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A Donor Who Had Big Allies

The Nation

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

Duane Gibson, the committee's general counsel who later went to work for Abramoff, was named the chief investigator. They immediately subpoenaed internal records from the FDIC and the Office of Thrift Supervision, which also had responsibilities for S&Ls.

Both agencies were wary and, although complying with the subpoenas, repeatedly urged the lawmakers not to make the documents public or share them with Hurwitz.

William F. Kroener III, general counsel at the FDIC, warned the committee that Hurwitz and his lawyers were not entitled to see many of the documents.

Kroener told the panel that, should the material end up in their hands, it "could significantly injure our ability to litigate this matter and reduce damages otherwise recoverable to reimburse taxpayers."

Carolyn J. Buck, chief counsel at the Office of Thrift Supervision, also wrote the committee emphasizing that "we note our objection to any publication or release of these documents."

The task force was set up for six months, and disbanded in December 2000. It held one hearing, and called FDIC and Office of Thrift Supervision officials as witnesses.

At that hearing, Tanoue defended the FDIC's investigation.

"I have listened to and considered the arguments made directly to me by representatives of Mr. Hurwitz," she testified. "However, I have found no compelling reason to take the extraordinary step of ... taking this case out of the hands of the judicial system."

Kroener testified that the FDIC was not interested in a trees-for-debt swap, saying his agency "has expressed its preference for a cash settlement."

Six months later, in June 2001, Pombo submitted a portion of the subpoenaed documents that filled 14 pages in the Congressional Record.

Six months after that, in December 2001, Doolittle\o7 \f7did the same, even though he was no longer a member of the committee. And his submission was much larger -- filling 111 pages.

The documents were so voluminous that Doolittle and Pombo had to pay a total of about $20,000 from their congressional accounts to cover the extra printing costs.

The FDIC was outraged over the documents' release.

Its chief spokesman, Phil Battey, said in a statement to the Sacramento Bee at the time that the publication of the materials was a "subordination ... and a seamy abuse of the legislative process."

Not long afterward, the FDIC dismissed its case, and the Office of Thrift Supervision settled with Hurwitz for about $200,000 in administrative costs.

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Times staff writer Ted Rohrlich contributed to this report.

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