[DOCID: f:hr1027v1.106] From the House Reports Online via GPO Access [wais.access.gpo.gov] Union Calendar No. 595 106th Congress, 2d Session - - - - - - - - House Report 106-1027 JANET RENO'S STEWARDSHIP OF THE JUSTICE DEPARTMENT: A FAILURE TO SERVE THE ENDS OF JUSTICE __________ TENTH REPORT by the COMMITTEE ON GOVERNMENT REFORM together with MINORITY VIEWS Volume 1 of 2 <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform December 13, 2000.--Committed to the Committee of the Whole House on the State of the Union and ordered to be printed __________ U.S. GOVERNMENT PRINTING OFFICE 67-356 WASHINGTON : 2000 COMMITTEE ON GOVERNMENT REFORM DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania JOHN L. MICA, Florida PATSY T. MINK, Hawaii THOMAS M. DAVIS III, Virginia CAROLYN B. MALONEY, New York DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, District of MARK E. SOUDER, Indiana Columbia JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio Carolina ROD R. BLAGOJEVICH, Illinois BOB BARR, Georgia DANNY K. DAVIS, Illinois DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts ASA HUTCHINSON, Arkansas JIM TURNER, Texas LEE TERRY, Nebraska THOMAS H. ALLEN, Maine JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois DOUG OSE, California ------ PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont HELEN CHENOWETH-HAGE, Idaho (Independent) DAVID VITTER, Louisiana Kevin Binger, Staff Director Daniel R. Moll, Deputy Staff Director James C. Wilson, Chief Counsel David A. Kass, Deputy Counsel and Parliamentarian Kristi L. Remington, Senior Counsel Jim Schumann, Counsel Kimberly A. Reed, Counsel Maria P. Tamburri, Assistant to the Chief Counsel Robert A. Briggs, Chief Clerk Philip Schiliro, Minority Staff Director Philip S. Barnett, Miniority Chief Counsel Kristin Amerling, Minority Deputy Chief Counsel Paul Weinberger, Minority Counsel LETTER OF TRANSMITTAL House of Representatives, Washington, DC, December 13, 2000. Hon. J. Dennis Hastert, Speaker of the House of Representatives, Washington, DC. Dear Mr. Speaker: By direction of the Committee on Government Reform, I submit herewith the committee's tenth report to the 106th Congress. Dan Burton, Chairman. C O N T E N T S ---------- Page Findings of the Committee on Government Reform................... VII I. The Attorney General's conflicted investigation..................1 A. Background on the Independent Counsel Act............. 3 B. A rocky start: early conflicts in the Justice Department's campaign finance investigation.......... 9 C. Attorney General Reno changed her interpretation of the Independent Counsel Act.......................... 14 D. Memoranda from FBI Louis J. Freeh and Task Force Supervising Attorney Charles La Bella recommending that an independent counsel be appointed............. 19 E. Department of Justice rebuttal memoranda.............. 44 F. Department of Justice's bad faith in its application of the Independent Counsel Act....................... 54 G. The failure to appoint a special counsel for Vice President Gore....................................... 59 II. The failures of the Justice Department investigation............63 A. The Justice Department failed to pursue the December 15, 1995, coffee tape................................ 63 B. The Justice Department has failed to question the President and Vice President effectively............. 71 C. The Justice Department failed to pursue relevant documents............................................ 74 D. The Justice Department failed to pursue key individuals and entities............................. 84 E. The Justice Department failed to pursue the Kansas conduit contribution scheme.......................... 107 F. The Justice Department failed to investigate leaks harmful to the campaign fundraising investigation.... 116 III. The Justice Department's political interference with congressional oversight......................................................123 A. Failure to comply with subpoenas for the Freeh and La Bella memoranda...................................... 123 B. Failure to produce the Conrad memorandum.............. 143 C. The Justice Department's political gamesmanship....... 146 IV. The favorable treatment of the Attorney General's friends......154 A. The Justice Department's handling of the Soka Gakkai matter............................................... 154 B. Robert Bratt.......................................... 181 Exhibits......................................................... 188 APPENDIXES Appendix 1.--Correspondence between the committee and the Justice Department..................................................... 638 Appendix 2.--Kansas Democratic party disclosure forms (receipts and disbursements)............................................. 1862 VIEWS Minority views of Hon. Henry A. Waxman, Hon. Tom Lantos, Hon. Major R. Owens, Hon. Edolphus Towns, Hon. Paul E. Kanjorski, 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. John F. Tierney, Hon. Jim Turner, Hon. Harold E. Ford, Jr., and Hon. Janice D. Schakowsky..................................................... 2008 Exhibits......................................................... 2034 FINDINGS OF THE COMMITTEE ON GOVERNMENT REFORM The Attorney General of the United States has exhibited a critical lack of judgment in her stewardship of the campaign fundraising investigation. Furthermore, the reputation of the Justice Department has suffered greatly during her tenure. Given the evidence compiled by the committee, it is hard to escape the conclusion that the Attorney General has acted politically to benefit the President, the Vice President, and her own political party. Specifically: <bullet> The Attorney General had a conflict of interest in the Justice Department investigation of possible criminal wrongdoing involving the President and Vice President. Any investigation of the campaign fundraising scandal required a detailed examination of the actions of the President and Vice President. The Justice Department is wholly unsuited to conduct such an investigation, and the repeated failures of the Department during the last 4 years proves that the Attorney General cannot investigate her superiors. <bullet> When investigative matters arose that touched upon the President, the Vice President, or the Democratic party, the Attorney General abandoned her expressed belief that an appearance of conflict was to be avoided by the Nation's chief law enforcement official. On May 14, 1993, Attorney General Reno testified before Congress. She stated: ``It is absolutely essential for the public to have confidence in the system and you cannot do that when there is a conflict or an appearance of conflict in the person who is, in effect, the chief prosecutor.'' This belief gave way to an inexplicable acceptance of the very appearance of conflict she sought to avoid when she retained supervision of the campaign finance investigation of the President, the Vice President and her own political party. <bullet> The decision to retain control of the investigation of the President and the Vice President showed an unacceptable indifference to an appearance of impropriety. The principal beneficiaries of the campaign finance scandal of 1996 were President Clinton and Vice President Gore. In insisting that she retain control of the investigation of the President and Vice President, Attorney General Reno has failed to exercise a minimally acceptable standard of judgment required of the custodian of Federal law enforcement. If her investigation of campaign fundraising matters had indeed been thorough and vigorous, and if she had exhibited good faith cooperation with legitimate congressional oversight of her investigation, there would be less cause for concern. However, the decision to retain supervision of the investigation of the President, the Vice President, senior administration officials and her political party--juxtaposed with numerous missteps, failures, preferential treatment of political appointees, rejection of the advice of senior advisors, combined with the obvious bad faith exhibited toward congressional oversight--does not instill confidence in the Department of Justice. <bullet> The decision to retain control of the investigation of her own political party showed an unacceptable indifference to an appearance of impropriety. For much of her adult life, the Attorney General has been an elected public official. She has, throughout that time, been elected on the Democratic party ticket. Although there has been an effort to describe the 1996 campaign finance scandal as a matter of ``everybody does it,'' it is worth noting that Campaign Financing Task Force supervisor Charles La Bella devoted approximately 65 pages to possible Democratic misconduct and approximately 2 pages to possible Republican misconduct. The Attorney General's insistence on maintaining supervision of the investigation of her own political party again showed indifference to the appearance of evenhanded application of justice, and a critical lack of judgment. An example of this is the Justice Department failure to investigate an apparently illegal scheme by the DNC to use conduit contributors to funnel over a third of a million dollars to the Kansas Democratic party. The Department conducted a 3 year investigation of contributions to Republicans in Kansas but failed even to consider an illegal-- and successful--effort by her own party to use straw donors for political benefit. <bullet> The failure to conduct a thorough investigation promoted an appearance of favoritism. This reflected poorly on the judgment of the Attorney General, particularly given recommendations made in 1997, 1998, and 2000, that someone else should supervise the investigation. Charles La Bella made the following point in his first recommendation for an independent counsel: ``[i]f these allegations involved anyone other than the President, Vice President, senior White House, or DNC and Clinton/Gore '96 officials, an appropriate investigation would have commenced months ago without hesitation.'' LThe following failures bolster the conclusion that the Justice Department has not lived up to its obligation to conduct a thorough investigation of the campaign fundraising scandal, and that the country would have been better served if an independent counsel or special counsel had been appointed to handle the investigation: <bullet> The President was not asked a single question about foreign money until 2000. <bullet> The President was not asked a single question about James Riady until 2000. <bullet> The President was not asked a single question about John Huang, Charlie Trie, Mark Middleton, and the Presidential Legal Expense Trust until 2000. <bullet> The President was not asked a single question about his 5 minute meeting with Korean national John K.H. Lee, which resulted in a $250,000 illegal political contribution, until 2000. <bullet> The President and Vice President were not asked a single question about White House coffee fundraising events until 2000. <bullet> The Vice President was not asked a single question about the Hsi Lai Temple fundraiser until 2000. <bullet> The Vice President was not asked a single question about Maria Hsia until 2000, after she had been convicted in Federal court. To make matters worse, the Justice Department failed to subpoena the White House for records regarding Hsia. <bullet> The Vice President was not asked a single question about John Huang or James Riady until the year 2000. <bullet> The Justice Department should have been aware of evidence that, on December 15, 1995, the Vice President expressed an interest in showing political advertisements to James Riady, who lived in Jakarta, Indonesia. Not only did the Justice Department fail to obtain the original evidence for over 6 months, at least one unidentified source within the Department sought to discredit the possible evidence before it was even reviewed. <bullet> The Vice President's former Director of Political Affairs appears to have never been interviewed by the Justice Department. This comes in spite of the fact that she authored such communications as the recently produced e-mail that discusses a ``coffee list'' and states: ``these are FR coffees right?'' \1\ --------------------------------------------------------------------------- \1\ When the White House released this document on Sept. 22, 2000, White House staff anonymously suggested that ``FR'' could stand for ``finance-related,'' not fundraiser. Other documents authored by the same individual, however, show that her use of the abbreviation ``FR'' refers to fundraisers. <bullet> The Vice President was not asked about the September 27, 1993, fundraiser with John Huang and --------------------------------------------------------------------------- China Resources Chairman Shen Jueren until 2000. <bullet> At a very sensitive time in the Department's investigation of Charlie Trie, it became clear that Trie's former bookkeeper was destroying evidence. Although the FBI wanted to move swiftly and execute a search warrant, Justice Department lawyers refused to approve such a warrant. <bullet> The Justice Department failed to subpoena the White House for records regarding Ernest Green and Mark Middleton until 2000. To date, the Justice Department has failed to advance an investigative rationale for these significant failures. It appears that the President and Vice President received preferential treatment at the expense of the campaign finance investigation. <bullet> The Attorney General has taken an active step to assist the Vice President during his election campaign. On August 23, 2000, the Attorney General announced that she would not appoint a special counsel to investigate Vice President Gore: ``I have concluded that there is no reasonable possibility that further investigation could develop evidence that would support the filing of charges for making a willful false statement [in the Hsi Lai Temple or White House coffee investigation].'' The Attorney General further explained her position in a committee interview on October 5, 2000: ``[t]he Vice President defined what he meant by a fund-raiser. . . . Based on his definition of what a fund-raiser was and what he said, I would not be able to prove, based on that, that he believed it to be a fund-raiser and testified falsely.'' Minutes later, the Attorney General reinforced this point: ``I think the whole statement clearly reflects what the Vice President understood a fund-raiser to be, and within his definition, I think he made it clear that his statement was not inaccurate.'' There can be no more stark example of why the Attorney General should refrain from acting as investigator, judge and jury in a matter involving the Vice President. There are many suspects of criminal inquiry or criminal defendants around the country who would be eager to accept an offer from the government to be allowed to insert their definition of a factual matter in place of a jury's determination of a factual matter. The Attorney General has made an extraordinary accommodation to the Vice President--she effectively allowed him the opportunity to define a material element of the investigation and then said not only that she believed him, but that there was no possibility of developing evidence that would cast doubt on his definition. <bullet> The Attorney General has gone to extraordinary lengths to cover up the failures of the Justice Department. Examples of bad faith negotiation by the Justice Department regarding document requests are legion. While the Department has argued that turning over documents would harm ongoing investigations or chill internal communications, these explanations have almost universally turned out to be pretexts to cover up embarrassment. For example: <bullet> On December 10, 1999, the Department of Justice announced that it would not comply with a committee subpoena for FBI interview summaries of the President and Harold Ickes. One month prior to this notification, committee staff had been told that the documents would be produced, without fail, on a specific date. After relying on Department representations, the committee was disappointed to learn of the Department's new position. Not surprisingly, the change of position came the week before John Huang was scheduled to testify before the committee. It must be noted that the hypocrisy of the Department's position was underscored by the fact that when Democrat Senate Committee Chairman Donald Riegle requested FBI interview summaries in 1994, 84 such documents were produced by the Attorney General. It appears that a special standard was developed for the campaign finance investigation--one made more understandable when the interviews of the President were finally produced and it became clear that the Justice Department had neglected to ask a single question about foreign money or James Riady. The hypocrisy of the Department's refusal was also underscored by the assertion that ``[t]he Department has observed what appears to be an increasing incidence of public release of [FBI interviews].'' Chairman Riegle released 84 FBI summaries in 1994. The Committee on Government Reform, however, had released a grand total of one FBI summary in the previous 3 years. <bullet> The Freeh and La Bella memoranda, and the transcripts of the Justice Department interviews with the President and Vice President, show an investigation derailed. Thus, the committee believed it was prudent to come to an understanding of what documents had been subpoenaed by the Justice Department. This too proved informative. For example, by obtaining subpoenas issued to the White House, the committee now knows that the Justice Department did not even ask the White House for information about former Presidential advisor Mark Middleton (who invoked his fifth amendment rights before this committee) or about Vice Presidential friend and fundraiser Maria Hsia. Unfortunately, however, the Justice Department and DNC have gone to extraordinary lengths to keep this committee from obtaining the subpoena issued to the DNC. The DNC and the Justice Department have worked hand-in-glove to keep the committee from learning whether the Department was thorough in making its document requests to the DNC. As of October 10, 2000, the DNC continues to refuse to comply with a congressional subpoena for the document requests issued to it by the Justice Department. <bullet> The Attorney General and her subordinates have made false statements to obtain tactical advantage in different negotiations. At various points in the committee's investigation, the Justice Department relied upon obfuscation. The Attorney General and her staff ignored truth when a falsehood made one of their arguments stronger. <bullet> The Attorney General continued to rely on Lee Radek's advice regarding campaign finance matters even after he was rebuked within the Justice Department for attempting to mislead his superiors about important elements of the investigation. <bullet> After a Federal court ruling made it permissible for the Justice Department to share most of the Freeh and La Bella memoranda with Congress, committee staff requested the opportunity to review the memoranda and were rebuffed. Nevertheless, the Attorney General stated in a letter, ``[w]e advised the Committee staff last fall that the memorandum with reduced redactions was available for review.'' The Attorney General's statement was patently false. This statement is typical of the deceptive, self-serving statements made by the Justice Department throughout the debate on the Freeh and La Bella memoranda. <bullet> After the committee subpoenaed the Freeh and La Bella memoranda, the Attorney General and Director Freeh signed a statement that the committee's subpoena was ``unprecedented.'' This allowed the media and other commentators to paint the committee in an unfavorable light. The committee pointed out that this statement was factually inaccurate, and the FBI Director withdrew his statement. The Attorney General, however, persisted in claiming that the subpoena was unprecedented until the following year when one of her subordinates finally admitted, in writing, that the subpoena was not unprecedented. By then, of course, the Attorney General had obtained the desired political benefit, and there were no negative repercussions. While this admission would have greatly harmed the Justice Department's political position in August 1998 during the contempt debate, by March 1999 few in the public cared. <bullet> Justice Department officials believed that a key supervisor of the campaign finance investigation thought that the Attorney General's political future hinged on her decisions regarding her political superiors. The Attorney General's decision to retain control of this investigation while there was such a cloud over its stewardship shows a critical failure of judgment. William Esposito, the former Deputy Director of the FBI, testified before the committee that in November 1996, Lee Radek, the head of the Public Integrity Section, told him that he ``felt a lot of pressure,'' and that the Attorney General's job might ``hang in the balance'' depending on his decisions in the campaign finance investigation. This testimony, which was corroborated by another senior FBI official, Neil Gallagher, reinforced the committee's long-held view that the Attorney General had a political conflict of interest in trying to investigate the fundraising of the President, the Vice President and the Democratic party. <bullet> The Justice Department's political support for the President and Vice President was evident when its officials publicly undermined prosecutors who recommended independent investigations of the President, Vice President and Democratic party. The Attorney General's failure to solve this problem by appointing an independent counsel to conduct the investigation was a significant failure of judgment. Justice Department officials showed that they were acting in a political manner when they publicly disparaged their colleagues on a number of occasions. The Attorney General tolerated this conduct by keeping the investigation under the purview of these same individuals. <bullet> When Robert Conrad recommended that a special counsel be appointed to investigate Vice President Gore, the New York Times reported that ``Justice Department officials disparaged his conclusions.'' The newspaper reported: ``[o]ne Justice Department official said that Mr. Conrad was alone in his recommendation. `No other prosecutor in this matter thought that there should be a need for a special counsel,' said the official, who spoke on the condition of anonymity.'' This was such an egregious lie that even the Attorney General could not allow it to go unremarked. The same day, she stated that Conrad's recommendation was supported by other prosecutors. <bullet> When Director Freeh recommended that an independent counsel be appointed to look into fundraising matters, he was savaged by both Justice Department and White House officials. For example, the New York Times reported the following in 1997: ``[a]lthough Mr. Clinton had pointedly avoided answering questions about Mr. Freeh's disagreement with Ms. Reno's decision, White House aides were not so circumspect. They privately ripped into Mr. Freeh--once lauded by the President as one of his best appointees-- and called him a disloyal subordinate.'' <bullet> When Charles La Bella's recommendation for an independent counsel was being openly discussed in the media by the Attorney General's advisors, not only was La Bella's legal acumen attacked. One Justice Department official commented that some people were wondering whether La Bella had a ``deep-seated psychiatric problem,'' or whether he was unstable. One can hardly imagine a clearer message to refrain from making honest recommendations than having a government official question your sanity. <bullet> The committee has been obstructed by the Justice Department's failure to provide guidance regarding subjects of investigation that would hamper ongoing criminal investigations. While investigating the illegal fundraising activities of John Huang, Charlie Trie and Johnny Chung, the committee respected requests by the Justice Department not to ask questions about certain individuals or subjects. For example, on November 9, 1999, Chairman Burton informed Attorney General Reno: ``I will respect the Department's wishes, and avoid questioning Mr. Trie about these two individuals, as long as they are under active investigation. I will also instruct other members of the Committee to avoid questioning Mr. Trie about those two individuals.'' Many months later, the committee sought guidance as to whether it is permissible to go back and revisit the unresolved subjects. The Justice Department has simply refused to cooperate and respond to numerous committee requests on these matters. <bullet> The Justice Department's failure to be vigorous in pursuit of evidence indicates a lack of judgment and a proclivity to take the side of the White House. <bullet> The Justice Department appears to be more interested in defending the White House in the e-mail matter than investigating it. The Justice Department appears to be engaging in a vigorous defense of the White House in the e-mail matter, rather than investigating possible wrongdoing by the White House. Although the Justice Department refuses to disclose staffing levels of the e-mail investigation, it has become known that the one part time lawyer handling the e-mail investigation for the Department has recently left government employment. This does not indicate an aggressive allocation of resources. (For a detailed discussion of this issue, please refer to the recently- released committee report ``The Failure to Produce White House E-Mails: Threats, Obstruction, and Unanswered Questions.'') <bullet> Justice Department lawyers have taken affirmative steps to mislead the public regarding key matters that relate to document discovery in the campaign finance investigation. This undermines confidence in the Justice Department and shows an extreme lack of judgment on the part of the Attorney General. Department of Justice lawyers are taking active steps to mislead a Federal court and the public about essential elements of White House document production. For example, Department lawyers stated that the ``technical failure [to produce the e-mails] is a long-standing matter of public record that has been confirmed by the White House itself.'' This, of course fails to disclose that the White House did not tell the Justice Department investigators and Congress that it had not fully complied with subpoenas. (For a detailed discussion of this issue, please refer to the recently- released committee report ``The Failure to Produce White House E-Mails: Threats, Obstruction, and Unanswered Questions.'') <bullet> The failure to investigate whether there has been an obstruction of congressional investigations of the campaign finance scandal indicates that the Justice Department is giving the White House preferential treatment. In an October 5, 2000, interview with the committee, Attorney General Reno made it clear that she would not take proactive steps to determine whether the White House had obstructed congressional investigations by failing to take steps to produce subpoenaed e-mail records. (For a detailed discussion of this issue, please refer to the recently-released committee report ``The Failure to Produce White House E-Mails: Threats, Obstruction, and Unanswered Questions.'') <bullet> For reasons unexplained to date, the Attorney General has been lenient in her treatment of major foreign benefactors of the President, Vice President and DNC. There has been a very lengthy delay in Justice Department efforts to indict major DNC benefactors James Riady, Ji Shengde, Liu Chao- ying and Tomy Winata. There is no acceptable explanation for the lack of vigor in the investigations of these individuals. <bullet> Leaks from Justice Department personnel have harmed the campaign finance investigation. The Attorney General has exhibited poor judgment in leaving the investigation in the hands of people who have demonstrated their interest in harming the investigation. The Justice Department's campaign fundraising investigation has been plagued by leaks. These leaks, which were often made at strategic times, greatly harmed the Justice Department's investigation, and strongly suggested that certain officials in the Justice Department did not want the investigation to succeed. These leaks provide a clear example of why the Attorney General should have appointed an independent counsel--to remove the investigation from politically biased officials at the Justice Department. <bullet> While acting as the primary Main Justice supervisor of the campaign finance investigation, Deputy Assistant Attorney General Alan Gershel took time away from his responsibilities to be the lead attorney in the trial of Charles Bakaly. It is difficult to determine which is a greater failure of judgment--Gershel agreeing to take on this assignment, or the Attorney General and the head of the Criminal Division allowing him to take on the assignment. Charles Bakaly was the spokesman of Independent Counsel Kenneth Starr during the Lewinsky investigation. For Gershel or the Attorney General to have decided that he, and only he, out of hundreds of lawyers qualified to work on the case, was essential to the Bakaly prosecution, shows an astounding lack of judgment. At a time when it was becoming clear that the Justice Department had failed to ask the President and Vice President questions about significant campaign finance matters--and a whole new element of the investigation was opening up with the disclosure that the White House had failed to produce e-mail records to the Justice Department--Gershel decided to take on additional responsibility. Perhaps more important, he was oblivious to concerns that as the supervisor of an investigation of the President and his election tactics, he might look less than impartial if he prioritized his time so that he was a lead prosecutor in a case urged by the President, and designed to discredit Independent Counsel Starr. Union Calendar No. 595 106th Congress Rept. 106-1027 HOUSE OF REPRESENTATIVES 2d Session Vol. 1 of 2 ====================================================================== JANET RENO'S STEWARDSHIP OF THE JUSTICE DEPARTMENT: A FAILURE TO SERVE THE ENDS OF JUSTICE _______ December 13, 2000.--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 submitted the following TENTH REPORT On October 19, 2000, the Committee on Government Reform approved and adopted a report entitled, ``Janet Reno's Stewardship of the Justice Department: A Failure to Serve the Ends of Justice.'' The chairman was directed to transmit a copy to the Speaker of the House. I. The Attorney General's Conflicted Investigation Since the inception of the Department of Justice's Campaign Financing Task Force, many people have believed that a conflict or perceived conflict of interest existed for the Department of Justice to investigate the fundraising issues surrounding the Democratic party and the reelection of President Clinton and Vice President Gore. This was because Attorney General Reno, ostensibly the final decisionmaker in any Justice Department investigation, was appointed by the President and answered only to him. The Independent Counsel Act\1\ (``the Act'') was enacted for just such situations. In order to avoid a conflict or an appearance of a conflict when the Attorney General would have to investigate the administration of which she is a part, she was able to request the appointment of an independent counsel. However, Attorney General Reno disregarded the Act and insisted that she was able to conduct the campaign finance investigation without conflict. This assertion was unfortunate considering she had an inherent conflict in any investigation involving the President, Vice President, and Democratic National Committee as central figures. Her actions troubled the committee and were the committee's impetus for conducting oversight of the Department of Justice in this matter. Although the Independent Counsel Act expired, and Reno would not have been able to request the appointment of an independent counsel in this matter after June 30, 1999, the committee believed it was important to investigate because the Attorney General's handling of the campaign finance investigation was tantamount to obstructing her own investigation. --------------------------------------------------------------------------- \1\ 28 U.S.C. Sec. Sec. 591-599 (expired 1999). --------------------------------------------------------------------------- What the committee eventually came to discover was alarming. Through various memoranda eventually produced to the committee, it was learned that Reno engaged in a creative analysis of the law in what appeared to be an effort to avoid the implementation of the Independent Counsel Act. FBI Director Louis J. Freeh and later, Task Force Supervising Attorney Charles La Bella, took the position that under both the discretionary and mandatory provisions of the independent counsel statute, the Attorney General should request the appointment of an independent counsel for the campaign finance investigation. However, the Attorney General and her senior advisers disagreed with the conclusions reached by Freeh and La Bella. After each preliminary investigation of senior level White House officials, including the President and Vice President, opened by the Public Integrity Section (PIS), the Attorney General determined that no independent counsel was warranted. There are dozens of memoranda among senior level Justice Department officials discussing whether an independent counsel should be appointed to investigate campaign finance matters. The Justice officials, in their memoranda, spend hundreds of pages in an attempt to explain away the need for an independent counsel. The committee was shocked to find that the Chief of the Public Integrity Section, who was in charge of the application of the Independent Counsel Act, frequently misrepresented the facts and the law in memoranda for the Attorney General. In retrospect, had an independent counsel been appointed, thousands of hours could have been spent investigating criminal and possible criminal conduct, rather than fighting the recommendations of those that believed an independent counsel was necessary. The Attorney General was able to avoid the appointment of an independent counsel through a disregard of the law and a narrow view of the evidence. She did this by refusing to consider all of the evidence, taken as a whole, to determine whether there was sufficient information to appoint an independent counsel. Instead, she would examine individual pieces of information, as if in a vacuum, and disregard the fact that nearly all of the allegations relating to campaign finance violations led back to the overwhelming need for money created by the President and Vice President themselves. To make the appointment of an independent counsel more unlikely, the Task Force was not able to seek out information relating to covered persons under the Act. It seems that they had to hope that specific information from a credible source would simply appear. If this were to happen, the Department would then be able to initiate a preliminary investigation.\2\ Ultimately, Attorney General Janet Reno chose to ignore the facts, the political conflicts, and the trust placed in her by the American people, by refusing to appoint an independent counsel for the campaign finance matter.\3\ --------------------------------------------------------------------------- \2\ In nearly all of the preliminary investigations conducted by the Department of Justice, the allegations investigated came from an outside source. The press first reported on the President and Vice President's fundraising phone calls from the White House. The Senate Governmental Affairs Committee brought the issue of Ickes' alleged perjury to the Task Force's attention. Common Cause first brought the media fund allegations to the Department. \3\ The Independent Counsel Act expired June 30, 1999. 28 U.S.C. Sec. 599. However, soon after the expiration of the Act, the Department of Justice enacted regulations allowing the Attorney General to appoint a special counsel, who would be authorized to investigate and prosecute matters when the Attorney General concludes that extraordinary circumstances exist such that the public interest would be served by removing a large degree of responsibility for a matter from the Department of Justice. 28 C.F.R. Sec. 600 et. seq. (1999). --------------------------------------------------------------------------- On June 30, 1999, the Attorney General and many senior level political appointees at the Justice Department could breathe a collective sigh of relief. On that day, the Independent Counsel Act expired.\4\ After holding hearings, Congress decided not to reauthorize the Act.\5\ Therefore, the Department of Justice could no longer be called upon to implement the Act in the campaign finance investigation. After the Act expired, the Attorney General assured Congress and the public that the Department had instituted regulations allowing for a ``special counsel.'' A special counsel was supposed to be similar to an independent counsel, but without the statutory authority or independence. It came as no surprise that when Reno's new Supervising Attorney, Robert Conrad, determined that a special counsel should be appointed to investigate Vice President Gore, Reno declined. --------------------------------------------------------------------------- \4\ 28 U.S.C. Sec. 599 (1994). \5\ See generally hearing on the ``Reauthorization of the Independent Counsel Statute,'' before the subcommittee on Commercial and Administrative Law of the House Committee on the Judiciary, 106th Cong. (1999); hearings on the ``Independent Counsel Act,'' before the Senate Committee on Governmental Affairs, 106th Cong. (1999). --------------------------------------------------------------------------- A. Background on the Independent Counsel Act The Independent Counsel Act allowed the Attorney General, in certain situations, to remove an investigation from the Department of Justice, and place it in the hands of a neutral party who was empowered to investigate and prosecute Federal crimes.\6\ That neutral party was the independent counsel. The Office of Independent Counsel was entirely separate and independent from Main Justice.\7\ What made the independent counsel truly unique was that it had all of the power and authority of the Department of Justice, but did not report to the Attorney General or President.\8\ This was considered to be the best manner in which to assure the public that a truly non- partisan investigation, free from undue influence, would be conducted. --------------------------------------------------------------------------- \6\ Because of the authority it conveyed upon an independent entity, appointed by a three judge panel, many people charged that the Independent Counsel Act was unconstitutional. \7\ 28 U.S.C. Sec. 594(i). \8\ 28 U.S.C. Sec. 594(a). --------------------------------------------------------------------------- 1. Legislative History of the Act The independent counsel statute was conceived in the aftermath of the Watergate investigation. As a result of the experiences of Watergate, Congress came to believe that the Attorney General and political appointees at the Department of Justice were not always able to conduct an impartial investigation when Presidential and party politics were involved. For instance, during the Senate Select Committee on Presidential Campaign Activities' (Watergate Committee) investigation, the committee uncovered evidence of impropriety on the part of the Department of Justice.\9\ In particular, the Watergate Committee concluded that the Chief of the Department's Criminal Division, Henry Peterson, acted as a conduit for information from the grand jury to the Counsel to the President and the President himself.\10\ In addition, Peterson gave the President tactical advice regarding the manner in which the White House should respond to the Watergate investigation.\11\ The committee also determined that Peterson ``attempted to insure that the Department of Justice investigation of Watergate `was narrowed down' to avoid investigating the President.'' \12\ After uncovering this troubling conduct, at the completion of its investigation the Watergate Committee recommended the establishment of a permanent, independent prosecutor to handle ``criminal cases in which there is a real or apparent conflict of interest in the executive branch.'' \13\ In so doing, Congress wanted to ensure that nothing similar could happen in the future. --------------------------------------------------------------------------- \9\ CRS Rept. No. 87-192A, ``Legislative History and Purposes of Enactment of the Independent Counsel Provisions of the Ethics in Government Act of 1978,'' Mar. 4, 1987, at 2. \10\ Id. \11\ Id. \12\ Id. (citing ``Final Report of the Senate Select Committee on Presidential Campaign Activities,'' S. Rept. No. 93-981, at 80-81 (1974)). \13\ Id. (citing ``Final Report of the Senate Select Committee on Presidential Campaign Activities,'' S. Rept. No. 93-981, at 96 (1974)). --------------------------------------------------------------------------- Between 1974 and the Act's passage in 1978, both the Senate and House held numerous hearings on the various bills proposing an independent prosecutor. The first Senate hearings focused on the political and personal conflicts of interest in the Attorney General investigating the President or high-level administration officials. Whitney North Seymour, Jr., who was later appointed as an independent counsel,\14\ testified in 1974, that, ``[l]oyalty to the political interests of the administration may often require disloyalty to the goal of impartial justice.'' \15\ Seymour illustrated the point that the Office of Attorney General is a political one, and that the Attorney General's loyalty often lies with the President who appointed him. Therefore it would be presumed that the Attorney General would want to shield the administration. Similarly, Watergate Special Prosecutor Archibald Cox testified regarding his belief in the need for independent counsel legislation. He stated, ``[t]he pressures, the tensions of divided loyalty are too much for any man, and as honorable and conscientious as any individual might be, the public could never feel entirely easy about the vigor and thoroughness with which the investigation was pursued. Some outside person is absolutely essential.'' \16\ Cox recognized the importance of the public's confidence in an investigation of a political figure. Likewise, the theory of those advocating the legislation was that if someone independent were to conduct the investigation, the public's concerns would be allayed. --------------------------------------------------------------------------- \14\ Whitney North Seymour, Jr. was appointed on May 29, 1986, to investigate former aide to President Reagan, Michael Deaver. The allegations involved post-employment conflict of interest laws relating to Deaver's representation of certain foreign clients before the White House after leaving government employment. \15\ ``Removing Politics from the Administration of Justice,'' hearings on S. 2803 and S. 2987 before the Subcommittee on Separation of Powers of the Senate Committee on the Judiciary, 93d Cong. 216 (1974). \16\ Id. at 200. --------------------------------------------------------------------------- In its reports on the independent counsel legislation, Congress echoed the themes of conflicts of interest and public confidence in investigations. The following rationales for passage of the Act were highlighted: <bullet> The Department of Justice has difficulty investigating alleged criminal activity by high-level government officials. <bullet> It is too much to ask for any person that he investigate his superior. <bullet> It is a basic tenet of our legal system that a lawyer cannot act in a situation where he has a conflict of interest or the appearance thereof. . . . The Attorney General and his principal assistants are appointees of the President and members of an elected administration. It is a conflict of interest for them to investigate their own campaign or, thereafter, any allegations of criminal wrongdoing by high-level officials of the executive branch. The appearance of conflict is as dangerous to public confidence in the administration of justice as true conflict itself. Having men of integrity operate in the face of a conflict is an insufficient protection for a system of justice.\17\ --------------------------------------------------------------------------- \17\ S. Rept. No. 95-170 at 5-6 (1977). Although there was a general consensus of why there was a need for some type of independent prosecutor, at first there was not agreement on how the entity should be structured. One of the first bills proposed the establishment of an ``independent Department of Justice,'' or some other permanent mechanism for appointing special prosecutors, rather than relying on the Attorney General to make a request in each instance.\18\ The Senate's reasoning behind such a proposal was that ``[i]t is not sufficient to rely on the President or the Attorney General to appoint a temporary special prosecutor the next time the Attorney General or the President has a conflict of interest or the appearance thereof. It is not at all obvious that such an appointment will occur.'' \19\ Attorney General Janet Reno was met with that same criticism for her refusal to appoint an independent counsel in the campaign finance matter. However, under the language of the Act as passed, the Attorney General had the prerogative on whether or not to appoint an independent counsel. --------------------------------------------------------------------------- \18\ ``Legislative History and Purposes of Enactment of the Independent Counsel (Special Prosecutor) Provisions of the Ethics in Government Act of 1978,'' CRS Rept. No. 87-192A at 3, Mar. 4, 1987 (citing ``Removing Politics from the Administration of Justice,'' hearings on S. 2803 and S. 2978 before the Subcommittee on Separation of Powers of the Senate Committee on the Judiciary, 93d Cong. (1974)). \19\ Id. at 9 (citing S. Rept. No. 94-823, at 5). --------------------------------------------------------------------------- 2. Language of the Act The Independent Counsel Act was not passed until 1978, approximately 4 years after the Congress first began looking into the concept.\20\ The proposed purpose of the Act was ``to provide a mechanism to avoid the inherent or structural conflicts of interest, or the appearances of conflicts or of 'conflicting loyalties,' which could arise where the Attorney General or the President must supervise or conduct criminal prosecutions of themselves, or of high level officials or colleagues in the President's Administration.'' \21\ In order to do so, certain individuals were automatically covered by the Act: --------------------------------------------------------------------------- \20\ The Independent Counsel Act was passed as Title VI of the Ethics in Government Act of 1978, Public Law No. 95-521, as amended and reauthorized by Public Law 97-409, Public Law 100-191, and Public Law 103-270 (codified at 28 U.S.C. Sec. Sec. 591-599 (1994)) (no longer in effect June 30, 1999). The Act as first passed referred to a ``special prosecutor.'' Id. \21\ ``Independent Counsel Provisions: An Overview of the Operation of the Law,'' CRS Rept. No. 98-283, at 3 (Mar. 20, 1998). --------------------------------------------------------------------------- <bullet> the President and Vice President; <bullet> Cabinet level officials; <bullet> an individual working in the Executive Office of the President and compensated at a rate equivalent to SES II; <bullet> any Assistant Attorney General, or DOJ employee compensated at or above SES III; <bullet> the Director and Deputy Director of the CIA, and the Commissioner of the IRS; <bullet> any person who held a position listed in (1)-(5) for 1 year after the person leaves office; <bullet> the chairman and the treasurer of the campaign committee seeking the election or reelection of the President, and any officer of that committee exercising authority at the national level, during the incumbency of the President.\22\ --------------------------------------------------------------------------- \22\ 28 U.S.C. Sec. 591(b). Congress also realized that situations would arise where investigation by the Attorney General or Department of Justice officials of an individual not identified in the statute would create some type of conflict. Therefore, the Attorney General was permitted to appoint an independent counsel for any person if he determined that an investigation by him or other Department of Justice officials might have resulted in a ``personal, financial, or political conflict of interest.'' \23\ This ``catch-all'' conflicts provision was not added to the Act until 1982, when the Act was reauthorized.\24\ A similar provision had been considered in 1977, but had been dropped prior to the enactment of the Independent Counsel Act. Although it did not remain in the final legislation, the House report noted: --------------------------------------------------------------------------- \23\ 28 U.S.C. Sec. 591(c)(1). \24\ Public Law No. 97-409. The mechanism recommended by the committee is triggered by a conflict of interest. That conflict is defined to occur in two situations. The first situation arises when specified high-level executive branch officials are accused of committing specified offenses. . . . The second situation arises when an investigation or prosecution directly and substantially affects the political interests of the President or Attorney General.\25\ --------------------------------------------------------------------------- \25\ ``Legislative History and Purposes of Enactment of the Independent Counsel (Special Prosecutor) Provisions of the Ethics in Government Act of 1978,'' CRS Rept. No. 87-192A, at 17 (Mar. 4, 1987) (citing H. Rept. No. 95-1307, at 4-5 (1978)) (emphasis added). The original report language demonstrates that there surely would be a conflict were the Attorney General to investigate a matter relevant to the political interests of the President and their political party. During the 1982 reauthorization, Congress determined that the ``catch-all'' provision was needed in the Act because there were situations where serious conflicts of interest could arise that were not covered by the mandatory provision. The 1982 Senate report explained, ``[t]he Committee recognizes that there may be instances when investigations by the Attorney General of persons not covered by the Act may create an actual or apparent conflict of interest.'' \26\ At the time of consideration, Congress clearly understood that perceived conflicts could be just as harmful to the public's trust in a Department of Justice investigation as actual conflicts.\27\ --------------------------------------------------------------------------- \26\ Id. at 17-18 (citing S. Rept. No. 97-469, at 9 (1981) (emphasis added). \27\ Attorney General Reno has recently interpreted the Act so as to exclude perceived conflicts. See letter from Janet Reno, Attorney General, U.S. Department of Justice, to Orrin G. Hatch, chairman, Senate Judiciary Committee, (Apr. 14, 1997). --------------------------------------------------------------------------- As a consequence of the amendments in 1982, the statute could be triggered in one of two ways. The mandatory triggering occurred when the Attorney General received information alleging a violation of Federal law by a covered official. Under the discretionary provision, the Attorney General could determine that some other individual posed a conflict for him or the Department. Thereafter, there were several steps the Attorney General would take to determine whether an independent counsel was necessary under the Act. The first step was the threshold inquiry, in which the Attorney General examined the sufficiency of the allegations presented to determine whether there were grounds to investigate. In determining the sufficiency of the allegations that a covered individual violated a Federal law the Attorney General could only consider the ``degree of specificity of the information'' and the ``credibility of the source of the information.'' \28\ The Attorney General would have 30 days in which to make this determination.\29\ If, within the 30 days, he decided that the information received was specific and the source was credible, or, if he were unable to make any determination within that time, the investigation would move on to the ``preliminary investigation'' stage.\30\ The Act required that the preliminary investigation be completed within 90 days.\31\ In addition, the Attorney General was able to request that the Special Division grant a one time extension of 60 days in which to complete the preliminary investigation.\32\ During this phase, the Attorney General, after reviewing the matter, was to determine whether there were ``reasonable grounds to believe that further investigation is warranted.'' \33\ --------------------------------------------------------------------------- \28\ 28 U.S.C. Sec. 591(d)(1). \29\ 28 U.S.C. Sec. 591(d)(2). \30\ 28 U.S.C. Sec. 591 (a), (c). \31\ 28 U.S.C. Sec. 592(a)(1). \32\ 28 U.S.C. Sec. 592(a)(3). \33\ 28 U.S.C. Sec. 592(a)(1). --------------------------------------------------------------------------- The Act was drafted so that the Department of Justice would have limited authority to conduct an investigation during the threshold inquiry and preliminary investigation stages; therefore the parameters of those inquiries were purposely narrow. Similarly, there was no authority to ``convene grand juries, plea bargain, grant immunity, or issue subpoenas'' during the preliminary investigation.\34\ The statute intentionally limited the power of the Attorney General during this period in order to prevent his extensive participation in substantive decision making. Again, this is to avoid potential conflicts of interest. If, at the completion of the preliminary inquiry, the Attorney General determined that no further investigation were warranted, he was required to notify the Special Division of the Court of Appeals \35\ that handled independent counsel matters.\36\ As a check on his discretion, the Attorney General was not permitted to make a determination that ``no further investigation was warranted'' based on a finding that the official lacked the state of mind required for the violation, unless there was ``clear and convincing evidence.'' \37\ Congress believed that the Attorney General would rarely base a determination on state of mind, noting: ``Congress believes that the Attorney General should rarely close a matter under the independent counsel law based upon finding a lack of criminal intent, due to the subjective judgments required and the limited role accorded the Attorney General in the independent counsel process.''\38\ --------------------------------------------------------------------------- \34\ 28 U.S.C. Sec. 592(a)(2)(A). \35\ The Special Division is a division of the U.S. Court of Appeals for the District of Columbia Circuit. The court consists of three circuit court judges or justices appointed by the Chief Justice of the United States. No two judges may be named to the Special Division from the same court at the same time, and one of the judges must be from the District of Columbia Circuit. The judges are appointed for 2 year terms, with any vacancy being filled only for the remainder of the 2-year period. 28 U.S.C. Sec. 49. \36\ 28 U.S.C. Sec. 592(b). \37\ 28 U.S.C. Sec. 592(a)(2)(B)(ii). \38\ ``Independent Counsel Provisions: An Overview of the Operation of the Law,'' CRS Rept. No. 98-283, at FN 22 (Mar. 20, 1998) (citing H. Rept. No. 103-511, at 11 (1994)). --------------------------------------------------------------------------- In considering whether further investigation was warranted, the Attorney General was required to take into account the written or other established policies of the Department of Justice relating to the conduct and prosecution of criminal investigations.\39\ Had the Attorney General found reasonable grounds to believe that further investigation was warranted, or after the specified period no determination was made, the Attorney General was required to apply to the Special Division for the appointment of an independent counsel.\40\ The Special Division then was responsible for appointing an independent counsel and defining his prosecutorial jurisdiction.\41\ --------------------------------------------------------------------------- \39\ 28 U.S.C. Sec. 592(c)(1)(B). \40\ 28 U.S.C. Sec. 592(c). \41\ 28 U.S.C. Sec. 593(b). --------------------------------------------------------------------------- During the campaign finance investigation Attorney General Reno initiated several preliminary investigations, including two related to President Clinton and three related to Vice President Gore.\42\ Independent of those investigations, FBI Director Louis Freeh and Task Force Supervising Attorney Charles La Bella recommended that the Attorney General request the appointment of an independent counsel based on their opinion that both the mandatory and discretionary provisions of the Act had been triggered. Miss Reno declined to request the appointment of an independent counsel in each instance.\43\ --------------------------------------------------------------------------- \42\ Attorney General Reno initiated a preliminary investigation of President Clinton to examine whether he violated 18 U.S.C. section 607. The investigation related to alleged fundraising telephone calls made by President Clinton from the White House. The Attorney General also initiated a preliminary investigation of President Clinton to examine the Common Cause allegations of violations of election laws. Vice President Gore was subject to the same preliminary investigation. Two additional preliminary investigations were opened on Vice President Gore relating to fundraising telephone calls he made from his White House office. The first investigation was an inquiry into whether Gore violated section 607. The second investigation looked into whether Gore made false statements to investigators during the initial preliminary inquiry. \43\ In re William Jefferson Clinton, notification to the court pursuant to 28 U.S.C. Sec. 592(b) of results of preliminary investigation (Special Div. DC Cir. 1997); in re William Jefferson Clinton, notification to the court pursuant to 28 U.S.C. Sec. 592(b) of results of preliminary investigation (Special Div. DC Cir. 1998); in re Albert Gore, Jr., notification to the court pursuant to 28 U.S.C. Sec. 592(b) of results of preliminary investigation (Special Div. DC Cir. 1997); in re Albert Gore, Jr., notification to the court pursuant to 28 U.S.C. Sec. 592(b) of results of preliminary investigation (Special Div. DC Cir. 1998); in re Albert Gore, Jr., notification to the court pursuant to 28 U.S.C. Sec. 592(b) of results of preliminary investigation (Special Div. DC Cir. 1998). --------------------------------------------------------------------------- B. A Rocky Start: Early Conflicts in the Justice Department's Campaign Finance Investigation 1. Reno's Job ``Hangs in the Balance'' After the November 1996 elections, Attorney General Reno was called on to decide whether to appoint an independent counsel to look into allegations of campaign finance abuses. As early as October 9, 1996, public interest group Common Cause requested that an independent counsel be appointed to investigate allegations of abuses on the part of both Republicans and Democrats.\44\ Common Cause also argued that Attorney General Reno and the Department of Justice had a conflict in conducting any criminal probe of campaign fundraising.\45\ Soon thereafter, Attorney General Reno received requests from the chairmen of four House committees and Senator John McCain for her to appoint an independent counsel.\46\ Pressure was building for a thorough investigation into the allegations of campaign finance abuses that were appearing daily in newspapers across the country. Many people believed that because the investigation would necessarily focus on political activities and the actions of President Clinton, Vice President Gore, and other high-ranking administration officials, the Attorney General would have a conflict were she to conduct the investigation. --------------------------------------------------------------------------- \44\ Common Cause (visited Sept. 9, 2000) <http:// www.commoncause.org/publications/1196jusstm.htm>. Common Cause alleged that both the Clinton and Dole campaigns violated Federal election laws by using their respective party committees to purchase TV advertisements, while circumventing the spending limits imposed on the candidates. Id. \45\ Id. \46\ Connie Cass, ``Democratic Committee Bows to Pressure and Releases Financial Data,'' AP, Oct. 29, 1996. Chairman Bill Clinger, Chairman Benjamin Gilman, Chairman Gerald Solomon, and Chairman Bill Thomas all requested that the Attorney General appoint an independent counsel to look into allegations of improprieties in Democrats' fundraising, including allegations of illegal contributions from foreign individuals and corporations. Id. --------------------------------------------------------------------------- While Reno weighed whether to appoint an independent counsel for campaign finance, President Clinton was determining which members of his Cabinet would remain for his second term. Attorney General Reno already had stated publicly that she would like to remain in her position. However, the President refused to comment on whether he would retain Reno as Attorney General.\47\ In fact, the press reported that ``White House aides, meanwhile, have privately said they wish Reno would leave in part because of her readiness to send allegations of official misconduct to independent counsels.''\48\ The White House was making it clear, through the press, that the President was contemplating appointing a new Attorney General, in part because Reno had requested too many independent counsels. The Attorney General serves at the pleasure of the President, and the President made it clear that he did not want an independent counsel appointed for the campaign finance investigation. --------------------------------------------------------------------------- \47\ President William J. Clinton, White House press conference (Nov. 8, 1996). \48\ Carolyn Skorneck, ``Attorney General Rejects Call for Special Prosecutor,'' AP, Nov. 8, 1996. --------------------------------------------------------------------------- Instead of appointing an independent counsel, in late November 1996, Attorney General Reno created a ``Task Force'' to investigate the allegations of campaign finance abuses in the 1996 election cycle. At the beginning of the investigation, the Task Force was nothing more than a few attorneys in the Public Integrity Section (PIS) of the Department of Justice. PIS was headed by Lee Radek, who Attorney General Reno placed in charge of the investigation.\49\ As Chief of PIS, Radek was responsible for conducting preliminary investigations under the Independent Counsel Act and making recommendations to the Attorney General on its application.\50\ Radek made his views on the Act very clear, stating in an interview that ``[i]nstitutionally, the independent counsel statute is an insult.'' \51\ He added, ``[i]t's a clear enunciation by the legislative branch that we cannot be trusted on certain species of cases.'' \52\ --------------------------------------------------------------------------- \49\ GAO report at 20. \50\ GAO report at 27. \51\ Jeffrey Goldberg, ``What Is Janet Reno Thinking?,'' NY Times Magazine, July 6, 1997, at 30. \52\ Id. --------------------------------------------------------------------------- FBI Director Louis Freeh expressed to Attorney General Reno his reservations about Radek and PIS' involvement in the campaign finance investigation. Director Freeh's concerns stemmed from a conversation between Lee Radek and FBI Deputy Director William J. Esposito prior to the integration of the Department of Justice and FBI agents into a formal Task Force. A meeting between Esposito and Radek took place on November 20, 1996, the same time that the media was reporting on the precarious nature of Reno's position.\53\ They met to discuss, among other things, the campaign finance investigation.\54\ Mr. Esposito testified that at the end of his meeting with Radek that, ``[Radek] made the statement that there is a lot of pressure on him [Radek], and the Attorney General's job could hang in the balance.'' \55\ Esposito further testified that Radek linked the Attorney General's job status with the pressure on Radek and PIS.\56\ Concerned about the statement, Esposito reported the comment to Director Freeh. --------------------------------------------------------------------------- \53\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the House Committee on Government Reform, 106th Cong. 38 (2000) (testimony of William J. Esposito) (preliminary transcript). \54\ Id. \55\ Id. at 39. \56\ Id. --------------------------------------------------------------------------- Radek's comment raised the question of whether he was able to be an impartial decisionmaker in the campaign finance investigation. Director Freeh also was troubled by the statement, and raised the issue with the Attorney General.\57\ In a memorandum outlining his conversation with Attorney General Reno, Director Freeh indicated that he told the Attorney General that, ``those comments would be enough for me to take [Radek] and the Criminal Division off the case completely.'' \58\ Furthermore, Radek himself later acknowledged that he was aware of rumors that the White House might not retain Reno as Attorney General during the second term. Radek stated, ``I recall press speculation that the possibility of her being the Attorney General into the second term might be being held up because the White House was concerned about the way she was doing her job[,] including this campaign finance investigation.'' \59\ Freeh's concerns regarding Radek were justified considering the timing of the comments and the position Radek assumed in the investigation. --------------------------------------------------------------------------- \57\ Memorandum from Louis J. Freeh, Director, Federal Bureau of Investigation, to William Esposito, Deputy Director, Federal Bureau of Investigation (Dec. 9, 1996) (exhibit 1). \58\ Id. \59\ ``Oversight Hearing on 1996 Campaign Finance Investigation,'' hearing before the Senate Subcommittee on Administrative Oversight and the Courts of the Senate Committee on the Judiciary, 106th Cong. 18 (2000) (Federal Document Clearing House transcript). --------------------------------------------------------------------------- According to Director Freeh, the Attorney General said that she would look into the matter of Radek's comment.\60\ However, none of the individuals who were parties to the conversation were contacted about the statement.\61\ In fact, after her conversation with Director Freeh, the Attorney General formally established the Campaign Financing Task Force and placed it under the auspices of the PIS, making Radek the single most important attorney in the campaign finance investigation. --------------------------------------------------------------------------- \60\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the House Committee on Government Reform, 106th Cong. 45 (2000) (testimony of William J. Esposito) (preliminary transcript). \61\ Id. at 46-48. --------------------------------------------------------------------------- The only follow-up Attorney General Reno ever conducted on Radek's comment occurred when the Freeh memo came to light, 3\1/2\ years after it was written. Once Director Freeh's concerns were made public, in May 2000, Deputy Attorney General Eric Holder and even Attorney General Reno herself, contacted Esposito and Radek to determine what they recalled about the meeting.\62\ Such attention from the highest levels appears to indicate that the Attorney General realized that her disregard for Director Freeh's concerns created the perception that the Justice Department purposely ignored the conflict. As for the Attorney General, she stated that she did not recall the meeting to which Director Freeh referred in his memorandum, and did not recall any concerns raised regarding PIS or Lee Radek.\63\ Likewise, Radek did not recall his meeting with FBI Deputy Director Esposito.\64\ When called before House and Senate committees to testify about his alleged statement, Radek insisted that he could not recall the meeting with Esposito, but nevertheless said that he would not have made a statement linking pressure and the Attorney General's job ``hanging in the balance.'' \65\ It is difficult to understand how Radek was able to both state affirmatively that he had no recollection of the Esposito meeting and be certain that he did not make the statement attributed to him in Director Freeh's memo.\66\ --------------------------------------------------------------------------- \62\ Id. at 46-48, 50. \63\ Attorney General Janet Reno, press conference (May 19, 2000). \64\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the House Committee on Government Reform, 106th Cong. 42 (2000) (testimony of Lee Radek) (preliminary transcript). \65\ Id.; ``Oversight Hearing on 1996 Campaign Finance Investigation,'' hearing before the Senate Subcommittee on Administrative Oversight and the Courts of the Senate Committee on the Judiciary, 106th Cong. 17 (2000) (Federal Document Clearing House transcript). \66\ ``Oversight Hearing on 1996 Campaign Finance Investigation,'' hearing before the Senate Subcommittee on Administrative Oversight and the Courts of the Senate Committee on the Judiciary, 106th Cong. 22 (2000) (Federal Document Clearing House transcript). --------------------------------------------------------------------------- 2. PIS Control of the Task Force Relations between the FBI and Department of Justice were somewhat shaky in the beginning. Prior to any formalization of the Task Force, the Department of Justice asserted to the public and the media that the Federal Bureau of Investigation (FBI) was the lead agency on the campaign finance investigation.\67\ However, the FBI had yet to be contacted by the Justice Department. Despite the assertions about the FBI, PIS had been working with Commerce Department Inspector General investigators on the campaign finance matter.\68\ FBI Director Louis Freeh stated that he told the Attorney General, ``it didn't make sense for PIS to call the FBI the `lead agency' in this matter while operating a `Task Force' with DOC [Commerce] IGs who were conducting interviews of key witnesses without the knowledge or participation of the FBI.'' \69\ Freeh then recommended that the FBI and ``hand-picked DOJ attorneys from outside Main Justice'' conduct the investigation.\70\ --------------------------------------------------------------------------- \67\ Exhibit 1. \68\ Id. \69\ Id. See also Daniel Klaidman, ``Dodging A Bullet (Attorney General Janet Reno and the Investigation into Allegedly Illicit Fundraising by the Democratic Party),'' Newsweek, Dec. 9, 1996, at 24. \70\ Exhibit 1. --------------------------------------------------------------------------- Director Freeh also expressed general concern over the prospect of PIS controlling the investigation. In his memorandum, Director Freeh indicated that he told the Attorney General that ``in [his] view, PIS was not capable of conducting the thorough, aggressive kind of investigation which was required.'' \71\ The Attorney General disregarded Director Freeh's recommendation and formally installed the investigation in PIS, headed by Radek. Although it was apparent that the campaign finance investigation would be followed very closely by the public, the media, and Congress, Radek appointed a junior PIS trial attorney, Laura Ingersoll, to lead the investigation. It appeared that the Justice Department was setting the investigation up to fail. --------------------------------------------------------------------------- \71\ Id. --------------------------------------------------------------------------- A prime example of PIS' attitude toward the investigation and the Independent Counsel Act is the early investigation of Vice President Gore's fundraiser at the Hsi Lai Temple in Los Angeles. After the media reported allegations of the Vice President's involvement in the fundraiser at the Buddhist temple, the local U.S. Attorney's Office in California consulted with Main Justice and was given approval to investigate the matter on October 17, 1996.\72\ In the following 2 weeks Steve Mansfield, the Assistant U.S. Attorney assigned to the matter, actively investigated it. However, shortly before the election, Lee Radek informed the U.S. Attorney's Office that Main Justice, through PIS, was taking the case away from them.\73\ Radek indicated that PIS would handle the case because the independent counsel statute had been implicated.\74\ In an effort to continue his investigation, Mansfield vainly objected to PIS' effort to take the case away.\75\ --------------------------------------------------------------------------- \72\ See letter from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, to Steven E. Zipperstein, Chief Assistant U.S. Attorney, U.S. Attorney's Office, Central District of California (Nov. 1, 1996). \73\ Memorandum from Craig C. Donsanto, Public Integrity Section, U.S. Department of Justice, to Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice (Nov. 1, 1996). \74\ Id. \75\ Id. --------------------------------------------------------------------------- What is even more troubling is that, after having taken the case away from the Central District, under the pretext of an investigation to determine whether the application of the Independent Counsel Act was appropriate, PIS never conducted the threshold inquiry. PIS' inaction gave the members of the Hsi Lai Temple the opportunity to destroy documents central to the investigation. Had they allowed the U.S. Attorney's Office to conduct the investigation, they surely would have been able to quickly subpoena documents and witnesses. In order to determine whether PIS made any attempt to investigate the matter, the committee subpoenaed the Justice Department's file on the Hsi Lai preliminary investigation. In response, the committee received a stack of news clippings.\76\ There was obviously no investigation. It appears that PIS took the case away from the U.S. Attorney's office on a pretext. Radek's misleading explanations were typical of his handling of the fundraising investigation. He admittedly disliked the Independent Counsel Act, and had already acknowledged that he was under a lot of pressure regarding the Independent Counsel Act provisions. His actions with regard to the Hsi Lai Temple were representative of the manner in which Radek conducted himself during the campaign finance investigation. --------------------------------------------------------------------------- \76\ Subpoena from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General, U.S. Department of Justice (June 26, 2000) (seeking all records relating to any possible consideration of the appointment of an independent counsel in the Hsi Lai Temple matter). All correspondence between and subpoenas to the Department of Justice are contained in appendix I. --------------------------------------------------------------------------- Radek's control over the campaign finance investigation caused some friction with the FBI as well. From the beginning, the working relationship between the Department of Justice and FBI was strained.\77\ DOJ attorneys and FBI investigators disagreed over the proper approach to the investigation, and an atmosphere of mistrust developed.\78\ One of the problems was that PIS did not have any plan for investigating the campaign finance matter.\79\ Radek assumed that PIS could conduct the campaign finance investigation as he would conduct any other PIS investigation.\80\ In so doing, he underestimated the nature and breadth of the investigation. Unfortunately for PIS, its normal caseload did not compare with the campaign finance investigation. It ultimately became clear that PIS and Ingersoll were unable to handle such a complicated investigation. --------------------------------------------------------------------------- \77\ GAO report at 1. \78\ Id. at 1. \79\ Id. at 20. \80\ Id. at 20. --------------------------------------------------------------------------- Attorney General Reno eventually was forced to follow Director Freeh's original recommendation. The Task Force under PIS was failing and the structure had to be changed. The GAO investigation of the management and oversight, operations, and results of the Task Force reported: 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 [the Public Integrity Section] from its leadership role and the commitment of additional staff and information management resources to get the investigation on track.\81\ --------------------------------------------------------------------------- \81\ Id. at 5. In September 1997, Charles La Bella, first Assistant U.S. Attorney in San Diego, and James DeSarno, a former Special Agent-in-Charge of the FBI's New Orleans Field Office were placed in charge of the Task Force. After La Bella's arrival, Lee Radek and PIS were taken out of the direct chain of command.\82\ However, Radek maintained primary responsibility for threshold inquiries and preliminary investigations under the Independent Counsel Act.\83\ --------------------------------------------------------------------------- \82\ Id. at 37. \83\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the House Committee on Government Reform, 106th Cong. 151-152 (2000) (testimony of Lee Radek) (preliminary transcript). The GAO report indicated that, ``Mr. Radek continued a direct role whenever Independent Counsel statute issues arose, as PI maintained primary responsibility for initial inquiries and preliminary investigations related to the statute.'' GAO report at 37. --------------------------------------------------------------------------- It was the application of the independent counsel statute that remained one of the main areas of contention between the Department of Justice and FBI.\84\ Radek categorized the conflict as disagreements over the threshold of information required to trigger a recommendation for an independent counsel.\85\ The FBI agreed, indicating that senior FBI officials believed Radek's criteria for what information was needed to trigger the seeking of an independent counsel were too stringent.\86\ The FBI had been wary of its interaction with the Department of Justice on independent counsel issues, as it was excluded from the independent counsel decisionmaking process previously.\87\ Director Freeh wrote, ``[i]t was unfortunate that DOJ declined to allow the FBI to play any role in the Independent Counsel referral deliberations.'' \88\ By late-1997, Director Freeh made a formal recommendation that the Attorney General appoint an independent counsel. --------------------------------------------------------------------------- \84\ GAO report at 4. \85\ Id. at 24. \86\ Id. at 25. \87\ Exhibit 1. \88\ Id. --------------------------------------------------------------------------- C. Attorney General Reno Changed Her Interpretation of the Independent Counsel Act To understand how the Attorney General was able to consistently refuse to appoint an independent counsel in the campaign financing investigation, it is necessary to understand her interpretation of the Independent Counsel Act. In addition, it has to be pointed out that her interpretation has not been consistent. Attorney General Reno made numerous appointments under the discretionary provision of the statute that she never could have made under her present day interpretation. Her first articulation of her revised analysis was in response to a March 1997, Senate Judiciary Committee request that she appoint an independent counsel in the campaign finance matter.\89\ Reno responded 1 month later, declining to request the appointment of an independent counsel.\90\ In the response, she laid out several points about the Independent Counsel Act itself, upon which her refusal was based.\91\ --------------------------------------------------------------------------- \89\ Senate Judiciary Committee Chairman Orrin G. Hatch and nine other Republican Members made the request. See letter from Janet Reno, Attorney General, U.S. Department of Justice, to Orrin G. Hatch, chairman, Senate Judiciary Committee (Apr. 14, 1997). \90\ Id. \91\ Id. --------------------------------------------------------------------------- 1. Appearance of a Conflict Versus Actual Conflict The key to Reno's arguments was her interpretation of the statute itself. If one were to follow the simple language of the statute, it would have been difficult for Reno to explain why she could not use the discretionary provision of the Act to request an independent counsel. Reno needed to interpret the statute in such a way that she could argue that the Act did not permit her to invoke the discretionary clause. Breaking with her own previous interpretations on the discretionary provision of the Act, Attorney General Reno stated in her letter to the Senate Judiciary Committee that ``[u]nder the Act, I must conclude that there is a potential for an actual conflict of interest, rather than merely an appearance of a conflict of interest.'' \92\ In the past, she had requested the appointment of independent counsels based on an appearance of a conflict. --------------------------------------------------------------------------- \92\ Letter from Janet Reno, Attorney General, U.S. Department of Justice, to Orrin G. Hatch, chairman, Senate Judiciary Committee (Apr. 14, 1997). --------------------------------------------------------------------------- Reno repeated her new understanding of the discretionary provision in her May 1997 testimony before the Senate Judiciary Committee, where she was questioned about her interpretation.\93\ In her testimony, she repeated her conclusions regarding the discretionary provision, using the exact words of her letter.\94\ Reno expressly relied on the legislative history of a single proposed amendment to the Independent Counsel Act for her interpretation.\95\ She testified regarding her theory: --------------------------------------------------------------------------- \93\ ``Oversight of the Department of Justice,'' hearing before the Senate Committee on the Judiciary, 105th Cong. 12 (1997). \94\ She stated that she ``must conclude that there is a potential for an actual conflict of interest rather than merely an appearance of a conflict of interest.'' ``Oversight of the Department of Justice,'' hearing before the Senate Committee on the Judiciary, 105th Cong. 12 (1997) (testimony of Attorney General Janet Reno). \95\ Id. The Congress in 1994, under the reauthorization, considered a proposal for a more flexible standard for invoking the discretionary clause which would have permitted its use to refer any matter to an independent counsel when the purposes of the Act would be served. Congress rejected this suggestion, explaining that such a standard would substantially lower the threshold for use of the general discretionary provision.\96\ --------------------------------------------------------------------------- \96\ Id. However, as support for her argument, Reno was relying on negative legislative history.\97\ She attempted to define what Congress intended by describing what it did not do, rather than what it did. The Justice Department itself had rejected the practice, noting that it is not useful as an interpretive tool.\98\ In fact, a Justice Department report to the Attorney General states, ``[r]ejection is doubtful evidence of the legislative intent, let alone the meaning of the statute as enacted.'' \99\ Furthermore, the Attorney General neglected to mention the report language supporting the idea of an apparent conflict of interest. The legislative history is replete with statements of intent that completely contradict the Attorney General's interpretation.