Campaign Finance Task Force: Problems and Disagreements Initially
Hampered Justice's Investigation (Briefing Report, 05/31/2000,
GAO/GGD-00-101BR).

The Campaign Finance Task Force was established by Attorney General
Janet Reno to investigate allegations of illegal fundraising during the
1996 presidential election. Following its creation, the Task Force faced
several management challenges and operational problems. Notably, the
working relationship between the Justice Department and the FBI was
strained and hampered by mutual concerns of trust, with DOJ attorneys
and FBI investigators disagreeing over which investigative approach to
take. To get the investigation on track, in the fall of 1997, DOJ and
the FBI changed the Task Force's leadership, streamlined the Task
Force's oversight structure, and committed additional staff and
information management resources. The Task Force has launched 121
investigations as of the end of 1999. It has begun 24 prosecutions, and
15 persons and one corporation have been convicted as of March 2000.
Through fiscal year 1999, DOJ and the FBI estimated that they have spent
$31.2 million on the Task Force.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-00-101BR
     TITLE:  Campaign Finance Task Force: Problems and Disagreements
	     Initially Hampered Justice's Investigation
      DATE:  05/31/2000
   SUBJECT:  Investigations by federal agencies
	     Interagency relations
	     Election campaign financing
	     Statutory law
	     Malfeasance

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GAO/GGD-00-101BR

United States General Accounting Office
GAO

Briefing Report to the Chairman

Committee on the Judiciary

House of Representatives

May 2000

GAO/GGD-00-101BR

CAMPAIGN FINANCE TASK FORCE
Problems and Disagreements Initially Hampered

Justice's Investigation

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B-284908

Page 48GAO/GGD-00-101BR Campaign Finance Task Forc
e
     B-284908

     May 31, 2000

The Honorable Henry J. Hyde
Chairman, Committee on the Judiciary
House of Representatives
 
 Dear Mr. Chairman:

As you requested, this report discusses the
management and oversight, operations, and results
of the Department of Justice's (DOJ) Campaign
Finance Task Force (CFTF). Created by Attorney
General Reno in December 1996 within the Criminal
Division's Public Integrity Section (PI), CFTF was
established to investigate allegations of illegal
fundraising during the 1996 presidential election.
Subsequently, investigating illegal fundraising
allegations concerning the 1994 congressional
election was added to CFTF's mission. The Task
Force comprised primarily DOJ attorneys; Federal
Bureau of Investigation (FBI) investigators; and
support staff, such as financial analysts and
intelligence research specialists. Since its
creation, CFTF has undergone several management
changes and has been the target of accusations of
mismanagement.

On February 17, 2000, we provided your office a
preliminary briefing on the results of our review.
This report summarizes and updates the information
presented at that briefing. More specifically it
addresses (1) strained working relationships and
trust concerns; (2) disagreement over
investigative approach; (3) management and
analysis of evidence problems; (4) management
changes, staffing fluctuations, and oversight; (5)
CFTF prosecutive results and costs; and (6)
limitations in the Federal Election Campaign Act
that may inhibit prosecutions. The briefing
slides, which have been updated to include
additional information obtained subsequent to our
briefing, are contained in appendix I.

Results in Brief
     Following its creation, CFTF faced several
management challenges and operational problems.
Notably, the working relationships between DOJ and
the FBI were strained and hampered by mutual
concerns of trust, with DOJ attorneys and FBI
investigators disagreeing over which investigative
approach to take. Furthermore, efforts to manage
and analyze documentation and evidence were
hampered by the lack of (1) an electronic data
management system that could effectively process
and manage the overwhelming amount of documents
and other evidence collected and (2) sufficient
staff to input and analyze them.

     To get the investigation on track, in the
fall of 1997, DOJ and the FBI changed the Task
Force's leadership, streamlined CFTF's oversight
structure, and committed additional staff and
information management resources. The Task Force
was removed from PI's leadership and placed
directly under a Deputy Assistant Attorney General
in DOJ's Criminal Division. PI, however,
maintained its oversight of CFTF-related matters
that had Independent Counsel statute implications.
Up until its expiration in 1999, the statute and
its applicability to CFTF's investigation had been
a source of tension and disagreement between DOJ
and the FBI and within DOJ.

