A New Trifecta
So, the House Majority Leader, the Senate Majority Leader, and the White House itself are under investigation.
And the Democrats will speak up about all this... just as soon as Mr. Rove gets back from his own day in court and tells them it's okay.
And the Democrats will speak up about all this... just as soon as Mr. Rove gets back from his own day in court and tells them it's okay.
posted by Management at 10:12 PM
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DeLay Indicted in Texas Finance Probe
He Steps Aside as House GOP Leader to Fight Conspiracy Charge in State Elections
By R. Jeffrey Smith
Washington Post Staff Writer
Thursday, September 29, 2005; A01
A Texas grand jury indicted House Majority Leader Tom DeLay (R-Tex.) yesterday on a charge of criminally conspiring with two political associates to inject illegal corporate contributions into 2002 state elections that helped the Republican Party reorder the congressional map in Texas and cement its control of the House in Washington.
The indictment forced DeLay, one of the Republicans' most powerful leaders and fundraisers, to step aside under House rules barring such posts to those accused of criminal conduct. House Whip Roy Blunt (R-Mo.), the third-ranking leader, was elected by Republican House members yesterday afternoon to fill the spot temporarily after conservatives threatened a revolt against another candidate considered by House Speaker J. Dennis Hastert (R-Ill.).
Although the indictment had been rumored for weeks among top Republicans, based on what several described as a difficult meeting in August between DeLay and the Texas prosecutor behind the case, it shook the GOP political establishment and posed new problems for the party as it heads into the midterm elections next year.
DeLay bitterly denounced the charge as baseless and defiantly called the prosecutor, Ronnie Earle, "an unabashed partisan zealot" engaging in "personal revenge" because DeLay helped elect a Republican majority to the Texas House in 2002. "I have the facts, the law and the truth on my side," DeLay said, reading from a statement, before declining to answer questions.
But the indictment, which comes after three rebukes of DeLay in 2004 by the House ethics committee on unrelated matters, poses a major political problem for the 58-year-old Bush administration loyalist, 11-term congressman, and self-described champion of free enterprise and deregulation. DeLay is also likely to face an inquiry by the ethics committee into a series of foreign trips he took that were initially partly paid for by lobbyists.
The indictment specifically alleges that DeLay, who helped organize the Texas political committee at the heart of the charge, participated in a conspiracy to funnel corporate money into the 2002 state election "with the intent that a felony be committed."
Using corporate funds for state election purposes has long been illegal in Texas, as it is in 17 other states. Earle's probe of the contributions began after 17 Republicans who received the committee's funds were elected, giving the party control of the Texas House for the first time in 130 years. One year later, following a road map that DeLay and his political aides drafted from Washington, the Texas House approved a sweeping reorganization of the state's congressional district map meant to favor Republicans.
Then, in 2004, five more Texas Republicans were elected to Congress, enlarging the Republican majority in the House .
The facts of one of the central transactions at issue in the case have never been in dispute -- the transfer in September 2002 to an arm of the Republican National Committee in Washington of $190,000 in corporate funds collected by the committee in Texas and the subsequent donation by the RNC arm of $190,000 to seven Texas House candidates on Oct. 4, 2002.
Earle has long alleged that this transfer was intended to circumvent the Texas law. A copy of the relevant check from the Texas committee has been in his hands for more than a year, and he has repeatedly said the committee supplied the RNC with a list showing which Texas candidates should eventually be paid the funds.
Some evidence collected in a related civil case has pointed to heavy involvement by DeLay in the operations of the Texas committee. Its start-up was financed by a transfer of corporate funds from his leadership fund. He was a member of the Texas committee's advisory board in 2001 and 2002, participated in its strategizing, appeared at its fundraisers, and signed its solicitations. He also attended dinners with corporate donors that agreed to contribute tens of thousands of dollars to it; his fundraisers recorded the favors that donors sought.
