of these financial
institutions, the New York District Attorney's Office initiated
an investigation into possible violations of banking law by the
Castro family.\60\ In the course of the investigation, an
Assistant District Attorney and several investigators were
granted permission to examine the files of the Banco
Latinamericano in Santo Domingo, one of the Castro family
banks. Banco Latinamericano's president was Jorge Castro
Barredo, Castro Llanes' grandson.\61\
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\59\ Kindler-Dawson Interview.
\60\ Kindler-Dawson Interview.
\61\ Castro Hearing at 75 (Testimony of Joseph J. Dawson); see also
Kindler-Dawson Interview.
---------------------------------------------------------------------------
While conducting their search, the New York investigators
discovered a number of documents in the office of Castro
Barredo's secretary, including the fax dated September 16,
1992, from Intriago instructing Castro Barredo to make conduit
contributions. The New York investigators also discovered
copies of checks showing Castro Barredo's contributions to the
Democratic party.\62\
---------------------------------------------------------------------------
\62\ See Exhibits 5-7.
---------------------------------------------------------------------------
Later, upon their return to New York, the District
Attorney's Office subpoenaed a number of bank records including
those of Jorge Castro Barredo and Maria Sire Castro. The bank
records showed that both of the $20,000 checks to the DNC
Victory Fund 1992 Federal Account had been cashed, but that
Castro Barredo's first two state party checks had not been
cashed. They did confirm, though, that Castro Barredo's $5,000
check made out to the Florida Democratic party had been
cashed.\63\ More importantly, the records showed that on
September 24, 1992--just 8 days after the fax--both Jorge
Castro Barredo and Maria Sire Castro received wire transfers to
each of their accounts in the amount of $24,990.\64\ Taken
together, these documents support the assertion that an illicit
transaction consisting of a conduit contribution reimbursed by
a non-U.S. entity took place.
---------------------------------------------------------------------------
\63\ See Exhibit 10.
\64\ See Wire transfer documents (Exhibits 13-14).
---------------------------------------------------------------------------
IV. The Justice Department's Handling of the Castro Case
The New York District Attorney's Office had uncovered
convincing evidence of a serious violation of Federal campaign
law, and they decided to refer the matter to Federal
prosecutors. Since most of the criminal acts involved in the
case had occurred in Miami, the District Attorney's Office
referred the matter to the Federal prosecutors in the Southern
District of Florida. In the referral letter, Assistant District
Attorney John Moscow wrote to Richard Gregorie, Senior
Litigation Counsel in the U.S. Attorney's Office in Miami, to
inform him of what had been discovered:
[T]he checks and wire transfer relate to a series of
violations of the laws relating to campaign financing.
That is, two people sent $25,000 each to a political
party and received reimbursement for those political
contributions from an off-shore company.\65\
---------------------------------------------------------------------------
\65\ Letter from John W. Moscow to Richard Gregorie, Oct. 9, 1996
(Exhibit 18).
Mr. Moscow also forwarded copies of the documents which had
been obtained in the course of the bank fraud investigation. At
this same point in time, the District Attorney's Office also
referred another aspect of the Castro investigation, involving
customs law violations, to Federal prosecutors in the Southern
District of New York.
Mr. Moscow followed up on the letter by meeting with
Gregorie in Miami on October 17, 1996.\66\ Further follow-up to
this meeting took the form of two letters sent to the Miami
Assistant U.S. Attorney on October 28, 1996, and October 29,
1996.\67\ On February 24, 1997, two additional packets of
documents were forwarded to Miami by the New York District
Attorney. These packets included:
---------------------------------------------------------------------------
\66\ Castro Hearing at 77 (Testimony of Joseph J. Dawson).
\67\ Letters from John W. Moscow to Richard Gregorie, Oct. 28, 1996
(Exhibit 19) and Oct. 29, 1996 (Exhibit 20).
---------------------------------------------------------------------------
The fax from Alert International discovered
in Santo Domingo.
Copies of checks issued by Jorge Castro
Barredo and Maria Sire Castro to DNC ``Victory Funds.''
A wire transfer document showing that on
September 13, 1994, Castro Barredo sent Intriago
$100,000.
Two canceled checks issued by Castro
Barredo, one for $20,000 to the DNC Victory Fund '92
Federal Account and one for $5,000 to the Florida
Democratic party Federal Account.
Account statements from the International
Bank of Miami N.A. for the account of Jorge Castro
Barredo showing the checks were cashed.
Two canceled checks issued by Maria Castro,
one in the amount of $20,000 to the ``DNC Victory Fund
1992 Federal Account'' and one for $5,000 to the
Maryland Democratic party Federal Account.
The NationsBank account statements for Maria
Sire Castro showing that the check was cashed.
Wire transfer documents showing that $25,000
was wired to both Jorge Castro Barredo and Maria Sire
Castro from Banco Latino by order of Inversiones
Latinfin on September 24, 1996.
Shareholder documents showing that
Inversiones Latinfin was owned by Castro Llanes.\68\
---------------------------------------------------------------------------
\68\ Letter from John W. Moscow to Richard Gregory Esq. [sic], Feb.
24, 1997 (Exhibit 21).
---------------------------------------------------------------------------
On March 11, 1997, Joseph Dawson of the New York District
Attorney's Office spoke with a Miami Federal prosecutor and
discussed the issue of the statute of limitations for
prosecuting the campaign law case against Castro. The
prosecutors agreed that since the fax transmission occurred and
the checks were written in the fall of 1992, the statute would
expire in the fall of 1997.\69\
---------------------------------------------------------------------------
\69\ Id.
---------------------------------------------------------------------------
A. Castro Cooperates
At the same time that the New York District Attorney's
Office was discussing the conduit contributions case with the
Miami U.S. Attorney's Office, they were also holding
discussions about obtaining Jorge Castro Barredo's cooperation.
Castro Barredo had been convicted, along with his grandfather
and uncle, on February 19, 1997. An agreement was ultimately
reached, and Jorge Castro Barredo agreed to be debriefed by the
New York District Attorney's Office.\70\
---------------------------------------------------------------------------
\70\ Id.
---------------------------------------------------------------------------
The debriefings took place on March 20, 1997 and April 3,
1997. In the course of the debriefings, Castro Barredo stated
that he made contributions of $20,000 to the DNC, and $5,000 to
a state Democratic party at Intriago's instructions, and that
he was reimbursed for the contribution by one of his
grandfather's companies.\71\ According to Castro Barredo, Maria
Sire Castro also made a $20,000 contribution to the DNC and a
$5,000 contribution to a state Democratic party at Charles
Intriago's direction, and was similarly reimbursed by Castro
Llanes.\72\ Castro shared with the prosecutors the entire story
of how he had come to contribute to the Democratic party, how
he had been reimbursed, and what the family had received for
the contributions. The testimony given by Castro to the
prosecutors was the same that he gave the Committee in
interviews, and in its hearing.\73\ In the Committee's hearing,
the District Attorney working on the case confirmed that Castro
was truthful throughout interviews and debriefings with their
office:
---------------------------------------------------------------------------
\71\ Id.
\72\ Id.
\73\ Castro Hearing at 82.
Counsel. Has Mr. Castro ever told you anything about
conduit contributions that has later proven to be
false?
Mr. Preiss. No.\74\
---------------------------------------------------------------------------
\74\ Id. at 82 (Testimony of Richard T. Preiss).
Following the debriefing of Castro Barredo by the New York
prosecutors, they arranged for Castro Barredo to meet with
Federal prosecutors on May 28, 1997.\75\ Just prior to the
meeting, Preiss spoke with Assistant U.S. Attorney Bruce Udolf
from the U.S. Attorney's Office in the Southern District of
Florida and again expressed his concern over the potential
statute of limitations problem.\76\ They agreed that the likely
statute of limitations for a prosecution relating to the Castro
contribution expired on September 16, 1997, or 5 years from the
date of Intriago's fax to Castro Barredo.\77\ Roughly 1 week
after Castro Barredo talked with the Federal prosecutors, a
Federal prosecutor in Miami called Preiss, thanking him for the
cooperation and courtesy provided by the New York District
Attorney's Office.\78\ He also stated that his office intended
to pursue the matter, and that its investigation could be
completed before the statute of limitations expired.\79\
---------------------------------------------------------------------------
\75\ Id. at 79 (Testimony of Richard T. Preiss).
\76\ Id.; see also Kindler-Dawson Interview.
\77\ Interview of Richard Preiss and Joseph Dawson, Jan. 19, 1998
(``Preiss-Dawson Interview'') at 1.
\78\ Castro Hearing at pp. 79-80.
\79\ Id.
---------------------------------------------------------------------------
B. The Castro Case is Taken by the Public Integrity Section
In late June or early July 1997, Preiss received a phone
call from Castro Barredo's attorney, Marc Nurik, stating that
the Justice Department's Public Integrity Section had taken the
Castro case away from the prosecutors in the Southern District
of Florida.\80\ Nurik said that he had spoken with the head of
the Justice Department's Public Integrity Section, Lee Radek,
and was concerned that Radek had nothing substantive to say
about the Justice Department's plans for the case.\81\ Nurik
feared that the Justice Department would allow the statute of
limitations to expire, leaving his client with nothing to show
for his cooperation.\82\
---------------------------------------------------------------------------
\80\ Preiss-Dawson Interview.
\81\ Id.
\82\ Id.
---------------------------------------------------------------------------
After confirming that the case had been transferred, Preiss
attempted to speak to Lee Radek. Preiss spoke with Radek's
assistant, but the assistant refused to put Preiss through
unless he had a ``referral number'' for the case.\83\ Preiss
then asked that whoever was handling the case contact him.\84\
An exchange between the Committee Counsel and Mr. Preiss
concerning his attempts to contact Radek raises serious
questions about the responsiveness of the Justice Department to
the apparent violation of law which was connected to a DNC
trustee:
---------------------------------------------------------------------------
\83\ Id.
\84\ Castro Hearing at 88-89 (Testimony of Richard T. Preiss).
Counsel. Now, Mr. Preiss, did you try and have a
conversation with Mr. Radek?
Mr. Preiss. Yes.
Counsel. What was the result?
Mr. Preiss. I was not put through to him.
Counsel. Now, it's my understanding--correct me if
I'm wrong--that you were told that Mr. Radek would not
speak to anyone unless they had a referral number for
the case, correct?
Mr. Preiss. That's correct.
Counsel. And do you know whether Mr. Castro's lawyer
had such a referral number?
Mr. Preiss. If he did, he didn't give it to me.
Counsel. Did anybody ever give you a referral number
for this case?
Mr. Preiss. No, I don't think we were ever given a
referral number. I don't think anybody had a referral
number. Maybe there was a referral number inside the
Department of Justice, but, again I wouldn't be privy
to that, so I don't know.
Counsel. Right, but Mr. Castro's attorney was not an
employee of the Department of Justice, so he had the
same status as you.
Mr. Preiss. No he was not an employee of the
Department of Justice.
Counsel. OK. And I don't know whether this is a
question you can answer or not, but were you concerned
at the time that Mr. Castro's attorney was given more
attentive treatment at the highest levels of the
Department of Justice than you?
Mr. Preiss. Well, I thought at the time, I think I
said in the conversation that I couldn't understand why
the defense attorney's phone call could be taken the
day before, but mine couldn't be and I was the
prosecutor and he was the defense lawyer. I think
that's what I said to the person who answered the
phone.\85\
---------------------------------------------------------------------------
\85\ Id. at 89 (Testimony of Richard T. Preiss).
The willingness of Mr. Radek to accept a phone call from a
defense attorney and at the same time refuse to accept a phone
call from a New York Assistant District Attorney who referred
the case is curious. At the same time, however, it is not the
most troubling aspect of the case. Of particular concern is the
decision of Justice Department officials in Washington to
ignore evidence which strongly suggests that not only was an
illegal conduit contribution made, but that it was made in
close coordination with a prominent Democratic contributor who
is a lawyer and who was getting directions from another unknown
party.
C. The Castro Case Dies
Roughly 1 week later, Preiss was called by Peter Ainsworth,
a trial attorney from the Justice Department's Campaign Finance
Task Force. Ainsworth told Preiss that he was handling the
Castro case, and had in his possession the notes and documents
from the meeting the other Federal prosecutors had had with
Castro Barredo.\86\ Preiss offered to make Castro Barredo
available for an interview, and stated that he was willing to
request a sentencing delay if necessary. The attorney told
Preiss that he did not want to speak with Castro Barredo, but
did want to speak with the New York prosecutors and to review
some documents.\87\
---------------------------------------------------------------------------
\86\ Preiss-Dawson Interview.
\87\ Castro Hearing at 80 (Testimony of Richard T. Preiss).
---------------------------------------------------------------------------
On July 23, 1997, Ainsworth came to New York accompanied by
an FBI agent, spoke with the New York prosecutors, reviewed the
documents which corroborated Castro Barredo's testimony, and
took with him photocopies of some of the documents.\88\ At this
meeting, Preiss and Dawson told Ainsworth that they were
willing to delay Castro Barredo's sentencing pending the
Justice Department's review of Castro Barredo's
contributions.\89\ The New York District Attorneys recommended
the delay in sentencing so that Castro Barredo would continue
to have an incentive to cooperate. Requesting such a delay in
sentencing was the standard prosecutorial practice that they
had followed in the past.\90\ In addition, while Ainsworth was
at their office, Preiss and Dawson both reminded Ainsworth that
the statute of limitations on the Castro case likely expired on
September 16, 1997.\91\
---------------------------------------------------------------------------
\88\ Id.
\89\ Id.
\90\ Castro Hearing at 103-104.
\91\ Preiss-Dawson Interview.
---------------------------------------------------------------------------
The following month, the New York prosecutors asked for and
received a stay in Castro Barredo's sentencing.\92\ On August
19, 1997, and then again on September 23, 1997, the New York
District Attorney's Office requested delays in Castro Barredo's
sentencing.\93\ Preiss also provided additional information to
Ainsworth after Castro Barredo's sentencing was delayed.\94\ In
his letter to Ainsworth, Preiss again asked that the Justice
Department let him know what their plans were concerning this
case.\95\
---------------------------------------------------------------------------
\92\ Castro Hearing at 80.
\93\ Id.
\94\ Letter from Richard T. Preiss to Peter Ainsworth, Sept. 4,
1997 (Exhibit 22).
\95\ Id.
---------------------------------------------------------------------------
After returning from a vacation in late September 1997,
Preiss called the Task Force attorney several times to find out
what the status of the case was.\96\ He was concerned that the
perceived September 16 deadline would pass without any action
from the Justice Department.\97\ Eventually, he received a
voice mail message thanking him for his patience. Despite the
lack of response from the Justice Department, the New York
District Attorney again requested that sentencing be delayed
once more, and it was, this time until October 20, 1997.\98\
---------------------------------------------------------------------------
\96\ Preiss-Dawson Interview.
\97\ Id.
\98\ Castro Hearing at 81 (Testimony of Richard T. Preiss).
---------------------------------------------------------------------------
Preiss wrote to Ainsworth again on October 10, 1997,
stating:
Jorge Castro Barredo is currently scheduled to be
sentenced on October 20, 1997. We referred a matter to
the Department of Justice in late 1996 and Castro
Barredo is a witness who has been interviewed by
representatives of the Department of Justice in
connection with an investigation of Charles A.
Intriago.\99\
---------------------------------------------------------------------------
\99\ Letter from Richard Preiss to Peter Ainsworth, Oct. 10, 1997
(Exhibit 23).
* * * * * * *
---------------------------------------------------------------------------
Please advise us whether the Department of Justice
intends to make any submissions regarding Castro
Barredo's cooperation or lack of cooperation in your
investigation and send us a copy before October 20,
1997. If you wish us to request a delay in the
sentencing of Castro Barredo, please advise us
immediately how long a delay you would like us to
request and the basis for the delay in order that we
may convey that information to the court.\100\
---------------------------------------------------------------------------
\100\ Id.
A week later, Castro Barredo's attorney called Preiss,
stating that he had received a copy of a letter from Lee Radek,
chief of the Justice Department's Public Integrity Section to
Preiss advising him that the Department would neither be asking
for a further postponement of Castro Barredo's sentence, nor
---------------------------------------------------------------------------
submitting a letter on his behalf. In the letter, Radek stated:
[W]e have concluded that there is at this time no
further role for him [Castro Barredo] to play in
matters under investigation by the Task Force.\101\
---------------------------------------------------------------------------
\101\ Memorandum from Marc S. Nurik to Richard T. Preiss with
attached letter from Lee J. Radek, Oct. 17, 1997 (Exhibit 24).
Castro Barredo was sentenced on December 15, 1997, to between
3\1/2\ to 10\1/2\ years in prison on bank fraud charges. No
charges have ever been filed against Charles Intriago by the
Justice Department. When he was called to testify by the
Committee, Mr. Intriago invoked his Fifth Amendment
rights.\102\
---------------------------------------------------------------------------
\102\ See Intriago Deposition.
---------------------------------------------------------------------------
The frustration of the New York District Attorney's Office
with the Justice Department was clear from the testimony of
Preiss and Dawson before the Committee. In fact, at one point
during their dealings with the Justice Department, the District
Attorney's Office considered taking the Castro case back from
the Justice Department. Mr. Dawson testified to this fact
before the Committee:
Counsel. Just one last question, and I'll address this to
you, Mr. Dawson. Did you at any time have great enough concerns
that you discussed or contemplated trying to take the case back
and have your own office do something with the conduit
contributions case?
Mr. Dawson. Yes, we had conversations about it.
* * * * * * *
Mr. Burton. Let me followup on that. When you had
conversations about it, were those conversations involving Mr.
Intriago?
Mr. Dawson. Well, I'm reluctant to answer the question only
because it involves questions between--I mean conversations
between Assistant District Attorneys in our office, and the
question whether to basically take back a matter that had
already been referred is sort of a touchy area.\103\
---------------------------------------------------------------------------
\103\ Castro Hearing at 107.
---------------------------------------------------------------------------
Conclusion
The Castro case represents one small episode in a large
pattern of illegal campaign contributions in the 1992 and 1996
elections. However, the Castro case stands out from the others
for the way it was so obviously mishandled by the Justice
Department. The Justice Department was presented with clear
evidence that a major DNC fundraiser was involved in directing
conduit contributions to the DNC. Moreover, they had evidence
that Mr. Intriago was receiving guidance on how to direct those
contributions from some higher authority, presumably within the
Democratic party. Inexplicably, the Justice Department failed
to pursue this case, and let the statute of limitations on the
case expire, effectively preventing anyone else from pursuing
it.
A key point in the testimony of the New York District
Attorneys, Dawson and Preiss, came during an exchange with
Chairman Burton:
Mr. Burton. You thought Mr. Intriago should have been
investigated?
Mr. Dawson. That the matter should have been
investigated.
Mr. Preiss. We thought the matter should have been
investigated.
Mr. Burton. Including Mr. Intriago.
Mr. Dawson. Well, to be honest with you Mr. Chairman,
we had already looked into some of Mr. Intriago's
transactions ourselves, and we had referred all of this
stuff. So, I guess it's no secret that this was among,
I suppose, that he would be among the matters we had
referred.
Mr. Burton. You thought it was worth them looking at.
Mr. Preiss. Absolutely, that's why we referred
it.\104\
---------------------------------------------------------------------------
\104\ Id. at 88 (Testimony of Joseph J. Dawson and Richard T.
Preiss).
The investigation into the illegal conduit contributions of
the Castro family leaves many unanswered questions. Among the
most pressing unresolved issues are:
The role Charles Intriago played in
funneling illegal conduit contributions to the DNC and
its various state affiliates.
The possibility that the solicitation of
such contributions was coordinated with senior
officials of the DNC.
The circumstances surrounding the transfer
of the Castro family case from the Southern District of
Florida to the Justice Department's Public Integrity
Section.
Why the Justice Department chose not to
prosecute a case where there was clear and compelling
evidence to show that several crimes had been
committed.
Why the FEC failed to act on the clear
evidence of election law violations presented in the
Castro family case.
Why, for more than 2 months, the Attorney
General has denied the request of the Committee to
interview Richard Gregorie, the Assistant U.S. Attorney
involved in the investigation of the Castro case before
it was taken away by the Public Integrity Section.
Gregorie likely has detailed information about the
reasons that the Castro case was taken to Public
Integrity, but the Attorney general has never responded
to multiple requests made by the chairman to interview
Mr. Gregorie.
It is the opinion of the Committee that the Public
Integrity Section of the Department of Justice was derelict in
its duty to pursue clear evidence of crimes including wire
fraud, mail fraud, conspiracy and campaign finance violations
related to the Castro case. The Justice Department's failure to
act on this case prevented the American people from learning
the truth about illegal campaign fundraising activities going
back to the 1992 presidential election. The Committee was able
to uncover only part of the truth, the story of how Jorge
Castro and his aunt made $50,000 in illegal contributions to
the DNC. However, there are two more critical questions that
the Committee has been unable to answer: why did the Castro
family make the contributions, and who was telling Charles
Intriago how to direct these contributions? These are facts
that could have been discovered by a timely prosecution of
Charles Intriago. However, because of the Justice Department's
malfeasance in the Castro case, the truth may never be
discovered.
[Supporting documentation follows:]
=======================================================================
CHAPTER V, PART B
THE FAILURE OF GOVERNMENT AGENCIES TO VIGOROUSLY PURSUE CAMPAIGN
VIOLATIONS:
FEC ENFORCEMENT PRACTICES AND THE CASE AGAINST FOREIGN NATIONAL THOMAS
KRAMER: DID PROMINENT DNC FUNDRAISERS RECEIVE SPECIAL TREATMENT?
=======================================================================
FEC Enforcement Practices and the Case against Foreign National Thomas
Kramer: Did Prominent DNC Fundraisers Receive Special Treatment?
I. INTRODUCTION
Another foreign contributor who came to the Committee's
attention was Thomas Kramer. Mr. Kramer, a German citizen with
considerable real estate holdings in the South Beach area of
Miami, illegally contributed over $322,600 to national, state,
and local candidates of both the Democratic and Republican
parties.\1\ The Tampa Tribune noted the donations and published
an article in September 1994 questioning whether or not Kramer
was eligible to make political contributions.\2\ The following
week, Kramer ``voluntarily'' disclosed his illegal activity,
claiming ignorance as to the illegality of his campaign
contributions.
---------------------------------------------------------------------------
\1\ The Committee's investigation focused only on the state and
national contributions.
\2\ Louis Lavelle, ``Developer's donations questioned,'' Tampa
Trib., Sept. 28, 1994, at Florida/Metro 1.
---------------------------------------------------------------------------
Upon learning that Kramer's contributions might not be
legal, almost all of the contributed money was returned to
Kramer by the parties involved.\3\ The FEC ultimately fined
Kramer, his secretary (Terri Bradley), the law firm of
Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A.
(``Greenberg Traurig''), and the Republican Party of Florida
(``RPF'') for giving or receiving Kramer's contributions. The
penalties associated with the Kramer contributions totaled
$503,000. Mr. Kramer was individually fined $323,000--the
largest penalty of its kind ever assessed by the FEC.\4\
---------------------------------------------------------------------------
\3\ The Republican Party of Florida [RPF] did not return $95,000 of
the $205,000 it received. The RPF successfully argued that the money
had been placed in a redistricting account that it was legally
permitted both to receive and spend money contributed by foreign
nationals. The FEC agreed with the RPF's position. Conciliation
Agreement, In the Matter of Republican Party of Florida (federal/non-
federal accounts) and James H. Stelling, as treasurer, MUR 4398, Feb.
20, 1997, at 1.3 (Exhibit 1).
\4\ Robert Jackson, ``German Given Record Fine in Campaign Donation
Case,'' L.A. Times, July 19, 1997, at A16.
---------------------------------------------------------------------------
The two individuals most closely identified with soliciting
Kramer's contributions were Marvin Rosen, the former Finance
Chairman of the Democratic National Committee (``DNC''), and
Howard Glicken, a former Vice Finance Chairman of the DNC and
close political associate of Vice President Gore. Mr. Glicken
was charged on July 9, 1998, by the Department of Justice's
Campaign Financing Task Force and pled guilty to two
misdemeanor violations stemming from his role in the Kramer
solicitations.\5\ The FEC fined Greenberg Traurig--the law firm
hired by Kramer to handle immigration matters and which counts
Marvin Rosen as a partner--$77,000 for soliciting illegal
contributions from Kramer with knowledge of his foreign
national status. When asked who at the firm besides Rosen
solicited contributions from Kramer, the FEC reported that:
---------------------------------------------------------------------------
\5\ Jane Bussey, ``Political money probe nabs Miamian,'' Miami
Herald, July 10, 1998, at 9A.
The only Greenberg-Traurig individual specifically
identified as a solicitor of Mr. Kramer's contributions
in the file of this matter is Marvin Rosen.\6\
---------------------------------------------------------------------------
\6\ Federal Election Commission Enforcement Actions: Foreign
Campaign Contributions And Other FECA Violations Before the House
Committee on Government Reform And Oversight, 105th Cong., 2d sess. 114
(1998).
During the course of the Committee's investigation, the
explanations given by FEC staff members only served to raise
further skepticism as to the conviction with which the FEC
pursued the Rosen and Glicken investigations. Indeed, the FEC
has never adequately explained why it failed to bring a case
against Rosen individually, or why it initially failed to
pursue a case against Glicken. Notwithstanding the fact that
neither Rosen nor Glicken was fined by the FEC--despite
evidence demonstrating that these two individuals were the only
solicitors who had reason to know that Kramer was ineligible to
make contributions--FEC General Counsel Noble stated on March
31, 1998, that no one at the FEC ever even called Rosen or
Glicken about the contributions.\7\ It should be further noted
that Kramer was not contacted by the FEC until a year and a
half after first disclosing his illegal contributions to the
commission. Yet, in announcing that it would not conduct
enforcement proceedings against Glicken, the FEC made the
following statement in December 1997:
---------------------------------------------------------------------------
\7\ Id. at 80 (statement of FEC General Counsel) (emphasis added).
[B]ecause of Mr. Glicken's high profile as a prominent
Democratic fundraiser, including his potential
fundraising involvement in support of Vice President
Gore's expected presidential campaign, it is unclear
that this individual would agree to settle this matter
short of litigation.\8\
---------------------------------------------------------------------------
\8\ General Counsel's Report, In the Matter of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A., et al, MUR 4638, Dec. 19, 1997,
at 2.3-2.4 (Exhibit 2).
FEC counsels and Commissioners, in both the FEC
conciliation agreement and in subsequent testimony before the
Committee, argued that this statement referred to a statute of
limitations that was about to expire at the time Glicken's name
was discovered in conjunction with his solicitation of
Kramer.\9\ They argued that discovering Glicken's name at such
a late point made bringing a case against Glicken difficult for
the Commission and would complicate the settlement process for
the other involved parties.\10\ This position, however, cannot
explain away the fact that Kramer submitted an affidavit in
December 1994--approximately 4 years before the statute of
limitations would expire--which put the FEC on notice that a
key fundraiser for the Democratic party may have knowingly
solicited his illegal contributions.\11\ Furthermore, the FEC's
statement linking Glicken to Vice President Gore as an apparent
reason for not pursuing the matter appears to be a particularly
ill-considered message that the FEC does not prosecute cases
when met with resolve and political connections.
Notwithstanding the fact that many of the recipients of
Kramer's donations had no knowledge of his foreign national
status, the Thomas Kramer matter demands vigorous attention for
two reasons:
---------------------------------------------------------------------------
\9\ Federal Election Commission Enforcement Actions, supra note 6
at 80-81 (statement of FEC General Counsel). General Counsel Noble
stated that the FEC ``did not find Mr. Glicken's name until July 1997,
and that particular contribution, where there was a suggestion that it
was a contribution in the name of another, or solicited as a
contribution in the name of another, the statute of limitations would
have run at the end of April of this year.'' Id. at 81.
\10\ Id. at 82.
\11\ Affidavit of Thomas Kramer, Dec. 27, 1994 (Exhibit 3); see
also Letter from Roger M. Witten to Joan McEnery and Mary L. Taksar,
Dec. 27, 1994 (Exhibit 21).
---------------------------------------------------------------------------
(1) Kramer's first and third federal contributions
were conduit contributions made at the request of, and
with the knowledge of, very prominent Democratic
fundraisers; and
(2) the FEC appears to have missed the mark
entirely--prominent national fundraisers should be
penalized heavily if they encourage others to break the
law.
An analysis of FEC practices and procedures relevant to the
Thomas Kramer matter follows this chapter as Appendix 1.
II. Thomas Kramer: High Profile German Developer
A. Background
Thomas Bernhard Kramer was born in Bad Soden, Germany on
April 27, 1957. He worked at Shearson Lehman Hutton Inc. in
Frankfurt from 1983 until 1988, leaving Germany the following
year after his plan to buy up East German pre-reunification
real estate proved unsuccessful. He settled in Miami during the
early 1990s and remains in the United States as a resident on a
tourist visa.\12\
---------------------------------------------------------------------------
\12\ Christine Evans, ``Kramer vs. Kramer,'' Miami Herald, May 9,
1993, at 9. Notwithstanding requests to the Department of Justice for
immigration information on Thomas Kramer, this Committee has not
received as much cooperation as expected.
---------------------------------------------------------------------------
Mr. Kramer's lack of U.S. citizenship would certainly not
surprise anyone remotely familiar with the Miami South Beach
scene. Leading a high profile life colored with self-promotion,
Kramer was often described in newspapers and national magazines
by such monikers as ``the impulsive German whiz kid'' \13\ or
``the German multimillionaire.'' \14\ During the early 1990s,
he amassed more than $40 million in property on South Beach and
Star Island--often paying cash for his acquisitions. The Miami
Herald once ran a full color picture of Kramer on the cover of
its Tropic insert describing Kramer as ``The German Tycoon Who
Wants To Rebuild South Beach in His Own Image.'' \15\
---------------------------------------------------------------------------
\13\ Evans, supra note 12.
\14\ Christine Evans, ``The Mysterious Stranger,'' Tropic, Jan. 3,
1993, at 11.
\15\ Tropic Magazine Cover, Jan. 3, 1993 (Exhibit 4).
---------------------------------------------------------------------------
FEC General Counsel Lawrence Noble stated in testimony
before this Committee that, to his understanding, Kramer was
definitely known to be a German investor in the South Beach,
Miami area. Mr. Noble further pointed out that Kramer's
immigration status ``was a question of whether or not it was
obvious or not he was a foreign national and whether or not he
was what's called a green card holder in this country.'' \16\
Mr. Noble's statement shows that Kramer's immigration status
was thus something certainly in need of scrutiny.
Notwithstanding public information that might have led
potential solicitors to question Kramer's nationality, the
evidence obtained by the Committee demonstrates that Marvin
Rosen and Howard Glicken clearly had knowledge that Kramer was
ineligible to make political contributions. The sections of
this chapter discussing the roles played by Rosen and Glicken
in the Kramer solicitations will explore such evidence in
detail.
---------------------------------------------------------------------------
\16\ Federal Election Commission Enforcement Actions, supra note 6
at 35 (statement of FEC General Counsel).
---------------------------------------------------------------------------
The DNC and Kramer's Questionable Immigration Status
The Committee uncovered additional evidence demonstrating
that the DNC was on, at a minimum, constructive notice of
Kramer's questionable immigration status. Notwithstanding the
aforementioned newspaper articles describing Kramer's foreign
national status, documents show that the DNC conducted
background NEXIS research on the Miami-based developer which
turned up a Forbes magazine article describing Kramer as a
``German investor.'' \17\ The DNC's own ``Event Form'' for
Chairman David Wilhelm for a June 10, 1993, Vice Presidential
dinner described Kramer as being ``[b]orn in Germany.'' \18\
The form did not mention Kramer's exact immigration status,
leaving the legality of his ability to make political
contributions a matter of uncertainty.
---------------------------------------------------------------------------
\17\ DNC Major Donor Screening Form for Olympus Holdings, Inc. and
corresponding background information (Exhibit 5).
\18\ Event Form for Chairman Wilhelm, June 10, 1993 (Exhibit 6).
---------------------------------------------------------------------------
Despite his questionable status, Kramer earned a DNC
Business Leadership Forum position due to the fundraising
efforts he undertook for an April 29, 1993, dinner for Vice
President Gore.\19\ A DNC memo dated May 7, 1993, to party
finance directors demonstrated why Kramer was considered an
attractive target for campaign funds:
---------------------------------------------------------------------------
\19\ Charles Intriago, another South Florida Democratic Fundraiser
and DNC Trustee was also in attendance. See ``Charles Intriago and
Illegal Political Contributions from Venezuela'' section of this
report).
Tom Kramer--Gave $25,000 to the event. Is the developer
who will build much of South Miami Beach and is worth
tens of millions. Make him a Trustee and stroke him and
he'll do more than $50,000 for the program.\20\
---------------------------------------------------------------------------
\20\ Florida Donors Memorandum, May 7, 1993, at 7.5 (Exhibit 7).
Other employees at the DNC also targeted Kramer directly.
Eric Sildon, Director of Membership Services for the DNC,
included Kramer on a list of potential invitees to a Florida
event for President Clinton ``because things like this might
get him jazzed-up to start writing those big checks.'' \21\ Mr.
Kramer's name appeared on call sheets for both Laura Hartigan,
Director of the DNC's Trustee Program, and for David Wilhelm,
the then-DNC Chairman.\22\ Mr. Wilhelm also drafted a letter to
Kramer and his wife on May 27, 1994, inviting them to a June
1994 DNC National Presidential Dinner.\23\ National Finance
Chairman Terry McAulliffe also invited Kramer to the DNC's 1994
Business Leadership Forum's Issue Conference and to the DNC's
National Presidential Dinner.\24\ As a result of such targeted
solicitation, Kramer eventually attained DNC Managing Trustee
status.\25\ Along with his numerous contributions and
invitations to various DNC causes and events, Kramer also began
to gain access to both the Vice President and the First Lady:
Mr. Kramer likely attended a private dinner with the Vice
President on June 10, 1993, at the Four Seasons Hotel in
Georgetown \26\ and was also scheduled to be seated at the
First Lady's table at another DNC event.\27\
---------------------------------------------------------------------------
\21\ Clinton in Florida Memorandum, Sept. 20, 1993 (Exhibit 8).
\22\ Laura Hartigan Calls (Exhibit 9); see also Call Sheet for
Chairman David Wilhelm, Nov. 16, 1993 (Exhibit 10).
\23\ Chairman David Wilhelm Letter to Mr. and Mrs. Tom Kramer,
dated May 27, 1994 (Exhibit 11).
\24\ Invitation to Thomas Kramer to the 1994 Business Leadership
Forum's Issue Conference (Exhibit 12).
\25\ Invoice Dates DNC Managing Trustees, at 13.7 (Exhibit 13).
\26\ NMR Event Brief, June 10, 1993 (Exhibit 14). Kramer was slated
to sit at Chairman Wilhelm's table. Table Diagram (Exhibit 15).
\27\ The First Lady's Table (Exhibit 16). Mark Jimenez, who is also
currently under investigation for campaign fundraising abuses, was also
listed on the diagram. Id.
---------------------------------------------------------------------------
B. Contributions
Mr. Kramer made numerous contributions to national and
state candidates of both the Democratic and Republican parties
between April 1993 and March 1994. He made the contributions in
his own name, in the name of his companies, in his wife
Catherine Burda Kramer's name, and in his secretary Terri
Bradley's name. In an affidavit filed with the FEC, Kramer
said:
[N]o one who solicited or accepted my candidate
contributions ever asked me about my immigration
status, advised me that I was illegal to contribute, or
rejected my political contributions because of my
citizenship.\28\
---------------------------------------------------------------------------
\28\ Affidavit, supra note 11.
The Committee's investigation uncovered no evidence
contradicting this claim for the majority of recipients. Two
facts, however, stand out. First, Marvin Rosen's law firm--
Greenberg Traurig--did immigration work for Kramer, thereby
putting Rosen and his colleagues on clear notice that Kramer
was not eligible to make political contributions. Second, there
appeared to be clear and convincing evidence that Kramer was
counseled on how to break the law by Howard Glicken. Because
Glicken coached Kramer on making conduit contributions through
Kramer's secretary, it is appropriate to assume that he
understood that Kramer himself would not make the
contributions.
On August 5, 1996, Kramer entered into a conciliation
agreement with the FEC stating that ``[r]espondent Thomas
Kramer made a total of $322,600 in contributions either
directly, through his secretary, through unknown
intermediaries, or as an officer through his various
corporations which were used in connection with elections for
local, State and Federal office, in violation of 2 U.S.C.
Sec. Sec. 441e and 441f.'' \29\ The two conduit contributions
made through his secretary Terri Bradley, the first and third
contributions made by Kramer,\30\ are detailed in the chart
below:
---------------------------------------------------------------------------
\29\ Conciliation Agreement, In the Matter of Thomas Kramer et al.
MUR 4398, Aug. 5, 1996 (Exhibit 17).
\30\ See Affidavit, supra note 11 at 3.3.
Contributions Made in the Name of Terri Bradley \31\
----------------------------------------------------------------------------------------------------------------
Date Recipient Amount Returned? Solicitor
----------------------------------------------------------------------------------------------------------------
3/20/93........................... Mitchell for Senate.. $1,000 Yes................. Marvin Rosen \32\
4/28/93........................... DSCC................. $20,000 Yes................. Howard Glicken \33\
----------------------------------------------------------------------------------------------------------------
\31\ Bradley is no longer employed by the Portofino Group.
\32\ Sandler Letter to Rodriguez, Sept. 3, 1997, at 18.3, 18.11 (Exhibit 18).
\33\ DSCC Finance Division Check Tracking Memorandum (Exhibit 19).
Kramer focused on these two contributions in his December
1994 affidavit. The contributions are distinct from his other
illegal contributions in that they involve violations of two
Federal election law provisions--2 U.S.C. Sec. 441e, making
illegal contributions by a foreign national and Sec. 441f,
making illegal contributions in the name of another. This
chapter will show that both Rosen and Glicken sought
contributions from Kramer knowing he was a foreign national and
that Glicken encouraged him to make contributions through a
conduit. Anyone soliciting a contribution from Kramer knowing
he was a foreign national or encouraging him to make the
contribution through a conduit would thus be conspiring to
violate Federal election law provisions.
C. The Case Against Thomas Kramer
On September 28, 1994, the Tampa Tribune published an
article entitled ``Developer's donations questioned,'' bringing
into question the more than $500,000 contributed by the
``flamboyant German developer.'' \34\ Shortly thereafter,
Kramer brought the matter to the attention of the FEC. The
somewhat unorthodox method by which the case arrived at the FEC
was noted by FEC Commissioner McGarry during one of the Pre-
Matter Under Review, or Pre-MUR, hearings:
---------------------------------------------------------------------------
\34\ Lavelle, supra note 2.
I'm convinced also in my own mind that if it weren't
for the Tampa Tribune we wouldn't be seeing this case.
