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Prepare to have your credulity tested.

Back in February, the AP broke the story that the White House had secretly modified a proposed rule to crack down on contract fraud. The rule, originally drafted by the Justice Department, was intended to force contractors to police themselves and report evidence of fraud or abuse. But the White House's version of the rule specifically exempted contractors working overseas on contracts that exceeded $5 million.

The Justice Department, which needs all the help it can get in busting corrupt contractors, was dismayed. But it made the major overseas contractors (like, say, Blackwater, KBR, CACI International, etc.), who had been opposing the rule, very happy.

When the AP asked why the White House had inserted the loophole, no answers were forthcoming. A spokeswoman from the Office of Management and Budget would only say that it was a "proposed rule," and that they were reviewing public comments.

And that was it. Over the ensuing months, members of Congress from both parties denounced the rule and vowed investigations. Even the Special Inspector General for Iraq Reconstruction publicly criticized the rule. But the White House otherwise stayed mum.

The first Congressional hearing was set for today. And the White House has let it be known that the loophole is gone -- and that it was all a big misunderstanding:

Reversing itself after months of criticism, the administration closed the loophole that was quietly slipped last year into a proposed Justice Department crackdown on government contract fraud....

Government policywriters said the original rule was drawn up quickly, and chided the Justice Department for not explicitly making sure that overseas contracts should be included in the crackdown. "It was only after publication of the proposed rule ... that DoJ and other respondents expressed concern about the overseas exemption," the draft states....

A Bush administration official on Monday called the loophole "a drafting error" that happened when policywriters merely cut and pasted a 20-year-old Defense Department regulation into the contracting crackdown.

Oh well. Mistakes do happen.

Rep. Peter Welch (D-VT), who had called for the hearing, seems not to take the White House's story at face value: "This investigation proves why oversight works.... The question is why it required a congressional investigation to prevent the Bush administration from giving overseas contractors a free pass to defraud taxpayers."

Republican Senate candidate Bob Schaffer swears he's never met Jack Abramoff. But his track record of serving as a key ally for one of Abramoff's star clients, the Northern Mariana Islands, makes it clear that the two had a surprising overlap of interests over a number of years.

This weekend, The Denver Post detailed how Schaffer had beautifully orchestrated Abramoff's lobbying strategy for the islands in a September, 1999 Congressional hearing.

Schaffer told the Post that his "were questions that occurred to me at the time listening to the testimony." But it's apparent from the course of the hearing that's not true.

In a 1998 memo, Abramoff had laid out that strategy, which concentrated on attacking Interior Department officials who had been advocating stricter immigration and labor laws on the islands. Flying lawmakers on junkets to the islands, Abramoff wrote, was "one of the most effective ways to build permanent friends on the Hill." The September hearing occurred just weeks after Schaffer's Abramoff-organized trip to the islands.

Perhaps even more remarkable, though, was the form that Schaffer's attack took against Interior officials. Human rights activists had arranged for Nousher Jahedi, a Bangladeshi laborer who'd been robbed by human traffickers on his way to the Northern Marianas, to appear at the hearing.

Schaffer's aggressive questioning of Jahedi brings to mind comments that Rep. Ralph Hall (R-TX) entered into the Congressional record in 1997 -- comments that were shown to have been prepared by Jack Abramoff. Hall said that one of the key test cases of abuse on the islands, the testimony of a fifteen year-old girl who'd been forced to work for a local nightclub, was being distorted. She "wanted to do nude dancing." Hall has also said he never met Abramoff.

In his prepared statement, Jahedi told the committee that he'd paid a $7,000 "recruitment fee" to get a job on the islands, a U.S. territory, but that his recruiter had robbed him of $1,700 at gunpoint in the Philippines, and then demanded an additional $29,000 when the group of Bangladeshis finally reached the islands. When they could not pay, they were turned loose and found themselves "homeless and destitute."

Schaffer led the questioning of Jahedi. In a clearly choreographed allotting of time by the Republican members of the committee, Rep. John Doolittle (R-CA), a key Abramoff ally who chaired most of the hearing, ceded all of his questioning time for Schaffer to grill Jahedi.

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Count former U.S. Attorney David Iglesias among those who are critical of prosecutors' use of FBI agents to contact jurors from the Pittsburgh trial of Dr. Cyril Wecht.

