It is just as well that justice is blind; she might not like some of the things done in her name if she could see them. Anonymous
ETHICAL BEHAVIOR OR THE LACK OF IT.  And then there's Congress...
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H O T   L I N K S  immediately below...CT examples HERE.

Indeed, it (ethics) is all in the eye of the beholder.  And everyone is different.  Some people never even think about it - including people who should.  So, as my newspaper publisher once said, "when in doubt, don't."   Below please find articles about judges, public employees, and a really outrageous couple of actions by folks who should have known better.  (Didn't anyone ask themselves "how will this look in 72-point type on the front page?")  Some examples of ethical "challenges" in the news:


Take-Home Pay Is Key In Food Stamp Case
The Hartford Courant
By CHRISTOPHER KEATING, ckeating@courant.com
7:47 PM EST, December 19, 2011

HARTFORD

Why would highly paid state employees apply for emergency food stamp benefits when it would appear they would not qualify?

The reason, veteran state employees said, might be the rules of the game. The Department of Social Services workers who processed the benefits were told that they should look at the applicant's self-declared take-home pay, not their gross pay, according to a worker directly involved in awarding benefits.

Another worker said that many state employees have a relatively low take-home pay because their mortgages, car insurance, and homeowners' insurance can all be deducted through the credit union. The state comptroller's spokeswoman, Tara Downes, confirmed Monday that those items, as well as union dues, health insurance premiums, and contributions to the state's version of a 401(k) program, are routinely deducted from paychecks and make the take-home pay much smaller.  Based on those guidelines, some DSS workers assumed that a large number of state employees would apply for the program — even when supervisors did not make that assumption. Overall, more than 23,000 citizens applied, including about 800 state employees. Of those who applied, 92 percent received benefits.

"Friends told friends. I assume that's where a lot of these state workers came from,'' said one worker who spoke on the condition of anonymity. "We have a great credit union. A lot of state employees did qualify.''

She added, "The lower-paid, new state troopers, especially if they have a family, could qualify. They said it was the net pay during that time frame.''

Andrew McDonald, Gov. Dannel P. Malloy's chief legal counsel, said he was not personally aware of any cases where a home mortgage payment, for example, might be involved. The issue, he said, could potentially be further complicated by child support payments or garnishments on wages.

"Those are fact-driven questions that will be part of the investigation,'' said McDonald, who has been heavily involved in the matter on behalf of Malloy. "Those are the types of questions that would be analyzed.''

The two-page application for benefits says that a person should "list the source and amount of take-home pay, as well as any other income that is or will be received by your household while the emergency program is running.'' That includes the amounts in checking and savings accounts, as well as in the state employee credit union.

McDonald has stressed that state employees who answered the questions truthfully have nothing to fear. But he said those who have falsified their income or assets should be concerned, as Malloy has stated flatly that those who defrauded the state will be fired.

Overall, 34 state employees have been referred to department commissioners for disciplinary hearings. So far, state officials have not announced how many state employees have been cleared of any wrongdoing.  A veteran state employee who worked directly on awarding benefits said the long lines were simply part of a program that was marked by little training and little verification. With lines outside virtually every DSS office, the state employees were working as fast as possible to process the applications.

"They had scheduled the training, but the crowds started coming in,'' said the worker, who spoke on the condition of anonymity. "My training was two minutes in a cubicle, watching a supervisor process a D-SNAP application. Nobody went [to training] because there wasn't enough time. We were just thrown in the deep end, and it was sink or swim.''

Regarding the requirements for the applicants, the worker said, "We were told to ask for the self-declared, take-home pay minus self-declared storm losses and expenses. … We didn't even ask people how long they lost power.''

The applicants were rushed through the line as quickly as possible, she said.

"When they said two minutes per person, in the paper, that is absolutely true,'' she said. "The supervisors were doing it, too. Everybody was doing it the same way. We were doing it exactly the way we were told to do it. … It was crisis management at that point. It was completely crazy.''

The worker rejected the notion, as told to The Courant by some state employees, that some DSS workers had deliberately changed the numbers on an application so that a fellow state employee could qualify for benefits. But she said that state workers did offer assistance to applicants in filling out the forms.

"We prompted people,'' she said. "Did you purchase batteries? Did you purchase propane? Did you go to the laundromat?''

She added, "I would say, and this is not an exaggeration, every other person walking in the door was lying.''

But knowing the details of the program and the scrutiny that often comes upon state workers, another veteran state worker said that she and others did not attempt to obtain benefits.

"We kind of smelled a rat. I did, anyway,'' she said. "You can tell when trouble is coming, and it looked like trouble.''

Copyright © 2011, The Hartford Courant

NU Enjoys Power Connections
Hartford Courant
Jon Lender, Government Watch
9:17 PM EST, November 12, 2011

Northeast Utilities, now facing scrutiny over its slow reconnection of storm-damaged power lines, has established a network of connections with Connecticut's political establishment, including Democratic Gov. Dannel P. Malloy's administration and other officeholders who could affect investigations of the company.

NU's subsidiary, Connecticut Light & Power Co., was hit by a blast of criticism last week from Malloy, who brought in a national consultant to investigate the utility and said he'll be "holding everybody's feet to the fire on this." But such an action could end up warming the shoes of a few people who populate the same political circles as Malloy.

That's because the utility giant has spent millions over the years wiring itself in with government officials of both major parties — and its presence pervades the State Capitol. That longstanding investment is intended, at least in part, to assure that NU finds some receptive ears among executive-branch and legislative decision-makers to minimize its difficulties during bad times like these.

Coming months will reveal how well NU fares in several pending state and federal government investigations of its performance in the disastrous storms of Aug. 28 and Oct. 29. Before all of that plays out, it's worth looking at connections that show either NU's prominence in, and potential influence on, the political power structure.

NU's connections were downplayed in an interview Friday by Malloy's senior adviser and leading spokesman, Roy Occhiogrosso, who until last year was a partner in a consulting firm that does opinion-polling work for CL&P.

The utility's network of connections "hasn't prevented them from becoming the center of the storm. It hasn't prevented them form being criticized, reviewed and investigated," said Occhiogrosso. "I am hard-pressed to see how anyone can claim that that the company's connections are preventing anything from occurring now."

The connections are listed below in four categories: lobbying, representation on Malloy's 2010 transition team, consulting relationships and campaign contributions.

LOBBYING

In addition to employing four lobbyists on its in-house corporate staff to influence Connecticut government officials and legislators during 2011, NU is paying a total of $704,000 to a cadre of politically connected lobbyists this year, records at the Office of State Ethics show.

NU's hired lobbyists (with anticipated 2011 compensation) include the firms of:

--Marc DiBella, son of former state Senate Majority Leader William A. DiBella, ($120,000).

--John Droney, former Democratic state party chairman, ($100,000).

--Anthony DeFilippis Jr., former chief of staff for state Senate Democrats ($72,000)

--Jay Malcynsky, a prominent Republican activist for years and top adviser to past governors ($250,000).

--Delores Malloy — no relation to the governor — a longtime voice at the Capitol for the utility company ($72,000).

--Kevin Reynolds, counsel to the state Democratic party ($50,000).

--John King, past president of the Hartford County Bar Association, who was named last week by New Britain Mayor-elect Tim O'Brien to serve as city attorney ($40,000).

NU's lobbying efforts don't stop at the Connecticut border, by the way. According to the New England Center for Investigative Reporting, NU has spent $32,500 for legislative lobbying in Massachusetts this year. NU and Boston-based NStar are now seeking Bay State utility regulators' approval for a merger that would form New England's largest utility company.

Transition Team

After winning the 2010 election, Malloy appointed the NU system's top government-relations executive, Senior Vice President and General Counsel Gregory B. Butler of Glastonbury, as a member of his transition team to form his present administration. Butler, whose total 2010 compensation was listed by NU at more than $3.5 million, is in charge of the utility's lobbyists.

Butler's inclusion on Malloy's 22-member transition team was an interesting move. He is a Republican who served under President George W. Bush as a senior attorney-adviser in the Department of Justice, and was close to the GOP's 2010 gubernatorial nominee, Tom Foley. In fact, the day after the 2010 election, when a winner hadn't yet been declared in the Malloy-Foley contest, Foley announced that Butler would be one of the two co-chairman of his own transition team.

After Malloy won, he tapped Butler because he wanted his transition team to be "diverse and broad-based," said Occhiogrosso. "Greg Butler is a really nice guy, and might be the only person chosen … by two would-be governors in the same election. … He's a well-respected Republican [who would] bring a welcome perspective to the table."

Transition teams are part substance and part symbolism; they come up with policy positions and evaluate potential appointees in the two months between Election Day and the launch of a new gubernatorial administration.

"I was invited to serve on Governor Malloy's transition team, and was honored that he asked me to participate in that process. I believe greatly in public service," Butler said in an emailed reply to Courant questions on Friday. He is unrelated to CL&P president Jeffrey D. Butler, who became a familiar figure in recent news briefings about power restoration efforts.

Consulting Relationships

Two consulting relationships are worth mentioning from recent years, the fresher involving Occhiogrosso, Malloy's senior adviser.

The same political and public-relations consulting firm — Global Strategy Group, based in New York with an office in Hartford — has done paid worked for NU, CL&P and Malloy's 2010 election campaign. For several years ending last December, Global's Hartford office was run by Occhiogrosso. Then, when Occhiogrosso quit to take his current job in the governor's office, Global hired an NU communications executive, Tanya Meck, to take his place in Hartford.

What significance is there in this interlock of personnel, politics, consultants and clients? According to Occhiogrosso, none.

"It doesn't mean anything," he said. "It's a big company in a small state — doesn't mean anything."

Occhiogrosso said that Global's polling research for CL&P has gone on for years, and was always handled out of the New York office. He said he started work at Global in 2003, and he believed that Malloy's dealings with Global went back beyond that, to when Malloy was Stamford's mayor.

Meck said that NU's current status as a client of Global is only about a year old, and began when she quit NU to replace Occhiogrosso. NU did not refill her position — in which she assisted Marie T. van Luling, NU's vice president in charge of communications, such as public relations and advertising — and instead had Meck continue assisting van Luling in her current consultant's role at Global.

Occhiogrosso and Meck are friends. Both worked in Democratic staff roles at the Capitol in past years — he for Senate Democrats, and she for House Democrats. Meck also served for a time as spokeswoman for former Secretary of the State Susan Bysiewicz during the latter's unsuccessful attorney general campaign last year.

Asked if she gains any advantage for NU in dealing with the state as head of Global's Hartford office, Meck said: "I'm flattered that you asked that question. But I can tell you that that is not my role."

One other consulting relationship involving NU and a Malloy administration figure already has made news in 2011: In the past two months, The Courant disclosed that Malloy's appointee as head of the Department of Energy and Environmental Protection, Daniel Esty, was paid $205,000 by NU as a consultant from 1997 to 2005.

Also, earlier this year, four NU executives gave a total of $2,000 to the 5th Congressional District campaign of Esty's wife, Democrat Elizabeth Esty, public records show.

Esty's department includes the Public Utilities Regulatory Authority, which has launched an investigation of its own into CL&P's handling of storm-related problems.

He has said in the past that his past consulting work for the company will not impair his ability to handle NU-related matters, and that he did not solicit the contributions that NU made to his wife.

Campaign Contributions

NU's political action committee, along with Butler and other NU executives, have been contributed tens of thousands of dollars in recent years to the campaigns of congressional candidates in Connecticut and other states.

For example, NU's PAC contributed $5,000 earlier this year to 5th District U.S. Rep. Chris Murphy's 2012 campaign for Connecticut's Democratic U.S. Senate nomination after giving him $6,000 for his 2008 House campaign and $10,000 for his 2010 House effort.

It's also given $19,000 to 2nd District U.S. Rep. Joe Courtney's campaigns since 2008, $4,000 to 3rd District Congresswoman Rosa DeLauro in that same period, $11,500 to 4th District Congressman Jim Himes, and $7,000 to 1st District U.S. Rep. John Larson.

Those PAC totals are exclusive of many thousands more in donations from individual NU employees.

Officeholders who receive donations invariably insist that the money doesn't affect their actions. On Nov. 4, four of Connecticut's five U.S. House members — all except Larson — and the state's two U.S. senators asked the Federal Energy Regulatory Commission to investigate CL&P and NU over their performance during and after the Oct. 29 snowstorm.

State Worker Sues Malloy, 2 Aides Over Job Change
By EDMUND H. MAHONY, emahony@courant.com
6:30 PM EDT, July 1, 2011

A state employee is suing Gov. Dannel P. Malloy and two top aides, claiming that they fired her during the governor's inauguration ceremony because she is a Republican who expressed a contrary opinion about proposed legislation.

Jean E. Henry of Watertown names Malloy; Benjamin Barnes, secretary of the Office of Policy and Management; and Andrew J. McDonald, general counsel for the office of governor. The federal lawsuit says the three orchestrated the termination in violation of Henry's rights to free speech.

When she was fired, Henry says in the suit, she was a classified state employee whose position was protected from patronage considerations. She was working as a legislative program manager for the Office of Policy and Management, an agency for which she had worked for 14 years, including the Republican administrations of former Govs. John G. Rowland and M. Jodi Rell.

Henry is represented by Westport lawyer Andrew Bowman, who has won judgments in the past for state employees claiming wrongful termination.

Malloy's press office referred questions about the suit to Attorney General George Jepsen, who is defending it.

"We don't believe that the lawsuit has any factual or legal merit and we will respond in court at the appropriate time," Jepsen spokesman Anthony Krize said.

On March 11, a month after her effective termination from OPM, Henry was given a relatively low-paying position as a processing technician at the chief medical examiner's office. Her salary dropped from about $100,000 to about $56,000 a year.

Henry suggests that her dismissal had its roots in what is characterized in the suit as an odd conversation she had in 2007 with McDonald, a Greenwich Democrat who, at the time, was the Senate chairman of the legislature's judiciary committee.

Neither Henry nor McDonald could be reached to discuss the matter. Bowman declined to elaborate on the suit.

In the suit, Henry said she expressed her support to McDonald, in personal remarks that were "outside of her job function," for legislation to extend the time period during which sexual assault suspects may be prosecuted if DNA evidence results in an arrest long after the crime. The law was a reaction to the experience of a victim who was a friend of Henry's, according to the suit.

Henry asserts in the suit that she made her support for the law known to McDonald "for the sake of the woman she knew and all women whose assailants might have been prosecuted but for the late discovery of a DNA link between their assailants and the crime."

The suit claims that McDonald "reacted with anger at plaintiff, since he refused to support the bill unless it was linked to another bill he championed."

"When plaintiff offered her view that linking the two bills would certainly and objectively result in defeat, defendant McDonald responded angrily that he knew that was the case," the suit contends.

Henry said in the suit that, during Malloy's swearing in ceremony Jan. 5, a superior summoned her for a conversation. When Henry asked whether she should be worried, she said in the suit that she was told, "Yes."

The suit says that Henry was told she was being terminated because her agency was being restructured and that there was nothing she could do about it and no one she could talk to about it. Two days later, the suit contends, Barnes told her she was being fired because "they did not want her to continue in her employment."


IS THIS THE BEST WE CAN DO?
Perhaps the administration is in a hurry?  Considering the gap or GAAP in trustworthiness (a one-Party system)...

Legislators urge SEEC to reject Giuliano as new director
Keith M. Phaneuf and Mark Pazniokas, CT MIRROR
January 13, 2012

The co-chairmen of the legislature's Government Administration and Elections Committee called Friday afternoon for the state's elections watchdog panel to reconsider its plans to name former Middletown Mayor Sebastian Giuliano as its new executive director.

Rep. Russell Morin, D-Wethersfield, and Sen. Gayle Slossberg, D-Milford, told the State Elections Enforcement Commission by letter that Giuliano does not meet the basic qualification required of commissioners: that he be at least three years removed from partisan politics.

Giuliano, a Republican, served three terms as Middletown's mayor through 2011. He lost his bid for a fourth term last November, defeated by Democrat Dan Drew. The commission announced Thursday that it planned to name Giuliano to the executive director's post at a meeting Wednesday.

"I strongly believe the SEEC must first and foremost be an independent watchdog of Connecticut's elections policies, procedures and processes, without even a hint of partisanship, and a chief elected official, of any party and any municipality, who served in office and ran for re-election as recently as this nominee, compromises that desire for irrefutable nonpartisanship," Slossberg said.

"Individual SEEC commissioners must be removed from partisan politics for three full years before they are eligible to serve; I think the same standard should be applied to the agency's staff positions as well," she said.

"There is no place for partisan politics at Elections Enforcement," Morin said. "In essence, the commissioners are naming an executive director whose feet are still tired from walking the campaign trail. This is a job that rises above party politics -- even the slightest hint of partisanship would contaminate Election Enforcement's ability to carry out its mission."

Giuliano was one of two former mayors in the pool of four finalists. He faced competition from a Democrat, who is more than three years removed from elective office, who was backed by a top official of Common Cause, the advocacy group often seen as an ally of the commission at the state Capitol.

The Democrat confirmed he was a finalist, speaking on condition of anonymity so as not to jeopardize his current job. One other finalist was the chief operating officer of a municipality. The fourth had no government experience.

Stephen F. Cashman, the chairman of the commission, said he would review the letter, but the call for being clear of partisan politics for three years is not required of the director.

"All I can indicate is that requirement was neither in the job description, which was posted by DAS, nor is it part of the statute associated with the appointment of the executive director," Cashman said. "It seems they are asking us to impose a condition that has not heretofore existed."

DAS is the Department of Administrative Services, which oversees hiring.

Giuliano could not be reached.

In addition to saying that Giluliano too recently was an active partisan, Slossberg and Morin also drew a parallel between Giuliano's situation and state ethics standards.

The legislators noted that ethics rules guard against more than just outright conflicts of interest, but also caution against the appearance of a conflict. The executive director of an agency that oversees and enforces fair elections, including Connecticut's public campaign financing program, should appear to be far removed from any office that has a stake in these services.

Both legislative leaders added that their objections are not personal.

"I'm not attacking the former mayor," Morin said. "I respect what he did" in municipal service.

"We need an independent watchdog agency that doesn't have the appearance of even a smattering of partisanship," Slossberg said.
Democratic leaders back bill to shorten leash on elections watchdog
Mark Pazniokas, CT MIRROR
May 31, 2011

House Speaker Christopher G. Donovan's appointee to the State Elections Enforcement Commission says a budget bill co-sponsored by the Democratic leaders of the House and Senate is about to put the watchdog agency on too short a leash.

A sweeping budget-implementation bill approved Tuesday night by the House limits the tenure of every elections commissioner and ends the agency's practice of auditing every legislative campaign. The bill now goes to the Senate, where approval is assured.

"It looks like the legislature is dismantling the agency that oversees it," said Anthony J. Castagno, the commissioner appointed by Donovan. "I'm really surprised that's the direction the legislature is going."

Legislative leaders said they are maintaining the independence of the agency, dropping some of the provisions  in a controversial earlier bill that would have stripped the commission of its audit and investigative staff and given control of public financing of campaigns to the secretary of the state's office.

But without a public hearing or significant input from the commission or the legislators who oversee election law, the legislature is cutting the terms of commissioners from five to three years and barring them from serving consecutive terms.

"Just about the time you become proficient, your term is up," said Stephen F. Cashman, a Republican appointee of the House minority leader and chairman of the commission. "I don't understand it."

Castagno said he has complained to the speaker that the shorter, non-renewable terms will leave the commission as a rubber stamp for a shrinking, reorganized professional staff that will be part of a new Office of Government Accountability.  Cashman made a similar argument in a letter to legislative leaders.

"Our elections and campaign finance laws are not simple," Cashman wrote. "This is especially so in these historic times as the United States Supreme Court re-writes election law and the Commission implements the landmark Citizens' Election Program.  A new Commissioner with the SEEC can take a year or longer to become fluent in this diverse and quickly evolving subject matter.  Abruptly cutting off the Commissioners' ability to serve after 3 years would be a significant blow to the collective intellectual capital of the Commission."

"The idea is to have fresh people take a fresh look," Donovan said.

"We don't want these folks to become entrenched. This particular board has tremendous political power," said Senate President Pro Tempore Donald E. Williams Jr., D-Brooklyn.

That power includes reviewing applications by legislative candidates for public financing of their campaigns under the Citizens Election Program, as well as the enforcement of other election laws.  The legislature did not make similar changes in the terms of the other commissions in the Office of Government Accountability. But its relationship with elections enforcement has been strained over the years, especially over the issue of campaign audits.

The commission will continue to audit every statewide campaign, but the bill passed Tuesday by the House limits audits of legislative races to no more than 50 percent of the campaigns.  Last year, an investigation initiated by elections enforcement led to a criminal investigation and the resignation of Sen. Thomas Gaffey, D-Meriden, over double-billing for travel.

The consolidation of the watchdog agencies under one administrative umbrella was proposed by the Malloy Administration, but Benjamin Barnes, the secretary of the Office of Policy and Management, said the  administration did not seek the shorter terms.  Williams and Donovan said the idea was developed by legislative staff, though neither leader chose to be more specific. Donovan called it an "ongoing group. Various people got together."

Rep. Russ Morin, D-Wethersfield, the co-chairman of the Government Administration and Elections Committee, said he did not seek the changes in terms, nor was he sure who proposed them.  Donovan said it was appropriate to remake the elections commission in a budget bill, because the changes were part of a consolidation of agencies proposed to cut spending.

"This is a tough budget," Donovan said.

But House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, said the scope of the changes had little to do with saving money. Any substantive change to the state's elections watchdog should be subject to public hearing, he said.

"We're passing legislation left and right that never got a public hearing," Cafero said.

Karen Hobert Flynn, a vice president of Common Cause, said the organization was troubled that budget implementer bills were being used to change elections laws.

"There's a lot of stuff that shows up in implementers, and we don't know why it's there," she said. "There's not a lot of explanation."

Hobert Flynn said it seems odd to force a constant turnover of elections commissioners, given the complexity of the public financing program it oversees. She also questioned why the change popped up in a budget bill without consulting past or present commissioners.

"It would have been useful to go through a committee hearing process and get input from people who have served on the commission," she said.

A Supreme conflict of interest
NYPOST
By STEPHEN B. MEISTER
Last Updated: 3:30 AM, May 27, 2011
Posted: 10:46 PM, May 26, 2011

Judicial Watch, a public-interest watch dog group, just unearthed a cache of e- mails showing that Elena Kagan participated in preparing the government's defense of ObamaCare during her time as President Obama's solicitor general. By all precedent -- and her promise to the Senate Judiciary Committee she'd abide by "letter and spirit" of the law -- this should oblige Justice Kagan to recuse herself when the ObamaCare cases come before the Supreme Court.

Before joining the court, Kagan said she was not involved in the Justice Deparment's preparations for the inevitable legal challenges to the health-care "reform." But the e-mails suggest otherwise:

* In January 2010, then-Deputy Solicitor General Neal Katyal told Brian Hauck, senior counsel to Associate AG Thomas Perrelli: "Brian, Elena would definitely like OSG [Office of Solicitor General] to be involved in this set of issues [health-care defense] . . . we will bring in Elena as needed."

* Later, Katyal urged Kagan to attend a health-care-defense meeting.

But once Obama announced he was appointing Kagan to the high court, Katyal changed his tune: He said Kagan had been "walled off" and told Tracy Schmaler, a DOJ spokesperson, that he'd "never discussed the [ObamaCare] issues with [Kagan] one bit."

Kaytal forwarded Kagan his e-mail to Schmaler telling her: "This is what I told Tracy about Health Care."

Kagan herself then e-mailed Schmaler: "This needs to be coordinated. Tracy you should not say anything about this before talking to me."

This is highly suspicious. Why would Kaytal have felt the need to tell Kagan "this" is what he'd told Schmaler, and Kagan to tell Schmaler "this needs to be coordinated," if they were telling the unvarnished truth?

The Justice Department withheld other relevant e-mails -- but was forced to prepare a log describing them. The log shows that Kagan was a recipient and author on e-mail chains under the subject "health care," discussing "what categories of legal arguments may arise."

Attorneys general from more than half the states have filed a lawsuit contending ObamaCare's "individual mandate" exceeds Congress' power to regulate commerce. In that case, a federal judge ruled the whole law unconstitutional; in other (less significant) cases, federal judges have ruled either for or against upholding the law. The issue is plainly headed to the Supreme Court after appeals.

But the high court last month declined to "fast track" Virginia Attorney General Ken Cucinelli's case -- and there's no indication Kagan recused herself from discussion of deciding Cucinelli's request. Yet Kagan herself testified that she'd abide by the law and custom that require her to disqualify herself "in any proceeding in which [her] impartiality might be reasonably questioned . . . or where [she] has served in governmental employment and in such capacity participated as counsel, adviser . . . [or] expressed an opinion concerning the merits."

Rep. Anthony Weiner (Brooklyn-Queens) and 73 other congressional Democrats recently wrote Justice Clarence Thomas asking him to recuse himself. The reason? Thomas' wife, Virginia, worked for a conservative think tank, The Heritage Foundation, until 2008 -- long before Congress took up ObamaCare. Pretty irrelevant. Conversely, the release of the e-mails makes the case for Kagan's recusal quite strong.

Justice is supposed to be blind; Kagan should recuse herself.



SEC and Mozilo in talks to settle civil fraud case: report
Fri Oct 15, 2010 1:09 am ET

BANGALORE (Reuters) – Securities and Exchange Commission (SEC) and former Countrywide Financial Corp Chief Executive Angelo Mozilo are in discussions to settle the civil fraud case, the Wall Street Journal said, citing people familiar with the matter.

SEC had accused Mozilo, former Countrywide President David Sambol and former Chief Financial Officer Eric Sieracki of failing to disclose the true state of Countrywide's deteriorating mortgage portfolio.

Attorneys for the defendants have denied any wrongdoing, and argued in court filings that Countrywide was upfront about the risks of its mortgages.  However, lawyers representing both the parties are preparing for trial if no agreement is reached, people familiar with the matter told the Journal.  In September, SEC received the go-ahead from a federal judge to take Mozilo and two other former executives of the mortgage company to trial, which is currently scheduled to begin in Los Angeles on October 19.

A SEC spokesman declined to comment to the Journal. SEC and Mozilo's lead attorney could not immediately be reached for comment by Reuters outside regular U.S. business hours.







New speaker has fewer millions than predecessor - note item below in blue.
YAHOO
By JIM ABRAMS, Associated Press
15 June 2011

WASHINGTON – New House Speaker John Boehner doesn't have as many millions as his predecessor, Nancy Pelosi, but like many new committee chairmen and other leaders, he has holdings in companies that have major financial stakes in the actions of Congress.

For Boehner, that includes a portfolio of stocks in oil companies, financial firms, communication companies and pharmaceuticals. Holdings among other lawmakers include farmland, real estate and investments in high tech companies.

None of this is in any way illegal. Ethics rules state that members can't use their official positions for personal gain and limits to $26,100 what they can earn as a director of a business or for actual work performed outside Congress. The rules, however, do not limit personal investments, a source of considerable wealth for many lawmakers.

Boehner, a Republican and son of an Ohio bar owner, derives much of his nest egg from his career as a small businessman before coming to Congress more than two decades ago, said his spokesman, Michael Steel, "Boehner's day-to-day investment decisions are made by a professional financial adviser. He is not consulted on individual transactions," Steel said.

Likewise, Judiciary Committee Chairman Lamar Smith, R-Texas, said an account manager makes all the decisions for a portfolio of more than $1 million that he and his wife hold. He made 599 trades last year involving companies such as Apple Computer, Microsoft, Dreamworks Animation and Lockheed Martin.

In 2009, Boehner sold a retirement plan in the plastics company he once ran, taking in between $1 million and $5 million. He then purchased shares in almost 60 companies, including stock in BP, Exxon, Chevron, ConocoPhilips and Occidental. His holdings in each of them are valued at between $15,000 and $50,000.

In 2010, he listed 121 transactions in which he bought or sold investments. He listed as major assets four mutual and IRA funds worth between $100,001 and $250,000 each and 12 investments valued from $50,001 to $100,000 each.

All members of Congress must file the annual forms that list their major sources of earned and unearned income, primary assets and liabilities and privately funded gifts. In 2010 rank-and-file members received salaries of $174,000. As speaker last year, Pelosi received $223,500 and House and Senate majority and minority leaders got $193,400.

Boehner's wealth pales compared to that of the House's chief investigator, Oversight and Government Reform Committee chairman Darrell Issa, R-Calif.

Issa, who invented the Viper car alarm system, is among the richest members of Congress with holdings of at least $150 million and possibly approaching $500 million. This year Issa reported two investments that were each worth more than $50 million, a Putnam High Yield Trust Fund and a company that owns and manages properties in five California cities and Cincinnati. He lists four other mutual funds or holdings in property companies worth $25 million to $50 million each. Issa's jurisdiction as the oversight committee chairman is so vast that it could potentially conflict with almost any source of income, and Issa avoids any appearance of a problem by not owning individual stocks.

His disclosure form included mention of $825 from each of two appearances on the Bill Maher show that he donated to charity.

Former Speaker Pelosi, D-Calif., now the House's minority leader, also makes the perennial lists of Congress's richest. Much of her family's wealth is listed to her husband, Paul, including a commercial property in San Francisco valued between $5 million and $25 million. She reports as assets joint ownership with her husband of a home and vineyard in St. Helena, Calif., valued at between $5 million and $25 million. She's also a limited partner in residential real estate in Sacramento in the $5 million-$25 million range.

Her husband reported capital gains of $1 million to $5 million last year from a sale of stock in Apple Inc.

Lawmakers are not required to provide details of their spouses' business dealings, and in some cases these can be substantial.

Financial Services Committee Chairman Spencer Bachus, R-Ala., lists his most valuable assets as belonging to his wife, including an annuity from the Pacific Life Insurance Co. worth between $250,000 and $500,000.

Rep. John Kline, R-Minn., chairman of the House Education and Work Force Committee, lists as major assets four mutual funds each valued at less than $15,000, but notes that his wife owns a 534-acre farm in Houston, Minn., valued $100,000 to $250,000.

Rep. Paul Ryan of Wisconsin, the new Budget Committee chairman and the GOP's point man on cutting government spending, says his biggest asset is a 20 percent interest in the Ryan-Hutter Investment Partnership worth $250,001 to $500,000. He also has a college savings plan for his son worth between $100,000 and $250,000. His wife Janna is a partner in mining and oil companies in Madill, Okla.

The ascension of Rep. Doc Hastings, R-Wash., to chair the Natural Resources Committee, was also a natural step for a person who used to run his family's paper supply business. He lists as a major asset a trust fund with his family's Columbia Basin Paper and Supply Co. worth between $500,000 and $1 million.

Of the two Senate leaders, Majority Leader Harry Reid, D-Nev., is a landholder, claiming 160 acres in Bullhead City, Ariz., worth between $1,000,001 and $5 million and controlling interest in 47 acres in mining claims worth $250,001 to $500,000. While he doesn't list any holdings of individual companies, his investment funds include some focusing on the health care, technology, financial, telecommunications and utilities sectors.

Senate Republican leader Mitch McConnell of Kentucky has jointly held money market and other accounts worth $5,000,001 to $25 million and two other money market funds in the $1,000,001 to $5 million range. His wife Elaine Chao served as labor secretary under President George W. Bush and last year received a salary from The Heritage Foundation.

The forms also showed that Rep. Charles Rangel, D-N.Y., former chairman of the tax-writing Ways and Means Committee, sold his villa in Punta Cana, Dominican Republic for $250,001 to $500,000. Rangel's failure to pay taxes on income from the villa was among the ethics violations that led to his censure by the House last year.

Not all lawmakers are wealthy. Senate Agriculture, Nutrition and Forestry Chairman Debbie Stabenow, D-Mich., said she earned $64,919 from a Michigan legislative pension program but has no major assets or sources of unearned income.

Among those seeking extensions for filing their forms were no. 2 Senate Democrat Dick Durbin of Illinois, House Ways and Means Committee Chairman Dave Camp, R-Mich., House Appropriations Committee Chairman Hal Rogers, R-Ky., and GOP presidential hopeful Michele Bachmann, R-Minn.
Rangel Convicted of 11 Ethics Violations
NYTIMES
By ANDY NEWMAN
November 16, 2010, 11:55 am

Updated, 12:47 p.m. | A House ethics panel has convicted Representative Charles B. Rangel of all but one of the 13 ethics violations he faced, ranging from accepting rent-stabilized apartments from a Manhattan developer to failing to pay taxes on rental income from his Dominican villa to raising charitable donations from companies and corporate executives who had business before the committee he led.

The convictions (see full list of counts below) cast a cloud over the half-century political career of Mr. Rangel, an 80-year-old Democrat who was re-elected this month to a 21st term representing Harlem and who was the head of the House Ways and Means Committee.

Representative Zoe Lofgren of California, chairwoman of the adjudicatory subcommittee of the House ethics committee, announced the subcommittee’s verdicts Tuesday morning just before noon; the panel had begun deliberating Monday after Mr. Rangel made a dramatic exit from the hearing, saying he could not afford a lawyer. The matter now goes to the full House ethics committee for action.

Ethics experts say the committee is likely to issue Mr. Rangel only a letter of reprimand or a formal censure. While the committee has the power to expel, that has happened only rarely and is considered highly unlikely.

The subcommittee was unable to reach a verdict on one count, Count 3, which charged Mr. Rangel with violating House gift rules by accepting contributions for Charles B. Rangel Center for Public Policy at City College of New York. But it convicted Mr. Rangel of the rest:

    * Count 1: Violating solicitation and gift ban: Soliciting donations and other things of value on behalf of the Rangel Center from persons or entities with business before him or his Ways and Means Committee.

    * Count 2: Violating code of ethics for government service: Accepting benefits under circumstances that could be construed as influencing the performance of his governmental duties, with respect to soliciting donations and other things of value on behalf of the Charles B. Rangel Center for Public Policy at City College of New York.

    * Counts 4 and 5, merged into one count: Violating postal service laws and franking commission regulations: Mr. Rangel was accused of using his franking privileges for the benefit of a charitable organization and for solicitation of funds.

    * Count 6: Violating House Office Building Commission regulations. Mr. Rangel and his staff drafted solicitation letters on House property.

    * Count 7: Violation of the Purpose Law and the Member’s Congressional Handbook: Mr. Rangel used House employees and other official House resources for work related to the Rangel Center and used his Congress member’s allowance to pay expenses related to the Rangel Center.

    * Count 8: Violation of letterhead rule: Mr. Rangel sent letters related to the Rangel Center on House letterhead.

    * Count 9: Violating Ethics in Government Act and House Rule 26: Mr. Rangel submitted incomplete and inaccurate financial disclosure statements, and failed to report or erroneously reported items he was required to disclose under the Ethics in Government Act from 1998 through 2008. In particular, Mr. Rangel amended certain financial disclosure statements only after a House committee began investigating his reporting of income from his Dominican villa.

    * Count 10: Violating code of ethics for government service: Mr. Rangel leased a rent-stabilized apartment on Lenox Terrace in Harlem for residential use only, but was allowed by the landlord, a developer whom Mr. Rangel dealt with in his Congressional capacity, to use the apartment as office space for his campaign committee. The arrangement could be construed as influencing the performance of Mr. Rangel’s official duties.

    * Count 11: Violating the Code of Ethics for Government Service: Mr. Rangel violated the code by failing to report rental income on his Dominican Villa.

    * Count 12: Violating the letter and spirit of House Rules listed above.

    * Count 13: Conduct reflecting discreditably on the House: Mr. Rangel’s improper solicitations and acceptance of donations for the Rangel Center; his misuse of House staff, letterhead and franking privilege for the Rangel Center solicitations; his failure to file full financial disclosure statement; his failure to report the rental income on his Dominican villa; and his use of his rent-controlled residential apartment for his campaign office all brought discredit to the House.
House ethics panel: Rep. Rangel violated rules
YAHOO
By LARRY MARGASAK, Associated Press
16 November 2010

WASHINGTON – Rep. Charles Rangel, once one of the most influential House members, was convicted Tuesday on 11 counts of breaking ethics rules and now faces punishment.

An ethics panel of eight House peers deliberated over two days before delivering a jarring blow to the 20-term New York Democrat's career. The 80-year-old Rangel was charged with 13 counts of financial and fundraising misconduct.  Only last spring, Rangel held the exalted post of Ways and Means chairman, a position that made him the House's main writer of tax legislation. The Harlem congressman was not present when the verdict was announced.

