In a potential new avenue for federal corruption investigators looking at Capitol Hill, the FBI searched the homes of a close friend and the daughter of Pennsylvania Representative Curt Weldon. The search warrants are related to an investigation of Representative Weldon involving possible assistance he gave a company, Solutions North America, owned by his daughter and the close friend, to obtain lobbying contracts from foreign clients. Neither Representative Weldon’s congressional offices nor his home were searched. The FBI also searched properties in Florida owned by a Russian natural gas company that paid Solutions $500,000 for lobbying work. According to an AP story (here), the Department of Justice executed the warrants because of the disclosure of its investigation over the past few days, and the concern that documents might be destroyed. While search warrants used to be uncommon in white collar crime cases, any indication that documents may "disappear" will usually trigger a broad search for an array of records. Although more cumbersome than a grand jury subpoena, a warrant allows for the quick seizure of documents that can be sorted out later, rather than trusting the recipient to produce relevant records. A warrant certainly does not mean wrongdoing occurred, and the FBI’s description of probable cause used to obtain it may indicate little more than the surmise of agents. (ph)
Category: Corruption
-
A long-time fundraiser and adviser to Illinois Governor Rod Blagojevich, Tony Rezko, was indicted by U.S. Attorney Patrick Fitzgerald’s office on extortion and bank fraud charges. The indictment comes only a few weeks before the general election in which Governor Blagojevich is running for reelection, and marks another blow to the Illinois Governor’s office after the earlier conviction of Blagojevich’s predecessor, George Ryan. The charges come in two separate indictments (here and here), and a press release (here) states, "One indictment alleges that Rezko participated with Chicago businessman Stuart Levine in a scheme to obtain millions of dollars by shaking down firms doing business before two Illinois regulatory boards on which Levine served. The second indictment alleges that Rezko fraudulently obtained more than $10 million in loans for a pizza restaurant business from General Electric Capital Corp. (GECC) and also defrauded investors in that business." Rezko has been traveling out of the country for the past few weeks, and a Chicago Tribune story (here) notes that there is some concern whether he will return for his arraignment, although his attorney states that he’s trying to notify Rezko of the charges. (ph)
-
It was not a good day for most of the defendants in the Alabama Sewer case as the former sewer chief Jack Swann, three businessmen and three companies were convicted in a conspiracy/bribery case. One executive was cleared of charges. Swann was found guilty of conspiracy, bribery, and mail fraud. He was found not guilty of one bribery count and he and others were found not guilty of 17 counts of mail fraud that were premised on 18 USC 1346, the honest services provision. (See Birmingham News here). The investigation had previously produced some guilty pleas. (see here).
(esp)
-
In a joint request by federal prosecutors and defense counsel, U.S. District Court Judge Paul Huck postponed the prison reporting date for former superlobbyist Jack Abramoff from October 2 until November 15. Judge Huck expressed some reluctance to grant the request, according to an AP story (here), stating that "there comes a time when people have to pay the piper, so to speak. I think that time has come." The government requested a 90-day postponement, and the judge only granted about half of that. The reason for postponing the start of the prison term is to allow Abramoff to continue his cooperation in the continuing corruption investigation that recently resulted in the guilty plea of Ohio Rep. Bob Ney. With a cut-off of November 15 to have Abramoff readily available, prosecutors may move more quickly to bring charges against additional defendants. This can’t be good news for those on Capitol Hill who dealt with him, and perhaps the White House. An AP story (here) discusses a draft report by the House Government Reform Committee that details 485 contacts Abramoff had with the Administration, although it notes that he was largely unsuccessful in helping his clients. (ph)
-
With the guilty plea of Rep. Ney (see here), Jack Abramoff has again proved his value to the Government. It is not often that one has an individual of this caliber cooperating with the government.
In addition to Rep. Ney, this cooperation has brought down some top individuals (see Washington Post timeline here) What is particularly helpful to the DOJ is that Abramoff appears to be able to supply sufficient corroborated evidence that is causing targets of DOJ investigations to fold without the necessity of trial. This is extremely efficient as it saves the cost of a long investigation and trial. Most importantly, pleas often include cooperation which means an increased breadth in future investigations.
The Miami Herald here discusses the roots of this investigation and notes the extensive role that Florida prosecutors have played in the different investigations.
(esp)
-
Ohio Representative Bob Ney will plead guilty to conspiracy to commit honest services mail fraud and filing false statements regarding expenses paid on his behalf. A Department of Justice press release (here) outlines the factual basis for the corruption charges:
Congressman Ney admits that he corruptly solicited and accepted a stream of benefits from Jack Abramoff and other lobbyists, including:
- international and domestic trips, such as a trip Scotland with others costing $160,000; a $7000 trip to New Orleans and a $3500 vacation at Lake George, New York all paid for by lobbyists and their clients; and
- Thousands of dollars worth of meals, drinks, tickets to concerts and sporting events and free use of box suites to conduct fundraisers.
