US House Ethics Committee expands Charlie Rangel's probe.
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Harvard Law Professor Larry Lessig: The effects of Political Corruption on Voters. In this video Sen. Max Baucus is the focus of a lesson on Political and Public Corruption.
Ethics Probes may saddle Democrats in 2010
The House Ethics Committee Investigation of Rep. Charles Rangel (D-N.Y.) is likely to extend well into 2010, according to sources familiar with the probe, meaning that the fate of the powerful chairman of the Ways and Means Committee could become a major political issue for House Speaker Nancy Pelosi of California and the Democratic leadership during a difficult election year.
The committee’s investigation of Rangel’s personal finances, now 14 months old, has dragged on far longer than both Pelosi and Rangel had hoped. Pelosi predicted in late 2008 that it would be over by the end of that year or early 2009. Now sources familiar with the Rangel probe say the investigation could continue into February or March.
The veteran New York lawmaker is the most prominent — but hardly the only — Democrat facing ethical questions.
Recently, Rep. Bennie Thompson of Mississippi has had to deny allegations that he used his chairmanship of the Homeland Security Committee to help raise campaign contributions.
In addition, the Justice Department is continuing its criminal investigation into Democratic lawmakers’ dealings with the PMA Group, a now-defunct lobbying firm that specialized in winning multimillion-dollar spending earmarks from the Appropriations Committee for its clients.
Rep. Pete Visclosky of Indiana, a senior member of the Appropriations panel, and his former top aide Charles Brimmer were issued subpoenas as part of that investigation earlier this year. The DOJ probe is ongoing, according to multiple sources.
And on the other side of the Capitol, Sen. Max Baucus of Montana faces accusations that he nominated his girlfriend for a U.S. attorney position in the Justice Department, while Sen. Roland Burris of Illinois was recently admonished by the Senate Ethics Committee for failing to fully disclose his contacts with indicted former Illinois Democratic Gov. Rod Blagojevich over an appointment to the Senate seat vacated by now-President Barack Obama.
This wave of ethics problems for Capitol Hill Democrats makes GOP strategists optimistic that they can do to Democrats what was done to Republicans in 2006: paint a picture of a majority party corrupted by its own power.
“Thanks to Nancy Pelosi’s lapses in judgment, the rap sheet on the Democratic-led Congress is getting longer by the day,” said Ken Spain, communications director for the National Republican Congressional Committee. “When the speaker promised to ‘drain the swamp,’ she probably didn’t think she’d be fighting off hypocrisy charges four years later heading into the 2010 elections.”
Democrats, though, downplay the GOP ethics attacks, arguing that party leaders are making sure that improper behavior is promptly investigated and punished. They note that a recently leaked document from the House ethics committee showed that the panel and the Office of Congressional Ethics, an independent watchdog created by Democrats in 2008, are reviewing a broad range of cases against lawmakers. To Democrats, this means the ethics process is working as designed.
They also note that Republicans have their own ethical problems to deal with and shouldn’t be spoiling for a fight on this issue.
Sen. John Ensign of Nevada faces a Senate Ethics Committee investigation — and a possible Justice Department probe — of his handling of an extramarital affair with a former staffer, a controversy that has also ensnared Sen. Tom Coburn of Oklahoma. Rep. Don Young of Alaska was accused by an Alaska businessman of receiving tens of thousands of dollars in improper campaign donations. And Republican appropriators had their own ties to the PMA Group, which means that GOP lawmakers are vulnerable on that front, as well.
“After more than a decade of Republicans’ culture of corruption, they are not used to seeing an ethics committee that does its work without interference from Republican leaders,” said Jennifer Crider, spokeswoman for the Democratic Congressional Campaign Committee. “House Democrats passed the most sweeping ethics and lobbying reforms in history and established an independent outside ethics office.”
It is unclear whether Rangel has been interviewed yet by ethics committee investigators looking into his personal finances, although he did meet with a different subcommittee reviewing Caribbean trips made by five African-American House Democrats in 2007 and 2008. A special investigative subcommittee is trying to determine if those trips were improperly paid for using corporate funds.