\100\ For example, the Senate report accompanying the 1982 amendments to the Act stated, ``[t]he Committee recognizes that there may be instances when investigations by the Attorney General of persons not covered by the Act may create an actual or apparent conflict of interest.'' \101\ Not only did Reno have a problem with her interpretation of the Act's legislative history, she had her own prior statements, as well as prior requests she had made for the appointment of independent counsels to explain away. --------------------------------------------------------------------------- \97\ Furthermore, Attorney General Reno was relying on the statement of only one Congressman, Representative Hall, for her argument. \98\ ``Using and Misusing Legislative History: A Re-Evaluation of the Status of Legislative History in Statutory Interpretation,'' report to the Attorney General (Jan. 5, 1989). The report states: --------------------------------------------------------------------------- Rejection of proposed language does not necessarily imply an intent to reject its substance. Language may be rejected because it is perceived to be superfluous and potentially damaging to the prospects for passage of the bill. If the perception that it is superfluous is correct, the actual meaning of the statute is the same without the language as it is with it; rejection of that language cannot imply that the enacted statute should be interpreted to mean something different. Id. at 107. --------------------------------------------------------------------------- \99\ Id. at 108. \100\ For examples of such statements, see section I.A. above. \101\ ``Using and Misusing Legislative History: A Re-Evaluation of the Status of Legislative History in Statutory Interpretation,'' report to the Attorney General, at 17-18 (Jan. 5, 1989) (citing S. Rept. No. 97-469, at 9 (1981)) (emphasis added). --------------------------------------------------------------------------- When called upon to testify before the Senate Governmental Affairs Committee on May 14, 1993, regarding the reauthorization of the Independent Counsel Act, Janet Reno stated: It is absolutely essential for the public to have confidence in the system and you cannot do that when there is conflict or an appearance of conflict in the person who is, in effect, the Chief prosecutor. There is an inherent conflict here, and I think that that is why this Act is so important. * * * * * The Independent Counsel Act was designed to avoid even the appearance of impropriety in the consideration of allegations of misconduct by high-level Executive Branch officials and to prevent, as I have said, the actual or perceived conflicts of interest. The Act thus served as a vehicle to further the public's perception of fairness and thoroughness in such matters, and to avert even the most subtle influences that may appear in an investigation of highly placed Executive officials.\102\ --------------------------------------------------------------------------- \102\ ``To Reauthorize the Independent Counsel Law for an Additional 5 Years, and for Other Purposes,'' hearing before the Senate Committee on Governmental Affairs, 103d Cong. 12 (1993) (statement of Attorney General Reno). After the reauthorization of the Independent Counsel Act on June 30, 1994, the Attorney General, adhering to her original interpretation, referred at least four matters to an independent counsel that fell under the discretionary provision of the Act. She first referred what has become known as the Whitewater matter. In that case, she requested the independent counsel under the political conflict of interest provision because the individuals under investigation were friends and former business partners of the President and Mrs. Clinton. Similarly, under the discretionary provision, Attorney General Reno asked that the jurisdiction of the Whitewater Independent Counsel be expanded to include an investigation of former Assistant to the President for Management and Administration David Watkins for the Travel Office matter.\103\ David Watkins did not satisfy any of the requirements for the mandatory provision of the Act, and had left the White House's employ several years earlier. Several months after the Watkins referral, the Attorney General again requested that the Whitewater Independent Counsel's jurisdiction be expanded to include an investigation of Anthony Marceca, an investigator with the U.S. Army Criminal Investigation Division who had been detailed to the White House. The only political conflict of interest Mr. Marceca, or any of these individuals, posed to the Attorney General or the Justice Department were their connection to the White House. Finally, the Attorney General requested that the Whitewater Independent Counsel's jurisdiction be expanded to include an investigation of a perjury allegation against former Counsel to the President Bernard Nussbaum. Nussbaum left the White House nearly 3 years earlier. As with all of the prior investigations, Nussbaum did not fall under the mandatory provision of the Act. The Attorney General had to make the determination that there was a political conflict of interest for her to investigate the McDougals, David Watkins, Anthony Marceca, and Bernard Nussbaum. --------------------------------------------------------------------------- \103\ Prior to joining the White House staff, Watkins had also worked on President Clinton's 1992 campaign. --------------------------------------------------------------------------- It is obvious that the Attorney General was applying the standard of an apparent conflict in these earlier independent counsel appointments. Had she been applying the actual conflict standard she surely would not have come to the conclusion that she had an actual conflict of interest with individuals such as the McDougals, David Watkins, Bernie Nussbaum, or Anthony Marceca, but not with any of the individuals involved in the campaign finance investigation. Her conflict, or perceived conflict, with those individuals for whom she did recommend an independent counsel was based on their relationship with President Clinton or the White House generally. The most glaring example is Anthony Marceca, a low-level detailee from the Department of Defense. It is laughable that Reno would determine that Marceca posed a conflict of interest for her while fundraisers for the DNC and friends of the President, such as John Huang and Charlie Trie, did not. By changing her interpretation, Reno set the bar for appointing an independent counsel even higher for the campaign finance investigation than previous investigations. 2. Standard for Initiating a Preliminary Investigation Reno also raised the bar by ignoring the statutory language of the discretionary provision, and instead applying a higher standard for initiating a preliminary investigation. In interpreting the discretionary provision of the Independent Counsel Act, the Attorney General stated, contrary to the statutory language, that: If, on the other hand, I receive specific and credible evidence that a person not covered by the mandatory provisions of the Act has committed a crime and I determine that a conflict of interest exists with respect to the investigation of that person, I may--but need not--commence a preliminary investigation pursuant to the provisions of the Act.\104\ --------------------------------------------------------------------------- \104\ Letter from Janet Reno, Attorney General, U.S. Department of Justice, to Orrin G. Hatch, chairman, Senate Committee on the Judiciary 3 (Apr. 14, 1997) (emphasis added). --------------------------------------------------------------------------- However, the statute reads: When the Attorney General determines that an investigation or prosecution of a person by the Department of Justice may result in a personal, financial, or political conflict of interest, the Attorney General may conduct a preliminary investigation of such person in accordance with section 592 if the Attorney General receives information sufficient to constitute grounds to investigate whether that person may have violated federal criminal law. . . .\105\ --------------------------------------------------------------------------- \105\ 28 U.S.C. Sec. 591(c)(1) (emphasis added). Under Reno's standard, before initiating a preliminary investigation under the discretionary provision, she needed to have specific and credible evidence that a crime was actually committed. However, under the language of the statute, information that a crime may have been committed was sufficient. The original independent counsel provisions of the Ethics in Government Act of 1978, did require that in order to trigger a preliminary investigation, ``the Attorney General receive[] specific information that a person has committed a violation. . . .'' \106\ However, in 1982, the independent counsel provisions were reauthorized and amended.\107\ At that time, Congress changed the name from special prosecutor to independent counsel, and changed the requirement for triggering a preliminary investigation to ``grounds to investigate whether a person may have violated . . .'' \108\ The accompanying Senate report clarified: --------------------------------------------------------------------------- \106\ 28 U.S.C. Sec. 591 (1978). \107\ Public Law 97-409. \108\ Id. It cannot be expected at this first step in the process that the Attorney General could or should determine that a criminal act has been committed. The purpose of the change is to make it clear that the Attorney General should proceed under the Act if the information indicates that a violation of criminal law may have taken place.\109\ --------------------------------------------------------------------------- \109\ S. Rept. No. 97-469 (1981). The legislative history of the provision clearly shows that Congress intended to create a lower threshold, and intentionally replaced the language ``has committed'' with ``may have.'' Throughout the campaign finance investigation Reno used her creative analysis of the statute to support her argument that she did not create a conflict by investigating. However, both FBI Director Freeh and Task Force Supervising Attorney Charles La Bella wrote detailed memoranda to the Attorney General explaining why they believed that she did have a conflict of interest, and therefore must appoint an independent counsel.\110\ They pointed out that the Task Force investigation was leading to the highest levels of the White House. Nevertheless, Attorney General Reno adopted a very narrow view of the language of the independent counsel statute, allowing her to claim that the campaign finance investigation had not yet reached the legal threshold for applying the Act. --------------------------------------------------------------------------- \110\ Memorandum from Louis J. Freeh, Director, Federal Bureau of Investigation, to Janet Reno, Attorney General, U.S. Department of Justice (Nov. 24, 1997); memorandum from Charles La Bella, Supervising Attorney, U.S. Department of Justice Campaign Financing Task Force, and James DeSarno, Assistant Director, Federal Bureau of Investigation, to Janet Reno, Attorney General, U.S. Department of Justice, and Louis J. Freeh, Director, Federal Bureau of Investigation, (July 16, 1998). Both memoranda also recommend that the Attorney General recommend the appointment of an independent counsel pursuant to the mandatory provisions of the Act. Id. --------------------------------------------------------------------------- D. Memoranda from FBI Director Louis J. Freeh and Task Force Supervising Attorney Charles La Bella Recommending that an Independent Counsel Be Appointed Both FBI Director Freeh and Task Force Supervising Attorney Charles La Bella believed that the Attorney General was required, under the Independent Counsel Act, to request the appointment of an independent counsel in the campaign finance matter.\111\ In detailed memoranda, they applied the facts of the case to the independent counsel statute and came to the same conclusions. As the head of the FBI, Director Freeh was the chief investigator for the campaign finance investigation, and was familiar with both the facts and the law. Charles La Bella was Reno's handpicked choice for the Supervising Attorney position. La Bella coordinated the entire investigation, giving him the benefit of a comprehensive view of the matter. Freeh and La Bella were the two individuals with perhaps the best grasp of the investigation as a whole. Nevertheless, Attorney General Reno ignored their counsel. She insisted on compartmentalizing the investigation, viewing from a vacuum only one issue at a time and drawing no connections between the massive illegal fundraising and the push on the part of the administration to raise unprecedented amounts of money. --------------------------------------------------------------------------- \111\ Id. --------------------------------------------------------------------------- 1. The Freeh Memorandum In the fall of 1997, Attorney General Reno was confronted with her first decisions under the Independent Counsel Act in the campaign finance investigation. The initial question was whether to initiate preliminary investigations of Vice President Gore and President Clinton for fundraising telephone calls made from the White House.\112\ Reno agreed to the preliminary investigations, and was soon faced with making the final decision on whether to request the appointment of an independent counsel. Prior to her decision, FBI Director Freeh forwarded her a memorandum offering his recommendation that an independent counsel be appointed.\113\ --------------------------------------------------------------------------- \112\ See memorandum from Mark M. Richard, Acting Assistant Attorney General, U.S. Department of Justice, to Janet Reno, Attorney General, U.S. Department of Justice (Sept. 29, 1997) (recommending that the Attorney General initiate a preliminary investigation into whether Vice President Albert Gore, Jr., violated Federal criminal law, 18 U.S.C. Sec. 607, requiring that a preliminary investigation be commenced); memorandum from Mark M. Richard, Acting Assistant Attorney General, U.S. Department of Justice, to Janet Reno, Attorney General, U.S. Department of Justice (Oct. 14, 1997) (recommending that the Attorney General initiate a preliminary investigation into whether President William Jefferson Clinton violated Federal criminal law, 18 U.S.C. Sec. 607, in soliciting contributions to the Democratic National Committee from his office in the White House). \113\ See memorandum from Louis J. Freeh, Director, Federal Bureau of Investigation, to Janet Reno, Attorney General, U.S. Department of Justice (Nov. 24, 1997) (exhibit 2). --------------------------------------------------------------------------- The November 24, 1997, memorandum from FBI Director Louis J. Freeh outlined his evaluation of the campaign finance investigation to date.\114\ He recounted the purpose and structure of the independent counsel statute, citing the legislative history. He reviewed Congress' intent in passing the legislation, outlining the justifications for the Act itself.\115\ Freeh, quoting from the original Senate report on the Act, repeated the reasons for the Act's enactment: the Department of Justice has difficulty investigating alleged criminal activity by high-level government officials; it is too much to ask for any person that he investigate his superior; and, the appearance of conflict is as dangerous to public confidence in the administration of justice as true conflict itself.\116\ --------------------------------------------------------------------------- \114\ Id. \115\ Id. \116\ Id. at 1 (quoting the Senate Governmental Affairs Committee report upon the enactment of the Independent Counsel Act. S. Rept. No. 100-123, at 2 (1978)). --------------------------------------------------------------------------- a. FBI's Investigative Plan In order to explain the context in which the memorandum was written, Freeh reviewed the Task Force's investigative plan, which investigators had been following since early 1997.\117\ The Task Force had developed three distinct areas of investigation, which they believed were interrelated.\118\ The three matters were: --------------------------------------------------------------------------- \117\ See id. at 7. \118\ See id. <bullet> An aggressive campaign fundraising operation developed and executed by a core group of individuals from the DNC and the White House, including the President, the Vice President, and a number of top --------------------------------------------------------------------------- White House advisors. <bullet> Allegations of illegal conduct by a myriad of opportunists and other individuals who gained White House access in order to further their personal, business, and political interests. <bullet> Efforts by the [People's Republic of China] and other countries to gain foreign policy influence by illegally contributing foreign money to U.S. political campaigns and to the DNC through domestic conduits.\119\ --------------------------------------------------------------------------- \119\ Id. Director Freeh explained that, ``[t]he core group investigative plan was based on a theory that most of the alleged campaign abuses flowed, directly or indirectly from the all-out effort by the White House and the DNC to raise money.'' One of the reasons for this was the President's decision to put in place an early and expensive media campaign. In order to pay for all of the television airtime and commercials they wanted to run, Clinton/Gore '96 and the DNC had to raise huge sums of money. Director Freeh pointed out that it was this need for money that led to things such as the White House coffees, overnights in the Lincoln bedroom, Presidential perks for large donors, as well as the telephone solicitations by the President and Vice President.\120\ Freeh asserted that nearly all of the FBI investigators' ``investigative avenues'' were linked to the initiatives of the core group.\121\ That was not to say that Freeh believed that the core group members were necessarily culpable for any criminal violations, but that they should not be immune from investigation.\122\ Director Freeh's explanation of the investigation, and acknowledgment that it led to the ``highest reaches of the White House,'' including the President and Vice President, seemed exactly the type of situation for which the Independent Counsel Act was drafted.\123\ Because of where the campaign finance investigation was leading the Task Force, the attorneys and investigators necessarily had to consider whether the independent counsel statute should apply.\124\ --------------------------------------------------------------------------- \120\ Id. at 8. See H. Rept. No. 105-829 (1998) (House Committee on Government Reform's interim report into the campaign financing investigation); S. Rept. No. 105-167 (1998) (Senate Governmental Affairs Committee final report on its investigation of illegal or improper activities in connection with 1996 Federal election campaigns.) \121\ Exhibit 2 at 8. \122\ Id. \123\ Id. at 2. \124\ Id. --------------------------------------------------------------------------- The Department of Justice conducted the investigation in a manner that avoided looking into the actions of the core group of individuals referred to in Freeh's memorandum.\125\ Freeh explained that the FBI and Department of Justice had a fundamental disagreement over the manner in which the investigation should proceed.\126\ The FBI wanted to conduct a top-down strategy, and focus on the core group of individuals.\127\ The strategy followed from the working theory that the majority of the abuses occurred as a result of the core group's effort to raise vast sums of money.\128\ In contrast, the Department of Justice wanted to focus on what Freeh referred to as the ``opportunists.'' \129\ Freeh stated that with such a ``bottom up'' strategy, the investigation may or may not ever lead to the core group.\130\ In addition, by so doing, the Department of Justice was assured that it most likely would not need to address Independent Counsel Act issues. Finally, in July 1997, Freeh became frustrated with the Department of Justice's investigation and ordered FBI agents to interview ``all relevant core group and DNC officials.'' \131\ At that time there still was no prosecutor assigned to handle core group issues.\132\ --------------------------------------------------------------------------- \125\ See id. at 8. \126\ See id. \127\ Id. \128\ Id. \129\ Id. \130\ Id. \131\ Id. \132\ Id. --------------------------------------------------------------------------- b. The Department of Justice's Approach to Investigating Covered Persons Freeh indicated that the Department of Justice attorneys in charge of the Task Force adopted a ``cautious approach to investigating covered persons.'' \133\ The Department of Justice attorneys were extremely reluctant to proceed into areas of investigation where covered persons might be implicated, whereas in a normal investigation, agents and attorneys would follow all investigative leads.\134\ Freeh asserted that this process led to a flawed investigation in the following ways: --------------------------------------------------------------------------- \133\ Id. at 9. \134\ Id. First, the Task Force has partitioned its investigation, focusing on individual persons and events without effectively analyzing their relationship to the broader fundraising scheme. Second, the Task Force attorneys sometimes have made dispositive factual assumptions without investigating to see if those assumptions are accurate. . . . Third, important investigative areas, such as the serious allegations raised by Common Cause, have never been pursued because they have been tied up in lengthy threshold legal analyses within the Department.\135\ --------------------------------------------------------------------------- \135\ Id. Again, this manner of investigation appears to almost intentionally skirt around the independent counsel process. It was evident that Reno refused to invoke the discretionary clause of the Independent Counsel Act, and the Task Force's investigation made it very unlikely that she would have to confront an allegation against a covered person.\136\ --------------------------------------------------------------------------- \136\ The Justice Department did have preliminary investigations open on President Clinton and Vice President Gore at the time Director Freeh wrote his memorandum, which Director Freeh readily acknowledges. However, those investigations were in response to media reports that both the President and Vice President had made telephone calls from their White House offices soliciting campaign contributions. Ultimately, Attorney General Reno declined to request the appointment of an independent counsel in both cases. --------------------------------------------------------------------------- In those instances where allegations were reviewed for the application of the Independent Counsel Act, they were handled by the Public Integrity Section.\137\ The PIS attorneys had very limited involvement in the Task Force's work, and were therefore unfamiliar with the broader investigation.\138\ Freeh acknowledged that the issues should have been reviewed by PIS, but believed that the front line investigators and attorneys were being excluded unnecessarily.\139\ Freeh pointed out that separation between PIS and the Task Force in the independent counsel review process became even more apparent after Attorney General Reno changed the Task Force leadership and took PIS out of its leadership role.\140\ Accordingly, the new Task Force leadership, Supervising Attorney Charles La Bella and Lead Investigator James DeSarno, had ``no meaningful role'' in independent counsel matters.\141\ Freeh added that the tenor of the weekly meetings of the Task Force leadership changed ``markedly,'' explaining that there was no longer any discussion of independent counsel related issues.\142\ Although Freeh noted that ``the FBI has very recently received several DOJ drafts on pending IC matters, FBI officials have not had any significant role in the deliberative process.'' \143\ --------------------------------------------------------------------------- \137\ Exhibit 2 at 9. \138\ Id. \139\ Id. \140\ Id. \141\ Id. \142\ Id. at 10. \143\ Id. --------------------------------------------------------------------------- c. Information Sufficient to Trigger the Independent Counsel Statute in the Campaign Finance Investigation In his memorandum, Freeh laid out the argument for appointing an independent counsel using the facts of the campaign finance investigation. Freeh connected the various pieces of the Task Force's investigation to what he referred to as an ``overall funding scheme.'' \144\ The scheme was tied back to the core group's fundraising, which Freeh believed had never been investigated properly.\145\ Freeh stated: ``As a starting point, the Campcon Task Force has failed to address an overarching issue: whether the Clinton/Gore campaign (as well as the Dole campaign) engaged in an illegal scheme to circumvent the federal campaign financing laws.'' \146\ --------------------------------------------------------------------------- \144\ Id. at 13. \145\ Id. \146\ Id. --------------------------------------------------------------------------- The allegations Freeh was referring to were based on allegations set forth by the public interest group Common Cause.\147\ In Freeh's memorandum, he focused on the manner in which the Clinton/Gore campaign appeared to have violated several election laws.\148\ He explained that in early 1995, the Clinton/Gore campaign agreed to engage in an ``extremely ambitious series of TV ads,'' which would be very expensive. The problem for the campaign was that it was limited in the amount of money it was able to spend during both the primary and general elections.\149\ In exchange for receiving Federal matching funds, a candidate for President is required to limit his overall campaign spending, during both the primary and general elections.\150\ The Federal Election Campaign Act (FECA), Presidential Primary Matching Payment Account Act, and the Presidential Election Campaign Fund Act set forth criminal penalties for any knowing and willful violations of the spending limits.\151\ --------------------------------------------------------------------------- \147\ Id. at 10. \148\ Id. \149\ Id. In 1996, there was a spending limit of approximately $62 million for the general election. Id. \150\ Id. \151\ 2 U.S.C. Sec. Sec. 431-455; 26 U.S.C. Sec. 9031 et. seq.; 26 U.S.C. Sec. 9001 et. seq. --------------------------------------------------------------------------- The Clinton/Gore campaign worked out a plan to use the DNC to purchase the advertising, effectively working around the spending limits imposed by accepting matching funds.\152\ The campaign actually controlled the advertising, from creation to placement, while the President personally reviewed and approved all of the ads.\153\ Common Cause alleged that all of the facts put together led to a violation of the law.\154\ The Justice Department's preliminary conclusion was that, ``this scheme was simply an act of `coordination' between the Clinton/Gore campaign and the DNC.'' \155\ Director Freeh argued that the allegations presented unprecedented legal issues that led to differences of opinion of the election law experts on whom the Task Force relied.\156\ He added that because the law was unclear, and that there were no established enforcement policies to turn to at either the Department of Justice or the Federal Election Commission (FEC), the case should be turned over to an independent counsel to make the judgment of whether there was a prosecutable offense.\157\ Freeh stated that, ``[a]ny case in which there is no clear policy against prosecution or any arguably exceptional circumstances are present should be sent to a special prosecutor.'' \158\ Freeh believed that the two most important points that the Attorney General should consider in deciding whether to seek the appointment of an independent counsel for the Common Cause allegations were: ``(1) the Department has had the allegations for more than a year; and (2) there is virtually no chance that the allegations could be resolved in the course of a limited preliminary inquiry.'' \159\ --------------------------------------------------------------------------- \152\ Exhibit 2 at 11. \153\ Id. at. 10. \154\ Id. at 11. \155\ Id. at 11-12. \156\ Id. at 12. \157\ Id. \158\ Id. \159\ Id. at 13. --------------------------------------------------------------------------- i. Vice President Gore and President Clinton Freeh believed that many of the other allegations of criminal or potentially criminal activity were a result of the overarching need for money to pay for the media campaign. He explained, ``[i]n addition to allegations of a broad conspiracy to circumvent the campaign contribution and spending limits, many of the other allegations that have arisen in the course of the investigations have a direct connection to the core group's fundraising scheme.'' \160\ For instance, Freeh cited the preliminary investigations into President Clinton and Vice President Gore's fundraising telephone calls from the White House.\161\ In the case of the Vice President, who admitted that he made fundraising calls from his White House office, the Attorney General was faced with three legal questions in determining whether to request the appointment of an independent counsel: --------------------------------------------------------------------------- \160\ Id. \161\ Id. <bullet> Does section 607 [of the criminal code] \162\ apply to the Vice President's telephone solicitations? --------------------------------------------------------------------------- \162\ 18 U.S.C. section 607 makes it unlawful ``for any person to solicit or receive any contribution within the meaning of section 301(8) of the FECA in any room or building occupied in the discharge of official duties by any [officer or employee of the United States]. <bullet> Assuming section 607 does apply, is there an established DOJ policy of non prosecution of such --------------------------------------------------------------------------- offenses? <bullet> Assuming section 607 applies and there is no established policy of non-prosecution, is further investigation warranted by an independent counsel? \163\ --------------------------------------------------------------------------- \163\ Exhibit 2 at 14. Freeh concluded that section 607 would apply under the fact pattern presented by the Vice President's phone calls.\164\ He also found that there was neither a written nor other established policy of non-prosecution in section 607 cases, primarily because the facts of the individual cases are determinative.\165\ Finally, Freeh acknowledged that there was a consensus among Department of Justice prosecutors that it was likely that Justice would never prosecute a case such as Gore's, even if there were a technical violation.\166\ However, Freeh pointed out that the independent counsel statute did not permit the Attorney General ``to simply dispose of a case through an exercise of prosecutorial discretion.'' \167\ --------------------------------------------------------------------------- \164\ Id. at 15. \165\ Id. \166\ Id. \167\ Id. at 16. Freeh also warned against closing the case based on lack of intent. Freeh stated that based on the facts, one could not come to the conclusion, beyond a reasonable doubt, that the Vice President had no knowledge that the money he was raising would be used for both ``hard'' and ``soft'' money accounts. An important distinction to make the argument that a violation of 18 U.S.C. section 607 occurred. Id. --------------------------------------------------------------------------- As to the Vice President, Freeh concluded: The Attorney General should seek the appointment of an Independent Counsel with respect to the Vice President's telephone solicitations. Such an appointment is warranted on two levels. The preferable course of action would be to refer this matter as simply one piece of a comprehensive Independent Counsel investigation which focuses on the alleged scheme to circumvent the campaign financing laws. . . . Viewed in that context, it is essentially immaterial whether the telephone solicitations sought ``hard'' money or ``soft'' money, or whether they were made from public space or private space. Because they were a key component of the overall fundraising scheme alleged by Common Cause and others, these solicitations should be referred for further investigation by an Independent Counsel. Such a referral could be made under either the mandatory clause or as a discretionary matter.\168\ --------------------------------------------------------------------------- \168\ Exhibit 2 a 17. Director Freeh took a similar position in the investigation of President Clinton's telephone solicitations from the White House residence. He acknowledged that the calls most likely were not a violation of section 607, however, considered them to be part of a larger conspiracy to circumvent the campaign finance laws.\169\ For this reason, Freeh believed that an independent counsel should be appointed, and the President's phone calls should be part of the investigation.\170\ --------------------------------------------------------------------------- \169\ Id. at 18. \170\ Id. --------------------------------------------------------------------------- ii. White House Coffees and Overnights The Clinton administration regularly held fundraising coffees with the President and Vice President in the White House, invited large donors to stay overnight in the Lincoln bedroom, or take trips on Air Force One.\171\ Again, there was a question of whether the actions of the Clinton administration violated section 607 for fundraising on Federal property.\172\ Freeh believed that the coffees, overnights in the Lincoln bedroom, and other perks for big donors were part of the overall scheme that he discussed, and that they should be part of an independent counsel investigation.\173\ --------------------------------------------------------------------------- \171\ See H. Rept. No. 105-829 (1998) (House Committee on Government Reform's interim report into the campaign financing investigation); S. Rept. No. 105-167 (1998) (Senate Governmental Affairs Committee final report on its investigation of illegal or improper activities in connection with 1996 Federal election campaigns.) \172\ 18 U.S.C. Sec. 607. An Office of Legal Counsel opinion concluded that certain rooms in the White House were not covered by section 607 if they were used for ``personal entertaining where there is a history of such use and where the cost of such use is not charged against an account appropriating funds for official functions.'' Exhibit 2 at 19. Originally, the Department of Justice assumed that all of the coffees took place in the White House residence, without ever investigating whether that was the case. However, after the belated production of White House videotapes, it became clear that the coffees took place in several different rooms, including the Oval Office. \173\ Exhibit 2 at 20. --------------------------------------------------------------------------- iii. Solicitation of Foreign Nationals In the course of the campaign finance investigation, the Task Force ``developed substantial evidence that money from foreign nationals flowed into the DNC as a result of the massive fundraising effort coordinated by the DNC and the White House.'' \174\ Freeh asserted that the Federal Election Campaign Act (FECA) should apply to those contributions.\175\ However, early in the campaign finance investigation, the Attorney General came to the opposite conclusion. She reasoned that the foreign gifts given to the DNC were soft money, and that soft money did not fall within the definition of ``contribution'' under the FECA.\176\ Freeh argued that Reno's legal reasoning was intensely criticized by numerous election law experts, and that at the very least, the issue was one of unsettled law.\177\ --------------------------------------------------------------------------- \174\ Id. \175\ Id. at 20. Section 441e of FECA states that: It shall be unlawful for a foreign national directly or through any other person to make any contribution of money or other thing of value, or to promise expressly or impliedly to make any such contribution, in connection with an election to any political office or in connection with any primary election, convention, or caucus held to select candidates for any political office; or for any person to solicit, accept, or receive any such contribution from a --------------------------------------------------------------------------- foreign national. 2 U.S.C. Sec. 441e. \176\ Exhibit 2 at 20. Contribution is defined as including, ``any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office . . .'' 2 U.S.C. section 431(8)(A)(i) (emphasis added). \177\ Exhibit 2 at 20. --------------------------------------------------------------------------- Soft money is neither defined nor specifically addressed in the FECA, and therefore Freeh questioned whether the Department of Justice should have engaged in ``elaborate legal analysis'' in the midst of determining whether an independent counsel should be appointed.\178\ He also pointed out that it was premature for Attorney General Reno to consider all foreign gifts soft money.\179\ Freeh stated, ``[i]n light of the evidence of nearly absolute control of DNC fundraising efforts by the White House, there is a very real issue about whether the `soft money' argument is largely a sham.'' \180\ --------------------------------------------------------------------------- \178\ Id. at 20 (quoting 1987 U.S.C.C.A.N. 2158). \179\ Id. at 21. \180\ Id. Freeh cited to a Jan. 6, 1997, statement of the FEC general counsel, indicating that if money is ``used for a candidate's election directly, then there is no question that 441e applies.'' Id. --------------------------------------------------------------------------- d. Additional Reasons to Appoint an Independent Counsel i. The DNC Was ``Commandeered'' by the White House Freeh pointed out that the independent counsel statute was established because of the campaign related abuses of Watergate.\181\ Top campaign officials were the only non- government officials to be included in the mandatory provision of the Act because those individuals are so important to the individual running for President.\182\ Freeh acknowledged that under the statute, only the chairman and treasurer of Clinton/ Gore would be covered. However, he argued that in the campaign finance case, the DNC itself should trigger the discretionary provision of the Act: --------------------------------------------------------------------------- \181\ Id. at 23. \182\ Id. It does not by its terms cover senior officers of the Democratic National Committee. However, in deciding whether to exercise her discretionary authority, the Attorney General should consider how the DNC was used during the 1996 election cycle. By essentially commandeering the DNC for the purpose of getting the President re-elected, the White House appears to have erased the traditional lines between the President's own campaign committee and the national party committee. In fact, the DNC was in large part the President's central re-election machine, under the tight control of senior White House advisors.\183\ --------------------------------------------------------------------------- \183\ Id. at 24. --------------------------------------------------------------------------- ii. The FBI Had a Conflict in Releasing National Security Matters to the White House The campaign finance investigation required the Task Force to look into allegations of Chinese Government efforts to influence the United States elections.\184\ This particular portion of the investigation caused a conflict for both the FBI and Department of Justice because they had ``conflicting duties to (1) keep the President informed about significant national security matters, and (2) simultaneously keep from the White House certain national security information that may relate to the ongoing criminal investigation.'' \185\ Freeh acknowledged that the appointment of an independent counsel would not entirely alleviate the problem, but would ease the perception of a conflict. --------------------------------------------------------------------------- \184\ Id. at 25. \185\ Id. --------------------------------------------------------------------------- e. Conclusions Director Freeh found there was sufficient evidence under both the mandatory and discretionary provisions of the Act for Attorney General Reno to request the appointment of an independent counsel. Freeh argued that the Attorney General's interpretation of the Act, requiring an actual conflict of interest, was not supported by the language or the legislative history of the statute.\186\ Finally, he concluded by stating: --------------------------------------------------------------------------- \186\ Id. at 27. The Chief Campcon investigator, Director Freeh, has concluded that the investigation presents the Department with a political conflict of interest. This by itself does not trigger the independent counsel statute, since the ultimate resolution of the conflict issue rests solely with the Attorney General. However, the Director's view should be a significant factor in the Attorney General's continued analysis of whether to invoke the discretionary provision.\187\ --------------------------------------------------------------------------- \187\ Id. Attorney General Reno ultimately disregarded the arguments set forth in Director Freeh's memorandum. She steadfastly maintained that she had no actual conflict of interest, despite what appearances might have been. 2. The La Bella Memorandum Shortly before Freeh submitted his memorandum to the Attorney General, there was a major reorganization of the Task Force. The Department of Justice realized that the established structure of the Task Force, with PIS as the leader, was not able to conduct the investigation in a productive manner.\188\ Therefore, in September 1997, Reno brought in Charles La Bella, a prosecutor from outside of Main Justice, to lead the Task Force.\189\ La Bella stayed with the Task Force for approximately 1 year, leaving between July and August 1998.\190\ --------------------------------------------------------------------------- \188\ GAO report at 34. \189\ The GAO report on the Campaign Finance Task Force found that ``[i]n the fall of 1997, displeased with the investigator's slow pace, disclosures in the press that critical leads were not being pursued, and internal frictions plaguing CFTF, the Attorney General and FBI Director Freeh decided to replace CFTF's leaderhip.'' GAO report at 34. \190\ GAO report at 41. La Bella returned to San Diego to become Acting U.S. Attorney for the Southern District of California. However, he was not nominated to fill the position permanently. Id. --------------------------------------------------------------------------- Prior to leaving the Task Force, La Bella drafted a 94-page memorandum outlining the facts surrounding several different investigations that La Bella believed warranted the appointment of an independent counsel.\191\ La Bella came to the same conclusion as Director Freeh had nearly 8 months earlier, that an independent counsel should have been appointed. He also echoed the concepts of a ``core group'' and ``opportunists'' outlined in the Freeh memo. However, La Bella focused his summary around individuals involved in the Task Force's investigation, including: Harold Ickes; President Clinton; Vice President Gore; Hillary Rodham Clinton; and, John Huang, Marvin Rosen, David Mercer and the DNC.\192\ With respect to the individual Task Force investigations, La Bella articulated common themes running through each and tying them together: --------------------------------------------------------------------------- \191\ Memorandum from Charles G. La Bella, Supervising Attorney, Campaign Financing Task Force, and James DeSarno, Assistant Director, Federal Bureau of Investigation, to Janet Reno, Attorney General, U.S. Department of Justice, and Louis J. Freeh, Director, Federal Bureau of Investigation (July 16, 1998) (exhibit 3). \192\ Exhibit 3. the desperate need to raise enormous sums of money to finance a media campaign designed to bring the Democratic party back from the brink after the devastating Congressional losses during the 1994 election cycle, and the calculated use of access to the White House and high level officials--including the President and First Lady--by the White House, DNC and Clinton/Gore '96, as leverage to extract contributions from individuals who were themselves using access as a means to enhance their business opportunities.\193\ --------------------------------------------------------------------------- \193\ Id. at 1. La Bella, like Freeh, focused on the idea that the exploitation of the campaign financing laws were a direct result of the conditions established by the White House. According to La Bella, as the pressure to raise money grew, there was a blurring of lines between the campaign and the DNC--there was an intermingling of funds, resources, and personnel--that eventually led to violations of the campaign contribution laws.\194\ La Bella explained: --------------------------------------------------------------------------- \194\ Id. at 3. The intentional conduct and the ``willful ignorance'' uncovered by our investigations, when combined with the line blurring, resulted in a situation where abuse was rampant, and indeed the norm. At some point the campaign was so corrupted by bloated fundraising and questionable ``contributions'' that the system became a caricature of itself. It is hoped that this report will place in context the abuses uncovered in our investigation: a system designed to raise money by whatever means, and from whomever would give it, without meaningful attention to the lawfulness of the contributions or the manner in which the money was spent.\195\ --------------------------------------------------------------------------- \195\ Id. at 6. La Bella did not reserve his criticism for only the Clinton administration and the DNC; he was equally critical in his evaluation of the manner in which the Department of Justice had conducted the campaign finance investigation. a. The Department of Justice's Investigative Approach The Task Force as it was run by PIS operated under a method of investigation which La Bella described as a ``stovepipe'' approach, conducting 30 to 40 investigations of individual targets at any given time.\196\ Each investigation was assigned an investigative team of agents and prosecutors who were solely responsible for that particular investigation, and necessarily focused on its own issue.\197\ La Bella expressed concern that while each team might have been aware of other teams' overlapping activities, there had never been an overall review.\198\ Likewise, when the Attorney General and her advisers viewed the results of the investigation, they too focused on it one allegation at a time. Rather than viewing the entire ``landscape'' of allegations against covered persons, PIS, which had primary authority for the Act, viewed each allegation independently, making it difficult to trigger the application of the Act.\199\ La Bella recommended an approach that looked at all of the allegations in a broader context.\200\ --------------------------------------------------------------------------- \196\ Id. at 6. La Bella indicated that there were several investigations where key players and themes were consistent, such as the investigations of Johnny Chung, Maria Hsia, Charlie Trie, Mark Jimenez, Howard Glicken, and John Huang. Id. \197\ Id. \198\ Id. at 7. \199\ Id. \200\ Id. --------------------------------------------------------------------------- The memorandum was La Bella's attempt to bring all the pieces of the investigation together to form a whole picture. Upon doing so, he remarked that the information developed to that point presented ``the earmarks of a loose enterprise employing different actors at different levels who share a common goal: bring in the money.'' \201\ La Bella believed that such a situation should trigger the Independent Counsel Act. However, in practical terms, nobody at the Task Force had ever looked at the overall investigation to determine whether all the pieces of information put together might trigger the Act. That is, when viewed as a whole, whether there was specific information from a credible source that a covered person may have violated a Federal criminal law. La Bella asserted that each time such an investigation was suggested, it was rejected based on the claim that such an investigation could only be conducted as a preliminary investigation under the Act.\202\ The Department of Justice then insisted that a preliminary investigation could only be initiated if there were ``specific and credible evidence that a potential criminal violation has occurred.'' \203\ However, the Justice Department's argument was circular. The Task Force was unable to look for information on covered persons unless there was a preliminary investigation, but could not initiate a preliminary investigation without specific and credible evidence; and, in order to find evidence one had to investigate. Obviously, with those limitations placed on the Task Force, investigations relating to covered persons would go nowhere. The Task Force had to hope that information on covered individuals would just appear. --------------------------------------------------------------------------- \201\ Id. \202\ Id. at 7-8. \203\ Id. at 8. La Bella took issue with the Department of Justice's use of the term ``evidence,'' which was not in the statutory language. He believed it created a higher threshold for preliminary investigations. --------------------------------------------------------------------------- The information in the La Bella memo was information that the Task Force already had. However, La Bella attempted to put it in the context of the entire investigation.\204\ Having done that, La Bella was able to distinguish alarming patterns running through each investigation. Were he to have reviewed the individual actions in an investigative vacuum, they might have appeared innocuous.\205\ La Bella remarked: --------------------------------------------------------------------------- \204\ Id. \205\ Id. This is especially true with respect to the conduct of senior White House officials and key DNC and Clinton/ Gore officials. These individuals make brief, albeit key, appearances in the individual investigations. While their participation in a single investigation generally falls short of a knowing participation in potential criminal conduct, the sum of their appearances results in a pattern of conduct worthy of investigation.\206\ --------------------------------------------------------------------------- \206\ Id. --------------------------------------------------------------------------- b. The Department of Justice Did Not Apply Thresholds of Investigation Uniformly i. Initiating a Preliminary Investigation The Attorney General instructed the Task Force to ``leave no stone unturned.'' \207\ The Task Force was able to open an investigation on an uncovered person ``based upon a determination that there is an allegation which, if true, may present a violation of federal law.'' \208\ Although the threshold was admittedly low, the Department of Justice had articulated ``compelling'' reasons why it was the most appropriate policy for the campaign finance investigation: --------------------------------------------------------------------------- \207\ Id. at 9. \208\ Id. the shortened statue of limitations for election violations; the rash of potential illegal activities presented during the 1996 election cycle and the resulting political crisis; the apparent injection of foreign money into our political system; the widespread circumvention of existing election law restrictions; the exposure of gaps in the law which permitted wholesale circumvention of federal election laws; and the possible participation--or willful blindness--of public officials, and high level party officials in connection with these activities.\209\ --------------------------------------------------------------------------- \209\ Id. at 13. The Justice Department had put forth strong justifications for its position, but seemed to ignore that reasoning when it came to certain individuals. La Bella contrasted the stated standard for opening a Task Force investigation with the one that had been imposed when dealing with covered persons under the Independent Counsel Act. Particularly, when dealing with the President, Vice President, and senior White House personnel, the Justice Department required specific and credible evidence that a crime had been committed in order for the Department, through PIS, to commence an investigation.\210\ According to La Bella, this structure made it nearly impossible to investigate covered persons. --------------------------------------------------------------------------- \210\ Id. at 9. --------------------------------------------------------------------------- La Bella stated that ``the Department would not investigate covered White House personnel nor open a preliminary inquiry unless there was a critical mass of specific and credible evidence of a federal violation.'' \211\ Again, the standard the Attorney General mandated in cases of covered persons was ``specific and credible evidence that a potential criminal violation has occurred.'' \212\ For La Bella, the use of the word ``evidence'' instead of ``information,'' as is used in the statute, also indicated a higher standard. He also explained that when an allegation against a covered person was made, PIS took over the investigation, taking it out of the Task Force's jurisdiction. Therefore PIS controlled the standards used to consider the allegations under the Act.\213\ In contrast, he noted that the Task Force initiated criminal investigations of individuals not covered by the Act on a ``wisp of information.'' \214\ Furthermore, he pointed out that even when the Department was conducting a preliminary investigation under the Act, the President, Vice President, and senior White House officials were treated more favorably than others were.\215\ For example, the matters involving Interior Secretary Bruce Babbitt and Labor Secretary Alexis Herman illustrated La Bella's contention.\216\ He observed that the amount of information needed to trigger the Independent Counsel Act, and subsequently warrant further investigation in those cases, was extremely low in comparison to the standards set for the President, Vice President, and senior White House personnel.\217\ --------------------------------------------------------------------------- \211\ Id. at 11. La Bella also made the distinction between the terms ``evidence'' and ``information.'' The Justice Department consistently used the term evidence when referring to the standard in the Independent Counsel Act, whereas the statutory language refers to ``specific information from a credible source.'' According to La Bella, the term evidence suggests a higher burden of proof. To him, the distinction, although subtle, was significant. Id. at 10-11. \212\ Id. at 8 (emphasis added). \213\ Id. at 10. \214\ Id. at 11. \215\ Id. \216\ Id. Independent counsels were appointed for both Babbitt and Herman. In re Bruce Edward Babbitt, application of the Attorney General pursuant to 28 U.S.C. Sec. 592(c)(1) for the appointment of an independent counsel (Special Div. D.C. Cir.) (Feb. 11, 1998); in re Alexis M. Herman, application of the Attorney General pursuant to 28 U.S.C. Sec. 592(c)(1) for the appointment of an independent counsel (Special Div. D.C. Cir.) (May 11, 1998). \217\ Exhibit 3 at 11. --------------------------------------------------------------------------- La Bella believed that the standard for initiating a preliminary investigation under the Act should be the same as the threshold applied when determining whether to open a Task Force investigation.\218\ The Attorney General, La Bella argued, was artificially raising the standard to determine whether there were grounds sufficient to investigate. Looking to the legislative history, La Bella stated that the reference to ``the specificity of the information and the credibility of the source for the information'' was intended to limit the factors the Attorney General could consider when deciding whether to proceed with a preliminary investigation. However, Reno turned the language around to create some type of higher threshold for even commencing an investigation that might implicate a covered person.\219\ La Bella observed that the Department of Justice engaged in ``unnecessary complication'' when applying the Independent Counsel Act standards, both in commencing and conducting an investigation.\220\ La Bella added: --------------------------------------------------------------------------- \218\ Id. \219\ Id. at 12 \220\ Id. This is especially so where the President and White House personnel are involved. Indeed, the continuing and often heated debate involving the so-called Common Cause allegations is an apt example. If these allegations involved anyone other than the President, Vice President, senior White House, or DNC and Clinton/ Gore '96 officials, an appropriate investigation would have commenced months ago without hesitation. However, simply because the subjects of the investigation are covered persons, a heated debated [sic] has raged within the Department as to whether to investigate at all. The allegations remain unaddressed.\221\ --------------------------------------------------------------------------- \221\ Id. at 14. Also with regard to the investigation of the Common Cause allegations, La Bella charged that, ``[t]he contortions that the Department has gone through to avoid investigating these allegations are apparent.'' \222\ The standards for initiating an investigation, La Bella argued, should be identical, and the better standard to use was the general Task Force standard: a determination that there is an allegation which, if true, may present a violation of federal law.'' \223\ --------------------------------------------------------------------------- \222\ Id. \223\ Id. at 9, 14. Of course, the requirement that the information be specific and from a credible source would still be taken into account. Id. --------------------------------------------------------------------------- ii. Determining Whether Further Investigation Was Warranted Like the standard for commencing an investigation, La Bella urged that the standard for determining whether further investigation was warranted in a preliminary investigation be similar to the standard the Task Force used in both conducting and closing investigations.\224\ In the Task Force's investigations, they adhered to the ``leave no stone unturned'' policy demanded by the Attorney General.\225\ Conversely, in preliminary investigations, the Attorney General appeared to search for reasons not to continue to investigate. For example, during the campaign finance investigation, she often turned to examining the intent of the individual under investigation in order to close the investigation.\226\ The Independent Counsel Act instructed the Attorney General to comply with the ``written or other established policies of the Department of Justice with respect to the conduct of criminal investigations.'' \227\ La Bella asserted that the ``leave no stone unturned'' theory was the established policy of the Task Force's investigation, as mandated by Reno.\228\ As such, the Department of Justice should adhere to the same standard when considering whether further investigation is warranted in a preliminary investigation. That is, the Attorney General should not have engaged in contortions to find a somewhat viable reason not to investigate. Anything that might even be considered prosecutorial discretion should have been left to an independent counsel to decide. --------------------------------------------------------------------------- \224\ Id. at 12. \225\ Id. \226\ The statute makes it clear that the Attorney General may not base her recommendation on a finding that an official lacked the state of mind required for the crime, unless there exists ``clear and convincing evidence.'' ``Independent Counsel Provisions: An Overview of the Operation of the Law,'' CRS Rept. No. 98-283, at 4 (Mar. 20, 1998) (citing H. Rept. No. 103-511, at 11 (1994)). Furthermore, Congress, in enacting the statute, believed that it would be a ``rare case'' in which the Attorney General could come to such a conclusion. Id. The House report notes: ``Congress believes that the Attorney General should rarely close a matter under the Independent Counsel law based upon finding a lack of criminal intent, due to the subjective judgments required and the limited role accorded the Attorney General in the independent counsel process.'' Id. However, that is precisely what Reno did in the case of Vice President Gore. \227\ 28 U.S.C. Sec. 592(c)(1) (emphasis added). \228\ Exhibit 3 at 14. La Bella stated, ``[i]t has also been the policy of the Task Force to continue to investigate allegations and to decline prosecution and/or further investigation only after each and every allegation has been fully investigated. This is true despite the fact that some allegations approached what a reasonable investigator might characterize as frivolous.'' Id. at n.2. --------------------------------------------------------------------------- iii. La Bella's Interpretation of the Legislative History La Bella supported his theories with the legislative history of the Independent Counsel Act.\229\ He demonstrated that Congress often corrected the manner in which the Department of Justice was implementing the Act by amending the language of the Act. At the outset, he stated that Congress intended to create a system under which covered individuals were treated in the same manner as other individuals being investigated by the Justice Department, no more harshly or leniently.\230\ The amendments in 1987 and 1994 made clear that individuals covered by the Act should be treated the same as non-covered individuals in determining whether an investigation is initiated, and once initiated, whether further investigation was warranted.\231\ This was established, according to La Bella, by the language requiring the Department to follow ``established policies'' in making its determinations.\232\ --------------------------------------------------------------------------- \229\ Id. at 15. \230\ Id. \231\ Id. \232\ Id. --------------------------------------------------------------------------- La Bella cited numerous examples of the Congress criticizing the Department for interpreting the Independent Counsel Act in a manner that would serve Justice's own purposes. By doing so, the Justice Department substituted its own judgment for that of Congress.\233\ In order to demonstrate his point that the Department had raised the bar for investigating covered individuals, La Bella pointed to the following passage to demonstrate Congress' intent on the standards for investigation: --------------------------------------------------------------------------- \233\ Id. at 18. The purpose of allowing the Justice Department to conduct a preliminary investigation is to allow an opportunity for frivolous or totally groundless allegations to be weeded out. . . . On the other hand, as soon as there is any indication whatsoever that the allegations. . . . involving a high-level official may be serious or have any potential chance of substantiation, a Special Prosecutor should be appointed to take over the investigation.\234\ --------------------------------------------------------------------------- \234\ Id. (citing to 1978 U.S.C.C.A.N. at 4270). La Bella acknowledged that the Independent Counsel Act was not a ``model'' piece of legislation, but believed that people in the Department of Justice were trying to substitute what they thought to be the proper threshold for investigation.\235\ --------------------------------------------------------------------------- \235\ Id. --------------------------------------------------------------------------- a. Information Sufficient to Warrant the Appointment of an Independent Counsel There were numerous fact patterns involving covered and other individuals that the Task Force had looked into and that La Bella believed were sufficient to warrant the appointment of an independent counsel. Among those individuals implicated in the investigation were: President Clinton; Vice President Gore; Harold Ickes; Hillary Rodham Clinton; and, John Huang, Marvin Rosen, David Mercer, and the DNC.\236\ --------------------------------------------------------------------------- \236\ See exhibit 3 at 20-79. --------------------------------------------------------------------------- i. Harold Ickes There were numerous allegations surrounding Harold Ickes, President Clinton's Deputy Chief of Staff, during the campaign finance investigation. Ickes was at the center of the Common Cause allegations because he ran the DNC and Clinton/Gore reelection efforts from the White House.\237\ Ickes was not a ``covered person'' under the mandatory provision of the Act because his salary did not reach level II of the Executive Schedule, a requirement under the Act.\238\ However, La Bella believed that the mandatory provision should be applied to Ickes. His argument was based on the theory that Ickes was a de facto officer of Clinton/Gore '96, exercising authority at the national level.\239\ --------------------------------------------------------------------------- \237\ Id. at 24. \238\ 28 U.S.C. Sec. 591(b)(3). La Bella pointed out that the President is authorized to pay 25 persons at level II, only 6 individuals in the Executive Office of the President are paid at that level--none of whom are involved in the campaign finance investigation. In prior administrations, the Deputy Chief of Staff had been covered by the Act by virtue of his salary. Exhibit 3 at 20. \239\ Exhibit 3 at 20. As de facto chairman of the re-elect, Ickes would be subject to the Independent Counsel Act pursuant to section 591(b)(6). --------------------------------------------------------------------------- In support of his argument, La Bella pointed to information such as the DNC and Clinton/Gore '96 reporting to Ickes before authorizing the disbursement of any funds or taking other actions.\240\ In addition, individuals involved in the re- election effort confirmed Ickes leadership role.\241\ La Bella applied the facts of Ickes case to a two-part test developed by PIS for determining whether an individual was a covered person under section 591(b)(6) of the Act.\242\ The test relied upon an analysis of title and function in order to determine whether an individual was a covered person.\243\ La Bella argued that when he reviewed the reality or function of Ickes' position rather than just the title he was given, Ickes fell under the mandatory provision because of his re-elect activities.\244\ In the alternative, La Bella believed that Ickes fit within the discretionary provision of the Act as well.\245\ La Bella cited to the legislative history of the discretionary provision as intending ``to include members of the President's family, and lower level campaign and government officials who are perceived to be close to the President.'' \246\ Due to Ickes role in the campaign, the control he wielded, and his close relationship to the President, La Bella argued that the circumstances fit the type of political conflict that the Act envisioned.\247\ --------------------------------------------------------------------------- \240\ Exhibit 3 at 22. \241\ Id. at 23. According to La Bella, Clinton campaign advisor Dick Morris ``confirmed that Ickes was the sole person charged with making financial decisions for the White House, DNC and the reelection effort.'' Id. Morris also added that Ickes controlled ``every aspect of DNC and Clinton/Gore fundraising and that Ickes was brought in by the President.'' Id. Finally, in an interview with former White House Chief of Staff Leon Panetta, Panetta told the Task Force that he personally did not have the experience needed to run a national Presidential campaign and he therefore ``relied heavily on Ickes to handle all issues relating to the President's re-election.'' Id. at 24. \242\ Id. at 21. The test was originally developed to determine whether Clinton fundraiser Terry McAuliffe was a covered person under the Act. Ultimately, PIS determined that he was not a covered person. Id. \243\ Id. \244\ Id. \245\ Id. at 25. \246\ Id. at 25 (citing 1987 U.S.C.C.A.N. at 2165). \247\ Id. Ultimately, the Attorney General decided to open a preliminary investigation of Harold Ickes under the Independent Counsel Act to investigate allegations of perjury before the Senate Governmental Affairs Committee. No independent counsel was appointed. --------------------------------------------------------------------------- Once La Bella established that the Independent Counsel Act should cover Ickes, he turned to the fact patterns that warranted the appointment of an independent counsel. The first argument La Bella made was that Ickes ``knowingly permitted the DNC and Clinton/Gore '96 to accept conduit contributions collected by Charlie Trie \248\ and to file false and misleading reports with the FEC.'' \249\ Ickes had a unique knowledge of Trie's questionable contributions to another entity associated with the Clintons, the Presidential Legal Expense Trust (PLET).\250\ Ickes, along with several senior White House staff, was briefed on the questionable source for the funds.\251\ During the meeting, Deputy Counsel to the President, Bruce Lindsey mentioned that he knew Trie from Arkansas, and that Trie was involved with the Democratic party.\252\ Ickes, who La Bella considered the de facto head of Clinton/Gore '96 and the DNC, was the only individual at the meeting who had regular contacts with those organizations.\253\ He concluded that Ickes therefore had a duty to warn both organizations. --------------------------------------------------------------------------- \248\ Trie was a close friend of President Clinton's from Arkansas with wide-ranging access to the White House, Presidential advisors, and Clinton administration officials. See H. Rept. No. 105-829 at 1347 (1998). Trie later plead guilty to knowingly causing the DNC to make a false report to the FEC and knowingly causing a conduit contribution to be made to the DNC. \249\ Exhibit 3 at 26. \250\ The PLET was established by and for the benefit of the President and the First Lady for the purpose of paying their personal legal bills. Contributions to the PLET were limited to $1,000 per person. See S. Rept. No. 105-167, at 2711 (1998). \251\ Exhibit 3 at 26. Michael Cardozo, the PLET Executive Director, hired a private investigator to examine the Trie donations. Cardozo briefed Ickes, the First Lady's Chief of Staff, and several of the White House counsels regarding the private investigators findings. In his prepared statement before the Senate Governmental Affairs Committee, Cardozo explained what the investigators found and why Trie's contributions were ultimately returned: One, the unique circumstances under which the funds were delivered to the Trust; Two, the fact that it now appeared that most if not all of these contributions were raised at meetings of a religious organization, the Ching Hai-- Buddhist sect which according to IGI had been described by some as a ``cult'' and which raised concerns abut peer pressure and coercion; and Three, concern over the ultimate source of some of the contributions due to what appeared to be the advancement of funds by the Ching Hai organization --------------------------------------------------------------------------- to some contributors. Id. at 30. \252\ Exhibit 3 at 29. \253\ Id. --------------------------------------------------------------------------- After the campaign finance scandal was reported in the press, the Executive Director of the DNC, B.J. Thornberry, asked Ickes about DNC fundraiser John Huang.\254\ Ickes indicated that if the DNC were looking at John Huang, they should also take a look at Charlie Trie.\255\ The comment, La Bella believed, spoke volumes about Ickes knowledge of Trie and his fundraising.\256\ La Bella summarized, ``[a]t best, Ickes engineered an effort to consciously avoid learning the truth about Trie. At worst, Ickes' failure to act was intended to conceal the truth from those who would have protected the DNC and Clinton/Gore from Trie's illegal solicitations/ contributions.'' \257\ --------------------------------------------------------------------------- \254\ Id. at 32. \255\ Id. \256\ Id. \257\ Id. at 35. --------------------------------------------------------------------------- La Bella also believed that Ickes' role in the Common Cause allegations was troubling. He asserted that the information uncovered to date warranted the appointment of an independent counsel. He expressed frustration that the Department had not taken any action whatsoever, even independent of Ickes, on the Common Cause allegations.\258\ La Bella outlined the Department's refusal to initiate an investigation and stated: --------------------------------------------------------------------------- \258\ Id. at 37. The alternative approach--a parochial and professorial application of the [Independent Counsel Act]--is the very approach that has gotten the Department into trouble in the past. It is the same type of maneuvering and practice that triggered the 1987 Amendments to the ICA and the sharp criticism of the Department that accompanied these amendments. Indeed, one could argue that the Department's treatment of the Common Cause allegations has been marked by gamesmanship rather than an even-handed analysis of the issues.\259\ --------------------------------------------------------------------------- \259\ Id. at 38. Ickes was intimately involved with the media efforts that were central to the Common Cause allegations. The President conferred the authority to run the re-election effort upon Ickes, who did so. Therefore, La Bella concluded that ``[t]o the extent that there was any effort to circumvent the regulations outlined above, Ickes was at the heart of the effort.''\260\ --------------------------------------------------------------------------- \260\ Id. at 40. --------------------------------------------------------------------------- The final area of investigation relating to Ickes was the Diamond Walnut matter.\261\ The allegations centered on whether there was an effort to encourage teamster contributions and support of the Democratic party through the use of the administration's influence to attempt to settle an ongoing labor dispute.\262\ Ickes testified about the matter before the Senate Governmental Affairs Committee, and there were some questions regarding the truthfulness of his testimony.\263\ La Bella outlined the facts and information that the Task Force had to date, and admitted that the investigation was in its ``infancy.'' \264\ However, he concluded that there was sufficient specific information from a credible source to commence an investigation. The Task Force had done so, however, La Bella believed that, in light of the other information on Ickes, a preliminary investigation should have been initiated.\265\ --------------------------------------------------------------------------- \261\ Id. at 41. \262\ Id. \263\ Id. at 41-42. \264\ Id. at 45. \265\ Id. --------------------------------------------------------------------------- ii. President Clinton La Bella laid out his argument for appointing an independent counsel to investigate the President, who is a covered person under the Act. The main issues he addressed were: Charlie Trie's PLET contributions and subsequent appointment to a Presidential commission; the Common Cause allegations and conspiracy to violate soft money regulations; and, the President and senior White House officials' knowledge of foreign contributions.\266\ --------------------------------------------------------------------------- \266\ Id. at 46-56. --------------------------------------------------------------------------- As mentioned in the previous section, Charlie Trie, a close friend of the President and DNC fundraiser and contributor, delivered questionable contributions to the PLET totaling $789,000. According to its own guidelines, the PLET only accepted contributions from individual U.S. citizens using their own funds; and, the contributions had to be voluntary. Ultimately, it was discovered that the Trie contributions came from the Supreme Master Suma Ching Hai of the Ching Hai Buddhist sect, who offered to reimburse her followers if they contributed $1,000 to the PLET.\267\ --------------------------------------------------------------------------- \267\ See S. Rept. No. 105-167, at 2722 (1998). The money orders delivered to the PLET by Trie were sequentially numbered, meaning that they were purchased at one location. However, they were written from people living in different parts of the country. Many of the checks had the identical spelling error of ``presidencial.'' In addition, some of the checks were written by one person on behalf of another, in violation of trust guidelines. Finally, the Supreme Master Suma Ching Hai, who provided the reimbursement for the contributions, is based out of Taiwan--a violation of the foreign money guideline. Id. --------------------------------------------------------------------------- Not only were the contributions suspect, but the timing of the contributions was suspect as well. Around the time of the contributions, Trie was appointed to the Commission on U.S. Trade and Investment Policy (Commission).\268\ The President issued an Executive order expanding the size of the Commission on January 31, 1996, while Trie had visited the President 2 days earlier.\269\ Trie delivered the first contributions on March 21, 1996.\270\ Approximately a month later, Trie received his formal appointment to the Commission.\271\ During the time period between the delivery of the contributions and Trie's appointment, the PLET Executive Director made the First Lady and senior White House staff aware of the problems with the contributions and Trie's delivery of them.\272\ Subsequently, the President himself was made aware of the problems, as he affirmed the decision to return the funds. La Bella concluded that based on the President's knowledge of the contributions and of the status of Charlie Trie as a fundraiser and contributor to the DNC and Clinton/Gore '96, his involvement should have been further investigated.\273\ --------------------------------------------------------------------------- \268\ The committee learned that the White House made the appointment process for the Commission very political. Because he had been instrumental in the creation of the commission, Senator Bingaman and his staff were supposed to have had a great deal of input into the creation of the Commission. Bingaman's staffer, Steve Clemons, found that he had a great deal of trouble getting Bingaman's candidates for the Commission approved. Charles Duncan, the Assistant Director of Presidential Personnel told Clemons that he checked all candidates names against a DNC donor list. When Trie's appointment was brought up, Clemons objected based on lack of experience and quality of candidate. However, the White House responded that Trie was a ``must appointment'' from the ``highest levels of the White House.'' See H. Rept. No. 105- 829, at 1374-1390 (1998). \269\ Exhibit 3 at 46. \270\ Id. \271\ Id. at 48. \272\ Id. \273\ Id. at 50. --------------------------------------------------------------------------- La Bella also believed that the President played a major role in the Common Cause allegations.\274\ He pointed out that the President was regularly briefed on the media fund and re- election efforts.\275\ In addition, as Director Freeh pointed out in his memorandum, the President was highly involved in the creation and placement of the ads. It was the President who entrusted Harold Ickes with running the media campaign that is at the heart of the Common Cause allegations. Therefore, La Bella imputes to the President knowledge of Ickes' control over both the DNC and Clinton/Gore '96 in order to effect the media campaign.\276\ --------------------------------------------------------------------------- \274\ Id. \275\ Id. \276\ Id. --------------------------------------------------------------------------- In conjunction with the media fund and general re-election efforts, there was an ongoing demand for more money to sustain the campaign.\277\ La Bella described events that he believed demonstrated a pattern of activity involving senior White House officials. He added, ``[t]his pattern suggests a level of knowledge within the White House--including the President's and First Lady's offices--concerning the injection of foreign funds into the reelection effort.'' \278\ The two examples La Bella used were the White House's handling of major donors Johnny Chung and Charlie Trie. --------------------------------------------------------------------------- \277\Id. at 51. \278\ Id. --------------------------------------------------------------------------- Chung had a significant amount of contact with the First Lady's office in order to make arrangements for his Chinese associates to meet both the President and the First Lady. Chung first made attempts to get meetings and perks through the DNC.\279\ However, even the DNC was wary of Chung and his Chinese business associates. Therefore, Chung went to the First Lady's Chief of Staff, Maggie Williams. On two separate occasions when the DNC would not deliver, Williams was able to arrange a photo-op with the President or First Lady for Chung and groups of Chinese businessmen.\280\ In one instance, Chung offered the DNC $50,000 to arrange for him and a group of Chinese businessmen to meet with President Clinton.\281\ When the DNC would not do it, the First Lady's office did, using the $50,000 to retire a portion of its debt to the DNC.\282\ Chung explained in an interview with the Task Force that he informed White House and DNC staff that ``the more access he could get, the better his business would be and the more he could contribute.'' \283\ It should have been clear to anyone who dealt with Chung that he was using funds from the Chinese businessmen he brought to meet the President to contribute to the DNC. --------------------------------------------------------------------------- \279\ Id. at 52. \280\ Id. \281\ Id. \282\ Id. \283\ Id. at 60. --------------------------------------------------------------------------- At one point, the NSC stepped in to question whether photos of the President in the White House with the Chinese businessmen should be released.\284\ The NSC was told that the individuals were major DNC donors and that the President's office would like to release the photos.\285\ After reviewing the Johnny Chung scenarios, La Bella concluded that the connection between Chung's foreign business associates and his DNC contributions was quite clear. He added, ``[i]t is inconceivable that senior officials at the White House were oblivious to these connections.'' \286\ --------------------------------------------------------------------------- \284\ Id. at 53. \285\ Id. \286\ Id. at 54. --------------------------------------------------------------------------- White House officials should have drawn similar conclusions about Charlie Trie and his contributions. Both the President and First Lady, along with senior White House staff, were warned about the possibility of problems with Trie's fundraising through the PLET fiasco.\287\ Although they were aware that Trie was an active fundraiser for the DNC, nobody brought the problem to the attention of the DNC.\288\ La Bella stated: --------------------------------------------------------------------------- \287\ Id. at 54-55. \288\ Id. at 55. These actions (and inactions) involving the President, First Lady, Ickes, White House Counsel and Bruce Lindsey, suggest a conscious decision not to learn the truth about Trie's fundraising activities. By not alerting the DNC and Clinton/Gore and by directing IGI not to confront Trie about the PLET ``donations,'' the White House chose not to impede a potent fundraiser at a time when funds were needed.\289\ --------------------------------------------------------------------------- \289\ Id. La Bella was able to tie all of the issues relating to the President together through the Common Cause allegations. For instance, the need to raise astronomical amounts of cash developed from the need to pay for the media campaign. Because the re-election efforts needed to raise so much cash, they turned a blind eye to problems such as foreign money coming into the campaign. Finally, under La Bella's analysis, the President was in the middle of it all. He approved the media campaign and followed it closely, assisted in raising the cash, and attending all of the fundraisers where he greeted the numerous foreign attendees, many of whom were unable to even speak English. La Bella argued that the President's role needed to be investigated and therefore, an independent counsel should have been appointed. iii. Vice President Gore The argument for an investigation of Vice President Gore was nearly identical to that of the President.\290\ Like the President, Vice President Gore participated in the decisionmaking on the media campaign and approved the efforts.\291\ Furthermore, La Bella believed that there should be a close review of the Vice President's fundraising calls from his White House office.\292\ The Department of Justice already had concluded that Gore did believe that he was soliciting ``hard'' money, a distinction that meant that there would have been no violation of law. However, La Bella did not want to rely solely on the Vice President's word, he believed further investigation was warranted.