The full ethics committee will now conduct a hearing on the appropriate punishment for Rangel, the silver-haired, gravelly-voiced and sartorially flashy veteran of 20 terms in the House.  Possible sanctions include a House vote deploring Rangel's conduct, a fine and denial of privileges.

The congressional panel, sitting as a jury, found that Rangel had used House stationery and staff to solicit money for a New York college center named after him. It also concluded he solicited donors for the center with interests before the Ways and Means Committee, leaving the impression the money could influence official actions.

He also was found guilty of failing to disclose at least $600,000 in assets and income in a series of inaccurate reports to Congress; using a rent-subsidized New York apartment for a campaign office, when it was designated for residential use; and failure to report to the IRS rental income from a housing unit in a Dominican Republic resort.

The ethics panel split 4-4 on a charge that Rangel violated a ban on gifts because he was to have an office — and storage of his papers — at the Charles B. Rangel Center for Public Service at City College of New York.  Two counts charging him with misuse of Congress' free mail privilege were merged into one.
Ethics Hearing Goes Ahead After Rangel Walks Out
NYTIMES
By DAVID KOCIENIEWSKI
November 15, 2010

Members of the House ethics committee began deliberating charges Monday that Representative Charles B. Rangel violated Congressional rules, after an unusual public hearing that was abbreviated by the longtime congressman’s dramatic exit from the proceedings.

Mr. Rangel, who appeared at the inquiry alone, stunned the packed hearing room by walking out after complaining that he had no lawyer because he could not afford the millions of dollars in legal fees he had racked up during the two-year investigation.

After declaring that “I respectfully withdraw from these proceedings,” Mr. Rangel shook hands with the lawyers for the ethics committee who were preparing to lay out the case against him and strode steadily out of the room. But after meeting privately, committee members resumed the proceedings without Mr. Rangel, a Democrat who has represented Harlem for four decades.

In a rebuke to Mr. Rangel, members noted that he had been advised repeatedly, starting as early as September 2008, that he was well within his rights to set up a defense fund to raise money for his legal expenses. Mr. Rangel and his defense team from the firm Zuckerman Spaeder parted ways several weeks ago.

With Mr. Rangel’s chair empty, the committee’s chief counsel presented what he said was “uncontested evidence” that the congressman’s fund-raising and failure to disclose his assets or pay taxes on a Dominican villa had violated Congressional rules.

The members of the ethics committee were expected to decide later Monday whether there were enough facts to support the charges against Mr. Rangel.

Acting as a kind of prosecutor in the case, the committee’s chief counsel, R. Blake Chisam, said Mr. Rangel had not contested most of the facts in the case even when he had a lawyer defending him.

In a 20-minute summary of the evidence, Mr. Chisam presented letters, e-mail and financial documents to corroborate the charges. And although Mr. Rangel was not present, his booming voice still rung through the hearing room as the committee lawyers played videos of him admitting to several of the charges during an impromptu speech he made on the House floor this summer, pleading for mercy from his colleagues.

“You can’t get so carried away with good intentions that you break the rules,” Mr. Rangel said in one excerpt played during the hearing.

After taking questions from committee members, Mr. Chisam said that the record was so clear that there was no need to call witnesses, because Mr. Rangel had never challenged the essential elements of the case against him.

“The record is the record,” Mr. Chisam said. “The facts are the fact. The time has come for a vote.”
The NYTimes blogging from Capitol Hill...
Rangel Asks if He Can Get a Lawyer
By THE NEW YORK TIMES
November 15, 2010, 9:17 am

Updated, 9:40 a.m. | The hearing just broke up after Mr. Rangel asked if he could have counsel. Committee members are meeting privately to discuss the request. Mr. Rangel has fired his former lawyers.

Updated, 9:23 a.m. | Mr. Rangel addressed the ethics committee, saying he has been waiting for a chance to clear his name. “I have been asking for this matter to be heard,” he said, standing. “My family has gone through hell.”

He said the hearings came after months of frustration. “I have not been able to explain my position,” he said.

Original Post | Representative Charles B. Rangel’s moment in Congressional court has arrived.

Mr. Rangel, a Democrat who has represented Harlem for more than 40 years, is sitting in a Congressional hearing room listening as fellow lawmakers lay out charges that his fund-raising and personal finances violated Congressional rules.

It is the first time since 2002 that Congress has held a public ethics hearing. The House ethics committee has released 13 allegations that Mr. Rangel had brought dishonor to Congress by accepting rent-stabilized apartments from a Manhattan developer, failing to pay taxes on a rental income from his Dominican villa and raising charitable donations from companies and corporate executives who had business before the committee he led.

Mr. Rangel has acknowledged some errors, but he has claimed that his missteps were never intended for his personal benefit. One of the biggest unknowns as the proceedings began was whether Mr. Rangel would choose to defend himself.
Jury of Rangel's House peers meets in ethics case
Washington Times
By Larry Margasak - Associated Press
9:16 a.m., Thursday, July 29, 2010

WASHINGTON (AP) — A jury of Rep. Charles Rangel's congressional peers is ready to publicly discuss charges of ethical misdeeds. But the political discussions outside the room will be far more significant.

Eight House lawmakers who will determine guilt or innocence of the former committee chairman will hold their first meeting Thursday. A number of Democrats considering calls for the New York Democrat to resign will get their first look at the allegations.

"I think everyone is looking forward to getting all the facts out in the open and people will have to react once we know what we're dealing with," said Rep. Mike Quigley, D-Ill.

Rangel is tied for fourth in House seniority, having served for 40 years. He's still vigorous at 80 years old. He had substantial influence as chairman of the House Ways and Means Committee, which handles taxes, trade, portions of health care, Medicare and Social Security.

Rangel stepped down from that post in March after the ethics committee criticized him in a separate case, saying he should have known that corporate money paid for two trips to Caribbean conferences.

The four Democrats and four Republicans acting as judges are holding their organizational meeting for an ethics trial that many Democrats hope will go away. That could only happen if Rangel negotiates a plea bargain, admitting to substantial violations, or resigns. Punishment could range from a report criticizing his conduct to a reprimand or censure by the House, or a vote to expel him — which is highly unlikely.

Rangel's attorney has been negotiating with nonpartisan lawyers for the House ethics committee. Any agreement would have to be approved by Rangel and ethics committee members.

"Depends on what the settlement is," Rangel said, when asked whether he was likely to approval a deal negotiated by his lawyer.

Rangel has repeatedly said he looked forward to a public discussion of the allegations. A four-member investigating panel, with separate members from the judging subcommittee, brought the charges after a two-year investigation.

The investigators looked at Rangel's misuse of his office for fundraising, failure to disclose income, belated payment of taxes and possible help with a tax shelter for a company whose chief executive was a major donor.

The 42-member Congressional Black Caucus has warned Democrats against a rush to judgment, and any lawmaker with a significant African-American constituency must consider whether it's worth asking Rangel to quit.

However, some Democratic House members in close races may think it's more important to distance themselves from Rangel. They don't want to have to answer negative Republican ads about Speaker Nancy Pelosi's promise to wipe Congress clean of ethical misdeeds.

Two Democrats didn't wait to hear the charges.

Rep. Betty Sutton of Ohio, a second-term lawmaker who received 65 percent of the vote two years ago, said Rangel needs to resign to preserve the public's trust in Congress.

Rep. Walt Minnick of Idaho, a freshman who got 51 percent of the vote last time, called for resignation if the charges are proven.

If a trial is held, it probably would begin in September. Congress adjourns for its August recess after this week.

"The focus right now is let's get out of here," said Rep. William Delahunt, D-Mass.
The Rangel Standard
A public ethics trial will be instructive.
The Wall Street Journal
24 July 2010

The House ethics committee announced on Thursday that it would bring charges against Charlie Rangel, and the Manhattan Democrat responded by telling reporters that "I look forward to airing this thing." Don't we all.

The ethics committee has been investigating Mr. Rangel since 2008 and its formal charges will remain sealed until a public hearing next week. However, the committee is not lost for choices:

Allegations include Mr. Rangel's failure to report assets and income totaling at least a half-million dollars that, when he "amended" his reporting last year, doubled his net worth; his use of four rent-stabilized apartments in New York's tony Lenox Terrace complex, including one that he used as a campaign office; concealing taxable rental income from his Dominican Republic beachfront villa at the Punta Cana Yacht Club; and using his official Congressional letterhead to solicit donations for the Charles B. Rangel Center for Public Service at the City College of New York.

Mr. Rangel has portrayed these charges as it-could-happen-to-anyone accounting errors, and he has vigorously denied any wrongdoing while declining to provide details until the ethics committee completed its inquiry. Still, in March he surrendered his gavel as Chairman of the tax-writing Ways and Means Committee, not as the result of these accusations or any other pang of conscience, but because a separate investigation concluded that his participation in several corporate-sponsored Caribbean junkets violated House regulations. At the time, his work in raising taxes to pay for ObamaCare was nearly complete.

The ethics committee's step of proceeding to a public trial is the first since 2002, when Ohio Democrat James Traficant was removed from Congress after federal prosecutors indicted him for bribery, racketeering and other corruption. Possible ethics punishments range from censure to removal from office. Mr. Rangel—Congressional class of 1970—is nonetheless expected to prevail in his September primary and go on to a 21st term, unless the ethics charges intervene.

The prospects of a public trial, perhaps beginning in September, are excruciating for Democrats. They won the House in 2006 in part by running against the corruption of GOP Members, and now one of their own barons is in the dock. The charges appear to be the kind that would cost any normal citizen a big fine if not jail time, and the spectacle of the nation's chief tax writer not reporting all of his income and half his assets will infuriate voters who know their own taxes are going up.

We certainly look forward to hearing Mr. Rangel's defense, in particular his explanation for why the rules that apply to everyone else would seem not to apply to him.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

The Separation of Politics and State
NYTIMES
By RICHARD PAINTER
June 11, 2010

Minneapolis

PRESIDENT OBAMA has made some headway in government ethics reform by imposing new restrictions on those who join his administration from the private sector, moving to exclude lobbyists from presidential boards and commissions, and suggesting legislation that might lessen the influence of corporate campaign spending on federal elections.

It’s unfortunate, then, that his White House staff remains so deeply immersed in partisan politics, as demonstrated by the administration’s offering a presidential appointment to try to dissuade Representative Joe Sestak from running in the Pennsylvania Democratic primary against Senator Arlen Specter. There were similar discussions with Andrew Romanoff, a former speaker of the Colorado House, who is challenging Senator Michael Bennet.

Despite what some Republicans might claim, such politicking is not illegal; in fact, this sort of thing has been business as usual in presidential administrations for a very long time. Nonetheless, these recent incidents should prompt us to rethink whether overtly partisan work has a legitimate place in the White House and, if so, who should be doing it.

Federal employees’ participation in partisan political activity is governed by the Hatch Act of 1939, which was put into place after accusations that New Deal programs were being used by party bosses to influence Congressional elections. The statute prohibits government officials from engaging in political activity using official titles, at government expense or while on duty. And it prohibits them from using their official capacities to sway an election.

The Hatch Act has a few big exceptions, however: not only the president and vice president but also political appointees, including cabinet members and many senior White House staff members, may do both government and political work in the same office, provided they distinguish between the two.

For instance, White House officials usually use separate BlackBerrys, cellphones and computers for their partisan activities. That way, political calls and e-mail messages coming from White House officials are not legally coming from the White House at all. They are instead “personal capacity” communications by people who happen to be White House staff members — including, in this administration, the chief of staff, Rahm Emanuel, and his deputy.

This is not the Hatch Act’s only legal distinction with little grounding in reality: the regulations also allow government employees to speak at partisan fund-raising events, provided they do not explicitly ask for money.

The employees of the White House Office of Political Affairs, which was established under Ronald Reagan to offer advice on the political viability of administration policies, thus spend an enormous amount of their “personal time” moonlighting for the president’s political party.

These distinctions between official work and personal political work are nonsensical. When White House staff members send a message, everyone knows where they work. When they speak at campaign events, everyone knows who they are. Calling partisan political activity by White House staff “personal” rather than “official” is a legal fiction.

There is also no way of knowing how much time is spent on politics instead of official duties because time records for senior political employees are not required. Little is known, for example, about how many trips are taken by the staff of the political affairs office and who pays for them.

Then there are the conflicts of interest that inevitably and frequently arise. Suggestions made to government employees by candidates, contributors and political operatives can easily influence White House policy, whether it be political concerns about a United States attorney or a Senate candidate who is getting in the way. But what is best for a political party does not often reflect what is best for the country — and what is best for the country should be the top priority of full-time federal employees.

Congress should amend the Hatch Act, or the president should issue an executive order, to prohibit all White House staff members from participating in partisan political activity in any capacity during the relatively short time they serve in government. (The act already imposes similar restrictions on federal employees in intelligence and some areas of law enforcement.)

The president and vice president, the only two elected officials in the executive branch, should still be permitted to engage in partisan politics while holding office. But in their partisan duties, they should be supported only by the staff of their political party, and not that of the White House.

Incidents like the Pennsylvania and Colorado primary controversies might still occur even if the White House staff is barred from partisan politics, but they would occur less often. Expanding the Hatch Act would be a change in keeping with the ethics reform that the Obama administration has promised the American people.

Richard W. Painter, a professor of law at the University of Minnesota, was the chief White House ethics lawyer from 2005 to 2007.


"Hollow" men?  Senator Dodd ends career "not with a bang but a whimper."

EDITORIAL: Obama's financial Frankenstein
Failure to reform Fannie and Freddie puts taxpayers at risk
By THE WASHINGTON TIMES
6:52 p.m., Thursday, May 27, 2010

The oil spill in the Gulf isn't the only calamity the administration is ignoring. As a result of the BP accident, anywhere from $400,000 to $7 million worth of crude oil is leaking into the ocean each day, threatening widespread environmental damage. A much larger leak - $232 million per day - has come from taxpayer vaults since Sept. 7, 2008, when mortgage giants Fannie Mae and Freddie Mac came seeking the first billion-dollar patch for their fiscal mismanagement. And there's no plug in sight for that gusher.

The disaster caused by these so-called government-sponsored enterprises (GSEs) threatens even more widespread economic fallout after already causing thousands to lose their homes, their jobs and their way of life. Requests for billions more to shore up the financial ledgers continue to come in, but the administration and congressional Democrats remain silent about their plans to stop the losses. President Obama's budget promises no more than to "monitor the situation of the GSEs closely" and to "provide updates" on long-term reform proposals. House Financial Services Chairman Barney Frank, Massachusetts Democrat, protected Fannie and Freddie from his own legislation that would break up large private institutions that run into financial trouble. In a fit of bravado, Senate Banking Chairman Christopher J. Dodd, Connecticut Democrat, vowed to "study" the problem.

Rep. Jeb Hensarling, Texas Republican, and Sen. John McCain, Arizona Republican, have introduced serious reform proposals that have been passed over by the majority. Mr. Hensarling will settle - for the moment - for a little bit more openness from what he called the financial Frankensteins.

"The least Congress can do is require frequent and fully transparent disclosures from its regulator, the Federal Housing Finance Administration [FHFA]," Mr. Hensarling told The Washington Times. "Taxpayers have already spent over $145 billion to cover Fannie's and Freddie's losses, losses which will likely grow to be tens or hundreds of billions of dollars more. If the Obama administration believes it is worth spending so much money on Fannie and Freddie, then it ought to be willing to justify why to the American people every time they need a new bailout."

Mr. Hensarling's latest bill, introduced Tuesday, would require FHFA's director to testify before Congress before the full Financial Services and Banking committees in the House and Senate whenever Fannie and Freddie seek another taxpayer handout. It's a simple and non-controversial idea meant to raise the profile of an ongoing disaster that so far has failed to dominate the daily headlines despite its impact on everyone in the country.

The federal responsibility for the Gulf oil spill may be limited, but Fannie and Freddie are creatures of Congress. Government has a responsibility to clean up this mess of its own making.

© Copyright 2010 The Washington Times, LLC. Click here for reprint permission.
O's hollow promises
NYPOST
By NICOLE GELINAS
Last Updated: 8:38 AM, April 22, 2010
Posted: 1:18 AM, April 22, 2010

President Obama hits Lower Manhattan today to chastise Wall Street ahead of a Senate debate on fixing finance. Problem is, he's using his bank-bashing to push a bill that doesn't deliver what he's promising.

Obama pledged Saturday and likely will today: "Never again will taxpayers be on the hook because a company is 'too big to fail.' " This reform is vital. No business should be able to expect government bailouts, of course -- but it's especially dangerous when it comes to banks.

When lenders to banks believe they'll be bailed out, they inevitably create too much debt -- because they'll profit as long as the investment works, but have their losses covered by the taxpayers if it blows up.

And for 25 years, the feds have done just that -- protected bondholders to big banks from losses. The crises, and the bailouts, kept growing with each cycle -- until we reached the near-meltdown of 2008. Lending to the financial world has ballooned, too: In the early '80s, financial firms had borrowed just 25 percent of the nation's GDP. By 2007, they had borrowed 115 percent of GDP.

But, as critics led by Kentucky's Sen. Mitch McConnell, have pointed out, the bill, sponsored by Sen. Chris Dodd, doesn't end "too big to fail" -- under any fair reading.

It says that failed financial firms must repay taxpayer money "unless the United States agrees or consents otherwise." It says, too, that Washington can bail out bondholders to financial firms as long as officialdom "determines that such payments or credits are necessary or appropriate to minimize losses."

Wall Street will read this as a capitulation: Despite Obama's pronouncements, bailouts will still come when "necessary and appropriate." And bailouts will be "necessary and appropriate" during the next crisis -- a crisis created by this very expectation.

Without ending "too big to fail," Obama can't deliver on his other big promise: to "enact the strongest consumer financial protections ever."

Dodd's bill offers 306 pages on how to protect consumers -- but omits the three words that describe what really plagues consumers: "too much debt." Consumers can borrow so much only because the banks could borrow so much, thanks to "too big to fail."

Legislation to end this permanent subsidy must do two things:

* Force now-unregulated "derivatives" onto public exchanges. Trillions of dollars are tied up in derivatives, like the synthetic mortgage securities that Goldman Sachs is now in trouble over. Yet almost no one understands what's really in any given "financial product" -- which means a serious problem can easily trigger mass panic, as it did in 2008.

Getting derivatives onto public exchanges will let regulators limit borrowing and force price and volume disclosures -- so that millions of investors, rather than just a few backroom negotiators, know what's going on.

* Limit borrowing across-the-board at financial institutions -- no matter how safe the firms, or their holdings, seem. Firms should also have to hold even more cash down behind their short-term borrowings -- because this debt leaves them more vulnerable to a crisis.

If firms can't leverage at the extremes seen in 2007-8, then one firm's failure won't trigger a wave of other failures.

The Dodd bill fails both these tests. On derivatives, it leaves loopholes that will let far too many financial instruments remain utterly opaque.

There's some hope: The Senate Agriculture Committee, led by Arkansas' Blanche Lincoln, yesterday passed a tougher derivatives bill. Yet only one Republican -- Iowa's Chuck Grassley -- voted for the fix. The public needs Republicans to get how important this is, so that they can push the Dems to fold the provision -- without loopholes -- into the Dodd bill.

Wall Street won't like it: Big banks reap billions a year under the current rules. And it would be easy for Congress and the president to leave this money pot alone -- because the next blowup is in the future.

On the second point, consistent borrowing limits for financial firms, Dodd's bill is a complete failure. It leaves the issue to the discretion of a new "financial-stability oversight council." The problem here is that nobody can predict the future. Eventually, regulators will guess wrong -- leaving the whole financial industry open to another catastrophe.

Obama hasn't said a word about this deficiency -- and don't expect him to today. The GOP, led by the Banking Committee's Sen. Richard Shelby, long ago signed on to the idea that "a systemic-risk regulator" will be able to magically see the future, after all.

Yes, strict borrowing limits -- ones that regulators and banks can't game -- will curtail credit for consumers. That's the point: Credit that is too easy endangers the economy.

The president may sound tough in today's speech -- but the bill is what matters. And, just as on Wall Street, the fine print needs lots of public scrutiny, lest it be a blueprint for a future disaster.



How many in Congress are guilty of doing similar things?
Representative Charles Rangel, holder of former Congressman Adam Clayton Powel's seat, faces trial on ethics violations.  Chicago-style politics is "change?"

Ethics raps put Rangel on trial
NYPOST
By GEOFF EARLE Post Correspondent
Last Updated: 9:24 AM, July 23, 2010
Posted: 2:29 AM, July 23, 2010

WASHINGTON -- Rep. Charles Rangel was slapped yesterday with charges of serious ethics violations -- and faces a public trial in the House that could end with his expulsion after 40 years in office.

The charges are the latest setback for the embattled 80-year-old dean of the state congressional delegation, who grudgingly relinquished his chairmanship of the powerful Ways and Means Committee in March after being admonished by the committee for going on a corporate-paid junket to the Caribbean.

The secretive House Ethics Committee didn't reveal which of the accusations leveled against the Harlem Democrat were included in the formal charges being brought against him.  But sources said they're related to Rangel's use of official stationery to raise money for a City College center named for him; his use of four rent-regulated apartments; and his failure to report income.

"It's very bad news for Mr. Rangel," said Melanie Sloan of Citizens for Responsible Ethics in Washington, which called for him to step down yesterday.

"This means they found some very bad stuff. To me, this is a step toward expulsion."

Rangel was briefed in recent weeks on the allegations and rejected them, The Washington Post reported, citing sources who said he could have avoided the trial by accepting the findings. 
Among the most serious charges that have been aired against Rangel -- first disclosed by The Post -- was his failure to report and pay taxes on rental income from his villa in the Dominican Republic.  The Post later revealed that Rangel also didn't report hundreds of thousands of dollars in assets and income on the financial-disclosure forms he has filed with Congress each year.

And Rangel has been accused of soliciting large corporate donations for a center named after him at CCNY while heading Ways and Means.

He also was found to be maintaining four rent-regulated apartments in Harlem, as well as preserving a tax shelter for an oil-drilling company, Nabors Industries, whose CEO had donated to the Rangel Center.  The trial is set to kick off Thursday and is certain to draw national attention.  The sharp-tongued Rangel was spotted arguing with Ethics Chairwoman Zoe Lofgren (D-Calif.) right before the bombshell charges were announced.

First elected in 1970, Rangel, under intense pressure in this election year, handed over his Ways and Means Committee gavel "temporarily" in the spring, hoping to reclaim it after clearing his name through an investigation he requested two years ago.  Attaining the committee chairmanship in 2007 had been considered the high point of his career.

"I am pleased that, at long last, sunshine will pierce the cloud of serious allegations that have been raised against me in the media," Rangel said in a statement yesterday.

"I will be glad to respond to the allegations at such time as the Ethics Committee makes them public."

Rangel also told The Hill newspaper, "I have no idea as to what the alleged violations are finally going to be."

He has already spent $1.7 million on lawyers defending him against the charges.  Under House rules, the official charges will be brought before a bipartisan subcommittee of eight lawmakers, acting essentially as jurors, who must find guilt by "clear and convincing evidence."

The committee has a range of options, including expulsion, reprimand, a fine or no action at all.  The last lawmaker to face a public trial, in 2002, was Ohio Rep. James Traficant, a Democrat, who ended up in prison.

A public trial is the last thing Democratic leaders want to contend with just months before midterm elections in which they already face resurgent Republicans -- who were thrown out of power in 2006 by Democrats calling to end a "culture of corruption."

Democratic House leaders weren't going out of their way to defend Rangel yesterday.

"The process needed to work and it is working, and we'll see what the findings are," said House Majority Leader Steny Hoyer (Md.).

Sleazy does it: Pol’s shady record

* Unpaid taxes: Rangel admitted he neglected to pay taxes on $75,000 in rental income from his villa in the Dominican Republic.

* 4 rent-stabilized apartments: He leased the Harlem units, including one as an office — which is barred by state law.

* Undisclosed income: Failed to reveal to Congress more than $600,000 in assets and tens of thousands of dollars in income.

* Inappropriate fund-raising: Wrote letters on official congressional stationery to solicit money to build the Rangel Center at CUNY.

* Pay-to-play: Preserved a tax shelter for an oil-drilling company, Nabors Industries, whose chief executive donated money to the Rangel Center.

* Breaking House rules: Stored his vintage Mercedes in the congressional garage.

House Panel Will Try Rangel in Ethics Cases
NYTIMES
By ERIC LIPTON and DAVID KOCIENIEWSKI
22 July 2010

WASHINGTON — A House investigative panel has found “substantial reason to believe” that Representative Charles B. Rangel violated a range of ethics rules, dealing a serious blow to Mr. Rangel, a Harlem Democrat, in the twilight of his political career.

The finding means that he must face a public trial before the House ethics committee, the first member of Congress to be forced to do so since 2002, when Representative James A. Traficant Jr. was expelled from Congress after a corruption conviction.

The investigative panel did not disclose any details about the nature of the violations.

But two Democrats with knowledge of the investigation said the committee found evidence to support accusations that Mr. Rangel, 80, wrongly accepted four rent-stabilized apartments in Manhattan and misused his office to preserve a tax loophole worth half a billion dollars for an oil executive who pledged a donation for an educational center being built in Mr. Rangel’s honor.

The committee also found evidence to support a charge that Mr. Rangel failed to report or pay taxes on rental income from his beachfront Dominican villa.

They are among the most serious of the assortment of charges against Mr. Rangel that the panel has been examining for nearly two years.

Mr. Rangel, who has dismissed the accusations since they were first made in 2008, continued to contest them on Thursday and said he looked forward to publicly rebutting them. “I am pleased that, at long last, sunshine will pierce the cloud of serious allegations that have been raised against me in the media,” Mr. Rangel’s statement said.

Mr. Rangel, who in March gave up his seat as chairman of the House Ways and Means Committee in response to a separate ethics issue, has spent nearly $2 million fighting to clear himself in the various investigations as he seeks a 21st term this fall.

His office said Thursday that there was no possibility he would withdraw from the race or resign. But his mounting problems have become a liability for Democrats nationally as they seek to retain their control of the House. Republicans have criticized Speaker Nancy Pelosi, Democrat of California, for not moving more swiftly and decisively to discipline Mr. Rangel.

“Today’s announcement is a sad reminder of Speaker Pelosi’s most glaring broken promise: to ‘drain the swamp’ in Washington,” said Representative John A. Boehner, Republican of Ohio, the House minority leader.

The ethics charges rattled New York’s Democratic establishment, which considers Mr. Rangel political royalty, and touched off speculation about his future. The committee’s action comes days after the deadline for candidates to enter the Sept. 14 primary. Mr. Rangel faces four poorly financed opponents: Vince Morgan, a banker; Adam Clayton Powell IV, a state assemblyman; Jonathan Tasini, an activist, and Joyce Johnson, a former Obama campaign official.

There were indications on Thursday that New York’s Democratic leaders would rally around Mr. Rangel, at least for now. But at least one of his opponents, Mr. Tasini, called for the representative to drop out of the race, saying that his presence in the contest posed a “threat to the future of the Democratic Party.”

“The Republicans will make him the face of Washington corruption,” Mr. Tasini said. “It is not good for the party or for New York.”

The findings on Thursday were made by a four-member bipartisan investigative subcommittee of the full House Committee on Standards of Official Conduct. They will be aired at a public trial before an adjudicatory subcommittee, which will report to the full committee about whether it substantiated the findings. If the accusations are substantiated, the full committee then decides on what punishment should occur, from a letter rebuking him to a recommendation that he be expelled from the House.

The investigative panel began its work in September 2008 after The New York Times reported that Mr. Rangel accepted four rent-stabilized apartments from a developer at a price below market value, despite rules forbidding House members from taking gifts worth more than $50.

The units, one of which he used for his campaign, are in Lenox Terrace, a luxury complex in Harlem. Mr. Rangel paid a total of $3,894 monthly for the four units, while the market-rate rent for similar apartments in his building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization.

After years of Mr. Rangel’s facing little opposition or scrutiny, the revelations about his arrangement set off a flurry of questions and aggressive examination of his personal finances and fund-raising.

The panel also examined whether Mr. Rangel had improperly used his position as chairman of the Ways and Means Committee to preserve a tax loophole worth more than half a billion dollars for the oil company whose executive, Eugene Isenberg, had promised $1 million for the Charles B. Rangel Center for Public Service at City College of New York. It also was exploring whether Mr. Rangel broke ethics rules when he failed to report taxable income received from the Dominican villa.

Mr. Rangel, who was first elected to the House in 1970, has usually coasted to re-election thanks to deep popularity in his district and his ability to deliver money and projects to the city.

His life story has been one of overcoming seemingly insurmountable challenges, dating to his service in the Korean War when he nearly froze to death while under attack by the Chinese, so New York politicians have been skittish about how the ruling would affect the outcome of the September primary.

“It means the investigation is still taking its course,” said Keith L. T. Wright, a State Assembly member. “It is not time for him to resign. I fully expect for him to be re-elected this fall and carrying the concerns of the people of Harlem down to Washington.”

As recently as this month, Mr. Rangel was boasting about how his constituents in Harlem were coming to his defense, despite the long-running investigation. And he showed no signs of considering retiring. “This is not the time to be hanging up the gloves,” he said in an interview last month.

Still, it is not clear whether Mr. Rangel, a proud and combative figure, will want to face the public spectacle of a trial. Democratic leaders, eager to contain the damage from his troubles, may push him to step aside in the coming weeks. If Mr. Rangel resigns from the House, the proceedings against him would almost certainly end.

In March, Mr. Rangel was admonished by the ethics committee for trips he and other members of the Congressional Black Caucus took to the Caribbean in 2007 and 2008 that were indirectly paid for by corporate sponsors like Pfizer, Verizon and AT&T, in violation of House rules.

On Thursday, after the findings were released, reporters pressed Mr. Rangel for a response. The congressman slapped away a question from Luke Russert of MSNBC about whether the inquiry might cost him his job.

“Basically you know it’s a dumb question, and I’m not going to respond,” he said.

Michael Barbaro contributed reporting from New York.

Long history of vote-trading on Capitol Hill
Washington Times
Stephen Dinan
Originally published 05:45 a.m., December 24, 2009, updated 08:48 a.m., December 24, 2009

UPDATED:

As it has come down in history, President Andrew Johnson's narrow escape from being the first president convicted on impeachment charges in 1868 depended on the honorable doings of Sen. Edmund Ross of Kansas.

But David O. Stewart, author of "Impeached," a book looking at the Johnson trial, says it's more likely the president owed his survival to payments made by his allies' $150,000 "acquittal fund" and to the patronage jobs he doled out after the vote, all but turning over to Ross some appointments in Kansas and the Colorado and New Mexico territories.

Vote-trading has a long, inglorious history in Congress, and presidents and party leaders alike have played the role of Monty Hall, the original host of TV's "Let's Make a Deal."

In recent days that's included Senate Majority Leader Harry Reid, who bargained wherever he could to gain the 60 votes needed to pass his version of health care reform.

A final vote occurred Thursday morning, and the bill passed. On Wednesday, Democrats turned back several challenges, including rejecting two claims that the bill is so broad it violates the Constitution.

Democrats also turned back an effort to add a new rule preventing senators from trading votes in exchange for earmarked spending, voting 53-46 against a rule that just two years ago had passed 98-0. Even Sen. Richard J. Durbin, Illinois Democrat, who co-sponsored the rule in 2007, voted against it this time.

Senators' change-of-heart may have come based on the realization they never would have gotten this far on health care without the deals Mr. Reid struck.

Behind door No. 1 was Sen. Ben Nelson of Nebraska's bargain to exempt his state from having to pay for expanded Medicaid costs under the bill. Door No. 2 held $100 million to help Louisiana pay Medicaid costs, which secured Sen. Mary L. Landrieu's vote. Door No. 3 offered extra Medicaid help for Vermont, which preserved the support of Sen. Bernard Sanders, an independent who caucuses with Democrats. And Door No. 4 included protections for Medicare Advantage customers in three states, even as customers in other states face cuts.

It's in the eye of the beholder, though, whether those deals are more or less altruistic than the days of old.

"That's not that different than the patronage jobs; it's just a different kind of trophy to bring home," Mr. Stewart said. "In the 1860s, we didn't have so many massive government programs you could get pieces of."

Still, Sen. Judd Gregg, New Hampshire Republican, said there is a difference. In the past, folks traded votes in exchange for specific goodies for themselves or their state: a pet project, say. But, Mr. Gregg said, in this bill, senators bargained for policy changes that actually exempt their states from part of the law they are being asked to support.

"There's nothing like this," said Mr. Gregg, looking back on his quarter-century in Congress. "It balkanizes the country."

Sen. Jon Kyl, Arizona Republican, said he expects Democrats will hear during their winter break from their constituents angry at the deals.

He pointed to several Democrats who have had to denounce the deals, including Sen. Michael Bennet of Colorado, who took to the Senate floor Monday to denounce the bargaining.

Mr. Reid, though, said the trading is no different than what happens with the thousands of earmarks in the dozen annual spending bills.

He said senators should be embarrassed if they weren't able to carve out exemptions.

"There's 100 senators here, and I don't know if there is a senator that doesn't have something in this bill that was important to them," he said. "And if they don't have something in it important to them then, it doesn't speak well of them."

The White House has also given the deals a pass, with press secretary Robert Gibbs saying it has long been part of legislating.

Asked how that squared with Mr. Obama's pledge to do things differently, Mr. Gibbs said the end result is what matters.

"Well, I think one of the things that's going to be done differently is, we're going to have health care reform in this country," he said. "The president thinks that's an enormously good thing for the American people."

Deal-making has landed some members of Congress in jail, and has earned others admonishment and ridicule.

Former House Majority Leader Tom DeLay was admonished for appearing to trade his political endorsement of a congressman's son in exchange for the member's support for the 2003 Medicare prescription-drug bill.

And in the 1990s, late-night comics joked that President Clinton won votes by offering rides on Air Force One.

Not all of the deals struck on health care reform have clear-cut winners. Sen. Christopher J. Dodd, Connecticut Democrat, inserted a provision to spend $100 million on a university hospital. He hopes the money goes to the University of Connecticut, but said he wrote the language so that another state could win the money if it has a better proposal.

History suggests dealmakers should beware.

Public Citizen, a consumer advocacy group, studied the deals Mr. Clinton cut in 1993 to secure passage of the North America Free Trade Agreement, and found that most went unfulfilled.

Opponents of NAFTA were brutal in criticizing Mr. Clinton for offering those, including then-Rep. Sherrod Brown, Ohio Democrat, who was the only congressman to attend a press conference with consumer advocate Ralph Nader blasting the president for horse-trading.

He told the Cleveland Plain Dealer newspaper he wanted to "shame" members into rejecting the deals.

"Gov. Clinton campaigned for change. All of us campaigned against business as usual," Mr. Brown said. "Unfortunately, the last two weeks of wheeling and dealing in Congress has shown pork-barrel politics at its worst."

Mr. Brown is now a senator who supports the health care reform bill, and has changed his tune on deals.

He told PBS' "News Hour" program this week he didn't like the bargaining that forced Mr. Reid to drop abortion coverage or the government-sponsored public option from the bill, but said "the deals notwithstanding, this bill is good for the country in so many ways."

So far in the health care reform debate, there have been no allegations of senators trading votes for personal gain - which puts them ahead of their predecessor Ross and many other colleagues.

Former House Majority Leader Dick Armey, Texas Republican, bristles at vote-dealing. "I was always appalled by it when I saw it going on or knew it was going on," he said, adding there were times when other members "were so dense about it, they would brag about it in the cloakroom."

One congressman traded a vote for an invite to the next state dinner at the White House, Mr. Armey said.

Mr. Armey said one reason vote-trading happens is party leaders in Congress often come from the ranks of the Appropriations Committee, where trading is a way of life.

The House has a rule banning members from trading their votes in exchange for getting pork-barrel spending projects, but the Senate does not. The provision that passed the Senate 98-0 in 2007 was dropped from the final version of a House-Senate compromise bill, and never became law.

The 2007 measure was sponsored by Sen. Jim DeMint, South Carolina Republican, and Mr. Durbin. Mr. DeMint was incredulous yesterday when it became clear on the Senate floor Mr. Durbin would no longer support his own legislation.

"This is the DeMint-Durbin amendment," he said, to which his erstwhile partner replied, "Not anymore."

Congress lower than car salesmen
Politico
Andy Barr
Wed Dec 9, 8:32 am ET

Being a member of Congress rates as the least ethical and honest professions – faring worse than car salesmen by 4 percent – according to a new Gallup poll out Wednesday.

