Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.news From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Why did U.S. pass on the BCCI Date: Wed, 25 Nov 92 16:20:05 EST Message-ID: Lines: 163 \SE A \HD Why did U.S. pass on the BCCI case? \SH Evidence called 'surprisingly weak' \BY Nancy E. Roman and Jerry Seper \CR THE WASHINGTON TIMES A two-year, $20 million investigation that promised to link Washington power brokers Clark Clifford and Robert Altman to the Bank of Credit and Commerce International scandal has yielded considerably less than expected. A federal indictment issued in July, in tandem with a similar indictment by New York prosecutors, missed what many said was the government's main target: tying Mr. Clifford and Mr. Altman to BCCI's secret ownership of Washington's First American Bank. Instead, in a move that surprised some former federal prosecutors, the Justice Department deferred prosecution to Manhattan District Attorney Robert Morgenthau, who has targeted Mr. Clifford and Mr. Altman under state fraud statutes. And privately, some federal officials say Mr. Morgenthau has "a surprisingly weak case." "This is the first time in my recollection that the Department of Justice has yielded to a state prosecution. It appears to me a tacit admission that it is better for New York to try the case and lose than for the Department of Justice to do the same thing," said John Hume, a former senior prosecutor with the U.S. Attorney's Office in Washington familiar with the BCCI case. Attorneys for Mr. Clifford and Mr. Altman have argued that New York state statutes do not cover the alleged misconduct and were manipulated by New York prosecutors eager to get the case in court. Moreover, circumstantial evidence has led some former federal prosecutors to speculate that Justice Department officials concluded earlier this year that they could not win their case - and were quietly relieved when Mr. Morgenthau fought to prosecute. "Who ever heard of the Justice Department employing enormous resources investigating high-profile individuals for a couple of years, returning indictments with as much fanfare as they could muster, and then saying, 'Oh, never mind. . . .'?" asked Henry F. Schuelke, a former prosecutor for the U.S. Attorney's Office in Washington. The three-count federal indictment did not include charges of money laundering, drug connections, skimming profits or making favorable loans to friends. It charges instead that Mr. Clifford, then chairman of First American, and Mr. Altman, who served as president, failed to disclose to federal regulators loan arrangements with BCCI and "breached their duty of loyalty to the First American banks." The nine-count New York indictment alleges that the two men deceived state and federal banking regulators regarding BCCI's involvement in and control of banks in the United States. The two also are accused of receiving bribes. Mr. Clifford and Mr. Altman have denied all charges. Justice Department officials have said they allowed New York to go first because of a state double-jeopardy law that would prevent New York authorities from trying the two men on the same charges. Paul McNulty, a spokesman for Attorney General William P. Barr, said the department deferred to New York because Mr. Morgenthau was eager to prosecute. "My sense is that if there was any relief [at Justice], it wasn't because they didn't have a good case," he said. "It was more of a feeling that if New York is gung-ho, let them have it. Nobody viewed this case as a walk in the park." Mr. Hume, however, said he didn't believe the department's public reasons for letting the New York case go first. "Justice was backed into investigating something they didn't think had any merit. The charges brought - given what the rumors and allegations have been - were remarkably scanty," he said. But a high-ranking department official involved in the BCCI probe insisted that federal prosecutors were eager to move forward. Just because the indictment was narrower than some had hoped, the official said, doesn't mean no crimes were committed. "I don't have to accuse Clifford and Altman of being on the grassy knoll in order to say that they committed the crime," said the official, who asked not to be identified. Mr. Hume countered: "If they had a solid case that they believed they could win, they would have gone first." The Justice Department's unusual decision to indict with gusto and then defer to Mr. Morgenthau may be a result of harsh criticism in the press for "foot-dragging" in their BCCI investigation, Mr. Schulke said. "They were apparently unwilling to take criticism that they were not doing as good a job as Morgenthau," he added. Mr. Clifford and Mr. Altman are awaiting a New York trial scheduled for Feb. 15, but several pending appellate court rulings could block that trial and move it back to Washington. Supporters of Mr. Clifford and Mr. Altman say Mr. Morgenthau recognized the investigation against these two high-profile targets as an opportunity to rejuvenate his own flagging career. During the 1980s, Mr. Morgenthau unsuccessfully prosecuted La Cosa Nostra boss John Gotti three times; Mr. Gotti was ultimately convicted in a federal case. In another high-profile case, Mr. Morgenthau was able to obtain only a weapons-possession conviction against Bernhard Goetz, charged in the subway shooting of four men who he said attempted to rob him. Previous media reports have said Mr. Morgenthau may have had a vendetta against Mr. Clifford because of a falling-out his father - Treasury Secretary Henry Morgenthau Jr. - had with President Truman. After Henry Morgenthau Jr. resigned, Mr. Clifford became the fair-haired boy of the Truman administration. "That strikes me as preposterous," Mr. Schuelke said. "I don't think there was a vendetta. I do think what has occurred bespeaks a very aggressive campaign of self-aggrandizement on the part of Mr. Morgenthau. . . . Perhaps the best insight into this is the interview they gave to Vanity Fair - before they knew how the grand jury would act." In April, three months before the state indictment, Vanity Fair magazine ran a gushing article about Mr. Morgenthau and his BCCI investigation titled "How They Broke the Bank." The article claimed, "It is now known that BCCI used Clifford and Altman to secretly acquire the bank," a charge that has yet to be proved in court. Mr. Hume said he was appalled by Mr. Morgenthau's cooperation with such a report. "You don't comment on demeanor or evidence during the investigatory stage," he said. "That softens or weakens the defendant's position before the charge is brought. It is unfair and it is most unethical. In fact, it's outrageous." Mr. Morgenthau did not return repeated phone calls from The Washington Times. The 72-year-old prosecutor told reporters earlier this year he explored the global tentacles of BCCI to stop drug profits from flowing through the U.S. banking system, whose massive computerized payments and clearance operations are based in Manhattan. Mr. Morgenthau bitterly complained at one point about what he said was a lack of cooperation from Justice Department officials in the BCCI probe. He jumped into the case after Jack Blum, a staff lawyer for Sen. John Kerry's terrorism and narcotics subcommittee, contacted him, blaming the Justice Department for not vigorously pursuing BCCI. "This thing was going to be tubed," the staffer for the Massachusetts Democrat said in an August interview with the Associated Press. "Had Morgenthau not been involved, this case never would have happened." Mr. Blum has been a key figure in several controversial congressional probes. In the BCCI case, one former federal official said, "Blum believed much more than ever could be proven." This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM