In a news conference to talk about his switch to the Democratic Party, Sen. Arlen Specter said of controversial Office of Legal Counsel nominee Dawn Johnsen: ”I’m opposed to the nominee.” But he declined to say whether he would vote with his new party on a procedural motion to end debate on her nomination, telling Main Justice’s Andrew Ramonas after the news conference: ”I’m all out of answers.”
The stunning news earlier today that the ranking Senate Judiciary Committee member, for years a lonely Republican moderate, will switch his party affiliation immediately put into play the question of whether Democrats were one vote closer to cloture on Johnsen. The liberal Indiana University law professor needed two Senate Republicans to end debate. Click here to read our last report on the close confirmation vote.
If Al Franken is seated pending resolution of ex-Sen. Norm Coleman’s (R) legal challenges in the disputed Minnesota Senate election, Democrats will have a filibuster-proof 60-vote margin with Specter’s party switch. But it’s unclear whether or when Franken will be seated. A Senate Democratic aide today said the leadership is still short of cloture on Johnsen and is unsure how her situation will play out.
Some good news for Johnsen: Conservative Senate Democrat Ben Nelson of Nebraska will vote for cloture. The anti-abortion Nelson has expressed doubts about the Johnsen, who was both an abortion-rights lawyer and a leading activist against the Bush-era legal policies that authorized torture. But he told Main Justice this afternoon that he will vote with his party on the procedural motion to end debate against Johnsen. Then he will vote “nay” on her actual confirmation. Specter could split the difference in a similar way. But that’s okay for Johnsen: If Senate Democrats can end debate on her nomination, she will only need a simple majority for confirmation.
Specter’s party switch was in response to a very tough GOP primary battle he was facing against conservative former Rep. Pat Toomey (R-Pa.). Assistant Senate Majority Leader Dick Durbin (D-Ill.) told reporters in the Senate today he had spoken with Specter about switching parties “once…a few weeks ago.”
THIS POST WAS UPDATED AT 2:51 P.M.
Read Specter’s statement on his party switch here.
Here is Senate Majority Leader Harry Reid’s statement on Specter:
REID STATEMENT ON ARLEN SPECTER
Washington, DC—Senate Majority Leader Harry Reid made the following statement today:
“I have known Senator Specter for more than a quarter-century. He has always been a man of honor and integrity, and a fine public servant.
Senator Specter and I have had a long dialogue about his place in an evolving Republican Party. We have not always agreed on every issue, but Senator Specter has shown a willingness to work in a bipartisan manner, put people over party, and do what is right for Pennsylvanians and all Americans. I welcome Senator Specter and his moderate voice to our diverse caucus, and to continuing our open and honest debate about the best way to make life better for the American people.”
Former CIA officer John Kiriakou’s account to ABC News in 2007 that waterboarding was used sparingly and had elicited valuable intelligence helped change the public debate in favor of harsh interrogation techniques, the New York Times reports.
From the Times:
His ABC interview came at an especially delicate juncture in the debate over the use of torture. Weeks earlier, the nomination of Michael Mukasey as attorney general was nearly derailed by his refusal to comment on the legality of waterboarding, and one day later, the C.I.A. director testified about the destruction of interrogation videotapes. Mr. Kiriakou told MSNBC that he was willing to talk in part because he thought the C.I.A. had “gotten a bum rap on waterboarding.”
Kiriakou’s account was contradicted by the declassified legal memos President Obama released two weeks ago. A footnote said 2 suspects were waterboarded 266 times. Kiriakou also didn’t have first-hand knowledge of the treatment of captured al-Qaeda suspect Abu Zubaydah, the Times reports. His unverified account nonetheless “richoted” around the Web.
Sen. Mary Landrieu (D-La.) said today that she wants Jim Letten, U.S. Attorney for the Eastern District of Louisiana, to stay on the job.
Jim Letten (USDOJ)
Letten became the interim U.S. attorney for the district in 2001 and was later appointed by President Bush in 2005. “The New Orleans region is a safer place thanks to the grit and determination of our U.S. Attorney Jim Letten, and he deserves reappointment,” Landrieu said in a statement.