It is sua sponte yes, but I always am less sympathetic
when someone is accelerated, eh, to jump in and do
something and bring it to our attention when it's
publicized in a major newspaper.\35\
---------------------------------------------------------------------------
\35\ FEC Pre-MUR 307/MUR 4398 proceedings, June 25, 1996.
On October 4, 1994, Kramer's counsel wrote to FEC General
Counsel Lawrence Noble expressing his client's desire to
voluntarily disclose his violations of the Federal Election
Campaign Act (``FECA'').\36\ The case was docketed as Pre-MUR
307 (which later became MUR 4398 as the investigation
continued). A longer letter and an affidavit from Kramer
disclosing the contributions he made to the DNC and to the
Republican party of Florida followed in December.\37\ In the
affidavit, Kramer cited the September 1994 Tampa Tribune
article, which spotlighted his illegal contributions, as
providing the impetus for his decision to come forward. Kramer
claimed that he was ``not knowledgeable about federal campaign
finance laws'' at the time he made his political
contributions.\38\ Both the letter and the affidavit state that
Kramer was never advised that a foreign national could not make
candidate contributions.
---------------------------------------------------------------------------
\36\ Letter from Roger M. Witten to General Counsel Noble, Oct. 4,
1994 (Exhibit 20).
\37\ Letter from Roger M. Witten and Margaret L. Ackerley to the
Office of the General Counsel, Dec. 27, 1994 (Exhibit 21); see also
Affidavit, supra note 11.
\38\ Affidavit, supra note 11.
---------------------------------------------------------------------------
The fact that the FEC did not discover the identities of
the solicitors of Kramer's illegal contributions until over
2\1/2\ years after receiving Kramer's admissions, together with
the FEC's General Counsel citing a then-expiring statute of
limitations as a reason not to pursue a case against the
solicitors, brings into question the FEC's management of this
case. Indeed, FEC Commissioner Joan Aikens acknowledged a
problem during one of the MUR hearings:
My first objection to this was to the length of time
this was sitting around for a sua sponte complaint.\39\
---------------------------------------------------------------------------
\39\ FEC Pre-MUR 307/MUR 4398, supra note 35.
---------------------------------------------------------------------------
Commissioner Aikens further noted:
I understand the misfortunes that befell the matter,
but I do find it distressing to have a sua sponte
matter involving both corporate and foreign national
contributions delayed this long. It would seem that
something like this should be flagged to be sure that
it doesn't fall between the cracks.\40\
---------------------------------------------------------------------------
\40\ Id.
The FEC ultimately discussed the cases in Executive Session
on four occasions,\41\ and handed down the following fines:
Terri Bradley was fined $21,000 in July 1996; Kramer $323,000
in August 1996; the Republican Party of Florida $82,000 in
March 1997; and the law firm Greenberg Traurig $77,000 in
February 1998. At the time, Kramer's fine was the largest ever
assessed by the FEC for an illegal campaign contribution by an
individual.\42\ The FEC decided to concentrate its case against
these four entities in order to maximize the possibility of
entering into conciliation agreements. For various other
reasons--reasons which will be examined and explored in this
chapter--the FEC decided not to pursue a case against Marvin
Rosen or Howard Glicken, both closely involved with the Kramer
conduit contributions. (The personal involvement of these
individuals will be discussed in detail in the ``Marvin Rosen,
Howard Glicken and Their Solicitations of Thomas Kramer''
section of this chapter).
---------------------------------------------------------------------------
\41\ Noble Memorandum to the Commission, May 4, 1998 (Exhibit 23).
\42\ Jackson, supra note 4.
---------------------------------------------------------------------------
D. The Case against the Republican Party of Florida (``RPF'')
On February 20, 1997, the RPF voluntarily entered into a
Conciliation Agreement with the FEC for contributions it
accepted from Kramer. The agreement noted that the party
accepted the following contributions from Kramer: (1) Separate
contributions of $100,000 and $5,000 from the Kramer-owned
Portofino Group on June 4, 1994; and (2) $100,000 from Kramer
on March 3, 1994, $5,000 of which was deposited into the
party's Federal account with the balance being transferred into
a non-Federal account and then transferred into a segregated
redistricting account. The RPF argued, and the FEC later
agreed, that it did not need to return $95,000 of the $205,000
it received because it had been legally placed into a
redistricting account. The FEC noted in the agreement that
funds used solely for non-campaign related redistricting issues
are exempt from the foreign national prohibition at 2 U.S.C.
Sec. 441.\43\ The $95,000 transferred by the party was thus,
according to the FEC, legally permissible under campaign
finance law. Nothing in this agreement pointed to any evidence
whatsoever that anyone within or related to the RPF knowingly
solicited contributions from the foreign national or had direct
knowledge of Kramer's status as a foreign national.
---------------------------------------------------------------------------
\43\ In the Matter of Republican Party of Florida, supra note 3.
The Committee believes that this aspect of Federal election law should
be evaluated to determine whether it is appropriate.
---------------------------------------------------------------------------
E. The Case against Greenberg Traurig
Because of the FEC's inability to reach a settlement with
Greenberg Traurig as part of the broader Kramer-related MUR
4398--and so as to not adversely prejudice the successfully
completed portion of MUR 4398--the Commission severed the
activity concerning Greenberg Traurig into a separate matter
and launched an investigation into the law firm's involvement
in Kramer's contributions.\44\ The investigation into Greenberg
Traurig's actions was assigned the MUR number 4638.
---------------------------------------------------------------------------
\44\ General Counsel's Report, In the Matter of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A., MUR 4638, Oct. 27, 1997, at
23.2 (Exhibit 23).
---------------------------------------------------------------------------
The FEC's case against Kramer from the outset, according to
FEC Associate General Counsel Lois Lerner, targeted Greenberg
Traurig:
Our focus . . . was to proceed against him [Kramer] and
the law firm. Ordinarily in the past, we had not really
proceeded against solicitors in these kinds of cases,
but here we had very specific information regarding the
law firm[.] \45\
---------------------------------------------------------------------------
\45\ Federal Election Commission Enforcement Actions, supra note 6
at 39 (statement of FEC Associate General Counsel).
According to Lerner, ``Mr. Kramer had said that it was
individuals in the law firm that had solicited him and that was
how we had proceeded.'' \46\ Kramer's secretary, Terri Bradley
informed the FEC that a named partner at Greenberg Traurig had
solicited Kramer for illegal contributions. (For a discussion
of the FEC's case against Rosen--whom the Committee suspects
may be the ``named partner'' in question--see the ``Marvin
Rosen'' portion of the following section.)
---------------------------------------------------------------------------
\46\ Id.
---------------------------------------------------------------------------
The FEC has not been clear about the frequency with which
it proceeds against the solicitors of illegal foreign or
conduit contributions. In an exchange before this Committee,
FEC Associate General Counsel Lerner suggested that it was
virtually unprecedented for the FEC to target the solicitors:
Mr. Burton. Let me just follow up, if I might. You
have gone after individuals who illegally or
unethically solicited contributions that were not
legal, have you not?
Ms. Lerner. Foreign national contributions, I believe
there's only been one other instance where we have
pursued a solicitor.
Mr. Burton. Is that right? Only one other?
Ms. Lerner. I believe so.
Yet according to arguments made by FEC Staff Attorney Jose
Rodriguez to the Commissioners during the FEC's MUR hearing:
There is a violation for someone who solicits the
foreign national contributions, but not for the
conduit. And having looked at some of our past practice
through the MURS, I don't believe we've actually held
anyone in violation of the foreign national prohibition
for simply being a conduit. We have held people
certainly for soliciting funds on behalf of the
[political] committee, but not for being a conduit.\47\
---------------------------------------------------------------------------
\47\ FEC Pre-MUR 307/MUR 4398, supra note 35 (emphasis added).
Greenberg Traurig was presumably targeted because of its
particular and indisputable knowledge of Kramer's foreign
national status. Yet it was Marvin Rosen--the DNC Finance
Chairman, the lawyer who held Kramer as a client, and the
actual solicitor of some of Kramer's contributions--who was in
a unique and significant position. These factors make the
reality that the FEC targeted Greenberg Traurig, rather than
Rosen individually, even more difficult to comprehend.
Greenberg Traurig eventually expressed a desire to settle
the matter, and did so based on the $91,000 the firm admitted
soliciting from Kramer.\48\ The agreement noted that the firm
lawyers working on the immigration matters were aware of
Kramer's foreign national status.\49\ The agreement did not
detail which contributions the respondent solicited or which
specific lawyers at the firm were aware of his immigration
status.
---------------------------------------------------------------------------
\48\ Certification and Conciliation Agreement, In the Matter of
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., et al. MUR
4638, Dec. 31, 1997, at 24.3 (Exhibit 24).
\49\ Id.
---------------------------------------------------------------------------
It should be noted, however, that the FEC may have actually
given Greenberg Traurig (and Marvin Rosen) an unfair advantage
when it decided to split the case into two investigations. By
splitting the case, the FEC was allowed to place into the
public domain all of the facts involving all of the parties
except Greenberg Traurig. The law firm, with which Kramer had
placed his trust to advise him of the laws of this country and
which in turn advised him to break the law by making illegal
contributions, was thus given a chance to further distance
itself from Kramer by splitting itself off into a far less
public investigation.
It should be further noted that Kramer's attorney objected
to splitting off the Greenberg Traurig case. In a letter
written to the FEC on June 20, 1997, Kramer's counsel wrote:
We are advised that the Commission has taken the very
rare, if not unprecedented, action of severing the
above-referenced MUR [MUR 4398] to create a new MUR for
one respondent that has failed to reach a conciliation
agreement with the Commission.
* * * * * * *
We have been told that in severing this matter into two
separate MURs, the Commission will redact from the
public record of MUR 4398 certain facts that are
essential to a fair understanding of the case as it
concerns our client, Thomas Kramer. Specifically, we
understand that references in our December 27, 1994
voluntary disclosure letter and in Mr. Kramer's
accompanying affidavit to his having made contributions
at the suggestion and with the advice of counsel will
be omitted. . . . The planned deletions would omit a
critically relevant fact--that Mr. Kramer made many of
his contributions at the suggestion of a law firm that
knew of his foreign national status. Because the
omissions will obscure the fact that Mr. Kramer had
every reason to believe he was acting within the law
when he made campaign contributions, the public's
understanding of the facts will be skewed in a manner
grossly unfair to Mr. Kramer.\50\
---------------------------------------------------------------------------
\50\ Letter from Roger M. Witten and Margaret L. Ackerley to
General Counsel Noble, June 20, 1997 (Exhibit 25).
Kramer's counsel further pointed out that at no time did
Kramer ever advocate selectively publishing the facts
surrounding his contributions. On the contrary, Kramer
advocated full disclosure. Whether by intention or by accident,
the splitting of the case into two separate MURs may have
placed Kramer--who voluntarily came forward and disclosed all
his improprieties completely and accurately--at a disadvantage,
while placing Greenberg Traurig in a more favorable position.
III. Marvin Rosen, Howard Glicken, and Their Solicitations of Thomas
Kramer
A. Marvin Rosen's involvement
1. Background
Marvin S. Rosen is a shareholder in the Miami-based law
firm Greenberg Traurig. He has a long history of political
fundraising. He personally raised more than $300,000 for Walter
Mondale's pre-nomination campaign in 1984.\51\ Mr. Rosen also
served as chairman of Michael Dukakis' national finance board
of directors in 1988 and was one of former Florida Governor
Reubin Askew's chief fundraisers.\52\ He has also raised money
for a number of Democratic Senators. He was elevated by the DNC
to trustee status after raising more than $50,000 for an April
1993 dinner in Miami honoring Vice President Gore.\53\ He
served as a fundraiser for the Summit of the Americas
conference in Miami and as head of the DNC Business Council.
---------------------------------------------------------------------------
\51\ Jackson, Brooks, ``Dukakis Nears a Fund-Raising Record With
Big Boost From Greek-Americans,'' Wall Street Journal, Sept. 21, 1987,
at A1.
\52\ Kenneth S. Allen, ``Costly decision: Askew pays price for
leaving race,'' St. Pete. Times, May 12, 1988, at 1B.
\53\ Florida Donors Memorandum, supra note 20.
---------------------------------------------------------------------------
Mr. Rosen became Finance Chairman of the DNC in September
1995. He did not, however, take a leave of absence from his
private practice upon assuming the chairmanship--resulting in
criticism from some of his colleagues for mixing personal and
party business.\54\ As Finance Chairman, Rosen oversaw a staff
of 110 people--setting broad strategy for raising funds,
deciding where to hold Clinton fundraisers, and soliciting
money from donors. He has since sought to distance himself from
the investigation of campaign finance violations, stressing his
chairmanship position was voluntary and claiming that others
had day-to-day management responsibilities.\55\ Press accounts
have reported that the DNC is paying his legal bills.\56\
---------------------------------------------------------------------------
\54\ Michael Weisskopf and Susan Schmidt, ``Some Clouds Over a
Rainmaker; As Democratic party Finance Role Grew, So Did Lobbying
Firm,'' the Washington Post, Jan. 26, 1998, at A8.
\55\ Id.
\56\ Susan Schmidt, ``Democrats Renew Attacks on House Panel After
Staff Turmoil in Political Funds Probe,'' the Washington Post, July 3,
1997, at A4.
---------------------------------------------------------------------------
According to then-DNC Chairman Don Fowler, Rosen conducted
his fundraising under the control of Deputy White House Chief
of Staff Harold Ickes: the finance division reportedly ``took
their mission and charter from the White House and seemed to do
what the White House wanted done.'' \57\ In November 1995,
Rosen allegedly estimated that 20 telephone calls by Clinton
and 15 calls made by Gore would raise $1.2 million,\58\ and two
lists of potential donors were prepared for the President and
Vice President.\59\ Mr. Rosen may have also been involved with
setting up coffees with the President: an unidentified
fundraiser stated in a newspaper article on February 26, 1997,
that Rosen said ``[u]se the coffees to get the money,'' thereby
acting against White House guidelines.\60\
---------------------------------------------------------------------------
\57\ ``Democrats' Fowler: Donors Got Access On White House Word,''
Inv. Bus. Daily, Sept. 10, 1997, at A1.
\58\ Don Van Natta, Jr., ``Fundraising fell short, report says,''
New York Times, Sept. 29, 1997, at A8.
\59\ David Dahl, ``Lawyer Implies Clinton may have made calls,''
St. Pete. Times, Sept. 22, 1997, at A1.
\60\ Lena H. Sun, ``Grand Jury Begins Hearing Testimony in DNC
Fund-Raising Probe,'' the Washington Post, Feb. 27, 1997, at A17.
---------------------------------------------------------------------------
2. A. Pattern of Questionable Fundraising
Although he was the key DNC finance official during the
1996 campaign, Marvin Rosen has to date been largely overlooked
in the campaign finance investigation. During his tenure as DNC
Finance Chairman, Rosen was connected and involved with a
number of questionable activities:
Rosen's law firm was retained by Mark
Jimenez and his company Future Tech International, Inc.
Jimenez, Future Tech International, and his employees
donated $800,000 since 1993 to President Clinton,
Democratic causes and other related groups. Jimenez
says that he was introduced to the world of political
fundraising through the Miami firm. Future Tech began
making contributions to the DNC in 1993.\61\ Mr. Rosen
solicited $50,000 from Jimenez as detailed on a March
24, 1994, DNC Executive Finance Summary. Jimenez
visited the White House 12 times beginning in April
1994. Twenty-two employees of Future Tech each gave a
$1,000 contribution to Clinton-Gore '96 at a Bal
Harbour fundraiser in September 1995. Many or all of
these appear to be conduit contributions.\62\ Jimenez
was Florida's largest DNC contributor in 1996.\63\
---------------------------------------------------------------------------
\61\ Jill Abramson, Jonathan Friedland, and Marcus W. Brauchli,
``Latin Connection: DNC Donor with Ties to Paraguay Presses Its Case in
White House,'' Wall Street Journal, Feb. 20, 1997, at A1. Jimenez was
born in the Philippines and is a legal resident of the United States.
He has links to the Paraguay government. Tom Squitieri, ``White House
link to Paraguay probed,'' USA Today, Feb. 24, 1997, at 6A.
\62\ William March, ``Feds examine campaign largess,'' Tampa Trib.,
Dec. 3, 1997, at 1.
\63\ Id.
---------------------------------------------------------------------------
On September 30, 1998, Jimenez was indicted by the
Justice Department Campaign Financing Task Force. The
17 count indictment was for, ``organizing, making and
concealing illegal conduit contributions to a number of
Democratic campaigns, including the 1996 Clinton/Gore
primary committee.'' \64\
---------------------------------------------------------------------------
\64\ Press Release, Department of Justice, Sept. 30, 1998.
---------------------------------------------------------------------------
Rosen was personally directed by President
Clinton to hire controversial fundraiser John Huang
after the DNC had ignored the suggestion of Joe Giroir
to hire Huang. Giroir was a friend of both the
President and of the Riady family. Ickes called Rosen
twice in the autumn of 1995 before Huang was finally
hired.\65\ Former DNC Finance Director Richard
Sullivan, before the Senate Governmental Affairs
Committee, testified that: ``My sense of it at the time
was that Harold had called Marvin on--twice about it
over the period of a couple of weeks, and that is when
Marvin acted on it.'' \66\ Rosen was prompted to hire
Huang after President Clinton approached him on
November 8, 1995, at an event held at the Historic Car
Barn: Rosen, in a deposition before the Senate
Committee on Governmental Affairs, stated that ``I
believe as part of the conversation, [the President
said] something along the lines that he came highly
recommended or something, but I did believe that it was
an approving comment at the time.'' \67\ Rosen and
Fowler soon thereafter gave Huang the title of Vice
Finance Chairman, the No. 2 or No. 3 position at the
DNC (according to Sullivan).\68\
---------------------------------------------------------------------------
\65\ Don Van Natta, Jr., ``President Linked to Urgent Enlisting of
Top Fundraiser,'' New York Times, July 7, 1997, at A1.
\66\ Investigation on Illegal or Improper Activities in Connection
with the 1996 Federal Election Campaign Part I Before the Senate
Committee on Governmental Affairs, S. Hrg. 105-300 92 (1997) (statement
of Richard Sullivan).
\67\ Id. at 1663 (statement of Marvin Rosen).
\68\ Id. at 99 (statement of Richard Sullivan).
---------------------------------------------------------------------------
Rosen reportedly approved of the inclusion
of Wang Jun, head of a Chinese arms-trading company
under investigation for alleged involvement in weapons
smuggling, at a February 6, 1996, coffee because now-
indicted fundraiser Charlie Trie and Ernie Green, a
friend of the President's and a Managing Trustee of the
DNC, were helping Huang raise money for a then-upcoming
fundraiser.\69\ Rosen also gave John Huang the go ahead
for the July 30, 1996, dinner at the Jefferson Hotel
which raised $488,000 for the President.\70\
---------------------------------------------------------------------------
\69\ Alan C. Miller and Glenn F. Bunting, Ex-DNC Official May Pose
Biggest Party Threat, July 9, 1997, at 1.
\70\ See generally Tom Squitieri, ``Democrats knew Huang might be
trouble,'' USA Today, Feb. 19, 1997, at 09A.
---------------------------------------------------------------------------
Rosen's firm was also hired by Roger Tamraz,
an Egyptian-American oil financier wanted in Lebanon on
embezzlement charges. Tamraz hired Greenberg Traurig
and donated money to the Democratic party to promote
himself and his proposal to build a $2.5 billion oil
pipeline from the Caspian Sea region of Central Asia to
Western markets. Tamraz contributed about $300,000 to
Democrats in 1995 and 1996. A Federal grand jury is
seeking to determine if anyone tried to bribe or
pressure any Clinton administration officials into
supporting Tamraz and his plan.\71\
---------------------------------------------------------------------------
\71\ David B. Ottaway and Dan Morgan, ``Senate panel to study saga
of access and oil,'' Austin American-Statesman, Sept. 9, 1997, A8.
---------------------------------------------------------------------------
Tamraz claimed that the firm was hired for legal
advice on regaining some of his properties seized in
Lebanon. The connection evidently came through Tamraz'
hiring of Greenberg Traurig lawyer Victoria Kennedy,
wife of Senator Ted Kennedy.\72\ Rosen and Sullivan met
with Tamraz at the Four Seasons Hotel in Washington, DC
on October 6, 1995. Tamraz complained that he had been
frozen out from the White House. Rosen promised to look
into it. Tamraz was later admitted to four White House
functions.\73\
---------------------------------------------------------------------------
\72\ Edward Walsh, ``Tamraz Defends Political Donations; Access to
Top Officials Was `Only Reason' Pipeline Promoter Testifies,'' the
Washington Post, Sept. 19, 1997, at A1.
\73\ Gregory Vistica and Michael Issikof, ``A Shadowy Scandal,''
Newsweek, Mar. 31, 1997, at 34.
---------------------------------------------------------------------------
Tamraz testified before the Senate Committee on
Governmental Affairs during its campaign finance
inquiry. When asked by Senator Joseph Lieberman whether
he thought he got his ``money's worth'' for the
$300,000 he gave, Tamraz replied, ``I think next time
I'll give $600,000.'' \74\
---------------------------------------------------------------------------
\74\ Investigation on Illegal or Improper Activities in Connection
with the 1996 Federal Election Campaign Part VII Before the Senate
Committee on Governmental Affairs, S. Hrg. 105-300 184 (1997)
(statement of Roger Tamraz).
---------------------------------------------------------------------------
The DNC assumed $25,000 in bills incurred at
Chicago's Four Seasons Hotel during the 1996 Democratic
Convention. Greg Cortes, an attorney from Puerto Rico,
had picked up the tab for Rosen's $3,000-a-night suite,
as well as part of the tab for treasurer Scott
Pastrick, after the hotel refused to provide free
rooms. Much of the bill was paid through wire
transfers. The DNC was concerned that the wire transfer
may have come from Cortes's South American business
associates and thus decided to pick up the tab. The DNC
also failed to report Cortes' payment as an in-kind
contribution to the party in its FEC filings.\75\
---------------------------------------------------------------------------
\75\ Charles Babcock, ``DNC Assumes Hotel Bills First Paid by
Business Consultant,'' the Washington Post, Jan. 8, 1997, at A14.
---------------------------------------------------------------------------
3. Marvin Rosen and the Kramer Solicitations
Terri Bradley told the FEC she was able to identify the
Greenberg Traurig partner who solicited contributions from
Kramer, and was aware of both telephone and fax solicitations
evidencing such solicitation.\76\ This information was conveyed
during a telephone conversation between her lawyer and Jose
Rodriguez, the staff attorney assigned to the case, in
September 1997. Rodriguez was asked about this information
during a Committee hearing:
---------------------------------------------------------------------------
\76\ Office of the General Counsel Memorandum of Telephone Call or
Visit, Sept. 11, 1997 (Exhibit 26).
A: We had some discussion about the language that we
could include. Of course, what they wanted was some
language showing that the client relied on, uhm, legal
advice from the law firm. If I understand correctly, we
told them that we would provide some of this language.
We would not identify the law firm of course. Nor would
we include language showing that the law firm solicited
a number of the contributions. But we would allow some
language showing the client's reliance on legal
advice.\77\
---------------------------------------------------------------------------
\77\ FEC Pre-MUR 307/MUR 4398, supra note 35.
---------------------------------------------------------------------------
Q: And I guess my question is up until 1997, what was
done to try to deal with this very clear, specific
request and, obviously a violation of the law because
Ms. Bradley did, in fact, make a $20,000 conduit
payment, didn't she?
A: Yes she did.
Q: OK. And what steps did you take to try to find out
who this person was?
A: The steps that were taken were taken during the
conciliation process, and I can't go into detail
because it's confidential information.
Q: I understand.
A: We sought to gain further information on this
transaction during the negotiations for conciliation.
We did not--the conciliation negotiations went quickly
incidentally, settlement was reached quickly. Later on
in the investigation when we could not find settlement
or reach settlement with the law firm, we inquired
further, and that brings us to the conversation you saw
earlier on the Telecon and other information that you
have in your possession.\78\
---------------------------------------------------------------------------
\78\ Federal Election Commission Enforcement Actions, supra note 6,
at 60.
Associate General Counsel Lerner testified before this
Committee during the same hearing that ``there's also
information that there were other people in the law firm who
were also involved in the solicitations, not just Mr. Rosen.''
\79\ Yet in a statement provided to the Committee after its
March 31, 1998, hearing, the FEC reported that:
---------------------------------------------------------------------------
\79\ Id. at 40 (statement of FEC Associate General Counsel).
The only Greenberg-Traurig individual specifically
identified as a solicitor of Mr. Kramer's contributions
in the file of this matter is Marvin Rosen.\80\
---------------------------------------------------------------------------
\80\ Id. at 114.
Based on evidence provided to the Committee by the FEC itself,
it thus appears that Rosen was the ``named partner'' to whom
Bradley was referring. Unfortunately, the Committee was not
able to learn the identity of the ``named partner'' directly
from Bradley because she asserted her Fifth Amendment rights
before this Committee.
The Committee also discovered that Rosen solicited $60,000
from Kramer at an event in March 1994 and another $65,000 from
Kramer through his companies. Both of the contributions
violated 2 U.S.C. Sec. 441e.\81\
---------------------------------------------------------------------------
\81\ DNC Check Tracking Form for 35 Star Island Inc. (Exhibit 27);
Executive Summary for Mr. Tom Kramer (Exhibit 28); DNC Finance System
report on Tom Kramer (Exhibit 29); DNC Response to Committee
Interrogatories, Mar. 30, 1998 at 30.3 (Exhibit 30); see also Karpel,
Craig, ``Al Gore's Ties to Dirty Money in Miami,'' Apr. 4, 1994, at 1.
---------------------------------------------------------------------------
B. Howard Glicken's involvement
1. Background
Howard M. Glicken was born on November 16, 1943, in Miami.
He serves as the Chairman of the Board of the Americas Group
and is the former chairman of the Commonwealth Group,\82\ the
College Democrats of America, and Jillian's Entertainment
Corporation.\83\ He was fired from a Miami bank in 1983 after
accepting a commission that his boss considered to be a
kickback.\84\ Mr. Glicken also once headed MetalBanc Corp.,\85\
a precious-metals trading company indicted in a case involving
laundering drug money.\86\ The charges were dropped, but in a
settlement agreement Glicken created a subsidiary that agreed
to pay the government $375,000. Mr. Glicken was never charged,
but testified under a grant of limited immunity at the trial of
his former partner, Harry Aaron Falk.\87\ Mr. Falk is currently
serving a 27-year sentence.\88\ Committee investigators learned
that another partner indicted in the MetalBanc investigation,
Duvan Arboleda, was murdered in Colombia in early 1998.\89\
---------------------------------------------------------------------------
\82\ The business addresses are: Alhambra Plaza, Suite 620, Coral
Gables, FL 33134; 1 Massachusetts Ave. NW, Suite 850, Washington, DC
20001; One Boston Street, 30th Floor, Boston, MA 02108.
\83\ Jillian's owns a chain of billiard parlor/restaurants in
Miami, Seattle, Cleveland, and Boston. Jillian's was formerly known as
Carom. Carom was one of two Miami companies indicted by an Atlanta
based grand jury on charges of money laundering as part of Operation
Polar Cap. Polar Cap was a nationwide attack on the financial end of
the Medellin cocaine cartel. David Sedore, ``Carom and Analysts Say
Indictment Misses the Mark,'' S. Fla. Bus. J., Dec. 2, 1991, at 1. Falk
and Duvan Arboleda, former chairman of the Orexana Corp. (another
company indicted by the grand jury) were named in the indictment. Id.
Arboleda was murdered in Colombia in spring 1998.
\84\ Phil Kuntz and Jill Abramson, ``Glicken Raises Millions,
Visits the White House Often, Arranges Introductions,'' Wall Street
Journal, Apr. 29, 1997, at A1.
\85\ MetalBanc bought Jillian's by paying an undisclosed sum for a
51 percent interest in the chain of pool halls. Patrick Danner, ``Banc
Shot: MetalBank Prepares to Take on Billiards Industry,'' S. Fla. Bus.
J., Mar. 26, 1990, at 1. MetalBanc started Metal Resources Corp. in
1987 as a mean to capitalize on opportunities in Brazil and other
markets. ``Public Offering Set by Dealer of Precious Metals,'' S. Fla.
Bus. J., July 6, 1987, at 1.
\86\ Phil Willon, ``Fundraiser for Gore Reaps Dividends,'' Tampa
Trib., Feb. 11, 1998, at 6.
\87\ Phil Kuntz and Jill Abramson, ``Access Granted: A Fund-Raiser
for Gore Retools His Career With an Aura of Clout,'' Wall Street
Journal, Apr. 29, 1997, at A1.
\88\ Id.
\89\ Phone Interview of Cynthia Arboleda, Ex-Wife of Duvan
Arboleda, in Washington, DC (June 2, 1998). Mrs. Arboleda attended the
funeral of her ex-husband with her two children. According to Mrs.
Arboleda, Duvan Arboleda was murdered in Envigado, Colombia on May 9,
1998. His cause of death was attributed to multiple gunshot wounds. Id.
---------------------------------------------------------------------------
2. Prominent Fundraiser With Strong Ties to Vice President Gore
Mr. Glicken has known Vice President Gore since 1987,
serving as the Florida Finance Chairman during then Senator
Gore's 1988 Presidential campaign. The license plates on
Glicken's two Jaguars were, at one point, ``Gore 1'' and ``Gore
2.'' \90\ He is known to show photos of a $6,000 pool table
that he arranged to have donated to Vice President Gore's
home.\91\ In addition, his son, Monte Glicken, once worked for
Mr. Gore during his tenure as Vice President.\92\ According to
a newspaper article, Glicken ``frequently advises the Vice
President on ways to attract young people into the party.''
\93\ A request for a West Wing Tour made by Eric Sildon at the
DNC noted such strong ties to Vice President Gore: ``Howard is
one of our strongest supporters and has been a close friend of
the Vice President's for many, many years.'' \94\
---------------------------------------------------------------------------
\90\ Tamara Lytle, ``Friend of Gore avoids fine for illegal
donations,'' Orl. Sentinel, Feb. 12, 1998, at A8.
\91\ Id.
\92\ Id.
\93\ Hillary Stout, ``Gore Lays Strong Groundwork for the Future,''
Wall Street Journal Eur., Jan. 9, 1996, at 2.
\94\ West Wing Tour Memorandum, Oct. 22, 1993 (Exhibit 31).
---------------------------------------------------------------------------
Over the years, Glicken has developed an expertise in Latin
American business and reportedly counsels the Vice President on
Latin American affairs.\95\ He testified before a July 1994
joint House International Relations Committee hearing on trade
and the Western Hemisphere.\96\ Mr. Glicken was also hosted in
Argentina by Ambassador James Cheek and twice stayed as a guest
of U.S. Ambassador to Chile Gabriel Guerra Mondragon at the
official residence.\97\ Mr. Glicken even accompanied the late
Commerce Secretary Ron Brown on a 1994 export promotion tour
through Latin America. His mere presence troubled some
delegation members: Mr. Glicken's ``wheeling and dealing''
reportedly ``evoked squeamishness among a number of officials
at Commerce.'' \98\ His inclusion thus raised the specter of
political considerations possibly affecting Commerce Department
decisionmaking.\99\ Despite such controversy, Glicken prepared
a memo for the Vice President upon returning from the trip.
This memo appeared to raise some concerns by staff members
based on handwritten notes written on the letter's face.\100\
---------------------------------------------------------------------------
\95\ Hillary Stout, ``Gore Lays Strong Groundwork for the Future,''
Wall Street Journal Eur., Jan. 9, 1996, at 2. Glicken also serves/
served on the board of the Make-A-Wish Foundation of South Florida.
Peter Bernard, ``Legal Aid Builds Its Staff With Promotions, Hiring,''
Sun-Sentinel (Ft. Lauderdale Fla.), Feb. 1, 1995, at 7.
\96\ The Summit of the Americas Hearing Part I: Prospects for or
Trade within the Hemisphere Before the Subcommittee on Economic Policy,
Trade and Environment and the Subcommittee on the Western Hemisphere of
the House Committee on International Relations, 103d Cong., 2d sess.
(1994).
\97\ Kuntz, supra note 87 at A8.
\98\ Paul Blustein, ``A Cloud Over Commerce; Politics May Have
Tainted Choices, Policy,'' the Washington Post, Dec. 22, 1996, at A1.
\99\ Id.
\100\ Glicken Letter and Memorandum to Vice President Gore, May 10,
1994 (Exhibit 32). Two notations, which appear to be written in
different handwriting, read ``David--We Better Discuss In Person--
Thanks J.Q.'', and ``Jack/David: Will you pls. Handle this--politics of
whether we mention this to Secy. Brown. Beth.''
---------------------------------------------------------------------------
The Miami businessman has also been considered for
administration appointments. Mr. Glicken's nomination to the
President's Export Council was approved by President Clinton in
a March 1994 memo.\101\ After additional FBI information on
Glicken arrived, however, his candidacy was withdrawn. No
reason was listed for the application's withdrawal.\102\ Mr.
Glicken was also considered a ``strong candidate'' and a ``good
fit'' for the Delegation to the Inauguration of the new
Colombian President.\103\ The recommendation memo noted that
``Howard is on the Executive Board . . . of the Maimi (sic)
Coalition for a Drug Free Community--a famous international
drug interdiction and prevention program. He served in this
organization with Janet Reno until she was appointed Attorney
General.'' \104\ Mr. Glicken was also considered a priority for
participation in the Miami Hemispheric Conference, according to
a DNC memo.\105\
---------------------------------------------------------------------------
\101\ Candidate for Presidential Appointment Memorandum, Mar. 22,
1994 (Exhibit 33).
\102\ Individual Information Sheet on Prospective Presidential
Appointees, May 5, 1997 (Exhibit 34).
\103\ Delegation to Columbia [sic] Memorandum, July 28, 1994
(Exhibit 35).
\104\ Id.
\105\ Hemispheric Conference Memorandum to Laura Hartigan, Aug. 16,
1994 (Exhibit 36). Marvin Rosen was also considered a priority. Id.
Mark Jimenez was also a suggested participant and Thomas Kramer and
Neal Harrington were considered as general priority. Id.
---------------------------------------------------------------------------
Mr. Glicken has also been an active party fundraiser. He
helped raise money for the Democrats in 1992 and raised $2
million for the party in 1996. He was elevated to trustee
status (along with Rosen) after raising more than $50,000 for
the April 29, 1993, Miami dinner honoring Vice President
Gore.\106\ He served as Co-Chairman of the December 1994 Miami-
based Summit of the Americas' business contingent.\107\ He
attended coffees with both the President and the Vice
President, flew on Air Force One, and visited the White House
on at least 70 occasions--staying overnight in the Lincoln
Bedroom at least once.\108\ He co-chaired a March 1994 Miami
dinner honoring the President and Mrs. Clinton, which raised
$3.4 million. Senator and DNC Chairman Chris Dodd wrote Glicken
a letter on February 27, 1995, expressing his pleasure at
seeing him at a White House dinner and appreciating his
``diligence and hard work as a Managing Trustee of the
Democratic party.'' \109\ President Clinton thanked Glicken
personally--who was seated in the front row--during his opening
remarks at the fundraiser. President Clinton also thanked
Glicken in his remarks given at an April 1996 Miami fundraising
event. In total, Glicken raised $2 million for the 1996
Clinton-Gore team. Vice President Gore thanked him personally
for his role in a Miami fundraiser which raised $3.4 million.
---------------------------------------------------------------------------
\106\ Florida Donors Memorandum, supra note 20 at 7.2.
\107\ M. Delal Boer, ``Latin American Free Trade Stumbles,'' Wall
Street Journal, Asia, Nov. 2, 1994, at 6.
\108\ Howard Glicken: Democratic Events Attended (Exhibit 37).
\109\ Dodd Letter to Glicken, Feb. 27, 1995 (Exhibit 38).
---------------------------------------------------------------------------
Apart from his role as a fundraiser, Glicken appears to
have combined his political activities with his business
ventures. In 1996, he founded the Americas Group (which counts
former Senator George Mitchell as a board member) as a vehicle
to encourage business deals between the United States and Latin
America.\110\ Mr. Glicken reportedly took a group of South
American businessmen and politicians to meet President Clinton
at a December 1996 reception at Miami's Biltmore Hotel.\111\ He
also met with officials from the personnel and political
affairs offices, the NSC, and the Presidential and Vice
Presidential staffs.\112\ On another occasion in 1996, Glicken
brought a client from Brazil to meet Ronald Klain, Vice
President Gore's Chief of Staff.\113\
---------------------------------------------------------------------------
\110\ The SEC objected to the merger of Americas Group, which
Glicken founded in 1996, with Advanced Electronic Support Products in
1996. A group of shareholders amounting to 18 percent of the fund are
suing Americas Group for ``blatant self-interest.'' See S. Fla. Bus.
J., Dec. 2, 1991, at 1.
\111\ Kuntz, supra note 87.
\112\ Kuntz, ``Democratic Fund-Raiser Glicken Visited White House
Officials Scores of Times,'' Wall Street Journal, May 5, 1997, at A20.
\113\ Id.
---------------------------------------------------------------------------
3. The Case Against Howard Glicken
Mr. Kramer's secretary, Terri Bradley, made a $20,000
contribution to the Democratic Senatorial Campaign Committee
(``DSCC'') after someone unknown to Bradley--later revealed to
be Glicken--approached Kramer. According to Staff Attorney
Rodriguez, in testimony before this Committee and in documents
produced by the FEC, Bradley overheard a conversation between
Kramer and another individual who asked Kramer if there was
``anyone else who could make the contribution in your place.''
\114\ The solicitor promised that the ``requested contribution
would make Mr. Kramer a member of the `inner circle' with
various accompanying perks.'' Bradley told the FEC that she
would divulge the name of the Democratic fundraiser suggesting
the illegal scheme in exchange for immunity from
prosecution.\115\ The Committee attempted to interview Bradley
but, as previously noted, she asserted her Fifth Amendment
rights before the Committee. The plea agreement Glicken entered
into focused on Bradley's DSCC contribution--the questionable
contribution referenced along with the ``prominent fundraiser''
language that resulted in tremendous public criticism and which
played a significant part in the Committee's March 31, 1998,
hearing.
---------------------------------------------------------------------------
\114\ Office of the General Counsel Memorandum of Telephone Call or
Visit, supra note 76.
\115\ Tamara Lytle, supra note 90.
---------------------------------------------------------------------------
Despite all of the controversy surrounding this Democratic
party insider, the FEC decided in December 1997 not to pursue a
case against Glicken. This decision was made in the face of
strong evidence demonstrating that Glicken had knowingly
solicited an illegal contribution from a German national
through a conduit straw donor. In an unusual announcement, the
FEC cited ``Mr. Glicken's high profile as a prominent
Democratic fundraiser'' and ``potential fundraising involvement
in support of Vice President Gore's expected presidential
campaign'' as reasons not to pursue a case against
Glicken.\116\ During testimony before this Committee, the FEC
General Counsel stated that his office first learned Glicken's
name only a few months before the statute of limitations
governing the case would expire. Yet, as previously noted, the
FEC was first provided with information by Kramer himself that
someone within the Democratic party knowingly solicited the
illegal contribution as early as December 1994.