In a poll ranking how Americans view the honesty and ethical standards of 21 professions, Congressmen were rated as having a “low/very low” ethical standards by 55 percent of 1,017 adults across the nation. Only 9 percent said members of Congress have “high/very high” standards, while 35 percent gave the lawmakers an “average” rating.

Car salesmen were the only other professionals to get a “low/very low” rating by at least 50 percent of respondents, receiving 51 percent.

Senators ranked third lowest in the poll, earning a 49 percent “low/very low” ethical rating, beating out stockbrokers, 46 percent, and HMO managers at 43 percent.

Only 11 percent of respondents gave senators a “high/very high” ethical rating.

Nurses ranked as the most respected profession with an 83 percent positive rating. Following nurses were pharmacists at 66 percent, doctors at 65 percent, police officers at 63 percent and engineers, who received a 62 percent “high/very high” rating.

Governors were the only other political job polled, and ranked much higher than lawmakers in Washington. Only 15 percent said they had a “high/very high” opinion of governors, but 48 percent gave governors an “average” rating while 35 percent rated them as “low/very low."


Photo from AP -  President Barack Obama speaks in Strongsville, Ohio, Monday, March 15, 2010.

PROMISES, PROMISES: Is gov't more open with Obama?
YAHOO
By SHARON THEIMER, Associated Press Writer
16 March 2010

WASHINGTON – Federal agencies haven't lived up to President Barack Obama's promise of a more open government, increasing their use of legal exemptions to keep records secret during his first year in office.

An Associated Press review of Freedom of Information Act reports filed by 17 major agencies found that the use of nearly every one of the law's nine exemptions to withhold information from the public rose in fiscal year 2009, which ended last October.

Among the most frequently used exemptions: one that lets the government hide records that detail its internal decision-making. Obama specifically directed agencies to stop using that exemption so frequently, but that directive appears to have been widely ignored.

Major agencies cited that exemption at least 70,779 times during the 2009 budget year, up from 47,395 times during President George W. Bush's final full budget year, according to annual FOIA reports filed by federal agencies. Obama was president for nine months in the 2009 period.

Departments used the exemption more even though Obama's Justice Department told agencies to that disclosing such records was "fully consistent with the purpose of the FOIA," a law intended to keep government accountable to the public.

For example, the Federal Aviation Administration cited the exemption in refusing the AP's FOIA request for internal memos on its decisions about a database showing incidents in which airplanes and birds collided. The FAA initially tried to withhold the bird-strike database from the public, but later released it under pressure.

The FAA claimed the same exemption to hold back nearly all records on its approval of an Air Force One flyover of New York City for publicity shots — a flight that prompted fears in the city of a Sept. 11-style attack. It also withheld internal communications during the aftermath of the public relations gaffe.

In all, major agencies cited that or other FOIA exemptions to refuse information at least 466,872 times in budget year 2009, compared with 312,683 times the previous year, the review found. Agencies often cite more than one exemption when withholding part or all of the material sought in an open-records request.

All told, the 17 agencies reviewed by AP reported getting 444,924 FOIA requests in fiscal 2009, compared with 493,610 in fiscal 2008.

The AP examined the 2008 and 2009 budget year FOIA reports from the departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Justice, Labor, State, Transportation, Treasury and Veterans Affairs; the Environmental Protection Agency; and the Federal Reserve Board.

Other FOIA exemptions cover information on national defense and foreign relations, internal agency rules and practices, trade secrets, personal privacy, law enforcement proceedings, supervision of financial institutions and geological information on wells.

One, known as Exemption 3, covers dozens of types of information that Congress shielded from disclosure when passing other laws.

In sentences that are often vaguely worded and buried deep in legislation, Congress has granted a wide array of information special protection over the years: information related to grand jury investigations, the additives in cigarettes, juvenile arrest records, the identities of people applying restricted-use pesticides to their crops, and the locations of historically significant caves are a sampling of the broad range of information the public cannot get under FOIA.

The chairman of the Senate Judiciary Committee, Sen. Patrick Leahy, D-Vt., was so concerned about what he called "exemption creep" that last year he successfully pressed for a new law that requires FOIA exemptions to be "clear and unambiguous."

The federal government cited Exemption 3 protections to withhold information at least 14,442 times in the last budget year, compared with at least 13,599 in the previous one, agency FOIA reports show.

The prolific use of FOIA exemptions is one measure of how far the federal government has yet to go to carry out Obama's promise of openness. His first full day in office, Obama told agencies the Freedom of Information Act, "which encourages accountability through transparency, is the most prominent expression of a profound national commitment to ensuring an open government."

Obama told agencies they shouldn't hide information merely because it might make them look bad. "The presumption of disclosure should be applied to all decisions involving FOIA," Obama wrote.

Following up on Obama's words, the Justice Department advised agencies against withholding records sought under FOIA "merely because an exemption legally applies." Most recently, the White House encouraged agency officials to hold contests, complete with prizes, to encourage employees to promote open government.

White House Chief of Staff Rahm Emanuel and White House Counsel Bob Bauer called on agency heads Tuesday to improve their handling of FOIA requests and assess whether they are devoting the resources needed to respond to requests "promptly and cooperatively."

Describing the Justice Department's actions on FOIA on Monday at the start of Sunshine Week, when news organizations promote open government and freedom of information, Attorney General Eric Holder said his agency is making progress. He noted that Justice provided everything sought in a FOIA request in more than 1,000 more cases than it had the previous year.

"Put simply, I asked that we make openness the default, not the exception. Today, I'm pleased to report that the disturbing 2008 trend — a reduction in this department's rate of disclosures — has been completely reversed," Holder said. "While we aren't where we need to be just yet, we're certainly on the right path."

Much of the Obama administration's early effort on FOIA seems to have been aimed at clearing out a backlog of old cases: The number of requests still sitting around past the time limits spelled out in the open-records law fell from 124,019 in budget year 2008 to 67,764 at the end of the most recent budget year over the 17 agencies, the AP's review found. There is no way to tell whether those whose old cases that were closed ultimately received the information they sought.





Don't Limit Public Right To Know 
DAY
By Morgan McGinley 
Published on 5/3/2009
 
The state bureaucracy and the legislature's Judiciary Committee are up to mischief again, trying to weaken the Freedom of Information law in the name of privacy. State Victim Advocate Michelle Cruz, a former Massachusetts prosecutor, developed the legislation to prevent information considered embarrassing to victims from becoming a matter of public record.

But in her well-meaning yet misguided zeal to give comfort to victims, Ms. Cruz would damage the public's right to information about its government. An amendment now being developed to a bill already cleared by the Judiciary Committee contains an assault on the public's right to know and carries an administrative burden that would disrupt the free flow of information.

The amendment would require any public agency that receives a freedom of information request to inspect or copy “any files,” to raise a privacy objection if the item can be “reasonably determined to be an invasion of personal privacy.” The language in quotations is vague and virtually meaningless unless tested before a court or appropriate commission. The agency would notify the person requesting the information and decline to release any details unless ordered to do so by the state Freedom of Information Commission. So any of thousands of legitimate requests for information might be denied and held up while the FOI Commission tries to fit the matter into its hearing schedule, typically months away.

The first writing of the bill put the matter of defining privacy in the hands of individual victims. That bill was such a twisted proposal that proponents saw trouble from FOI advocates ahead and changed the bill.  This amendment shifts the power to the hands of the public agency officials. This makes more sense than having victims interpret what is public information, but it is harmful for creating a bureaucratic labyrinth of potentially epic proportions.

Thus, matters that previously were public record and deserve to be available might be described by police, prosecutors or others as a matter of privacy rights. And that would then potentially require an FOI Commission hearing on all matter of material that ought not be challenged under normal conditions.

This is bad legislation because it does not provide a balancing act of public benefit versus a right to privacy. Rather, it stipulates a potential challenge to the most legitimate information and forces agency bureaucrats to determine what is an invasion of privacy, something better determined by the courts.

My colleague, Chris Powell, managing editor of the Journal Inquirer in Manchester, says that West Hartford Police Chief James J. Strillacci is concerned because, “We're put in the position of being the arbiter of whether there's an invasion of privacy or not.”

There's a danger, too, because police, prosecutors and other law enforcement officials are predisposed by their own self-interests to keep information secret from the public. Faced with privacy claims handed down by public agency administrators, police reporters could find themselves challenged to appeal, over and over again, to the FOI Commission for the most basic information.

Ms. Cruz apparently does not trust the media and so she is attempting to open virtually a blanket challenge to the release of basic information.  This is a bad omen, for the public's interest sometimes can be different from the intentions and motives of the police or other public officials.

Democracy flourishes when government is open and responsive. Ms. Cruz says the privacy rights of victims are a matter for agency bureaucrats to determine and undercuts the idea that government functions best when the people get the facts and understand what is happening.  Crimes often involve sensitive matters, many of them potentially embarrassing to victims and their families. But free, unfettered media provide the best opportunity for democracy to work well.

The legislature should see this bill for what it is and not entertain the idea of keeping more information from the public.

The Countrywide Vote: The backroom battle over a subpoena on VIP mortgages.
OCTOBER 17, 2009

Senators Chris Dodd and Kent Conrad lawyered up when the Senate ethics committee asked about their VIP loans from Countrywide Financial. But the sweetheart Senators may not be able to stop another look at their dealings with the subprime mortgage factory. A Democrat on the House oversight committee, Illinois freshman Mike Quigley, tells us that he supports a subpoena to obtain documents on the "Friends of Angelo" loan program.

Named for former Countrywide CEO Angelo Mozilo, the program was used to curry influence with government officials. Bank of America, which bought the failed lender last year, has said it's ready to turn over the files as soon as it receives a subpoena.

We're told that, at a closed Thursday meeting of Democrats on the House oversight committee, several Members urged Chairman Edolphus Towns (D., N.Y.) to allow a vote on California Republican Darrell Issa's proposal to issue the subpoena. Mr. Towns received two mortgage loans from the Countrywide unit that processed VIP loans but claims he received no special favors.

How long can Mr. Towns bottle up the subpoena vote? Mr. Quigley is urging Democrats to remember that ethical lapses helped end the GOP majority. "The right thing to do is also the smart thing to do," says Mr. Quigley. "Both parties must decide that they can't protect their members, no matter how powerful they are." Countrywide's efforts to obtain influence were not limited to one party, nor is there any guarantee that only Democrats like Messrs. Dodd and Conrad succumbed to Angelo's charms. As Mr. Quigley says, "Stupidity wears both hats."

Still, Mr. Issa tells us that he has all Republican members of the committee ready to vote for a subpoena. The aim is to find out the extent and impact of Countrywide's efforts to influence federal housing policy. This goes to the heart of the financial crisis. Countrywide was the largest originator of subprime loans and provided billions of dollars of mortgages to Fannie Mae and Freddie Mac, at huge cost to taxpayers.

Mr. Issa has even offered to redact the names of individuals. This would allow the committee to study Countrywide's activities without revealing individual recipients of VIP mortgage terms. Replies Mr. Quigley: "Forget redacting names." He believes the oversight committee should forward to the House ethics committee all the "names on Angelo's list."

To find out what role cut-rate mortgages might have played in encouraging politicians to allow Fan, Fred, Angelo and others to create the mortgage debacle, taxpayers will need four more Democrats to vote for a subpoena. Among potential swing votes, New Hampshire's Paul Hodes doesn't seem eager to have to vote on the issue. "The Congressman will make an independent judgment on this issue when it is brought up before the committee," says his spokesman. No response yet from Virginia Congressman Gerry Connolly, another oversight member.

Mr. Quigley, for his part, favors a broad investigation of "predatory lending." But he should understand that a party-line vote to redirect the inquiry away from evidence of wrongdoing will not instill public confidence. As he told us on Friday, "No one's going to believe you if you do this on a partisan basis." It's good advice for oversight committee Democrats, and a hopeful message for taxpayers.
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Dodd cleared in VIP mortgage probe
DAY
Published on 8/8/2009

Washington - The Senate ethics panel cleared Sens. Chris Dodd and Kent Conrad Friday of breaking rules by getting mortgages through a VIP program, but it scolded them for not being more careful to avoid the appearance of sweetheart deals.

The Select Committee on Ethics told Dodd, D-Conn., and Conrad, D-N.D., in separate letters that it found “no substantial credible evidence” after a yearlong investigation that their mortgages from Countrywide Financial Corp. broke Senate gift rules. The two influential Democrats got their mortgages through a VIP program for those designated as “friends” of then-Countrywide CEO Angelo Mozilo.

The committee said participants in the program “were often offered quicker, more efficient loan processing and some discounts,” but it also found that those borrowers didn't necessarily get the best financial deal available. And in both Dodd's and Conrad's cases, the panel said the loans they received would have been available to a wide variety of borrowers with comparable financial profiles.

Both senators have said that at the time the mortgages were being written, they didn't know they were in the so-called “Friends of Angelo” program and didn't think they were getting special deals.

At an afternoon news conference at his Hartford office, Dodd said he was “pleased and grateful” with the committee's conclusions, adding, “There was no sweetheart or special deal. The allegations have always been false.”

But the fifth-term Democrat, whose 2010 re-election bid has been badly damaged by the mortgage scandal, also acknowledged having mishandled the allegations, waiting for months to address them in detail or release documents on his loans.

”I think (that) contributed to people's cynicism and distrust, that maybe I wasn't telling the truth. And so I blame myself for that. That was a huge mistake I made and I paid a price for it,” Dodd said.

A Republican challenger to Dodd criticized the committee findings.

”Now that the World's Most Exclusive Club has - surprise, surprise - given a pass to one of its own, we still await the day when Senator Dodd will live up to his pledge of full transparency and make his mortgage documents public,” said former 2nd District Rep. Rob Simmons.

Dodd in February did allow reporters to view loan documents but did not permit them to be copied.

Conrad said the ethics panel's finding “confirms what I have said all along: I did not ask for or receive any preferential pricing on my loans.”

”While I should have shown more vigilance in the appearance of these transactions, the committee has concluded I did nothing unethical, and that is the truth.”

Both senators are playing pivotal roles in shepherding key elements of President Barack Obama's agenda through Congress. Dodd heads the Banking Committee, and is also playing a leading role in the health care overhaul taking shape on Capitol Hill. Conrad, the Budget Committee chairman, is also a major player in the health care debate, as well as in shaping legislation to curb global warming.

The investigation stemmed from a complaint by the watchdog group Citizens for Responsibility and Ethics in Washington (CREW) that charged that the two senators violated Senate rules against knowingly accepting gifts. The rule has an exception for loans that are provided on terms generally available to the public. The panel also said it looked into whether Dodd and Conrad violated another rule that bars senators from using their official positions for personal gain.

While it found no basis to believe Senate rules had been broken, the panel didn't excuse the two senators' behavior entirely. Dodd and Conrad “should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as a senator,” the committee wrote to them.

Dodd has previously said that he knew he was in a so-called “VIP” program, but thought it involved only enhanced customer service - not special deals. Conrad spoke by telephone with Mozilo when he was seeking one of his loans, but according to the letter the panel sent Conrad, he told the committee that when he learned of his VIP status, he too “assumed it was merely an employee and customer relations effort.”

The panel told both senators that their eventual realization that their loans were being handled through a VIP program - and Conrad's call with Mozilo - “should have raised red flags for you,” and prompted them to learn more about the loans, and whether they might have been special deals.

The committee acknowledged it hasn't given specific guidance on mortgages, and should do so in the future. Sen. Barbara Boxer, D-Calif., the ethics chairman, and Sen. Johnny Isakson of Georgia, the senior Republican, announced they've introduced legislation to require lawmakers to make “full and complete” public disclosures about their mortgages.

Melanie Sloan, CREW's executive director, all but called their panel's findings a whitewash.

”As is its practice, the Senate Ethics Committee has cleared the senators of any wrongdoing despite the fact that the senators participated in a program the committee found 'offered quicker, more efficient loan processing and some discounts,' “ she said in a statement.

The panel of three Democrats and three Republicans said it heard testimony and pored through 18,000 pages of documents from Countrywide - which has since been bought by Bank of America - to reach its conclusions.

As part of its investigation, the ethics committee heard from Robert Feinberg, the Countrywide official who handled the two senators' mortgage deals.

Feinberg told GOP investigators for another congressional panel, the House Oversight and Government Reform Committee, that both Dodd and Conrad were aware they were getting special treatment. He said it was standard practice for all borrowers in the VIP program to be told they were.

A transcript shows Feinberg initially replying yes when asked if he had told Dodd that he was getting special treatment. But when asked the same question again, he said, “I don't remember... but, you know, it was conveyed in some way, shape or form.”

Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.

Associated Press writer Susan Haigh in Hartford contributed to this report.
SENATOR’S WIFE: Jackie Clegg Dodd Making Big Money As Corporate Director
The Hartford Courant
By EDMUND H. MAHONY and JON LENDER
May 3, 2009

U.S. Sen. Christopher Dodd has long had a reputation as a politician of limited means — a reputation underscored, for good or bad, by recent disclosures about his dependence on friends to finance his homes.

The reputation could prove difficult to sustain as Dodd begins what political operatives predict might be the toughest campaign of his 35-year congressional career — considering the dramatic uptick in his wife's income since they married.

Since the low-profile family wedding on a rise above the Connecticut River in 1999, Jackie M. Clegg Dodd's income has quadrupled to the mid-six-figure range. All of the increase is due to her appointment as a highly compensated member of multiple corporate boards of directors.

Clegg Dodd, a former legislative aide and senior federal Export-Import Bank officer, was compensated at a rate of about $500,000 a year in 2007 and 2008 from seats on five corporate boards, according to the most recent filings by the companies to the federal Securities and Exchange Commission. The companies report based on overlapping fiscal years. About half the income is in cash; the remainder, in equity, is more difficult to calculate because of the accounting methods that corporations use to value stock and option compensation. A sixth company lists Clegg Dodd as a director but has not reported her compensation.

A spokesman for Dodd's office, who returned a call first placed to Clegg Dodd by The Courant, said that the annual figure is actually about $100,000 less. Some of the stock values reported in the SEC filings are unlikely to be realized or cannot be collected by Clegg Dodd until after she leaves the boards, said Dodd's press secretary, Bryan DeAngelis.

Clegg Dodd was dismissive late last week of any analysis linking her professional income to her husband's political career.

"I'm curious if you would ask the same questions of a male spouse of a female lawmaker," she said.

On his annual financial disclosure reports to the U.S. Senate, Dodd lists his wife's annual income from each of five of her corporate board seats as "over $1,000." One of those corporations, Blockbuster Inc., where Clegg Dodd is listed as a financial expert on the board's audit committee, reported paying her nearly $160,000 last year in cash and stock.

For the past half a dozen years, Dodd has listed his wife's stock holdings on the same financial disclosure reports. But the reported value of those holdings has been imprecise because the Senate does not require precision. For example, in his 2007 disclosure, the most recent one, Dodd listed his wife's dividend and interest income from publicly traded CME Group Inc. stock as between $100,001 and $1 million.

Precise or not, Dodd's disclosure reports comply with Senate standards. And experts say there is nothing improper about Clegg Dodd's serving on multiple boards of directors. But some independent analysts have questioned her credentials for corporate leadership, especially as directors in general are subjected to heightened scrutiny for compliance with strict, new financial reporting reforms and, more recently, for presiding over corporate meltdowns.

None of the boards on which Clegg Dodd sits has been accused of financial reporting or leadership lapses. And Dodd, his wife and their supporters say that she is eminently qualified for her directorships. They say that her qualifications are a product of her work for two decades as an aide to the Senate banking and appropriations committees, her senior position with the Export-Import Bank of the United States and as founder and chief executive of her own consulting business, Clegg International Consultants.

Credentials Eyed

Other analysts and observers, however, question the value that Clegg Dodd's experience brings to corporate boards and wonder whether it is really Dodd the corporations are targeting through his wife. Dodd is one of the longest-serving and most influential members of the U.S. Senate and is chairman of its powerful banking committee.

"In Washington, offering employment to the spouses and family members of politicians is a time-honored, if not so honorable, tradition," said Sheila Krumholz of the nonprofit watchdog group Citizens for Responsibility and Ethics in Washington. The group last year asked the Senate Ethics Committee to investigate whether the Dodds received favorable treatment when Countrywide Financial refinanced mortgages on two of their homes.

"It's another way for politicians to gain income and for donors, potential donors, people and industries with business before government to curry favor with powerful members who have jurisdiction over their issues," Krumholz said.

State Republican Chairman Christopher Healy was more blunt, saying that Clegg Dodd's directorships don't "pass the smirk test."

"I think in general the volume and the depth of value that Mrs. Dodd seems to have acquired would make even a gullible person wince at the hint of nepotism and favors that would be shown toward the spouse of a very powerful political leader," Healy said.

His wife's income is the most recent target of Dodd's political opponents. In addition to the Countrywide mortgages, his reliance on wealthy friends for help in buying residences in Washington and Ireland has drawn political scrutiny.

Clegg Dodd is listed in SEC filings as a director of Cardiome Pharma Corp. and Javelin Pharmaceuticals Inc., both pharmaceutical firms; Brookdale Senior Living Inc., which describes itself as the nation's largest owner and operator of senior living communities; Blockbuster Inc., the home entertainment company; and CME Group Inc., which became the world's largest futures exchange through a 2007 merger with the Chicago Board of Trade and the 2008 acquisition of the parent company of the New York Mercantile Exchange.

Pear Tree Pharmaceuticals, an apparent startup, lists Clegg Dodd as a director but the SEC has yet to report further information.

Clegg: No Clients

In the SEC filings, companies list directors' credentials. In Clegg Dodd's case, they mention — as Javelin Pharmaceuticals does in a new filing — that "in August 2001, she formed the international strategic consulting firm Clegg International Consultants, LLC ... specializing in emerging markets, and she has served as the Managing Partner of that entity since that time."

But Clegg Dodd's consulting firm has neither clients nor a current business phone listing.

"There are no clients now and there have been no clients for three and a half years," she said, responding to written questions. "Since the birth of my second child four years ago, I have not sought clients. My focus has been my two children and my board service which has kept me busy, full time."

Clegg Dodd said that she was recruited for her directorships and accepted only those cleared by an ethics adviser that she hired after leaving government service.

"Individuals sought me out directly or through headhunters to see if I would be interested in serving on a corporate board," she said. "After consultation and working with my ethics counsel, some opportunities after review have been rejected."

The directorships are not related to her husband's position and he has played no role in her obtaining them, Clegg Dodd said. She said she does not consider offers that could conflict with her husband's Senate duties and his name usually is mentioned only when she brings it to the attention of boards. Because she uses her maiden name professionally, some companies are not aware of her marriage, Clegg Dodd said.

If anything, Clegg Dodd said that her marriage has detracted from her appeal as a potential director.

"The marriage probably makes me less attractive because companies typically don't want the distraction that can come with reporters asking intrusive questions," she said. "Also, there were lost business opportunities because of the complications that come from the public and political nature of my family and the restrictions that I put on my service."

Executives from three of the companies she's served as a director — Javelin Pharmaceuticals, Blockbuster and CME —have contributed more than $40,000 to Dodd's campaigns in recent years, records show.

"Any contributions to my husband are irrelevant to my service on the boards," Clegg Dodd said.

Key Committees

Clegg Dodd holds a variety of committee assignments on the various boards, many of which provide committee members with thousands of dollars in additional income. But two assignments stand out: She is chairwoman of the audit committee at Javelin and is an audit committee member at Blockbuster. Both boards have designated her as an audit committee financial expert.

The designation is a demanding qualification written into SEC rules with the enactment of what has become known as the Sarbanes-Oxley law. The reform followed a succession of corporate accounting scandals and requires that corporate audit committees contain at least one member competent in complex corporate financial accounting. The goal was to put enough sophisticated accounting muscle on audit committees to resist companies' trying to inflate bottom lines.

Charles Elson, who directs the corporate governance program at the University of Delaware, said that Sarbanes-Oxley established a rigorous set of qualifications for directors designated as audit committee financial experts.

"You are held to a very high standard," Elson said. "Basically, if you are on an audit committee you better have been an accountant."

Clegg Dodd's supporters say that corporate boards have qualified her as an audit committee financial expert. But she did not list any financial accounting experience in her responses to questions.

Dodd's political critics say that the greater part of his wife's career has been the result of political appointments and that Dodd had a hand in some of them.

In interviews published during Dodd's unsuccessful effort to win the Democratic presidential nomination last year, Clegg Dodd said that she studied communications at the University of Southern Utah. She obtained an internship in the U.S. House of Representatives, a master's degree in national security studies from Georgetown University and later a job as an aide to former astronaut and Republican Utah Sen. Jake Garn, who was chairman of the Senate banking committee until 1987.

She worked for 10 years in the U.S. Senate as a staff member on both the banking and appropriations committees, according to SEC filings. In 1993, she was appointed as special assistant to the chairman of the Export-Import Bank. The bank, which is authorized by and subject to review by the Senate banking committee, was created to provide export financing for U.S. goods and services.

Over eight years, Clegg Dodd held a variety of positions at the bank, among them chief of staff and vice president for congressional and external affairs. In 1997, President Bill Clinton nominated her as first vice president and vice chairman of the bank. An attendee described her confirmation hearing before her former colleagues on the banking committee as a "love fest."

Eighteen months later, Clegg Dodd was named the bank's chief operating officer. When she left the bank in 2001, her salary was $125,700 a year, a bank spokesman said.

An official familiar with the bank's operations said that Clegg Dodd's duties at the bank involved, for the greater part, administration and public and congressional relations. The official, who asked not to be identified for fear of offending Dodd, said he does not believe that Clegg Dodd's legislative and banking experience qualified her as an audit committee expert.

U.S. Plans Attack and Defense in Cyberspace Warfare
NYTIMES
By DAVID E. SANGER, JOHN MARKOFF and THOM SHANKER
April 28, 2009

When American forces in Iraq wanted to lure members of Al Qaeda into a trap, they hacked into one of the group’s computers and altered information that drove them into American gun sights.

When President George W. Bush ordered new ways to slow Iran’s progress toward a nuclear bomb last year, he approved a plan for an experimental covert program — its results still unclear — to bore into their computers and undermine the project.

And the Pentagon has commissioned military contractors to develop a highly classified replica of the Internet of the future. The goal is to simulate what it would take for adversaries to shut down the country’s power stations, telecommunications and aviation systems, or freeze the financial markets — in an effort to build better defenses against such attacks, as well as a new generation of online weapons.

Just as the invention of the atomic bomb changed warfare and deterrence 64 years ago, a new international race has begun to develop cyberweapons and systems to protect against them.

Thousands of daily attacks on federal and private computer systems in the United States — many from China and Russia, some malicious and some testing chinks in the patchwork of American firewalls — have prompted the Obama administration to review American strategy.  President Obama is expected to propose a far larger defensive effort in coming days, including an expansion of the $17 billion, five-year program that Congress approved last year, the appointment of a White House official to coordinate the effort, and an end to a running bureaucratic battle over who is responsible for defending against cyberattacks.

But Mr. Obama is expected to say little or nothing about the nation’s offensive capabilities, on which the military and the nation’s intelligence agencies have been spending billions. In interviews over the past several months, a range of military and intelligence officials, as well as outside experts, have described a huge increase in the sophistication of American cyberwarfare capabilities.  Because so many aspects of the American effort to develop cyberweapons and define their proper use remain classified, many of those officials declined to speak on the record. The White House declined several requests for interviews or to say whether Mr. Obama as a matter of policy supports or opposes the use of American cyberweapons.

The most exotic innovations under consideration would enable a Pentagon programmer to surreptitiously enter a computer server in Russia or China, for example, and destroy a “botnet” — a potentially destructive program that commandeers infected machines into a vast network that can be clandestinely controlled — before it could be unleashed in the United States.

Or American intelligence agencies could activate malicious code that is secretly embedded on computer chips when they are manufactured, enabling the United States to take command of an enemy’s computers by remote control over the Internet. That, of course, is exactly the kind of attack officials fear could be launched on American targets, often through Chinese-made chips or computer servers.

So far, however, there are no broad authorizations for American forces to engage in cyberwar. The invasion of the Qaeda computer in Iraq several years ago and the covert activity in Iran were each individually authorized by Mr. Bush. When he issued a set of classified presidential orders in January 2008 to organize and improve America’s online defenses, the administration could not agree on how to write the authorization.

A principal architect of that order said the issue had been passed on to the next president, in part because of the complexities of cyberwar operations that, by necessity, would most likely be conducted on both domestic and foreign Internet sites. After the controversy surrounding domestic spying, Mr. Bush’s aides concluded, the Bush White House did not have the credibility or the political capital to deal with the subject.

Electronic Vulnerabilities

Cyberwar would not be as lethal as atomic war, of course, nor as visibly dramatic. But when Mike McConnell, the former director of national intelligence, briefed Mr. Bush on the threat in May 2007, he argued that if a single large American bank were successfully attacked “it would have an order-of-magnitude greater impact on the global economy” than the Sept. 11, 2001, attacks. Mr. McConnell, who left office three months ago, warned last year that “the ability to threaten the U.S. money supply is the equivalent of today’s nuclear weapon.”

The scenarios developed last year for the incoming president by Mr. McConnell and his coordinator for cybersecurity, Melissa Hathaway, went further. They described vulnerabilities including an attack on Wall Street and one intended to bring down the nation’s electric power grid. Most were extrapolations of attacks already tried.

Today, Ms. Hathaway is the primary author of White House cyberstrategy and has been traveling the country talking in vague terms about recent, increasingly bold attacks on the computer networks that keep the country running. Government officials will not discuss the details of a recent attack on the air transportation network, other than to say the attack never directly affected air traffic control systems.  Still, the specter of an attack that could blind air traffic controllers and, perhaps, the military’s aerospace defense networks haunts military and intelligence officials. (The saving grace of the air traffic control system, officials say, is that it is so old that it is not directly connected to the Internet.)

Studies, with code names like Dark Angel, have focused on whether cellphone towers, emergency-service communications and hospital systems could be brought down, to sow chaos.  But the theoretical has, at times, become real.

“We have seen Chinese network operations inside certain of our electricity grids,” said Joel F. Brenner, who oversees counterintelligence operations for Dennis Blair, Mr. McConnell’s successor as national intelligence director, speaking at the University of Texas at Austin this month. “Do I worry about those grids, and about air traffic control systems, water supply systems, and so on? You bet I do.”

But the broader question — one the administration so far declines to discuss — is whether the best defense against cyberattack is the development of a robust capability to wage cyberwar.  As Mr. Obama’s team quickly discovered, the Pentagon and the intelligence agencies both concluded in Mr. Bush’s last years in office that it would not be enough to simply build higher firewalls and better virus detectors or to restrict access to the federal government’s own computers.

“The fortress model simply will not work for cyber,” said one senior military officer who has been deeply engaged in the debate for several years. “Someone will always get in.”

That thinking has led to a debate over whether lessons learned in the nuclear age — from the days of “mutually assured destruction” — apply to cyberwar.

But in cyberwar, it is hard to know where to strike back, or even who the attacker might be. Others have argued for borrowing a page from Mr. Bush’s pre-emption doctrine by going into foreign computers to destroy malicious software before it is unleashed into the world’s digital bloodstream. But that could amount to an act of war, and many argue it is a losing game, because the United States is more dependent on a constantly running Internet system than many of its potential adversaries, and therefore could suffer more damage in a counterattack.

In a report scheduled to be released Wednesday, the National Research Council will argue that although an offensive cybercapability is an important asset for the United States, the nation is lacking a clear strategy, and secrecy surrounding preparations has hindered national debate, according to several people familiar with the report.

The advent of Internet attacks — especially those suspected of being directed by nations, not hackers — has given rise to a new term inside the Pentagon and the National Security Agency: “hybrid warfare.”

It describes a conflict in which attacks through the Internet can be launched as a warning shot — or to pave the way for a traditional attack.

Early hints of this new kind of warfare emerged in the confrontation between Russia and Estonia in April 2007. Clandestine groups — it was never determined if they had links to the Russian government — commandeered computers around the globe and directed a fire hose of data at Estonia’s banking system and its government Web sites.  The computer screens of Estonians trying to do business with the government online were frozen, if they got anything at all. It was annoying, but by the standards of cyberwar, it was child’s play.

In August 2008, when Russia invaded Georgia, the cyberattacks grew more widespread. Georgians were denied online access to news, cash and air tickets. The Georgian government had to move its Internet activity to servers in Ukraine when its own servers locked up, but the attacks did no permanent damage.

Every few months, it seems, some agency, research group or military contractor runs a war game to assess the United States’ vulnerability. Senior intelligence officials were shocked to discover how easy it was to permanently disable a large power generator. That prompted further studies to determine if attackers could take down a series of generators, bringing whole parts of the country to a halt.

Another war game that the Department of Homeland Security sponsored in March 2008, called Cyber Storm II, envisioned a far larger, coordinated attack against the United States, Britain, Canada, Australia and New Zealand. It studied a disruption of chemical plants, rail lines, oil and gas pipelines and private computer networks. That study and others like it concluded that when attacks go global, the potential economic repercussions increase exponentially.

To prove the point, Mr. McConnell, then the director of national intelligence, spent much of last summer urging senior government officials to examine the Treasury Department’s scramble to contain the effects of the collapse of Bear Stearns. Markets froze, he said, because “what backs up that money is confidence — an accounting system that is reconcilable.” He began studies of what would happen if the system that clears market trades froze.

“We were halfway through the study,” one senior intelligence official said last month, “and the markets froze of their own accord. And we looked at each other and said, ‘Our market collapse has just given every cyberwarrior out there a playbook.’ ”

Just before Mr. Obama was elected, the Center for Strategic and International Studies, a policy research group in Washington, warned in a report that “America’s failure to protect cyberspace is one of the most urgent national security problems facing the new administration.”

What alarmed the panel was not the capabilities of individual hackers but of nations — China and Russia among them — that experts believe are putting huge resources into the development of cyberweapons. A research company called Team Cymru recently examined “scans” that came across the Internet seeking ways to get inside industrial control systems, and discovered more than 90 percent of them came from computers in China.

Scanning alone does no damage, but it could be the prelude to an attack that scrambles databases or seeks to control computers. But Team Cymru ran into a brick wall as soon as it tried to trace who, exactly, was probing these industrial systems. It could not determine whether military organizations, intelligence agencies, terrorist groups, criminals or inventive teenagers were behind the efforts.  The good news, some government officials argue, is that the Chinese are deterred from doing real damage: Because they hold more than a trillion dollars in United States government debt, they have little interest in freezing up a system they depend on for their own investments.

Then again, some of the scans seemed to originate from 14 other countries, including Taiwan, Russia and, of course, the United States.

Bikini Atoll for an Online Age

Because “cyberwar” contains the word “war,” the Pentagon has argued that it should be the locus of American defensive and offensive strategy — and it is creating the kind of infrastructure that was built around nuclear weapons in the 1940s and ’50s.

Defense Secretary Robert M. Gates is considering proposals to create a Cyber Command — initially as a new headquarters within the Strategic Command, which controls the American nuclear arsenal and assets in space. Right now, the responsibility for computer network security is part of Strategic Command, and military officials there estimate that over the past six months, the government has spent $100 million responding to probes and attacks on military systems. Air Force officials confirm that a large network of computers at Maxwell Air Force Base in Alabama was temporarily taken off-line within the past eight months when it was put at risk of widespread infection from computer viruses.

But Mr. Gates has concluded that the military’s cyberwarfare effort requires a sharper focus — and thus a specific command. It would build the defenses for military computers and communications systems and — the part the Pentagon is reluctant to discuss — develop and deploy cyberweapons.

In fact, that effort is already under way — it is part of what the National Cyber Range is all about. The range is a replica of the Internet of the future, and it is being built to be attacked. Competing teams of contractors — including BAE Systems, the Applied Physics Laboratory at Johns Hopkins University and Sparta Inc. — are vying to build the Pentagon a system it can use to simulate attacks. The National Security Agency already has a smaller version of a similar system, in Millersville, Md.

In short, the Cyber Range is to the digital age what the Bikini Atoll — the islands the Army vaporized in the 1950s to measure the power of the hydrogen bomb — was to the nuclear age. But once the tests at Bikini Atoll demonstrated to the world the awesome destructive power of the bomb, it became evident to the United States and the Soviet Union — and other nuclear powers — that the risks of a nuclear exchange were simply too high. In the case of cyberattacks, where the results can vary from the annoying to the devastating, there are no such rules.

