Rangel launches legal defense fund for new allegations

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Anticipating another investigation following allegations of wrongdoing, Rep. Charles Rangel (D-N.Y.) said Tuesday that he was starting a legal defense trust to cover the cost of legal bills.

House Ethics Committee voted to censure him, now new ethics charges are surfacing

Earlier this month, Rangel was formally censured by the House of Representatives for violating rules of conduct, including failure to report income on a vacation house in the Dominican Republic, improperly using a rent-controlled apartment as a campaign office and having his congressional office raise money for a university center named after him.

Rangel was re-elected for the 21st straight term despite the ethics investigation and likelihood of censure at the time of the November election.

Earlier in December, the Federal Election Commission reported receiving a new complaint that Rangel violated election laws by using campaign monies to pay for his legal defense costs. The group that filed the complaint, the National Legal and Policy Center, was responsible for the complaint that led to the charges brought against Rangel by the House Committee on Standards of Official Conduct in July.

“The repeated filings of allegations, no matter how unsubstantiated, by the (National Legal and Policy Center), a politically-motivated right wing group dedicated to eviscerating civil rights and labor union protections, have led me to this action,” said Rangel in a prepared statement.

The NLPC’s complaint alleges that Rangel used almost $400,000 in funds from his National Leadership PAC, violating the Federal Election Campaign Act. The organization said that monies from the PAC are designated for contributions to other candidates, and cannot be used for legal expenses related to their official actions.

Rangel’s new fund called the Charles B. Rangel Legal Expense Trust was approved by the House ethics committee. Contributions of up to $5,000 can be made by supporters each year.

“I continue to draw satisfaction from the recently concluded ethics committee investigations that established that, while I committed serious violations of the rules of the House, none of those violations included corruption, intent, self-dealing, self-enrichment or quid pro quos involving any official action,” Rangel said.

“I am confident any continuing or subsequent investigations will find a similar lack of any intent to violate any rules or any actions designed in any way to personally benefit me or my family,” he said.

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Auto Czar Settles with SEC for $6.2 Million over Kickback Scheme

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Got Caught in New York State Pension Fund Kickback Scheme

The former Obama administration official charged with overseeing the restructuring of the auto industry has agreed to settle with the SEC on kickback charges involving New York state pension funds. Under the terms of the settlement, Steven L. Rattner has agreed to pay a fine of $6.2 million for violating the Martin Act, a state securities law.

Rattner was accused of paying Hank Morris, an aide to former state comptroller Alan G. Hevesi, for his help in securing business from the $135 billion fund. Morris pleaded guilty earlier this month to providing illegal access to the fund.

Rattner’s former firm, Quadrangle Group, settled with authorities in April over hiring Morris to get access to the pension fund. The firm paid the SEC a penalty of $12 million and, as part of its settlement, acknowledged Rattner’s actions were “inappropriate, wrong and unethical.” A lawyer for Rattner disputed the wording of the firm’s acknowledgement.

The SEC also charged Rattner with providing special favors to the brother of a senior pension fund official. The brother, a Hollywood producer, was helped by Rattner in securing distribution of a low-budget film called Chooch, through a DVD company owned by Quadrangle. Rattner also helped the brother secure a deal with IFC, a cable outlet partly owned by Quadrangle. Rattner was also a member of IFC’s board of directors.

Officials also accused Rattner of funneling $50,000 in campaign contributions to Hevesi’s reelection campaign for state comptroller through third parties to conceal the true identity of the donor. After making the illegal donations, Quadrangle’s state pension monies under management increased from $100 million to $150 million.

In a separate action Thursday, New York attorney general and governor-elect Andrew Cuomo sued Rattner over the same activities, seeking at least $26 million in fines and a lifetime ban from the New York securities industry. Rattner had been in settlement discussions with the attorney general’s office, and last month rejected a settlement offer of $20 million from Cuomo.

“While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General’s office prefers political considerations instead of a reasoned assessment of the facts,” Mr. Rattner said in a statement. “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity—and I certainly did not violate the Martin Act. That’s why I intend to clear my name by defending myself vigorously against this politically-motivated lawsuit.”

Before founding Quadrangle, Rattner was a reporter for The New York Times and went on to become an investment banker for Lazard in New York. When he was appointed to the auto czar post in February 2009, he listed his net worth on federal disclosure firms as between $188 million and $608 million.

Wall Street Journal

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No More Delays in DeLay Trial

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Skirted Campaign Finance Laws?

The corruption trial of former U.S. House majority leader Tom DeLay is getting underway today in Austin, Texas at the Travis County Justice Complex.  DeLay was charged in 2005 with money laundering and conspiracy to commit money laundering. If convicted he could face life in prison, plus fines.

At the center of the matter, is whether DeLay violated campaign contribution laws for his part in a single transaction involving campaign funds. A political action committee he founded, Texans for a Republican Majority, sent a $190,000 contribution to the Republican National Committee, which in turn used the monies to fund the 2002 campaigns of seven Texas Republican candidates supported by DeLay.

Under Texas state rules, corporate political donations to candidates are prohibited. Prosecutors claim that corporate donations to the PAC were “laundered” by virtue of a special arrangement with the RNC in Washington. Monies were provided by the PAC to the RNC, which in turn gave them to the  Texas candidates as non-corporate funds, presumably to skirt campaign finance rules.

Travis County prosecutor Beverly Mathews charged that the exchange of monies had a much larger role in state politics: a redistricting plan that would help elect more Republicans to Congress and thus help cement DeLay’s leadership position.

DeLay resigned from Congress in 2006 after an aide was implicated in the Jack Abramoff corruption scandal.

The Houston Chronicle

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San Diego Council Prez Makes Illegal Contribution to Brother

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$25,000 Handout for Brother Felipe's Campaign

Apparently, he though no one would notice. At least that’s what San Diego City Council President Ben Hueso must have been thinking when he diverted $25,000 in funds from his own campaign coffers for state assembly, to the campaign accounts of his brother Felipe, who is running to replace him on the city council.

According to the San Diego Union-Tribune, on October 7, Ben Hueso gave the monies from his campaign to a group called San Diegans for Healthy Neighborhoods and Strong Economy, a group created by local unions for one purpose: to see that brother Felipe get elected to the San Diego City Council. State law specifically prohibits transferring money raised for one candidate or cause to another.

Los Angeles-based campaign consultant Robert Stern said the contribution was clearly illegal. “He shouldn’t be doing this anyway … He is obviously trying to inject money in that (campaign) the law says he shouldn’t be doing.”

Campaign spokeswoman for Ben Hueso, Paola Avila, initially defended the contribution, but later backtracked admitting that the move violated the law. The Fair Political Practices Commission is looking into the matter, and has the authority to assess fines if wrongdoing is determined.

San Diego Union-Tribune

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