Is This The End Of Bibi?

Benjamin “Bibi” Netanyahu is the great survivor in the blood sport of Israeli politics. Glib, cunning and endlessly calculating, he squeezed past Shimon Peres to narrowly win a first term as prime minister in 1996, only to crash on the rocks of hubris and be crushed by Ehud Barak three years later. Ariel Sharon brought him back to political life as foreign minister and, later, finance minister. He repaid him by quitting the government after Mr. Sharon decided to withdraw from the Gaza Strip. In 2009, he returned as prime minister and has been there ever since, coming out on top in two more elections and cobbling together governing parliamentary coalitions with parties from many points on the Israeli political spectrum. He says he’ll seek an unprecedented fifth term as prime minister.

Unless he goes to jail first. The prime minister often has danced perilously close to scandal and defeat, only to come out on top. But a series of corruption cases suddenly has the Israeli public wondering if this is the end of Bibi. Four cases working their way through the Israeli justice system pose a threat.

Israeli prosecutors like round numbers. In “Case 1000,” Mr. Netanyahu is alleged to have received shipments of expensive cigars and champagne, as well as gifts of jewelry, plane tickets and hotel rooms, from Hollywood producer Arnon Milchan and Australian billionaire James Packer. What Mr. Netanyahu did in return is murky. News reports say he may have helped the two men with visa and residency issues—pretty thin stuff to bring down a prime minister—and protected Mr. Milchan’s interests in an Israeli television channel. Mr. Netanyahu insists that the lavish gifts were just tokens of affection from two good friends. The charges here could run from breach of public trust to bribery.

In “Case 2000,” Mr. Netanyahu is suspected of conspiring with an Israeli newspaper owner, Arnon Mozes, to illegally block a rival publication. In a classic Bibi twist, the rival publication was in fact a pro-Netanyahu tabloid owned by American casino magnate Sheldon Adelson, a supporter of the prime minister. But Mr. Netanyahu wanted Mr. Mozes’ newspaper to stop criticizing him. So he plotted to throw his own supporter, Mr. Adelson, under the bus. You can’t make this stuff up. Allegedly, Mr. Netanyahu conspired with Mr. Mozes to move legislation through the Israeli parliament that would have crippled Mr. Adelson’s newspaper. The charge here is bribery—an exchange of better newspaper coverage for favorable legislation. Mr. Netanyahu has deployed the “just kidding” defense in the case, insisting he never really meant to go forward with the plan, but was simply stringing Mr. Mozes along in conversations.

“Case 3000” is known in Israel as “the Submarine Affair.” Mr. Netanyahu is not a target in the investigation—at least not yet. He has denied any wrongdoing. In the case, Israeli businessman Michael Ganor is alleged to have bribed government officials to secure a billion-dollar deal to purchase submarines from a German manufacturer. Mr. Ganor’s lawyer was David Shimron, who was also Mr. Netanyahu’s personal lawyer and adviser. And his cousin. The Israeli media have reported that Mr. Shimron leaned on government officials on behalf of Mr. Ganor and was looking at a large payout from the deal, which was suspended amid the corruption controversy; Mr. Shimron denied the reports and says he did nothing wrong. A former Israeli defense minister, on the outs with the prime minister, reportedly told police investigators that Mr. Netanyahu facilitated the deal by sinking an earlier Defense Ministry contract and ordering more submarines than Israel needed. Mr. Netanyahu denied the allegations.

In “Case 4000,” known as “the Bezeq Affair,” a Netanyahu appointee at the Israeli Communications Ministry has been accused of providing confidential documents and information to the Israeli telecom giant, Bezeq. The information provided an improper financial advantage to Bezeq, investigators say. Mr. Netanyahu’s very good friend Shaul Elovitch is the controlling shareholder in Bezeq. A government inquiry found that Mr. Netanyahu, who in various ministerial capacities had the power to shape policy to benefit Bezeq, had failed to disclose his relationship with Mr. Elovitch. Mr. Netanyahu has not been charged with wrongdoing in the case.