The Deterrence Conundrum

During the cold war, if a strategic missile had been fired at the United States, screens deep in a mountain in Colorado would have lighted up and American commanders would have some time to decide whether to launch a counterattack. Today, when Pentagon computers are subjected to a barrage, the origin is often a mystery. Absent certainty about the source, it is almost impossible to mount a counterattack.

In the rare case where the preparations for an attack are detected in a foreign computer system, there is continuing debate about whether to embrace the concept of pre-emption, with all of its Bush-era connotations. The questions range from whether an online attack should be mounted on that system to, in an extreme case, blowing those computers up.

Some officials argue that if the United States engaged in such pre-emption — and demonstrated that it was watching the development of hostile cyberweapons — it could begin to deter some attacks. Others believe it will only justify pre-emptive attacks on the United States. “Russia and China have lots of nationalistic hackers,” one senior military officer said. “They seem very, very willing to take action on their own.”

Senior Pentagon and military officials also express deep concern that the laws and understanding of armed conflict have not kept current with the challenges of offensive cyberwarfare.

Over the decades, a number of limits on action have been accepted — if not always practiced. One is the prohibition against assassinating government leaders. Another is avoiding attacks aimed at civilians. Yet in the cyberworld, where the most vulnerable targets are civilian, there are no such rules or understandings. If a military base is attacked, would it be a proportional, legitimate response to bring down the attacker’s power grid if that would also shut down its hospital systems, its air traffic control system or its banking system?

“We don’t have that for cyber yet,” one senior Defense Department official said, “and that’s a little bit dangerous.”




"Isn't this the way the Republicans do things?" Congresswoman asks.  Yes, some, but these Republicans end up in stripes.

Congresswoman With Ties to Bank Helped Seek Funds
NYTIMES
By ERIC LIPTON and JIM RUTENBERG
March 13, 2009

WASHINGTON — Top banking regulators were taken aback late last year when a California congresswoman helped set up a meeting in which the chief executive of a bank with financial ties to her family asked them for up to $50 million in special bailout funds, Treasury officials said.

Representative Maxine Waters, Democrat of California, requested the September meeting on behalf of executives at OneUnited, one of the nation’s largest black-owned banks. Ms. Water’s husband, Sidney Williams, had served on the bank’s board of directors until early last year and has owned at least $250,000 in stock in the institution. Treasury officials said the session with nearly a dozen senior banking regulators had been intended to allow minority-owned banks and their trade association to discuss the losses they had incurred from the federal takeover of Fannie Mae and Freddie Mac. But Kevin Cohee, OneUnited’s chief executive, instead seized the opportunity to plead for special assistance for his bank, federal officials said.

“Here you had a tiny community bank that comes in and they are not proposing a broader policy — they were asking for help for themselves,” said Steve Lineberry, a former Treasury aide who attended the meeting. “I don’t remember that ever happening before.”

Ms. Waters declined on Tuesday to comment on the meeting, or to say if her husband still owns OneUnited shares. Her staff released two letters that showed the meeting was initially called to discuss industry concerns broadly, not matters related just to OneUnited.

The congresswoman, a member of the House Financial Services Committee, did not disclose her ties to OneUnited to Treasury officials, who said they learned of them only later.

“It angers me,” said one former Treasury official, asking that his name not be used because he had not been authorized while at Treasury to speak about the gathering. “You got to know you have to be careful when you are dealing with people who you have personal relations with.”

While OneUnited did not get the $50 billion it requested, the bank did become among the first minority-owned institutions to receive a cash infusion — $12 million — in December through the Treasury’s bank bailout effort, called the Troubled Asset Relief Program.

The aid surprised some bank analysts because the bailout was intended for healthy banks, and OneUnited was then considered to be in precarious condition. In addition, it had been harshly criticized by regulators in 2007 for failing to give a sufficient number of loans to lower income residents in Miami, while favoring wealthier customers there. And the F.D.I.C. sanctioned the institution in October 2008 for “unsafe or unsound banking practices,” including excessive compensation for Mr. Cohee. The bank had provided him with a 2008 Porsche SUV and maintained his $6.4 million beachfront compound in Santa Monica. Calif., with views of the Pacific and a spa and pool.

Critics of OneUnited, which is based in Boston and has branches in poor neighborhoods of Los Angeles and Miami, say the episode shows how special access arranged through a lawmaker with financial ties to the bank had compromised the integrity of the federal bailout effort.

“A member of Congress should not be helping out a family friend, especially one they share business ties with” said Kenneth H. Thomas, a Florida banking consultant who has filed complaints with federal regulators about OneUnited’s lending practices. “The folks who really need help here is the community served by OneUnited — a community that is starving for credit. ”

Mr. Cohee and Treasury officials said the TARP money had nothing to do with the intervention by Ms. Waters. Mr. Cohee also suggested that criticism of his operations by federal banking regulators was racially motivated.

“This is where the race issue comes in,” he said.

Ms. Waters and Mr. Cohee have been outspoken advocates for fair treatment of African-Americans and other minorities by the nation’s banks — “silver rights,” Mr. Cohee called it during an interview in his Los Angeles office, where he prominently displays a photograph of him with the congresswoman. Indeed, in Los Angeles the bank has won praise for its record of helping minority businesses and lower-income residents.

Their interests first intersected in 2002, when Mr. Cohee was involved in a bidding war for Family Savings, a small, black-owned bank in Ms. Waters’ South Los Angeles District.

As a white-owned Illinois bank initially emerged as the winner, Ms. Waters made clear through the local news media that she opposed any deal in which Family would fall out of African-American hands. She was credited when the bank abruptly changed course and gave Mr. Cohee another chance to submit a winning bid.

“It’s very helpful if you have a community-based transaction to have the real or implied support of Maxine,” said Wayne-Kent A. Bradshaw, the former president of Family Savings, who preferred the initial deal. “She’s a star in the community.”

The acquisition nearly doubled the size of Mr. Cohee’s bank, making it among the nation’s largest African-American-owned banks.

Less than two years later, Mr. Cohee named Mr. Williams, Ms. Waters’ husband, to the bank’s board. A former professional football player and ambassador to the Bahamas, Mr. Williams was working as a business consultant, pulling in hundreds of thousands of dollars over a several-year period working with some of Ms. Waters’s political allies, according to disclosure forms.

Mr. Williams accepted no compensation from the bank, to avoid any appearance of a conflict, Mr. Cohee said. But as a director, Mr. Williams was required to hold stock. Accordingly, he acquired between $250,000 and $500,000 worth, records show. Mr. Cohee said that Mr. Williams paid for the stock himself, although Ms. Waters and Mr. Cohee would not say how much he paid for the stock. He would not say whether Mr. Williams sold the shares after leaving the board last April. Attempts to reach Mr. Williams through his wife’s office were unsuccessful. He did not return a call left at his Los Angeles office.

The federal takeover of Fannie and Freddie last fall was a near-fatal blow to One United. The bank, like many others around the United States, had invested some of its capital in preferred stock of the two mortgage companies.

After the federal intervention, the stock became nearly worthless and OneUnited lost almost $50 million. That left the bank dangerously under capitalized.

Ms. Waters had been in regular contact with Henry M. Paulson Jr., then the Treasury secretary, urging him to hire minority contractors to advise the federal government on investments and to move more aggressively to head-off a rash of forced evictions of people defaulting on their mortgages, Treasury officials said.

It was in one of those conversations that she asked Mr. Paulson to host a gathering at Treasury of representatives from minority-owned banks to discuss their losses related to Fannie Mae and Freddie Mac, the officials said.

OneUnited officials, including Mr. Cohee, had separately been pressing for such a meeting, requesting it on behalf of the National Bankers Association, a Washington-based group that represents minority-owned banks. Its incoming chairman was a OneUnited executive, Robert Cooper. But it was only after Ms. Waters intervened that the session was approved, Treasury officials said.

At the meeting were representatives from the offices of Representative Barney Frank and Senator John Kerry, both Democrats of Massachusetts, the home state of OneUnited, along with Ms. Waters’s chief of staff. As the hour-long meeting got underway, Treasury officials were surprised as Mr. Cohee and Mr. Cooper focused the discussion on their bank, not broader industry problems, participants said. Mr. Cohee made it clear that he wanted the federal government to somehow make up for their $50 million loss.

“They wanted money — cash,” said a former Treasury Department official who attended the meeting but asked not to be named, because he was not authorized to speak to reporters. “That is why they were there. It was very, very explicit.”

No commitment was made at the meeting, federal officials said.

But Ms. Waters intervened again, in early December, calling Treasury to request a second meeting to ensure that minority-owned banks received a chunk of the $700 billion worth of bailout funds recently approved by Congress, according to Michael Grant, president of the National Bankers Association. At a Dec. 4 meeting, he and Mr. Cooper of OneUnited urged Treasury to release some of the bailout funds to their members.

Two weeks later, OneUnited received its $12 million TARP allocation. That money was approved by a five-member committee that included Anthony Ryan, then the Treasury department’s Undersecretary for Domestic Finance, who had been present at the September meeting.

The Wall Street Journal has previously reported that Mr. Frank had urged Treasury to act on the application, although in an interview last week he noted that he had no financial connection to the institution. On Thursday, The Journal reported the financial connections between Ms. Waters’s husband and OneUnited, as well as her role in requesting the Treasury meeting.

Treasury Department officials said neither political influence nor the appeals by OneUnited executives played a role in their decision to award the funds to the bank. They noted that the bank had met its requirement to raise roughly $20 million in private funds before receiving the aid. Officials from the F.D.I.C., which recommended that OneUnited get the money, said that based on the “entire spectrum of financial and other supervisory information,” about OneUnited, it felt that allocating the bailout funds to the bank was appropriate.

Mr. Cohee said he resents any suggestion that Ms. Waters played a direct role in this aid — or that she did anything out of the ordinary for the bank simply because her husband had been on its board.

“Ms. Waters is an important advocate for minorities and minority issues and an indispensable part of Los Angeles communities,” he said. “But we derived no benefit whatsoever from any activity related to her. And she did not really do anything. There is nothing that she did that impacted the process.”

The Price of Pay-to-Play
NYTIMES Editorial
January 14, 2009

We’re sure that he isn’t enjoying it, but Gov. Bill Richardson of New Mexico is offering statehouses across the nation a needed lesson in “pay-to-play” contamination. Mr. Richardson backed away from the chance to run the Commerce Department as federal prosecutors investigate whether his aides steered a lucrative state contract to a generous political donor.

The governor proclaimed his innocence while conceding the inquiry would be too much of a distraction from the Obama administration’s opening months. (Neither he nor the Obama team explained why the investigation — which has been going on for months — is more of a distraction now than when Mr. Richardson was first interviewed for the job.)

Pay-to-play is a staple of bad government. Proving an actual quid pro quo that can be prosecuted can be difficult, especially under porous state laws. But appearances — the fawning recipient, the deep-pocketed donor — taint all politicians. And pleas of “I didn’t know,” or “everyone else does it” aren’t fit for middle-schoolers let alone elected leaders.

What’s needed is some courage in statehouses to fix the shoddy campaign-finance rules and laissez-faire lobbying privileges and impose bans on “fact-finding” junkets and other “honest graft” for legislators. Clear rules would remove any doubt, and any temptation.

In Massachusetts, a public integrity task force just issued a sweeping plan to fix the state’s toothless lobbying and conflict-of-interest laws. Sure enough, one state lawmaker, caught up in ethics allegations, is already arguing that the Legislature doesn’t have the time, given the ballooning budget deficit — as if responsible politicians can’t walk and chew gum in the same session.

Of course, the most brazen episode of pay-to-play of late is Gov. Rod Blagojevich of Illinois. He is charged with trying to auction off the United States Senate seat vacated by President-elect Barack Obama. The now-impeached governor wound up arrested, begging for someone to take the seat off his hands for nothing — with the rest of us shuddering at the spectacle.

Nationwide Inquiry on Bids for Municipal Bonds
NYTIMES
By MARY WILLIAMS WALSH
January 9, 2009

The federal investigation that prompted Gov. Bill Richardson of New Mexico to withdraw his nomination as commerce secretary offers a rare glimpse into a long-simmering investigation of possible bid-rigging, tax evasion and other wrongdoing throughout the municipal bond business.

Three federal agencies and a loose consortium of state attorneys general have for several years been gathering evidence of what appears to be collusion among the banks and other companies that have helped state and local governments take approximately $400 billion worth of municipal notes and bonds to market each year.

E-mail messages, taped phone conversations and other court documents suggest that companies did not engage in open competition for this lucrative business, but secretly divided it among themselves, imposing layers of excess cost on local governments, violating the federal rules for tax-exempt bonds and making questionable payments and campaign contributions to local officials who could steer them business. In some cases, they created exotic financial structures that blew up.

People with knowledge of the evidence say investigators are not just looking at a few bad apples, but also at the way an entire market has operated for years.

“It’s rare to sell a Senate seat, but it’s not rare to sell a bond deal,” said Charles Anderson, who retired as manager of tax-exempt bond field operations for the Internal Revenue Service in 2007. “Pay-to-play in the municipal bond market is epidemic.”

Michael D. Hausfeld, an antitrust lawyer in Washington, who is representing some of the cities, counties and states entangled in the federal dragnet, called it “one of the longest-running, most economically pervasive antitrust conspiracies ever to be uncovered in the U.S.” Many of these municipalities say they did nothing wrong and were duped by financial firms, which they are suing.

The possibility of a vast web of collusion would be sobering in any case, but the issue is of particular concern now, as Congress and the incoming Obama administration prepare a big fiscal stimulus package that may spawn infrastructure projects carried out and financed at the state and local level. States and cities issue bonds to raise money to pay for things like schools and road construction, and are supposed to follow strict rules on how the proceeds are handled for investors to receive a tax exemption on the interest.

Mr. Anderson estimated that as much as $4 billion a year was vanishing into the system, based on the volume of problems he saw before retirement.

Christopher Cox, the chairman of the Securities and Exchange Commission, has said oversight of the municipal bond markets is inadequate, and has urged Congress to take steps to protect both investors and taxpayers. Congress has not taken up the initiative.

The S.E.C. and the Justice Department declined to discuss the details or status of their investigations, including in New Mexico, where work on municipal bonds is part of a federal grand jury investigation. Officials at the I.R.S. said they were giving the matter high priority and had challenged the tax-exempt status of municipal bonds in a number of places but declined to describe individual cases.

Christopher Taylor, who retired in 2007 as executive director of the Municipal Securities Rulemaking Board, said the evidence amassed so far included tape-recorded phone calls, in which the independent specialists who are supposed to help local governments pick their bankers could be heard telling bankers: “We want you to bid on this deal, but you’re not going to get it — you’re going to get the next one. We want you to submit a sloppy bid.”

Unsuspecting governments then accepted the recommended bids, and paid too much, he said. Mr. Taylor also cited evidence of banks being paid in cities where they did no work at all, apparently to reward them for throwing the business to their rivals.

The business is lightly regulated, with rules governing the conduct of companies set by the municipal securities board. Municipal bond underwriters are prohibited from making campaign contributions to “buy” the business of bringing bonds to market. But no such rules govern the conduct of a type of professional who appeared in the industry about a decade ago — specialists who work with financial derivatives, like swaps and options.

In the last few years, the use of such derivatives in combination with municipal bonds has grown rapidly, market participants say. And so, it appears, has the interest of federal agents.  The federal inquiry appears to have started at the I.R.S., which was concerned that the rules for tax-exempt bonds were being trampled.

“We saw this coming and went to the Department of Justice and said, ‘Hey look! It looks as if there’s been price-fixing and bid-rigging on a major scale here,’ ” said Mr. Anderson, the retired I.R.S. manager.

The efforts have broadened into what investigators and lawyers described as a coordinated effort among the federal agencies broken down by jurisdiction.  The S.E.C. polices fraud in the municipal bond markets and is looking into whether municipal bonds are routinely certified for tax-exempt treatment, by people who perhaps know or should know they do not qualify.  The Justice Department’s criminal antitrust division has authority over bid-rigging, and that part of the investigation is being led by federal prosecutors in Manhattan. At the same time, various regional U.S. attorneys’ offices around the country are looking at whether campaign contributions and other gifts to state and local politicians were used improperly to “buy” bond-related business.

More than 30 financial services companies have been subpoenaed, including JPMorgan Chase, Merrill Lynch and the American International Group, which have recently received government assistance and in the case of A.I.G., an outright federal bailout. Several have disclosed in corporate filings that their employees have been called to testify before grand juries or have received “Wells notices” from the S.E.C. warning that an enforcement action is looming.

The disclosures follow raids by the F.B.I., in 2006, of the offices of three specialized firms that bring together local officials and the banks and other companies that seek business working on municipal bond sales.

One of the three, CDR Financial Products, of Beverly Hills, Calif., is at the heart of the federal investigation in New Mexico. Investigators there are looking at how CDR Financial came to be selected as the “swap adviser” for a $1.5 billion program — called Governor Richardson’s Investment Program, or GRIP — to raise money for road and rail construction in New Mexico.

CDR Financial and its founder, David Rubin, gave $100,000 to two of Governor Richardson’s political action committees in 2003 and 2004, and the company earned $1.5 million for advising GRIP in 2004. A Colorado political consultant, Michael Stratton, lobbied on behalf of CDR Financial, and was paid $269,000 by JPMorgan Chase during the same period, according to regulatory filings. JPMorgan was the lead underwriter on about $1.1 billion of bond sales for GRIP.

Mr. Stratton did not respond to messages requesting comment, and a JPMorgan spokesman said the bank would have no comment.

Allan Ripp, a spokesman for CDR Financial, said that Mr. Rubin had made the contributions because he supported Governor Richardson’s efforts to register people likely to vote Democratic in the presidential election. He said CDR Financial had competed fairly for the bond business and won its assignment on the merits.

Governor Richardson has said that he and his aides acted correctly at all times, and that he withdrew his nomination as commerce secretary only out of concern that the investigation might cause a long and distracting confirmation battle.

CDR Financial and the other two firms raided by the F.B.I. — Investment Management Advisory Group, known as Image, of Pottstown., Pa., and Sound Capital Management of Eden Prairie, Minn. — had attracted unfavorable attention even before the F.B.I. raids, in some cases because of campaign contributions.

In Philadelphia, Image and CDR Financial were described as “Company No. 1” and “Company No. 2” in the indictments of the former city treasurer, Corey Kemp, and other officials in 2004. CDR Financial had made political contributions and earned $415,000 for helping Philadelphia link a type of derivative called a “swaption” to its bonds. Image squired the city treasurer around by limo, and was in the running to participate in a school bond sale, but the deal fell apart when a local newspaper, The Daily News, questioned Image’s involvement.

Mr. Kemp is serving a 10-year prison sentence for accepting illegal payments in exchange for steering city bond business and other contracts to selected companies. Neither CDR Financial nor Image was formally accused of wrongdoing.

The use of derivatives in connection with municipal bonds has grown rapidly in the last five years. The packages are presented as money-savers to the municipalities, which may want to protect themselves against interest rate changes. But over the last year, as turmoil spread through the credit markets, some of the derivatives have blown up, leaving local governments stuck with unexpected costs.

That happened in Alabama, where Jefferson County linked an extraordinary number of derivatives, called interest-rate swaps, to its bonds, in some cases with the help of CDR Financial. Despite publicized concerns about whether improper payments to certain officials were behind the swaps, the county insisted the swaps were saving money. Last year, the derivatives failed, leaving the county with vast bills. Jefferson County is now at risk of declaring what would be the biggest governmental bankruptcy in United States history.

Even in places where the bonds and derivatives are performing as expected, irate government officials are finding they may have overpaid for various services and have inadvertently broken federal tax rules. Again and again, proceeds from tax-exempt bonds appear to have improperly generated investment income for banks and insurers.

Among the governments that have sued these financial firms are the cities of Chicago and Baltimore; Oakland and Fresno, Calif.; the state of Mississippi; and a number of counties, school districts and at least one water and sewer district. The lawsuits were consolidated in November, in Federal District Court for the Southern District of New York. Chicago has since abandoned that litigation.

Rowland on Fox says Illinois governor should quit 
DAY
Posted on Dec 15, 9:00 AM EST

HARTFORD, Conn. (AP) -- Former Connecticut Gov. John G. Rowland has told a national TV audience that the governor of Illinois, who is the target of a corruption probe, should step down immediately.

Rowland has been there.

The Republican and Waterbury native who now lives in Middlebury, resigned amid an impeachment probe in 2004 and spent 10 months in federal prison after pleading guilty to a corruption-related charge.

Rowland appeared on the Fox News channel show "Huckabee" over the weekend.

Illinois Gov. Rod Blagojevich (blah-GOY'-uh-vich) is caught up in scandal over trying to sell the U.S. Senate seat once held by President-elect Barack Obama. Rowland says Blagojevich should immediately resign for the sake of his family and the state.

Connecticut's former governor says corruption comes from arrogance and sense of entitlement.
No "reach back"
State ethics bill at last is passed
Stamford ADVOCATE, Staff Reports
Article Launched: 06/17/2008 01:00:00 AM EDT

Finally, after years of lip service but little substantive action, the state General Assembly placed its imprimatur on a tough law to allow the reduction or total revocation of a state or municipal employee's public pension if he or she is convicted of corruption.

Of all the reforms approved by the assembly following a wave of state and municipal corruption scandals in the 1990s, pension revocation may well prove to be the most successful deterrent. This measure serves notice on elected officials and government employees that corruption related to their jobs or public offices won't be tolerated and will be dealt with by attaching their assets.

Lawmakers completed passage of the bill last week in special session, and Gov. M. Jodi Rell, an adamant supporter of ethics reform, was expected to sign it into law barring any technical flaws.

The measure requires the state attorney general to ask a state or federal judge to revoke or reduce the pension of a public official or employee convicted of public embezzlement, felonious theft, bribery or defrauding public funds.

Legislative leaders wisely dropped a two-tier system of punishment voted by the House in this year's regular assembly session that blocked passage of the reforms in the session's closing days.

Instead, it is left to judges to determine if full pension revocation would violate collective bargaining agreements.

More significant, the measure bars all future collective bargaining agreements negotiated by the state or municipalities from containing any language that limits the application of pension revocation.

The ethics package is far-ranging. For example, it prohibits certain state contractors from employing former public officials or state employees for a period of one year after their service ends, and it makes it a Class A misdemeanor for failure to report bribery by a public servant. Further, it defines the governor's spouse as a public official; limits gifts to public officials to major life events, such as the birth of a child, and to $1,000 or less; and provides for ethics training for lawmakers.

Unfortunately, a "reach-back" provision that would have allowed pension penalties for those employees or officials who had been convicted in the past was not included. The state attorney general maintained that would be permissible, but its inclusion in the legislation was a sticking point for lawmakers, even though they failed to publicly provide a reason as to why that was so.

Thus the legislation could have been stronger and helped mete out penalties for corrupt officials who deserved them in recent years. Yet it still represents a much-needed commitment to emphasizing and enforcing ethical standards in doing the people's business. That certainly was missing in the cases of such corrupt politicians as ex-Gov. John G. Rowland, ex-State Treasurer Paul Sylvester, ex-Bridgeport Mayor Joseph P. Ganim and ex-Bridgeport state Sen. Ernest E. Newton II.

We hope this legislation is a major step in restoring the public's confidence in the credibility of state and local government.
Legislators still debating ethics reform proposals
Stamford ADVOCATE
By Brian Lockhart
Article Launched: 05/30/2008 02:51:36 AM EDT

Lawmakers yesterday met briefly to try to bridge the divide over ethics reforms. State Sen. Gayle Slossberg, D-Milford, and state Rep. Christopher Caruso, D-Bridgeport, met for about half an hour in the conference room of the Government Administration and Elections Committee, of which they are co-chairmen.

"We had a very productive meeting," Slossberg said. "We're making positive movement, and I'm hopeful we'll be able to come to a resolution."

Caruso agreed, but neither divulged details of their discussion.

"It's a very delicate matter," Slossberg said. "Presumably at some point there will be an agreement, which will become public very quickly."

Slossberg and Caruso have been on opposite sides of the debate over how far lawmakers should go in penalizing corrupt state and municipal workers.  Senate Democrats, Republicans and Gov. M. Jodi Rell want to pass a bill that would allow judges to reduce or revoke the pensions of corrupt elected officials and public employees. But last month, House Democrats amended the Senate bill, limiting the amount a worker's pension could be revoked to the total cost of fines, restitution and incarceration.

Caruso and state Rep. Diana Urban, D-Stonington, vice chairwoman of the committee who sat in on the meeting, said the Senate bill is illegal because it would interfere with union agreements.

Attorney General Richard Blumenthal issued an opinion that the House is justified in creating a two-tiered pension revocation system for elected officials and public workers. Slossberg disagrees. Republicans said House Democrats are protecting union interests.  The House sent the amended bill back to the Senate, which stripped out the changes and called on the House to revote on the original bill. The House did not revisit the bill. It died when the session ended May 7.

Slossberg and Caruso said they did not schedule a follow-up meeting; neither could say whether a compromise might be reached in time for the June 11 special session. Democratic leaders in the House and Senate scheduled the special session to attempt to extend a real estate conveyance tax worth about $40 million a year to municipalities.

"I'd love to get it done for June 11, but we'll have to see how we go," Slossberg said.

Caruso said lawmakers were "just trying to get through some of the issues."

Last week, several House Democrats from Fairfield County said they would be willing to vote for the Senate bill rather than risk having no bill at all.  The negotiations could be complicated by Caruso's efforts to reinsert a provision that would allow judges to reduce or revoke pensions of anyone found guilty of corruption in the past 10 years, including that of former Gov. John Rowland.

Under the House and Senate bills, failure to report a bribe and failure to report witnessing a bribe would be a crime; the governor's spouse would be considered a public official; gifts to public officials would be limited to major life events, such as the birth of a child, and to $1,000 or less; state contractors would be prohibited from offering a job to a state employee who participated significantly in awarding a state contract to that firm; and lawmakers would be required to complete ethics training.

Senate Minority Leader John McKinney, R-Fairfield, said he was disappointed that no Republicans were invited to yesterday's meeting.

"I'm a little bit leery of the fact that three members of the General Assembly, none from the minority party, are in a room," McKinney said. "The bill we had in the Senate was the result of a lot of hard work between a lot of people. I would hope that cooler heads would prevail and they'd put the Senate bill before the House for a vote. I'm certain it would pass."
Lawmakers' tempers flare over ethics;  Dueling viewpoints at news conference 
DAY
By Susan Haigh , Associated Press    
Published on 5/16/2008 

Hartford - State lawmakers have said they want to reach a compromise on revoking pensions of corrupt politicians, but on Thursday they couldn't seem to agree on who should be speaking to the news media on the subject.

Reps. Christopher Caruso and Diana Urban, who support a version that creates different rules for elected officials and state and municipal workers, were miffed that Sen. Edward Meyer, a fellow Democrat, crashed their news conference on Thursday to give reporters his opposing point of view.

It's the latest wrinkle in the heated battle at the state Capitol between House and Senate Democrats over the pension revocation issue. Now that the regular session has ended, some lawmakers are hoping to revisit the bill in a special session. But given the continued acrimony, it's questionable whether that will happen.

Meyer, who wants the same standards for pension revocation for both elected officials and government workers, showed up as the two lawmakers were wrapping up the briefing at the Legislative Office Building. Even though Caruso told him he couldn't speak, Meyer approached the podium - infuriating Caruso and Urban, who loudly complained to one another while watching from the sidelines.

”That was just bush-league,” said Caruso, co-chairman of the Government Administration and Elections.“I have never had a colleague do that.”

Meyer, the committee's Senate vice chairman from Guilford, was unapologetic. He said the representatives' proposal is bad for the state and goes against what the public wants. Caruso's version does not automatically revoke a corrupt state or municipal employee's pension.

”It looks self-serving, it looks union-biased, it looks like (it's) against the public policy to our constituents and to me as a state legislator,” Meyer said.

Caruso, of Bridgeport, and Urban, the committee's House vice chairman from North Stonington, maintain that the pensions of unionized employees can only be reduced, not revoked, because of collective bargaining agreements. Instead, they support reducing a pension by the amount of any fines, restitution or incarceration costs.

They predict the state will face legal action if it tries to pull the pensions.

Meanwhile, Caruso said he wants legislators to again consider making the revocation provision retroactive to affect people like former Republican Gov. John G. Rowland, who resigned in 2004 amid a corruption charge and later served time in prison.

That idea was stripped from the bill last session because there wasn't enough support.
Lawmakers preventing ethics reform?
Stamford ADVOCATE editorial
Article Launched: 05/03/2008 02:56:53 AM EDT

Shame on the state House of Representatives for making a mockery of ethics reform.

The Democratic majority in the House on Tuesday narrowly added an amendment to the landmark ethics bill approved last week by the state Senate that could very well kill any reforms from being approved this year.

House members dismembered the Senate bill - which contained its own failings but was acceptable - by approving a provision that creates separate standards of punishment for corrupt state and municipal officials and for corrupt state and municipal employees.

Under the House amendment, unionized public employees covered by collective bargaining agreements would be subject to less-severe penalties than elected or appointed officials when it comes to revocation of their pensions.

In essence, the amendment sets up a double standard of punishment that is unfair and, frankly, incomprehensible. The two-tier system, which is being studied by state General Assembly lawyers to see if it would even pass a constitutional muster, is a concept which "came out of the blue" despite several months of negotiations on the legislation by a special task force created by Gov. M. Jodi Rell and assembly leaders.

We second the protest of House Minority Leader Lawrence Cafero, R-Norwalk, who declared, "So what we're doing here is not raising the standard of a public official. ... We're lowering the punishment for a state employee."

Employees can do just as much damage to the public trust as elected officials can. Why some on the take should suffer less that others is beyond us. It's hard to see how the sudden monkey wrench is anything but political maneuvering.  If the intention of those behind the House amendment is to torpedo ethics reform, they most likely have succeeded in the waning days of this session. In addition, they've also appeased the state's public employee unions that have quietly but strenuously opposed this measure.

Since the bill to revoke corrupt public officials' pensions was introduced, it was the question of retroactivity - whether the state could reclaim pensions already paid - that threatened to sink it. That issue has been separated out, only to give way to a new challenge.

Some legislative strides have been made in reforms in the wake of a string of political corruption cases ranging from ex-Gov. John G. Rowland and ex-state Sen. Ernest E. Newton II of Bridgeport down to state employees working in the Transportation, Environmental Protection and Motor Vehicles departments.

However, for the past four years, state lawmakers have given an incredible amount of lip service to tough reforms needed within their own ranks, but taken little action.

Now, House members appear to have set the stage for more of the same.
-------------------------------

Blumenthal sides with House on ethics proposal
Stamford ADVOCATE
By Brian Lockhart, Staff Writer
Article Launched: 05/03/2008 01:00:00 AM EDT

HARTFORD - The House of Representatives' decision to establish different pension revocation rules for public employees and elected officials is constitutional, state Attorney General Richard Blumenthal said yesterday.

Whether his opinion leads to a compromise with the Senate and passage of an ethics bill before the legislature adjourns Wednesday remains to be seen.

House Democrats last week amended a Senate ethics bill, backed by both parties, allowing courts to revoke the pensions of corrupt elected officials and public employees at both the state and local levels.

The change states that the amount of a worker's pension revoked cannot exceed the total cost of fines, restitution and incarceration.

House Democrats said they had to make the change for practical legal reasons, arguing the Senate bill interfered with the state's collective bargaining laws. But many also believe elected officials should be held to a higher standard and face greater punishment than rank-and-file workers.  Senate Democrats and the legislature's Republican minority cried foul, arguing the amendment weakened pension revocation penalties and that public employees in many cases have greater power than part-time lawmakers.  Some lawmakers also questioned whether it was legal to tailor the state's ethics laws to different "classes" of individuals.

Blumenthal, in a letter to the co-chairmen of the Government Administrations and Elections Committee, sided with the House.

"My conclusion is that this distinction would be justifiable legally under well-established constitutional principles," Blumenthal wrote. "If the General Assembly approves (the House-amended bill) a court would likely find the distinction between elected and appointed officials and state employees to be constitutional, because it has a supportable rational basis."

He said it is common for the General Assembly to make distinctions between public officials and municipal or state employees.

"There are civil service statutory protections for employees that are not available to officials," Blumenthal wrote. "State and municipal officials often receive pensions and other compensation different from employees, many of whom are subject to annual contractual increases and other benefits."

Existing requirements in the state code of ethics are "much more extensive and detailed" for elected or appointed public officials, he said.  Blumenthal's letter should settle the debate over the House amendment, said state Rep. Christopher Caruso, D-Bridgeport, the Government Administrations and Elections Committee co-chairman who spearheaded amending the Senate bill.

"The chief attorney for the state has spoken, so no more excuses," Caruso said. "The Senate needs to stop talking, act on it and send it to the governor's desk. If she really wants ethics reform and pension revocation, she'll sign it."

Gov. M. Jodi Rell, during a budget news conference last night, declined to take a question about the ethics bill. But committee co-chairwoman Sen. Gayle Slossberg, D-Milford, said all Blumenthal's letter did is confirm the House weakened the Senate's ethics bill.

"The same questions still stands. What's the right thing to do here?" said Slossberg, who argues that similar laws revoking corrupt union workers' pensions in other states have been upheld.

She is not looking to talk about a compromise. Slossberg said she needs to discuss the House bill with her fellow Senate Democrats.  She said she has not spoken to Caruso about it since the House added the amendment.

Caruso last night said the time for talk was before the Senate passed its bill, expecting the House to approve it without changes.

"We acted on it and sent it back up (to the Senate)," Caruso said. "Now they must act."

House Minority Leader Lawrence Cafero, R-Norwalk, said he has doubts about Blumenthal's opinion and accused House Democrats of pandering to organized labor.

"We shouldn't have a double standard" for politicians and public employees, he said.

Cafero said he believes Caruso is angry he could not muster support for another change to the Senate bill that would have allowed retroactive pension revocation for people such as former Gov. John Rowland.

Rell backs Democrats’ plans for ethics reform 
New Haven REGISTER
By Gregory B. Hladky, Capitol Bureau Chief 
Thursday, December 13, 2007 

HARTFORD — A new Democratic proposal to create a bipartisan legislative ethics panel and to bar state pensions for corrupt state officials drew support Wednesday from Republican Gov. M. Jodi Rell.

“I think it is indicative of the fact that most people in the state right now want to see ethics reform continue,” Rell said of the plan, portions of which Democratic lawmakers have opposed in the past.

“I welcome the proposal they are putting forward,” Rell said. But the Rell added she believes her own ethics reform efforts from the time she first entered office in 2004 “set the right tone and the right path” for the legislature to follow.

The five-point ethics reform plan offered by state Senate Democrats this week included possible restrictions on state officials who lobby lawmakers and requiring criminal penalties for elected officials who fail to report a bribe.

Both of those reform ideas clearly relate to two recent controversies involving state Sen. Thomas P. Gaffey, D-Meriden, and Louis C. DeLuca, a Woodbury Republican who recently resigned his Senate seat.

Gaffey has denied any wrongdoing in connection with his personal relationship with Jill Ferraiolo, an assistant vice chancellor with and legislative liaison for the Connecticut State University system. Critics claim Gaffey should have recused himself from voting on a major state bond allocation for CSU that Ferraiolo was pushing.

Under the Democratic proposal, state agency legislative liaisons like Ferraiolo might be subject to some of the restrictions currently applied to private lobbyists, such as prohibiting political contributions to the lawmakers they are attempting to persuade.

DeLuca stepped down from his seat amid a Senate investigation of his relationship with a Danbury garbage hauler facing organized crime charges. A federal undercover agent at one point offered DeLuca a $5,000 bribe, which he refused. But DeLuca also failed to report the bribe offer to any law enforcement authorities.

GOP lawmakers say Democrats in the past blocked some reforms they are now proposing, including the plan to revoke state pensions for elected officials convicted on corruption charges.

Rell said some past opposition to that proposal was based on concerns that revoking a state official’s pension could hurt innocent members of his or her family.

The governor said she has long supported pension revocations for corrupt officials and noted the new Democratic proposal would give prosecutors and judges discretion about whether such sanctions should be applied in any particular case.

“I’m hoping that if they proposed it they will support it,” Rell said.
Ethics Proposals: Democrats Offer Five-Point Reform Plan
By CHRISTOPHER KEATING | Capitol Bureau Chief
December 12, 2007

A week after questions surfaced about their colleague's personal relationship with a university official, Senate Democrats unveiled a five-point plan Tuesday that calls for creating a permanent legislative ethics committee and possibly treating certain state employees as lobbyists.

