NAILED!

Will Frist Survive?

By Jason Leopold

The HufffingtonPost.com

It's one thing to lie in politics. It's another to be caught in a lie. Bill Frist has been caught in a lie. His political future is over. The immediate question is, can he survive as Majority Leader?

The Tennessee Republican claims he wasn’t privy to any inside information leading up to the sale of his stock in Hospital Corporation of America (HCA), the country’s largest for-profit hospital chain founded by Frist’s father, Thomas, and brother, Thomas Jr., weeks before the company reported lower than expected earnings July 13 that sent the stock south.

Now the Securities and Exchange Commission is investigating the matter, a spokesman for the senator said last week, to determine if Frist broke any laws.

Frist’s press secretary told the Washington Post last week that Frist decided to sell his stock to eliminate any appearance of a conflict-of-interest due to his work in the senate in shaping the nation’s healthcare policies. So, the senator’s spokesman said, Frist drafted a letter to Northern Trust and Equitable Trust in Nashville June 13 advising them to sell all of his stock in HCA, as well as his wife and children’s investments in the company.

Still, the improprieties have been in the making for quite some time. According to an Associated Press report Saturday, Frist “received regular updates of transfers of assets to his blind trusts and sales of assets. He also was able to initiate a stock sale of a hospital chain founded by his family with perfect timing. Shortly after the sale this summer, the stock price dived.”

In fact, Frist had attempted to have it both ways since he created his so-called blind trust in the 1990s: being intimately involved with his investments that directly conflict with his political work as a senator and then claiming that he’s totally unaware of his personal financial investments—and stock sales—because it’s in a blind trust.

The mainstream media, quick to accept Frist’s statements that he’s been in the dark about his HCA holdings, was complicit in allowing the obvious conflict of having a senator who makes national decisions on healthcare that directly benefit the senator’s fortunes and that of his family, fall off the radar screen.

Indeed, in Jan. 26, 2003, story titled “Frist’s Health Care Votes Reflect Roots,” Frist told the Post that he “no longer knows how much the (HCA) stock is worth.”

But letters sent to Frist by Kirk Scobey Jr., his trustee, and documents filed with the senate contradict the Frist’s statement.

Frist knew that Scobey transferred three additional blocks of HCA stock—worth $750,000—to his trust in 2001 and 2002, which came from Frist’s parents’ estate. More than $750,000 in HCA stock was transferred into the blind trust during that time period from the estate of his late parents. Public filings show that Scobey sold as much as $8 million of Frist’s HCA stock between 1994 and 2000, a bulk of which was sold between 2001 and 2002.

“Interestingly, Frist knew of these sales, or at least had access to information that these sales took place,” reported the Nashville Scene, in an investigative story in July 2003 into Frist’s so-called blind trust.” How? The income from these sales of HCA stock was reported on Frist's annual financial disclosure statements that he filed with the Secretary of the Senate.”

"Given the annual reporting of capital gains, it's kind of a crock for Frist to say he doesn't know what he owns because it's in a blind trust," Charlie Gofen, a portfolio manager at Gofen and Glossberg, a Chicago-based investment-counseling firm, told the paper at the time.

Frist’s office provided the Scene with supporting documents into the senator’s blind trust. The paper hired an eight-member, bipartisan, unpaid panel of experts in trusts from around the country to analyze it and what the panel discovered was that Frist’s blind trust "blind" trust isn't really blind at all.”

“Frist’s ownership of HCA stock isn't considered a conflict of interest according to Senate rules,” the paper reported. “But then, according to those rules, almost nothing qualifies as a conflict of interest.”

Frist created his blind trust in accordance with the rules of the Ethics in Government Act. That law states that a "qualified blind trust" must meet certain requirements:

* The trustee, who is the individual charged with managing the assets of the trust, must be independent.

* There can be no restrictions on disposing of the trust's assets.
* Communication between the trustee and the politician must be limited.
* And the trust must be approved by the Senate's Ethics Committee.

In 1995, with his holdings in HCA and the senator’s increasing role in shaping the nation’s healthcare policies coming under intense scrutiny, Frist first put his assets into a blind trust. Five years later, in December 2000, Frist put his assets into a newer blind trust, prompting the Nashville Scene to ask “Why the new trust?”

“At the time he created his first trust, Frist’s portfolio included so-called "non-public securities," the paper reported. “More than likely, these were private partnerships and the like. Federal laws say such securities cannot be put into a so-called "qualified blind trust"—the type of high-end trust that Frist now has. Once these securities were sold the "more stringent" form of trust was created "as soon as practical."

Experts interviewed by the paper said what was likely the key selling point for Frist when he created the new trust in December 2000 was that he given the opportunity to look at his specific financial holdings, including HCA.

“Whenever one blind trust is discarded in favor of a newer one, panelists say the blind trust ceases to be blind during the changeover period,” the paper reported.

But what was virtually unknown, is that Frist was able to figure out the value of his financial holdings in the blind trust in a much simpler way that would give him a window into the value of his HCA stock, the main source of his wealth. Each year, the senator files his annual financial disclosure statement with the Office of the Secretary of the Senate Frist is required to disclose the amount of income generated from his blind trust. Considering that 89 percent of his assets are tied up in HCA stock, the senator would have a good indication of how well his stock has performed.

When Frist named Scobey as the administrator of his blind trust, he was choosing a well-connected family friend.

James C. Gooch, a trust and estates attorney who has worked at the prestigious Nashville law firm Bass Berry & Sims, the same firm where Frist’s brother-in-law H. Lee Barfield is a partner, drafted Frist’s trust, which, among other things, states that the trust is “concentrated in the stock of HCA”; and Scobey, president of Equitable Trust, an institution Frist has done business with for years, was chosen as the trustee.

“Scobey's boss at Equitable is William H. Cammack, the firm's chairman. In fact, Gooch, Cammack and Scobey are all solid members of genteel West Nashville culture, the same culture that produced and nurtured Bill Frist,” the Nashville Scene reported.

Scobey, according to documents filed with the Secretary of the Senate, doesn’t charge Frist a substantial fee to manage the trust. Furthermore, Equitable waived its $5,000 annual fee it usually charges individuals to manage similar assets, as well as cut its management fee for trusts as big as Frist’s from .3 of 1 percent to .22 of 1 percent.

But wait, there’s more. Back in September of 2002, a business partially owned and funded by Frist was embroiled in a lawsuit that claimed that the company’s founder, along with Frist's business agent, sold a Laundromat to a Bellevue, Tenn., couple at an inflated price.

Jon and Lynn Hargis of Bellevue, Tenn., didn’t accuse the senator of wrongdoing in their lawsuit against Campus Concepts Inc., a company that Frist holds a 49 percent stake in. But the couple said Frist’s close friend and business partner, David E. Harvey, the president of Campus Concepts, had told them that the Laundromat had grossed $10,000 more a month than it was actually bringing in. The Hargises said Harvey provided them with tax returns to back up his claims and the couple then agreed to purchase the Laundromat for $460,000.

The Hargises discovered a few months later that the income figures Harvey provided were grossly inflated and that he lied in papers he filed with the Tennessee Department of Revenue. Frist has been an investor in Campus Concepts since 1991.

At the time the lawsuit was filed, a spokeswoman for Frist told The Tennessean Nashville newspaper that the senator wasn’t involved in the "day-to-day operations" of Campus Concepts and that his share and investment in the business was placed into a blind trust.

“However, financial disclosure documents signed by Frist, a Tennessee Republican from Nashville, and filed with the Senate starting the year after he took office show he listed Campus Concepts as one of his assets, valued at $50,000-$100,000,” the paper reported. “His most recent disclosure for [2001] lists as an asset an unsecured note from [the Laundromat] valued at $100,000-$250,000. Asked how Frist could provide such information if he had no knowledge of the assets in his blind trust, Frist’s spokeswoman would not elaborate.”

It remains to be seen whether someone inside Hospital Corporation of America (HCA) tipped off Frist earlier this year that the for-profit hospital chain founded by his father, Thomas, and brother, Thomas Jr., expected to forecast lower second quarter earnings July 13, just a couple of weeks after Frist sold his stock, due to, among other things, an increase in uninsured hospital admissions at HCA facilities. Or perhaps Frist is just a savvy investor and the timing of his stock sales is coincidental.

It does seem that happenstance has been good to Senator Frist and HCA. Not long after he was chosen as Majority Leader, the Department of Justice abruptly ended a 10-year probe into how HCA defrauded the federal government’s Medicare and Medicaid programs. The Justice Department, which surely had been pursuing federal criminal charges against HCA executives, (including Frist’s brother, Thomas Jr., HCA’s former chief executive and current board member) agreed to a $631 million settlement. In total, HCA paid $1.7 billion in fines to keep at least one Frist out of jail, making it the largest fraud settlement in U.S. history.

In February, just a few months before Frist claims he instructed the administrator of his blind trust to unload his shares of HCA, company insiders were dumping shares by the truckload, prompting shareholders to raise questions on message boards and during HCA investor conference calls whether HCA executives—and possibly Frist—knew something that the public didn’t know.

A number of HCA executives seemed to be were aware that the increase in treating uninsured patients would have a negative impact on the company’s earnings. That would explain the massive sell off of HCA stock that started Feb. 2, when HCA chairman Jack Bovender sold 500,000 shares (despite the fact that HCA stock was near a 52-week high) earning roughly $9 million.

Bovender dumped his shares a day after a government official testified that the health care industry’s biggest problem was an increasing number of bad debts from the uninsured that would no doubt worsen during the course of the year.

Mike Leavitt, secretary of the U.S. Department of Health and Human Services, said the Medicaid program was on shaky ground and there was a desperate need to control spending on the government's health care coverage for the poor, according to a May 6 story on HCA in TheStreet.com.

In April, Congress passed a budget that cut Medicaid by $10 billion over five years for the first time since 1997, which is incidentally the same year that “Congress passed the Balanced Budget Act that reduced hospital payments and sent the industry into a tailspin,” TheStreet.com reported. That’s a major financial blow to hospitals such as the ones controlled by HCA and is what likely prompted the huge selloff by HCA executives.

Shortly after Bovender sold his shares several other insiders, including Treasurer David Anderson and Chief Investment Officer Noel Williams and three vice presidents sold their stock too, clearing tens of millions of dollars. In fact, between January and June, HCA insiders sold shares worth $112 million, 879,000 shares between March and April alone, netting the execs $45 million.

Insider sales increased in the beginning of March when HCA said it planned to sell 10 of its hospitals that were located in poor states that were dealing with Medicaid troubles. On April 22, HCA President Richard Bracken sold $4.13 million of company stock followed by Milton Johnson, the company’s chief financial officer, who sold twice that amount.

Speaking of the pending hospital sales, a footnote in HCA’s past proxy statements researched for this story has revealed something few HCA investors seem to be aware of: the cozy and questionable business relationship between the hospital chain and a company operated by the son-in-law of HCA’s former chairman, Thomas Frist, Senator Frist’s father.

A company owned by the elder Frist’s son-in-law, Charles Elcan, bought 116 medical office buildings from HCA back in December 2000 for $250 million, which the hospital chain disclosed in a 2001 SEC filing, the website footnoted.org said in April 22 posting. In a filing HCA made with the SEC last year when the company, known as MedCap was sold for $575 million, HCA disclosed for the first time that Elcan only put up a small fraction of the initial $250 million back in December 2000.

“This year, HCA has provided even more details, though it’s a somewhat convoluted path involving a swap transaction that involves quite a bit of alphabet soup,” said footnoted.org. “What it appears to boil down to is that HCA had to ante up even more money than it previously disclosed to essentially help the son-in-law out of a jam, even though it was unusually generous when it sold the office buildings to Elcan back in December 2000, since that investment more than doubled in less than three years. HCA has chosen to let details of the deal trickle out gradually over the past few years which certainly leave one with the impression that they’re trying to hide something.”

Jason Leopold has written about corporate malfeasance for The Wall Street Journal, The Financial Times, The Nation, The San Francisco Chronicle, and numerous other national and international publications. He is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at www.jasonleopold.com for updates.

The GOP’s Fiscal Policies Turned a Natural Disaster into a Man-Made Catastrophe

By Jason Leopold

© 2005 Jason Leopold

Republicans like to brag that, as a political party, they are more fiscally responsible than their Democratic counterparts. Well, thanks to President Bush’s four years in office that theory can now take up residence in the urban legend department.

If anything, Bush’s tenure as president proves that the Republican tax cuts (which everyone knows truly benefits the wealthiest one percent), drastically slashing funds in the federal budget for much needed improvements to the country’s aging infrastructure (a perfect example being the outdated power grid), and trying to get away with launching wars on the cheap, have cost taxpayers and their unborn grandchildren more money than anyone could have ever imagined.

Simply put, since he became president, Bush has not invested the funds to fix the cracks in the country’s façade, despite repeated warnings from experts and intense lobbying efforts by state officials that ignoring the problem will make it worse in the long run. Instead, the president pumped tens of billions of dollars into an unnecessary war that, when it became evident that attaining victory was tougher than the war planners imagined, required tens of billions of dollars more just to continue the fighting.

Only when devastation and catastrophe struck the nation did the federal government cough up the funds, but by then there wasn’t much of choice and as such a $1 billion restoration project before a devastating hurricane touched down in the Gulf Coast has turned into a $200 billion reconstruction effort and has now saddled taxpayers with economic woes that no tax cut can relieve.

You don’t have to look too far than New Orleans, a city wiped out by Hurricane Katrina, as evidence of the Bush administration’s and Congress’ fiscal irresponsibility. It’s a direct result of Washington’s financial incompetence that the cost for rebuilding The Big Easy is estimated to top $200 billion.

Flooding is the most destructive and costly natural disaster in the United States, accounting for approximately 75 percent of all disasters declared by the President annually. Approximately 160 million acres, or 7 percent of the United States are estimated to be floodplains and urban expansion into floodplains continues at an increasing rate, according to the Public Entity Risk Institute, a nonprofit think tank that that aims to educate the public and government on disaster management.

Sadly, no one was becoming any smarter. Instead of funding flood control projects, the Bush administration cut the Army Corps of Engineers budget, forcing the city of New Orleans to loan the agency $1 million back in December of 2003 to keep one crucial flood control project from shutting down entirely.

“It's not every day that New Orleans has to bail out the federal government,” said the Times-Picayune in a January 2, 2004 story. “But that's exactly what happened last month, when the Orleans Levee Board voted to advance the Army Corps of Engineers $1 million to prevent a vital flood control project from shutting down.”

Al Naomi, a senior project manager for the corps told the Picayune that federal funding has all but dried up threatening to put hurricane protection plans that were already underway on hold indefinitely.

Naomi said the corps has been strained for money, as the federal government's priorities have shifted to other concerns, such as homeland security, which prior to Hurricane Katrina meant protection from terrorist threats, and the war in Iraq.

Before Bush delivered his better-late-than-never speech to the nation earlier this month in front of Andrew Jackson's statue in New Orleans, he personally shot down repeated requests for federal assistance made by Louisiana officials over the past four years to help repair New Orleans’ eroding coastline, the most recent of which was turned down by the president in June. Even prior hurricanes, such as Ivan, which nearly whipped through New Orleans last September and still wreaked havoc on the city similar to that of Katrina, forcing local officials to evacuate New Orleans and calling on the federal government for help, was not enough to sway President Bush to focus on domestic threats instead of pouring all of his energy into terrorism and the war in Iraq.

So, to hear the president in a televised speech promise to spend whatever it takes to rebuild one of the nation’s great cities is not a sign of progress, rather it’s a symbol of the total breakdown of his administration and an attempt to conceal what could arguably have been a man-made disaster because of Bush’s policies.

The final blow, however, came in June. Louisiana state officials had been hoping that a provision included in the Senate energy bill that called for $500 million in offshore energy revenue from the federal government would finally provide Louisiana and four other coastal states with the funds it desperately needed to repair its damaged wetlands to protect itself, among other things, against possible future weather-related disasters.

But the White House adamantly refused to part ways with the $5 billion it gets from drilling in the Gulf Coast, its second biggest source of revenue (after income the Internal Revenue Service brings in) choosing to use most of those funds to finance the Iraq war.

To ensure that the message came across crystal clear, Bush personally ordered White House aides to take the unusual step of sending a letter to House and Senate negotiators advising them to kill the revenue-sharing plan in the final version of the energy bill.

The White House’s Office of Management and Budget released a policy statement paper in June that said the Bush administration opposes “the significant new funding authorizations and diversion” of Outer Continental Shelf revenue included in a national energy bill being discussed in Congress.

"Currently the federal government does share royalties with coastal states -- more than $3 trillion to date, in fact. Changing this amount only increases the budget deficit and diminishes the benefit the rest of the nation receives from these national resources," Scott Milburn, press secretary for the White House’s Office of Management and Budget, told The Associated Press in June.