Several recent developments signal more trouble ahead for Mr. Netanyahu. Most ominous, earlier this month, his former chief of staff, Ari Harow, agreed to testify in Case 1000 and Case 2000. Nailed on fraud charges in an unrelated case, Mr. Harow agreed to turn state’s witness in the two corruption cases. In the Submarine Affair, the key suspect, Mr. Ganor, has signed a cooperation agreement and agreed to testify. In the Bezeq Affair, the Netanyahu appointee at the center of the case has been placed under house arrest, and Mr. Netanyahu’s failure to disclose his relationship with the telecom giant’s controlling shareholder could lead to a conflict-of-interest probe.

That’s a lot of investigative muscle directed at the prime minister, but I wouldn’t count Bibi out just yet. Witnesses—even state witnesses—often are not as helpful as prosecutors think they will be. Mr. Netanyahu has an explanation for everything and a masterful command of the levers of political power. He’ll go down fighting. The endgame will play out over the next few months. If Mr. Netanyahu is indicted in any of the corruption cases and refuses to step down, it will be up to the Israeli parliamentary and judicial systems to summon the political will to remove him from office.

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Will Menendez Walk?

A criminal indictment is a beautiful thing—an austere document, grave and fateful. Who is charged with committing what crimes, and where, and when, and how? What laws have been violated? In it rests the fearsome power of the state. From it may pass a person’s liberty, even life itself. It is transparent in spite of itself: making the argument, it reveals its flaws

The indictment of United States Senator Robert Menendez and Florida ophthalmologist Salomon Melgen charges the two old friends with a conspiracy to commit bribery and “honest services fraud.” It states that they schemed to corruptly influence Senator Menendez’s “official acts” and “defraud and deprive the United States and the citizens of New Jersey of the honest services of a public official.” It sketches attempts to obtain visas for Dr. Melgen girlfriends; attempts to influence the Department of Homeland Security in a contractual matter concerning a Melgen-owned security-screening company; and attempts to gain a favorable ruling from the Department of Health and Human Services in a gigantic Medicare reimbursement dispute—an episode that eventually would land Dr. Melgen in calamity.

Every indictment tells a story. This one is a tale lust, greed and comical incompetence. Whether it’s a story of criminal behavior is another matter. Dr. Melgen showers his old friend with free plane trips, vacation holidays, and large campaign donations at critical moments. Senator Menendez fails to disclose the gifts, setting himself up for a false statements charge. The senator’s office helps the married Dr. Melgen obtain visas for three young girlfriends, all identified as “models.” Embassy officials push back, but eventually the visas are approved. The senator’s office attempts to intervene with the Department of Homeland Security to undermine a security-screening company in the Dominican Republic, a move that would boost the fortunes of Dr. Melgen’s rival company. But it turns out that DHS has no leverage in the matter. In 2009, the senator and his staff step into an $8.9 million Medicare fight, advocating on Dr. Melgen’s behalf in an increasingly tense series of meetings with Department of Health and Human Services officials, working their way up the bureaucratic food chain. The battle goes on for three years. Senator Menendez is rebuffed at every turn. Senator Menendez grows increasingly upset. The Medicare determination is upheld: Dr. Melgen owes $8.9 million.

The Medicare dispute was just the beginning of Dr. Melgen’s troubles. In 2015, he was indicted in a sweeping $90 million Medicare fraud scheme. The drug at the center of part of the scheme, an eye medication called Lucentis, was the same medication in the earlier Medicare dispute. There is no indication that Senator Menendez was involved in the Florida fraud scheme. In April, Dr. Melgen was convicted on all counts. He faces as much as twenty years in prison. Unless maybe he can cut a deal.

The Menendez-Melgen corruption trial opens September 6 in a New Jersey federal court. Does Dr. Melgen have anything to offer the prosecution? Senator Menendez may have some reason to fear Dr. Melgen’s testimony, but he can find solace—and possibly liberty—in last year’s Supreme Court McDonnell decision. In McDonnell, the court narrowed the definition of official acts and honest services fraud. Prosecutors needed to prove a direct “official action.” An “official act” has to be more than “setting up a meeting, talking to another official, or hosting an event,” the court ruled. Yes, Melgen could roll on Menendez. Yes, a host of government officials and aides could testify that the senator sought favorable actions for his friend. But where are the direct official acts that go beyond typical donor services? Based on the indictment, Senator Menendez, a canny and experienced political operator, appears to have stayed outside that realm.