     As of December 31, 1999, CFTF had launched
121 investigations.  As of March 31, 2000, it had
initiated 24 prosecutions and 15 individuals and 1
corporation had been convicted. From its inception
through fiscal year 1999, DOJ and the FBI
estimated that they had spent $31.2 million on
Task Force activities.

     DOJ and FBI officials reviewed a draft of
this report and generally concurred with its
substance.

Background
     As it relates to campaign financing, the
Federal Election Campaign Act (FECA) of 1971, as
amended, (2 U.S.C. 431-455) generally applies only
to financial transactions that are intended to
influence federal elections, i.e., campaigns for
the office of U.S. Representative, U.S. Senator,
President, or Vice President. FECA contains its
own criminal provision, which generally provides
that knowing and willful violations involving at
least $2,000 may be prosecuted as misdemeanors.

     According to DOJ, those FECA violations most
likely to warrant criminal prosecution involve
schemes to influence a federal candidate's
election by making contributions that are patently
illegal, through means calculated to conceal the
scheme. Furthermore, to warrant criminal
prosecution, in general, a FECA fraud must have
subverted one of FECA's "core" provisions. These
provisions place limits on the amount that can be
contributed and disallow contributions from
foreign nationals, disguised contributions, and
attempts to circumvent FECA's disclosure
requirements.

     The Independent Counsel statute, 28 U.S.C.
591-599, which expired June 30, 1999, required the
Attorney General to decide whether a criminal
allegation involving a top official of the
executive branch of the federal government, such
as the President, Vice President, Cabinet
officers, or the chairman or treasurer of the
national campaign committee seeking the reelection
of the President, was to be investigated by
someone outside of DOJ. The purpose of this
legislation was to ensure both the appearance and
the reality of impartial prosecutive decisions
concerning the President and certain high-level
government and campaign officials.

Scope and Methodology
At your request, we examined the management and
oversight, operations, and results of CFTF from
its inception through December 31, 1999. To
accomplish this objective, we interviewed current
and former DOJ and FBI officials responsible for
managing and overseeing CFTF. We obtained
information on CFTF's management structure,
oversight, cost, and staffing from DOJ and the
FBI. We reviewed CFTF indictments and obtained
information concerning the results of its
prosecutions. We have updated CFTF's prosecutive
results through March 31, 2000.

In addition, we reviewed selected prosecution and
declination documents1 from five closed cases and
five closed matters2 to gain a sense of whether
those documents showed evidence of supervisory
review and management oversight. Of the five cases
we selected, three cases were selected because
they had been high-profile cases; one case was
selected because the defendant was found not
guilty; and one case was randomly selected.

Because information on the number and chronology
of matters that had been declined was not readily
available, we selected, with CFTF's assistance,
five matters to review. We recognize that this
small sample is insufficient to be representative
of all matters declined; however, we sought to
obtain some limited insight into the supervisory
oversight and approval process for declinations.
Thus, we selected two matters closed during fiscal
year 1998 and three matters closed during fiscal
year 1999. No matters were declined during fiscal
year 1997.

We did not assess the appropriateness of CFTF's
prosecutive decisions or its rationale for those
decisions. Because CFTF's work is ongoing, active
investigation and prosecution files were not
available to us. We did our work from July 1999 to
March 2000 in accordance with generally accepted
government auditing standards.

Strained Working Relationships and Trust Concerns
Describing their working relationship following
CFTF's creation, the PI attorney in charge and the
FBI's lead investigator, respectively,
characterized their relationship as not very
effective and strained. According to PI's chief,
tensions between investigators and attorneys
existed over the extent of attorney involvement in
investigations. According to two FBI officials,
investigators believed that the Task Force
attorneys' involvement in traditional
investigative functions, especially interviews,
was excessive. For example, the lead investigator
said that some agents believed that during
investigative interviews they were being used
mainly as note takers.