The Times-Picayune says Letten was supported by Sen. David Vitter (R-La.), but was not backed by some Democrats.
The paper reports:
…Today’s announcement is sure to disappoint some Democrats and African-American leaders who have been urging her to choose a qualified Democrat who would also be committed to prosecuting public corruption. New Orleans attorney Brian Jackson, a longtime federal prosecutor, was among those rumored to be a top candidate.
Landrieu is still reviewing candidates for the Middle and Western Districts, said her spokesperson, Aaron Saunders. She is the second Democratic senator to support keeping a Bush-appointed U.S. Attorney in place; the other is Sen. Dick Durbin of Illinois, who wants Patrick Fitzgerald to be reappointed. Fitzgerald is prosecuting former Illinois Gov. Rod Blagojevich (D) for corruption.
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A new report from the Administrative Office of the U.S. Courts has the details. Thomas O’Toole at BNA wonders if the decrease means more surveillance is taking place outside of court supervision?
CQ’s Jeff Stein continues to break news on the Rep. Jane Harman (D-Calif.) story. Then-House Speaker Denny Hastert (R-Ill.) also learned from a “CIA-connected” whistleblower in 2006 that the California Democrat had been caught on a wiretap allegedly offering to help two pro-Israel lobbyists accused of spying against the U.S, Stein reports today.
From his story:
Incensed that Bush officials had ignored their obligation to alert him, Hastert demanded an explanation from then-Attorney General Alberto R. Gonzales …. but was rebuffed ….
The information was so sensitive, [Hastert chief of staff Scott] Palmer said, he and another aide composed and typed Hastert’s letter to Gonzales themselves, rather than dictating it to a secretary.
The two aides then summoned William Moschella, then the Justice Department’s chief of congressional liaison, to pick up the letter in person, “to signify how important we viewed the matter,” Palmer said
Stein previously reported that whistleblowers also contacted then-House Minority Leader Nancy Pelosi about the matter after Gonzales squashed a national security investigation in order to gain Harman’s support for the soon-to-break warrantless wiretapping story. Now he says Hastert informed Pelosi. Gonzales’s silence snubbed traditional protocol, which says top leaders in Congress are supposed to be informed when a lawmaker is under investigation by the government.
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The House’s ethics and lobbying rules have forced Alan Baron to leave Holland & Knight in order to continue working for the House in its impeachment investigation of U.S. District Judge G. Thomas Porteous Jr., Legal Times reports. The Eastern District of Louisiana judge is alleged to have taken bribes and committed perjury; he would be the first federal judge to be impeached in 20 years. Porteous denies the allegations. Holland & Knight concluced that Baron’s continued involvement in the case would have dented their lobbying practice by forcing them to stop contacting House Judiciary Committee members or their staffs.
Assistant Attorney General Lanny Breuer said financial fraud is one of his top priorities when he announced the indictment of five people for a mortgage scam today during his first press conference as the new criminal division chief at Main Justice.
Breuer, who has been on the job for five days, was flanked behind the podium by Maryland U.S. Attorney Rod J. Rosenstein, Maryland Attorney General Douglas F. Gansler, FBI Executive Assistant Director Thomas J. Harrington and Internal Revenue Service Criminal Investigation Deputy Director Rebecca Sparkman.
Mortgage fraud is a “pervasive problem” that requires the collaboration of federal, state and local authorities, Breuer said. Today’s unsealed indictment of five people for scheming $70 million from 1,000 people for home mortgages is a “perfect example” of the crimes he will prosecute with the assistance of other authorities, he said.
“Our resolve as a group is great,” Breuer said. “We will find you. We will prosecute you and we’re going to put you in prison.”
The full text of today’s news release on the indictment is below.
FOR IMMEDIATE RELEASE
MONDAY, APRIL 27, 2009
WWW.USDOJ.GOV
FIVE CHARGED IN $70 MILLION “DREAM HOME”
MORTGAGE FRAUD SCHEME
WASHINGTON – A federal grand jury has indicted four defendants, and an information has been filed against a fifth defendant, for their participation in a massive mortgage fraud scheme that allegedly promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves, Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the District of Maryland Rod J. Rosenstein announced today.
