DOJ denies knowledge of bribed prosecutors in Virgin Islands corruption case

Matthew Boyle Investigative Reporter
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In a Feb. 24 letter to Iowa Republican Sen. Chuck Grassley, the U.S. Department of Justice denied knowledge that two of its prosecutors accepted bribes in connection with a years-long investigation into financial crimes that National Rural Utilities Cooperative Finance Corporation (CFC) executives allegedly committed over the past ten or more years.

The DOJ’s letter to Grassley, signed by Assistant Attorney General Ronald Weich, was in response to the Senate Judiciary Committee ranking member’s request on Feb. 10 for the Department to brief his staff after The Daily Caller first reported on the scandal on Feb. 1.

TheDC’s investigation discovered that the DOJ had failed to arrest and prosecute already-indicted financial executives because bribery had corrupted the process.

In his letter to the DOJ, Grassley said he read TheDC’s investigation into the bribery allegations “with great concern.” That investigation unearthed allegations that two DOJ prosecutors on a team of more than 25 accepted cash bribes from indicted finance executives in the U.S. Virgin Islands.

(RELATED: Read the letters between Sen Grassley and Assistant Attorney General Weich)

According to TheDC’s source, a knowledgeable government official who served on a DOJ team put in place to arrest those finance executives, five other prosecutors on the team were also compromised in some way other than being bribed.

The DOJ never acted on the sealed indictments, which were the consequence of a lengthy criminal scheme involving bank fraud and other financial crimes. This, TheDC’s source said, was because Attorney General Eric Holder is embarrassed by the corruption that has plagued his DOJ internally.

U.S. Virgin Islands Gov. John de Jongh, a Democrat, was personally on the receiving end of a portion of $20 million in cash bribes spread to officials in the Virgin Islands government, according to TheDC’s Justice Department source. (RELATED: Full coverage of the Justice Department)

The bribes went to de Jongh, his attorney general Vincent Frazer and assorted Virgin Islands legislators, the source said. The bribes were intended to quash local concerns about financial irregularities identified on CFC’s books.

TheDC is withholding the name of its source in order to reduce the likelihood of career retaliation from political figures in the Obama administration.

“The article describes in extensive detail the alleged financial crimes of the National Rural Utilities Cooperative Finance Corporation in the U.S. Virgin Islands,” Grassley wrote to Holder in his request for a briefing.

“If the article is correct, the case was apparently a priority for the Department because more than 25 prosecutors were working on the case in some capacity. The whistleblowers in the article allege that confidential information was being leaked from the Department to the targets of the investigation. The article states that a meeting was held with all of the prosecutors involved and it was uncovered that two Department officials had accepted cash bribes and other improper contact had occurred.”

“It is further alleged that the bribed officials attempted to disrupt the investigation and protect certain targets,” Grassley added. “The article states although the suspects had been indicted and arrest teams were in place, the case went dormant due to the leaks and bribes at the Department. The article also goes on to allege that the sitting governor of the U.S. Virgin Islands and top officials in the government also accepted bribes.”

In his reply two weeks later, Weich addressed few specifics in TheDC’s reporting or in Grassley’s letter. Weich’s response makes no mention of the sealed indictments, or of the lengthy investigation the DOJ conducted into CFC’s financial irregularities. Instead, Weich challenged only the Daily Caller’s decision to give its source protection through anonymity, claiming the DOJ has no knowledge of the bribes explored in the story.

“The Department is not aware of facts supporting any allegations of bribery, as purported by the article,” Weich wrote.

DOJ spokeswoman Tracy Schmaler did not answer when TheDC asked her to define the term “bribery” and to explain what constitutes the Department being “aware” of a given matter.

She also didn’t respond when TheDC asked if Holder’s awareness of something was sufficient to conclude that the Department knew of it.

TheDC’s Justice Department source alleges that Holder was “briefed” on every aspect of this case.