---------------------------------------------------------------------------
\116\ General Counsel's Report, supra note 8 at 2.3-2.4.
---------------------------------------------------------------------------
When asked during the Committee's March 1998 hearing why
the FEC did not pursue a case against Glicken more
aggressively, FEC General Counsel Lawrence Noble stated:
We did not pursue the investigation of Mr. Glicken
because it was--most of the activity at issue was 1993
activity; some was 1994. We have a 5-year statute of
limitations. Mr. Glicken's name came up late in the
process. We have not found reason to believe against
Mr. Glicken. We would have had to start from the
beginning with Mr. Glicken. The statute of limitations
on the main part of a solicitation runs this
April.\117\
---------------------------------------------------------------------------
\117\ Federal Election Commission Enforcement Actions, supra note 6
at 67-68 (statement of FEC General Counsel).
* * * * * * *
---------------------------------------------------------------------------
What we were interested in with Mr. Glicken was the
suggestion that he may have suggested to somebody that
they make a contribution in the name of another. And
that took it up to another level which is why we held
on to that part of the case, thinking that we might be
able to do something about it. But by the time that--
that was in the DSCC information. We did not find Mr.
Glicken's name until July 1997, and that particular
contribution, where there was a suggestion that it was
a contribution in the name of another, or solicited as
a contribution in the name of another, the statute of
limitations would have run at the end of April of this
year.\118\
---------------------------------------------------------------------------
\118\ Id. at 81.
It should be noted that the FEC did not ``find Mr. Glicken's
name until July 1997'' because, in actuality, it did not send a
subpoena to the DSCC until June 10, 1997.\119\ Documents
produced in response to this subpoena revealed that Glicken had
solicited the Bradley contribution. No explanation given by the
commission has adequately addressed why the FEC waited until
2\1/2\ years after receiving Kramer's affidavit (which
highlighted the DSCC contribution) \120\ to send
interrogatories to the DSCC. It is thus the Committee's opinion
that this explanation--given the amount of money involved, the
fact that the case was brought sua sponte, and the involvement
of two of the most prominent Democratic fundraisers--is simply
incomprehensible.
---------------------------------------------------------------------------
\119\ Letter from Marc E. Elias to Rodriguez (Exhibit 39).
\120\ See Affidavit, supra note 11 at 3.3.
---------------------------------------------------------------------------
IV. The Department Of Justice's Involvement In The Kramer Matter
On July 22, 1997, FEC Staff Attorney Jose Rodriguez wrote
an e-mail requesting that ``LL check with Justice to determine
if they have any interest in pursuing the reported Kramer/
Bradley activity criminally.'' \121\ ``LL'' was a reference to
FEC Associate General Counsel Lois Lerner. Ms. Lerner responded
to Rodriguez' e-mail 3 days later, noting that she had spoken
to Craig Donsanto (her contact at the Department of Justice).
She stated that Donsanto thought that the Department was no
longer pursuing the law firm (Greenberg Traurig), Kramer, or
anyone else involved in the case.\122\ Ms. Lerner noted that
Donsanto would check with the U.S. Attorney in Florida ``to be
sure.'' Lerner conveyed her belief that Donsanto thought that
he might be able to get the department to ``sign off on as to
our potential witness.'' \123\ The Committee believes that
Terri Bradley was this ``potential witness.''
---------------------------------------------------------------------------
\121\ ``Bradley Issue'' e-mail, July 22, 1997 (Exhibit 40).
\122\ Kramer e-mail, July 25, 1997 (Exhibit 41).
\123\ Id.
---------------------------------------------------------------------------
An e-mail exchange during September suggests that the FEC
was at least attempting to obtain immunity for Bradley.\124\ In
December, however, the FEC signed off on its General Counsel
Report and decided against pursuing a case against Howard
Glicken:
---------------------------------------------------------------------------
\124\ ``Latest from Bradley'' e-mail, Sept. 15, 1997 (Exhibit 42).
While this Office would generally recommend a reason to
believe finding against Mr. Glicken and conduct an
investigation into the two DSCC contributions, because
of the discovery complications and time constraints
addressed above, and the fact that the transactions at
issue take place during the 1993-1994 election cycle,
this Office does not now recommend proceeding against
---------------------------------------------------------------------------
this identified individual or the DSCC.
Similarly, this Office does not recommend further
proceedings concerning the two DNC contributions
apparently solicited by Mr. Glicken. Unlike the DSCC
contributions, the larger of these two contributions
would not be time barred until March 1999--
approximately a year and 4 months from now. However,
because of Mr. Glicken's high profile as a prominent
Democratic fundraiser, including his potential
fundraising involvement in support of Vice President
Gore's expected presidential campaign, it is unclear
that this individual would agree to settle this matter
short of litigation. Therefore, rather than continuing
this matter for an unspecified period in pursuit of one
participant and because of the low prospect for timely
resolution, the age of the matter and the already
successful resolution concerning all principles in this
case, this Office does not recommend further
proceedings concerning these two DNC contributions
either. Instead, this Office recommends closing of the
entire file in MUR 4638.\125\
---------------------------------------------------------------------------
\125\ General Counsel's Report, supra note 8 at 2.4.
Once the conclusion about Glicken and his association was
reported in a major newspaper, the interest of the Department
of Justice in the matter was notably increased. Such interest
is obvious in an e-mail sent by Lois Lerner to Lawrence Noble
---------------------------------------------------------------------------
on February 12, 1998:
Donsanto just called. They've seen the ``offending
language.'' While he was sure there must be more to the
story than this was Gore's friend, he wanted to know
why this hadn't been referred to DOJ. He said that Task
Force would be revving up an investigation unless he
could provide them with something clarifying this.
While I have no problem with them investigating, I
thought it would be useful to provide them with
whatever statement we make to the press.\126\
---------------------------------------------------------------------------
\126\ ``GREENBERG TRAURIG (sp?)'' e-mail, Feb. 12, 1998 (Exhibit
43).
Despite the Justice Department's previous lack of interest
in these matters, the Task Force did indeed `rev up' an
investigation and entered into a factual proffer and plea
agreement with Glicken on July 9, 1998--3 months after this
Committee held itshearing reviewing the FEC's management of the
Kramer matter--in which Glicken admitted to criminal violations of FECA
by soliciting political contributions from a foreign national and by
causing a political contribution to be made in the name of
another.\127\ Based on the agreement, Glicken potentially faces up to 2
years in prison and a fine of $200,000. The Justice Department
recommended a fine of $80,000 and a minimum of 500 community service
hours. Mr. Glicken also ``expressed a desire to provide substantial
assistance to the Government in the investigation and prosecution of
others after entering his guilty plea'' \128\ and that he ``shall
cooperate fully with federal law enforcement authorities.'' \129\ Mr.
Glicken also promised to ``make himself available to all Government
agencies[.]'' \130\ If Glicken's guilty plea agreement is accepted by
the Court, and Glicken fulfills each of the terms within the agreement,
then:
---------------------------------------------------------------------------
\127\ United States of America v. Howard Glicken Factual Proffer
and Plea Agreement, (D. D.C. July 9, 1998), at 1 (Exhibit 44).
\128\ Id. at 44.10-44.11.
\129\ Id. at 44.2-44.3.
\130\ Id. at 44.11.
[T]he Government agrees that it will not further
prosecute defendant for his conduct that is the subject
of this plea agreement or for any other election code-
related conduct known to the Government as of the date
of defendant's guilty plea pursuant to this agreement,
or which becomes known as a result of his cooperation
pursuant to this agreement.\131\
---------------------------------------------------------------------------
\131\ Id. at 44.4-44.5.
Taking into account the weight of the evidence against
Glicken, it appears as if the Miami businessman entered into
what potentially could be an overly favorable plea agreement.
Mr. Glicken's role in soliciting contributions from other
Florida-based campaign contributors on behalf of the DNC and
other Democratic causes has yet to be fully investigated by
this Committee. However, the Committee has uncovered evidence
showing that Glicken also solicited contributions from Neal
Harrington and Calvin Grigsby's company, Fiscal Funding \132\--
contributions which led to the indictment of both Harrington
and Grigsby, along with Carmen Lunetta, in the June 1998 Port
of Miami conduit contribution scandal.\133\ Whether or not such
evidence was available to the Department of Justice at the time
it entered into the plea agreement with Glicken, which would
determine whether or not such action would fall within the
aforementioned immunity agreement, is not known by the
Committee. Glicken asserted his Fifth Amendment rights before
the Committee unless granted immunity.
---------------------------------------------------------------------------
\132\ 1994 Florida Presidential Dinner Donors, at 45.3 (Exhibit
45).
\133\ United States of America v. Carmen Lunetta, Calvin Grigsby
and Neal Harrington (So. D. FL June 3, 1998) (Exhibit 46). Messrs.
Glicken and Harrington, along with Charles Intriago and Mark Jimenez
(both of whom have asserted their fifth amendment rights before our
Committee) were noted guests at a December 1994 Brickell Key dinner
hosted by Vice President Gore. Vice President's Guest List, Dec. 11,
1994 (Exhibit 47).
---------------------------------------------------------------------------
Because Glicken has exercised his Fifth Amendment rights in
regards to the Committee's inquiry, the Committee's
investigation into further misfeasance on Glicken's part has
been impeded. This is not the cooperation that Glicken promised
upon signing his plea agreement. The Committee has not been
able to explore why the two additional illegal Kramer
contributions solicited by Glicken--a $25,000 contribution at
Vice President Gore event and $40,000 contribution at a
President Clinton fundraiser--were passed over by both the FEC
and the Department of Justice.\134\ The Committee is also not
privy to information the Department of Justice may have in its
possession regarding any additional campaign fundraising
improprieties that may have been committed by Glicken. The
Committee is thus not aware of which improprieties would be
covered by the immunity agreement if it were to be upheld by
the U.S. District Court for the District of Columbia.
---------------------------------------------------------------------------
\134\ DNC Response to Committee Interrogatories, Mar. 30, 1998 at
30.3 (Exhibit 30).
---------------------------------------------------------------------------
V. Conclusion
FEC's handling of the Kramer matter brings into serious
question the Commission's goals and effectiveness. Several
points need to be emphasized. Notwithstanding the knowledge
that a high-profile Democratic party fundraiser was allegedly
involved, the case received little attention by the FEC for
nearly 1\1/2\ years after Kramer first disclosed his
improprieties. In actuality, the FEC did not send an inquiry to
the DSCC regarding the contribution until 2\1/2\ years after
receiving Kramer's affidavit. Perhaps more important, the FEC
appears to have done nothing to pursue the allegations of
wrongdoing against Marvin Rosen. Although the Committee
recognizes that the FEC must prioritize its many cases, few
things would rival in importance the possibility that one of
the titular heads of either the Democratic or Republican
parties is involved in criminal conduct that cannot be
explained away by ``fuzzy'' or ``complicated'' election laws.
In addition, the case ultimately resulted in over $500,000
in fines, including the largest personal fine of its type. Such
fines, however, barely totaled more than the contributions
themselves (all of which were returned to the contributors).
Finally, the FEC made a public statement in which it
seemingly admitted that it was not pursuing a case against
Glicken because of his prominence and strong ties with Vice
President Gore. Prominent national fundraisers should face the
same consequences as any other citizen if they encourage others
to break the law. The FEC, in neglecting to investigate and
pursue such blatant violations of campaign fundraising laws,
appears to have been derelict in its mandated statutory
responsibilities.
Appendix 1
FEC PRACTICES AND PROCEDURES RELEVANT TO THE KRAMER MATTER
In order to understand the means by which the FEC conducted
the Thomas Kramer investigation, a brief explanation of FEC
practices and procedures is necessary. The statutes relevant to
the Kramer matter are 2 U.S.C. Sec. 437g, dealing with the
enforcement of Federal election campaign laws generally, 2
U.S.C. Sec. 441e, prohibiting contributions by a foreign
national, and 2 U.S.C. Sec. 441f, prohibiting contributions in
the name of another. The FEC provided to the Committee
statistics showing case disposition by fiscal year for cases
involving conduit payments and contributions by foreign
nationals.\1\
---------------------------------------------------------------------------
\1\ Case Disposition by Fiscal Year: Cases Involving Conduit
Payments under Section 441f (Exhibit A-1) and Case Disposition by
Fiscal Year: Cases involving Foreign National Contributions Under
Section 441e (Exhibit A-2).
---------------------------------------------------------------------------
A. Prioritization procedure
In the early 1990s, the FEC began to reinvigorate its case
management system. In 1992, the Commission adopted a criteria
worksheet, or ``rating sheet,'' that provides numerical ratings
for its cases.\2\ The following year, the FEC ``launched
substantial enforcement reform by adopting a comprehensive
prioritization system designed to produce timely resolution of
major cases.'' \3\ Known as the Enforcement Prioritization
System (``EPS''), the specific elements of the system included:
---------------------------------------------------------------------------
\2\ Introduction to the Enforcement Prioritization System (Exhibit
A-3).
\3\ FEC Press Release, Dec. 13, 1993 (Exhibit A-4).
Creating a detailed and objective method for
ranking cases that allow the Commission to identify
those which best warrant the use of the FEC's limited
resources.
Determining, based on resources, the total
number of cases the enforcement staff can actively and
efficiently pursue at one time.
Establishing realistic time goals for
resolving targeted cases (preferably within an election
cycle or less).
Managing and tracking cases through periodic
priority evaluations so that staff assignments can be
adjusted as needed and cases that warrant no further
resources can be identified for closing.
Creating a central enforcement docket system
(``CED'') to process incoming cases and assign them as
staff become available.\4\
---------------------------------------------------------------------------
\4\ Id.
The FEC based its prioritization procedures mostly on
confidential standards, some of which include: whether there
was knowing and willful intent to violate the law; the apparent
impact of the alleged violation on the election process; the
amount of money involved; the age and timing of the violation;
and whether a particular area of the law that needs attention
is involved.\5\
---------------------------------------------------------------------------
\5\ Remarks by Scott E. Thomas, Chairman of the Federal Election
Commission, Dec. 13, 1993 (Exhibit A-5).
---------------------------------------------------------------------------
General Counsel Noble told Committee investigators that the
focus of the EPS has changed over the years. According to
Noble, things like the $25,000 contribution limit used to be a
``big deal'' to the FEC, but now things like contributions made
by a foreign national are given higher priority.\6\ While the
Committee recognizes the FEC's limited resources, the fact that
the Commission periodically changes the degrees of priority for
violations of campaign laws inevitably forces oversight bodies,
such as this Committee, to question the Commission's
enforcement objectivity. In controversial cases such as the
Kramer matter, the FEC can thus argue that seemingly flagrant
violations of law were not considered as a priority by the
Commission based on standards and criteria which remain
confidential to everyone outside of the FEC staff.
---------------------------------------------------------------------------
\6\ Interview with Lawrence Noble, General Counsel of the Federal
Election Commission, in Washington, DC (July 2, 1998).
---------------------------------------------------------------------------
B. Case management
Any action by the FEC generally begins upon the filing of a
complaint alleging violations of Federal election campaign
laws. Within 5 days of receiving a complaint, the Commission
notifies any person alleged in the complaint to have committed
such a violation. Before the FEC votes on the complaint, other
than a vote to dismiss, any notified person has the opportunity
to demonstrate to the Commission that no action should be taken
against such person on the basis of the complaint.
If the Commission, by an affirmative vote of four of its
commissioners, finds that it has reason to believe (``RTB'')
that a person has committed, or is about to commit, a violation
of Federal campaign laws, the Commission shall, through the
chairman or vice chairman, notify the person of the alleged
violation. The FEC then conducts an investigation of the
alleged violation. If the Commission determines, by an
affirmative vote of four of its commissioners, that there is
probable cause to believe (``PCTB'') that any person has
committed, or is about to commit, a violation of Federal
campaign laws, the Commission attempts, for a period of at
least 30 days, to correct or prevent such violation by informal
methods of conference, conciliation, and persuasion, and to
enter into a conciliation agreement with any person involved.
Any attempt to correct or prevent any violations may continue
for a period of not more than 90 days. The Commission may not
enter into a conciliation agreement unless pursuant to an
affirmative vote of four of its members. A conciliation
agreement, unless violated, is a complete bar to any further
action by the Commission.
C. Fines, penalties, defenses, and mitigation of offenses
If the Commission believes that a violation has been
committed, a conciliation agreement may include a requirement
that the person involved in such conciliation agreement shall
pay a civil penalty which does not exceed the greater of $5,000
or an amount equal to any contribution or expenditure involved
in such violation. If the Commission believes that a knowing
and willful violation has been committed, a conciliation
agreement entered into by the Commission may require that the
person involved in such conciliation agreement pay a civil
penalty which does not exceed the greater of $10,000 or an
amount equal to 200 percent of any contribution or expenditure
involved in such violation.
If the FEC by an affirmative vote of four commissioners,
determines that there is PCTB that a knowing and willful
violation has occurred or is about to occur, it may refer such
apparent violation to the Attorney General of the United
States. The FEC cannot legally refer a case to the Department
of Justice unless it reaches this PCTB threshold. Both the
standards set to reach thresholds of either RTB or PCTB are,
for the most part, known only to the FEC staff.
In any case in which a person has entered into a
conciliation agreement with the Commission based on the PCTB
threshold, the FEC may institute a civil action for relief if
it believes that the person has violated any provision of such
conciliation agreement. For the Commission to obtain relief in
any civil action, the Commission need only establish that the
person has violated, in whole or in part, any requirement of
such conciliation agreement.
If the Commission is unable to correct or prevent any
violation, the Commission may, upon an affirmative vote of four
commissioners, institute a civil action for relief, including a
permanent or temporary injunction, restraining order, or any
other appropriate order (including an order for a civil penalty
which does not exceed the greater of $5,000 or an amount equal
to any contribution or expenditure involved in such violation)
in the district court of the United States for the district in
which the person against whom such action is brought is found,
resides, or transacts business. In certain civil actions
instituted by the FEC, the court may grant a permanent or
temporary injunction, restraining order, or other order,
including a civil penalty which does not exceed the greater of
$5,000 or an amount equal to any contribution or expenditure
involved in such violation, upon a proper showing that the
person involved has committed, or is about to commit (if the
relief sought is a permanent or temporary injunction or a
restraining order), a violation of relevant provisions.
Any person who knowingly and willfully commits a violation
of relevant Federal campaign laws--which involves the making,
receiving, or reporting of any contribution or expenditure
aggregating $2,000 or more during a calendar year--shall be
fined, or imprisoned for not more than 1 year, or both. The
amount of the fine shall not exceed the greater of $25,000 or
300 percent of any contribution or expenditure involved in such
violation. In the case of a knowing and willful violation of
Sec. 441b(b)(3), the penalties shall apply to a violation
involving an amount aggregating $250 or more during a calendar
year. Such violation of Sec. 441b(b)(3) may incorporate a
violation of Sec. 441c(b), Sec. 441f, or Sec. 441g.
In any criminal action, a defendant may evidence their lack
of knowledge or intent to commit the alleged violation by
introducing as evidence a conciliation agreement entered into
between the defendant and the FEC which specifically deals with
the act or failure to act constituting such violation and which
is still in effect. The court shall take into account, in
weighing the seriousness of the violation and in considering
the appropriateness of the penalty to be imposed if the
defendant is found guilty, whether the specific act or failure
to act which constitutes the violation for which the action was
brought is the subject of a conciliation agreement entered into
between the defendant and the Commission, the conciliation
agreement is in effect and the defendant is, with respect to
the violation involved, in compliance with the conciliation
agreement.
[Supporting documentation follows:]
=======================================================================
CHAPTER VI
THE HUDSON CASINO REJECTION
=======================================================================
THE HUDSON CASINO REJECTION
INTRODUCTION
This section of the report focuses on the rejection by the
Department of the Interior (DOI) of an application to take a 55
acre parcel of land into trust with the ultimate objective of
establishing an off-reservation gaming facility. This
application was made by three impoverished Wisconsin Indian
tribes who anticipated going into partnership with the owner of
an already existing class III gaming facility. After complying
with all of the requirements placed upon the tribes by the
Department of the Interior, the Bureau of Indian Affairs (BIA)
regional office in Ashland, Wisconsin, and the area office in
Minneapolis, Minnesota, both recommended that the application
be approved. After those closest to the proposed site
recommended the approval of the application on November 14,
1994, a 32 page report was sent to Interior's central office in
Washington, DC for final review.\1\
---------------------------------------------------------------------------
\1\ See Denise Homer's Recommendation to the Assistant Secretary
for Indian Affairs (Exhibit 1).
---------------------------------------------------------------------------
For the three tribes this was a day to celebrate because,
as DOI spokeswoman Stephanie Hanna noted, the DOI has never
overturned an Area Office recommendation to take land into
trust for gaming purposes.\2\ The 32 page report from the
Minnesota area office discussed a number of factors supporting
approval of the application. These included: an agreement for
government services, consultation with the city of Hudson,
public response to the proposal, impact on the neighboring
tribes, environmental impact, and impact on the infrastructure
including traffic, lighting, and water. Nevertheless, on July
14, 1995, the Department decided against the recommendation of
both the regional and area offices and rejected the tribes'
application.\3\
---------------------------------------------------------------------------
\2\ See Cary Spivak, Did White House Kill a Casino?, Milwaukee
Journal Sentinel, Sept. 14, 1997.
\3\ Letter from Michael Anderson to Rose Gurnoe, Alfred Trepania,
and Arlyn Ackley, Sr., July 14, 1995 (Exhibit 2).
---------------------------------------------------------------------------
In the weeks and months following the rejection, it became
apparent that it was possible that campaign donations and
political considerations may have influenced the Department of
the Interior's decision. As the Committee reviewed various
campaign finance issues, an investigation into the
decisionmaking process was commenced. During the investigation,
the Committee deposed and/or interviewed officials from the
White House, the Department of the Interior, lobbyists on both
sides of the application and representatives from the three
applicant Wisconsin Indian tribes. The Committee also
subpoenaed documents from various sources including the
Department of the Interior, law firms, and lobbyists involved
with the application, and a number of individuals close to the
case. Additionally, the Committee received relevant documents
from the ongoing Federal and state litigation surrounding the
Department's decision.
On January 21, 22, 28, and 29, 1998, the Committee held
public hearings on the issue of whether undue political
influence led to the rejection of the application. The
Committee heard from witnesses including: the Chairmen of the
three adversely affected tribes, Patrick O'Connor (a lobbyist
opposed to the application), Secretary of the Interior Bruce
Babbitt and a number of officials from the Department of the
Interior. These hearings focused on the process by which the
Department of the Interior came to reject the recommendations
of its area office and the influence of outside entities on the
process.
EVENTS LEADING TO THE DENIAL
In late 1993, three impoverished \4\ Wisconsin Indian
tribes--the Mole Lake Sakaogon Chippewa, the Lac Courte Oreille
Band of Lake Superior Chippewa, and the Red Cliff Band of Lake
Superior Chippewa--applied to have the U.S. Government, through
the Department of the Interior, take land into trust in Hudson,
Wisconsin, for the purpose of gaming.\5\ An existing Class III
gaming facility already on the parcel of land required very
little modification to add additional gaming devices.\6\ The
structure was originally built as a greyhound racing park and
included a 10,000 car parking lot to accommodate a capacity
crowd. A four lane roadway had already been built by the
developer of the existing track to relieve potential congestion
problems that could be created by a crowd attending a specific
event at the race track. Furthermore, the expected usage of the
casino was not greater than that originally anticipated for the
greyhound facility.
---------------------------------------------------------------------------
\4\ According to Arlyn Ackley, Sr., the chairman of the Mole Lake
Sokaogon Chippewas, the unemployment rate for his tribe was over 40
percent, and the average household income was approximately $8,000 per
year. George Newago, the chairman of the Red Cliff Chippewa, indicated
that his tribe faced over 50 percent unemployment and a household
income of $5,300 per year. Committee interviews with Chairman Arlyn
Ackley, Sr., and Chairman George Newago, Dec. 16, 1997.
\5\ This is the normal process used by Native American tribes under
Section 20 of the Indian Gaming Regulatory Act (IGRA) for the
acquisition of ``off reservation'' land. See 25 U.S.C. Sec. 2719
(1988).
\6\ In an interview with Committee investigators, Mr. Fred
Havenick, the owner of the existing dog track in Hudson, WI, confirmed
that no external construction was necessary or planned if the
application had been approved.
---------------------------------------------------------------------------
The applicant tribes moved the application forward
according to the prescribed guidelines of the Indian Gaming
Regulatory Act (IGRA). After an exhaustive review by both the
regional office and the area office of the BIA, including
consultation with area officials and the surrounding tribes,
the Area Director sent a 32 page recommendation for approval to
the central office in Washington, DC.
Once the application arrived in Washington, a number of
native American tribes who felt that new competition might
jeopardize their casino profits hired lobbyists to bring
political pressure on those who might be in a position to
reverse the earlier decisions. The tribes hired Patrick
O'Connor, a well known lobbyist, former fundraiser for Bruce
Babbitt's Presidential bid in 1988, and former DNC treasurer.
O'Connor, a name partner at the law firm of O'Connor and Hannan
based in Minneapolis, wasted no time in applying significant
pressure on the Democratic National Committee (DNC), the
President, White House staff, Members of Congress, and the
Department of the Interior.
On February 8, 1995, O'Connor set-up a meeting in Minnesota
Congressman Jim Oberstar's office with members of the Minnesota
Congressional delegation, John Duffy, who served as Counselor
to Secretary of the Interior Babbitt, and George Skibine, the
head of the Indian Gaming Management Staff (IGMS).\7\ The
meeting resulted in a great benefit to the tribes opposed to
the application because Duffy agreed to extend the comment
period which the Area Director had closed prior to sending her
recommendation to Washington. Duffy would later set an April
30, deadline for the comment period. However, he failed to
notify the applicant tribes of this special extension, thereby
giving the opponents of the application an unfair advantage.\8\
Given that the Department was required to treat all parties
evenhandedly, this was a troubling decision.
---------------------------------------------------------------------------
\7\ Memorandum from Larry Kitto to Lewis Taylor, Feb. 6, 1995
(Exhibit 67). This memorandum states: ``Pat O'Connor of our firm is
working with Secretary Babbitt's office to confirm his participation in
the meeting that will be held on Wednesday, February 8, 1995 at 1:30
p.m. in Congressman Oberstar's office.''
\8\ An undated letter to Secretary Babbitt from the applicants
indicates that they were never informed by the Department of Interior
about the extension of the comment period (Exhibit 3). John Duffy,
Secretary Babbitt's Solicitor, later notified the tribes in a Mar. 27,
1995, letter to Arlyn Ackley, Sr., almost 7 weeks after the period was
opened (Exhibit 4). In fact, this notification might never have
occurred if Ackley had not found out about the extension from other
sources. Once this came to light, the Department had no choice but to
let both sides respond.
---------------------------------------------------------------------------
The February 8, 1995, meeting in Representative Oberstar's
office was followed 5 weeks later by another high level contact
between the lobbyists against the application and
representatives from Secretary Babbitt's office. On March 15,
1995, Patrick O'Connor and former Congressman Thomas Corcoran
(a law partner of O'Connor) met with Tom Collier, Secretary
Babbitt's Chief of Staff, and Heather Sibbison, Special
Assistant to Secretary Babbitt's Counselor John Duffy.\9\ One
of the matters discussed at this meeting was ``the politics of
the project.'' Collier also told O'Connor and Corcoran that
``the final decision would be made by him or Secretary Babbitt
`depending on the level of controversy this application
generates.' '' \10\
---------------------------------------------------------------------------
\9\ Memorandum from Thomas Corcoran to Larry Kitto, Mar. 17, 1995
(Exhibit 68).
\10\ Id.
---------------------------------------------------------------------------
The President is asked for assistance
As early as April 1995, Patrick O'Connor tried to contact
Loretta Avent, Special Assistant to the President for
Intergovernmental Affairs, the person in the White House who
handled Native American issues.\11\ He faxed material to the
White House which discussed his client's opposition to the
Hudson application and asked that Avent intervene with
Secretary Babbitt on the Hudson application.\12\ According to
Avent, she did not return O'Connor's call or answer his fax
because of legal advice she had received and thus ``would not
speak with him or any lobbyist or lawyer'' about these
issues.\13\ Although his initial calls appear not to have been
returned, O'Connor capitalized on an opportunity to speak
directly with President Clinton when he met with the President,
Bruce Lindsey and Linda Moore at a small fundraising reception
in Minneapolis on April 24, 1995.\14\
---------------------------------------------------------------------------
\11\ See Patrick O'Connor's Datebook, Apr. 10 and 17, 1995 (Exhibit
5).
\12\ Memorandum from Michael T. Schmidt to Cheryl Mills, Apr. 24,
1995 (Exhibit 6).
\13\ Memorandum from Loretta Avent to Harold Ickes, Apr. 24, 1995
(Exhibit 7).
\14\ See Patrick O'Connor's Datebook, Apr. 24, 1995 (Exhibit 5).
---------------------------------------------------------------------------
The April 24 entry in O'Connor's calendar reads, ``Meeting
w/the President on the Hudson Race track issue with Bruce
Lindsey and Linda Moore of the White-House staff.'' \15\ This
meeting with the President was the breakthrough the tribes and
lobbyists had been looking for. O'Connor explained in his state
court deposition \16\ that President Clinton was receptive to
O'Connor's problem:
---------------------------------------------------------------------------
\15\ Id.
\16\ Patrick O'Connor's deposition was taken in a civil law suit
filed by the applicant tribes after DOI rejected the application.
When he [the President] got to me, I said ``Mr.
President, the Indian tribes I represent are concerned
about a possible casino going in near Hudson, Wisconsin
which is across the river.'' And that's what I said. At
that juncture, he said ``Bruce.'' And Bruce [Lindsey]
came over . . . [The President] said, ``Bruce, talk to
O'Connor about his concerns about tribes that he
represents.'' That was it.\17\
---------------------------------------------------------------------------
\17\ State Court Deposition of Patrick O'Connor, Apr. 18, 1997, p.
61 (Exhibit 8).
Ann Jablonski, a lobbyist for the St. Croix Tribe,
confirmed through Tom Corcoran, O'Connor's partner, that
O'Connor began to ``launch into the matter and Clinton called
Lindsay [sic] over to script the story and operationalize a
response or resolution. He was apparently the one who decided
it was a problem Ickes would/could/should take care of.'' \18\
Jablonski also received confirmation that the President was
aware of the Hudson situation: ``[a]nother partner in the
O'Connor and Hannan firm, Tom Schneider, allegedly an FOB
[Friend of Bill] who socializes with Bill and Hillary, has
confirmed in a conversation with Clinton that Clinton is aware
of the Hudson dog track issue.'' \19\
---------------------------------------------------------------------------
\18\ Memorandum from Ann Jablonski to Brady Williamson, May 23,
1995 (Exhibit 9).
\19\ Id.
---------------------------------------------------------------------------
Once the President became involved, the White House reacted
with a flurry of activity. Lindsey called back to the White
House once he returned to Air Force One in order to determine
what was happening with the former DNC Treasurer's problem, and
why Avent had not returned his calls.\20\ O'Connor testified:
---------------------------------------------------------------------------
\20\ See Memorandum from Michael T. Schmidt to Cheryl Mills, Apr.
24, 1995 (Exhibit 6).
I told Bruce the concern we had . . . And I said, ``I'm
trying to get our side of this matter, this issue,
across to the--to the people in Interior because'' and
I explained . . . ``I don't believe we're getting
through, although we've been trying.'' . . . And he
[Bruce Lindsey] said, ``Well,'' he said, ``I'll get
someone to call you on this.'' I said, ``I haven't''--
that Loretta Avent call came afterwards. I said, ``I
haven't been able to get anywhere with Loretta.'' And
he didn't say anything. He said, ``I will have someone
call you.'' And that was it.\21\
---------------------------------------------------------------------------
\21\ State Court Deposition of Patrick O'Connor, Apr. 18, 1997, p.
61 (Exhibit 8).
This brief meeting with the President was the catalyst for
White House activity regarding the Hudson casino application.
It is likely that Lindsey contacted Ickes shortly before or
after his call to Avent because Ickes placed a call to O'Connor
that same day.\22\
---------------------------------------------------------------------------
\22\ Id. at 79.
---------------------------------------------------------------------------
Warning of illegal and improper involvement
It appears that the conversation between Lindsey and the
White House staff on April 24 made an impression, prompting the
two key White House staffers on Indian issues, Loretta Avent
(Special Assistant to the President for Intergovernmental
Affairs) and Michael Schmidt (Senior Policy Analyst in the
White House Office of Policy Development) to prepare memoranda
on the issue. Both memoranda outlined legal, ethical, and
political reasons that the White House could not get involved
and intervene in the application before the Department of the
Interior. It appeared that these memoranda were attempts to
explain why the White House should not get involved in the
decisionmaking process at Interior. The only reasonable
explanation for such quick and forceful opposition to White
House involvement was that Lindsey may have suggested such
involvement.
Ms. Avent's memorandum to Harold Ickes explains the
improper nature of White House intervention in an Interior
decision. Avent relied upon advice of the White House counsel's
office to arrive at the conclusion that involvement by the
White House was improper and illegal:
I just got a call from Bruce in reference to a person
named Pat O'Connor, whom I don't know, who has called
me on numerous occasions. . . . Following the legal
advice we have received concerning these kinds of
issues, I have not and would not speak with him or any
lobbyist or lawyer. Irrespective of [who] lobbyists and
lawyers say they know in this Administration, my first
responsibility is to the pres[ident]. Because I am
aware of the politics and press surrounding this
particular situation, it is in our best interest to
keep it totally away from the [W]hite [H]ouse in
general, and the pres[ident] in particular. This is
such a hot potato (like Cabazon) \23\--too hot to
touch. The legal and political implications of our
involvement would be disastrous. . . . This is a
Department of Interior and Justice Department [matter]
and that's where it should stay. . . . I explained this
to Bruce and he understands the way I operate and I
assured him that I would make the call directly to
advise the party that called. I will do this as soon as
my meeting is over. I'll call later and give you an
update. The press is just waiting for this kind of
story. We don't need to give it to them.\24\
---------------------------------------------------------------------------
\23\ The Cabazon Band of Mission Indians were involved in
litigation with the Federal Government for the operation of slot
machines. They also reportedly funneled over $750,000 into the State of
California's Attorney General's race. When asked in her deposition
before the Committee about her reference to the Cabazons, Avent
replied: ``just that it was in court, it was a big court case, and I
don't have specifics on it, because I wasn't particularly interested in
it other than I just knew it was dealing with gaming and I am not an
expert on gaming and I have no expertise in the legal arena at all.''
(Avent Deposition, Dec. 5, 1997, p. 18). Mark Nichols, the Chief
Executive Officer of the Cabazon Band, was indicted in June 1998, and
accused ``of laundering thousands of dollars in illegal contributions
to six Democratic candidates, including President Clinton . . .''
(Rosenzweig, David, California and the West 2 Casino Executives Accused
of Laundering Politics, Los Angeles Times, June 19, 1998).
\24\ Memorandum from Loretta Avent to Harold Ickes, Apr. 24, 1995
(Exhibit 7).
Michael Schmidt also drafted a memorandum in response to
Lindsey's call. He sent his memo to Cheryl Mills in the White
---------------------------------------------------------------------------
House Counsel's office:
This e-mail is to fill you in more detail about a call
that Loretta and I were on with a Lobbyist/Fundraiser
named Pat O'Connor . . . Pat called Loretta last week
on this issue. As you know, last year WH counsel
advised Loretta that she should not meet with lobbyists
or lawyers on Indian issues. . . . The White House
should not be involved in this issue! . . . As you
know, we legally cannot intervene with the Secretary of
Interior on this issue. Please have Harold call Don
Fowler and explain that there are no secrets in Indian
Country, that word of this conversation is already
getting out and it would be political poison for the
President or his staff to be anywhere near this
issue.\25\
---------------------------------------------------------------------------
\25\ Memorandum from Michael Schmidt to Cheryl Mills, Apr. 24, 1995
(Exhibit 6).
Although these two memoranda indicate that the White House
staffers understood that they should not get involved in the
Hudson issue, the sentiments contrast with an overlooked
sentence in Loretta Avent's memorandum, where she stated: ``I
am on my way into a meeting with five of our strongest tribal
leaders (because of their significant voter turnout)[.]'' \26\
It is somewhat curious that Avent would react so negatively to
the Hudson issue and, at the same time, single out Native
American leaders--based on partisan political concerns--for
special White House treatment. The concern regarding ``secrets
in Indian country,'' referred to by Schmidt, appears to have
been overridden in this political situation.
---------------------------------------------------------------------------
\26\ Memorandum from Loretta Avent to Harold Ickes, Apr. 24, 1995
(Exhibit 7).
---------------------------------------------------------------------------
As the following pages make clear, others at the White
House did not follow the course suggested by Avent. There were
numerous subsequent contacts between the Secretary of the
Interior's office and White House Deputy Chief of Staff Harold
Ickes' office.
The DNC becomes involved
After meeting with the President, O'Connor moved to
increase the pressure on the Department of the Interior by
involving the DNC. As early as March 1995, O'Connor was
attempting to meet with people at the DNC and Interior.\27\ On
April 23, 1995, David Mercer called O'Connor to notify him that
a meeting with DNC Chairman Fowler was set for a time after his
[O'Connor's] meeting with the Department of the Interior's
Chief of Staff Tom Collier.\28\ On April 28, 1995, Patrick
O'Connor and representatives of tribes opposed to the Hudson
project met with Don Fowler, White House staff, and staff from
various Senate offices.\29\ Speculating on why lobbyists would
meet with the money raising wing of the Democratic party, Judge
Barbara Crabb of the U.S. District Court for the Western
District of Wisconsin stated in a published opinion: ``I cannot
assume that Fowler met with these tribes merely to socialize.
They must have expected that Fowler had some ability to affect
the decision on plaintiffs' application.'' \30\
---------------------------------------------------------------------------
\27\ Patrick O'Connor Datebook, Mar. 15, 1995 (Exhibit 5).
\28\ Fax from O'Connor & Hannan to Patrick O'Connor, Apr. 23, 1995
(Exhibit 10).
\29\ Sokaogon Chippewa Community v. Bruce Babbitt, 961 F. Supp,
1276, 1282 (W.D. Wis. 1997).
\30\ Id.
---------------------------------------------------------------------------
As it turned out, Judge Crabb appears to have correctly
articulated the purpose of the meeting. As one lobbyist who
also attended the April 28, 1995, meeting with Don Fowler
explained:
The purpose for this meeting is to discuss our position
on the Wisconsin Dog Track Fee to Trust proposal with
influential democrats in Washington. The people we are
meeting with are very close to President Clinton and
can get the job done.\31\
---------------------------------------------------------------------------
\31\ Memorandum from John McCarthy to all tribal leaders, Apr. 25,
1995 (Exhibit 11).