The Democrats said that the legislature needs to create a bipartisan committee that would oversee their peers regarding possibly unethical and illegal conduct, including criminal convictions, abuse of office and conflicts of interest.

The committee would be evenly divided among Republicans and Democrats, even though Democrats now hold more than two-thirds of all seats in the legislature.

Concerns about ethics have been heightened at the Capitol since the felony conviction of Democratic Sen. Ernest Newton of Bridgeport for accepting a bribe and the misdemeanor conviction of Republican Sen. Louis DeLuca of Woodbury for conspiring with a trash hauler to threaten his grandson-in-law. Democrats last week rejected calls for an investigation into Sen. Thomas Gaffey, D-Meriden, for his relationship with a high-ranking official at the Connecticut State University system as they were both working to gain $1 billion in bond funds for the university over 10 years.

Some of the proposals in the five-point plan, such as revoking the pension of a corrupt public official, have failed in the past and are being offered again as part of an overall package. But Sen. Edward Meyer, D-Guilford, one of the primary authors of the plan, said that it was not prompted by the recent revelations of the relationship between Gaffey, 48, and 44-year-old Jill Ferraiolo, the assistant vice chancellor at CSU.

"This has nothing to do with Sen. Tom Gaffey," Meyer told reporters. "If the media and the people of Connecticut think that what we are doing up here at this podium with these proposals relates to Sen. Gaffey, you are wrong."

But Republicans scoffed at the notion, saying it was obvious that the new call for ethics reform was connected to Gaffey.

"Let's face it. The timing is very curious," said House Republican leader Lawrence Cafero of Norwalk. "We're not stupid. C'mon."

Cafero said that the Democrats want "to try to get out in front of the issue."

The Democrats responded, however, that they had been working on most of the proposals for years, including the pension revocation plan that dates to 2003 when then-Gov. John G. Rowland's deputy chief of staff, Lawrence Alibozek, pleaded guilty in a corruption scandal that eventually led to Rowland's resignation and prison sentences for former co-chief of staff Peter Ellef and contractor William Tomasso.

The Democrats have controlled both chambers of the legislature since then, but Republicans say that the Democrats have balked at revoking pensions because it could extend to state employees. In addition, Republicans say, Democrats were concerned that a pension revocation could have extended to former Democratic state Rep. Jefferson Davis of Pomfret, who pleaded guilty in 2004 to risk of injury to a minor after admitting to committing a sex act with his former foster son. An arrest-warrant affidavit said that the boy had told investigators that he was assaulted 50 to 100 times by Davis.

Prompted by Gaffey's case, the Democrats are considering whether to treat legislative liaisons — like Ferraiolo — the same as registered lobbyists who are hired under contracts by various special interests. Registered lobbyists are prohibited from making campaign contributions to legislators, and gifts and meals are also heavily restricted.

The Democrats will examine whether to expand the lobbyist restrictions to commissioners, deputy commissioners, and heads of state agencies, as well as the liaisons.

Under the law, gifts and meals are regulated, but relationships are not. As such, Gaffey could have had a relationship with Ferraiolo if she was a registered lobbyist, and it would not have violated the law, officials said.

"Sen. Gaffey had no conflict. He violated no law," Williams said. "It was not a conflict. In hindsight, we wish he had disclosed his relationship. He wishes that he had as well."

In another proposal, it would become a crime for the first time if a lawmaker were offered a bribe and failed to report it. Currently, the law is silent on that point, which caught most legislators by surprise.

"I didn't know that you didn't have a duty to report a bribe," said Senate GOP leader John McKinney of Fairfield, a University of Connecticut law school graduate who has served in the legislature since 1999.

After 15 years in the General Assembly, Cafero said he was dumbfounded that there is no law on reporting bribes.

"I always thought that was the law," Cafero said.
Note:  Sen. Gaffey was an excellent speaker at a forum about vouchers some years ago.
A Compromising Affair
Hartford Courant editorial
December 7, 2007

Sen. Thomas Gaffey, D-Meriden, argues that his affair with a legislative liaison at the Connecticut State University System doesn't violate either the letter or the spirit of the state's ethics laws. Yet the romantic relationship raises troubling questions about Mr. Gaffey's role in a $1 billion bonding package for CSUS approved by the General Assembly this year.

Mr. Gaffey's failure to disclose his relationship with Jill Ferraiolo, the assistant vice chancellor for governmental affairs, reflects poorly on his ethical judgment. It should also disqualify him from serving on the legislature's Committee on Higher Education and Employment Advancement, which oversees public and independent colleges and universities, including CSUS.

Mr. Gaffey is a graduate of Southern Connecticut State University, one of four universities in CSUS. He says his push for the bonding proposal was consistent with his long record of work on behalf of the state's institutions of higher learning. He also says his support for the proposal predated his affair with Ms. Ferraiolo.

The senator also notes that Ms. Ferraiolo is a state employee who is a legislative liaison, not a registered lobbyist. It's not as though she were looking to line the pockets of some private special interest with the state's money, he said.

This argument is not persuasive. Ms. Ferraiolo's job is to influence lawmakers on her employer's behalf. The 10-year, $950 million bonding authorization is one of the largest bonding projects in Connecticut history, and taxpayers are entitled to have confidence that lawmakers are thinking clearly and protecting the public's interests when handing out millions of dollars in public funds.

In addition to serving on the higher education committee, Mr. Gaffey is also a member of the legislature's Finance, Revenue and Bonding Committee. Given his relationship with Ms. Ferraiolo, he could have recused himself from voting on the bonding package (it would have passed anyway). Or he could have informed both committees of the relationship. Mr. Gaffey, however, did neither.

In fact, the affair did not become widely known until it was the subject of a Commentary article last Sunday by Courant columnist Kevin Rennie. (It apparently also figured in Ms. Ferraiolo's divorce this past summer, although the terms were kept secret as part of the settlement.) Senate President Pro Tem Donald Williams said he first heard a rumor about the affair on the night of the vote for the CSUS bond money.

Mr. Gaffey may be comfortable with his motives. But to those outside the legislature who are unfamiliar with his record and commitment to the state's institutions of higher learning, his relationship with Ms. Ferraiolo calls those motives into question. His silence about the relationship raises the question of whether the public's trust in him is justified.

Now Republicans are calling for an investigation. One of the leaders of this push is, of all people, former Sen. Louis DeLuca, who resigned his seat three weeks ago, just hours before a Senate vote on pursuing FBI tapes he wouldn't release. Mr. DeLuca had pledged the powers of his public office to protect the business interests of a trash hauler who had promised to intimidate a relative on Mr. DeLuca's behalf.

Mr. DeLuca is obviously in no position to question ethical conduct. On Wednesday, however, Senate Democrats appeared quick to publicly absolve Mr. Gaffey and sweep this matter under the rug by rejecting calls for an investigation.

Mr. Gaffey has caused his own judgment to be called into question. His relationship with Ms. Ferraiolo is a conflict of interest and clear grounds for his removal from the Higher Education and Employment Advancement Committee. His conduct is also grounds for censure by the Senate.



U.S. HOUSE OF REPRESENTATIVES: POINTING FINGERS
Coffee, tea or...how about tweaking that bill?  And how about those taxes, not to mention cozy relationships with health care, banking industries?  Hedges are GREEN.

Op-Ed Columnist
The Rabbit Ragu Democrats
By FRANK RICH
October 4, 2009

IN the annals of American excess, there often arrives a moment when those with too much money, too much clout and too much hubris just can’t stop themselves from tempting the fates. They throw an over-the-top party in public, or parade their wealth and power before the press, and the next thing you know their world, and sometimes ours, has crashed.

In the go-go Reagan 1980s, the junk bond king Michael Milken bedazzled investors with lavish Predators’ Balls in Beverly Hills. Sure enough, he and Wall Street would end the decade in ruin. Back East, the financier Saul Steinberg celebrated his 50th birthday in 1989 with a $1 million party in the Hamptons. “Honey, if this moment were a stock, I’d short it,” he said when toasting his wife. He would soon suffer a stroke and see his company go bankrupt.

Steinberg sold his vast New York apartment to the private equity titan Stephen Schwarzman. In February 2007, Schwarzman marked his 60th birthday with a highly visible multimillion-dollar bacchanal in the Park Avenue Armory. Though Schwarzman hasn’t suffered much since — he is tied for 50th on the new Forbes list of the 400 wealthiest Americans — his bash presaged the bust to come. He became, as James Stewart wrote in The New Yorker, “the designated villain of an era on Wall Street — an era of rapacious capitalists and heedless self-indulgence.”

It’s in this context that you have to wonder what some of the Obama era’s most moneyed and White House-connected lobbyists were thinking as they preened before a Washington Post reporter recently for two lengthy articles. We’re not even nine months into the new administration, yet these swaggering, utterly un-self-aware influence peddlers seem determined to prove that nothing except the party affiliations has changed in the Beltway’s pay-for-play culture since Tom DeLay. If these lobbyists were stocks, I’d short them.

One of the articles focused on Heather Podesta — “The It Girl of a New Generation of Lobbyists” — who lobbies for health care players like Eli Lilly, HealthSouth and Cigna. Podesta is half of what The Post has called a “mega-lobbying” couple. Her husband, with his own separate (and larger) lobbying shop, is Tony Podesta, the brother of John Podesta, the Clinton White House chief of staff who ran the Obama transition. Back in November, Tony Podesta told The Times that only “very unsophisticated” clients would hire his firm because of his brother’s role in assembling the new administration. That encyclopedic and ever-expanding list of “unsophisticated” clients includes Amgen and the American Coalition for Clean Coal Electricity — and that’s just among the A’s. His business was up 57 percent from last year in the first six months of 2009. Heather Podesta’s was up 65 percent.

When we first meet Heather Podesta in The Post, she is being bussed on the cheek by Charles Rangel at his August birthday party at New York’s Tavern on the Green. In keeping with the usual pattern of blowback, it took only one day after the article appeared for The Times to report that Rangel, the ethically challenged chairman of the House Ways and Means Committee, was guilty of yet another lapse: He’d neglected to list at least $500,000 in assets on his 2007 Congressional disclosure form. As if that were not karmic retribution enough, Tavern on the Green filed for bankruptcy just days after that.

The second Post article, on the front page two weeks ago, described the scene, as well as the rabbit ragu, at Ristorante Tosca, the lobbyists’ hangout on F Street in downtown Washington. The Post did not mention that it is just four blocks away from the location of the now defunct Signatures, the restaurant whose owner, Jack Abramoff, was the go-to fixer of the DeLay “K Street project” before scandal brought him down.

The stars of Tosca’s “Power Section,” we learned, include the Podestas, Tom Daschle (“not technically a registered lobbyist” but, as The Post put it, “a ‘special policy adviser’ — wink wink”) and Steve Elmendorf (who “eats lunch out only at Tosca”). Elmendorf was chief of staff to the former Democratic House leader Dick Gephardt. A quick visit to opensecrets.org reveals that Elmendorf Strategies’ client list includes Citigroup and Goldman Sachs, among other players in the coming battle over financial regulation reform. Then again, as The Nation details in its current issue, Gephardt has also lobbied for Goldman, among many other corporate clients in opposition to the populist policies he once championed.

Barack Obama promised a change from this revolving-door, behind-closed-doors collaboration between special interests and government. He vowed to “do our business in the light of day” — with health care negotiations broadcast on C-Span — and to “restore the vital trust between people and their government.” He said, “I intend to tell the corporate lobbyists that their days of setting the agenda in Washington are over.” That those lobbyists would so extravagantly flaunt their undiminished role shows just how little they believe that a new sheriff has arrived in Dodge.

In his scathing Wall Street Journal column on The Post articles last week, Thomas Frank crystallized the gap between Obama’s pledge and this reality. “There is something uniquely depressing about the fact that the National Portrait Gallery’s version of the Barack Obama ‘Hope’ poster previously belonged to a pair of lobbyists.” That’s no joke: It was donated by Tony and Heather Podesta.

Obama’s promise to make Americans trust the government again was not just another campaign bullet point; it’s the foundation of his brand of governance and essential to his success in office. At the first anniversary of the TARP bailout of the banks, we can see how far he has to go. Americans’ continued suspicion that Washington is in cahoots with powerful interests in joints like Tosca is contributing to their confusion and skepticism about what’s happening out of view in the battle over health care reform.

The public is not wrong. The administration’s legislative deals with the pharmaceutical companies were made in back rooms. Business Week reported in early August that the UnitedHealth Group and its fellow insurance giants had already quietly rounded up moderate Democrats in the House to block any public health care option that would compete with them for business. UnitedHealth’s hired Beltway gunslingers include both Elmendorf Strategies and Daschle, a public supporter of the public option who nonetheless does some of his “wink, wink” counseling for UnitedHealth. The company’s in-house lobbyist is a former chief of staff to Steny Hoyer, the House majority leader. Gephardt consults there too.

But it’s not as if the Republicans now have the public’s back. DeLay may be reduced these days to violating public taste rather than the public trust on “Dancing With the Stars,” but back on Capitol Hill, his successors keep the K Street faith. In their campaign to kill the public option, G.O.P. leaders often cite data from the Lewin Group, a research company, which has projected that 88 million Americans might quit their private insurance plans if given a government alternative. (The Congressional Budget Office puts the figure at the far less earthshaking 10 to 11 million.) Lewin, which repeatedly insists it’s still a nonpartisan outfit, was actually bought by a subsidiary of UnitedHealth in 2007. The Huffington Post reported in August that John Boehner and Eric Cantor — who use Lewin’s findings to scare voters about a “government takeover” of health care — are big recipients of UnitedHealth campaign cash.

Next up will be the overhaul of financial regulations. With job seekers now outnumbering job openings 6 to 1 in America, many still wonder why most of the big-dog culprits who helped speed the national meltdown — from lying and gambling bankers to shyster subprime mortgage packagers to executives at delinquent ratings agencies — have not shared their pain. In his speech marking the anniversary of Lehman Brothers’ failure, Obama chastised Wall Street for having taken irresponsible risks. But of course it is already back doing exactly that.

Meanwhile, we’re hearing of behind-the-scenes Congressional softening of perhaps the most promising component of the White House’s modest financial regulatory package, a Consumer Financial Protection Agency. Real-estate brokerages are being exempted from its purview, and banks will not be required to offer “plain vanilla” mortgages. As in health care, the question of what the White House will really fight for in financial reform remains open. While the ostentatious daily predators’ ball at Ristorante Tosca is a bad omen, we don’t know yet whether that omen is for the lobbyists, or the Obama administration, or both.

This is history that the president still has the power to write. It will be written in the bills he will or won’t sign into law. We can only hope that he learned an important lesson from his stunning failure to secure Olympic gold for his political home of Chicago last week. If the Olympic committee has the audacity to stand up to a lobbyist as powerful as the president of the United States, then surely the president of the United States can stand up to the powerful interests angling to defeat his promise of reform.

It is in this newspaper that you get all the news the NYTIMES finds "inconvenient truth...not fit to print."
EXCLUSIVE: Obama nominee omitted ties to biotech
Washington Times
Jim McElhatton
Originally published 04:45 a.m., September 8, 2009, updated 06:25 a.m., September 8, 2009

President Obama's nominee at the Department of Homeland Security overseeing bioterrorism defense has served as a key adviser for a lobbying group funded by the pharmaceutical industry that has asked the government to spend more money for anthrax vaccines and biodefense research.

But Dr. Tara O'Toole, whose confirmation as undersecretary of science and technology is pending, never reported her involvement with the lobbying group called the Alliance for Biosecurity in a recent government ethics filing.

The alliance has spent more than $500,000 lobbying Congress and federal agencies -- including Homeland Security -- since 2005, congressional records show.

However, Homeland Security officials said Dr. O'Toole need not disclose her ties to the group on her government ethics form because the alliance is not incorporated: "There's no legal existence so she wouldn't have to disclose it," said Robert Coyle, an ethics official for the Department of Homeland Security.

Analysts say the lack of disclosure reflects a potential loophole in the policies for the Obama administration, which has boasted about its efforts to make government more transparent. They also question lobbying laws that allow such a group to spend hundreds of thousands of dollars without the public knowing exactly how much money each of the companies that belongs to the group contributes, though such arrangements are permitted under the law.

"You're not allowing the public to know the full background of this nominee," said Judy Nadler, a senior fellow at the Markkula Center for Applied Ethics at Santa Clara University in California. "It shouldn't matter whether it's incorporated or not."

Craig Holman, legislative director of the nonpartisan watchdog group Public Citizen, said the lack of disclosure "definitely and clearly runs counter to the intent of the law."

Ethics rules require nominees to report any paid or unpaid positions held outside of government, including but not limited to those of "officer, trustee, general partner, representative, employee or any consultant of any corporation, firm, partnership or other business enterprise ...." Dr. O'Toole signed a letter on behalf of the group sent to the White House as recently as March.

Dr. O'Toole declined to comment for this article. Her office referred questions to Mr. Coyle at Homeland Security and to officials for the Alliance for Biosecurity, who said the group is in "full compliance" with lobbying rules and noted that there were no financial ties between the Center for Biosecurity, where Dr. O'Toole is chief executive, and the lobbying group she help found.

In written testimony to Congress, Dr. O'Toole said the alliance was "created to protect the Center for Biosecurity's status as an honest broker between the biopharma companies and the U.S. government."

As undersecretary of science and technology, one of Dr. O'Toole's responsibilities would involve overseeing the department's chemical and biological division, which is in charge of making sure the nation is prepared to defend itself against chemical and biological attacks.

Dr. O'Toole was nominated less than four years after the alliance was formed in 2005. She has served as the group's unpaid strategic director and has signed her name on more than a dozen letters sent to Congress and federal agencies.

The group's letters to policymakers often seek more money for research and vaccines. She signed the letters as the group's strategic director, in addition to listing her full-time paid job as director of the Center for Biosecurity, which is affiliated with the University of Pittsburgh.

The letters, including one that Dr. O'Toole sent to House Speaker Nancy Pelosi, California Democrat, last fall, describe the Alliance for Biosecurity as a "collaboration" among the Center for Biosecurity of the University of Pittsburgh Medical Center, pharmaceutical companies and biotechnology companies "working to develop vaccines, medicines and other medical countermeasures for the nation's Strategic National Stockpile."

Members include companies such as Pfizer Inc., Sig Technologies and PharmAthene Inc. The group discloses the letters and list of members on a Web site.

But for all its lobbying and letters to Congress, the alliance isn't incorporated, it doesn't have a bank account and its day-to-day operations are overseen by the K Street lobbying arm of Drinker Biddle & Reath LLP, which also lobbies on behalf of the alliance, according to records and interviews.

The alliance's legal counsel, Anita Cicero, is also a Drinker Biddle lawyer who serves as a lobbyist for the group. In an e-mail response to questions about the alliance, Ms. Cicero said the group was formed to work "in the public interest to improve prevention and treatment of severe infectious diseases - particularly those diseases that present global security challenges in the 21st century."

Ms. Cicero described the lobbying activities as focusing on broad issues. "The overarching advocacy issues we address run across the industry, and we do not conduct lobbying activities to advance the commercial interests of any individual member company," she said.

Still, a review of the group's correspondence to federal lawmakers along with member companies' public disclosures to investors show that the lines between advocacy and commercial interests aren't always clear.

In an Oct. 31 letter to Mrs. Pelosi signed by Dr. O'Toole and two other alliance officials, the group called on Congress to include more than $900 million for the "advanced development of medical countermeasures" to be administered by the Biomedical Advanced Research and Development Authority.

The letter also was signed by the chief executive officer of member company PharmAthene, David Wright, who was one of the two first co-chairmen for the alliance after its creation in 2005.

Mr. Wright's company has a big financial interest in securing work from the authority, according to investor filings. A Securities and Exchange Commission filing last summer disclosed that PharmAthene has been trying to win a contract administered by the authority to supply 25 million doses of an anthrax vaccine to the national stockpile, which is overseen by the Department of Health and Human Services.

As undersecretary, Dr. O'Toole wouldn't be directly responsible for decisions on which vaccines to develop or buy. Still, she would oversee the government's threat assessments on the risks of bioagents.

Dr. O'Toole has told the Senate in written testimony that she would adhere to all ethics rule on conflicts of interests, but that because she has no financial interest in PharmAthene, she's not aware of any recusal requirements if she were to become involved in decisions concerning government funding for anthrax vaccine development.

Ethics groups say the alliance's setup is an example of what critics call "stealth lobbying," in which like-minded companies form a loosely knit compact and spend lots of money lobbying the government. The arrangement is legal, but it exposes loopholes that prevent the public from finding out how much money each company pays and whether one business exerts more control over the others.

Ms. Cicero said the group is complying with all applicable federal laws and that the alliance discloses on a Web site its membership list and correspondence to the White House, Congress and federal agencies. She said the companies pay a "pro rata" share to the Drinker Biddle & Reath firm.

"The alliance does not generate income, does not have a bank account and does not owe taxes," she said.

Ms. Cicero said the law firm "regularly convenes consortia of biopharma companies that share common goals or interests and provides secretarial and legal support for the groups." She said the alliance was formed so companies, academic institutions and the government could work together to "accelerate the development of therapeutic and vaccine countermeasures."

Ms. Cicero said Dr. O'Toole no longer has an active role as the strategic director for the alliance.

Another lobbying client of the firm, the International Pharmaceutical Aerosol Consortium, appears structured similarly. There are no records of any incorporation papers for that group, either. The group has a Web site listing several pharmaceutical companies as members, and Senate records show it has paid more than $250,000 to Drinker, Biddle & Reath since 2007.

Government watchdog groups acknowledge that the arrangement is legal but say it seems at odds with lobbying reform laws that were intended to shed more light on who bankrolls and controls special interest groups.

"At the end of the day, companies that form coalitions like this are being able to get around having to disclose the full breadth of who they are and what they're doing and what they're doing," said Dave Levinthal, a spokesman for the nonpartisan Center for Responsive Politics. "Does that cut against an open and transparent government? It appears that it does.

"Stealth lobbying has been taking place for years and despite the focus on the influence of lobbying, what's happening is that organizations are finding, if not loopholes, then ways around the spirit of the law," he said. "Companies that are lobbying Congress are not necessarily disclosing the full strength of their lobbying."

Fund-Raiser for Obama and Clintons Accused of Fraud
NYTIMES
By LIZ ROBBINS and BENJAMIN WEISER
August 26, 2009

A prominent Democratic party fund-raiser for Barack Obama and Hillary Rodham Clinton was arrested in Manhattan on Tuesday and accused of lying about his assets to obtain a $74 million loan from Citibank, the United States Attorney’s office said.

The fund-raiser, Hassan Nemazee, 59, had been a national finance chairman for Mrs. Clinton’s presidential campaign before raising more than $500,000 for Mr. Obama’s campaign after the Democratic National Convention last August.

F.B.I. investigators found that Mr. Nemazee, a Park Avenue financier and the chairman of Nemazee Capital Corporation, had claimed his assets were worth hundreds of millions of dollars, according to the complaint. In order to secure the loan, Mr. Nemazee submitted fraudulent documents about his holdings to Citibank, offering information for accounts that “never existed or had been closed years before,” Preet Bharara, the United States attorney for the Southern District of New York, said in a statement.

Mr. Nemazee was due in court on Tuesday afternoon, where he was to be formally charged with bank fraud. The charge carries a maximum prison term of 30 years and a maximum fine of $1 million.

Investigators said the fraud had been going on since December 2006. F.B.I. agents stopped and interviewed Mr. Nemazee at Liberty Newark International Airport on Sunday before he was able to board a flight to Rome. On Monday, Mr. Nemazee repaid the $74 million loan in full to Citibank, according to the U.S. Attorney.

Investigators found that Mr. Nemazee had provided false names, addresses and telephone numbers of institutions that he said could vouch for his assets. Instead, those numbers directed callers back to a number “controlled by Nemazee,” Mr. Bharara said in the statement.

Mr. Nemazee had been a Democratic fund-raiser since the early 1990s, when he raised money for the Clinton-Gore presidential campaign. His father was a shipping magnate who later became a diplomat for Iran in Washington, where Mr. Nemazee grew up.

Mr. Nemazee had given more than $450,000 over the years, mostly to Democrats, and entertained President Bill Clinton, Vice President Al Gore and Senator John Kerry, among others, at his Park Avenue home.

There were questions raised, about his financial dealings in 1998, when Mr. Nemazee was named by Mr. Clinton to be ambassador to Argentina. The Senate Foreign Relations Committee rejected his appointment after Forbes magazine published a scathing article about his business dealings and Republicans questioned his qualifications.

EXCLUSIVE: Rep. Perlmutter part owns 'green' bank he helped
Provision in bill would aid family members, political donor
Washington Times
By Kara Rowland
Originally published 04:45 a.m., July 15, 2009, updated 11:06 a.m., July 15, 2009

Rep. Ed Perlmutter of Colorado inserted a provision into the recently passed House climate change bill that would drum up business for "green" banks, such as the one he has invested in and his family and a political donor helped found in San Francisco.

The bill calls on bank regulators to promote green banking and says federal dollars should be used to support energy-efficient home improvements at government-funded housing projects.

Mr. Perlmutter, a two-term Democrat, has two investments in the 3-year-old New Resource Bank, which calls itself the nation's first green bank. Among other environmentally conscious banking products, the bank offers home equity loans for consumers to make their homes more energy efficient, in addition to construction loans for green builders.

A Perlmutter spokeswoman stressed that the bill provisions benefit any bank that offers qualifying products.

"Any bank can use this or take advantage of this, period. So it's equal opportunity," Leslie Oliver said.

"New Resource Bank was not even on the radar screen" when the congressman first introduced his ideas in a bill called the Green Resources for Energy Efficient Neighborhoods (GREEN) Act last session, she said, adding that four hearings have been held on the bill, which passed the House last year.

New Resource also lists Deana Perlmutter, the congressman's former spouse, and his father, Leonard Perlmutter, among those who have invested "seed capital and effort" to get the venture off the ground, according to the bank's Web site.

Mr. Perlmutter's sponsorship of the GREEN Act given his financial stake in the bank raises ethical questions.

Elliot S. Berke, a lawyer specializing in government ethics, said lawmakers should be cognizant when it comes to even the mere appearance of an ethical problem.

"Members of Congress always need to be aware of how a personal financial interest and an official action may intersect and whether or not it creates even the appearance of impropriety or a conflict of interest under the House Ethics Rules," Mr. Berke said.

According to the House Ethics Manual's guidance on outside employment and income: "Although the term 'conflict of interest' may be subject to various interpretations in general usage, under federal law and regulation, this term 'is limited in meaning; it denotes a situation in which an official's conduct of his office conflicts with his private economic affairs.' The ultimate concern 'is risk of impairment of impartial judgment, a risk which arrises whenever there is a temptation to serve personal interests.' "

Mr. Perlmutter's GREEN Act was part of a 300-page amendment added at the last minute to the Waxman-Markey energy bill, which the House passed June 26 by a narrow 219-212 vote.

According to financial disclosure forms, Mr. Perlmutter holds shares in New Resource Bank valued between $15,001 and $50,000 through a trust for his children. His stake in a separate investment partnership totals between $1,001 and $15,000.

Ms. Perlmutter, an environmental lobbyist who divorced Mr. Perlmutter in 2008, said she helped found the bank but did not invest any money into the venture.

"In my case, I provided effort [on green and sustainability principles]," she wrote in an e-mail.

Mr. Perlmutter's 2008 financial disclosure form lists Ms. Perlmutter as having received an unspecified salary from New Resource. She said she was compensated for being a founder and for finding investors.

The lawmakers father confirmed that he is an investor but said he has not had any conversations with his son about the GREEN Act.

In addition to having family ties with New Resource, the congressman has received more than $6,000 in political contributions throughout the 2006 and 2008 election cycles from Daniel Yohannes, a seed investor and former board chairman, records show.

Repeated efforts to reach Mr. Yohannes were unsuccessful.

Peter Liu, founder of New Resource and vice chairman of its board, declined to disclose information about the size of the investments, citing "privacy and regulatory issues."

"However, Leonard, Deana and Daniel are not significant shareholders warranting regulatory disclosure," he said, adding that the bank "has not had any conversation with the congressman or his staff about the green banking center proposals."

New Resource - which had $166 million in assets as of March - was the recent target of disciplinary action by the Federal Deposit Insurance Corp., which issued a cease-and-desist order in May instructing the bank to bolster its lending standards and reduce its bad debt. Mr. Liu credited the action to a slew of poorly performing construction loans.

"Back at the end of last year when the regulators were having their examination, in California the real estate market was definitely having a lot of problems," he said, noting that the bank nevertheless has "a very solid capital base."

The language Mr. Perlmutter inserted into the House bill instructs the secretary of Housing and Urban Development to "develop and implement a pilot program ... to facilitate the financing of cost-effective capital improvements for covered assisted housing projects to improve the energy efficiency and conservation of such projects" through a "privately financed loan."

Elsewhere, the bill says banking regulators "shall prescribe guidelines encouraging the establishment and maintenance of 'green banking' centers by insured depository institutions" and those centers will provide consumers with information on obtaining a home energy rating or getting financing for energy-saving improvements.

Another section seeks to minimize the upfront costs of renewable energy systems for homeowners by insuring loans for energy-efficient home improvements from green banks.

The Senate is not expected to take up energy and climate change legislation until this fall.
The firms he gave advice to should ask for their money back, perhaps?
Summers Paid Millions as Hedge Fund Director
By THE ASSOCIATED PRESS
Filed at 12:21 p.m. ET
April 4, 2009

WASHINGTON (AP) -- Lawrence Summers, President Barack Obama's top economic adviser, earned millions over the past year as managing director of the hedge fund D.E. Shaw Group and through speaking fees, some from financial institutions now at the center of the government's rescue program.

Financial disclosure reports released by the White House show that Summers received $5.2 million from D.E. Shaw. He also reported payments for appearances before institutions such as J.P. Morgan, Citigroup, Goldman Sachs and Lehman Brothers.

Overall, Summers was paid $2.7 million for more than 40 appearances before different organizations and companies, including financial institutions.

''Given that Dr. Summers is widely recognized as one of the country's most distinguished economists and formerly served as treasury Secretary, there was considerable interest in hearing his economic insights from companies across various industries,'' White House spokesman Ben LaBolt said.

Obama has enacted strict rules against hiring lobbyists for administration positions that would have influence over their former clients. A White House official said Summers will not work on issues specifically related to D.E. Shaw for two years. The official noted that Summers was not an adviser or an employee of the firms that paid him to give speeches.

Summers began as managing director at D.E. Shaw Group in October 2006. A company press release at the time said Summers would be involved part time to offer advice on strategic initiatives, provide high-level research and advise the executive committee. His income from the firm included deferred compensation from 2007 and 2008 that he was paid this year.

D.E. Shaw is a global investment and technology development firm with about $36 billion in investment capital.

LaBolt said the administration has worked to tighten accountability over banks and altered conditions for the receipt of government financial bailout funds ''so that taxpayers can see how their money is being spent, the influence of lobbyists is curbed, executive compensation is reined in, and firms are required to show how they will preserve or expand lending using government funds.''

He said Summers ''has been at the forefront of this administrations work to shore up our nations financial system and to put in place a regulatory framework that will strengthen the financial system and its oversight -- all in an effort to help the families across America who have paid a very steep price for risky decisions made by Wall Street executives.''
Dodd Admits Role In AIG Bonus Controversy
By CHRISTOPHER KEATING,  The Hartford Courant
March 19, 2009

U.S. Sen. Christopher Dodd, already reeling in public opinion polls, suffered another political blow Wednesday with the admission that he had been involved in key legislative changes that helped pave the way for AIG to pay controversial bonuses to its employees.

In a retreat from earlier statements, Dodd said Wednesday that U.S. Treasury Department officials had approached him last month, urging him to modify an amendment to the federal stimulus bill that capped bonuses for executives at companies receiving aid.

On Tuesday, Dodd said that he was not a member of the conference committee that crafted the final compromise bill and said that the exception had not been in the bill as he drafted it.

But late Wednesday, Dodd admitted in an interview with CNN that he had been involved in the change.

"I agreed reluctantly," Dodd said. "I was changing the amendment because others were insistent."

The admission was another in a series of issues that have brought negative attention to the state's senior senator.

"It's apparent that Sen. Dodd — on a whole host of issues — has a lot of explaining to do," state House Republican leader Lawrence Cafero said. "People are having a credibility problem here. ... For a long time, there was an impression that Chris Dodd was an institution and could be there [in the U.S. Senate] as long as he wanted to. Once you believe that, that's when the wheels come off."

Dodd said he agreed to the Treasury Department's request, which made the limits apply only to future bonuses. Dodd's provision, as originally proposed, operated retroactively, meaning that it would have applied to any firm, such as AIG, that benefited from the first wave of federal assistance.

The senator said he agreed to the change to protect the compensation restrictions he was seeking. He refused to name the U.S. Treasury officials who asked him to add the language that paved the way for the bonuses, saying that much of the detailed work on the bill was done on the staff level.

"The alternative was losing the amendment entirely," Dodd said.

The political firestorm that had been simmering around the issue all day exploded with Dodd's admission.
Sen. Chris Dodd Changes Explanation on AIG Bonuses
By Christopher Keating, Hartford Courant, on March 19, 2009 7:03 AM
 
U.S. Sen. Christopher Dodd, already reeling in public opinion polls, suffered another huge political blow Wednesday with the stunning admission he'd been involved in changes in legislation that helped pave the way for AIG to pay controversial bonuses to its employees.

 In a retreat from earlier statements, Dodd said Wednesday that U.S. Treasury department officials had come to him last month urging him to modify an amendment to the federal stimulus bill capping bonuses for executives at companies receiving aid.

On Tuesday, Dodd said he agreed to makes changes in the final version of the federal stimulus bill. This represented an about-face in his explanation, only one day after he said that he was not a member of the conference committee that crafted the final compromise bill and pointed out the exception had not been in the bill as he drafted it.

But late Wednesday, Dodd admitted in a live television interview with CNN he'd been involved in the change.

"I agreed reluctantly," Dodd said. "I was changing the amendment because others were insistent."

That admission increased the concerns raised by Republicans both nationally and locally.

"It's apparent that Senator Dodd - on a whole host of issues - has a lot of explaining to do,'' said State House Republican leader Lawrence Cafero. "People are having a credibility problem here. ... For a long time, there was an impression that Chris Dodd was an institution and could be there [in the U.S. Senate] as long as he wanted to. Once you believe that, that's when the wheels come off."

The political firestorm that had been simmering around the issue all day exploded in wake of Dodd's admission. Dodd is already vulnerable when it comes to matters relating to AIG. Employees and PACs related to the financial services company have donated thousands to the senator's campaign coffers over the years.

Amber Wilkerson, a spokeswoman for the National Republican Senatorial Committee, said "Senator Dodd's reversal on this issue is both astonishing and alarming. ... Contrary to his statements and denials over the last 24 hours, Senator Dodd has now admitted that he and his staff did in fact change the language in the stimulus bill to include a loophole for AIG executive bonuses."
Dodd said flatly that his comments were not a reversal, though when asked by CNN what had changed in his understanding between Tuesday and Wednesday, Dodd replied, "Going back and reviewing it. ... I apologize if we had some confusion.''

Still, he said in a statement, "Reports that I changed my position on this issue are simply untrue. I answered a question by CNN last night regarding whether or not a specific date was aimed at protecting AIG. When I saw that my comments had been misconstrued, I felt it was important to set the record straight - that this had nothing to do with AIG."

The political firestorm around Dodd is the most intense of his career for a veteran and highly successful politician who is known as one of the most savvy political players nationally. In Connecticut, his name recognition is as close to 100 percent as possible, and he normally wins re-election in a blowout.

But this year is different.

In a telephone interview with The Hartford Courant on Wednesday night, Dodd said he knows he has been enmeshed in multiple controversies recently, including the refinancing of his two mortgages with Countrywide Financial, his purchase of a 10-acre cottage in Ireland, and the latest firestorm over the AIG bonuses.

"I've been getting whacked around the head for the last eight or nine months - part of it my own fault for not stepping up earlier,'' Dodd said.

Concerning his poll ratings that show he is in a statistical dead heat with Republican Rob Simmons in a potential matchup in 2010, Dodd cited the national and state economies as being a major problem for an incumbent politician.

"The backdrop doesn't help,'' Dodd said. "Jobs being lost. Homes being lost. There are obviously exceptions to this, and we know it.''

When asked about the possibility of retiring rather than rumors among political insiders that he could retire instead of seeking re-election, Dodd said, "I'm running. I haven't announced anything yet. ... I want to win. What I want more than winning is to do what I'm supposed to be doing.''