The Washington Post reported in October that the ethics committee had interviewed Rangel’s son and a top aide, and House investigators have met with officials in New York City’s housing office. One of the accusations Rangel faces is that he improperly controlled multiple rent-stabilized apartments in a Harlem luxury apartment building.
A Rangel spokesman said the New York Democrat “remains focused on the issues that matter most to his constituents: enacting health insurance reform and advancing policies that will help our economy recover and create jobs. He looks forward to the conclusion of the review he himself requested.”
The House ethics committee spent more than eight months searching for a new staff director following the death of its chairwoman, Rep. Stephanie Tubbs Jones (D-Ind.), in August 2008, a delay that hampered the initial phases of the Rangel probe.
The committee has also been forced to expand the scope of the investigation twice in response to new allegations against Rangel, including once in October after he submitted amended financial-disclosure reports showing hundreds of thousands of dollars in previously unreported income and assets.
Rangel has also been accused of using his congressional office to help raise funds for the Charles B. Rangel Center for Public Service at the City College of New York, as well as helping a million-dollar donor to that center retain a lucrative tax break. Rangel has denied all allegations of wrongdoing.
With editorial writers across the country calling for Rangel’s head, Republican leaders have tried on several occasions to push through a resolution calling for Rangel to be stripped of the Ways and Means gavel.
But Pelosi and other Democratic leaders — under pressure from the Congressional Black Caucus — have stuck with Rangel, leaving him atop the panel despite the ethics controversy surrounding him.
The Republicans were also publicly embarrassed when Rep. John Carter of Texas, who offered the Rangel removal resolution, admitted that he had failed to disclose more than $300,000 in stock profits on his annual reports to Congress. Since that time, Carter and the GOP leadership have dropped their efforts to oust Rangel.
Max Baucus gave girlfriend $14K raise
Sen. Max Baucus (D-Mont.), chairman of the powerful Senate Finance Committee, gave a nearly $14,000 pay raise to a female staffer in 2008, at the time he was becoming romantically involved with her, and later that year took her on a taxpayer-funded trip to Southeast Asia and the Middle East, though foreign policy was not her specialty.
Late last Friday, Baucus acknowledged his relationship with Melodee Hanes, whom he nominated for the job of U.S. attorney in Montana, after it was first reported on the website MainJustice.com. But he said that Hanes withdrew from consideration for the job when the relationship became more serious. The following day, Baucus dismissed calls for an ethics investigation, saying, “I went out of my way to be up and up.”
Since his announcement, more details of the relationship have emerged, raising questions about a workplace romance between a boss and employee that Baucus tried to keep quiet, and also contradicting his explanation for why Hanes’s nomination was withdrawn.
Jodi Rave, a former reporter for the Missoulian revealed over the weekend that the paper informed Baucus in March that it was poised to publish a story about Hanes’s relationship with the senator and the fact that he had nominated her for the U.S. attorney job.
The next day, Hanes withdrew from consideration. According to the Missoulian, Baucus’s office never acknowledged a relationship between the two, and the paper did not run a story.
Baucus’s office said yesterday that while Baucus was aware of Rave’s questions, “there were a number of factors that went into Ms. Hanes’s decision to withdraw” from consideration for the U.S. attorney post, including that the couple’s relationship was “changing.”
“These discussions took place before, though around the same time as, the reporter’s inquiry,” Baucus’ office said in a statement. “This, coupled with the fact that they wanted to live together in Washington, led to her withdrawal.”
Baucus’ office also defended the salary boost for Hanes, saying it was in line with what his other staffers were receiving at the time, and argued that she played an important role on the international trip she took with Baucus.
Baucus separated from his now-ex-wife, Wanda, in March 2008 and moved out of their home. Hanes separated from her husband in April 2008 and moved out in early June. Hanes was divorced from her husband last December, and Baucus was divorced in April 2009. They are now living together on Capitol Hill and began dating in the summer of 2008. Hanes and other staff received their raises in this time period, according to public documents that show payroll breakdowns in six-month increments.
Baucus insists that Hanes was well-qualified for the prosecutor position, and his office released a lengthy résumé detailing her expertise as a prosecutor and in private practice.