The betting here: Menendez walks. And for that he can thank the United States Supreme Court.

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Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips: mmorrison@judicialwatch.org

Investigative Bulletin is published by Judicial Watch. Reprints and media inquiries: jfarrell@judicialwatch.org

The Final Confession of Peter W. Smith

I first ran into Peter W. Smith—that crafty master of the dark side of oppo research—in the early 1990s. The Chicago financier was spreading around a lot of money in Arkansas to support investigations into allegations that Arkansas state troopers were pimping for Gov. Bill Clinton. I didn’t take any of Mr. Smith’s money but state troopers, lawyers and a young reporter named David Brock did. “Troopergate” came to nothing, except that Brock wrote a story in the American Spectator that smeared a woman named “Paula,” which led to the Paula Jones sexual harassment lawsuit, which led to the impeachment of William Jefferson Clinton. So from a GOP oppo perspective, the mission was a roaring success. Thanks in large part to Peter W. Smith.

In the years that followed, plenty of folks on the Right took Mr. Smith’s money—he was a generous and inquisitive man, well known and well connected. On May 14, he committed suicide in a Rochester, Minnesota, hotel room near the Mayo Clinic. He was 81. He left a note stating “NO FOUL PLAY WHATSOEVER,” according to the Chicago Tribune, citing a “bad turn” in his health in recent months and an expiring $5 million life insurance policy.

Before he died, however, Mr. Smith carefully prepared what amounts to a deathbed confession—a final piece of oppo research lofted into the Russian connection case from beyond the grave. The delivery vehicle for the final confession of Peter W. Smith was Shane Harris of the Wall Street Journal. Mr. Harris spoke with Mr. Smith ten days before his death.

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Extreme Transparency & Discretionary Disclosure

These are tough times for transparency. But let’s be honest: does anyone care? The concept has an “eat your vegetables” feel to it. Deep down we know it’s good for us, but, meh.

If you think transparency and sunshine laws don’t matter, consider these recent items:

  • despite enormous public interest, the federal government has declined to release a redacted report on Russian meddling in the 2016 election
  • President Trump refuses to make his tax returns public and will not release White House visitor logs
  • the majority leader of the United States Senate attempted to ram through a colossal change in American health care with a bill written in near-total secrecy
  • the House of Representatives repealed an SEC rule requiring that extractive industries disclose payments to foreign governments, killing an effective “follow the money” transparency measure that deterred payoffs and bribes
  • anonymously owned shell companies are steering billions in dirty money to U.S. luxury real-estate markets
  • fighting government stonewalls, Judicial Watch has been forced to sue in federal court for former FBI Director James Comey’s memo of his meeting with President Trump, and to file five additional lawsuits related to alleged monitoring of the president and his associates in the Russia connection case

There’s plenty of blame to go around for transparency failures. But as Judicial Watch’s Director of Investigations Chris Farrell has pointed out, when it comes to sunshine actions, the Trump White House has a solution at hand that’s both elegantly simple and breathtakingly radical. The Freedom of Information Act allows for the executive branch to make “discretionary disclosures.”

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The Ukraine Connection

In January, Donald Trump’s personal attorney, Michael Cohen, met with a most unusual peace envoy: a former mobster and government informant named Felix Sater. They were joined by a third man, Andrii Artemenko, a member of the Ukrainian parliament with alleged ties to organized crime figures. Mr. Artemenko and Mr. Sater wanted the new president to consider a “peace deal” that would cede Crimea to Russia in exchange for the withdrawal of Russian forces from eastern Ukraine. Mr. Cohen was interested. Mr. Sater gave Mr. Cohen the proposal in a sealed envelope and Mr. Cohen dropped it off at the office of then-National Security Adviser Michael Flynn while visiting the White House to meet with President Trump. The government of Ukraine learned about the deal the way the rest of the world did, by reading about it in the New York Times. It furiously denounced the move as a “gross violation” of Ukrainian law by forces “covertly representing Russian interests.”