\293\ --------------------------------------------------------------------------- \290\ Id. at 57. \291\ Id. \292\ Id. \293\ Id. In fact, a subsequent preliminary investigation was opened on the Vice President when his aide's handwritten notes of a money meeting were discovered. The notes showed that hard and soft money splits for the media fund were discussed at a meeting the Vice President attended. --------------------------------------------------------------------------- iv. Hillary Rodham Clinton The First Lady is not covered under the mandatory provision of the Independent Counsel Act. However, La Bella concluded that she should be considered under the discretionary provision.\294\ He believed that, like Ickes and the President, her role in the Charlie Trie contributions and failure to warn the DNC and Clinton/Gore about those contributions should be further investigated. In addition, the First Lady's office also had a close relationship with contributor Johnny Chung that La Bella believed also should be investigated further.\295\ Chung often made arrangements through the First Lady's office for his Chinese business associates to meet with the President and First Lady.\296\ La Bella summarized, ``[g]iven our threshold for opening investigations, determination of what the First Lady knew and what she did (or chose not to do) in connection with the information detailed above, is something which deserves further inquiry.'' \297\ --------------------------------------------------------------------------- \294\ Id. at 60. \295\ Id. \296\ Id. \297\ Id. --------------------------------------------------------------------------- v. Other Campaign Finance Figures Central to the campaign finance investigation was the role of the DNC, its officers, and fundraisers. Millions of dollars in illegal or otherwise questionable contributions flowed into the DNC's coffers during the 1996 Federal elections. It was the discovery of a foreign contribution to the DNC that led to the campaign finance investigation. John Huang, a DNC fundraiser, brought foreign money into the DNC and became a major figure in the investigation. La Bella focused on the events that brought John Huang to the DNC, the individuals involved, as well as the actions taken by the DNC that allowed them to cross the line of legality.\298\ He stated, ``[t]hese incidents suggest that at some level, certain DNC fundraisers were actively engaged in conduct which had the effect of concealing questionable fundraising conduct from the FEC and the public.'' \299\ --------------------------------------------------------------------------- \298\ Id. at 61-73. \299\ Id. at 61. --------------------------------------------------------------------------- Huang came to the DNC as a fundraiser through the intervention of President Clinton, who enlisted White House aides and personally spoke with the DNC to help Huang.\300\ Prior to that, Huang was a political appointee, subject to the Hatch Act, at the Department of Commerce.\301\ While at the Commerce Department, Huang had engaged in fundraising activities, in violation of the Hatch Act, with the full knowledge, and possibly at the prompting of the DNC.\302\ La Bella described how David Mercer, DNC Deputy Finance Director, credited Huang's wife Jane for funds raised in order to hide the fact that Huang was violating the Hatch Act.\303\ The committee later learned that while Huang was still working at the Commerce Department, White House Deputy Chief of Staff Harold Ickes actually asked Huang to raise money.\304\ --------------------------------------------------------------------------- \300\ Id. at 69. Several individuals were working on Huang's behalf to get him a fundraising position with the DNC, including James Riady, Mark Middleton, and Joe Giroir. Riady, Huang, and Giroir had a meeting with the President at which they discussed Huang working at the DNC as a fundraiser. The President enlisted the help of White House aides Bruce Lindsey and Harold Ickes to pave the way for Huang with the DNC. Ickes contacted the head of DNC fundraising Marvin Rosen and DNC Chairman Don Fowler to recommend Huang. Huang's application did not move forward until the President personally mentioned Huang to Rosen during a fundraiser. Shortly thereafter, Huang was hired at the DNC. See H. Rept. No. 105-829, at 1207-1208 (1998). \301\ Exhibit 3 at 70. \302\ Id. at 67. \303\ Id. \304\ Ickes asked Huang to raise funds for Jesse Jackson, Jr.'s congressional campaign during Huang's ``interview'' process for the DNC. Huang stated that Ickes said something like, ``can you help out from the Asian American community, round-up ten to fifteen thousand dollars for Jesse Jackson, Jr.?'' Ultimately, Huang did raise several thousand dollars for Jackson. FBI summary of Huang interview, DOJ- H000127-131. --------------------------------------------------------------------------- Although there are no criminal penalties for violating the Hatch Act, La Bella believed that the disclosure of the violation would have jeopardized both Huang's Commerce Department employment and his move to the DNC, resulting in a ``public relations nightmare.'' \305\ Futhermore, La Bella indicated that the actions taken by Huang and Mercer possibly were in violation of section 371 of the criminal code. Such a violation would have involved a scheme to defraud the United States based on the Hatch Act violation.\306\ In light of the other evidence, and the potential section 371 violation, La Bella believed that a full investigation was warranted. --------------------------------------------------------------------------- \305\ Exhibit 3 at 67. \306\ Id. La Bella indicated that Justice Department Research showed that, ``a scheme to defraud in connection with false statements and active concealment relating to campaign funds solicited in violation of the Hatch Act, does present a viable prosecutable theory. Id. --------------------------------------------------------------------------- La Bella also cited to miscellaneous events that raised questions about whether DNC officials were aware of potential irregularities and illegalities in fundraising. For instance, by mid-1994, the DNC practically dismantled its procedures for vetting all contributions of $10,000 or more.\307\ Without vetting, the DNC would have no information on large contributions. As further evidence he cited to Johnny Chung's efforts to bring numerous Chinese businessmen to meet with the President. For example, Chung wrote to DNC Finance Director Richard Sullivan about a group of his Chinese associates who were to meet with the President, stating that one of the group would play ``an important role in our future party functions.'' \308\ Chung even wrote to Deputy Assistant to the President Doris Matsui, ``[i]n the next two years I will be coordinating a lot of visits from Asian business leaders to support DNC. I look forward to working closely with you. . . .'' \309\ La Bella believed that in light of these and other examples, a thorough investigation of the DNC's practices was in order. Such an investigation, he said, would be a political conflict of interest for the Department of Justice.\310\ He bolstered his assertion with the fact that the President and Harold Ickes were instrumental in running the affairs of the DNC and Clinton/Gore, meaning that any investigation would certainly include their activities. --------------------------------------------------------------------------- \307\ Id. at 71. \308\ Id. Chung was referring to Chairman Chen of Haomen Beer, who later used his photograph with President Clinton as a marketing tool in China. Id. \309\ Id. at 72. \310\ Id. --------------------------------------------------------------------------- vi. The Loral Matter Illustrating his assertion that there was a higher threshold for initiating an investigation of the White House or its senior officials, La Bella cited to the investigation of the satellite communications company Loral.\311\ Shortly before La Bella wrote his memorandum, there were allegations reported in the media that the administration gave Loral an export waiver for satellite technology in return for the campaign contributions of its CEO Bernard Schwartz.\312\ According to La Bella, nobody at the Department of Justice was able to provide a sound premise upon which to base the initiation of a criminal investigation.\313\ Rather, because of the media and political pressure, Justice commenced an investigation.\314\ Therefore, the standard used by the Justice Department in this case was that ``allegations were made which, if true, suggested a potential violation of federal law.'' \315\ In light of the Loral investigation, La Bella believed that there was no justification for the refusal to initiate an investigation into the Common Cause allegations.\316\ --------------------------------------------------------------------------- \311\ Id. at 73. \312\ Id. \313\ Id. \314\ Id. at 74. \315\ Id. In comparison, the Justice Department imposed a higher standard when considering allegations related to senior White House officials: ``a determination that there is specific and credible evidence of a federal violation.'' Id. at 10. \316\ Id. at 74. --------------------------------------------------------------------------- As the Justice Department already had decided to commence an investigation, La Bella argued that the actual and potential conflicts of interest were such that the appointment of an independent counsel ought to be sought.\317\ For instance, one of the areas of investigation was to determine whether Schwartz' campaign contributions ``corruptly influenced'' President Clinton's 1998 decision to grant Loral a waiver over the objections of the Department of Justice.\318\ At the time of the waiver, the Department of Justice had an open criminal investigation of Loral for the alleged transfer of technology to China.\319\ The Department of Justice informed the White House that a waiver would hinder its ongoing investigation of Loral.\320\ In addition to investigating the decision of the President, several high-level Justice Department officials were involved in discussions with the White House prior to the President's decision to grant the waiver.\321\ La Bella indicated that these officials' conversations with White House Counsel would be material to the investigation as well.\322\ In the end, La Bella determined that the most important factor in the investigation was that it would be an investigation of the President. He concluded that ``if the matter is sufficiently serious to commence a criminal investigation, it is sufficiently serious to commence a preliminary inquiry under the ICA since it is the president who is at the center of the investigation.'' \323\ --------------------------------------------------------------------------- \317\ Id. \318\ Id. \319\ Id. at 75. \320\ Id. \321\ Id. \322\ Id. Robert Litt and Mark Richard were the individuals in contact with the White House regarding the Loral matter. Litt conveyed the Department's concerns over the possible waiver to Counsel to the President Charles Ruff. Id. at 75-76. \323\ Id. at 79. --------------------------------------------------------------------------- d. La Bella's Conclusions La Bella argued that Justice Department officials were waiting for some type of smoking gun that implicated, beyond a doubt, a covered person in an act that violated Federal law.\324\ However, in the campaign finance matter, the information had to be gathered and reviewed as a whole, rather than looking at each individual piece. La Bella explained: --------------------------------------------------------------------------- \324\ Id. at 93. [T]here are bits of information (and evidence) which must be pieced together in order to put seemingly innocent actions in perspective. While this may take more work to accomplish, in our view it is no less compelling than the proverbial smoking gun in the end. . . . Indeed, were this quantum of information amassed during a preliminary inquiry under the ICA, we would have to conclude that there are reasonable grounds to believe that further investigation is warranted.\325\ --------------------------------------------------------------------------- \325\ Id. The report acknowledged that there were some areas of the campaign finance investigation that as an experienced prosecutor, La Bella would not pursue. Nevertheless, he made clear that in the situation at hand, the prosecutorial discretion belonged to an independent counsel. 3. Conclusion Both Director Freeh and Supervising Attorney La Bella believed that an independent counsel should be appointed to investigate the campaign finance investigation. Furthermore, they agreed that the Department of Justice was applying the Independent Counsel Act in a manner that almost assured that one would not be appointed. They both saw that the tunnel vision of Reno and her senior political advisors allowed them to ignore the big picture. Central to that big picture was what both Freeh and La Bella believed was some type of broad conspiracy centered around the need to raise vast sums of money and the willingness to bend or break the campaign financing laws to get it. The Common Cause allegations were a major part of their theory, and they asserted that the Department of Justice refused to investigate these allegations at any level. The Common Cause allegations laid out a common theme in both memoranda. The facts were that the President and Vice President needed to run ads early and frequently to be re- elected. In order to run the ads the campaign needed to raise significant amounts of money. The White House, DNC, and Clinton/Gore '96 all participated in the effort to raise the money and pay for the ads. Once they began the operation, the three entities became blurred and began to spend money as if they were one. All of this happened under the watch and with the knowledge of the President, Vice President, and senior White House, DNC, and Clinton/Gore staff. As momentum started building, they needed more money, and that left the door open for people like John Huang, Charlie Trie, Johnny Chung, and Pauline Kanchanalak to bring in questionable funds. Neither Freeh nor La Bella definitively state that White House, DNC, or Clinton/Gore officials knew about the illegal contributions. However, in their memoranda they show that there was sufficient information to further investigate. Because the President and Vice President were so intimately involved in the areas being investigated, it was nearly impossible for the Task Force to conduct the investigation without looking into their conduct. As Freeh noted, the Justice Department attorneys were extremely reluctant to proceed into areas of investigation where covered persons might be implicated, necessitating the appointment of an independent counsel. The Department of Justice was setting a very high standard for appointing an independent counsel in the campaign finance investigation. Although Attorney General Reno constantly repeated that she would appoint an independent counsel when presented with specific information from a credible source that needed to be further investigated, she had not done so in practice. As both La Bella and Freeh argued, any one piece of information seen in a vacuum might not satisfy the standard, rather, the pieces together created a pattern that could not be ignored. E. Department of Justice Rebuttal Memoranda The Department of Justice circulated the La Bella memorandum to senior level personnel for review and discussion. In memoranda to the Attorney General, several senior level personnel responded to the facts and issues raised in the memorandum. The committee received the responses of Associate Deputy Attorney General Robert Litt and Chief of the Public Integrity Section Lee Radek, who both had negative reactions to the La Bella memo. 1. Litt's Response to the La Bella Memorandum In a July 20, 1998, memorandum to the Attorney General, Litt sets forth his observations about the La Bella memo.\326\ He first denied that the Department had applied an artificially high standard in applying the Independent Counsel Act. Litt then summarily stated that the Department of Justice never prohibited La Bella and the Task Force from conducting an investigation of the entire campaign finance landscape in order to determine whether specific information from a credible source sufficient to trigger the Act existed.\327\ Litt believed that the comprehensive nature of La Bella's memorandum proved that the Task Force had not been impeded in its investigation.\328\ In short, Litt concluded, ``it is not the Independent Counsel Act that is blocking investigation of the President and those around him; it is the lack of any specific and credible information that they may have committed a crime.'' \329\ --------------------------------------------------------------------------- \326\ Memorandum from Robert S. Litt, Associate Deputy Attorney General, U.S. Department of Justice, to Janet Reno, Attorney General, U.S. Department of Justice, and Eric Holder, Deputy Attorney General, U.S. Department of Justice (July 20, 1998) (exhibit 4). \327\ Id. at 1. \328\ Id. \329\ Id. at 2. --------------------------------------------------------------------------- Litt's rebuttal of La Bella's allegations is unimpressive. He never addressed the argument that the Attorney General would look only at individual pieces of information in deciding whether the Independent Counsel Act was triggered rather than reviewing the investigation as a whole. Furthermore, he simply denied that La Bella's statements about the artificially high standard for the Independent Counsel Act were accurate. Obviously, La Bella had a difference of opinion which Litt never factually rebutted. Litt then turned to the individual cases discussed by La Bella, including the Common Cause allegations.\330\ Litt criticized La Bella for bringing up the Common Cause allegations, stating that the Department had already determined that they did not warrant criminal investigation under the FECA or Presidential Funding Acts.\331\ He also dismissed La Bella's legal argument that the Common Cause allegations could be prosecuted as a conspiracy to defraud the United States.\332\ Both Litt and PIS, headed by Radek, had rejected the Common Cause allegations earlier, and recommended that the charges be left to the FEC to investigate. Litt wrote: --------------------------------------------------------------------------- \330\ Id. at 3. \331\ Id. \332\ Id. It is unfortunate that the FEC is so weak, but we should not use that as an excuse to disregard well- established concepts of predication and well- established procedures, to conjure up novel legal theories of which political candidates had no notice, and to take on the responsibility of primary regulator of the political process. That is not an appropriate function of the Department of Justice.\333\ --------------------------------------------------------------------------- \333\ Memorandum from Robert S. Litt, Associate Deputy Attorney General, U.S. Department of Justice, to Janet Reno, Attorney General, U.S. Department of Justice 4 (Feb. 6, 1998). There was a difference of opinion between the Task Force prosecutors and the FBI on the one side, and the Attorney General's advisors and PIS on the other about whether there was a violation of any laws in the scheme described by Common Cause. La Bella wanted at a minimum, to investigate. The Attorney General and her advisors decided that there was no predication to investigate, and refused to allow a Task Force investigation of the issue to go forward. Ultimately, La Bella and other Common Cause advocates received belated support in a FEC audit that found that the ``DNC media payments ($46,546,476) to have been an in-kind contribution to either the primary or general campaign committee.'' \334\ --------------------------------------------------------------------------- \334\ Addendum to interim report from Charles G. La Bella, Supervising Attorney, Campaign Financing Task Force, and James DeSarno, Assistant Director, Federal Bureau of Investigation, for Janet Reno, Attorney General, U.S. Department of Justice, and Louis J. Freeh, Director, Federal Bureau of Investigation 5 (Aug. 12, 1998) (paraphrasing finding of FEC audit) (exhibit 5). --------------------------------------------------------------------------- Addressing another section of the LaBella memorandum, Litt generally agreed that Harold Ickes and high-ranking DNC officials ought to be investigated, but not by an independent counsel.\335\ Although La Bella did advocate considering Ickes under the mandatory provision, he also urged the Attorney General to recognize the conflict of interest she and the Department had in investigating Ickes and the DNC. Litt neglected the argument that these matters ought to be considered under the discretionary provision of the Independent Counsel Act. --------------------------------------------------------------------------- \335\ Exhibit 4 at 4. --------------------------------------------------------------------------- 2. Radek Response to the La Bella Memorandum and La Bella's Reply Lee Radek, the Chief of the Public Integrity Section, attacked La Bella's memorandum to the Attorney General in his own August 5, 1998 response.\336\ Radek criticized La Bella's recommendations as ``flawed and based on numerous misinterpretations of the Independent Counsel Act.'' \337\ He also complained bitterly about what he perceived as personal digs: --------------------------------------------------------------------------- \336\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, to James K. Robinson, Assistant Attorney General, Criminal Division, U.S. Department of Justice (Aug. 5, 1998) (exhibit 6) this memorandum was forwarded to the Attorney General on Aug. 6, 1998. \337\ Id. at 2. I am, to put it directly, outraged by the personal attacks and the suggestions contained in this Report, some subtle, and some stunningly blunt, that the motivations of those who have advised the attorney General over the last two years concerning the application of the Act with respect to campaign financing matters have been colored by bad faith, a deliberate twisting of the law, and an effort to protect the White House.\338\ --------------------------------------------------------------------------- \338\ Id. at 1. When La Bella's was confronted with Radek's charges, he replied, ``such an approach lessens legitimate debate and hampers the ability to reason to a result based on the merits.'' \339\ La Bella, on the other hand, insisted on replying to the substance of Radek's comments, rather than to his attacks. --------------------------------------------------------------------------- \339\ Exhibit 5 at 1. --------------------------------------------------------------------------- i. Stovepipe Versus Landscape Analysis Radek addressed La Bella's criticism that the Department was conducting a ``stovepipe'' analysis rather than a ``landscape'' analysis. Radek contended that there had been no previous investigation that was as carefully coordinated as the Task Force.\340\ He argued that efforts had been made and, ``extensive steps have been taken to ensure that any overlapping evidence or potentially interlocking cases is [sic] not overlooked.'' \341\ Radek asserted that if the big picture had been ignored it was the fault of La Bella himself.\342\ He also denied, as ``simply untrue,'' La Bella's contention that the Task Force had not been allowed to do a ``broad survey of the entire campaign finance landscape.'' \343\ --------------------------------------------------------------------------- \340\ Exhibit 6 at 3. \341\ Id. \342\ Id. \343\ Id. --------------------------------------------------------------------------- As evidence that La Bella was wrong, Radek pointed to the two examples that La Bella used in his memorandum. Radek first brought up the Common Cause allegations, and stated that they were ``thoroughly considered, analyzed at length, and closed on their merits.'' \344\ He also stated that the Task Force was told that they were free to investigate any of the facts underlying the investigation.\345\ Similarly, Radek asserted that the core group investigation was fully pursued by the FBI and dropped because it was not fruitful.\346\ --------------------------------------------------------------------------- \344\ Id. \345\ Id. \346\ Id. --------------------------------------------------------------------------- In response to Radek's assertions regarding the stovepipe analysis, La Bella clarified that he had intended ``to reference the natural tendency of investigators and prosecutors to segment individual allegations and charges.'' \347\ La Bella indicated that he was not criticizing the investigators, rather, he had hoped that his memorandum would cause the Attorney General and her advisors to see the matter from the landscape view. He believed that the Common Cause allegations and core group analysis would have forced the Department of Justice to look at the investigation from the landscape view sooner.\348\ --------------------------------------------------------------------------- \347\ Exhibit 5 at 1. \348\ Id. La Bella acknowledged that the core group investigation was closed before he arrived at the Task Force, and he had therefore relied upon the representations of others who were present. --------------------------------------------------------------------------- La Bella took issue with Radek's contention that the Common Cause allegations had been ``closed on the merits.'' \349\ On the contrary, he believed that the matter had been tabled, pending a decision by the Attorney General. La Bella stated that the Task Force had continually raised the Common Cause issue in order to come to some type of conclusion. Each time the issue was brought up, the Task Force was told that the matter remained under consideration.\350\ La Bella pointed to an August 4, 1998, memorandum from Criminal Appeals regarding Common Cause in support of his contention that the matter was very much open.\351\ --------------------------------------------------------------------------- \349\ Id. at 2. \350\ Id. \351\ Id. --------------------------------------------------------------------------- ii. Independent Counsel Act Interpretation Radek next turned to the Department's application and interpretation of the Independent Counsel Act. He took issue with the ``evidence'' versus ``information'' distinction pointed out by La Bella. The Act itself refers to the specificity of the information and the credibility of the source.\352\ However, the PIS and Attorney General consistently referred to the ``specific and credible evidence'' needed to initiate a preliminary investigation. Radek insisted that he used the words evidence and information interchangeably, and did not mean for a higher threshold to apply.\353\ In response, La Bella argued that the wording of the Act itself was crucial as it could make a difference in whether the Act was triggered.\354\ --------------------------------------------------------------------------- \352\ 28 U.S.C. Sec. 591(d)(1). \353\ Exhibit 6 at 5. \354\ Exhibit 5 at 8. --------------------------------------------------------------------------- As described above, in his memorandum, La Bella criticized the Department for having two standards for investigation, a higher one for covered persons and a lower threshold for all others. Radek argued that the Act itself imposed this higher standard.\355\ He discussed how Congress, in contrast to La Bella's argument, was worried that the threshold for investigation might be too low, and therefore used the specific and credible language to normalize the threshold.\356\ Radek concluded that ``[t]he Report's conclusion that this minimal standard should be set aside in this case has no support in the Act, and indeed appears to us to be the very sort of strained, result-oriented analysis of which it accuses those who disagree with the authors.'' \357\ According to La Bella, the 1987 and 1994 amendments to the Independent Counsel Act rebutted Radek's arguments which were based on the 1982 amendments.\358\ He argued that after the 1982 amendments, it became clear that the Justice Department was applying a higher threshold for the Act rather than applying it too loosely.\359\ Therefore, Congress changed the language to allow the Justice Department to take into account its own established policies in making decisions under the Act. --------------------------------------------------------------------------- \355\ Exhibit 6 at 5. \356\ Id. \357\ Id. \358\ Exhibit 5 at 9. See section C.2.b.iii. for La Bella's analysis of the legislative history. \359\ Id. --------------------------------------------------------------------------- iii. Harold Ickes Radek disagreed with La Bella's analysis of Ickes under the Independent Counsel Act. Radek insisted that the law did not permit the Attorney General to consider whether an individual was a ``de facto'' officer of a campaign committee, as La Bella argued that Harold Ickes was.\360\ However, he did acknowledge that the argument that the Attorney General should consider Ickes under the discretionary provision was persuasive.\361\ La Bella defended the ``de facto'' analysis, comparing it to liability in corporate law.\362\ For instance, Ickes would have been considered an ``agent'' of Clinton/Gore '96 based on that committee's own admissions. Therefore, Clinton/Gore '96 could have been held liable for Ickes' actions, making him a de facto officer in La Bella's view. --------------------------------------------------------------------------- \360\ Exhibit 6 at 9. \361\ Id. at 10. Radek quibbled with the manner in which La Bella made his argument, stating that La Bella presumed to make the decision for the Attorney General, whereas, the decision is discretionary. Id. La Bella's response was that: While we gather that it is Public Integrity's policy not to give advice as to invocation of the discretionary clause, [] we believe that as supervisors of the Task Force, it is our responsibility to address this important issue. To do otherwise is to ignore the facts and fail to provide a framework in which they should be considered. After hearing the various viewpoints, the decision, of course, is --------------------------------------------------------------------------- entirely the Attorney General's to make.'' Exhibit 5 at 9. \362\ Exhibit 6 at 11. --------------------------------------------------------------------------- The issue relating to Charlie Trie's PLET contributions encompassed Harold Ickes and the First Lady, as well as several other individuals in La Bella's memorandum. Radek stated that he could find no basis upon which to hold Ickes and the First Lady, criminally liable for failing to warn the DNC and Clinton/Gore about Trie's questionable fundraising.\363\ La Bella responded that in Ickes' case, there was support in basic agency law and statutes 18 U.S.C. sections 371 and 1341, among others.\364\ As for the First Lady, La Bella stated that, ``[h]er potential criminal involvement tracks the conduct set forth relating to the PLET incident.'' \365\ Therefore, he concluded that her conduct warranted further inquiry. La Bella made a novel legal argument that the Justice Department would have to determine whether it could support. It should be noted that the Task Force prosecuted several DNC fundraisers under a similarly novel legal argument regarding causing false statements to be made to the DNC. Those arguments were upheld on appeal. --------------------------------------------------------------------------- \363\ Id. \364\ Exhibit 5 at 13. Section 317 deals with a conspiracy to defraud the United States, and was discussed at great length in the La Bella memorandum. 18 U.S.C. Sec. 371. Section 1341 relates to frauds and swindles involving the mails. 18 U.S.C. Sec. 1341. \365\ Exhibit 5 at 16. --------------------------------------------------------------------------- iv. President Clinton Radek also disagreed with the issues raised in the La Bella memorandum regarding the President. First, he stated that there was no evidence of a quid pro quo in which the President appointed Charlie Trie to the Presidential Commission in exchange for contributions to the PLET.\366\ Second, he states that there is no evidence that the President knew any contributions to the campaign were foreign.\367\ However, he does not take into account the fact that it was nearly impossible for the Task Force to develop any evidence on covered individuals under the standards set by the Department of Justice. --------------------------------------------------------------------------- \366\ Exhibit 6 at 12. \367\ Id. at 13. --------------------------------------------------------------------------- Although La Bella raised numerous questions about the President's actions, Radek asserted that ``there is absolutely no specific and credible information suggesting that the president committed a crime with respect to any of these matters; the Report identifies none, but rather lists a series of provocative and speculative hypothetical questions it asserts should be answered.'' \368\ Radek added that La Bella had fallen back on his argument that there should be one standard for initiating an investigation, which was not possible to do while still adhering to the standard of the Independent Counsel Act.\369\ Radek seems to prove La Bella's point through his argument. There are two standards for investigating, as Radek acknowledges, and the Task Force was prohibited from investigating the President or any other covered person unless they uncovered a specific piece of evidence that implicated a covered person in a violation of criminal law. --------------------------------------------------------------------------- \368\ Id. at 12. \369\ Id. at 12. --------------------------------------------------------------------------- v. The Vice President Radek also rebuffed the arguments regarding the investigation of Vice President Gore. However, by the time La Bella wrote his reply, the Task Force had received a memorandum of a White House ``money meeting'' with David Strauss' handwritten notes referencing what was discussed at the meeting and the comments of the Vice President.\370\ The notes showed that hard and soft money splits required to pay for the media fund were discussed, although the Vice President previously stated that he had no knowledge that hard money would be used for the media fund.\371\ Therefore, as noted by La Bella, the discovery of the Strauss memo yet again raised the question of the Vice President's knowledge.\372\ In fact, after the Strauss memo came to light, the Attorney General did initiate a preliminary investigation.\373\ However, she ultimately declined to appoint an independent counsel.\374\ --------------------------------------------------------------------------- \370\ Exhibit 5 at 15. \371\ Id. \372\ Id. \373\ See in re Albert Gore, Jr., notification to the court pursuant to 28 U.S.C. Sec. 592(b) of results of preliminary investigation (Special Div. DC Cir. 1998). \374\ Id. --------------------------------------------------------------------------- vi. The DNC and Its Officials The La Bella memorandum also reintroduced the argument that the Attorney General had a political conflict of interest in investigating the DNC. The individuals involved were fundraiser John Huang, Finance Chairman Marvin Rosen, and Deputy Finance Director David Mercer, among others.\375\ Radek summarily dismissed La Bella's arguments as having been rejected by the Attorney General long ago.\376\ As long as no new information or developments had arisen relating to a covered person, Radek rejected the idea of an independent counsel.\377\ However, La Bella again pointed out that the DNC had been under the control of the White House and was used almost exclusively to re-elect the President.\378\ Therefore, he concluded that the matter, and the individuals being investigated, posed a political conflict of interest.\379\ --------------------------------------------------------------------------- \375\ Exhibit 6 at 16. \376\ Id. \377\ Id. \378\ Exhibit 5 at 16. \379\ Id. --------------------------------------------------------------------------- vii. The Common Cause Allegations The Common Cause allegations were central to both Freeh and La Bella's theories of the overall campaign finance investigation, yet the Department of Justice refused to investigate them. When La Bella was brought in to supervise the Task Force, he assigned one attorney, Steve Clark, to work solely on Common Cause. In late December 1997, Clark left the Task Force out of frustration over the Department's handling of Common Cause. Prior to his departure, Clark wrote in a December 23, 1997, memorandum: That, to date, we have been unable to investigate the Common Cause allegations in a straightforward way has been a great personal and professional disappointment. But, I believe the public has been most dis-served [sic] by the way in which the ``whether to investigate'' issue has been approached, debated, and resolved. Never did I dream that the Task Force's effort to air this issue would be met with so much behind the scenes maneuvering, personal animosity, distortions of fact, and contortions of law. (It also is my impression that many involved have not read the pertinent cases.) All this, not to forestall an ill- conceived indictment, not to foreclose a report making an independent counsel referral, but to prevent any investigation of a matter involving a potential loss of over $180 million to the Federal treasury.\380\ --------------------------------------------------------------------------- \380\ Memorandum from (name redacted), Assistant U.S. Attorney, to Chuck La Bella, Supervising Attorney, Campaign Financing Task Force (Dec. 23, 1997). (Exhibit 7). It has been made public that the author of the memorandum was Steve Clark, AUSA. It was not at all clear that Clark was referring to Radek in the passage, in fact, more than one individual would appear to be implicated. However, Radek's opinions match those that were disputed by Clark. Furthermore, Radek stooped to pure fabrication when he claimed that the Attorney General had decided that it did not warrant the appointment of an independent counsel. He was surely aware that there was never any closing memo on the Common Cause allegations that was approved by either the Attorney General or Director Freeh.\381\ --------------------------------------------------------------------------- \381\ Exhibit 6 at 16. --------------------------------------------------------------------------- After insisting that the matter had been closed, Radek went on to address the merits of the allegations. He claimed that the FEC had primary responsibility for investigating and interpreting the election laws and, under longstanding agreements between the FEC and Department of Justice, it would be inappropriate for Justice to investigate. Long before Radek wrote his memo, Clark rebutted the arguments Radek put forward. In his December 1997 memorandum, Clark stated: While I recognize that there have been legitimate disagreements, some positions urged in support of avoiding any investigation have been so plainly wrong as to be disheartening (e.g., the suggested referral to the FEC, on the misapplication of the MOU with that agency, with the claim that the FEC could refer the case back after it checked out the ad content, but with the unspoken reality that no criminal investigation would ever happen--certainly not within the three year statute of limitations; or the contention that an independent counsel referral must be made immediately if any investigation is even authorized).\382\ --------------------------------------------------------------------------- \382\ Exhibit 7. La Bella agreed with Clark, stating that ``the MOU does not mandate that initial responsibility be placed with the FEC. It is clear that the Department can investigate independently.'' \383\ --------------------------------------------------------------------------- \383\ Exhibit 5 at 5. --------------------------------------------------------------------------- Radek rejected the theory that the Common Cause allegations could establish a section 371 conspiracy to defraud the United States. He stated, ``[t]o the contrary, the Attorney General has addressed the ultimate issue here squarely. She has decided that no amount of coordination between the candidates and the party can, by itself, constitute a violation. Only the content of the ads can establish a civil violation of the FECA.'' \384\ In his memorandum, Clark had a better perspective on the allegations generally. He pointed out that the Department could not possibly know, without investigating further, whether or not they could initiate criminal prosecutions.\385\ --------------------------------------------------------------------------- \384\ Exhibit 6 at 19. \385\ Exhibit 7. --------------------------------------------------------------------------- In response, La Bella directly addressed the criminal conspiracy argument, citing to the recent findings of a FEC audit report stating that the payments made by the DNC for the media campaign were in-kind contributions to either the primary or general campaign.\386\ The FEC audit also found that the ads contained an electioneering message.\387\ La Bella asserted that the audit report added ``considerable, credible, and new information supporting the Common Cause allegations.'' \388\ The finding specifically supported the allegations that the President directed and controlled ads that were paid for by the DNC pursuant to the President's request and that were intended to effect the President's election.\389\ In addition, because the auditors found ``electioneering content,'' meaning there was some type of violation of the campaign laws, the theory of a section 371 conspiracy was bolstered. Clinton/Gore's exclusion of the funds used to pay for the media campaign from its spending figures was therefore a potential criminal violation of the Federal campaign financing laws, according to La Bella.\390\ --------------------------------------------------------------------------- \386\ Exhibit 5 at 5. \387\ Id. \388\ Id. at 6. \389\ Id. at 7. \390\ Id. --------------------------------------------------------------------------- After the Task Force received the FEC Audit memorandum referred to by La Bella, the Attorney General could no longer ignore the matter, and was forced to open a preliminary investigation on the Common Cause allegations. Three months after his stinging memorandum ridiculing the Common Cause allegations, Radek, along with the new Task Force Supervising Attorney David Vicinanzo, finally acknowledged that those allegations were credible. Radek stated: To the extent that these advertising expenditures did constitute contributions to and expenditures by the campaign committees, they were unlawful, in that they would have violated among other things, (1) the FECA's limits on contributions to candidates by multicandidate political parties like the DNC, and (2) the PPMPAA's and PECFA's expenditure limits on publicly financed elections. Any such violations made knowingly and willfully would potentially be criminal.\391\ --------------------------------------------------------------------------- \391\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, and David A. Vicinanzo, Supervising Attorney, Campaign Financing Task Force, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice, at 2 (Nov. 20, 1998). Radek stated that he would take the FEC's findings at face value for the purposes of the preliminary investigation. He determined that the main focus of the preliminary investigation was whether the President and Vice President had the requisite intent, knowing and willful, to be criminally liable.\392\ It is important to remember at this point that, as a check on the Attorney General's discretion under the Independent Counsel Act, she was not permitted to make a determination that ``no further investigation was warranted'' based on a finding that Clinton or Gore lacked the state of mind required for the violation, unless there was ``clear and convincing evidence.'' \393\ When drafting the Act, Congress believed that the Attorney General would rarely base a determination on state of mind, noting that ``due to the subjective judgments required and the limited role accorded the Attorney General in the independent counsel process.'' \394\ Nevertheless, Radek, accepting all of the other arguments that a criminal act transpired, focused in on intent as a way to avoid invoking the Independent Counsel Act. In fact, Radek concluded that the President and Vice President met this extremely high standard set by Congress, stating, ``in our view these facts establish that the President and Vice President lacked the requisite specific intent to violate the law.'' \395\ --------------------------------------------------------------------------- \392\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, and David A. Vicinanzo, Supervising Attorney, Campaign Financing Task Force, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice, at 2 (Nov. 20, 1998). \393\ 28 U.S.C. Sec. 592(a)(2)(B)(ii). \394\ ``Independent Counsel Provisions: An Overview of the Operation of the Law,'' CRS Rept. No. 98-283, at FN 22 (Mar. 20, 1998) (citing H. Rept. No. 103-511, at 11 (1994)). \395\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, and David A. Vicinanzo, Supervising Attorney, Campaign Financing Task Force, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice, at 4 (Nov. 20, 1998). --------------------------------------------------------------------------- Radek determined that the President and Vice President did not have the specific intent based upon their reliance on the advice of counsel.\396\ That is, they relied upon the advice of the DNC and Clinton/Gore attorneys who advised them. The attorneys, Joe Sandler and Lyn Utrecht, reviewed all of the ads before they were released and provided their opinion that the ads did not contain an electioneering message.\397\ Radek concludes that there was no evidence showing that the President and Vice President had independent knowledge of the electioneering standard or whether they might be violating it.\398\ However, he had to determine whether no further investigation was warranted. In this case, it is not at all clear that there was clear and convincing evidence of a lack of intent sufficient enough to overcome the need for further investigation, certainly without having conducted a grand jury investigation. --------------------------------------------------------------------------- \396\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, and David A. Vicinanzo, Supervising Attorney, Campaign Financing Task Force, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice, at 37 (Nov. 20, 1998). \397\ Id. \398\ Id. at 40. --------------------------------------------------------------------------- The FBI found that the ``advice of counsel'' defense relied upon by Radek and Vicinanzo was ``not strong enough to satisfy the `clear and convincing' standard under the Independent Counsel Act.'' \399\ FBI General Counsel Larry Parkinson indicated in a memorandum to Director Freeh that there were several reasons why the standard had not been met. First, while relying on the advice of counsel defense, the President and Vice President had no direct contact with the attorneys providing the advice.\400\ Parkinson points out that all of the advice was filtered through intermediaries and raised serious questions as to whether the actual legal advice was provided to the President and Vice President.\401\ In addition, the attorneys in question, Sandler and Utrecht, were not disinterested parties, both had a vested interest in ensuring the re-election of Clinton and Gore. As Parkinson stated, had they wanted a truly disinterested opinion they could have gone to the FEC for advice.\402\ --------------------------------------------------------------------------- \399\ Memorandum from Larry Parkinson, general counsel, Federal Bureau of Investigation, to Louis J. Freeh, Director, Federal Bureau of Investigation, at 3 (Dec. 4, 1998) (exhibit 8). \400\ Id. \401\ Id. \402\ Id. at 5. --------------------------------------------------------------------------- Perhaps most important to whether further investigation was warranted was that Sandler, one of the attorneys upon whom Clinton and Gore were relying, wrote a memorandum indicating he had doubts about whether the media campaign was violating election law.\403\ The memo stated, ``Under [the FEC's legal] test, the DNC is bumping up right against (and maybe a little bit over) the line in running our media campaign about the federal budget debate, praising the President's plan and criticizing Dole by name.'' \404\ The Sandler memo was somehow rewritten to soften the language by the time it was sent to the White House.\405\ Sandler was interviewed about the memoranda, and Parkinson stated that, ``Sandler gave a contorted explanation which led our agents to believe he was lying.'' \406\ In addition, the FBI believed that the White House had not produced all documents relevant to the preliminary investigation.\407\ --------------------------------------------------------------------------- \403\ Id. \404\ Id. (quoting memorandum written by Joe Sandler, general counsel, DNC). \405\ Id. \406\ Id. \407\ Id. at 6. --------------------------------------------------------------------------- Parkinson also took issue generally with Radek's application of the clear and convincing standard in the Vice President's case. He pointed out that Congress intended to set a very high threshold for the Attorney General to close a case based on lack of intent to commit the crime.\408\ He cited to the legislative history of the Act, wherein Congress stated that, ``[t]he Justice Department's demand for proof of intent to justify continuing independent counsel cases is disturbing, because criminal intent is extremely difficult to assess, especially in the early stages of an investigation. Further, it often requires subjective judgments, which should ideally be left to an independent decisionmaker.'' \409\ Parkinson framed the question as whether the Attorney General could reasonably conclude that the Vice President's case was one of those ``rare cases'' in which she could reach the threshold of the clear and convincing standard. Parkinson clearly concluded that it would not be reasonable for the Attorney General to make that determination.\410\ --------------------------------------------------------------------------- \408\ Memorandum from Larry Parkinson, general counsel, Federal Bureau of Investigation, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice, at 7 (Nov. 20, 1998). \409\ Id. (citing to 1987 U.S.C.C.A.N. at 2159-60). \410\ Id. at 8. --------------------------------------------------------------------------- The Parkinson memorandum should have been sufficient to convince the Attorney General that further investigation into the Common Cause allegations was warranted. Parkinson raised numerous issues that were not addressed by the preliminary investigation. In fact, Parkinson stated that the preliminary investigation, ``consisted primarily (but not exclusively) of an examination of an advice of counsel defense.'' \411\ That is hardly a ringing endorsement of the Public Integrity Section's preliminary investigation. Nevertheless, Attorney General Reno embraced the advice of counsel defense, disregarded the glaring problems with the investigation, and declined to appoint an independent counsel. --------------------------------------------------------------------------- \411\ Exhibit 8 at 8. --------------------------------------------------------------------------- F. Department of Justice's Bad Faith in Its Application of the Independent Counsel Act 1. The Chief of the Public Integrity Section Was Predisposed Against the Act The memoranda written by Freeh and La Bella made it clear that they believed that an independent counsel should have been appointed to investigate the campaign finance matter. However, the Justice Department's legal interpretation and application of the Act all but ensured that an independent counsel would not be appointed. Even the head of the Criminal Division, James Robinson, agreed that the Department had been applying too high of a threshold to trigger the appointment of an independent counsel in the case of the Common Cause allegations. He stated: It occurs to me that Public Integrity, in insisting upon a ``may have violated the law'' standard which includes a consideration of the ``state of the law'' at the time of the conduct in question, and which also addresses the issue of ``willfulness,'' is applying a higher trigger standard than the one called for by the ICA.\412\ --------------------------------------------------------------------------- \412\ Memorandum from James K. Robinson, Assistant Attorney General, U.S. Department of Justice, to Janet Reno, Attorney General, U.S. Department of Justice, at 4 (Aug. 25, 1998). Robinson disagreed with Lee Radek's analysis of the Common Cause allegations in Radek's response to the La Bella memo, and recommended that the Attorney General initiate a preliminary investigation. Id. at 11. However, it should have come as no surprise to anyone that Public Integrity would avoid the application of the independent counsel statute. The Chief of the Public Integrity Section made his views of the Act very clear when he told the New York Times, ``[i]nstitutionally, the Independent Counsel statute is an insult. It's a clear enunciation by the legislative branch that we cannot be trusted on certain species of cases.'' \413\ Obviously, Radek, who was in charge of the application of the statute, had a bias against the Act. He also had an additional impetus for rejecting the Act early in the investigation, to protect Reno's position at the Department. He told the Deputy Director of the FBI that he was under pressure because of the campaign finance investigation and that the Attorney General's job might depend on the decisions he made in the investigation.\414\ --------------------------------------------------------------------------- \413\ Jeffrey Goldberg, ``What Is Janet Reno Thinking?,'' NY Times Magazine, July 6, 1997, at 30. \414\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the House Committee on Government Reform, 106th Cong. 38 (2000) (testimony of William J. Esposito) (preliminary transcript). --------------------------------------------------------------------------- Radek's subsequent recommendations regarding the initiation of preliminary investigations or appointments of an independent counsel demonstrate that he interpreted the Act as narrowly as possible, or even misinterpreted the Act, in order to avoid its invocation. In their memoranda, Director Freeh and Supervising Attorney La Bella exhaustively analyzed the Public Integrity Section's thresholds and standards of investigation. They both came to the conclusion that PIS was applying a higher standard of investigation for individuals covered by the Independent Counsel Act. 2. The Chief of the Public Integrity Section Misrepresented Facts There have been numerous other examples of problems with Radek's interpretation of the Independent Counsel Act, some already cited. One of the most egregious examples, according to both the Freeh and La Bella memoranda, was Radek's refusal to consider a preliminary investigation of the Common Cause allegations until forced to do so by the FEC audit report. However, Radek was also criticized for misleading statements he made regarding the various investigations and the contortions he sometimes went through to avoid invoking the Act. In one instance, the Acting Assistant Attorney General for the Office of Legal Counsel Dawn Johnsen rebuked Radek for misrepresenting the opinions of her office in a memorandum to the head of the Criminal Division. She stated: [T]o the extent that the [Radek] memorandum attempts to report remarks made by OLC lawyers at the meeting, it does so incorrectly and incompletely. Thus, not only did the memorandum leave the mistaken impression that ``OLC positions'' were expressed, it also mischaracterized the comments that individual lawyers offered in [sic] during the meeting.\415\ --------------------------------------------------------------------------- \415\ Memorandum from Dawn Johnsen, Acting Assistant Attorney General, U.S. Department of Justice, to Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, at 1 (Oct. 2, 1997). In another example, Radek wrote an August 24, 1998, memorandum recommending that the Attorney General not pursue a preliminary inquiry into whether the Vice President may have provided false statements regarding his fundraising telephone calls from the White House.\416\ A line attorney, Judy Feigin, took issue with many of the factual assertions made by Radek in his recommendation, and wrote a memorandum clarifying the facts.\417\ She stated that FBI agents' notes and recollections of witness interviews were significantly different from what Radek had written in his memorandum.\418\ In particular, Radek characterized White House Chief of Staff Leon Panetta as having an ``evolving memory,'' implying that he was not a credible witness.\419\ Feigin stated that the agents viewed Panetta as a very credible witness. Feigin cited numerous examples of Radek's factual inaccuracies and blatant misrepresentations, including: --------------------------------------------------------------------------- \416\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice (Aug. 24, 1998) (transmitted to the Attorney General by Robinson). \417\ Memorandum from (name redacted), Assistant U.S. Attorney, U.S. Department of Justice, to James K. Robinson, Assistant Attorney General, U.S. Department of Justice (Aug. 25, 1998). (Exhibit 9). The name of the Attorney, Judy Feigin, has been made public since the Justice Department's production of the memorandum. \418\ Id. at 2. \419\ Id. <bullet> The memo (p. 11) says Panetta's ``impression'' was that the Vice President was following the hard money discussion. The agents' notes reflect that Panetta said the Vice President was --------------------------------------------------------------------------- listening attentively. <bullet> Page 10, fn. 11 suggests that the media fund was not an item in the DNC budget during the Spring and Summer of 1995. However Watson recalled the agenda of the June 8, 1995 meeting included the media fund. <bullet> Page 11, fn. 12 says that Panetta may have contradicted himself. The agents' notes do not support this. Panetta recalled the general topic discussed though not the specific details. <bullet> Page 12: The memo suggests that Rosen recalled the focus of the fundraising proposals presented to the President and Vice President during the November meeting was on raising soft money. The agents' notes indicate that Rosen had no recall whether the events were intended to raise soft or hard money. <bullet> Page 14, n. 15: The footnote concludes that Panetta, among others, did not understand the statement made by Pastrick at the top of the footnote. In fact, Panetta understood clearly the first part of the statement, i.e., that every DNC expenditure during a federal campaign is required to have a hard money component. The only thing Panetta did not know was the $20,000 limit. <bullet> Page 15, n. 16: The memo quotes Ickes' statement that Strauss was very sophisticated in matters of soft money/hard money, and therefore may have written notes of greater detail than actually discussed. However, the memo does not mention Strauss' own statement (reflected in agents' notes) that he was not familiar with these issues as they pertained to the White House and the DNC. Strauss was adamant that those notations reflected comments made at the meeting. <bullet> Page 16: The memo says that Gore stated he and the President did not often attend DNC budget meetings like that held on Nov. 21. In fact, the agents report that most witnesses indicated that the President and Vice President generally did attend the DNC budget meetings. <bullet> The memorandum at least twice refers to the fact that the Vice President might well have left the meeting at the point in which the hard money media fund discussion took place. Not only is there no evidence that this occurred (i.e., no witness recalls his leaving) but the agents' notes reflect that Ickes told them that when he conducted meetings (and he was conducting the meeting on November 21), he would halt the proceedings if the President or Vice President stepped out of the room; the meeting would resume when they returned. Therefore, rather than presume the Vice President was not present, the presumption must be that he was.\420\ --------------------------------------------------------------------------- \420\ Id. The information mischaracterized or left out by Radek was absolutely crucial to determining whether to initiate a preliminary investigation of Vice President Gore. At issue was whether the Vice President believed the media fund was financed exclusively with soft money, as Gore originally stated during the first investigation of his fundraising phone calls. What was discussed and recalled by other individuals present at the meeting would be a strong indication of the Vice President's knowledge. In Feigin's memorandum, she points out that there was specific evidence from a credible source suggesting that the Vice President did know that the DNC media fund had a hard money component, and that the only evidence to the contrary were self-serving statements by the Vice President and his counsel. Radek's flawed memorandum, on the other hand, intentionally or unintentionally had the effect of tipping the scales in Gore's favor and avoiding the initiation of a preliminary investigation under the Independent Counsel Act. A further example of Radek's tendency to discriminate against the Act occurred during the initial November 1997, investigation of the allegations that Gore made solicitations for campaign contributions from his White House office. La Bella raised a troubling issue regarding Radek's recommendation against the appointment of an independent counsel, stating, ``[m]y overall concern is that at every point where two inferences could be drawn from a set of facts, the inference consistent with a lack of criminal intent/conduct was always chosen.'' \421\ He added: --------------------------------------------------------------------------- \421\ Memorandum from Charles G. La Bella, Supervising Attorney, Campaign Financing Task Force, to Janet Reno, Attorney General, U.S. Department of Justice, at 2 (Nov. 30, 1997). By routinely embracing the most innocent inference at every turn, even if the inferences are factually defensible, the memorandum creates an appearance that the Department is straining to avoid the appointment of an Independent Counsel and foreclose what many would characterize as an impartial review of the allegations. When you look at the facts, the memos, the meetings, and the DNC practice, it is hard to say, as the memorandum does, that there is only one conclusion to be reached.\422\ --------------------------------------------------------------------------- \422\ Id.at 7. Perhaps if Radek had weighed the facts in favor of declining to initiate a preliminary investigation or appoint an independent counsel only on this one occasion, he would be more credible. However, it appears to have been his pattern and practice in nearly every Task Force investigation.\423\ This leads the committee to believe that Radek was intentionally avoiding the application of the Independent Counsel Act. --------------------------------------------------------------------------- \423\ On one occasion, Radek recommended that the Attorney General initiate a preliminary investigation. In a Sept. 29, 1997, memorandum, Radek concluded that, with regard to the allegations that Vice President Gore may have solicited campaign contributions from his White House office in violation of 18 U.S.C. section 607, there was information sufficiently specific and credible to warrant further investigation. Radek had to come to this conclusion given the Vice President admitted he made the fundraising telephone calls from his office. Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, to Mark M. Richard, Acting Assistant Attorney General, U.S. Department of Justice (Sept. 29, 1997). After the preliminary investigation, Radek concluded that there was insufficient evidence that the Vice President may have violated section 607 to warrant further investigation. Therefore, he recommended against the appointment of an independent counsel. Memorandum from Lee J. Radek, Chief, Public Integrity Section, U.S. Department of Justice, to Mark M. Richard, Acting Assitant Attorney General, U.S. Department of Justice, at 41 (Nov. 21, 1997). --------------------------------------------------------------------------- 3. The Attorney General Avoided the Invocation of the Independent Counsel Act In the end, the decisions on independent counsels were left to the Attorney General alone. She consistently failed to apply the Act in the campaign finance investigation, and the blame falls squarely on her. Although Public Integrity Chief Lee Radek developed many of the theories upon which Reno relied, it was the Attorney General who chose not to apply the Act responsibly. In defense of herself, Attorney General Reno often invoked the numerous previous independent counsels she had appointed as proof that she was doing the right thing. However, none of the other independent counsels were a direct referral based on the President or First Lady except for Whitewater. In the Whitewater case, the Attorney General adamantly refused to appoint a special prosecutor \424\ until the President ordered her to do so. --------------------------------------------------------------------------- \424\ At the time, the Independent Counsel Act had expired, and had not yet been reauthorized. --------------------------------------------------------------------------- Task force attorneys and FBI officials wrote numerous memoranda to the Attorney General regarding her interpretation of the statute or practical application of it. They often explained why the standard she was applying was too high, or the analysis was flawed. By intentionally ignoring the advice given to her by people like Director Freeh and Supervising Attorney La Bella, who were familiar with both the facts and the law, Attorney General Reno crippled the campaign fundraising investigation. It appeared from her actions throughout the investigation, that that was her intent all along. G. The Failure To Appoint a Special Counsel for Vice President Gore The committee learned in December 1999 that the President and Vice President had never been interviewed about the vast majority of their activities relating to the 1996 campaign fundraising scandal. Shortly thereafter, in April 2000, the head of the Campaign Financing Task Force, Robert Conrad, requested interviews with President Clinton and Vice President Gore. In these interviews, Conrad covered many of the subjects that had been neglected by the Justice Department for the preceding 3 years. After his interview with Vice President Gore, Conrad made a recommendation to the Attorney General that a special counsel be appointed to investigate the Vice President for possible false statements made during the course of the April 18, 2000, interview. The details of Conrad's recommendation are not available to the committee, given the Justice Department's refusal to produce the Conrad memo to the committee.\425\ However, the facts that have been made public make it clear that Conrad's recommendation was based in part on his opinion that the Vice President may have made false statements about the Hsi Lai Temple fundraiser and the White House coffees.\426\ --------------------------------------------------------------------------- \425\ The Attorney General's refusal to produce the Conrad memorandum to the committee is discussed in detail later in this report. \426\ News conference with Attorney General Reno, Washington, DC. (Aug. 23, 2000). --------------------------------------------------------------------------- The central dispute in the Vice President's interview about the Hsi Lai Temple event was whether or not the Vice President knew that the event was a fundraiser. During his testimony, the Vice President stated that: There was no solicitation of money. I did not see any money or checks change hands. I never heard it discussed. Nor do I believe it took place, incidentally. Perhaps you know that some money changed hands there. But to this day, I don't think any did. * * * * * And subsequent disclosures in the press and subsequent production of memoranda that I never saw at the time showed that--showed what they showed. And the very fact, for me, the very fact that the members of a finance-related event were present at the event was the only connection that I had to the possibility that it was finance-related. But I did not know that it was a fundraiser. And I do not to this day know that it was a fundraiser.\427\ --------------------------------------------------------------------------- \427\ Interview of Vice President Gore 68-69 (Apr. 18, 2000). After the Vice President made this statement, Conrad presented him with a number of pieces of evidence suggesting that the Hsi Lai Temple event was considered to be a fundraiser by the Vice President's staff and the DNC staff. Nevertheless, the Vice President continued to assert that the event was not a fundraiser. Conrad also asked the Vice President his understanding of the nature of White House coffees. Again, the Vice President insisted that the coffees were not intended to raise funds: Mr. Conrad. What was the purpose of the coffees? Vice President Gore. Well, they were for the President to meet with people who were interested in supporting his policies and his politics. But that was more or less on his side of the house and I'm not the best source of information about that. Mr. Conrad. In terms of a fund-raising tool, what was the purpose of the coffees? Vice President Gore. I don't know. They were on his side of the house. And I will give you my understanding of what I thought they were. I thought they were events that allowed the President to spend time with influential people who wanted to talk about policy, who would at some later time possibly be asked to financially support the DNC. It was certainly not my understanding that they were fund-raising events. Mr. Conrad. Did you have any understanding, or do you have any understanding that there was a price tag associated with the coffees? Vice President Gore. No, I do not and did not.\428\ --------------------------------------------------------------------------- \428\ Id. at 52-53. Conrad then presented to the Vice President the evidence that the coffees were used to raise funds for the DNC, but the Vice President did not change his belief that the coffees were not fundraisers. On August 23, 2000, after a lengthy period of deliberation, the Attorney General decided not to appoint a special counsel to investigate false statements made by the Vice President. The Attorney General explained her reasoning at a press conference: Because further investigation is not likely to result in a prosecutable case under applicable criminal law and principles of federal prosecution, I have concluded that a special counsel is not warranted. The transcript reflects neither false statements nor perjury, each of which requires proof of a willfully false statement about a material matter. Rather, the transcript reflects disagreements about labels. I have concluded that there is no reasonable possibility that further investigation could develop evidence that would support the filing of charges for making a willful false statement. The Task Force will, of course, continue its ongoing investigation into illegal fundraising activity and will be free to pursue all avenues of investigation, wherever they may lead.\429\ --------------------------------------------------------------------------- \429\ News conference with Attorney General Reno, Washington, DC. (Aug. 23, 2000). In her statement, the Attorney General said more than that she simply would not appoint a special counsel. She stated that there was no reasonable possibility of developing evidence which could lead to charges that the Vice President made a false statement during his interview. This definitive statement effectively closed the door to any further investigation of issues arising out of the Vice President's interview. During the period leading up to the Attorney General's announcement, a Justice Department source had leaked information making it appear that Conrad was alone in recommending a special counsel to the Attorney General, being quoted in the New York Times as saying that ``no other prosecutor in this matter thought that there should be a need for a special counsel.'' \430\ At her press conference, Attorney General Reno made it clear that the Justice Department leak was false: ``today Bob Conrad has been tagged with being the only person in the Justice Department who thought I should appoint a special counsel. Although I'm not going to get into who recommended what, I can tell you that that is not correct.'' \431\ Later, Reno confirmed that at least two other advisors of hers supported the appointment of a special counsel for Vice President Gore.\432\ A false leak from a Justice Department official about the level of support for Conrad's special counsel decision should have given the Attorney General pause. It appears that certain Justice Department officials are willing to both leak information about ongoing cases, and to lie about those cases, in order to create a public perception that is favorable to the Vice President. If these types of individuals are advising the Attorney General, how can she possibly receive unbiased advice? --------------------------------------------------------------------------- \430\ Neil A. Lewis and Don Van Natta, Jr., ``Reno, Rejecting Aide's Recommendation, Declines to Name Counsel on Gore Fund-Raising,'' the New York Times at A19 (Aug. 23, 2000). \431\ News conference with Attorney General Reno, Washington, DC. (Aug. 23, 2000). \432\ Id. --------------------------------------------------------------------------- Unsurprisingly, the Attorney General's broad decision not to appoint a special counsel was not supported by the law, or the facts of the Task Force investigation. In those respects, it closely resembled the Attorney General's earlier decisions not to appoint independent counsels. The Attorney General's decision had a number of serious flaws. The Attorney General did not have all of the relevant evidence before her. In late August, when the Attorney General made her decision, the Justice Department and FBI were in the process of reconstructing the first batch of ``missing'' e-mail which had not been produced to investigators by the White House. When she made her decision on August 23, 2000, the Attorney General had reviewed ``some of the e-mails, not all of them.'' \433\ The e-mail reconstructed by the FBI had direct relevance to the decisionmaking process that the Attorney General was undertaking. One e-mail, from Gore's Political Director, stated ``[t]hese are FR coffees right?'' \434\ Given the fact that the e-mail reconstruction process was turning up evidence relevant to the special counsel decision, it is peculiar that the Attorney General would reach her decision before having all of the evidence. In addition, the author of the e-mail was Vice President Gore's former Political Director, and she has yet to be interviewed by the Justice Department. --------------------------------------------------------------------------- \433\ Interview of Attorney General Janet Reno 34 (Oct. 5, 2000) (preliminary transcript). \434\ E-mail message from Karen Skelton to Ellen Ochs (Apr. 23, 1996) (exhibit 10). --------------------------------------------------------------------------- In fact, it appears that the Attorney General did not believe that there could be any evidence which would undermine the Vice President's statements. In her interview with the committee on October 5, 2000, the Attorney General stated ``I don't think that there is a reasonable possibility of finding an e-mail or evidence that says, yes, I did it.'' \435\ Of course, it would not be necessary for the Justice Department to find an e-mail where the Vice President says ``yes, I did it'' in order to support the filing of false statements charges. Rather, it would only be necessary to find an e-mail message indicating that the Vice President contemporaneously believed that the White House coffees or the Hsi Lai Temple event were fundraisers. It is difficult to believe that the Attorney General concluded that there was not a reasonable possibility of uncovering such evidence through the e-mail reconstruction process. While it might be appropriate for the Vice President's lawyers or staff to have blind faith in his credibility, it is unseemly and disturbing when the Attorney General makes a leap of faith to clear the Vice President of wrongdoing. --------------------------------------------------------------------------- \435\ Interview of Attorney General Janet Reno 39 (Oct. 5, 2000) (preliminary transcript). --------------------------------------------------------------------------- The Attorney General also based her decision on her belief that ``the transcript reflects disagreements about labels.'' The Attorney General reiterated this belief in her October 5 interview: The Vice President defined what he meant by fund- raiser, and there is no information at this time that there were funds raised that he knew about at the Temple. Based on his definition of what a fund-raiser was and what he said, I would not be able to prove, based on that, that he believed it to be a fund-raiser and testified falsely. * * * * * And if a man says this is my definition of a fund- raiser and this is not my definition of a fund-raiser, I've got to look at that and take it within the four corners of this transcript and judge based on his definition as to whether there is a false statement. * * * * * I think the whole statement clearly reflects what the Vice President understood a fund-raiser to be, and within his definition, I think he made it clear that the statement was not inaccurate.\436\ --------------------------------------------------------------------------- \436\ Interview of Attorney General Janet Reno 42-43, 46-47 (Oct. 5, 2000) (preliminary transcript). It is remarkable that the Attorney General would base her decision not to appoint a special counsel on the fact that the Vice President defined ``fundraiser'' in such a way as to exclude all of the evidence suggesting that the Hsi Lai Temple event and the White House coffees were fundraisers. The Vice President's definition, which requires funds to actually change hands at the event, differs from the definition used by the DNC, under which the DNC assigned the Hsi Lai Temple event and the White House coffees to raise certain amounts of money for the DNC. The Vice President's definition also differs from that of his staff, who considered both events to be fundraisers. Given these facts, the Attorney General would be entitled, and in fact, obligated, to consider whether the Vice President's definition of ``fundraiser'' was reasonable and not simply a post hoc defense to avoid prosecution. The Attorney General's decision not to appoint a special counsel to investigate Vice President Gore is, unfortunately, consistent with her earlier decisions not to appoint independent counsels to investigate the fundraising scandal. The Attorney General ignored the facts and the law to reach a strained conclusion which was favorable to the Vice President. Unlike her other decisions, this one was made in the middle of the Presidential election campaign, and provided the Vice President with a valuable boost. Yet again, the Attorney General placed politics over impartial enforcement of the laws. II. Failures of the Justice Department Investigation The Attorney General's failure to appoint an independent counsel to head the campaign fundraising investigation had unfortunate practical consequences. The investigation was inadequate in many ways. Key documents were never subpoenaed. Key witnesses were never interviewed. Guilty parties have yet to be indicted. The Justice Department failed to pursue evidence aggressively. The Department's investigation has been extraordinarily passive, and appears designed more to provide political cover to the administration than to find out what happened in the 1996 elections. The Justice Department did prosecute important individuals whose actions were central to the scandal, namely John Huang and Charlie Trie. Even in those prosecutions, however, where the Justice Department gained the cooperation of Trie and Huang, the Justice Department failed to follow significant leads. Other individuals, particularly those at the White House and the DNC, received a free pass from the Justice Department regardless of the evidence against them. The end result was a good cover story for an investigation derailed. The Justice Department could point to 25 prosecutions as evidence of its commitment to get to the truth. The White House and the DNC could rest assured that they would not be next. A. The Justice Department Failed to Pursue the December 15, 1995, Coffee Videotape 1. The White House Production of Fundraising Videotapes On March 4, 1997, the committee served a subpoena on the White House for records, including any ``video or audio recording,'' on various named individuals central to the campaign finance investigation.\437\ In response, the White House produced documents, but not videotapes. The Senate Committee on Governmental Affairs specifically asked the White House about recordings of fundraising events in August 1997. However, the White House claimed that there were no video recordings.\438\ Nevertheless, the Senate continued to question whether the recordings existed. Finally, the White House revealed in October 1997 that videotapes showing President Clinton and Vice President Gore with many individuals then under criminal investigation did indeed exist.\439\ --------------------------------------------------------------------------- \437\ Committee on Government Reform and Oversight subpoena to the Executive Office of the President, Mar. 4, 1997, at 1, 3-4. \438\ S. Rept. No. 105-167, at 4284-4285 (1998). \439\ The White House's assertion that there were no responsive videotapes was based on the fact that the White House Communications Agency (WHCA) produced only six documents, and no videotapes, pursuant to the White House Counsel Office's request for records to be searched. However, the White House claimed that a proper search was not conducted by WHCA. Steven Smith, WHCA's chief of operations, said that his office was never asked for any videotapes or documents about the coffees until around October 1997. George Lardner, Jr., ``Aide Says Agency Didn't Get Request For Coffee Tapes,'' Washington Post, Oct. 13, 1997, at A1. The committee received the first White House videotapes on Oct. 5, 1997. --------------------------------------------------------------------------- Although the White House discovered the videotapes on October 1, 1997, White House Counsel Charles Ruff did not immediately inform the Justice Department about their existence immediately. Despite the fact that he attended his weekly meeting with Attorney General Janet Reno on October 2, 1997, Ruff did not mention the videotapes. At the time of the meeting, Ruff was aware that Reno would be making a decision on whether or not to appoint an independent counsel within days. The videotapes were important pieces of evidence showing who attended and what occurred at numerous events. The next day, October 3, 1997, Special Counsel to the President Lanny Breuer informed the Senate of the existence of the videotapes, but neglected to inform the Justice Department. Reno announced her decision not to appoint an independent counsel on October 3.