Unlike many private corporations, there are no Congressional Rules barring a lawmaker from having a romantic liaison with an employee. In several cases, members have married staffers. For instance, Rep. Steve LaTourette (R-Ohio) became involved with his wife when she was still his chief of staff. Former Rep. David Bonior (D-Mich.) first hired his wife, Judy, as a staffer and later married her. Former Rep. Newt Gingrich (R-Ga.) became involved with a House staffer when he was speaker of the House. He later divorced his second wife and married the staffer.
Baucus himself was sued by his former chief of staff, Christine Niedermeier, after he fired her, but the case was thrown out on a technicality. She claimed the senator made unwanted sexual advances, but Baucus vehemently denied the allegation.
Hanes, who worked on Baucus’s staff as his state director and senior counsel, accompanied him on a taxpayer-funded congressional delegation in late 2008 with other members of the senator’s staff, a trip first reported by The Hill. The Baucus group traveled to Vietnam and the United Arab Emirates, at a cost to taxpayers of more than $14,000 per person
On Friday, Baucus’ office said that Hanes traveled in 2007 to Cuba on official travel, months before she and Baucus became romantically involved. The senator’s office said the Cuba trip was meant to promote trade issues between Montana and Cuba. The $1,105 cost of Hanes’ trip was paid for by the Finance Committee. Baucus was not part of the delegation, which also included representatives from Montana agricultural associations.
The two trips constituted Haynes’s only official foreign travel during her nearly six years on Baucus’s payroll.
Baucus’s office said it was appropriate for Hanes to accompany the senator and other aides to the Montana Democrat on the trip to Vietnam and the United Arab Emirates, even though the couple had begun a romantic relationship. The office said previous state directors had also gone on official overseas trips, and that the trip resulted in increased collaboration between universities in Montana and Vietnam. And it released a Jan. 2009 e-mail from an official at the University of Montana praising the senator for the trip, saying it yielded tangible results for the school in boosting educational and cultural exchanges with Asian colleges.
Baucus’s office also denies giving Hanes any preferential treatment while she was a paid member of his Senate staff. A Baucus spokesman downplayed the salary hike Hanes received, saying it was in line with what other aides to the senator received during the same period.
Around the time when her relationship with Baucus reportedly “intensified” in the summer of 2008, Hanes’s salary jumped $13,687, according to public documents covering the April 1-Sept. 30, 2008, period, to among the highest on the senator’s payroll.
In a statement to POLITICO, Baucus’s office argued that “virtually our entire staff” saw their salaries rise during the period, saying the raise was on a par with the legislative director’s and less than the chief of staff’s.
“In fact, during that period, Ms. Hanes’s salary increased by the exact same amount as our legislative director and less than our chief of staff,” said a statement from a Baucus spokesman.
Hanes’s salary did return to a lower level in the following six-month period, Senate records show. According to Baucus’s office, she left the staff in May and joined the Justice Department’s Office of Juvenile Justice and Delinquency Prevention, where she currently works as acting deputy administrator for policy.
Easley aide to appear before elections board
An aide to former Gov. Mike Easley is scheduled to appear before the State Board of Elections next week.
Ruffin Poole, who served as Easley's lawyer during the governor's two terms in office, will attend a Dec. 17 hearing, elections board Executive Director Gary Bartlett said Wednesday.
The board subpoenaed Poole in October to testify during its hearing into alleged campaign finance violations by Easley and his campaign, but Poole convinced a Superior Court judge to quash the subpoena. He argued that his testimony could violate the legally protected conversations he had with Easley as his attorney.
The state Court of Appeals overturned the judge's decision, ruling that Poole should comply with the subpoena because he was a government lawyer and not Easley's personal attorney.
The court's ruling came after the elections board turned the findings of its five-day hearing over to Wake County prosecutors, saying evidence from the hearing "suggests" criminal violations by Easley and possibly others.
The board also ordered Easley's campaign to forfeit $60,000 and fined the campaign another $40,000 for violations of campaign finance law related to unreported flights that major donors provided to Easley aboard their private planes.
Elections board Chairman Larry Leake said at the time that the hearing would be held open to allow members to hear from Poole.