The contacts came after the judge declared a mistrial because the jury was hung. Jurors have since told reporters that most of them had wanted to acquit Wecht. Nevertheless, prosecutors immediately declared their intent to retry the case.

Iglesias, one of the nine U.S. attorneys fired in 2006 as part of the political purge, told me that he'd "never heard" of such a thing. "Using the FBI smells of intimidation. The [prosecutors] should have picked up the phone and called the jurors themselves. I would have not authorized the FBI to contact jurors in this manner."

The spokeswoman for U.S. Attorney Mary Beth Buchanan has said that using the FBI agents was "commonplace."

"If that's true," Iglesias said, "I would change the practice because it sends the wrong message to people."

Iglesias also said that the case -- which involves charges that Wecht, then Allegheny County's coroner, wrongly billed taxpayers for mileage and gas costs that were really related to his personal business, costs that his lawyers say amount to less than $2,000 -- sounds "penny-ante" to him. "The loss to the government is so small," he said, that he thought many local prosecutors, let alone federal prosecutors, would "turn it down for being de minimis."

Things were already looking pretty hopeless for the FEC, but they just got bleaker. In a letter to White House chief of staff Josh Bolten today, Senate Majority Leader Harry Reid (D-NV) says that Robert Lenhard, one of the Democratic nominees for the commission, has withdrawn his name because of the ongoing stalemate.

It will most likely take "several months" to replace Lenhard, Reid writes, meaning that it's sure to be awhile before Democrats and Republicans can agree on a batch of nominees. Not that there have been any signs of hope anyway: Democrats continue to insist that the Senate vote on vote-suppression guru Hans von Spakovsky separately from the other three nominees, and Republicans refuse to allow that.

Meanwhile, the fracas over John McCain's withdrawal from public financing goes unresolved and outside groups are mounting up without worry of any imminent harassment from the FEC.

Update: By way of explanation, Lenhard has landed a gig (sub. req.) at the mega firm Covington & Burling.

For those of you waiting to hear from the senior executives behind AEY, Inc., you'll have to wait a little longer. The House oversight committee, which had set a hearing for 22 year-old AEY President Efraim Diveroli, his 25 year-old VP (and masseur) David Packouz, and the company's general manager, also 25, to testify, has indefinitely postponed the hearing.

Packouz's lawyer had informed the committee that his client would be pleading the Fifth unless he received immunity to testify -- something which seems unlikely. So that likely has something to do with the postponement. Diveroli and his boyz are under federal investigation for allegedly lying about the source of the ammunition he provided to the Afghan army.

Somehow things just aren't working out for Alberto Gonzales:

Alberto R. Gonzales, like many others recently unemployed, has discovered how difficult it can be to find a new job. Mr. Gonzales, the former attorney general, who was forced to resign last year, has been unable to interest law firms in adding his name to their roster, Washington lawyers and his associates said in recent interviews....

The greatest impediment to Mr. Gonzales's being offered the kind of high-salary job being snagged these days by lesser Justice Department officials, many lawyers agree, is his performance during his last few months in office. In that period, he was openly criticized by lawmakers for being untruthful in his sworn testimony. His conduct is being investigated by the Office of the Inspector General of the Justice Department, which could recommend actions from exonerating him to recommending criminal charges.

It's a pretty little mess. Despite being warned by the chairman of the FEC that he could not withdraw from the primary public funding system without the FEC's say-so, McCain, claiming to have withdrawn, has continued to spend away, by now far exceeding the spending cap. And the FEC remains powerless to act. (Here's our rundown on the whole thing.)

Today, the Democratic National Committee filed suit in federal court, seeking to force the FEC to action. The DNC filed a complaint with the FEC back in February, but since the FEC does not have enough commissioners to officially open an investigation, nothing has happened. The suit asks that the judge order the FEC to act, and if it doesn't, clear the way for the matter to be resolved in court. The soonest that could happen, DNC lawyers say, is June.

Here's a copy of the suit filed today.