Simmons declined to return multiple telephone calls.

As a liberal Democrat, Dodd said he expects to be criticized during the coming campaign by "the Rush Limbaughs and so forth'' on conservative talk radio programs nationwide. But, he added, "I'm not going to let them define my role.''

He said he learned about the AIG bonuses "a few days ago'' - long after the conference committee and even longer after the original bill on the Senate floor.

Dodd's turnaround on the AIG bonuses came during a live interview on CNN with host Wolf Blitzer and correspondent Dana Bash. The interview was arranged because Dodd had come under strong fire from Republicans and others as the person who was involved in what Blitzer called a "mysterious loophole'' in the legislation.

"I agreed to a modification in the legislation, reluctantly,'' Dodd said.

After Dodd's live segment on CNN was over, Blitzer continued with a report in which he said that Dodd was "coming forward with a vastly different story'' on Wednesday than he had told to a CNN producer on Tuesday regarding whether he was responsible for including the crucial date for the bonuses of February 11, 2009 into the bill.

"It's very embarrassing to Senator Dodd to say one thing yesterday and another thing today,'' Blitzer said.

Dodd declined to comment to The Courant about Blitzer's post-interview statements, saying, "We get caught up in the minutiae of all of this.''

When asked about Blitzer's comment that the legislation included "a mysterious loophole,'' Dodd said, "No, that's a lot of hype. It wasn't a mystery.''
In Daschle’s Tax Woes, a Peek Into Washington
NYTIMES
By DAVID D. KIRKPATRICK
February 2, 2009

WASHINGTON — Tom Daschle, the former Democratic Senate leader, had been voted out of office. His close friend Leo Hindery, a Democratic donor and media mogul, was out of a job too, having just sold his latest company, Yes Networks.

So in early 2005 the two men decided to team up. Mr. Daschle agreed to become the founding chairman of “a world-class executive advisory board” of “industry and regulatory experts” for a new investment firm run by Mr. Hindery, according to a news release announcing its inception and seeking investors. The Daschle-led board, the release said, would help provide a “collective depth of industry knowledge and expertise that will allow us to pursue unique and high-value opportunities.”

In addition to lending the prestige of his name, Mr. Daschle traveled to help raise money from investors for Mr. Hindery’s new venture, said Jenny Backus, a spokeswoman for Mr. Daschle. And in exchange, over the next four years the firm compensated Mr. Daschle with over $2 million, and Mr. Hindery lent Mr. Daschle the use of a chauffeured limousine in Washington.

Ms. Backus said that when Mr. Hindery was not in Washington he lent his car to Mr. Daschle as a favor to a friend.

The partnership has now come back to haunt Mr. Daschle, with the disclosure that he had failed to pay $128,000 in taxes on the car and driver Mr. Hindery’s firm provided him, threatening to derail his confirmation as secretary of health and human services...full story here.


Spousal Ties to Lobbying Test a Vow From Obama
NYTIMES
By CHARLIE SAVAGE and DAVID D. KIRKPATRICK
December 15, 2008

WASHINGTON — Linda Hall Daschle is one of the most important aviation lobbyists in town. Ms. Daschle is also the wife of Tom Daschle, whom President-elect Barack Obama has chosen to be the next secretary of health and human services.

Tom Downey is the founder and chairman of a lobbying firm with dozens of clients, including several with interests in energy policy. Mr. Downey is also the husband of Carol M. Browner, Mr. Obama’s likely choice to be the next White House energy czar.

Mr. Obama’s selection of Mr. Daschle and Ms. Browner to high-level positions illustrates a potential loophole in his pledge of keeping special interests at a distance.

The ethics code that Mr. Obama imposed on his transition team takes a hard line against lobbyists.

People are disqualified from working on any matters they lobbied about within the past year, and currently registered federal lobbyists are barred from playing a significant role — regardless of the issues they lobby about. But Mr. Obama’s embrace of Mr. Daschle and his presumed choice of Ms. Browner suggest that he will take a softer line on lobbying by the spouses of the officials in his administration.

In a town where influencing the government is a main industry, Thomas Susman, an expert on ethics rules who is also a lobbyist for the American Bar Association, said issues surrounding spousal lobbying presented a particular ethical challenge.

“On the one hand,” Mr. Susman said, “you say a spouse shouldn’t be disenfranchised from his or her professional activities because his or her spouse goes into government. But it does seem to me that a spouse ought not be allowed to lobby an agency or on issues under the control of the spouse in government.”

In the presidential campaign, Mr. Obama railed against influence-peddling in Washington and pledged to hold his administration to a higher standard.

“Your voices should speak louder than the whispers of lobbyists,” Mr. Obama told a crowd in Green Bay, Wis., in September.

Stephanie Cutter, the transition spokeswoman, said Mr. Obama’s team was writing “ethics rules for an Obama administration that will meet every commitment made during the campaign.”

“To prevent conflicts of interests,” Ms. Cutter added, “administration officials will recuse themselves from any issue involving a spouse, and spouses will be banned from lobbying relevant agencies.”

In a bid to avoid conflicts, Ms. Daschle has announced that she will leave her lobbying firm, where colleagues represent health care clients, and plans to start her own practice, which will not accept clients with interests in health care policy. Mr. Downey has not disclosed his plans and did not respond to an interview request, but Ms. Cutter said that if Ms. Browner became energy czar, Mr. Downey’s firm would no longer accept energy or environment-related work.

Joan Claybrook, the president of Public Citizen, a government watchdog group, said it would be going too far to require spouses of administration officials to give up their careers and “go do something else, like home decorating.”

“You may have to change your business plan and just give up on lobbying on those issues that are directly the responsibility of your spouse,” she said.

The business dealings of family members created a headache for Mr. Obama’s team even before the election. After Mr. Obama selected Senator Joseph R. Biden Jr. as his vice-presidential nominee, Republicans pounced on the fact that Mr. Biden’s son R. Hunter Biden was a lobbyist. He quit his firm in September.

Mr. Obama’s choice of Senator Hillary Rodham Clinton as secretary of state raised related issues. Since leaving the White House, her husband, former President Bill Clinton, has collected tens of millions of dollars in speaking fees and donations to his presidential library and charitable foundation, including from foreign governments. As a condition of his wife’s selection, Mr. Clinton agreed to disclose the identity of donors, to take no new donations from foreign governments and to let the administration review his speaking schedule.

The working relationship between the Daschles, who married in 1984, has come under scrutiny before. After three people died in the 1994 crash of a small plane operated by a friend of Mr. Daschle, he was accused of helping his friend’s firm evade oversight, and his wife was accused of helping her husband hide his efforts.

Both Mr. Daschle, who was then the top Senate Democrat, and Ms. Daschle, who then worked for the Federal Aviation Administration, were cleared of wrongdoing.

Ms. Daschle has been a lobbyist since 1997. Some early clients had an interest in health policy, like the drug maker Amgen and the tobacco giant Philip Morris. In recent years she has mainly represented aviation companies like Lockheed Martin.

Ms. Browner, a former administrator for the Environmental Protection Agency, is a principal at the Albright Group, an international consulting firm. She married Mr. Downey in 2007.

He had been a Democratic congressman from Long Island from 1975 to 1993, but lost his seat after it was revealed that he was among several lawmakers who had frequently overdrawn their House bank accounts without penalty, and that his wife at the time was a House bank auditor.

Mr. Downey later founded a lobbying firm whose past clients included energy companies like Chevron and the Standard Renewable Energy Group, several foreign countries, and the Albright Group. In 2006 the couple worked together on issues related to a Dubai firm’s purchase of a United States port operator.

His firm’s current clients include the government-backed mortgage giant Fannie Mae and Securing America’s Future Energy, a nonprofit that advocates reducing dependence on foreign oil.

Several other spouses of people tapped for top Obama administration jobs have careers connected to government.

Susan E. Rice, the United Nations ambassador pick, is married to a producer of the ABC program “This Week With George Stephanopoulos.” Gregory B. Craig, the White House counsel designate, is married to a graphic designer who has worked on Postal Service stamps. And the wife of Timothy F. Geithner, who is Mr. Obama’s choice for Treasury secretary, once worked for Common Cause, a watchdog group that lobbies for tighter ethics rules.

Ms. Daschle and Ms. Browner did not respond to interview requests. But in a 2002 interview with The New York Times, Ms. Daschle defended pursuing her lobbying career despite her husband’s Senate role.

“Why should a spouse, just because she is married to a high-profile public official, have to walk away from a career?” she asked.
Former Lobbyist Named Biden’s Chief of Staff
NYTIMES
By DAVID D. KIRKPATRICK
November 16, 2008

WASHINGTON — President-elect Barack Obama on Saturday named Ronald A. Klain, a former lobbyist and Clinton White House lawyer, as chief of staff to Vice President-elect Joseph R. Biden Jr.

His selection is one of several early appointments to Mr. Obama’s White House and transition staff that calls attention to the limits of Mr. Obama’s sweeping self-imposed ethics rules, laid out to fulfill a campaign pledge to “wrest the federal government out of the hands of lobbyists.”

Mr. Klain, who was chief of staff to former Vice President Al Gore, is an executive at Revolution, the investment company of the AOL founder Steve Case. He worked until 2005 as a lobbyist at the law firm of O’Melveny & Myers, where he lobbied for clients including the failed mortgage giant Fannie Mae; an industry group seeking help with asbestos lawsuits; a drug maker under federal investigation; the cable and media giant Time Warner; and an airline.

Mr. Obama’s ethics rules, however, do not bar former lobbyists. The rules prohibit officials like Mr. Klain from working on any matter directly related to their employers over the previous two years, so Mr. Klain would be required to recuse himself from issues involving Mr. Case’s firm Revolution.

The Obama transition also named Philip Schiliro as its liaison to Congress. Mr. Schiliro is a former chief of staff to Representative Henry A. Waxman, the California Democrat. Mr. Waxman is chairman of the House committee on government oversight and reform, which watches and sometimes investigates the White House.

Mr. Schiliro worked for Mr. Obama’s presidential campaign and had previously worked on Capitol Hill for 25 years. His jobs there have included a stint as an aide to former Senator Tom Daschle, adding to a growing roster of former Daschle aides in the Obama administration.
In Transition, Tangle of Ties to Lobbying
NYTIMES
By DAVID D. KIRKPATRICK
November 15, 2008

WASHINGTON — President-elect Barack Obama has imposed stricter conflict-of-interest restrictions on his White House transition team than any president before him. But a list of transition team members that his office made public on Friday includes a complicated tangle of ties to private influence-seekers.

Among the full roster of about 150 staff members being assigned to government agencies between now and Inauguration Day are dozens of former lobbyists and some who were registered as recently as this year. Many more are executives and partners at firms that pay lobbyists, and former government officials who work as consultants or advisers to those seeking influence.

After campaigning on promises to end the influence of lobbyists in the White House, Mr. Obama has imposed rules that bar officials on his transition team from handling any issues in areas of policy where they have lobbied over the last 12 months or from seeking to influence the same agencies for the next 12 months.

The rules also bar officials from working on matters where family members or recent business associates may have a direct conflict of interest. In cases where there is even an “appearance of conflict,” officials must seek a waiver from the transition’s executive director, an Obama Senate aide and law school classmate, Christopher Lu.

At least one official initially involved in the transition appears to have been reassigned because of concern about his lobbying or legal work. Henry Rivera, a former Democratic commissioner on the Federal Communication Commission who was involved in planning for the agency’s transition, has dropped out of that role because he had represented clients on communications policy in the last year, the newsletter Communications Daily reported Friday.

Instead, on the list that was made public on Friday, Mr. Rivera was listed on the team handling science, technology, space and the arts. The rules permit people who have lobbied in one area to join an Obama transition team in another. (With Mr. Rivera is Jim Kohlenberger, executive director of an advocacy group for Internet companies.)

Representatives of the transition team declined to comment on the assignment, and Mr. Rivera did not return a phone call seeking comment.

Transition officials said that their policy went further than any previous White House to avoid self-dealing or influence-trading in the formation of the new administration, and that in the modern Washington it would be foolish to try to eliminate anyone who had worked in public policy for a private interest — or who had a family member in that business — from contributing to the transition.

Stephanie Cutter, a transition spokeswoman, said in a written statement that the transition team reflected what she called Mr. Obama’s “commitment to change the way Washington does business and curb the influence of lobbyists on our government.”

“While these rules disqualify many well-qualified professionals from participating in the transition as a result, they also put in place the right safeguards to prevent any potential conflicts of interest,” Ms. Cutter said.

Some appear to skirt the edges of the ban on working in areas of the transition where they have recently lobbied. Handling some Interior Department issues is Keith Harper, who lobbied earlier this year for Native American tribes. Overseeing the Consumer Products Safety Commission is Pamela Gilbert, a former executive director of the agency who as recently as two years ago lobbied for a consumer advocacy group. Within the last year she has lobbied for the company Barr Laboratories, for an investor group, and for an antitrust enforcement group.

Among the group handling the Justice Department and civil rights areas of the transition is Theodore Shaw, a litigator for an arm of the N.A.A.C.P. He has registered as a lobbyist for the group in the past, but N.A.A.C.P. officials say he has not lobbied in the past 12 months.

David J. Hayes, part of the 12-member group overseeing the transition and co-head of the team handling the areas of energy and natural resources, is the chairman of the environmental practice at the law and lobbying firm Latham & Watkins. He was personally registered as a lobbyist as recently as 2006, for clients including San Diego Gas and Electric.

Sally Katzen, another member of the supervisory group who is also on teams for the office of the president and government operations, was registered last year to lobby for the pharmaceutical company Amgen on Medicare reimbursements. Louisa Terrell, another member of the top working group, is on leave from the public policy office of the Internet company Yahoo! Tom Wheeler, another of the 12, is on leave from a firm that invests in technology companies and before 2004 lobbied for the cable television and wireless industries.

John L. White, a former Clinton official charged with overseeing the new Defense Department, is a partner in a firm that invests in defense contractors. Michael Warren, charged with overseeing Treasury, is chief operating officer of a firm that lobbies for clients including the U.S.-India Business Council.

Several of the officials have ties to Fannie Mae, the government-backed mortgage firm whose implosion this fall contributed to the financial meltdown. Thomas Donilon, overseeing the State Department, is a partner in the law and lobbying firm O’Melveny and Myers who until three years ago lobbied for Fannie Mae. Wendy R. Sherman, the other official charged with reviewing the State Department, once headed Fannie Mae’s charitable foundation.

Even Mr. Lu, the transition’s executive director charged with policing potential conflicts of interests, may have his own appearance problems. His wife, Kathryn Thomson, is a lawyer who represents corporate clients dealing with federal environmental regulations, while his older brother, Curtis Lu, is a top lawyer for Fannie Mae. (Such family connections may not be disqualifying conflicts depending on the nature of the transition job, ethics lawyers said.)

Mr. Lu has his work cut out for him in deciding which apparent conflicts may be of real concern, said Robert Walker, a Washington lawyer and former staff director of the Senate Ethics Committee. “I don’t think it is the brightest of bright lines, and there is going to be a lot of time spent thinking about just where that line is,” Mr. Walker said.

The people involved in the transition teams assigned to each federal department and agency have begun meeting with their current staff to collect information on budgets, pending issues and personnel matters. For now, the advisers assigned to each agency report back to the central 12-person working group, which coordinates the efforts.

The vast majority involved are second-tier officials of the Clinton administration, eager to help another Democrat take control of the White House. With the exception of a few academics, almost all of them spent the intervening years in the private sector, usually capitalizing on the connections and expertise they developed in the Clinton years.

For example, Sandy Berger, the Clinton national security adviser, founded Stonebridge International, a consulting and lobbying firm focused on helping clients resolve government issues here and overseas.

Mr. Berger took with him Mr. Warren, the former executive director of the president’s economic council who became chief operating officer of Stonebridge and has now become a major contributor to the transition in the pivotal areas of the Treasury Department and economic policy. Although not a registered lobbyist, Mr. Warren helped manage Stonebridge while it lobbied the government for clients including the U.S.-India Business Council within the last year as well as Dynergy International, Airbus and Conoco in earlier years. (More of Stonebridge’s business involves using government expertise and connections to help corporate clients abroad.)

Some transition officials now work at firms that do business with the agencies they are examining. John O. Brennan, a former Central Intelligence Agency official working on its transition, is president and chief executive of the Analysis Corporation, an intelligence contractor.

On the NASA review board, Lori Garver is now president of a strategic consulting company, Capital Space LLC, and previously worked for the aerospace company DFI International.

Among the transition officials charged with reviewing the Securities and Exchange Commission — likely to come under significant scrutiny amid the financial meltdown — is Mozelle Thompson, who runs a legal and policy consulting business for publicly traded companies. One name on the transition list comes unencumbered by potential conflicts but instead by bad luck. Jami Miscik, leading a review of American intelligence agencies, was the head of intelligence analysis at the Central Intelligence Agency during its biggest embarrassment: the botched assessments about Iraq’s weapons of mass destruction. Then she moved on to become a senior official managing risks in emerging markets for the investment bank Lehman Brothers, until its collapse this fall.
Obama Transition Team Adopts Ethics Rules
NYTIMES
By BRIAN KNOWLTON
Published: November 11, 2008

WASHINGTON -- A top adviser to President-elect Barack Obama said Tuesday that the transition team would raise about $7 million to cover its costs, supplementing $5 million in government funds, but would reject donations from lobbyists or corporations and rely instead on the same of small donors who helped propel the Democrat to victory.

“We’ll raise all that money from individuals,” said John D. Podesta, who is a co-chairman of Mr. Obama’s transition team. “There’s a $5,000 limit on those contributions.”

In his remarks to a packed briefing room in the temporary transition offices here, Mr. Podesta, a former of chief of staff to President Bill Clinton, seemed intent on striking a tone of brisk efficiency and in advertising what he insisted would be historically high standards.

Under the rules announced by Mr. Podesta, federal lobbyists will not be allowed to raise money for the transition, nor continue lobbying while working in the transition. In addition, he said that someone who became a lobbyist after being involved in the transition would be prohibited from lobbying the administration on related matters for 12 months.

“These are the strictest ethics rules ever applied,” he said.

Mr. Podesta also vowed that the new administration would move “very aggressively and very rapidly” to address the country’s energy challenges, shifting American factories and consumers toward cleaner sources of power while creating more jobs.

Mr. Obama’s first priority was “to stabilize the economy and put America back to work,” he said.

Reiterating what Mr. Obama said at a news conference last week, Mr. Podesta said that if Congress did not pass an economic stimulus package in a lame-duck session next week that was announced on Tuesday, it would be “the first item of business after he is inaugurated.”

He confirmed reports that the transition team was reviewing options for closing the detention camp at Guantánamo Bay, but provided no details.

Mr. Podesta also said that Mr. Obama had no plans to meet with any of the world leaders coming to Washington this weekend to take part in a financial summit meeting — “either here or in Chicago,” where Mr. Obama is spending most of his time for now.

He described a brisk pace for some transition actions, noting, for example, that fact-finding teams would review more than 100 agencies and commissions starting next week to aid in decisions on budget, personnel and policy.

He said that Mr. Obama wanted to expand on the practice of some presidents of selecting one cabinet member from the opposition party, but that whoever was chosen, it was rare for any cabinet members to be named before December.

“At a moment when we face the most serious challenges of a lifetime,” said Mr. Podesta, referring to the ailing economy. “President-elect Obama wants to assure that we hit the ground running on Jan. 20, because we don’t have a moment to lose.”

While new administrations almost always promise to hew to strict ethical standards, Mr. Podesta’s language was particularly strong as he promised “the strictest, most far-reaching ethics rules of any transition team in history.”

He said about 450 people would be hired to undertake the work of preparing for the new administration, promising a transition “that is efficient, that is organized, that is bipartisan, and more open and transparent than others before.”

Lawmakers not able to avoid conflict issues
Norwalk HOUR editorial
Dec. 6, 2007

Having just endured the forced resignation from the state Senate of their minority leader, Louis C. DeLuca, some Republicans are accusing Democratic Sen. Thomas P. Gaffey of a breach of ethics and are urging the Senate to put him through the same sort of inquiry that pushed DeLuca out.

Gaffey, who represents the Meriden area, co-chairs the General Assembly's Education Committee, and is vice chairman of the Higher Education Committee, has had to do some explaining. But his situation is not the least comparable to DeLuca's.

To threaten the troublesome boyfriend of his granddaughter, DeLuca engaged a friend he considered a gangster, and as a result pleaded guilty to a misdemeanor charge. Along the way he failed to report a bribe offer. This was criminality and indifference to criminality.

Gaffey romanced a state university official while he voted for university bonding legislation, a relationship confirmed by affectionate remarks to each other in messages that became public record in the university e-mail system. At worst this relationship was a conflict of interest, but if it was, it was a small one, since, as a matter of state law, licensed professionals sit on the agencies that regulate their professions and practicing lawyers sit on the commissions that select and discipline judges.

The ethics questions are whether Gaffey's romantic interest could have compromised his view of the public interest in the bonding legislation and whether the public interest actually was compromised.

Political Fund Hanky-Panky?
Hartford Courant
Kevin Rennie | NOW YOU KNOW
December 9, 2007

An outbreak of modesty among Democratic state senators last week failed to divert attention from Sen. Thomas Gaffey's role in the passage of nearly $1 billion in funding for the Connecticut State University System. Democratic leaders waved away questions about Gaffey's affair with CSUS' legislative liaison, Associate Vice Chancellor Jill Ferraiolo, reported here a week ago. Gaffey, according to the party line, was just one of 187 legislators, nearly all of whom eventually supported the CSUS plan.

State Senate President Pro Tem Donald Williams, displaying his taste for censorship, mustered a studied disdain for the idea that Gaffey ought to have disclosed his affair while shaping and promoting the CSUS legislation. Pay no attention to Gaffey's gambit last spring, as a member of the legislature's Finance Committee, to replace a carefully controlled plan for CSUS with one that spent a lot more and included less oversight.

Williams pronounced, "People are kind of sick and tired with politics being played with people's private lives." Wrong again. People are sick and tired of politicians refusing to keep their private escapades separate from their public obligations. It's not much to ask.

Gaffey was deeply involved with the CSUS proposal at each step of the way. During the brief Oct. 30 debate on the proposal, Gaffey was one of the few senators to speak. He couldn't resist. After all, CSUS Chancellor David Carter, Gaffey said, "came to me about a year ago with this dream he dares to dream." And Carter is Gaffey-certified as "a great man."

Gaffey and Carter are good friends. Friends help each other. In February 2004, Carter, then serving as president of Eastern Connecticut State University, was in a bind. As a member of the NCAA Division III Presidents Council, Carter had been able to purchase tickets to the NCAA Final Four tournament in San Antonio. That's the one, you may recall, that the UConn men's team won.

An obligation at ECSU meant Carter couldn't go. How could he unload those tickets? Only several thousand people might want them. Carter offered them to Gaffey, who agreed to buy them at the original purchase price. What a lucky break for both of them, especially since no one else Carter offered them to was interested, he said.

Gaffey says he's an old-fashioned fella; he paid for meals with his inamorata, CSUS link Jill Ferraiolo, he said early last week.

By Friday, however, Gaffey's recollection was getting sharper. He recalled, in response to written questions, two previously undisclosed luncheons with Ferraiolo and others that he paid for with money from his Government Action Fund Political Action Committee. Those are political contributions that Gaffey has used for years to finance travel, dinners and trips.

He is indeed an old-fashioned guy. Sen. Williams should be disappointed to learn that Gaffey and Ferraiolo were mixing their private lives with political contributions.

GAFPAC, like every Connecticut political committee, must file quarterly finance reports. The law requires an itemized accounting of each contribution and expenditure. Gaffey has often neglected to comply with that requirement. It's hard to know exactly where, when and on what thousands of dollars have been spent. GAFPAC has made many payments to the senator's personal credit card for purchases that are not clearly disclosed.

On Friday, Gaffey said he'd file an amendment to one mysterious payment this year of $1,281 to his personal credit card. There are plenty of other blank spaces in the reports he's filed since the millennium that the state Elections Enforcement Commission may want to review.

Every two years, Gaffey pours his hefty campaign surplus into GAFPAC. A year ago, he held a fundraiser to put some more dough into the fund. Nearly all the contributors were lobbyists and other political action committees. Only two were not. One of those was ticket master Carter, good for $250 (what a return on that he got). Neither Carter nor Gaffey remembers how the kind invitation to donate to the PAC was made. Friends just do things for each other.

Visitors to the state Capitol often receive a brochure titled "How a Bill Becomes Law." It's a dry account of the formal process from proposal in the legislature to a signature by the governor.

It tells a tale, and so do political finance reports. And so will payments to Gaffey's credit card.

Kevin Rennie is a lawyer and a former Republican state lawmaker. His column appears Sundays on the Other Opinion page. He can be reached at kfrennie @yahoo.com.
Note:  we are including this column to fully explicate the editorial above.
Affair Tainted Schools' $1 Billion:  Legislator, CSUS Officer Took Bonding To Improper Level
Hartford Courant
Kevin Rennie | NOW YOU KNOW
December 2, 2007

Lust for power is merely ambition. Lust and power together, however, can make trouble.

The question is whether that potent cocktail cost taxpayers $1 billion this year because of a secret relationship between a high-ranking legislator and a state university vice chancellor. While they were pushing the bonding package, they were bonding.

Supporters and leaders of the Connecticut State University System wanted $1 billion to renovate and expand facilities at its four schools (Eastern, Central, Southern and Western). But they haven't spent years cultivating a large network of supporters the way the University of Connecticut has. CSUS faced a much bigger task.

State agencies and institutions hire people to represent them in other parts of the government. Bureaucratic veteran Jill Ferraiolo bats for CSUS as associate vice chancellor for government relations and communications. She's the legislative liaison for the central office, which oversees the four schools.

State Sen. Thomas Gaffey, D-Meriden, is a chairman of the Education Committee and vice chairman of the Higher Education and Employment Advancement Committee.

Ferraiolo and Gaffey became allies in the quest for that billion. E-mails between the two show that their entanglement extended beyond the halls of government as the legislature shaped policies on CSUS.

State Sen. Joan Hartley, D-Waterbury, a fiscal conservative and co-chairman of the Higher Education committee, resisted efforts to give $1 billion to CSUS without essential oversight. She opposed making the 10-year plan immune from the normal constraints of spending programs in a state with plenty of fiscal swings and roundabouts.

Hartley infuriated Ferraiolo. In June, the associate vice chancellor expressed her contempt for Hartley in a presumptuous e-mail she forwarded to Gaffey (her "big boy" in a later e-mail). Hartley's aide had dared to make an inquiry of Southern Connecticut State University on behalf of some constituents, not something that would usually be shared by a Connecticut State University System staff member with another senator. But Gaffey and Ferraiolo shared more than a legislator and a bureaucrat usually do.

June was not a good month for Ferraiolo. In June, Joseph Ferraiolo, married for 18 years, sued his wife for divorce, citing adultery, a pointed claim in an age when the vague "irreconcilable differences" suffices. The couple divorced in October. Their three young children live mostly with their dad under the divorce agreement. A highly unusual paragraph in it precludes the parties and their lawyers from discussing their grievances. It punishes any leaks. Husbands and wives don't usually worry about leaks, but politicians do.

As the summer ended, Gaffey and Ferraiolo were living in a convoluted e-mail world, one that could have been written by Barbara Cartland with some Stephen King creeping in. In August, Ferraiolo oohs and aahs at a Gaffey favor for a mutual friend. He declares, "I move mountains for my friends." In September, brace yourself, she proclaims him a "god." "Alongside every god is a great goddess," reads his modest reply. News from Gaffey that he's had a call from an editor at The New York Times has Ferraiolo repeating in capitals that he is indeed a god. Another exchange finds Zeus offering bon mots in French. Power rarely improves the judgment of those who wield it.

Plans for a trip to Dubai in the spring appear amid the e-mailed political hackery and claims to divinity. Meanwhile, Ferriaolo strayed far from her portfolio by helping Gaffey find ways to criticize Gov. M. Jodi Rell's refusal to join the Democrats in the annual bonding bacchanalia. Considering the authority the governor exerts over the state university system, Ferraiolo became reckless in her job in order to help Gaffey. There's the whiff of undue influence here in conducting the public's business.

Through this tumultuous year, Gaffey and Ferraiolo attended meetings, planned strategy and kept flogging that proposal for $1 billion — without telling their colleagues they were dating.

David G. Carter, chancellor of the Connecticut State University System, said the personal relationship wasn't disclosed to him until after the billion-dollar package passed. Don Williams, state Senate president pro tem, says he first heard the rumors on Oct. 30 — the day the big bonanza for CSUS passed the Senate. But he says "the governor, and legislative leaders from both parties and chambers had already agreed upon the total bond package which included the CSUS 2020 program." He said the relationship was not a conflict for Sen. Gaffey.

The state ethics office says that "the Code does not bear on this situation because "the liaison is not a family member" and the senator didn't receive "any benefit" from the bill's passage.

This kind of relationship, as is recognized throughout our land, clouds judgment. People involved in such entanglements end up serving each other rather than their constituents.

Hartley eventually forced constraints on the $1 billion present, angering her Democratic colleagues. She became the target of their wrath. As they bayed for Hartley's head, no one mentioned Gaffey's private interest in the bill.

They're celebrating at the Connecticut State University System, but Gaffey and Ferraiolo should brace themselves for scrutiny. The benefits bestowed by state employees on individual legislators are regulated. Ferraiolo and Gaffey had better start gathering receipts for the state's ethics agency. Shortly after the bill was passed, the Senate Democrats requested an opinion from the Office of State Ethics on Gaffey's role in the legislation, but failed to ask about any benefits he may have derived from his relationship with Ferraiolo.

Legislators who knew of the relationship but remained silent deceived their colleagues.

The philosopher-comedian Joan Rivers often declared that a pretty face and other attributes could get a girl a lot of good jewelry. Even the worldly Miss Rivers would gasp at a prize of a billion dollars in state bonds instead of traditional gems.
This Is Ethics 101
Hartford Courant editorial
July 27, 2007

Edward Sasso has a clear conflict of interest. If he's unable to see the light, aldermen on New Britain's common council should quickly show him the door.

Mr. Sasso is a New Britain representative to the Mattabassett regional sewage district's board of directors. He also heads an affiliate of the American Federation of State, County and Municipal Employees, a union representing supervisors - including some at the Mattabassett plant.

On May 21, Mattabassett's directors voted to go into a closed-door session. The purpose was to discuss labor-related matters, including its strategy for negotiating with Mr. Sasso's union. Over board members' clear objections, Mr. Sasso insisted upon sitting in at the meeting, forcing the meeting to adjourn.

The board's bylaws are clear. Any director with a "real or perceived" conflict of interest should abstain from debate and remove himself from executive session. But Mr. Sasso shouldn't need a bylaw to tell him his presence posed a threat to the purpose of that meeting. By discussing their negotiating strategy in Mr. Sasso's presence, board members would have been showing their hand and potentially undermining their position.

New Britain's common council has sole authority to remove Mr. Sasso from the board. In a letter to the council dated May 31, the Mattabassett board outlined its dilemma. The aldermen's responsibility here is clear: Set Mr. Sasso straight or fire him. But the aldermen are balking.

Mr. Sasso's usefulness on the board is already somewhat restricted by the various potential conflicts arising from his union duties. His willful disregard of the board's bylaws in this matter only worsens that problem. Now, it's holding up the Mattabassett board's business.

So is the common council's unwillingness to resolve this matter. This is Ethics 101. If Mr. Sasso doesn't understand the inappropriateness of his actions, then he lacks the judgment necessary to serve on the board.

House panel moves toward impeaching a judge
NYTIMES
By THE ASSOCIATED PRESS
Published: September 17, 2008
Filed at 6:18 p.m. ET

WASHINGTON (AP) -- The House Judiciary Committee voted Wednesday to open the first impeachment probe of a sitting judge in almost two decades.

With little discussion, the Democratic-led panel voted unanimously to launch an investigation against U.S. District Judge Thomas Porteous, a Louisiana jurist, who is charged with presiding over a trial in which the lawyers involved had given him money. He's also accused of filing for bankruptcy under a false name.

Porteous was appointed by President Clinton.

The Judicial Conference of the United States reported in June that Porteous may deserve impeachment. If the full House impeaches Porteous, the case would advance to a Senate trial. A guilty verdict would remove him from the bench.

It would be the first impeachment of a federal judge since 1989, when the House impeached Walter Nixon of Mississippi and the Senate convicted Alcee L. Hastings, now a Democratic congressman from Florida, who had been impeached the year before.

Neither Porteous, his attorney Kyle Schonekas, nor Chief Judge Helen G. Berrigan of Louisiana's Eastern District was available for comment.

In its report, the Judicial Conference said Porteous may deserve impeachment over allegations that he filed a personal bankruptcy petition for himself and his wife under a false name in 2001 and filed many other false statements under oath during the bankruptcy proceedings. He also allegedly took ''gifts and things of value'' from lawyers with cases before him.

''We take it very seriously when the governing body of the Judiciary sends us a referral for impeachment,'' said Judiciary Committee Chairman John Conyers, D-Mich. ''Upon review, we believe this matter merits a full investigation.''

There was no dissent on the often highly polarized panel.

''I strongly believe that the committee is doing the right thing,'' said the panel's ranking Republican, Lamar Smith of Texas. ''The alleged corruption of a federal judge, who is appointed for life, is especially egregious.''

The U.S. House has impeached 13 judges; the Senate acquitted four, convicted seven and two resigned without trial, according to the Federal Judicial Center's Web site.

The last acquittal was of Harold Lauderback, a California district judge, in 1933. Four federal district judges have been convicted and removed from office since then: Halsted L. Ritter of Florida in 1936; Harry E. Claiborne of Nevada in 1986 and Hastings and Nixon in 1989.

The allegations against Porteous were uncovered during the FBI's Operation Wrinkled Robe, an investigation of the relationship between state judges in Jefferson Parish, where Porteous served until he was appointed a federal judge in 1994, and bail bondsman Louis Marcotte.

That 5 1/2-year investigation put court-ordered wiretaps and video cameras in the parish courthouse and brought 14 convictions, including those of two state judges who were sent to federal prison.

In addition to making false statements under oath and taking gifts from attorneys, the charges against Porteous include hiding assets from the bankruptcy estate, leaving gambling losses off the list of debts and getting short-term credit from casinos after the bankruptcy judge ordered him to get approval of the court before taking on any debt.

The probe also uncovered evidence that Porteous rejected a request to step down from a case without revealing that he had a history of financial relationships with at least one attorney involved and leaving lawyers gifts off financial disclosure statements from 1994-2000.

Porteous stepped aside from all civil cases involving the federal government and all criminal cases in 2003, after a relative of Marcotte said the bondsman -- sent to prison for racketeering -- had paid for Porteous' car repairs and arranged another favor.

He was removed from bankruptcy cases after the 5th Circuit's judicial council's report.


Federal lawsuit alleges city corruption
Stamford: Municipal worker claims pattern of harassment, intimidation
Kate King, Staff Writer, Stamford ADVOCATE
Updated 10:40 a.m., Thursday, May 12, 2011

STAMFORD -- A vehicle maintenance employee filed a federal lawsuit against the city Tuesday, claiming his supervisor and several other high-ranking employees retaliated against his efforts to expose corruption and intimidated him to such a degree that he was hospitalized.

In his suit, city mechanic James Fasoli named Director of Operations Ernie Orgera, City Fleet Manager Michael Scacco, Director of Legal Affairs Michael Larobina and Human Resources Generalist Tania Barnes as defendants. Fasoli claimed his civil rights were violated and he was discriminated against because of his age as retaliation for reporting the sexual harassment of a coworker, alerting elected officials to nepotism in city hiring and revealing corruption in the sale of city scrap metal. Fasoli alleged a March encounter with Scacco and Barnes was so stressful that he was hospitalized overnight after suffering an anxiety attack.

His lawsuit sheds light on the continuing investigation, including the involvement of the FBI, into corruption in the Department of Operations, which is in the hands of State's Attorney David Cohen. Earlier this year, Larobina turned a forensic audit performed by Kroll Associates over to Cohen's office after reading in the report that the auditors uncovered possible criminal behavior.

Fasoli's 36-page lawsuit leveled 13 counts against the city and the four defendants. The suit requested unspecified monetary compensation for alleged violations of Fasoli's civil rights, constitutional rights, the Age Discrimination in Employment Act of 1967 and the Connecticut Fair Employment Practices Act. It also stated that Fasoli has already filed complaints with the Connecticut Commission on Human Rights and Opportunities and the Equal Employment Opportunity Commission.