But DeLay has long denied participating in its day-to-day operations and said that its activities were vetted by lawyers. As a result, the key question in Washington and Austin has been whether DeLay knew about the $190,000 transactions -- an allegation that lawyers say could be proved only by documentary evidence, such as an e-mail, or in grand jury testimony by one of those involved.
For DeLay to be guilty, he would have had to have both been informed of the transaction and approved the transaction, according to a source familiar with the details of case. David Berg, a Houston-based trial lawyer who wrote a best-selling legal textbook, said: "Politics in Texas is a real jungle, and money of this sort, I would suspect, gets washed all the time. [But] it would be illegal if [he] knew that corporate funds were going to be laundered and used in the state races. . . . I can't imagine somebody is not going to testify against [him]. Otherwise all Ronnie Earle can prove is that everything DeLay did is legal."
No evidence to support the conspiracy charge was cited in the indictment, which says only that DeLay and two named associates entered "into an agreement with one or more of each other" or with the committee to conduct the funds transfer. But Texas law permits such evidence to be left out of the indictment, so it is rarely included.
The others named in the indictment were James W. Ellis, who still runs DeLay's principal fundraising committee -- Americans for a Republican Majority -- and John D. Colyandro, the former director of the Texas offshoot. Both were previously charged with laundering money, an offense that can bring a 10-year prison term, and on Sept. 13 with conspiracy to accept illegal corporate donations.
The addition of DeLay to the conspiracy charge yesterday suggests that some crucial piece of information or testimony may have come into Earle's possession in recent weeks. The charge against DeLay carries a potential penalty of six months to two years in state jail, and a fine of as much as $100,000.
DeLay's attorney, Dick DeGuerin, said in the lobby of the Austin Criminal Justice Center that DeLay is so confident of his innocence that he will push for a swift trial. He said DeLay did not participate in a conspiracy and the $190,000 was spent "on proper things."
J.D. Pauerstein, an attorney for Ellis, said: "All of the indictments handed down in this case are frivolous and ridiculous. Our clients consulted election law experts, followed their advice and reported every contribution" to the Internal Revenue Service.
Colyandro, a veteran of White House Deputy Chief of Staff Karl Rove's direct-mail firm, has long denied wrongdoing but lost several court battles since the inquiry began to have the relevant Texas election law declared unconstitutional. His attorney in Austin, Joseph A. Turner, said that "this is really a rehash of previous indictments" and that the lengthy wait for it reflected the weakness of the prosecutor's case.
Regarding the $190,000 funds transfer from Texas to Washington and the return of the same amount from Washington to Texas, "Colyandro would say DeLay did not have any knowledge of that transaction in advance," Turner said.
The new indictment came after a 34-month inquiry and was issued on the final day the grand jury met. It caps a series of indictments that targeted eight corporations and an industry group, the Texas Association of Business, alleged to have worked with the Texas committee in collecting and disbursing illegal corporate contributions.
DeLay waived a requirement that the indictment be presented within three years of "the commission of the offense," the document states; DeGuerin said DeLay did this under duress so that he could put off an indictment weeks ago and keep trying to persuade Earle not to bring one.
Earle told reporters that he brought the indictment to defend the state's democratic system from undue corporate influence. "The law says the duty of a prosecutor is to make sure justice is done," Earle said, adding that the ban against corporate contributions "is intended to safeguard democracy and make the ballot box accessible to everybody, regardless of the amount of money involved."
But DeLay spokesman Kevin Madden said ill motives lie behind Earle's action: "They could not get Tom DeLay at the polls. They could not get Mr. DeLay on the House floor. Now they're trying to get him into the courtroom. This is not going to detract from the Republican agenda."
House Speaker Hastert, surrounded by other GOP leaders, said of DeLay: "He will fight this, and we will give him our utmost support." Blunt complained about "this terribly unfair thing that ha happened to him."
House Democratic Leader Nancy Pelosi (Calif.) said, "The criminal indictment of Majority Leader Tom DeLay is the latest example that Republicans in Congress are plagued by a culture of corruption at the expense of the American people."
But White House spokesman Scott McClellan described DeLay as "a good ally, a leader who we have worked closely with to get things done for the American people."