The purpose of the April 28, 1995, meeting with the DNC
Chairman was also clearly outlined in a memoranda from lobbyist
---------------------------------------------------------------------------
Larry Kitto to the opposing tribes.
The purpose of the meeting was to request the DNC and
the Committee to re-elect the President, to help
communicate with the White House and the President
about why the Department of the Interior should not
approve the fee-to-trust land transfer for the Hudson
Dog Track. The message was quite simple: all of the
people against the project both Indian and non-Indian
are Democrats who have a substantially large block of
votes and who contribute heavily to the Democratic
party. In contrast, all of the people for this project
are Republican. Fowler assured the group that he would
take this issue up with high ranking officials in the
White House[.] \32\
---------------------------------------------------------------------------
\32\ Minnesota Legislative Update Apr. 24-28, 1995 (Exhibit 12).
This lobbying report prepared by Larry Kitto mistakenly notes the
meeting as Apr. 18, 1995.
Both Chairman Fowler and David Mercer, the Deputy Finance
Director of the DNC, understood the potential of helping people
who ``contribute heavily to the Democratic party.'' Lewis
Taylor, head of the St. Croix tribe, mentioned in a State Court
Deposition that contributions to the DNC were discussed. Taylor
commented: ``I told Mr. Fowler that, you know, that we've got a
number of heavy-duty issues that we needed help on and our
friends are the Democrats and therefore I think we should
donate to assist in some of these causes.'' \33\ Tom Krajewski,
a lobbyist working on behalf of the Hudson opponents, passed on
information from Kitto, O'Connor's partner and a principal
lobbyist for the tribes, that Fowler listened, took notes,
asked questions and got the message: ``It's politics and the
Democrats are against it and the people for it are
Republicans.'' \34\ When asked about any discussion of campaign
contributions, Fowler did not recall and defended himself by
saying that he had ``no memory.'' \35\
---------------------------------------------------------------------------
\33\ State Court Deposition of Lewis Taylor, Dec. 17, 1996, p. 71
(Exhibit 13).
\34\ Memorandum from Tom Krajewski to JoAnn Jones, May 3, 1995
(Exhibit 14).
\35\ Testimony of DNC Chairman Don Fowler before the Senate
Committee on Governmental Affairs, Sept. 9, 1997, p. 108.
---------------------------------------------------------------------------
It is difficult to believe that Fowler would have a
different perception of this meeting. After all, the message
was as Larry Kitto said, ``quite simple.'' After the
discussions of campaign contributions, Fowler not only promised
to contact the White House, but also promised to urge Harold
Ickes, White House Deputy Chief of Staff, to press Secretary
Babbitt to ``make a closer examination of impact of the [Hudson
casino].'' \36\ The above excerpts clearly show a belief on the
part of the lobbyists that campaign donations were to be
exchanged for policy decisions.
---------------------------------------------------------------------------
\36\ Memorandum from Carl Artman to Scott Dacey, May 1, 1995
(Exhibit 15).
---------------------------------------------------------------------------
In a document obtained by the Committee from the Democratic
National Committee, it seems clear that both Chairman Fowler
and David Mercer understood the possible fundraising potential
of opponents of the Hudson application. Mercer outlined calls
for Chairman Fowler, and under the heading ``Pat & Evelyn
``Evie'' O'Connor'' stated:
The O'Connors are on the hook with Peter Knight to
raise $50k for the re-election. I'm meeting with them
tonight to talk to them about bringing in the American
Indian money of $50k for the Gala[.] . . . Pat is
certain to inquire about the status of the Indian
gaming issue at Interior.\37\
---------------------------------------------------------------------------
\37\ Memorandum from David Mercer to Chairman Fowler, May 19, 1995
(Exhibit 76).
From this it is clear that the DNC had very clear fundraising
goals related to O'Connor, and there was a clear understanding
that the lobbyist was interested in a policy issue far from the
legitimate purview of the DNC.
DNC contacts the White House and Department of the Interior
True to his word, Fowler focused his efforts on the White
House and the Department of the Interior. In his testimony
before the Senate he stated: ``I called Mr. Ickes, explained to
him the situation, and I called someone at the Department of
the Interior . . . I simply asked that the situation and the
facts in that situation be reviewed.'' \38\ However, a memo
from DNC counsel Joe Sandler and Neil Reiff to the DNC finance
staff updating the ``basic legal guidelines for fundraising,''
specifically states that:
---------------------------------------------------------------------------
\38\ Testimony of Don Fowler before Senate Committee on
Governmental Affairs, Sept. 9, 1997, p. 107.
[I]n no event should any DNC staff ever promise a
meeting with or access to any government official or
agency in connection with a donation, or ever imply
that such contact or access can be arranged, or ever
contact an Administration official on behalf of a donor
for any reason.\39\
---------------------------------------------------------------------------
\39\ Memorandum from Joe Sandler and Neil Reiff to the DNC Finance
Staff, Nov. 11, 1995 (Exhibit 16).
Although this memorandum was updated after Fowler's action,
Fowler admits that he was also instructed by White House
counsel Jack Quinn and House Political Director Doug Sosnik
that such contact on behalf of a donor was inappropriate as was
White House involvement in the decision of an independent
agency.\40\
---------------------------------------------------------------------------
\40\ Senate Deposition of Don Fowler, May 21, 1997, pp. 260-261.
---------------------------------------------------------------------------
Ignoring the warnings he received about the impropriety and
illegality of such conduct, Fowler continued to contact the
White House. On May 5, 1995, he sent a memorandum to Harold
Ickes following up on a previous conversation they had about
the Hudson casino proposal.\41\ Fowler acknowledged in this
memo the politics involved and the stance of the DNC
supporters:
---------------------------------------------------------------------------
\41\ Memorandum from Don Fowler to Harold Ickes, May 5, 1995
(Exhibit 17).
Below is an outline of the issues raised during my
meeting with several tribal leaders and DNC supporters
who oppose the project. I've also attached a Peat
Marwick impact study forwarded by our supporters.
Please let me know how we might proceed. . . . The
proposal to convert a dog track to a casino is being
pushed by American Indian tribes who are supporters of
Governor Thompson[.] \42\
---------------------------------------------------------------------------
\42\ Id.
---------------------------------------------------------------------------
Continued pressure on the White House
Fowler's calls and memorandum only added to the pressure
placed upon the White House to intervene on the issue. Ickes
had tried to contact O'Connor on a number of occasions but
appears to have been unsuccessful.\43\ O'Connor's May 8, 1995,
letter to Ickes, where he expressed his concern that the steps
being taken by the officials at the Interior Department were
not in his client's best interests, only solidifies the belief
that the lobbyists, the DNC and perhaps the White House were
working to pressure a decision from Interior:
---------------------------------------------------------------------------
\43\ See Letter to Harold Ickes from Patrick O'Connor, May 8, 1995
(Exhibit 18).
I have been advised that Chairman Fowler has talked to
you about this matter and sent you a memo outlining the
basis for the opposition to creating another gaming
casino in this area. . . . I am concerned that those at
Interior who are involved are leaning toward creating
trust lands.\44\
---------------------------------------------------------------------------
\44\ Id.
O'Connor then put the issue into terms Ickes, President
Clinton's chief fundraiser at the White House, could not easily
miss: ``I would also like to relate the politics involved in
this situation: . . . All of the representatives of the tribes
that met with Chairman Fowler are Democrats and have been so
for years. I can testify to their previous financial support to
the DNC and the 1992 Clinton/Gore Campaign Committee.'' \45\
O'Connor's purpose in writing the memo admittedly was ``to
alert Ickes as to the politics involved.'' \46\ When asked
whether he thought the Department of the Interior was required
to review the political factors mentioned, Patrick O'Connor
testified, ``I don't imagine they were.'' \47\ If these were
not areas that the Department of the Interior would be
considering for the application, it seems reasonable to
conclude that O'Connor was looking to exert political influence
upon the Department of the Interior's Hudson decision.
---------------------------------------------------------------------------
\45\ Id.
\46\ State Court Deposition of Patrick O'Connor, Apr. 18, 1997, pp.
128-129 (Exhibit 8).
\47\ Id.
---------------------------------------------------------------------------
On May 14, 1995, Tom Schneider, another O'Connor & Hannan
partner, met with President Clinton and Harold Ickes and
elicited Ickes' assurances that he would ``follow up'' on
O'Connor's requests relating to the Hudson application.\48\
Notwithstanding Schneider's denials that he met with the
President on this matter,\49\ he did bill his clients for a
``meeting with senior White House staff and POTUS [President of
the United States] re expansion of gaming and the dog track and
opposition to so doing.'' \50\
---------------------------------------------------------------------------
\48\ Deposition of Thomas J. Schneider, Dec. 10, 1997, p. 17.
\49\ Deposition of Thomas Schneider, Dec. 10, 1997, p. 15.
\50\ O'Connor and Hannan Billing Records (Exhibit 31).
---------------------------------------------------------------------------
Harold Ickes' staff contacts the Department of the Interior
Harold Ickes, apparently, did keep his promise. Indeed,
Ickes and his staff kept a close eye on the application from
the White House. On May 18, 1995, Ickes' assistant, Jennifer
O'Connor,\51\ prepared a memorandum for Ickes updating him on
the information received from Patrick O'Connor and where the
Department of Interior was in the decisionmaking process.\52\
It is clear from this memorandum that Jennifer O'Connor was in
contact with staff familiar with the application at the
Department of the Interior. Jennifer O'Connor also was privy to
information that Interior was looking to reject the application
and advised Ickes that the information ``is not public and is
confidential at this point.'' \53\
---------------------------------------------------------------------------
\51\ Jennifer O'Connor is no relation to Patrick O'Connor.
\52\ Memorandum from Jennifer O'Connor to Harold Ickes, May 18,
1995 (Exhibit 19).
\53\ Id.
---------------------------------------------------------------------------
This would not be the last time the White House would
contact Interior to receive confidential information kept from
the applicant tribes. On June 6, 1995, David Meyers, an
employee in Ickes' office, indicated that he had spoken with
Heather Sibbison, Special Assistant to Secretary Babbitt, and
that Interior planned to ``make an announcement in the next two
weeks.'' \54\ Sibbison relayed confidential information that
Interior was ``95% certain that the application will be turned
down. . . . [and] they will probably decline because of their
``discretion'' in this matter.'' \55\ Sibbison also mentioned
the fact that there was local opposition to the application,
but noted that ``much of the opposition, however, was a by-
product of wealthier tribes lobbying against the
application[.]'' \56\ The recognition that local opposition was
a by-product of lobbying efforts by ``wealthier tribes'' is
particularly troubling. The regional office and the area office
had both concluded that local opposition was not sufficient to
deny the application. Only after wealthy opponents became
involved--and the Department of the Interior had accorded their
tribes preferential treatment in the form of an extended
comment period--did local opposition become a dispositive
issue. Even then, as will be discussed in later sections of
this chapter, the ``opposition'' failed to articulate
substantive reasons for denial of the application. The
Department's obvious favoritism tends to undermine the
Secretary's assertion that the denial of the application was
appropriate.
---------------------------------------------------------------------------
\54\ Memorandum from David Meyers to Jennifer O'Connor, June 6,
1995 (Exhibit 20).
\55\ Id. The quotation marks around the word ``discretion'' are
found in the original. One of the central concerns in the rejection of
the Hudson application is whether the Department made its decision
according to articulated standards and past practices. It is curious
that someone on Harold Ickes' staff would use quotation marks to
describe something the Secretary of the Interior was about to do.
Contextually, it seems as though Meyers recognizes that it would not be
appropriate in this case to ignore the law, ignore the facts, and
decide based on discretion.
\56\ Id.
---------------------------------------------------------------------------
Further communication between the White House and the Department of the
Interior
Harold Ickes' office appears to have been the primary
contact at the White House for the Department of the Interior.
Ickes, in an effort to distance himself from the application,
testified that he was ``peripherally involved'' and ``Jennifer
O'Connor on my staff was the primary person on [the Hudson
application].'' \57\ Heather Sibbison and Jennifer O'Connor
continued communications between the Department of the Interior
and the White House, even though O'Connor did indicate that she
prefaced all of her conversations with Interior stating ``I'm
making a status inquiry, don't want to influence anything,
don't tell me anything you're not supposed to tell me.'' \58\
In addition, Jennifer O'Connor was also in contact with John
Duffy's office. At the time, Duffy was Counselor to the
Secretary and one of the top political appointees involved in
the decisionmaking process. O'Connor called Duffy's office on
at least two occasions known to the Committee. One conversation
was in response to a call from Duffy. The message slip received
from Duffy's office records reads ``returned your call.'' \59\
Additionally, it is important to note that the ``disposition''
column read ``done'' which most likely means that Duffy
returned O'Connor's call.\60\
---------------------------------------------------------------------------
\57\ Testimony of Harold Ickes before the Senate Committee on
Governmental Affairs, Oct. 8, 1997, pp. 46-47.
\58\ Deposition of Jennifer O'Connor, Sept. 15, 1997, pp. 96-97.
\59\ Department of the Interior telephone record, May 25, 1995
(Exhibit 21).
\60\ Id.
---------------------------------------------------------------------------
On June 26, 1995, Jennifer O'Connor faxed a letter to
Sibbison inquiring about the Chippewas' application. The next
day, Sibbison faxed back two responses--one indicating that the
Department would reject the Chippewa application and the other
indicating that the Department was reviewing the matter.\61\
This raised strong suspicions of political impropriety in the
eyes of Judge Crabb, who stated:
---------------------------------------------------------------------------
\61\ Letter from Heather Sibbison to Jennifer O'Connor, June 27,
1995 (Exhibit 22).
[T]he fact that [Sibbison] sent two letters to the
White House with different messages implies that the
White House had been involved in the matter already.
Also, the mere fact that Sibbison sent two somewhat
contradictory letters suggests that the department was
aware of the need for some subterfuge in the process to
allow Ickes to advance political ends. The letters seem
almost to allow Ickes to choose which direction he
wanted the Department to take. The more troubling
aspect of Sibbison's June 27 response is that it means
the Department had reached a decision on plaintiffs'
application by that date. This undermines the
department's assertion that Deputy Assistant Secretary
Anderson was the one making the decision on plaintiffs'
application.\62\
---------------------------------------------------------------------------
\62\ Sokaogon Chippewa Comm., 961 F. Supp, at 1283.
Judge Crabb's remarks appear particularly well-founded
considering what was happening at the staff level. For example,
on July 5--just 2 weeks after the ``subterfuge'' of the
diametrically opposed letters--Troy Woodward, a lawyer in the
---------------------------------------------------------------------------
Solicitor's office, sent the following e-mail:
Tom [Hartman], George [Skibine] said you were working
on an analysis of the Hudson Dog Track proposal and
whether the proposed gaming would be in the best
interests of the Tribes and not detrimental to the
surrounding community. Can you please send me an
electronic copy of your analysis before 1:30? \63\
---------------------------------------------------------------------------
\63\ E-mail from Troy Woodward to Tom Hartman, July 5, 1995
(Exhibit 65).
This communication is remarkable for two reasons. First, it
shows that 9 days before the decision was made, the key non-
political staff had not reached a conclusion about the fate of
the application.\64\ Second, and perhaps more important, it
shows that there was still no analysis that indicated the
application was detrimental to the surrounding community.
Nevertheless, 9 days later a political appointee rejected the
application, stating: ``Because of our concerns over
detrimental affects on the surrounding community, we are not in
a position, on this record, to substitute our judgment for that
of local communities directly impacted by the proposed off-
reservation gaming acquisition.'' \65\ Given the
extraordinarily arbitrary nature of the decision, Judge Crabb
was certainly justified when she speculated that ``the
Department was aware of the need for some subterfuge in the
process to allow Ickes to advance political ends.'' \66\
---------------------------------------------------------------------------
\64\ All produced copies of memoranda prepared by Tom Hartman show
that far from finding that the application was a detriment to the
surrounding community, he concluded the opposite--that the application
was not a detriment to the surrounding community. See, e.g., Memorandum
from Indian Gaming Management Staff to Director, Indian Gaming
Management Staff, June 8, 1995 (Exhibit 44); see also Memorandum from
George Skibine to Assistant Secretary--Indian Affairs, undated (Exhibit
45). Both of these memoranda are marked ``draft.'' However, no other
memoranda were produced as final work product, and there are no other
staff memoranda to the contrary prior to the rejection letter.
\65\ Letter from Michael Anderson to Rose Gurnoe, Alfred Trepania,
and Arlyn Ackley, Sr., July 14, 1995 (Exhibit 2).
\66\ Sokaogon Chippewa Comm., 961 F. Supp, at 1283.
---------------------------------------------------------------------------
Ultimately, communication between the White House and
Interior reached a level where according to David Meyers,
Sibbison went so far as to ask Jennifer O'Connor for any
``feedback'' she might have had on the application.\67\ In an
extraordinary memorandum from one Ickes staffer to another
Ickes staffer, David Meyers writes to Jennifer O'Connor:
``[Sibbison] stated that they will probably decline without
offering much explanation, because of their `discretion' in
this matter. She asked that if you have any feedback please
call her with your thoughts.'' \68\ As already discussed, the
use of quotation marks for ``discretion'' is curious. More
important, the fact that the Secretary of the Interior's
Special Assistant was telling Harold Ickes' staff that Interior
would reject the application ``without offering much
explanation'' cannot be given an innocent explanation. Given
the weight of all the evidence before this Committee, the real
reason that the rejection would be made ``without offering much
explanation'' is that there was no evidence to offer. Mere
incompetence cannot explain why the government would reject an
application without properly justifying its decision. Not only
is such action the definition of ``arbitrary and capricious,''
it is also, given the almost-certainty of litigation when a
decision is not supported by valid reasoning, contemptuous of
the taxpayer who must pay for the agency's misfeasance in
court.
---------------------------------------------------------------------------
\67\ Memorandum from David Meyers to Jennifer O'Connor, June 6,
1995 (Exhibit 20).
\68\ Id.
---------------------------------------------------------------------------
The communication which has received the most speculation
and attention, however, appears to have been from Harold Ickes
to Secretary Babbitt himself.
Additional significant communications prior to the denial
Although evidence shows frequent communication between the
White House and the Department indicating the application would
be denied, there was no such communication with the applicant
tribes. The applicants had a number of contacts with Interior
officials and were not informed of any significant--let alone
fatal--defects in their application. Indeed, in May 1995, Paul
Eckstein,\69\ a lawyer and friend of Secretary Babbitt's who
worked on behalf of the Chippewas, had a conversation with
Secretary Babbitt during which Babbitt reportedly promised to
meet personally with the tribal Chairmen and Eckstein if a
problem with the application arose.\70\
---------------------------------------------------------------------------
\69\ Paul Eckstein is a long time friend of Secretary Babbitt. The
two met at Harvard Law School in 1962 and returned to Arizona to
practice law. In 1967, Babbitt was hired by a small law firm in Phoenix
where Eckstein was working. In 1974, Babbitt left the firm when he was
elected Arizona Attorney General. In 1978 Babbitt was elected Governor
of Arizona. Throughout Babbitt's political career, Paul Eckstein has
been a part of his inner circle of advisors. For example, Eckstein ran
Babbitt's re-election for Governor in 1982. Needless to say Eckstein
and Babbitt were close friends. (Committee Staff Interview with Paul
Eckstein; see also Senate testimony of Paul Eckstein, Oct. 30, 1997,
pp. 13-14).
\70\ Testimony of Paul Eckstein before the Senate Committee on
Governmental Affairs, Oct. 30, 1997, p. 18; see also Senate Deposition
of Paul Eckstein, Sept. 30, 1997, p. 29.
---------------------------------------------------------------------------
On May 17, 1995, tribal representatives, Fred Havenick, and
Paul Eckstein met with John Duffy. In this meeting Duffy did
not identify any specific problem with the application.
Nevertheless, he did convey that he did not believe the
application would be a ``slam dunk.'' \71\ This was one of the
only comments made by Duffy in the meeting. In an effort to
look deeper into the matter, the group met with George Skibine
and Thomas Hartman that same day. In this meeting the group
discussed the technical aspects of the application and no
problems were identified.\72\ That night, however, staff at
Interior met and reported to the White House that a preliminary
decision to reject the application had been reached.\73\ Not
only was this not communicated to the applicant tribes, they
had not even been given a clear understanding of what they
needed to do to correct any perceived defects in the
application. Given the Department's previous efforts to work
with applicant tribes to perfect applications--including in one
situation hiring mediators to broker applicant/community
harmony--there has yet to be advanced a reasonable explanation
for the Department's approach to this application. If the
decision was made under appropriate circumstances, as Secretary
Babbitt has repeatedly argued, there would have been no reason
to withhold critical information from the applicants, while at
the same time favoring the opponents.
---------------------------------------------------------------------------
\71\ Senate Deposition of Paul Eckstein, Sept. 30, 1997, p. 88. In
his deposition before this Committee, John Duffy remembered the phrase
``not a slam dunk,'' but did not recall having had any discussions
about problems with the application with ``the applicant tribes or any
other representatives.'' Deposition of John Duffy, Jan. 26, 1998, pp.
40-41.
\72\ Id. at 35-36.
\73\ See Memorandum from Jennifer O'Connor to Harold Ickes, May 18,
1995 (Exhibit 19).
---------------------------------------------------------------------------
George Skibine and Thomas Hartman had the opportunity to
articulate any perceived problems when they met again with Paul
Eckstein and Fred Havenick on May 31, 1995. Interestingly,
there were no problems identified and Eckstein and Havenick
left believing the application was on its way to approval.\74\
Either Skibine and Hartman did not know that a decision had
been made, or they refused to help the applicant tribes.
Hartman, however, may not have known about the preliminary
decision, because as late as June 16, 1995, he relayed to
Eckstein that the staff report was just passed to Skibine and
there were no problems that could not be cured.\75\ Eckstein
later called George Skibine on June 26, 1995, seeking an
additional status report. To Eckstein's surprise, Skibine
refused to talk about the application for fear that he would
lose his job.\76\ Again, this adds to the concern that the
Hudson decision was not made on the merits.
---------------------------------------------------------------------------
\74\ Committee Staff interview with Fred Havenick.
\75\ Affidavit of Paul Eckstein, Jan. 8, 1996 (Exhibit 23).
\76\ Id. This is Eckstein's recollection of the exchange.
---------------------------------------------------------------------------
Inconsistencies in Secretary Babbitt's statements
There is substantial evidence that Ickes called Secretary
Babbitt in order to influence the Department's decision on the
Chippewa's application. Paul Eckstein testified in a sworn
affidavit:
Later that day, on July 14, 1995, I met with Secretary
Babbitt. I asked the Secretary if he would delay the
release of the decision of the Tribes' application
until the following Monday to allow time for the Tribes
to attempt to respond to the political pressure being
exerted against the application. Secretary Babbitt said
that the decision could not be delayed because
Presidential Deputy Chief of Staff Harold Ickes had
called the Secretary and told him that the decision had
to be issued that day.\77\
---------------------------------------------------------------------------
\77\ Id.
When word of Eckstein's assertion was disseminated,
Secretary Babbitt denied the account. Babbitt immediately
denied any contact with Ickes or that Ickes played any role in
the decision. Secretary Babbitt even denied ever using Ickes'
name in front of Eckstein. In an August 30, 1996, letter to
---------------------------------------------------------------------------
Senator John McCain, Secretary Babbitt stated:
I must regretfully dispute Mr. Eckstein's assertion
that I told him that Mr. Ickes instructed me to issue a
decision in this matter without delay. I never
discussed the matter with Mr. Ickes; he never gave me
any instruction as to what the Department's decision
should be, nor when it should be made.\78\
---------------------------------------------------------------------------
\78\ Letter from Secretary Bruce Babbitt to Senator John McCain,
Aug. 30, 1996 (Exhibit 24).
Judge Crabb, in the Federal law suit filed in Wisconsin
against the Department of the Interior, correctly noted: ``[i]t
would be improper to dismiss Eckstein's assertion just because
Babbitt denies it.'' \79\ Indeed, Secretary Babbitt, upon
further reflection, gave Senate Governmental Affairs Committee
Chairman Fred Thompson another contradictory statement about
what happened:
---------------------------------------------------------------------------
\79\ Sokaogon, 961 F. Supp, at 1284.
[W]hile I did meet with Mr. Eckstein on this matter
shortly before the Department made a decision on the
application, I have never discussed the matter with Mr.
Ickes or anyone else in the White House. Mr. Ickes
never gave me instructions as to what this Department's
decision should be, nor when it should be made. I do
believe that Mr. Eckstein's recollection that I said
something to the effect that Mr. Ickes wanted a
decision is correct. Mr. Eckstein was extremely
persistent in our meeting, and I used this phrase
simply as a means of terminating the discussion and
getting him out the door.\80\
---------------------------------------------------------------------------
\80\ Letter from Secretary Bruce Babbitt to Senator Fred Thompson,
Oct. 10, 1997 (Exhibit 25).
In testimony before the Committee on Government Reform and
Oversight and the Committee on Governmental Affairs, Babbitt
indicated that his statements were not only truthful but
consistent.\81\ A simple reading, however, would lead to the
opposite conclusion.
---------------------------------------------------------------------------
\81\ Testimony of Secretary Bruce Babbitt before the Committee on
Government Reform and Oversight, Jan. 29, 1998, p. 797; see also
Testimony of Secretary Bruce Babbitt before the Committee on
Governmental Affairs, Oct. 30, 1997.
---------------------------------------------------------------------------
One of the most damaging and troubling pieces of Eckstein
testimony revolved around the alleged rhetorical question asked
of Eckstein by Secretary Babbitt. The question involved
campaign contributions given to the Democratic party.\82\
Secretary Babbitt is said to have indicated that ``these tribes
[donated] on the order of half a million dollars, something
like that.'' \83\ This statement, if true, constitutes an
illegal sale of government policy for campaign contributions.
Secretary Babbitt has said he has ``no recollection'' of
mentioning contributions with anyone from the White House, the
DNC, or anyone else.\84\ However, the difference between his
correspondence to Senator McCain and then to Senator Thompson--
combined with direct evidence of White House contacts with the
Secretary's office and direct and circumstantial evidence
relating to improper decisionmaking at the Department of the
Interior--make the Secretary's statement less than credible.
Furthermore, Secretary Babbitt's willingness to make
misrepresentations about smaller matters--for example, Governor
Thompson's position on the application or whether the decision
was based solely on Section 20 of the Indian Gaming Regulatory
Act--adds to the sense that he has not been candid about his
involvement in the Hudson matter.
---------------------------------------------------------------------------
\82\ Senate Deposition of Paul Eckstein, Sept. 30, 1997, p. 53.
\83\ Id.
\84\ Testimony of Secretary Bruce Babbitt before the Committee on
Government Reform and Oversight, Jan. 29, 1998, p. 791; see also
Testimony of Secretary Bruce Babbitt before the Committee on
Governmental Affairs, Oct. 30, 1997.
---------------------------------------------------------------------------
``Possible DOJ involvement''
In a document produced to the Committee pursuant to
subpoena, Scott Keep, an employee in the Solicitor's office,
sent the following e-mail to Heather Sibbison, Hilda Manuel,
Michael Anderson, Tom Hartman, Paula Hart, George Skibine and
Troy Woodward:
DOJ [Department of Justice] has found a reference in
one of the documents or testimony to possible DOJ
involvement in the Hudson dog track matter. Are any of
you aware of any involvement by anyone at DOJ in the
Hudson dog track matter prior to the decision on July
14? . . . If anyone has any recollection of a contact
from DOJ, please advise me.\85\
---------------------------------------------------------------------------
\85\ E-mail from Scott Keep to Heather Sibbison, Hilda Manuel,
Michael Anderson, Tom Hartman, Paula Hart, George Skibine, Troy
Woodward, Nov. 17, 1997 (Exhibit 72).
Apart from this one reference, the Committee is not aware
of any Department of Justice involvement with the Hudson
application prior to the rejection of the application on July
14, 1995. It is entirely possible, however, that such a contact
would have relevance to the Committee's investigation.
PROBLEMATIC ASPECTS OF THE HUDSON DECISION
Large contributors got what they wanted
During the 1996 election cycle, tribes opposed to the
Hudson application donated at least $356,250 to the DNC and
other Democratic party causes during the 1995-1996 election
cycle.\86\ This figure does not include money donated by the
lobbyists paid by the opponents or other ``intangibles,'' such
as the fundraiser held in the home of lobbyist Tom Schneider
which raised $420,000 for Clinton Gore '96 the night before the
decision to deny the application was made.\87\
---------------------------------------------------------------------------
\86\ See Committee on Government Reform and Oversight Chart
(Exhibit 26).
\87\ See Vern Shen and Karl Vick, ``Schaefer and Bentley's Latest
Pitch,'' the Washington Post, July 20, 1995.
---------------------------------------------------------------------------
Prior to the fundraiser at his home, Schneider had elicited
Ickes' promise to ``follow up'' on Patrick O'Connor's requests
regarding the dog track in Hudson, Wisconsin.\88\ According to
Schneider: ``my experience, due to sort of a personal
relationship with the White House, is when people say they are
going to follow up, they usually will follow up.'' \89\
---------------------------------------------------------------------------
\88\ Deposition of Thomas Schneider, Dec. 10, 1997, pp. 16-17.
\89\ Id.
---------------------------------------------------------------------------
These large donations from Native Americans were not merely
coincidental. On the contrary, the Democratic National
Committee and Clinton/Gore '96 campaign staff were actively
soliciting such contributions from Native American tribes.
It is also interesting to note the pattern of wealthy
Native American contributors getting what they wanted where
off-reservation gaming was concerned. The Sault Ste. Marie
Chippewa gave at least $384,964 to the Democrats in 1995-1996
\90\ and received approval from the Department of the Interior
to open a gaming facility over 300 miles from their
reservation.\91\ The Mashantucket Pequots gave over $409,625 in
1995 and 1996 to the Democrats and the Department of the
Interior not only approved their application, but hired
mediators to try to alleviate some of the extraordinary local
opposition to the expansion of gambling. Indeed, the Committee
received one document from the DNC on August 28, 1998--7 months
after the Committee held hearings on this subject--which shows
that Richard Hayward, the Chairman of the Mashantucket Pequots,
is listed as: ``Wrote $500,000 +'' to the DNC.\92\
---------------------------------------------------------------------------
\90\ A ``movie list'' of attendees at White House movies was
produced to the Committee which lists ``Bernard (Chippewa Indians)''
along with Ted Sioeng, Charlie Trie, Arief Wiriadinata and 16 others.
See movie list (Exhibit 27). At one point, the DNC appeared to be
feeling great urgency regarding matters pertaining to this tribe. In a
call sheet dated Feb. 22, 1996, Mark Thomann called Richard Sullivan
and the following message was recorded: ``[c]an we overnight a Finance
Board packet to his Indians.'' (Exhibit 28).
\91\ The tribe's casino application was vetoed by the Governor of
Michigan and therefore the casino was not built.
\92\ This is a sum far greater than that known prior to the recent
production of documents (Exhibit 29).
---------------------------------------------------------------------------
The opposing tribes in the Hudson matter contributed
(through Patrick O'Connor) at the same time that opposition
tribe lobbyists were meeting with White House and DNC staff
(through O'Connor) on the Chippewas' application.\93\ Patrick
O'Connor also testified that he met with David Mercer, the
Deputy Finance Director of the DNC, several times after his
April 28 meeting with Chairman Fowler to discuss ``how many
Indians we could get to attend the presidential gala'' ($1,000
or $1,500 donation required) in June.\94\ Patrick O'Connor had
a goal to raise $25,000 from the Tribes for that
fundraiser,\95\ and he also recalled that he and Larry Kitto
met with Terry McAuliffe, the National Finance Chairman of the
Clinton/Gore '96 Committee, and was asked for more $1,000
donations from members of tribes opposed to the
application.\96\ O'Connor was also responsible for a fundraiser
on October 23, 1996, in Minneapolis, Minnesota, honoring Vice
President Gore, in which 17 of the 20 attendees were members of
tribes opposed to the Hudson casino, or their lobbyists.\97\
Thus, the Vice President went to a fundraiser that was--with
the exception of only three attendees--composed exclusively of
beneficiaries of the Hudson decision.
---------------------------------------------------------------------------
\93\ State Court Deposition of Patrick O'Connor, Apr. 18, 1997, pp.
71-72 (Exhibit 8).
\94\ Id.
\95\ Id.
\96\ Id. at 87-88.
\97\ VPOTUS Reception list, Oct. 23, 1996 (Exhibit 30).
---------------------------------------------------------------------------
In testimony before the Senate Governmental Affairs
Committee, when asked about the contact Patrick O'Connor had
with Deputy Finance Director David Mercer while the Hudson
application was under consideration at the Department of the
Interior, Fowler could not remember anything about Mercer's
contacts with those opposed to the application.\98\ However,
Chairman Fowler admitted that ``one could infer that the casino
matter was discussed[.]'' \99\ Although O'Connor has denied any
link between DNC solicitations and his clients' donations, a
review of his daybook would reasonably lead to a different
conclusion. Because O'Connor billed his Native American clients
for the time he spent discussing and coordinating campaign
donations with the DNC and Clinton/Gore '96 staff,\100\ it is
reasonable to conclude that Patrick O'Connor believed that
these contributions were intertwined with defeat of the
Chippewas' application before the Department of the Interior.
---------------------------------------------------------------------------
\98\ Testimony of Don Fowler before the Committee on Governmental
Affairs, Sept. 9, 1997.
\99\ Id.
\100\ See O'Connor & Hannan billing records (Exhibit 31).
---------------------------------------------------------------------------
A review of O'Connor's calendar is one of the clearest
indications that campaign dollars were exchanged for influence
in the decisionmaking process at the Department of the
Interior. On the day the application was denied, Patrick
O'Connor wrote in his daily planner: ``need to follow up with
Harold Ickes at the White House, [Don] Fowler at the DNC and
Terry Mac [Auliffe] at the Committee to reelect--outlining
fundraising strategies.'' \101\ In addition to the entry in
O'Connor's calendar he also billed the St. Croix tribe for the
fundraising discussions with Ickes, Fowler, and McAuliffe.\102\
The fact that O'Connor was engaged in ``follow up'' discussions
on the very day the Hudson application was denied indicates
that fundraising dollars played a larger role in the decision
than anyone is willing to admit.
---------------------------------------------------------------------------
\101\ Patrick O'Connor Datebook, July 14, 1995 (Exhibit 5).
\102\ O'Connor & Hannan billing records, July 14, 1995 (Exhibit
31).
---------------------------------------------------------------------------
Given the direct and circumstantial evidence indicating a
political decision, it is hardly surprising that O'Connor's
clients and the lobbyists against the Hudson application began
contributing after the Chippewas' application was denied, and
O'Connor had cemented the ``fundraising strategy'' with the
White House, DNC and Clinton/Gore '96. Furthermore, 2 months
later, on September 14, 1995, Patrick O'Connor and Larry Kitto
sent out personal invitations encouraging opposition tribe
members to attend $1,000 per person Presidential and Vice
Presidential fundraisers.\103\ In the invitation, O'Connor and
Kitto reiterated their belief that President Clinton and his
staff intervened on behalf of the opposing tribes: ``As
witnessed in the fight to stop the Hudson Dog Track proposal,
the Office of the President can and will work on our behalf
when asked to do so.'' \104\ This feeling was also shared by at
least one of the tribes who wrote to thank both the President
and the DNC Chairman. The President of the Ho-Chunk Nation
wrote to Chairman Don Fowler:
---------------------------------------------------------------------------
\103\ Letter from Patrick O'Connor and Larry Kitto, Sept. 14, 1995
(Exhibit 32).
\104\ Id.
On behalf of the Ho-Chunk Nation, I want to thank you
for your help in the successful effort to defeat the
Hudson casino. Numerous people contributed to the
Department of Interior decision. You were particularly
instrumental in helping the Department understand the
significance and importance of their decision.\105\
---------------------------------------------------------------------------
\105\ Letter from JoAnn Jones to Don Fowler, Aug. 3, 1995 (Exhibit
33).
President Clinton's efforts also did not go unappreciated: ``On
behalf of the Ho-Chunk Nation, I want to thank you for your
role in the decision to deny the request to approve the Hudson
casino.'' \106\ Shortly before the decision to reject the
application was made, at the time that the White House was
getting involved in the Hudson application, Chairman Fowler
received a memorandum from one of his staffers. This memorandum
states: ``Craig Smith, White House Assistant to Political
Affairs, and Judy DeAtley, DNC Western Political Desk, met this
week with Indian representatives to discuss political and
campaign strategies.'' \107\ This memorandum indicates much
greater coordination with Native Americans than previously
known. It also includes material from Kevin Gover--then a
lawyer/lobbyist in the private sector and now the Assistant
Secretary for the Bureau of Indian Affairs--stating that:
``[t]he tribes can be major financial players in California,
Minnesota, Wisconsin, Florida, New Mexico, and Washington.''
\108\
---------------------------------------------------------------------------
\106\ Letter from JoAnn Jones to President Clinton, Aug. 3, 1995
(Exhibit 34).
\107\ Memorandum from Alejandra Castillo to Don Fowler, June 23,
1995 (Exhibit 35).
\108\ Memorandum from Kevin Gover and Cate Stetson to Craig Smith
and Judy DeAtley, June 19, 1995 (Exhibit 36).
---------------------------------------------------------------------------
It appears to be far from coincidental that this flurry of
political activity involving Native Americans was taking place
as the Department of the Interior was deciding to reject the
advice of its own area and regional offices.
The applicant tribes were not given the opportunity to cure any of the
application's alleged defects
While the opponents celebrated their victory and sent
letters of appreciation to the President, the decision to
reject the application took the applicant tribes by surprise.
The applicant tribes have consistently complained that they
were never consulted in advance about the alleged problems the
Department of the Interior found in the application. This is a
critical point, and the record supports this position.
The statutory language of Section 20, reads: ``[land may be
placed into trust if] the Secretary, after consultation with
the Indian tribe . . . determines that a gaming establishment .
. . would be in the best interest of the Indian tribe and its
members, and would not be detrimental to the surrounding
community[.]'' \109\ It is true that members of the Interior
Department met with tribal leaders, but the tribal leaders were
not consulted about any problem which would have jeopardized
the application. Indeed, the consultation that did take place
resulted in both the Area and Regional office approving the
application. There was no subsequent consultation that put the
applicants on notice that the Secretary's office had identified
problems that had not already been addressed or solved at the
Area and Regional levels. Furthermore, there was no indication
that the Department was going to change its policy just for the
Hudson application and discard the standard that opposition, to
be considered, had to be supported by ``factual
documentation.'' \110\ Given the Department's role in the Sault
Ste. Marie and Pequot applications to help facilitate
accommodations with the local communities, there are strong
indications that the decision may have been driven by political
motives.