Larobina described Fasoli's suit as routine.

"The city is sued with these types of lawsuits routinely by employees and by outside parties," he said Wednesday. "It's a rather ordinary suit. I think we need an opportunity to read the suit in more depth before we comment on any of the specifics of the allegations made here."

Fasoli, a 66-year-old mechanic employed by the city since 2005, is represented by Stamford attorney Richard Freeth.

"We have filed this action in an effort to redress the wrongs visited upon Mr. Fasoli by the defendants," Freeth said in an email. "Other than that I should refrain from further comment for the moment."

Scacco referred questions to his attorney, Lewis Chimes, who described the lawsuit as "frivolous." Chimes questioned how Fasoli could claim age discrimination when he was hired by the city at age 61.

Barnes' attorney, David Golub, said the complaint was "desperate" and promised to take legal action if it was not withdrawn.

An email and phone message left for Orgera Wednesday was not returned.

Harassment alleged

The lawsuit claims harassment against Fasoli began in April 2008, when he spoke out in support of a female coworker. After giving the coworker a ride to her car, Fasoli noticed "some magazines or pictures on her car window." The woman showed Fasoli the images, which were "sexually explicit pornography," and said it was not the first time it had happened, according to the lawsuit.

Fasoli wrote a letter to the city about the alleged sexual harassment and asked then-Director of Operations Benjamin Barnes to intervene, the suit said. Barnes, Tania Barnes's husband, now works as budget director for Gov. Dannel P. Malloy. Malloy was mayor of Stamford at the time of the incident.

"(Fasoli) was placed on the Defendants' `hit list' and thereafter began to suffer harassment that he had not previously suffered," the lawsuit said. "Within two months (Fasoli) started receiving warnings for insubordination, `stealing time,' was threatened with termination and was subjected to summary suspensions during 2008 and 2009."

BLOWING THE WHISTLE

The lawsuit revealed Fasoli helped spur the investigation into alleged theft of scrap metal in the Department of Operations. It claimed Fasoli witnessed city workers selling city scrap metal and pocketing the cash, as well as using vehicle maintenance equipment for non-city side jobs.

The lawsuit also alleged Orgera, as supervisor of the highways department prior to becoming operations director, used cash from scrap metal sales to fund employee parties and events.

Fasoli told former Board of Finance Chairman Joe Tarzia, city Rep. Sal Gabriele, R-16, and the Federal Bureau of Investigation about the alleged thefts, the suit said.

The suit also claimed Fasoli observed special treatment bestowed by Barnes, a human resources employee, on her half-brother, George Rodriguez. Rodriguez was hired as a provisional traffic violations officer in January 2010, a position that normally would go to a member of Fasoli's union under the collective bargaining agreement, the lawsuit said.

Fasoli reported the alleged nepotism to Tarzia and Gabriele, according to the suit.

RETALIATION

The lawsuit claimed Scacco, Barnes and Orgera harassed and threatened Fasoli's employment in retaliation for his whistleblowing.

Scacco, who has overseen the Vehicle Maintenance Department since 2008, unjustly portrayed Fasoli's work performance as unsatisfactory, blocked his attempts to work overtime, intentionally disclosed his private personnel files to the Board of Ethics and threatened to discipline and fire him, the lawsuit alleged.

The suit also said several of Fasoli's coworkers harassed and intimidated him over the past year in retaliation for revealing alleged corruption in their department. Anonymous, "sexually explicit innuendos" were written on the lunchroom whiteboard pertaining to whistleblowers and "rats," plastic rats were left in Fasoli's toolbox, and a coworker suggested at a union meeting that Fasoli be ejected from the union for being a "rat," the lawsuit said.

The claim stated that Scacco displayed the plastic rats in his office window, which overlooks the area where Fasoli works, "in an obvious effort to continue to harass and intimidate (Fasoli) and encourage (Fasoli's) co-workers to do the same."

The lawsuit detailed an alleged confrontation with Scacco and Tania Barnes, which ended with Fasoli being sent to the hospital in an ambulance. The meeting, which occurred in Scacco's office in late March, was retaliation for The Advocate's inquiries into allegations of nepotism by Barnes, the suit alleged.

"This was the first and only time that a Human Resources Generalist (i.e. defendant Barnes) ... came to the city garage as part of employees' discipline," the lawsuit said. "Ms. Barnes' and Mr. Scacco's tone at the meeting was abusive and menacing, and they wrongly accused (Fasoli) of failing to perform his job ... (Fasoli) became ill, dizzy, had trouble breathing and felt pain in his chest."

Fasoli was admitted to Stamford Hospital March 21, spokesman Scott Orstad said. The lawsuit stated Fasoli was diagnosed with having suffered an anxiety attack, and was kept at the hospital overnight. Scacco later allegedly issued a five-day suspension to Fasoli for failing to call in sick to work during his stay at the hospital, the lawsuit said.

The lawsuit alleged Larobina, as head of the Legal Affairs Department, which includes Human Resources, knew about the harassment and intimidation and failed to protect Fasoli.

Frivolous complaint?

Chimes, who represents Scacco, described the lawsuit as a "frivolous complaint" and compared it to a federal lawsuit filed by Tarzia against the city in October 2010.

Tarzia's suit alleged Scacco and Barnes worked with other city officials to fabricate allegations of ethics violations in retaliation for Tarzia's efforts to expose nepotism and waste in city government. It claimed city employees broke the law by retaliating against Tarzia for exercising his right to free speech and named Orgera and former Parks Superintendent Mickey Docimo, as well as the city Ethics Board and city of Stamford as defendants in the case.

The lawsuit was settled in February when the city paid Tarzia $45,000 in exchange for his dropping the lawsuit, resigning from municipal office and withdrawing all ethics complaints and Freedom of Information requests he filed.

"This is exactly the same tactic that Mr. Tarzia used, and in the end Mr. Tarzia ended up resigning before he even served Mr. Scacco with the complaint," he said. "He basically tries to turn every personnel gripe into a constitutional violation. In my opinion this is a case of a classic malcontent. Mr. Scacco has now been subject to two federal lawsuits, a FBI investigation and multiple grievances and a Board of Ethics complaint all because, as a manger, he tried to impose discipline on a problem employee."

Golub, who represents Barnes, echoed Chimes' criticism of Fasoli's lawsuit. He questioned the timing of the filing, which comes a week and a half before public ethics hearing on allegations Gabriele improperly intervened in a disciplinary suspension for Fasoli.

"This is the second time that a desperate federal lawsuit has been brought on the eve of ethics hearings investigating the conduct of Mr. Tarzia and Mr. Gabriele," Golub said in an email. "Mr. Fasoli's lawsuit against Ms. Barnes is also a shameless abuse of our court system. If, like Mr. Tarzia's case, Mr. Fasoli's lawsuit against Ms. Barnes is not withdrawn, we will seek to have it thrown out of court. When that happens, Ms. Barnes will proceed against Mr. Fasoli and everyone else who participated in bringing this case against her."

ANOTHER LEGAL BILL

Because the lawsuit concerns civil rights violations, Larobina said all of the named defendants would have their legal costs covered by the city.

"The legal expense will continue to mount up," he said. "This complaint is without merit and we will defend it vigorously."


Referendum not needed in this case.
Selectmen rescind decision to appoint Edward Schwarz
Weston FORUM
 by BRIAN GIOIELE
 Jul 13, 2007

Two weeks after granting its unanimous approval, the Weston Board of Selectmen voted last night, Thursday, July 12, to rescind its decision to appoint Edward Schwarz to fill the vacant Police Commission seat.

Mr. Schwarz was nominated by the Democratic Town Committee to fill the seat vacated by Wally Marcus, but unbeknownst to the selectmen, Mr. Schwarz had been arrested by Weston Police in December 2006 for a domestic incident.

“The Democratic Town Committee owes an explanation to the selectmen as to their candidate selection process,” said Selectman Glenn Major during Thursday’s selectmen’s meeting.

“They have a duty to give all the information we need to make an appropriate choice,” added Mr. Major. “To think that a criminal matter that is still pending is not information we should have ... it’s absurd, particularly when that board or commission is the Police Commission.”

“Knowing what I know today, I would not have voted the way I voted,” said First Selectman Woody Bliss.

Selectman Richard Miller agreed. “If I knew at the time I voted at the last meeting what I know now, I would not have voted ‘yea,’” he said.

Because Mr. Schwarz was appointed to an elective commission — not an appointive one — the question as to whether the Board of Selectmen has the legal authority to now reverse its decision is still not crystal clear. Mr. Bliss said he talked to town counsel, who confirmed there is precedent for such a reversal.

“The case law is not 100%,” said Mr. Bliss.

Arrest

The selectmen were informed about Mr. Schwarz’s arrest by Interim Police Chief John Troxell during the June 28 meeting, but after the appointment had already been approved.

Chief Troxell said Thursday he knew that the Mr. Schwarz being nominated for the post was the man arrested by Weston police but did not speak up because he did not know if it was appropriate.

“We did know he was the individual, we just didn’t know the process,” said Chief Troxell. “It was my fault.”

The circumstances surrounding Mr. Schwarz’s arrest have Weston police officers unified in their opposition to Mr. Schwarz’s appointment.

According to the chief and the police union, Mr. Schwarz’s conduct and the words he said to them when he was arrested for a domestic incident last December make them question whether he can sit on the commission objectively.

Officer Robert Klein, who arrested Mr. Schwarz, said Monday, “At the time of his arrest, Mr. Schwarz was very argumentative and said to me, ‘I’ll have your f--ing badge.’”

Officers Chris Powers and Rob Curcio were also at the scene at the time of the arrest, and recalled Mr. Schwarz using those exact words.

Officer Powers said Mr. Schwarz told them he was a lawyer and was careful to note the spellings of their names. “He told us we were making the situation worse by being there,” he said.

Mr. Schwarz has said he told DTC Search Committee members about the domestic incident and also explained that the DCF (Department of Children and Families) had found the allegations unsubstantiated and they were withdrawn.

Mr. Schwarz has a court date of July 18 for the remaining charges and he said he expects the case to be dismissed or nollied. A nolle means the prosecutor has agreed to drop the case but has the right to reopen and prosecute it at any time during the next 13 months.

Discussion

Mr. Bliss said he had asked Mr. Schwarz to attend the July 12 selectmen’s meeting, but that Mr. Schwarz said he had a conflict and was unable to attend. Mr. Schwarz, per Freedom of Information rules, has asked that any discussion about the “content” of his legal situation be held in executive session.

But that did not stop the selectmen from voicing their concerns about the process used in selecting potential candidates to fill vacancies on boards or commissions.

Tradition has held that the political party representing an individual vacating his seat must provide a replacement. The political party does its own search, including interviews, narrowing the field until a single candidate is presented to the selectmen for approval.

Mr. Bliss said over the years the selectmen’s vote has become somewhat of a rubberstamp for the political party’s selection.

“This is troubling,” said Mr. Bliss. “If we are going to have situations like this, where there is a deficiency of information, we may have to have a whole new process for these appointments.”

Chief Troxell suggested performing background checks.

“If a background check or something like that was done, we would not be here right now,” added the chief.

More contentious

The discussion turned more contentious when Mr. Major questioned the DTC’s handling of the selection process. Mr. Miller said he felt that was an inappropriate political attack.

“The (DTC) candidate selection committee had this information. They withheld it from the selectmen, and it sounds like they withheld it from the entire committee,” said Mr. Major.

“You are trying to put the DTC on trial here, and I strongly object to this conversation,” responded Mr. Miller.

“The DTC brought this candidate to the table. They represented that they had vetted the candidates. This is not a political issue. We were deceived, and for you to defend that deception is shocking,” Mr. Major said.

Mr. Miller, a DTC member, said he was not told about Mr. Schwarz’s arrest before the Democrats approved backing his appointment. Mr. Bliss added that fellow DTC member Rick Saltz, also a member of the Police Commission, stated in a letter to the selectmen that he, also, did not know about Mr. Schwarz’s arrest prior to his appointment.

“I don’t know how anyone can possibly justify not telling us this information,” added Mr. Major.

Mr. Miller said he was uncomfortable making any final decision until Mr. Schwarz’s case is heard next week. He did say he felt that Mr. Schwarz should have informed the selectmen about the arrest during his interview the night he was approved.

“In my opinion, when Ed Schwarz was at this table, he should have made the statement, just as he did before the candidate search committee,” said Mr. Miller.

Mr. Major added that, with Mr. Schwarz not informing the selectmen, it became incumbent on the search committee chairman, Barbara Reynolds, who was in attendance when the selectmen were asked to approve the appointment, to provide the information.

Mr. Miller said, “This was a combination of a lot of people making poor judgments,” adding that Chief Troxell or the officers in attendance should have spoken up before the appointment was finally approved. “We’re all at fault.”

“That’s ridiculous,” responded Mr. Bliss. “The fault lies with the one who failed to provide the information.”

FOLLOW-UP:  Weston Police Commission - October 4, 2007, Selectmen appoint, as requested by the DTC, John Hammerslough (on the ballot November 6) "to fill vacancy of Walter Marcus"
Good Ethical Decisions 
DAY editorial
Published on 5/26/2007

The state Senate this past week unanimously approved two bills that provide a proper balance between ethics and common sense. Both repair well-intentioned, but impractical, rulings by the Office of State Ethics.

In one case the ethics regulators decided that faculty doctors at the University of Connecticut, if they prescribed to their patients medications developed in drug-company sponsored drug trials in which they were involved, were at risk of violating state ethics codes. The office reasoned that the doctors, as state employees, should not personally benefit in any way from public-private partnerships in which they took part.

The ruling placed at risk all work done by university researchers involving corporate involvement.

The proposed new law would allow such beneficial research to continue with enough oversight to prevent abuses. The watchdog group Common Cause, which is always mindful of potential conflicts involving state officials, agrees that the bill has adequate safeguards to prevent exploitation.

Addressed in the second bill was an ethics decision that state legislators would no longer have to disclose outside employment. Though lawmakers have been including employment information on disclosure forms for about 25 years, the newly created Office of State Ethics said it found no such specific requirement in the law.

It is important for constituents to know how lawmakers make their money when not in session in Hartford. Logical assessments can then be made whether legislators are acting in their personal best interest, as it relates to their job, or in the best interests of the voters.

The Senate recognized the reasonableness of requiring employment disclosures and acted accordingly in passing the bill that specifically mandates them. If the measure is approved by the House of Representatives and signed into law by Gov. M. Jodi Rell, as expected, legislators will have to file amended disclosure forms by Aug. 1.

In both cases lawmakers acted in the best interests of good government. Well done.

Our view: Legislators must be held to highest ethical standards - Why does it seem ethics is such a difficult issue for some lawmakers to understand?
Norwich Bulletin editorial
April 3, 2007

The Office of State Ethics recently handed down an opinion that says legislators cannot act in a way that benefits their employers. It is a reversal of a 2005 opinion that suggested legislators could act to benefit their employers, if they had no personal financial gain.
  
The issue was sparked by House Speaker James Amann, D-Milford, who has been criticized for soliciting donations for the Greater Connecticut Multiple Sclerosis Society from lobbyists. Amann is a paid fund-raiser for the society.

Democrats are saying this could change the way the part-time legislature does business, as most do have outside employment. Frankly, that seems ridiculous.

Most professionals, such as doctors, lawyers, accountants and journalists, have far more stringent ethics codes. Legislators are elected and handed the public trust to make decisions for the right reason, not their personal pocketbooks.

Benefits to the job

Let's look at Amann's situation closer. While the donations did not go directly to his pocket, are we to actually believe he did not benefit from bringing the money in? Wouldn't the society compensate him properly and keep him on the job for the work he did?

Beyond his personal gain, there could also be the perception that in getting donations from the lobbyist, Amann would now be beholden to them. As house speaker, Amann has the power to decide which issues the full house votes on, or never sees. That kind of power requires nothing less than behavior beyond reproach.

Unfortunately, it seems that many legislators prefer to bemoan a higher ethical standard and talk about how it will impinge on their abilities to legislate. We would prefer they embrace a higher standard of behavior and truly earn the public trust they have been granted.  

Doesn't pass the smell test...as in "smell a rat"...in Legislative language, of course!
Two Ways To Look At Norwich Billboards; Is new city contract political patronage, or just the best business deal? 
DAY
By Ted Mann
Published on 4/2/2007

When John W. Fonfara's fledgling business won a municipal contract to rebuild and manage four billboards in the city of Norwich this month, a few sets of ears at the state Capitol stood straight up.

Fonfara is a state senator from Hartford, and, as co-chairman of the Energy and Technology Committee, a powerful member of the legislature's even more powerful Democratic majority.  The Norwich alderwoman who initially offered the resolution to grant the billboard contract to Fonfara's company is Jackie Caron, a longtime employee of the state Senate Democrats.

And the lobbyist for Fonfara's company, Face Value LLC, who introduced the senator around City Hall, is Jude Malone, an employee of the ubiquitous Hartford firm Sullivan & LeShane, a former political adviser to Norwich's Democratic mayor, and the ex-wife of one of the city's two Democratic representatives.  So to some critics at the state Capitol — namely Republicans — the case of Fonfara, his business, and the Norwich billboards sounded like yet another case of conflicted interests, of Connecticut's governing class helping itself to the most desirable morsels in the public trough.

But to Fonfara and his defenders, the story is more simple, and lot less controversial: A part-time legislator, out on his own and trying to build his start-up business, saw an undervalued asset in the city and pounced.

It was Fonfara the businessman, they said, not Fonfara the public official, who offered the city a better deal.

Norwich city officials say the city council chose the best deal it could get for the management of the billboards. Everyone involved, from Fonfara to City Manager Robert Zarnetske to representatives from NextMedia, the company that manages and owns them now, seems to accept that they are worth much more than the city had been paid over the years: less than $500 a month for years.

Fonfara, who says the motive of his business is to reap profits by helping billboard owners realize the untapped worth of their property, says he dropped in on the city after spying the signs from Route 2, and inquired about the amount the city — through its Parking Commission — was being paid for the right to erect and maintain the signs.

His proposal to the city, which Zarnetske and others say was both lucrative and similar to the bid made by NextMedia, is a 20-year lease agreement at payments equal to $29,500 per year or 35 percent of the net advertising revenue reaped from the four signs, whichever is greater. Fonfara also offered a $100,000 signing bonus, and, in what the senator says is perhaps the greatest benefit of his proposal, the city will own the billboard stanchions outright when the 20-year lease period is complete. Construction of those stanchions, Fonfara said in an interview, will likely cost him $120,000. NextMedia proposed a 15-year lease but the city would not own the stanchions at the end of the lease.

“They have benefited themselves far beyond the money today,” Fonfara said about the city. “They have now obtained an asset that they will now be able to use for years to come.”

In a wide-ranging conversation, he defended himself against the accusation by NextMedia's general manager, Charlie Ghione, that Fonfara's firm only won the Norwich competition because the senator is “politically connected.”

“I have a private company, and I do my work,” Fonfara said, adding that he is “careful” to avoid negotiations where he might be accused of using his status as a public official to assist his own business interests.

Of the Norwich proposal, he said, “I bid more money than anyone else, cumulatively and any other way.”

Malone, citing her firm's policy of not talking about its clients, declined to comment.  But the political climate in Hartford and the state at large is as hostile as it has been in years to conflicts of interest for elected officials. Years of corruption and ethics scandals have tarred legislators and appointees of both political parties with charges that they have used the power of government to steer contracts to friends and benefactors, pressured subordinates into showering them with gifts, and otherwise taken advantage of their offices.

Even as those knowledgeable about the Norwich deal were being interviewed over the last two weeks, the speaker of the state House of Representatives, Rep. James A. Amann, D-Milford, was vigorously defending himself against renewed complaints that he was inappropriately using his powerful legislative position to bolster his day job as a contracted fund-raiser for the Connecticut Chapter of the Multiple Sclerosis Society.

Some at the Capitol, seeing headlines about Fonfara's successful takeover of the Norwich billboards, and Caron's involvement, soon began muttering along similar lines.

“This doesn't even pass the smirk test,” said Chris Healy, the chairman of the Connecticut Republican Party and a veteran political operative.

Healy said he thought Fonfara was getting a free ride from legislators and journalists because of his party affiliation.

“If you put an 'R' by all these people, there'd be a hue and cry that they'd be screaming from the rooftops,” Healy said.

And the company that Fonfara defeated was eager to join in that discussion.

“I wasn't born at night,” said Ghione, who has known Fonfara for years, and who suggested soon after NextMedia lost its right to lease the billboard properties in Norwich that something was amiss.

Ghione noted that Fonfara had only been in business on his own since 2005 — he previously worked for AllVision, another outdoor advertising firm with which NextMedia has been involved in a legal fight — and questioned whether the senator's firm had the wherewithal to construct the stanchions it has promised the city, or to market the advertising space that it will create.

“I don't think you need to be a brain surgeon to see what happened, but we tried as hard as we could to be as straightforward and honest with city officials of Norwich.”

But those officials deny any political motive inspired them. Instead, said Caron, the city rewarded the newcomer for helping the city realize the value of its underappreciated asset.

“The reason I liked it (the proposal) was because they were the ones who brought to the attention of the parking commission” that the city was not receiving all it could, said Caron, who initially proposed the resolution awarding Fonfara's company the bid, but eventually recused herself. “It didn't even come into play that we worked in the same place, because I have no interaction with him whatsoever.”

“I didn't put that forward because of any political ties,” Caron said. “I truly feel that Face Value was giving the city of Norwich the best buy.”

Caron's other potential conflict also didn't come to mind, she said: The nonprofit group she founded and runs along with her husband, the Connecticut Pardon Team Inc., is currently seeking funding from the state to help finance its operations. Helping a state senator win private business even as she seeks funding from a budget he will be voting on could appear questionable, Caron acknowledged, adding that she withdrew from the billboard vote “more so for his sake than mine.”

As the legislature continues to debate ethics measures, similar dilemmas are continually presenting themselves, government reform advocates say, in which part-time legislators who must work to support themselves wind up confronting at least the appearance of conflicts of interest.

“What you're seeing happen there you're seeing happen in almost every town in Connecticut,” said Andy Sauer, the executive director of Common Cause Connecticut. “Does it raise the specter of something improper happening? Of course it does.”

“There's law, and then there's perception, and the perception is uncontrollable,” Sauer said, sitting outside a hearing where a legislative committee had just approved a proposal for a model code of municipal ethics. “The questions of impropriety are almost as bad as actual instances of conflict. It still harms the public trust in government.”

But at least at the municipal level in Norwich, there appears to be no concern that Fonfara or his firm got anything they did not deserve.

“I think that the decision made is substantiated by the evidence in the proposal records,” said Zarnetske. “It's a perfectly reasonable conclusion.”
A Reputation Stained;   Review Council Punishes Former Chief Justice For Delaying Opinion, A First In Judicial History
By LYNNE TUOHY, Courant Staff Writer
November 18, 2006

For former Chief Justice William J. Sullivan, the harshest sanction Friday wasn't a 15-day suspension for holding up the release of a controversial ruling to help a colleague succeed him as chief justice.  It was the notoriety of being the first judge in the nation ever to be disciplined for holding up release of an opinion.   It was the ugly blot on an otherwise unblemished judicial career of 28 years that threatens to overshadow many remarkable accomplishments.

As he faced the 12-member Judicial Review Council just after 6 p.m. Friday to learn his fate, Sullivan appeared deflated, in contrast to the normally robust former chief justice. There would be five verdicts - one for each of the charges the council lodged against him in July.

He won the first round. The council voted 10-2 that he had not prejudiced the impartial administration of justice and brought disrepute to his judicial office. There was no smile, no evidence of relief.

The council voted 8-4 that Sullivan failed to observe high standards of conduct and preserve the integrity and independence of the judiciary. It voted 11-1 on what many had called the slam-dunk count: that he allowed his social or other relationships to influence his judicial conduct. The council unanimously rejected charges that Sullivan failed to promptly dispose of the business of the court and that he failed to discharge his administrative responsibilities.

Superior Court Judge Christine E. Keller was the only council member who voted across the board not to convict Sullivan. She cited the lack of precedent and any rules at the court itself about withholding release of a ruling. She noted that the ethics experts who testified before the council - renowned expert Geoffrey C. Hazard and Rutgers University School of Law Professor Robert Leubsdorf - disagreed on whether Sullivan's conduct warranted disciplinary action.

"There was no precedent. There was no rule. There wasn't even a memo about what could be done or not," Keller said at one point. "I've placed strong emphasis on the career of this man - 41 years of public service, 28 years on the judiciary. That should be given extreme consideration."

Sullivan, 67, a man of immense pride and intense loyalty, faced up to a year's suspension for violating two canons of judicial ethics. He had assembled an impressive list of character witnesses, capped Friday by Louis Pepe, the former president of the Connecticut Bar Association.

"Chief Justice Sullivan's character and integrity is of the absolutely highest order, beyond reproach," Pepe testified. He recounted one of Sullivan's accomplishments as chief justice, transforming the swearing-in ceremony for new lawyers from a five-minute cattle call in a crowded courtroom to a dignified, two-hour ceremony held at either the Supreme Court or at the Bushnell Center for the Performing Arts.

The council's deliberations behind closed doors included discussion of the appropriate sanction. Sullivan politely declined to speak to the council before its members retired to discuss his fate. "Everything I had to say has been said," he replied.

And it had. Some rolled their eyes at his testimony on the opening day of the hearings Sept. 6, seeing it as more of a biographical soliloquy than relevant to the alleged misconduct. But it clearly worked to his benefit when it was time to levy sanctions. The council had before it a whole man, one in obvious anguish over the taint he brought on himself and the judiciary.

He hails from a blue-collar family, worked hard labor to pay his way through college and fought in Vietnam. He is personable, self-effacing and plain-spoken. His history of heart problems - one that forced a month's delay in the hearings - is staggering.

Sullivan did not deny that he held up publication of a controversial ruling on public access to court documents, nor that he did it to save Associate Justice Peter T. Zarella from having to answer for the ruling during his confirmation hearings to be chief justice.

Sullivan put a hold on the case March 14, the same week he told Gov. M. Jodi Rell he was going to resign as chief justice and take senior justice status. He knew from a conversation with her four months earlier that if he retired, she planned to nominate Zarella - Sullivan's protege and the only Republican on the high court - to succeed him.

"I had an unblemished record," Sullivan testified last month. "If I thought I was doing anything wrong I wouldn't have done it."

Sullivan also said he would have done it for any member of the court facing confirmation proceedings. Sullivan wrote the 4-3 opinion; Zarella sided with him in the majority.  Sullivan's defense was multifaceted. His lawyers claimed the council had no jurisdiction to review acts of judicial discretion and that a chief justice or the author of a Supreme Court ruling has unfettered authority to hold up release of a decision for any reason.

"There is no evidence that a judge has ever been disciplined for putting a hold on a case," Sullivan's attorney Edward Maum Sheehy argued.

Sheehy, after advising the council to consider the motives behind the actions of other members of the court, questioned why Justice Richard Palmer, who learned of the hold on April 8, did not confront Sullivan until eight days later, April 17.

Sullivan's expert witness, Leubsdorf, testified that Sullivan's actions - "whether or not they were ideal, they did not rise to a level requiring disciplinary action."

Before going into executive session, the council heard testimony by three notable witnesses - Hazard, Pepe, and videotaped deposition by Frank Williams, the chief justice of the Rhode Island Supreme Court.  Hazard quoted the provision of the Code of Judicial Conduct that bars a judge from "allowing his social or other relationships to influence his judicial conduct."

Hazard then noted, "It seems to me it's pretty straightforward. I don't understand that there is any dispute Justice Sullivan ... exercised his administrative discretion with the view to benefiting the chances of a colleague being considered for chief justice of the state."

Asked about Leubsdorf's opinion that Sullivan's conduct did not warrant disciplinary action, Hazard replied, "Perhaps in days past we would have said this is okay between colleagues, but it is not consistent with the rules." Hazard noted, "The whole thing is tragic."

Williams was adamant that a chief justice has the authority to delay release of a ruling even when the motive is to aid a colleague during confirmation proceedings.

"I don't know that there can be any detriment to the legislature when a chief holds a decision to maintain a level playing field so that the legislature does not home in unnecessarily on one case," Williams asserted. He said a chief justice has "absolute discretion."

Sullivan, asked afterward if he wanted to comment on the council's action, winced and said softly, "No." Sheehy attempted to convey Sullivan's feelings.

"I think it hits him pretty hard," Sheehy said. "As you all know, he's a man of integrity. We don't feel there was clear and convincing evidence on any of the charges."

Sullivan could appeal his disposition to the state Supreme Court, the justices of which would be obligated to disqualify themselves from hearing his appeal. Judges from the Appellate Court would sit in their place, creating a court closely resembling the one that heard the appeal earlier this month on whether the judiciary committee co-chairmen could subpoena Sullivan to testify before their investigation. No ruling has been issued in that appeal.

Sen. Andrew McDonald, the co-chairman of the judiciary committee, said there is little historic framework out of the Judicial Review Council against which to measure the severity of Sullivan's sanction. Only three judges since 1989 have received suspensions - one for five days, one for 15 and one for 30.

"By the precedents of the JRC, this is not an extraordinary penalty," McDonald said. "This was a clear manipulation of a branch's governmental operations for a brazen political purpose, to undermine a constitutional [confirmation] process."

But McDonald acknowledged the intangible penalty Sullivan has paid.

"In many ways, this is the denouement of Justice Sullivan's career," he said. "He's paid a personal price, as well as a legal price now."
An Imprudent Judge
Hartford Courant edirotial
August 25, 2006

Whatever made Judge Anna Taylor Diggs of the U.S. District Court in eastern Michigan think she didn't have to disclose her ties to plaintiffs in a case before her court? 
She's the jurist who ruled last week that President Bush's warrantless surveillance program is unconstitutional.

Set aside the merits of her arguments, which have come under fire from all sides. Stick to the cold fact that Judge Diggs is a trustee and an officer of the Community Foundation for Southeastern Michigan.

The foundation has contributed more than $125,000 to the Michigan ACLU. It and its national parent were among the parties in Judge Diggs' court challenging the administration's eavesdropping practices.

As trustee and secretary of the foundation, Judge Diggs is supposed to participate in making all financing decisions of the organization. At least that's the role of the trustees, according to the foundation's website.

Federal judges are required by law to disqualify themselves from a case in which their impartiality might be "reasonably questioned." There certainly is reason to question Judge Diggs' partiality, given her ties to two parties in the case.

The judge's conduct cries for judicial review. At the very least a complaint should be filed with Michigan's judicial disciplinary body. Whether she broke the law would be for courts to decide, but she certainly compromised her impartiality.

Judge Diggs obviously believed that she need not have recused herself. Maybe so, but she should at least have disclosed her connection to two of the plaintiffs.

That would have been prudent. 

Ethics dispute gets top billing; panel probing deal on Stratford theater
RICHARD WEIZEL rweizel@ctpost.com
Article Last Updated: 12/23/2006 07:16:20 AM EST

STRATFORD — Tragedy or comedy?

That's what Town Council leaders were trying to figure out Friday after learning they will be investigated for allegedly violating the town's ethics code in selecting a New York developer to revitalize the long-dormant Shakespeare theater.

The Ethics Commission will investigate complaints by supporters of local director/promoter Louis Burke that council leaders had "conflicts of interest" and used "undue influence" in selecting Koerner Kronenfeld Partners LLC over Burke's Stratford Theater Group to reopen the theater.

If the complaints are found to have merit, the commission will schedule hearings on the allegations.

Council Chairman James Feehan, R-9; Majority Leader Michael Henrick, R-10; and Councilman Angelo Stavola, D-4, are named in at least one of the complaints, while Henrick and Feehan are named in several others.

Town Clerk Patricia Ulatowski confirmed her office has received seven ethics complaints through Friday, though she is not permitted to reveal the contents or the names of the complainants. But a half-dozen Burke supporters said they have filed ethics complaints.

"All anybody has to do is read what we are presenting and it's clear this whole process was handled illegally," said actor Lee Bergman, who filed one of the complaints.

The decision to launch a probe comes as Mayor James R. Miron said Friday he plans to sign a contract with KKP over the weekend, completing an agreement that could reopen the theater as early as spring 2008. The theater has been closed since 1989.

"This would be very humorous if it weren't so ludicrous," Henrick said of the ethics complaints. "These people just cannot accept that we have selected another developer and they are just proving my point about how fanatical they are."

Stavola, who has headed the council's efforts to reopen the theater, said it is "very unfortunate that these misguided individuals are trying to disrupt the process."

Feehan added, "I can't wait to show how completely unfounded these allegations are."

All three councilmen said if the Ethics Commission takes the probe to a hearing, they would demand it be open to the public.  Burke's failed attempt to reopen the theater during the 1990s has drawn considerable criticism from Town Council members, but Burke has insisted he was within months of opening the crumbling showcase when the state invoked a "reverter clause" to reclaim the Elm Street property.

The Ethics Commission has notified the complainants and those accused of violating the ethics code that it will consider whether there is "probable cause" for a final hearing.

"The Ethics Commission has determined that sufficient cause exists in the complaint filed by you," commission Chairwoman Susan Birge stated in a letter to one of the complainants, Meredith Gatschet. "The commission will proceed with an investigation of this matter."

Henrick, Feehan and Stavola, all named in a complaint by resident Daniel Chase, have been notified by the commission of its decision to weigh the allegations, made in closed session earlier this week.

"I am very pleased there will be an investigation because many of us strongly believe there was conflict of interest, corruption and an even illegal process used in selecting KKP during the Nov. 13, 2006, council meeting," Gatschet said.

In her complaint, she states, "Feehan's regular inflammatory statements against Mr. Burke, within the debate on the theater issue, compromised his impartiality as a member of the council, especially since, as chairman, he wields influence over other members, including the council's newest members."

She also blasts Henrick for comparing Burke to the late cult leader Jim Jones during the same Nov. 13 council meeting.

"I do see a very close correlation to that," Henrick said, standing by his comments. "I strongly suggest you take a look at who you are following."


State Senator's Spouse Tied To Tax Debt
Courant.com
Jon Lender, Government Watch
May 24, 2009

State Sen. Toni Harp, D- New Haven, plays an important role as co-chairwoman of the legislature's appropriations committee during current efforts to balance a state budget that faces a two-year deficit projected at $8.7 billion.

She issued a press release a few months back about how "vitally important" it is to "bring the state's current-year budget back into balance" and then to "address the serious matter of a state budget for the next [two-year] biennium."

One way to balance the budget is to increase tax collections -- so here's an irony: A company owned and headed by the senator's husband, New Haven developer Wendell Harp, is listed by the Department of Revenue Services as the state's third-largest business tax delinquent.

The company, New Haven-based Renaissance Management Co. of New Haven, owes $706,634 in back sales-and-use taxes and interest, ranking it third on DRS' official website listing of "The Top 100 Delinquent Business Taxpayer Accounts."

Public corporate filings verified her husband's role in the company. Also, his interest in Renaissance Management is listed on the senator's annual filing to state ethics officials of the financial interests of herself and her family.

However, when Toni Harp was asked Thursday how she feels about Renaissance Management's tax debt, in light of her public role concerning the budget, she said she hadn't known anything about it.

"I'm as shocked as anyone else would be," she said.

"I have nothing to do with his business. I didn't know anything about it at all. I don't get involved in his business," she said, adding that she was not aware of the DRS' public Top 100 tax delinquency list. "He never discusses his business with me. He has several companies. I really don't know [the details]." She said "that's the way it's been" while "I've been married to him for 30 years."

Asked if she planned to talk to her husband about the tax issue, Sen. Harp said, "Well, of course I'll mention it," but "I don't know whether or not he'll discuss it with me, because he typically handles it himself."

Wendell Harp has been a prominent, politically connected and sometimes controversial developer for years in New Haven. Questions about back taxes have come up continually, and records show a long history of government liens being placed on his properties and then removed.

A lawyer for Renaissance Management, Robert J. Percy, said Friday that the tax debt dates back to a dispute about whether the company was exempt from certain sales taxes on gross receipts examined during an audit covering 1993 to 1996. The company had been paying sales tax on its management fees for eight federally subsidized, low-income housing projects in and around New Haven in which Harp is a partner -- but the DRS took the position that payments for accounting and other services also should have been taxed.

