TPM News

It doesn't get harsher than that.

In a floor speech today, Arlen Specter, the ranking Republican on the Senate Judiciary committee, suggested that Eric Holder, Barack Obama's nominee for Attorney General, might follow in the footsteps of ... Alberto Gonzales!

The Washington Independent reports that Specter cited several of the attacks that we've heard from GOPers since Holder's nomination was announced -- including the Al Gore "campaign finance violations" of 1996, the Elian Gonzalez case, and the last-minute pardon of Marc Rich.

Then Specter really hit below the belt, declaring:

After our recent experience with Attorney General Gonzales, it is imperative that the Attorney General undertake and effectuate that responsibility of independence. Mr. Gonzales left office accused of politicizing the Justice Department, failing to restrain Executive overreaching, and being less than forthcoming with Congress ... I am convinced that many of Attorney General Gonzales' missteps were caused by his eagerness to please the White House. Similarly, when Mr. Holder was serving as DAG to President Clinton, some of his actions raised concerns about his ability to maintain his independence from the president.

Specter concluded:
I am prepared to give Mr. Holder a full opportunity to explain his past actions and convince the Committee and the Senate that his record warrants confirmation.

As we noted last month, Specter has already tried to throw a hitch into the Holder nomination, ultimately prevailing on Judiciary chair Pat Leahy to postpone Holder's confirmation hearings, citing the need to scrutinize Holder's record -- particularly on the Rich pardon -- more closely.

But comparing Holder to Gonzales surely goes too far.

Brian Hudson, the executive director of the Pennsylvania Housing Finance Agency was not contacted by anyone in the office of governor Ed Rendell in regard to the 2003 no-bid contract awarded by the agency to CDR Financial Products, Hudson told TPMmuckraker moments ago.

Hudson said that at that time, only two firms had the technical expertise to do the bond-swap advisory work the agency sought, and that CDR Financial was selected over a rival, Swap Advisors, simply because its appeared to "bring more to the table."

Hudson added he had been pleased with the company's work, saying that CDR had saved the PHFA $2-3 million, and that the agency had renewed its contract with the firm each year, and continues to employ it.

But he allowed that he was troubled by the allegations against CDR, and would reconsider the agency's ongoing relationship with the firm when its contract came up for renewal in March.

Hudson added that he had never heard of Alan Kessler, the Rendell fundraiser who records show, has lobbied for CDR.

As we noted earlier, Pennsylvania governor Ed Rendell has received at least $35,000 in contributions from CDR founder David Rubin. New Mexico governor Bill Richardson, who also received money from Rubin, this weekend withdrew his nomination to be Commerce Secretary citing a federal probe into the company's contracts with his state.

Earlier today we noted Pennsylvania governor Ed Rendell's ties to CDR Financial Products, the firm that derailed Bill Richardson's bid to be Commerce Secretary. Now we've found another Rendell-CDR link.

State lobbying disclosure records from 2006 show that CDR was represented by Alan Kessler of the Philadelphia law firm Wolf, Block, Schorr and Solis-Cohen. Kessler is also the chair of the USPS board of governors.

Philadelphia magazine describes Kessler as a "big fundraiser" for Rendell. And his Wolf Block bio shows he's held a string of prime patronage posts in government and Democratic politics.

From the bio:

Kessler was appointed by Governor Rendell as Finance Chair of the Pennsylvania Democratic Party.

Kessler also served, according to the site, as co-chair of Rendell's two transitions, the first after Rendell was elected mayor of Philadelphia in 1992, and the second after he was elected Pennsylvania governor in 2002.

And Kessler is said to have served as finance vice chair of the Democratic National Committee (DNC), which Rendell chaired from 1999 to 2001.

Kessler did not immediately respond to a phone call and email from TPMmuckraker requesting comment.

As we noted earlier, CDR obtained a no-bid financial contract from a state agency, the Pennsylvania Housing Finance Agency (PHFA), in 2003. And its founder David Rubin has contributed $35,000 to Rendell.

Chuck Ardo, a spokesman for Rendell told TPMmuckraker: "The governor took no action on behalf of CDR."