“Disheartening,” “frustrating,” “upsetting” and “just another nail in my coffin” is how Louisiana senators, community leaders and coastal advocates responded to the news in June that the White House intervened and advised the Senate to defeat the revenue provision, according to June 16 report in the Houma, La., Courier.

Ironically the erosion to the state’s coastline—which became considerably worse over the past five years—is due, in part, to oil and gas drilling in the Gulf, much of which takes place right in New Orleans. Although the state is responsible for repairing its coastline to support its oil and gas infrastructure it barely benefits financially from the drilling that takes place right in its own backyard.

“While inland states enjoy 50 percent of the tax revenue from drilling on their federal lands, Louisiana gets back a mere $35 million of the $5 billion it contributes to the federal treasury each year from offshore drilling, or less than one percent,” the Courier said.

In a written statement, U.S. Sen. Mary Landrieu, D-La., condemned the White House position. Landrieu said the Bush administration simply can’t comprehend why the state of Louisiana needs compensation for producing a bulk of the nation’s energy supply. It’s a fact that coastal oil-and-gas-producing states account for 25 percent of the nation’s natural gas and 30 percent of oil.

“The president’s statement indicates a failure to appreciate the burdens borne by the people of Louisiana and other coastal oil-and-gas-producing states,” Landrieu said.

It wasn’t long after the White House issued its statement on the revenue sharing concept that Louisiana lawmakers predicted an apocalyptic end to the city of New Orleans.

Clifford Smith, a Houma, La., civil engineer and coastal advocate who is also a member of the U.S. Army Corps of Engineers’ Mississippi River Commission, told The Courier in June that without federal assistance New Orleans could very well drown if it took a direct hit from a hurricane.

"We’re not going to get the kind of recognition and concern we deserve until we have a disaster," he said.

Jason Leopold is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at www.jasonleopold.com for updates.

CIA Intelligence Reports Seven Months Before 9/11 said Iraq Posed No Threat to U.S., Containment Was Working

By Jason Leopold
(C) 2005 Jason Leopold

CIA Director George Tenet testified before Congress in February 2001 that Iraq posed no immediate threat to the United States or to other countries in the Middle East.

But immediately after the terrorist attacks on 9-11, which the Bush administration has said Iraq is partially responsible for, the President and his advisers were already making a case for war against Iraq without so much as providing a shred of evidence to back up their allegations that Iraq and its former President, Saddam Hussein, helped al-Qaida hijackers plan the catastrophe.

It was then, after the 9-11 attacks, that intelligence reports from the CIA radically changed from previous months, which said Iraq posed no immediate threat to the U.S., to now show Iraq had a stockpile of chemical and biological weapons and was in hot pursuit of a nuclear bomb. The Bush administration seized upon the reports to build public support for the war and used the information to eventually justify a preemptive strike against the country last March.

Lawmakers in Washington, D.C. are now investigating whether the intelligence information gathered by the CIA was accurate or whether the Bush administration manipulated and or exaggerated the intelligence to make a case for war.

In just seven short months, beginning as early as February 2001, Bush administration officials said Iraq went from being a threat only to its own people to posing an imminent threat to the world. Indeed, in a Feb. 12, 2001 interview with the Fox News Channel Secretary of Defense Donald Rumsfeld said: “Iraq is probably not a nuclear threat at the present time.”

But Rumsfeld testified before the House Armed Services Committee on Sept. 18, 2002 that Iraq is close to acquiring the materials needed to build a nuclear bomb.

“Some have argued that the nuclear threat from Iraq is not imminent -- that Saddam is at least 5-7 years away from having nuclear weapons,” Rumsfeld testified before the committee .

”I would not be so certain… He has, at this moment, stockpiles chemical and biological weapons, and is pursuing nuclear weapons.”

Rumsfeld never offered any evidence to support his claims, but his dire warnings of a nuclear catastrophe caused by Saddam Hussein was enough to convince most lawmakers, both Democrat and Republican, that Saddam’s Iraq was doomed. Shortly after his remarks before the House Armed Services Committee, Congress passed a resolution authorizing President Bush to use “all appropriate means” to remove Saddam from power.

However, intelligence reports released by the CIA in 2001 and 2002 and more than 100 interviews top officials in the Bush administration, such as Secretary of State Colin Powell, Defense Secretary Donald Rumsfeld and Deputy Defense Secretary Paul Wolfowitz, gave to various Senate and Congressional committees and media outlets prior to 9-11 show that the U.S. never believed Saddam Hussein to be an imminent threat other than to his own people.

Moreover, the CIA reported in February 2001 that Iraq was “probably” pursuing chemical and biological weapons programs but that it had no direct evidence that Iraq actually had actually obtained such weapons.

“We do not have any direct evidence that Iraq has used the period since (Operation) Desert Fox to reconstitute its WMD programs, although given its past behavior, this type of activity must be regarded as likely,” CIA director Tenet said in a agency report to Congress on Feb 7, 2001.

“We assess that since the suspension of (United Nations) inspections in December of 1998, Baghdad has had the capability to reinitiate both its (chemical and biological weapons) programs… without an inspection monitoring program, however, it is more difficult to determine if Iraq has done so.”

“Moreover, the automated video monitoring systems installed by the UN at known and suspect WMD facilities in Iraq are still not operating,” according to the 2001 CIA report. “Having lost this on-the-ground access, it is more difficult for the UN or the US to accurately assess the current state of Iraq’s WMD programs.”

Ironically, in the February 2001 report, Tenet said Osama bin Laden and his al-Qaida terrorist network remain the single greatest threat to U.S. interests here and abroad. Tenet eerily describes in the report a scenario that six months later would become a reality.

