Rep. Alan Mollohan, whose finances were the subject of a four-year federal probe triggered by NLPC, was defeated yesterday in the Democratic primary in West Virginia’s first Congressional District. The 14-term Congressman was beaten 56 to 44 percent by state Senator Mike Oliverio, who made corruption the centerpiece of his campaign. Mollohan accused Oliverio of “spreading right-wing smears.”
The investigation began in February 2006 after NLPC filed a 500-page Complaint with the U.S. Attorney for the District of Columbia alleging that Mollohan failed to report millions in assets on his Congressional disclosure forms in order to conceal cozy financial relationships with recipients of earmarks he had arranged.
Mollohan, a member of the Appropriations Committee, earmarked as much as $500 million to nonprofit groups founded and controlled by business partners, campaign contributors and former staffers.
Our allegations were first made public in a front-page Wall Street Journal story by the late John Wilke, who was awarded the 2007 Everett McKinley Dirksen prize for distinguished coverage of Congress by the National Press Foundation.
In the uproar that followed, Mollohan “temporarily” resigned as ranking Democrat on the Ethics Committee. At the time, House Speaker Nancy Pelosi (D-CA) blamed NLPC, instead of Mollohan, for his problems.
The end of the investigation came in a two-sentence press release in February when the Justice Department announced that it had ended its four-year probe, just weeks after Mollohan voted for Barack Obama’s unpopular health care plan.
While we are delighted to see corruption become the central issue of this race, and we are heartened to see the political system work, we believe that Attorney General Eric Holder has perpetrated a grave injustice by saving Mollohan from criminal indictment.
In February, NLPC Chairman Ken Boehm called Holder’s action a “horrible precedent, “ and asked, “Has Attorney General Eric Holder now made it legal for members of Congress to earmark money to their business partners?”
Mollohan put out a statement claiming that he had been “exonerated.” Choosing not to indict is a lot different than exoneration. The Justice Department said nothing about the specific allegations. Mollohan also repeated his attacks on NLPC as being “right wing.”
Mollohan himself confirmed key elements of NLPC’s Complaint on June 13, 2006 when he amended six years’ worth of his disclosures (1999-2004), after denying for two months that they contained errors. He omitted more assets than he reported on his original filings, including his largest single asset, a note worth over $4 million.
The Ethics in Government Act of 1978, as amended, provides that the Attorney General may seek a civil penalty of up to $11,000 against an individual who knowingly and willfully falsifies or fails to file or report any information required by the Act. Other statutes provide for criminal penalties.
Even though Mollohan’s reporting violations were potentially criminal, especially given their scale, NLPC was more concerned with the actions that they were intended to keep hidden, specifically Mollohan’s personal financial relationships with persons who were also getting taxpayer money through Mollohan earmarks. The appearance was (and still is) that Mollohan was recycling taxpayer money into his own pocket.
One such appearance was Mollohan’s relationship with Don and Laura Kuhns. Laura Kuhns is a former Mollohan staff member who heads Vandalia Heritage Foundation, a nonprofit which received more than $28 million in federal earmarks with Mollohan’s help. Mr. and Mrs. Kuhns jointly invested with Rep. Mollohan and his wife in more than two million dollars worth of property on North Carolina’s Bald Head Island where the two couples had adjoining ocean front beach houses.
Mollohan filed an amendment (actually a letter) to his 2005 disclosures with the House Clerk on December 23, 2005. In the letter, Mollohan claimed that he had “inadvertently” failed to report a $35,000 loan from the Kuhnses. Mollohan stated that “the loan was used principally to make payments on the partnership borrowings, and related expenses.” In other words, the joint expenses of the partnership were being paid by the Kuhnses.
Another such appearance was the joint purchase of a West Virginia farm on the aptly named Cheat River by Mollohan and Dale R. McBride, the CEO of FMW Composite Systems, for which Mollohan had secured a NASA contract.
Mollohan’s June 2006 amendments showed that he misstated investment income, failed to disclose an asset worth more than $2 million for five consecutive years, misidentified assets, failed to disclose liabilities exceeding $2 million associated with a secretly held asset, and misstated a loan liability amount. During 2000, Mollohan reported income producing assets of $179,012 to $562,000 yet failed to disclose his 50% interest in a $2.3 million asset – meaning that he failed to disclose more of his assets than he disclosed.
While Mollohan did not correct his reports prior to 1999, he released a letter from his accountant revealing additional misrepresentations and omissions in his financial disclosure reports filed prior to 1999. The largest problem dealt with Mollohan’s repeated failure to disclose the 50% interest he and his wife held in a company called Remington Group, LLC, which purchased 17 condo units in the Foggy Bottom area of Washington.
The decision to let off Mollohan is fueling charges that Holder is soft on corruption in Congress. According to a March 15 article in the Daily Beast, Philip Shenon reported:
…current and former department officials fear the department under Attorney General Eric Holder is mostly out of the business—at least for now—of bringing criminal charges against corrupt federal lawmakers and other powerful government officials in Washington.
Holder set the tone soon after his confirmation when he announced that former Senator Ted Stevens (R-AK) would not be retried for failing to report gifts from lobbyists on his disclosure forms. His conviction had been thrown out for prosecutorial misconduct that had nothing to do with the actual merits of the case.
Holder started his career at the Justice Department in the 1970’s as a prosecutor in the Public Integrity Section. When he became attorney general, Holder promised to make a priority of corruption cases. What Mollohan and Stevens have in common is a history of success in securing earmarks. Holder knows that the leadership in Congress would not welcome an aggressive crackdown on corruption related to earmarks.
This is the second time that Holder has punted on an important case involving NLPC. The first was when NLPC successfully sued Hillary Rodham Clinton’s health care task force to open its meetings and records. During a sworn deposition in 1993, task force director Ira Magaziner lied to us when he claimed that no non-governmental personnel had taken part in the task force. When Judge Royce Lamberth learned of Magaziner’s falsehood, he referred the matter for prosecution to Holder, who was the U.S. Attorney for the District of Columbia at the time. In 1995, Holder announced that he would not prosecute Ira Magaziner.