Also, though it has been nearly a month since TheDC first asked her to comment on the DOJ’s failure to act on the sealed indictments of the finance executives, Schmaler has not responded. Schmaler also has not denied the existence of the investigation.

Shown Weich’s letter, TheDC’s source said it was by no means comprehensive and appears to be an attempt to dodge certain questions with careful wording.

“He left out portions of the letter to him from Sen. Grassley, like the indictments, all the things against CFC and everything to that end,” the source said in an interview, while clarifying that proof of the bribery exists “internally, based on documents.”

Telecommunications investor Jeffrey Prosser, the former CEO of Innovative Communications Corporation who was ousted during a scheme by CFC and its allies to keep their pattern of financial irregularities quiet, agreed that Weich’s short letter to Grassley doesn’t answer any of the significant questions about this investigation.

“It is interesting that the Department of Justice chose not to deny the serious allegations contained in Senator Grassley’s letter,” Prosser said. “Even in addressing the allegation of bribes paid to two DOJ Prosecutors and/or the sitting Governor of the Virgin Islands, John de Jongh, you’re left with more questions than answers.”

“It seems that the DOJ is more concerned with what information Senator Grassley has instead of what the truth is.”

TheDC’s source added that since February 1, when TheDC first published information about this alleged internal DOJ corruption, the Justice Department has resumed pursuing its open investigation into Virgin Islands officials.

“Based on the [Feb. 1] article, the U.S. DOJ has realized that there are a lot of open windows as far as CFC and the governor of the U.S. Virgin Islands, and realized that the potential of federal funds being fraudulently obtained is a serious concern to the citizens of the United States of America,” the source said. “Holder himself is very upset at the negligence internally that led to a poor investigation and lack of action, and the lack of professionalism when it comes to federal tax dollars.”

As evidence of the current DOJ investigation’s renewed success, TheDC’s source explained that U.S. Virgin Islands Senate President Ronald Russell canceled a press conference last week. Russell had scheduled the Friday event to discuss specific names and details surrounding allegations in an Inspector General report, which alleged that several U.S. Virgin Islands senators and their families misused taxpayer money.

Local media were shocked when Russell canceled the press conference at the last minute.

Russell told the local Virgin Islands Daily News that “[t]here is an investigation ongoing,” and that “the press conference could have created some problems.”

Russell echoed that sentiment Friday during an interview with WLDV-FM radio host Alvin Gee. “Under the circumstances, it was better to provide information to the public through a different medium,” he said. “We are going to send it out through print media and probably through LEGIT–TV.”

LEGIT is a public access cable program. Its name is an acronym for Legislative Educational and Government Informational Television.

“We decided that as a team,” Russell added, “because we received information that it may compromise on ongoing investigation and we don’t want to interfere with that.”

TheDC’s Justice Department source said Russell was referring to the investigation into the CFC and the bribes allegedly accepted by the Virgin Islands governor, his attorney general and various senators.

“The Senate President wanted to do a few things, but we have asked him to hold off,” the source said, citing the need to avoid compromising the investigation. “It is directly related to this [the bribery, corruption and financial crimes investigation] and other matters, because of course now it actually goes into them using some of these funds to pay for trips for family members.”

Similar to how the DOJ has not denied specific elements of TheDC’s reporting, CFC executives and others involved in the story have not responded to requests for comment during the past four weeks. They also have not denied any of the allegations of financial crimes.

The only person involved in this scandal who has denied the allegations directly is Governor de Jongh. He has accused TheDC of have a racial motivation for reporting on this scandal.

“It is a sad, sad day in the life of our territory when gossip and slander wash away reason and truth and fairness and commonsense,” de Jongh said in an official statement. “It is a sad day in our nation when reckless allegations can be published without substance or verification as part of the smearing of our President or his Attorney General. This kind of broad brush stereotyping was shameful in the days of Jim Crow, and it is more so today.”

It’s unclear if Holder agrees with de Jongh that TheDC was racially motivated to report on this scandal, Schmaler has not answered the question of where he stands on that topic.

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