Research Briefing

An Update On The Obama Ethics Scandals

FAST AND FURIOUS

Attorney General Holder Is Set To Testify Before The House Oversight Committee Today. “Attorney General Eric Holder is scheduled to testify about the botched ‘Fast and Furious’ gun-tracking operation before the House Oversight and Government Reform Committee next month.” (Jordy Yager, “Holder To Appear Before Issa’s Panel,” The Hill, 1/4/12)

Claims That High-Ranking Officials Were Unaware Have Proven False

Assistant Attorney General Lanny Breuer Claimed That Had He Known About “Gunwalking,” He “Would Have Stopped It.” “Gary Grindler, the former Acting Deputy Attorney General, and Lanny Breuer, the Assistant Attorney General for the Criminal Division, both stated that neither ATF nor the U.S. Attorney’s Office ever brought to their attention concerns about gunwalking in Operation Fast and Furious, and that, if they had been told, they ‘would have stopped it.’” (Report Of The Minority Staff, “Fatally Flawed: Five Years Of Gunwalking In Arizona,” Committee On Oversight And Government Reform, 1/12)

Breuer Had Claimed That He Was “Never Briefed” On “Fast And Furious” Tactics. “Similarly, the Attorney General’s key subordinates—the Deputy Attorney General and the Assistant Attorney General for the Criminal Division—informed the Committee that they were never briefed on the tactics by ATF or the U.S. Attorney’s Office and never raised concerns about the operation to the Attorney General.” (Report Of The Minority Staff, “Fatally Flawed: Five Years Of Gunwalking In Arizona,” Committee On Oversight And Government Reform, 1/12)

• New Documents Released In January 2012 Show Assistant Attorney General Lanny Breuer “Suggested Letting Some Illicit ‘Straw’ Weapons Buyers In The U.S. Transport Their Guns Across The Border.” “Newly released Justice Department emails sent to Capitol Hill for a congressional inquiry into a gun-smuggling operation indicate that the head of the department's criminal division suggested letting some illicit ‘straw’ weapons buyers in the U.S. transport their guns across the border into Mexico where they could be arrested.” (“Justice Dept. Releases Documents In Fast And Furious Probe,” The Associated Press, 1/28/12)
• Breuer Suggested The Use Of “Gunwalking” To “Send A Strong Message To Arms Traffickers.” “According to the emails turned over to the House Oversight and Government Reform Committee on Friday night, the Justice official, Lanny Breuer, made the suggestion to Mexican officials because it ‘may send a strong message to arms traffickers.’” (“Justice Dept. Releases Documents In Fast And Furious Probe,” The Associated Press, 1/28/12)

And Holder’s Stall Tactics Have Brought Him On The Verge Of Contempt Of Congress

Attorney General Holder Was Threatened With Contempt For Refusing To Comply With A Congressional Subpoena Of Documents Regarding “Fast And Furious.” “Rep. Darrell Issa (R-Calif.) threatened to hold Attorney General Eric Holder in contempt of Congress if the nation’s top cop doesn’t hand over Justice Department documents within nine days. Issa, the chairman of the House Oversight and Government Reform Committee, blasted Holder in a letter on Tuesday for refusing to comply with the panel’s subpoena for documents relating to the ‘Operation Fast and Furious’ gun-trafficking operation.” (Jordy Yager, “Rep. Issa Threatens Holder With Contempt Over ‘Fast And Furious’ Operation,” The Hill, 1/31/12)

After Over A Year Of Requests, The Justice Department Released “For The First Time” This Month Documents From “The Highest Levels Of The Agency” About Agent Brian Terry’s Murder. “For the first time, the Justice Department has made public a series of sensitive messages that passed to the highest levels of the agency within hours of an ambush that killed a U.S. border patrol agent along the Southwest border in December 2010, igniting a national scandal over a gun trafficking investigation gone wrong.” (Carrie Johnson, “Emails Show How ‘Fast And Furious’ Ambush News Unfolded At Justice Dept.,” NPR’s “The Two-Way," 1/27/12)

In A Newly Released Report, Congressional Democrats Admit That Attorney General Holder Refused To Release Documents Regarding “Fast And Furious” For Nearly A Year.  “In March 2011, the Committee sent letters to ATF and the Department of Justice requesting documents and communications.  Committee Chairman Darrell Issa subsequently issued subpoenas for these documents in March and October 2011, and he has issued numerous document requests to other agencies, including the FBI and DEA.” (Report Of The Minority Staff, “Fatally Flawed: Five Years Of Gunwalking In Arizona,” Committee On Oversight And Government Reform, 1/12)

MF GLOBAL

Michael Roseman, Chief Risk Officer Who Warned About MF Global’s Bets And Michael Stockman, The Officer Who Replaced Him, Will Appear Before The House Financial Services Committee Thursday. “The oversight panel of the House Financial Services Committee announced Friday that its witness list for the Feb. 2 hearing would include Michael Roseman, the chief risk officer who sounded the alarms about MF Global’s outsize bets, and Michael Stockman, who took the reins after Mr. Roseman clashed with the firm’s top executives.” (Ben Protess, “Congress To Hear From MF Global’s Former Risk Chiefs,” The New York Times’ “Dealbook,” 1/27/12)