No U.S. laws were broken in the backchannel approach to the White House and Mr. Artemenko, who has modeled his political persona on Mr. Trump, denies any connection to organized crime. But the episode underscores some of the dangers for the Trump White House lurking in the Russia connection case. Following the money may take Special Counsel Robert Mueller to some very shady places.

Throughout his life, Mr. Trump has not shied away from contacts with organized crime figures. He crossed paths with them in the construction business, in the casino business, in deals with Mr. Sater and his colleagues, and through his longtime personal attorney Roy Cohn, whose client list included many of New York’s leading mobsters. Maybe Mr. Trump never did business with the mob. Maybe he just got a kick out of gangsters. We don’t know. But the problem now for President Trump is a special counsel who may want to know, and who is empowered to find out.

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Trump v. Mueller

“The President went on to say that if there were some ‘satellite’ associates of his who did something wrong, it would be good to find that out, but that he hadn’t done anything wrong and hoped I would find a way to get it out that we weren’t investigating him.”

–Former FBI Director James Comey to the Senate Intelligence Committee

 

“The Special Counsel is authorized to conduct the investigation…including: any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and any matters that arose or may arise directly from the investigation; and any other matters within the scope of 28 C.F.R. § 600.4(a).”

–Justice Department letter appointing Robert Mueller as special counsel

 

The president has claimed a measure of relief—okay, “total and complete vindication”—after James Comey confirmed in Senate testimony that Mr. Trump himself is not under investigation in the Russia connection case. According to Mr. Comey’s notes of his meetings with the president, Mr. Trump insists he hasn’t done anything wrong but if any of his “satellite associates” did do something wrong, it would be good to find that out. The important thing, President Trump repeats, is that he himself is not a target of the probe.

The conventional wisdom out of Washington is that the president is a political neophyte stumbling from one crisis to another. But when it comes to legal battles, Mr. Trump is an experienced combatant. Trump biographers have noted that the future president was mentored by attorney Roy Cohn, an avatar of legal evil whose life’s work included hounding homosexuals and suspected communists, representing mobsters and financial titans, and protecting Trump family interests. Cohn beat back repeated federal attempts to jail him and died from an AIDS-related illness in 1986, but he lives on in the president’s brain. If you’re gaming Trump v. Mueller, think Roy Cohn, not the hapless New York corporate lawyers currently being shoved out front as cannon fodder.

The Roy Cohn method is to fight until the last dog dies and that’s precisely what the president wants. For Mr. Trump knows that a war with the special counsel is at hand. Taking a page from the Clintons’ Whitewater playbook, Trump surrogates have started blasting Mr. Mueller as Democrat-linked and unfit for office. Mr. Trump has served notice that anyone can be thrown under the bus—it would be “good to find out” if any of his associates did anything wrong, he tells the then-FBI chief—and Trump friends note that even Mr. Mueller is not safe from being fired. None of this is an accident.

As for Mr. Mueller, like Mr. Trump, it’s not in his character to back away from a fight. Mr. Mueller enlisted in the Marine Corps and commanded a rifle platoon in the Vietnam War, receiving the Bronze Star and the Purple Heart. A Republican, he served in high Justice Department criminal prosecution posts and took over the FBI one week before 9-11. He’s a serious, straight-arrow prosecutor facing the biggest case of his lifetime. He’ll go where the evidence takes him and is assembling a formidable team to get him there.

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EB-5, VEB Updates, Bad Juju For Jared

A snarky, disparaging—and let’s be honest, wildly entertaining—color commentary on the Trump White House in the New York Times last week noted that the president lately has been taking a dim view of his son-in-law and senior aide, Jared Kushner. Mr. Kushner’s star is falling. The president made “several snarky, disparaging comments about Mr. Kushner’s family” and the “Trump-Kushner relationship…is showing unmistakable signs of strain,” the Times reported. It noted that Mr. Kushner’s influence diminished as he came under scrutiny in the Russia connection case, but “the most serious point of contention between the president and his son-in-law” was the Kushner family’s push in China to fund a New Jersey luxury tower project through the controversial EB-5 visa program.