“Terrorists are also becoming more operationally adept and more technically sophisticated in order to defeat counter-terrorism measures. For example, as we have increased security around government and military facilities, terrorists are seeking out "softer" targets that provide opportunities for mass casualties. Employing increasingly advanced devices and using strategies such as simultaneous attacks, the number of people killed … Usama bin Ladin and his global network of lieutenants and associates remain the most immediate and serious threat. Since 1998, Bin Ladin has declared all U.S. citizens legitimate targets of attack. As shown by the bombing of our embassies in Africa in 1998 and his Millennium plots last year, he is capable of planning multiple attacks with little or no warning,” Tenet said.

However, Tenet only briefly discussed the al-Qaida threat and devoted the bulk of his testimony on how to deal with the threat of rogue countries such as North Korea, Syria, Iran and Iraq. Six months later, Bin Laden was identified as the mastermind behind 9-11.

Between 1998 and early 2002, the CIA’s reports on the so-called terror threat offered no details on what types of chemical and biological weapons that Iraq obtained.

But that changed dramatically in October 2002 when the CIA issued another report that this time included details of Iraq’s alleged vast chemical and biological weapons.

The October 2002 CIA report into Iraq’s WMD identifies sarin, mustard gas, VX and numerous other chemical weapons that the CIA claims Iraq had been stockpiling over the years, in stark contrast to earlier reports by Tenet that said the agency had no evidence to support such claims. And unlike testimony Tenet gave a year earlier, in which he said the CIA had no direct evidence of Iraq’s WMD programs, the intelligence information in the 2002 report, Tenet said, is rock solid.

“This information is based on a solid foundation of intelligence,” Tenet said during a CIA briefing in February. “It comes to us from credible and reliable sources. Much of it is corroborated by multiple sources.”

The CIA would not comment on the differing reports between 2001 and 2002 or how the agency was able to obtain such intelligence information and corroborate it so quickly.

Still, in early 2001, while hardliners in the Bush administration were privately discussing ways to remove Saddam Hussein from power, Secretary of State Powell said the U.S. successfully “contained” Iraq in the years since the first Gulf War and that because of economic sanctions placed on the country Iraq was unable to obtain WMD.

“We have been able to keep weapons from going into Iraq,” Powell said during a Feb 11, 2001 interview with “Face the Nation. “We have been able to keep the sanctions in place to the extent that items that might support weapons of mass destruction development have had some controls on them… it's been quite a success for ten years…”
Moreover, during a meeting with Joschka Fischer, the German Foreign Minister, in February 2001 on how to deal with Iraq, Powell said the U.N., the U.S. and its allies “have succeeded in containing Saddam Hussein and his ambitions.”

Saddam’s “forces are about one-third their original size. They don't really possess the capability to attack their neighbors the way they did ten years ago,” Powell said during the meeting with Fischer. “Containment has been a successful policy, and I think we should make sure that we continue it until such time as Saddam Hussein comes into compliance with the agreements he made at the end of the (Gulf) war.”

Powell added that Iraq is “not threatening America.”

Division of Funeral Corp. Charged With Desecrating Corpses Hired to Collect Deceased Victims of Hurricane Katrina

Service Corporation International visits the NYSE to celebrate its 30^th anniversary of listing. In honor of the occasion, Bob Waltrip, Chairman & CEO, rings The Closing Bell.

By Jason Leopold
© 2005 Jason Leopold

A funeral services company which recently learned that one of its subsidiaries is negotiating a lucrative contract with the Federal Emergency Management Agency to remove dead bodies in areas ravaged by Hurricane Katrina, paid $100 million to settle a class-action lawsuit several years ago alleging the company desecrated thousands of corpses, and dumped bodies into mass graves.

Moreover, the company paid $200,000 to settle a whistleblower lawsuit that sought to expose that two members of the Texas funeral commission, the agency which regulates the funeral industry, were actually employees of the company they were supposed to monitor--an obvious conflict-of-interest.

In the civil matter, which took place at two Jewish cemeteries in Florida, the plaintiff's attorney said that SCI secretly broke into and opened burial vaults and dumped remains in a wooded area where the remains may have been consumed by wild animals.

Details about SCI's mass graves and mutilated corpses emerged publicly five years ago. According to the lawsuit, a former employee of Menorah Gardens & Funeral Chapels in West Palm Beach, which is owned by SCI, showed investigators human remains discarded in a wooded area near the cemetery.

Attorneys representing the families of the deceased who were buried at Menorah Gardens said they obtained a so-called "burial book" which included gruesome details about SCI's burial practices.

“No room for spouse,” “move Mrs. Kolin” and “dig this grave double deep,” said one excerpt from the book. A handwritten note obtained along with the book said, “Where are Lippitis and who are Haskells and are they both deceased? Move Haskell marker.”

Additionally, SCI buried "remains in locations other than those purchased by plaintiffs; crushing burial vaults in order to make room for other vaults; burying remains on top of the other rather than side-by-side; secretly digging up and removing remains; secretly burying remains head-to-foot rather than side-by-side; secretly mixing body parts and remains from different individuals; secretly allowing plots owned by one part to be occupied by a different person; secretly selling plots in rows where there were more graves assigned than the rows could accommodate; secretly allowed graves to encroach on other plots; secretly sold plots so narrow that the plots could not accommodate standard burial vaults; secretly participated in the desecration of gravesites and markers and failed to exercise reasonable care in handling the plaintiff's loved ones remains."

Kenyon International. a unit of SCI, is presently in charge of the delicate task of collecting the hundreds, perhaps thousands, of dead bodies in the aftermath of the hurricane. Reuters reported Wednesday that Kenyon will receive $119,000 a day from the state of Louisiana for recovering the corpses of hurricane victims.