---------------------------------------------------------------------------
\109\ Section 20 of the Indian Gaming Regulatory Act has been
codified at 25 U.S.C. Sec. 2719(b)(1)(A) (emphasis added).
\110\ Hilda Manuel, in a letter to Representative Gunderson, stated
that ``any opposition should be supported by factual documentation.''
Letter from Hilda Manuel to Representative Steve Gunderson, Mar. 2,
1995 (Exhibit 38). This issue is discussed fully in the next section of
this chapter.
---------------------------------------------------------------------------
The conclusion appears to be inescapable: where
contributors of large amounts of money were involved, the
Secretary's office appears to have helped the contributors. In
the Hudson application, the Secretary's office again helped the
large contributors--this time by failing to notify the
applicants that the comment period had been reopened and then
denying the application without informing the applicants of
defects or providing a chance to cure the alleged defects.
David Jones, the Assistant U.S. Attorney representing the
Department of the Interior in the ongoing law suit regarding
this matter, identified the problem that the Department would
face when it became clear that the applicant tribes had not
been consulted about potential problems with the application.
Jones wrote:
Now that we have reviewed the administrative record in
greater depth, we have determined that the alleged
problems with the 2719 [Section 20 of IGRA] process are
significant. We are primarily concerned about our
ability to show that the plaintiffs were told about and
given an opportunity to remedy the problems which the
Department ultimately found were outcome-determinative.
Area Directors are told to give applicants an
opportunity to cure problems, and it will be hard to
argue persuasively that applicants lose this
opportunity once the Central Office begins its
review.\111\
---------------------------------------------------------------------------
\111\ Letter from David Jones to Scott Keep, Feb. 14, 1996 (Exhibit
37).
---------------------------------------------------------------------------
Jones goes even further to note:
The administrative record, as far as we can tell,
contains no record of Department meeting or
communications with the applicant tribes in which the
Department's concerns were expressed to the
plaintiffs.\112\
---------------------------------------------------------------------------
\112\ Id.
The reason that there was nothing in the record is that the
Department simply failed to identify such problems in advance.
Had there been a problem that would appropriately have led to
the rejection of the application, the Department of the
Interior would have had some record of the problem.
Furthermore, it is likely that at least one employee of the
Department of the Interior would have told the applicants that
there was a problem that would prove fatal unless cured.
The following exchange from George Skibine's deposition
confirms David Jones' conclusion that the applicants were not
given an opportunity to cure defects:
Q: To clarify the meaning of my question, here were
three poor tribes that had presented an application to
the Department of the Interior, and you were making a
determination as to whether to approve the application
or deny the application. If you, as the director of the
IGMS staff, identified a particular problem that might
lead to the rejection of the application, did you
consider it important to communicate that directly to
the applicant tribes to give them an opportunity to
cure the problem?
A: Good question. I don't think that I did that on
this application, the first application I considered as
head of the gaming office. If I were to do that again
different now, you know, it might be different, it
might be something I would consider doing, but at that
time, I didn't do it. In other words, we did not[.]
\113\
---------------------------------------------------------------------------
\113\ Deposition of George Skibine, Jan. 13, 1998, p. 61 (Exhibit
69).
Skibine elaborated further in the following exchange during his
---------------------------------------------------------------------------
deposition:
Q: Now if you had shared the June 29 draft with the
applicants, is it possible they might have come back
and offered accommodations to the problems you
identified?
A: If we had done more consultation with them and
told them, yes, it's possible. We didn't do that in
this instance.\114\
---------------------------------------------------------------------------
\114\ Id. at 121.
If the Department of the Interior was acting in good faith,
it would have given the tribes an opportunity to cure the
alleged defects. Because Interior acts as a middleman--the
collector of information supporting or opposing the
application--it has historically been responsible for keeping
the tribes informed of problems. In other situations where
political considerations were not driving the decision,
Interior kept the applicants informed of the issues. In one
case they even hired a mediator to solve the problems between
the applicants and the local opponents.\115\ Particularly given
the fact that George Skibine recognized that the local
opposition was ``largely generated'' by lobbyists opposed to
the application,\116\ it is legitimate to ask why a mediator
would be hired in one case and not in another. One answer that
naturally suggests itself is that to hire a mediator for the
Mashantucket Pequots benefited Democratic contributors, and to
hire a mediator for the three Chippewa applicants would have
worked against Democratic contributors.
---------------------------------------------------------------------------
\115\ See Deposition of Hilda Manuel, Jan. 6, 1998, pp. 81-82.
\116\ E-mail from George Skibine to Heather Sibbison, Paula Hart,
Tom Hartman, Troy Woodward and Kevin Meisner, June 30, 1995 (Exhibit
46).
---------------------------------------------------------------------------
In the Hudson application, no one from DOI's central office
even visited the proposed site in Hudson, Wisconsin, to see any
of the alleged problems first hand. As for the central tenet of
the rejection--opposition by the surrounding communities--the
Department of the Interior went so far as to misrepresent to
this Committee and to a Federal judge the facts pertaining to
support for the application.\117\
---------------------------------------------------------------------------
\117\ As will be discussed later in this chapter, the Department of
the Interior significantly misrepresented the amount of support for the
application in the record submitted for the purposes of the Federal
litigation in Wisconsin. The Department of the Interior also failed to
inform the court that their own Solicitor's office found opposition by
elected officials to be irrelevant. See e-mail from Kevin Meisner to
Heather Sibbison, Mar. 23, 1995 (Exhibit 56). In this e-mail, Meisner
states that he is also sending the e-mail to another Department of the
Interior lawyer named Tim Elliot ``who should be able to shed some
further light on this question.'' No documents were produced to this
Committee regarding Mr. Elliot's position on this matter.
Notwithstanding Mr. Elliot's potential role as a witness in this
matter, however, Elliot represented all Department of the Interior
employees in depositions taken by this Committee.
---------------------------------------------------------------------------
The Department changed its policy regarding off-reservation
applications just before deciding Hudson
It is clear that the Department would have acted
appropriately if it made a finding, supported by fact, that the
proposed Hudson casino would have been a ``detriment to the
surrounding community.'' Because the record did not support
such a finding, the Secretary's office changed the approach to
evaluating off-reservation gaming applications, and decided
that unsupported opposition within the community would be
enough for a finding that the proposal would be a detriment to
the surrounding community. In its rejection of the application,
the Department has morphed the Section 20 ``detrimental to the
surrounding community'' standard into a policy that the
existence of opposition to an application is a ``detriment to
the surrounding community.''
The Department of the Interior has not publicly discussed
this policy change. In communications obtained by this
Committee pursuant to subpoena, however, Department officials
have admitted that a new policy was used to decide the Hudson
application. Furthermore, it is clear that the applicants were
not informed of the new ground rules for deciding their
application.
One clear statement that a new policy was used to decide
the Hudson application is found in an internal communication
between Secretary Babbitt's Special Assistant Heather Sibbison,
and Michael Gauldin, a Department spokesman responsible for
answering questions about the Hudson decision. Almost 2\1/2\
years after the decision was made, Sibbison--who was also the
go-between with the White House for the Hudson matter--made the
following statement in a confidential internal e-mail:
[I]t has been our position, first articulated in
Hudson, that expressed opposition from local elected
officials essentially is prima facie evidence of
detriment.\118\
---------------------------------------------------------------------------
\118\ E-Mail from Heather Sibbison to Michael Gauldin, Dec. 16,
1997 (emphasis added) (Exhibit 54).
David Jones, the Department of the Interior's own attorney
in the civil litigation in Wisconsin, adds to our understanding
---------------------------------------------------------------------------
of Sibbison's statement:
The second, and related, problem is that the Department
appears to have changed its past policy of requiring
``hard'' evidence of detriment to the community. The
plaintiffs will therefore argue that they had no
notice, either through past policy or through direct
Departmental communication, that the ``soft'' concerns
expressed by local officials would jeopardize their
application.\119\
---------------------------------------------------------------------------
\119\ Memorandum from David Jones to Scott Keep, Feb. 14, 1996
(emphasis added) (Exhibit 37).
Even more enlightening is George Skibine's explanation of
the role of Counselor to the Secretary John Duffy. Skibine
---------------------------------------------------------------------------
noted:
The Department (Duffy) made a decision that the
opposition of the local communities was evidence per se
of detriment, and that the Department was not going to
require the communities for detailed evidence to back
up their opposition.\120\
---------------------------------------------------------------------------
\120\ Memorandum from George Skibine to Scott Keep, Assistant
Solicitor, Aug. 5, 1996 (Exhibit 51). Heather Sibbison characterizes
Duffy as the person ``most centrally involved'' in the decision.
Although he did not have the actual decisionmaking authority, Sibbison
answered in the affirmative when asked if Duffy ``was much more
involved in meetings and deliberations about this particular
application than Mr. Anderson.'' Deposition of Heather Sibbison, Senate
Committee on Governmental Affairs, Sept. 26, 1997, p. 118-119. In a
memorandum prepared by Troy Woodward, Duffy's role is further
explained: ``Duffy thinks that the local communities may veto off-
reservation Indian gaming by objecting during the consultation process
of Section 20. I expressed the opinion, advocated by George [Skibine]
and which we have used to evaluate objections in the past, that the
consultation process does not provide for an absolute veto by a mere
objection, but requires that the objection be accompanied by evidence
that the gaming establishment will actually have a detrimental impact
(economic, social, developmental, etc.).'' Memorandum by TMW [Troy
Woodward], July 6, 1995 (Exhibit 77).
This was a departure from Department practice and established a
new standard to assess trust applications. It is certainly a
departure from Acting Deputy Commissioner of Indian Affairs
Hilda Manuel's letter to Representative Gunderson--drafted just
4 months before the rejection--which pointed out that ``any
opposition should be supported by factual documentation.''
\121\ Thus, in the Hudson case, Babbitt's counsel established a
new policy--one not articulated anywhere or shared with any of
the applicants.
---------------------------------------------------------------------------
\121\ Letter from Hilda Manuel to Representative Steve Gunderson,
Mar. 2, 1995 (Exhibit 38).
---------------------------------------------------------------------------
Further illustrating the departure from what was standard
practice up until the Hudson application, Kevin Meisner, an
attorney at the Department of the Interior, disagreed with
Duffy's decision and wrote a memorandum to a number of
Department employees involved in the Hudson decision (Troy
Woodward, George Skibine, Paula Hart, Tom Hartman, and Larry
Scrivner). Meisner stated:
My view on this matter is that the bald objections of
surrounding communities including Indian tribes are not
enough evidence of detriment to the surrounding
communities to find under Section 20 of IGRA that the
acquisition for gaming will be detrimental to the
surrounding communities.
Specific examples of detriment must be presented by the
communities during the consultation period in order for
us to determine that there will be actual detriment. A
finding of detriment to surrounding communities will
not hold up in court without some actual evidence of
detriment. In this case the gaming office did not think
that the information obtained during the consultation
period was enough to show actual detriment to the
surrounding community.\122\
---------------------------------------------------------------------------
\122\ Memorandum from Kevin Meisner to Troy Woodward, George
Skibine, Paula Hart, Tom Hartman, and Larry Scrivner, July 6, 1995
(Exhibit 52).
In addition to making the point about unsupported
objections not being sufficient to establish detriment to the
community, Meisner provides a clear window into what actually
happened prior to the revisions and political cover-up
following the decision. By pointing that the ``gaming office
did not think that the information obtained during the
consultation period was enough to show actual detriment to the
surrounding communities,'' a dispassionate observer can only
wonder what Secretary Babbitt meant when he told this Committee
that ``the Department based its decision solely on the criteria
set forth in Section 20 of the Indian Gaming Regulatory Act.''
\123\ If Section 20 requires a finding that an application not
be a detriment to the surrounding community, and Secretary
Babbitt maintains that the decision was based on Section 20 of
IGRA, and his own staff stated 8 days before the rejection that
the gaming office did not have evidence of actual detriment,
there should be little surprise that this Committee has a
significant problem with the following language from the
rejection letter: ``Because of our concerns over detrimental
effects on the surrounding community, we are not in a position,
on this record, to substitute our judgment for that of the
local communities directly impacted by this proposed off-
reservation gaming acquisition.'' \124\
---------------------------------------------------------------------------
\123\ Testimony of Secretary of the Interior Bruce Babbitt, Jan.
29, 1998, p. 776.
\124\ Letter from Michael Anderson to Rose Gurnoe, Alfred Trepania
and Arlyn Ackley, Sr., July 14, 1995 (Exhibit 2).
---------------------------------------------------------------------------
Two significant problems flow from this policy change: (1)
the applicants were not informed that new rules were being
invented for, and applied to, their application; and (2) the
abrupt shift in policy defied a valid Presidential directive
prohibiting the Department from changing policy without
providing advance notification to the tribes.\125\ Indeed, the
change of policy conflicts with Section 20 of IGRA, which
requires ``consultation with the Indian tribe'' \126\ prior to
a determination that the proposal would be a detriment to the
surrounding community. It can hardly be argued that the
Secretary consulted with the applicants if they were unaware
that a new policy was being used to consider the application.
---------------------------------------------------------------------------
\125\ President's Memorandum for the Heads of Executive Departments
and Agencies: Government-to-Government Relations With Native American
Tribal Governments, 59 Fed. Reg. 22951 (1994). In pertinent part, this
Memorandum states: ``In order to ensure that the rights of sovereign
tribal governments are fully respected, executive branch activities
shall be guided by the following: . . . (b) Each executive department
and agency shall consult, to the greatest extent practicable and to the
extent permitted by law, with tribal governments prior to taking
actions that affect federally recognized tribal governments. All such
consultations are to be open and candid so that all interested parties
may evaluate for themselves the potential impact of relevant
proposals'' (Exhibit 66).
\126\ 20 U.S.C. Sec. 2719(b)(1)(A).
---------------------------------------------------------------------------
George Skibine, allegedly the key decisionmaker in the
rejection of the application, lends support to a statement by
Sibbison that the Department had changed its policy. In an e-
mail to Hilda Manuel, Bob Anderson, Heather Sibbison, Michael
Anderson, Scott Keep, Dave Etheridge, Tom Hartman, and Nancy
Pierskalla, dated March 17, 1997, he states:
Plaintiffs informed us that a pivotal question in their
decision to resubmit an application is whether the
Department again stand by its position that the
``naked'' political opposition of the surrounding
communities without factual support is enough for the
Secretary to refuse to make a finding that the proposed
acquisition is not detrimental to the surrounding
community. . . . We told them we would confer with
policy makers within the Department and let them know
the outcome. . . . I think that it is a fair question
for plaintiffs to ask.\127\
---------------------------------------------------------------------------
\127\ E-Mail from George Skibine to Hilda Manuel, Mar. 17, 1997
(Exhibit 57).
It is significant that Skibine does not take issue with the
fundamental premise of the question. This admission that
``factual support'' was absent from the decision goes directly
to the question of whether the decision was improperly made,
and whether the Department has tried to cover up this fact. The
Committee is left with a significant question: Why would
``naked'' political opposition without factual support ever be
a legitimate reason to deny an application? Prior to Hudson, it
was not a sufficient reason and nowhere in the record is there
a discussion of why the Department felt compelled to change the
policy without even notifying the parties that there had been a
change. Again, the circumstantial evidence points to an
improper motive.
Secretary Babbitt made his position clear in a statement to
the New York Times: ``This department does not force off-
reservation casinos upon unwilling communities.'' \128\
However, prior to the Hudson decision, mere opposition was not
enough--there had to be an objective showing of detriment. For
example, in her letter to Representative Gunderson, Hilda
Manuel stated:
---------------------------------------------------------------------------
\128\ Secretary of the Interior Bruce Babbitt, Letter to the
Editor, the New York Times, Jan. 4, 1998.
You request clarification on whether or not the Bureau
of Indian Affairs (BIA) considers the views of parties
opposing a fee-to-trust acquisition by a tribe for
gaming purposes. Because of the contentious nature of
fee-to-trust acquisitions for gaming purposes, public
sentiment and concerns of the negative impacts of
casino gambling are two of the several issues that are
common. The Department of the Interior (Department) is
sensitive to these issues. Consequently, we want to
take this opportunity to assure you that comments
opposing fee-to-trust acquisition receive the highest
consideration during the review process. However, it is
important to point out that any opposition should be
supported by factual documentation. If the opposing
parties do not furnish any documented evidence to
support their position, it is difficult, if not
impossible, to make a finding that the acquisition is
not detrimental to the surrounding community as
required by the Indian Gaming Regulatory Act (IGRA), 25
U.S.C. Sec. 2719.129
---------------------------------------------------------------------------
\129\ Letter from Hilda Manuel, Acting Deputy Commissioner of
Indian Affairs, to Hon. Steve Gunderson, Mar. 2, 1995 (emphasis added)
(Exhibit 38).
The commonsense rationale for this standard is obvious:
opposition based on racism, for example, would hardly be an
acceptable reason for rejecting an application. Thus, to be a
part of the decisionmaking process, ``factual documentation''
of opposition was always required prior to Hudson. George
Skibine, during his deposition, understood this concept. When
asked whether he would accept a claim of opposition and a claim
---------------------------------------------------------------------------
of harm ``without any research,'' he replied:
No; I think that we would need to look at what
justification you submit.\130\
---------------------------------------------------------------------------
\130\ Deposition of George Skibine, Jan. 13, 1998, p. 44.
The weakness of the Department's position regarding the
Hudson application is illustrated by an exchange between
---------------------------------------------------------------------------
Committee counsel and Mr. Skibine during his deposition:
Q: [A] longtime Hudson business person wrote in
support [of the application] and states that the
opposition to the acquisition is receiving money from
opposing Indian tribes. Is this an observation that you
investigated at the time you were analyzing whether to
approve or reject the application?
Skibine: No, it was not an allegation we
investigated.
Q: Do you know whether it is correct or incorrect?
Skibine: No, I don't know whether it is correct or
incorrect.
Q: Would it make a difference if it was correct?
Skibine: I think that if it was correct, it would
make a difference, yes.\131\
---------------------------------------------------------------------------
\131\ Id. at p. 133.
Given that the Department of the Interior was basing its
rejection--at least according to the Department--on opposition
from the local community, it would seem that fundamental
fairness would have required an inquiry into whether it was
true that people were receiving money for their opposition to
the application. Forced to admit that it would have made a
difference if the allegation were true, Skibine has essentially
conceded the Department's case--the Department failed to
examine a potentially dispositive factor, which makes it well-
nigh impossible to argue that ``the right decision was made in
the right way and for the right reasons.'' \132\
---------------------------------------------------------------------------
\132\ Testimony of Secretary of the Interior Bruce Babbitt, Jan.
29, 1998, p. 769.
---------------------------------------------------------------------------
Indeed, the Department's intellectual position is even
worse. By changing the policy to allow opposition to constitute
a prima facie case of detriment to the community, as Sibbison
stated in her e-mail to Michael Gauldin,\133\ the Department is
conceding that it would be acceptable in future cases if the
opposition was bought by a special interest or, in the extreme,
the opposition was grounded on a racist reaction to the
applicant. In the final analysis, the failure of the
decisionmakers to look beneath the surface of the opposition
makes it appear that they were less interested in a fair
decision than in arriving at a predetermined goal, by whatever
means necessary.
---------------------------------------------------------------------------
\133\ E-mail from Heather Sibbison to Michael Gauldin, Dec. 16,
1997 (Exhibit 54).
---------------------------------------------------------------------------
In the Hudson application, there was certainly opposition.
There was also, however, support for the application, and it
appears that quantitatively there was more support than
opposition. Perhaps more important to the making of a
principled decision, there is hardly any ``factual
documentation'' to back up the opposition. Furthermore, to
return to the point emphasized in the previous section, there
was no opposition that was beyond cure if the applicants had
been informed of the basis for the opposition. In addition, as
will be discussed later, the Department misrepresented the
amount of support for the application before this Committee and
a Federal court. Given the importance placed on community
opposition, this leads to a serious concern that the quantity
of support and opposition was manipulated in order to validate
the pre-determined outcome of the Hudson application denial.
The reasons advanced for the rejection of the application are
contradicted by information obtained by this Committee
A review of the recommendations prepared by the career
professionals working for the Department of the Interior gives
insight into not only what the career civil servants were
thinking, but also what the applicant tribes were expecting
from their meetings with Interior officials. The Finding of No
Significant Impact (``FONSI''),\134\ the first Area Office
recommendation,\135\ the second Area Office
recommendation,\136\ the recommendation from the Indian Gaming
Management Staff (IGMS), signed by Thomas Hartman (the IGMS
economic specialist) \137\ and George Skibine's re-draft of the
IGMS memorandum,\138\ all support the conclusion that the
application was on its way to being approved by the career
professionals at the Department of the Interior. The only
letter or memorandum to the contrary is Michael Anderson's
three page rejection letter written on July 14, 1995.\139\
Indeed, it is particularly troubling that there are no
memoranda recommending that the application be rejected. One
reasonable conclusion as to why no such memoranda were prepared
is that the facts, as developed, did not support such a
position being committed to paper.
---------------------------------------------------------------------------
\134\ Finding of No Significant Impact, Sept. 14, 1994 (Exhibit
41).
\135\ Memorandum from Denise Homer, Area Director to Ada Deer,
Assistant Secretary--Indian Affairs, Nov. 15, 1994 (Exhibit 42).
\136\ Memorandum from Denise Homer, Area Director to Ada Deer,
Assistant Secretary--Indian Affairs, Apr. 20, 1995 (Exhibit 43).
\137\ Memorandum from Indian Gaming Management Staff to the
Director of the Indian Gaming Management Staff, June 8, 1995 (Exhibit
44). Although it was marked ``draft'' it was signed by Thomas Hartman.
\138\ Memorandum from George Skibine to Assistant Secretary--Indian
Affairs, undated (Exhibit 45). Skibine denies that he had any input
into this memorandum.
\139\ Letter from Michael Anderson to Rose Gurnoe, Alfred Trepania,
and Arlyn Ackley, Sr., July 14, 1995 (Exhibit 2).
---------------------------------------------------------------------------
The three page rejection letter signed by Michael Anderson
points to ``detriment to the surrounding community'' as the
reason for the denial. However, George Skibine, allegedly the
most important of the decisionmakers, made the following
statement in an internal memorandum after the decision was
made:
It is true that extensive factual findings supporting
the local communities' objections are nowhere to be
found.\140\
---------------------------------------------------------------------------
\140\ Memorandum from George Skibine to Scott Keep, Aug. 5, 1996
(Exhibit 51).
This is a crucial point considering that Skibine acknowledges:
``The point here, and a very crucial one, is that the
Department has to rely on the record, and the opposition of the
local communities in the record is the evidence relied upon.''
\141\
---------------------------------------------------------------------------
\141\ Id.
---------------------------------------------------------------------------
Supporting Skibine's after-the-fact recognition that
``extensive factual findings supporting the local communities'
objections are nowhere to be found,'' \142\ is an
acknowledgment by him that as of June 30, 1995, just 2 weeks
before the rejection, the IGMS had tentatively reached the
conclusion that the application would not be detrimental to the
surrounding community:
---------------------------------------------------------------------------
\142\ Id.
Tom Hartman of my staff also prepared a memo regarding
the section 20 ``not detrimental'' analysis.
Unfortunately, I have not been able to finish the
review because of computer difficulties. Our tentative
conclusion is that the record permits us to make a
finding that a gaming establishment at that location
will not be detrimental to the surrounding
community.\143\
---------------------------------------------------------------------------
\143\ E-mail from George Skibine to Heather Sibbison, June 30, 1995
(emphasis added) (Exhibit 46).
Of particular interest to the Committee is the timing of this
e-mail when compared to other correspondence from the
Secretary's office. On June 6, 1995, before Skibine stated that
the record indicated that the proposal would not be detrimental
to the surrounding community, Heather Sibbison, Special
Assistant to Secretary Babbitt, relayed to the White House that
Interior was ``95% certain that the application [would] be
turned down.'' \144\ On June 27, 1995, Sibbison wrote to the
White House indicating that the application would be denied,
and the decision ``may be made public at the end of the week.''
\145\ This leads to a fundamental question: how could the
decision based on Section 20 have followed the recommendations
of career officials if 3 days after Ms. Sibbison had confirmed
the application's denial to the White House, Skibine indicated
that the IGMS position was that the application would ``not be
detrimental to the surrounding community.''
---------------------------------------------------------------------------
\144\ Memorandum from David Meyers to Jennifer O'Connor, June 6,
1995 (Exhibit 20).
\145\ Memorandum from Heather Sibbison to Jennifer O'Connor, June
27, 1995 (Exhibit 22).
---------------------------------------------------------------------------
Skibine's statement about ``our tentative conclusion'' is
consistent with representations made in the record about impact
on the community. For example, the Indian Gaming Management
Staff (IGMS) made the following observations about ``detriment
to the community'':
Staff finds that detrimental impacts are appropriately
mitigated through the proposed actions of the Tribes
and the Agreement for Governmental Services. It finds
that gaming at the St. Croix Meadows Greyhound Racing
Park that adds slot machines and blackjack to the
existing Class III pari-mutuel wagering would not be
detrimental to the surrounding community[.] \146\
---------------------------------------------------------------------------
\146\Memorandum from the Indian Gaming Management Staff to the
Director of the Indian Gaming Management Staff (George Skibine), June
8, 1995. (Exhibit 44) The memo was signed by Mr. Hartman even though
there is a stamp located on the bottom of the document indicating
``Draft.'' Additionally, Mr. Hartman in his deposition indicated that
the memo was a compilation of views from a number of the staff. See
Deposition of Thomas Hartman, Dec. 8, 1997, pp. 81-82.
Inconsistencies such as the one between this statement and
Michael Anderson's rejection letter lead to the justifiable
suspicion that the decision was made for reasons other than
those publicly advanced. Furthermore, how could the applicants
have addressed the perceived ``defect'' if the record did not
support an argument that the ``defect'' existed?
Another clear contradiction of the rationale advanced in
the July 14, 1995, rejection is found in an e-mail from George
Skibine to Heather Sibbison, Paula Hart, Tom Hartman, Troy
Woodward, and Kevin Meisner. Skibine states:
I also sense that even if the Town of Hudson and the
Town of Troy embrace the proposal, we may still not
change our position because of political opposition on
the Hill, largely generated by the Minnesota and
Wisconsin Tribes who oppose this acquisition.\147\
---------------------------------------------------------------------------
\147\ E-mail from George Skibine to Heather Sibbison, Paula Hart,
Tom Hartman, Troy Woodward and Kevin Meisner, June 30, 1995 (Exhibit
46).
This admission makes a mockery of Secretary Babbitt's assertion
that the decision was ``the right decision made in the right
way and for the right reasons.'' \148\ After spending so much
effort in attempts to convince Congress that the decision was
predicated on local opposition, this e-mail shows that Skibine
understood that the Department of the Interior was prepared to
disregard the views of both Hudson and the closest neighboring
town. Indeed, even the Governor of Wisconsin understood that
there was support for the application. When asked if the
December 1992 referendum in Hudson indicated local support,
Thompson replied ``Yes.'' \149\
---------------------------------------------------------------------------
\148\ Testimony of Secretary of the Interior Bruce Babbitt, Jan.
29, 1998, p. 769.
\149\ Doug Stohlberg, Thompson Says He ``Won't Stop'' Casino at Dog
Track, Hudson Star Observer, Feb. 10, 1994 (Exhibit 71).
---------------------------------------------------------------------------
Heather Sibbison also expressed concerns that it might not
be wise to include references to other Native American
opposition to the Hudson application. In an e-mail 2 weeks
before the rejection, she stated:
[W]e may not want to include in our rationale the
opposition of the other tribes, because I think it is
possible that if the three Tribes came back with
stellar support from their local towns and Congressman,
we might look at the proposition in a new light--but
even in that case, the Minnesota tribes will still be
against it. And also, I agree with Collier's uneasiness
about some tribes getting all of the goodies at the
expense of other tribes--theoretically they all should
have equal opportunities.\150\
---------------------------------------------------------------------------
\150\ E-mail from Heather Sibbison to George Skibine and Troy
Woodward, June 30, 1995 (Exhibit 75).
Sibbison's observation is curious because it stresses political
factors and not legal factors. Her concern that there would be
a problem with the perception of certain tribes ``getting all
the goodies'' appears to have no place in a principled
decision, made on the merits.
The record provides no indication of what came to light
between June 30--when Skibine stated that ``our tentative
conclusion is that the record permits us to make a finding that
a gaming establishment at that location will not be detrimental
to the surrounding community''--and July 14, when Anderson
rejected the application. Because there is no indication in the
record of what could have changed the minds of the staff, it is
reasonable to conclude that ``detriment to the surrounding
community'' was the pretext for the rejection, and that the
failure to announce that the Department was changing its policy
in this case was necessary because the debate would have become
infinitely more complicated, and the grounds for appeal to
Federal court would have been strengthened.
Political considerations appear to have influenced the decision
Secretary Babbitt has said publicly that the Hudson
decision was the ``right decision made in the right way for the
right reasons.'' \151\ A review of the above material does not
support this statement. It is simply inexplicable for the
Department to have made a decision without support in the
record for that decision. Furthermore, but for political
considerations, it seems the Department could have delayed the
final decision in order to provide the applicants a chance to
remedy any alleged defects.
---------------------------------------------------------------------------
\151\ Testimony of Secretary Bruce Babbitt, Jan. 29, 1998, 769.
---------------------------------------------------------------------------
In addition, lobbyists' notes of meetings with Interior
staff call into question the integrity of Interior's
decisionmaking process. In a May 25, 1995, memo lobbyist Scott
Dacey discussed meetings with Mike Anderson, George Skibine,
and Thomas Hartman. In these meetings the process for reviewing
the application under section 20 of IGRA was discussed. As of
this meeting Michael Anderson apparently not only did not want
to establish a precedent against tribes wishing to bring land
into trust into the future, he also acknowledged that the law
was not on their side.\152\
---------------------------------------------------------------------------
\152\ Memorandum from Scott Dacey to Debbie Doxtator, May 25, 1995
(Exhibit 53).
---------------------------------------------------------------------------
Dacey went on to explain that ``[r]eaching the
`detrimental' standard is difficult [to establish]. According
to Tom Hartman, all of the economic impact statements are of no
value in this assessment. The addition of a new Indian gaming
establishment to the market area brings `normal competitive
pressures.' '' \153\ When asked about competitive pressure and
the role it played in finding ``detriment,'' Hartman had the
following response:
---------------------------------------------------------------------------
\153\ Id.
The only policy I was aware of, and it was articulated
verbally by the Deputy Commissioner of Indian Affairs,
was that economic competition was ``not detrimental,''
that we couldn't pick one tribe out over another. And
even from a business standpoint, the reason you have a
McDonald's on one corner and a Burger King on another
and a Wendy's on the third corner is because there are
synergisms in a lot of these, so you can't--it is very
difficult from an econometric standpoint to say, when
you add another casino that it ruins everybody else's
business. If that was the case, then the second person
moving into Las Vegas would have ruined it for
everybody, and I think we know that that is not the
case.\154\
---------------------------------------------------------------------------
\154\ Deposition of Thomas Hartman, Dec. 8, 1997, p. 37.
According to Dacey, Mike Anderson relayed that the Department
was ``trying to keep this issue on the merits'' and would ``try
to thread the needle on this request.'' \155\ The memo
concluded:
---------------------------------------------------------------------------
\155\ Memorandum from Scott Dacey to Debbie Doxtator, May 25, 1995
(Exhibit 53).
Things might change when the politicians like Babbitt
and Duffy become involved, but without the law on their
side it will be difficult to ``kill the deal.'' \156\
---------------------------------------------------------------------------
\156\ Id.
On July 14, 1995, the Department of the Interior did in
fact ``kill the deal.'' The Department relied upon a finding of
detriment in the face of the career professionals who had
stated that there was no articulated detriment. Interestingly
enough, Dacey noted in his memo that if Babbitt were to come
out against the Hudson application he would ``find his excuse
in Section 151.'' \157\ It is significant that a lobbyist for
the opponents was being briefed on the legal analysis at the
Department, while the applicants were being told nothing.
Indeed, given what was discovered during the Committee's
investigation, it is reasonable to speculate that Interior
officials did not inform the applicant tribes about perceived
problems because either the problems were not supported by past
practice and current fact, or the concern that by identifying
``problems,'' the applicants would have an opportunity to cure.
Given the obvious preferential treatment given the opponents of
the application, there appeared to be little interest in
allowing the applicants an opportunity to address the
Department's concerns. Although George Skibine now states that
he would have done things differently, it is hard to believe
that Interior officials would not have worked with the
applicant tribes--unless the ulterior motive was to help the
opponents achieve their objective.
---------------------------------------------------------------------------
\157\ Id.
---------------------------------------------------------------------------
It is significant that the Department was prepared to take
the unprecedented step of rejecting the application for off-
reservation gaming using a 151 analysis. Kevin Meisner
confirmed this when he wrote on July 11, 1995, ``I thought
after the Friday meeting that everyone (except Duffy who we had
not yet consulted) agreed that there was not enough evidence
supporting a finding of ``detriment'' to the surrounding
community under section 20 and therefore we would decline to
acquire the land under 151.'' \158\ Notwithstanding the fact
that ``everyone'' agreed the decision could not be made under
Section 20, Secretary Babbitt has repeatedly said that the
Department based its decision solely on the criteria set forth
in Section 20.\159\
---------------------------------------------------------------------------
\158\ E-mail from Kevin Meisner to George Skibine and Troy
Woodward, July 11, 1995 (Exhibit 55).
\159\ Testimony of Secretary of the Interior Bruce Babbitt, Jan.
29, 1998, p. 776.
---------------------------------------------------------------------------
Perhaps even more revealing, the Department of the Interior
was prepared to reject the Chippewas' application even if the
local officials were uniformly behind the application. George
Skibine, in an e-mail to Sibbison, Hart, Hartman, Woodward, and
Meisner stated: ``I also sense that even if the Town of Hudson
and the Town of Troy embrace the proposal, we may still not
change our position because of political opposition on the
Hill, largely generated by the Minnesota and Wisconsin Tribes
who oppose this acquisition.'' \160\ This is a curious
conclusion in that the question of congressional participation
had already been addressed by the Department's solicitors
office. Kevin Meisner, an attorney for the Department, stated
prior to the final resolution: ``I think the question of
whether a Congressman can participate in the state consultation
process for taking land into trust for gaming under IGRA (25
U.S.C. 2719(b)(1)(a)) should be answered in the negative. . . .
My feeling is that it would not be appropriate for Federal
Congresspersons to comment[.]'' \161\ Skibine's statement that
the application would be rejected even if there was complete
support from the affected towns, shows the transparency of the
Secretary's claim that the Department made the right decision
for the right reasons.
---------------------------------------------------------------------------
\160\ E-mail from George Skibine to Heather Sibbison, June 30, 1995
(Exhibit 46).
\161\ E-mail from Kevin Meisner to Heather Sibbison, Mar. 23, 1995
(Exhibit 56). It is somewhat ironic that discussion of this matter
during Committee hearings often that such opposition by elected
leaders. Meisner's position that such opposition was not relevant is
the only expression of Department policy produced by the Department
pursuant to the Committee's document request and subpoena, and it is
curious that many argued such opposition was relevant when the
Solicitor's office at Interior indicated that it was not.
---------------------------------------------------------------------------
Thomas Hartman stated under oath that Interior was
concerned about the political ramifications of Interior
approving the application and a Republican Governor rejecting
it. Hartman had the following to say:
In the meetings I had been in, the negatives of taking
the land into trust had certainly been discussed. A
concept that had been tossed out was that in a
Democratic administration and a Republican governor, to
ignore the local input and impose a casino on an
unwilling community and then have the Republican
governor say, well, look at those ridiculous Democrats
doing this again, was not viewed as being the best
position to be in. So I know when they say ``probably a
bad idea to create a land trust,'' there were plenty of
ideas thrown out to indicate that some people in those
meetings thought it was a bad idea to create a land
trust in this case.\162\
---------------------------------------------------------------------------
\162\ Deposition of Thomas Hartman, Dec. 8, 1997, p. 54.
Whether Democrats would suffer political consequences for
following the law and past Department of the Interior practice
should never have even been considered as a factor in the
decisionmaking process.
Michael Anderson--decisionmaker or political puppet?
When asked whether he was the decisionmaker in the Hudson
case, Michael Anderson, the Deputy Assistant Secretary for
Indian Affairs, stated ``That is correct.'' \163\ Despite this
assertion, evidence reviewed by the Committee showed that
Anderson appeared to play little or no role in the actual
decision. Anderson admitted that he spent only 4-5 hours on the
Chippewas' application and that he did not read or review the
32 page recommendation to approve the application provided by
the Department's area office.\164\
---------------------------------------------------------------------------
\163\ Deposition of Michael Anderson, Jan. 14, 1998, p. 38.
\164\ Senate Deposition of Michael Anderson, Sept. 26, 1997, pp.
66-67.
---------------------------------------------------------------------------
Anderson did, however, express a concern about the
detrimental impact that the casino would have on the nearby St.
Croix Chippewa. When asked about this, he had the following
exchange:
A: I believe the nature of the concern was that they
had developed a market for the casino in that area, and
that they felt that there would be a detrimental impact
to their market if another casino was located nearby. I
believe they also may have provided studies to that
effect as well.
Q: So correct me if I'm wrong, it is a valid
opposition for an opposing tribe to object on economic
grounds?
A: Yes, and the letter states that as a factor.\165\
---------------------------------------------------------------------------
\165\ Deposition of Michael Anderson, Jan. 14, 1998, pp. 24-25.
After Committee lawyers pressed Anderson, he admitted that
he was aware that the St. Croix tribe gaming operation was
``very profitable.''\166\ Although Anderson was aware of the
general financial status of the St. Croix tribe he testified
that he did not review any of the market information provided
to the Department regarding the impact of the Hudson
application and relied solely on the staff for this
information.
---------------------------------------------------------------------------
\166\ Id.
A: I didn't review specific market information. I was
informed by the staff, the Indian Gaming Management
Staff, that there was an impact and that was also
contained in the letter, the decision letter as well.
There may have been discussions about the location and
the market area that was developed by St. Croix, but I
don't recall any specifics.
Q: Do you recall who on the Indian Gaming Management
Staff told you that, or communicated that to you?
A: I don't remember who the major staff advisors on
the market impact would have been. George Skibine and
Tom Hartman.\167\
---------------------------------------------------------------------------
\167\ Id. at 28.
This testimony is of particular interest because Hartman, the
economic specialist for the Indian Gaming Management Staff, has
testified that a casino in Hudson would not have had a
detrimental impact on the surrounding community. Hartman also
signed a memorandum compiled by the Indian Gaming Management
Staff to this effect and included an analysis of the detriment
on surrounding tribes.\168\ Michael Anderson, however, had
never seen or been told of this analysis before he signed the
rejection letter on July 14, 1995.\169\ If Anderson was not
aware of the analysis compiled by the staff responsible for
reviewing these applications, he must have received direction
from another source.