We’ve been following EB-5 and outlined the Kushner China hustle last month. Foreigners—mostly wealthy Chinese—pay $500,000 for an EB-5 visa, which gives them a green card and a path to U.S. citizenship. The program was established by Congress to funnel low-interest loans, well below commercial lending standards, to development projects in economically distressed areas. But the money—more than $20 billion—mostly has gone to finance lavish developments in flashy locations like Manhattan, Miami and Beverly Hills. The real estate industry loves the program because it provides cheap financing.

In the May 24 edition of City & State, the Brooklyn-based journalist Norman Oder provided new details about the Kushner’s New Jersey luxury apartment projects. Mr. Oder had been covering EB-5 since 2010 at his groundbreaking Atlantic Yards/Pacific Park Report. Using New Jersey sunshine laws, Mr. Oder revealed previously unreported “creative mapmaking” of census tracts critical to two Kushner projects in New Jersey that use EB-5 funds.

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The Kushner Connection

 

The Russian connection story took another twist Friday with a bombshell Washington Post story that Jared Kushner sought a secret communications channel with the Kremlin. In a Trump Tower meeting with the Russian ambassador in early December, Mr. Kushner, Donald Trump’s son-in-law and a senior aide, proposed using Russian diplomatic facilities for secure communications, the Post reported. Michael Flynn—soon to be President Trump’s first national security adviser—attended the meeting.

Some might call this an overture to espionage. Need we add that if it had been government employee Jared Jones, he would have been picked up in the dead of night, stripped of his security clearance and grilled by the FBI? But this Jared, of course, is the husband of the president’s favorite child. So we sail again into uncharted waters.

No one knows where this incredible story is heading. Are we in a Pink Panther movie or Whittaker Chambers territory? Is it a comedy of errors—a tale of a dumb-but-not-criminal actions in the heat of a historic presidential race—or a tragedy of spycraft and treason? Is the president a victim of an organized “deep state” campaign of leaks and smears to do him in? Or did he collude with agents of the Kremlin to undermine American democracy and then cover it up? The director of the FBI (Comey) is out and a special counsel (Mueller) is in. And now, with the Kushner connection, the probe moves toward the president’s innermost circle.

The administration spins Mr. Kushner’s overture to Moscow as no big deal. “It’s both normal, in my opinion, and acceptable,” Homeland Security Secretary John Kelly told ABC. Uh, sure. Mr. Mueller is certain to be taking a look at the meeting within a broader context. And that’s where Mr. Kushner could be headed for trouble.

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Trump & The Hydraulic Power Of Money

Many years ago, at the prompting of Wall Street Journal Editorial Page Editor Robert Bartley, I visited Harry Albright, seeking insights into the corrupt, Saudi-dominated Bank of Credit & Commerce International. The former New York state banking superintendent had just been appointed trustee to oversee the sale of First American Bankshares, a BCCI-connected bank holding company. We met at his downtown office, the North Tower of the World Trade Center framed in his window on a sparkling sunny day.

“Think of the hydraulic power of money,” Albright cheerfully told me, spreading his hands, conjuring rivers of cash. BCCI was a multi-billion-dollar international criminal enterprise. It spread money far and wide, enriching insiders with bogus loans, purchasing the friendship of American politicians, buying up banks, extending letters of credit to arms dealers, tax evaders and racketeers, opening secret accounts for dictators, terrorists, drug dealers and spies, and providing a financial conduit for the development of Pakistan’s nuclear weapons program. With front men from Pakistan and the United Arab Emirates, Saudi Arabian interests dominated the bank through major stakeholders such as Khalid bin Mahfouz, Ghaith Pharaon, and Kamal Adham, the head of the Saudi intelligence service.