“The contract between the company and the state's Department of Health and Hospitals runs from Sept. 12 to Nov. 15 at a daily personnel rate of $118,980, after a 10 percent discount,” Reuters reported, citing documents released by the state. “Kenyon also estimated expenses of around $639,000 for the first 31 days of its mission, covering everything from body bags to trailers to laundry services for its staffers.”

SCI, Kenyon’s parent company, has been plagued by scandals for more than a decade. The fact that its subsidiary Kenyon has bee in talks with the federal government, largely due to its close ties to the White House, to remove victims of Hurricane Katrina in New Orleans is ghastly given its track record for desecrating corpses.

The whistleblower suit dates back to 1999 and alleged that while he was governor of Texas, George W. Bush's office interfered with an aggressive state probe into Service Corporation International's embalming methods. SCI, Houston's largest funeral services company, was headed by Robert Waltrip--a close associate of the Bush family. Waltrip contributed more than $45,000 to then Gov. Bush's gubernatorial campaigns and ponied up $100,000 for former President George H.W. Bush's presidential library.

An attorney for Eliza May, a former whistleblower who served as executive director of the Texas Funeral Services Commission, the state agency that regulates the funeral business, claimed that she was fired from her state job because she raised questions about SCI's embalming practices and sought to expose the company's misdeeds. She filed a whistleblower suit in 1999 alleging "she was the victim of "political" retaliation because she was threatening the interests of a well-connected political patron of the governor," Newsweek reported in an April 21, 2001, story.

May claimed that current White House Counsel Alberto Gonzales was also complicit in the matter and even helped SCI in a cover-up. Gonzales, who was also Bush’s gubernatorial counsel, reportedly received a memo on April 22, 1996, suggesting possible improprieties by two funeral commissioners with ties to SCI.

"Bush and his top aides have heatedly denied the charges and suggested the entire matter was drummed up by Democratic lawyers with political motives, Newsweek reported.

The memo, written by Marc Allen Connelly, who was general counsel to the funeral services commission at the time, and sent to Dick McNeil, the Bush-appointed chairman of the funeral commission, stated that Connelly "received information"from Texas state officials that two of the funeral commissioners charged with regulating the state funeral business actually worked for SCI-the largest funeral firm in the state. Although one of the commissioners was openly an SCI officer (the one appointed by Bush), Connelly stated that state banking records he inspected showed that another of the commissioners worked for a firm in which SCI had become the largest stockholder," Newsweek reported.

The revelation represented a "a possible statutory conflict." Texas law prohibited any two commissioners from having ties "directly or indirectly"to the same funeral company.

In the memo, Connelly told McNeil that he should "immediately inform the Governor of this apparent conflict and also recommend that the Governor take action to remove both (the two SCI-related commissioners) from the commission because both individuals knew or should have known of this conflict yet failed to notify the governor's office."

McNeil stated in a deposition that after he received the Connelly memo, he faxed it to Polly Sowell, who then served as Bush's appointments secretary. "When she was questioned, Sowell was asked what she did with the memo. "I sent it to the General Counsel's Office," she told Newsweek. “But Sowell said she did not remember what happened after that and Gonzales said such a memo was merely one of many that might have crossed his desk and was otherwise not memorable. In any case, Bush never acted on the memo's recommendations that the SCI affiliated commissioners be removed."

Jason Leopold is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at http://www.jasonleopold.com for updates.

EXCLUSIVE!!! FEMA Chief Brown Paid Millions in False Claims to Help Bush Win Fla. Votes in '04

By Jason Leopold

© 2005 Jason Leopold

Michael Brown, the embattled head of the Federal Emergency Management Agency, approved payments in excess of $31 million in taxpayer money to thousands of Florida residents who were unaffected by Hurricane Frances and three other hurricanes last year in an effort to help President Bush win a majority of votes in that state during his reelection campaign, according to published reports.

“Some Homeland Security sources said FEMA's efforts to distribute funds quickly after Frances and three other hurricanes that hit the key political battleground state of Florida in a six-week period last fall were undertaken with a keen awareness of the looming presidential elections,” according to a May 19 Washington Post story.

Homeland Security sources told the Post that after the hurricanes that Brown “and his allies [recommended] him to succeed Tom Ridge as Homeland Security secretary because of their claim that he helped deliver Florida to President Bush by efficiently responding to the Florida hurricanes.”

The South Florida Sun-Sentinel uncovered emails from Florida Gov. Jeb Bush that confirmed those allegations and directly implicated Brown as playing politics at the expense of hurricane victims.

“As the second hurricane in less than a month bore down on Florida last fall, a federal [FEMA] consultant predicted a "huge mess" that could reflect poorly on President Bush and suggested that his re-election staff be brought in to minimize any political liability, records show,” the Sentinel reported in a March 23 story.

“Two weeks later, a Florida official summarizing the hurricane response wrote that the Federal Emergency Management Agency was handing out housing assistance "to everyone who needs it without asking for much information of any kind."

The records the Sentinel obtained were contained in hundreds of pages of Gov. Jeb Bush's storm-related e-mails the paper received from the governor’s office under the threat of a lawsuit.

The explosive charges of mismanagement of disaster relief funds made against Brown and FEMA were confirmed earlier this year following a four-month investigation by Richard Skinner, the Department of Homeland Security’s inspector general. Skinner looked into media reports alleging that residents of Miami-Dade were receiving windfall payments from FEMA to cover losses from Hurricane Frances they never incurred.

Hurricane Frances hit Hutchinson Island, Fla., about 100 miles north of Dade County, on Sept. 5. Miami-Dade officials described damage there from heavy rain and winds of up to 45 mph as ''minimal,'' according to the Post.