---------------------------------------------------------------------------
\168\ See memorandum from Indian Gaming Management Staff to
Director Indian Gaming Management Staff, June 8, 1995 (Exhibit 44).
\169\ Deposition of Michael Anderson, Jan. 14, 1998, p. 29.
---------------------------------------------------------------------------
There are numerous additional examples of Anderson being
unaware of significant information. For example, he was not
aware of a contract for services signed by the applicant tribes
and the community authorities in Hudson, Wisconsin, which would
have mitigated a number of the concerns and objections
mentioned in the actual rejection letter.\170\ Anderson also
was unaware that Heather Sibbison had sent letters to the White
House indicating how the decision would be made.\171\ This is
critical because Sibbison sent these letters to the White House
before George Skibine had prepared his first draft of the
denial letter on June 29, 1995. Anderson testified that not
only did Heather Sibbison not consult him on these letters, but
he was unaware that the Department of the Interior's position
had ever been communicated to the White House.\172\
---------------------------------------------------------------------------
\170\ Id. at 70-71. See also Agreement for Government Services
(Exhibit 70). Attached to the Agreement is a letter from the Mayor of
Hudson stating: ``I think you will find, as you review the attached
material, that the City of Hudson has a strong vision and planning
effort for the future and that this proposed Casino can apparently be
accommodated with minimal overall impact, just as any other development
of this size.'' Also attached is a referendum showing that a majority
of those who cast ballots were supportive of the proposed casino.
\171\ Senate Deposition of Michael Anderson, Sept. 26, 1997, p. 29.
\172\ Id. at 29-31.
---------------------------------------------------------------------------
Notwithstanding his representations to the contrary, it
appears that Anderson's role in the decisionmaking process was
limited. His conduct in this matter is consistent with that of
someone who was going along with a decision already made, and
his failure to inquire about any of the salient facts, and his
obvious concern for the wealthy Democratic contributors opposed
to the application, raise serious questions about his
involvement.
CONTRADICTIONS AND CHANGING STORIES
In addition to the major contradictions already discussed,
including the contradiction between Secretary Babbitt and Paul
Eckstein regarding contacts with Harold Ickes, whether the
Secretary mentioned political contributions by the opposing
tribes to Democratic organizations, Secretary Babbitt's belief
that his letters to Senator McCain and Senator Thompson were
consistent, and Babbitt's statement that the decision was based
solely on section 20 of IGRA, there are a number of other
contradictions which require further explanation.
Was the President contacted about the Hudson application after the
initial meeting with Patrick O'Connor?
There is contradictory testimony over whether Tom
Schneider, a lobbyist at O'Connor & Hannan and good friend of
the President's, communicated with the President about the
Hudson dog track application. O'Connor & Hannan billed a total
of $4,000 to their clients for Tom Schneider's time on the dog
track matter, a fact that was initially withheld from this
Committee.\173\ In fact, the billing entry unambiguously reads:
``meeting with senior White House staff and POTUS [President of
the United States] re. Expansion of gaming and the dog track
and opposition to doing so.'' \174\
---------------------------------------------------------------------------
\173\ See O'Connor & Hannan billing records (Exhibit 31).
\174\ Id.
---------------------------------------------------------------------------
Schneider has testified that O'Connor asked him to stop by
an event at the Mayflower hotel because the President was there
for an event.\175\ Schneider did stop by the event: ``I talked
to [the President] for a few minutes, did not say anything
about the Hudson Dog Track, and saw Harold Ickes there. Ickes
said ``that he had told Pat that he was going to look into it.
I said to Harold that I thought that it deserved looking into
and I would appreciate it if he would.\176\ He further
clarified his communication with the President by stating: ``I
absolutely did not talk to the President then or ever about the
dog track and the Indians.\177\
---------------------------------------------------------------------------
\175\ Deposition of Thomas Schneider, Dec. 10, 1997, p. 15.
\176\ Id.
\177\ Id. at 19.
---------------------------------------------------------------------------
Schneider's story is contradicted by Thomas Corcoran, a
former member of Congress and fellow partner of Schneider's at
O'Connor & Hannan. Corcoran noted:
The only other contact that I know of with respect to
anybody from O'Connor & Hannan with the President was a
casual contact, not really a lobbying contact, that Tom
Schneider told me about, as I recall a day or so after
it happened. Mr. Schneider is a good friend of the
President. He was attending a reception, I believe at
the White House, and they were just chatting. And in
the course of that chat the President indicated that
Pat O'Connor had mentioned this dog track to him. They
both had a pretty good laugh about the fact that the
President of the United States had been informed about
a dog track in Wisconsin, and I must say that Tom and I
had a pretty good laugh about it as well.\178\
---------------------------------------------------------------------------
\178\ Deposition of Thomas Corcoran, Dec. 10, 1997, p. 30.
This version of events is supported by Schneider's billing
records at O'Connor & Hannan. The billing entry reads as
follows: ``Indian matter regarding racetrack gaming and Hudson
dog track. Telephone discussion and meeting with senior White
House staff and POTUS [The President] re[garding] expansion of
gaming and the dog track and opposition to so doing.'' \179\
---------------------------------------------------------------------------
\179\ O'Connor & Hannan Billing records, Oct. 2, 1995 (Exhibit 31).
---------------------------------------------------------------------------
Fred Havenick was told that the DNC and Clinton/Gore '96 played a
significant role in the Hudson rejection
Fred Havenick, the owner of the existing dog track in
Hudson, Wisconsin, attended a Democratic fundraiser in Florida
on August 15, 1995. At this fundraiser, Havenick spoke with
Terry McAuliffe, the Clinton/Gore '96 Finance Chairman. The
following is Fred Havenick's sworn testimony before the
Committee on Government Reform and Oversight:
[J]ust a month after the rejection. I was at a fund-
raising event in Florida where I ran into Terry
McAuliffe, chairman of the finance committee for the
President's re-election campaign. After the meeting, I
went to say hello to Terry. I've known Terry for quite
some time, mostly through his political activities. At
the same time, Terry approached me with a large smile
on his face and said, what's doing in doggiedom? I said
that we were having an enormous problem with an Indian
gaming project in northern Wisconsin. He said, oh, I
know all about that; to which I responded, come into my
office, a private corner of the meeting room. I recall
that Terry said, I took care of that problem for you. I
was baffled and asked him what he meant. I recall that
he said, I got Delaware North's Indian casino project
killed, the one that would have competed with you. I
set up the meeting with Fowler and others and turned it
around. I told Terry that was my project and I was the
one who owns the track in Hudson. His face dropped. He
was clearly in shock and said little else.\180\
---------------------------------------------------------------------------
\180\ Testimony of Fred Havenick, Jan. 21, 1998, pp. 117-118
(emphasis added). Terry McAuliffe was not deposed by this Committee. He
did, however, dispute the accuracy of Havenick's account.
McAuliffe clearly thought he was helping a Democratic
contributor when he helped ``kill'' the application. Terry
McAuliffe had known Havenick for quite some time through his
activity as a Democratic contributor. This relationship began
in the mid-1980s when Havenick and McAuliffe were both members
of the Democratic Senatorial Campaign Committee. Havenick also
came into contact with McAuliffe at numerous Democratic
fundraising events.\181\
---------------------------------------------------------------------------
\181\ Id.
---------------------------------------------------------------------------
A meeting at Lac Courte Oreilles produced diametrically opposed
affidavits from the Department of the Interior and the
applicant tribes
On December 3, 1996, George Skibine went to a meeting at
the La Courte Oreilles reservation to meet with members of the
applicant tribes. This meeting was set up because of a
potential settlement arrangement with the law suit filed by the
tribes against the Department of the Interior. According to a
number of people who attended the December 3, 1996, meeting the
following exchange occurred:
Q: How did [the application] not get approved the
first time?
A: We approved it, but when it got to the Secretary's
office politics took over.\182\
---------------------------------------------------------------------------
\182\ See Affidavits of Frederick R. Roach, Fred Havenick, Mary Ann
Polar, Peter A. Liptack, J.W. Cadotte, Arlyn Ackley, Sr., and DuWayne
Derrickson (Exhibit 58).
Frederick R. Roach, Fred Havenick, Mary Ann Polar, Peter A.
Liptack, J.W. Cadotte, Arlyn Ackley, Sr., and DuWayne
Derrickson all signed affidavits to this effect. In response to
these sworn affidavits, the Department of the Interior produced
affidavits from individuals with a differing recollection of
events.\183\ Skibine in his testimony had this to say about the
meeting:
---------------------------------------------------------------------------
\183\ See Affidavits of Nancy Pierskalla, Troy Woodward, Tim
LaPointe, Paula Hart, and Robin Jaeger (Exhibit 59).
We were contacted by the Lac Courte Oreilles tribe to
come to Wisconsin to discuss with them the problems
that the Wisconsin tribes had with the upcoming
renegotiation of their Class III gaming contracts with
the State of Wisconsin. And we agreed to come there to
make a presentation about compact negotiation. At the
same time, the tribes asked us to come and discuss with
them, the three tribes, either the day before, to
discuss with them and give technical advice on placing
land in trust, in general. We clarified to them that we
could not and would not discuss the Hudson--the
litigation involving the Hudson Dog Track at this
meeting . . . we made that absolutely clear to the Lac
Courte Oreilles tribe that this was not going to
happen. And they told us that they would inform the
other two tribes there that the litigation and whatever
happened during the litigation of the Hudson Dog Track
would not be discussed.\184\
---------------------------------------------------------------------------
\184\ Testimony of George Skibine before the Committee on
Government Reform and Oversight, Jan. 22, 1998.
Skibine's explanation before the Committee is undermined by a
letter from Ray Wolf, the Vice-Chairman of the LCO Governing
---------------------------------------------------------------------------
Board. Wolf wrote:
George Skabine [sic], the Director of the BIA Office of
Indian Gaming Management and Nancy Pierskella, Land
Acquisition Specialist for his office, have suggested
they come to Wisconsin on Tuesday, December 3 to meet
only with the Chippewa tribes interested in acquiring
off reservation land for the purposes of establishing a
casino, specifically, Hudson.
The purpose of the BIA meeting is to provide technical
assistance to Mole Lake, Red Cliff, and Lac Courte
Oreilles. Mr. Skabine [sic] is aware of the need for
discretion as his office is scheduled to meet the next
day with all of the Wisconsin tribes to provide
technical assistance on gaming compact
negotiations.\185\
---------------------------------------------------------------------------
\185\ Letter from Raymond Wolf to Arlyn Ackley, Sr., and Rose
Gurnoe, Nov. 7, 1996 (Exhibit 60).
In interviews with Mark Goff, lobbyist for the applicant
tribes, and J.W. Cadotte, a member of the Lac Courte Oreilles
tribe, Committee investigators learned that there were two
meetings held on December 3, 1996. The first meeting was a
smaller meeting held at the council headquarters, and the
second was a large meeting held at the LCO bingo hall. This is
an important fact which can explain why the two sets of
affidavits are diametrically opposed. Most of the Interior
officials who signed affidavits regarding a December 3, 1996,
meeting did not attend the initial meeting at the tribal
headquarters.\186\ This is a fact that should have been known
to the attorneys preparing the affidavits, and to Mr. Skibine,
who apparently attended both meetings and failed to reflect
this fact in his affidavit.
---------------------------------------------------------------------------
\186\ Committee interview with Mark Goff and J.W. Cadotte, Dec. 15,
1997.
---------------------------------------------------------------------------
Shannon Swanstrom, attorney for the Red Cliff tribe, took
notes at the December 3, 1996, meeting with George Skibine. In
these notes, Ms. Swanstrom wrote a quote from Skibine as
follows: ``I find that [Hudson] in best interests of tribes and
not to detriment of surrounding community, will send letter to
governor.'' \187\ This information places Skibine's testimony
before this Committee in question.
---------------------------------------------------------------------------
\187\ See Notes taken by Shannon Swanstrom, Dec. 3, 1996 (quotation
in the original) (Exhibit 61).
---------------------------------------------------------------------------
The Department of the Interior misled the Committee and a Federal
district court in Wisconsin with the information contained in
the administrative record
The administrative record detailing this case was compiled
by the Department of the Interior for the ongoing litigation
over this matter in Wisconsin. The Committee reviewed the
material and believes that Interior officials may have tried to
mislead those who received the record. First, the record does
not adequately reflect support for the application to take land
into trust. A review of the material received by the Committee
pursuant to its subpoena revealed the following support: a
petition totaling 114 pages of signatures,\188\ another
petition of 38 full or partial pages,\189\ 207 cards,\190\ and
127 letters.
---------------------------------------------------------------------------
\188\ Petition of General Support (Exhibit 62).
\189\ Letter to Secretary Babbitt from petition signatories, Jan.
26, 1994 (Exhibit 63).
\190\ Letter from Wisconsin resident to George Skibine (with
attached cards), June 5, 1995 (Exhibit 64).
---------------------------------------------------------------------------
The record prepared for the litigation, however, reflects a
lesser amount of support and inaccurately indicates that there
was more opposition than support. The Department's Solicitor
took affirmative steps at a hearing conducted by this Committee
to provide misleading information about the extent of the
support for the application. The following exchange occurred
before this Committee:
Mr. Horn. Mr. Secretary, your counsel, to be
charitable about it, misrepresented the record in terms
of that document when he said it was referred to the
court. We got the document finally and what is in the
court's binder is not that document. Here is the
difference: 797 cards, letters and petition signatures
are on that computerized document to which your
counsel, the Solicitor of Interior, I think, referred,
and we have in the original document, which is not in
the court record, 1,413 petition signatures. In other
words, counsel is saying it was all the same and it is
just some were typed and Xeroxed and what not and some
were in hand, and that means 616 people were left out.
And I don't particularly appreciate that
misrepresentation . . .
Mr. Leshy. I am told by staff that Mr. Hartman, who
had the handwritten signatures converted to type
script, eliminated duplicate signatures so that these
716 or however many there were taken out were actually
in there twice.\191\
---------------------------------------------------------------------------
\191\ See Jan. 29, 1998 hearing testimony before the Committee on
Government Reform and Oversight, pp. 932-933.
This testimony is particularly interesting when compared with
the memo authored by George Skibine, the head of the IGMS,
which states: ``Several thousand cards, letters, and petition
signatures have been received in support of an Indian casino at
the Hudson dog track.'' \192\ Mr. Leshy's statement, given
every benefit of the doubt, does not explain how ``several
thousand cards, letters, and petition signatures'' were
represented by 797 names compiled by the Department to provide
the Federal Court in Wisconsin a sense of how much support
there was for the application. The record, read at face value,
misrepresents the facts and support associated with this
application. The 38 page petition alone would probably have had
more than 797 signatures. Because the full 38 pages have not
been included in either the record compiled for litigation, or
the material produced to this committee, it is not possible to
determine the precise number. The figure of support rises when
the additional 114 page petition and other forms of support are
included. Although it is curious that the Department appears to
have actively misrepresented the lack of support for the
application, it is consistent with the need to make this point
so as to support the theory of the rejection.
---------------------------------------------------------------------------
\192\ Memorandum from George Skibine to Assistant Secretary--Indian
Affairs, undated (Exhibit 45).
---------------------------------------------------------------------------
The Department of the Interior provided misleading information to
Congress prior to the decision to reject the application was
made
At least one representative who came out in opposition to
the application apparently received false information from
Secretary Babbitt's office, perhaps in an effort to ``educate''
individuals in order to encourage them to oppose the
application. In a letter to Secretary of the Interior Bruce
Babbitt, Representative Steve Gunderson stated: ``According to
your office, since Congress passed the IGRA in 1988, the
Secretary of Interior has never approved the acquisition of
off-reservation land to be used for casino gambling.'' \193\
The information provided to Representative Gunderson--that
``the Secretary of the Interior has never approved the
acquisition of off-reservation land to be used for casino
gambling''--is false. Hilda Manuel, Deputy Commissioner at BIA,
when asked about Congressman Gunderson's assertion stated
``It's not correct.'' \194\
---------------------------------------------------------------------------
\193\ Letter from the Honorable Steve Gunderson to Secretary Bruce
Babbitt, Apr. 28, 1995 (emphasis in the original) (Exhibit 47).
\194\ Deposition of Hilda Manuel, Jan. 6, 1998, p. 50.
---------------------------------------------------------------------------
Once again, the veracity of Department of the Interior
representations about the Hudson decision is called into
question when one considers that false information was provided
to Congress even before the application was rejected. There
certainly appears to be a self-fulfilling aspect to the
Secretary's office response to Congress--the information
provided appears now to have helped pave the way for the
decision to reject.
The role of Section 20 in the decision
In the rejection letter, Michael Anderson also informed the
applicants that even if the Section 20 problems were satisfied,
the Secretary would reject the application under another
statutory provision known as Section 151. There is no
indication in the record, however, that the Department ever
analyzed the application according to the provisions of Section
151. Furthermore, Secretary Babbitt told this Committee:
``[T]he Department based its decision solely on the criteria
set forth in Section 20 of the Indian Gaming Regulatory Act.''
\195\
---------------------------------------------------------------------------
\195\ Testimony of Secretary of the Interior Bruce Babbitt, Jan.
29, 1998, p. 776.
---------------------------------------------------------------------------
On review, however, this statement does not appear to be
entirely correct. Perhaps the most direct indication is from
George Skibine, the head of the Indian Gaming Management Staff,
who made the following statement in a deposition before this
Committee:
Q. If I asked you the question, the decision to
reject the Hudson Dog Track application was based
solely on section 20 of the Indian Gaming Regulatory
Act, would you say that that was correct or false?
A. It would be false.\196\
---------------------------------------------------------------------------
\196\ Deposition of George Skibine, Jan. 13, 1998, p. 17. In a
document that runs counter to many of the other important documents
related to the Hudson matter, George Skibine makes the following
request of lawyers in the Solicitors office: ``As you know, I am
drafting a document relating to the acquisition of the Hudson dog track
by three Indian tribes in Wisconsin. The letter will decline to take
the land into trust pursuant to the IRA and Part 151 relying on the
discretionary authority of the Secretary not to take such land into
trust. The acquisition is for gaming purposes, but we want to avoid
making a determination under Section 20 of IGRA.'' E-mail from George
Skibine to Dave Etheridge, Kevin Meisner and Troy Woodward, June 6,
1995 (Exhibit 73). This communication is particularly strange because
others on Skibine's staff were not aware of the decision in early June,
and all indications are that the record had not provided support for a
finding that the application was a detriment to the community.
Furthermore, it is curious that Skibine would come right out and say
that there was a desire to avoid making the decision under Section 20
of IGRA. One can speculate that he wanted to avoid setting a precedent
by making the decision under Section 20 without employing the
traditional Section 20 criteria.
The confusion over how the application would be rejected is
seen in an exchange of e-mails in the days before the decision
was made. In an e-mail to Skibine and Heather Sibbison, Kevin
---------------------------------------------------------------------------
Meisner states:
Why are we changing our analysis to deny gaming under
Section 20? I thought after the Friday meeting that
everyone (except Duffy who we had not yet consulted)
agreed that there was not enough evidence supporting a
finding of ``detriment'' to the surrounding communities
under Section 20 and therefore we would decline to
acquire the land under 151.\197\
---------------------------------------------------------------------------
\197\ Exchange of e-mails between Kevin Meisner and Heather
Sibbison, George Skibine and Troy Woodward, July 11, 1995 (Exhibit 74).
In an indication that John Duffy was the driving force behind
the ultimate decision on how the rejection would be made,
---------------------------------------------------------------------------
Meisner sent the following message to Troy Woodward:
Troy: Apparently Bob Anderson did review the letter
late Monday. I checked with him Tuesday and he thought
that since Duffy wanted the Section 20 finding so badly
that we would let the letter go through. I still think
that there was not enough evidence for a section 20
finding of detriment.\198\
---------------------------------------------------------------------------
\198\ Id.
Once again, this exchange of e-mails shows that there were
significant concerns about whether there was evidence to
support a finding under Section 20 of IGRA. Given the strong
feelings that there was not enough evidence to make such a
showing, it is all the more curious that Secretary Babbitt
continues to maintain that the decision was based ``solely on
the criteria set forth in Section 20 of the Indian Gaming
Regulatory Act.'' \199\
---------------------------------------------------------------------------
\199\ Testimony of Secretary of the Interior Bruce Babbitt, Jan.
29, 1998, p. 776.
---------------------------------------------------------------------------
The Department of the Interior mischaracterized Governor Thompson's
public position against the expansion of gambling
Notwithstanding representations from a number of Department
officials that Governor Thompson was opposed to the Hudson
application, he stated: ``I will not promote and I will not
block. I'm on the tail end of the process, and if everyone
else, including the local people, approves it before me, I
won't stop it.'' \200\ Although there is nothing in the record
to indicate anything to support his position, Babbitt has
stated that the Governor opposed the dog track.\201\
---------------------------------------------------------------------------
\200\ Doug Stohlberg, ``Thompson Says he ``Won't Stop'' Casino at
Dog Track,'' Hudson Star Observer, 2/10/94.
\201\ See Testimony of Secretary Bruce Babbitt before the
Government Reform and Oversight Committee, Jan. 29, 1998, p. 946.
---------------------------------------------------------------------------
Governor Thompson did make statements about opposition to
the spread of gambling. However, in this case, he had
apparently discussed a deal where the tribes would each give up
their rights to a second casino if the Governor would approve
the Hudson casino. Thus, there would be fewer casinos allowed
in Wisconsin if the Hudson application were approved. Fred
Havenick explained the proposal before the Committee:
If you wanted to say that you were against the
expansion of gambling, there are currently 17 casinos
operating in Wisconsin. This really would have reduced
that number by 3 . . . it would be almost a 20 percent
reduction in the total number of casinos[.] \202\
---------------------------------------------------------------------------
\202\ Testimony of Fred Havenick before the Government Reform and
Oversight Committee, Jan. 29, 1998.
The record contains no indication that the Department made
an effort to obtain Governor Thompson's views on the Hudson
application. Therefore, it seems inappropriate that it would
make representations about whether he would, or would not
support the application.
DEPARTMENT OF THE INTERIOR COMPLIANCE WITH DOCUMENT REQUESTS
On August 20, 1997, the Department of the Interior was
asked to provide documents pertaining to the Hudson matter. The
compliance date for this request was September 8, 1997.
Unfortunately, however, Interior failed to respond adequately
to this Committee's legitimate request.
On October 23, 1997, Interior provided one file of records.
On November 3, 1997, another file of records was produced. At
this point, the Committee was under the impression that
production of records--with the exception of a record prepared
for litigation in Wisconsin, which the Committee initially
elected not to receive--was complete.
On December 11, 1997, during a deposition before this
Committee, Robin Jaeger, the Superintendent of the Regional
Office in Wisconsin had the following exchange with Committee
counsel:
Q: When did you receive communication that you are
requested to produce documents about the Hudson dog
track matter?
A: Yesterday.\203\
---------------------------------------------------------------------------
\203\ Deposition of Robin Jaeger, Dec. 11, 1997, p. 11-12.
This revelation prompted the Committee to take the unusual step
of issuing a subpoena to a government agency. On December 12,
1997, Interior received a subpoena to produce all documents
related to the Hudson matter. The compliance date for this
subpoena was January 2, 1998.
The following is a list of dates and productions received
from the Department of the Interior after it received this
Committee's subpoena:
December 17, 1997: One file containing records.
January 2, 1998: Six boxes of records.
January 13, 1998: One file containing records.
Information included records related to Ada Deer, whose
deposition was taken that day.
January 16, 1998: One file containing records.
January 17, 1998: One file containing records.
February 13, 1998: Copies of e-mails.
But for the deposition of Robin Jaeger, and the belated
discovery that the Department of the Interior had failed to
produce all relevant documents, the Committee would have been
denied significant, probative material.
WHITE HOUSE CLAIMS OF PRIVILEGE DELAYED THE COMMITTEE'S INVESTIGATION
The White House appeared to be particularly concerned about
turning over to the Committee a number of documents that
indicated the President had some level of familiarity with the
Hudson application. Many months were consumed while the White
House argued that some documents responsive to legitimate
requests made by the Committee were ``subject to executive
privilege.''
The Committee did ultimately receive relevant documents
from the White House. The original of one document with the
following message has still not been provided to the Committee:
\204\
---------------------------------------------------------------------------
\204\ Exhibit 78.
Leon
What's the deal on the Wisconsin tribe Indian dispute?
BC
The author of this note is the President, and the White House
argued that Congress should not receive this document. Both
this Committee and the Congressional Research Service \205\
disagreed with the Counsel to the President's legal analysis
that executive privilege applied to this document, and to the
other documents withheld for a considerable period of time.
---------------------------------------------------------------------------
\205\ Memorandum from American Law Division, Congressional Research
Service, to Honorable Dan Burton, Dec. 3, 1997 (Exhibit 79).
---------------------------------------------------------------------------
CONCLUSION
Evidence obtained by this Committee indicates that the
decision to reject the Hudson application did not comport with
factual evidence and past practice. The fact that the
Department of the Interior has continued to misrepresent how
and why the decision was made makes Secretary Babbitt's alleged
comments to Paul Eckstein about Harold Ickes' role in the
decision and the importance of Native American political
contributions seem an accurate reflection of the facts.
Secretary Babbitt's protestation that he did not make the
statement about contributions and that he did not mean the
statement about Ickes ring hollow in the face of the candid
statements of his staff about what was really going on in the
Department's decisionmaking process.
[Supporting documentation follows:]
=======================================================================
CHAPTER VII
PROCEDURAL BACKGROUND OF THE CAMPAIGN FINANCE INVESTIGATION
=======================================================================
PROCEDURAL BACKGROUND OF THE CAMPAIGN FINANCE INVESTIGATION
I. Budget
The Committee on Government Reform and Oversight was
allocated funds from the Reserve Fund established by the House
of Representatives to carry out its additional responsibilities
entailed in the campaign finance investigation. These funds
were used to hire additional staff, purchase additional
equipment, and pay for travel associated with the
investigation.
In 1997, the first year of the investigation, the Committee
was allocated $3.8 million from the House Reserve Fund. The
Committee spent approximately $2.4 million on the
investigation.\1\ In 1998, the Committee was allocated an
additional $1.8 million from the Reserve Fund, and it expects
to spend approximately two-thirds of that amount.\2\ The
minority was allocated 25 percent of the Committee's
investigative funds and permanent funds.
---------------------------------------------------------------------------
\1\ See Letter from Chairman Dan Burton to Congressman Henry
Waxman, May 11, 1998.
\2\ See Letter from Chairman Bill Thomas to Chairman Dan Burton,
Mar. 25, 1998.
---------------------------------------------------------------------------
The Ranking Minority Member has made a number of public
statements regarding the amount of money spent by the Committee
on the investigation. Congressman Waxman stated on several
occasions that the Committee spent $6 million on the campaign
finance investigation. The Chairman has publicly corrected the
Ranking Member, and pointed out that less than $4 million was
spent on the investigation by the majority and minority staff
combined.
II. Subpoena Power
Throughout the 105th Congress, the Chairman has had the
power to issue subpoenas pursuant to Committee Rule 18, which
reads in relevant part as follows:
The chairman of the full committee shall:
* * * * * * *
(d) Authorize and issue subpoenas as provided in
House Rule XI, clause 2(m), in the conduct of any
investigation or activity or series of investigations
or activities within the jurisdiction of the committee.
. . .\3\
---------------------------------------------------------------------------
\3\ House Committee on Government Reform and Oversight Rule 18.
---------------------------------------------------------------------------
House Rules XI, clause 2(m), in turn, states:
The power to authorize and issue subpoenas under
subparagraph (1)(B) may be delegated to the chairman of
the committee pursuant to such rules and under such
limitations as the committee may prescribe.\4\
---------------------------------------------------------------------------
\4\ House Rule XI(2)(m)(2)(A).
The Committee rule was adopted at the Committee's first
organizational meeting of the 105th Congress, on February 12,
1997. The rules, including the subpoena rule, were adopted by
unanimous voice vote.\5\ No Democrat objected to the Committee
rules, and only one amendment to the rules was offered by
Congressman Waxman. His amendment was accepted by unanimous
voice vote.\6\ Congressman Waxman took notice of the subpoena
provision in the Committee rules, but did not object to it.
Rather, he asked that the Chairman consult with the minority a
sufficient period of time before the issuance of the subpoena,
stating that ``I assume that in order for consultation with the
minority to be a real opportunity, that you will try to contact
us in sufficient time so we can have an opportunity to discuss
it.'' \7\ The Chairman indicated that he intended to inform the
minority in advance of his intent to issue a subpoena, and has
done so throughout the course of the investigation.\8\
---------------------------------------------------------------------------
\5\ Organizational Meeting, House Committee on Government Reform
and Oversight, Feb. 12, 1997, at 23.
\6\ Id. at 22.
\7\ Id. at 17.
\8\ Id. at 16-17.
---------------------------------------------------------------------------
The power delegated to the Chairman by the Committee is
consistent with the past practices of the Government Reform and
Oversight Committee, as well as a number of other House
committees. For example, in the 105th Congress, the Committee
on International Relations and the Committee on Small Business
both had substantially similar rules.
In April 1997, the Committee approved a Document Protocol.
The Protocol established procedures for maintaining documents
as well as rules for the issuance of subpoenas, and created a
working group to review the release of documents. The Document
Protocol made clear that the Committee minority would be
consulted prior to the issuance of all subpoenas, unless they
were issued on an emergency basis.\9\ Although the Document
Protocol merely codified the practices that had been agreed to
at the February business meeting, Congressman Waxman changed
his position and at that time objected to the Chairman's power
to issue subpoenas. During the April 10, 1997, business
meeting, Congressman Waxman claimed that if the protocol were
adopted, it would:
---------------------------------------------------------------------------
\9\ Protocol for Documents, Apr. 10, 1997, at (A)(2) (Exhibit 1).
Give Chairman Burton unprecedented power that no Member
of Congress has ever had; and, in fact, nobody in the
country has had the power that he would have invested
in him. . . . I want to emphasize that no other
investigation by a committee of the Congress has ever
had such powers in its chairman.\10\
---------------------------------------------------------------------------
\10\ Business Meeting, House Committee on Government Reform and
Oversight, Apr. 10, 1997, at 10-11.
Congressman Waxman then offered an amendment to the Document
Protocol that would require a Committee vote on any disputed
subpoenas.
Congressman Waxman's arguments regarding the nature of the
Chairman's power to issue subpoenas were false. Not only did a
number of other Committees in the 105th congress have the same
power, but past congressional committees conducting
investigation had the same power. The committees conducting the
Iran-Contra, October Surprise, Filegate, and Travelgate
investigations all had this same subpoena power.
Under the procedures established by the April 10, 1997,
Document Protocol, the Chairman provided notice to the minority
when he intended to issue a subpoena.\11\ Within a 24-hour
period, the minority was to provide the Chairman with any
suggestions regarding how it sought to improve or modify the
subpoena.\12\ After that 24-hour period, the Chairman could
issue the subpoena.\13\ The Protocol also allowed the Chairman
to issue subpoenas without prior notice if delay would hinder
the Committee's ability to obtain certain documents or
testimony.\14\ This authority was rarely used by the Chairman.
---------------------------------------------------------------------------
\11\ Protocol for Documents, Apr. 10, 1997, at (A)(2)(a) Exhibit A.
\12\ Id.
\13\ Id.
\14\ Id. at (A)(2)(b).
---------------------------------------------------------------------------
The Committee operated under this procedure until June
1998. At that time, the minority insisted upon a change in
Committee rules as a condition for voting in support of
granting immunity to four witnesses. The Chairman, after
consultation with several members, offered a compromise package
of rules changes, and on June 23, 1998, the Committee adopted
them. With regard to subpoenas, these provisions similarly
required the Chairman to provide subpoenas to the minority for
a 24-hour period during which the minority could suggest
modifications or object to the subpoenas.\15\ If the minority
objected to a subpoena, the Chairman was required either to
convene a meeting of the Subpoena Working Group, or bring the
subpoena to a vote of the Committee.\16\ The Subpoena Working
Group was a group composed of the Chairman, the Ranking
Minority Member, the Vice Chairman, a member selected by the
Chairman, and a member selected by the Ranking Minority
Member.\17\ The Working Group was to discuss subpoenas before
it, and, if it was unable to reach consensus, hold a vote on
whether the Chairman should issue the subpoena.\18\ The
Chairman agreed to be bound by the decision of the Working
Group.\19\ This procedure has been used by the Committee since
June 23, 1998.
---------------------------------------------------------------------------
\15\ Protocol for Documents, June 23, 1998, at (A)(2)(a) (Exhibit
2).
\16\ Id.
\17\ Id.
\18\ Id.
\19\ Id.
---------------------------------------------------------------------------
III. Document Protocol
The April 10, 1997, Document Protocol also addressed the
procedures used by the Committee to store and release documents
obtained by the Committee in the course of the campaign finance
investigation. The Protocol was later changed in June 1998 in
such a way as to modify the document release provisions.
As initially adopted, the Protocol allowed the release of
nonpublic documents through one of three means: (1) agreement
between the Chairman and Ranking Minority Member; (2) agreement
or vote of the Document Working Group; or (3) vote of the full
Committee.\20\ Under the first provision, the Chairman could
notify the Ranking Minority Member of his intent to release
documents, and if the Chairman and Ranking Member agreed, the
documents could be released.\21\ If the Chairman and Ranking
Minority Member could not agree on the release of documents,
the Chairman could convene a meeting of the Document Working
Group to consider the release.\22\ The Working Group was
composed of the Chairman, the Vice Chairman, the Ranking
Minority Member, and two members selected by the Chairman and
Ranking Minority Member, respectively.\23\ The Working Group
was to consider the release of documents, and attempt to reach
consensus about the release of documents.\24\ If it was unable
to reach consensus, the Chairman could request the Working
Group to render a vote regarding the release of documents.\25\
This vote was to be binding upon the Chairman.\26\
---------------------------------------------------------------------------
\20\ Protocol for Documents, Apr. 10, 1997, at (C)(3).
\21\ Id. at (C)(3)(a).
\22\ Id. at (C)(3)(b).
\23\ Id.
\24\ Id.
\25\ Id.
\26\ Id.
---------------------------------------------------------------------------
The procedure outlined in the April 10, 1997, Document
Protocol was used successfully by the Committee for over 1
year, until it was modified by the Committee on June 23,
1998.\27\ The vote of the Committee on June 23, 1998, modified
the Protocol to eliminate the Document Working Group, and to
allow only two means of document release: (1) agreement between
the Chairman and Ranking Minority Member; or (2) vote by the
full Committee.\28\
---------------------------------------------------------------------------
\27\ See Business Meeting, House Committee on Government Reform and
Oversight, June 23, 1998.
\28\ See Protocol for Documents, June 23, 1998, at (C).
---------------------------------------------------------------------------
IV. Deposition Authority
On June 20, 1997, the House of Representatives passed H.
Res. 167 to provide special investigative authorities for the
Committee's campaign finance investigation. This resolution
provided the Committee with the power to take depositions and
interrogatories from witnesses in the investigation. Chairman
Burton requested this authority to assist the Committee in its
work of gathering information relevant to the campaign finance
inquiry. The powers granted to the Committee by the House of
Representatives were consistent with investigative authorities
granted to investigative committees in the past.
The Committee met on June 18, 1997, to adopt Committee
rules 20 and 21, which governed the taking of depositions,
interrogatories and letters rogatory.\29\ The Committee passed
the new rules by a vote of 22 to 17.\30\ Later on June 18,
Chairman Burton and Congressman Waxman testified before the
Rules Committee on H. Res. 167. The Rules Committee then passed
H. Res. 167, which was considered on the House floor on June
20, 1997. H. Res. 167 passed the House by a vote of 216 to
194.\31\
---------------------------------------------------------------------------
\29\ See Business Meeting, House Committee on Government Reform and
Oversight, June 18, 1997.
\30\ Id. at 234.
\31\ Congressional Record, June 20, 1997, at H4091.
---------------------------------------------------------------------------
The major power granted to the Committee by H. Res. 167 was
to conduct staff depositions. Under the procedures established
by H. Res. 167 and Committee Rule 20, the Chairman had the
authority to order the taking of depositions of witnesses after
consulting with the Ranking Minority Member.\32\ This power was
consistent with the power granted to chairmen in the
congressional investigations relating to the Assassinations
Investigation, Iran-Contra, and October Surprise.\33\ The
resolution also authorized the Chairman to issue
interrogatories to witnesses, to be answered under oath.\34\
Finally, it authorized the Committee to apply for the issuance
of letters rogatory and other forms of international
assistance.\35\
---------------------------------------------------------------------------
\32\ House Resolution 167 at 2; House Committee on Government
Reform and Oversight Rule 20.
\33\ See Hearing, House Committee on Rules, June 18, 1997, at 8-11
(testimony of Chairman Dan Burton).
\34\ House Resolution 167 at 2.
\35\ Id.
---------------------------------------------------------------------------
V. Rules Requirements
A. Committee Action and Vote
Pursuant to clause 2(l)(2) (A) and (B) of House Rule XI, a
majority of the Committee having been present, the resolution
recommended in this report was approved by voice vote.
B. Statement of Committee Oversight Findings and Recommendations
Pursuant to clause 2(l)(3)(A) of House Rule XI and clause
2(b)(1) of House Rule X, the findings and recommendations of
the Committee are contained in the foregoing chapters of this
report.
C. Statement on New Budget Authority and Related Items
Pursuant to clause 2(l)(3)(B) of House Rule XI and Section
308(a)(1) of the Congressional Budget Act of 1974, the
Committee finds that no new budget authority, new spending
authority, new credit authority, or an increase or decrease in
revenues or tax expenditures result from an enactment of this
resolution.
D. Statement of CBO Cost Estimate and Comparison
Pursuant to House Rule XI(2)(l)(3)(C) and Section 403(a) of
the Congressional Budget Act of 1974, the Committee finds that
a statement of Congressional Budget Office cost estimate is not
required as this resolution is not of a public character.
E. Statement of Constitutional Authority
Pursuant to House Rule XI(2)(l)(4), the Committee finds
that a statement of Constitutional authority to enact is not
required as this resolution is not of a public character.
F. Changes in Existing Law
Pursuant to House Rule XIII(3), the Committee finds that a
statement of changes in existing law is not necessary, as the
resolution does not alter existing law.
G. Statement of Committee Cost Estimate
Pursuant to House Rule XIII(7)(a), the Committee finds that
a statement of Committee cost estimate is not necessary as this
resolution is not of a public character.
H. Statement of Federal Mandates
Pursuant to the Unfunded Mandates Reform Act and Section
423 of the Congressional Budget Act of 1974, the Committee
finds that a statement of Federal mandates is not necessary as
this resolution is not of a public character.
