Politics & Policy

Unpardonable: Holder’s Marc Rich Shuffle

The AG nominee's 1995 lawsuit refutes his claims of ignorance about the fugitive.

Eric Holder’s intercession on behalf of fugitive Marc Rich is so inexplicable that he has always viewed ignorance as his best defense. It’s as though Holder believes that a deputy attorney general looks better for having remained studiously unaware of critical facts in a criminal case before throwing his weight around. But that’s Holder’s story, and he’s sticking to it: even if it turns out not to be true.

Holder is President Obama’s choice to become attorney general. That means the Rich case is a big problem for him today–just as it was in 2001, when an outraged Congress demanded an explanation of the controversial affair. President Clinton had pardoned the fugitive financier on the recommendation of Holder, who was then deputy attorney general. The only feeble response Holder could muster was that he didn’t really know much about Rich’s case and that, as Justice’s number two official, he was simply too busy to learn about it.

Clearly, the nominee has calculated that there’s something worse than championing a presidential pardon for a guy like Rich, and that’s knowingly championing such a pardon.

#ad#1999: ‘MR. RICH’S NAME WAS UNFAMILIAR TO ME.’

If Holder were to admit familiarity with Rich’s background at the time of the pardon, he would be admitting he knew that Rich, once among the FBI’s “ten most wanted” fugitives, stood accused of racketeering, defrauding the Treasury out of tens of millions of dollars, and trading with our nation’s enemies–including Iran, which Rich supplied with desperately needed funds while Khomeini’s embargoed regime held American hostages.

That won’t do. Holder realizes that, in these kinds of cases, the public expects prosecutions, not pardons. In the 15 years prior to Holder’s tenure as deputy attorney general, the Justice Department had chased Rich around the globe, determined to apprehend and convict him–just as it had convicted his confederates and his corporations. The public doesn’t expect, and wouldn’t lightly tolerate, a more clement approach. That is why the Rich pardon brought universal condemnation. It is also why Holder has determined that claiming ignorance–though embarrassing–is his only viable strategy.

In 2001, when Holder was summoned before Congress, he testified that he hadn’t even known who Rich was back in 1999. That’s when the fugitive’s powerhouse lawyer, former Clinton White House counsel Jack Quinn, beseeched Holder to lean on federal prosecutors who were not inclined to negotiate with the agents of a fugitive.

“Mr. Rich’s name was unfamiliar to me,” Holder told the Senate Judiciary Committee, under oath, on February 14, 2001. Despite this purported dearth of knowledge, Holder readily acceded to the request that he “facilitate a meeting” at which Quinn could try to persuade “the U.S. Attorney’s office to drop the charges.” What’s more, Holder told the Senate, he had “gained only a passing familiarity with the underlying facts of the Rich case” when, months afterward, he began providing invaluable assistance to Quinn’s pursuit of Rich’s pardon.

Holder’s testimony was rambling and often incredible. But he was consistent on the subject of his own ignorance. Indeed, a House investigation concluded that Holder’s “sum total of knowledge about Rich came from a page of talking points provided to him by Jack Quinn in 2000”–talking points that failed to address important aspects of Rich’s background and conduct.

But Holder’s protestations of ignorance do not stand scrutiny. When Quinn first came to him in 1999, he knew exactly who Marc Rich was. For back in 1995, when Holder was the Clinton-appointed U.S. attorney for the District of Columbia, he had sued a company precisely because it was substantially controlled by Rich–a fact the company concealed in order to obtain lucrative government contracts.

1995: MR. RICH’S NAME WAS PRETTY FAMILIAR AFTER ALL

To be clear, years before the pardon scandal convinced him it was in his interest to make like he barely knew Rich’s name, Holder had bragged to the media about how his office was cracking down on Rich, an international fugitive who had duped the government out of loads of cash. Contrary to his congressional testimony that he’d never heard of Rich before 1999, Holder had unquestionably been aware of Rich’s name and history four years earlier; in fact, it was solely because of Rich that Holder extracted a $1.2 million settlement in a federal civil action.