\440\ When Breuer informed the Justice Department of the videotapes on October 4, 1997, it appeared as though the White House had purposefully withheld the tapes until after Reno made her decision. --------------------------------------------------------------------------- \440\ Letter from Attorney General Janet Reno to Chairman Henry Hyde, Oct. 3, 1997. --------------------------------------------------------------------------- Once the Attorney General learned what had occurred, she said: ``I was mad at the people responsible, but what I think what's important now is that we move on.'' \441\ Despite her anger, Reno quickly jumped to the defense of the White House. Based on what could only have been a cursory review of the tapes, Reno fully exonerated the White House of any wrongdoing when she said ``we do not have any indication of criminal activity by people covered under the Independent Counsel Act, including the President.'' \442\ --------------------------------------------------------------------------- \441\ Jim Abrams, ``Reno Says She Will Not Resign, Will Not Stop Investigation,'' Associated Press, quoting Meet the Press (NBC television broadcast, Oct. 12, 1997). \442\ Id. --------------------------------------------------------------------------- 2. The December 15, 1995, White House Coffee The videotapes showed a number of events where the President and Vice President were raising funds for the DNC. One of the events, a December 15, 1995, coffee, was especially relevant because the President and Vice President attended along with Arief Wiriadinata, an Indonesian citizen living in the United States. Wiriadinata and his wife, Soraya, contributed $455,000 to the DNC after they received a $500,000 wire transfer from Indonesia from Soraya's father, Hashim Ning. Ning was a former business partner of the Riady family. The initial review of this tape showed that Arief Wiriadinata greeted President Clinton and said ``James Riady sent me.'' \443\ When the committee analyzed the tape further, it became apparent that the Vice President may have spoken with Wiriadinata as well. Vice President Gore appears to say: --------------------------------------------------------------------------- \443\ White House Communications Agency videotape, Dec. 15, 1995. The committee subpoenaed the original WHCA Betacam tape of the event from the White House. We oughta, we oughta, we oughta show Mr. Riady the tapes, some of the ad tapes.\444\ --------------------------------------------------------------------------- \444\ Id. --------------------------------------------------------------------------- Another voice then adds: I'll see if I can do that.\445\ --------------------------------------------------------------------------- \445\ Two DNC officials, DNC Finance Chairman Marvin Rosen and DNC Finance Director Richard Sullivan, were in the vicinity of the Vice President when the comments were made. However, it is unclear who made the follow-up statement. Vice President Gore was apparently referring to DNC issue advertisements that were televised across the country from the fall of 1995 until the election in 1996. President Clinton and Vice President Gore had agreed to help raise millions of dollars to finance the DNC's unprecedented advertisement blitz. According to the Vice President, the ads were shown to ``individuals who would be willing to contribute to the DNC media fund.'' \446\ The Vice President traveled to San Francisco on October 13, 1995, to show a group of potential contributors the DNC issue ads. Then, on December 11, 1995, 4 days prior to the coffee, Vice President Gore was in an airport hangar in Chicago again showing the DNC issue ads to potential donors in order to solicit contributions. Therefore, it was clear that in December 1995, the Vice President was using the presentation of the DNC issue ads as a fundraising tool. Four days after the Chicago fundraiser, Vice President Gore attended the December 15, 1995, White House coffee. Therefore, it is reasonable to believe that the Vice President was thinking about obtaining financial support from donors when he apparently suggested that the DNC issue ads be shown to James Riady.\447\ --------------------------------------------------------------------------- \446\ FBI interview of Vice President Gore, at 10 (Nov. 11, 1997). \447\ Vice President Gore was scheduled to hold his own coffee for DNC contributors in the Old Executive Office Building on Dec. 15, 1995. The Vice President was not included on the guest list for the coffee President Clinton held for DNC contributors in the Roosevelt Room of the White House on the same day. Guest list for Dec. 15, 1995, White House coffee (exhibit 11). It should also be noted that the Roosevelt Room is an official room in the White House and political solicitations there are illegal. --------------------------------------------------------------------------- 3. The December 15, 1995, Videotape is Relevant to the Investigation of Vice President Gore If Vice President Gore said that DNC advertisement tapes should be shown to James Riady in December 1995, his comment has far-reaching implications that could demonstrate the Vice President's direct knowledge of criminal activity in the 1996 Presidential campaign. For the Vice President to have made the comment, he would have to be aware of two significant facts: (1) the Vice President understood that Arief Wiriadinata had a connection to James Riady; and (2) the Vice President had to know that James Riady was either raising or funneling contributions into the 1996 campaign, or that he was important enough to receive preferential treatment. The Vice President first would have to know who Arief Wiriadinata was and that Wiriadinata was connected to James Riady. Arief Wiriadinata and his wife, Soraya, were Indonesians who settled in Springfield, VA, where Arief was employed as a gardener. The Wiriadinatas were able to become prominent DNC donors enjoying the attention of the President and Vice President because of Soraya's father, Hashim Ning. Ning was a former business partner of the Riady family and a co-founder of the Lippo Group. When Ning became ill during a visit to the United States in June 1995, James Riady had his representative, John Huang, visit Ning in the hospital.\448\ During Ning's hospital stay, Riady and Huang arranged a ``get well'' card from President Clinton and a visit from Mark Middleton, who had worked in the White House chief of staff's office.\449\ --------------------------------------------------------------------------- \448\ The visit at the hospital was the first time Huang met Arief and Soraya Wiriadinata. ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 247 (Dec. 16, 1999) (preliminary transcript). \449\ Letter from President Clinton to Hasjim [sic] Ning, June 19, 1995, F 0033816 (exhibit 12). --------------------------------------------------------------------------- By November 1995, while still employed by the Commerce Department, Huang began soliciting contributions from Arief and Soraya Wiriadinata on Riady's recommendation.\450\ Over the next 6 months, the Wiriadinatas would give $455,000 to the DNC. The Wiriadinatas' contributions all came from a $500,000 wire transfer sent to them on November 7, 1995, by Hashim Ning. By the time of the White House coffee on December 15, 1995, the Wiriadinatas had already contributed $130,000. John Huang's testimony before the committee in December 1999 revealed the close link between the contributions and the Lippo Group. First, Riady told Huang that he should ask the Wiriadinatas to give. Second, the money given by the Wiriadinatas came from one of the Riadys' long-time associates. Finally, and perhaps most striking, Huang testified that when Ning died in late 1995 or early 1996 and the Wiriadinatas had to return to Indonesia, they gave him a series of blank checks to fulfill their contribution commitment to him.\451\ Huang kept the blank checks in his desk and used them as needed to make contributions to the DNC on the Wiriadinatas' behalf. --------------------------------------------------------------------------- \450\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 252 (Dec. 16, 1999) (preliminary transcript). \451\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 13 (Dec. 17, 1999) (preliminary transcript). --------------------------------------------------------------------------- On November 2, 1995, Arief and Soraya Wiriadinata attended their first DNC fundraiser with Vice President Gore. At the event, John Huang introduced the couple to the Vice President. By this time, the Vice President had already begun the solicitation of contributors for the DNC issue ad campaign. The next known meeting between the Vice President and Arief Wiriadinata occurred at the White House coffee on December 15, 1995. The Vice President's comment to Wiriadinata begs the question: why did the Vice President refer to James Riady? Was the Vice President aware that Riady was the source of the Wiriadinata contributions? Two possible explanations are apparent: either the Vice President heard Wiriadinata say ``James Riady sent me'' to the President or the DNC officials near the Vice President prompted his remark about the ad tapes. The Vice President knew that Riady was an Indonesian businessman.\452\ Therefore, the Vice President's comment is troubling, as the showing of advertisement tapes to donors appears to have been a device to encourage further contributions and provide thanks for past contributions. --------------------------------------------------------------------------- \452\ Testimony of Vice President Albert Gore Jr., at 111 (April 18, 2000). --------------------------------------------------------------------------- Clearly, it would have been illegal for Riady to contribute money to the 1996 Presidential campaign.\453\ Even John Huang, the DNC fundraiser responsible for many of the illegal contributions to the DNC in 1995 and 1996, acknowledged that it would have been illegal for Riady to contribute: --------------------------------------------------------------------------- \453\ The DNC's last officially recorded contribution from James Riady occurred October 1992. The reason was because Riady had been permanently moved back to Indonesia in 1990 at the latest, and therefore, was ineligible even to make any political contributions in 1992. Mr. Shays. Would it have been illegal for you to raise --------------------------------------------------------------------------- money from the Riadys when you worked for the DNC? Mr. Huang. I'm sorry, sir? Mr. Shays. Would it have been illegal for you to have raised money from the Riadys? You seem to want to make clear to me that somehow during that time while you worked at the DNC you did not raise money from the Riadys but you raised money from people who had business acquaintances and agreements with the Riadys. Mr. Huang. Because I had the knowledge at that time Mr. Riady has relinquished his green card status back to the United States and he was no longer holding the PR, so-called permanent resident status in the United States, he was not eligible to take care of any further.\454\ --------------------------------------------------------------------------- \454\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 111 (Dec. 15, 1999) (preliminary transcript). Vice President Gore's statement about Riady is troubling in light of his testimony concerning James Riady in his April 18, 2000, interview with the Task Force. In that testimony, the Vice President created the impression he did not know Riady --------------------------------------------------------------------------- well, and was not politically involved with Riady: Mr. Conrad. When is the first time you ever met James Riady? Vice President Gore. To my knowledge, I have only seen him twice in my life. I may be wrong about this. There may be other times that I'm not thinking, that I'm not remembering. But the only times--I think the only times I've met him were once when he was in Betty Currie's office preparing to go in to see the President with a couple of other people. Mr. Conrad. Did you know who those people were? Vice President Gore. No, I did not. I was on the way out. And either he introduced himself or somebody introduced him to me. The only other time I-- Mr. Conrad. Before you get to the other time, do you recall the substance of any conversation with him at that time? Vice President Gore. Hello, how are you. I said, you know, I've heard your name. That was it. The door was open. It was one of those deals. Mr. Conrad. What about the second time? Vice President Gore. The second time was in Malaysia. I filled in for the President at the last minute for a trip to Kuala Lumpur for a meeting for the Asian Pacific-- Mr. Conrad. Economic Council? Vice President Gore. Yes, APEC. Mr. Conrad. Right. Vice President Gore. And in conjunction with that event, which was hosted by Mahathir, the leader of Malaysia, there was a cultural event where all of the heads of state and their stand-in--of which I think I was the only stand-in--all went to this big dinner and they had a dance, kind of a show. And he came up to me during that and said, introduced himself again, and said, hello, how are you. I said, fine, hello, how are you. It was just--that was the substance of it[.] Mr. Conrad. Any substantive conversation with Mr. Riady? Vice President Gore. No. Mr. Conrad. And no other meetings that you remember? Vice President Gore. No, not that I remember? \455\ --------------------------------------------------------------------------- \455\ Testimony of Vice President Albert Gore, Jr., at 109-111 (Apr. 18, 2000). In his testimony, the only personal information the Vice President knew about James Riady was that Riady was a businessman in Indonesia.\456\ The Vice President said he did not learn of Riady's relationship to President Clinton until after the scandal became public.\457\ The Vice President also indicated that he had no direct knowledge of Riady's involvement in politics or campaign contributions: --------------------------------------------------------------------------- \456\ Id. at 111. \457\ Id. at 114. Mr. Conrad. Mr. Riady has been fairly active, some would say aggressive, in his courting of other political people. But I take it from your testimony that you've provided today that you weren't one of --------------------------------------------------------------------------- them? Vice President Gore. No. I think that--no. Unless you count his role evidently in the background of organizing that trip to Taiwan, but I never saw him or talked to him there. * * * * * Mr. Conrad. At least based on your previous testimony, you had no knowledge of any financial sponsorship by Mr. Riady of a portion of the '89 trip to Asia? Vice President Gore. I don't think so . . . * * * * * Mr. Conrad. Also in August of 1992, Mr. Riady made certain financial fund-raising commitments to the President. Did you ever have any discussions with the President about the fund-raising role of Mr. Riady in-- Vice President Gore. No. Mr. Conrad. --The 1992 election cycle? Vice President Gore. No.\458\ --------------------------------------------------------------------------- \458\ Id. at 113-114. If the Vice President told Arief Wiriadinata that the DNC issue advertisements should be shown to James Riady, it would dramatically undermine the testimony given by Vice President Gore to the Justice Department. The Vice President testified that he was unaware of Riady's fundraising or contributions in the 1992 election, and Riady was clearly unable to participate in the 1996 election. Ostensibly, the only reason Vice President Gore was showing the ad tapes was to solicit a contribution, or to provide thanks for past contributions. 4. The Justice Department Failed to Obtain the Original Videotape After the Apparent Remarks by Vice President Gore to Wiriadinata Became Public The Justice Department has had a copy of the videotape for the December 15, 1995, White House coffee since October 5, 1997. Yet in five interviews with the Vice President, the Justice Department did not ask any questions about Wiriadinata or that particular White House coffee. Either the Justice Department has not seriously examined the videotapes or they are unwilling to ask Vice President Gore what he said. The committee highlighted Vice President Gore's remarks at the coffee on previous occasions. The Justice Department has chosen not to take notice any of these times. On December 17, 1999, at a committee hearing, Congressman Souder asked John Huang about the videotape: Mr. Souder. And then so at one point Mr. Wiriadinata says James Riady sent me, and then if you keep listening to the tape, as he speaks to the President, a voice can be heard saying we should show tapes of the advertisements to Mr. Riady. This sounds like Vice President Gore. * * * * * Mr. Souder. Thanks. Why would the Vice President have said we should show tapes of the advertisements to Mr. Riady? Mr. Huang. I really don't know, Congressman, no.\459\ --------------------------------------------------------------------------- \459\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 9-11 (Dec. 17, 1999) (preliminary transcript). Representatives of the Justice Department were present throughout the 3 days of hearings with John Huang in December 1999. Nevertheless, the Justice Department did not follow up on this issue after the committee's hearing. After the Vice President released his April 18, 2000, interview with the Task Force, the committee once again asked the Justice Department why the Vice President was not questioned about the Wiriadinata coffee.\460\ The Justice Department was also informed that the committee had possession of the original tape of the December 15, 1995, coffee, the best possible source of the information. The Justice Department did not respond. --------------------------------------------------------------------------- \460\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (July 18, 2000) (correspondence between the committee and the Justice Department is contained in appendix 1). --------------------------------------------------------------------------- At a hearing on July 20, 2000, the committee directly questioned four top-level Justice Department officials about the Vice President's comments at the December 15, 1995, coffee.\461\ The Justice Department officials refused to comment on any aspect of the tape: --------------------------------------------------------------------------- \461\ The Justice Department witnesses were James Robinson, Assistant Attorney General, Criminal Division; Alan Gershel, Deputy Assistant Attorney General, Criminal Division; Robert Raben, Assistant Attorney General, Office of Legislative Affairs; and Robert Conrad, Supervising Attorney, Campaign Financing Task Force. Mr. Barr. I ask again, is this tape, is this coffee, are these individuals, is this language, of interest to --------------------------------------------------------------------------- the Department of Justice? Mr. Robinson. I cannot comment on the investigative matter but obviously we are here, we have heard it and we receive lots of information from Congress and other sources. Whenever we get information, we look at it carefully as a general proposition, but I can't comment on the specifics of our investigations. It would be inappropriate.\462\ --------------------------------------------------------------------------- \462\ ``Has the Department of Justice Given Preferential Treatment to the President and Vice President,'' hearing before the House Committee on Government Reform, 106th Cong., 41 (July 20, 2000) (preliminary transcript). In an attempt to assess how carefully the Justice Department has reviewed this evidence, if at all, the committee wrote to the Justice Department on August 1, 2000, and asked if Justice Department lawyers had ever listened to the original White House tape of the Wiriadinata coffee.\463\ The Justice Department refused to answer the question, stating: --------------------------------------------------------------------------- \463\ Letter from James C. Wilson, chief counsel, Committee on Government Reform, to Robert Raben, Assistant Attorney General (Aug. 1, 2000). [I]t would be inappropriate for this Department to provide such information concerning an ongoing investigation, both in terms of the ethical responsibilities of federal prosecutors, and in terms of our duty to avoid any appearance of undue external influence on our investigations.\464\ --------------------------------------------------------------------------- \464\ Letter from Robert Raben, Assistant Attorney General, to James C. Wilson, chief counsel, Committee on Government Reform (Aug. 4, 2000). Apparently, the high-minded ideal which prevented the Justice Department from discussing basic facts about the videotape with the Congress does not apply to its relationship with the media. On July 19, 2000, an unnamed Justice Department source leaked the Department's interpretation of the substance of the tape by telling the press that it was unclear what was said on the tape because of ``poor audio.'' \465\ --------------------------------------------------------------------------- \465\ ``Justice Says White House Coffee Tape Unclear; Hearings Scheduled Tuesday'' [sic] (viewed July 19, 2000) http://www.cnn.com/ 2000/ALLPOLITICS/stories/07/19/burton.gore/index.html. --------------------------------------------------------------------------- Vice President Gore and his White House surrogates have been unwilling to explain the Vice President's remarks. The Vice President himself admitted it was his voice, but deflected questions by saying it was a political attack using news that had been available for years.\466\ The White House offered, off-the-record only, that the Vice President may have said ``Godfrey,'' rather than ``Riady,'' a reference to H. Lee Godfrey, who also attended the December 15 coffee. Even the White House refused to go on the record with this defense, and the Vice President did not embrace it.\467\ --------------------------------------------------------------------------- \466\ ``Congressman Focuses on Gore Videotape Comment,'' Associated Press, July 19, 2000. \467\ Don Van Natta Jr., ``Questions Raised by House Panel About Gore Remark at a 1995 Fund-Raiser,'' New York Times, July 19, 2000, at A21. --------------------------------------------------------------------------- If the Vice President told Arief Wiriadinata that the DNC issue advertisements should be shown to James Riady, it would constitute a significant piece of evidence that top White House officials may have been aware of illegalities in the 1996 Presidential campaign. The Justice Department's purposeful refusal to examine the evidence or to question the Vice President on this matter clearly demonstrates its unwillingness to pursue an honest and thorough investigation. On September 25, 2000, 9 months after the committee first highlighted the December 15, 1995, coffee tape, the Justice Department finally informed the committee it would ask for the videotape. As of October 10, 2000, though, it still had not made a written request for the videotape.\468\ --------------------------------------------------------------------------- \468\ Letter from Robert Raben, Assistant Attorney General, Department of Justice, to Dan Burton, chairman, Committee on Government Reform (Sept. 25, 2000). Several days after the Sept. 25, 2000, letter, an FBI agent called the committee staff and requested the videotape. Committee staff informed the FBI agent that the committee would like to receive a written request before it turned over the original evidence to the FBI. The agent agreed to ask a Justice Department lawyer to send a written request to the committee. As of Oct. 10, 2000, the committee has not received the request. --------------------------------------------------------------------------- B. The Justice Department Has Failed To Question the President and Vice President Effectively 1. Delay in Asking Relevant Questions From the beginning of the campaign finance scandal, it was clear that President Clinton and Vice President Gore were knowledgeable witnesses and possible participants in a scheme to bring illegal money into the DNC to finance their re- election. Accordingly, it was important for the Justice Department to interview the President and Vice President--both thoroughly and expeditiously. However, the Justice Department waited over 3 years before asking the President or Vice President about most aspects of the fundraising scandal. The Justice Department interviewed President Clinton two times and Vice President Gore four times in 1997 and 1998.\469\ The Justice Department purposefully restricted the topics covered in the six interviews to the DNC issue advertisements and telephone solicitations from the White House. The justification for limiting the interviews to those two issues was because they were the subjects of preliminary investigations under the Independent Counsel Act. This rationale, however, fails to explain why they could not have been asked about other pertinent subjects. --------------------------------------------------------------------------- \469\ President Clinton was interviewed on Nov. 11, 1997, and Nov. 9, 1998. Vice President Gore was interviewed on Nov. 11, 1997, June 10, 1998, Aug. 8, 1998, and Nov. 11, 1998. --------------------------------------------------------------------------- Under the Justice Department's self-imposed restriction, the President and Vice President would not be interviewed about their interaction with various criminals and questionable individuals because those investigations were not part of a preliminary investigation under the Independent Counsel Act. However, the Justice Department ignored evidence that the President and Vice President were possibly aware of illegal activity. In addition, the Justice Department ignored the fact that the President and Vice President were significant witnesses in the investigation. In some instances, President Clinton and Vice President Gore were the only available witnesses. Thus, there was no acceptable investigative reason for the failure to ask questions about important subjects. It appears, moreover, that the President and Vice President received preferential treatment at the expense of the campaign finance investigation. On April 25, 1999, due to concerns that the President and Vice President were receiving preferential treatment, the committee subpoenaed all Task Force interviews with President Clinton and Vice President Gore. In response to the committee's subpoena, the Justice Department, which previously supplied interview summaries to the Congress, announced a new policy of refusing to provide such summaries. The purported basis for the new Justice Department policy was that the public release of the interview summaries would have a chilling effect on future witnesses' cooperation, thereby harming law enforcement efforts.\470\ --------------------------------------------------------------------------- \470\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Dec. 14, 1999). --------------------------------------------------------------------------- In December 1999, the Justice Department finally allowed the committee to review the interview summaries of the President and Vice President, but not to have copies.\471\ The committee's review in December 1999 found that the Justice Department had questioned the President and Vice President only about DNC issue advertisements and telephone solicitations at the White House. After 3 years of investigation, the Justice Department had not asked President Clinton one question on the following issues: --------------------------------------------------------------------------- \471\ The Justice Department's attempt to withhold these interview summaries from the committee is discussed in detail later in this report. <bullet> The President's relationship with James --------------------------------------------------------------------------- Riady. <bullet> John Huang's placement at the DNC. <bullet> White House coffees and other perks offered in exchange for contributions. <bullet> The President's interactions with Johnny Chung and the reasons Chung was given access to the White House. <bullet> Charlie Trie's contributions to the Presidential Legal Expense Trust. <bullet> Charlie Trie's appointment to the Bingaman Commission. <bullet> The President's attendance at the July 30, 1996, fundraiser with James Riady and three of his Asian business associates. <bullet> The February 6, 1996, White House coffee with Charlie Trie and Wang Jun. <bullet> The June 18, 1996, White House coffee with Huang, Pauline Kanchanalak and the CP Group from Thailand. <bullet> The President's attendance at the February 19, 1996, May 13, 1996, and July 22, 1996, fundraisers, where numerous foreign nationals attended and contributed. <bullet> The President's 5-minute meeting with John K.H. Lee, a Korean national, in exchange for $250,000. Similarly, the Vice President was not questioned for 3 years about the following topics: <bullet> The Hsi Lai Temple. <bullet> The Vice President's relationship with Maria Hsia. <bullet> The Vice President's relationship with John Huang. <bullet> The Vice President's relationship with Howard Glicken. <bullet> White House coffees. <bullet> Senator Gore's 1990 trip to Asia with Hsia and Huang. <bullet> The September 27, 1993, fundraiser with Huang and China Resources Chairman Shen Jueren. <bullet> The February 19, 1996, fundraiser at the Hay Adams. On December 15, 1999, the Justice Department finally produced the interview summaries of President Clinton and Vice President Gore. The committee publicly announced the deficiencies of the interviews on December 16, 1999. The Justice Department's last interviews with the President and Vice President were in November 1998, and there was no evidence that the Justice Department intended to question them again. Since the Justice Department unreasonably withheld the interview summaries from the committee, the Justice Department would not have publicly revealed them voluntarily. However, once the committee announced the Justice Department's complete failure to ask a single question of the President or Vice President about foreign money or their knowledge of various criminals in the campaign finance investigation, the President and Vice President were re-interviewed in April 2000. 2. Favorable Circumstances of the April 2000 Interviews The April 2000 interviews were conducted differently than the previous six interviews with the President and Vice President. This time, the President and Vice President were both under oath and the interviews were transcribed. This provided the Justice Department with the benefit of having a clear record of what was discussed, but it also put the President and Vice President in a position where they could publicly release their interviews, theoretically compromising the Department's investigation. In addition, the Task Force afforded the President and Vice President an extraordinary courtesy by supplying the exhibits that were to be used in the interviews beforehand.\472\ --------------------------------------------------------------------------- \472\ The Department was also under a time limit in its interview of President Clinton. President Clinton and his attorneys agreed to an interview with Robert Conrad by Apr. 7, 2000. However, 2 days before the scheduled interview, and the day after the Vice President's contentious interview with the Task Force, the President rescheduled his weekly Saturday radio address to Friday, Apr. 21, 2000, the day of the Task Force interview. Mr. Conrad, who had previously been given as much time as necessary to complete the interview, then had to cover 43 topics in less than 4 hours. Letter from Robert J. Conrad, Jr., to Beth Nolan, et al., Apr. 11, 2000; letter from Robert J. Conrad, Jr., to Beth Nolan, et al., Apr. 20, 2000. --------------------------------------------------------------------------- By prior agreement with the Task Force, both President Clinton and Vice President Gore were given copies of their April 2000 interview transcripts. The committee is unaware of the President and Vice President or any other witness receiving copies of any of their previous interviews. Task Force Chief Robert Conrad explained that they were provided with a copy of the transcripts as a result of negotiations with the President and Vice President's counsels.\473\ --------------------------------------------------------------------------- \473\ ``Has the Department of Justice Given Preferential Treatment to the President and Vice President,'' hearing before the House Committee on Government Reform, 106th Cong., 49 (July 20, 2000) (preliminary transcript). --------------------------------------------------------------------------- The Justice Department had consistently told the committee that any release of interview summaries or transcripts would harm ongoing investigations. However, by allowing the President and Vice President to have copies of the transcripts, they contradicted their own argument. Again, it appears the President and Vice President were accorded preferential treatment. At the committee's July 20, 2000, hearing, all of the Justice Department officials present agreed with Attorney General Reno's statement to the committee that, ``significant harm to ongoing investigations would result from the disclosure of the records of the recent interviews.'' \474\ Disregarding any harm that might come to the Justice Department's investigation, Vice President Gore released his interview transcript to blunt media reports that the Task Force had once again recommended an outside prosecutor to investigate the Vice President.\475\ President Clinton followed suit and released his testimony on July 24, 2000.\476\ --------------------------------------------------------------------------- \474\ Id. at 112-113 (2000). \475\ Id. at 107-109. \476\ The committee subpoenaed the transcript of the President's Apr. 21, 2000, interview after the Vice President publicly released his transcript. When the President produced a copy of his transcript to the committee, he also gave a copy to the media. --------------------------------------------------------------------------- C. The Justice Department Failed to Pursue Relevant Documents 1. Failure to Subpoena Relevant Records The committee was concerned about the Justice Department's ability to conduct a fair and impartial investigation, particularly in light of its numerous missteps and failures. In order to carry out its oversight investigation of the Justice Department, the committee decided review document requests and subpoenas sent by the Justice Department to the White House, the Commerce Department, the State Department, and the DNC so that it could determine how thorough the Justice Department investigation had been. After the committee obtained records from the White House and Commerce Department which revealed how incomplete and incompetent the Justice Department investigation had been, the Justice Department began a concerted effort to keep the committee from obtaining the subpoenas served upon both public and private entities by the Justice Department. As a result of the Justice Department's efforts, which are described in detail below, the Justice Department has limited the committee's oversight of the Justice Department investigation, and covered up the Department's biased investigation from any further public scrutiny. a. The White House On March 16, 2000, the committee subpoenaed the White House to produce subpoenas and document requests it had received from the Task Force. These records were received nearly 5 months later on August 10, 2000. The White House obviously had thousands of documents relating to numerous individuals involved in the campaign finance investigation, and the Justice Department subpoenaed many documents from the White House. However, in certain crucial cases--Maria Hsia, Ernest Green, and Mark Middleton--the Justice Department either failed to ask the White House for documents or they requested the documents only very recently, years after the individual's involvement in the scandal became known. The Task Force never asked the White House for records concerning Maria Hsia. Hsia had a close relationship with Vice President Gore spanning 10 years. The Justice Department prosecuted Hsia for funneling illegal contributions to the DNC in support of Vice President Gore's visit to the Hsi Lai Temple in April 1996. Yet, the Justice Department never subpoenaed the White House for records relating to Hsia. This failure meant that the Justice Department brought a case against Hsia without a full understanding of Hsia's interactions with White House officials.\477\ The Justice Department did subpoena records on Maria Hsia from Ann Lewis, the White House Communications Director.\478\ However, that subpoena, sent to Lewis in her personal capacity, in no way obligated the White House to produce any records regarding Hsia.\479\ --------------------------------------------------------------------------- \477\ The Vice President also was not questioned about his relationship and interaction with Hsia until after her conviction. \478\ Justice Department subpoena for documents to Ann Frank Lewis, Aug. 13, 1997 (exhibit 13). \479\ The subpoena was sent to Lewis on Aug. 15, 1997, immediately after the Task Force interviewed Lewis, even though Lewis had no substantive knowledge of the individuals or the White House's involvement in campaign finance improprieties or illegalities. --------------------------------------------------------------------------- The Justice Department did not subpoena the White House for records on Ernest Green or Mark Middleton until March 2000. Both Green and Middleton were key players in the campaign finance scandal in that each could provide substantial amounts of information about the fundraising activities of Charlie Trie, John Huang, and their interaction with the Clinton administration. Green and Charlie Trie were fundraising and business partners from 1994 to 1996. Green and Trie were frequent visitors to the White House and each were friends of President Clinton. Green used his influence in the DNC and Clinton administration to help Trie, and Trie in return tried to find business opportunities for Green in Asia. In 1998, Green became the focus of a Justice Department investigation for perjury relating to his testimony before Congress on Charlie Trie. Unlike Green, Middleton invoked the fifth amendment against self-incrimination and has refused to cooperate with the committee. Mark Middleton is a key figure in the campaign finance scandal. Middleton served as the principal White House contact for both John Huang and Charlie Trie. Once Middleton left the White House, he traveled to Asia with Trie and courted many foreign businessmen. Middleton frequently brought his foreign business clients to the White House. The White House had numerous records of Middleton bringing his foreign business clients to the White House, at times to meet the President, First Lady, or the White House staff. Middleton's extensive involvement in the campaign finance scandal all centers around the White House. There cannot be any investigation of Middleton, much less a serious one, without his White House records. In 1999, the committee obtained a document from the Justice Department that indicated that the Department's investigation of Middleton was ``reinvigorated'' in light of Charlie Trie's cooperation with the Justice Department.\480\ In fact, when Charlie Trie testified before the committee in March 2000, the Justice Department requested that the committee refrain from asking any questions about Middleton or Green because they were part of ongoing investigations. --------------------------------------------------------------------------- \480\ Listing of Task Force cases, June 4, 1999 (exhibit 14). --------------------------------------------------------------------------- The Justice Department's subpoenas to the White House reveal a great deal about the Department's investigation. While the Attorney General has frequently stated that the Task Force is free to follow any evidence, it is obvious that the Task Force is avoiding gathering critical evidence. It is difficult to believe that Justice Department prosecutors simply forgot to ask for this crucial evidence. Rather, it is possible that the Attorney General and her staff felt hesitant to pressure the White House which they serve to produce documents. Furthermore, as has become abundantly clear in the Justice Department investigation of the e-mails that have been withheld by the White House, it seems that the Justice Department is subordinate to the White House where document requests are concerned. An independent counsel would not experience this same conflict, and likely would have obtained the necessary documents. b. The State Department On August 4, 2000, the committee sent a subpoena to the State Department for any requests or subpoenas it received from the Justice Department in the course of the campaign finance investigation. The Justice Department's requests to the State Department were particularly critical due to the numerous foreign nationals involved in the investigation and allegations of foreign governments funneling illegal contributions into the DNC. If the Justice Department was serious about its investigation, it would ask the State Department to pressure foreign governments to provide access to the necessary documents and witnesses. Rather than comply with the committee's subpoena, the State Department turned to the Justice Department, to see whether it should comply. The Justice Department directed the State Department to redact from their submission to the committee any information that related to ongoing investigations. The Justice Department's position was more fully explained in a September 25, 2000, letter from Assistant Attorney General Robert Raben, which claimed that the Justice Department had a right to redact information that related to ongoing investigations from State Department documents.\481\ --------------------------------------------------------------------------- \481\ Letter from Robert Raben to Chairman Dan Burton, Sept. 25, 2000. --------------------------------------------------------------------------- The Justice Department's position is legally groundless, and moreover, has in practice, been abused by the Justice Department. When the committee did finally receive documents from the State Department, they were redacted so that almost every substantive piece of information was taken out. It is difficult to believe that the Justice Department still has so many ongoing investigations. If the Department's investigation is as far-flung as its redactions suggest, it is not equipped to handle such an investigation, having, as of December 31, 1999, only 13 attorneys and 12 agents, down from 24 attorneys and 67 agents in 1997.\482\ --------------------------------------------------------------------------- \482\ Briefing report by the U.S. General Accounting Office, ``Campaign Finance Task Force: Problems and Disagreements Initially Hampered Justice's Investigation,'' May 2000, at 48. --------------------------------------------------------------------------- Moreover, one specific redaction by the Justice Department suggests that the Department is acting in bad faith, and that it is redacting material that does not relate to ongoing investigations. The committee has been able to determine, by comparison with the same subpoena from the White House that was not redacted, at least two names redacted by the State Department at the Justice Department's insistence: Liu Chao- Ying and her father, General Liu Huaqing.\483\ Liu Chao-Ying, a colonel in the Chinese military, gave $80,000 to the DNC through DNC fundraiser Johnny Chung. Liu Chao-Ying also introduced Chung to General Ji Shengde, the head of Chinese military intelligence, who gave Chung an additional $300,000 to funnel into the DNC. General Liu Huaqing, was the vice chairman of the Central Military Commission, and reportedly oversaw the Chinese army's modernization program. He was also a member of the Standing Committee of the Politburo of the Communist party. --------------------------------------------------------------------------- \483\ Subpoena to the Custodian of Records, Executive Office of the President, May 26, 1998. --------------------------------------------------------------------------- As late as June 4, 1999, the Task Force had already listed Liu Chao-Ying as a ``Pending Inactive Investigation.'' \484\ The Task Force had not listed any investigation of General Liu Huaqing as of June 1999. Both Liu Chao-Ying and General Liu Huaqing are Chinese nationals living in China, and the committee is unaware of any Justice Department or State Department efforts to have Liu Chao-Ying or her father extradited. Furthermore, the Justice Department presented no objections to the committee's public hearings with Johnny Chung where he extensively discussed his interactions with Liu. It is troubling that they would allow their star witness against Liu to testify publicly about his dealings with her, and then claim that peripheral documents relating to her are part of an ongoing investigation. The facts suggest that it is highly unlikely Liu Chao-Ying or Liu Huaqing are the subjects of active Justice Department investigations. Rather, it appears that once again, the Justice Department is making a bad faith effort to shield itself from congressional oversight. --------------------------------------------------------------------------- \484\ Listing of Task Force cases, June 4, 1999 (exhibit 14). --------------------------------------------------------------------------- c. The DNC On August 3, 2000, the committee subpoenaed the DNC to produce the subpoenas and document requests it received from the Justice Department. For the next 6 weeks, the DNC failed to comply with the subpoena. During this period of time, counsel for the DNC informed the committee that they had concerns about complying with the subpoena, based on warnings accompanying a number of the subpoenas that they were not to be publicly disclosed. Counsel for the DNC attempted to contact the Justice Department during this 6 week period to determine whether the Justice Department objected to the DNC's compliance with the committee subpoena. DNC counsel claims that despite a number of contacts with the Justice Department, he was unable to obtain a definitive answer from the Department. Accordingly, as of September 26, 2000, the committee's subpoena had still not been satisfied. Therefore, when Deputy Assistant Attorney General Alan Gershel appeared before the committee, he was asked about the DNC subpoena: Committee Counsel. We also subpoenaed the DNC. We asked the DNC for subpoenas served upon it by the Task Force. Now, despite the fact that the subpoena was served over 6 weeks ago, the DNC has failed to comply because the Department of Justice has prevented it from doing so. This was communicated to us today. The DNC, however, is either a witness or a target of the Department in this investigation. Now I am going to read some words that your immediate superior, Assistant Attorney General Robinson, spoke at our last hearing. He testified under oath: ``although a prosecutor may prefer that a witness not disclose information about a pending case, the government does not have any right to dictate who a witness can or cannot talk to. Witnesses do not belong to either side of a matter. As a matter of due process and prosecutorial ethics, the government cannot threaten or intimidate a witness for the purpose of preventing a witness from talking to a subject or a target of investigation or from exercising their First Amendment rights.'' Now, isn't that what the Department of Justice is doing now in terms of preventing the DNC from complying with the congressional subpoena? Mr. Gershel. Absolutely not. The DNC has never been told not to comply with this committee's subpoena. To the contrary, it's not my understanding. I have not had contact with them. It's my understanding they were told to fully comply with the subpoena.\485\ --------------------------------------------------------------------------- \485\ ``Contacts Between Northrop Grumman Corporation and the White House Regarding Missing White House E-Mails,'' hearing before the Committee on Government Reform, 106th Cong., 111-12 (Sept. 26, 2000) (preliminary transcript). Shortly after the hearing, Mr. Gershel attempted to clarify his --------------------------------------------------------------------------- statement in a letter: Some members of the committee had the misimpression that the Department was preventing the DNC from complying with its subpoena. I also may have contributed to the confusion by offering my mistaken understanding that the DNC had been told by the Department to fully comply with the subpoena. I want to clarify that the Department takes no position on the issue of the DNC's rights and obligations concerning compliance with a congressional subpoena. That is an issue between the DNC and the congressional committee. It certainly has never been the Department's intent to prevent or discourage compliance with a congressional subpoena.\486\ --------------------------------------------------------------------------- \486\ Letter from Alan Gershel, Deputy Assistant Attorney General, to Judah Best, Debevoise & Plimpton (Sept. 29, 2000) (exhibit 15). Leaving aside the dramatic difference between Gershel's initial testimony that the DNC was told to ``fully comply'' with the subpoena, and his later statement that the Department ``took no position'' on the DNC's compliance, the effect of the Department's actions was clear.\487\ Two months have passed since the committee issued its subpoena, and the DNC has not complied with the subpoena. --------------------------------------------------------------------------- \487\ The Justice Department's position with respect to the DNC's compliance with a lawful congressional subpoena--that it can take no position--gives an indication of the Department's lack of respect for Congress. Given this position, it is difficult to see how the Department could prosecute any party for obstructing or failing to comply with a congressional subpoena. --------------------------------------------------------------------------- After the September 26, 2000, hearing, DNC counsel called and then wrote to the committee to express their ``concern'' regarding committee's counsel's representations at the hearing. DNC counsel took the position that the DNC was never ``prevented'' from complying with the committee's subpoena. Rather, in their mind, the Justice Department had protested the committee subpoena, and had raised ``admonitions'' with the DNC about disclosing the subpoena.\488\ The DNC tried to resolve these issues prior to the committee's hearing, and was unsuccessful. In the mind of DNC counsel, such conduct by the Justice Department did not ``prevent'' the DNC from complying the with the committee's subpoena. --------------------------------------------------------------------------- \488\ These comments were made by Judah Best, counsel for the DNC, during a telephone conversation on Oct. 4, 2000. --------------------------------------------------------------------------- However, there is ample evidence that the Justice Department's actions have prevented timely compliance with the committee's subpoena: <bullet> A number of Justice Department subpoenas to the DNC warned the DNC that ``[b]ecause this subpoena relates to an ongoing official criminal investigation being conducted by the Federal Bureau of Investigation, it is requested that you not disclose the existence of the subpoena for an indefinite period of time. Disclosure may impede the investigation and interfere with the enforcement of the law.'' \489\ Such directions are, however, contrary to the ethical standards of prosecutors outlined by Assistant Attorney General Robinson before the committee. --------------------------------------------------------------------------- \489\ See, e.g., letter from Daniel O'Brien, Assistant U.S. Attorney, to Custodian of Records, Democratic National Committee (Jan. 21, 2000) (exhibit 16). <bullet> In a letter to the committee, which was copied to the DNC, Assistant Attorney General Raben expressed concern about the committee's subpoena to the DNC. In that letter, Raben stated that ``I am writing to express the Department's serious concern about the committee's recent practice of subpoenaing public and private sector entities to produce copies of grand jury subpoenas and other documents relating to evidence gathered by the Campaign Financing Task Force, including subpoenas and documents relating to ongoing criminal investigations.'' \490\ The only private sector entity to which the committee directed such a subpoena was the DNC. The Justice Department's expression of ``serious concern'' about the DNC subpoena was in conflict with the Department's official position that it could take no position on whether the DNC should comply with the subpoena. --------------------------------------------------------------------------- \490\ Letter from Robert Raben, Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform (Sept. 25, 2000) (emphasis added). Indeed, these protests had their intended effect, as on October 6, 2000, the DNC informed the committee that it would not comply with the committee's subpoena.\491\ In his letter to the committee, DNC counsel repeatedly cited the fact that the Justice Department had ``protested'' the committee's subpoena, and that the Department had concerns about the effect of compliance with the subpoena on ongoing investigations. Claiming that it wanted to protect these ongoing investigations, as well as the reputations of individuals named in the subpoenaed documents, the DNC refused to comply with the committee's subpoena.\492\ --------------------------------------------------------------------------- \491\ Letter from Judah Best, Debevoise & Plimpton, to Dan Burton, chairman, Committee on Government Reform (Oct. 6, 2000) (exhibit 17). \492\ The mere fact that the DNC shows such interest in protecting the integrity of the Justice Department investigation speaks volumes. The DNC is at the center of the campaign fundraising scandal. The fact that the DNC is working in tandem with the Justice Department to keep information about the investigation out of Congress' hands suggests that the DNC is trying to hide something about the investigation. If the subpoenas to the DNC are anything like the subpoenas to the White House, it is likely trying to hide the fact that the Justice Department has conducted a weak and politically biased investigation. --------------------------------------------------------------------------- At the conclusion of this matter, it is clear that both the DNC and the Justice Department have worked together to keep the committee from obtaining information which might be extremely embarrassing to the Department of Justice and which might expose the DNC to additional investigation, as happened to the White House when it became clear the Justice Department had failed to ask the President and Vice President so many important questions. The Justice Department's admonitions and protests regarding the committee's subpoena sent the clear message to the DNC that it should not comply with the committee's subpoena. At the same time, in his letter of September 29, 2000, Mr. Gershel did state that the Department took no position on the committee's subpoena. Therefore, in the final analysis, it is the DNC that has decided to willfully disobey a lawful congressional subpoena.\493\ --------------------------------------------------------------------------- \493\ The DNC and their counsel have a long history of misrepresentations to the committee. These are detailed in chapter II of the committee's interim report on the campaign fundraising investigation. --------------------------------------------------------------------------- 2. The Justice Department Failed to Obtain a Timely Search Warrant for Charlie Trie's Residence In 1997, a serious dispute arose between Justice Department attorneys and FBI agents regarding decisions made by the Justice Department in the investigation of Charlie Trie. The dispute concerned whether the Justice Department justifiably rejected a FBI request for a search warrant for Trie's residence after the FBI found documents discarded in the trash that were responsive to a subpoena.\494\ --------------------------------------------------------------------------- \494\ Around 1996, Trie began to use his residence in Little Rock as the office for his Arkansas companies, consequently most of his business records were at that location. --------------------------------------------------------------------------- On March 7, 1997, Maria Mapili, Charlie Trie's bookkeeper, was served with a subpoena for documents by the Senate Committee on Governmental Affairs.\495\ Mapili contacted Trie in Asia and informed him that she had been served with a subpoena from the Congress. According to Mapili, Trie told her to throw away certain documents called for in the subpoena.\496\ Mapili began to destroy documents specified by Trie, but at some point, Mapili became nervous and hid documents instead of destroying them. The FBI found in Trie and Mapili's garbage a number of documents relevant to the fundraising investigation, and which were responsive to the Senate subpoena. --------------------------------------------------------------------------- \495\ The committee requested records from Trie in a letter to Trie's attorneys on Jan. 20, 1997. Trie's attorney said that because of the Justice Department's criminal investigation, they would not comply with the committee's document request. In February 1997, the committee attempted to serve a subpoena on Trie's attorneys in Washington, DC, but the attorneys refused to accept service. \496\ Testimony of Maria Mapili at 21, U.S. v. Yah Lin ``Charlie'' Trie, No. LR-CR-98-239 (D. AR, May 18, 1999). Mapili received immunity and testified against Trie during his trial in Little Rock, AR on obstruction of justice charges in April 1999. Before the trial was completed, Trie reached a plea agreement with the government. --------------------------------------------------------------------------- FBI Special Agent Roberta Parker and her partner, FBI Special Agent Kevin Sheridan requested search warrants for Trie's residence because they believed that Mapili was obstructing justice by destroying evidence. The agents were told by Task Force chief, Laura Ingersoll, that grand jury subpoenas had to be served before probable cause for search warrants would exist.\497\ A grand jury subpoena was served on Mapili on June 27, 1997.\498\ --------------------------------------------------------------------------- \497\ Id. \498\ The FBI charged that the timing of the grand jury subpoena cost them a valuable investigative lead. The Justice Department and the FBI had already agreed to place a pen register on Mapili's telephones to record the telephone numbers of incoming and outgoing calls made after Mapili was served with the grand jury subpoena. Before the pen register was in place, FBI Special Agent Daniel Wehr, in Little Rock, AR, was ordered to serve the grand jury subpoena on Mapili. Both Agent Wehr and FBI Special Agent in Charge in Arkansas Ivian Smith complained that the decision to prematurely serve the subpoena before the pen register was installed cost them a valuable lead. ``The Justice Department's Handling of the Yah Lin ``Charlie'' Trie Case,'' hearing before the Senate Committee on Governmental Affairs, 106th Cong., 52-53 (Sept. 22, 1999). --------------------------------------------------------------------------- In the search of the trash after the grand jury subpoena was served, the FBI found discarded financial statements and a check register for Daihatsu, along with a fax cover sheet to Antonio Pan. Agent Sheridan's understanding from Laura Ingersoll was that finding additional discarded documents after the grand jury subpoena was served would be sufficient evidence to allow the FBI to obtain the search warrant.\499\ Agents Parker and Sheridan began drafting an affidavit for search warrants for the residences of Trie and Mapili on July 1, 1997, and gave a copy to the Justice Department attorneys. Agents Parker and Sheridan had not heard of any opposition to the search warrants up to this point.\500\ --------------------------------------------------------------------------- \499\ Interview of Kevin Sheridan, Committee on Government Reform, at 2-3 (Sept. 13, 1999). \500\ Interview of Roberta Parker, Committee on Government Reform, 4 (Aug. 27, 1999); interview of Kevin Sheridan, Committee on Government Reform, at 3 (Sept. 13, 1999). --------------------------------------------------------------------------- On July 2, 1997, Justice Department Attorneys Jonathan Biran and William Corcoran had a telephone conference with Lee Radek, and during this discussion, the three Department lawyers decided that there was no probable cause for the warrants.\501\ This decision contradicted everything the FBI had been told up to this point. While Ingersoll conceded that the discarded documents were relevant, she said that before a warrant could be obtained, there also needed to be proof that Mapili was knowingly destroying the documents to avoid producing them.\502\ --------------------------------------------------------------------------- \501\ During the telephone conference, Lee Radek acknowledged the deteriorating relationship between the Task Force and the FBI when he advised William Corcoran that they were not to seek a search warrant in Little Rock without his personal approval. Radek's purpose behind this decision was to inject himself between the FBI and Ingersoll, who was a frequent target of FBI attacks and criticisms. Interview of Lee Radek, Committee on Government Reform, at 2 (Sept. 17, 1999). Radek's move added another bureaucratic layer to an already cumbersome process and required the approval of the Chief of the Public Integrity Section on routine matters. \502\ Interview of Laura Ingersoll, Committee on Government Reform, at 6 (Sept. 17, 1999). --------------------------------------------------------------------------- Ingersoll told FBI agents Kevin Sheridan and Laura Laughlin that the search warrants were rejected, but she could not give a good answer as to why there was no probable cause.\503\ Ingersoll sent an e-mail to her superiors on July 7, 1997, stating that the ``case agent'' and Laughlin conceded that there was no probable cause for the search warrants.\504\ In her testimony before the Senate, Ingersoll admitted she was referring to Agent Sheridan, but Agent Sheridan denied that he ever conceded that there was no probable cause for the warrants.\505\ Both Agents Parker and Sheridan found the refusal to pursue search warrants in this case to be abnormal compared to their other experiences.\506\ --------------------------------------------------------------------------- \503\ Interview of Kevin Sheridan, Committee on Government Reform, at 3 (Sept. 13, 1999). Ingersoll met with Agents Sheridan and Laughlin in the afternoon of July 2, 1997, after the telephone conference with Lee Radek. Ingersoll did not specifically recall meeting with Sheridan and Laughlin, while Laughlin recalled the meeting, but could not remember what was said. Interview of Laura Ingersoll, Committee on Government Reform, at 5 (Sept. 17, 1999); interview of Laura Laughlin, Committee on Government Reform, at 2 (Oct. 1, 1999). \504\ Ingersoll e-mail to Mark Richard, Bob Litt, and Lee Radek, July 7, 1997 (exhibit 18). \505\ ``The Justice Department's Handling of the Yah Lin ``Charlie'' Trie Case,'' hearing before the Senate Committee on Governmental Affairs, 106th Cong., 1st Sess., 78 (Sept. 22, 1999); interview of Kevin Sheridan, Committee on Government Reform, at 3 (Sept. 13, 1999). \506\ Sheridan said they had done searches before with a lot less probable cause than there was in the Trie case. Interview of Kevin Sheridan, Committee on Government Reform, at 5 (Sept. 13, 1999); Parker said she had never seen a warrant be rejected like this. Interview of Roberta Parker, Committee on Government Reform, at 8 (Aug. 27, 1999). --------------------------------------------------------------------------- The Justice Department imposed a higher standard than necessary for a search warrant. A search warrant needs to be supported by probable cause. Probable cause exists ``where the known facts and circumstances are sufficient to warrant a man of reasonable prudence in the belief that contraband or evidence of a crime will be found.'' \507\ The question was simply whether it was reasonable to believe, given the known facts and circumstances, that Mapili was obstructing the subpoenas, not whether it could be proven. --------------------------------------------------------------------------- \507\ See Illinois v. Gates, 462 U.S. 213, 238 (1983); Beck v. Ohio, 379 U.S. 89, 91(1964); Brinegar v. U.S., 338 U.S. 160, 176 (1949); Wong Sun v. U.S., 371 U.S. 471, 479 (1963). --------------------------------------------------------------------------- After the search warrant request was denied, the FBI agents continued to investigate the matter. Agent Parker spoke with Agent Daniel Wehr in Little Rock and they listed documents found in the trash covers that were not produced pursuant to the grand jury subpoena.\508\ Task Force Attorney Jonathan Biran and Agent Parker then traveled to Little Rock to compare the documents recovered in the trash with the documents produced pursuant to the grand jury subpoena. After the review, Biran advised Ingersoll that there was no basis for an obstruction prosecution against Mapili.\509\ Agent Parker had a different assessment of the document review. It was clear to Agent Parker that folders marked ``President Clinton'' and ``Vice President Gore'' that contained only one or two documents were not complete as was a fax cover sheet indicating five pages when only one was produced.\510\ --------------------------------------------------------------------------- \508\ Roberta Parker memorandum to ``Criminal Investigative'', July 25, 1997. \509\ Interview of Laura Ingersoll, Committee on Government Reform, at 7 (Sept. 17, 1999). Biran told Ingersoll that some of the documents were produced pursuant to the grand jury subpoena were incriminating and some other documents that were destroyed were copies of documents that had been produced. \510\ Interview of Roberta Parker, Committee on Government Reform, 7-8 (Aug. 27, 1999). --------------------------------------------------------------------------- The FBI agents were proven correct. On October 21 and 22, 1997, Mapili was interviewed by the Task Force and FBI agents in anticipation of her testimony before the grand jury. During the interviews, Mapili admitted that she had destroyed documents and stashed other documents that still remained hidden. Mapili had not informed her attorney or Trie's attorneys about the hidden documents. In addition, Mapili admitted that she did this at the direction of Charlie Trie, who told her to destroy certain documents after she received the Senate subpoena in March 1997. On October 23, 1997, the FBI conducted simultaneous searches of Trie's residence and office in Little Rock and his office at the Watergate in Washington, DC, uncovering many responsive documents that had never been produced to investigators. On November 9, 1998, Charlie Trie was indicted in Arkansas for obstructing the campaign finance investigation of the Senate Committee on Governmental Affairs.\511\ --------------------------------------------------------------------------- \511\ Indictment of Yah Lin ``Charlie'' Trie, U.S. v. Trie, No. LR- CR-98-239 (D. AR., Nov. 9, 1998). --------------------------------------------------------------------------- The Senate was not informed that Mapili was destroying records in response to their March 1997 subpoena. The FBI agents were told not to have contact with the Senate investigation.\512\ Although Agents Parker and Sheridan were under the impression that Ingersoll could contact the Senate should the need arise, Ingersoll denied it was her responsibility. Ingersoll's superior, Lee Radek, said Ingersoll was free to contact the Senate with any pertinent information.\513\ The explanation given by Ingersoll and Corcoran for not contacting the Senate was that since they had not seen the Senate subpoena, they did not know what it subpoenaed, and thus they were not in a position to determine if the documents found in the trash were responsive to it.\514\ --------------------------------------------------------------------------- \512\ Sheridan said they were told in writing not to contact the Senate. Interview of Kevin Sheridan, Committee on Government Reform, at 4 (Sept. 13, 1999). Parker said Ingersoll told them she would handle all liaison with the Senate, and Parker took that to mean they should not contact the Senate. Interview of Roberta Parker, Committee on Government Reform, at 8 (Aug. 27, 1999). \513\ Radek said there were no special restrictions on Task Force attorneys, but the usual procedures were to be followed--informing superiors after the fact or going through the Congressional Affairs Office. Interview of Lee Radek, Committee on Government Reform, at 3 (Sept. 17, 1999). \514\ Corcoran memos, attachment to memorandum of Sept. 29, 1997, at A-046; interview of Laura Ingersoll, Committee on Government Reform, at 3 (Sept. 17, 1999). --------------------------------------------------------------------------- Although Justice Department attorneys and FBI agents differed on their recollection of the facts and the application of the law, one area of general agreement was the degree of control top-level Justice Department officials exercised over the campaign finance investigation. Lee Radek, Chief of the Public Integrity Section and a 28-year veteran of the Justice Department, stated: ``we had the Attorney General regularly wanting to know how the investigation was progressing. We had supervision of the Acting Assistant Attorney General on a daily basis, something that usually does not happen.'' \515\ Laura Ingersoll, former chief of the Task Force and a 11-year veteran of the Justice Department, said the degree of control exercised by the Justice Department was ``unprecedented.'' \516\ For the FBI agents in the field, the Justice Department's control of the investigation caused, ``problems of aggressiveness and timeliness of investigative avenues [and] . . . investigative decisionmaking [that] was slow, if at all.'' \517\ --------------------------------------------------------------------------- \515\ ``The Justice Department's Handling of the Yah Lin ``Charlie'' Trie Case,'' hearing before the Senate Committee on Governmental Affairs, 106th Cong., 99 (1999). \516\ Id. at 98. Ingersoll was the first chief of the Task Force. She was appointed to head the Task Force by Lee Radek on Nov. 1, 1996. When it became apparent that the Task Force was not doing its job properly, Attorney General Reno replaced Ingersoll with Charles LaBella in September 1997. \517\ Id. at 12 (statement of Special Agent-in-Charge Ivian Smith). Agent Smith is a 25-year veteran of the FBI. --------------------------------------------------------------------------- The Justice Department's decisionmaking process caused a substantial delay in the Charlie Trie investigation. Even when it did finally issue a grand jury subpoena to Mapili, its purpose was to scare Mapili into preserving the documents and not to investigate Trie's criminal activity, even though many of Trie's illegal activities had been publicly documented. Without the FBI's insistence that something be done to preserve evidence, there was no indication that the Justice Department intended to subpoena documents that proved very useful in the investigation of Trie.\518\ --------------------------------------------------------------------------- \518\ The Justice Department collected 13 boxes worth of documents from Trie. The committee examined the documents and found a great deal of significant information that could not have been obtained from any other source. --------------------------------------------------------------------------- D. The Justice Department Failed to Pursue Key Individuals and Entities 1. Failure to Pursue the DNC While the White House was the focal point for favors and access, the DNC served as the collection point for the illegal foreign and conduit contributions. In that capacity, officials at the DNC worked closely with the individuals bringing in foreign conduit contributions, John Huang and Charlie Trie. Huang and Trie both began their associations with the DNC as outsiders, giving illegal foreign and conduit contributions in exchange for favors and access. By 1996, the DNC had brought Huang and Trie inside the operation. Huang was a fundraiser working for the DNC and Trie spent a large amount of time soliciting contributions for Huang's events. No one voiced any concerns about allowing Huang or Trie to work on the DNC's behalf. There is evidence, however, that at least four officials at the DNC may have known of, encouraged or even participated in, illegal activities by Huang and Trie. Their knowledge of illegal acts by Huang and Trie began at the very early stages of Huang and Trie's association with the DNC. In interviews and depositions with the Justice Department and Congress, the DNC officials gave very misleading and potentially perjurious testimony to protect the DNC and to cover up their own involvement in the illegal activity. Despite the fact that the Justice Department has all of the information about the DNC officials' involvement in the fundraising scandal, the committee is not aware of any DNC official who has been under serious scrutiny by the Task Force. In several instances, DNC officials were questioned about their knowledge or participation in Huang and Trie's illegal acts, but there is no evidence that the Justice Department intended to investigate thoroughly or prosecute possible criminal acts by officials of the DNC. At other times, the Justice Department completely ignored evidence of wrongdoing by DNC officials. a. Melinda Yee, DNC Director of Constituencies Melinda Yee was a key figure in the campaign fundraising investigation, as she had contacts with John Huang and the Riadys in the 1992 election all the way through the 1996 election. Yee met Huang in the late 1980s when she worked as the executive director of the Organization for Chinese Americans, and Huang was just beginning his political involvement. Melinda Yee joined the DNC in 1990 as the Director of Constituencies. When Yee worked for both the DNC and Clinton/Gore '92 during the 1992 campaign, she would occasionally see Huang in Los Angeles. After the election, Yee worked briefly for the Office of Presidential Personnel before joining the Commerce Department in May 1993.\519\ --------------------------------------------------------------------------- \519\ Deposition of Melinda Yee, Senate Committee on Governmental Affairs, May 9, 1997, at 14. --------------------------------------------------------------------------- In deposition testimony before the Senate, Yee was asked to recite the times she saw Huang between their initial meeting and his employment with the Commerce Department in July 1994. Yee stated that she saw him whenever the 1992 campaign went to Los Angeles, but she could not recall any other specific meetings.\520\ Yee failed to mention her interaction with Huang in relation to the DNC's trip to Asia between December 4-13, 1991, for DNC Chairman Ron Brown. To ensure that the fundraising portion of the trip was successful, Yee recruited John Huang to raise money in Hong Kong. Yee also explained Huang's role on the trip to Chairman Ron Brown: --------------------------------------------------------------------------- \520\ Id. at 198. John Huang is our key to Hong Kong. He is also interested in renewing his trusteeship to us on this trip through his Asian banking connections. He has agreed to host a high dollar event for us in Hong Kong with wealthy Asian bankers who are either U.S. permanent residents or with U.S. corporate ties. He will make sure that all of the hotel accommodations, meals, and transportation are paid for by his bank. He should be invited to be part of our delegation.\521\ --------------------------------------------------------------------------- \521\ Memorandum from Melinda Yee to RHB [Ronald H. Brown], Oct. 15, 1991, DNC 0828866-67 (exhibit 19). Yee said John Huang agreed to host an event in Hong Kong with a goal of $50,000.\522\ The schedule for Chairman Brown shows dollar signs next to a lunch and a dinner on December 10, 1991, hosted by the Lippo Group.\523\ --------------------------------------------------------------------------- \522\ Memorandum from Melinda Yee to RHB [Ronald H. Brown], Oct. 22, 1991, DNC 0828865 (exhibit 20). \523\ Memorandum from Melinda Yee to Alexis Herman, et al., Dec. 2, 1991, DNC 0828853-58 (exhibit 21). --------------------------------------------------------------------------- Huang testified that Yee invited him to go on the trip and that he did arrange for Lippo to pay the DNC's expenses. Huang gathered individuals together for a lunch and dinner hosted by Lippo, but he flatly denied that he ever promised to raise money or did raise any money in Hong Kong: Mr. Burton. Exhibit No. 109. That exhibit is a memo from Melinda Yee to DNC Chairman Ron Brown. Ms. Yee said you offered to host an event in Hong Kong with a goal of $50,000; is that correct? Mr. Huang. The memo indicated that way. I did not really offer that $50,000. * * * * * Mr. Burton. You never promised that. Did you say that you would consider it? Did you say you would do it? Mr. Huang. She has proposed that I could do that.\524\ --------------------------------------------------------------------------- \524\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the Committee on Government Reform, 106th Cong., 192-195 (Dec. 17, 1999) (preliminary transcript). Less than 1 year later, Huang and Yee were again discussing fundraising for the DNC. In August 1992, Huang asked Yee to arrange a private limousine ride between James Riady and then- Governor Clinton.\525\ Yee made the arrangements and drafted a briefing memo to Clinton. Huang provided her with the information for the memo. Yee wrote that Riady gave $100,000 for the August 14, 1992, fundraiser and that he had, ``the potential to give much more.'' \526\ Although Huang denied talking to Yee about future contributions, after Riady's limousine ride with Governor Clinton, Riady funneled over $640,000 to the 1992 campaign through his employees. --------------------------------------------------------------------------- \525\ Id. at part I, 73. \526\ Memorandum from Melinda Yee to Governor Clinton, Aug. 14, 1992, CG92B-00543 (exhibit 22). --------------------------------------------------------------------------- Yee invoked her fifth amendment right against self- incrimination with the committee and refused to appear at a deposition.\527\ She had previously given deposition testimony to the Senate Committee on Governmental Affairs in May 1997. In her testimony to the Senate, Yee directly contradicted her own DNC documents and Huang's testimony on the subject of fundraising with Huang: --------------------------------------------------------------------------- \527\ Letter from Nancy Luque to Barbara Comstock, chief counsel, Committee on Government Reform and Oversight, July 17, 1998 (exhibit 23). --------------------------------------------------------------------------- Q. Did you ever talk to John Huang about fundraising? A. No. Q. When I say ever, I mean at any time. Did you talk to John Huang about fund raising, political or campaign fund raising? A. Well, I know he did fundraising, but I was, again, in the political division and he worked with the finance people on fundraising matters, specific fundraising. Q. Did you discuss fund raising matters with him? A. Not--I was working--I talked to him about political issues. I mean, if he had a fund raising, it could have been mentioned, but if he ad [sic] to actually do fund raising, he worked with finance. I mean, I just didn't, I wasn't--that wasn't my job. Q. When are you talking about? You said, you talked to John Huang when he worked with finance at DNC. A. No, no, I'm saying he worked with--I'm not staff forwarding. I'm just saying, when I was at the DNC or during the campaign, I would work with him on these issues and campaign organizing. If he had finance issues, he didn't work with me. He worked with whoever he worked with and I don't know who in the finance division. This was in 1992. I'm not talking about when he actually worked there.\528\ --------------------------------------------------------------------------- \528\ Deposition of Melinda Yee, Senate Committee on Governmental Affairs, May 9, 1997, at 198-99 (emphasis added). Yee's testimony before the Senate cannot be reconciled with documents or the testimony of John Huang. Yee asked Huang to raise $50,000 for the DNC in Hong Kong and they discussed Riady's $100,000 and ``potential to give much more'' during the 1992 campaign. The Justice Department should investigate Melinda Yee about her relationship with John Huang, her interaction with Huang for the DNC's 1991 trip to Asia, the 1992 limousine ride, and the contributions that resulted from the ride.\529\ There is evidence that Yee may have misled the Senate about the nature of her relationship with Huang. Despite this evidence, the committee has seen no indication that Yee is under active investigation. --------------------------------------------------------------------------- \529\ The Justice Department should also investigate Yee's statements about APAC-Vote, an Asian American organization set up for the 1992 campaign by Nora Lum. Yee denied that APAC-Vote was affiliated with the DNC, but Yee wrote to Lum stating that APAC-Vote was very important to the DNC and the DNC agreed to fund the organization. In addition, Yee wrote a letter authorizing Nora Lum of the ``DNC's APAC- Vote Project to open an account under the name of `DNC/APAC'.'' --------------------------------------------------------------------------- b. David Mercer, DNC Deputy Finance Director There is substantial evidence that DNC fundraiser David Mercer conspired with John Huang to violate the Hatch Act, and then lied about his actions when questioned by this committee. While he worked as a Commerce Department employee, Huang was constrained in the political activities he could perform. Although Mercer was ``mindful of the Hatch Act,'' it did not stop him from asking Huang repeatedly to violate the statute.\530\ Mercer placed numerous calls to Huang at the Commerce Department and asked at least once to meet him across the street from the Commerce Department so Mercer could ask Huang to solicit contributions. At one point, Huang even asked Mercer not to get him involved in fundraising while he worked at the Commerce Department.\531\ Mercer did not stop. --------------------------------------------------------------------------- \530\ FBI interview of David Lawrence Mercer, at 9 (Apr. 27, 1998). \531\ FBI interview of John Huang, at 57 (Jan. 19-Feb. 10, 1999). --------------------------------------------------------------------------- In June 1995, Mi Ryu Ahn contributed $10,000 to the DNC. Ahn made the contribution after she received four or five telephone calls from John Huang, who was working at the Commerce Department.\532\ Although Huang stated that he did not solicit Ahn for her contribution, Huang clearly referred her to Mercer.\533\ Four days before receiving Ahn's $10,000, Mercer left a message for Huang at the Commerce Department that read: ``Have talked to Mi. Thank you very much.'' \534\ On the check tracking form used by the DNC to record both internal and required information for the FEC, Mercer listed Jane Huang, John Huang's wife, as the solicitor of the contribution from Ahn.\535\ Mercer stated that he listed Jane Huang as the solicitor because she was an active trustee and there was a connection between the Huangs and Ahn.\536\ Statements from both John Huang and Mi Ryu Ahn contradict Mercer's contention. Huang stated that Jane Huang most likely did not know Ahn and that Jane did not solicit contributions while John worked at the Commerce Department.\537\ Ahn could not recall ever talking to Jane Huang, but she did remember that John Huang asked her to get involved with the DNC.\538\ --------------------------------------------------------------------------- \532\ S. Rept. No. 105-167, at 1189 (1998). \533\ FBI interview of John Huang, at 26 (Feb. 23-Mar. 26, 1999). \534\ S. Rept. No. 105-167, at 1189 (1998). \535\ Id. at 1189-1190. \536\ FBI interview of David Lawrence Mercer, at 7 (Apr. 27, 1998). \537\ FBI interview of John Huang, at 27 (Feb. 23-Mar. 26, 1999). \538\ S. Rept. No. 105-167, at 1190 (1998). --------------------------------------------------------------------------- John Huang also introduced Mercer to Arief and Soraya Wiriadinata. In November 1995, while Huang still worked at the Commerce Department, Arief and Soraya Wiriadinata each contributed $15,000 to the DNC. David Mercer was the DNC contact for those two contributions and he filled out their check tracking forms for the DNC. Mercer again recorded Jane Huang, John's wife, as the solicitor of the contributions.\539\ Mercer was asked why he listed Jane Huang, instead of John Huang, as the solicitor the contributions from the Wiriadinatas: --------------------------------------------------------------------------- \539\ DNC check tracking forms for Arief Wiriadinata and Soraya Wiriadinata, DNC 1276337 and DNC 1276338. Q. How did you know to credit this to Jane Huang as --------------------------------------------------------------------------- solicitor? A. Through an understanding prior of the Wiriadinatas having association with the Huangs. Q. How did that understanding come about? A. I don't know. Q. But you understood that the Wiriadinatas and the Huangs were associated. How did you understand they were associated? A. I don't recall. Q. Why didn't you put John Huang down as solicitor? A. I don't recall why I--you know, I don't recall. I didn't, you know--I don't . . . I don't recall. Jane could have--I could have been told that Jane was the one that brought these checks in. I don't know.