Albright was giving me a lesson in influence peddling at the highest level of the global game. “All that money is out there in different pools,” he said, “it’s liquid, it flows from place to place. But as in hydraulics, you can exert tremendous pressure by drawing it through a narrow pipeline when you need to—by focusing the intense hydraulic force of that money on a particular person or institution.”

BCCI showed the sinister side of Saudi influence. With its secret purchase of First American—a prominent Washington bank—BCCI bought entry into the top tier of the U.S. power system. It installed a Democratic Party icon, Clark Clifford, as First American’s chairman. Loans and favors flowed to Democrats and Republicans alike. When BCCI started to unravel, the hydraulic force of all that money caused official Washington to drag its feet on investigating. It took crusading Manhattan District Attorney Robert Morgenthau and the Journal’s Bob Bartley to prod the feds, and the world, into action.

I thought of Harry Albright and BCCI while following the kerfuffle over the pledge by Saudi Arabia and the UAE to donate $100 million to Ivanka Trump’s proposed Women Entrepreneurs Fund, to be administered by the World Bank. News flashed around the world about “Ivanka’s Fund” and the Trumpian hypocrisy in a pay-to-play move so similar to the Clinton Foundation, swiftly followed by a Twitter outburst decrying “fake news”—because, after all, the enterprise would be run by the World Bank, not the Trumps.

Or maybe not. It’s worth noting that there is no Women Entrepreneurs Fund. The World Bank website makes no mention of it. It’s simply an idea Ms. Trump raised with World Bank President Jim Yong Kim recently. Mr. Kim steers a ship riven by controversy, even crisis. So any port in a storm and who knows whether Ms. Trump will feel compelled to “rescue” the fund.

The Saudis don’t care. The notion that the deeply patriarchal state has developed a sudden love for women’s entrepreneurship is ludicrous. This is a classic Saudi influence play aimed at America’s ruling family. We’ve seen this movie before. It’s a little exercise in the hydraulic power of money. If you’re an oil-rich monarchy sitting on top of a restive region, you never know when you’re going to need to call in a favor. The best way to ensure favorable treatment is to spread around a lot of money.

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Following The Trump Money

Amid the sound and fury over the firing of FBI Director James Comey and classified conversations in the Oval Office, a significant development in the Russian connection investigations received only fleeting attention. But it’s important. Investigators are getting serious about following the Trump money.

Senator Lindsey Graham signaled the new development at the end of the May 8 subcommittee hearing of the Senate Judiciary Committee. It was quickly overshadowed by President Trump’s firing of Mr. Comey the next day.

Senator Graham asked former Director of National Intelligence James Clapper: “During your investigation of all things Russia, did you ever find a situation where a Trump business interest in Russia gave you concern?”

Mr. Clapper paused, then artfully dodged: “Not in the course of the preparation of the intelligence community assessment” of Russian meddling in the election.

Senator Graham was not deterred. “Since?” And, “At all, anytime?”

“I can’t comment on that because that impacts an investigation,” Mr. Clapper said.

Four days later, the Wall Street Journal reported that the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, would be sharing “financial records with an expanding Senate probe into possible ties between Russia and President Donald Trump and his associates.” The FBI is already making use of FinCEN data and analysis.

FinCEN is basically a gigantic vacuum machine sucking up massive amounts of global financial data. It tracks suspicious banking activity and other financial transactions for signs of criminal activity, fraud, tax evasion, terrorism and money laundering. The Patriot Act put FinCEN on steroids, elevating it as a national security and law-enforcement resource.

“The basic concept underlying FinCEN’s core activities is ‘follow the money,’” the agency notes on its website. “The primary motive of criminals is financial gain, and they leave financial trails as they try to launder the proceeds of crimes or attempt to spend their ill-gotten profits.”

The Journal report noted that Senate investigators “came across information that led them to inquire about Mr. Trump’s business ties,” marking “an escalation of the committee’s probe.” According to the Journal, investigators plan to look at a broad matrix of companies involved with Mr. Trump, possibly including “businesses owned or associated with Mr. Trump’s family members, including Kushner Cos., where his son-in-law and now senior White House aide, Jared Kushner, was previously CEO.”

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