#page#

On April 13, 1995, the Wall Street Journal reported Holder’s announcement that his office had obtained a settlement from a Swiss trading company called Clarendon Ltd. Rich had maintained a significant ownership interest in Clarendon, but the company had falsely represented to the government that none of its principals was disqualified from federal contracts. By concealing its link to Rich, Clarendon had induced the government to purchase its wares–coinage metal for the U.S. mint. When Holder’s office found out about Rich’s chicanery, it filed civil charges. The settlement of those charges, Holder told the Journal, ended a broader investigation his office had been conducting into Rich’s business interests.

#ad#The civil complaint filed by Holder’s office exudes familiarity with Rich. It recounts that the financier and his partners operated Switzerland-based commodity trading concerns, led by Marc Rich & Company AG (MRAG). MRAG did business in New York City through its wholly-owned subsidiary, Marc Rich & Company International (MRI). Eventually, the name of MRI was changed to Clarendon Ltd. In 1981, the complaint adds, the Justice Department began investigating MRAG and Clarendon, among other Rich companies, for tax evasion. Finally, in June 1983, Rich and his partner Pincus Green left the U.S. for Switzerland because they were “facing indictment.” Thus, the complaint states, Rich and Green were “considered fugitives by the United States government.”

As a matter of fact, Holder was apparently aware not only of the charges against Rich but also the fugitive’s brazen obstruction of justice, a detail that has gotten little recent attention. As the complaint states: “In 1982, subpoenas for the production of documents were served on [MRAG and MRI] in New York, NY. MRAG failed to produce documents in accordance with its subpoena and consequently paid $21 million in contempt fines between 1983 and 1984.” That $21 million was a consequence of a $50,000-per-day assessment imposed by a judge when Rich refused to surrender various documents demanded by a federal grand jury. Rich had begun paying the fines only after prosecutors, acting on a tip, stopped a plane en route to Europe–where Rich was evading arrest–just as it was about to take off from Kennedy airport in New York. On board were two steamer trunks loaded with documents the subpoenas had sought.

Holder’s complaint goes on to describe how, in 1984, the Defense Department notified Rich and others that they had been placed on the government’s “Consolidated List of Debarred, Suspended and Ineligible Contractors,” a suspension that remained in effect, the complaint added, “[d]ue to their fugitive status.” And even though Rich’s companies had pleaded guilty, their “plea agreement did not resolve any of the personal charges pertaining to Rich and Green.” Those, the complaint continued, remained “outstanding.”

The complaint further outlined a dizzying series of restructurings, through which Rich hid his guiding hand behind a labyrinth of corporate dissolutions, name changes, and asset swaps. It was all legerdemain: as Holder’s prosecutors pointed out, the management structure remained the same and the companies continued to share office space with Rich-controlled companies in Switzerland and the U.S.

With Rich’s role hidden, Clarendon claimed that none of its backers was “presently debarred, or declared ineligible for the award of federal contracts by any Federal Agency.” The company falsely added that no Clarendon principal was “presently indicted for, or otherwise criminally or civilly charged by a government entity.” As a result, the complaint details, “between 1988 and 1991, CLARENDON LTD. was awarded 22 coinage metal supply contracts by the procurement office of the United States Mint, with an aggregate purchase price of $45,092,820.”

HOLDER’S CHANGING STORY

To summarize: In 1995, when he was an ambitious U.S. attorney in Washington, Eric Holder knew exactly who Marc Rich was. He was sufficiently outraged by Rich’s conduct that he had his office sue a Rich-controlled company that had duped the government into awarding it a lucrative contract while Rich remained a fugitive from justice. Holder then publicly filed a complaint which unmasked Rich’s duplicity in detail. Furthermore, Holder took credit in the press for inducing Rich’s company to pay Uncle Sam a $1.2 million settlement and to concede that it should have acknowledged “Rich’s substantial indirect ownership.”

Then in 1999, when he was deputy attorney general in the Clinton administration, Holder was approached to help Rich by Jack Quinn, Rich’s attorney and a confidant of Al Gore, who was at that time running for president. Holder was hopeful that Quinn would recommend him for attorney general in a Gore administration. Abandoning the approach he’d had his subordinates take with Rich in 1995, Holder in 1999 decided Rich wasn’t so bad after all. He tried to persuade the U.S. attorney in New York to meet with Quinn to discuss settling the fugitive’s case without jail time. When that didn’t work, he helped Quinn obtain a pardon for Rich–running interference so that prosecutors would not learn a pardon was under consideration–and conveyed to President Clinton that, as DOJ’s top spokesman, he favored clemency. (As he slyly phrased it, he was “neutral leaning in favor.”)