\540\ --------------------------------------------------------------------------- \540\ Deposition of David L. Mercer, Senate Committee on Governmental Affairs, May 27, 1997, at 33-34. Mercer could not explain his own actions because to do so would uncover Mercer's role in encouraging Huang to violate the Hatch Act. John Huang and Arief and Soraya Wiriadinata all directly contradict Mercer's testimony. Not only did Arief say that John Huang solicited the November 1995 contributions, but both Arief and Soraya denied ever speaking to or meeting with Jane Huang.\541\ Huang also stated that Mercer testified falsely: --------------------------------------------------------------------------- \541\ S. Rept. No. 105-167, at 1191 (1998). Mr. Wilson. But you do recall, and I may be wrong on the complete number, but on some of the DNC check tracking forms your wife was listed as the solicitor of --------------------------------------------------------------------------- contributions from the Wiriadinatas. Mr. Huang. I've learned that since I saw the documents. Mr. Wilson. Now, that was not correct you've testified, is that right? Mr. Huang. That was not correct. My wife did not solicit those contributions, no.\542\ --------------------------------------------------------------------------- \542\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 280 (Dec. 17, 1999) (preliminary transcript). The Justice Department should investigate David Mercer for knowingly giving false testimony to the Congress by stating that Jane Huang solicited the contributions from Mi Ryu Ahn and the Wiriadinatas. Mercer's fundraising activities with Huang, while Huang was at the Commerce Department, points to a greater concern: Mercer knew that the DNC was hiring someone who was willing to break the law in return for contributions to the DNC. c. Richard Sullivan, DNC Finance Director In 1994, Charlie Trie and his foreign financier, Ng Lap Seng, contributed $15,000 to the DNC in illegal foreign money through the San Kin Yip International Trading Co. Documents show that DNC officials knew the money came from Ng Lap Seng and may have attempted to hide that fact. There is no evidence that the Justice Department has pursued these issues. On October 10, 1994, Charlie Trie received a fundraising letter from Richard Sullivan, Director of the BLF, and Tim Collins of the Business Leadership Forum (BLF), a DNC donor council for business leaders to interact with officials in the Clinton administration and the Democratic party.\543\ Trie was invited to recruit a guest to join the BLF and attend a small October 20, 1994, BLF event with Vice President Gore and senior administration officials in Washington, DC. Trie recruited his foreign benefactor Ng Lap Seng to join the BLF.\544\ --------------------------------------------------------------------------- \543\ Letter from Richard Sullivan, director, Business Leadership Forum, and Timothy C. Collins, chairman, Business Leadership Forum, to Charlie Trie, Oct. 10, 1994 (exhibit 24). \544\ Interview of Yah Lin ``Charlie'' Trie, Committee on Government Reform, at 2-3 (Feb. 29, 2000). --------------------------------------------------------------------------- To pay for Ng's membership in the BLF, a company newly incorporated by Trie, San Kin Yip International Trading Co., gave a $15,000 check to the DNC. Sullivan filled out the DNC check tracking form for the $15,000 San Kin Yip contribution. The check was signed by Ng Lap Seng in Chinese.\545\ On the check tracking form, Sullivan listed Charlie Trie as the contact for the contribution. Following the event, though, Sullivan sent a letter to Ng Lap Seng, not Trie, thanking him for his contribution and for joining the BLF.\546\ There was no documentary evidence other than the Chinese signature that would have told Sullivan that the contribution came from Ng and not Trie, who Sullivan listed on the check tracking form. --------------------------------------------------------------------------- \545\ Id. at 3. \546\ Letter from Richard Sullivan to Ng Lap Seng, Oct. 24, 1994 (exhibit 25). --------------------------------------------------------------------------- In deposition testimony, Sullivan distanced himself from Trie. In fact, Sullivan said that he specifically told David Mercer to instruct Trie that conduit contributions were unacceptable.\547\ Sullivan said he also gave a general warning to DNC fundraisers that if there was any chance of illegal contributions, Trie might be involved.\548\ Sullivan stated he did not solicit any contributions from Trie and that Deputy Finance Director David Mercer was Trie's primary contact.\549\ Sullivan did describe to the Justice Department a September 1994 event Trie attended at Mercer's invitation where Trie agreed to serve as a chairman of the DNC Business Council.\550\ Sullivan said about 30 people attended and they went to hear the Vice President speak at the Old Executive Office Building. However, Sullivan neglected to tell the Justice Department about his involvement with Trie and Ng at the October 20, 1994, event and Ng's contribution to the DNC. --------------------------------------------------------------------------- \547\ FBI interview of Richard Lyles Sullivan, at 14 (Aug. 13, 1997). \548\ FBI interview of Richard Lyles Sullivan, at 14 (Aug. 13, 1997). \549\ Deposition of Richard Sullivan, Senate Committee on Governmental Affairs, June 4, 1997, at 101-102. \550\ FBI interview of Richard Sullivan, at 2 (Nov. 21, 1997). The Business Council was the earlier name for the BLF. --------------------------------------------------------------------------- The Justice Department did not confront Sullivan with the documents evidencing his own involvement with the illegal contribution from Ng. The Justice Department has had possession of Richard Sullivan's thank you letter to Ng Lap Seng since October 1997.\551\ The Justice Department interviewed Sullivan seven times after it seized the letter from Charlie Trie's residence in Little Rock and not once did the Justice Department ask Sullivan about it.\552\ The Justice Department did manage to ask Trie whether he sponsored Ng for membership in the BLF. When Trie could not recall, there were no further questions on the subject.\553\ --------------------------------------------------------------------------- \551\ The only known copy of Sullivan's letter was seized by the Justice Department and the FBI after a search warrant was executed on Charlie Trie's residence in Little Rock in October 1997. \552\ Sullivan was interviewed by the Justice Department two times prior to the search warrant in October 1997. After the letter was seized, the Justice Department interviewed Sullivan Nov. 21, 1997, Dec. 1, 1997, May 14, 1998, Sept. 17, 1998, Sept. 18, 1998, Nov. 23, 1998, and Mar. 15, 1999. \553\ FBI interview of Charlie Trie, at 7 (June-October 1999). --------------------------------------------------------------------------- d. Fran Wakem, Deputy Director, DNC Business Leadership Forum Fran Wakem was the Deputy Director of the Business Leadership Forum. In late 1994, Wakem arranged for an invitation to Lin Ruo Qing, a former colonel in the People's Liberation Army who was associated with Charlie Trie, to come to the United States and attend a DNC fundraiser. In 1994, Trie was introduced to Lin Ruo Qing when she served as the chairwoman of the San You Scientific and Technology Industry Group in Beijing, which was a Chinese Government-controlled entity. Trie started his own company called Sanyou Science & Technology Enterprises USA, Inc. in hopes of creating a joint venture with Lin's company in Beijing. As part of his efforts to enter a joint venture with Lin, Trie invited Lin to attend a DNC fundraiser in December 1994. Trie's employee, Jennifer Russell, contacted Richard Sullivan, Director of the DNC's Business Leadership Forum, and was told that a new member needs to pay $10,000 in order to attend a BLF event.\554\ Since Trie was already a member of the BLF, Sullivan's reference applied to Trie's efforts to get Lin into the BLF event. --------------------------------------------------------------------------- \554\ Note from Jennifer Russell to Charlie Trie (exhibit 26). Attached to the letter is the committee's translation of the letter. --------------------------------------------------------------------------- In order to facilitate Lin's entry into the United States, Trie, through his employee Jennifer Russell, asked Fran Wakem, deputy director of the BLF, to invite Lin to a BLF event in the United States. In a letter dated November 9, 1994, Fran Wakem invited Lin to join the BLF and attend one of several upcoming BLF events.\555\ Wakem signed the letter and addressed it to Lin's business address in Beijing. Wakem's letter apparently was not specific enough to enable Lin to receive a United States entry visa. On November 16, 1994, Russell sent a copy of the letter back to Wakem with suggested revisions.\556\ Wakem quickly changed the letter, signed it, and sent the revised letter, still with the Beijing address, back to Russell.\557\ --------------------------------------------------------------------------- \555\ Letter from Francessa Wakem to Miss Lin Rou Qing, Nov. 9, 1994 (exhibit 27). \556\ Facsimile from Jennifer Russell to Fran Wakem, Nov. 16, 1994 (exhibit 28). The draft letter from Fran Wakem to Lin Ruo Qing is attached. \557\ Letter from Fran Wakem to Lin Ruo Qing, Nov. 16, 1994 (exhibit 29). --------------------------------------------------------------------------- The FBI interviewed Wakem about her involvement in inviting a former military officer from Beijing to join the BLF and attend a BLF event. Although Wakem verified her signatures, Wakem had no recollection of her letters to Lin.\558\ Wakem knew that foreign nationals could not join the BLF because they could not contribute, and she could not think of any situation where a foreign national was invited to join the BLF.\559\ Richard Sullivan, director of the BLF, said that Wakem's letters to Lin were prepared at Charlie Trie's request.\560\ Sullivan, though, said he authorized Wakem to invite Lin to attend BLF events, but not to invite Lin to join the BLF.\561\ Sullivan surmised that Wakem sent letters inviting Lin to join the BLF because it was easier than drafting a new letter.\562\ Wakem's letter to Lin contained two references about traveling to the United States. Wakem admitted that such references were not contained in BLF form letters inviting someone to join the donor program.\563\ --------------------------------------------------------------------------- \558\ FBI interview of Francessa J. Wakem, at 2 (Oct. 6, 1998). \559\ Id. \560\ FBI interview of Richard Sullivan, at 2 (Sept. 18, 1998). \561\ Id. \562\ Id. \563\ Interview of Fran Wakem, Committee on Government Reform, at 3 (Sept. 13, 2000). --------------------------------------------------------------------------- In an interview with the committee, Wakem stated that she did not recall any of her dealings with Russell or the Lin letters. Wakem did admit, though, that the letters she signed to Lin were not ``form letters.'' \564\ As such, they were required to be approved by the DNC's general counsel's office before being sent out, but Wakem could not specifically recall whether the letter to Lin was approved by the general counsel's office.\565\ In addition, since the letters referencing visits to the United States were clearly not form letters, Sullivan's speculation that Wakem sent out a form letter inviting Lin to join cannot be correct. Wakem could not explain why it would not have occurred to her that the letters were inappropriate when she added two sentences inviting Lin to the United States. In her interview with the committee, Wakem characterized her letter as ``wacky'' and asked rhetorically, ``why in the hell was I doing that?'' \566\ Wakem's memory loss this year in no way effects the fact that in 1994, she knowingly invited a foreign national living in Beijing to join the BLF. --------------------------------------------------------------------------- \564\ Id. at 3. \565\ Id. at 3. \566\ Id. at 4. --------------------------------------------------------------------------- 2. Failure to Pursue Foreign Kingpins The campaign finance investigation revealed that three major participants in the scandal--John Huang, Charlie Trie, and Johnny Chung--each had wealthy and powerful foreign patrons. Documentary and testimonial evidence revealed that the foreign patrons had indeed funneled illegal foreign contributions into the DNC. Four foreign nationals in particular attracted investigative scrutiny: James Riady, Ng Lap Seng, General Ji Shengde, and Tomy Winata. These foreign nationals attracted attention not just because of the hundreds of thousands of dollars they provided in illegal political contributions, but also because they all had strong ties to the People's Republic of China (PRC) and other foreign governments. In March 1997, it was reported that United States intelligence had learned in 1996 that the PRC had discussed a plan to influence United States policy through lobbying and funding.\567\ Despite these alarming allegations, it appears that the Justice Department has done little to investigate or prosecute the foreign kingpins who were the source of much of the illegal money in the 1996 elections. --------------------------------------------------------------------------- \567\ Brian Duffy and Bob Woodward, ``FBI Warned 6 on Hill About China Money; Officials Say Lawmakers, Others Targeted in $2 Million Plan to Buy Influence,'' Washington Post, Mar. 9, 1997, at A1. --------------------------------------------------------------------------- a. James Riady James Riady's family runs the Lippo Group, a $12 billion business empire based in Jakarta, Indonesia. Although the ethnic Chinese Riady family had close ties to the regime of President Soeharto in Indonesia, it also maintained very close business relationships with PRC Government interests and participated in major investments in China. One Lippo link in particular merits scrutiny--its multiple partnerships with China Resources. China Resources was owned entirely by the PRC Government and has been identified as an intelligence-gathering arm of the People's Liberation Army (PLA). According to John Huang, China Resources' parent company is the Ministry of Foreign Trade and Economic Cooperation (MOFTEC).\568\ MOFTEC is responsible for ensuring MFN status for China and reducing or eliminating United States-imposed restrictions on technical exports.\569\ --------------------------------------------------------------------------- \568\ FBI interview of John Huang, at 133 (Feb. 23-Mar. 26, 1999). \569\ Id. --------------------------------------------------------------------------- The Justice Department and the committee received extensive evidence and testimony documenting James Riady's involvement in funneling illegal contributions to the DNC and State Democratic parties. In August 1992, Huang arranged for Riady to have a private limousine ride with then-Governor Bill Clinton, so Riady could tell Governor Clinton that he would raise $1 million for the Governor's Presidential campaign. Riady and Huang then identified Lippo employees and their spouses who could contribute to fulfill Riady's promise. At least $750,000 in illegal contributions from Lippo Group employees and their spouses were sent to the DNC in the 1992 election.\570\ Huang gave Riady a detailed listing of Lippo employees' contributions and some of the employees bank accounts numbers so they could be reimbursed.\571\ Huang was personally told by some of the Lippo employees that they received reimbursements.\572\ The committee has bank records which show that the Lippo employees received reimbursements from various companies in amounts equaling their political contributions. --------------------------------------------------------------------------- \570\ At the direction of the DNC, some of the Lippo contributions were sent to State Democratic parties. \571\ FBI interview of John Huang, at 20 (Oct. 25-26, 1999). \572\ FBI interview of John Huang, at 22-25 (Jan. 19-Feb. 10, 1999). --------------------------------------------------------------------------- After the 1992 election, Riady continued to remain involved in U.S. politics. In 1995, he appealed directly to President Clinton to have his long-time aide John Huang hired at the DNC. During his year at the DNC, Huang would raise at least $1.6 million in illegal contributions, a substantial amount of it from individuals with ties to the Lippo Group. For example, Huang raised over $450,000 from Arief and Soraya Wiriadinata, an Indonesian gardener and his wife, who received the entire sum that they gave to the DNC from Hashim Ning, a long-time Indonesian business partner of the Riadys. Despite the ample documentary and testimonial evidence implicating James Riady in illegal conduct, the Justice Department has failed to indict Riady. The department obtained John Huang's cooperation over a year ago, and gave Huang a reduced sentence in exchange for his testimony against Riady. Yet a year later, the Department still has not brought charges against Riady. The Justice Department's failure to bring charges against Riady certainly does not spring from any lack of evidence against Riady. It is possible that the Department has been dissuaded from pursuing Riady because of his close relationship with President Clinton. President Clinton has never denounced James Riady since his role in the fundraising scandal was uncovered, and he has never demanded that Riady return to the United States to face charges. Rather, he has continued to embrace a man who has been caught trying to illegally subvert U.S. elections. In September 1999, shortly after Huang finished providing evidence against Riady to the Justice Department, President Clinton saw Riady at an APEC conference in New Zealand. After he finished giving a speech, the President went down a ropeline, where Riady was prominently placed. When he saw Riady, the President stopped, and they exchanged extended pleasantries.\573\ The President apparently expressed little hesitation about meeting with Riady, who was a central target of one of the largest investigations in the history of the Justice Department.\574\ --------------------------------------------------------------------------- \573\ After learning of the Clinton-Riady encounter, the committee requested any WHCA videotapes of the New Zealand event. Two WHCA videotapes filmed the event, but remarkably, both missed the encounter between the President and Riady. One camera stopped filming as soon as the President reached Riady's place in line. The other WHCA cameraman was focused on his WHCA colleague rather than the President meeting Riady. The committee obtained a third tape of the event from a private source which captured the entire encounter between Riady and Clinton. This tape showed that the President greeted Riady warmly. \574\ Notwithstanding the President's warm embrace of Riady, the White House refuses to produce any documents related to recent contacts between Riady and the White House. The committee asked the White House to produce documents about this meeting on Oct. 5, 1999, but the White House has failed to produce any such records. --------------------------------------------------------------------------- Recent news reports suggest that the relationship between James Riady and Bill Clinton is alive and well, and not limited to one friendly handshake in New Zealand. The Far Eastern Economic Review reported on October 5, 2000, that Riady has been telling associates that he has invited President Clinton to join the Lippo Board of Directors after he leaves office in 2001, and expects the President to accept his offer. While this report has not been confirmed, it would be a shocking development if the President went to work for a man who is the target of a massive Federal investigation, who has close ties to the PRC, and who has been caught trying to funnel illegal foreign money to United States political campaigns. It would be a sad commentary on the Attorney General's judgment if she clung to her supervision of the investigation of the President and Riady while, at the same time, Riady was planning to involve the President in business ventures--as he had done with Webster Hubbell and Jim Guy Tucker after both came under investigation.\575\ --------------------------------------------------------------------------- \575\ It should be noted that Riady has a history of providing money and jobs to his allies and the allies of President Clinton when they are under investigation. He provided $100,000 to Webster Hubbell when he was under investigation by the Office of the Independent Counsel, he has hired former Arkansas Governor Jim Guy Tucker to work for him in Jakarta, and he provided John Huang with $20,000 in cash during the same period of time that Huang was ``cooperating'' with the Justice Department. --------------------------------------------------------------------------- President Clinton's continued warm relationship with James Riady sends the wrong message to the Justice Department. When one looks at the videotape of President Clinton and Riady exchanging warm greetings in September 1999, it is easy to see why the Justice Department has not indicted him. This problem provides a clear example of why the Justice Department is entirely unsuited to conduct this investigation, and why an independent counsel was necessary.\576\ --------------------------------------------------------------------------- \576\ Attorney General Reno appointed an independent counsel for Whitewater because Jim McDougal was involved. There is every indication that Riady is just as close to President Clinton as McDougal. Why did the Attorney General not employ the same rationale in this case? --------------------------------------------------------------------------- b. General Ji Shengde and Colonel Liu Chao-Ying For almost 2 years, the committee's critics claimed that there was no evidence of a Chinese plan to influence United States elections. For these critics, it was not enough to show that John Huang and Charlie Trie had funneled hundreds of thousands of dollars into the elections from foreign businessmen with close ties to China. However, in May 1999, when Johnny Chung testified before the committee, he provided clear evidence that Chinese military officers had funneled money into United States elections. Despite this clear evidence, the Justice Department has also failed to bring charges against either Chinese military officer involved. When he appeared before the committee, Chung testified that in August 1996, a business associate, Colonel Liu Chao-Ying, introduced him to General Ji Shengde, the head of Chinese military intelligence. Chung testified that General Ji told him: We like your President very much. We would like to see him reelected. I will give you $300,000 U.S. dollars. You can give it to the President and the Democrat party.\577\ --------------------------------------------------------------------------- \577\ ``Johnny Chung: Foreign Connections, Foreign Contributions,'' hearing before the House Committee on Government Reform, 106th Cong., 283 (May 11, 1999). Shortly after this meeting, General Ji provided Chung with $300,000 through his subordinate, Liu Chao-Ying. Chung funneled $35,000 of this money to the DNC.\578\ --------------------------------------------------------------------------- \578\ Id. --------------------------------------------------------------------------- If the Justice Department was interested in determining the scope of the effort by the PRC to influence United States elections, the obvious first step would be to pursue General Ji Shengde and Colonel Liu Chao-Ying. However, there is little evidence that the Department has taken any firm steps to prosecute them. A list of Justice Department Task Force cases as of June 4, 1999, listed Liu Chao-Ying as a ``Pending Inactive Investigation.'' \579\ Consistent with the inactive state of the Department's investigation is that the administration has never called upon the Chinese Government to provide Liu or Ji to United States law enforcement. --------------------------------------------------------------------------- \579\ Listing of Task Force cases, June 4, 1999 (exhibit 14). It should be noted that the Justice Department recently attempted to withhold documents relating to Liu from the committee, claiming that she was part of an active investigation. --------------------------------------------------------------------------- Johnny Chung was one of the only witnesses to provide full and honest cooperation to the committee after he pled guilty. Chung provided clear evidence implicating high-level Chinese Government officials in illegal activity. It is inexplicable that the Department has not actively pursued this evidence. The failure, while one of many, is one of the most serious, and it sends a dangerous message China, and other governments that might seek to exercise improper influence in the United States electoral process. c. Ng Lap Seng Ng Lap Seng is an ethnic Chinese businessman who became wealthy through real estate ventures in Macau. According to one of Ng's business partners, Ng's success was due to the fact that he was chosen to be a ``front man'' in different investment projects for city and provincial governments in China.\580\ Ng was also a member of the Chinese People's Political Consultative Conference (CPPCC), a Communist political group populated by some of the most powerful people in Asia, including Stanley Ho, Li Ka Shing, Henry Fok, and Hong Kong's Chief Executive Tung Chee Hua.\581\ Ng also conducts business with Wang Jun, chairman of CITIC, and son of the former Vice President of China, Wang Zhen. Ng's largest project is the Nam Van Lakes development, a $600 million hotel and casino development co-owned by Edmund Ho Wah Hau, chosen by Beijing as the first chief executive of Macau, and Stanley Ho Hung Sun, who holds the monopoly on gambling rights in Macau. Barry Gold, senior vice president and head of the Asian project finance group in Hong Kong for Lehman Brothers, when told of details of the project by Trie, said it consisted of casinos and ``well-known Chinese interests.'' \582\ --------------------------------------------------------------------------- \580\ Interview of George Johnson, Committee on Government Reform, at 2 (Feb. 13, 1998). \581\ Li Ka Shing is one of the wealthiest individuals in Asia. Henry Fok, who is very wealthy, endeared himself to the Communist Chinese by running guns into China during the Korean War. \582\ Interview of Barry Gold, Committee on Government Reform and Oversight, at 1-2 (Mar. 26, 1998). --------------------------------------------------------------------------- In 1994, Ng and Trie formed a partnership in which Ng would give Trie money, and Trie would find investors for the Nam Van Lakes development. Over the next 2 years, Ng wired over $1 million to Trie. Trie used the money for all of his expenses, including making illegal contributions to the DNC and reimbursing the contributions of others. Ng obviously understood that Trie was using the wire transfers for political contributions because Ng attended a number of fundraising events with Trie. In October 1994, Ng was even credited by the DNC for giving a contribution, even though he was ineligible to give and he signed the check in Chinese. In October 1995, Ng had Charlie Trie and Ernie Green set up a dinner with Commerce Secretary Ron Brown and Ng's Asian business colleagues in Hong Kong. At the dinner, Secretary Brown told the crowd that they should do business with Trie in the United States and that Trie had a close relationship with President Clinton. Trie told the Asian businessmen to help the Democratic party with contributions.\583\ --------------------------------------------------------------------------- \583\ Interview of Yah Lin ``Charlie'' Trie, Committee on Government Reform, at 6 (Feb. 29, 2000). --------------------------------------------------------------------------- There was not even a pretense of an investigation of Ng Lap Seng by the Justice Department. In January 1998, the Justice Department indicted Charlie Trie and Antonio Pan, while both were hiding in Asia, for funneling Ng's money into the DNC. If the Justice Department was truly following a ``bottom up'' approach to the campaign finance investigation, Ng would naturally be the next target after Trie and Pan. However, in June 1999, the Task Force identified all of its investigations and Ng Lap Seng was not even mentioned. However, there is no indication that the Justice Department is actively pursuing Ng.\584\ The fact that a foreign national could knowingly provide hundreds of thousands of dollars for illegal contributions in a U.S. Presidential campaign and completely escape scrutiny is unconscionable. --------------------------------------------------------------------------- \584\ When Trie testified before the committee, the Department identified three active investigations relating to Trie: Ernie Green, Mark Middleton, and Jude Kearney. The committee was prevented from questioning Trie about these matters. The committee questioned Trie extensively about his dealings with Ng. --------------------------------------------------------------------------- There is no excuse for the Justice Department's failure to investigate or indict Ng Lap Seng. Ng is in the same situation as James Riady. Both were wealthy overseas businessmen who used individuals in President Clinton's inner circle to funnel hundreds of thousands of dollars in illegal campaign contributions to the DNC. Press reports indicate that the Justice Department is at least working on an investigation of James Riady. There has been no indication that the Justice Department will ever investigate Ng Lap Seng for his illegal actions. d. Tomy Winata Tomy Winata is a fourth foreign national who illegally funneled money into U.S. elections, but there has not been any indication that the Justice Department intends to pursue his illegal conduct. Winata is an Indonesian billionaire with close ties to both the Chinese and Indonesian Governments. Winata served as the main business partner of the PLA and the largest shareholder in Satelindo, a major Indonesian telecommunications company. Winata was also a former business partner of the Riady family and Colonel Liu Chao-Ying. Winata gave Trie a total of $120,000 in wire transfers and between $10,000 and $20,000 in cash each time Winata visited the United States. In late 1995, Winata told Trie he wanted a private, one-on- one meeting with President Clinton. Trie could not obtain a private meeting, but as an alternative, Trie invited Winata to sit next to President Clinton at the February 19, 1996, fundraiser at the Hay Adams Hotel in Washington, DC. Winata declined the invitation but sent two of his employees instead. Trie requested that Winata send money for the event, so Winata sent $200,000 in Bank Central Asia travelers checks with his employees.\585\ Trie used a portion of the $200,000 to reimburse contributors illegally for the February 19, 1996, event.\586\ Trie testified that Winata knew he was going to use the travelers checks to pay for tickets to the fundraiser.\587\ --------------------------------------------------------------------------- \585\ Hearing on ``The Role of Yah Lin ``Charlie'' Trie in Illegal Political Fundraising, Part I,'' hearing before the Committee on Government Reform, 106th Cong., 37-39 (Mar. 1, 2000) (preliminary transcript). \586\ Id. at 39-40. \587\ Id. at 39. --------------------------------------------------------------------------- Although Winata's true involvement in illegal political contributions was not known until Trie began cooperating, Winata's name had already surfaced through the wire transfers sent to Trie's bank accounts. Despite Trie's testimony, though, there is no indication that the Justice Department intends to indict Winata for knowingly funneling illegal contributions to the DNC. 3. Mark Middleton, Assistant to the White House Chief of Staff Mark Middleton is the highest-ranking Clinton administration official to invoke his fifth amendment right against self-incrimination in the fundraising scandal. The committee found that Middleton was heavily involved with several of the central figures under investigation. No other White House official had as much contact with John Huang, James Riady, and Charlie Trie as Mark Middleton. Their contacts continued after Middleton left the White House. While on his own, Middleton courted wealthy foreign businessmen and offered access to the White House and the DNC. During the time Middleton worked in the White House, he served as a key contact with Huang and Riady. White House records showed numerous visits and telephone calls between Huang, Riady, and Middleton. Middleton also served as a conduit of information between the White House and Huang and Riady. Middleton met with Huang and Riady three times in the week before Riady paid Hubbell $100,000. Middleton also hand- delivered a ``get well'' note from President Clinton to Hashim Ning when he fell ill in the United States. In gratitude, Ning's daughter, Soraya Wiriadinata, and her husband Arief gave $455,000 to the DNC. After leaving the White House, Middleton was paid $12,500 a month by a Riady company. Middleton also served as Charlie Trie's main White House contact. Trie and Ng Lap Seng would regularly meet with Middleton in the White House when they came to Washington. When Middleton left the White House, he traveled to Asia twice with Trie. Middleton openly used his former position in the White House to impress potential Asian clients. During the second trip with Trie, Middleton discussed getting $15 million for President Clinton's re-election with the treasurer of Taiwan's ruling party.\588\ --------------------------------------------------------------------------- \588\ John Huang said Middleton told him about the $15 million offer and Huang told Middleton to be ``very careful.'' FBI interview of John Huang, at 30 (Feb. 23-Mar. 26, 1999). --------------------------------------------------------------------------- After leaving the White House, Middleton amassed an impressive array of wealthy foreign clients. However, there is no evidence that Middleton provided any work for his clients beyond facilitating White House visits, meetings with Clinton administration officials, or meetings with the chairman of the DNC. On several occasions, Middleton made it blatantly clear to White House and DNC officials that his foreign clients were prepared to make substantial political contributions or trade access for cash. The Justice Department has been investigating Middleton for 4 years. It has had Charlie Trie's cooperation with the investigation for over a year. Nevertheless, it has still failed to bring charges against Mark Middleton, one of the central figures in the scandal. Moreover, there is every indication that the Department is not even conducting a thorough or aggressive investigation of Middleton.\589\ Such failures indicate that the Department is not interested in learning what happened in the 1996 elections. --------------------------------------------------------------------------- \589\ As explained above, the Department did not even obtain the records on Middleton from the White House, where he worked for 2 years, until March 2000. --------------------------------------------------------------------------- 4. Ernie Green The committee's investigation of the activities of Charlie Trie involved a review of Trie's relationship with Ernest G. Green, who is also a close friend of President Clinton. Green and Trie had a close personal and business relationship, and they used their political contacts in order to further their business goals. They also made two trips to Asia, ostensibly for business reasons, to court prospective clients with invitations to events and fundraisers with top administration officials. In October 1995, in Hong Kong, Green, Trie, and Ng Lap Seng hosted a dinner of Asian businessmen with Commerce Secretary Ron Brown.\590\ In February 1996, Trie accompanied Wang Jun, one of the most prominent Chinese businessmen, to a White House coffee.\591\ On the same day, Green contributed $50,000 to the DNC, the precise amount Trie was instructed to pay to attend a coffee.\592\ Green and Trie accompanied Wang to meetings in Washington and New York. Green also used his White House contacts to help Trie land a Presidential appointment on an international trade commission.\593\ --------------------------------------------------------------------------- \590\ See H. Rept. No. 105-829, at 1370-1373. \591\ Guest list for Feb. 6, 1996, White House coffee. \592\ DNC check tracking form for Ernie Green, DNC 3064259; hearing on ``The Role of Yah Lin ``Charlie'' Trie in Illegal Political Fundraising, Part I,'' hearing before the House Committee on Government Reform, 106th Cong., 266 (2000) (preliminary transcript). \593\ Memorandum for the President from Bob J. Nash, Nov. 22, 1995, EOP 002216-002223. Ernie Green was listed as Trie's sponsor for appointment to the Commission. --------------------------------------------------------------------------- Green was deposed by the House Government Reform Committee and the Senate Committee on Governmental Affairs. When new evidence contradicting Green's testimony was discovered, Green was deposed a second time by this committee. On March 12, 1999, the committee referred Green's case to the Justice Department, asking the Department to determine whether Green perjured himself in his depositions. In his depositions, Green attempted to minimize his relationship with Trie. Green also denied that he made any conduit contributions or that his $50,000 contribution was connected in any way to Trie and Wang Jun's attendance at the White House coffee.\594\ Perhaps more significantly, Green claimed that he never received any money from Trie.\595\ The committee discovered irrefutable evidence that Green did receive at least $2,000 in travelers checks from Trie. In addition, Green's bank records showed numerous cash deposits into separate bank accounts at the time of Green's major contributions to the DNC.\596\ Green could not explain the source for the over $30,000 in cash he deposited.\597\ Green also denied that two cash deposits of $3,500 and $2,500 were connected to his $6,000 contribution to the DNC around the same time.\598\ The committee's referral clearly spelled out that, at a minimum, Green gave false statements about whether he received any money from Trie, and perhaps, misled the committee about his other contributions to the DNC. --------------------------------------------------------------------------- \594\ Deposition of Ernest G. Green, Committee on Government Reform and Oversight, Dec. 17, 1997, at 210-214. \595\ Deposition of Ernest Green, Senate Committee on Governmental Affairs, June 18, 1997, at 191-192. \596\ In fact, the $2,000 in travelers checks that Green received from Trie was right in the middle of the time that Green was making all of these cash deposits, February and March 1996. \597\ Deposition of Ernest G. Green, Committee on Government Reform and Oversight, Sept. 25, 1998, at 20-30. \598\ Id. at 12-14. --------------------------------------------------------------------------- Shortly after the committee's referral, around May 1999, Trie began cooperating with the Justice Department. The Justice Department attempted to shield from the committee or the public any information Trie gave about Green under the guise that Green was the subject or target of an ongoing criminal investigation. In November 1999, the committee immunized Trie, but was told by the Justice Department that questions relating to Green, along with Mark Middleton and Jude Kearney, were off limits. The basis for the Department's decision was that their investigation of Green was very serious and would be resolved in the near future. The committee was told that if Trie testified publicly about Green, it could jeopardize any case against Green. Through disclosures by the Justice Department and Trie, the committee subsequently learned that Trie did indeed provide incriminating information about Green. Not only did Trie's statements affirm the validity of the committee's referral against Green, but Trie also provided additional information that contradicted other sworn statements by Green regarding both his political contributions and his role in arranging high-level political meetings for Trie. The committee recently discovered that the Justice Department had not even requested Green's records from either the White House or the Commerce Department until March 24, 2000, 1 full year after the committee's referral.\599\ Therefore, in February 2000, when the Justice Department told the committee that it was about to take action on Green, and prevented the committee from questioning Trie about Green, it had not even taken the basic first step of getting Green's documents from the White House or the Commerce Department. At a hearing on July 20, 2000, the Justice Department was asked to explain the anomaly between their words and their actions: --------------------------------------------------------------------------- \599\ Subpoena to the Custodian of Records, Executive Office of the President, Mar. 24, 2000 (exhibit 30); subpoena to the Custodian of Records, U.S. Department of Commerce, Mar. 24, 2000 (exhibit 31). Mr. LaTourette. Let me ask you this, and I think I already know the answer, but you know what? I'm going to ask it anyway. Are Mark Middleton and Ernie Green under active investigation by the Department of --------------------------------------------------------------------------- Justice? Mr. Conrad. I couldn't comment on that. Mr. LaTourette. Well, the reason I ask you that question, we were specifically asked by the Department of Justice to avoid talking about Ernie Green during the Charlie Trie hearing, if I remember correctly. Because we were advised that there was an ongoing criminal investigation that the Justice Department was very excited about. But I have to tell you that the level of excitement is puzzling to me, and I assume to my colleagues, when we find out that what you're so excited about you're not even requesting records about from the White House. And again, I don't like this backseat driving business. It makes me very uncomfortable, because I'm sure as career prosecutors, you do an excellent job . . . Mr. Robinson, do you want to say something? Mr. Robinson. I would like to make one comment that I hope will continue to be the case in our interaction on parallel matters with the Congress. To the extent that we have conversations with counsel for committees about the appropriate scope of inquiry into witnesses, we don't make those, we don't have those conversations with the expectation that they will be publicly disseminated. And the Code of Professional Responsibility prohibits us from doing that. Mr. LaTourette. Yes, and I appreciate that chastisement, but I will tell you that the committee also has an oversight responsibility. And what you're asking us to do is say, trust us. But then when we get documents from the White House, we find out that stuff we gave you a year and a half ago, you haven't acted on[.] \600\ --------------------------------------------------------------------------- \600\ ``Has the Justice Department Given Preferential Treatment to the President and Vice President,'' hearing before the House Committee on Government Reform, 106th Cong., 121-123 (July 20, 2000) (preliminary transcript). The comments by Congressman LaTourette summarize the committee's conclusions about the Justice Department's handling of the Green case. The committee referred the matter to the Justice Department in March 1999, and it is clear that the Justice Department took little action on the referral, failing to subpoena records on Green from the White House or the Commerce Department until the following year. The Department's failure to act quickly on the referral is puzzling, given the clear evidence of perjury prepared by the committee. Even more puzzling though, is the fact that the Justice Department continued to delay action on Green, even after Charlie Trie presented them with substantial evidence of perjury and other crimes committed by Green. The Justice Department's failure to pursue the case against Green vigorously creates the appearance that the Justice Department is hesitant to pursue ever the clearest criminal case against individuals who are prominent Democrats and friends of President Clinton. 5. Keshi Zhan The Justice Department lost another investigative opportunity by failing to do a thorough investigation of Keshi Zhan, an associate of Charlie Trie. Zhan was initially thought to have been merely Trie's assistant and hostess in Washington, DC. She initially gained notoriety in the campaign fundraising investigation for having made a $12,500 contribution to the DNC on her annual salary of $22,408 as an Arlington County records clerk. However, as the investigation developed, it became clear that Zhan had a serious role in illegal activity. As the committee developed documentary and testimonial evidence, it became clear that Zhan was close to Ng Lap Seng, Charlie Trie's benefactor, who provided Trie with over $1 million, much of which was directed into political campaigns. In addition, Zhan's father was a high-ranking professor of linguistics at a Chinese university, suggesting that her family had some political influence in China. Finally, Zhan was implicated in facilitating conduit contributions on behalf of Trie.\601\ This activity was significant, because the Justice Department has a policy of refusing to prosecute mere conduit contributors. However, it does prosecute individuals who facilitate conduit contributions. --------------------------------------------------------------------------- \601\ In his interview with committee staff and his testimony before the committee, Trie cited a number of cases where Zhan arranged conduit contributions with individuals he did not even know. --------------------------------------------------------------------------- The Justice Department has failed to prosecute Zhan, despite a surfeit of evidence against her. The Senate Committee on Governmental Affairs immunized Zhan in 1997, and attempted to take her deposition. However, it soon became clear that Zhan was lying about even the simplest matters. Therefore, the committee closed her deposition. Zhan could be prosecuted for false statements made during the course of this deposition. However, the Department has declined to do so. Moreover, it appears that the Justice Department is failing to pursue Zhan for any of her illegal activities. A list of the status of Justice Department campaign fundraising investigations, which was inadvertently released by the Justice Department, listed the following information about Zhan: ``Keshi Zhan (subfile of Trie, not being actively pursued).'' \602\ --------------------------------------------------------------------------- \602\ Listing of Task Force cases, June 4, 1999 (exhibit 14). --------------------------------------------------------------------------- By failing to pursue the Zhan investigation, the Justice Department has missed an opportunity to uncover valuable information about the campaign fundraising scandal. There is ample evidence to prosecute Zhan for a number of felonies, but the Department has simply decided, without explanation, not to investigate her. 6. The Justice Department Failed to Ask Key Questions of John Huang The Justice Department approved plea agreements with John Huang and Charlie Trie in 1999. The plea agreements allowed Huang and Trie to plead guilty to lesser offenses than their conduct warranted in return for full cooperation with the Task Force's investigation. The benefit to the Justice Department was to learn the details of Huang and Trie's activities and to gain information about the involvement of others, particularly those above Huang and Trie. By obtaining the summaries of the Justice Department interviews of Huang and Trie, and by questioning them extensively, the committee has learned that the Justice Department failed to question Huang and Trie about a number of significant matters. Most importantly, the Justice Department failed to question either Huang or Trie extensively about a number of connections between Trie, Huang, Riady, and Lippo Group employees. By failing to examine sufficiently the ties between them, the Justice Department allowed Huang and Trie to both claim that they were ignorant of each other's criminal activities. a. The Justice Department Did Not Investigate Ties Between Trie, Huang, and the Lippo Group Trie and Huang both state that they met around the summer of 1994.\603\ When Huang moved to the DNC in late 1995, Huang and Trie began working together to solicit contributions. Both claim that since they had met after both were established with the Democratic party, they did not discuss the rules of fundraising.\604\ Their claims are difficult to believe, in light of the evidence to the contrary. There is substantial evidence linking Trie to the Lippo Group and James Riady. This evidence may suggest that Trie was not acting on his own in funneling money to the DNC, but rather, like John Huang, was acting as an agent of the Lippo Group. --------------------------------------------------------------------------- \603\ FBI interview of John Huang, at 41 (Jan. 19-Feb. 10, 1999); FBI interview of Charlie Trie, at 50 (June-October 1999). \604\ FBI interview of John Huang, at 4 (Feb. 5, 1999); FBI interview of Charlie Trie, at 51 (June-October 1999). --------------------------------------------------------------------------- The money for Trie's first illegal contributions to the DNC in May 1994 came from Lucky Port Investments Ltd.\605\ The owner of Lucky Port, Peter Chen, was a longtime Lippo employee and good friend of the Riady family patriarch, Mochtar Riady.\606\ While at Lucky Port, the Riadys accepted Chen's offer to invest in a shopping mall in China with a former member of the PLA.\607\ At the time of the wire transfer, Chen was still a Lippo employee as well. Antonio Pan, another longtime Lippo employee and future Trie assistant also worked at Lucky Port. Trie testified that this was the only money he received from either Lippo or anyone associated with the Riadys.\608\ The Justice Department did not question Trie about the $100,000 from Lucky Port. While he admitted that this money came from the Lippo Group, Trie could not explain why he received this money, and denied that he was acting on behalf of the Lippo Group when he funneled the $100,000 from Lucky Port into the U.S. elections. In failing to question Trie about the $100,000 from Lucky Port, the Justice Department missed a valuable piece of evidence linking Trie and the Lippo Group. --------------------------------------------------------------------------- \605\ Wire transfer from Lucky Port Investments Ltd. to Yah Lin or Wang Mei Trie, May 6, 1994. \606\ Interview of Yah Lin ``Charlie'' Trie, Committee on Government Reform, at 13 (Feb. 29, 2000). \607\ Interview of Carol Pan, Committee on Government Reform, at 1 (Dec. 1, 1998). Carol Pan, Antonio's ex-wife, worked at Lucky Port with Antonio and Chen. \608\ Hearing on ``The Role of Yah Lin ``Charlie'' Trie in Illegal Political Fundraising, Part I,'' hearing before the House Committee on Government Reform, 106th Cong., 236 (Mar. 1, 2000) (preliminary transcript). --------------------------------------------------------------------------- The Justice Department missed other important leads linking Trie and Lippo. In documents seized from Trie's home by the FBI, one undated document, in Chinese, was entitled, ``Cooperation Opportunities with James Riady.'' The document lists five separate business ventures involving Lippo and the Riadys. Trie strongly denied his own involvement in any of the projects listed in the document, which he said was authored by either Peter Chen or Antonio Pan.\609\ However, Trie admitted that one of the Lippo business projects in the documents did involve him: --------------------------------------------------------------------------- \609\ Id. at 228-235. 5. L.A. Bank Stocks: Maybe a part of the L.A. bank stock can be sold to Wang Jun. Knowing you have good relations with Wang Jun, hoping you can be the intermediary. Proposing that Wang Jun buy the Lippo bank stocks with money as reinforcement to enter the U.S. market. You may also plan to get a part of the stocks and a director position. James is a fair person. He knows especially the long-term strategy and the advantage of using business partners. He knows you have good relations with China. Hope you may be able to help realize the above suggestions. He agrees with my proposal and is willing to work with you on the above items.\610\ --------------------------------------------------------------------------- \610\ Undated document entitled, ``Cooperation Opportunities with James Riady'' (exhibit 32). Trie admitted that Lippo was asking him to contact Wang Jun, CITIC chairman, to invest with Lippo.\611\ Although Trie denied any involvement with Lippo, he was clearly involved in negotiations of various business deals with James Riady. The Justice Department did not ask Trie about this document. --------------------------------------------------------------------------- \611\ Hearing on ``The Role of Yah Lin ``Charlie'' Trie in Illegal Political Fundraising, Part I,'' hearing before the Committee on Government Reform, 106th Cong., 231-235 (Mar. 1, 2000) (preliminary transcript). --------------------------------------------------------------------------- These pieces of evidence are important in determining the extent and nature of the relationship between John Huang and Charlie Trie. Considering Huang's claim that he was unaware of the fact that most of the contributions raised by Trie were illegal, it is important to obtain independent proof of the nature of the relationship between Huang and Trie. These pieces of evidence, which the Department did not question Trie about, suggest that the relationship between Trie and Huang was close, and raise the possibility that they were working together to raise illegal funds in 1996. b. The Justice Department Did Not Investigate the 1991 DNC Trip to Asia The Justice Department did not ask Huang any questions about a DNC trip to Asia in December 1991. This was an important area to explore because in 1996, the DNC claimed the two main fundraisers on the 1991 Asia trip, John Huang and Maria Hsia, duped them in 1996 by funneling illegal conduit and foreign contributions into the DNC. But in 1991, the DNC asked both Huang and Hsia to solicit political contributions in Asia. A review of the DNC documents for the trip show that the only purpose of the trip was fundraising. DNC documents about the trip focus almost exclusively on fundraising and whether enough money would be raised to justify the trip. Melinda Yee, who asserted her fifth amendment privilege against self- incrimination before the committee, wrote, ``our goal is to bring $100,000 out of Taiwan and thus far, $50,000 is pledged.'' \612\ Chairman Ron Brown commented that the planning for the trip, ``looked good pending confirmation ($) from Waihee, Hsia, Huang.'' \613\ Linda Rotunno, from the Finance Division of the DNC, summed up the DNC's view by saying, ``as far as our goals are concerned, it would be a wasted trip if we could not finesse these new relationships into real money.'' \614\ --------------------------------------------------------------------------- \612\ Memo from Melinda Yee to Brian Foucart, Nov. 15, 1991, DNC 0828876 (exhibit 33). \613\ Memo from Melinda Yee to RHB [Ronald H. Brown], Oct. 22, 1991, DNC 0828865 (exhibit 20). \614\ Memo from Linda Rotunno to Cheri Carter, Oct. 25, 1991 (exhibit 34). --------------------------------------------------------------------------- The DNC recruited two fundraisers whose later tactics would haunt the DNC, John Huang and Maria Hsia, to bring in the money from Asia.\615\ Maria Hsia's job was to identify contributors who were going to give the money to the DNC while they were in Taiwan.\616\ John Huang agreed to host a high dollar event for the DNC where $50,000 would be collected from wealthy Asian bankers in Hong Kong who were either United States permanent residents or with United States corporate ties and even more money would be received when they returned to the United States.\617\ According to Huang's resume, however, his only contacts with wealthy Asian bankers were the Salim Group and the Riady family, both of which were ineligible to contribute to the DNC.\618\ The DNC noted Huang's commitment with dollar sign notations next to a lunch and dinner sponsored by the Lippo Group in Hong Kong.\619\ --------------------------------------------------------------------------- \615\ It should be noted that the DNC was very familiar with Huang, Hsia, and James Riady by this point because of their high-profile as fundraisers in California for the DSCC. \616\ Id. \617\ Id.; memo from Melinda Yee to RHB [Ronald H. Brown], Oct. 15, 1991 (exhibit 19). \618\ The Riady family also paid all of the DNC's hotel, meal, and transportation expenses in Hong Kong. \619\ Schedule for Asia/Hawaii, DNC 0828853-58 (exhibit 21). --------------------------------------------------------------------------- The DNC and its officials have not been forthcoming about what happened on the 1991 Asia trip. Although the DNC was able to produce many documents on planning the trip, it could not produce a single document detailing what actually occurred in Asia. The DNC officials involved in the trip refused to cooperate. Maria Hsia and Melinda Yee exercised their fifth amendment privilege against self-incrimination and have refused to cooperate with the committee. Alexis Herman, who documents show was very involved in the trip, cannot even recall it happening.\620\ Linda Rotunno does not recall writing the memorandum which stated that the trip would be a waste unless the DNC got contributions from it.\621\ John Huang disavowed any involvement in the DNC's expectation that he would solicit contributions in Hong Kong. Huang testified before the committee that despite all of the DNC documents showing that he committed to raising money in Hong Kong, he did not ask for any money or contributions from anyone. Huang did admit that Melinda Yee proposed that Huang would raise $50,000 in Hong Kong, but Huang denied he did so.\622\ Huang claimed that he told the DNC that he could gather businessmen to greet Chairman Brown in Hong Kong, but Huang denied that the dollar signs next to the Lippo Group lunch and dinner signified a fundraising event.\623\ --------------------------------------------------------------------------- \620\ Interrogatories to Secretary Alexis Herman, May 7, 1998. \621\ Deposition of Linda Rotunno, Mar. 19, 1998, at 70. \622\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before Committee on Government Reform, 106th Cong., 194 (Dec. 17, 1999) (preliminary transcript). \623\ Id. at 194-197. --------------------------------------------------------------------------- The 1991 DNC trip to Asia was the first chapter in the DNC's long and sordid relationship with foreign money. By investigating this trip, the Justice Department could have learned more about the relationship between Huang, Maria Hsia, and the DNC. However, it apparently failed to ask Huang any questions about this matter. This failure cannot be explained. c. The Justice Department Did Not Investigate Huang's Demands for Political Jobs in Exchange for Contributions The Justice Department did not question Huang about his role in a September 27, 1993, fundraiser in Los Angeles with Vice President Gore. By 1993, Huang had established himself as one of the dominant players in the California Asian American fundraising community. The DNC, cognizant of Huang's importance, arranged to meet with Huang, who was described as the Chair of the local fundraising committee.\624\ DNC staff went to Huang's office at the Lippobank, and Huang agreed to raise $200,000 for the September fundraiser with Vice President Gore.\625\ During the meeting, several others on Huang's fundraising committee stated that they felt hesitant about committing to contribute without a guarantee that there would be political appointments of Asian Americans by the time of the fundraiser.\626\ For example, the DNC was told that March Fong Eu, who was later appointed Ambassador to Micronesia, was concerned that she had not yet been contacted about her appointment. --------------------------------------------------------------------------- \624\ Undated memorandum from Vida Benavides to Laura Hartigan (exhibit 35). \625\ Id.; interview of Darius Anderson, Committee on Government Reform, Jan. 21, 2000, at 1. \626\ Undated memorandum from Vida Benavides to Laura Hartigan (exhibit 35). --------------------------------------------------------------------------- After the meeting, Huang contacted the DNC with a compromise offer and the reasons for his concessions in exchange for his cooperation with the fundraiser: John Huang's Proposal (1) downpayment commitment of $100,000. * * * * * (3) commit 300-400,000 dollars at a later event once significant appointments are named and if the administration are useful of APA's during the APEC Conference in Seattle. * * * * * Reasons: * * * * * (3) Since John Huang himself is up for an appointment, his early commitment of 200,000 would be perceived as a buy-off. (4) These fundraisers would like to help in the future by going back to their fundraising base but would look foolish if they themselves commit to give without a guarantee of a possible appointment. Their own credibility will be questioned . . . regardless if their [sic] ``activist'' or not. WE should not assume that APA fundraisers lack political integrity. SOLUTIONS (1) Accept John Huang's proposal, on the condition that the next fundraiser will raise $900,000 to a total of $1 million dollars when Clinton comes to LA in December * * * * * These must happen: (1) appointments by December.\627\ --------------------------------------------------------------------------- \627\ Undated memorandum from Vida Benavides to Martha Phipps, et al., (exhibit 36). One month after Huang laid out his proposal, the White House signaled their acceptance of his terms. March Fong Eu wrote Huang to inform him that she learned the White House was set to announce her ambassadorship to Micronesia.\628\ On the top of the letter, it says, ``copy to JTR,'' meaning James Tjahaja Riady. Huang admitted that this was the sign he was waiting for from the administration.\629\ --------------------------------------------------------------------------- \628\ Letter from March Fong Eu to John Huang, Sept. 23, 1993, HHH 3164 (exhibit 37). \629\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 208-209 (Dec. 17, 1999) (preliminary transcript). --------------------------------------------------------------------------- Huang kept his promise and funneled over $120,000 in illegal foreign and conduit contributions through Lippo employees and Lippo companies to the September 27, 1993, fundraiser after receiving March Fong Eu's letter. In December 1993, Huang funneled another $156,000 to the DNC for a fundraiser with President Clinton in furtherance of Huang's promise for additional money. The Justice Department never asked Huang about his negotiations with the DNC for the September 27, 1993, fundraiser. In his testimony before the committee, Huang admitted that he offered to exchange contributions for political appointments with the DNC, although Huang denied that he said his commitment of $200,000 could be perceived as a payoff for his own appointment.\630\ --------------------------------------------------------------------------- \630\ Id. at 207-208 (1999). --------------------------------------------------------------------------- E. The Justice Department Failed To Pursue the Kansas Conduit Contribution Scheme I believe there was a very orchestrated campaign from a high level to move money from Washington to Topeka.\631\--Henry Helgerson, D-Wichita. --------------------------------------------------------------------------- \631\ Dave Seaton, ``Local Demos say they felt need to repay state party: Legality of transfers questioned,'' Winfield Daily Courier, Oct. 9, 1997 at 39 (exhibit 38). One of the more interesting episodes in the 1996 election cycle involved an apparently illegal conduit contribution scheme by the Democratic National Committee to funnel more than a third of a million dollars to the Kansas Democratic party.\632\ The motivating factor for this scheme appears to have been a Kansas statute that limited the amount of out-of- state non-Federal (soft) money that could legally be contributed to Kansas political parties.\633\ In order for the national party to contribute large amounts of soft money to influence the two Senate and four House races in 1996, the Kansas statute had to be circumvented. This resulted in a particularly clever--but relatively transparent--effort to funnel money to the State Democratic party through a number of State political parties, Kansas County parties, and individual Kansas legislators. According to then-DNC General Counsel Joseph Sandler, ``[p]robably people from the White House would have been involved[.]'' \634\ --------------------------------------------------------------------------- \632\ The chart at the end of this section provides a one-page overview of the DNC's conduit contribution scheme. \633\ Kan Stat. Ann. Sec. 25-4153 (1999). \634\ Transcript of deposition of Joseph E. Sandler, former general counsel, Democratic National Committee, by Committee on Government Reform at 150 (May 14, 1998) (deposition on file with committee). Sandler also indicates that ``Harold Ickes, Doug Sosnik, Karen Hancox would have reviewed the budget.'' Id. --------------------------------------------------------------------------- Although these apparent violations of law \635\ by the DNC were reported in the media, and although the committee brought these violations to the attention of the Department of Justice, the Attorney General made no effort to look into the allegations. It is troubling that while Attorney General Reno's Justice Department conducted a 3 year investigation of contributions to Republicans in Kansas that originated with the Triad organization,\636\ she took no steps to look at the obvious pattern of conduit contributions that originated with the DNC and that ended up in Topeka. This uneven enforcement of the law provides further indication that Attorney General Reno should not have retained supervision of the investigation of her own political party. Her failure to conduct even a cursory investigation pursuant to laws currently on the books also provides support to political efforts to make campaign finance reform more of an issue than it might otherwise be. --------------------------------------------------------------------------- \635\ Under Federal law, the treasurer of a political committee is required to file reports that disclose ``the total amount of all disbursements, and all disbursements [including] . . . transfers to affiliated committees and, where the reporting committee is a political party committee, transfers to other political party committees, regardless of whether they are affiliated[.]'' See 2 U.S.C. Sec. 434(b)(4)(C). National party committees are further required under 11 CFR 104.9(e) to ``report in a memo Schedule B each transfer from their non-federal account(s) to the non-federal account(s) of a state or local party committee.'' In other words, non-Federal or ``soft'' money is clearly covered by the Federal regulations governing disclosure. Also, 18 U.S.C. Sec. 1001 prohibits false reports to the Federal Election Commission. \636\ The committee was provided a list of Justice Department campaign finance cases. As of the date of the list, June 4, 1999, the Triad investigation was listed as ``ongoing,'' even though there appears to be no serious suggestion that the Triad organization did anything illegal with respect to Kansas political contributions. The Justice Department list contains no reference to the DNC scheme to funnel soft money to Kansas, and the witnesses interviewed by this committee had not been contacted by the Justice Department at the time of their interview. See listing of Task Force cases (June 4, 1999) (exhibit 14). --------------------------------------------------------------------------- The decision by the Justice Department not to investigate the Kansas matter is particularly troubling because a line appears to have been drawn by the Attorney General and her staff: conduit schemes involving the likes of Charlie Trie, John Huang and Johnny Chung were to be investigated, but a conduit scheme involving the Democratic party was to be ignored. In many respects, one would think that a scheme to circumvent campaign financing laws by one of the two major political parties would be accorded at least as much--if not more--importance than efforts by individuals who might be acting at their own behest. The Justice Department's decision is even more curious because the individual who appeared to be the DNC's liaison in Kansas came to Washington immediately after the 1996 election and was given a job on the staff of Democratic Senate Minority Leader Tom Daschle.\637\ --------------------------------------------------------------------------- \637\ The Justice Department appears to have provided great deference to Senator Daschle. Not only did they avoid investigating the Kansas matter when it was clear that a member of his staff would need to be questioned, they also avoided referring to the conduit contributions made to him in the Charlie Trie indictment. There appeared to be no rationale for the omission of these particular contributions. --------------------------------------------------------------------------- 1. The Elements of the Conduit Contribution Scheme In a 2 month period prior to the 1996 election, the Kansas Democratic party or its affiliates received over a third of a million dollars in contributions that appear to have originated in Washington, DC, with the DNC or affiliated organizations. The contributions were derived from the following sources: <bullet> A total of $254,950 was received during the months of September and October from 17 State political parties. Each State gave either $14,990 or $15,000, the limit permitted according to Kansas statute. Prior to making these contributions, many of these States had an influx of funds from the national Democratic party in Washington, DC. <bullet> A total of $56,900 was contributed to the State Democratic party or its affiliates by Kansas County Democratic parties. On September 30, 1998, 17 county parties were sent $5,000 by the Democratic Congressional Campaign Committee in Washington, DC. Within a matter of days, 13 of these counties had passed along most of this money to the State party. <bullet> Kansas State Senate and House candidates also received money from the Democratic National Committee or its affiliates in Washington, DC and passed much of the money on to the State party. During the first week of August, for example, State Senate candidate Donald Biggs received a check for $1,000 from the Democratic Senatorial Campaign Committee in Washington, DC.\638\ Biggs later received a memorandum dated September 3, 1996, from the Office of the Senate Democratic Leader in Kansas, Jerry Karr. It stated: --------------------------------------------------------------------------- \638\ Letter from the Honorable J. Robert Kerrey, chairman, Democratic Senatorial Campaign Committee, to Donald Biggs, Kansas State Senate candidate (Aug. 1, 1996) (exhibit 39). The DSCC, in an effort to support state senate candidates, the Democratic Party, and their own candidates, will contribute $1,000 to each state Senate campaign our office designates. You may keep $200 but then must turn around and contribute $800 to the Senate Victory Fund, P.O. Box 1811, Topeka, KS 66601. * * * * * This money will help you (the $200) and it will help the Kansas Coordinated Campaign and all Democratic candidates as well.\639\ --------------------------------------------------------------------------- \639\ Memorandum from Tressie Hurley to Donald Biggs, Kansas State Senate candidate (Sept. 3, 1996) (exhibit 40) (emphasis added). LAs this instruction indicates, there was a very clear and specific intent to use Kansas citizens as conduits to funnel money from Washington, DC to the State party. a. Contributions from the DSCC Using States as Conduits Why did States--particularly traditionally campaign cash- poor States like Maine, New Hampshire, Idaho, Wyoming and South Dakota--make large political contributions to Kansas? Tino Monaldo, who in 1996 was a lawyer for the Kansas Democratic party, would have the public believe Kansas ``attracted these contributions from other DSPs [Democratic State Parties] because of the excellence of its coordinated campaign efforts, and the quality of its candidates.'' \640\ The more honest answer, however, was provided by then-DNC General Counsel: ``I'm aware that the DSCC requested State parties to make-- other State parties to make political contributions to the Kansas Democratic Party.'' \641\ Thus it was not the effectiveness of the Kansas Democratic party that drew unsolicited contributions; rather, it was on order from Washington, DC. --------------------------------------------------------------------------- \640\ Letter from Tino Monaldo to Carol Williams, executive director, Kansas Commission on Governmental Standards and Conduct (Nov. 13, 1997) (exhibit 41). \641\ Transcript of deposition of Joseph E. Sandler, former general counsel, Democratic National Committee, by Committee on Government Reform at 152 (May 14, 1998) (deposition on file with committee). --------------------------------------------------------------------------- The following chart provides an overview of which States contributed to Kansas, when they received funds from Washington, and when the money was sent on to Kansas: \642\ --------------------------------------------------------------------------- \642\ Appendix 2 provides supporting documentation for the charts that follow. ---------------------------------------------------------------------------------------------------------------- Amount sent by the Date State received money DSCC to States States responsible for sending $15,000 or from DSCC and date received near in time to Entity $14,990 to Kansas by Kansas the contribution to Kansas ---------------------------------------------------------------------------------------------------------------- Idaho.................................... 9/10/96 <r-arrow> 9/17/96... $64,464 DSCC Florida.................................. 9/29/96 <r-arrow> 9/27/96... 40,000 DSCC Nebraska................................. 10/8/96 <r-arrow> 9/30/96... 50,000 DSCC Arkansas................................. \643\ <r-arrow> 10/3/96..... Maine.................................... 10/2/96 <r-arrow> 10/4/96... 15,000 DSCC Colorado................................. \644\ <r-arrow> 10/4/96..... Georgia.................................. \645\ <r-arrow> 10/7/96..... Louisiana................................ \646\ <r-arrow> 10/16/96.... Alabama.................................. 10/15/96 <r-arrow> 10/16/96. 15,000 DSCC Wyoming.................................. 10/15/96 <r-arrow> 10/18/96. 15,000 DSCC South Carolina........................... \647\ <r-arrow> 10/18/96.... California............................... 10/18/96 <r-arrow> 10/18/96. 35,000 DSCC South Dakota............................. \648\ <r-arrow> 10/18/96.... New Hampshire............................ 10/17/96 <r-arrow> 10/21/96. 18,750 DSCC Minnesota................................ 10/23/96 <r-arrow> 10/25/96. 17,500 DSCC Michigan................................. 10/29/96 <r-arrow> 10/25/96. 16,500 DSCC Montana.................................. 10/25/96 <r-arrow> 10/30/96. 25,000 DSCC ---------------------------------------------------------------------------------------------------------------- As seems fairly clear from the above chart, it would be very surprising indeed if the contributions to Kansas were not coordinated. It takes a significant suspension of credulity to conclude that 17 States suddenly took it upon themselves to make large contributions to Kansas. --------------------------------------------------------------------------- \643\ Arkansas reporting requirements are such that this information was not recorded. \644\ The committee was unable to obtain information for Colorado filings after June 28, 1996. \645\ The committee was unable to obtain information for Georgia filings after May 9, 1996. \646\ There were numerous large donations from the DNC during the relevant time period. \647\ Records show that South Carolina received only $1,140 from the DNC in 1996. \648\ South Dakota's records provided no dates for contributions received from the DNC. --------------------------------------------------------------------------- Furthermore, there are other indications that these contributions were unusual. For example, the Maine Democratic party amended an earlier financial disclosure report required by Maine and communicated the following to the State Commission on Government Ethics: ``The committee mistakenly did not report a contribution to the Kansas Democratic party. The disbursement was made from an account that is normally inactive. In fact, this was the only disbursement from the account this year.'' \649\ --------------------------------------------------------------------------- \649\ Letter from Kevin J. Mattson, executive director, the Maine Democratic party, to Marilyn Canavan, Commission on Governmental Ethics (Nov. 4, 1996) (exhibit 42). --------------------------------------------------------------------------- b. Contributions from the DCCC Using Kansas Counties as Conduits Seventeen county parties were sent $5,000 by the Democratic Congressional Campaign Committee (DCCC) on September 31, 1996. Within days, 13 of the recipients made substantial contributions to the Kansas Democratic party. Most of these contributions were for the same amount. This is remarkable, given that the average total annual receipt for the 13 counties was $19,816. The following chart provides an overview of which Kansas counties received contributions from Washington, and what they did with the money: ---------------------------------------------------------------------------------------------------------------- Total county receipts for 1996 & percentage of Amount sent Date sent income derived from the County * to State to State DCCC party party -------------------------- Receipts Percentage ---------------------------------------------------------------------------------------------------------------- Cowley..................................................... $4,750 10/8/96 $6,001 83 Douglas.................................................... $4,500 10/7/96 $28,081 17 Ellis...................................................... $4,500 10/4/96 $18,387.27 27 Harvey..................................................... $4,500 10/13/96 $7,463 70 Leavenworth................................................ $4,500 10/9/96 $7,322 68 Marshall................................................... $4,750 10/9/96 $5,590 89 Miami...................................................... $4,500 10/17/96 $5,500 91 Osage...................................................... $4,750 10/7/96 $5,200.98 96 Reno....................................................... $4,500 10/3/96 $18,435 27 Riley...................................................... $4,500 10/2/96 $10,216 49 Sedgwick................................................... $4,250 10/4/96 $98,208 5 Shawnee.................................................... $4,500 10/3/96 $34,182 14 Wyandotte.................................................. $2,400 10/30/96 $13,031 38 ---------------------------------------------------------------------------------------------------------------- * Thirteen county parties were sent $5,000 by the DCCC on September 31, 1996, and passed money on. It is interesting to note that at least one of the counties appears not to have even asked for money from Washington. When asked why the Democratic Congressional Campaign Committee contributed $5,000 to Sedgwick county, former chairman of the Sedgwick County Democratic Central Committee Jim Lawing answered: ``No we never solicited that gift . . . it never occurred to me or anybody else with the Sedgwick County Democratic Central Committee to go look for that source of funding at the national level.\650\ In fact, prior to the 1996 election, records indicate that county parties provided almost no money to the State party. In 1992, $1,924.88 was passed along to the State party by all county parties combined. In 1994, $1,200 was passed along. In 1996, $60,650 was passed from county parties to the State party. --------------------------------------------------------------------------- \650\ Transcript of deposition of Jim Lawing, former chairman, Sedgwick County Democratic Central Committee by Committee on Government Reform at 22-23 (Feb. 18, 1998) (deposition on file with committee). --------------------------------------------------------------------------- An invoice prepared by the Reno County Democratic Committee is illustrative of the close coordination between Washington and Kansas: 9-30-96 (Monday)--DCCC sends Reno County $5,000 \651\ --------------------------------------------------------------------------- \651\ Reno County Democratic Central Committee's disclosure forms of disbursements (schedule C) (Aug. 10, 1996-Oct. 8, 1996) (exhibit 43). --------------------------------------------------------------------------- Date Unknown--$5,000 arrives 10-3-96 (Thursday)--KCCC bills Reno County for $4,500 \652\ --------------------------------------------------------------------------- \652\ ``KCCC'' is the Kansas Coordinated Campaign Committee. See Invoice from Reno County Democratic Committee to KCCC (exhibit 44). 10-3-96 (Thursday)--Reno sends check to Kansas Dem. party for $4,500 \653\ --------------------------------------------------------------------------- \653\ Check from Reno County Democratic Central Committee to Kansas Democratic party (exhibit 45). Other Kansas Counties had so few financial transactions in 1996 that the DCCC contribution provided most of the county's annual revenue. For example, Osage County received a $5,000 check on September 30, 1996, and 7 days later sent $4,750 to the State party. Interestingly enough, Osage County revenue for the entire year--excluding the $5,000 from Washington--was $200.98. Miami County revenue for the entire year, excluding the $5,000 from Washington, was $500, and it passed $4,500 to the State party. But for the out-of-State benevolence, Marshall County revenue was only $590 for 1996, and Marshall County passed almost all of its windfall on to the State party. Although the DNC's then-General Counsel was aware that States were being asked to give money to Kansas, he was unaware of the arrangements with the counties. Indeed, in 1998 he testified ``that comes as a surprise to me even today.'' \654\ --------------------------------------------------------------------------- \654\ Transcript of deposition of Joseph E. Sandler, former general counsel, Democratic National Committee, by Committee on Government Reform at 155 (May 14, 1998) (deposition on file with committee). --------------------------------------------------------------------------- c. Contributions from Washington Using Kansas Citizens as Conduits In addition to the Memorandum from Tressie Hurley to Don Biggs that explains ``[y]ou may keep $200 but then must turn around and contribute $800 to the Senate Victory Fund,'' the committee obtained a document titled, ``Contribution Plan from DSCC in Washington.'' It states: ``The DSCC, in an effort to support state senate candidates, the Democratic Party, and their own candidates, will contribute $500 to each state Senate campaign we designate. The campaign may keep $100 but then must turn around and contribute $400 to either the Kansas Coordinated Campaign or the Senate Victory Fund. . . . It will help the candidate ($100) but it will help the Kansas Coordinated Campaign and all Democratic candidates as well.'' \655\ --------------------------------------------------------------------------- \655\ Document entitled, ``Contribution Plan from DSCC in Washington--July 22, 1996'' (exhibit 46). --------------------------------------------------------------------------- The following chart details contributions received from Washington by State candidates and the amount they in turn forwarded to the State party: ---------------------------------------------------------------------------------------------------------------- Amount passed Received on Date received and date disbursed ---------------------------------------------------------------------------------------------------------------- Senate Candidate: Don Biggs................................. $1,000 $800 8/5/96 <r-arrow> 9/5/96 Glenn Braun............................... $1,000 $800 8/1/96 <r-arrow> 8/6/96 Micheline Burger.......................... $1,000 $800 8/5/96 <r-arrow> 8/29/96 Bill Campsey.............................. $1,000 $500 8/1/96 <r-arrow> 8/5/96 Dana Crietz............................... $1,000 $800 8/8/96 <r-arrow> 8/8/96 Larry Daniels............................. $1,000 $800 8/1/96 <r-arrow> 8/9/96 Diana Dierks.............................. $1,000 $800 8/6/96 <r-arrow> 8/6/96 Christine Downey.......................... $1,000 $800 8/5/96 <r-arrow> 8/20/96 Paul Feliciano............................ $1,000 $800 8/3/96 <r-arrow> 8/12/96 Wade Garrett.............................. $1,000 $800 8/6/96 <r-arrow> 8/9/96 Rip Gooch................................. $1,000 $800 7/30/96 <r-arrow> 9/11/96 Greta Goodwin............................. $1,000 $800 8/6/96 <r-arrow> 8/9/96 Richard Hazell............................ $1,000 $800 8/1/96 <r-arrow> 8/22/96 Anthony Hensley........................... $1,000 $800 8/20/96 <r-arrow> 9/24/96 Gerald Karr............................... $1,000 $800 8/6/96 <r-arrow> 8/13/96 Janis Lee................................. $1,000 $800 8/1/96 <r-arrow> 8/13/96 Janice McIntyre........................... $1,000 $800 8/30/96 <r-arrow> 8/5/96 Marge Petty............................... $1,000 $800 8/1/96 <r-arrow> 8/6/96 Pat Huggins Pettey........................ $1,000 $800 8/5/96 <r-arrow> 8/7/96 John Sears................................ $1,000 $800 8/1/96 <r-arrow> 9/1/96 Chris Steineger........................... $1,000 $800 8/12/96 <r-arrow> 8/12/96 Arthur Tannahill.......................... $1,000 $800 8/1/96 <r-arrow> 8/5/96 Doug Walker............................... $1,000 $800 8/1/96 <r-arrow> 8/9/96 Allan White............................... $1,000 $800 8/1/96 <r-arrow> 9/8/96 Sherman Jones (In his Schedule C $1,000 $800 8/5/96 <r-arrow> 8/5/96 Expenditures and Disbursements, it is clear that Jones gave the money on the day he received it. He also sent the money to the Kansas Senate Victory Fund, care of the ``DSCC.'' The address is Topeka, but it is strange that DSCC is mentioned.). ----------------------------------------------------------------- Total Senate............................ $25,000 $19,700 ================================================================= House Candidate: Judy Showalter............................ $500 $400 8/7/96 <r-arrow> 8/9/96 Joe Shriver............................... $500 $250 8/6/96 <r-arrow> 10/16/96 Troy Findley.............................. $500 $400 8/5/96 <r-arrow> 8/14/96 Chris Gallaway............................ $500 $400 8/5/96 <r-arrow> 8/8/96 Jim Garner................................ $500 $250 8/6/96 <r-arrow> 8/8/96 Bob Grant................................. $500 $400 8/5/96 <r-arrow> 8/13/96 Jerry Henry............................... $500 $250 8/1/96 <r-arrow> 8/9/96 Tom Platis................................ $500 $250 8/5/96 <r-arrow> 8/20/96 Harry Stephens............................ $500 $375 8/6/96 <r-arrow> 8/20/96 Vince Wetta............................... $500 $500 8/1/96 <r-arrow> 8/14/96 ----------------------------------------------------------------- Total House............................. $5,000 $3,475 ================================================================= Total Senate and House.................. $30,000 $23,175 ---------------------------------------------------------------------------------------------------------------- One recipient of a check from Washington provided a rather odd answer to a relatively straightforward question. When asked: ``[i]s it fair to say that no one told you that your receipt of this money was conditioned on your sending part or all of it to the Kansas Democratic Party or an affiliate,'' State senate candidate Doug Walker replied: ``I'm not sure if the answer is yes or no.'' \656\ --------------------------------------------------------------------------- \656\ Transcript of deposition of Douglas Walker, former Kansas State Senator, by the Committee on Government Reform at 40 (Feb. 23, 1998) (deposition on file with committee). --------------------------------------------------------------------------- When State Representative Henry Helgerson was deposed by this committee, he indicated that his initial concern arose because ``I was asked to accept money and then pass it on.'' \657\ He testified: ``I was asked to receive the check and to give $400 prior to receiving the check. That occurred before I received it. And then I received the check shortly after that.'' \658\ When it was first suggested that he would receive money, and that he should pass it on after it arrived, Helgerson told the committee that he said to staff at the State legislature: ``I think that's illegal, because I helped write the campaign finance law a few years ago. And I said that it sounded to me like it violated state law.'' \659\ The concern over the legality of the contribution scheme was also expressed in a local Kansas newspaper: --------------------------------------------------------------------------- \657\ Transcript of deposition of Henry Helgerson, member, Kansas State House, by the Committee on Government Reform at 22 (Feb. 19, 1998) (deposition on file with committee). \658\ Id. at 54-55. \659\ Id. at 22-23. Brad Russell, an Olathe attorney who also ran for a Kansas Senate seat in 1996, confirmed that he was asked to pass part of a DNC donation along for use by the state party. Russell said he was contacted by a staffer in the Kansas Senate Minority Leader's Office, who indicated he would be receiving a check from the Democratic Senatorial Campaign Committee. Russell said the staffer encouraged him to send 20 percent of the donation along to the state party. ``It sounded to me like that would be running afoul of the spirit, if not the out and out letter of the law,'' Russell said.\660\ --------------------------------------------------------------------------- \660\ Phil LaCerte, ``Democrat party chair doubts any role in fund- raising scheme,'' Johnson County Sun, Sept. 26, 1997, at 69 (exhibit 47). As Helgerson and Russell's statements make clear, there were contemporaneous concerns about the instructions to act as a conduit for money that originated in Washington and was intended to go to the State party. When all the contributions are considered together, it is clear that the DNC and its affiliates were attempting to avoid Federal disclosure requirements. 2. By Funneling Money to the State Party, the DNC in Washington Was Able to Benefit Statewide Candidates and Get More for Each Dollar than if it had Simply Contributed to Candidates Conduit contribution schemes are generally designed to circumvent disclosure requirements. The ultimate goals are usually to enable contributions in excess of those legally permitted, or to hide the true identity of the contributor. Often, these two goals coexist. In Kansas, State statute prohibited contributions of out-of-state soft money above certain levels. Therefore, a conduit scheme was necessary to allow any one donor to make sizable soft money contributions. The purpose of the Kansas conduit scheme appeared to be twofold: (1) when re-directed to the State party, the money could be used for statewide candidates; and (2) by effecting an economy of scale at the State level, more could be obtained for a lesser expenditure. a. The Money from Washington Benefited Statewide Candidates Unfortunately, most Kansas Democratic party officials would not cooperate with the committee's investigation. Therefore, it was difficult to obtain straight answers to questions about how money that originated in Washington was used. However, it appears that once the money was funneled to the State party, it was not used exclusively for the benefit of the original recipient. For example, the State disclosure of the Reno County Democratic Central Committee stated that it was contributing $4,500 to the State party for ``electoral targeting data, Voter data base and software survey research--Voter contact services GOTV.'' \661\ --------------------------------------------------------------------------- \661\ Reno County Democratic Central Committee's disclosure forms of receipts and disbursements (schedules A and C) (Aug. 10, 1996-Oct. 8, 1996) (exhibit 48). --------------------------------------------------------------------------- Another statewide Democratic party official provided an additional rationale for why it was important for the money from Washington to be redirected to the State party. He suggested: As you are aware, the Kansas Democratic Party through the KCCC is providing generic voter contact/GOTV activities on behalf of Democratic candidates all the way down the ticket. In addition we have provided field organizers and a state wide voter file.\662\ --------------------------------------------------------------------------- \662\ Memorandum from Tom Beal, Democratic Coordination Campaign, to Doug Johnston (Sept. 24, 1996) (exhibit 49). As this communication makes clear, if money sent to the county by the DNC in Washington was re-directed to the State party, the State party would be able to undertake initiatives that would be of benefit to candidates outside of the particular county that had initially received the money. It is interesting to follow the paper trail that accompanied some of the individual contributions. For example, on September 30, 1996, DCCC Chairman Martin Frost sent $5,000 to Sedgwick County and said that he was pleased to support ``your 1996 nonfederal general election activities in the state of Kansas.'' \663\ Two days after the check is dated, the County Chair thanked Representative Frost, remarking ``please let the members of the DCCC know how helpful the $5,000 contribution will be in getting our base of support to the polls.'' \664\ Four days after the DCCC check was dated in Washington, the Sedgwick County Democratic Central Committee sent a check for $4,250 to the Kansas Coordinated Campaign.\665\ The person who signed the letter is the same person who recognized that the money would go further if spent by the State party, as opposed to the county party. The only possible conclusion that follows from this tortured series of exchanges is that the conduit scheme had been set up to achieve something that would not have been legal if the money had been initially sent to its ultimate destination. --------------------------------------------------------------------------- \663\ Letter from the Honorable Martin Frost, chairman, Democratic Congressional Campaign Committee, to treasurer, Sedgwick County Democratic Committee (Sept. 30, 1996) (exhibit 50). \664\ Letter from Jim Lawing, county chair, Sedgwick County Democratic Central Committee, to the Honorable Martin Frost, chairman, Democratic Congressional Campaign Committee (Oct. 2, 1996) (exhibit 51). \665\ Letter from Jim Lawing, county chair, Sedgwick County Democratic Central Committee, to Tom Beal, Democratic Coordination Campaign (Oct. 4, 1996) (exhibit 52). --------------------------------------------------------------------------- b. The Kansas State Party Could Obtain a Greater Level of Services for the Same Expenditure than if Individual Counties or Candidates Spent the Money that They Received from Washington One Kansas county official provided an insight into why there was benefit attached to taking the money sent by Washington to counties and individuals and funneling it to the State party. He suggested that the State party would be able to take care of responsibilities for mailing campaign-related information, and ``do so on the state's mailing permit which apparently allowed for a little cheaper rate than we would get here.'' \666\ State party executives refused to cooperate with the committee, and therefore did not answer questions about the precise benefits derived from bundling smaller sums of money for use in larger spending campaigns. Nevertheless, it is reasonable to infer that the very type on conduct referenced by Mr. Lawing is in fact the type of conduct that did take place. --------------------------------------------------------------------------- \666\ Transcript of deposition of Jim Lawing, former chairman, Sedgwick County Democratic Central Committee by Committee on Government Reform at 30 (Feb. 18, 1998) (deposition on file with committee). There was also a suggestion that the ``State Committee would do all of the necessary printing . . . at its own expense'' Id. This, too, would permit an economy of scale unavailable without the subterfuge of the conduit contribution scheme. Kansas State Democratic Party--Contributions Originating with the Democratic National Committee or its Affiliates in Washington, DC ------------------------------------------------------------------------ Local candidates (29 candidates County parties (Seventeen for the Kansas State parties (Democratic county parties were sent Senate received parties in 17 states gave $5,000 on 9/30/98 by the $1,000 each. 41 to the Kansas Democratic DCCC. Thirteen sent the candidates for Party.) following amounts to the the Kansas House State party.) received $500 each.) ------------------------------------------------------------------------ Idaho: $15,000 Cowley: $4,750 Senate Florida: $15,000 Douglas: $4,500 24 Senate candidates sent $800 on. Nebraska: $14,990 Ellis: $4,500 1 Senate candidate sent $500 on. Arkansas: $15,000 Harvey: $4,500 Maine: $15,000 Leavenworth: $4,500 House Colorado: $14,990 Marshall: $4,750 10 House candidates sent a total of $3,475 to the State Dem. Party. Georgia: $15,000 Miami: $4,500 Louisiana: $15,000 Osage: $4,750 Alabama: $14,990 Reno: $4,500 Wyoming: $14,990 Riley: $4,500 South Carolina: $15,000 Sedgwick: $4,250 California: $14,990 Shawnee: $4,500 South Dakota: $15,000 Wyandotte: $2,400 New Hampshire: $15,000 Minnesota: $15,000 Michigan: $15,000 Montana: $15,000 ------------------------------------------------------------------------ Total: $254,950 Total: $56,900 Total: $23,175 ------------------------------------------------------------------------ Total = $335,025 ................. ------------------------------------------------------------------------ F. The Justice Department Failed To Investigate Leaks Harmful to the Campaign Fundraising Investigation The Justice Department's frequent and harmful leaks about the campaign fundraising investigation provided another clear sign of the investigation's failure. These leaks, which were often made at strategic times, greatly harmed the Justice Department's investigation, and strongly suggested that certain officials in the Justice Department did not want the investigation to succeed. The Attorney General has failed to investigate the vast majority of these leaks, and they have continued unabated, up to the present time. These leaks provide a clear example of why the Attorney General should have appointed an independent counsel--to remove the investigation from the politically biased officials at the Justice Department. 1. Leaks Regarding DNC Issue Ads The day after Justice Department lawyers interviewed President Clinton regarding his role in crafting DNC ``issue ads'' promoting his Presidency, a senior official in the Justice Department leaked information relating to that interview. Judging from the quote provided to the Washington Post, that senior official clearly gave the reporter the impression that it was unlikely that the Attorney General would appoint an independent counsel: ``Because this involves political speech, which clearly falls under the protection of the First Amendment, there is a relatively high threshold for determining what constitutes criminal behavior,'' said a senior Justice Department official. ``There are not a lot of mysteries surrounding how the DNC ads were produced and financed, but whether anything crossed that threshold is another matter.'' \667\ --------------------------------------------------------------------------- \667\ John F. Harris and Roberto Suro, ``Clinton: 1996 `Issue Ads' Passed Legal Test,'' the Washington Post, Nov. 10, 1998, at A6. The willingness of Justice Department staff to discuss ongoing investigations with the press should be contrasted to the Attorney General's repeated refusals to answer questions from this body--which is Constitutionally charged with overseeing the Justice Department. These types of leaks demonstrate that the Justice Department relies on the ``open case'' justification to keep damaging information from Congress, but casts that rationale aside when it wants to spread information favorable to the administration in the press. 2. Leaks Regarding the La Bella Memorandum In July 1998, shortly after Charles La Bella, the head of the Campaign Finance Task Force, gave the Attorney General his memorandum concluding that she was required by law to appoint an independent counsel, details of that memorandum were leaked to the press. Again, unnamed ``senior Justice Department officials'' released sensitive investigative materials to several newspapers: Government sources, even those speaking anonymously, declined to provide specifics on La Bella's report, which runs more than 100 pages. But one source who had read the report said it represents ``a fresh approach to everything he [La Bella] has seen'' and called for legal conclusions and steps that had not been advanced earlier.\668\ --------------------------------------------------------------------------- \668\ Ronald J. Ostrow, ``Report to Reno Urges Independent Counsel on Fund-Raising,'' Los Angeles Times, July 24, 1998, at A6. Officials familiar with Freeh's memo last winter and La Bella's current report said that La Bella's includes a much more extensive review of the evidence and makes a firmer conclusion that there are sufficient indications of wrongdoing by top officials to oblige Reno to seek an outside prosecutor. As with the Freeh memo, the basic argument is that top Democratic and White House officials conducted a systematic and deliberate effort to circumvent campaign finance laws setting limits on fund-raising and defining what constitutes a legal contribution.\669\ --------------------------------------------------------------------------- \669\ Roberto Suro and Michael Grunwald, ``Independent Probe of '96 Funds Urged; Reno Noncommittal on Campaign Report,'' the Washington Post, July 24, 1998, at A21. Another leak of the La Bella memorandum occurred in the pages of the Wall Street Journal. There, it was reported that the La Bella memorandum focused on potential wrongdoing by Harold --------------------------------------------------------------------------- Ickes: Charles La Bella's findings, presented in a lengthy memorandum to Ms. Reno, focus sharply on the fund- raising efforts of Harold Ickes, the former deputy White House chief of staff. They form the basis of Mr. La Bella's recommendation that Ms. Reno seek the appointment of an independent counsel.\670\ --------------------------------------------------------------------------- \670\ Brian Duffy, ``Campaign Probe Looked at Ickes, Says La Bella,'' the Wall Street Journal, Aug. 3, 1998. While the Attorney General apparently tolerated public release of details from the La Bella memorandum by her senior staff, for almost 2 years she refused to provide the same memorandum to Members of Congress charged with oversight of the Justice Department. 3. Leaks Regarding the Gore Independent Counsel Decision The Attorney General was also steadfast in refusing to comment on her decisionmaking process in concluding that an independent counsel was not necessary to investigate the fundraising scandal. However, her aides did not show similar reticence. Before the Attorney General reached a decision on appointing an independent counsel to investigate Vice President Gore's fundraising telephone calls, her aides were discussing her decisionmaking process with reporters, saying ``they believe the Attorney General will reject accusations that there is specific and credible evidence of criminal wrongdoing[.]'' \671\ These types of leaks again show that Department officials did not hesitate to spread information favorable to the administration in the press. --------------------------------------------------------------------------- \671\ Jerry Seper, ``No Outside Counsel Likely in Probe of Gore Campaign Calls,'' the Washington Times, Nov. 24, 1998, at A3. See also David Johnston, ``Reno's Aides Split on Merits of Need for Gore Prosecutor,'' the New York Times, Nov. 24, 1998, at A1. --------------------------------------------------------------------------- 4. Leaks Regarding the Huang Investigation Justice Department staff also leaked information regarding the investigation of former DNC Finance vice-chair and Presidential appointee John Huang. On October 2, 1998, the Washington Post reported that the Justice Department was no longer seeking to prosecute John Huang: Now, instead of pressuring Huang to say what he knows about White House officials in exchange for immunity from prosecution, federal prosecutors are bargaining to get his testimony against Maria Hsia, a California fundraiser already under indictment who played a minor though controversial role in 1996, according to lawyers close to the case. * * * * * And 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. As a result, attention has turned to the possibility that Huang might be able to bolster the endangered case against Hsia.\672\ --------------------------------------------------------------------------- \672\ Roberto Suro, ``Prosecutors' Approach to Huang Signals Shift in Campaign Probe,'' the Washington Post, Oct. 2, 1998, at A17. This leak must be contrasted with the Attorney General's refusal to produce subpoenaed documents to this committee because she feared that the members of the committee would publicly disclose a ``roadmap'' to the investigation. Justice Department staff, however, felt free to disclose the Department's investigative roadmap regarding John Huang. 5. Leaks Regarding Johnny Chung One of the most disturbing leaks to come from the Justice Department concerned the testimony of DNC fundraiser Johnny Chung. After Mr. Chung pled guilty to criminal charges and began cooperating with the Justice Department, details of his testimony were on the pages of the New York Times: A Democratic fund-raiser has told Federal investigators he funneled tens of thousands of dollars from a Chinese military officer to the Democrats during President Clinton's 1996 re-election campaign, according to lawyers and officials with knowledge of the Justice Department's campaign finance inquiry. The fund-raiser, Johnny Chung, told investigators that a large part of the nearly $100,000 he gave to Democratic causes in the summer of 1996--including $80,000 to the Democratic National Committee--came from China's People's Liberation Army through a Chinese lieutenant colonel and aerospace executive whose father was Gen. Liu Huaqing, the official and lawyers said. * * * * * A lawyer for Mr. Chung, Brian A. Sun, declined to comment on his client's conversations with investigators, citing his client's sealed plea agreement with the Justice Department. ``I'm shocked that sources at the Justice Department would attribute anything like that to my client.'' \673\ --------------------------------------------------------------------------- \673\ Jeff Gerth, ``Democrat Fund-Raiser Said to Detail China Tie,'' the New York Times, May 15, 1998, at A1. --------------------------------------------------------------------------- Similar leaks appeared in the Washington Post: Democratic fund-raiser Johnny Chung has told Justice Department investigators that a Chinese military officer who is an executive with a state-owned aerospace company gave him $300,000 to donate to the Democrats' 1996 campaign, according to federal officials[.] \674\ --------------------------------------------------------------------------- \674\ Roberto Suro and Bob Woodward, ``Chung Ties China Money to DNC,'' the Washington Post, May 16, 1998, at A1. These leaks proved extraordinarily harmful to Johnny Chung. First, they were used by certain members of the Committee on Government Reform to attack Chung, and undermine his credibility at the very time that he was offering evidence tying senior Chinese officials to efforts to influence United States elections. Second, and more importantly, these leaks led to threats to Chung's life. In May 1998, when these articles appeared, Chung was cooperating with the Justice Department investigation, and had recently been contacted by Robert Luu. Luu claimed to be an associate of Liu Chao-Ying, and suggested to Chung that if he refused to cooperate with the Justice Department, he and Liu would compensate Chung. Luu also subtly suggested that if Chung did cooperate with the Justice Department, Chung and his family could be in danger. Chung cooperated with the FBI in an effort to get a tape of Luu offering money in exchange for Chung's silence. The investigation was at its most delicate phase at the time the leaks appeared in the New York Times. Chung described the events that followed in his testimony before the committee: In the first week of May, I learned that the New York Times was doing a story that involved Liu Chao Ying and the $300,000. The FBI and I were very concerned that the news story would scare Mr. Luu off. My attorney and I tried to get the New York Times to kill the story. They refused. On the day before the story came out (May 15, 1998), I ended up going forward with a meeting with Luu and his attorney. I consulted with the FBI before I proceeded.\675\ --------------------------------------------------------------------------- \675\ ``Johnny Chung: Foreign Connections, Foreign Contributions,'' hearing Before the House Committee on Government Reform, 106th Cong. 266 (May 11, 1999) (statement of Johnny Chung). After the article appeared, though, Chung and the FBI were not able to get Luu on tape threatening Chung, and it appeared that Luu had grown more cautious, and tried to distance himself from his earlier statements to Chung. However, Chung made it clear that the leaks from the Justice Department posed a serious --------------------------------------------------------------------------- threat to him: Mr. Barr. Do you consider that your life was in danger in 1998 because of the leaked story that appeared in the New York Times? Mr. Chung. That is correct, and I am still looking out my back every day. Mr. Barr. Did you leak that information in any way, shape or form to the New York Times? Mr. Chung. No. I don't leak that information to the New York Times. Mr. Barr. And would it also be accurate that your attorneys didn't leak that information to the New York Times? Mr. Chung. We tried to stop them. * * * * * Mr. Barr. Well, we would like the Department of Justice to find that out. It would be very interesting to find out, one, if they are concerned about it, because this is a very damaging leak that endangered a very important witness, yourself; and it may very well have come from the Department of Justice. So we would be very interested in that, as I am sure you would be. Mr. Chung. Mr. Congressman, that night, I had to go to a meeting with those people. My attorney told me, don't go. Maybe you are in trouble, in danger. I talked to my wife, I talked to my attorney again, and I talked to the FBI. I want to go forward because I want the truth to come out.\676\ --------------------------------------------------------------------------- \676\ Id. at 319-20. The seriousness of this leak was apparent to the Justice Department as soon as it happened. However, it appears that the Justice Department has not undertaken any steps to determine where this information came from. Committee staff interviewed staff of the Justice Department Office of Professional Responsibility, who confirmed that as of October 27, 1999, this leak had not come under investigation by the Department.\677\ While most of the leaks from the Justice Department simply send the message that the Department is politically biased and not interested in a thorough investigation, this leak sent an even more dangerous message. This leak showed that someone involved in the Chung investigation thought that press coverage in the New York Times was more important than Chung's well-being, or the success of a significant sting operation. It is deeply disturbing that the Justice Department has not investigated this leak. --------------------------------------------------------------------------- \677\ In December 1998, and again in August 1999, the committee drew the attention of the Justice Department to many of the leaks discussed in this section of the report. Committee staff met with Justice Department staff on Oct. 27, 1999, to discuss the Justice Department leak investigations. In that meeting, the Justice Department confirmed that of all of the leaks brought to their attention, they had only investigated the leaks of the Freeh memo and the decisionmaking relating to John Huang. In addition, the Department disclosed a leak of information relating to Charlie Trie. --------------------------------------------------------------------------- 6. Leaks Regarding the December 15, 1995, White House Coffee Videotape In July 2000, the committee brought the December 15, 1995, White House coffee videotape to the attention of the Justice Department. The committee had subpoenaed the original White House videotape of the event, and with the superior audio quality of that tape, was able to confirm that on the tape Vice President Gore said ``we oughta, we oughta, we oughta show Mr. Riady the tapes, some of the ad tapes.'' In a letter dated July 18, 2000, the chairman asked the Attorney General to investigate these statements by the Vice President. A CNN article the following day captured the response of the Justice Department: ``a Justice Department source said it was unclear what was on the tape because of poor audio.'' \678\ --------------------------------------------------------------------------- \678\ ``Justice Says White House Coffee Tape Unclear; Hearings Scheduled Tuesday'' (published July 19, 2000) <http://www.cnn.com/2000/ ALLPOLITICS/stories/07/19/burton.gore/index.html>. --------------------------------------------------------------------------- This particular leak was troubling for two reasons. First, it constituted a comment on an ongoing investigation by a Justice Department staffer. When the committee called a number of Justice Department officials before the committee, and asked them questions about the tape, they refused to comment in any way. It is troubling that Justice Department staff would observe Departmental policy when called before Congress and presented with serious evidence, and then disregard that same policy when denigrating the evidence in the press. But even more telling, is that the leak makes the very point the committee was trying to impress upon the Justice Department. The committee possessed the original White House tape of the event, and only using that original tape could the Justice Department reach a justifiable conclusion about the contents of the tape. 7. Leaks Regarding the Vice President Gore Special Counsel Decision The most recent leak in the Justice Department's campaign fundraising investigation came in August 2000, when the Attorney General was considering whether to appoint a special counsel to investigate Vice President Gore. The day of the Attorney General's announcement, the New York Times reported that ``[o]ne Justice Department official said that Mr. Conrad was alone in his recommendation. `No other prosecutor in this matter thought that there should be a special counsel,' said the official, who spoke on the condition of anonymity.'' \679\ However, just hours later, the Attorney General came forward to state that the ``Justice Department official'' cited in the Times had been lying: ``today Bob Conrad has been tagged with being the only person in the Justice Department who thought that I should appoint a special counsel. Although I'm not going to get into who recommended what, I can tell you that that is not correct.'' \680\ --------------------------------------------------------------------------- \679\ Neil A. Lewis and Don Van Natta, Jr., ``Reno, Rejecting Aide's Recommendation, Declines to Name Counsel on Gore Fund-Raising,'' the New York Times, Aug. 23, 2000, at A19. \680\ News conference with Attorney General Janet Reno, Washington, DC, (Aug. 23, 2000). --------------------------------------------------------------------------- The false leak regarding Robert Conrad's recommendation follows the pattern of Justice Department leaks. Information was spread by Justice Department staff, in contravention of Department policy, to minimize the seriousness of the investigation and to benefit the Clinton-Gore administration. The Attorney General did take the unusual step of making it clear that the leak was untrue. However, there is no sign that the Justice Department has taken any steps to find the source of this leak. The leaks from the Justice Department's campaign fundraising investigation are harmful on many levels. First, they harm the Department's investigation. The leak of information about Johnny Chung endangered the investigation and Chung's life. The leak of information about John Huang provided him a signal that he was not a serious target of the Department's investigation. Second, the leaks have been made to minimize the investigation and support the Clinton administration. Recommendations for independent and special counsels have been trivialized, as has evidence of potential wrongdoing. Finally, these leaks have proven that the Justice Department cannot be trusted to carry out the campaign fundraising investigation. By keeping the investigation in the Department, where political appointees have had tight control over the investigation, the Attorney General has created an atmosphere where Department officials have the opportunity to undermine the case. By failing to investigate and punish the individuals responsible for the leaks, the Attorney General has sent the message that these kinds of leaks are permissible. III. The Justice Department's Political Interference with Congressional Oversight A. Failure To Comply With the Committee's Subpoena for the Freeh and La Bella Memoranda For 2\1/2\ years, the committee struggled to obtain copies of the Freeh and La Bella memoranda from the Justice Department. During that period of time, the committee issued four different subpoenas for the memos, in addition to a number of additional formal requests for the documents. Throughout the process, the Justice Department raised countless objections to complying with the committee's demands. The Justice Department's recalcitrance culminated in the committee's August 6, 1998, vote to hold the Attorney General in contempt of Congress. In May 2000, the Justice Department finally relented, and provided copies of the Freeh and La Bella memos, and a number of other memoranda relating to the Attorney General's independent counsel decisionmaking process, to the committee. The committee released those documents to the public a short time later, on June 6, 2000. When the committee subpoenaed the Freeh and La Bella memoranda, the Justice Department raised a number of different objections to complying with the subpoenas. First, the Department claimed that the committee's demand would harm the campaign fundraising investigation. Then it claimed that the committee's action would harm the effective functioning of the Justice Department. Finally, it claimed that there was no legal precedent for the committee's action. However, when the Justice Department finally turned the documents over to the committee, it was clear that the Justice Department's objections had been utterly false and baseless. Indeed, the fact that the Campaign Financing Task Force supervisor Robert Conrad later wrote a memorandum suggesting a special counsel to investigate whether the Vice President committed perjury, lays to rest the argument that honestly held opinion is ``chilled'' by congressional oversight.\681\ --------------------------------------------------------------------------- \681\ The Attorney General, in her opposition to disclosure of the Freeh and La Bella memoranda, fails to understand that the only recommendations chilled by oversight are dishonest or malicious recommendations. A review of honestly held opinions will never prevent anyone from acting in good faith in the future. --------------------------------------------------------------------------- The contents of the Freeh and La Bella memoranda were highly informative, and pointed out a number of shortcomings in the Task Force's investigation. However, almost as revealing as the memoranda was the way that the Justice Department handled the committee's demands for the memoranda. When the Justice Department was faced with a situation that was embarrassing and that pointed out the Attorney General's abysmal handling of the campaign fundraising investigation, it turned to mistruths, obfuscation, and outright obstruction of the committee's demands. 1. Why the Committee Needed the Freeh and La Bella Memoranda In December 1997, the committee learned from press reports that the Director of the FBI had drafted a memorandum to the Attorney General recommending the appointment of an independent counsel to investigate potential violations of law relating to the 1996 Democratic election campaign.\682\ Similarly, in July 1998, the committee learned from press reports that Charles La Bella, the Supervising Attorney of the Justice Department Campaign Financing Task Force, had recommended that the Attorney General appoint an independent counsel to lead the investigation.\683\ In both cases, it appeared that the investigators with the greatest knowledge of the campaign fundraising scandal had decided that the Justice Department could not conduct the investigation without a conflict of interest. --------------------------------------------------------------------------- \682\ See, e.g., David Johnston, ``F.B.I.'s Chief Tries to Influence Reno, Memo Argues for Appointment of Independent Prosecutor,'' N.Y. Times, Dec. 2, 1997, at A1. \683\ See, e.g., David Johnston, ``Report to Reno urges a Counsel Over Donations,'' N.Y. Times, July 23, 1998, at A1. --------------------------------------------------------------------------- The failure of the Attorney General to follow the advice of her advisors to appoint an independent counsel was a strange departure for the Attorney General. Indeed, she had appointed independent counsels for a number of cabinet officials, and had strongly supported the reauthorization of the Independent Counsel Act in 1994. At a hearing in 1994, the Attorney General stated: The Independent Counsel Act was designed to avoid even the appearance of impropriety in the consideration of allegations of misconduct by high-level Executive Branch officials and to prevent, as I have said, the actual or perceived conflicts of interest. The Act thus served as a vehicle to further the public's perception of fairness and thoroughness in such matters, and to avert even the most subtle influences that may appear in an investigation of highly placed Executive officials.\684\ --------------------------------------------------------------------------- \684\ ``S. 24, the Independent Counsel Reauthorization Act of 1993,'' hearing before the Senate Committee on Governmental Affairs, 103d Cong., 12 (1993). As the Attorney General correctly observed in 1994, the proper application of the Independent Counsel Act was crucial in assuring American citizens that allegations of wrongdoing by senior government officials were being investigated thoroughly and free of political bias. Yet, when the time came that the Attorney General was faced with allegations of criminal wrongdoing by the President, Vice President, and senior officials of her political party that went to the heart of the Nation's political process, she steadfastly refused to appoint an independent investigator. Fueling the committee's concern that the Justice Department simply was not able to investigate the President, Vice President, and senior DNC officials were the Justice Department's numerous fumbles and failures in the investigation by that point. By December 1997, the time that word of Director Freeh's memorandum first leaked to the press, the Justice Department had already began to lose control of its investigation: <bullet> The first lead prosecutor in charge of the investigation, Laura Ingersoll, had to be removed by Attorney General Reno, and replaced with Charles La Bella. <bullet> The White House delayed the production of a number of records to the Justice Department, including crucial videotapes of Presidential fundraising events. In addition, the White House often preceded document productions with Friday night ``document dumps'' to the media. <bullet> Specific and credible allegations of criminal wrongdoing had already been made against senior DNC and administration officials, and yet, no independent counsel had been appointed, and few indictments had been brought. In addition, a number of other problems had developed inside the investigation, and had not yet become known to the outside world. For example, at the beginning of the investigation, Lee Radek, who was then in charge of the investigation, told William Esposito, a senior FBI official, that he felt ``that there was a lot of pressure on him, and the Attorney General's job could hang in the balance based on the decision that he would make.'' \685\ Several months later, FBI agents discovered Charlie Trie's employees destroying documents responsive to congressional and Justice Department subpoenas. They asked for a search warrant to stop the destruction, and to determine what documents Trie had in his possession that he had not yet turned over. Laura Ingersoll, the head of the Task Force, refused to let the Task Force agents get the search warrant, claiming that they did not have adequate probable cause. Also, by December 1997, despite the fact that the fundraising investigation had been underway for over a year, the Justice Department had failed to subpoena critical documents from the White House, including documents relating to Maria Hsia. --------------------------------------------------------------------------- \685\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the House Committee on Government Reform, 106th Cong., 39 (2000) (preliminary transcript). --------------------------------------------------------------------------- By the time that word of Charles La Bella's recommendation leaked in July 1998, the committee's skepticism of the Justice Department investigation had grown. Despite 19 months of investigation, the Justice Department still had not taken any significant action against the foreign kingpins of the fundraising scandal, like James Riady or Ng Lap Seng. Similarly, the Task Force had failed to take any action against officials in the administration and DNC who had made the scandal possible, like Harold Ickes, Richard Sullivan, or David Mercer. Rather, the Task Force had brought charges only against the low-level fundraisers who had solicited much of the illegal money, like Charlie Trie, John Huang, and Maria Hsia. Accordingly, when the committee demanded the Freeh and La Bella memoranda, it was attempting to discover the reasons why the Attorney General was failing to trigger the Independent Counsel Act, and whether the inherent conflict of the Attorney General's investigation of the President, Vice President, and her own political party, had adversely impacted even-handed enforcement of the law. In each case, it appeared to the committee that there was significant cause to trigger the Act, and that the Attorney General had not explained her failure to do so. Moreover, it appeared at the time that the failure of the Attorney General to trigger the Act was causing significant, irreversible harm to the investigation. 2. The Committee's December 1997 Subpoena for the Freeh Memorandum On December 2, 1997, press reports emerged indicating that FBI Director Louis Freeh had drafted a memorandum to the Attorney General asking her to appoint an independent counsel to conduct the campaign fundraising investigation.\686\ The reports indicated that Director Freeh believed that the Justice Department had a political conflict of interest which prohibited it from conducting an investigation of the Clinton administration.\687\ That same day, the committee scheduled a hearing into the matter, and sent Director Freeh a letter requesting him to produce his memorandum to the committee by December 4, 1997.\688\ On December 4, 1997, Attorney General Reno wrote to the chairman, explaining why she would not comply with the chairman's request. In her letter, the Attorney General identified two reasons for her refusal to comply with the chairman's request: first, that longstanding Justice Department policy prohibited the Department from sharing with Congress deliberative material relating to open criminal cases; and second, that to provide this kind of deliberative material to Congress would chill Justice Department personnel from providing their frank advice to the Attorney General in future investigations.\689\ --------------------------------------------------------------------------- \686\ David Johnston, ``F.B.I.'s Chief Tries to Influence Reno, Memo Argues for Appointment of Independent Prosecutor,'' N.Y. Times, Dec. 2, 1997, at A1. \687\ Id. \688\ Letter from Dan Burton, chairman, Committee on Government Reform and Oversight, to Louis Freeh, Director, Federal Bureau of Investigation (Dec. 2, 1997) (all committee correspondence with and subpoenas to the Justice Department are printed in the appendix accompanying this report). \689\ Letter from Janet Reno, Attorney General, to Dan Burton, chairman, Committee on Government Reform and Oversight 1-2 (Dec. 4, 1997). --------------------------------------------------------------------------- As the Attorney General refused to produce the memorandum voluntarily, on December 5, 1997, Chairman Burton issued a subpoena to the Justice Department, requiring the production of the Freeh memorandum.\690\ In a letter accompanying the subpoena, Chairman Burton pointed out that it was critical to the committee's oversight responsibility to review the Freeh memorandum.\691\ He also pointed out that the committee's demand was consistent with a number of subpoenas and requests issued by congressional committees over the past decade.\692\ In those cases, the Justice Department complied with congressional requests. --------------------------------------------------------------------------- \690\ Subpoena duces tecum issued by the Committee on Government Reform and Oversight (Dec. 5, 1997). \691\ Letter from Dan Burton, chairman, Committee on Government Reform and Oversight, to Janet Reno, Attorney General 1 (Dec. 5, 1997). \692\ Id. at 2. --------------------------------------------------------------------------- On December 8, 1997, Attorney General Reno and Director Freeh responded to the subpoena, again refusing to comply. The Attorney General and Director Freeh reiterated the two reasons that Ms. Reno gave for refusing to comply in her December 4, 1997, letter.\693\ In addition, they enunciated several new reasons for refusing to comply: first, that public and judicial confidence in the Department's investigation would be undermined by congressional intrusion into the investigative process; second, that disclosure of the memorandum would provide a ``road map'' of the Department's investigation; and third, that the reputations of individuals mentioned in the memorandum could be damaged by the disclosure of the memorandum.\694\ In addition, Attorney General Reno and Director Freeh claimed that the precedents for the committee's action, which had been cited in the chairman's letter of December 5, 1997, were inapplicable to this case. --------------------------------------------------------------------------- \693\ Letter from Janet Reno, Attorney General, and Louis Freeh, Director, Federal Bureau of Investigation, to Dan Burton, chairman, Committee on Government Reform and Oversight (Dec. 8, 1997). \694\ Id. at 1-2. --------------------------------------------------------------------------- The committee accepted at face value a number of the arguments that had been forwarded by the Justice Department. The committee hoped that the Attorney General was operating in good faith when she made these points, and that she was not using these arguments simply as pretext to avoid compliance with the committee's subpoena. Accordingly, the committee sought to reach an accommodation with the Justice Department to avoid enforcement of the committee's subpoena. Such an accommodation was reached in December 1997, when the Department agreed to allow Chairman Burton, Congressman Waxman, and three committee staff to review a heavily-redacted copy of the Freeh memorandum. The small portion of the memo that the chairman was allowed to review confirmed the committee's view that the law required the Attorney General to appoint an independent counsel to investigate the campaign fundraising scandal. 3. The Committee's July 1998 Subpoena for the La Bella Memorandum On July 23, 1998, a number of newspapers reported that the supervising attorney of the Campaign Financing Task Force, Charles La Bella, had drafted a report to the Attorney General recommending that she appoint an independent counsel to take over the investigation.\695\ According to these press reports, like Director Freeh, Mr. La Bella had concluded that the law required the appointment of an independent counsel, both because of the high-level administration officials who were being investigated, as well as the conflict of interest that the Attorney General had in conducting the investigation. --------------------------------------------------------------------------- \695\ David Johnston, ``Report to Reno urges a Counsel Over Donations,'' N.Y. Times, July 23, 1998, at A1. --------------------------------------------------------------------------- That same day, July 23, 1998, Chairman Burton sent a formal request to the Attorney General, asking her to produce to the committee both the Freeh and La Bella memoranda.\696\ The following day, committee staff were informed by telephone that the Justice Department would not comply with the chairman's request. Accordingly, on July 24, 1998, the chairman issued a subpoena to the Justice Department, requiring the production of the Freeh and La Bella memoranda.\697\ On July 28, 1998, Attorney General Reno and Director Freeh wrote to the chairman, informing him that they would not comply with the committee's subpoena.\698\ In the letter, the Attorney General and the Director repeated many of the arguments made when they refused to comply with the committee's subpoena for the Freeh memorandum in December 1997. The Attorney General and Director laid out five arguments against compliance with the committee's subpoena: (1) that longstanding Justice Department policy prohibited the Department from sharing open law enforcement files with Congress; (2) that disclosure of the memoranda could provide a ``road map'' of the Department's investigation; (3) the reputations of individuals mentioned in the memoranda could be harmed by public disclosure of the documents; (4) that disclosure of the memoranda would create the perception that Congress was putting political pressure on the Justice Department, and consequently, would undermine public confidence in the results of the investigation; and (5) the memoranda reflected the personal view of their authors, and the public disclosure of the memoranda could create a ``chilling effect'' on candid advice in the future.\699\ --------------------------------------------------------------------------- \696\ Letter from Dan Burton, chairman, Committee on Government Reform and Oversight, to Janet Reno, Attorney General 1 (July 23, 1998). \697\ Subpoena duces tecum issued by the Committee on Government Reform and Oversight (July 24, 1998). \698\ Letter from Janet Reno, Attorney General, and Louis Freeh, Director, Federal Bureau of Investigation, to Dan Burton, chairman, Committee on Government Reform and Oversight 1 (July 28, 1998). \699\ Id. at 1-3. --------------------------------------------------------------------------- The chairman responded on August 3, 1998, to inform the Attorney General that he would not accept her explanation, and would move to enforce the committee's subpoena.\700\ In this letter, and throughout his correspondence with the Justice Department on this matter, the chairman explained why the objections raised by the Department had no merit: --------------------------------------------------------------------------- \700\ Letter from Dan Burton, chairman, Committee on Government Reform and Oversight, to Janet Reno, Attorney General (Aug. 3, 1998). <bullet> First, the ``longstanding policy'' of refusing to share open law enforcement files with Congress, referred to by Attorney General Reno, was never intended to be used as a way of refusing to comply with a congressional subpoena. Rather, the only valid basis for refusing to comply with the committee's subpoena would be to cite executive privilege, or some other constitutional privilege. The committee provided the Attorney General with a number of precedents for the committee's action, where Congress obtained records relating to open Justice Department cases.\701\ --------------------------------------------------------------------------- \701\ Id. at 3-4. <bullet> Second, the Attorney General's claim that the memoranda provided a ``road map'' that would harm the Task Force's investigation was misleading. Much of the content of the memoranda had already been leaked to the press. In addition, the facts discussed in the memoranda were all publicly known through the investigations conducted by the Government Reform Committee and the Senate Committee on Governmental --------------------------------------------------------------------------- Affairs. <bullet> Third, the complaint that the reputations of innocent persons could be harmed by disclosure of the memoranda was similarly hollow. The vast majority of individuals discussed in the memoranda were individuals who had been discussed extensively in the public record, been deposed, or testified at public hearings. <bullet> Fourth, the Attorney General's complaint that the disclosure of the memoranda would create the impression that Congress was placing political pressure on the Justice Department to prosecute certain matters was completely untenable. In the summer of 1998, there was already a widespread perception that the Attorney General was refusing to investigate certain matters because of her political bias. This committee was simply calling on the Attorney General to appoint an independent counsel, not to indict certain individuals. It is a testament to the doublespeak of this Attorney General that she can claim to be acting in an apolitical and principled fashion by conducting an investigation of her boss and political party, and that it would be ``politically motivated'' if she turned the investigation over to an independent counsel. <bullet> Finally, the Attorney General's claims that the release of the memoranda would create a chilling effect was similarly baseless. As previously noted, many of the memoranda's conclusions had already been shared with the press by Justice Department personnel. Despite the overwhelming weight of the committee's arguments, the Attorney General refused to comply with the committee's subpoena. Accordingly, the chairman scheduled a vote on a report citing the Attorney General for contempt of Congress. The members of the committee were subjected to an intensive lobbying campaign by the Justice Department to vote against the report. Two members of the committee were even invited by President Clinton to attend a ceremony at the White House at the time that the report was scheduled for a vote. Despite the lobbying campaign, the committee's Republican members voted unanimously in favor of the report. On August 6, 1998, the Attorney General was cited for contempt of Congress.\702\ However, the contempt report was not taken up on the House floor prior to the end of the 105th Congress. --------------------------------------------------------------------------- \702\ See H. Rept. No. 105-728 (1998). --------------------------------------------------------------------------- 4. The Committee's October 1999 Request to Review the Freeh and La Bella Memoranda Despite the committee's contempt vote, the Justice Department still made no effort to accommodate the committee's interests. Committee staff were allowed only several opportunities to review heavily-redacted copies of the lengthy memoranda. In the summer of 1999, a new ruling from the Court of Appeals for the District of Columbia Circuit narrowed an earlier interpretation of Rule 6(e) of the Federal Rules of Criminal Procedure.\703\ This new ruling cleared the way for the Justice Department to share a great deal of information with the committee that was previously thought to be covered by Federal grand jury secrecy rules. Accordingly, on September 17, 1999, committee staff asked Justice Department staff to make the Freeh and La Bella memoranda available for review by committee staff, in light of the new 6(e) ruling.\704\ By October 12, 1999, the Justice Department had still failed to reply to the committee's request. On October 12, Chairman Burton wrote to the Attorney General and formally requested that she make the memoranda available for review in their less- redacted format.\705\ --------------------------------------------------------------------------- \703\ Rule 6(e) establishes the secrecy of grand jury proceedings. \704\ See letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General 3 (Oct. 12, 1999). The request to review the memoranda was made by the committee's chief counsel, James C. Wilson, to Craig Iscoe, Associate Deputy Attorney General, at the conclusion of a staff interview of Lee Radek. \705\ Id. --------------------------------------------------------------------------- The Justice Department never responded to the chairman's October 12, 1999, request to provide the memoranda for the committee's review in the less-redacted format. On March 21, 2000, in a letter responding to a later subpoena for the memoranda, the Attorney General stated ``as a result of the Court decision, a large portion of the previously redacted information was no longer subject to redaction. We advised the Committee staff last fall that the memorandum with reduced redactions was available for review.'' \706\ The Attorney General's statement was patently false. At no time in 1999 did Justice Department personnel make the Freeh or La Bella memoranda available for the committee's review.\707\ The statement in the Attorney General's letter is typical of the deceptive, self-serving statements made by the Justice Department throughout the debate on the Freeh and La Bella memoranda. --------------------------------------------------------------------------- \706\ Letter from Janet Reno, Attorney General, to Dan Burton, chairman, Committee on Government Reform 3 (Mar. 21, 2000). \707\ If such an offer had been made, the committee would have accepted the offer, as it accepted the offer when it was made in March 2000. --------------------------------------------------------------------------- 5. The Committee's March 2000 Subpoena for the Freeh and La Bella Memoranda On March 10, 2000, the Los Angeles Times published an article on the La Bella memorandum which included extensive quotes from the memorandum.\708\ The Los Angeles Times apparently obtained a copy of the memoranda, despite the fact that it had never been provided to the committee, which had subpoenaed it almost 2 years earlier. Therefore, on March 10, 2000, the committee subpoenaed the Freeh and La Bella memoranda, as well as all other Justice Department memoranda responding to the Freeh and La Bella memoranda.\709\ In a letter accompanying the subpoena, the chairman noted that the leak of the La Bella memorandum undermined all of the arguments that the Attorney General had made to the committee in the preceding year and a half.\710\ The Attorney General had argued that the release of the memoranda would give the targets of the investigation a ``road map'' of the prosecutors' plans; she said that the release of the documents would create a ``chilling effect'' on her senior advisors; and she stated that the memoranda were so sensitive that she could not even let all of the members of the committee look at them. However, while she was using these arguments to avoid complying with a lawful subpoena, she was careless enough to let her staff leak the La Bella memorandum to the Los Angeles Times. Given the fact that the entire memorandum was in the possession of the Los Angeles Times, and that large portions of it had been reported, the chairman again asked the Attorney General to now comply with the subpoena by March 14, 2000. --------------------------------------------------------------------------- \708\ William C. Rempel and Alan C. Miller, ``Funds Probe Unfairly Spared White House, '98 Report Says; Donations: Revelations from Long- Sealed Report Show Internal Dissension on Reno's Refusal to Appoint Counsel,'' L.A. Times, Mar. 10, 2000, A1. \709\ Subpoena duces tecum issued by the Committee on Government Reform (Mar. 10, 2000). \710\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Mar. 10, 2000). --------------------------------------------------------------------------- Amazingly, the Attorney General still refused to comply. In a letter dated March 21, 2000, she recited many of the arguments that she made in previous letters to the committee.\711\ She also acknowledged that the Justice Department had leaked the La Bella memorandum to the Los Angeles Times: --------------------------------------------------------------------------- \711\ Letter from Janet Reno, Attorney General, to Dan Burton, chairman, Committee on Government Reform (Mar. 21, 2000). There have apparently been disclosures from one or more memoranda to the media. It is not clear whether the entire memoranda or only portions were disclosed to the media, or whether additional materials were disclosed as well. In any event, whatever disclosure was made was wholly unauthorized.\712\ --------------------------------------------------------------------------- \712\ Id. at 2. While it was comforting to know that the Attorney General did not authorize the release of the La Bella memorandum to the press, the endless parade of leaks of information relating to the campaign fundraising investigation was disturbing. By March 2000, the chairman had repeatedly brought the Attorney General's attention to the fact that her subordinates were leaking highly sensitive information relating to the investigation. Yet, she apparently took no action to identify and discipline these individuals. Nor did she understand the appearance problems derived from her refusal to endorse an independent investigation while her subordinates were undermining the Department's own efforts. Despite the leak of the memorandum to the press, the Attorney General still refused to provide the memorandum to the committee. She did offer to allow committee staff to review the Freeh and La Bella memoranda, in their less-redacted form.\713\ However, as a condition of that review, staff were not allowed to take any notes. The Attorney General's conditions were somewhat troubling, given that she had allowed the staff of another committee to review the memoranda while taking notes.\714\ In addition, the Attorney General's condition rendered a review of the memoranda difficult, given the fact that the major memoranda (including the reply memorandum of Lee Radek, the response of Charles La Bella, and the summary memorandum of James Robinson) totaled over 180 pages.\715\ --------------------------------------------------------------------------- \713\ Id. at 3-4. \714\ Committee staff learned that staff of the House Judiciary Committee were allowed to take extensive notes while reviewing the La Bella memorandum. \715\ On May 3, 2000, the committee issued a new subpoena to the Justice Department for all ``formal memoranda that were sent to the Attorney General or senior Justice Department officials in connection with decisions involving the application of the Independent Counsel Act to campaign finance-related matters, including memos that address the Independent Counsel Act-related aspects of the Freeh and La Bella memoranda.'' Subpoena duces tecum issued by the Committee on Government Reform (May 3, 2000). The Justice Department's production of the various campaign fundraising memoranda was formally made in response to this subpoena. --------------------------------------------------------------------------- a. The Committee's Attempts to Reach Agreement with the Justice Department Despite the Attorney General's unsatisfactory response to the committee's March 10 subpoena, committee staff began to review the responsive memoranda on March 31, 2000. Over the next 2 months, committee staff reviewed the memoranda a number of times. During this period, the committee also negotiated with the Justice Department regarding the Department's refusal to comply with the committee's subpoena. The Department repeatedly asked the committee to agree to a ``protocol'' under which the committee would receive and handle the subpoenaed memoranda. While the Department was never specific about how it wanted the committee to handle the memoranda, it identified two major concerns: (1) protecting the identity of line attorneys mentioned in the memoranda; and (2) ``keeping internal, deliberative documents out of the campaign season.'' \716\ --------------------------------------------------------------------------- \716\ This statement was made initially by John Tanner of the Justice Department's Office of Legislative Affairs at a meeting on May 16, 2000, between Mr. Tanner, Alan Gershel, Deputy Assistant Attorney General, James C. Wilson, majority chief counsel, Committee on Government Reform, David A. Kass, majority deputy counsel, Committee on Government Reform, Phil Schiliro, minority staff director, Committee on Government Reform, and Phil Barnett, minority chief counsel, Committee on Government Reform. --------------------------------------------------------------------------- The Justice Department's candor on this point was refreshing, but it revealed the central motive in the Justice Department's actions throughout the debate over the Freeh and La Bella memoranda--protecting the Clinton administration from political embarrassment. It is illustrative that at the end of the day, after all of the posturing, the Justice Department identified only these two concerns when turning the documents over to the committee. No longer did the Department raise arguments about ``chilling effects'' or ``prosecutorial roadmaps.'' Rather, now it was focused on the negative political impact that the release of the documents would have on the Democratic party. Indeed, the Freeh and La Bella memoranda overwhelming discuss potentially illegal conduct by Democratic officials and donors.\717\ Therefore, when the Justice Department stated that it wanted to keep these documents out of the campaign season, it was saying that it did not want documents embarrassing to Democrats to come out during the campaign. --------------------------------------------------------------------------- \717\ Indeed, approximately 65 pages of the La Bella memorandum are devoted to discussions of Democrat wrongdoing, while approximately 2 pages are devoted to Republican wrongdoing. --------------------------------------------------------------------------- b. The Justice Department's Production of the Memoranda to the Committee Other developments quickly superseded the committee's negotiations with the Justice Department. On May 18, 2000, the Associated Press reported that in December 1996, Lee Radek, the head of the Public Integrity Section, which was then conducting the campaign fundraising investigation, told William Esposito, the Deputy FBI Director, that Radek felt ``a lot of pressure'' and that the Attorney General's job might ``hang in the balance'' with respect to the campaign fundraising investigation.\718\ This report reinforced the committee's long-held view that the Attorney General had a political conflict of interest in trying to investigate the fundraising of the President, Vice President and Democratic party. Therefore, on May 19, the chairman wrote to the Attorney General informing her that the committee had scheduled a hearing on this matter, and requesting the production of the Freeh, La Bella, and related memoranda before that hearing.\719\ On May 23, the chairman wrote again, demanding production of the memoranda, and informing the Attorney General that the memoranda would be treated as any other committee record, subject to release by a vote of the committee.\720\ --------------------------------------------------------------------------- \718\ John Solomon, ``Freeh: Justice Felt Pressure Not to Proceed with Probe to Save Reno,'' Associated Press, (May 18, 2000). \719\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (May 19, 2000). \720\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (May 23, 2000). --------------------------------------------------------------------------- On May 24, 2000, Robert Raben, the Assistant Attorney General for Legislative Affairs responded to the chairman, stating that the Justice Department was ``pleased to agree to your Committee's proposal as set forth in your May 23 letter and as elaborated in subsequent discussions with your staff.'' \721\ Under the agreement reached with the Justice Department, all of the memoranda responsive to the committee's May 3 subpoena were to be produced to the committee. The documents were to be kept in a secured facility, and access was to be restricted to six staff from each side of the committee. In addition, the committee was to provide the Department with notice of any plan to release the documents, and also gave the Justice Department the opportunity to explain why the release should not take place.\722\ --------------------------------------------------------------------------- \721\ Letter from Robert Raben, Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform (May 24, 2000). \722\ Id. at 1. --------------------------------------------------------------------------- On May 31, 2000, the chairman wrote to the Attorney General and informed her of the plan to release the Freeh and La Bella memoranda, as well as other related memoranda, at the committee's June 6, 2000, hearing.\723\ On June 2, 2000, the Justice Department wrote to object to the committee's release of the documents.\724\ In this, the final objection prior to the release of the documents, the Justice Department only identified two concerns: first, the chilling effect that the release of the memoranda might have on the ability of Justice Department lawyers to render full and frank advice; and second, the way that the memos infringed upon the ``privacy interests'' of individuals mentioned in the memoranda.\725\ --------------------------------------------------------------------------- \723\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (May 31, 2000). \724\ Letter from Robert Raben, Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform (June 2, 2000). \725\ Id. --------------------------------------------------------------------------- On June 6, 2000, at a hearing of the committee on the Department's implementation of the Independent Counsel Act, the chairman asked unanimous consent to release the Freeh, La Bella, and a number of related memoranda.\726\ Representative Lantos then amended the unanimous consent request to release all of the documents received from the Justice Department in response to the May 3, 2000, subpoena.\727\ All of the records were then released by unanimous consent. --------------------------------------------------------------------------- \726\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the Committee on Government Reform, 106th Cong. 5, (June 6, 2000) (preliminary transcript). \727\ Id. at 9. --------------------------------------------------------------------------- 6. The Justice Department's Misleading Arguments It is understandable that the Justice Department resisted giving the committee the Freeh and La Bella memoranda. The Justice Department did have legitimate institutional interests at stake that it was entitled to protect. However, once the committee served its subpoena upon the Justice Department, it was legally obligated to produce the memoranda to the committee. Rather than follow the legally obligated course of action, the Justice Department used misleading arguments for over 2 years to avoid complying with its legal duty. Few of the arguments were true, and none constituted a valid basis for a subpoena. Now that the Justice Department has complied with the committee's subpoenas, it appears that the Justice Department did not even believe the arguments that it was making. a. The Justice Department's Shifting Arguments When the committee first subpoenaed the Freeh memorandum in December 1997, the Justice Department presented four main arguments: (1) the Justice Department had a policy against discussing investigative strategies of open cases (and that it was unprecedented for a congressional committee to demand such records); (2) the release of the memoranda could create a ``chilling effect'' on Justice Department employees; (3) the memorandum could provide a ``road map'' of the investigation; and (4) the reputations of individuals mentioned in the memoranda could be harmed by the release of the documents.\728\ --------------------------------------------------------------------------- \728\ Letter from Janet Reno, Attorney General, to Dan Burton, chairman, Committee on Government Reform and Oversight (Dec. 4, 1997); letter from Janet Reno, Attorney General, and Louis Freeh, Director, Federal Bureau of Investigation, to Dan Burton, chairman, Committee on Government Reform and Oversight (Dec. 8, 1997). --------------------------------------------------------------------------- When the committee subpoenaed the Freeh and La Bella memoranda in July 1998, the Department reiterated its earlier concerns, and made an additional argument, that compliance with the committee's demand would create the perception of political influence in the prosecutorial process, undermining public confidence in the investigation.\729\ --------------------------------------------------------------------------- \729\ Letter from Janet Reno, Attorney General, and Louis Freeh, Director, Federal Bureau of Investigation, to Dan Burton, chairman, Committee on Government Reform (July 28, 1998). --------------------------------------------------------------------------- When the committee subpoenaed the memoranda in March 2000, the Attorney General made only three arguments: (1) the campaign fundraising investigation remained open, and therefore, the release of the memoranda could have an impact on the investigation; (2) the release of the memoranda could create a chilling effect inside the Justice Department; and (3) the memoranda were available for review by committee staff, and therefore, it was unnecessary to provide the memoranda to the committee.\730\ As explained above, the Attorney General's statement in the March 21, 2000, letter that committee staff were offered the opportunity to review the memoranda in the fall of 1999 was false. --------------------------------------------------------------------------- \730\ Letter from Janet Reno, Attorney General, to Dan Burton, chairman, Committee on Government Reform (Mar. 21, 2000). --------------------------------------------------------------------------- However, when the committee actually received the memoranda in May 2000, the Justice Department made four arguments, two of which were made in the three earlier rounds of discussion: (1) the release of the memoranda would create a chilling effect; (2) the memoranda would infringe privacy interests of individuals mentioned in the documents, and (3) the memoranda contained the identity of line attorneys; and (4) the memoranda should not be released during the campaign season. b. The Justice Department's False Arguments i. The Justice Department's Nonexistent ``Policy'' Against Providing Deliberative Documents The argument repeated most often by the Justice Department throughout the debate on the Freeh and La Bella memoranda was that the Justice Department had a longstanding policy against providing deliberative documents about ongoing investigations to Congress. In fact, in a December 8, 1997, letter to Chairman Burton, Attorney General Reno and FBI Director Freeh stated that ``[i]t is unprecedented for a congressional committee to demand internal decisionmaking memoranda generated during an ongoing criminal investigation.'' \731\ As was pointed out by the committee in its correspondence with the Justice Department, this claim was not true: congressional committees had demanded and received internal decisionmaking memoranda and other investigative materials during ongoing investigations. --------------------------------------------------------------------------- \731\ Letter from Janet Reno, Attorney General, and Louis Freeh, Director, Federal Bureau of Investigation, to Dan Burton, chairman, Committee on Government Reform and Oversight 2 (Dec. 8, 1997). --------------------------------------------------------------------------- Palmer Raids Investigation: In the early 1920s, the Senate and the House held hearings into the raids and arrests of suspected communists conducted by the Department of Justice under Attorney General A. Mitchell Palmer. During the course of their investigation, the committees received a number of Department records relating to the raids. Included in the documents provided to the committees was a ``memorandum of comments and analysis'' prepared by a Department lawyer, responding to a District Court opinion, which was under appeal, and which criticized the Department's actions.\732\ This document was provided to the committee even though it contained facts and the Department's legal reasoning regarding an open case. --------------------------------------------------------------------------- \732\ ``Charges of Illegal Practices of the Department of Justice,'' hearings before a subcommittee of the Senate Committee on the Judiciary, 66th Cong. 484-538 (1921). --------------------------------------------------------------------------- Teapot Dome Scandal: Later in the 1920s, the Senate conducted an investigation into the Department of Justice's handling of the Teapot Dome scandal, specifically, charges of ``misfeasance and nonfeasance in the Department of Justice.'' \733\ The Senate committee heard from Justice Department attorneys and agents who offered extensive testimony about the Department's failure to pursue cases. Likewise, the Senate committee also received documentary evidence from the Department about its nonfeasance. Testimony and documents were received from a number of cases, some of which were still open.\734\ In one notable example, the Attorney General permitted an accountant with the Department to testify and produce documents relating to an investigation that he conducted. The accountant produced his confidential reports in which he had described his factual findings and made recommendations for further action. The Department had failed to act upon his recommendations, although the case was still open.\735\ In a letter to the committee on March 12, 1999, Acting Assistant Attorney General Dennis Burke acknowledged that this case did provide a precedent for the committee's request, but attempted to distinguish the case because the Senate committee was not asking for a prosecutorial decisionmaking document like the Freeh or La Bella memoranda. --------------------------------------------------------------------------- \733\ McGrain v. Daugherty, 273 U.S. 135, 151 (1927). \734\ See, e.g., hearings before the Senate Select Committee on ``Investigation of the Attorney General,'' vols. 1-3, 68th Cong. 1495- 1503, 1529-30, 2295-96 (1924). \735\ Id. at 1495-1547. --------------------------------------------------------------------------- White Collar Crime in the Oil Industry: In 1979, the House Committee on Interstate and Foreign Commerce and the House Committee on the Judiciary held joint hearings on allegations of fraudulent pricing in the oil industry. As part of that inquiry, the committees examined the failure of the Justice Department to investigate properly and prosecute related cases. As part of their hearings, the committees held closed sessions where they received evidence regarding open cases in which indictments were pending.\736\ In open session, the committees called a Justice Department staff attorney who testified as to the reasons for not proceeding with a certain criminal case, despite the fact that a civil prosecution of the same case was pending. The Department similarly provided the committees with documentary evidence relating to this case.\737\ --------------------------------------------------------------------------- \736\ See ``White Collar Crime in the Oil Industry,'' joint hearings before the Subcommittee on Energy and Power of the House Committee on Interstate and Foreign Commerce and the Subcommittee on Crime of the House Committee on the Judiciary, 96th Cong. (1979). \737\ Id. at 156-57. --------------------------------------------------------------------------- Gorsuch/EPA Investigation: In the early 1980's the Subcommittee on Oversight and Investigations of the House Committee on Public Works and Transportation investigated the enforcement policy of the Environmental Protection Agency (EPA) with regard to the Superfund program. The subcommittee investigated the EPA's enforcement policy with respect to both criminal and civil matters.\738\ In response to the committee's document requests, the EPA, with the advice and assistance of the Justice Department, objected to the request on the basis that ``[i]nternal enforcement documents which form the basis for ongoing or anticipated civil or criminal prosecutions are extremely sensitive. These documents include, for example, memoranda by Agency or Department of Justice attorneys containing litigation and negotiation strategy, settlement positions, names of informants in criminal cases, and other similar material.'' \739\ After the committee's issuance of a subpoena for the documents, President Reagan asserted executive privilege over the documents, stating that ``a controversy has arisen . . . over the EPA's unwillingness to permit copying of a number of documents generated by attorneys and other enforcement personnel within the EPA in the development of potential civil or criminal enforcement actions against private parties.'' \740\ The Department of Justice took the position in the case that the policy against providing Congress with access to open law enforcement files applied to both civil and criminal matters.\741\ Despite the President's invocation of executive privilege in the Gorsuch matter, the committee and the House of Representatives voted to hold Administrator Gorsuch in contempt of Congress for refusing to produce the subpoenaed documents. Ultimately the documents were produced, and the contempt citation was withdrawn. --------------------------------------------------------------------------- \738\ ``Contempt of Congress,'' report of the Committee on Public Works and Transportation, H. Rept. No. 97-968 at 10 (1982). \739\ Id. at 28 (letter from Robert M. Perry, associate administrator and general counsel to Chairman Elliott H. Levitas, Oct. 7, 1982). \740\ Id. at 42 (memorandum from President Ronald Reagan to the Administrator of the Environmental Protection Agency). \741\ Id. at 87-88 (memorandum from Assistant Attorney General Theodore B. Olson to Attorney General William French Smith). --------------------------------------------------------------------------- Iran-Contra: The most well-known example of congressional oversight of the Justice Department involving the demand and receipt of information from open case files in the investigation of the Iran-Contra affair. As part of their work, the Iran-Contra committees investigated the nature of the Department of Justice's initial inquiry into the affair. The investigating committees demanded the production of the Department's files regarding their initial inquiry. The House committee requested, inter alia: (b) All records relating to Justice Department consideration of, or action in response to, the request of October 17, 1986, by members of the House Committee on the Judiciary for an application for appointment of an independent counsel. (c) All records relating to the consideration of, and ultimate preparation and submission of, an application for appointment of an Independent Counsel on the Iran matter. (d) All records from January 1, 1984, to December 15, 1986, relating to requests to, by, or through the Department of Justice to stop or delay ongoing investigations relating to the anti-government forces in Nicaragua and assistance being provided to them[.] \742\ --------------------------------------------------------------------------- \742\ Letter from Chairman Lee Hamilton to Attorney General Edwin Meese III, Jan. 14, 1987. The Department resisted, making claims similar to those Attorney General Reno is making now. The Department claimed that the production of documents to the committees would prejudice the upcoming prosecutions by the independent counsel. The committees overruled this objection, and received all requested documents, despite the fact that the independent counsel was pursuing the prosecution of a number of open cases. The committees obtained both documentary evidence and the testimonial evidence of a number of high-level Department officials, including Attorney General Meese.