Ardo added that the 2003 contract was given by PHFA, and that the governor had no role in selecting CDR -- the same thing he told the Pittsburgh Tribune-Review which first reported the existence of the contract this morning.

Brian Hudson, the PHFA's executive director, told the Tribune-Review that he made the decision to select CDR, and that he wasn't contacted by anyone from the governor's office.

Hudson did not immediately respond to a phone call from TPMmuckraker.

Since Bill Richardson withdrew as Commerce Secretary nominee, citing the investigation into CDR Financial Products, there's been speculation (I know, I know, it's the Spectator) that he might not be the only prominent elected official who received political contributions from the company, and also contracted with it for government business.

And it looks like he isn't.

Recent reports have noted that Pennsylvania governor Ed Rendell received significant contributions from CDR founder David Rubin -- whose company's various run-ins with the law are beginning to attract scrutiny.

Today the Pittsburgh Tribune Review puts those contributions at $35,000. But it also reveals that CDR does indeed have a contract - a no-bid contract, to be precise -- with a state agency, which appears to be similar to the one it has with a New Mexico government agency.

The paper reports:

Gov. Ed Rendell was not aware that the Pennsylvania Housing Finance Agency awarded a $160,000 no-bid contract in 2003 to a California company headed by a member of his transition team for the state Department of Revenue, his spokesman said today.

Since then, CDR Financial Products has collected an estimated $770,000 as financial advisor to the housing agency, said Brian Hudson, the agency's executive director. Its contract is for $45,000, Hudson said.

A story (via nexis) that appeared in The Bond Buyer, a trade publication, in May of 2006 sheds a bit more light on that contract. The story reports that:
The Pennsylvania Housing Finance Agency [will issue] $150 million in single-family mortgage debt starting Wednesday to help fund home loans for residents with low to moderate incomes.


CDR Financial Products is the agency's swap adviser.

An earlier statement given to the paper by Rendell's office also described the governor's relationship with Rubin as "tangential". But it did not mention that, as the Tribune-Review noted, Rubin served on Rendell's 2003 transition team when Rendell was preparing to become governor. Rubin is still touting the appointment on his company's website.

As we noted yesteday, CDR was also found to have paid for the then-Treasurer of the city of Philadelphia, Corey Kemp, to attend the 2003 Super Bowl. Kemp is currently serving a jail sentence on a corruption conviction, though CDR was not charged with wrong-doing.

CDR won its contract with the city without a competitive bidding process.

Rendell was mayor of Philadelphia until 2000, though no evidence has yet emerged that the city's contract with CDR dates to his tenure as mayor.

Late update: Hudson tells TPMmuckraker he wasn't contacted by the governor's office in regard to CDR.

Yesterday we noted that, based on his testimony before Congress, SEC Inspector General David Kotz appears to be conducting an aggressive investigation of the agency's failures in connection with the Bernard Madoff case.

But on one crucial point, Kotz's tetimony was much less heartening.

Questioned by lawmakers about his authority to gain access to documents and witness testimony, Kotz admitted that he didn't have the power to subpoena former SEC employees for their testimony. (We'll post the video or the relevant portion of the transcript when it becomes available.)

Here's why that matters. Three SEC enforcement staffers -- Assistant Regional Director Doria Bachenheimer, Branch Chief Meaghan Cheung, and Staff Attorney Simona Suh -- were listed on the "closing document" for the 2006-07 inquiry into Madoff, which has emerged as exhibit A in the case against the agency. According to an SEC enforcement source, only Suh, the most junior of the three, remains at the agency. (A receptionist at the agency's New York office, where all three had been based, confirmed to TPMmuckraker that Bachenheimer and Cheung no longer worked at the SEC.)

So Kotz wont have the power to compel testimony from the two SEC staffers who were perhaps the most central on-the-ground players in the agency's failure to catch Madoff. That may well limit his ability to draw broad conclusions about the SEC's slip-up, and how to avoid similar mishaps in the future.

Buried in a Washington Post story on the incipient infighting between the Obama and Richardson camps about who's to blame for the aborted Commerce Secretary nomination, there's an interesting advance on the deeper story itself.