Renaissance challenged that in the state Superior Court and later before the state Supreme Court, but lost. By 2003, when the high court ruled, the interest on about $418,000 in sales tax had snowballed. "The properties did not have the ability to pay the sales tax debt, as they were just keeping afloat, and the mortgages are at 12.5 percent interest," Percy said.

Now, monthly interest payments of $4,180 are being made to DRS while arrangements are being made to refinance the housing properties through the quasi-public Connecticut Public Housing Authority, "which I understand will lower the interest rates significantly and generate funds to deal with the taxes owed," Percy said. He did not say when he expected the $706,634 debt, including interest, to be settled.

Jon Lender is a reporter on The Courant's investigative desk, with a focus on government and politics. Contact him at jlender@courant .com, 860-241-6524, or c/o The Hartford Courant, 285 Broad St., Hartford, CT 06115.

Copyright © 2009, The Hartford Courant


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Hartford's Perez should resign 
DAY editorial
Published on 1/29/2009

Eddie A. Perez should resign as mayor of Hartford.

It will be left to the justice system to determine whether Mayor Perez's decision to accept free work from a contractor doing major business with the city was criminal. At the very least, it showed extremely poor judgment.  It is both depressing and disheartening to find the energetic mayor in this position. On Tuesday state police charged Mayor Perez with bribery, falsifying evidence and conspiring to falsify evidence.

The charges stem from renovation work done to his home by contractor Carlos Costa beginning in 2005. The mayor should not have engaged a city contractor for work on his home. There are plenty of contractors in the state not doing business with Hartford.

Mr. Costa worked without pay, something the mayor calls an oversight. Mr. Costa told investigators he considered doing free work for the mayor “the cost of me doing business with the city.”

And in 2005 the mayor intervened to keep Mr. Costa working on the multimillion-dollar Park Street streetscape project, overruling city administrators who wanted to fire the contractor.  In 2006, beginning to feel the heat, the mayor asked Mr. Costa for a bill, and paid about $20,000 for the home renovations. Mr. Costa estimates the true cost at $40,000.

The mayor's actions were foolish and shameful. It is time for him to step aside.  
Sen. Gaffey’s Expenses: State GOP Chairman Calls For Gaffey Investigation
The Hartford Courant
By JON LENDER
January 17, 2009

Revelations about state Sen. Thomas Gaffey's double-billing for thousands of dollars' worth of travel and hotel accommodations prompted state Republican Party Chairman Chris Healy to call Friday for a bipartisan legislative investigation.

"The Hartford Courant reported Friday that Sen. Gaffey sought and received reimbursement twice for travel to legislative conferences," Healy said. He noted that Gaffey repeatedly collected trip expenses from both the state Office of Legislative Management and from his own political action committee, called the Government Action Fund.

Gaffey, D- Meriden, acknowledged the double-billing in an interview Thursday, saying it was unintentional and that he has repaid his PAC for funds that he also received in state reimbursements. All told, he estimated he has repaid the PAC $2,500 to $3,000.

"By his own admission, Sen. Gaffey has broken the public trust," Healy said. "Sen. Gaffey's casual disregard for the rules and his flagrant misuse of state funds and campaign contributions more than qualifies for further investigation and punishment."

The matter has been under investigation for months by the State Elections Enforcement Commission, but that panel has not indicated how it plans to deal with the matter. Gaffey's lawyer told The Courant Friday he thinks the case is headed for a negotiated settlement, perhaps involving a fine or forfeiture of the $15,000 to $20,000 the PAC now has on hand. Gaffey said he has heard nothing about the possibility of the commission referring the case for a criminal investigation.

However, Healy said that the Democrats who control the Senate should vote to convene an investigative "committee of inquiry" — as they did in 2007 after then-state Senate Minority Leader Louis DeLuca, R-Woodbury, pleaded guilty to a misdemeanor charge of conspiring to threaten the husband of his granddaughter. That six-member, bipartisan committee conducted an inquiry before DeLuca finally resigned in November 2007.

Healy said Gaffey "has a history of noncompliance" with state election laws and "has also run afoul of reimbursement protocols with his employer," the Connecticut Resources Recovery Authority. "It seems that the only time Sen. Gaffey is embarrassed is when he is caught," said Healy. Healy wondered if Democrats "will apply the same standard to him" they did to DeLuca.

Senate Democrats brushed off Healy's comments. "The State Elections Enforcement Commission is investigating and we should respect that process," said Derek Slap, spokesman for state Senate President Pro Tempore Donald Williams, D-Brooklyn. "It appears that the mistakes were unintentional but it is up to the SEEC to look at the facts and make its determination."
Auditor sees ethics issues in UConn polling center case
By Don Michak, Journal Inquirer
11/28/2006

The state auditors say they expect to soon forward to Attorney General Richard Blumenthal their review of an internal University of Connecticut probe involving the former directors of the school's polling center.  The move would mark the latest development in the auditors' investigation of a "whistleblower" complaint concerning the polling operation, according to auditor Robert G. Jaekle, who last week cited the confidentiality of such probes in declining to provide further details.
 
Jaekle, however, said some matters that were not investigated by UConn's Office of Audit, Compliance, and Ethics - whose report concluded that nearly $100,000 was improperly deposited with the school's private fundraising entity when the polling center was run by its former director and associate director, Kenneth Dautrich and Christopher Barnes - were expected be dealt with by the State Office of Ethics.

"The UConn internal report touched on some conflict-of-interest issues that are appropriately within the purview of the Ethics Commission," he said. "There are still some issues about some contracts let by UConn to SmartRevenue.com."

The latter is a market research firm that in 2002 provided work for clients of the UConn polling operation, according to the university's auditors.

They said Dautrich and Barnes had described the firm as a "startup dot com company that developed Internet technologies," and that the two men "were consulted on how to apply this technology to market research."

Dautrich and Barnes in 2000 provided "information on current practices" in the industry, "guidance on the types of commercial industries and companies within those industries that might use and adapt this new technology," and "lists of potential commercial clients that SmartRevenue might target for business development."

The report by UConn's Office of Audit, Compliance, and Ethics stated that while their consulting agreement was officially terminated in 2001, Dautrich and Barnes retained a 0.2 percent ownership of SmartRevenue's capital stock.

The school's auditors concluded that "it appears that the consulting work provided" by Dautrich and Barnes "was not work which related to the mission" of the UConn polling center and that "it appears the work was a legitimate use of their expertise."

"The evidence provided indicates that they did not receive any direct financial gain as a result of directing work to SmartRevenue in 2002," the auditors wrote, noting that in prior advisory opinions the state ethics office had ruled "that you may not use your position to direct work to a business with which you are associated."

"Based on the information provided, it appears that SmartRevenue is not a business with which they are associated (as defined in the code of ethics); it follows that they are not prohibited from referring any work to that organization."

The school auditors probed SmartRevenue's dealings with Dautrich and Barnes after the current director of the polling operation, Samuel Best, forwarded his own reviews of the vendor and his predecessors' "business interests."

They said Best was concerned that Dautrich "may have intercepted calls received at" UConn's polling operation, called the Center for Survey Research and Analysis, "and steered potential CSRA work to his private consulting firm."
Best's reviews also cited two other companies, Validata Research, a firm that analyzes market research and focus group results which the school's auditors described as partly owned by Dautrich, and New England Survey Associates, with which they said Dautrich also is "associated."

The school auditors reported that Dautrich had said his consulting through Validata was exclusively for two clients, Foxwoods Resort Casino and JPMorgan/Chase.

They said Best had documented that CRSA had done polling regarding the casino and that he was "concerned that the polling questions could have been skewed by professor Dautrich in order to create a need for his consulting work thereby giving rise to a conflict of interest."

They added, however, that Dautrich and Barnes said Dautrich did not participate in the CSRA's polling on the issue of casinos.

The school's auditors concluded that the state ethics office would have to determine whether it was appropriate for Dautrich to accept private employment from Foxwoods while he was still associated with CSRA.

Similarly, they said the ethics office also would "need to determine" whether Dautrich's consulting for New England Survey Associates - work on surveys for the First Amendment Center of the Freedom Forum - is a conflict of interest.

The school auditors also noted that the state ethics office had yet to issue any form opinion "regarding whether it is appropriate for a state employee to otherwise compete through one's private enterprise with university projects, when such projects are not conducted in one's own department."

They concluded that the state ethics office "should rule on whether or not it is a conflict of interest for a state employee to discuss his department's ability to provide the work with a potential client if the department is likely to be a bidder for the business."
Ethics Law May Force Schools To Refuse Donated Equipment, Gifts
Hartford Courant
Associated Press
4:55 PM EDT, June 29, 2006

HARTFORD, Conn. -- An ethics law intended to clean up Connecticut's contracting process could force state educators to refuse equipment, scholarship money and other corporate donations intended to benefit students.  State officials worry the new rules could end a practice that they say curbs costs and tuition rates while giving students hands-on experience on donated machinery and computers.

In a recent opinion, the state Office of Ethics said the 2005 law bans all gifts to state agencies from certain types of donors, including companies that spend more than $2,000 a year on lobbying.  But many of those businesses also make large yearly donations to the state's colleges, universities and vocational-technical high schools, providing everything from science lab equipment to secondhand cars for auto-repair classes.  Connecticut's departments of education and higher education are examining whether accepting the equipment, scholarship money and other items violates the law.

Laura Anastasio, a staff attorney for the Department of Education, said her agency will review offers on a case-by-case basis, but that certain donations will be refused from now on.

"The ethics opinion says the statute is very clear that they definitely don't want gifts given," she said. "That would indicate to me that even if it's for the benefit of the students, it doesn't matter."

Brian O'Dowd, assistant general counsel at the state Office of Ethics, said the law makes no exceptions for education-related gifts, so they are banned along with all others.

"It was a very broadly written provision that basically says, no more gifts to the state from regulated donors," he said. "Reading the plain language, the (ethics) board didn't think it could be read any other way."

The law does not apply to local schools run by municipal boards of education.

The legislature approved the new rules in an attempt to curb contracting abuses. They prohibit state workers and agencies from accepting gifts, trips and other benefits from lobbyists, contractors, aspiring contractors and companies that pay for lobbying.  State Rep. Christopher Caruso, D-Bridgeport, co-chairman of the legislature's Government Administration and Elections Committee, said he is willing to review whether the law should be revised to allow scholarship donations.

But the state should not offer courses with the expectation that key supplies, such as used cars for auto-repair classes, will come from outside sources, he said.

Regardless of the intent of their gifts, those companies still seek contracts with the state, he said, adding that being viewed as a generous benefactor could give them an unfair advantage over companies that do not have the money to make such donations.

"If you start carving out exemptions to the law, then what you're saying is that it's OK in certain situations to have conflicts, and in others it is not," Caruso said. "Then you intentionally or otherwise allow corruption to breed."

State education officials said this week that several large Connecticut companies that contract with the state and hire lobbyists also have unrelated philanthropic programs that donate to the state-run technical schools, colleges and universities.  Valerie Lewis, the state's higher education commissioner, said she is still trying to interpret how the state's colleges and universities will be affected.

"It potentially has a very large effect," she said. "It is not a small question as to how we handle those gifts and contributions, weighed against the clear intent of doing that ethically." 
Politician's Job Raises Ethical Concerns;   Ex-Official Now Paid By Bidder He Helped Pick
By RACHEL GOTTLIEB, Courant Staff Writer
May 8, 2006

A prominent Hartford politician who was in a key position when a Kansas firm secured a multimillion-dollar contract to oversee the rebuilding of city schools is now working for the company as a $3,000-a-month consultant with the job of soothing relations with the community.  The relationship between Louis Watkins, a former councilman and chairman of the city's school building committee, and Diggs Construction may violate city ethics regulations governing conflicts of interest, according to city officials.

"I think it raises questions with respect to the ethics issue," said Carl Nasto, the city's deputy corporation counsel.  Those regulations include a permanent ban on former officers or officials representing companies in their dealing with the city if the official "exercised contract management authority" over the contract in question. That authority is defined in the code as "involvement in or direct supervisory responsibility for the formulation or execution of a city contract."

First as chairman, then as a member, of the city's school building committee, Watkins was a key player when Diggs was selected as the lead choice to oversee the school construction projects in the city. The expansion and renovation of Hartford schools is a 10-year project with a price tag of more than $1 billion.  City lawyers began looking into the question of a conflict of interest at the request of Hartford Mayor Eddie A. Perez after The Courant filed a freedom-of-information request for Watkins' contract with Diggs.

Nasto sent a copy of the code to officials at Diggs - who initially fought public release of the contract - along with a letter directing the company to comply with it. Watkins' contract states that, in addition to creating "a positive relationship with city and state leaders, community based organizations and minority contractors," Watkins is to advise Diggs on where to make charitable contributions for community projects.

It remained unclear whether the permanent ban provision included in the ethics code, which specifically addresses those who represent "for compensation any persons in their business with the City," applies to the work Watkins is doing for Diggs.  But there is no formal investigation underway into that question because no one has filed a complaint with the city's ethics commission.

"We put Diggs on notice of what the rules are. They have to comply with the rules," Perez said. "We're not going to tolerate any violation of the rules. ... We have a contract. The contract requires Diggs to follow the rules."

Perez did not say whether he believes Watkins' employment for Diggs violates city ethics rules. "Corporation counsel gives me advice. As mayor and board chairman, I will make sure that whatever corporation counsel's advice is, I follow it."

Officials at Diggs said it is not up to them to enforce the city's rules. James Keaney, program director for Diggs, said Diggs is a private firm not bound by the city's code of ethics. Moreover, he asserted that Watkins' job does not fall within the bounds of the firm's contract with the city.

"If Lou Watkins feels he is in violation of some ethics code, that would be his issue, not necessarily my issue," Keaney said. "I think Lou's doing a fantastic job for us. I'm not considering letting him go."

Watkins said he didn't realize that the city's code of ethics may apply to his work for Diggs. "I never knew that piece was in there," Watkins said. "I think that's ludicrous. I think it's crazy that it's forever."

But he nonetheless said he would defer to the city ethics commission if his contract is referred there for review. "If I'm in violation, then I will resign," Watkins said. "I always abide by whatever the law says."

Diggs hired Watkins this year to help soothe relations with the community and help deal with complaints from minority contractors and construction workers in the city. 
For more than a year, minority contractors have complained that payment for their work was sometimes months late, or they weren't being paid at all. The contractors have blamed Diggs for holding up payments they say they are owed, and have accused the firm of holding on to their money.

"There are misunderstandings about what power we have and what money we control. We didn't have anyone close enough to the community and respected in the community to tell the truth - a community liaison," Keaney said.

Watkins, a longtime player in the city's Blue Hills neighborhood, said he approached Dale Diggs, principal of the Kansas-based construction firm, and offered to help him improve the company's image. Watkins signed a one-year contract for $36,000 for his consulting firm, Jazmin Associates, LLC, starting Feb. 1.

A problem with the job, however, may be the role Watkins played when Diggs was selected to oversee the school construction project in Hartford. Watkins was chairman of the committee when the panel narrowed the choice to Diggs, and was a member of the panel when the contract was signed.

To move construction along more quickly, the committee was looking for an outside company to focus exclusively on the project. The new company was to help select and supervise architects and construction managers, oversee budgets and monitor compliance with the city's goals of hiring city residents, women and minority contractors.

But the selection process became politically charged as city officials wrangled with the building committee - which had been created by the state legislature - over who had the authority to choose which company to hire. State Attorney General Richard Blumenthal stepped in to settle the matter, advising in October 2001 that the power rested with the building committee.

In December 2001 the committee settled on Diggs, but the wrangling around the selection process continued. Three months later, Perez joined the building committee and muscled Watkins - then city council minority leader - out of the chairmanship.

Although the committee had settled on Diggs, the final selection of the company hit a snag in March 2002. Perez and then state Education Commissioner Theodore Sergi said the city had not completed financial background checks on the company, with both expressing discomfort about Diggs overseeing construction on its own. Diggs had never built a school anywhere, nor had it ever worked in Connecticut.

Two months later, in May 2002, after months of behind-the-scenes negotiations, the building committee unanimously voted to hire Diggs to oversee the first five schools and the city was to pay Diggs more than $6 million in fees, with the proviso that it sign contracts with more experienced partners.  The school building committee acted with few questions and no debate, giving no hint of the city's bruising negotiations with Diggs and persistent lobbying on Diggs' behalf by leaders in the city's African American community, who complained the company was being held to too high a standard.

The company's contract was recently extended for three years, with fees of just more than $10 million, though Watkins is no longer a member of the building committee. 
Former state ethics chief offered spot in Blumenthal's office
DAY
Apr 22, 12:13 PM EDT

HARTFORD, Conn. (AP) -- Former state ethics chief Alan Plofsky is scheduled to meet Monday with state Attorney General Richard Blumenthal about a new job in that office.

A state appeals board ruled in March that Plofsky was improperly fired in 2004 from his position as head of the State Ethics Commission, and that he deserves to be reinstated to the spot and receive back pay.  However, Plofsky's old job no longer exists, so he must be offered a position that is the equivalent in pay and duties.

Gregg Adler, Plofsky's attorney, said Friday that Blumenthal has offered Plofsky a position in the consumer protection department of the attorney general's office. They will meet Monday to discuss a potential starting date and other details.  Plofsky was paid $120,000 annually in his old position, where he also had supervisory responsibilities.

State Administrative Services Commissioner Linda Yelmini asked Blumenthal earlier this month to accept Plofsky. The state Employees' Review Board ordered her last month to find a new position for him.

Blumenthal said Friday that his office was willing to welcome Plofsky, but that he "could in no way promise or represent that this position is comparable" because it is "non-supervisory," a fact that he has told Yelmini.  Adler, Plofsky's attorney, told The Hartford Courant that he still plans to file a federal lawsuit seeking compensation for violations of Plofsky's rights during what he called a "public crucifixion."

But Adler said that he first is focusing on "trying to get the state to comply" with the review board's ruling.

Plofsky was fired in September 2004 after an investigation found he had misused compensatory time by failing to obtain advance authorization from the commission chairwoman. The review board said that such authorization had not been required in the past.

The review board also found that Plofsky may have chosen his words poorly when talking with an employee anxious about receiving a federal subpoena regarding former Gov. John G. Rowland, but that he did not order her to lie.

The ethics commission has since been dissolved and replaced with a new Office of State Ethics and a Citizens Ethics Advisory Board.
Ethics Chief Wins Reinstatement
By JON LENDER, The Hartford Courant
11:02 AM EST, March 31, 2006

In a thorough reversal of the former State Ethics Commission and a top state personnel official, the state Employees' Review Board Friday ruled that Alan S. Plofsky was fired as ethics director without reasonable cause in 2004 and ordered him rehired with back pay and benefits.

Where Plofsky will land on the state employment roster was not immediately clear: His old job was abolished when the General Assembly scrapped the ethics commission in the bitter turmoil that followed his ouster. Friday's ruling entitles him to a job of comparable rank and pay.

In one ironic note, the employees' review board ordered that Plofsky's new position in state government be found for him by Linda Yelmini, now the commissioner of the state Department of Administrative Services, who as a top personnel administrator in 2004 advised the former ethics panel on procedures leading to Plofsky's termination. Those procedures were flawed, the review board noted in Friday's 27-page decision, as the state Freedom of Information Commission ruled that the ethics panel had held an illegal closed session that denied Plofsky his rights.

State officials who had defended the firing could not immediately be reached to say if they would appeal the decision to the state Superior Court. However, more litigation appears to be brewing, as Plofsky's lawyer, Gregg Adler, said he expects to file a federal lawsuit over violations of his constitutional rights during what he called a "public crucifixion."

Friday's ruling would mean at least $180,000 in back pay for Plofsky, who has been out of his $120,000-a-year job for 18 months. Pension and other benefits also would be reinstated for the lost time.

"I am deeply gratified by the Employee Review Board's unanimous decision exonerating me of wrongdoing and reinstating me to state service," Plofsky said Friday. "At the same time, neither I nor my lawyer are in the least surprised by the outcome. We have both been confident throughout this long ordeal that any impartial tribunal would totally reject the rationale given for my illegal firing.

"While I am understandably pleased by the board's decision, I remain outraged over my gross mistreatment by the members of the former ethics commission.

To address my outstanding grievances and vindicate my rights in this matter, I have authorized my attorney to file a federal lawsuit seeking compensatory and punitive damages for the violation of my constitutional right to free speech and due process."

Adler added: "The former members of the State Ethics Commission succumbed to political pressure by rushing to judgment in this matter without fully or fairly considering the evidence, without ever discussing any of the issues directly with Mr. Plofsky, without informing him of the evidence being used against him, and without regard to his constitutional right to due process of law."

He said the that "the devastating impact of the ethics commission's public crucifixion of Mr Plofsky after more than than 24 years of effective and dedicated service to the state of Connecticut cannot be fully remedied by this order," requiring the intended federal lawsuit.

Plofsky's Sept. 10, 2004 firing came after a year of tumult and tension at his agency, which played a prominent role in the investigation and scandal that led to the resignation of former Gov. John G. Rowland. Plofsky incurred the ire of his superiors on the old commission by calling Rowland a liar during a public speech before Rowland gave up his fight to survive as governor and quit July 1, 2004.

Plofsky narrowly averted a suspension, but further problems erupted when three subordinate staff attorneys lodged sworn complaints of misconduct against him in August of 2004. Those charges led to an investigation by a former DAS deputy commissioner, Alan Mazzola, and finally the proceedings that abruptly led to his termination that September.

Bitter divisions remained at the old agency after Plofsky's departure prompting state lawmakers in 2005 to scrap the old agency and replaced it with the Office of State Ethics and a Citizens Ethics Advisory Board.

A provision in that legislation required the transfer of all seven of the agency's remaining paid staff members to jobs elsewhere in state government. It is under the provisions of that law, requiring spots to be found for all of the old ethics agency's employees, that Yelmini would have to find Plofsky a new job.

Ethics Chief: Shaky Start;   Bycel, Facing Scrutiny, Says `Time To Move On'
By JON LENDER, Courant Staff Writer
January 16, 2006

Last month, Charlotte Koskoff quit her seat on the new Citizen's Ethics Advisory Board because she believed the board was moving too hastily toward hiring a new state ethics director.

On Sunday she said, "I am saddened that some of my fears seemed to have been proven" - referring to a debacle last week in which newly appointed ethics director Benjamin Bycel quickly had to rescind his controversial hiring of a gubernatorial aide for his new Office of State Ethics.

Despite Bycel's impressive resume that includes service as Los Angeles' ethics chief, Koskoff said, "This is troubling."

Though it's too early for a final judgment, "sometimes a resume is more about a person's ability as a self-promoter," said Koskoff, a three-time Democratic nominee for Congress from Plainville.  Such comments by Koskoff and others in recent days indicate that Bycel will now be watched even more carefully in his sensitive new role.

"We want to give him a chance to redeem himself, but at the same time we'll be watching closely the new hires that he makes," said Rep. Christopher Caruso, D-Bridgeport, co-chairman of the legislative committee that oversees Bycel's ethics agency.  Bycel said Sunday night that he is "looking forward to Tuesday morning" when he returns to work after the holiday. "I was hired to do a job, and I think there was some fair criticism of me last week - that I did stumble." But, he said, "it's time to move on, it's time to work together, and it's time to allow me to do my job."

Caruso and other legislators had been irked by Bycel's defiance Wednesday after his hiring of Daniel Moreland, aide to the governor's chief of staff, M. Lisa Moody.

The lawmakers said the new Office of State Ethics is too sensitive a spot to plant any political appointee - particularly Moreland, who recently was questioned by criminal investigators focusing on Moody's improper distribution of political fundraiser invitations at the state Capitol.  Bycel first told lawmakers it was none of their business - and only relented after it was revealed Moreland lied on his resume.

Even after dumping Moreland, it took Bycel until Friday to comply with Caruso's demand that he reveal the identity of a "mutual acquaintance" he said told him Moreland might make a capable executive assistant in the ethics office. Bycel said Friday the acquaintance was Gov. M. Jodi Rell's own ethics counsel, Rachel Rubin.

So angry were Caruso and other lawmakers that the good-government group Common Cause spent two days last week making calls to calm them down. For example, they helped broker a Thursday meeting in which Bycel apologized to Caruso.

"We went to the leaders and said to them, `Give the guy a second chance. As crazy as it seems, he did not comprehend the situation here,'" said Andy Sauer, Common Cause's local director.  The "situation" is that Connecticut has been reeling from ethics scandals such as one that jailed ex-Gov. John G. Rowland. The stress of dealing with the Rowland scandal paralyzed the former State Ethics Commission so badly that legislators abolished it last year, replacing it with the new ethics office and advisory board. Caruso and other leaders wanted no more trouble from the new office - and that's why Sauer moved so fast last week.

"It's important that the new office succeed," Sauer said. "We need a strong office of ethics."

Whether it succeeds depends partly on whether legislators who created the office are satisfied. Caruso, although satisfied with Bycel's apology, still questioned the salary that Rell-administration personnel officials established for the intended Moreland hiring.

Moreland makes $51,500 a year in the governor's office, where he will stay. The new job of "ethics program manager," created by Rell-administration personnel officials in consultation with Bycel, has a salary range from $60,951 up to $78,185.

"That's excessive," Caruso said, noting that Bycel had described the job as merely a get-things-done office assistant's job.

"He was never intended to be a policy guy," Bycel said - but the official listing for Moreland's intended job at ethics involved "drafting regulations, policies and procedures." Bycel said from now on he will "look at every single job description."

Caruso said it was "very upsetting that anyone from the governor's office" spoke to Bycel about Moreland's potential transfer. "I think this is a clear warning for anyone who works for the legislative or executive branch: Keep your hands off the Office of State Ethics," Caruso said. "It's an independent agency, and needs to be maintained as that." 


Are you surprised?

 Not CT, but now and then New Jersey sounds like us!  "Do as I say, not as I do" Democrat response to most things...
Aide: N.J. Governor Was Not Wearing Seat Belt; Corzine Critical With Broken Bones After Car Crash 
DAY
By Kathy Matheson , Associated Press Writer  
Published on 4/14/2007   
 
Camden, N.J. — Gov. Jon S. Corzine was apparently riding without a seat belt, in violation of state law, when he was critically injured in the crash of his official vehicle, a spokesman said Friday.

A state trooper was at the wheel and the governor was sitting as usual in the front passenger seat when the SUV slammed into a guard rail Thursday night, authorities said. Corzine broke a leg, his breastbone, 12 ribs and a vertebra.

Corzine, 60, was sedated and on a breathing tube, and a doctor who helped treat him said the governor was fortunate he was not more seriously hurt.

“There's no way to tell specifically how close he came to more severe injuries, but based on pictures I've seen of the crash, I think he's lucky,” said Dr. Steven E. Ross, trauma chief at Cooper University Hospital.

Ross said Corzine was stable and improving, and could be removed from a ventilator within the next few days. But a spokesman said it is unclear how long it will take before the governor is well enough to return to work.

Dr. Robert Ostrum, who performed two hours of surgery on the governor Thursday night, said a rod was inserted in Corzine's leg, and additional operations were scheduled for today and Monday.

State police were looking for the driver of a pickup truck they believe caused the crash and fled. That driver could be charged with careless driving and leaving the scene of an accident. The governor himself could face a citation.

New Jersey law requires all front-seat occupants of a vehicle to wear a seat belt. Violators face a $46 fine.

Corzine chief of staff Tom Shea said he did not believe the governor had been wearing his seat belt.

“If he was not, he certainly should have been,” Shea said, “and we would encourage the state police to issue a citation.”

Shea said Corzine usually wears his seat belt. When asked why the trooper who was driving would not have asked Corzine to put on his seat belt, Shea said the governor was “not always amenable to suggestion.”

A law enforcement official close to the investigation told The Associated Press on Thursday that the governor typically does not wear his seat belt, and that his state trooper detail had not been successful in persuading him. The source spoke on condition of anonymity, citing a lack of authorization to speak on the matter.

Corzine cannot speak because of the breathing tube down his throat, and state police said they have been unable to interview him about the accident.

Senate President Richard J. Codey, a fellow Democrat, took over as acting governor. It is a familiar role for Codey, who served the last 14 months of Gov. James E. McGreevey's term after he disclosed a gay affair and resigned in 2004.

The accident happened while Corzine was en route from Atlantic City to the governor's mansion in Princeton for a meeting between the Rutgers women's basketball team and radio host Don Imus, who was fired for using a slur to describe the athletes.

State Trooper Robert Rasinski was driving the governor's Chevrolet Suburban when another vehicle, swerving to avoid a pickup truck, hit the sport utility vehicle and sent it off the Garden State Parkway, authorities said. Police following the governor in another vehicle administered first aid to Corzine and called for a helicopter.

Rasinski also was injured. His condition was not disclosed, but Codey said he was expected to be released from the hospital Friday. A governor's aide in the vehicle was not hurt, authorities said.

The speed limit was 65 mph. State police said speed was not believed to be a factor, but they had no immediate word on how fast the SUV was going. Shea said he did not know whether its air bags deployed.

The accident marks the third straight time a New Jersey governor has broken a leg while in office. McGreevey broke his leg in 2002 during a nighttime walk on the beach, and Christie Whitman broke her leg while skiing in the Swiss Alps in 1999.
Will Morano's Warning Shot Be Heeded?
Hartford Courant
Stan Simpson column
September 4, 2005

This much we know about Chief State's Attorney Christopher Morano's failed attempt to arrest imprisoned ex-Gov. John Rowland for securing consulting contracts with companies that had business ties to Connecticut:

The chief state's attorney's office, before Morano took charge two years ago, mostly passed when it came to cracking down on crooked Connecticut pols. It's the federal government that has taken the lead in stamping down political corruption here.

Morano has sought to change the perception of his office as uninterested in corruption cases, even re-establishing a public integrity bureau. The good news for him is that Connecticut's incorrigible public officials give his office ample opportunities to redeem itself.

Even though he was stiff-armed in his efforts to bring Connecticut's first criminal charges for ethics violations, Morano is telling the gang at the legislature that the state's top prosecutor is back on the case. No more influence peddling.

Brazen behavior runs rampant at the state Capitol.

How else do you explain Rowland - months before he was to be sentenced on a corruption-related charge - securing $15,000-a-month consulting gigs with companies that had business links to the state?

How else do you explain the allegation that Bridgeport Sen. Ernie Newton accepted a bribe - during the Rowland impeachment hearings, of all times - to steer bonding money to a nonprofit group? He denies the charge, saying he was paid by the group as a consultant - which gets to another ethical issue.

Sen. Toni Harp, D-New Haven, introduced a bill this year that would have funneled $6.5 million to New Haven's Hill Health Center, where Harp is employed. She pulled back when others took umbrage.

Deputy House Republican leader Lawrence Cafero Jr. was pushing a bill that would have hooked up the Maritime Aquarium in his hometown of Norwalk with $1.5 million in state funds. Cafero is a lawyer with Brown Rudnick Berlack Israels, whose lobbying arm represents the aquarium.

When the CRRA, a quasi-state regional trash authority, was under heavy scrutiny by the legislature a few years back for squandering $220 million in public money in a dubious loan deal with Enron, its chief spokesman was Brian Flaherty. At the time, Flaherty was a Watertown Republican state representative. CRRA was also fortified by the employment of Sen. Thomas P. Gaffey, D-Meriden, and Rep. Paul Doyle, D-Wethersfield.

So, while Morano may have been overzealous in seeking to send Ole JR farther up the river, he's also frustrated that Connecticut lawmakers are awfully thick in adhering to conflict-of-interest concerns.

"The best way to avoid potential conflicts of interest is to have a clear law that draws a very bright line," said state Rep. Christopher Caruso, D-Bridgeport. He co-chairs the legislative committee that is examining the "revolving door" policy, which bans for one year a former state official from lobbying his former agency on behalf of a private company.

Superior Court Judge Edward J. Mullarkey reportedly balked at busting Rowland because the "revolving door" law is so poorly worded that it could be read as only banning him from lobbying the governor's office itself - not the dozens of agencies whose top officials he appointed. That's got to change.

Caruso this year introduced an amendment - which never got voted on - that would ban lawmakers from introducing legislation on behalf of their employers. That there is not already such a law on the books suggests there is little political will to change the norm.

Here are two more amendments that should be enacted next year:

If you're a lawmaker, you can no longer be employed by quasi-state agencies.

And if you're a company that violates the revolving door policy or enters into shady side "consultant" deals with politicians, then the CEO will be criminally liable too.

Call Morano's calculated maneuver with Judge Mullarkey a warning shot.

Let's see if the legislators take heed.
Meeting Stirs Advocates of Government Reform;  Lawmakers, Officials Dismiss Criticism, See Chance To Tout Region
By TED MANN
Day Staff Writer, Politics/Government
Published on 7/26/2005

Mystic— The legislators, lobbyists and state officials waiting for the clam bake at the Mystic Seaport Museum had all heard the complaints.

The annual meeting of the Eastern Regional Conference of the Council of State Governments, their critics say, is tainted by corporate money, another opportunity for the rich and persuasive to shower lawmakers with goodies in exchange for later favors.

The crowd at cocktail hour said it's all nonsense.

“This,” state Rep. Robert Godfrey, D-Danbury, said Monday evening, as lawmakers from 10 states, two territories and three Canadian provinces mingled behind him, “is about showing off what this state is all about.”

To some advocates of government reform, the conference's annual meeting, which takes place in a different host state every year and this year continues through Thursday at Mohegan Sun, demonstrates perfectly the problems plaguing state government: Lawmakers luxuriating in a setting partially paid for by the corporations who stand to benefit from their votes.

To many of those lawmakers, that view is twisted and cynical. This, they said Monday, is how government happens, how smart officials share their ideas.

And, they said, this is a rare chance to show off a part of the state that must grow if the state is to keep pace with its neighbors, namely the tourist destinations of Mystic, the beaches and islands, the towering casinos in the woods.

As both sides talk at length about changing campaign finance laws, reform groups and the politicians who will make those changes remain divided about a central question: What is an inappropriate level of influence on legislators? How much is too much?

“There's a legitimate purpose for these things,” said Andy Sauer, the executive director of the state chapter of Common Cause, the reform lobbying group. “The schmoozing is also an element of it. This is how these relationships are made, and there is a legitimate public interest in getting to know representatives from other states. That part doesn't bother me.”

But, he said, the list of contributors who helped pay for the meeting and its perks — a ferry ride to Block Island, the Mystic clam bake, the wine and hors d'oeuvres on tables topped with whole pineapples — is “a who's who of special interests.”

Among the sponsors he cited are some of the state's biggest corporations — Northeast Utilities, United Technologies — and also some businesses that have been rewarded by actions of some of the legislators they are helping to wine and dine.

Among those is Cross Sound Ferry, for which legislators voted a grant of $1.75 million for shipyard dredging and repairs, and which provided the ferry jaunt to Block Island Sunday night.

After Sauer's public complaints and a skeptical opinion from the new Office of State Ethics, Lt. Gov. Kevin B. Sullivan, one of the organizers, decided to skip the boat ride and all but one day of the annual meeting as well.

“I've had more than enough exposure to the Council of State Governments for one week,” Sullivan said Monday, with a chuckle.

Asked about the propriety of accepting some of the offered perks, he replied, “Frankly, I didn't think about it until we got down to this week, and it started to not look so hot.”

But Sullivan suggested the new watchdog office will have to delineate clearer boundaries for legislators, state officials and their guests.

“Now I think the new ethics people need to probably sit down and put this out more clearly, because this is going to recur,” he said.

But organizers and attendees said they don't see anything to apologize for.

Godfrey and his co-chairwoman, Sen. Toni Harp, D-New Haven, said the corporate contributions were raised by an independent fund-raising outfit, D & J Strategic Communications, so lawmakers didn't know who had supported the event when they were drawing up the state budget.

And, Godfrey said, the contributions of private business and the dues of the legislators themselves help pay for an invaluable experience, when elected officials who might otherwise not meet face-to-face can talk casually and trade suggestions on policy, from taxes to crime prevention.

“There's never been a consideration, certainly in my mind, of any kind of quid pro quo in the slightest,” Godfrey said Monday afternoon. “This was set up months and months ago, out of that context. There were no qualms on my part of treating one kind of company differently from others.

“I didn't even know the Cross Sound Ferry had gotten anything (in the budget) until I read about it Sunday morning in the paper.”

Speaker of the House James Amann, D-Milford, strolled along with his wife and a plastic cup of wine, shaking hands, accepting congratulations and dismissing the critics.

“This is the best way to promote your state,” Amann said. “If Andy Sauer wants to continue down the path that everyone's a crook, a thief and a liar, he's wrong.”

And, he sai