Documents obtained by Citizens for Responsibility and Ethics in Washington (CREW) from the Department of Justice provide “hard evidence” that former Rep. Alan Mollohan (D-WV) should have been prosecuted after NLPC exposed his questionable financial dealings, and triggered a Justice Department investigation.
CREW executive director Melanie Sloan told Politico yesterday, “It was clear the Justice Department should have indicted Mollohan.”
Mollohan was defeated for re-election in 2010 in a Democratic primary. His ethics woes were a key issue in the campaign.
Although we have not yet had the opportunity to study the underlying documents, CREW has released a very concise summary of their own review. The CREW summary confirms the key accusations made by NLPC against Mollohan. It is also a serious indictment of the Justice Department for failing to prosecute Mollohan.
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.
According to CREW:
The FBI documents released by DOJ are particularly revealing, confirming a thorough investigation into Rep. Mollohan’s close involvement with the nonprofits he founded and the extent to which he used them to enrich himself. They also offer insight into egregious mismanagement of taxpayer funds: millions of dollars were wasted on graft, cronyism, and flagrant misconduct.
First and foremost, Mollohan profited by ripping off taxpayers in real estate deals. From CREW:
According to the interviews, Rep. Mollohan was very skilled at making strategic land deals from which he stood to benefit personally and at surreptitiously moving money around to hide its source.
CREW says the documents provide specifics:
For example, the U.S. government paid WVHTCF $4 million for a property valued at less than $1 million, which one unidentified person labeled “money laundering to AM [Alan Mollohan].” According to the source, a number of other unidentified individuals “knew the whole process was shady.” Similarly, a heavily redacted portion of an FBI interview revealed the government overpaid for another property, paying nearly $1 million — which the interviewee described as an “astronomical” amount of money — for a parcel of land worth less than $400,000…the documents describe a pattern of behavior whereby Rep. Mollohan or an entity associated with him secured government funding to purchase properties at prices far exceeding their actual value.
WVHTCF is the West Virginia High Technology Consortium Foundation, a recipient of Mollohan earmarks.
When not doing inflated real estate deals, CREW reports that Mollohan was directly looting taxpayer funds:
Rep. Mollohan knew how to transfer government money from these organizations to his own pocket or his family foundation. For example, one witness revealed Rep. Mollohan routinely borrowed money directly from VHF. Another stated an unidentified individual associated with one of the nonprofits gave Rep. Mollohan and his wife one car each per year. VHF also may have paid Rep. Mollohan $55 a day in per diem allowances according to the FBI documents…In addition, in July 2001, WVHTCF transferred more than $150,000 in certificates of deposit to the Robert H. Mollohan Family Charitable Foundation, an organization named in honor of Rep. Mollohan’s father and run by Rep. Mollohan that offers scholarships and community grants to West Virginians.
VHF is the Vandalia Heritage Foundation, a recipient of Mollohan earmarks.
(Mollohan apparently learned a few things from his dad. According to the 1982 edition of Politics in America, the elder Mollohan left Congress to run unsuccessfully for governor of West Virginia in 1956. His campaign “was crippled by political scandal. It was revealed during the campaign that while Mollohan was superintendent of the states’ boys school, he had received $20,000 and two cars from a Grafton coal company that obtained a contract to strip-mine on school land.”)
According to CREW:
The nonprofits were also a source of do-nothing and no-show jobs for Rep. Mollohan’s cronies. Many witnesses said a number of their colleagues typically filled out inaccurate timesheets and billed for work they never did. In one case, an employee at Pro-Logic, a tech firm located in the Mollohan Innovation Center, billed for hundreds of hours on a U.S. Army Corps of Engineers project but only attended one 30-minute meeting. Another Pro-Logic employee, told the FBI “I never dreamt that I’d be paid $45-50 thousand a year to sit in a chair and do nothing- [I] thought we’d be doing real work.”
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 2010 when the Justice Department announced that it had ended its four-year probe, just after Mollohan voted for Obamacare.
At the time, 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.” The Justice Department said nothing about the specific allegations. Mollohan also repeated his attacks on NLPC.
Mollohan is now a lobbyist for the National White Collar Crime Center.