The Post reports:

The seriousness of the matter became apparent after the FBI began its own background check on Dec. 2.

And a little further down:
FBI agents assigned to comb his background learned independently that an inquiry was underway in New Mexico, the [Justice Department] source said.

In other words, it looks like FBI agents conducting a background check on Richardson for the Commerce job started bumping into their colleagues, who were looking into how CDR, a financial products company with a sketchy past that's donated over $100,000 to Richardson, obtained lucrative contracts advising the state finance authority on bond issues.

That suggests -- though of course, doesn't prove -- that the federal probe of CDR could be looking more directly at the governor himself.

And in that same vein, it was reported yesterday that Richardson had hired a top Albuquerque white-collar lawyer, Peter Schoenburg, in connection with the investigation.

More to come...

Interior Secretary Dirk Kempthorne spent up to $235,000 of taxpayer money on renovations to his office bathroom, the Washington Post reports. The General Services Administration approved the project because the office is in a government building and renovations to aging plumbing would have to have been made eventually. Additions included a shower, refrigerator and freezer, and monogrammed towels. (Washington Post)

The corruption trial of state Sen. Vincent Fumo of Pennsylvania continued Monday with new testimony regarding solicitations made to a phone company. The retired head of Verizon Pennsylvania alleged that Fumo had delivered a list of $50 million worth of demands during deregulation negotiations. Fumo has been indicted on 139 counts of corruption. (Associated Press)

A federal judge has renewed the case of an Islamic charity suing the government over illegal wiretaps. Al-Haramain Islamic Foundation had originally been barred from filing the case due to national security interests but says it now has enough access to evidence to prove it was potentially the target of surveillance under the Terrorist Surveillance Program. The Saudi Arabian charity is currently listed as a terrorist organization. (Associated Press)

Read More →

We noted earlier today that Madoff whistleblower Harry Markopolos over the weekend cancelled his scheduled testimony before a House committee, citing illness. Markopolos had been one of the key witnesses scheduled to appear, so his eleventh-hour withdrawal raised a few eyebrows.

We've now spoken to Markopolos' lawyer, Phil Michael, who assured TPMmuckraker that his client was incapacitated and unable to leave his home, and that Markopolos still intends to find a time to testify in the near future.

We look forward to hearing from him.

Did Madoff violate bail?

The Associated Press reports:

Prosecutors on Monday said disgraced financier Bernard Madoff violated bail conditions by mailing about $1 million worth of jewelry and other assets to relatives and should be jailed without bail.

"The defendant's recent actions amount to obstruction of justice," Assistant U.S. Attorney Marc Litt told a judge at a hearing in federal court in Manhattan.

Madoff's lawyer, Ira Sorkin, described the items as heirlooms that included cufflinks and antique watches. He said they were not significant assets. The items were sent to Madoff's children and to unidentified friends vacationing in Florida.

The prosecutor said the case against Madoff "is strong and getting stronger."

SEC Inspector General David Kotz, who is conducting an investigation into the agency's failure to detect Bernard Madoff's alleged "$50 billion ponzi scheme" despite conducting several probes of Madoff's business over the last decade, testified before Congress today.

And from the sound of his opening statement, his inquiry could be worth paying attention to.

Here, paraphrased, are a few highlights from the statement:

- Kotz has asked SEC employees to preserve relevant documents.

- He has sought information from the office of SEC chair Chris Cox, and with senior officials from the agency's compliance section, whose performance is at the heart of concerns that the SEC fell down on the job.

- He has obtained emails sent by former and current employees, both those at the Washington DC headquarters and in the New York and Boston regional offices.

- He hopes to add four new investigators to his team, and is seeking additional office space and administrative help.

- He has scheduled an on-the-record interview with Harry Markopoulos for later this month. Markopolos, who first rasied concern about Madoff's business in a lengthy complaint to the SEC, was scheduled to testify before Congress today but cancelled, citing illness. - He'll probe conflicts of interest at SEC stemming from Madoff's and his family's relationships with SEC officials.

- He'll also look at the overall operations of the enforcement division.

- And his probe will be "independent and as hard-hitting as necessary."

More news from today's hearing to follow...