[Supporting documentation follows:]
ADDITIONAL VIEWS OF HON. DAN BURTON
Introduction
Throughout the Committee's investigation into illegal
campaign fundraising, the Committee's Democratic minority has
engaged in a pattern of making public statements that are
purposefully misleading. The ``Preliminary Minority Views on
the Campaign Finance Investigation,'' handed out to reporters
at the Committee's business meeting on Thursday, October 8, are
rife with assertions that are misleading at best and
deliberately false at worst.
As Chairman of a committee conducting an investigation of
the Clinton Administration, I expected that the Committee on
Government Reform and Oversight--and myself personally--would
be subjected to unfair and partisan attacks. Many chairmen of
prior committee investigations have learned that it comes with
the territory. This is, after all, the same Administration
which attacked its own FBI Director when it became known that
he endorsed an independent counsel for the campaign finance
investigation. And a member of the minority, Mr. Lantos, even
resorted to attacking a Committee witness, Independent Counsel
Donald Smaltz, by comparing him to a Nazi.\1\
---------------------------------------------------------------------------
\1\ Representative Lantos was roundly criticized for his highly
inappropriate comments in numerous editorials including the Washington
Post, ``. . . And the Assault on Mr. Smaltz,'' Dec. 14, 1997; and the
Wall Street Journal, ``Ms. Reno's Carapace,'' Dec. 12, 1997.
---------------------------------------------------------------------------
I cannot help but recall earlier broadsides leveled at my
predecessor, Congressman Bill Clinger of Pennsylvania, as
honorable and statesmanlike a figure as one could hope to find
in the Congress. I remember the parting comments Mr. Waxman had
for the gentlemanly Chairman Clinger 2 years ago: ``I leave
this committee with absolute disgust for it and its Chairman.''
\2\
---------------------------------------------------------------------------
\2\ Nancy E. Roman, ``GOP feels bite of `bulldog' Waxman,'' the
Washington Times, May 6, 1998.
---------------------------------------------------------------------------
One of the more disappointing legacies of this Committee's
investigation has been the failure of even one member of the
minority party to stand up and challenge the wrongdoing and
excesses of its own party. Despite the fact that over 120
people connected with fundraising for the President's campaign
either took the Fifth or fled the country, and despite the
Committee's receipt of volumes of evidence of illegal
contributions and stunning access to the White House by people
who went on to be indicted, not a single Member of President
Clinton's party on the Committee rose to the occasion in the
tradition of Howard Baker in the Watergate hearings or Warren
Rudman during the Iran/Contra hearings. To the contrary,
Members of the minority party in this investigation often acted
more like defense attorneys rather than investigators on the
chief oversight committee in the U.S. House of Representatives.
A broad look at the minority's preliminary views
distributed on October 8, 1998, makes an important statement
about the priorities of the Democratic minority in this
investigation. The minority devotes 80 pages and 366 footnotes
to partisan attacks against the majority. In most cases, the
criticisms are blatantly false, intentionally misleading, or
petty in nature.
As for charges of illegal campaign activities by the
Clinton Administration, the Democratic National Committee, and
high-level Democratic donors accused of funneling foreign money
into Democratic campaigns--the substance of the investigation--
the Democrats devoted only 12 pages with a sparse 8 footnotes.
The implications are clear: despite the mountains of
documentary evidence, and the existence of a list of 120 people
connected with fundraising for Democratic campaigns who either
took the Fifth or left the country, the Democratic minority
chose to devote the lion's share of its resources to political
attacks against the Republican majority. This sets a poor
precedent for the conduct of the minority party in future
Congressional investigations.
The frequency with which the truth is stretched in the
minority's preliminary views makes it nearly impossible to
respond fully to all of the distortions. The Committee's
majority report sets out in detail the fundraising
improprieties by the key DNC fundraisers and is backed up by
extensive documentation. Given the lack of seriousness with
which the minority's criticisms seem likely to be treated, a
point-by-point refutation seems unnecessary. In the interest of
brevity, I will only respond here to some of the more egregious
assaults on the truth.
I. The Democrats Acted as Defense Counsel for the DNC and Key Foreign
Money Figures
In its initial response to the Committee report on campaign
finance matters, the minority wrote extensively on the lack of
bipartisanship on the part of the majority. Congressman Waxman
cited the Watergate and Iran-Contra investigations as models of
bipartisanship. Yet what Congressman Waxman failed to mention
is that it was a cooperative Republican minority examining its
own party which made the previous investigations bipartisan.
Frequently minority members and staff during the campaign
finance investigation have employed tactics more typical of an
aggressive defense attorney rather than serious Congressional
investigators with important Congressional oversight
responsibilities. The following examples illustrate this point.
a. the minority's preliminary response to chapter 3 of the committee
interim report defends democratic retention of illegal and suspect
contributions and ignores the facts
The minority's response to chapter 3 of the Committee's
Interim Report can be summed up by the following statement (in
their own words): ``The DNC has returned contributions when it
has had a good faith basis to believe that the contributions
are illegal or otherwise inappropriate.'' The facts tell a
different story as the majority outlined in extensive detail in
Chapter 3 of the Committee's Interim Report. The minority's
preliminary views had no credible defense for the continued
retention by the DNC and Democratic entities of hundreds of
thousands of dollars in illegal and/or suspect contributions.
The minority states that ``perhaps around $100,000'' of the
$1.8 million in suspect or illegal contributions appear to
warrant further scrutiny by the DNC. While $100,000 is a start,
the facts show the figure to be approximately 18 times that
amount. In fact, K&L International's$150,000 contribution to
the DNC alone surpasses the minority's figure. The majority concluded
that K&L's contribution was illegal after interviewing witnesses,
reviewing checking account records, wire transfer information,
cashier's check information, and publicly available corporate
information. The minority simply ignores the evidence.
Furthermore, on several occasions the majority
characterized contributions as ``suspect'' instead of
``illegal'' because the Committee lacked the information
necessary to conclude without hestitation that the contribution
was illegal. One such example was the three $15,000
contributions made by Lippo subsidiaries Hip Hing Holdings, San
Jose Holdings, and Toy Center Holdings. In the case of the
subsidiaries' 1993 contributions totaling $45,000, the DNC has
retained them based upon the fact that the subsidiaries were
not reimbursed for the contributions by a foreign source,
namely the Lippo Group. At the time the Committee's Interim
Report was released, the minority report and the DNC position
may have been tortured, but arguable.
However, documents produced to the Committee the day after
the Interim Report was released indicate that shortly after
their contributions were made, all three subsidiaries were
reimbursed $15,000 each--the full amount of their
contributions--with funds originating from the Lippo Group of
Jakarta, Indonesia. This evidence validates the work of the
majority investigators and serves to confirm what the majority
believed: the three $15,000 contributions were made illegally.
Despite the fact that many of the contributors whose
contributions have been questioned have either left the country
or taken the Fifth Amendment, there should be little doubt that
evidence will continue to emerge that will enable the Committee
to shift contributions from the suspect category to the illegal
category.
B. The Minority Repeatedly Defended Major DNC Fundraiser Charlie Trie
The preliminary minority views released by the ranking
minority member are consistent with the minority's position
throughout this investigation. The minority has continually
tried to minimize Trie's offenses. However, even the minority
did not attempt to defend Trie against the conclusive evidence
offered in the Committee's report detailing Trie's central role
in making and orchestrating conduit contributions to the DNC.
Oddly, the minority faults the Committee's report for
failing to prove that Trie was a Chinese spy.\3\ However, few
have ever alleged that Trie was a spy. Rather, allegations have
been made, and substantial evidence has been uncovered, showing
that Trie received large amounts of money from sources
connected to communist China. Trie then used this money to
funnel political contributions to the DNC. There is also strong
evidence indicating that Trie and his associate Antonio Pan may
have received funds from the Lippo Group to funnel political
contributions to the DNC. These are the allegations that have
been made against Trie, and they have been corroborated by the
Committee's investigation.
---------------------------------------------------------------------------
\3\ Preliminary Minority Views on the Campaign Finance
Investigation, Oct. 8, 1998, (``Preliminary Minority Views'') at 86.
---------------------------------------------------------------------------
The Committee has also uncovered substantial evidence
indicating that Trie did attempt to influence United States
foreign policy to benefit the PRC. This evidence was detailed
in the Committee's report, and was conveniently ignored in the
minority's preliminary views.\4\ While it is unknown if Trie
was acting as an agent for the Chinese government, Trie's
statements at meetings of the Bingaman Commission and written
statements indicate that he was attempting to influence the
United States to treat the PRC more favorably.
---------------------------------------------------------------------------
\4\ See Preliminary Minority Views at 86-87.
---------------------------------------------------------------------------
C. The Minority Defended Major DNC Fundraiser Ernie Green
The minority's preliminary report again came to the defense
of another figure in the campaign finance scandal, Ernie Green.
The minority claimed that ``speculation'' was the sole basis
for the allegations against Green, and that the report
presented ``no evidence'' to rebut Green's denials of
wrongdoing.\5\ Again, the minority has ignored the substantial
evidence of wrongdoing detailed in the Committee's report. The
report contains extensive evidence relating to Mr. Green's
highly unusual financial transactions that coincided with his
efforts, and those of Charlie Trie, to have the Chairman of
CITIC, Wang Jun, invited to a White House coffee. Green
deposited over $38,000 in cash into his bank in a number of
small deposits, and has not offered any definitive explanation
for the source of these deposits, despite repeated invitations
to do so by the Committee.
---------------------------------------------------------------------------
\5\ Preliminary Minority Views at 87.
---------------------------------------------------------------------------
The minority also ignored the fact that Green likely
offered false testimony before the Committee. Green recieved
$11,500 from Charles Trie, despite his sworn statements that he
never recieved money from Charlie Trie. Evidence received since
the Committee approved its report proves that at least $9,500
of the money that Trie gave to Green originated with Chun Hua
Yeh, a Chinese businessman with extensive ties to the Chinese
government.\6\
---------------------------------------------------------------------------
\6\ See NationsBank wire transfer report (Exhibit 1) (showing
transfer of $9,500 from Manlin Foung to the Green/McKenzie Group);
Account Statement of Manlin Foung, January 1996 (Exhibit 2) (showing
deposit of $30,000 before wire transfer to Green/McKenzie); Cashier's
Check for $30,000 to Yah Lin Trie (Exhibit 3) (showing that the $30,000
cashier's check came from Trie); Cashier's Check for $30,000 (Exhibit
4) (showing that the cashier's check was drawn on American
International Bank account 008453489); signature card for American
International Bank account of Chun Hua Yeh (Exhibit 5).
---------------------------------------------------------------------------
The minority report makes it clear that they accept Green's
denials at face value, despite the fact that Green has
repeatedly misled the Committee. They also ignore the facts
regarding Green's unusual financial transactions and summarily
dismiss questions about whether these transactions may have
been connected in any way with his political contributions. The
minority relies primarily on two facts to support this
conclusion: first, that Green could afford to make sizable
political contributions; and second, that Green has ``a history
of making political contributions.'' \7\ Both of these claims
are misleading. First, it is true that Green does have
substantial assets. However, many individuals proven to be
conduit contributors in this investigation have had adequate
assets to cover their contribution--they have simply opted not
to use those resources to make their contribution. The
minority's reliance on Green's ``history of contributions'' is
also misleading. While Green had raised hundreds of thousands
of dollars for the DNC from other donors, he had never made a
contribution greater than $3,700 before he met Charlie Trie.\8\
Then, after he met Trie, he gave two contributions totaling
$56,000. There are a number of disturbing inaccuracies and
inconsistencies in Green's testimony regarding these
contributions that have not been explained. It is disappointing
that the minority has shown no desire to ask the serious
questions that are raised by the activities of this long-time
Democratic party supporter.
---------------------------------------------------------------------------
\7\ Preliminary Minority Views at 87.
\8\ See FEC Records of Contributions of Ernest G. Green,
www.tray.com/fecinfo.
---------------------------------------------------------------------------
D. The Minority Defended Major DNC Fundraiser Charles Intriago
Ever since the Committee began investigating the illegal
campaign contributions made by the Castro family of Venezuela
in 1992, the Committee minority has attempted to defend the
major Democratic figure implicated by the Castros, Charles
Intriago. Intriago is a prominent Florida attorney, and a major
supporter of the Democratic party. Despite the evidence against
Mr. Intriago, who took the Fifth before the Committee, the
Democrats defended him vigorously. In this case, the defense
offered by Congressman Waxman and his staff has been valuable
to Mr. Intriago, since he has taken the Fifth, and has remained
silent since the Committee's investigation began.
At the Committee's hearing on the Castro contributions on
April 30, 1998, Congressman Waxman introduced into the record a
statement by Robert Plotkin, counsel for Mr. Intriago.\9\ In
this statement, Plotkin denied any wrongdoing by his client.
Congressman Waxman also defended Intriago's decision to take
the Fifth: ``Mr. Intriago didn't come here because he didn't
think it would do him any good. Mr. Castro is here because he
thinks this might do him a lot of good.'' \10\ Apparently,
Congressman Waxman thinks that witnesses are justified in not
cooperating with Congressional investigations if it doesn't
``do them any good.''
---------------------------------------------------------------------------
\9\ Venezuelan Money and the Presidential Election, Hearing,
Committee on Government Reform and Oversight, Apr. 30, 1998, (``Castro
Hearing'') at 35.
\10\ Castro Hearing at 44.
---------------------------------------------------------------------------
In addition to its heavy reliance on the self-serving
statements of Intriago's lawyer, the minority repeatedly
attacked Jorge Castro, who offered substantial evidence
implicating Intriago in illegal activity.\11\ At the hearing,
and again in their preliminary views, the minority has attacked
Castro's credibility, and clearly taken sides with Charles
Intriago. In doing so, Congressman Waxman and many other
Democrats have ignored substantial documentary evidence that
confirms Jorge Castro's account. They have also ignored the
sworn testimony of two career prosecutors from the New York
District Attorney Robert Morgenthau's office, who testified
that Castro's testimony was consistent with everything that
Castro had always told them, and that Castro had never told
them anything about his political contributions that later
proved to be false.\12\
---------------------------------------------------------------------------
\11\ Castro Hearing at 38-55.
\12\ Castro Hearing at 82.
---------------------------------------------------------------------------
The minority's preliminary views make the claim that the
Castro family received no special treatment in return for their
illegal contributions to the DNC.\13\ However, the record shows
that Charles Intriago set up a meeting between the patriarch of
the Castro family and two high-level State Department officials
at the time that the Castros were under investigation for
involvement in money laundering. The Castros took advantage of
this meeting to promote themselves with the U.S. Government and
discredit allegations of money laundering which were plaguing
them at the time. The minority refers to this visit as a
``courtesy meeting,'' vastly understating the importance of
this meeting to the Castros.\14\
---------------------------------------------------------------------------
\13\ Preliminary Minority Views at 90-91.
\14\ Id. at 91.
---------------------------------------------------------------------------
Finally, the minority's preliminary report claims that the
Department of Justice is still investigating the allegations
made by Castro against Intriago.\15\ While it may be true that
the Justice Department is investigating Mr. Intriago for a
number of potentially illegal acts, it is not clear that his
role in arranging Jorge Castro's illegal political
contributions is among them. The statute of limitations for
such a prosecution has passed, and if the Justice Department is
still investigating Castro's allegations against Intriago, it
merely provides further evidence of the disorganized state of
the Justice Department's campaign finance investigation.
---------------------------------------------------------------------------
\15\ Id.
---------------------------------------------------------------------------
e. the minority employed questionable tactics against a witness who
testified unfavorably about dnc official john huang
During the campaign fundraising investigation the minority
attacked a witness whose testimony was not favorable to the DNC
or the White House. David Wang was a witness at the Committee's
first hearing. Under a grant of immunity, Wang testified that
he made two conduit contributions at the request of John
Huang--one from his own bank account and one from the bank
account of his friend, Daniel Wu, who lived in Taiwan.\16\
---------------------------------------------------------------------------
\16\ David Wang testified that he was solicited by John Huang and
Antonio Pan to make $10,000 in contributions to the DNC in his and his
associate's name. Wang was then reimbursed by Pan with $10,000 cash,
making the transaction a conduit contribution. ``Conduit Payments to
the Democratic National Committee: Hearing Before the House Committee
on Government Reform and Oversight,'' 105th Cong., 1st sess. (1997).
---------------------------------------------------------------------------
In an attempt to discredit Mr. Wang, the minority placed in
the Committee record what purported to be a summary of an
interview with David Wang's father, James Wang, conducted by
two minority counsel. David Wang had testified in his
deposition that his father was with him when John Huang came to
his house and asked for the contributions. As Mr. Wang's father
did not speak English well, minority counsel attempted to
communicate with him in broken Mandarin Chinese. The staff
summary said in part, ``James Wang told us that he was neither
present at any meetings nor aware of any conversations in which
John Huang asked David Wang to make a campaign contribution.''
\17\
---------------------------------------------------------------------------
\17\ Id., Exhibit 128, p. 354.
---------------------------------------------------------------------------
What the minority did not inform the majority members of
the Committee or the public was that they had faxed a similar
statement to James Wang and asked him to sign it. David Wang's
lawyer informed the Committee that James Wang refused to do so
because it was not correct. Subsequently, David Wang's attorney
submitted a handwritten statement from James Wang confirming
that he was at the meeting with John Huang, and that John Huang
did ask David Wang to make the contributions in question.\18\
It is disappointing that the minority would submit a statement
for the record that they knew was disputed by the witness
without informing the Committee of that fact. Furthermore, it
is disturbing that minority counsel attempted to intimidate Mr.
Wang to sign the minority affidavit even after he told the
committee it was inaccurate.
---------------------------------------------------------------------------
\18\ Id., Exhibit 127, p. 353.
---------------------------------------------------------------------------
The minority insisted that it was impossible that John
Huang met with and solicited David Wang in Los Angeles on the
date about which Wang testified, August 16, 1996. The minority
then distributed several statements and receipts allegedly
indicating that John Huang was in New York between August 10-
19, 1996. These statements were not sworn testimony before the
Committee. In fact, John Huang's attorney assisted the
Democrats in gathering the statements. John Huang refused to
personally refute Wang's testimony, as Huang had asserted his
Fifth Amendment right against self-incrimination.
Mr. Wang's attorney addressed the Committee regarding the
minority's assertions:
First, the notion that Mr. Wang would perjure himself
on this question seems to me so facially implausible as
not to be seriously entertained.
To say that somebody would falsely say that he was a
conduit for John Huang is absurd. I can't think of any
person in the world that you would want to associate
yourself with less that John Huang.
If Mr. Wang could have possibly said that he didn't
know Mr. Huang and had not engaged in illegal
transactions with him, I assure you, he would have done
so. He would not be here today. He would not be in
front of the grand jury, and he would not be in the
largest problem he has ever faced.\19\
---------------------------------------------------------------------------
\19\ ``Conduit Payments to the Democratic National Committee:
Hearing Before the House Committee on Government Reform and
Oversight,'' 105th Cong., 1st sess. 276 (1997) (Statement of Michael
Carvin, attorney for David Wang.)
Although the minority might have argued that Wang was mistaken
about the dates, as Wang's attorney argued, it is beyond
comprehension that Wang would lie when he was already admitting
to illegal acts. In any event, all the records show that the
money given to the DNC was illegal, a fact from which the
minority sought to divert attention.
II. The Democrats Defended Sioeng Family Contributions to the DNC While
Engaging in a Blatantly Partisan Attack on Senate Candidate Matt Fong
During the course of the Committee's investigation of Ted
Sioeng, 28 people either asserted their Fifth Amendment rights,
fled the country, or refused to testify. During that time the
minority made little or no effort to participate in the
investigation of Sioeng.
The minority has alleged that ``. . . Chairman Burton
ignored Republican abuses even while investigating parallel
allegations against Democrats.'' \20\ This statement overlooks
the fact that during the course of the majority's investigation
of Ted Sioeng several Republican entities and candidates were
either deposed, interviewed, or had their bank records
subpoenaed. The majority staff deposed or interviewed, with the
minority, several witnesses with connections to the Republican
party. These included Matt Fong, the current Republican
candidate for Senate in California, Steven Walker, Jr., former
Comptroller of the National Policy Forum, Daniel Wong, former
Republican mayor of Cerritos, California, and Julia Wu, a
Republican from southern California with connections to Matt
Fong.
---------------------------------------------------------------------------
\20\ Preliminary Minority Views on the Campaign Finance
Investigation, Committee on Government Reform and Oversight at 5.
---------------------------------------------------------------------------
The minority has continually attempted to minimize the
efforts of the Committee in order to further its own political
purposes. At times, the minority has contradicted itself in
obvious ways. One of the most glaring examples involves
Representative Waxman's comments concerning the testimony of
Kent La, a key figure in the Sioeng investigation. In a floor
statement made on May 19, 1998, Representative Waxman stated
the following:
The Department of Justice does have serious
reservations about immunizing Kent La. In a letter
dated April 22, 1998, the Department of Justice
expressed its view that ``if Mr. La were to testify
publicly at this time, the Department's criminal
investigation could in fact be compromised. Even if Mr.
La were to testify in a closed session, any disclosure
or leak of that testimony, whether intentional or
inadvertent, could seriously compromise the
investigation and any subsequent prosecutions.'' The
numerous leaks of information during the course of
Committee's investigation suggests that the
confidentiality that the Department of Justice has
requested could not be maintained.\21\
---------------------------------------------------------------------------
\21\ 144 Congressional Record H3452-02.
The Department of Justice has requested that the Committee
not release the deposition of Kent La, for fear that doing so
would compromise an ongoing criminal investigation.\22\ Yet,
despite Mr. Waxman's protests concerning leaks and the
Department of Justice's concerns, it was Mr. Waxman himself who
violated that agreement when he characterized Mr. La's
testimony during a Committee hearing. Mr. Waxman, who at the
time had not read or heard Mr. La's testimony, stated that
there was nothing relevant in the testimony,\23\ which appears
inconsistent with the position of the Department of Justice and
violates the terms of the Committee's agreement.
---------------------------------------------------------------------------
\22\ Letter from L. Anthony Sutin to Chairman Burton, Aug. 28,
1998.
\23\ House Committee on Government Reform and Oversight, ``Hearings
on the Need for an Independent Counsel in the Campaign Finance
Investigation,'' 105th Cong., 2d sess., 67 (Aug. 4, 1998).
---------------------------------------------------------------------------
The minority's preliminary report states that ``none of the
12 witnesses whose depositions have been made public provided
testimony supporting the allegations that Mr. Sioeng was an
agent of the Chinese government, engaged in lobbying for the
Chinese government, or made political contributions on behalf
of the Chinese government.'' \24\ This statement completely
ignores many aspects of the testimony gathered by the majority
staff. In fact, several witnesses testified about Mr. Sioeng's
connections to officials at the PRC embassy, consulate and
central government.\25\
---------------------------------------------------------------------------
\24\ Preliminary Minority Views on the Campaign Finance
Investigation, Committee on Government Reform and Oversight at 89.
\25\ See Deposition of Daniel K. Wong, 3/12/98; Deposition of
Robert Prins, 1/27/98; Deposition of Johnny Ma, 2/12/98.
---------------------------------------------------------------------------
The minority also ignores Mr. Sioeng's strong connections
to the PRC government through his business ventures. The
majority has documented that Mr. Sioeng operates a cigarette
distribution and production network in Singapore in partnership
with the PRC government. Sioeng and his partner, the PRC's
largest tobacco company, produce and export Hongtashan (Red
Pagoda Mountain) cigarettes.
a. democrats mount a partisan defense of sioeng's dnc contributions
The majority report presented a cogent and thorough
analysis of the $400,000 in foreign and other questionable
contributions made to the DNC by Ted Sioeng, his family, and
his business associates. The minority response entirely
sidestepped the majority's analysis. In response, the minority
retreats behind issues of fact it knows the Committee cannot
conclusively resolve due to the stonewalling campaign waged by
Ted Sioeng's family and its attorneys and business associates.
But the Potemkin village created by the minority cannot obscure
the results of the Committee's painstaking investigation, which
determined that $310,000 of the $400,000 contributed by Sioeng
to the DNC appears to have been funded from bank accounts in
Hong Kong and Indonesia.
The minority's tortured struggle to defend the DNC is
evident in its inconsistent stances on the foreign money Sioeng
funneled into the political system. First, the minority writes,
``there is not evidence in the record indicating that the
Sioeng-related contributions to the DNC were illegal.'' Later,
the minority backs away from this blanket assertion and
acknowledges that foreign money transferred into Sioeng-family
accounts ultimately funded contributions to the DNC. The
minority's preliminary report states, ``Although the U.S. bank
accounts of Ms. Elnitiarta and the Panda companies received
foreign wire transfers, this does not necessarily mean that
political contributions drawn from these accounts are
illegal.''
In distilled form, the minority's position is that
demonstrating the DNC contributions were funded by transfers
from Hong Kong and Indonesia is not enough to prove they are
illegal, or even that they should be returned by the DNC. This
argument misses the mark for several reasons. First, the
Committee has shown that under FEC regulations and practice,
the $100,000 contributed to the DNC by Panda Estates is illegal
because it was funded with foreign money, not domestic
receipts. The minority has not and cannot challenge this point
directly. Second, as explained in the Committee report, the
$250,000 in DNC contributions made or directed by Sioeng's
daughter Jessica are likely illegal due to Ted Sioeng's
probable involvement in the decisionmaking process.\26\ This
point, as well, is unchallenged by the minority. Third, the
contention that Sioeng's DNC contributions are ``not
necessarily'' illegal is unfair. The reason the Committee
cannot ascertain for certain whether some of the contributions
are illegal is that the information needed to make such
determination is being fiercely guarded by Sioeng, his family,
and their lawyers. All of this is spelled out in great detail
in the Committee's report--the 28 persons who asserted their
privileges against self-incrimination, fled the country, or
otherwise refused to speak to the Committee, the promises of
cooperation made and broken by the family's lawyers--and stands
unrefuted.
---------------------------------------------------------------------------
\26\ See The Sioeng Family's Contributions and Foreign Ties,
Section VII. Note that the $250,000 figure includes the $100,000
contributed to the DNC by Panda Estates.
---------------------------------------------------------------------------
B. The Minority Engaged in Transparent and Unfair Attack of Matt Fong,
who in contrast to the Democats promptly returned money linked to Ted
Sioeng
In contrast to the vigorous defense the minority mounts of
the Sioeng contributions to the DNC, the minority spends
considerable time attempting to smear Republican Senate
candidate Matt Fong. In its preliminary report and an article
in the October 22, 1998 issue of Roll Call, the minority
accuses Mr. Fong of providing conflicting testimony to the
House and Senate and concludes the Sioeng-related contributions
he received were illegal.\27\
---------------------------------------------------------------------------
\27\ Amy Keller, ``House Democratic Report Targets Fong,'' Roll
Call, Oct. 22, 1998, p. 3.
---------------------------------------------------------------------------
Not once does the minority report mention that Mr. Fong
returned all of the $100,000 in contributions he received from
Sioeng and Panda Estates and that he did so a year-and-a-half
ago--almost immediately upon learning of the questionable
nature of Sioeng's contributions. Nor does the minority point
out that the DNC has kept all $400,000 in Sioeng-related
contributions it received during the 1996 election cycle,
including $150,000 from the same Sioeng company from which Matt
Fong received funds, Panda Estates. Nor does it mention that
California law contains no prohibition on receiving
contributions from foreign nationals and that, hence, Mr.
Fong--in stark contrast to the DNC--returned money he legally
may have been able to keep.
Instead, the minority attempts to divine inconsistencies
from the testimony of a Senate candidate, locked in an
extremely close race, and who voluntarily agreed to be deposed
on three separate occasions by the House and Senate and
returned all of the Sioeng money in stark contrast to the DNC.
What the minority has not done is spell out any supposed
``inconsistencies'' or explain their significance.
The minority report refers to a supposed inconsistency
relating to ``how [Mr. Fong's] campaign came to receive a
second contribution from Mr. Sioeng.'' In both his Senate and
House depositions, Mr. Fong stated clearly that he did not know
how the second check made its way to his campaign offices. He
testified that it may have been messengered or dropped off, or
in it may have been in the sealed envelope Sioeng handed Fong
when he went to pick up the first check.\28\ Moreover, the
Committee sees no significance in how the check ended up in Mr.
Fong's campaign offices given that his testimony is abundantly
clear on the point that he never saw it.
---------------------------------------------------------------------------
\28\ Compare House Fong Depo., Vol. I, at 32; 11-14 & 35; 10-17
with Senate Fong Depo., at 37; 6-9 & 40: 13-15.
---------------------------------------------------------------------------
C. The Minority Mischaracterizes Sioeng's Contribution to the Non-
Profit National Policy Forum as Illegal
The minority alleges that federal law bars foreign
nationals from contributing to ``any campaign for elected
office, state or federal.'' \29\ In addition, the minority
implies that a $50,000 contribution from Panda Industries,
Inc., to the National Policy Forum was somehow disbursed to the
Republican National Committee.\30\ As a result, the minority
contends that the ``NPF contribution is another example of a
foreign contribution to the RNC.'' \31\
---------------------------------------------------------------------------
\29\ Preliminary Minority Views on the Campaign Finance
Investigation, Committee on Government Reform and Oversight, at 115.
\30\ Id. at 116.
\31\ Id.
---------------------------------------------------------------------------
Nothing could be further from the truth. The comments are a
clumsy attempt to shift the focus from wrongdoing by the
Democratic National Committee and the Clinton-Gore campaign.
Moreover, they are again calculated politically to damage Matt
Fong, who is running for a U.S. Senate seat in California.
The Committee notes that ranking minority member Waxman
made numerous comments decrying the investigation as a waste of
time, money, and resources since--in his view--the Committee
was duplicating the work of the Senate Governmental Affairs
Committee's Special Investigation. Nevertheless, Mr. Waxman
chooses to respond to the interim report by rehashing
discredited allegations against the National Policy Forum first
aired during 3 full days of Senate hearings over a year ago.
The Thompson Committee also conducted more than a dozen
depositions on the topic, and reviewed literally thousands of
pages of documents.
Aside from the partisan bent, there are several problems
with the minority's views regarding the NPF. First and
foremost, there is ample evidence and testimony that the NPF
was separate and distinct from the RNC. Haley Barbour, who
served as NPF chairman, addressed that very point in testimony
before the U.S. Senate Governmental Affairs Committee, Special
Investigation. Mr. Barbour stated that NPF had ``its own
separate board of directors . . . its own separate management,
its own separate staff, its own separate offices, had its own
separate bank accounts, had filed its own separate tax returns,
[and] had its own separate books.'' \32\ Mr. Barbour is
supported by both witness testimony and the documentary record.
For example, the former Comptroller of the NPF, under
questioning from minority counsel in his House deposition,
discussed in detail the great lengths to which NPF went to
ensure a separation from the RNC.\33\
---------------------------------------------------------------------------
\32\ S. Hrg. 105-300, Part III at 156.
\33\ See Deposition of Stephen A. Walker.
---------------------------------------------------------------------------
Also rebutting the minority's contention is the fact that
NPF was a non-profit corporation established under Section
501(c)(4) of the U.S. Tax Code.\34\ Such entities can legally
accept donations, gifts, and loans from U.S. persons, foreign
nationals, domestic corporations, and foreign corporations.\35\
If, as the minority alleges, it was illegal for the NPF to
accept $50,000 from Panda Industries, it was equally unlawful
for Vote Now '96, a non-profit group linked to the Clinton-Gore
campaign,\36\ to accept $100,000 from a Philippine
national.\37\ However, the minority made no such demands about
Vote Now '96, a group which directed funds that ultimately
helped Democratic candidates.
---------------------------------------------------------------------------
\34\ S. Hrg. 105-300, Part III at 215.
\35\ Section 501(c)(4) of U.S. Tax Code.
\36\ Deposition of Harold Ickes conducted by the U.S. Senate
Governmental Affairs Committee, Special Investigation, June 27, 1997,
at 39.
\37\ S. Rept. 105-167, Vol. 3, at 3666.
---------------------------------------------------------------------------
Finally, three sections from two congressional reports find
no evidence that the Panda Industries' contribution to the NPF
was made with foreign funds.\38\ One of those sections was
written by minority members of the Senate Governmental Affairs
Committee. An obvious question is whether the minority is
ignoring the views of their Senate colleagues in an effort to
score political points against Mr. Fong.
---------------------------------------------------------------------------
\38\ See S. Rept. 105-167, Vol. I, at 972; S. Rept. 106-167, Vol.
4, at 5573; See Chapter 4D, ``The Sioeng Family's Contributions and
Foreign Ties.''
---------------------------------------------------------------------------
d. conclusion
The minority's attempt to tar Matt Fong is a transparent
attempt to assist the campaign of his opponent, Senator Barbara
Boxer. The minority's unsubstantiated attack against a
Republican candidate who promptly returned questionable Sioeng-
related contributions and cooperated with the Committee stands
in stark contrast to their refusal to question the DNC's
indefensible decision to keep more than $300,000 in clearly
illegal contributions from Sioeng's family and friends--all of
whom have refused to cooperate with the Committee's
investigation.
III. The Hudson Casino Rejection--Misrepresentations by the Democrats
Committee Democrats argue that because the central figures
in the Hudson casino rejection tell us that they acted
appropriately, then surely it must be so. This Luddite
application of Congressional oversight is consistent with the
minority practice of taking all denials of impropriety by
Democrats at face value, changing the subject and putting up
roadblocks. It is also consistent with the minority tactic of
sweeping under the carpet that which begs legitimate inquiry.
In its interim report, the majority points to significant
problems with the Department of the Interior decisionmaking
process over the Hudson casino application. At the very least,
these problems stand for the proposition that the process was
unfair to the applicants, that the decisionmakers failed to
follow Department of the Interior policy and that the Secretary
ignored a Presidential directive. At their worst, they stand
for the proposition that Department of the Interior personnel
were involved in illegal conduct. In either case--whether the
government is being unfair to citizens or whether the law was
broken--there is no doubt that Congress has a reason to
exercise its oversight authority.
The Democratic minority has apparently decided to ignore
the problems identified by this Committee's investigation. For
the record, it is worth reviewing the ``Preliminary Minority
Views'' section on the Hudson casino decision in order to point
out what the minority Democrats chose to ignore and what they
chose to misstate.
a. what the minority failed to mention regarding the hudson casino
rejection
First. The Democratic minority appears unconcerned that
Paul Eckstein has testified that Secretary of the Interior
Bruce Babbitt told him that Harold Ickes was responsible for
the timing of the rejection. Eckstein is a man whose life-long
ties of personal friendship to Secretary Babbitt would normally
make him privy to candid observations and whose reputation for
veracity has never been questioned.
Second. The Democratic minority finds it unremarkable that
the Secretary of the Interior allegedly referred to large
campaign contributions to Democratic interests during a meeting
on the Hudson matter.
Third. The Democratic minority ignores the fact that
wealthy contributors, led by a lobbyist who had once been the
Democratic National Committee's top money man, were given an
unfair advantage over the Hudson applicants. They find it
unremarkable that the Secretary of the Interior's Counsel would
reopen a comment period for opponents of the application--who
also happened to be significant political contributors--and not
even inform the applicants.
Fourth. The Democratic minority, whose preliminary views
are infused with references to imaginary examples of unfairness
to witnesses, fails to comment on the fact that the policy used
to make the Hudson decision had never been used before and had
never been articulated prior to the decision. The fact that the
three poor tribes involved in the Hudson application were not
advised of the decisionmaking criteria is disturbing, and goes
against principles of fundamental fairness. Indeed, the
Department of the Interior's own lawyers recognize that ``the
administrative record, as far as we can tell, contains no
record of Department meeting or communications with the
applicant tribes in which the Department's concerns were
expressed to the plaintiffs.'' \39\ This is inexcusable. Even
George Skibine--the man described by the minority as ``the
career civil servant who recommended that the application be
rejected'' \40\--admitted that the Department failed to tell
the applicants why the Department had concerns with the
application.\41\
---------------------------------------------------------------------------
\39\ Letter from David Jones to Scott Keep, Feb. 14, 1996.
\40\ Preliminary Minority Views on the Campaign Finance
Investigations, p. 67.
\41\ Deposition of George Skibine, Jan. 13, 1998, p. 61.
---------------------------------------------------------------------------
It is hard to fathom how the minority, so concerned about
``fairness'' in its preliminary views, would be so eager to
participate in the cover-up of the Department of the Interior's
conduct in the Hudson matter.
Fifth. The fact that the Department of the Interior failed
to give the applicant tribes an opportunity to remedy the
perceived deficiencies in their application is also of little
consequence to the minority Democrats. Other Native American
tribes who were large contributors to the DNC were given
opportunities to cure problems. Therefore, it is curious that
the Interior Department did not at any stage give the
applicants an opportunity to cure perceived deficiencies. The
failure to provide an opportunity to cure can only reasonably
be explained in the context of improper motive.
Sixth. The fact that the Department of the Interior planned
in advance to reject the application ``without offering much
explanation''--and that they shared this intelligence with
Deputy Chief of Staff Harold Ickes's office--also proved to be
unremarkable to the Democratic minority. Given the obvious need
for agencies to avoid charges that they have acted in an
arbitrary fashion, and given the dictates of fundamental
fairness that agencies provide an indication of the criteria
upon which decisions are based, it is hard to understand why
the minority would not be troubled by this fact.
Seventh. The Democratic minority argues simplistically that
``local officials from the Hudson town council up to the
Republican Governor Tommy Thompson opposed [the application],
as did the local congressman, Republican Steve Gunderson.''
This ignores the reality that George Skibine admitted that ``it
is true that extensive factual findings supporting the local
communities' objections are nowhere to be found.'' \42\ It
ignores the fact that Representative Gunderson was provided
erroneous information provided to him by the Secretary of the
Interior's office. It misstates Governor Thompson's position.
It ignores the fact that a Hudson referendum had supported the
application. It ignores that fact that the Town of Hudson had
even entered into a contract for services in the expectation
that the application would be approved. It even ignores the
fact that the witness who testified about the community
opposition had herself attempted to get a contract to run a
concession at the proposed casino.
---------------------------------------------------------------------------
\42\ Memorandum from George Skibine to Scott Keep, Aug. 5, 1996.
---------------------------------------------------------------------------
Most important, the minority ignores the extraordinary
revelation by George Skibine that he sensed ``that even if the
Town of Hudson and the Town of Troy embrace the proposal, we
may still not change our position because of political
opposition on the Hill, largely generated by the Minnesota and
Wisconsin Tribes who oppose this acquisition.'' \43\ This
observation provides an indication of what is most obviously
wrong with the Department of the Interior's conduct. The
failure to tell the applicants that the perceived opposition
was to be the determinative factor--particularly when the only
Interior employees to ever visit Hudson had come to a different
conclusion--coupled with the admission that the Department was
willing to disregard support from local citizens, makes a
mockery of everything the Department has said about this
matter. How could it be the ``right decision . . . made in the
right way and for the right reasons'' as Secretary Babbitt has
argued,\44\ if the Department was unwilling to treat the
applicants fairly?
---------------------------------------------------------------------------
\43\ E-mail from George Skibine to Heather Sibbison, Paula Hart,
Tom Hartman, Troy Woodward and Kevin Meisner, June 30, 1995.
