ProPublica, Journalism in the Public Interest

Breaking on the Web: July 3, P.M. Edition

• Wall Street Firms Warned Mass. Treasurer, Not Investors, About Securities - Beth Healy, The Boston Globe
• UBS Whistleblower Accuses Firm of Retaliation - Beth Healy, The Boston Globe
• EPA’s Toxic Assessment Delays Block New Safety Standards - OMB Watch
• IRS Taps Audit Firms to Probe Foreign Banks’ Role in Tax Evasion - Ryan J. Donmoyer, Bloomberg News
• An In-Depth Look at ‘Don’t Ask, Don’t Tell’ - Scott Freeman, Creative Loafing Atlanta
• Consumer Safety Panel Weakened - Suemedha Sood, The Washington Independent
• ACLU: Pentagon Made ‘Unprecedented’ Effort to Hide War Deaths - Think Progress
• Lawsuit Accuses Big Oil of Climate Change Deceptions - Amy Goodman, Democracy Now!
• Fed. Housing Admin. Aims to Curb No-Money-Down Loan Program - John Ydstie, NPR
• GOP Rep Uses Campaign Funds To Pay Aide’s Lawyers - Matt Apuzzo, AP
• Sen. Wants Campaign Cash To Pay Legal Fees For Prostitution Case - Gerard Shields, The Advocate
• Some Lawmakers Raise 20% of Funds From a Single Industry - Lindsay Renick Mayer, Capital Eye
• Two Texas Supreme Court Justices Face Ethics Hearings - Clay Robison, Houston Chronicle (June 30)

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Obama’s and McCain’s Positions on Executive Power

An article this week by Politico’s John Bresnahan examined Barack Obama’s and John McCain’s stances on presidential power and how they would regard restraints on their own authority.

The Bush administration will leave behind a far more muscular executive branch considering its use of signing statements, claims of executive privilege, and the decision-making authority vested in the vice president. Charlie Savage, a 2007 Pulitzer recipient for his work uncovering Bush’s views on executive power for The Boston Globe (he now writes for The New York Times), has made the case that these trends reflect a political philosophy, in gestation since the Nixon years, that argues for unfettered executive power and minimal congressional and judicial oversight in the face of grave foreign threats.

Savage also argues that Bush’s successor will be hard pressed to scale back his executive power. Others -- including legal scholar Jack Balkin and the libertarian writer Gene Healey -- agree that these trends aren’t the exclusive domain of the Republican party.

Apart from the Politico piece and a survey of candidates last December by Savage, Obama and McCain have rarely been pressed on the issue. So we thought it would be helpful to present the statements the two have made on executive power.

Read what Sens. John McCain and Barack Obama have said about executive power.

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This Week in Scandal Watch

1. Detainee Treatment

Salon reported that the former Joint Chiefs of Staff, Gen. Richard Myers, suppressed opposition from officials at the Army, Navy, Air Force and Marine Corps who stepped up to complain about harsh interrogation techniques at Guantanamo Bay and call for greater legal scrutiny. Four inmates at Abu Ghraib in Iraq have filed lawsuits against defense contractors that allegedly tortured them in 2003 and 2004.

A federal appeals court that dismissed the case against a Gitmo detainee criticized the government's justification for his imprisonment and compared it to a nonsensical Lewis Carroll poem.

And The New York Times reported that military trainers who taught interrogation classes at Gitmo had based lessons on a chart "copied verbatim" from a 1957 study of Chinese Communist torture techniques (pdf).

2. Subprime Mortgages and Ratings Agencies

This week, Florida became the third state - after California and Illinois - to sue Countrywide for deceptive lending practices. Meanwhile, GOP lawmakers continue to call for a probe into Countrywide's "Friends of Angelo" program - yet many of those same lawmakers have no qualms about keeping funds donated to their campaigns by Countrywide's PAC. Countrywide shut down its PAC, which has donated more than $500,000 to campaigns and organizations since 2005.

Trouble continued at Moody's Investor Services - one of the ratings agencies that rated securities backed by bundled residential mortgages - where a key player left amid accusations that his department bungled the response to a modeling error that incorrectly rated $1 billion in complex credit products.