#page#

Finally, in 2001, when he was confronted by angry congressional committees investigating the Rich pardon, Holder claimed that “Rich’s name was unfamiliar to me” when Quinn approached him in 1999. Moreover, Holder insisted that he’d remained largely ignorant of Rich’s background when the pardon was under consideration.

At his confirmation hearing last Thursday, Holder conceded that he’d made mistakes in connection with Rich’s pardon. But those mistakes, he maintained, lay in failing to become better informed. “I should not have spoken to the White House and expressed an opinion without knowing all the facts with regard to that matter,” he told a sympathetic Sen. Patrick Leahy, the Democrat who chairs the Senate Judiciary Committee. Holder elaborated that his ignorance was due to a lack of “consultation” with the prosecutors in charge of the case. He shouldn’t, he intimated, have operated in the dark.

#ad#Later, Sen. Arlen Specter, the committee’s ranking Republican, went through Rich’s sordid history and pointedly asked Holder, “Were you aware of this kind of a record this man had?”

“No I was not,” Holder replied. “And that was one of the mistakes that I made. I did not really acquaint myself with his record. I knew that the matter involved–it was a tax fraud case; it was a substantial tax fraud case. I knew that he was a fugitive. I did not know a lot of the underlying facts that you have described.”

But Holder obviously knew plenty of the underlying facts.

Explaining their civil complaint to the press in 1995, prosecutors from Holder’s office said, as the Wall Street Journal put it, that “Mr. Rich was suspended from doing business with the U.S. government in 1984 after he fled to Switzerland to avoid charges of trading with the enemy and income-tax evasion.” Holder’s office not only decided to bring the civil case but, in the course of settlement negotiations, went to the difficulty of obtaining an affidavit from Rich himself in Switzerland–not something that happens every day with one of the nation’s most notorious outlaws.

Holder, moreover, was the U.S. attorney in Washington for well over a year while his office investigated the case. An investigation of fraud in the inducement of any $45 million contract with the government would have been significant in any U.S. attorney’s office in 1995–it would plainly have called for the U.S. attorney’s personal attention. Given the added factor in this case that the suspected fraud implicated one of the FBI’s ten most wanted fugitives, it is inconceivable that Holder would not have been closely consulted on a settlement that would bear his name and was sure to draw media attention.

Holder’s office, after all, had to decide whether to accept a civil settlement, how much of a penalty to demand, and whether a criminal prosecution based on fraud and false statements should be pursued. Furthermore, in agreeing to take $1.2 million, Holder’s office expressly represented (a) that this amount was designed “to recoup the cost of the investigation” to Holder’s budget, and (b) that, in exchange, it would not “institute or maintain any civil or criminal action” against Rich’s company, based on the evidence developed during the investigation–an extremely valuable concession that a competent U.S. attorney’s office does not make without carefully considering all the relevant facts.

We need not speculate, however, about whether Holder was involved in what had to be one of his office’s most significant civil cases. It should go without saying that if he hadn’t been–if underlings were permitted to run rampant, using his name and his authority without his permission–Holder would have some explaining to do about how he ran his office and about what such inattention would say about Obama’s wisdom in selecting him to run the Justice Department. But it is clear that Holder was personally involved. Here’s how the Wall Street Journal reported his determination to accept the Clarendon settlement in lieu of further charges: “U.S. Attorney Eric Holder said the agreement ends an investigation into the company’s contracts to supply $45 million in coinage metal to the U.S. Mint.” Holder, not an underling, is the reported source of that statement.

At Holder’s confirmation hearing last week, senators seemed to accept his claim that he just didn’t know that much about Rich when he pushed the pardon through in 2001. For some reason, Holder’s own case against Rich was never brought up–it was certainly never mentioned by the nominee, nor did senators use it to impeach Holder’s implausible claims of ignorance. Why not? And in light of that 1995 case, how should the Judiciary Committee and the Senate judge Holder’s testimony last week, and his testimony in 2001, that Marc Rich was “unfamiliar” to him in 1999, when he began intervening on behalf of the fugitive, ultimately ensuring that Rich escaped justice?

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