TPM News

From the Miami Herald:

A 22-year-old munitions dealer and others in his Miami Beach company were arrested on charges of selling prohibited Chinese weaponry to the U.S. government to supply allied forces in Afghanistan, according to law enforcement officials.

Efraim Diveroli, president of AEY Inc., and three other employees were arrested Thursday night and Friday morning -- accused of conspiring to misrepresent the types of munitions they sold to the U.S. Department of Defense as part of a $300 million Army weapons contract, officials said.

Diveroli and the others are charged with violating the Arms Export Control Act stemming from an investigation that began earlier this year by the Pentagon and Immigration and Customs Enforcement.

Remember this guy?

The White House pulled out the old executive privilege trump card at the last minute today to avert a House government oversight committee vote to hold Administration officials in contempt of Congress.

Committee Chairman Henry Waxman (D-CA) has announced that EPA Administrator Stephen Johnson and Susan Dudley, administrator for information and regulatory affairs at the White House, have invoked executive privilege as the basis for not complying with subpoenas from Waxman's committee seeking documents about new smog requirements and a decision blocking California greenhouse gas limits.

Waxman postponed the vote on contempt in order to determine whether the statements of executive privilege were valid. "But," he emphasized, "to date I have not seen a valid instance of their executive privilege":

I don't think we've had a situation like this since Richard Nixon was president. When the President of the United States, may have been involved in acting contrary to law and the evidence that would determine that question for Congress, in exercising our oversight, is being blocked by an assertion of executive privilege. I would hope and expect this administration would not be making this assertion without a valid basis for it, but to date I have not seen a valid instance of their executive privilege.

We'll have video of Waxman's statements coming shortly.

The House debate about the FISA law is underway. The House has capped debate at just one hour.

So far, the Democrats seem to emphasize that this legislation will not get the Bush Administration off the hook.

Rep. John Conyers (D-MI) said he opposed the bill, but did point to one bright spot in the legislation.

"[The bill] will ask the inspector general to conduct an independent investigation of the president's wiretapping program," Conyers said. "This will uncover the truth for the American people, hopefully, about the president's activity."

Rep. Sylvester Reyes (D-TX), the chair of the House Intelligence Committee, also noted that: "This bill does not grant immunity to any government official that might have violated the law."

The girlfriend of fugitive Samuel Israel III was arrested Thursday, for aiding and abetting his flight. Israel, recently sentenced to 20 years in prison for swindling his hedge fund clients out of almost $400 million, faked his suicide days before he was supposed to enter prison. His girlfriend told authorities that she had helped Israel pack a recreational vehicle, attach a motor scooter and then drove with him to a rest area, where the R.V. was left for later use. (New York Times)

Two former Bear Stearns senior executives were arrested on Thursday for securities fraud relating to the subprime mortgage fallout. The former hedge fund managers were among 60 people arrested this week in a sweep the Justice Department is calling "Operation Malicious Mortgage." Over 400 people have been arrested since March on charges of mortgage fraud. (New York Times)

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Scott McClellan's testimony is underway before the House Judiciary Committee.

He was asked early on about President Bush's involvement in the leak of CIA operative Valerie Plame's identity.

"I do not think the president in any way had knowledge of it," McClellan said.

Also, we heard he got a $75,000 advance for the book.

Read more for the text of his opening statement.

Late Update: The Judiciary Committee recessed for the House debate on the compromise bill on the federal wiretapping law. That debate is underway and will last one hour.

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After everyone had a chance to sift through yesterday's breakthrough "compromise" on a new federal surveillance law, the biggest winer of the day was not Republicans or Democrats but the telecom companies.

Today's Washington Post summarizes the legal impact succicntly in it's front-page story :

The agreement extends the government's ability to eavesdrop on espionage and terrorism suspects while effectively providing a legal escape hatch for AT&T, Verizon Communications and other telecom firms. They face more than 40 lawsuits that allege they violated customers' privacy rights by helping the government conduct a warrantless spying program after the Sept. 11, 2001, attacks.