And analysts say that the homeowner-relief program proposed in Congress' housing bill would leave the majority of troubled homeowners in the lurch.

3. Military Contractor Abuse

Those lawsuits brought by four Abu Ghraib inmates targeted two defense contractors - CACI International and L-3 Communications, and they named individual employees of the contractors as defendants as well.

The Pentagon, meanwhile, ordered inspections of all the wiring work done by KBR in Iraq. At least 13 Americans have been electrocuted in Iraq since the war began. The Army had issued a warning in October 2004 about KBR's shoddy electrical wiring, and one KBR employee had even quit in protest after warnings to his boss were ignored, but repairs were never made.

And Iraqi's foreign minister announced on Tuesday that the U.S. had agreed to lift immunity for military contractors in Iraq, leaving them open to prosecution under Iraqi law.

4. Politicization at EPA

This week the White House blocked a report on greenhouse-gas emissions that the EPA drafted after a two-year study. In December, the Office of Management and Budget refused to open an e-mail from the EPA that included a draft of this report. It then demanded that the EPA recall the e-mail. Now, OMB is blocking the report and demanding that the EPA delete several key sections - included those that say greenhouse-gas emissions are dangerous to human's health - and show that the Clean Air Act is flawed.

5. Warrantless Surveillance

A federal judge dealt a blow to Bush's presidential authority by declaring that Congress' wiretapping law is the "exclusive" means for him to eavesdrop on Americans. The Justice Department had previously argued that the president's constitutional power as commander in chief allows him to wiretap Americans without a warrant.

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Political Fundraising Firm Defends Practices

To say that Brian Chavez-Ochoa was a long shot to unseat Rep. Nancy Pelosi (D-CA) in 2006 is an understatement. No opponent had come close in the nearly 20 years she’d held the seat. A conservative lawyer who mainly handles First Amendment cases, he had never held elected office and didn’t even live in the district. But in the summer of 2005, there was no declared Republican challenger, and he was being urged to make a run. “I was asked by a group in D.C. to put my hat in the ring, so I did,” he told ProPublica.

That group was BMW Direct, a conservative direct-mail fundraising firm. An associate of the firm became Chavez-Ochoa’s treasurer, and over the course of the next several months, his campaign committee raised tens of thousands of dollars from small donors all over the country. He said he “fully intended” to move to the 8th District from his home in the nearby 3rd District. But when Mike DeNunzio, the chairman of the San Francisco Republican Party, entered the race in February of 2006, Chavez-Ochoa decided he should step aside for “party unity,” he said.

Despite the fact that his campaign never got off the ground, Chavez-Ochoa managed to raise more than $220,000 (about $70,000 more than DeNunzio, who lost to Pelosi by 69 points). But all of that was consumed by fundraising costs, and his campaign still carries more than $13,000 in debt to BMW Direct and its affiliates.

Characteristic of BMW Direct’s fundraising campaigns, more than 80 percent of the contributions came from out of the state and most donors disclosed their occupation as “retired,” according to CQ Money Line. Among them was a 91 year-old man, whose family has become so alarmed by his giving to various Republican campaigns—$139,000 since 1996 - that they’ve asked his caretaker to screen his calls and mail.

The handling of Chavez-Ochoa’s campaign is another example of BMW Direct’s questionable fundraising practices that were highlighted in a Boston Globe piece earlier this week. That story focused on Charles Morse, the long shot challenger to Rep. Barney Frank (D-MA) whose committee raised more than $700,000, with all but four percent consumed by fundraising costs.

Representatives of the firm fiercely deny any wrongdoing and argue that the high cost of direct mail fundraising, particularly for little-known candidates, necessitates such expenses. Both Chavez-Ochoa and Morse dropped out before the candidates could reap the benefit of the early fundraising, they said.

“One of things you do when you go out prospecting is build a donor file and that costs money,” Scott Mackenzie, a consultant for BMW Direct and Chavez-Ochoa’s campaign treasurer, said. “Once you build a house file and start mailing to the list, that’s when you start making the money.”