\743\ --------------------------------------------------------------------------- \743\ See ``Report of the Congressional Committees Investigating the Iran-Contra Affair,'' H. Rept. No. 433 and S. Rept. No. 216, 100th Cong. 310, 317, 314, 647 (1987). --------------------------------------------------------------------------- Other Cases: In other cases where congressional oversight committees sought access to Department of Justice records relating to prosecution of cases, the cases at issue were closed. However, those committees were investigating the fact that the cases were closed, because they were closed through alleged malfeasance on the part of the Department. For example, in the Rocky Flats case, and in the case of Congressman Dingell's investigation of the Department's environmental crimes prosecutions, there were allegations that the Department was allowing guilty parties out of criminal prosecutions with only minimal punishment. In the Rocky Flats matter, Congressman Dingell described the Department's objections to disclosure, which are similar to those asserted here, as ``misguided and legally unjustifiable.'' Ultimately, over the objection of the Department, investigating committees obtained a number of sensitive internal documents. In the Rocky Flats case, the committee even obtained testimony from line attorneys at the Department. It also obtained documents, witness interviews, and other records submitted to the grand jury, but not subject to Rule 6(e).\744\ --------------------------------------------------------------------------- \744\ Another notable example of the scope and need for congressional oversight of the Justice Department can be found in Watergate. In his testimony in the House Judiciary Committee's INSLAW hearings, House Counsel Steven R. Ross addressed the nature of congressional oversight in the Watergate scandal: The Impeachment Report concluded, ``Unknown to Congress, the efforts of the President, through Dean, his counsel''-- specifically, having the Assistant Attorney General tell Congress to hold off its investigation because of pending --------------------------------------------------------------------------- proceedings--``had effectively cut off the investigation.'' Of course, the excuse of pending proceedings did not keep Congress out of investigating Watergate forever; it only delayed that Congressional investigation. By Spring of 1973, Congressional committees were no longer accepting the claim of parallel proceedings as an excuse for withholding evidence. Ultimately, Watergate and its cover-up, including the role of Attorney General Mitchell, the role of Attorney General Kleindienst in related matters, and the manipulation of the Justice Department and the FBI, were thoroughly probed by the Senate Watergate Committee and the House Judiciary Committee. This probing occurred at the same time as the pending investigations and proceedings of Special Prosecutors Cox and Jaworski. * * * * * * * Watergate was a dramatic instance where the House and Senate investigations had to overcome, not mere claims of pendency of civil proceedings--let alone, as here, mere pendency of the appeal from such proceedings--but claims of impact on soon-to-be-tried criminal cases. It was up to the committees to determine what evidence they needed, not to the Justice Department to measure whether to block those committees. History reflects that it was only because this Committee insisted on obtaining all the documents and other evidence from the Justice Department, despite any claims about pending proceedings, that the depths of the scandal were ultimately plumbed. It is an appropriate note to this period that two Attorneys General--Kleindienst and Mitchell--were eventually convicted of perjury before Congressional investigations. ``The Attorney General's Refusal to Provide Congressional Access to ``Privileged'' INSLAW Documents,'' hearing before the House Committee on the Judiciary, 101st Congress 88-90 (Dec. 5, 1990) (statement of Steven R. Ross) (emphasis added). Based on his review of this and the other precedents discussed above, Ross concluded that the Justice Department's policy of refusing access to open civil or criminal law enforcement files has been consistently rejected by the courts and by Congress. Id. at 84, 94. Shortly after he signed a letter claiming that the committee's subpoena was ``unprecedented,'' \745\ FBI director Louis Freeh reversed course, and admitted that ``your subpoena is not an unprecedented one, but it is an extraordinary one.'' \746\ However, the Attorney General persisted in claiming that the committee's subpoena was unprecedented until the following year. In March 1999, after the threat of contempt had subsided, Acting Assistant Attorney General Dennis Burke admitted that the committee's subpoena was not unprecedented.\747\ While this admission would have greatly harmed the Justice Department's political position in August 1998, during the contempt debate, by March 1999, few in the public cared. --------------------------------------------------------------------------- \745\ Letter from Janet Reno, Attorney General, and Louis Freeh, Director, Federal Bureau of Investigation, to Dan Burton, chairman, Committee on Government Reform and Oversight (Dec. 8, 1997). \746\ ``The Need for an Independent Counsel in the Campaign Finance Investigation,'' hearing before the Committee on Government Reform and Oversight, 105th Cong. 70 (Aug. 4, 1998). \747\ Letter from Dennis K. Burke, Acting Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform 2-3 (Mar. 12, 1999). --------------------------------------------------------------------------- ii. The Chilling Effect of the Release of the Memoranda The Attorney General claimed that if the Justice Department complied with the committee's subpoena, it would create a ``chilling effect'' that would discourage Justice Department personnel from providing the Attorney General with candid and thorough advice. By its very nature, the Attorney General's argument was highly speculative, and difficult to prove. There is no evidence that the public release of the Freeh and La Bella memoranda has had any such chilling effect. Indeed, the evidence shows that the Attorney General's advisors continue to offer their candid, written advice, despite the intense public scrutiny given to the Freeh and La Bella memoranda. Charles La Bella drafted his memorandum after all of the attention given to the Freeh memorandum in December 1997. In the middle of the debate over whether to hold the Attorney General in contempt for her failure to turn over the Freeh and La Bella memoranda, her advisors continued to draft lengthy reports reviewing the evidence in the campaign fundraising investigation. This practice continued even after the Justice Department turned the memoranda over to the committee in May 2000. In the spring of 2000, the new head of the Task Force, Robert Conrad, prepared a report recommending the appointment of a special counsel to investigate Vice President Gore. Indeed, the only practical consequence of the committee's release of the Freeh and La Bella memoranda is probably the message that one should not commit dishonest views to paper. The committee does not feel the need to protect dishonest or malign advice. Also undermining the Attorney General's claim of a chilling effect was the fact that some of her advisors contemplated the publication of their memoranda. In addition, once the memoranda were turned over to the committee, it became clear that at least one Charles La Bella's critics, Lee Radek, contemplated that the memos would be made public: ``[i]t is inexcusable, and I believe clearly calculated, that they [La Bella and De Sarno] have chosen to communicate their views about others within the Department in a memorandum that is the subject of such intense public interest, and is therefore likely to be leaked or become public through some other route.'' \748\ --------------------------------------------------------------------------- \748\ Memorandum from Lee J. Radek, Chief, Public Integrity Section, to James K. Robinson, Assistant Attorney General 2 (Aug. 6, 1998) (exhibit 6). --------------------------------------------------------------------------- It appears that this committee's interest in the Freeh and La Bella memoranda has not had any chilling effect on Justice Department personnel. The more serious chilling effect on those personnel may come from the Attorney General's apparent disinterest in the advice of her advisors. She disregarded calls from seven different career law enforcement professionals to appoint an independent or special counsel to investigate Democratic fundraising in 1996. At the same time she appeared to be oblivious to failures to ask important questions and interview significant witnesses, and the reality that subordinates were leaking material in a way that undermined the Justice Department investigations. It is surprising that advisors like Robert Conrad still make recommendations to appoint a special counsel when the Attorney General routinely disregards such recommendations. Another more likely source of a chilling effect upon the Attorney General's advisors is the fact that their recommendations are selectively leaked to the media after they are made. The recommendations of Director Freeh, Charles La Bella, and Robert Conrad were all leaked to the press shortly after they were made. Often, these leaks were made in such a way to disparage the authors of the documents. For example, as one ABC reporter noted: I vividly recall talking to officials back then who were amazed at the language employed in the report. This week, they remembered their shock. One senior aide who is no fan of Public Integrity and had generally supported La Bella's efforts, said in his report La Bella had gone ``over the top'' and ``out of bounds.'' He said La Bella had become ``too emotionally involved to be able to present a cogent legal argument;'' it was more a rant, a tirade, than an argument. The so-called evidence was really just new wine in old bottles. And this official noted that in ensuing days the vitriol became remarkable on both sides. He recalled that some people were actually wondering whether La Bella had a ``deep-seated psychiatric problem,'' or whether he was unstable. * * * * * I asked, well, did his argument make sense? ``It made sense, it was just wrong.'' He said parts of it contained ``horrendous inferences'' and were ``not persuasive.'' \749\ --------------------------------------------------------------------------- \749\ Beverly Lumpkin, ``Waco, Yet Again,'' (published Mar. 17, 2000) <http://www.abcnews.go.com/sections/us/hallsofjustice/ hallsofjustice28.html>. Similarly, when Robert Conrad recommended that a special counsel be appointed to investigate Vice President Gore, senior --------------------------------------------------------------------------- ``Justice Department officials'' disparaged his conclusions: One Justice Department official said that Mr. Conrad was alone in his recommendation. ``No other prosecutor in this matter thought that there should be a need for a special counsel,'' said the official, who spoke on the condition of anonymity.\750\ --------------------------------------------------------------------------- \750\ Neil A. Lewis and Don Van Natta, Jr., ``Reno, Rejecting Aide's Recommendation, Declines to Name Counsel on Gore Fund-Raising,'' N.Y. Times (Aug. 23, 2000) at A19. The following day, the Attorney General was forced to admit that this statement, given by one of her own Justice Department staff, was false, and that Mr. Conrad had been supported in his recommendation by two other Task Force prosecutors.\751\ --------------------------------------------------------------------------- \751\ Attorney General Reno, remarks at press conference, Washington, DC (Aug. 23, 2000). --------------------------------------------------------------------------- Even worse than the criticism in the press aimed at Justice Department officials who dared speak their mind was the treatment that Director Freeh received at the hands of the White House after his recommendation that an independent counsel be appointed. The New York Times reported the White House's reaction to his recommendation in December 1997: Although Mr. Clinton had pointedly avoided answering questions about Mr. Freeh's disagreement with Ms. Reno's decision, White House aides were not so circumspect. They privately ripped into Mr. Freeh--once lauded by the President as one of his best appointees-- and called him a disloyal subordinate.\752\ --------------------------------------------------------------------------- \752\ David Johnston, ``Reno Decision Bares Rifts on Clinton Team,'' N.Y. Times (Dec. 4, 1997) at A28. It is difficult to believe that the committee's subpoena for the Freeh memorandum could have had a greater chilling effect upon Director Freeh's actions than criticism leveled at him by staff of the President of the United States. Yet, while Attorney General Reno defended Director Freeh against the committee's advances, she did not afford him the same protection from the White House. iii. The Memoranda Did Not Contain a ``Road Map'' of the Investigation The Attorney General claimed that the subpoenaed memoranda contained a ``road map'' of her investigation, and that the information in the documents, if it came into the possession of the targets of the investigation, could seriously prejudice the investigation. Now that the committee has received the documents, we can see that the Attorney General's claim was not true. None of the matters discussed in these memoranda was ever prosecuted. As Chairman Burton observed when the committee released the memoranda, ``if this is a road map, it's a road map of a car going around in circles.'' \753\ --------------------------------------------------------------------------- \753\ ``The Justice Department's Implementation of the Independent Counsel Act,'' hearing before the Committee on Government Reform, 106th Cong. 15 (June 6, 2000) (preliminary transcript). --------------------------------------------------------------------------- The Freeh memorandum discusses only seven substantive investigative matters: (1) the ``Common Cause Allegations;'' (2) Vice President Gore's fundraising phone calls; (3) President Clinton's fundraising phone calls; (4) allegations made against Secretary O'Leary by Johnny Chung; (5) White House coffees and overnights; (6) solicitation of money from foreign nationals; (7) the White House Database. Of these investigative areas, the Justice Department brought charges in only one area--solicitation of funds from foreign nationals. This section of Director Freeh's memorandum is four paragraphs long, and discusses only general legal issues, and does not even name any of the individuals under investigation. Given these facts, it is difficult to understand the Attorney General's reference to a ``road map.'' There is no information in the Freeh memorandum that related to any criminal charges ever brought in the campaign fundraising investigation. The La Bella memorandum discussed a wide range of subject areas, six in all: (1) Harold Ickes; (2) President Clinton; (3) Vice President Gore; (4) First Lady Hillary Clinton; (5) John Huang, Marvin Rosen, David Mercer and the DNC; and (6) Loral. Of all of these individuals and entities, charges were brought only against one individual, John Huang, and for conduct not discussed in the La Bella memorandum. iv. The Memoranda Did Not Infringe on Privacy Interests On several occasions, the Attorney General asserted that the release of the memoranda would infringe upon the privacy interests of individuals who were named in the documents, but who were never charged with any crimes. This argument, like the others, was specious. Once the committee received the memoranda, it was able to see that there were very few facts discussed in the documents that had not already been extensively discussed in public.\754\ Indeed, when the committee was releasing the memoranda, the Justice Department was given an opportunity to protect privacy interests by suggesting redactions. It failed to identify one substantive area, or the name of any suspect or witness that should be redacted from the documents prepared for release by the majority staff.\755\ --------------------------------------------------------------------------- \754\ One example of an issue in the La Bella memorandum that was not public prior to the release of the La Bella memorandum was the role of Robert Litt, a senior Department staffer, in the Loral investigation. In his memorandum, Charles La Bella took issue with what he saw as Mr. Litt assisting the White House with its ``damage control'' at the same time that the Department was investigating the White House's handling of the Loral matter. As Mr. Litt was a senior Justice Department official, it is difficult to believe he has a strong privacy interest in keeping this matter out of the public record. \755\ At one point, Justice Department staff recommended that the committee redact from the La Bella memorandum the discussion of the ``Gina Ratliff'' incident, wherein Johnny Chung alleged that he was threatened by the First Lady's Chief of Staff, Margaret Williams, to repay debts he owed to a former employee, Gina Ratliff. In addition, when the chairman proposed releasing the binders of selected memoranda, Representative Lantos amended the unanimous consent request to release all of the documents received by the committee in response to its May 3 subpoena. Among these documents was a memorandum referring to an investigation of CIA Director Tenet which contained various personal information about the Director. This information was redacted from the memorandum, and in addition, that memorandum was never released or disseminated by the committee majority. --------------------------------------------------------------------------- v. The Release of the Memoranda Does Not Create the Perception of Political Influence in the Task Force Investigation The Attorney General's claim that the release of the memorandum would create the perception that her investigation was politically influenced is, like many other of her claims, speculative. However, the committee's interest in this matter, from the beginning, has not been to dictate any certain outcome in the campaign fundraising investigation, but rather, to ensure that a thorough and unbiased investigation is conducted. It has been the Attorney General's continued refusal to appoint an outside investigator to conduct the investigation, not the efforts of this committee, that have undermined public trust in the Attorney General's investigation. The editorial board of the New York Times observed that: [The memoranda] are further evidence of Ms. Reno's politicized handling of the campaign fund-raising issue and of her dedication to protecting Democratic Party interests from start to finish. . . . These latest documents, however, cast further doubt on her wisdom and add to the evidence that she has run a Justice Department that often puts politics ahead of impartial law enforcement.\756\ --------------------------------------------------------------------------- \756\ ``The Justice Department Memos,'' N.Y. Times (Mar. 11, 2000) at A14. Given observations like that, and from a number of other editorial boards, it may be that the release of the memoranda did undermine confidence in the Justice Department's investigation--not because it raised some specter of political influence--but because it showed how political the Department's investigation had been. vi. The Justice Department's Request to Keep the Memoranda Out of the Campaign Season Shortly before the Justice Department produced the subpoenaed memoranda to the committee, Justice Department staff and committee staff negotiated terms for the handling of the documents. During those negotiations, Justice Department staff identified one of their central concerns as ``keeping the memoranda out of the campaign season.'' This request had never been raised in the earlier debates over the Freeh and La Bella memoranda. Indeed, one can only imagine the reaction if the Attorney General had stated in a letter that she was refusing to comply with the committee's subpoena because she feared that the memoranda would be used to attack Vice President Gore. However, that is precisely what her subordinates suggested in their negotiations with committee staff. Again, it is understandable that the Attorney General wanted these memoranda out of the public's hands. The documents do not portray the subjects of the Justice Department's investigation in a positive light. However, the Attorney General is not entitled to use political fallout as a reason to avoid complying with a congressional subpoena. That her staff even recommended such a thing speaks volumes about the Justice Department's motives throughout this matter. B. The Justice Department's Failure To Produce the Conrad Memorandum The committee had hoped that the Justice Department's damaging, and ultimately unsuccessful experience in trying to keep the Freeh and La Bella memoranda from the committee would keep it from repeating such efforts in the future. The Justice Department's misleading arguments and bad faith in trying keep the Freeh and La Bella memoranda from the committee were fully exposed when the committee obtained the documents in May 2000. However, the committee's recent efforts in trying to obtain the Conrad memorandum has shown that the Justice Department has learned nothing from its experiences. It has continued to deal with the committee in bad faith, trying to keep information embarrassing to the administration from becoming public. After the Attorney General announced her decision not to seek a special counsel for Vice President Gore on August 23, 2000, the committee subpoenaed the Conrad memorandum and all related memoranda, from the Justice Department. The committee believed that Attorney General Reno's announcement on August 23, 2000, gave every indication that the investigation of false statements by Vice President Gore had been closed, and accordingly, that the Conrad memorandum could be produced to the committee: The transcript reflects neither false statements nor perjury, each of which requires proof of a willfully false statement about a material matter. Rather, the transcript reflects disagreements about labels. I have concluded that there is no reasonable possibility that further investigation could develop evidence that would support the filing of charges for making a willful false statement. The Task Force will, of course, continue its ongoing investigation into illegal fundraising activity and will be free to pursue all avenues of investigation, wherever they may lead.\757\ --------------------------------------------------------------------------- \757\ News conference with Attorney General Reno, Washington, DC (Aug. 23, 2000). In this statement, the Attorney General clearly indicated that there was no reasonable possibility that the Justice Department would ever turn up evidence supporting the filing of charges against Vice President Gore for making a false statement. Given the basis of the Attorney General's efforts to frustrate congressional oversight of the Justice Department--that she did not want to interfere with ongoing investigations--she would hardly have made such a pronouncement unless she believed this matter to be closed. Therefore, she should not flout a valid congressional subpoena. Her willingness to do so, given her strong conclusion, is indicative of the extreme bad faith currently being exercised by the Justice Department. The deadline for compliance with the subpoena, August 31, 2000, passed without any action by the Justice Department. On September 6, 2000, committee staff discussed the subpoena with Justice Department staff.\758\ During that discussion, Justice Department staff could not provide a cogent explanation for the failure to produce the Conrad memorandum. The Department did suggest that it was possible that the Conrad memorandum did still pertain to an open case. However, the discussion gave every indication that the Justice Department had decided that it was not going to produce the Conrad memorandum to the committee, but was still groping for the rationale for its refusal. As the experience with the Freeh and La Bella memoranda had shown, it was not unusual for the Reno Justice Department to reach its conclusion first, and attempt to develop a rationale later. --------------------------------------------------------------------------- \758\ See letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Sept. 7, 2000). --------------------------------------------------------------------------- The Justice Department refused to provide any further information regarding its refusal to comply with the committee's subpoena for the Conrad memorandum until the committee's October 5, 2000, interview with the Attorney General. During that interview, the Attorney General was questioned about her failure to comply with the committee's subpoena: Committee Counsel. Moving on to the Conrad--Mr. Conrad's recommendation to appoint a special counsel. Is it fair to say that you have absolutely refused to comply with the Committee's subpoena for us to receive Mr. Conrad's recommendation to you to appoint a special counsel? Attorney General Reno. I don't think Mr. Conrad's memo should be produced. I think it is part of a pending investigation. Chairman Burton. Is that--that is pretty much the same reason you gave for not giving us the La Bella memo? Attorney General Reno. What I indicated for the La Bella memo was that it was--been a part of the investigation. Much of it has been made public now, and the matter is behind. The issues in the Conrad memo, as I told them, could still be pursued, any lead could be followed; and I want to make sure that we don't do anything that interferes with that. * * * * * Chairman Burton. It is not a matter of whether the issues in the Conrad memo can be pursued. It is whether they are being pursued. Are the issues raised in the Conrad memo still under active investigation? Attorney General Reno. I cannot comment. Chairman Burton: You can't tell us whether or not they are under active investigation? The reason we can't see the memo, according to you, is because there is an ongoing criminal investigation. If there is no investigation going on, then there should be no reason why we can't see the memo. And so all we are asking is, simply, are the issues raised in his memo still under investigation? Attorney General Reno. I can't tell you that. Chairman Burton. You are not telling us about any specific investigation; you are not talking about anything like that. All we are asking generically is, are the issues raised in his memo--and you don't have to go into the specifics--are those being pursued in an investigation, criminal investigation? Attorney General Reno. Mr. Chairman, I respectfully suggest to you that if I start answering questions like that, I am going to continue to run into the situation that I am faced with now where people are beginning to question whether we are being pushed around by Congress inappropriately in pending criminal matters.\759\ --------------------------------------------------------------------------- \759\ Interview of Attorney General Reno 47-50 (Oct. 5, 2000) (preliminary transcript). The Attorney General's responses to Chairman Burton are facially absurd. In her announcement on August 23, 2000, she stated that she was not appointing a special counsel to investigate the Vice President because there was no reasonable possibility that further investigation would produce evidence that would support the filing of charges. This statement sent the clear message that Vice President Gore had been cleared, and that he was no longer under investigation for making false statements. This message was warmly welcomed by the Gore campaign. However, when the committee subpoenaed the Conrad memorandum, the Attorney General tried to manufacture a reason why the committee could not receive the document. When she was squarely asked whether Conrad was still investigating false statement charges against Vice President Gore, Attorney General Reno refused to answer the question. In the past, the Justice Department has rarely hesitated to tell the committee that it could not receive certain documents because they pertained to an open case. The fact that the Attorney General refused to state whether the Conrad investigation of Vice President Gore is still open suggests one of two possibilities: (1) that the case is in fact closed, or (2) that the Attorney General's statement that there was ``no reasonable possibility that further investigation could develop evidence'' was made to benefit the Vice President. If the former is true, the Attorney General is withholding the Conrad memo from the committee with no proper justification. If the latter is true, the Attorney General has misled the public about the nature of the Task Force's investigation to benefit the Presidential nominee of her political party. The Justice Department has also refused to provide the committee with any opportunity to review the Conrad memorandum. When asked why the Justice Department had not provided the committee the opportunity to review the memorandum, Reno provided the following answer: I think it is important, based on the experience that we are having now and the questions that have been raised, that we do everything we can to ensure that there is not an inappropriate outside influence on a pending matter.\760\ --------------------------------------------------------------------------- \760\ Interview of Attorney General Reno 53 (Oct. 5, 2000) (preliminary transcript). However, the refusal to provide any review of the Conrad memorandum stands in contrast to the Department's willingness to allow the committee to review the Freeh and La Bella memoranda. The Department allowed the committee to review those memos in 1998, despite the fact that information in those documents still conceivably was linked to open cases. The Justice Department's refusal to provide the Conrad memorandum to the committee provides further evidence of the politicization of the Justice Department. Without any legal or factual basis, the Justice Department has refused to comply with a lawful congressional subpoena. It appears that the Justice Department's motive for keeping the Conrad memo out of Congress' hands is the same motive that has guided it for the past 4 years--protecting the Clinton-Gore administration from criminal jeopardy and public embarrassment. C. The Justice Department's Political Gamesmanship The Justice Department's refusal to cooperate with the committee was also manifested in its willingness to engage in political gamesmanship to try to embarrass the administration's critics. There were two notable instances of this behavior during the campaign fundraising investigation: first, the release of the FBI interview summary of former Congressman Gerald Solomon; and second, the attempted release of investigative material relating to Chairman Burton. 1. The Release of the Solomon Interview Summary a. The Justice Department Refuses to Provide the Clinton and Gore Interview Summaries On November 9, 1999, the committee subpoenaed the FBI interview summaries of President Clinton and Harold Ickes.\761\ The committee was seeking the records as part of its oversight of the Justice Department's campaign fundraising investigation, to ensure that the Justice Department conducted thorough interviews of Mr. Ickes and Mr. Clinton before declining to appoint an independent counsel to investigate their fundraising activities. The committee did not expect to receive any resistance to this subpoena, as it had already received FBI interview summaries for John Huang. Before the committee received a response to the subpoena from the Justice Department, the chairman sent another request to the Department on November 17, 1999, requesting 25 additional FBI interview summaries relating to the campaign fundraising investigation, including the interview summaries for Vice President Gore.\762\ --------------------------------------------------------------------------- \761\ Subpoena duces tecum issued by the Committee on Government Reform (Nov. 9, 1999) (all committee correspondence with and subpoenas to the Justice Department are printed in the appendix accompanying this report). \762\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Nov. 17, 1999). This request was made pursuant to the committee's subpoena of July 29, 1999, which required the Justice Department to produce all records relating to the investigations of John Huang and Yah Lin ``Charlie'' Trie. On several occasions, the chairman sent specific narrow requests to the Department for records covered by this subpoena. --------------------------------------------------------------------------- Committee staff asked Justice Department staff about the production of these interview summaries on a number of occasions during the following weeks. As Chairman Burton noted in a November 30, 1999, letter to the Attorney General, the Justice Department failed to produce the records, and provided no explanation for the failure to produce them.\763\ At the time, the committee was planning to hold a major hearing on John Huang from December 15-17, 1999. On December 10, 1999, the committee finally received an answer to its requests. In a letter to Chairman Burton, Assistant Attorney General Robert Raben explained that the Justice Department was formulating a new policy against the release of FBI interview summaries to Congress: --------------------------------------------------------------------------- \763\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Nov. 30, 1999). The decision by the Department and its FBI component to permit the Committee to review the 302s, but not to provide copies, is based upon the chilling effect that public disclosure of the 302s can have on law enforcement. Historically, witnesses who have been interviewed by the FBI have understood that their interviews, and the information that they provided, would not be made public unless the witness were to testify at a public trial or the prosecutor were to use the information as the factual basis for a guilty plea. . . . A witness who believes that it is likely that his or her interview will become public may become less --------------------------------------------------------------------------- willing to cooperate fully with the FBI. The Department has observed what appears to be an increasing incidence of public release of 302s. The widespread public disclosure of 302s is likely to make it more difficult for the FBI to conduct its investigations in the future, especially in cases in which witnesses may become reluctant to cooperate out of a desire to avoid becoming publicly involved in a high-profile matter.\764\ --------------------------------------------------------------------------- \764\ Letter from Robert Raben, Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform 1-2 (Dec. 10, 1999). The Justice Department's position was further elaborated by Craig Iscoe, Associate Deputy Attorney General, and Larry Parkinson, General Counsel of the FBI, in a meeting on December 13, 1999. In that meeting, Mr. Iscoe and Mr. Parkinson expounded on the Justice Department's concern that the release of FBI interview summaries to the committee would harm the Department's ability to conduct investigations in the future. Committee staff pointed out to Mr. Iscoe and Mr. Parkinson that the Department had produced interview summaries on a number of other occasions, and had never expressed this concern until the committee sought the interview summaries of President Clinton, Vice President Gore, and Harold Ickes. The chairman protested the Department's decision not to provide the interview summaries in a letter on December 14, 1999.\765\ First, the chairman pointed out the suspicious timing of the Department's decision. The Department was subpoenaed to produce the interview summaries of President Clinton and Harold Ickes over a month earlier, and was requested to produce Vice President Gore summaries almost a month earlier.\766\ Despite numerous requests during that period of time, the Department announced its decision not to provide the documents to the committee only several days before the John Huang hearing. The subpoenaed documents were needed for the hearing, and indeed, ended up being discussed extensively at the hearing. --------------------------------------------------------------------------- \765\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Dec. 14, 1999). \766\ Id. at 1. --------------------------------------------------------------------------- The chairman also pointed out the Justice Department's apparent double standard. In the 103rd Congress, Chairman Don Riegle requested a number of FBI interview summaries, which he received, and subsequently published in a Senate report.\767\ In the 104th Congress, the Department provided Chairman Bill Clinger with 183 FBI interview summaries pertaining to the White House Travel Office investigation.\768\ In addition, throughout the fall and winter of 1999, the Justice Department was producing scores of interview summaries pertaining to the Waco investigation, even as it was trying to prevent the committee from obtaining interview summaries from the fundraising investigation. Moreover, by December 10, the committee had received three FBI 302s relating to the campaign fundraising investigation--John Huang, Charlie Trie, and Johnny Chung--without the committee even requesting the 302 for Johnny Chung. Therefore, the Justice Department's newly-found hesitance seemed to be linked to the fact that the committee was now requesting the 302s for the President, Vice President and Harold Ickes. --------------------------------------------------------------------------- \767\ Id. \768\ Id. --------------------------------------------------------------------------- Finally, the chairman took issue with the statement by Assistant Attorney General Raben in his December 10, 1999, letter in which he stated that ``[t]he Department has observed what appears to be an increasing incidence of public release of 302s.'' \769\ The chairman then pointed out that Chairman Riegle released 84 FBI interview summaries in a Democrat- controlled Congress in 1994, and that the Government Reform Committee had released just 1 such interview summary in the preceding 3 years.\770\ The chairman also noted the fact that the Department's concerns about the release of 302s harming ongoing investigations seemed to be misplaced. When the committee received the 302s for Charlie Trie, they had supposedly redacted all information from the summary that could harm ongoing investigations. However, the Department failed to redact from the Trie 302 information relating to Ernest Green, information which strongly indicated that Green had perjured himself in a committee deposition.\771\ At the time, Green was under active investigation by the Justice Department for perjury, and the release of this information could have theoretically harmed the Department's investigation. The committee identified the Justice Department's error, and on its own initiative, redacted the information relating to Green.\772\ --------------------------------------------------------------------------- \769\ Letter from Robert Raben, Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform 1-2 (Dec. 10, 1999). \770\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Dec. 14, 1999). \771\ Id. at 2. \772\ Id. --------------------------------------------------------------------------- After receiving the chairman's letter, the Department finally relented, and provided the requested 302s for President Clinton, Vice President Gore, and Harold Ickes on December 15, 1999. When the committee was able to review these 302s, it learned that the Justice Department had failed to ask the President and Vice President about central matters involved in the campaign fundraising scandal: the President had not been asked about James Riady or Charlie Trie; and the Vice President had not been asked about the Hsi Lai Temple fundraiser or Maria Hsia. Once the committee received these 302s, it became evident why the Justice Department had gone through such contortions to keep them out of the public domain. However, if the content of the 302s was not enough to confirm that the Justice Department's posturing of the past month had been purely political, the Department's actions in the following 2 days would confirm that fact. b. The Justice Department Releases the Interview Summary of Representative Gerald Solomon When John Huang appeared before the committee on December 15, 1999, he made the following statement: People seeking publicity have lied about me repeatedly in the press and even before this committee without consequence. For example, a former Member of this body, Mr. Solomon, in attacking the administration, accused me of economic espionage on the basis of what I am advised was an anonymous source at a cocktail party, with whom, it turned out, did not even mention my name or do anything other than perpetuate a rumor against an unidentified Asian-American, a rumor which Mr. Solomon was only too eager to embrace and capitalize upon.\773\ --------------------------------------------------------------------------- \773\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 55 (1999) (preliminary transcript). At the time that Mr. Huang made his statement, it was unclear where he had obtained this information. Therefore, Chairman Burton asked John Huang to identify the source of his knowledge about Representative Solomon's comments.\774\ Huang told the chairman that he had been told this by his attorneys.\775\ Chairman Burton then asked Ty Cobb, Huang's counsel, where he had obtained this information, and Mr. Cobb stated that he had learned this information from one of the prosecutors on the Campaign Financing Task Force.\776\ As Chairman Burton noted in a letter to the Justice Department after the Huang hearing, it was highly irregular that the Department would share this kind of information with the target of a criminal investigation.\777\ As the chairman noted, the disclosure to Huang's attorneys ``could have no legitimate investigative purpose, and seemed to be designed only to give Mr. Huang a sympathetic anecdote for his opening statement.'' \778\ Moreover, the Department's willingness to provide details from FBI interview summaries certainly undermined the arguments it had so forcefully made just days earlier, when it claimed that releasing 302s would chill witnesses from giving interviews to law enforcement, or that it would jeopardize investigations. Indeed, it is hard to conceive of a situation that would chill a witness from giving an interview more than turning the details of the interview over to an admitted felon who then used that information to attack the witness in the press and on national television. --------------------------------------------------------------------------- \774\ Id. at 166. \775\ Id. \776\ Id. at 167. \777\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General 2 (Apr. 18, 2000). \778\ Id. --------------------------------------------------------------------------- However, the Justice Department's hypocrisy was only beginning to emerge. During the first day of the Huang hearing, in response to Huang's opening statement, Congressman Waxman asked Chairman Burton to request the FBI interview summary of Congressman Solomon from the Justice Department.\779\ Chairman Burton agreed that he would do so.\780\ The following day, Associate Deputy Attorney General Craig Iscoe appeared at the committee offices with a copy of the Solomon 302. The chairman had not even formally requested the Solomon 302, but the Justice Department had produced it nonetheless in under 24 hours. There were several facts about this chronology that were especially troubling: --------------------------------------------------------------------------- \779\ ``The Role of John Huang and the Riady Family in Political Fundraising,'' hearings before the House Committee on Government Reform, 106th Cong., 97 (1999) (preliminary transcript). \780\ Id. at 97-98. <bullet> The Justice Department produced the 302 without a formal request of any type, much less a subpoena. Justice Department staff explained that it views an oral request made by a chairman during a committee hearing the same way that it would view a written request or a subpoena.\781\ This was the first time that this policy was ever enunciated for this committee, and it seemed to be a post hoc justification for the Department's actions. --------------------------------------------------------------------------- \781\ This information was related by Craig Iscoe, Associate Deputy Attorney General, to committee staff when he brought the Solomon 302 to committee offices on Dec. 16, 1999. <bullet> The Justice Department produced the Solomon 302 in under 24 hours. Craig Iscoe, the Associate Deputy Attorney General who brought the 302 to the committee, explained that the 302 was relatively short, and was easy to prepare for production.\782\ However, when the Reno Justice Department's track record of document productions is closely scrutinized, the rapid production of the Solomon 302 appears suspicious. During the committee's investigation, there were occasions where the Justice Department: lost committee document requests; failed to produce documents for days because they could not find a messenger to bring the documents to committee offices; failed to produce documents for days because they had to be personally Bates-stamped by the Associate Deputy Attorney General; or simply took months to produce documents because of vacations, illness, or difficulty in locating responsive documents.\783\ Yet, when the Department had a 302 that was potentially embarrassing to Representative Solomon, a critic of the Justice Department, they produced it in less than 24 hours. --------------------------------------------------------------------------- \782\ This information was related by Craig Iscoe, Associate Deputy Attorney General, to committee staff when he brought the Solomon 302 to committee offices on Dec. 16, 1999. \783\ See, e.g., letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (Feb. 11, 1999) (regarding failure of Justice Department to respond in timely fashion to requests for documents relating to Orlando Castro); letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (June 14, 1999) (regarding failure of Justice Department to respond in timely fashion to requests for documents relating to search warrant of Trie residence). <bullet> The Solomon 302 was produced rapidly, and without a formal request, despite the Justice Department's impassioned arguments of several days earlier. The Department had been arguing that the committee was receiving and releasing too many 302s. The Department was even willing to argue that it should not obey a congressional subpoena because of the harm that the committee was doing by requesting and releasing 302s. Yet, scarcely days after those arguments had been made, the Department provided a 302 to the committee without a formal request. Moreover, Department staff had made the information in that 302 available to a convicted felon so that he could paint himself in a more favorable light in his congressional testimony. The speed with which this document was produced made a mockery of the apparently earnest entreaties made just days earlier by Associate Deputy Attorney General Iscoe and FBI General Counsel Parkinson.\784\ --------------------------------------------------------------------------- \784\ It is only fair to point out that Mr. Parkinson did not appear to be involved in the Justice Department's efforts to get the Solomon 302 out to the committee and the media. The Department's release of the Solomon 302 served as a stark example of the politicization of the Justice Department. The Department was willing to disobey lawful subpoenas when the committee was seeking information pertaining to the President and Vice President that was embarrassing to the Justice Department because it indicated a serious failure in the campaign fundraising investigation. Yet, when the Justice Department had the opportunity to spread information that harmed a widely respected Republican Member of Congress, it abandoned all of its principled arguments and seized the opportunity. Faced with an example like this, it is difficult to believe that the actions of the Reno Justice Department were motivated by anything other than crass political self-interest. 2. Attempted Release of Information Relating to Chairman Burton Six months later, the Justice Department again tried to release information that was harmful to one of its critics. This time, on the eve of the committee's release of the Freeh and La Bella memoranda, the Justice Department attempted to force the committee to release information relating to the Justice Department's investigation of Chairman Burton.\785\ --------------------------------------------------------------------------- \785\ Shortly after Chairman Burton announced his plans to conduct an investigation of the 1996 campaign fundraising scandal, Mark Siegel, a former DNC officer and active DNC fundraiser, alleged that he had been ``shaken down'' to make political contributions by Chairman Burton. Given Mr. Siegel's political affiliation, and the timing of his charges, his allegations could scarcely be taken seriously. Nevertheless, the Justice Department launched a grand jury investigation of the allegations, issuing subpoenas to the Burton campaign shortly after the Government Reform Committee issued its first subpoena to the Justice Department. --------------------------------------------------------------------------- Throughout the month of May 2000, the Justice Department located and made available to the committee various memoranda responsive to the committee's May 3, 2000, subpoena for the Freeh and La Bella memoranda, as well as other memoranda written in response to those two reports. After the responsive documents were produced to the committee on May 24, 2000, the committee continued to receive additional documents. In most cases, these were memoranda that were missed in earlier searches. In most of these cases, these documents pertained to the Attorney General's decision not to appoint an independent counsel to investigate the 1996 campaign fundraising scandal. In late May, the committee scheduled a hearing to take place on June 6, 2000. At this hearing, the committee was scheduled to release the Freeh and La Bella memoranda and related documents, and it was also scheduled to question Public Integrity Section Chief Lee Radek about those documents. However, on the evening of June 5, 2000, a staff attorney in the Department's Office of Legislative Affairs contacted committee staff to tell them that the Department would be producing to the committee that evening a document relating to the investigation of Chairman Burton. Chairman Burton responded almost immediately with a letter refusing to accept production of the records, and questioning the Department's attempt to send the documents to the committee.\786\ The Department's attempted production of records relating to Chairman Burton raised several troubling questions: (1) how were the Burton records related to the committee's subpoena; (2) why did the Justice Department attempt to produce records relating to what purported to be an open investigation; and (3) why did the Justice Department attempt to provide these records to the committee at 5:10 p.m., on the evening before a hearing. --------------------------------------------------------------------------- \786\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (June 6, 2000). --------------------------------------------------------------------------- First, the committee's May 3, 2000, subpoena called for ``[a]ll formal memoranda that were sent to the Attorney General or senior Justice Department officials in connection with decisions involving the application of the Independent Counsel Act to campaign finance-related matters, including memos that address the Independent Counsel Act-related aspects of the Freeh and La Bella memoranda.'' \787\ When they told committee staff that they intended to produce the documents relating to the Burton investigation, Justice Department staff were unable to provide any explanation of how the records related to the committee's subpoena. While there was a provision of the Independent Counsel Act that allowed the Attorney General to request an independent counsel for Members of Congress, there had been no indication that such a request had been made for Chairman Burton. Indeed, the Justice Department has investigated many Members of Congress in the past several years, and of all of those investigations, the Department proposed producing documents only from the Burton investigation.\788\ --------------------------------------------------------------------------- \787\ Subpoena duces tecum issued by the Committee on Government Reform (May 3, 2000). \788\ After the committee refused to accept records relating to the investigation of Chairman Burton, the Justice Department did attempt to explain the production of records relating to Chairman Burton. In a letter dated June 9, 2000, Robert Raben, the Assistant Attorney General, stated that ``[w]e have confirmed that the allegations that are discussed in the memorandum were the subject of a decision under the Independent Counsel Act and therefore that the memorandum is responsive to your subpoena. We have further confirmed that production of the memorandum would not harm any pending investigation--which is the standard we have applied to all other documents responsive to the Committee's subpoena for Independent Counsel-related memoranda.'' Letter from Robert Raben, Assistant Attorney General, to Dan Burton, chairman, Committee on Government Reform (June 9, 2000). Taking the significant step of accepting all of these representations as true, the timing of the Department's decision still raises serious questions about the Department's motivations. The Department attempted to produce the memorandum to the committee on the eve of the release of the Freeh and La Bella memoranda (and the wholesale release of all independent counsel memoranda, which was proposed by the committee minority). --------------------------------------------------------------------------- Second, the Justice Department had frequently refused to produce records to the committee on the basis that the subpoenaed records related to an open investigation. A memorandum improperly released by a senior Justice Department staffer in 1999 listed the allegation against Chairman Burton as ``not yet closed, but likely to be shortly.'' \789\ Despite this designation in June 1999, neither Chairman Burton nor his private counsel have ever been informed that the investigation against him was closed. Therefore, it appears that as of the Department's attempted release of the information regarding Chairman Burton in June 2000, the investigation of Chairman Burton was still technically open. Leaving aside the significant issue of why the Burton investigation was left open for so long after all investigative work had ceased,\790\ the Justice Department appeared to be deviating from its policy of refusing to release records relating to open cases, so that it could release records relating to Chairman Burton. --------------------------------------------------------------------------- \789\ Memorandum titled Task Force cases (June 4, 1999) (exhibit 14). \790\ Chairman Burton has often questioned the apparent Justice Department practice of leaving cases open long after investigative activity in that case has ceased. The Justice Department has often refused to produce records about a matter to the committee, claiming that the matter is open. However, in many of these cases, it is apparent that all activity in the case has stopped. The June 4, 1999, list of Task Force cases seems to confirm the chairman's criticisms. For example, there are 27 cases listed under the heading ``Investigations Which FBI and the Task Force have closed (awaiting AG determination).'' Id. There are another 14 cases listed under the heading ``Investigations Not yet Closed but Likely to be Shortly.'' Id. Chairman Burton's case is listed under this heading, with the additional notation ``closing memo sent to Public Integrity.'' Id. --------------------------------------------------------------------------- Third, the timing of the Department's decision was especially suspicious. The Department had had over 2 months to locate records responsive to the committee's subpoena. Yet, it waited until the evening before the committee's release of the Freeh and La Bella memoranda to attempt to produce these records to the committee. When committee staff asked Justice Department staff to describe the process that led to this document being discovered, Justice Department staff described it as ``people rooting through boxes and pulling out documents.'' \791\ As part of an effort to better understand this process, and identify the staffer who was ``rooting through'' boxes relating to the Burton investigation, the chairman asked the Justice Department to identify the staffers responsible for proposing the production of the Burton records.\792\ The Department never responded to this request. --------------------------------------------------------------------------- \791\ Letter from Dan Burton, chairman, Committee on Government Reform, to Janet Reno, Attorney General (June 6, 2000). \792\ Id. --------------------------------------------------------------------------- The Justice Department's attempt to produce records relating to the investigation of Chairman Burton appeared to be a maneuver, much like the release of the Solomon 302, designed to draw attention away from committee hearings which were embarrassing to the Clinton administration. It also appeared to be designed to intimidate Chairman Burton, and to discourage him from subpoenaing documents from the Justice Department. Like the Department's release of the Solomon 302, the Department's attempted release of information about Chairman Burton was done in contravention of Department policy, and under highly irregular circumstances. IV. Favorable Treatment of the Attorney General's Friends A. The Justice Department's Handling of the Soka Gakkai Matter The committee investigated the efforts of Rebekah Poston, a prominent Miami lawyer and a friend of the Attorney General, to obtain confidential law enforcement information from the Justice Department. The committee has learned the following: <bullet> Rebekah Poston was hired by Soka Gakkai, a large Japanese Buddhist sect, to obtain criminal justice records on a man named Nobuo Abe, the head of a rival Buddhist sect. Soka Gakkai hoped to use these records in a defamation lawsuit against Abe. <bullet> Poston hired private investigators who illegally obtained confidential National Crime Information Center (NCIC) records on Nobuo Abe. <bullet> Poston then filed a Freedom of Information Act (FOIA) request to legally obtain this same information on Abe. Long-standing Justice Department policy prohibited the Department from releasing this type of information pursuant to a FOIA request. Moreover, long-standing Department policy prohibited even confirming or denying the existence of a criminal record. Accordingly, Poston's FOIA request was rejected, as was her appeal. <bullet> Poston used her influence with the Attorney General's Chief of Staff to obtain a reversal of the Justice Department's position. Poston had at least 22 contacts with senior Justice Department staff regarding her FOIA request. Her contacts resulted in a meeting between her and Associate Attorney General John Schmidt, the third-ranking official in the Justice Department. Schmidt reversed the earlier decision of Richard Huff, the head of the Office of Information and Privacy, who had rejected Poston's FOIA appeal. Huff could recall no other meetings like this in his 25 year career. <bullet> When the Department of Justice responded to Poston's FOIA request, it stated that it had no records on Nobuo Abe. Poston's investigators believed that the record they had earlier obtained had been deleted by government officials. This deletion, as well as other evidence regarding the record, led a number of individuals involved in the case to speculate that the Abe record had been planted in the NCIC system by individuals associated with Soka Gakkai. <bullet> The evidence that Abe's NCIC record was illegally accessed was provided to lawyers at the FBI's Office of Professional Responsibility on at least four different occasions. Yet, the FBI and the Justice Department failed to conduct a thorough investigation of these allegations. There are two deeply troubling aspects to the facts uncovered by the committee. First, a prominent Florida attorney, a close friend of the Attorney General, was involved in criminal activity. This criminal activity has gone without any investigation or punishment for nearly 6 years. Now that the committee has brought these facts to light, Rebekah Poston has refused to answer any questions regarding her activities. Poston refused to answer a number of questions in a private interview, citing both attorney-client privilege, and concerns regarding possible criminal exposure. Then, when called to a public hearing, Poston repeatedly cited attorney-client privilege.\793\ Second, this same friend of the Attorney General used her influence within the Justice Department to obtain a one-time reversal of long-standing Department policy. The implications of the Justice Department's failures in this case are severe: (1) it appears that the Department does not want to investigate allegations of improper access to its law enforcement databases; (2) it appears that the Department does not want to investigate allegations of wrongdoing by a friend of the Attorney General; (3) it appears that the Department applies a more lenient legal standard to FOIA requests made by a friend of the Attorney General than other FOIA requesters; and (4) the long-standing Justice Department policy of neither confirming nor denying the existence of criminal records relating to non-citizens is in doubt. --------------------------------------------------------------------------- \793\ Both during and after the committee's July 27, 2000, hearing, Ms. Poston and her counsel denied that she ever intended to invoke her fifth amendment rights. However, during the committee's interview of Ms. Poston on June 29, 2000, Ms. Poston's counsel, Eduardo Palmer, informed committee staff that Ms. Poston would not answer any questions about her efforts to obtain information through private investigators because of attorney-client privilege issues and because of her possible criminal exposure. These issues were raised in a letter to Chairman Burton after the committee's hearing. See letter from C. Boyden Gray, Wilmer Cutler & Pickering, to Chairman Dan Burton (Sept. 21, 2000) (exhibit 53). Ms. Poston's--and her counsel's--expressions that she would be unable to answer questions because of ``possible criminal exposure,'' and her baseless invocation of attorney-client privilege are discussed in detail below. --------------------------------------------------------------------------- 1. Background a. Background on Soka Gakkai Soka Gakkai was formed in 1930 as an organization espousing the reform of Japanese schools. After World War II, Soka Gakkai became affiliated with the Nichiren Shoshu Buddhist sect. Between 1951 and 1991, Soka Gakkai operated as a lay organization affiliated with the Nichiren Shoshu Buddhist sect. During that period of time, Soka Gakkai grew to have approximately 10 million members and assets over $100 billion.\794\ Soka Gakkai also controls Komeito, which is the fourth-largest political party in Japan. --------------------------------------------------------------------------- \794\ Bob Whitby, ``The Buddha Brotherhood,'' Miami New Times (Nov. 11, 1999). --------------------------------------------------------------------------- In 1991, after years of tension between Nobuo Abe (also known as Nikken Abe), leader of Nichiren Shoshu, and Daisaku Ikeda, leader of Soka Gakkai, the leaders of Nichiren Shoshu expelled Soka Gakkai members from their sect, and severed all ties between the groups. This action sparked extended litigation between the groups that continues to this day. This litigation reached American shores, as Nichiren Shoshu and Soka Gakkai both had extensive United States assets and membership. In June 1992, two Soka Gakkai publications published a controversial allegation by Hiroe Clow, a Soka Gakkai member. Clow stated that in 1963, she traveled to the United States with Nobuo Abe, and was called by Mr. Abe late at night after he was detained by the Seattle police for being involved in an altercation with prostitutes. Ms. Clow stated that she picked Mr. Abe up at the police station, and that no charges were filed against Abe. Clow's charges against Abe were a major embarrassment for Abe and Nichiren Shoshu, and they responded by filing a lawsuit for libel against Clow and Soka Gakkai in Japan. This lawsuit, as well as counterclaims, and related litigation in the United States, was pursued by both sides with little regard for expense, and both sides employed large teams of lawyers and investigators in the United States and Japan. Soka Gakkai International-USA had extensive real estate holdings in the United States, including a 120-acre compound outside of Miami, FL. Steel Hector & Davis, a leading Miami law firm, represented Soka Gakkai in connection with its Florida real estate projects, and considered Soka Gakkai a major client.\795\ In late 1994, Soka Gakkai apparently asked Steel Hector if it could assist in connection with the Abe lawsuit. --------------------------------------------------------------------------- \795\ Memorandum from Rich [Lucas] to Phil [Manuel] (Nov. 4, 1994) (exhibit 58). --------------------------------------------------------------------------- b. Background on Steel Hector & Davis Steel Hector & Davis was formed in 1925, and is now one of Florida's largest and best known law firms. The current Attorney General of the United States, Janet Reno, served as a partner at the firm prior to her service as Florida State Attorney. When Soka Gakkai was seeking help in getting information from the Justice Department, Steel Hector was a good choice for other reasons as well. John Edward Smith, a senior partner in the firm, was a long-time friend of the Attorney General, and was one of only two lawyers to help her prepare for her confirmation hearings.\796\ Rebekah Poston also made Steel Hector a good choice for Soka Gakkai. Poston had just joined Steel Hector as counsel, but she was an experienced white collar defense lawyer, and more importantly, was also a friend of the Attorney General. Poston's sister, Roberta Forrest, served as the campaign manager for Reno when she ran for State Attorney. Poston's sister also worked as a secretary in the State Attorney's office where both Reno and her future Chief of Staff at the Justice Department, John Hogan, worked.\797\ Poston describes herself as a friend of the Attorney General, and describes her sister as a close personal friend of the Attorney General.\798\ --------------------------------------------------------------------------- \796\ Interview of John Hogan at 2 (June 23, 2000) (Hogan interview). \797\ Interview of Rebekah Poston at 1 (June 29, 2000) (Poston interview); Hogan interview at 1. \798\ Poston interview at 1. --------------------------------------------------------------------------- 2. Rebekah Poston Illegally Obtains Information from the Department of Justice In 1992, Soka Gakkai printed the account of Hiroe Clow, a member of Soka Gakkai. Clow stated that in 1963, she witnessed the arrest of Nobuo Abe, the leader of Nichiren Shoshu, for soliciting prostitutes. Litigation in the United States and Japan commenced soon thereafter. Nichiren Shoshu argued that Nobuo Abe, its High Priest, had been defamed by the charges printed by Soka Gakkai. In response, Soka Gakkai argued that Mrs. Clow had been defamed by Abe's repeated statements that Clow's accusations were false. Central to these lawsuits was whether there was any proof that Abe had actually been arrested for soliciting prostitutes in Seattle in 1963. Soka Gakkai's lawyers faced two major problems. First, the incident occurred 30 years earlier, and few records remained, especially since charges were never brought against Mr. Abe. Second, if records did exist, they may have resided in non-public files or databases. a. Soka Gakkai Illegally Obtains Information on Nobuo Abe Through Jack Palladino According to one cooperating witness, Soka Gakkai's main lawyer in the United States, Barry Langberg, hired Jack Palladino, a well-known private investigator, to determine whether Abe was arrested in Seattle in 1963.\799\ Palladino then apparently contacted a source in the Bureau of Prisons who had access to the National Crime Information Center (NCIC) database. This source accessed the database, and noted the following information: --------------------------------------------------------------------------- \799\ Interview of Richard Lucas at 1 (July 11, 2000) (Lucas interview). 3/63, NCIC-NATF, Complaint by four females of possible pandering and solicitation by a bald Oriental, male, no english at 12:40 AM, taken in for questioning, at 1:30 AM, no english. detained [sic] and released at 3:30 AM, forwarded by teletype.\800\ --------------------------------------------------------------------------- \800\ Memorandum from Rich Lucas to Phil Manuel (Dec. 28, 1994) (exhibit 72). This information was then apparently provided to other attorneys working on the case. If this information on Abe was taken from the NCIC database and provided to private parties like Langberg or Palladino, the source at the Bureau of Prisons (BOP) broke the law, as did possibly Langberg and Palladino.\801\ Federal law prohibits the theft, conversion, or unauthorized conveyance of government records, and individuals have been prosecuted for the theft of NCIC records specifically.\802\ --------------------------------------------------------------------------- \801\ After the committee's July 27, 2000, hearing regarding this subject, committee staff was contacted by counsel for Mr. Langberg, who denied that Mr. Langberg had hired Palladino to obtain any information on Abe. He also denied that Mr. Langberg was involved in any illegal activity. The committee intends to subpoena information from Mr. Langberg and Mr. Palladino to confirm the extent of their involvement in this matter. \802\ 18 U.S.C. Sec. 641; see also facsimile from John Sebastian to Phillip Manual (sic) (Feb. 15, 1995) (attaching two newspaper articles about prosecutions for theft of NCIC records) (exhibit 80). --------------------------------------------------------------------------- Soka Gakkai would later attempt to confirm this record through other sources, and would have great difficulty in doing so. First, it received confirmation through Rebekah Poston and her investigators that there was a record on Abe in the NCIC system, but that it was different from the record viewed by the source at the Bureau of Prisons. Then, subsequently, when Poston tried to access the record through the FOIA process, she was told that no record existed. These later problems, which are discussed in detail below, have led individuals involved in the case to speculate that the NCIC information on Abe was planted there by the initial source at the Bureau of Prisons. This speculation is supported by several factors: <bullet> It is unlikely that a computer record would have existed for Abe if he was detained and released in 1963 on a minor charge. <bullet> Indeed, in his interview with committee staff, Phil Manuel, the main investigator who worked for Poston, noted that he believed that the BOP source was a member of Soka Gakkai, and a friend or associate of Hiroe Clow.\803\ If that information is true, she would have had the motive to fabricate evidence against Abe. --------------------------------------------------------------------------- \803\ Interview of Philip Manuel at 3 (July 18, 2000) (Manuel interview). <bullet> Other private investigators were unable to --------------------------------------------------------------------------- verify the information provided by the BOP source. <bullet> When conducting a search for records in response to Poston's FOIA request, the Justice Department was unable to find any records on Abe. If indeed this information on Abe was planted in the NCIC system, it raises serious questions about the stewardship of the NCIC database, and makes the subsequent failure by the Justice Department to investigate this matter even more troublesome. b. Poston Requests Her Private Investigators to Break the Law While Soka Gakkai already had gained access to what purported to be Abe's arrest record, they chose to confirm its existence through another source. It is unclear why Soka Gakkai chose to hire another set of lawyers and investigators to access Abe's record a second time. Perhaps they were concerned with the reliability of Mr. Palladino's work, or perhaps they simply wanted a high degree of confidence in their information before they used it in court in Japan. Billing records subpoenaed by the committee indicate that Poston's work for Soka Gakkai began in early November 1994.\804\ Poston was one of a number of lawyers hired by Soka Gakkai through their main California-based lawyer, Barry Langberg. While the circumstances of Poston's hiring are not entirely clear, at least one document prepared by individuals working with Poston states that ``Steel Hector was hired due to the relationship with the Attorney General.'' \805\ Indeed, Poston confirmed to investigators working for her that she believed that the only reason Steel Hector & Davis was working on this matter was because of the firm's influence in Washington.\806\ --------------------------------------------------------------------------- \804\ See Steel Hector & Davis billing records at 0000143, 0000154 (exhibit 100). \805\ Memorandum from Mike Wilson to John Gibbons at 1 (Nov. 27, 1996) (exhibit 98). \806\ Lucas interview at 3. --------------------------------------------------------------------------- Poston had her initial client meeting on the Abe matter on November 2, 1994.\807\ Due to an invocation of privilege by Soka Gakkai, the committee has not learned who met with Poston, or what was discussed. However, immediately after her client meeting, Poston apparently contacted Richard Lucas, a private investigator in Florida who worked with the Philip Manuel Resource Group (PMRG), an investigative firm based in Washington, DC. Poston retained PMRG to work on the case, and specifically, to determine whether Abe had a record in the NCIC system. Lucas explained Poston's request in a memo to Phil Manuel, the principal in PRMG: --------------------------------------------------------------------------- \807\ Steel Hector & Davis billing records at 0000154 (exhibit 100). [Poston] called this afternoon asking for assistance on a government inquiry. Her request is unusual and came with the usual promises that it will lead to bigger and --------------------------------------------------------------------------- better things. She is attempting to obtain a March 1963 document that substantiates an individual was arrested 30 years ago in Seattle for prostitution. It was confirmed, according to her, through the Federal Bureau of Prisons that they have in there [sic] files a reference of this arrest.\808\ --------------------------------------------------------------------------- \808\ Memorandum from Rich Lucas to Phil Manual (Nov. 2, 1994) (exhibit 54). This task, though, proved difficult for Lucas and Manuel to accomplish. Poston's billing records indicate that she had four telephone calls with ``investigators'' over the next 2 days.\809\ On November 4, 1994, Lucas sent another memo to Manuel: --------------------------------------------------------------------------- \809\ Steel Hector & Davis billing records at 0000154. As you know we received an assignment from Poston and now I am in a precarious position. * * * * * It appears the two alternatives are to use a confidential source or tell Poston that we do not want the case. The latter will cause ill feelings since we should have informed her on Wednesday but it is better to be up front now than to incur expenses, not get the information, and burn bridges with the our [sic] only inroad at Steel Hector Davis.\810\ --------------------------------------------------------------------------- \810\ Memorandum from Rich Lucas to Phil Manuel (Nov. 4, 1994) (exhibit 55). Manuel responded by saying ``Poston must realize that SUPERMAN does not exist. There is no confidential source who will give documentary evidence which is not released through proper channels. . . . If the document exists we can get it but it will take time--that's it. She'll have to take it or leave it.'' \811\ After an additional memo from Lucas asking him to reconsider, Manuel wrote ``I do not know a confidential source in Seattle which has the authority to hand search criminal files that are not on a computer--remember we have no identifiers like DOB or SSN only a name therefore NCIC sources are useless. Computer files do not go back to 1963. The files must be hand searched by someone with access.'' \812\ Later on November 4, Poston obtained Abe's date of birth, and provided it to Manuel and Lucas to assist them in their search. --------------------------------------------------------------------------- \811\ Memorandum from Rich Lucas to Phil Manuel (Nov. 4, 1994), (with handwritten notations of Phil Manuel) (exhibit 56). \812\ Memorandum from Rich [Lucas] to Phil [Manuel] (with handwritten notations by Phil Manuel) (exhibit 57). --------------------------------------------------------------------------- c. Poston Obtains the Information Using the information provided by Poston, Manuel and Lucas each contacted confidential sources to determine whether Abe had an arrest record. Manuel contacted Ben Brewer, the manager of the Program Support Section within the Administration Division at the FBI.\813\ According to Richard Lucas, Brewer accessed the NCIC database, and told Manuel the information on Abe contained in the database.\814\ Lucas contacted a friend, Tony Gonzalez, a retired IRS investigator, to ask for help in obtaining criminal history information on Abe. Gonzalez in turn contacted a confidential source who provided him with information regarding Abe's purported 1963 arrest in Seattle.\815\ Several days later, on November 11, 1994, Lucas sent a memo to Poston containing the information that Manuel and Lucas had been able to obtain from their confidential law enforcement sources: --------------------------------------------------------------------------- \813\ Lucas interview at 1. In an interview with committee staff, Philip Manuel denied that he ever obtained NCIC information, or any other proprietary government information on Abe. Manuel interview at 2- 3. However, Manuel's interview statement is contradicted not only by Lucas, but also by Manuel's own sworn affidavit, in which he states ``I contacted a confidential and highly reliable source'' and ``my source told me that there was a federal government record for Nobuo Abe which referred to `Suspicion of Solicitation of Prostitution, Seattle Police Department, March 1963.' '' \814\ Lucas interview at 1. \815\ Id. A source was contacted and provided the following --------------------------------------------------------------------------- information: 1. The source was provided with the identifiers of Nobuo Abe and Noburo Abbe, and the date of birth of December 19, 1922. The source was also told there was no social security number due to the subject not being a U.S. citizen. 2. The source relayed that under the data provided there was a reference to ``Solicitation of Prostitution, Seattle Police Department, March 1963''. The charge was abbreviated and not spelled out.\816\ --------------------------------------------------------------------------- \816\ Memorandum from Richard Lucas to Rebekah Poston (Nov. 11, 1994) (exhibit 61). The memo then contained a detailed explanation of the NCIC database, as well as an explanation of why information like --------------------------------------------------------------------------- this would be in the NCIC: 6. The source theorized that if Abe was a Japanese citizen with no U.S. residence or forms of identification, other than a passport, an inquiry might have been made with NCIC to determine if he was wanted on other charges or had previous encounters with law enforcement.\817\ --------------------------------------------------------------------------- \817\ Id. After receiving this information, Poston and Soka Gakkai came back with a number of questions. George Odano, the Soka Gakkai representative dealing with Poston, posed a number of questions to Poston, seeking more detail on the information that the investigators had obtained, as well as confirmation that the information obtained by Manuel and Lucas was accurate.\818\ Apparently, one concern was that the information that Soka Gakkai had previously obtained from the Federal Bureau of Prisons was more detailed than the information obtained by Manuel and Lucas. Poston forwarded these questions to Lucas, ordering him to ``please get answers to as many of these as you can and be specific. This is a matter of serious importance.'' \819\ --------------------------------------------------------------------------- \818\ Facsimile from Rebekah Poston to Richard Lucas (Nov. 11, 1994) (attaching Nov. 10, 1994 letter from George Odano to Rebekah Poston) (exhibit 62). \819\ Id. --------------------------------------------------------------------------- Lucas provided these follow-up questions to Phil Manuel, and Manuel worked to obtain the requested information. Six days later, on November 17, 1994, Lucas wrote another memo to Poston to address Odano's follow-up questions: A source within the U.S. government in Washington D.C. was contacted and provided the following information: 1. There is no record or information on Hiroe Clow. 2. There is a record for Nobuo Abe. The record refers to ``Suspicion of Solicitation of Prostitution, Seattle Police Department, March 1963''. There is no reference to Abe's date of birth nor the exact date of the incident. There was no other significant date as to the facts and circumstances surrounding the incident. 3. The confidential source stated that the information on Mr. Abe was an inquiry for information by the Seattle Police Dept. not a recording of an arrest or conviction. 4. The source in Washington D.C. has access to any inquiries made by third parties on Mr. Abe. According to the computer tracking system there have been more than six inquiries on Mr. Abe from various U.S. cities over the last two weeks. 5. The various inquiries by the different government entities has caused concern in the Washington D.C. central office. The source stated the recorded information should never have been entered on Mr. Abe. The source also stated that if Mr. Abe made an official request, the entry under his name would be removed from the record. In addition, it is under consideration that the entire record be removed due to the obvious recent interest by numerous third parties, the date of the alleged incident and the fact it is a ``questionable entry''. 6. It is our opinion that any effort to obtain the information on Nobuo Abe through an official request be done expeditiously.\820\ --------------------------------------------------------------------------- \820\ Memorandum from Richard Lucas to Rebekah Poston (Nov. 17, 1994) (exhibit 63). Lucas informed committee staff that Manuel obtained this information from Ben Brewer, his confidential source in the FBI.