The final compromise on the immunity issue was this: Many Democrats had wanted the federal courts to review whether the surveillance program was legal before granting immunity. The White House wanted the courts to have no involvement whatsoever. The "compromise" calls on the courts to consider the surveillance legal if the companies can prove that the Administration told them it was legal. (Which we know they did).

The Chicago Tribune reports:
The new bill would require federal courts to cast those lawsuits aside if the companies can show that they received written requests from the government stating that their cooperation was deemed lawful and had been authorized by the president.
The House is expected to vote on the measure today. Though billed as a compromise, the final version was viewed as a victory for the White House, according to the Post.
But overall, the deal appears to give Bush and his aides, including Attorney General Michael B. Mukasey and Director of National Intelligence Mike McConnell, much of what they sought in a new surveillance law.
As for the future of the spying program, this new law allows it to grow.

The Wall Street Journal this morning wrote:
The lasting impact of the agreement would be a broader scope for the government's domestic surveillance.

Before 9/11, the NSA had to acquire a specific warrant if it wanted to listen to any conversation involving a U.S. citizen. Now, the secret court would be able to approve broad patterns of surveillance, focused on groups of people believed to be overseas, even if they are communicating with people in the U.S. So without a warrant, the NSA could listen to the conversation of a U.S. citizen if he or she was talking to a suspicious person overseas.
Several Democrats spoke out against the bill, but enough of them agreed to assure this version will pass into law.

Again, from the Journal:

The outcome was driven largely by the realities of election-year politics. Democrats, particularly more conservative ones, in vulnerable re-election races couldn't afford to appear to be dodging a big national-security issue. And many believed the law needed to be updated before surveillance orders expired in August. House Democratic leaders struggled for months to find a proposal their entire party could support but couldn't overcome splits between conservative and liberal Democrats -- some of whom are reacting angrily to the deal.
Behind the political positioning, however, was the pressure from the telecom firms -- particuarly AT&T and Verizon, which both stepped up their lobbying efforts this spring.

Just who makes up Rep. Don Young's "A Team," the nine transportation lobbyists listed in Young's "Intern Survival Guide" who "can talk to whoever they want" when they call his congressional office?

We've put together a snapshot of each "team" member. Pictures, mysterious silhouettes and more after the jump.

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We know the feds have had their eye on former Rep. John Sweeney for a while.

DOJ investigators pulled some of Sweeney's financial records from the House clerk in 2006 and reviewed them along with those from other lawmakers linked to convicted Washington lobbyist Jack Abramoff.

Now we're learning about a previously unreported search of his congressional office just about the time voters kicked him out of office in late 2006.

The Times Union up in Albany has made two references (here and here) to the search in its recent coverage:

The FBI also entered Sweeney's congressional office on his last day in Congress in 2006 and took computers, cellphones, various electronic devices, equipment and records from his aides, two sources familiar with the matter said.

A source close to Sweeney's former congressional office said the FBI first indicated its interest in Sweeney's activities when it seized records and computers of his staffers at the end of 2006.

It's not precisely clear whether this was a search of Sweeney's office on Capitol Hill or an office back in his district. Whatever the FBI got during that search might not be much help. A federal judge has since ruled that FBI searches in Congressional offices can violate the constitution. (Thanks to Rep. William Jefferson, whose Hill office was raided in May 2006.)

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As lawmakers continue to react to the "compromise" deal on a new federal surveillance law, several Democrats in the Senate are coming out against the bill.

Sen. Russ Feingold (D-WI) has been the most outspoken since the deal was unveiled this morning.

"The proposed FISA deal is not a compromise; it is a capitulation. The House and Senate should not be taking up this bill, which effectively guarantees immunity for telecom companies alleged to have participated in the President's illegal program, and which fails to protect the privacy of law-abiding Americans at home. Allowing courts to review the question of immunity is meaningless when the same legislation essentially requires the court to grant immunity. And under this bill, the government can still sweep up and keep the international communications of innocent Americans in the U.S. with no connection to suspected terrorists, with very few safeguards to protect against abuse of this power. Instead of cutting bad deals on both FISA and funding for the war in Iraq, Democrats should be standing up to the flawed and dangerous policies of this administration."