“We like working with people who are long shots,” Jordan Gehrke, the firm’s director of development, said. If not for the firm’s efforts to help little-known candidates, only “a bunch of millionaires” would be able to afford a run, he said. “We don’t feel it’s right that all these candidates should run unopposed,” said Mackenzie, and direct mail is the “only way if a candidate doesn’t have name recognition or personal finances to run their campaigns.”

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Breaking on the Web: July 3, A.M. Edition

• Judge Rejects Bush’s View on Wiretaps - Eric Lichtblau, The New York Times
• Climate Scorecard Ranks U.S. Last Among Richest Nations - AP
• Audit: U.S. AID’s Paraguay Program Is Corrupt - Derek Kravitz, Washington Post
• Pentagon’s IG Quits in Latest Shake-Up at DoD - AP
• Racial Profiling Eyed for Terror Probes - Lara Jakes Jordan, AP
• Scholar Defends Study Showing Dangers From Speedy FDA Approvals - Keith J. Winstein, The Wall Street Journal
• McCain Allies Find Finance-Law Holes - Brody Mullins and T.W. Farnam, The Wall Street Journal
• Report: Toxic FEMA Trailers Due to Lax Gov’t Standards - Spencer S. Hsu, Washington Post
• Airliner ‘Go-Arounds’ Pose Possible Safety Hazard - David Porter, AP
• Report: Southwest and FAA Relationship Too Cozy - Sholnn Freeman, Washington Post
• DHS Report: Treatment of Immigrant Detainees Is Flawed - Nicole Gaouette, Los Angeles Times
• Vet’s Charity Dumped Fundraising Group Over Exorbitant Fees - Andrew Tilghman, TPMmuckraker
• Georgia Bars Calif. Insurer For Scamming GIs - Diana B. Henriques , The New York Times
• DoJ Admits Error in Not Briefing Court - Linda Greenhouse, The New York Times
• Panel Questions State Dept. Role in Iraq Oil Deal - James Glanz and Richard A. Oppel Jr., The New York Times

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Breaking on the Web: July 2, P.M. Edition

• GAO: White House Knew of Controversial Hunt-Kurdistan Oil Deal - Matthew Blake, Washington Independent
• FDA Favors Top Staff with Bonuses - Sydelle Moore, Medill News Service
• Fed. Agency: Protection of Humans in Research Has ‘Serious’ Flaws - Jeffrey Brainard, The Chronicle of Higher Education ($)
• Fla. Gave U.S. Sugar a Sweet Deal - Joshua Zumbrun, Forbes
• Countrywide’s PAC Closing Amid Inquiries - Jim McElhatton, The Washington Times
• Moody’s Loses a Key Player Amid Error Probe - Aaron Lucchetti, The Wall Street Journal
• Red Tape Delays $400 Million for Mexico Drug War - Stewart M. Powell, Houston Chronicle
• New Orleans, FEMA Wrangle Over Katrina Bills - Alex Roth, The Wall Street Journal
• Groups Sue Feds for Cellphone Tracking Info - Ellen Nakashima, Washington Post
• Ex-Intel Officer: Defense Earmarks Damage Nat’l Security - Eric Egland, The Washington Times

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Employee Sues Justice Department, Cites Discrimination in Civil Rights Division

The civil rights division of the Justice Department, which is responsible for enforcing federal anti-discrimination laws, has been accused in a recent lawsuit of discriminating against its own employees based on race.

A 13-year veteran of the division brought the suit, alleging she was “repeatedly denied the opportunity to apply and compete” for promotions because she is black.

Joi Hyatte, who works as an equal opportunity assistant in the division’s voting rights section, claims that superiors subjected her and “African-American colleagues to numerous forms of discrimination and harassment,” according to the suit filed May 29 in the U.S. District Court for the District of Columbia.

“I saw the hiring process being abused,” Hyatte said in a recent interview with ProPublica. “I just want a fair chance to compete, but I was kept out.”

Black and white employees in the voting section have independently supported Hyatte’s claims. The suit alleges that several administrative employees have filed racial discrimination complaints against the section’s managers, which the Justice Department failed to investigate.

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