In addition, disagreements developed over the need
for an Independent Counsel. Both DOJ and FBI
officials frequently cited their disagreement over
the need for an Independent Counsel as a major
source of tension and conflict. One FBI official
characterized DOJ's criteria for triggering the
seeking of an Independent Counsel as too
stringent. According to PI's Chief, the
disagreement over the need for an Independent
Counsel also created mutual trust concerns.
Eventually, both the FBI Director and a
Supervising Attorney leading the Task Force
recommended that the Attorney General appoint an
Independent Counsel. (See appendix I, slides 17 -
18.)

Disagreement Over Investigative Approach
Initially, attorneys and investigators differed
over the Task Force's investigative approach. The
attorneys' approach was to build cases from the
ground up and investigate wherever the evidence
led. One of DOJ's concerns was to avoid
prematurely tipping off potential witnesses or
targeting individuals before sufficient
predication was established. The lead
investigator, on the other hand, wanted to pursue
several investigative tracks simultaneously. For
example, a senior FBI official said that on the
basis of news reports of White House coffees for
campaign contributors, one of the tracks the FBI
wanted to investigate was whether the White House
had violated campaign finance laws. However,
according to the Chief of PI, there was no
specific predication to justify all the
investigative tracks that the FBI wanted to
pursue.

Moreover, the FBI official said that the
investigative effort was always under a microscope
and subject to enormous scrutiny and second-
guessing. The Chief of PI agreed that the
investigation was under considerable scrutiny, but
he also said that this scrutiny was occasioned by
PI's belief that the press created expectations
for a major scandal. DOJ officials said it was
important to have sufficient predication to
justify an investigative direction, and it was
particularly important for the investigation to be
thorough and not perceived as being political.
(See app. I, slides 19 - 21.)

Management and Analysis of Evidence Problems
Exacerbating the strained situation were document
management problems, which impeded the
investigation's progress. According to the lead
investigator, CFTF was overwhelmed with documents
and other evidence and lacked sufficient staff and
electronic system resources to input and organize
the information being gathered. The lead
investigator noted that after several months, the
large volume of documents obtained overwhelmed
CFTF's electronic data management system and a new
system had to be purchased. He added that due, in
part, to delays in hiring support staff, it took
months to input backlogged documents into the new
system. According to the lead investigator and
CFTF's attorney-in-charge, the document management
problems hindered efforts to assess the documents'
importance to the investigation and their
relationship to other evidence. The problems
continued into late 1997. (See app. I, slides 22 -
24.)

Management Changes, Staffing Fluctuations, and
Oversight
In the fall of 1997, displeased with the
investigation's slow pace, disclosures in the
press about critical leads not being pursued, and
internal frictions, the Attorney General and the
FBI Director changed the Task Force's leadership.
Subsequently, the Task Force's oversight structure
was streamlined by the removal of PI from its
leadership role and the commitment of additional
staff and information management resources to get
the investigation on track.

Since its inception, CFTF's staffing levels have
fluctuated as investigations were initiated,
documents and evidence were obtained and analyzed,
and cases were completed. CFTF staffing peaked in
late 1997 at 126 (24 attorneys, 67 agents, and 35
support staff). However, it has declined since
then; and as of December 31, 1999, it totaled 48
(13 attorneys, 12 agents, and 23 support staff).

Since the fall of 1997, a number of personnel
changes have taken place within CFTF and among the
DOJ officials responsible for its oversight.
However, the level and type of CFTF's management
and oversight have remained fairly consistent.
According to officials, (1) briefings for the
Attorney General and top DOJ management officials
have taken place weekly; (2) the FBI Director has
had periodic discussions about CFTF with his
executive staff; and (3) within CFTF, weekly
meetings have been held among managers, case
attorneys, and investigators to discuss case
strategy, progress, and problems.