NC Senator Tony Rand Accused of Insider Trading
The former president of a publicly traded Raleigh company is accusing NC State Sen. Tony Rand, one of the state's most powerful lawmakers, of insider trading and other illegal actions.
In a complaint filed with the U.S. Department of Labor, Paul Feldman, who claims he was illegally fired as president of Law Enforcement Associates in August, alleges that Rand had a scheme to profit from manipulating the value of LEA stock, Alan Wolf reports on the .biz blog.
Rand, the Fayetteville Democrat who plans to step down from the state Senate this month, has been chairman of LEA's board since 2003. The company, which makes security and surveillance equipment, was spun off in 2001 from Sirchie Finger Print Laboratories, a Franklin County company started by former state Sen. John Carrington.
In his complaint, Feldman also alleges that Rand told another LEA executive that he previously had traded the stock of Raleigh-based First Citizens Bank based on inside information he had gotten from former president Frank Holding. Rand said that he "planned to do the same to LEA stock," Feldman wrote.
Rand called the charges "insane" and "hogwash."
"He's a disgruntled ex-employee," Rand said Wednesday in a phone interview with Rob Christensen. "I'm embarrassed that Frank Holding has even been mentioned in this mess. But I guess that is part of it, when you are in business and in politics. People think you are fair game and maybe you are."
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LEA disclosed Feldman's allegations, including his Nov. 17 letter to the Labor Department, in a filing with the Securities and Exchange Commission on Tuesday.
Feldman also alleges that Rand and other LEA board members violated SEC rules by falsifying minutes of board meetings and omitting information in SEC filings. He also contends that LEA sold video equipment and other products through a sister company to police in the Dominican Republic. That violated federal export laws, Feldman alleges.
Feldman wrote that he has been interviewed by special agents for the FBI and IRS related to his allegations.
Rand said he has not been contacted by any law enforcement officials. "This offends me," he added. "There's no truth to any of this."
A spokeswoman for First Citizens wasn't immediately available for comment.
LEA officials responded in its SEC filing on Tuesday that Feldman's "claims are groundless, and are an attempt by a disgruntled former executive to seek retribution from the company."
LEA "does not believe the allegations ... have any merit" and plans to "vigorously defend against these actions."
The company also wrote that Feldman was removed as CEO in August for "insubordination" and "in the face of poor performance."
Feldman claims that Rand and other LEA board members fired him in late August when he was hospitalized for two days because of a "mini-stroke" and unable to attend the meeting to defend himself. Feldman couldn't be reached for further comment.
Feldman is seeking reinstatement as CEO and president of LEA, or economic damages for lost compensation, and "damages to his career, reputation and earning capacity." Feldman had been LEA's top executive for 19 years.
The company has struggled to boost sales of its products, including under-car inspection systems, explosive detection kits and GPS tracking equipment, to law enforcement agencies, nuclear power plants, the military and other customers.
LEA moved its headquarters to Raleigh from Youngsville last year, and has been cutting costs and jobs. It now employs about 25. Chief financial officer Paul Briggs couldn't be reached for comment.
LEA reported last month that net sales fell to $1.9 million during the third quarter, down 21 percent from the same quarter last year. LEA's net loss was $99,000, compared to net income of $96,000 last year.
Its stock now trades for pennies. In 2004 and 2005, when Feldman alleges the insider-trading scheme occurred, LEA's shares surged above $4. At its peak, in January 2005, the stock closed as high as $10.86.
On Wednesday, the shares rose 4 cents to 15 cents.
Federal Grand jury investigating Charlotte-Mecklenburg County DSS
A grand jury is investigating the Mecklenburg County Department of Social Services, which has faced scrutiny over accounting practices and spending since early this year, two county commissioners said Monday.
Commissioner George Dunlap said the Federal Grand Jury has been looking into whether crimes were committed by employees.
Commissioner Bill James said board members were told last month that a federal grand jury is investigating. He refused further comment on the topic, saying commissioners were instructed by a county attorney not to discuss specifics.
The county ordered an audit of the Giving Tree after a DSS employee raised questions about spending at the Christmas charity for needy children. The county discovered checks written out to a county employee who volunteered with the program, as well as money issued to the sister of another employee.
