Feds Probing Dem Sen. Relationship to Former Aide

As the feds are bearing down hard on Sen. Ted Stevens (R-AK), raiding his Alaska home and convening a grand jury in Washington, D.C., another investigation into a sitting senator has been proceeding quietly up in New Jersey.

Over the past several months, the U.S. attorney’s office in New Jersey has issued two grand jury subpoenas to former clients of Kay LiCausi, a lobbyist and former aide to Sen. Robert Menendez (D-NJ). The investigation, of course, is no secret, but after a controversy raged over subpoenas issued shortly before the 2006 election, the investigation has shifted direction entirely. Now the focus seems to be whether Menendez steered lobbying contracts to his former girlfriend and then delivered government funds to those client once they’d hired her.

It’s never been confirmed that LiCausi and Menendez, who’s divorced, were in a romantic relationship. But the rumors were such that The New York Times didn’t hesitate to report in 2005 on “the widespread belief” in New Jersey and among Menendez’s former staffers that they were. And Menendez himself has never denied it, always answering queries with “that’s strictly personal.” Reports of the relationship have always been phrased in the past tense since 2005.

LiCausi started work for Menendez back when he was in the House in 1998. She was 26. Four years later she left with the title of chief of staff of his New Jersey office, a position that the Times called “midlevel” — she supervised six people. But immediately she began raking in some hefty contracts, not only as a lobbyist, but also as a fundraiser for Menendez and the Democratic Congressional Campaign Committee. Menendez admitted to the Times that he’d “encouraged” the DCCC to hire her for the $10,000 a month spot. And no doubt he was responsible for the work on his political committees, where she was also making another $10,000 a month fundraising for both his political action committee and his campaign. And then there were the lobbying contracts which also rolled in.

The subpoenas issued in the past few months have been to two of LiCausi’s clients. One, to Jersey City Medical Center, was originally reported by The Star-Ledger in late August. The other, to the Stevens Institute of Technology in Hoboken, was reported two weeks ago. The hospital signed up LiCausi in January, 2003, shortly after she left Menendez’s office; the contract paid $280,000 through February of this year. An exec from the hospital has also testified before a grand jury.

Both subpoenas focused on the contracts with LiCausi. The Times cited “people familiar with the inquiry” as saying that investigators were trying to determine whether Mr. Menendez had “improperly” helped LiCausi “win the contract to represent [the center], and if her position was linked to the hospital’s successful efforts to win government-backed bonds.”

Precisely what crime prosecutors might be looking to prove is unclear. Menendez has admitted that he gave “positive recommendations” of LiCausi to clients when asked, but has also insisted, “I have never steered a contract to anyone.”

Criminal defense lawyer Stan Brand told me that generally such a case could be very hard to prosecute. “There’s no magical statute,” he said. “Unless you have some proof or evidence of personal financial gain by a public official, it’s very hard to make a case…. The typical political give and take isn’t going to be enough.”

The investigation certainly has taken a very public change in direction. When U.S. Attorney Christopher Christie, a major GOP donor, issued subpoenas in September of last year, Menendez was locked in a tight reelection race (he was originally appointed to the Senate in January 2006 when then-Sen. Jon Corzine (D) won the governorship). And Menendez didn’t hesitate to question the timing of the revelation:

“Suddenly 61 days before an election a prosecutor appointed by George Bush decides to take an interest, and not coincidentally, leaks to the press follow immediately. There are serious questions about the timing of this inquiry and I will not allow an orchestrated concerted effort to smear and personally destroy those who oppose this administration.”

And the nature of the inquiry related to the subpoenas was just plain confusing, as we wrote at the time. The subpoenas related to a community charity who rents out Menendez’s former Union City home.

But prosecutors apparently have stopped pushing that angle. After nothing seemed to happen for such a very long while, Menendez’s lawyers went so far as to request a letter from prosecutors in June that he was officially cleared. But that didn’t happen. And in August of this year, the investigation showed life again.

If investigators were looking for muck on Menendez, his relationship with LiCausi is an obvious place to look. It’s far from a new scandal. In fact, allegations date back to August 2004, when the scandal over then-Gov. Jim McGreevey was raging. When Menendez pushed publicly for McGreevey to step down sooner than he intended, a McGreevey aide hit back in a very public way, telling a local television station,

”How hypocritical it is for the congressman to call for the governor’s immediate resignation over an illicit affair, when the congressman had an illicit affair and then set her up in business which he then referred clients to. Maybe it’s the congressman who should be resigning.”

Menendez, who separated from his wife in 2002, backed off. But his relationship with LiCausi remained an issue throughout his 2006 reelection campaign, and he consistently denied doing anything wrong. Now with the U.S. attorney’s office on the case, he and his lawyers are doing the same.