The Justice Department is pursuing the leak from government officials to The New York Times' James Risen. A former government official called before a grand jury regarding the case has confirmed that he was shown phone records that prove some in the government had conversations with Risen as he was reporting on the CIA, as well as the National Security Agency's program of warrantless eavesdropping. The department is pursuing the sources for Risen's book "State of War," and articles he wrote for the Times. (New York Times)

The Bush administration has plans to implement a new advanced domestic spying system, employing technology formerly used for the likes of mapping and disaster response. Congress has responded critically, claiming that there's no proof that the program will not be used to violate citizens' privacy. The Department of Homeland Security wants to use the program for enhanced satellite imagery and chemical detection, among other monitoring abilities. (Washington Post)

Bill Clinton's charity, credited with raising millions for causes like disaster response and poverty relief, is now accused of accepting funds from a Chinese Internet company closely associated with the Chinese government. Alibaba Inc., now running Yahoo in China, carried a government-mandated post on the Yahoo China homepage calling for citizens to point out any Tibetan activists involved in the recent riots. This comes after Clinton's wife, Sen. Hillary Clinton, has called for President Bush to boycott the opening ceremonies of the upcoming Beijing Olympics. (Los Angeles Times)

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Sen. David Vitter (R-LA), your prayers have been answered! The D.C. Madam's attorney tells the AP that he will not be calling her most famous former client as a witness.

Of course, Vitter's attorney made it as clear as he could that Vitter would not be a helpful witness for the former madam, Deborah Jeane Palfrey. Palfrey's defense is that she was running a legitimate "fantasy sex" operation from her laundry room in California. Vitter's attorney said his client would plead the Fifth if called; not a helpful spectacle for the madam's case.

If Vitter and his escort didn't restrain themselves to fantasy, they weren't alone. The prosecution has called more than a dozen of Palfrey's former escorts to testify, and it hasn't been pretty. From The Washington Post:

The jurors have watched a procession of scared, mortified ex-prostitutes (13 so far) reluctantly take the witness stand, forced to reveal their secret former lives in intermittently graphic detail -- a past each clearly hoped was buried forever. Most testified that they grew weary of the business in less than a year and quit.

At $250 for 60 minutes or so, these weren't high-priced call girls, it turns out. They didn't measure up in appearance to the elites in the business. As the women tell it, Palfrey's niche was a middle-of-the-road, largely suburban clientele -- a long way up from the streetwalker trade, but well south of Emperors Club VIP, the four-figure-per-hour call girl outfit that last month proved the undoing of former New York governor Eliot Spitzer....

[T]he trial has been just a long, sad parade of former prostitutes, some in wigs provided by the government, a feeble disguise, a few dabbing tears on the witness stand.

The Post offers some snippets of testimony to convey the tone of things:

Prosecutor: "Of those 80 appointments, approximately how many times did you have sex?"

Ex-call girl: "Seventy-nine. . . . All except the gentleman who was a quadriplegic."


Defense attorney: "Ma'am, you ultimately decided that this wasn't for you, right? . . . I believe you were tired of lying to your boyfriend, correct?"

Ex-call girl: "Yes."

Defense attorney: "And you're not particularly happy to be here, are you, ma'am?"

Ex-call girl: "Who would be?"

Amen to that, eh, Sen. Vitter?

For days, Bruce Barclay's political career hung in the balance. The Republican commissioner of Cumberland County, Pennsylvania, had been accused of rape -- by a man, no less -- and the police were bearing down. Barclay's lawyer issued a strong denial ("This accusation of rape is ludicrous It will be defended forever and is wrong."). But it was clear things were looking pretty dicey. Until... vindication! Well, sort of.

On March 31st, police, investigating the allegation of rape by the 20-year old Marshall McCurdy, obtained a warrant to search Barclay's home. They didn't find evidence of rape. But they did find videotapes of hundreds of sexual encounters with men that Barclay had filmed on high-tech surveillance cameras. The cameras were hidden inside AM/FM radios, motion detectors and intercom speaker systems, among other places. There was also one at his business office.

None of the subjects were aware they were being filmed and no permission had been obtained, Barclay admitted. According to a second warrant issued on April 9th, Barclay also admitted to hiring prostitutes on a weekly basis from the now-defunct website

On April 10th, the rape charges were dropped. One of the videos found during the search showed Barclay and McCurdy engaging in apparently consensual sex. As his lawyer put it:

"It is clear in my client's private life he has made an error of judgment. What is striking is this very same lack of judgment exonerates him from a rape allegation that wasn't going anywhere."

Sadly, his vindication was his undoing. Barclay was forced to resign.

And legally, Barclay's not quite out of the woods yet-- he's still facing possible charges for privacy violations and promoting prostitution. McCurdy, however, has been charged with making false reports to law enforcement authorities and unsworn falsifications to authorities. He's up for a possible 3-year prison stint and $7,500 in fines.