County spokesman Danny Diehl said officials cannot confirm whether a federal grand jury is involved, but said the county "is cooperating with law enforcement to complete the investigation."
The county has asked Charlotte-Mecklenburg police to investigate. A police spokesperson on Monday said their work is ongoing.
Other commissioners reached Monday would not comment on work by authorities. "I want the investigation to have the best possible outcome, said board Chair Jennifer Roberts. "So I am unable to discuss it in the interest of not impeding the work of law enforcement."
In the meantime, James and fellow Republican commissioners Karen Bentley and Neil Cooksey want the county board to meet next week to learn more about ongoing probes.
"There are facts we don't have," James said. "I am just concerned there is stuff even senior management doesn't know."
Diehl said the county will respond to any questions the board has about the DSS audits. "The board has received reports and been briefed on all aspects of the DSS audits that are available to the county manager and staff."
The developments follow Observer stories on Sunday detailing a 74-page memo from a former county employee who headed the Giving Tree. Cindy Brady, who retired from the county in August, wrote she was never given a chance to talk at length about how the charity worked, despite requests to do so.
Brady said the county advanced her as much as $198,000 since 2005 with the approval of her supervisors. Brady said she spent the money on gifts for needy children, but says she did not collect all of her receipts, and some were handwritten or lost.
County leaders say they can account for how about $162,000 was spent by the Giving Tree last year.
But audit reports acknowledge numerous problems with receipts and other documents to track expenses and cited inadequate oversight and controls of the program by management.
The county has announced a number of changes in response to the charity audit and reviews of other DSS spending, including putting department finances under control of the county finance office and re-training DSS employees in financial practices and procedures.
The agency employs about 1,200, with a current annual budget of $176 million.
Brady's memo, dated July 29 and sent to a human resources manager, criticized county investigators for not interviewing her during the audit investigation. The county's former Internal Audit Director Cornita Spears said she first read the memo last month, and it led her to revise her earlier report to include about $33,000 Brady said she returned to the county earlier this year.
County Manager Harry Jones suspended Spears last month over the error.
Why James wants meeting
James cited the Observer story in explaining his reasons for calling the new discussions on DSS. He said he wants to give disgruntled employees a venue to air grievances. For months, James said, commissioners have been deluged with anonymous complaint letters from people who only identify themselves as current and former agency workers.
Some apparently won't divulge their names because they fear retaliation from superiors, James said.
The proposal requests that the board discuss the DSS issues on Dec. 17, with portions of the meeting to be held behind closed doors. It asks that DSS Director Mary Wilson appear to the meeting, and that other department employees be made available.
It also requests that former Giving Tree employees be invited to talk, including former county general manager Janice Allen Jackson, who briefly led DSS on an interim basis until Wilson was hired last year.
Neither Jackson nor Brady could be reached for comment Monday.
The proposal also wants Jones to provide in open session a detailed list of gifts bought with Giving Tree money and information on all items from the charity now in county inventory.
It also asks for copies of all internal memos produced by internal audit and county management involving the Giving Tree.
The county publicly released a three-page report in June and a follow-up report last month. The Observer has requested a longer report by Spears multiple times since July, but the county has said personnel laws bar them from releasing the document.
In order to hold the Dec. 17 meeting, at least five commissioners would have to agree. At least two of the six Democrats would have to sign on.
Roberts, Dunlap and Vilma Leake said they want to hear more about what the commissioners are trying to accomplish in holding the meeting before they can decide whether to support it. However, Roberts questioned whether meeting in closed session was the best approach, and said she is "distressed" that the board Republicans did not talk to her before putting the item on next week's agenda.
Dumont Clarke said he's inclined "to be as transparent and public as possible about this issue and do as little as possible behind closed doors."
Commissioners Harold Cogdell and Dan Murrey did not respond to requests for comments.
Cooksey said his constituents are demanding the board take a "more active role in getting to the bottom of this."
Cooksey disagreed with commissioners who have said they county is spending too much time on the issue and should not look into anonymous complaints.
"When you have issues swirling around, you can't ignore it," Cooksey said. "We have an obligation to see if these allegations have any truth to them or not."
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