|FOR IMMEDIATE RELEASE
June 19, 1997
Via Facsimile Transmission
to 212/522-0601 and U.S. Mail
Letters To The Editor
1271 Avenue of the Americas
New York, NY 10020
The first sentence of your June 16, 1997 story, The Peril of
Prosecutorial Passion, states I was appointed to learn "whether a Cabinet member
[former United States Department of Agriculture Secretary Mike Espy] got some free
football tickets and a few other gifts." Following a slurry of misleading
observations, your reporter asserts, as the primary point of her piece, that "so far
he's turned up little in his costly probe." TIME's unfounded conclusion of
course fails to reference the criminal convictions of three corporations, five individuals
and one law firm, and the imposition and collection of in excess of $3.5 million in
TIME's reporter is entitled to her opinions but not to her own
set of facts. For example, she falsely reported that Kenneth Starr "had to tell
Smaltz to back off in delving into issues involving Clinton." This never happened in
any form, at any time, at any place. Moreover, TIME's story is also inaccurate
because it fails to report relevant facts, thereby conveying misleading impressions.
Contrary to TIME's assertion that this investigation is about
"some free football tickets and a few other gifts," this investigation is in
fact about big business and powerful individuals illegally buying and attempting to buy
access to a member of the President's Cabinet who regulates their industry. The 44
offenses involved in the convictions noted below, in substantial part, involved gifts to
Secretary Espy or contributions given to Secretary Espy's brother because the givers
wanted to influence decisions and/or obtain and maintain access to Secretary Espy:
1. James Lake - well-known Washington lobbyist, representing Sun-Diamond Growers
in matters before the USDA
- GUILTY of wire fraud and violations of the Federal Election Campaign Act in making
$4,000 in illegal campaign contributions to Henry Espy for Congress.
2. Five M Farming Enterprises & Brook K. Mitchell, Sr. - friends of
- GUILTY of conspiracy, false statements and false entries involving a $700,000 USDA
commodity price support program.
3. Crop Growers Corporation - major publicly-owned crop insurance company,
regulated by and dependent on the USDA
- GUILTY of conspiracy and concealing and disguising $46,000 in illegal corporate
contributions to the Henry Espy for Congress campaign. The $2 million dollar fine, which
has been paid, is the largest fine secured by any Independent Counsel to date.
4. Sun-Diamond Growers of California - large California agricultural cooperative
regulated by the USDA
- GUILTY of illegally giving more than $6,000 worth of gratuities to Secretary Espy and
$4,000 in illegal campaign contributions to Secretary Espy's brother. Sun-Diamond was
fined $1.5 million and is on five years' probation.
5. Alvarez T. Ferrouillet, Jr. - New Orleans lawyer and Chairman of the effort
to retire Henry Espy's campaign debt
- GUILTY of conspiring to defraud the Federal Election Commission, money laundering,
illegal monetary transactions, defrauding a federal bank, lying to federal investigators,
and participating in interstate transportation of stolen property. Fined $10,000 and
sentenced to one year imprisonment.
6. John Hemmingson - Chairman of the Board and largest shareholder of Crop
Growers Corporation, who used Henry Espy to obtain access to Secretary Espy
- GUILTY of interstate transportation of $20,000 taken by fraud and laundering that money
into the Henry Espy campaign debt retirement account. Fined $30,000, sentenced to one year
imprisonment, and $20,000 restitution.
7. Municipal Healthcare Cooperative, Inc. - Louisiana corporation that
participated in defrauding a Mississippi bank in connection with the Henry Espy $75,000
campaign debt retirement loan
- GUILTY of one count of conspiracy and five counts of making false statements to a
federal bank in connection with the $75,000 loan.
8. Ferrouillet & Ferrouillet - Louisiana law firm that guaranteed the
illegal $75,000 Henry Espy campaign debt retirement loan
- GUILTY of conspiracy to defraud a federal bank. Fined $10,000.
9. Jack L. Williams - Washington lobbyist for Tyson Foods, Inc.
- GUILTY of making false material statements to two Special Agents of the USDA Office of
the Inspector General and to Special Agents of the Federal Bureau of Investigation to
conceal his role in providing a $1,009 airline ticket and $1,200 scholarship for Secretary
Espy's girlfriend, Patricia Dempsey. (The trial court judge granted and set a new trial
for August 11, 1997. We expect the outcome of the second trial also to be a guilty
Contrary to TIME's reporter's suggestion, these prosecutions
and convictions are hardly trivial:
- First, Sun-Diamond's conviction represents the first person or entity convicted in
approximately 100 years for giving a gratuity to a sitting Cabinet member. Corporate
misconduct in connection with payments and gratuities to Cabinet secretaries is a
pernicious act that pervades not only the official, but also the agency, and the public
- Second, the dispositions against Crop Growers and Sun-Diamond are fundamental to the
concept of corporate accountability. Crop Growers' plea to a violation of the Foreign
Corrupt Practices Act and the Court's imposition of special conditions of probation on
Sun-Diamond to ensure corporate responsibility highlight the importance of maintaining
integrity in the corporate board room.
- Third, this office is the first prosecuting agency to charge and convict individuals for
money laundering in connection with illegal campaign contributions. Senator Arlen Specter
recognized the significance of this approach when he recently described as a
"clear-cut evidentiary pattern of illegal conduct of laundering money" the
reimbursed contributions to a Democratic National Committee fundraiser at the Hsi Lai
Buddhist Temple in April 1996.
There are, in addition, two other prosecutions pending -- one
concerning Richard Douglas, former Vice President of Governmental Affairs for Sun-Diamond
Growers for illegal gratuities to the Secretary, mail fraud, illegal campaign
contributions and mortgage fraud, and another against Ronald Blackley, former Chief of
Staff to Secretary Espy for false statements. The investigation of other criminal conduct
is ongoing, and there may well be other indictments.
TIME's article also referenced comments from the lawyer of the
indicted former Chief of Staff to Secretary Espy and a suggestion of inappropriate use of
support staff. Legally, I am prohibited from commenting about grand jury matters and
cannot now answer Blackley's lawyer's claims about what did or did not occur. I am,
however, conversant with all the facts and the prosecutors in my office conducted
themselves properly. With regard to your statement that a junior staff member was required
to be in the place where I was living when an outside cleaning service came, you are
absolutely right. I have and will continue to take appropriate measures to ensure the
security of all locations where my office conducts business.
Upon application of the Attorney General of the United States, the
Special Division of the United States Court of Appeals appointed me to determine whether
Secretary Espy violated any federal criminal law "relating in any way to the
acceptance of gifts by him from organizations or individuals with business pending before
the Department of Agriculture;" and also to determine whether "any organization
or individual . . . connected with or arising out of that investigation" violated any
federal criminal laws. Federal law has long prohibited regulated persons and companies
from buying access to public officials who regulate them. That is the essence of this
investigation, not a few football tickets as your article proclaims.
Notwithstanding TIME's unfounded criticism and efforts to
trivialize this investigation even before its conclusion, I will continue to perform the
duties for which I was appointed fairly, vigorously and expeditiously.
Donald C. Smaltz
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