"I think the president's view is that we need to let the legal process work," he added.
"No jury can undo the outcome of Texas's 2002 elections," Craig McDonald, director of Texans for Public Justice, said in a news release. McDonald, whose complaint helped spark Earle's investigation, continued: "But the justice system must punish those who criminally conspire to undermine democracy -- no matter how powerful they may be. If we are to be a 'democracy,' then powerful politicians cannot flout such laws with impunity."
Staff writers Juliet Eilperin in Austin and Jeffrey H. Birnbaum and Amy Goldstein in Washington contributed to this report.
SEC Opens Full Probe Into Frist Stock Sale
Securities Exchange Commission Opens Formal Probe Into Sen. Bill Frist's Sale of HCA Stock
By JONATHAN M. KATZ Associated Press Writer
The Associated Press
WASHINGTON - While insiders at HCA Inc. were selling millions of dollars of their own stock this year, they were also painting a sunny picture of the company's outlook for investors. Federal prosecutors and the Securities and Exchange Commission are investigating the sale of HCA stock by Senate Majority Leader Bill Frist, R-Tenn., whose family founded the company that grew into the nation's largest for-profit health care chain.
The SEC turned its initial inquiry into a formal investigation of the company, HCA announced Thursday. The company said it is cooperating with investigators.
Frist's office said Wednesday that he had gotten notice of a formal investigation, which grants subpoena powers to investigators to obtain information and documents.
On June 14, the day after Frist ordered his shares sold, HCA officers at a Goldman Sachs health care conference in Laguna Niguel, Calif., spoke optimistically about the company's prospects.
Victor Campbell, HCA's senior vice president of corporate communications and government relations, soothed investor concerns about unpaid patient debts and worries about patient volumes. He also advocated for a still-pending Senate bill that would limit the establishment of physician-owned specialty hospitals and called Washington "my favorite place ... where I spend at least a day or two a week."
In the month before the speech, Campbell sold about $12 million worth of stock. It was part of a massive insider sell-off at HCA that totaled some $112 million between January and June 2005.
Those sales were disclosed publicly through filings with the SEC.
HCA shares peaked about a week later, closing at $58.40 on June 22. On July 13, they tumbled 9 percent following the company's announcement that it would not meet earnings expectations.
Citigroup said the drop was "a clear disappointment versus recently heightened investor expectations."
In his remarks, Campbell did not speculate about the company's earnings, but spoke of a number of positive trends for the company. The only expense line the company didn't like, he told investors, was the issue of money lost from treating uninsured patients who never paid. But he said that was improving: "We've had a couple of quarters now ... where the trend lines have looked better. We hope that will continue. We're not predicting." He did forecast that outpatient volumes would continue to grow.
Campbell highlighted HCA's buyback of stock in late 2004 but did not mention the insider sell-off then nearing completion. The company had borrowed the full amount it needed for a $2.5 billion buyback, which spurred credit-rating agency Standard & Poor's to downgrade its debt rating to junk, a move which coincided with the start of the stock's ascent to its June 22 peak.
"We look smarter than we probably really are, but it was good timing," Campbell told investors.
The speech helped feed optimism surrounding HCA stock, said Oksanna Butler, a senior health care industry analyst with Citigroup Investment Research.
"I talked to investors that had been at that conference and what I hear was that they were coming away with a positive view," Butler said.
In April, analysts with Oppenheimer & Co. cited the increasing volume and improving prospects of unpaid patient debt and rated the stock a "buy," calling its raised earnings expectations "conservative." Analysts at Morgan Stanley and Jeffries & Co. Inc. gave similar advice the next day. On May 5, Morgan Stanley analysts reported that HCA executives led an "upbeat" and confident discussion of the hospital company's prospects at a conference on health care issues.
Campbell did not respond to a request for comment Wednesday. HCA spokesman Jeff Prescott declined comment, saying, "I'll let what he said at the conference speak for itself."
"The mere fact that someone says, 'we're optimistic' and then a month later the stock price goes down doesn't mean that people have tried to mislead anybody else," said David Becker, a former general counsel at the SEC. "If you purport to tell people what you know about the future but you mislead them by leaving important things out, that can well be the sin of omission. But you have to look at what, precisely, people say and what, precisely, is left out."
Frist's staff discussed selling all remaining HCA stock in April, as well as that of his wife and children, Frist said. The sales, ordered on June 13, were completed by July 1.
Frist said he sold the shares to eliminate the appearance of a conflict of interest, using only information that was publicly available.
HCA shares were down 40 cents to $47.55 in early trading Thursday on the New York Stock Exchange.
On the Net:
Hospital Corp. of America Inc.: http://www.hcahealthcare.com/
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Copyright © 2005 ABC News Internet Ventures
Source to Stephanopoulos: President Bush Directly Involved In Leak Scandal
Near the end of a round table discussion on ABC’s This Week, George Stephanopoulos dropped this bomb:
Definitely a political problem but I wonder, George Will, do you think it’s a manageable one for the White House especially if we don’t know whether Fitzgerald is going to write a report or have indictments but if he is able to show as a source close to this told me this week, that President Bush and Vice President Cheney were actually involved in some of these discussions.
This would explain why Bush spent more than an hour answering questions from special prosecutor Patrick Fitzgerald. It would also fundamentally change the dynamics of the scandal. President Bush could no longer claim he was merely a bystander who wants to “get to the bottom of it.” As Stephanopoulos notes, if Bush played a direct role it could make this scandal completely unmanageable.
UPDATE: Crooks and Liars has the video.
Rove to testify in leak case without immunity
file:home3
October 6, 2005
BY JOHN SOLOMON ASSOCIATED PRESS
WASHINGTON-- Federal prosecutors have accepted an offer from presidential adviser Karl Rove to give 11th hour testimony in the case of a CIA officer's leaked identity and have warned they cannot guarantee he won't be indicted, according to people directly familiar with the investigation.
The people, who spoke only on condition of anonymity because of grand jury secrecy, said Special Prosecutor Patrick Fitzgerald has not made any decision yet on whether to file criminal charges against the longtime confidant of President Bush or anyone else.
The U.S. attorney's manual requires that prosecutors not bring witnesses before a grand jury if there is a possibility of future criminal charges unless the witnesses are notified in advance that their testimony can be used against them in a later indictment.
Rove has already made at least three grand jury appearances and his return at this late stage in the investigation is unusual.
The prosecutor did not give Rove similar warnings before his earlier grand jury appearances.
Rove offered in July to return to the grand jury for additional testimony, and Fitzgerald accepted that offer last Friday after taking grand jury testimony from the formerly jailed New York Times reporter Judith Miller.
Before accepting the offer, Fitzgerald sent correspondence to Rove's legal team making clear that there was no guarantee he wouldn't be indicted at a later point, as required by the rules.
Rove's attorney, Robert Luskin, said Thursday he would not comment on any ongoing discussions he has had with Fitzgerald's office, but he said he had been assured no decisions on charges had been made. Rove would first have to receive what is known as a target letter if he is about to be indicted.
"I can say categorically that Karl has not received a target letter from the special counsel. The special counsel has confirmed that he has not made any charging decisions in respect to Karl," Luskin said.
He said that Rove "continues to be cooperative voluntarily" with the investigation and "beyond that, any communication I have or may have in the future are going to be treated as completely confidential."
Stephen Gillers, a New York University law professor, said it was unusual for a witness to be called back to the grand jury four times and that the prosecutor's legally required warning to Rove before this next appearance is "an ominous sign" for the presidential adviser.
"It suggest Fitzgerald has learned new information that is tightening the noose," Gillers said. "It shows Fitzgerald now, perhaps after Miller's testimony, suspects Rove may be in some way implicated in the revelation of Plame's identity or that Fitzgerald is investigating various people for obstruction of justice, false statements or perjury. That is the menu of risk for Rove."