In exchange, as Congressman Ney admits, he agreed to take and he took a series of official actions. For example, he
- Agreed to insert four separate unrelated amendments to an election reform legislation at Abramoff’s request;
- Agreed to insert statements into the Congressional Record; and
- supported Abramoff’s efforts to get a multi-million dollar contract for his client
Then, to conceal this illegal conduct from the public, he failed to accurately report these benefits and lied on his Annual Financial Disclosure Statements filed with the House of Representatives. In addition, as part of the conspiracy to deprive the public of his honest services, and with the intent to be influenced, Congressman Ney took thousands of dollars in free gambling chips from a foreign businessman. This foreign businessman was seeking an exemption to the U.S. export laws prohibiting the sale of his goods to a foreign country, and a visa to the United States. Congressman Ney traveled to London, took free gambling money and, then, Congressman Ney agreed to help, and indeed made efforts to help when he returned home to the United States. Congressman Ney admits that he intentionally concealed the amount of gambling proceeds by filing a false U.S. Customs disclosure form and false annual financial disclosure statements. And Congressman Ney had a staff member carry approximately $5,000 through Customs so the Congressman could falsely report a smaller amount to Customs officials.
Representative Ney certainly developed a facility for lying that included repeated denials of having engaged in any wrongdoing and assertions of his innocence, all of which are now shown to be utterly dishonest. He has entered a treatment program for alcoholism, and will not formally enter the plea until October 13. It is not clear whether Representative Ney will resign his position after entering his guilty plea, although I would hope he would not drag Congress down any further than he already has by leaving that body as soon as possible. (ph)
-
Ohio Representative Bob Ney reportedly is going to plead guilty to a federal criminal charge related to the corruption investigation spawned by the activities of former high-powered lobbyist Jack Abramoff. An AP story (here) reports that Republican party officials said that Ney will enter a guilty plea for his role in accepting benefits from Abramoff, many of which have already been described in the guilty pleas of former Congressional aides and Abramoff’s lobbying team. Ney has long maintained his innocence, although he recently dropped out of the race to be reelected, a strong signal that he was looking to resolve the investigation. If Ney does plead guilty, he will be the first elected official charged in the Abramoff investigation, and the second snared on corruption charges this year, following former California Representative Randy (Duke) Cunningham, who is serving an eight-year prison term. An interesting question will be whether Ney will cooperate in the government’s continuing investigation of Capitol Hill corruption, and if he could provide information about other Congressmen. (ph)
-
Kentucky businessman Vernon Jackson, former CEO of telecommunications company iGate Inc., received an 87-month prison term after pleading guilty to two counts of conspiracy and bribery. According to the criminal information (press release here) filed in the case:
Representative A told Jackson that Representative A would not continue to provide official assistance to Jackson’s company iGate, unless Jackson agreed to pay a nominee company ostensibly maintained in the names of Representative A’s spouse and children. Jackson agreed and signed a consulting services agreement committing iGate to pay the nominee company various things of value in return for Representative A’s performance of official acts in furtherance of iGate’s business in Africa and elsewhere. This includes, but is not limited to monthly payments of $7,500; a percentage of iGate’s gross sales; a percentage of capital investments raised for iGate; options for iGate stock; and payment to a member of Representative A’s family to perform legal work for various iGate business ventures.
"Representative A" has been identified as Louisiana Representative William Jefferson, and this is the second defendant to plead guilty to paying bribes to the Congressman, who denies receiving any corrupt payments. Both defendants have agreed to cooperate in the continuing investigation.
In May, the FBI conducted a search of Representative Jefferson’s Capitol Hill office, triggering a confrontation between Congress and the Department of Justice over interference in the legislative branch. A District Judge upheld the legality of the search, and the issue is now before the D.C. Circuit, which has ordered prosecutors not to allow any review of the seized documents until after the court renders its decision. Given that the mid-term elections are nearly upon us, it is unlikely the Department of Justice will seek an indictment of the Congressman before the election, to avoid any interference in the process. Once that is past, however, the government may well bring charges. (ph)
-
Former Illinois Governor George Ryan was sentenced to serve 6 and one-half years in federal prison for his convictions on corruption and RICO charges following a seven-month trial. The charges related to conduct when Ryan was the Illinois Secretary of State and involved gifts related to the issuance of drivers licenses and other government contracts. A number of former aides have been convicted, and Ryan received the same sentence as his top aide. The government sought a sentence within the Guidelines range of 8-10 years, and the defense argued for a 30-month sentence due to Ryan’s poor health. Although U.S. District Judge Rebecca Pallmeyer did not impose the sentence called for by the Sentencing Guidelines, the term of imprisonment is significant and means that Ryan will not be released until he is at least 78 years old, assuming the conviction is upheld on appeal. A Chicago Tribune story (here) discusses the sentencing.
-
The president of the Atlantic City council and a Camden (N.J.) city council member each pleaded guilty to corruption charges related to payments for contractors for receiving government work. Craig Callaway, from Atlantic City, and Ali Sloan El, from Camden, each entered guilty pleas, and a press release issued by the U.S Attorney’s Office (here) describes the conduct:
During his guilty plea, Callaway, 47, of Atlantic City, admitted to taking approximately $36,000 in six different payments between 2003 and 2005, in exchange for using his position to assist a contractor, Terry Jacobs of Pleasantville, in obtaining construction work in Atlantic City projects. Those projects include development of the Garwood Mills site, a 6.4-acre waterfront site on the northeast inlet of Atlantic City, named for a department store that once occupied the land.
Sloan El, 52, of Camden admitted during his guilty plea to taking approximately the same amount, $36,000, in six different payments between 2003 and 2005, in exchange for steering Camden redevelopment work to the contractor. The promised projects included concrete, sidewalk and other construction work including regarding Camden’s Cooper’s Ferry project and parking for the New Jersey Aquarium.
An article in The Press of Atlantic City (here) notes that two other member of the Atlantic City council are targets of the three-year federal corruption investigation. It sure sounds like local elected officials in South Jersey aren’t too expensive to buy these days. (ph)
MattBray.net 