Sen. Patrick Leahy (D-VT) also said he opposed the House deal.
"This bill would dismiss ongoing cases against the telecommunications carriers that participated in that program without allowing a judicial review of the legality of the program. Therefore, it lacks accountability measures that I believe are crucial.

Sen. Harry Reid (D-NV), who has been cool to recent talk about the House deal, appears on the fence, and issued this statement today:

"Senator Reid believes this version is better than the bill the Senate passed in February and much better than the Protect America Act signed by the President last summer, but he remains opposed to retroactive immunity and is reviewing the bill in its entirety."

The Senate passed a bill that provided retroactive immunity to telecom companies earlier this year, so it's unlikely that there will be enough votes to defeat the latest version of immunity.

Besides the sub-prime mortgage crisis, UBS has an entirely different set of problems to worry about: the criminal prosecution of their former employees and the possible public exposure of their massive wealth management business.

Bradley Birkenfeld, a former UBS banker in Geneva, pled guilty in a Florida court today, for conspiring to hide $200 million in client assets in order to avoid paying U.S. taxes. The plea is the latest in bad news for the bank, who has its wealthiest clients running for cover as authorities pressure bank officials to give up the names of over 20,000 of their high-net- worth clients.

And it's all because no one wanted to pay their taxes. Birkenfeld and colleague Mario Staggl, currently at large, helped billionaire American real estate developer and owner of Olen Properties Corp., Igor Olenicoff avoid almost $7.2 million in taxes between 2001 and 2006. Olenicoff was sentenced on April 14, 2008 and agreed to pay $52 million in back taxes.

In his statement today in U.S. District Court in Fort Lauderdale, Birkenfeld detailed how he, Staggl and other managers and bankers at UBS had concealed client assets.

From a Department of Justice press release earlier today:

Birkenfeld, managers and bankers at the Swiss bank, and U.S. clients prepared false and misleading IRS forms that claimed that the owners of the accounts were sham off-shore entities' and failed to prepare and file IRS forms that should have identified the true U.S. owner of the accounts.

To further assist U.S. clients of the bank in concealing their offshore accounts, Birkenfeld admitted that he, Mario Staggl, additional private bankers and managers at the Swiss bank, and others advised U.S. clients to place cash and valuables in Swiss safety deposit boxes, and purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas. Additionally, they advised the clients to misrepresent the receipt of funds from the Swiss bank account in the United States as loans from the bank; destroy all off-shore banking records existing in the United States; utilize Swiss bank credit cards that they claimed could not be discovered by U.S. authorities; and file false U.S. individual income tax returns that omitted income earned by the clients and fraudulently misrepresented that the clients did not have an interest in and signature authority over accounts held offshore.

. . . To circumvent the requirements of the agreement between the bank and the IRS, Birkenfeld and others conspired to conceal the American real estate developer's ownership and control of the $200 million of assets hidden offshore by creating and utilizing nominee and sham entities, including Bahamian corporations, Liechtenstein trusts and Danish corporations.

According to the DOJ, Birkenfeld and his co-conspirators actions were in direct violation of a 2001 agreement between UBS and the American government, which stated that the Swiss bank would "identify and document any customers who received reportable U.S. source income or would withhold and anonymously pay a 28 percent withholding tax."

The guilty plea is the latest in what has been an ongoing and dramatic investigation of UBS and its Geneva bankers. In April of 2008, Martin Liechti, head of UBS' international wealth management business for the America's was briefly detained while passing through Miami airport. Birkenfeld, who has been talking to prosecutors for over a year regarding this matter, was arrested on May 7 upon entering the U.S. at Logan Airport for a high school reunion.

Staggl, co-founder of New Haven Trust Company Ltd. in Liechtenstein is considered a fugitive and is still at large.