Regarding case management, all prosecution
proposals were to be reviewed by senior Task Force
managers and attorneys and forwarded through DOJ
management to the Attorney General. Procedurally,
both DOJ and the FBI were to concur on whether to
decline prosecution of an investigation. Our
review of documents in five selected prosecution
case files showed evidence of high-level DOJ
reviews in three of the five cases. However, the
absence of documentary evidence in the two cases
does not necessarily mean that supervisory reviews
did not occur. Our review of documents in five
selected declination matters showed evidence of
DOJ and FBI concurrence in all instances. (See
app. I, slides 27 - 41.)

CFTF Prosecutive Results and Costs
As of December 31, 1999, CFTF had completed 70 of
the 121 investigations it had initiated and was
focusing on completing its work on the 51
investigations ongoing. As of March 31, 2000, CFTF
had initiated prosecution of 24 cases. It had
convicted 15 individuals and 1 corporation, and 6
trials were pending. A jury acquitted one
individual, and one prosecution resulted in a hung
jury. Through fiscal year 1999, DOJ estimated that
it had spent $5.2 million, and the FBI estimated
that it had spent about $26 million funding CFTF.
(See app. I, slides 42 - 43.)

Federal Election Campaign Act Limitations May
Inhibit Prosecutions
According to a DOJ official, limitations in FECA
penalties and its statute of limitations have
inhibited more effective investigation of campaign
finance violations. Specifically, he said that the
criminal misdemeanor penalties provided in FECA
are not severe enough to encourage violators to
cooperate with the government to reveal the other
participants and the extent of campaign financing
schemes in exchange for lesser charges or for
favorable consideration at sentencing. (See app.
I, slides 44 - 46.)

Agency Comments
We provided the Attorney General with a draft of
this report for comment. Representatives of the
Criminal Division and the FBI reviewed the draft.
On May 8, 2000, the Director of the Department of
Justice's Audit Liaison Office responded that the
Department generally concurred with the report's
substance. The Department provided some technical
comments, which have been incorporated where
appropriate.

As agreed with your office, unless you publicly
announce its contents earlier, we plan no further
distribution of this report until 30 days from the
date of this letter. At that time, we will send
copies of this report to Representative John
Conyers, Ranking Minority Member of your
Committee; Senator Orrin G. Hatch, Chairman of the
Senate Judiciary Committee; Senator Patrick J.
Leahy, Ranking Minority Member of the Senate
Judiciary Committee; Senator Fred Thompson,
Chairman of the Senate Governmental Affairs
Committee; Senator Joseph Lieberman, Ranking
Minority Member of the Senate Governmental Affairs
Committee; Representative Dan Burton, Chairman of
the House Government Reform Committee;
Representative Henry Waxman, Ranking Minority
Member of the House Government Reform Committee;
the Honorable Janet Reno, Attorney General; the
Honorable Louis J. Freeh, Director of the Federal
Bureau of Investigation; the Honorable Jacob J.
Lew, Director of OMB; and other interested
parties. Copies will also be made available to
others upon request.

If you have any questions, please contact me or
Daniel C. Harris, Assistant Director, at (202) 512-
8777 or by e-mail at [email protected] or
[email protected]. Major contributors to this
work were Robert P. Glick and Charles Michael
Johnson.

Sincerely yours,

Laurie Ekstrand
Director, Administration
   of Justice Issues

Note: Information on Task Force prosecutions and
staffing was updated subsequent to the briefing.

Note: Additional management changes have taken
place since December 31, 1999

Note: Support staff included computer support,
paralegal, intelligence research staff, financial
analysts, and clerical.

Note: See summary of prosecutions, slides 47 - 52.

_______________________________
1 Declination memoranda are internal documents,
which set forth the facts of a matter and explain
the government's reasons for not prosecuting
individuals or organizations accused of
violations.
2 For purposes of this report, we define a matter
as an allegation of a violation that has been
considered for possible further investigation and
prosecution. If Justice decides to prosecute a
matter and files it with the court, either by
indictment or information, it then becomes a case.
*** End of document ***