For almost two years, Fitzgerald has been investigating whether someone in the Bush administration leaked the identity of Valerie Plame as a CIA officer for political reasons. Dozens of government officials were interviewed and boxloads of documents collected.
Reporters have been called before a grand jury to testify about their conversations with Rove and I. Lewis Libby, Vice President Dick Cheney's chief of staff.
Leaking the identity of a covert agent can be a crime, but it must be done knowingly and the legal threshold for proving such a crime is high. Fitzgerald could also seek charges against anyone he thinks lied to investigators in the case.
The leak investigation stems from a July 2003 syndicated column by Robert Novak identifying Plame as a CIA operative. Plame is married to former Ambassador Joseph C. Wilson, who says his wife's identity was disclosed to discredit his assertions that the Bush administration exaggerated Iraq's nuclear capabilities to build the case for war.
Miller spent 85 days in jail before agreeing to testify before the grand jury. The newspaper identified Libby as her source.
Rove, Bush's top adviser on political strategy and policy, has known the president for three decades. He worked for Bush as far back as 1978, when Bush unsuccessfully ran for Congress. Rove orchestrated Bush's campaigns for Texas governor and president, then brought his political skills into the White House.
"The president always knows"
Why won't anyone ask Bush when he first learned of Valerie Plame's identity? That's one question he doesn't need to wait for the special prosecutor to answer.
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By Judd Legum and Faiz Shakir
printe-mail
Aug. 17, 2005 | Ever since the outing of CIA operative Valerie Plame Wilson in 2003, the media has focused on whether President Bush would fire any people in his administration who were involved. Recent coverage has focused on the role, and fate, of deputy chief of staff Karl Rove. On July 31, Knight Ridder reporter Ron Hutcheson -- in an article that typifies the frame the media has imposed on the story -- speculated that "the president soon could face a painful choice between protecting his trusted aide or forcing his resignation to limit political damage."
Last week, Associated Press reporter Pete Yost wrote a relatively aggressive article about potential conversations between Rove and Bush about Valerie Wilson. But Yost's piece considers only the possibility that Rove lied about his involvement in the leak to Bush after the fact. Yost writes, "Whether Rove shaded the truth with Bush two years ago is a potential political problem."
Yet, strangely, even the most probing report has refused to raise the possibility that George W. Bush had any advance knowledge of or direct involvement in the leak. It's an irresponsible choice, considering Bush has more experience as a political operative than as president of the United States.
Most prominent is Bush's role as a powerful force in his father's presidential campaigns. His principal duty was enforcing strict loyalty to George H.W. Bush from everyone involved. Conservative strategist Mary Matalin, who held senior positions in the 1988 and 1992 campaigns, described Bush as "his father's trusted consigliere." George W., for his part, embraced the role and made it clear that anyone who crossed his father could expect retribution. In 1990, he told writer Ann Grimes, "I was the enforcer when I thought things were going wrong. I had the ability to go and lay down some behavioral modification."
Bush had started his career as a political operative nearly two decades earlier, when he left the Texas Air National Guard to work on the Alabama Senate campaign of Winton Blount. (Even at the young age of 26, the younger Bush was reportedly one of Blount's top four advisors.)
As one might expect, much of Bush's work for his father's presidential campaigns was done behind the scenes. Yet it's clear he was steeped in political minutiae and imposed few limits on what he was willing to do to get the job done. In 1986, veteran reporter Al Hunt predicted that Jack Kemp would receive the 1988 Republican presidential nomination instead of George H.W. Bush. When George W. saw Hunt dining with his wife and 4-year-old son at a Mexican restaurant in Dallas, he went up to their table and said, "You fucking son of bitch. I won't forget what you said and you're going to pay a fucking price for it." Bush didn't apologize until 13 years later, when the incident resurfaced in the context of his own presidential campaign.
