-Caveat Lector-
Sen. Torricelli Loan Probe Continues
by JOHN SOLOMON
WASHINGTON (AP) -- A prominent New Jersey contributor arranged
and guaranteed a $100,000 loan for Sen. Robert Torricelli that
helped earn him a $144,000 profit in the stock market, a deal
that sparked six years of federal investigations into the New
Jersey Democrat's finances.
Prosecutors opened a preliminary inquiry into whether the loan
arrangement was an illegal gift and whether Torricelli provided
favors to the donor in exchange for it. They interviewed the
lawmaker in 1995 under oath, telling him his rights before asking
questions, law enforcement officials and lawyers told The
Associated Press.
But prosecutors turned down FBI requests for subpoenas, gave
Torricelli time to voluntarily turn over all his financial
documents, and eventually ended the inquiry. One prosecutor told
Torricelli the U.S. attorney's office was ''going out of our
way'' to keep the investigation quiet ''to protect your
interest,'' documents show.
At the time, Torricelli was a congressman preparing to run for
the Senate.
Though conducted and closed without public knowledge, the inquiry
led the FBI to new allegations that eventually spurred the
Justice Department's current investigation of fund raising during
Torricelli's 1996 Senate campaign, the officials said.
Six people have pleaded guilty to making illegal donations to
Torricelli's campaign, and one current and two former aides have
been told they could be indicted. Torricelli denies knowledge of
any wrongdoing.
''The U.S. attorney's review of this nine-year-old transaction
ended quickly for the most basic reasons -- every rule and
regulation was considered and complied with at the time,''
Torricelli's lawyer, Abbe Lowell, said Sunday.
The 1995 inquiry focused on Torricelli's relationship with Grover
Connell, a New Jersey businessman who provided speaking fees and
free trips to dozens of members of Congress over the past two
decades. His family and business have donated $1.8 million to
politicians, mostly Democrats. That includes more than $100,000
to Torricelli's campaigns, legal defense funds and political
action committee.
Connell's business interests have ranged from rice and sugar to
tractors and real estate.
''The government affects any business in any number of ways, and
not many Americans understand how the government works,'' Connell
told the AP. ''Nor do they have any interest. Well, we have an
interest, and we do understand it.''
He and Torricelli struck up a friendship in the 1980s. ''We
consider him virtually part of our family,'' Connell said.
Torricelli told prosecutors Connell was a close friend who even
accompanied him to his mother's funeral.
In 1992, Connell helped Torricelli hit it big in the stock
market.
The lawmaker was offered a chance to buy preferred stock in First
Savings Bank of Perth Amboy, N.J., a savings and loan owned by
Torricelli friends.
Torricelli said he sought Connell's advice on the investment and
wanted to borrow the money from his home equity loan to make the
purchase, but did not have enough time to get the necessary home
appraisal before the stock option expired.
Instead, Connell helped arrange a $100,000 unsecured loan for
Torricelli at a New York investment firm. Connell's company put
up a guarantee for the loan, meaning the company would assume the
debt if Torricelli defaulted.
Torricelli told prosecutors he cleared the arrangement in advance
with two personal lawyers who specialized in ethics, paid Connell
market rates -- about $800 -- for the guarantee, and paid the
loan interest and principal. The guarantee was never invoked.
Connell said he would have given the guarantee for free, but
Torricelli insisted paying for it.
''We'd do this for any friend,'' Connell said. ''It was a
favor.''
Law enforcement officials, speaking on condition of anonymity,
said the fact that Torricelli sought legal advice before the
transaction weighed heavily in their decision to close the
inquiry, though they questioned the accuracy of some of the
lawmaker's answers.
The senator's spokesman, Dale Leibach, said Sunday that
Torricelli wanted ''to avoid even a question of special treatment
by a close personal friend'' and had the transaction reviewed by
Lowell. ''As the inquiry found there was no legitimate cause for
concern, then and now,'' he said.
Lowell said he ''reviewed and confirmed that the investment, loan
and guarantee were arms-length, at market rates and properly
documented. This was not even a close call.''
Torricelli bought $100,000 of nonpublic stock with the loan
proceeds, eventually selling it for $244,000.
Torricelli disclosed the loan and stock purchase on his
congressional financial disclosure form. But Connell's role
remained a secret; Torricelli had no obligation to disclose it on
ethics form required of lawmakers.
Prosecutors questioned Torricelli about whether he tried to
mislead reporters about the transaction, why he contacted
potential witnesses such as Connell during the inquiry, and
whether he may have dated the check for the stock purchase before
he actually had received the loan funds.
The lawmaker acknowledged refreshing his recollection with
Connell but denied any wrongdoing. And the lawmaker said he wrote
and dated the check only after Connell told him the loan was
being approved.
Investigating for evidence of favors, prosecutors also questioned
Torricelli about two overseas trips he took to places where
Connell had business interests: Zaire and Turkmenistan. With
Connell in attendance, the lawmaker met with the leaders of both
countries.
''Our business was never discussed, of course,'' Connell said.
''We never discuss our business, except in a very general way,
with members of Congress.''
Prosecutors pressed Torricelli about whether he helped Connell on
several New Jersey matters as well; the lawmaker said he referred
Connell to a lawyer for a real estate dispute with one town but
never did anything legislatively to help him.
Two years after the interview, Torricelli sponsored a Senate
amendment that killed two proposed flood-control basins, one
which Connell opposed because it would have been built on his
business property. Torricelli has said he pushed the amendment
because environmental groups including the Sierra Club, opposed
the project.
The 1995 investigation was begun under U.S. Attorney Faith
Hochberg, who, because of a judicial nomination, later recused
herself in favor of chief deputy Robert Cleary, a 20-year career
veteran who handled the Unabomber case. With help from
Torricelli, both eventually were promoted -- Hochberg as a
federal judge and Cleary as U.S. attorney.
Concerned the prosecutors went easy on Torricelli, FBI officials
in 1997 took the rare step of providing investigative files to
the Senate committee that reviews the nominations of judges and
prosecutors, according to law enforcement and congressional
officials.
FBI officials provided the Senate Judiciary Committee information
about the Connell loan guarantee, the stock purchase, and
disputes between the bureau and the U.S. attorney over how to
proceed with the inquiry.
Included were excerpts from Torricelli's interview in which
Cleary acknowledged subpoenas were not issued because prosecutors
sought to protect Torricelli's privacy. Cleary made the comment
at a time when the lawmaker became reluctant to answer questions
about his father's finances.
''We've gone out of our way to conduct this preliminary inquiry
in a way that is never going to get picked up in the papers,''
Cleary said in the transcript.
''The only reason we refrain from doing that (subpoenas) is to
protect your interest, your privacy,'' Cleary added.
Cleary's spokesman, Michael Drewniak, said the prosecutor acted
properly. ''It is entirely appropriate that investigations be
conducted in secrecy. We are obligated to take steps to ensure
they remain secret until and unless criminal charges are
brought,'' Drewniak said.
Cleary ultimately signed a letter to Torricelli's lawyer saying
the U.S. attorney's office had decided to end the 1995 inquiry.
Later, Cleary transferred the fund-raising allegations involving
Torricelli's campaign to the Justice Department. That
investigation has continued for three years and cost Torricelli
hundreds of thousands of dollars in legal fees.
AP-NY-03-18-01 2048EST<
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Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT
FROM THE DESK OF:
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