PRESS RELEASE

Donald C. Smaltz, Independent Counsel In re Espy, today announced:

   A federal jury in the District of Columbia convicted former Secretary of Agriculture Alphonso Michael Espy's Chief of Staff, Ronald H. Blackley, of three counts of lying to hide $22,000 he received in 1993 from Mississippi agri-businesses in violation of 18 U.S.C. § 1001. These businesses sought and received in excess of $400,000 in USDA subsidies in the one year that Blackley served as Espy's Chief of Staff, and Blackley attempted to influence and reverse a USDA decision not to provide one of those businesses with the amount of subsidies it requested.

   In January 1993, prior to Mr. Espy's confirmation as Secretary of Agriculture, issues arose as to possible conflicts of interest between defendant Blackley and various Mississippi agri-business entities he had represented. Blackley had served as an agriculture aide to Mississippi Congressman Espy from 1989 until Espy was appointed Secretary of Agriculture. Beginning sometime in 1987 he operated a private consulting firm -- Ron Blackley & Associates -- which, among other things, advised agri-businesses seeking farming subsidies from USDA. In response to conflict of interest allegations and questions raised by Senate Agriculture Committee staff members, Blackley claimed that he had severed all his business relationships, and in January 1993 had no personal business interests. He said that his only source of income was the Congressional salary he was receiving as a Congressional aide to then Congressman Espy. Espy on January 21, 1993 appointed Blackley as his Chief of Staff of USDA.

COUNT I

   The jury found in Count One that defendant Blackley knowingly and willfully made false, fictitious and fraudulent statements and representations by omitting to disclose the $22,000 he received from Mississippi agri-businesses on his 1993 Public Financial Disclosure Report. Blackley, as a senior government official in the Executive Branch, was required by the Ethics in Government Act to file complete and accurate Public Financial Disclosure Reports so the reviewing agency and the public would know of any conflicts of interest. The agri-businesses that gave Blackley the $22,000 had been clients of Blackley's consulting business and had matters pending before USDA.

COUNT II

   In February 1994 defendant Blackley changed jobs from Chief of Staff to Chairman of the Loan Resolution Task Force of USDA. In August 1994, after the Attorney General filed her application for appointment of an Independent Counsel to investigate allegations of misconduct by Secretary Espy, the Office of Inspector General of the USDA commenced an investigation of Blackley. Allegations had arisen that, while Chief of Staff, Blackley had intervened on behalf of certain Mississippi agri-businesses who were former clients of Blackley's consulting business and who had appeals pending before USDA. The USDA-IG's investigation disclosed that in 1993, out of a total of only ten nationwide agri-business appeals to reach the highest USDA senior review level in Washington, D.C., five of these were from Mississippi. Each of these five involved a former client of Blackley, and each was granted some relief after Blackley as Chief of Staff intervened.

   During the course of that USDA-IG investigation, defendant Blackley made statements to the agents that he had severed all prior business and financial interests upon being appointed Chief of Staff; that in 1993 he received no income or consulting fees directly or indirectly from previous clients; that his only income was his USDA salary; and that his 1993 Financial Disclosure Report was correct. The jury found defendant Blackley guilty of Count Two, which charged that in November 1994, Blackley made these false representations and concealed the $22,000 in a sworn statement that he gave to those investigating agents.

COUNT III

   In 1995 defendant Blackley resigned from the USDA and became a Special Assistant to the Administrator -- United States Agency for International Development. On May 23, 1996, following the investigation by the Office of Independent Counsel, the grand jury indicted Five M Farming Enterprises, Brook Keith Mitchell, and his son, Brook Keith Mitchell, Jr., for conspiracy to defraud the USDA and false statements to illegally obtain $700,000 in USDA subsidies. Subsequently, 5M Farming Enterprises and Brook Keith Mitchell pleaded guilty to each of four Counts of the Indictment and are presently awaiting sentence.

   The 5M Farming prosecution identified defendant Blackley as an unindicted co-conspirator in the 5M/Mitchell scheme and, after that disclosure, the USAID Inspector General commenced an investigation to determine whether Blackley's Top Secret security clearance should be withdrawn. The jury convicted Blackley of Count Three which charged that he lied to USAID-IG investigators in a sworn statement he gave them that, "after I ended my consulting business and entered U.S. Government service I did not receive any remuneration of any kind from Mitchell or anyone else."

   Each of the three Counts of 18 U.S.C. § 1001 of which Blackley was convicted carries a maximum of five years imprisonment and a $250,000 fine. The date for Blackley's sentencing has been set for February 12, 1997, before the Honorable Royce C. Lamberth, U.S. District Judge.

    Independent Counsel Donald C. Smaltz stated:

  I thank and commend the jury for the time, attention, and full and impartial consideration of all the evidence presented, and also the trial judge for a fair and expeditiously conducted trial.

  Defendant Blackley, as Chief of Staff to the Secretary of Agriculture, was the "alter-ego" of the Secretary of Agriculture. He was one of the most powerful persons in USDA, which in 1993 had a budget in excess of $60 billion and over 100,000 employees. As Chief of Staff, Blackley had significant input and considerable influence in many of the wide variety of USDA programs and decisions including government subsidies to agri-businesses.

  The evidence at trial revealed that defendant Blackley not only accepted more than $22,000 from Mississippi agri-business entities regulated by USDA, he also attempted to influence, and have reversed an adverse decision concerning one of these entities that had received over $300,000 in subsidy payments from the USDA in 1993, and then lied repeatedly by denying his receipt of the $22,000. Blackley not only accepted things of value from businesses his agency regulated, he lied on at least four separate occasions: first -- to Senate staffers in January 1993; second -- on his Public Financial Disclosure Form; third -- to the Inspector General of USDA; and fourth -- to the Inspector General of USAID.

  This corrupt activity by a senior executive government official undermines the public's confidence in the regulatory process and suggests to the public that government largesse goes not necessarily to those most entitled to it -- but to those who are cozy with the regulators or to those who are willing to purchase it.

   As the Supreme Court observed:

   A democracy is effective only if the people have faith in those who govern, and that faith is bound to be shattered where high officials and their appointees engage in activities which arouse suspicion of malfeasance and corruption.

  In my judgment it is a prosecutor's sworn duty and obligation to fully investigate and, where appropriate, vigorously prosecute those Executive Officials who illegally accept things of value from persons and entities who have matters pending before that Executive's department, or who lie about things of value received from regulated entities, whether the lie occurs on Financial Disclosure Reports or to government investigators.

  While I am, of course, very pleased with the verdict, I regret DOJ's decision not to prosecute defendant Blackley for his various crimes. Moreover, there was in my judgment, no valid basis for DOJ's vigorous opposition to the application we filed with the Special Division of the U.S. Court of Appeals to confirm our right to prosecute Blackley, 5M Farming, and Mitchell as "related matters." That confirmation from the Special Division, issued over DOJ's objections, permitted us to bring defendants Blackley, 5M Farming, and Brook Keith Mitchell to account. However, DOJ's opposition significantly delayed our investigation and prosecutions.