Indeed. A May 14 story in the Sun-Sentinel, said: “Miami-Dade County residents collected Hurricane Frances aid for belongings they didn't own, temporary housing they never requested and cars worth far less than the government paid, according to a federal audit that questions millions in storm payouts.

Responding to those allegations, Brown held a news conference Jan. 11 blaming the overpayments on a “computer glitch” and said the disbursements were far less than the $31 million that was cited in news reports and involved 3,500 people. Moreover, to silence his critics who said that Hurricane Frances barely touched down in Miami-Dade, Brown cited a report by the National Oceanic Atmospheric Administration (NOAA) to prove that there were legitimate hurricane conditions there and as a result that a bulk of the payments was legitimate.

But according to the Sun-Sentinel, NOAA had refuted the weather maps Brown claimed to have obtained from them. That report prompted Congressman Robert Wexler, D-Fla., to send off a scathing letter to President Bush calling for Brown’s resignation.

Bush rebuffed Wexler. However, the DHS’ inspector general launched a probe to determine how widespread the problems were involving overpayments to Miami-Dade residents. In May, the inspector general released his report. What he found was damning.

“The review found waste and poor controls in every level of the Federal Emergency Management Agency's assistance program and challenges the designation of Miami-Dade as a disaster area when the county "did not incur any hurricane force winds, tornados or other adverse weather conditions that would cause widespread damage."

In identifying one of the overpayments, the inspector general’s report said FEMA paid $10 million to replace hundreds of household items even though only a bed was reported to be damaged, the inspector general’s report said.

"Millions of individuals and households became eligible to apply for [money], straining FEMA's limited inspection resources to verify damages and making the program more susceptible to potential fraud, waste and abuse," the report states.

Sen. Susan Collins, R-Maine, chairwoman of the Homeland Security and Governmental Affairs committee, said during a committee hearing in May that Brown “approved massive payouts to replace thousands of televisions, air conditioners, beds and other furniture, as well as a number of cars, without receipts, or proof of ownership or damage, and based solely on verbal statements by the residents, sometimes made in fleeting encounters at fast-food restaurants.”

“It was a pay first, ask questions later approach,'' Collins said. ''The inspector general's report identifies a number of significant control weaknesses that create a potential for widespread fraud, erroneous payments and wasteful practices.''

But the most interesting charge against Brown is that he helped speed up payments in Florida and purposely bypassed FEMA’s lengthy reviews process for distributing funds in order to help Bush secure votes in the state during last year’s presidential election.

Bob Hunter, director of insurance for the Consumer Federation of America, who was a top federal flood insurance official in the 1970s and 1980s and a Texas insurance commissioner in the 1990s, told the Post “that in the vast majority of hurricanes, other than those in Florida in 2004, complaints are rife that FEMA has vastly underpaid hurricane victims. The Frances overpayments are questionable given the timing of the election and Florida's importance as a battleground state.”

FEMA consultant Glenn Garcelon actions certainly lends credibility to questions raised by Hunter.

On Sept. 2, 2004, Garcelon, wrote a three-page memo titled "Hurricane Frances -- Thoughts and Suggestions."

“The Republican National Convention was winding down, and President Bush had only a slight lead in the polls against Democrat John Kerry,” the Sentinel reported in its March 23 story. “Winning Florida was key to the president's re-election. FEMA should pay careful attention to how it is portrayed by the public, Garcelon wrote in the memo, conveying "the team effort theme at every opportunity" alongside state and local officials, the insurance and construction industries, and relief agencies such as the Red Cross.”

Gov. Bush received the memo Sept. 30, 2004 shortly before a swell of payments made its way to residents in Miami-Dade who did not sustain damage as a result of Hurricane Frances.

A couple of weeks before Gov. Bush received the memo from Garcelon, Orlando J. Cabrera, executive director of the Florida Housing Finance Corp. and a member of the governor's Hurricane Housing Work Group, said in a different memo to Gov. Bush that FEMA was allocating short-term rental assistance to "everyone who needs it, without asking for much information of any kind," the Sentinel reported.

In addition, "standard housing assistance," of up to $25,600, Cabrera wrote, is "liberally provided without significant scrutiny of the request made during the initial months; scrutiny increases remarkably and the package is far more stringent after an unspecified time."

The DHS audit report found that, under Brown, FEMA erroneously distributed to Miami-Dade residents:

• $8.2 million in rental assistance to 4,308 applicants in the county who "did not indicate a need for shelter" when they registered for help. In 60 cases reviewed by auditors, inspectors deemed homes unsafe without explanation, and applicants never moved out.
  
  $720,403 to 228 people for belongings based on their word alone.
  
  $192,592 for generators, air purifiers, wet/dry vacuum cleaners, chainsaws and other items without proof that they were needed to deal with the hurricane. Three applicants got generators for their homes, plus rental assistance from FEMA to live somewhere else.
  
  $15,743 for three funerals without sufficient documentation that the deaths were due to the hurricane.
  
  $46,464 to 64 residents for temporary housing even though they had homeowners insurance. FEMA funds cannot be used when costs are covered by insurance.
  
  $17,424 in rental assistance to 24 people who reported that their homes were not damaged.
  
  $97,500 for 15 automobiles with a "blue book" value of $56,140. In general, the report states that FEMA approved claims for damaged vehicles without properly verifying that the losses were caused by the storm.

Jason Leopold is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at http://www.jasonleopold.com/ for updates.

Bush's Trail of Death and Destruction

By Jason Leopold

© 2005 Jason Leopold

Thousands more bit the dust.

Chalk another one up for the Bush administration. That’ll be President Bush’s long lasting legacy when we look back on the first few years of the 21^st Century. Thousands of people killed on U.S. soil because the president failed to protect them.

There won’t be any admission of guilt, no one to take responsibility, no one fired for screwing up, just lies and spin, and mudslinging.