\821\ --------------------------------------------------------------------------- \821\ Lucas interview at 2. Again, Manuel denied in his committee interview that he obtained NCIC information on Abe. However, Manuel's denials are contradicted by his own sworn affidavit, and are not credible. --------------------------------------------------------------------------- At this point, both Lucas and Manuel were becoming quite concerned with their involvement in the Soka Gakkai matter. Both were under the impression that this would be a small project when they accepted it.\822\ In fact, the only reason they accepted it was because Poston was a senior lawyer with a prominent firm with close connections to the Justice Department. Otherwise, PMRG never would have accepted a case so small.\823\ However, shortly after they started working on the project, Lucas and Manuel realized that the project was more complicated, and exposed them to significant risks. Lucas told the committee that it was clear that ``essentially you were breaking the law'' by doing what Poston had asked.\824\ In sum, Lucas and Manuel became convinced that Poston had asked them to expose themselves to a major risk for very little financial reward.\825\ --------------------------------------------------------------------------- \822\ Lucas interview at 2. \823\ Id. \824\ Id. When questioned by minority staff at the committee's July 27, 2000, hearing, Lucas qualified the statement he had given to majority staff on an earlier occasion. When asked if he felt that his actions broke the law, Mr. Lucas first stated that he could not reach a legal conclusion determining whether or not he broke the law. ``Felonies and Favors: A Friend of the Attorney General Gathers Information from the Justice Department,'' 106th Cong. 52 (July 27, 2000) (preliminary transcript). Then, he stated that ``I do not believe my contact with Mr. Gonzalez was breaking the law.'' Id. at 53. Mr. Lucas' conclusion that he was not breaking the law was based upon the fact that he claims that he did not have specific knowledge that Gonzalez would be accessing the NCIC database, and that he did not specifically request Gonzalez to access to NCIC database. The fact that Lucas, and for that matter, Manuel, did not specifically ask their sources to access NCIC is legally irrelevant. Rather, the fact is that they were asked to confirm the existence of information in NCIC, and asked their sources to confirm the existence of the information. Their sources then did so, by accessing NCIC. Such activity is illegal. \825\ Id. --------------------------------------------------------------------------- d. The Information on Abe is Deleted By December 1994, Manuel and Lucas became concerned that the NCIC record on Abe was going to be deleted. Apparently, Ben Brewer, Manuel's source within the FBI, told Manuel that there was concern in the FBI about the origin of the Abe record, and that it might be deleted.\826\ By early December 1994, Lucas was discussing with Poston actions that Soka Gakkai could take to secure the Abe NCIC record before it was deleted. They discussed seeking a court injunction preserving the Abe record, but apparently decided not to.\827\ --------------------------------------------------------------------------- \826\ Id. \827\ Memorandum from Richard Lucas to Rebekah Poston (Dec. 9, 1994) (exhibit 67). --------------------------------------------------------------------------- By late December 1994, Abe's NCIC record had been deleted. On December 22, 1994, Manuel wrote a memo to Poston in which he described his contacts with a confidential source who accessed NCIC on his behalf (Richard Lucas informed the committee that this source was again Ben Brewer of the FBI): This is to report that a highly confidential and reliable source has advised as follows regarding the subject of your inquiry: (1) Whatever files of references, either in data base [sic] form or hard copy form, which were available previously have apparently been purged. There are currently no derogatory references to the subject of your inquiry in any files maintained by or under the control of the Department of Justice or any of its investigative agencies. Specifically, there is no information in NCIC.\828\ --------------------------------------------------------------------------- \828\ Memorandum from Philip R. Manuel to Rebekah Poston (Dec. 22, 1994) (exhibit 71). Because of the confusion surrounding Abe's NCIC record at this point, Poston apparently went back to the original source of the information on Abe--Jack Palladino's source at the Bureau of Prisons. Poston apparently learned exactly what information the BOP source extracted from the NCIC, and passed this information on to PMRG.\829\ Poston asked Lucas and Manuel to determine whether the BOP source's notes were legitimate, and whether that kind of information could have come from databases accessible at the BOP.\830\ --------------------------------------------------------------------------- \829\ Memorandum from Rich Lucas to Phil Manuel (exhibit 71). \830\ Id. --------------------------------------------------------------------------- It is unclear what, if any, answers Manuel and Lucas were able to provide to Poston. A number of records show that Poston was hiring still more private investigators as late as 1996 to determine what happened to the NCIC records on Abe.\831\ It appears that Poston decided that it was crucial to her case to determine where the original BOP source got the information on Abe. It also appears that Poston's desire to get information from the BOP source may have even led her to offer a bribe to the BOP employee. As one memo from 1996 notes: --------------------------------------------------------------------------- \831\ Memorandum from Michael Wilson to John Gibbons (Nov. 19, 1996) (exhibit 97). Poston stated she was told the Bureau of Prison [sic] employee would not come forward due to her pension may be at risk if she was exposed. She added an offer may have been made as to severance pay by the client if that resulted.\832\ --------------------------------------------------------------------------- \832\ Memorandum from Michael Wilson to John Gibbons (Nov. 27, 1996) (exhibit 98). Due to barriers raised by Poston and her attorneys, namely the invocation of the fifth amendment and attorney-client privileges, the committee has not been able to learn whether Poston or Soka Gakkai ever made good on this payment to their confidential source. e. The Actions Taken Were Illegal There is no question that the actions taken by Rebekah Poston, Philip Manuel, Richard Lucas, and their confidential sources, were illegal. 18 U.S.C. Sec. 641 provides for felony or misdemeanor penalties for anyone who ``embezzles, steals, purloins, or knowingly converts to his use or the use of another, or without authority, sells, conveys or disposes of any record . . . or whoever receives, conceals, or retains the same with intent to convert it to his use or gain, knowing it to have been embezzled, stolen, purloined or converted[.]'' \833\ This statute has been used to prosecute individuals who sell or give away government information.\834\ It appears that both Poston and the private investigators at PMRG were aware of their legal exposure. Richard Lucas stated that ``in direct conversations with Ms. Poston, she commented about her concern that the activities of the unknown Bureau of Prisons employee and the actions taken by PMRG on her behalf could be illegal[.]'' \835\ There is also a document indicating that Phil Manuel was aware of the risks involved in improperly obtaining NCIC information. On February 15, 1995, an individual named John Sebastian sent Manuel a fax of two newspaper articles with the handwritten note ``TITLE: OUT ON THE LIMB.'' Sebastian then wrote on top of each article a caption stating ``THEFT OF NCIC RECORDS.'' \836\ The articles describe police officers prosecuted for selling NCIC printouts. --------------------------------------------------------------------------- \833\ 18 U.S.C. Sec. 641. \834\ See, e.g., United States v. Elefant, 999 F.2d 674 (2d Cir. 1993). \835\ Letter from John C. Gibbons to David V. Ries, Deputy Chief, Office of Professional Responsibility, Federal Bureau of Investigation, May 28, 1997 (exhibit 103). \836\ Facsimile from John Sebastian to Philip Manuel (Feb. 15, 1995) (attaching articles regarding the theft of NCIC records) (exhibit 80). --------------------------------------------------------------------------- In addition, the 1996 memo describing Poston's efforts to obtain information from Jack Palladino's source at the BOP raises additional questions about illegal conduct by the Soka Gakkai lawyers and investigators. The memo indicates that Poston may have made an offer that Soka Gakkai would reimburse the BOP source if she lost her pension as a result of coming forward with her confidential information.\837\ If these allegations are true, they could constitute a bribe or solicitation for bribery, in violation of 18 U.S.C. Sec. 201. --------------------------------------------------------------------------- \837\ Memorandum from Michael Wilson to John Gibbons (Nov. 27, 1996) (exhibit 98). --------------------------------------------------------------------------- 3. Poston Requests Information on Nobuo Abe Through FOIA a. Poston Places FOIA Requests for Information on Abe On November 21, 1994, Poston submitted FOIA requests to the Justice Department, the Federal Bureau of Investigation, the Immigration and Naturalization Service, and a number of other agencies, requesting information on Abe's alleged detention in Seattle. Given the claims of attorney-client privilege made by parties involved in the investigation, all of Poston's reasons for pursuing the information through FOIA are unknown. However, it appears that information obtained through legal means would be easier to use in the ongoing litigation in Japan. In addition, it appears that Poston had a concern that the Abe record might be deleted from the NCIC database, given the concern within the FBI that it was not a legitimate record. b. Poston Publicly Confirms that She Already Has the Information While her FOIA requests were still pending, in December 1994 and January 1995, Poston took steps that publicly acknowledged the receipt of confidential NCIC records from Manuel and Lucas. First, on December 9, 1994, Poston wrote a letter to Soka Gakkai confirming that she had obtained the NCIC information on Abe: Your organization has requested us to investigate whether the United States government has maintained any records of an investigation concerning an individual known as Nobuo Abe, a foreign national, born December 19, 1922. Subsequent to this request, we engaged the Philip Manuel Resource Group, Ltd. (PMRG), a highly prestigious private investigations firm based in Washington, D.C[.] PMRG reported to us on November 17, 1994, that a source within the U.S. government in Washington, D.C. was contacted and the source confirmed to PMRG that there is a record for Nobuo Abe. According to PMRG's report to us, the record refers to: Suspicion of Solicitation of Prostitution Seattle Police Department March, 1963 * * * * * I am able to testify as to the truthfulness and accuracy of my statements in this letter.\838\ --------------------------------------------------------------------------- \838\ Letter from Rebekah Poston to Soka Gakkai (Dec. 9, 1994) (exhibit 68). Poston repeated the same information in a letter sent to Hiroe Clow on January 4, 1995.\839\ Shortly thereafter, in a SGI-USA newsletter dated January 9, 1995, Barry Langberg, Hiroe Clow's lawyer, publicly disclosed Poston's letter to Clow.\840\ Langberg included the letter in an interview in which he was explaining the progress of Clow's lawsuit against Abe. --------------------------------------------------------------------------- \839\ Letter from Rebekah Poston to Hiroe Clow (Jan. 4, 1995) (exhibit 73). \840\ The SGI-USA Newsletter (Jan. 9, 1995) (exhibit 74). --------------------------------------------------------------------------- Poston's disclosure of the information that PMRG had obtained for her is surprising, given that her activities had been cloaked in secrecy to that point. Moreover, the disclosure by Poston constitutes a public admission that she had hired individuals who broke the law to obtain Abe's NCIC information, with Poston's apparent knowledge and consent. In addition, Poston's disclosure of the information obtained by PMRG constitutes a waiver of any attorney-client privilege or work product protection that she could invoke over those subjects. c. Negative Responses to Poston's FOIA Requests When Poston made her FOIA requests for NCIC information on Nobuo Abe, she was taking on a long-standing Justice Department policy against the release of that kind of information. According to Richard Huff, the Co-Director of the Office of Information and Privacy, the Department has a policy against releasing any criminal justice information to a third party without permission of the party involved.\841\ Moreover, in cases where they cannot release records, the Department has a policy against even confirming or denying the existence of criminal justice records within the Department.\842\ According to Huff, this policy ensures that individuals who have arrest records, and other records, have those records kept private. As Huff explained to committee staff, if the Department confirmed when individuals did not have arrest records, and simply said ``no comment'' when they did have records, any person would be able to determine who had arrest records in the Justice Department.\843\ Therefore, according to Huff, the Justice Department's policy of refusing to confirm or deny whether criminal justice records exist is integral to a system that attempts to protect the privacy of individuals involved.\844\ --------------------------------------------------------------------------- \841\ Interview of Richard L. Huff at 1 (June 16, 2000) (Huff interview). \842\ Id. \843\ Id. at 1-2. \844\ Id. at 2. --------------------------------------------------------------------------- Poston apparently recognized the fact that she was attempting to obtain information in the face of long-standing Justice Department policy. She informed the committee that she viewed her FOIA request as a long-shot, because she was requesting information on a person that she did not represent.\845\ Poston's client, Hiroe Clow, also seemed to recognize that the FOIA request would not be granted, stating in a letter to Janet Reno: ``[m]y lawyers tell me that things don't look so good on the F.O.I.A. request if decided in accordance with previous practices.'' \846\ And, as expected, Poston's FOIA requests were rejected. The FBI informed Poston that she could not receive any information on Abe unless she provided either proof of death, or a notarized waiver from Abe.\847\ Similarly, the Executive Office of United States Attorneys told Poston that she must provide a notarized waiver by Abe.\848\ --------------------------------------------------------------------------- \845\ Poston interview at 3. \846\ Letter from Hiroe Clow to Janet Reno, Attorney General, Department of Justice (Mar. 21, 1995) (exhibit 110). \847\ Letter from J. Kevin O'Brien, Chief, Freedom of Information-- Privacy Acts Section, Information Resources Division, Federal Bureau of Investigation, to Rebekah Poston (Dec. 8, 1994) (exhibit 66). \848\ Letter from Bonnie L. Gay, Attorney-in-Charge, FOIA/PA Unit, Executive Office for U.S. Attorneys, to Rebekah Poston (Jan. 12, 1995) (exhibit 75). --------------------------------------------------------------------------- Poston met with the FBI to discuss their handling of the FOIA request, and according to Poston, the FBI was receptive to her arguments, but informed her that their general policy was not to release, or even confirm or deny the existence of records about third parties in NCIC without the permission of the third party.\849\ According to Poston, the FBI told her that they would like to help her, but that any decision on the release of Abe's NCIC information would have to be made by the Attorney General, not the FBI.\850\ --------------------------------------------------------------------------- \849\ Poston interview at 2. \850\ Id. --------------------------------------------------------------------------- After she received negative responses to her FOIA requests, on February 3, 1995, Poston submitted an appeal to the Justice Department. In her appeal, she argued that the Justice Department should release NCIC records on Abe, based on the fact that there was a significant public interest in whether Abe was arrested in Seattle in 1963; and that as a non-citizen, Abe was not protected by the Privacy Act.\851\ However, Poston was aware that her arguments would not likely be accepted by the Justice Department.\852\ The Justice Department had an established policy that it would not confirm or deny the existence of the records that Poston was seeking. This policy had been in place for a significant period of time, and Poston's arguments did not change that fact. --------------------------------------------------------------------------- \851\ Letter from Rebekah Poston to Attorney General Janet Reno (Feb. 3, 1995) (exhibit 77). \852\ Poston interview at 3. --------------------------------------------------------------------------- 4. Rebekah Poston's Lobbying Campaign After her unsuccessful meeting with the FBI, Poston began a remarkable series of contacts with the Justice Department, in an effort to reverse the existing Justice Department policy, and obtain whatever information existed on Nobuo Abe in the NCIC system. Between January and June 1995, Poston contacted high-level Justice Department officials at least 22 times regarding her FOIA request.\853\ These contacts were made with senior staff in the Office of the Attorney General, the Office of the Associate Attorney General, and the Office of Information and Privacy. Poston began this lobbying campaign even before her FOIA appeal had been rejected by the Justice Department. As she explained in her interview with committee staff, she understood that her legal arguments were a long- shot, and she believed that she needed to raise this matter at the highest levels of the Justice Department.\854\ --------------------------------------------------------------------------- \853\ See Steel Hector & Davis billing records (exhibit 100). \854\ Poston interview at 3. --------------------------------------------------------------------------- a. Poston's Contacts with John Hogan Over the next several months, Poston would be in frequent contact with John Hogan, the Chief of Staff to the Attorney General. According to Poston, Hogan is a good friend of hers, and a great friend of her sister.\855\ As an example of her family's friendship with Hogan, Poston informed the committee that at the time of Hurricane Andrew, Hogan invited Poston's sister and Poston to stay with him in his house.\856\ Poston initially told Hogan that she was in a ``FOIA situation,'' and wanted to meet with the decisionmakers face-to-face to make her case.\857\ Poston explained to Hogan that she wanted him to make an introduction to the relevant individuals who could help her.\858\ According to Poston, Hogan told her that ``he didn't do FOIA, but would be happy to help her,'' and he told her that he would check into the matter.\859\ --------------------------------------------------------------------------- \855\ Id. \856\ Id. \857\ Id. \858\ Id. \859\ Id. --------------------------------------------------------------------------- Hogan's account differs in some significant respects from Poston's. First, he downplayed his relationship with Poston. He acknowledged that he knows Poston, but did not describe her as a friend.\860\ He similarly downplayed Poston's relationship with the Attorney General, merely acknowledging that Roberta Forrest was a secretary for the State Attorney's Office, failing to mention that she managed Ms. Reno's campaigns for office.\861\ Hogan acknowledged that he was contacted by Poston, and that Poston asked him for help with her FOIA appeal. However, he stated that he ``did not pay much attention to what she was saying after he heard that it was a FOIA case,'' and that he generally suggested that she needed to talk to people in the DOJ FOIA office.\862\ --------------------------------------------------------------------------- \860\ See Hogan interview. \861\ Id. at 1. \862\ Id. --------------------------------------------------------------------------- Hogan informed the committee that he believed that he spoke with Poston on less than five occasions.\863\ Similarly, Poston estimated that she spoke with Hogan on two to four occasions.\864\ However, records subpoenaed by the committee reveal a remarkable volume of contacts between Poston and Hogan. Between January 26, 1995, and June 2, 1995, Poston contacted John Hogan at least 18 times on the Soka Gakkai matter.\865\ While it is possible that some of these contacts were occasions when Poston merely left a message with Hogan, they clearly indicate that Hogan did more than suggest that Poston speak with officials in the Justice Department FOIA office. --------------------------------------------------------------------------- \863\ Id. \864\ Poston interview at 3. \865\ See Steel Hector & Davis billing records. A number of the cited pages refer to contact between Poston and the Attorney General's Office. However, in her interview, Poston acknowledged that her sole contact in the Attorney General's Office was Hogan. Similarly, in his interview, Hogan stated that he believed that other than the Attorney General, he was the only person in the Attorney General's Office who knew Poston. --------------------------------------------------------------------------- b. Poston's FOIA Appeal is Rejected During the time that Poston was making these contacts with Hogan, her appeal was rejected by the Justice Department's FOIA office. In a letter dated April 25, 1995, Richard Huff, the Co- Director of the Office of Information and Privacy, rejected Poston's arguments. Huff informed the committee that he did not spend much time deliberating Poston's appeal, and viewed it as a clear-cut decision.\866\ In Huff's mind, the Supreme Court directly addressed this issue: --------------------------------------------------------------------------- \866\ Huff interview at 2. I find the Supreme Court's holding in United States Department of Justice v. Reporter's Committee for Freedom of the Press, 489 U.S. 749 (1989) to be controlling in this case. Thus, in the absence of such authorization [from Mr. Abe], and after careful consideration of your appeals from the actions of the EOUSA and the FBI, I have decided to affirm the initial actions of these components in refusing to confirm or deny the existence of records responsive to your request. Lacking an individual's consent, proof of death, official acknowledgment of an investigation, or an overriding public interest, even to acknowledge the existence of law enforcement records pertaining to an individual could reasonably be expected to constitute an unwarranted invasion of personal privacy.\867\ --------------------------------------------------------------------------- \867\ Letter from Richard L. Huff to Rebekah J. Poston (Apr. 25, 1995) (exhibit 83). At this point, the Office of Information and Privacy, which served as the highest office deciding FOIA appeals within the Justice Department, had spoken. To obtain a reversal would require the intervention of a high-level appointee at the Justice Department. c. Attorney General Reno Recuses Herself On April 28, 1995, only 3 days after Huff rejected Poston's FOIA appeal, the Attorney General recused herself from the Soka Gakkai matter. In a memorandum to her staff, copied to the Associate Attorney General, Ms. Reno stated: This is to inform you that I have recused myself from participation in the FOIA appeal made to the Department concerning requests for information relating to Nobuo Abe, a prominent religious leader, on behalf of Mrs. Hiroe Clow. Apparently, an attorney, who is a close personal friend of mine and participated in my confirmation hearing preparation has requested my intervention in the matter and I want to make it very clear that I have chosen to disqualify myself from any participation and request that no information regarding this matter be brought to my attention.\868\ --------------------------------------------------------------------------- \868\ Memorandum from Attorney General Janet Reno to staff of the Attorney General (Apr. 28, 1995) (exhibit 84). Poston was asked about the recusal memo, and stated that the memo clearly refers to a contact from John Edward Smith, a close friend of the Attorney General, and a senior partner at Steel Hector who worked on the Abe matter.\869\ However, Poston denied having any knowledge that Smith contacted Reno on the Abe matter.\870\ In addition, the Steel Hector billing records do not show that Smith billed any time on the Abe matter.\871\ John Hogan, the Attorney General's Chief of Staff, similarly believed that the memo referred to Smith.\872\ In his interview with committee staff, Hogan claimed that he was unaware that Reno had recused herself from this matter.\873\ However, at the committee's July 27, 2000, hearing, Hogan offered a new explanation of Reno's recusal: --------------------------------------------------------------------------- \869\ Poston interview at 4. \870\ Id. \871\ See Steel Hector & Davis billing records (exhibit 100). \872\ Hogan interview at 2. \873\ Id. I had a conversation with her [Poston] at one point, and she clearly was frustrated with the fact that her position was not gaining momentum within the Department, and she mentioned to me that she was handling the matter with a man by the name of John Edward Smith. I knew him to be a friend of the Attorney General. Again, I have worked with the Attorney General since 1979 and knew her before that. He had been at Steel Hector & Davis when the Attorney General was there, as opposed to Ms. Poston, who joined the firm after Ms. Reno left. He was someone--when she was nominated to be Attorney General, he took a leave of absence from the firm and actually came up here to Washington to help her prepare for her confirmation hearings. He came up here and helped her prepare for --------------------------------------------------------------------------- those hearings. So when Ms. Poston mentioned John Edward Smith's name to me, I became concerned. I went to the Attorney General and said, there is this FOIA matter that Rebekah Poston had called me on, and I sent it off to the career people. And the Attorney General just said, I am recusing myself from the matter. Make sure nothing else comes to me. Although Ms. Poston I would not characterize as a friend or social acquaintance of the Attorney General, Mr. Smith was, and that was my notice that he was more involved, and so I brought it to her attention.\874\ --------------------------------------------------------------------------- \874\ ``Felonies and Favors: A Friend of the Attorney General Gathers Information from the Justice Department,'' 106th Cong. 147-48 (July 27, 2000) (preliminary transcript). However, Hogan's hearing testimony is in some tension with the text of Reno's recusal memo, which states that ``[a]pparently, an attorney, who is a close personal friend of mine and participated in my confirmation hearing preparation has requested my intervention in the matter[.]'' This statement is considerably different from what Hogan supposedly relayed to the Attorney General. Given the fact that Poston is unaware of Smith's contacts with Reno, the two versions of Hogan's recollection, and the text of Reno's own recusal memo, the --------------------------------------------------------------------------- committee is left with a number of questions: <bullet> Did anyone representing Soka Gakkai contact Attorney General Reno? If it was John Smith, why didn't he either inform Poston, who was overseeing the case, or bill his time? <bullet> If Smith contacted Reno, why does Rebekah Poston claim to be unaware of the contact? Smith was not the main attorney on the case, and it is difficult to believe that he would contact the Attorney General about the case without informing Poston. <bullet> Why did Reno recuse herself from the case? Richard Huff, who has directed the Office of Information and Privacy for almost 20 years, stated that he has never heard of the Attorney General, Deputy Attorney General, or Associate Attorney General ever recusing themselves from a FOIA appeal. <bullet> The manner of Reno's recusal raises significant questions about the contacts that led to the recusal. What did Smith ask Reno to do? Hogan stated that in his experience, Reno would ``not receive it well if [someone like Smith] asked her for special treatment on behalf of a client.'' \875\ that is the case, why did Smith, a long time friend of the Attorney General, contact her? --------------------------------------------------------------------------- \875\ Id. --------------------------------------------------------------------------- d. John Hogan Arranges a Meeting with the Associate Attorney General After the rejection of her FOIA appeal, Rebekah Poston continued her contacts with John Hogan, requesting a meeting with the Associate Attorney General. On May 12, 1995, she wrote to Hogan, and specifically requested a meeting. In a letter marked ``PERSONAL AND CONFIDENTIAL,'' Poston stated that she was ``rather disappointed'' with the Justice Department's rejection of her FOIA appeal.\876\ She then requested the meeting with Schmidt: --------------------------------------------------------------------------- \876\ Letter from Rebekah Poston to John Hogan (May 12, 1995) (exhibit 85). Consequently, John Smith, Russell Bruemmer and I believe we must take one last step before deciding whether to initiate litigation on these issues. Believe me, we do not want to bring unnecessary or senseless litigation. Unfortunately, however, we are lacking an understanding, given our arguments and the failure of anyone in the Office of Information and Privacy to address them head on, as to why our appeal has been denied. If you could assist the three of us in scheduling a meeting with Mr. Schmidt, we would like to address our concerns with him. We have not yet --------------------------------------------------------------------------- attempted to contact Mr. Schmidt. We trust that Mr. Schmidt will agree to one final conference on this matter; we will of course work with his schedule on a convenient date and time. I harken [sic] back to the beginning of this matter when you and I first spoke. You commented that you didn't understand why they could not tell whether they have a record or not. Frankly, we would be satisfied with such a response.\877\ --------------------------------------------------------------------------- \877\ Id. Steel Hector & Davis billing records also indicate that Poston called Hogan at least four times in late May and early June, apparently the time when the meeting with Schmidt was scheduled.\878\ In her interview with committee staff, Poston stated that she was asking Hogan to help set up the meeting with Schmidt.\879\ Poston stated that Hogan was responsive, and said he would contact Schmidt, and help set up the meeting.\880\ When he was interviewed by committee staff though, Hogan had a different recollection. He stated that he did not even recall Poston asking for help in setting up a meeting with Schmidt.\881\ Hogan stated that ``I cannot imagine that I would be so presumptuous as to ask Schmidt to meet with anyone.'' \882\ Hogan did allow that it was possible that he forwarded Poston's May 12 letter to Schmidt's office, but does not believe that he ever spoke with Schmidt about this matter.\883\ --------------------------------------------------------------------------- \878\ Steel Hector & Davis billing records at 0000146 (exhibit 100). \879\ Poston interview at 3. \880\ Id. \881\ Hogan interview at 1. \882\ Id. at 2. \883\ Id. --------------------------------------------------------------------------- Hogan's account of how the Schmidt meeting was arranged is troubling. Poston clearly stated that Hogan helped arrange the meeting. The timing and volume of the telephone calls between Poston and Hogan supports the conclusion that Hogan was involved in scheduling the meeting with Schmidt. Under Hogan's account, the 18 contacts from Rebekah Poston go unexplained. Poston continued to contact him, despite the fact that in their initial conversation, Hogan told her that he did not ``do FOIA,'' and directed her to the Office of Information and Privacy. The fact that there were so many more contacts, including contacts shortly before the meeting with Schmidt, supports the conclusion that Hogan was involved in scheduling the meeting. Finally, common sense supports the conclusion that Poston received some assistance in arranging a meeting with the Associate Attorney General on a matter so small as a FOIA appeal. It would be unlikely that the Associate Attorney General would meet with a party on this kind of matter unless there was some special request. e. The Justice Department ``Reverses its Policy'' Rebekah Poston, John Smith, and Russell Bruemmer met with John Schmidt on June 15, 1995, at 3:30 p.m.\884\ Before their meeting with Schmidt, John Smith arranged for the group to visit Attorney General Reno in her office. In her interview, Poston confirmed that John Smith had made this appointment with the Attorney General.\885\ Poston stated that this was a social call, and that the group exchanged pleasantries with the Attorney General.\886\ For example, Poston stated that the Attorney General asked her how her sister and her children were doing.\887\ Poston denied that she, Smith, or Bruemmer discussed the Soka Gakkai matter with the Attorney General.\888\ When the Attorney General asked them what brought them to the Justice Department, Smith stated that ``we have other business in the Department.'' \889\ --------------------------------------------------------------------------- \884\ Calendar of Rebekah Poston for June 15, 1995, Steel Hector & Davis document 000028 (exhibit 99). \885\ Poston interview at 5. \886\ Id. \887\ Id. \888\ Id. \889\ Id. --------------------------------------------------------------------------- After their meeting with the Attorney General, Poston, Smith and Bruemmer met with Schmidt. According to Poston, Schmidt started the meeting by informing them that he had not yet discussed the matter with Richard Huff.\890\ Poston took this as a positive sign, because it meant that Schmidt had an open mind on the subject.\891\ On the other hand, it is slightly troubling that Schmidt would not take any steps to educate himself on the Department's FOIA policy before he met with a party who was seeking the reversal of long-standing Department policy. Poston commented on another troubling aspect of the meeting with Schmidt--Schmidt had no staff present at the meeting with Poston.\892\ It is strange enough that Schmidt, the third-highest official in the Department of Justice, would even attend a meeting on a FOIA request. It is even more odd that he would attend this meeting by himself, and not seek to delegate this matter to a staffer. Due to Schmidt's failure to recall even the most basic facts about this matter, we cannot determine whether Schmidt recognized that Poston's request was irregular, or whether he simply wanted to work on this matter himself. --------------------------------------------------------------------------- \890\ Id. \891\ Id. \892\ Id. --------------------------------------------------------------------------- Poston informed the committee that she, Smith and Bruemmer made their points with Schmidt, and he stated that he would take their arguments under advisement.\893\ When he was interviewed by committee staff, Schmidt could recall almost nothing about the entire Soka Gakkai matter. Schmidt did recall that he asked Huff to find out what information the Department had on Abe, and that when he discovered that there were no records, that he decided they could tell that to Poston.\894\ According to Schmidt, ``it was hard to see the adverse consequences'' of confirming that there were no NCIC records on Abe.\895\ Schmidt told committee staff that ``Dick [Huff] said he would be comfortable with that.'' \896\ --------------------------------------------------------------------------- \893\ Id. \894\ Interview of John R. Schmidt (June 16, 2000). \895\ Id. \896\ Id. --------------------------------------------------------------------------- Richard Huff, though, tells a dramatically different story. Huff stated that Schmidt called him in mid-June to ask about the Poston FOIA appeal.\897\ They arranged a meeting for June 22, 1995. At the meeting, Schmidt asked Huff what the Department policy was on releasing this kind of information.\898\ Huff told Schmidt that Abe, as a foreign national, was not covered by the Privacy Act.\899\ Huff also explained, however, that there was a Department policy against even confirming or denying the existence of criminal justice information on third parties, whether they were U.S. citizens or not.\900\ Schmidt asked Huff if they could make a disclosure in this case.\901\ Huff responded by saying that they should not vary Justice Department policy in this case.\902\ Huff believes that Schmidt also mentioned the fact that Poston was threatening to litigate if she did not receive the information that she had requested. Huff responded by telling Schmidt that the odds were ``spectacular'' that the Justice Department would prevail in such litigation, given that the Supreme Court had already addressed this precise issue.\903\ Schmidt resolved the meeting by asking Huff to find out whether the Department had any NCIC records on Abe.\904\ --------------------------------------------------------------------------- \897\ Huff interview at 2-3. \898\ Id. at 3. \899\ Id. \900\ Id. \901\ Id. \902\ Id. \903\ Id. \904\ Id. --------------------------------------------------------------------------- After his meeting with Schmidt, Huff requested the FBI and the Executive Office of U.S. Attorneys to search for the requested information on Abe, and they confirmed that they had no information on Abe.\905\ Huff communicated this fact to Schmidt.\906\ Schmidt asked Huff if the Department could tell Poston that they had no NCIC records on Abe.\907\ Huff told Schmidt that they legally could do so.\908\ Schmidt then directed Huff to reverse his earlier decision, and confirm in a letter to Poston that they did not have any NCIC records on Abe.\909\ Accordingly, on July 11, 1995, Huff wrote to Poston to tell her that: --------------------------------------------------------------------------- \905\ Id. \906\ Id. \907\ Id. \908\ Id. Huff informed Schmidt that the Privacy Act did not apply to Nobuo Abe, since he was not a U.S. citizen or permanent resident. Therefore, the Justice Department's confirmation that Abe had no records at DOJ was not a violation of the Privacy Act. Despite the fact that the Privacy Act was inapplicable in this case, Huff still believed that Justice Department policy not to confirm or deny the existence of any criminal justice records should apply. \909\ Id. After considering your Freedom of Information Act request under Attorney General Reno's policy of undertaking discretionary disclosure of information whenever no foreseeable harm would result, Associate Attorney General John R. Schmidt has determined that it is appropriate to disclose the fact that neither the Federal Bureau of Investigation nor the Executive Office for United States Attorneys maintains, or has any evidence of ever maintaining, any record within the scope of your request.\910\ --------------------------------------------------------------------------- \910\ Letter from Richard L. Huff to Rebekah J. Poston (July 11, 1995) (exhibit 90). While Schmidt told committee staff that Huff was ``comfortable'' with this decision, Huff told a different story, and pointed out a series of remarkable facts about this --------------------------------------------------------------------------- matter. <bullet> First, Huff made it clear to Schmidt that he disagreed with the decision.\911\ He told Schmidt that it wouldn't be illegal to release this information, but that he disagreed with the discretionary disclosure. In addition, Huff characterized Schmidt's decision as ``unusual.'' \912\ --------------------------------------------------------------------------- \911\ Huff interview at 3. \912\ Id. <bullet> In his 25 years at the Justice Department, Huff had never had any one-on-one meetings with Schmidt, or any other Associate Attorney General.\913\ --------------------------------------------------------------------------- \913\ Id. <bullet> When asked how much senior political appointees were involved in FOIA appeals, Huff stated that ``typically, there is none.'' \914\ --------------------------------------------------------------------------- \914\ Id. at 1. <bullet> Huff is aware of involvement of senior political appointees in FOIA appeals in only two other cases. The first case involved a request for notes taken by a Justice Department lawyer relating to an interview of Sandra Day O'Connor before she was appointed to the Supreme Court. The Office of Information and Privacy initially made a decision to grant the request, and this decision was then overturned by a political appointee.\915\ The second case involved a request by Terry Anderson, who had been held captive in Lebanon, for criminal justice information possessed by the government on the individuals who had held him captive. The Office of Information and Privacy had denied his request, consistent with Justice Department policy, and then, after significant media attention, political appointees at the Department directed Huff to reverse the decision.\916\ Both cases stand in obvious contrast to this case. --------------------------------------------------------------------------- \915\ Id. \916\ Id. <bullet> It is unclear what effect the Schmidt decision had on Justice Department policy. Huff was asked whether this decision was a change of DOJ policy, or whether it was a one-time departure from existing policy. Huff stated that he believed that it was a one- time departure.\917\ When asked if Schmidt offered Huff any reason why this case would be treated differently from any other FOIA case coming to the Department, Huff stated that Schmidt offered no such rationale.\918\ --------------------------------------------------------------------------- \917\ Id. at 3. \918\ Id. --------------------------------------------------------------------------- 5. Aftermath a. Poston ``Wins the Battle, but Loses the War'' When Poston received the July 11, 1995, letter from Huff informing her that Schmidt had decided to disclose the fact DOJ had no NCIC records on Nobuo Abe, she felt like she had ``won the battle, but lost the war.'' \919\ When asked to explain why she felt that way, she declined, based on her lawyers' concerns that such an explanation would cause her to disclose the illegal activities conducted on her behalf by PMRG.\920\ However, documents obtained by the committee show how disturbed Poston was to find out that the Justice Department did not have any records on Abe. Huff's letter conflicted with the information that Phil Manuel, Richard Lucas, and Jack Palladino had extracted from confidential sources within the Justice Department. On July 19, 1995, shortly after she got the Huff letter, Poston wrote to Manuel and Lucas to ask them to follow up with their confidential sources: --------------------------------------------------------------------------- \919\ Poston interview at 5. \920\ Id. I need your assistance in helping me explain to my clients the apparent inconsistencies between the letter we received from Richard L. Huff, dated July 11, 1995 and your investigative reports of November 11 and 17, --------------------------------------------------------------------------- 1994. Our personal meeting with Deputy [sic] Associate Attorney General John Schmidt resulted in a policy decision by the Attorney General to reverse the original position of the Department of Justice by authorizing the release of the requested record or a statement as to whether it existed in the past. That is a major accomplishment and victory. The result, however, is quite perplexing. I can only conclude that since a record existed, which your two independent sources verified, the places searched enumerated in Huff's letter must not have been the proper locations. Any other conclusion means that the sources are either not telling the truth or that the record was deleted (a real possibility according to the source in the November 17, 1994 report) without a trace, an impossibility according to former, FBI, S/A Lawler, if the record was ever in NCIC. That is part of the problem. Our client views this letter as an absolute defeat for them in Japan. * * * * * Our client is requesting that each of you ask your sources for an explanation or [sic] where they found the record. The Attorney General's position is clear-- its existence and/or its deletion is authorized to be disclosed. I have the utmost confidence in your reports. We must try our best to resolve this critical issue for our client. Please give this matter your immediate attention. Leave no stone unturned.\921\ --------------------------------------------------------------------------- \921\ Letter from Rebekah Poston to Philip Manuel and Richard Lucas at 2 (July 19, 1995) (exhibit 92). Poston and Schmidt were questioned about this letter at the committee's hearing. When questioned about the statement that the Attorney General had decided to reverse the Justice Department's position, Schmidt stated that it was ``obviously wrong'' and ``lawyer's puffery.'' \922\ However, Poston stood by the statement in her letter, saying ``it could have been more artfully written to say the `office of,' but I don't believe it's puffery.'' \923\ Poston's insistence that the Office of the Attorney General was responsible for her success in obtaining the information on Abe continues to raise questions about the involvement of John Hogan in this matter. --------------------------------------------------------------------------- \922\ ``Felonies and Favors: A Friend of the Attorney General Gathers Information from the Justice Department,'' 106th Cong. 155 (July 27, 2000) (preliminary transcript). \923\ Id. --------------------------------------------------------------------------- Lucas informed the committee that he took no action in response to Poston's requests.\924\ He believes that Phil Manuel's confidential source, Ben Brewer, told Manuel that he believed that Abe's NCIC record was erased, and that there was no evidence of its erasure.\925\ --------------------------------------------------------------------------- \924\ Lucas interview at 3. \925\ Id. --------------------------------------------------------------------------- After Lucas and Manuel failed to produce any further information, Poston threatened to make both of them testify at trial in Japan, where apparently, Poston's earlier representations about the existence of an NCIC record on Abe were coming under considerable scrutiny.\926\ Lucas refused to go to Japan and instead, Poston drafted an affidavit for Lucas to sign.\927\ Lucas refused to sign the affidavit unless Manuel signed one as well.\928\ The surprising result was that in September 1995, Manuel and Lucas both executed sworn affidavits regarding their activities in the Abe case, including their illegal conduct in obtaining the information on Abe. Manuel admitted: --------------------------------------------------------------------------- \926\ Id. \927\ Id. \928\ Id. 11. As part of PMRG's investigation, I contacted a confidential and highly reliable source who I believed would be able to determine whether the federal --------------------------------------------------------------------------- government had documentary evidence. 12. My source told me that there was a federal government record for Nobuo Abe which referred to ``Suspicion of Solicitation of Prostitution, Seattle Police Department, March 1963.'' 13. My source further told me that the record concerning Mr. Abe reflected that the Seattle Police Department had made an inquiry for information. 14. My source also told me that if Mr. Abe made an official request for the information under his name to be removed from the record, it could be removed. 15. Sometime later, my source informed me that the record concerning Mr. Abe apparently had been purged. 16. I am confident that the information provided to me by the source is accurate and reliable.\929\ --------------------------------------------------------------------------- \929\ Affidavit of Philip R. Manuel at 2-3 (Sept. 20, 1975) (exhibit 95). --------------------------------------------------------------------------- Lucas made similar admissions in his affidavit: 9. As part of my investigation for PMRG, I contacted a highly reliable source and advised the source that I was attempting to confirm the existence and the whereabouts of documents in the possession of the federal government related to Mr. Abe. I told this source that Mr. Abe's name is ``Nobuo Abe'' and that his date of birth is December 19, 1922. I also told the source that Mr. Abe had no social security number because he was not a U.S. citizen. 10. The source later reported to me that he had determined that the federal government did have a record regarding a Nobuo Abe which referred to solicitation of prostitution, Seattle Police Department, March 1963. 11. I am confident that the information provided to me by the source is accurate and reliable.\930\ --------------------------------------------------------------------------- \930\ Affidavit of Richard Lucas at 2 (Sept. 22, 1995) (exhibit 96). --------------------------------------------------------------------------- b. Justice Department Fails to Prosecute Poston or Manuel One of the committee's greatest concerns is that the Justice Department has shown no interest in prosecuting the clearly illegal conduct evident in this case. The actions by Poston, Manuel, and Lucas clearly implicate 18 U.S.C. Sec. 641. Any case brought against Poston or Manuel would be exceedingly strong, as it would be bolstered by extensive documentary evidence, as well as the testimony of Richard Lucas. Indeed, Poston and Manuel admit to their illegal actions, in writing, and in Manuel's case, even under oath. The Justice Department has been provided with this information on a number of occasions. In February 1997, counsel for Nichiren Shoshu, John Gibbons, sent a set of documents to the FBI Washington Field Office.\931\ Those documents detailed the fact that NCIC information on Abe had been illegally obtained by Poston, Manuel, and Lucas. Those records were forwarded to the FBI Office of Professional Responsibility (OPR). On February 19, 1997, David Ries, the Deputy Chief of OPR, wrote to Gibbons, stating that the charges ``have no merit.'' \932\ However, Ries did state that the FBI OPR would consider revisiting the issue if it obtained a detailed statement from Richard Lucas. Gibbons provided a detailed accounting of Lucas's testimony in May 1997.\933\ In September 1997, Ries responded, stating that ``the allegations presented by you and others have been repeatedly brought to the attention of the FBI by numerous individuals in various communications and in various meetings, for a number of years. . . . This review indicates the allegations remain without merit.'' \934\ Gibbons wrote back on September 26, 1997, to ask Ries to at least interview Lucas before he reached any conclusions that the Abe matter was without merit.\935\ Ries wrote back one final time on October 16, 1997, to tell Gibbons that OPR would not conduct any further investigation into the Abe matter, and that his ``allegations remain without merit.'' \936\ --------------------------------------------------------------------------- \931\ See letter from David V. Ries, Deputy Assistant Director, Office of Professional Responsibility, Federal Bureau of Investigation, to the OSO Group, Ltd. (Feb. 19, 1997) (exhibit 102). \932\ Id. \933\ Letter from John C. Gibbons to David V. Ries, Deputy Assistant Director, Office of Professional Responsibility, Federal Bureau of Investigation (May 28, 1997) (exhibit 103). \934\ Letter from David V. Ries, Deputy Assistant Director, Office of Professional Responsibility, Federal Bureau of Investigation, to the OSO Group, Ltd. (Sept. 4, 1997) (exhibit 105). \935\ Letter from John C. Gibbons to David V. Ries, Deputy Assistant Director, Office of Professional Responsibility, Federal Bureau of Investigation (Sept. 26, 1977) (exhibit 106). \936\ Letter from David V. Ries, Deputy Assistant Director, Office of Professional Responsibility, Federal Bureau of Investigation, to the OSO Group, Ltd. (Oct. 16, 1997) (exhibit 107). --------------------------------------------------------------------------- In addition to numerous attempts made by counsel for Nichiren Shoshu, the committee has referred this matter to the Justice Department. In 1998, committee staff met with FBI personnel to explain this matter, and request the FBI to investigate the potentially illegal actions taken by Poston and PMRG. It is astounding that the Justice Department has refused to take action on this matter. The Department has been provided on repeated occasions with clear-cut evidence of illegal activity. There is both documentary and testimonial evidence that Rebekah Poston, Philip Manuel, and Richard Lucas penetrated confidential law enforcement databases to obtain information on Nobuo Abe. However, the Department has concluded on three separate occasions, without explanation, that these charges are ``without merit.'' Apparently, though, they have not attempted to interview any of the witnesses in this case, including Richard Lucas, who offered repeatedly to be interviewed, against his own legal interests.\937\ --------------------------------------------------------------------------- \937\ Although there is no doubt that Richard Lucas' conduct was unlawful, it must be pointed out that he was the only witness involved in the illegal efforts to obtain information on Abe to cooperate fully with the committee. As important, his offer of cooperation to the Justice Department indicates a willingness to atone for his part in improper conduct. By comparison, Poston and Manuel have taken no steps to cooperate with law enforcement. --------------------------------------------------------------------------- 6. Poston's Appearance Before the Committee on July 27, 2000 On July 27, 2000, the committee held a hearing at which Rebekah Poston, Philip Manuel, Richard Lucas, John Schmidt, Richard Huff, and John Hogan testified. a. Poston Refused to Invoke the Fifth Amendment When Poston was interviewed by committee staff on June 29, 2000, her counsel informed committee staff that she would not answer questions about her efforts to obtain information about Nobuo Abe through private investigators. Her counsel, Eduardo Palmer, stated that Poston would not answer these questions because of the attorney-client privilege and Poston's possible criminal exposure. Therefore, committee staff asked few questions about those subjects. When Poston was informed in early July that she would be called to a hearing of the committee, her counsel strenuously objected. In a conference call on July 12, 2000, her counsel, Eduardo Palmer, C. Boyden Gray, and Jane Sherburne, explained the reasons why they believed Poston should not be called to the committee's hearing. During this telephone call, Palmer and Gray repeatedly stated that they believed that Poston would be forced to take the fifth if called to a hearing. Palmer repeatedly stated that he did not want Poston to be forced to take the fifth publicly, and argued that in light of this fact, it would be more appropriate to hold a closed hearing, to spare Poston the embarrassment of taking the fifth publicly. Once at the hearing, Poston and her counsel did not invoke the fifth amendment, and even attempted to deny that they ever stated that they would if called to a hearing. When asked about her contacts with private investigators, and her requests that they illegally obtain NCIC information, Poston claimed attorney-client privilege. Chairman Burton then questioned her about her counsel's representations: Chairman Burton. Let me just inform Ms. Poston, first of all, that you are directed by the committee to answer the question and you do run the risk of being held in contempt of Congress if you do not. The second thing is, I'd like to ask the question, when you appeared before Mr. Wilson and his colleague and were discussing these issues, did you indicate that you would take the fifth amendment before this committee? Ms. Poston. I did not, nor do I intend to do so. * * * * * Chairman Burton. Did your legal counsel, your lawyers, indicate that you might take the fifth amendment? * * * * * Mr. Palmer. I had discussions with a member of your committee who spoke with me about these matters over the course of the last year and a half. Chairman Burton. I'm talking about when you were here, what, a few weeks ago. Mr. Palmer. Three weeks ago. Chairman Burton. Yes. Mr. Palmer. No, sir. Chairman Burton. When you discussed with them on the phone the issues in the last week did you indicate that she might take the fifth amendment? Mr. Palmer. Members of your committee indicated to me that, in their view, the conduct at issue here could constitute a criminal violation; and we discussed all the privileges that would be applicable in that situation. I advised them that if that were the situation that, first and foremost, the information the committee sought would be protected by the attorney- client privilege and the work product doctrine. I also told them that if they believed that a witness had committed a criminal offense and they knew that from the outset, that it would be improper for--to force the witness to come before this committee merely to assert a fifth amendment privilege. Chairman Burton. So you did indicate that Ms. Poston might under these circumstances assert her fifth amendment privilege. Mr. Palmer. I indicated exactly what I just expressed to you.\938\ --------------------------------------------------------------------------- \938\ ``Felonies and Favors: A Friend of the Attorney General Gathers Information from the Justice Department,'' 106th Cong. 39-40 (July 27, 2000) (preliminary transcript). Palmer's characterization of his discussions with committee staff varied substantially from reality. Palmer's discussions with staff were not an abstract discussion of the propriety of forcing a witness to invoke the fifth amendment. Rather, he made an extended plea to have Poston appear in a closed session, based upon the fact that it would be improper and embarrassing to force her to take the fifth in public. Indeed, if Palmer never intended to have Poston take the fifth, as he claimed at the hearing, the plea made in his July 12 conference call was highly misleading. In retrospect, it appears as though the positions taken by Poston and her counsel evolved. Initially they believed that they would be compelled by the facts of this particular case to invoke the fifth amendment. Later, they decided--improperly, from the perspective of the committee--to use the attorney-client privilege as an all- purpose prophylactic against appearing to admit guilt to any possible crime. b. Poston Refused to Answer Questions Which She Was Legally Obligated to Answer A number of times during the committee's hearing, Poston was asked about her contacts with Philip Manuel Resource Group, and her efforts to obtain criminal history information about Nobuo Abe. Any time that Poston was asked substantive information about those efforts, she invoked attorney-client privilege. Poston invoked the privilege despite the fact that she was informed that the privilege did not apply. As explained to her during the hearing, many of the subjects being discussed in the committee's hearing were not privileged in any way, for the following reasons: <bullet> A number of details about Poston's contacts with PMRG were published by her client in the Soka Gakkai newsletter. The publication of these matters would waive the privilege. <bullet> Many of the contacts between Poston and her investigators took place prior to the establishment of a formal agency relationship between Steel Hector & Davis and PMRG. <bullet> Many of the activities undertaken by PMRG were illegal, and cannot be the subject of a claim of privilege, because of the crime/fraud exception to the privilege. <bullet> Finally, Congress need not recognize the attorney-client privilege, and the committee does not in the Poston case, given the clear indicia that Poston and her investigators were engaged in illegal activity. Despite a clear instruction from the chairman that she answer questions put to her, Poston refused to answer questions about her attempts to gather criminal history information on Nobuo Abe.\939\ --------------------------------------------------------------------------- \939\ Poston's refusal to comply with the chairman's order should be contrasted with Richard Lucas's compliance with the chairman's order. Lucas answered all questions put to him, understanding that the committee had considered and rejected all claims of privilege. ``Felonies and Favors: A Friend of the Attorney General Gathers Information from the Justice Department,'' 106th Cong. 45-46 (July 27, 2000) (preliminary transcript). --------------------------------------------------------------------------- Improper access to law enforcement databases is a serious and pervasive problem. While it is not uncommon for investigators to access databases like NCIC without permission, such activity is illegal. The Department of Justice and FBI should take seriously their responsibility to guard the privacy and integrity of the information in law enforcement databases. When confronted with clear evidence that a team of lawyers, private investigators, and law enforcement personnel were improperly accessing the NCIC record of Nobuo Abe, the Justice Department should have taken action, and prosecuted the responsible parties. By failing to investigate this case, the Justice Department and FBI have sent the clear message that they do not value the sanctity of law enforcement databases. Similarly, Justice Department's handling of Rebekah Poston's FOIA request raises serious questions. Justice Department policy called for Poston's FOIA request to be rejected, without confirming or denying the existence of any record. However, through her contacts in the Office of the Attorney General, Poston was able to obtain special treatment. While the disclosure made by the Justice Department in response to Poston's FOIA request was not criminal, it was an unseemly favor for a friend of the Attorney General. This disclosure makes it appear that the Justice Department places the Attorney General's personal friendships above the judgment of career Justice Department staff and long-standing Justice Department policy. B. Robert Bratt Robert K. Bratt, who had a 21 year career with the Department of Justice, retired on August 1, 2000. From August 1995 to July 2000, he was the Criminal Division Executive Officer for the Office of Administration (OA).\940\ From March 1995 until his retirement, Bratt also held the following posts: --------------------------------------------------------------------------- \940\ ``An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration,'' U.S. Department of Justice, Office of the Inspector General, at xiii (Sept. 2000). <bullet> March 1995-August 1996: Acting Director of the International Criminal Investigative Training Assistance Program (ICITAP)\941\ --------------------------------------------------------------------------- \941\ Created in 1986, ICITAP's mission includes ``two principal types of projects: (1) developing police forces in the context of international peacekeeping operations, and (2) enhancing the capabilities of existing policing forces in emerging democracies based on internationally recognized principles of human rights, the rule of law, and modern police practices.'' Id. at 23. <bullet> September 1996-April 1997: Coordinator of ICITAP and Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT)\942\ --------------------------------------------------------------------------- \942\ Created in 1991, OPDAT ``works with United States embassies and other United States government agencies to coordinate training for judges and prosecutors in South and Central America, the Caribbean, Russia, other Newly Independent States, and Central and Eastern Europe. The office also serves as the Department of Justice's liaison between private and public agencies that sponsor visits to the United States for foreign officials interested in learning about his country's legal system.'' Id. at 24-25. In 1997, ``OPDAT's mission shifted exclusively to international training issues.'' Id. at 23 n.1. <bullet> April 1997-March 1998: Detailed as Executive Director for Naturalization Operation of the Immigration and Naturalization Service (INS)\943\ --------------------------------------------------------------------------- \943\ ``Hearing on the Immigration and Naturalization Service,'' hearing before the Senate Judiciary Subcommittee on Immigration, 105th Cong. (testimony of Doris Meissner, Commissioner, Immigration and Naturalization Service) (May 1, 1997). <bullet> March 1998-July 2000: Detailed as Acting Director of Information Management Narrowband Communications Wireless Offices of Justice Management Division (JMD) \944\ --------------------------------------------------------------------------- \944\ Id. at xiii. Bratt, a onetime Reno favorite, served as one of the Attorney General's top troubleshooters.\945\ In a committee interview, Attorney General Reno stated that ``Mr. Bratt was first introduced to me as somebody in the [C]riminal [D]ivision who was a very good administrator, and I saw him in that context.'' \946\ --------------------------------------------------------------------------- \945\ See, e.g., ``Hearing on the Immigration and Naturalization Service,'' hearing before the Senate Judiciary Subcommittee on Immigration, 105th Cong. (testimony of Doris Meissner, Commissioner, Immigration and Naturalization Service) (May 1, 1997); Michael Isikoff, ``The Perils of Romance,'' Newsweek Online (Sept. 12, 2000) <www.msnbc.com/news/459043.asp>; Jerry Seper, ``Top Justice Officials Being Probed About Security Violations,'' the Washington Times, Sept. 22, 2000, at A10; and Jamie Dettmer, ``Internal Probe to Embarrass Justice Department,'' Insight on the News, Jan. 3, 2000, at 6. \946\ Transcript of interview of Attorney General Janet Reno, Department of Justice, in Washington, DC, at 62 (Oct. 5, 2000) (preliminary transcript). Because of Reno's confidence in Bratt, she personally asked him to be detailed to INS. Id. and ``Hearing on the Immigration and Naturalization Service,'' hearing before the Senate Judiciary Subcommittee on Immigration, 105th Cong. (testimony of Doris Meissner, Commissioner, Immigration and Naturalization Service) (May 1, 1997). --------------------------------------------------------------------------- In March 1997, the Department of Justice Office of Inspector General (OIG) initiated an investigation into ``allegations of misconduct, security violations, financial mismanagement, travel violations, and favoritism in ICITAP, OPDAT, and [OA].'' \947\ Bratt was one of the main subjects of this investigation. As a safeguard measure, in March 1998, after OIG briefed Attorney General Reno on the ongoing investigation, the Department of Justice suspended Bratt's security clearance.\948\ In September 2000, OIG released its findings in the report: An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration. --------------------------------------------------------------------------- \947\ ``An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration,'' U.S. Department of Justice, Office of the Inspector General, at 27 (September 2000). \948\ Id. at 27 n.4. --------------------------------------------------------------------------- In its report, the OIG determined that ``Bratt repeatedly engaged in substantial misconduct while serving as the Executive Officer of the Criminal Division and while he was responsible for overseeing ICITAP and OPDAT.'' \949\ In particular, the OIG concluded the following: --------------------------------------------------------------------------- \949\ Id. at 401. <bullet> Bratt committed egregious misconduct by using his government position to improperly procure visas for two Russian citizens[.] \950\ --------------------------------------------------------------------------- \950\ Id. at 402. <bullet> Bratt attempted to provide his former assistant ``with a false scenario that she would then provide to the OIG'' in its investigation.\951\ --------------------------------------------------------------------------- \951\ Id. at 205. <bullet> Bratt ``was engaged in an effort to alert and probe witnesses, to dissemble to them that he had never knowingly done anything wrong, and to seek reassurance from them that they would not say otherwise'' to the OIG.\952\ --------------------------------------------------------------------------- \952\ Id. <bullet> ICITAP employees under Bratt's supervision failed ``to observe fundamental security practices,'' \953\ failed to ``enforce the government's security regulations,'' \954\ resisted continual ``advice and warnings of ICITAP's security officers,'' \955\ and ``violated security regulations by disclosing classified information to uncleared parties and by removing documents.'' \956\ --------------------------------------------------------------------------- \953\ Id. at 21 (regarding Associate Deputy ICITAP Director Joseph Trincellito's conduct). \954\ Id. at 405 (regarding ICITAP Director Janice Stromsem's conduct). \955\ Id. at 21 (regarding Associate Deputy ICITAP Director Joseph Trincellito's conduct). \956\ Id. (regarding Special Assistant to the ICITAP Director Cary Hoover's conduct). <bullet> Bratt committed serious misconduct in connection with his government travel.\957\ --------------------------------------------------------------------------- \957\ Id. at 402. <bullet> Bratt ``put his staff in a position where following his instructions left them with no other option [but to violate Department of Justice rules.]'' \958\ --------------------------------------------------------------------------- \958\ Id. at 180. <bullet> Bratt had a pattern of ``blaming his staff for his own misconduct and failures to abide by the rules'' during the OIG investigation.\959\ --------------------------------------------------------------------------- \959\ Id. at 403. <bullet> Bratt was not forthcoming and honest during his interviews with [the OIG].\960\ --------------------------------------------------------------------------- \960\ Id. at 402. <bullet> Bratt's [romantic] involvement with [a female Russian citizen] also raised significant security concerns.\961\ --------------------------------------------------------------------------- \961\ Id. at 403. In the end, Attorney General Reno's ``successful, effective troubleshooter and adviser'' was found to be ``a supervisor who willfully violated government regulations, who was recklessly indifferent to the security interests of the government, who induced subordinates to aid and abet his misconduct, and who made false statements to the OIG.'' \962\ --------------------------------------------------------------------------- \962\ Id. --------------------------------------------------------------------------- Building upon the OIG's alarming evidence, this committee is concerned about several instances of possible Department of Justice favoritism toward Bratt and its effects. Despite Bratt's egregious conduct, the Department offered and Bratt accepted early retirement, which included employment benefits and an annuity. The OIG determined that, in effect, this option allowed Bratt to be ``no longer subject to discipline by the Department'' because he is no longer a Federal employee.\963\ Deputy Attorney General Eric Holder testified that ``Bratt was not awarded any special arrangements'' regarding early retirement.\964\ However, the committee believes that Bratt took advantage of this offer to escape discipline. The timing of the OIG's release of a draft copy of its report to Bratt and Bratt's application for early retirement, which comes within a few days of each other, is suspect.\965\ Bratt's early retirement took effect 1 month before the OIG released its report.\966\ --------------------------------------------------------------------------- \963\ Id. at 402. \964\ Hearing on the Department of Justice Office of the Inspector General's September 2000 report titled: ``An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration,'' hearing before the House Judiciary Committee, 106th Cong. (testimony of Eric Holder, Deputy Attorney General, Department of Justice) (Sept. 21, 2000). \965\ On July 10, 2000, Bratt was provided a copy of the draft IG report and asked to respond. On July 19, 2000, Bratt submitted an application for early retirement. \966\ On August 1, 2000, Bratt's early retirement took effect. In mid-September, the OIG report was released to Congress. The Judiciary Committee made the report available to the public on its Web site. --------------------------------------------------------------------------- The committee also believes that Bratt's senior position within the Department of Justice had a chilling effect on whistleblowers. Denise Turcotte, Bratt's former assistant, was co-opted to make improper travel arrangements for Bratt.\967\ In her initial interview with OIG, Turcotte denied doing anything improper. Several months after that interview, she voluntarily asked the OIG to reinterview her. During the interview, Turcotte explained that Bratt had tried to influence her testimony, and get her to lie about her activities: --------------------------------------------------------------------------- \967\ The OIG found that Turcotte's conduct did not warrant discipline. ``An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration,'' U.S. Department of Justice, Office of the Inspector General, at 407 (September 2000). Ms. Turcotte. He said that he had had like a full day of talking with you folks about travel and that he wanted to talk to me about it, and could we go for a walk, so we went for a walk. We went, he got a bagel and I was very uncomfortable. He started talking about, you know, basically, I turned all the travel over to you and, you know, I--I expressed, you know, you made the final decisions, basically. If I made any --------------------------------------------------------------------------- preference, you had the final decision. OIG: Is this Mr. Bratt saying this to you? Ms. Turcotte. This is Mr. Bratt saying this. And I am going--I am in shock, first of all, and I just continued to listen to him because I couldn't quite tell where he was going with it. But he also said that, first of all, he didn't want anyone to know about this conversation. He made that very clear, we never had this conversation. And, again, I didn't say yes or no about keeping any, you know. He--he said that--something to the effect, and I can't recall the exact words, but I never asked you to juggle my travel hours so that I could qualify for business class, did I? \968\ --------------------------------------------------------------------------- \968\ Transcript of Office of the Inspector General, U.S. Department of Justice, investigative interview of Denise Turcotte (Feb. 24, 1999) at 20. Also in this interview, Turcotte was asked why she had been --------------------------------------------------------------------------- afraid of coming forward. Ms. Turcotte. [Bratt] is a powerful guy, yeah. He knows a lot of high level people. And I was hoping that, gee, if I get bored with this position in the Criminal Division, you know,--am I thinking the OIG had better hire me? I mean I am--you know, I am--there's that part of it, too. You know, please, you know, I can be trusted. I don't know where I--you know, I just don't know. Mr. Nassikas.\969\ And he is a powerful, as I understand, personality. I mean there's a---- --------------------------------------------------------------------------- \969\ John Nassikas represented Denise Turcotte as counsel. Ms. Turcotte. Yeah, he is very charismatic. He has done a lot of pet projects for Reno. He has been tasked to do the INS thing, for instance. Now it is the wireless thing. Of course, the circumstances are different, but---- \970\ --------------------------------------------------------------------------- \970\ Transcript of Office of the Inspector General, U.S. Department of Justice, investigative interview of Denise Turcotte (Feb. 24, 1999) at 47-48. It is clear that Turcotte believed she could not come forward because of Bratt's relationship with Attorney General Reno and other high-level Department of Justice officials. Turcotte also indicated that whistleblower protections were not enough to protect her against retaliation.\971\ --------------------------------------------------------------------------- \971\ Id. at 46. --------------------------------------------------------------------------- The actions of another senior Justice Department official may also have had a chilling effect upon whistleblowers. Shortly after the allegations against Bratt surfaced, Stephen Colgate, Assistant Attorney General for Administration, Justice Management Division, who was a close friend of Bratt, told the Legal Times: ``Believe me, when the dust settles, Bratt will be vindicated . . . [the allegations are] an outrage, an absolute outrage.'' \972\ --------------------------------------------------------------------------- \972\ Sam Skolnik, ``Charges of Fraud, Waste Prompt Probe of Justice Department Training Programs,'' Legal Times, Sept. 21, 1998, at 2. --------------------------------------------------------------------------- Colgate's comments are troubling because he is commenting about an open case. More important, such comments by a senior Justice Department official like Colgate condemning whistleblowers' allegations sends a clear message that whistleblowers are not welcome at the Department. Much to the dismay of this committee, when the Attorney General was asked about the effects of Colgate's comment, she only defended his actions and refused to admit the potential negative implications. Committee Counsel. And it would not be mysterious, I think, but our concern would be that if senior Department of Justice officials are commenting about what is a pending case, something that we have so much communication back and forth with with [sic] the Department, that that communicates to employees in the Department of Justice something very negative. Do you think Mr. Colgate should have made a statement like that back in 1998? Attorney General Reno. My understanding is that he was recused from this matter and that he feels that the questions and the answer--and that the answer was taken out of context. So I would have to check on that. Committee Counsel. But is it just he feels it was taken out of context or do you think it was appropriate or inappropriate for him to go on the record and make a comment about what was at that point a pending matter that was just starting to be investigated by the Inspector General's office? Attorney General Reno. I would have to understand the context. Committee Counsel. But even without the context, just the comment on the pending investigation, is that something you would condone or not condone? Attorney General Reno. I would look at it in terms of the context and how it was said and what was asked and where the occasion took place. Committee Counsel. Do you personally have any reaction to the effect that a statement like that would have on a low level employee like Ms. Turcotte? Attorney General Reno. Counsel, I may not have--be as far along in my review of the matter to understand all the details I need to properly respond to your question, but I just think it is important before I do that, I understand all the issues and that I don't spout off without being fully informed.\973\ --------------------------------------------------------------------------- \973\ Transcript of interview with Attorney General Janet Reno, Department of Justice, in Washington, DC at 71-73 (Oct. 5, 2000) (preliminary transcript). During the October 5, 2000, committee interview, there were many more examples of Attorney General Reno's unwillingness to answer questions about Mr. Bratt. As the transcript shows, Attorney General Reno was either unwilling or unable to answer --------------------------------------------------------------------------- many of the questions directed to her: Committee Counsel. Have you read the Office of Inspector General report about Mr. Bratt? Attorney General Reno. I have read it but not in detail.\974\ --------------------------------------------------------------------------- \974\ Id. at 63 * * * * * --------------------------------------------------------------------------- Committee Counsel. [W]ere you aware the Inspector General concluded Mr. Bratt had asked his former assistant to lie for him? Attorney General Reno. Because the disciplinary and remedial matters are pending, we are limited, as I am sure the committee understands, in what we can say about them[.]\975\ --------------------------------------------------------------------------- \975\ Id. at 64-65. * * * * * --------------------------------------------------------------------------- Committee Counsel. But my question is, if [Bratt] doesn't work for the Department of Justice, short of a prosecution, is there any avenue of discipline that the Department of Justice can effect at this point? Attorney General Reno. There are matters relating to a number of issues within the report, and I think it would be inappropriate to comment until all those matters are resolved.\976\ --------------------------------------------------------------------------- \976\ Id. at 65-66. * * * * * --------------------------------------------------------------------------- Committee Counsel. [D]o you at this point think that Mr. Bratt did receive any preferential treatment by the Department of Justice thus far? Attorney General Reno. I think the important thing for me, before I answer specific questions, would be to review the whole record. And I think that is something Dr. Hawk Sawyer should do.\977\ --------------------------------------------------------------------------- \977\ Id. at 70-71. These exchanges did nothing to resolve the committee's serious questions about this case.\978\ --------------------------------------------------------------------------- \978\ The OIG also concluded that senior level Department of Justice employees were failing to doing their jobs: Even if Bratt had been an exemplary manager, ICITAP and OPDAT would have benefited from attention and guidance by senior Criminal Division managers[.] [T]he failure to adequately supervise [Bratt's] conduct added fuel to ICITAP's preexisting problems. We do not believe that all of ICITAP's difficulties and Bratt's and other managers' improprieties could only have been ferreted out by an OIG investigation. Some of them, particularly security and travel issues, should have been apparent to anyone taking the time to look. The fact that the Criminal Division did not follow up to ensure that recommendations from other OIG or internal investigations had been implemented is an --------------------------------------------------------------------------- example of the lack of adequate oversight. ``An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration,'' U.S. Department of Justice, Office of the Inspector General, at 413 (September 2000). Representative Howard Coble recently expressed concern at a Judiciary Committee hearing about the OIG report that, when it came to security issues, the ``fox may be guarding the henhouse down at Justice.'' \979\ Noting the Department of Justice's favorable treatment toward Bratt and inaction toward Colgate's intimidating statements to the press, this committee also must conclude that the Department's embarrassing instances of security breaches by top officials are being contained--not discouraged--with a ``fox guarding the henhouse'' approach. The Bratt case provides just one more example of an Attorney General more interested in providing unfair advantages to her friends and political allies than in doing her job. --------------------------------------------------------------------------- \979\ Hearing on the Department of Justice Office of the Inspector General's September 2000 report titled: ``An Investigation of Misconduct and Mismanagement at ICITAP, OPDAT, and the Criminal Division's Office of Administration,'' hearing before the House Judiciary Committee, 106th Cong. (statement of Representative Howard Coble) (Sept. 21, 2000). --------------------------------------------------------------------------- [The exhibits referred to follow:] <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>