The indictment was returned on April 22, 2009, and unsealed today.
“The Criminal Division and the U.S. Attorneys’ Offices are jointly committed to redoubling our efforts to uncover and prosecute fraud and abuse in all facets of the housing market – a market upon which so many American families have pinned their hopes and their futures for so many years,” said Assistant Attorney General of the Criminal Division Lanny A. Breuer. “I want to assure the American public that we will not rest until the tide of this criminal activity is turned.”
“The indictment alleges that the defendants used slick marketing to conceal empty promises,” said U.S. Attorney Rod J. Rosenstein. “They convinced many victims to invest at least $50,000 by refinancing their existing homes or buying new homes at inflated prices, while claiming that Metro Dream Homes would repay the mortgages with revenue from profitable businesses. The indictment alleges that there was no revenue to pay the mortgage payments. Instead, the conspirators used some of the investors’ money to repay earlier investors in the Ponzi scheme and spent the remainder on themselves.”
“The effects of this wide-ranging mortgage fraud scheme are particularly disturbing within the backdrop of today’s economic environment. With our federal, state and local partners working on 18 mortgage fraud task forces and 47 mortgage fraud working groups across the country, the FBI is committed to combating mortgage fraud and other financial crimes nationwide to protect the American homeowner and the national economy,” said Executive Assistant Director Thomas J. Harrington, FBI Criminal, Cyber, Response, and Services Branch.
“IRS Criminal Investigation takes allegations of mortgage fraud seriously,” said “Eileen Mayer, Chief, IRS Criminal Investigation. “These types of crimes drive home owners into foreclosure, erode the integrity of our tax system and threaten the financial health of our communities.”
According to the indictment, from 2005 to 2007 the defendants allegedly used corporate names such as “Metropolitan Grapevine LLC,” “Metro Dream Homes,” “POS Dream Homes,” and “POS DH LLC” (collectively, MDH) to target homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” To participate, an investor had to provide a minimum of $50,000 for each home enrolled in the program, in addition to an “administrative fee” of up to $5,000. In exchange, the program promised to make the homeowner’s future monthly mortgage payments, and pay off the homeowner’s mortgage within five to seven years. Thereafter, the homeowner and MDH would own an equal interest in the home.
The indictment alleges that Andrew Hamilton Williams, Jr., 58, of Hollywood, Fla., was the founder and owner of MDH; Michael Anthony Hickson, 46, of Commack, N.Y., was the chief financial officer; Isaac Jerome Smith, 46, of Spotsylvania, Va., was the president; and Alvita Karen Gunn, 31, of Hanover, Md., was the vice president of operations. The information alleges that Carole Nelson, age 50, of Washington, D.C., was the chief financial officer of POS Dream Homes.
The indictment further alleges that Dream Homes Program representatives explained to investors that the homeowners’ initial payments would be used to fund investments in automated teller machines (ATMs), flat-screen televisions that would show paid business advertisements, and “Touch-N-Buy” electronic kiosks that sold telephone calling cards and other
items. To give the Dream Homes Program a veneer of legitimacy and financial success, the defendants marketed the program through live presentations at luxury hotels in Maryland, Washington, D.C., and Beverly Hills, Calif., among other locations. The defendants allegedly told some of the investors that they should not worry about the price of the homes or monthly mortgage payments because MDH would make mortgage payments on their behalf.
The indictment alleges that the defendants failed to advise investors that: the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue; the defendants used the funds from later investors to pay the mortgages of earlier investors; and MDH had not filed any federal income tax returns throughout its existence. The defendants also allegedly failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including the defendants, to: pay salaries of up to $200,000 a year as well as their mortgages; employ a staff of 10 chauffeurs and maintain a fleet of luxury cars; and travel to and attend the 2007 National Basketball Association All-Star game and the 2007 National Football League Super Bowl, staying in luxury accommodations in both instances. Nor were investors told that investor funds were allegedly used to: pay off investors in a prior failed ATM investment venture that Williams had founded called Bankcard Group; make multiple donations of up to $50,000 each to charitable organizations to allegedly give MDH the appearance of being financially successful; and fund investments in third-party businesses that had not been disclosed to investors.