• “The Hearing Will Present The First Opportunity For MF Global’s Internal Watchdogs To Shed Light On Their Tumultuous Tenures At The Firm, Which Filed For Bankruptcy On Oct. 31.” (Ben Protess, “Congress To Hear From MF Global’s Former Risk Chiefs,” The New York Times’ “Dealbook,” 1/27/12)

We’ve Learned That Jon Corzine Was Managing “The Process Soup To Nuts”

Former Jon Corzine Associate: “Jon Became A Zealot” About European-Debt Trades. “As federal authorities searched for the brokerage house’s more than $1 billion in missing customer money, friends and former associates of Corzine weighed in on the ways his personal quirks informed his management style. ‘On this, Jon became a zealot,’ one person says of Corzine’s European-debt trades.” (“On Eve Of $41 Billion MF Global Bankruptcy Filing, Jon Corzine Was Cháteau Shopping In France,” Vanity Fair, 1/5/12)

• “‘He Managed The Process Soup To Nuts,’ Says A Former Employee. ‘He Knew Every Number Back And Forth. He’d Talk To The Accountants And The Board. He’s Not A Detail-Oriented Guy, But On This He Knew Every Detail.’” (“On Eve Of $41 Billion MF Global Bankruptcy Filing, Jon Corzine Was Cháteau Shopping In France,” Vanity Fair, 1/5/12)

Corzine & MF Global Misled Regulators, Employees, And Customers About Their Financial Position And Are Now Being Sued

MF Global Told S&P Their Capital Position Had “Never Been Stronger” A Week Before Filing For Bankruptcy. “Just a week before futures brokerage MF Global filed for bankruptcy, the firm's chief financial officer told analysts at Standard & Poor's that its capital position had ‘never been stronger,’ according to the ratings agency.” (Sarah Lynch, “MF Global Told S&P Its Capital Position Was Strong,” Reuters, 1/30/12)

• There Are At Least 9 Lawsuits Aimed At Corzine, Centering Around His Alleged Misleading Statements About MF Global’s Financial Condition. “Corzine is the defendant in at least nine lawsuits before a federal judge in Manhattan that seek compensation for losses from the company’s bankruptcy, according to court papers. U.S. District Judge Victor Marrero has been combining the cases into one, saying they make similar claims that Corzine and other company officials made misleading statements about MF Global’s financial condition before its Oct. 31 Chapter 11 filing. Banyon Capital Master Fund Ltd., Virginia and Arkansas retirement systems and the Building Trades United Pension Trust Fund all filed separate requests in court yesterday to serve as lead plaintiff.” (Lisa Sandler And Patricia Hurtado, “MF Global Plaintiffs Compete to Lead Lawsuit Against Corzine Over Collapse,” Bloomberg, 1/4/12)

Officials Believe Employees Used The “Customer Segregated Account” In The Final Days Before MF Global Declared Bankruptcy. “Many officials now believe certain employees at MF Global dipped into the ‘customer segregated account’ that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.”  (Scott Patterson And Aaron Lucchetti, “Money From MF global Feared Gone,” The Wall Street Journal, 1/30/12)

• Montana Farmers Have Filed A Class Action Lawsuit Against Jon Corzine, Charging That He “Stole Millions From Their Accounts” To Pay Off MF Global’s “Spiraling Debts.” “Montana farmers have filed a class action suit against former New Jersey governor Jon Corzine, charging that the failed financial firm run by Corzine stole millions from their accounts to pay off its spiraling debts, and that Corzine's ‘single-minded obsession’ with making MF Global a big player on Wall Street led to the firm's collapse.” (Cindy Galli, “Farmers Sue Jon Corzine Over Missing Millions,” ABC News, 1/9/12)
• “Regulators And Investigators Currently Have ‘No Idea About What Customers Will Ultimately Receive,’ One Top Regulator Recently Told The Post.” (Kaja Whitehouse, “Senators Urge Justice Department To Investigate MF Global,” New York Post, 12/23/11)

SOLYNDRA

House Republicans Are Voting Whether To Hold The White House In Contempt Over Its Response To Solyndra-Related Subpoenas. “House Republicans investigating Solyndra will huddle this week to weigh holding a contempt of Congress vote against the White House over its response to subpoenas seeking internal documents involving the bankrupt solar company.” (Darren Samuelsohn, “Cliff Stearns: Contempt Of Congress Vote Under Consideration,” Politico, 1/31/12)

Two Of Obama's Bundlers Are Linked To The Solyndra Scandal - Steven Spiner And Steve Westley . "The list also includes two bundlers linked to Solyndra, the controversial solar company that received a $528 million federal loan and later declared bankruptcy - Steven Spiner and Steve Westley. The White House decision to approve the loan triggered a congressional probe on whether the deal smacked of political favoritism." (Carl Campanile, "Obama's 'Bundled' Up With Corzine," New York Post, 2/1/12)

• Spinner And Westly Have Raised At Least $700,000 For Obama's Reelection Campaign, Are Connected To Solyndra. "The list includes two fundraisers linked to Solyndra LLC, the California solar company that received a $528 million federal loan and then later declared bankruptcy, prompting a federal investigation. Steve Spinner, an Energy Department adviser, raised at least $500,000 and Steve Westly, a venture capitalist who was an unpaid adviser to the department, raised between $200,000 and $500,000." ("Obama Bundlers Include Advisers On Solyndra, Corzine, Eva Longoria," The Associated Press , 2/1/12)