You may be familiar with some of that already.

“I don’t think anyone anticipated the breach of the levees,” President Bush told Diane Sawyer in an interview last week in response to questions about the reason federal authorities took two days to aid the victims of Hurricane Katrina.

That’s a page right out of Condoleeza Rice’s playbook.

No one "could have predicted that they [al-Qaeda] would try to use a … hijacked airplane as a missile," Rice told the commission investigating the 9/11 terrorist attacks in 2003.

Wrong and wrong. Or rather, liar, liar.

There were warnings, memos, emails, phone calls, newspaper reports, meetings, threats, and cries for help. They were just ignored by the president and his administration.

Still, there are those who refuse to believe that President Bush and his closest advisers have spent their entire term in office lying to the American public about everything from the Iraq war to social security to the environment to Medicaid and so on.

It’s all documented; the lies. In black and white, in intelligence memos, emails, news reports, transcripts. Even with a mountain of evidence stacked against them, the Bush administration behaves like sociopaths.

Perhaps the apocalyptic images of the devastation wrought by Hurricane Katrina will shake these people into reality. The mainstream media has showed a little bit of spine and has asked federal officials some tough questions about the reasons they failed to do their jobs in the aftermath of the hurricane.

Prior to grilling a former official of the Federal Emergency Management Agency (FEMA), Anderson Cooper, a CNN talking head, cautioned viewers Sunday that the cable network was going to show gruesome images of corpses scattered amid the wreckage of New Orleans.

“We don’t want to gloss this over,” Cooper said as the reason CNN was being brutally honest in its reporting.

It would have been nice if those same reporters had a set of balls and asked the same tough questions before the war started in Iraq and showed its viewers the same carnage that littered the streets of Baghdad. There’s no doubt its worse over there. But for now we’ll take what we can get.

Jason Leopold is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at www.jasonleopold.com for updates.

The President’s Priorities: State of Marriage Took Precedence over State of Louisiana

By Jason Leopold

© 2005 Jason Leopold

Why is President Bush more concerned with the state of marriage than the state of Louisiana?

That’s what the New Orleans City Business paper asked in early February, a couple of weeks after Bush’s State of the Union address, in which the president called for a constitutional amendment banning same-sex marriages, upon learning that Bush’s budget proposal recommended slashing $34 million from the New Orleans district of the U.S. Army Corps of Engineers, leaving the city with a $581 million shortfall for flood control and coastal erosion improvement projects.

Despite more than four hurricanes that have whipped through New Orleans since 2002, leaving a trail of destruction in their wake, and personal pleas to the president by Louisiana’s local and state officials to provide much needed funding to rebuild the state’s rapidly disappearing wetlands, the Bush administration declined, shifting its priorities—and federal funds—into its foreign policy initiatives.

Bush said Thursday no one expected the levees in New Orleans to break after Hurricane Katrina. But there were warnings.

“Coastal erosion [is] swallowing Louisiana whole at a rate of a football field every 30 minutes,” said the Feb. 14, 2005 story in New Orleans City Business.

The erosion has a direct impact on New Orleans' ability to absorb the blow of a storm like [Hurricane] Katrina. For every 2.7 miles of wetlands, storm surges are reduced by about one foot, said Sidney Coffee, executive assistant to Louisiana Gov. Kathleen Blanco, in charge of coastal activities, in an interview with MSNBC.

About 1,900 square miles of wetlands have disappeared from the area since the 1930s, and the receding continues at a rate of about 24 square miles per year. Most of the erosion in Louisiana is blamed on the levees, which faithfully steer all the water from the Mississippi into the Gulf of Mexico. That prevents occasional flooding, keeping area residents above water most of the time. But one unforeseen consequence of the levees has been to cut off wetlands from their life force.

“How is losing vast tracts of valuable state property less important than the nebulous goal of somehow trying to restrict immigration?” the New Orleans paper asked.

Bush’s domestic priorities were dwarfed by the war in Iraq and the so-called war on terror.

The lack of federal funding became so dire that last November Louisiana Gov. Kathleen Blanco, at the urging of Louisiana levee districts, considered suing the federal government for a larger share of the $5 billion in royalties from offshore oil and natural gas drilling in the Gulf of Mexico just so the state could pay for the work needed to repair its deteriorating coast.

A lawsuit, the levee district said, would grab the nation’s attention and advance the issue of coastal restoration in the federal court system as opposed to being bogged down in legislation on Capitol Hill. The money from the Gulf of Mexico is, after income the Internal Revenue Service brings in, the second largest source of revenue for the federal government.

Blanco said that every year state officials plead with lawmakers to fund ongoing projects to preserve what’s left of the coast and to help fund other endeavors to replace what’s no longer there. Yet every year the state is shortchanged which threatens the very existence of historic cities like New Orleans.

Lawmakers included the proposal in the national energy bill. The legislation called for carving out $540 million—a 10 percent—royalty from oil and gas revenue at the Gulf of Mexico on top of the $800 million or so Louisiana already receives from drilling revenues to fund the coastal restoration project. In June, the Bush administration took the unusual step of sending a letter to House and Senate negotiators advising them to kill the revenue- sharing plan in the final version of the energy bill. It was.

New Orleans resident David Morris was none too happy when he got the news, particularly because a majority of Louisianans voted for Bush in 2000 and 2004.

President Bush has just told Louisiana to go jump in the Gulf,” Morris wrote in a June 17, letter to the Times-Picayune. “This is our president, Louisiana. We helped him win his second term in office, and this is how he thanks us. Our dwindling coastline just isn't Bush's concern. Nor is the prospect of New Orleans under 20 feet water.”

Jason Leopold is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at www.jasonleopold.com for updates.