On Aug. 15, 2007, the Maryland Securities Commissioner issued a cease-and-desist order to Williams, MDH and other related companies directing them to immediately cease the offering and sale of unregistered securities in connection with their promotion of the Dream Homes Program. However, the defendants thereafter allegedly called additional meetings in which they made additional misrepresentations about the financial success of MDH’s operations. On Sept. 4, 2007, the defendants filed a legal challenge in federal court in Maryland to the cease-and-desist order. The indictment alleges that at a hearing on Sept. 12, 2007, Hickson testified that the financial success of the Dream Homes Program did not rely upon new investor funds, when in fact Hickson knew that the sole source of meaningful revenue for MDH was new investor funds.
As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $70 million. When the defendants stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.
The four indicted defendants face a maximum sentence of 20 years in prison for the fraud conspiracy; 20 years in prison on each of the 15 counts of wire fraud; and 20 years in prison for conspiracy to commit money laundering. Hickson also faces a maximum sentence of five years in prison for making false statements. Smith also faces a maximum sentence of 30 years in prison for bank fraud arising out of his alleged misrepresentation of his income in order to obtain a bank loan to purchase a new Bentley automobile. Nelson was charged by information with money laundering, which carries a maximum penalty of ten years in prison. The indictment seeks forfeiture of the fraud proceeds, including $70 million.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.
This prosecution is being brought jointly by the Maryland and Washington, D.C. Mortgage Fraud Task Forces, which are comprised of federal, state and local law enforcement agencies in Maryland, Washington, D.C. and Northern Virginia. The Task Forces were formed to promote the early detection, identification, prevention and prosecution of various kinds of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Forces, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and help to ensure the integrity of the mortgage market and other credit markets. Information about mortgage fraud prosecutions is available on the internet at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.
Assistant Attorney General Lanny A. Breuer and U.S. Attorney Rod J. Rosenstein praised the FBI, IRS – CI, the Maryland Attorney General’s Office, Securities Division and the Federal Deposit Insurance Corporation, Office of Inspector General for their investigative work; and thanked Assistant U.S. Attorneys for the District of Maryland Jonathan C. Su and Bryan E. Foreman, who are prosecuting the case.
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The president of Switzerland, Hans-Rudolf Merz, has asked Treasury Secretary Tim Geithner to abandon a major Justice Department-led lawsuit that is threatening to tear a huge hole in the Alpine nation’s bank-secrecy laws, threatning its lucrative niche as a tax haven.
The DOJ and the Internal Revenue Service are seeking the names of 52,000 Americans who used Swiss bank UBS to evade U.S. taxes through the use of overseas accounts. A source told the New York Times that DOJ “is not going to give in” on the matter.
Switzerland instead is proposing to negotiate a new treaty with the U.S. that would allow disclosures of such names in the future, in exchange for the U.S. dropping its current investigation. Treasury issued a statement Sunday saying Geithner “listened to the Swiss concerns” and understands “the importance of appropriately resolving the matter.”
The Associated Press’s Devlin Barrett spoke with Eric Holder during a flight to London Sunday, in advance of the Attorney General’s meetings this week with his European counterparts, in which he will undoubtedly face questions about Obama administration plans for reversing Bush-era policies on torture and indefinite detention.
Toward that end, Holder on Sunday made a stop at the fabled Tower of London, where for centuries England’s rulers sent their wives, siblings, nephews and other enemies of the state for torture and execution. Subtle, huh?
On Gitmo: President Obama has set a January deadline for closing the Guantanamo Bay detention facility. But before the camp can be shut down, the U.S. has to sort through which detainees to put on trial, and which should be released, Holder told the AP. “I think we’re probably relatively close to making some calls,” he said.
The Arabic-speaking former FBI agent, who conducted many of the early interrogations of Al-Qaeda figures, tells Newsweeks’ Michael Isikoff about the battles between the Bureau and the Agency over the use of torture. Read it here.