In 1987, the George H.W. Bush campaign gave unusually close access to Newsweek reporter Margaret Warner. That resulted in a cover story titled "Fighting the Wimp Factor," in which Warner discussed "the potentially crippling handicap" that the senior Bush wasn't tough enough for the job. George W. was incensed. He called the magazine and "told reporters that his father's campaign would no longer talk to Newsweek." According to White House reporter Thomas DeFrank, George W. told him that Newsweek was "out of business." In his anger, however, Bush "went somewhat beyond the authorized message." The following day, a Bush campaign spokesman announced, "We're not cutting them [Newsweek] or anybody else off from their efforts to cover the campaign." George W., apparently, has never gotten over the incident. In his memoir, "A Charge to Keep," published more than a decade later, he wrote, "My blood pressure still goes up when I remember the cover."
After his father was elected president in 1988, Bush was placed in charge of a group called the Silent Committee (aka the "scrub group"), which was made up of "about fifteen blood-oath Bushies," according to the Texas Monthly. The purpose of the group was "to 'scrub' potential appointees for their loyalty and past service to Bush." The Washington Post noted at the time that George W. had a "somewhat more developed sense of political loyalty than even his father."
Although Bush left Washington after the campaign concluded, his role as loyalty enforcer remained largely unchanged. In November 1991, for example, then White House chief of staff John Sununu told a reporter the president had "ad-libbed" an ill-advised line during a speech about credit card interest rates. The younger Bush was infuriated that Sununu didn't defend his father. George W. told another White House staffer, "We have a saying in our family: If a grenade is rolling by the Man, you dive on it first. The guy violated the cardinal rule."
George W. was dispatched to Washington to deal with the Sununu situation. He met with Sununu and told him he should resign. On Dec. 3, 1991, Sununu -- also facing criticism for his misuse of government vehicles -- stepped down. Asked about the confrontation, George W. would only say, "The conversations between me and Mr. Sununu are going to be private. I talked to him, and then he and Dad reached an agreement."
The effort to discredit Joseph Wilson by exposing his wife as an undercover CIA agent is, for George W. Bush, entangled with the politics of Bush-family loyalty. Wilson, a trusted emissary of the elder Bush, served as deputy chief of mission at the U.S. Embassy in Baghdad, Iraq, from 1988 to 1991. During Desert Shield, Bush appointed Wilson to the post of acting ambassador. Wilson led negotiations that resulted in the release of several hundred American hostages, and as Wilson was quick to note, the president was pleased with his service. Bush sent Wilson a letter on Jan. 30, 1991, which read in part: "Dear Joe ... We appreciate your service to your country and your courageous leadership when you were in Baghdad ... Many thanks."
So how did the current President Bush react when he learned that Joe Wilson -- once a member of his father's administration -- was using what was learned on a CIA trip to undermine Bush's rationale for the second Iraq war?
It's a question the media has been unwilling to ask.
Reporters have asked President Bush if he believed the Justice Department could conduct an independent investigation of the Plame leak. They've asked him if he believed any of his staffers would be found guilty of a crime in the affair. They've asked him if he would fire anyone found to be involved. And they have repeatedly asked him about Rove's role.
In response to all of these questions, Bush has deferred giving complete answers until the conclusion of special prosecutor Patrick Fitzgerald's criminal investigation.
But the media refuses to ask two questions that President Bush could not delay answering until he "finds out the facts": Mr. President, prior to July 14, 2003 (the day Robert Novak's column appeared), were you aware that Valerie Wilson was a CIA agent? And did you discuss her role with any other member of your administration?
The media is so far sticking with the idea that President Bush was an innocent bystander. Fitzgerald doesn't seem to share its perspective. Bush was interviewed by the special prosecutor for more than an hour. Floyd Abrams, an attorney who represented Time magazine in the case, said, "It's hard to believe the special prosecutor would be burdening the president with an interview unless they had testimony to the effect that the president had information."
No one outside the White House knows for certain the extent of President Bush's involvement. But one thing is clear: The press's assumption of ignorance is misguided, especially in light of George W.'s long history as a political operative. Allan Lichtman, a noted presidential historian, says the "presumption in presidential politics" should be "that the president always knows." It's not too late for responsible reporters to ask the right questions.
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