Mary Jo White is a poor choice to head the SEC. As a U.S. attorney, she demonstrated a lack of political independence and competence.
In the late 90’s prosecution of the Teamsters money landering scandal, White won several guilty pleas from low-level has-beens, but gave a pass to prominent union figures who played a key role in the Democratic political campaign of 2000, and every one since. The magnitude of White’s dereliction of duty can be seen in who was not prosecuted- Richard Trumka, Andrew Stern and Gerald McEntee.
In the 1996 Teamster election, incumbent President Ron Carey narrowly defeated Detroit union attorney James Hoffa, son of the legendary Teamsters boss Jimmy Hoffa. After the loss, the younger Hoffa’s operatives pored over Carey’s campaign disclosure documents and found evidence of serious wrongdoing by the Carey campaign. Carey’s campaign raised $538,100 through a series of schemes including some $885,000 in bogus “donations” from the union’s general treasury. The Teamsters “donated” funds to select left-wing organizations that agreed to route a portion of such “donations” to Carey’s campaign.
These findings led to the 1996 election being invalidated and Carey being disqualified from the 1998 rerun election. Carey was later expelled from the union. They also led to three September 1997 guilty pleas by Carey campaign consultant Martin Davis, manager Jere Nash, and vendor Michael Ansara, who in theory cooperated with White’s office in the case.
Following this respectable start, the prosecution got terribly bogged down. Two years later, the case inched forward with the November 1999 trial of former Teamster political director William Hamilton, Davis and Nash’s inside man for funneling the $885,000 out of the Teamsters coffers. The jury convicted Hamilton on all six counts of conspiracy, embezzlement, fraud, and perjury. He was sentenced to three years in federal prison and ordered to pay $100,000 in restitution.
White did not go after Richard Trumka, now AFL-CIO president, who at the time was AFL-CIO secretary-treasurer, despite his deep involvement in the scandal. Trumka invoked the Fifth Amendment during the investigation. At Hamilton’s trial, White’s office showed that a key meeting for planning an illegal $150,000 transaction took place in Trumka’s AFL-CIO office with him present. In this transaction, Hamilton gave $150,000 to the AFL-CIO, for laundering through a liberal activist group called Citizen Action.
Another big fish who escaped was Andrew Stern, who at the time was president of the Service Employees International Union (SEIU). Like Trumka, Stern promised to raise $50,000 for Carey’s campaign. Later, Nash learned that Stern had failed to raise the funds and approached Edgar James, an attorney representing SEIU, who then agreed to help raise the $50,000. Ultimately, James raised $16,000.
Likewise, Gerald McEntee, then president of the American Federation of State, County and Municipal Employees, along with its then-organizing director, Paul Booth, allegedly conspired to solicit and/or contribute $50,000 to the Carey campaign. According to court records, McEntee raised $20,000 and Booth $7,100.
White’s competence as a prosecutor must be questioned for botching the prosecution of Ron Carey. White put a hostile witness, the imprisoned Hamilton, on the stand only to have him undermine her case against Carey. Despite being called by the prosecution, Hamilton’s testimony bolstered the defense’s contention that Carey was unaware that the donations were linked to his campaign.
Hamilton, who did not take the stand in his own trial, testified without a grant of immunity or any other deal from the prosecution and therefore had no incentive to help the prosecution. Hamilton’s testimony was so detrimental that it forced the prosecution to attempt to undercut the credibility of their own witness. Had Hamilton been a defense witness, prosecutors would have an easier time undermining Hamilton’s credibility. But this line of argument was hopelessly weak when it was the prosecutors who put the defective witness on the stand. In the end, Hamilton’s testimony created enough reasonable doubt for the jury to acquit Carey.
White’s ability to police the financial world is particularly suspect given the Obama administration’s close relationship with Wall Street. Notwithstanding Obama’s rhetoric, no politician has ever enjoyed the Street’s near-unanimous support and funding that Obama received in 2008, which has continued since with only a few exceptions. The financial bailouts, the Feds low interest/easy money policies, and the institutionalization of “too big to fail,” have all served to guarantee profits for the money center banks for many years to come.
Obama is just too tied into Wall Street to expect White to act independently, especially given her track record of protecting political friends. The Senate should reject this nomination.