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.
The Independent Counsel's investigation is continuing.