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The Nation

A Donor Who Had Big Allies

DeLay and two others helped put the brakes on a federal probe of a businessman. Evidence was published in the Congressional Record.

January 08, 2006|Richard A. Serrano and Stephen Braun | Times Staff Writers

WASHINGTON — In a case that echoes the Jack Abramoff influence-peddling scandal, two Northern California Republican congressmen used their official positions to try to stop a federal investigation of a wealthy Texas businessman who provided them with political contributions.

Reps. John T. Doolittle and Richard W. Pombo joined forces with former House Majority Leader Tom DeLay of Texas to oppose an investigation by federal banking regulators into the affairs of Houston millionaire Charles Hurwitz, documents recently obtained by The Times show. The Federal Deposit Insurance Corp. was seeking $300 million from Hurwitz for his role in the collapse of a Texas savings and loan that cost taxpayers $1.6 billion.

The investigation was ultimately dropped.

The effort to help Hurwitz began in 1999 when DeLay wrote a letter to the chairman of the FDIC denouncing the investigation of Hurwitz as a "form of harassment and deceit on the part of government employees." When the FDIC persisted, Doolittle and Pombo -- both considered proteges of DeLay -- used their power as members of the House Resources Committee to subpoena the agency's confidential records on the case, including details of the evidence FDIC investigators had compiled on Hurwitz.

Then, in 2001, the two congressmen inserted many of the sensitive documents into the Congressional Record, making them public and accessible to Hurwitz's lawyers, a move that FDIC officials said damaged the government's ability to pursue the banker.

The FDIC's chief spokesman characterized what Doolittle and Pombo did as "a seamy abuse of the legislative process." But soon afterward, in 2002, the FDIC dropped its case against Hurwitz, who had owned a controlling interest in the United Savings Assn. of Texas. United Savings' failure was one of the worst of the S&L debacles in the 1980s.

Doolittle and Pombo did not respond to requests for interviews last week. They publicly defended Hurwitz at the time, saying the inquiry was unfair. Hurwitz's lawyer said Friday that the FDIC had been overzealous. This summer, a judge in Texas agreed and awarded Hurwitz attorney fees and other costs in a civil suit he filed. "They sought to humiliate him," U.S. District Judge Lynn N. Hughes, said in the ruling. The government is appealing the decision.

In key aspects, the Hurwitz case follows the pattern of the Abramoff scandal: members of Congress using their offices to do favors for a politically well-connected individual who, in turn, supplies them with campaign funds. Although Washington politicians frequently try to help important constituents and contributors, it is unusual for members of Congress to take direct steps to stymie an ongoing investigation by an agency such as the FDIC.

And the actions of the two Californians reflect DeLay's broad strategy of cementing relationships with individuals, business interests and lobbyists whose financial support enabled Republicans to extend their grip on Congress and on government agencies as well. The system DeLay developed and Abramoff took part in went beyond simple quid pro quo; it mobilized whatever GOP resources were available to help those who could help the party.

In the Hurwitz case, Doolittle and Pombo were in a position to pressure the FDIC and did so. Pombo received a modest campaign contribution. In another case, Pombo helped one of Abramoff's clients, the Mashpee Indians in Massachusetts, gain official recognition as a tribe; the congressman received contributions from the lobbyist and the tribe in that instance.

Andrew Wheat, research director for Texans for Public Justice, a nonpartisan electoral reform group based in Austin, put it this way: "DeLay and Hurwitz seem like natural allies in that they have geographic and ideological proximity. Mr. Hurwitz is a guy who has a reputation of being willing to pay to play. And DeLay likes to play that game too, so there's a natural affinity."

DeLay announced Saturday that he was giving up his efforts to regain the majority leader position. He was majority whip when he first became involved in helping Hurwitz.

In the Abramoff scandal, members of Congress allegedly did favors for the politically connected lobbyist's clients -- including Indian casinos -- and received campaign contributions and lavish free entertainment. Last week, the lobbyist pleaded guilty in separate cases in Miami and Washington in a deal that government investigators hope will lead to more prosecutions. Others involved have also made deals to cooperate, and Washington is braced for new criminal charges to come.

The episode involving Hurwitz and the two California congressmen took place with little public notice just before the Abramoff scandal began to escalate. The Sacramento Bee published a story when Doolittle inserted FDIC investigative documents into the Congressional Record, noting that it occurred at a time when Congress was distracted by the Sept. 11 terrorist attacks and the anthrax episode.

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