\44\ Testimony of Secretary of the Interior Bruce Babbitt, Jan. 9,
1998, p. 769.
---------------------------------------------------------------------------
Consider the words of Secretary Babbitt's Special
Assistant, Heather Sibbison:
[W]e may not want to include in our rationale the
opposition of the other tribes, because I think it is
possible that if the three Tribes came back with
stellar support from their local towns and Congressman,
we might look at the proposition in a new light--but
even in that case, the Minnesota tribes will still be
against it. And also, I agree with Collier's [Chief of
Staff to Secretary Bruce Babbitt] uneasiness about some
tribes getting all the goodies at the expense of other
tribes--theoretically they all should have equal
opportunities.\45\
---------------------------------------------------------------------------
\45\ E-mail from Heather Sibbison to George Skibine and Troy
Woodward, June 30, 1995.
The minority is not troubled by this admission that the
Hudson applicants were not given the same opportunities as
other tribes. An admission that this Administration gives
wealthy DNC contributors better opportunities and that the
contributors to the DNC are ``getting all of the goodies''
would normally be of interest to Congressional investigators.
Eighth. There is an allegation in the record that local
opposition to the application was being financially
underwritten by wealthy contributors to the DNC. Even though
George Skibine admitted that this would be relevant to
determining how to weigh community support or opposition, the
Department of the Interior failed to investigate this charge.
As with other significant matters, the Democratic minority
failed to find fault with the Department. Indeed, they fail to
comment on this matter.
The list of problems in the decisionmaking process could be
extended for many pages. As is clear in the Majority interim
report, these problems would suggest to a non-partisan observer
that something was seriously amiss at the Department of the
Interior. As Judge Barbara Crabb noted in the section of a
published opinion that discussed actions taken by the Secretary
of the Interior's Special Assistant, Heather Sibbison, the
action ``suggests that the department was aware of the need for
some subterfuge in the process to allow Ickes to advance
personal ends.'' \46\ As might be expected, the minority
Democrats failed to refer to this observation by a Federal
judge appointed by President Jimmy Carter.
---------------------------------------------------------------------------
\46\ Sokaogon Chippewa Community v. Bruce Babbitt, 961 F. Supp,
1276, 1283 (W.D. Wis. 1997).
---------------------------------------------------------------------------
Overall, the problems identified lend support to the sworn
testimony of Paul Eckstein that the Secretary of the Interior
said he was influenced by the White House, and that he was
thinking about campaign contributions when he was involved in
the decisionmaking process.
B. Distortions and Incorrect Statements by the Democrats
The minority Democrats made a number of statements in their
preliminary views that simply are not true. The following are
some of the attempts to mislead.
First. The minority states that depositions taken
``established that the decision was based on the merits.'' This
is a ludicrous reading of the depositions which, overall, lend
support to the concern that there was something grievously
wrong in the Department's decisionmaking. Taken together, the
depositions provide support for Secretary Babbitt's statement
to Paul Eckstein that the White House was involved in the
decisionmaking and that campaign contributions were a factor.
Second. The minority states that ``the evidence showed that
the Department had sound reasons for rejecting the casino
application.'' In fact, the evidence shows the reasons
articulated for the rejection were not supported by the record.
It further shows that the Department of the Interior gave
advantages to wealthy contributors that were not given to non-
contributors, misled at least one Congressman, and failed to
notify anyone that the Department was changing its
decisionmaking criteria just for the Hudson case. The record
also shows that the Department misled a Federal court in
Wisconsin.
Third. The minority states that Governor Thompson of
Wisconsin opposed the application. In making this claim, they
ignore Governor Thompson's own statement--made in Hudson to
Hudson residents--that he would not stop the application.
Fourth. The minority states categorically that ``the land
would have been used for casino gambling, which is illegal
under Wisconsin law.'' However, there are numerous casino
gambling venues in Wisconsin, and such a blatant attempt to
mislead can only be understood in terms of the need to bend the
truth for partisan purposes.
Fifth. The minority states that the majority conceded that
``the decision was correct on the merits.'' This is simply not
true. Many members noted their opposition to gambling, and
indicated that they might not have been supportive of the
application because of their opposition to gambling. The same
members, however, recognized that state and Federal laws permit
gambling in some areas, and that the issue before the Committee
was whether the Department of the Interior had followed the
law, its own regulations, and its own past practices. The
failure to grasp the difference between opposition to gambling
and the duty of legislators to uphold the law is stunning.
Sixth. In its constant attempt to marginalize evidence, the
minority states that Fred Havenick's allegation that George
Skibine once stated that the Hudson application was killed
because of politics was supported ``by affidavits from two
officials of the disgruntled applicant tribes.'' In fact, there
were seven affidavits, not two.
C. Conclusion
The Attorney General of the United States felt compelled to
appoint an Independent Counsel to examine Secretary Babbitt's
statements and the Hudson matter in general. Given the Attorney
General's aversion to appointing Independent Counsels--seen so
clearly in the campaign finance scandal--it is difficult to see
why minority Democrats expend so much time and effort defending
the indefensible. If even Attorney General Reno recognized that
an Independent Counsel might have to investigate the Department
of the Interior conduct surrounding the Hudson rejection, then
surely the Democratic minority could at least follow her lead
and maintain a semblance of objectivity.
IV. The Democrats Engaged in a Pattern of Making False Statements About
the Majority's Investigation and Mischaracterizations About the
Majority's Actions
A. False Statements About the Committee's Budget
The false statements that the minority has made about the
Committee's budget are a case study of how the minority has
manufactured information in order to advance partisan
interests. At a March 31, 1998 hearing, ranking member Henry
Waxman asserted that the Committee had spent $5 million over
the first year of the investigation.\47\ At a subsequent
hearing on April 30, Mr. Waxman inflated his figure, accusing
the majority of having spent $6 million on the
investigation.\48\
---------------------------------------------------------------------------
\47\ Hearing on FEC Enforcement Actions, Committee on Government
Reform and Oversight, Mar. 31, 1998, p. 16.
\48\ Hearing on Venezuelan Money and the Presidential Election,
Committee on Government Reform and Oversight, Apr. 30, 1998, p. 11.
---------------------------------------------------------------------------
Both figures grossly overstated the funds spent by the
Committee. Congressman Waxman's repeated mischaracterizations
caused reporters to use erroneous figures in news articles. The
Wall Street Journal reported, ``Democrats estimate that,
overall, Mr. Burton has spent more than $5 million on the
investigation . . .'' \49\ Along the same lines, Roll Call
Newspaper printed a chart in its July 13, 1998 edition, listing
Mr. Waxman's estimate of $6 million for the Committee's
expenditures on the investigation.\50\
---------------------------------------------------------------------------
\49\ Jeanne Cummings, ``Burton's Campaign-Finance Probe is Drawing
Criticism for Mounting Costs and Slow Progress,'' the Wall Street
Journal, Mar. 27, 1998.
\50\ Rashidah Goodwin and Jim Vanderhei, ``Democrats' Report
Doesn't Add Up,'' Roll Call, July 13, 1998.
---------------------------------------------------------------------------
However, Roll Call, in an article entitled ``Democrats'
Report Doesn't Add Up,'' lampooned Democrat generated cost
estimates for Congressional investigations included in a
partisan report produced by House Minority Whip Richard
Gephardt. The article stated, in part:
The Democratic price tag ignores committee funds
allocated to Democrats (typically one-quarter to one-
third of each panel's budget); assumes incorrectly that
some GOP staffers are spending 100 percent of their
time working on investigations; and includes millions
of dollars that Republicans have not spent, according
to a review of the report.'' \51\
---------------------------------------------------------------------------
\51\ Id.
Mr. Waxman's efforts were clearly part of a larger
Democratic leadership effort to spread disinformation about
legitimate investigations into an Administration which already
has had seven Independent Counsels appointed by its own
Attorney General. Mr. Waxman even had the General Accounting
Office waste $300,000 to determine how much it cost for
agencies to respond to appropriate oversight requests from
Congress.\52\
---------------------------------------------------------------------------
\52\ Letter to the Honorable Dan Burton from Theodore C. Barreaux,
Associate Director, General Accounting Office, Oct. 23, 1998.
---------------------------------------------------------------------------
Even after the majority provided a detailed accounting of
the Committee's expenditures, Congressman Waxman continued to
misstate the amount of money the Committee had spent. On May
11, 1998, Chairman Burton wrote a letter to Congressman Waxman
providing him with an itemized accounting of the Committee's
investigative expenditures for 1997--$2.4 million.\53\ The
figure included the salaries of all Committee staff who worked
on the investigation, both from the Committee's permanent
budget and its separate investigative budget. It also broke
down the spending into nine separate categories, including
equipment, overtime, travel, consultants, and supplies.
---------------------------------------------------------------------------
\53\ Letter to Congressman Waxman from Chairman Burton, May 11,
1998.
---------------------------------------------------------------------------
Even after receiving the detailed accounting he had
requested earlier, Mr. Waxman and his staff continued to
mislead the public about the Committee's expenses. The
minority's preliminary views, prepared by Mr. Waxman's staff
for the Committee's October 8 meeting, stated that the
Committee had spent $7.4 million on the illegal fundraising
investigation,\54\ a figure that is wildly exaggerated and
misses the mark by more than $3 million. The minority report
incorrectly asserted that $5.7 million had been expended on
staff salaries alone. This figure was apparently based on an
estimate that the majority had 50 staff working on the
investigation at any given time \55\--a number that was
provided without attribution and apparently made up out of
whole cloth.
---------------------------------------------------------------------------
\54\ ``Preliminary Minority Views on the Campaign Finance
Investigation,'' Oct. 8, 1998, p. 44.
\55\ Id. p. 45.
---------------------------------------------------------------------------
In fact, at its peak, the majority had no more than 35
staff working on the investigation. At the beginning of 1997,
and following the August recess of 1998, the number of majority
staff was significantly lower. For instance, in 1997, the
Committee's investigative budget of $3.8 million was not
approved by the Committee on House Oversight until March 25,
1997. Prior to this, the investigative staff numbered less than
one dozen. The investigative staff was gradually augmented
through the spring and summer, and did not reach its peak of 35
until the fall.
The accurate figures for investigative staff salaries and
overtime are:
1997: $1.56 million
1998: $1.33 million \56\
---------------------------------------------------------------------------
\56\ Committee payroll records through August 1998.
---------------------------------------------------------------------------
The combined total through August 1998 equals $2.9 million,
a far cry from the minority's estimate of $5.7 million. What is
more, 25 percent of those funds were set aside for minority
staff. Only 75 percent of those funds were expended for
majority staff.
The minority also neglected to state instances in which the
Committee did not spend or returned significant amounts of
money allocated to the investigation. For instance, in 1997, $1
million of the Committee's $3.8 million investigative budget
was allocated for investigative detailees. Most of these funds
were left unspent after Congressman Waxman blocked the
Committee from obtaining FBI detailees.\57\ In 1998, the
Committee was allocated $1.8 million from the House Oversight
Committee's Reserve Fund. Of that amount, the Committee
returned $500,000 in unused funds to the House Oversight
Committee.\58\
---------------------------------------------------------------------------
\57\ Letter from Representative Waxman to Chairman Burton, July 18,
1997. In most instances, Federal agencies require a Memorandum of
Understanding signed by both the chairman and the ranking member before
detailing personnel to congressional committees.
\58\ Letter from Chairman Burton to Chairman Thomas, Oct. 8, 1998.
---------------------------------------------------------------------------
In total, the Committee spent approximately $2.4 million on
its investigation into illegal fundraising activities in 1997.
While it is difficult to determine an exact amount spent to
date in 1998 because recording and payment of official expenses
are typically delayed by several months, the Committee expects
to spend less in 1998 than it did in 1997. A reasonable
estimate of the Committee's total investigative expenditures
for the 2 year period would not exceed $4 million to $4.25
million.
It is hard to understand why the Committee's ranking member
would continue to publicize false estimates of the Committee's
expenditures, even after being notified in May of this year
that his figures were inaccurate. This is an example of the
purposeful use of falsehoods to deflect attention from the
campaign finance scandal and the facts uncovered by the
Committee.
B. False Statements About the Committee's Work
The minority views published by Congressman Waxman did not
stop at trying to deceive the American people about the
Committee's expenses. They also tried to deceive the public
about the Committee's work. For instance, the minority played
elaborate word games to try to make it appear that the
Committee had held fewer hearings than it had. In listing the
number of hearings held by other investigative committees, the
minority listed ``days of hearings held.'' For instance, the
minority report states that the Senate Governmental Affairs
Committee held 33 days of public hearings.\59\ However, when
describing the number of hearings held by the House Government
Reform and Oversight Committee, the minority report states that
only 9 hearings were held.\60\ It neglects to explain that the
Committee's hearings on Interior Secretary Bruce Babbitt and
allegations of corruption at the Interior Department lasted 4
days, or that hearings into Johnny Chung's unusual access to
the White House lasted 2 days.
---------------------------------------------------------------------------
\59\ ``Preliminary Minority Views on the Campaign Finance
Investigation,'' Oct. 8, 1998, p. 45-46.
\60\ Id.
---------------------------------------------------------------------------
Along the same lines, the minority views were misleading
about the subject matter of the hearings. For instance, the
minority report states that, ``in 1998, the Committee did not
hold a single day of investigative hearings on the role of
foreign contributions in the 1996 campaign.'' \61\ The wording
of this sentence was carefully crafted to avoid recognizing
hearings the Committee held on foreign money in the 1992 and
1994 campaigns.\62\ Furthermore, the minority fails to
recognize the numerous instances in which the Committee
released documents or other information to the public when
hearings could not be held because witnesses had either
asserted their Fifth Amendment rights not to incriminate
themselves or fled the country.
---------------------------------------------------------------------------
\61\ Id.
\62\ The Committee held hearings on Mar. 31, 1998 and Apr. 30, 1998
regarding foreign money in the political system.
---------------------------------------------------------------------------
It is disappointing that the minority would feel compelled
to use such petty tactics in an investigation into a matter as
important as the role of illegal foreign money in our
elections.
C. False Statements About Leaks
The Democratic minority has also falsely accused the
majority of leaking. At the Committee's August 6, 1998 meeting,
Congressman John Tierney inserted a document into the Committee
record titled, ``History of Committee Leaks.'' \63\ The
document, prepared by Congressman Waxman's staff, was
circulated to reporters attending the meeting.
---------------------------------------------------------------------------
\63\ Hearing on Whether to Hold the Attorney General in Contempt of
Congress, Committee on Government Reform and Oversight, Aug. 6, 1998,
p. 120 of the committee transcript.
---------------------------------------------------------------------------
However, not a single instance cited in the two-page
document was actually a Committee leak. For instance, the first
incident cited in the document occurred on another Committee
during a previous Congress. Congressman Burton had not yet been
elected Chairman of the Government Reform and Oversight
Committee, and the Committee had not yet commenced its
investigation of campaign finance improprieties and possible
violations of law. What is more, the documents in question,
John Huang's phone logs from the Commerce Department, were not
classified or covered under any protocol or confidentiality
agreement.
The minority similarly mischaracterized other incidents
they defined as leaks. For instance, Congressman Waxman accused
the majority of leaking information from staff interviews.
However, it is a well-established principle that staff notes of
informal interviews are considered staff work-product and are
not covered under the Committee's document protocol. Chairman
Burton informed Congressman Waxman of this fact in writing in
March 1998.\64\ It is profoundly disappointing that the
minority would persist in promulgating false and misleading
information months after being informed in a clear and
unambiguous way that their facts were wrong.
---------------------------------------------------------------------------
\64\ Letter from Chairman Burton to Congressman Waxman, Mar. 27,
1998.
---------------------------------------------------------------------------
In another instance, the ``Talking Points'' handed out by
the minority on August 6, 1998, asserted:
The most repugnant leak occurred when Chairman Burton
leaked subpoenaed Bureau of Prisons tape recordings of
Webster Hubbell's private phone conversations with his
wife and others.\65\
---------------------------------------------------------------------------
\65\ Hearing on Whether to Hold the Attorney General in Contempt of
Congress, Committee on Government Reform and Oversight, Aug. 6, 1998,
p. 120 of the committee transcript.
However, the Hubbell prison tape recordings were not
leaked. Two prison tape recordings of Mr. Hubbell's
conversations were entered into the Committee record and made
public on December 9, 1997.\66\ Chairman Burton informed
Congressman Waxman of this fact by letter on March 27, 1998
after Congressman Waxman publicly accused him of leaking the
tapes.\67\ Additional tapes were made public by a vote of the
Committee's 5-person working group on April 15, 1998, as
authorized by the Committee's document protocol.
---------------------------------------------------------------------------
\66\ Hearing on the Current Implementation of the Independent
Counsel Act, Committee on Government Reform and Oversight, Dec. 9,
1997, p. 212-213.
\67\ Letter from Congressman Waxman to Chairman Burton, Mar. 20,
1998; Letter from Chairman Burton to Congressman Waxman, Mar. 27, 1998.
---------------------------------------------------------------------------
Mr. Hubbell, who resigned under a cloud from the Justice
Department in March 1994, received hundreds of thousands of
dollars in fees from friends and supporters of the President at
a time that he was under criminal investigation and his
testimony was being sought in the Whitewater matter. Among the
lucrative arrangements Hubbell secured was a $100,000
consulting fee from the Lippo Group in June 1994. This fee was
paid at a time when James Riady and John Huang had numerous
meetings at the White House, including a visit with the
President. At the same time, James Riady also met with Webster
Hubbell.\68\
---------------------------------------------------------------------------
\68\ See Chapter 4A of the Committee majority report for further
discussion of the connections between the Riadys, John Huang and
Webster Hubbell.
---------------------------------------------------------------------------
Mr. Hubbell was one of the first witnesses called by the
Committee, and among the first to assert the Fifth Amendment in
refusing to cooperate. His refusal to cooperate led the
Committee to seek other avenues to determine why the Riady
family paid Hubbell, who asked them to do so, and what they
sought in return. One source of information to which the
Committee turned were hundreds of hours of tape recordings of
Mr. Hubbell's telephone conversations from prison. The tapes
included discussions Hubbell had about his contacts with John
Huang and discussions he had with White House official Marsha
Scott. Mr. Hubbell also discussed factual matters related to
his legal case with his wife throughout the tape recordings. As
in all Federal penal institutions, prisoners are made aware by
large signs that their conversations are being recorded.\69\
The Committee's subpoena for these tapes was lawful and
warranted and the public release of the documents was done
through proper committee procedures.
---------------------------------------------------------------------------
\69\ Mr. Hubbell himself acknowledged that he knew he was being
taped when in a Mar. 25, 1996 tape recording, Mr. Hubbell specifically
reminded his wife that they were on a ``recorded phone.'' Mr. Hubbell
also cautioned one of his benefactors, Bernard Rapoport, in an Oct. 13,
1995 letter about his calls: ``You can't call, but I can call you if
you are willing to take a collect call. . . . Also understand that all
my calls are monitored and recorded.''
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The mischaracterizations and misinformation about the
release of the tapes were again, in large part a partisan
distraction to run from troubling facts. Once questions arose
about the informal transcript logs provided by the Committee as
a guide for the press when the tapes were released, the
Committee released the tapes in their entirety when questions
arose in order to clear up any misunderstandings. There was
never any intent or effort to omit any information for
political purposes. In fact, from the first days the tapes were
released, reporters were encouraged to listen to the prison
tapes themselves. Inadvertent errors on the committee's
informal logs should not minimize the importance of the
information in the tapes themselves. While the Washington Post
raised questions about the release of the tapes and the
editing, the editorial board still acknowledged the importance
of the tapes to the public debate:
Still, with all the caveats, the tapes appear to raise
questions both about Mr. Hubbell's conduct and about
the White House's behavior toward the former associate
attorney general while he was in prison.\70\
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\70\ ``The Hubbell Tapes,'' the Washington Post, May 3, 1998.
---------------------------------------------------------------------------
Again on May 6, the Washington Post editorialized:
The White House spin--that the errors in the
transcripts somehow render the tapes themselves
insignificant--is unconvincing.\71\
---------------------------------------------------------------------------
\71\ ``Mr. Burton's Transcripts,'' the Washington Post, May 6,
1998.
In a May 5, 1998 appearance on ``Nightline,'' even
Congressman Waxman was compelled to admit that, ``there are
things in those tapes that are disturbing to me, but I don't
know the answer to them.'' \72\ However, to date, the serious
questions about payments to Mr. Hubbell remain unanswered by
Mr. Hubbell, the Riadys, and John Huang--all key players in a
highly questionable $100,000 payment to Mr. Hubbell when he was
a target in a serious criminal investigation related to the
President and First Lady.
---------------------------------------------------------------------------
\72\ ``Nightline,'' ABC News, May 5, 1998.
---------------------------------------------------------------------------
The Democrats did not just erroneously claim that the
Hubbell prison tape recordings were ``leaked,'' they also
falsely claimed the tapes themselves were ``doctored.'' This
falsehood was routinely repeated by Democrats. The minority had
their own copies of the actual tapes for months and knew that
no physical alterations were ever made to any tape recordings.
Unfortunately, the false accusation that the tapes were
``doctored'' continues to be perpetuated by Democrats. For
example, Judiciary ranking Democrat John Conyers perpetuated
this falsehood in a May 10, 1998 appearance on ``Fox News
Sunday:''
Brit Hume. Congressman Conyers, what do you think
that Webb Hubbell meant when he said on a conversation
he knew was being taped that I guess I'll have to--I
think the quote was ``roll over again.'' What do you
think he meant by roll over again?
Rep. Conyers. Sir, the tapes that were released by
the Chairman Dan Burton, my friend from Indiana, were
doctored.
Mr. Hume. There was no doctoring of any tapes, sir.
There was an edited transcript. The tapes were released
in full. My question to you is what do you think he
meant by roll over again?
Rep. Conyers. I said--I said the tapes were doctored.
Mr. Hume. Yes, you were incorrect about that. They
were released in their entirety. What was edited were
the transcripts. My question for you, what do you think
he meant when he said roll over again?
Rep. Conyers. I have absolutely no idea.
Mr. Hume. Would you like----
Rep. Conyers. What do you think he means?
Mr. Hume. Would you like to find out sir?
Rep. Conyers. Well I don't have any reason to find
out. I mean, what do I need to know for? \73\
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\73\ ``Fox News Sunday,'' May 10, 1998.
As was often the case with the Democrats, their zeal for
avoiding the facts, made them less than active participants in
any real search for the truth. As for other misrepresentations
about supposed ``leaks,'' in their preliminary minority views
issued on October 8, the Democrats made a tacit admission that
many of their earlier accusations of leaks were false. Many of
the same incidents labeled leaks in the August 6 document
released by the minority were reclassified under a more
ambiguous heading in the minority views of October 8. However,
the minority persisted in classifying several authorized
releases of information which served the public's right to know
the facts as leaks,\74\ in the face of all of the evidence to
the contrary.
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\74\ ``Preliminary Minority Views on the Campaign Finance
Investigation,'' Oct. 8, 1998, p. 40-41.
---------------------------------------------------------------------------
D. False Accusations About Abuse of Witnesses
The Democratic minority's accusations about abuse of
witnesses have bordered on the absurd. At one point in its
minority views, the minority complains that the Committee
deposed an Interior Department employee who is a diabetic. The
minority had the audacity to suggest that the deposition
interfered with the employee's ability to monitor his insulin
with absolutely no basis in fact.\75\
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\75\ Id. p. 30-31.
---------------------------------------------------------------------------
Obviously, the deposition posed no risk to the health of
the employee, George Skibine, who was afforded frequent
opportunities to take breaks. For the minority to suggest that
someone who suffers from diabetes is physically incapable of
participating in a deposition is an insult to people who cope
with diabetes on a day-to-day basis. Furthermore, the fact of
the medical condition was not brought to majority counsel's
attention until the proceeding was well underway. As soon as
the condition was disclosed, Mr. Skibine was offered any
accommodation that he considered necessary.
Along the same lines, after an investigative trip to Los
Angeles in August 1997, Congressman Waxman attacked the
majority investigators for knocking too loudly on people's
doors, wearing suits and ties, and ``sitting in a full-sized
Chevrolet'' as they waited for an individual to return home
from work.\76\ It is unclear to this day whether Mr. Waxman's
objections rested on the size of the car or its make and model.
---------------------------------------------------------------------------
\76\ Letter from Congressman Waxman to Chairman Burton, Sept. 4,
1997.
---------------------------------------------------------------------------
During this same trip, Congressman Waxman accused majority
staff of ``bullying,'' ``staking out,'' ``accosting,'' and
``interrogating'' Felix Ma.\77\ Of course, this description
does not bear even the faintest resemblance to what actually
happened. In reality, Committee staff had a brief and cordial
discussion with Mr. Ma outside his house when he arrived home.
Mr. Ma told the staff that he wished he could introduce them to
his wife, and he did so when she arrived home a few minutes
later. Mr. Ma also told the investigators that he was happy to
have the opportunity to clear up the fact that he was not the
Felix Ma who worked for the Lippo Group and contributed $25,000
to the DNC. Mr. Ma explained that he had also been contacted by
numerous reporters and Democratic fundraisers seeking
additional contributions.\78\
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\77\ ``Preliminary Minority Views on the Campaign Finance
Investigation,'' Oct. 8, 1998, p. 18-19.
\78\ Letter from Chairman Burton to Congressman Waxman, Sept. 30,
1997.
---------------------------------------------------------------------------
The minority also accused the majority of ``squandering
taxpayer dollars'' by sending three Committee staff to Florida
``to retrieve a computer disk that could have been mailed to
the Committee for the cost of first-class postage.'' \79\ What
the minority failed to mention was that the primary purpose of
the trip was to interview the individual who had possession of
the disk, something which obviously could not be done through
the mail. To compound the problem, after his staff supported
making the trip and agreed to keep the trip confidential,
Congressman Waxman held a press conference to criticize it.\80\
---------------------------------------------------------------------------
\79\ ``Preliminary Minority Views on the Campaign Finance
Investigation,'' Oct. 8, 1998, p. 47.
\80\ Letter from Chairman Burton to Congressman Waxman, July 23,
1997.
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Following this series of irresponsible, misleading and
highly partisan attacks, it should come as little surprise that
the majority decided to conduct separate investigative travel
and interviews.
E. False Statements about the Committee's Vote Holding the Attorney
General in Contempt
The minority has made repeated false claims about the
Committee's efforts to compel the production of documents from
the Justice Department. In July 1998, the Committee issued a
subpoena calling for production of both the Freeh and La Bella
memoranda which advised the Attorney General that the law
required the appointment of an independent counsel in the
campaign finance investigation. The minority has consistently
opposed the Committee's efforts to conduct legitimate oversight
of the Department of Justice and has misrepresented key facts
and the law throughout the Committee's oversight process. The
Committee has had a number of concerns about the Justice
Department's campaign finance investigation, and has held two
hearings about that investigation.
The Attorney General has never complied with the
Committee's subpoena for the Freeh and La Bella memoranda. She
has never raised any claim of privilege to justify her failure
to comply with the Committee's subpoena. Rather, she has simply
refused to produce the required documents, citing various false
rationales that compliance with the subpoena would jeopardize
the Justice Department's investigation. The Committee's
subpoena specifically called for grand jury information to be
redacted.
In their preliminary report, the minority claims that the
Attorney General's refusal to comply with the Committee's
subpoena was ``consistent with 100 years of precedent.'' \81\
This claim is yet another example of the type of misleading
statement that the minority is willing to make to serve their
political purposes. Documents such as the memoranda subpoenaed
by the committee have been produced to investigative committees
repeatedly throughout the last 80 years. The details of these
cases have been discussed extensively at Committee business
meetings, and in the Committee's contempt report.\82\
---------------------------------------------------------------------------
\81\ Preliminary Minority Views at 35.
\82\ See ``Report by the Committee on Government Reform and
Oversight together with Additional Views, Minority Views, and
Additional Minority Views on the Refusal of Attorney General Janet Reno
to Produce Documents Subpoenaed by the Government Reform and Oversight
Committee,'' Sept. 17, 1998, H. Rept. 105-728, 105th Cong., 2d sess.
---------------------------------------------------------------------------
While the minority's misrepresentations are disturbing, it
is the minority's complete lack of interest in overseeing the
Justice Department that is more troubling. The Committee has
uncovered substantial evidence indicating that the Justice
Department is not thoroughly investigating the campaign finance
scandal. Furthermore, at least one senior official at the
Department of Justice has shown a clear disdain for the law and
the campaign finance investigation. On October 2, 1998, the
Washington Post reported the following:
A Senior Justice Department official said that some
investigators have concluded that Huang does not have
information that would support the prosecution of the
Democratic officials who received and spent the funds
he raised or the White House officials who promoted his
career in Washington.\83\
---------------------------------------------------------------------------
\83\ Roberto Suro, ``Prosecutor's Approach to Huang Signals Shift
in Campaign Probe,'' the Washington Post, Oct. 2, 1998, A17.
Given that the Department has apparently not even talked to
John Huang according to news reports, it is troubling that
statements such as this are attributed to the Department of
Justice. Although General Reno has recently informed the
Committee that an Office of Professional Responsibility
investigation has been opened over this statement, this is not
reassuring given the fact that the target of the investigation
may be one of the key decisionmakers when the Department
decides whether to appeal recent rulings regarding criminal
indictments of DNC fundraisers Charlie Trie and Maria Hsia.
Given these facts, it is disturbing that, rather than be part
of a bipartisan effort to ensure that the executive branch does
what it is trusted to do, the minority has attempted to impede
the Committee's work.
V. Democrats Made Tortured Arguments Alleging ``Asian Bashing''
The Democratic minority makes a tortured argument that the
investigation of illegal campaign contributions is insensitive
``to the concerns of Asian-Americans.'' This is consistent with
their failure to focus on the people who put so many in legal
jeopardy. According to Representative Lantos, ``there is a
grave danger that stereotyping and Asian bashing will become
and, in many instances, have become part and parcel of this
investigation.'' \84\ The Committee, however, focused on
illegal conduct and those who attempted to break the law. While
it is regrettable that so many Democratic operatives exploited
Asian-Americans, it is certainly not the fault of Republicans
on this Committee.
---------------------------------------------------------------------------
\84\ House Committee on Government Reform and Oversight, Committee
Vote on Immunity, 105th Cong., 1st sess., 18-19 (1997) (quoted in
Preliminary Minority Views on the Campaign Finance Investigation, p.
21).
---------------------------------------------------------------------------
In their cynical effort to characterize this Committee's
work as racist, minority Democrats also quoted Francey Lim
Youngberg. However, the minority failed to point out that
Youngberg is hardly a disinterested party--the group she
headed, the Congressional Asian-Pacific American Caucus
Institute--received $35,000 from Charlie Trie, one of the
central figures in the campaign finance scandal.
During the course of the investigation, the minority also
made harsh allegations of racial impropriety against the
Committee's inquiry into a $10,000 contribution made on August
18, 1996, by Helen Chien. On Sunday, October 5, 1997, a
reporter on the television program ``Face the Nation''
commented on this Committee's concern over the Chien
contribution: ``Committee Democrats are in a furor about this,
because they say all of it took place after the Democrats
checked out the couple and found they had done nothing wrong;
their contribution was perfectly proper. Committee Democrat Tom
Lantos says the couple was subjected to abusive questioning
just because they had Asian surnames[.]'' Representative Lantos
continued to assert that the majority was acting improperly in
a ``Dear Colleague'' letter dated October 9, 1997: ``We must
all take the experience of this couple--who gave a perfectly
legal donation--to heart. This couple have [sic] been subjected
to repeated interviews and abusive questioning by investigators
working for Dan Burton.''
Notwithstanding the overwrought protestations of minority
Democrats, on March 25, 1998, the DNC in a letter to the FEC
acknowledged that the $10,000 contribution from Helen Chien was
in fact returned for cause:
Based on our analysis of allegations contained in the
indictments returned in the cases of United States v.
Yah Lin ``Charlie'' Trie et al, U.S. District Court for
the District of Columbia, Jan. 28, 1998, and United
States v. Maria Hsia, U.S. District Court for the
District of Columbia, Feb. 18, 1998, the DNC has
determined that it now has information suggesting that
certain contributions that at the time they were
received, did not appear to be unlawful, were in fact
contributions made in the name of another . . . A list
of these contributions is attached.\85\
\85\ Letter from Joseph E. Sandler, Esq., to Lawrence Noble, Esq.,
Mar. 25, 1998; see also Federal Grand Jury Indictment of Yah Lin
``Charlie'' Trie, U.S. District Court for the District of Columbia,
Jan. 28, 1998; Federal Grand Jury Indictment of Maria Hsia, U.S.
District Court for the District of Columbia, Feb. 28, 1998.
The list of contributions included that of Helen Chien in
the amount of $10,000. The majority has not heard from Mr.
Lantos regarding the DNC's action in this regard. Aside from
the inappropriate and partisan zeal to play the race card to
discredit a legitimate investigation, there is no reason to
have made the race-baiting accusations against the majority
when we raised questions about contributions which the DNC has
itself now deemed necessary to return. Such conduct has been an
extremely disappointing aspect of the minority's participation
in this investigation.
The minority also failed to take into account a comment by
former White House Deputy Chief of Staff Harold Ickes:
I think this current flap is very, very minor. What you
basically have is a group of people, Asians, who are
just beginning to participate in the political system,
who are not fully aware of all the rules. They are used
to doing business in a different way in their
homeland.\86\
\86\ An Insider Looks Back--Harold Ickes Faces Uncertainty,
Newsday, Dec. 26, 1996.
Such self-serving and patronizing comments ignore the fact that
those who encouraged the giving were certainly in a position to
know what was right and what was wrong. John Huang, for
example, is a highly educated individual who was placed in a
senior Commerce Department position. He had direct access to
the President of the United States. Other fundraisers under
scrutiny--Charlie Trie, Maria Hsia, Charles Intriago, Howard
Glicken, Marvin Rosen, Johnny Chung, Gene and Nora Lum, to name
but a few--are also for the most part highly educated and
politically savvy. The only ``homeland'' they are used to doing
business in is the United States, and it is absurd to say that
they were just beginning to participate in the political
process. John Huang had been very active in fundraising in
1992, and others had been involved years earlier. Charlie Trie,
for example, began contributing to Bill Clinton's campaigns in
the 1980s. These individuals used others for their own improper
ends, and for anyone to be cynical enough to blame those who
were exploited as conduits is patronizing and indicative of the
blame-everyone-else-and-cover-your-tracks mindset that the
Committee has been faced with.
Those who would attempt to distract would do well to take a
look at a document produced by the Democratic National
Committee (``DNC''). Generated by the DNC's office of Asian
Pacific Affairs, it is titled ``Affinity Group Endorsement
Project (Slice & Dice).'' \87\ Here is how the ``Slice and
Dice'' program characterized the ``special interests'' of
various ethnic groups: Hmong--Bungee Jumpers, Japanese--
Golfers, Hawaiian--Cigar Smokers, Chinese--Senior Citizens,
Korean--Gay/Lesbian. The apparent stereotyping of ethnic groups
by special interests along the lines envisioned by the DNC
would appear to be a far more fruitful avenue for an
investigation of racial insensitivity than the Committee's
efforts to determine whether there were illegal efforts to
influence U.S. elections. Rather than defend those who point to
how Asian-Americans ``are used to doing business in a different
way in their homeland,'' the scrutiny should properly be on how
Harold Ickes and the DNC did business in their homeland.
---------------------------------------------------------------------------
\87\ DNC Document F 0047206 (Exhibit 6).
---------------------------------------------------------------------------
It is disappointing that the Minority would attempt to
exploit race, while at the same time cover up the DNC's sordid
efforts to ``Slice & Dice'' American citizens into absurd
special interest groups.
Dan Burton.
[Supporting documentation follows:]
ADDITIONAL VIEWS OF HON. PETE SESSIONS
Mr. Chairman, in a desperate attempt to focus attention
away from the Clinton foreign money scandal, the Democratic
minority is attempting to find a scandal where none exists.
Representative Henry Waxman alleges that House Majority
Whip Tom DeLay was involved in a scheme to raise illegal
campaign funds for the congressional campaign of Brian Babin in
Texas. Mr. Waxman bases this contention on the credibility and
charges of one Peter Cloeron.
Mr. Cloeron claims that at a Babin campaign event in 1996
that Representative DeLay was present, DeLay and his staff in a
lunch meeting encouraged him to undertake an illegal campaign
to fund the election efforts of Brian Babin.
Representative DeLay has repeatedly and unambiguously
denied these outrageous claims. DeLay has said that he has
never encouraged, solicited or proposed any effort to
circumvent Federal campaign laws, and he never would.
Peter Cloeron's claim is false, unsubstantiated, and
potentially libelous--and the minority knows it. His claims
against Congressman DeLay are nothing more than an attempt to
inflict the maximum political damage possible to the campaign
of Brian Babin.
A quick scan of Mr. Cloeron's public statements about this
affair demonstrates his lack of credibility.
It should be known that Mr. Cloeron has been convicted of
criminal violations of Federal law. He admitted multiple
violations of the Campaign Finance Reform Act, and has been
subject to civil penalties by the Federal Election Commission.
He is looking for someone, besides himself, to blame for his
illegal activities.
Mr. Cloeron's own contradictory statements raise further
questions about his credibility. For example, on November 1,
1997, the Houston Chronicle reported that Mr. Cloeron said that
he was contacted directly by ``Triad officials,'' rather than
by Mr. DeLay or his staff, with respect to making illegal
contributions to organizations that would, in turn, make
contributions to the Babin campaign.
In the same article, Mr. Cloeron indicated that he was
``contacted by Triad officials because he was a conservative
who had given to a number of Republican campaigns, including
that of Majority Whip Tom DeLay.'' As FEC records clearly
indicate, Mr. Cloeron is not now, nor has ever been, a
contributor to DeLay. It appears that the truth is not an
obstacle in Cloeron's campaign of deceit and destruction.
Similarly, in an August 6, 1998 article in the Houston
Chronicle, Mr. Cloeron modified his earlier allegation and was
now saying that his alleged discussion with Congressman DeLay
was not as specific as he earlier suggested. According to
Cloeron, ``my discussion with DeLay on this, over lunch, lasted
two or three minutes. It was not like we spent a lunch hour.''
Indeed, in this article, Mr. Cloeron indicated that ``it
wasn't like [DeLay] was saying `Hey, you were up against the
wall (having given the maximum contribution), but we've got a
different way to do this and here's the way you do it.' It was
more a statement to the effect of Babin being outspent by his
opponent.''
Now Cloeron has changed his story again and Mr. Waxman
doesn't seem to care.
Given the contradictory public statements made by Mr.
Cloeron in the media, his motivations, and the efforts of the
minority to desperately change the subject from the Clinton
scandals, it becomes apparent that the minority is attempting
to engage the American people in a rouse. The American people
won't fall for it. These charges appear baseless.
Pete Sessions.