Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies (9 page)

In the same article, Bauder also wrote: “The directors were told that the Securities and Exchange Commission had questioned three Peregrine top executives and a national business magazine was on the story. Directors discussed how to spin it.”

John Moores, a real estate mogul and the owner of the San Diego Padres, had also reportedly been a campaign contributor to Richardson’s re-election campaign. According to an article in the
San Diego Union-Tribune
, Moores sold or transferred more than $487 million worth of Peregrine shares, though he hasn’t been charged or implicated in the government’s investigation.
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On the other side of the political aisle, liberal magazine
Mother Jones
had also called attention to Richardson’s shady role in the Peregrine Systems scandal, which the publication in 2007 dubbed “a financial scam in the Enron style.”
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On top of all that, Richardson was the subject of a high-profile probe and ongoing grand jury investigation into whether he traded New Mexico government contracts for campaign contributions. The White House transition team knew about the pay-to-play scandal involving a California company, CDR Financial Products, well before Obama unwisely fêted Richardson’s ability to show “how government can act as a partner to support our businesses.” FBI and federal prosecutors launched their probe of CDR’s activities in New Mexico in the summer of 2008.

The feds had been digging into a nationwide web of favor-trading between financial firms and politicians overseeing local government bond markets. CDR was tied to a doomed bond deal in Alabama which, according to Bloomberg News, threatened to cause the biggest municipal bankruptcy in U.S. history.
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CDR raked in nearly $1.5 million in fees from a New Mexico state financial agency after donating more than $100,000 to Richardson’s efforts to register Hispanic and American Indian voters and to pay for expenses at the 2004 Democratic National Convention, the news service reported. The state agency that awarded the money consisted of five Richardson appointees and five members of his gubernatorial cabinet. CDR made contributions both shortly before and after securing consultant work with the state of New Mexico. CDR’s president also contributed $29,000 to Obama’s presidential campaign.

It took thirty-three days before Team Obama threw Richardson and his ethical baggage off the bus. On January 4, 2009, Richardson announced his withdrawal. “Let me say unequivocally that I and my Administration have acted properly in all matters and that this investigation will bear out that fact,” he told NBC News. “But I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process.”
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Obama gave the obligatory send-off: “It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet to avoid any delay in filling this important economic post at this critical time.”
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But it is a measure of Obama’s obliviousness that he nominated the ethically-challenged Richardson in the first place.
Mother Jones
writer James Ridgeway’s comment on the day of Richardson’s withdrawal proved quite prescient: “It may be premature to say that Obama and his team have too high a tolerance for corruption. But this first self-destruct among his cabinet picks could well prove all the more damaging because it’s something they should have seen coming from miles away.”
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DRIVING TOM DASCHLE

In 1998, then Minority Leader Tom Daschle read a bold statement on the Senate floor condemning tax cheats. “Make no mistake,” the Democrat politician said emphatically, “tax cheaters cheat us all, and the IRS should enforce our laws to the letter.”
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He also crusaded righteously against “Benedict Arnold corporations” that earned income overseas to avoid high corporate tax rates in the United States.
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Daschle had zero tolerance for tax evaders.

Fast-forward to January 31, 2009. The
New York Times
reported that Daschle “was aware as early as last June [2008] that he might have to pay back taxes for the use of a car and driver provided by a private equity firm, but did not inform the Obama transition team until weeks after Mr. Obama named him to the health secretary’s post” in mid-December 2008.
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Daschle was on the cusp of attaining enormous power to reshape the American economy and implement his sweeping universal health care proposals. He wasn’t going to let a pesky tax omission get in the way. On January 2, 2009, he had been forced to amend his 2005 and 2007 tax returns to reflect $255,256 for the use of the car service, $83,000 in unreported consulting income, and $14,963 in charitable contributions. In addition, the would-be Health and Human Services Secretary failed to pay $6,000 in Medicare taxes for the driver. On February 1, 2009, Daschle groveled before his former Senate colleagues to explain away the back payments he owed, as well as dubious charitable deductions worth an estimated $146,000, including interest and penalties.

“Sorry” worked for tax cheat Treasury Secretary Tim Geithner. Why not Daschle, too? His hang-dog letter read:

As you can well imagine, I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns. I apologize for the errors and profoundly regret that you have had to devote time to them.

Last fall, when I was being considered for this position, the Presidential Transition Team’s vetters reviewed my records. During the course of those reviews, the vetting team flagged charitable contributions they felt were deducted in error. When my accountant realized I would need to file amended returns, he suggested addressing another matter I had raised with him earlier in the year: whether the use of a car service offered to me by a close friend might be a tax issue. In December, my accountant advised me that it should be reported as imputed income in the amended returns.

At about the same time, the friend’s company, a consulting client, informed my accountant of a clerical error it had made on the Form 1099 it provided to me and reported to the IRS for 2007. In an effort to ensure full compliance and the most complete disclosure possible of my personal finances, we remedied these issues by filing amended tax returns with full payments, including interest. We provided all this information to the Committee in addition to the completed Committee questionnaire and my responses to your staff’s questions. I disclosed this information to the Committee voluntarily, and paid the taxes and any interest owed promptly. My mistakes were unintentional.

The national media seemed ready to downplay the unbelievable lapses. A
Washington Post
headline characterized the problem as a “tax glitch.”
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A glitch is checking off the wrong box or misspelling a name. This was an ethical morass. The donor and personal friend who provided the chauffeured services, Leo Hindery Jr., had also made Daschle chairman of the executive advisory board of InterMedia Advisors, a high-flying investment firm. Daschle raked in a million-dollar salary from the arrangement in addition to his private chariot. Asked why he hadn’t disclosed the cozy arrangement, Daschle “told committee staff he had grown used to having a car and driver as majority leader and did not think to report the perk on his taxes, according to staff members.”
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It was a perfect expression of the culture of Beltway entitlement.

Obama stuck by Daschle—one of his earliest champions and closest advisers—that day. “Absolutely,” the president-elect responded when asked if he still supported the nomination. At a press briefing that afternoon, White House spokesman Robert Gibbs dismissed Daschle’s tax evasion: “Nobody’s perfect.” But in twenty-four short hours, Obama was singing a different tune. CBS News rounded up the White House “I’m Sorry” Media Tour:

During interviews with CBS, ABC, NBC, FOX and CNN, President Obama was asked about the cabinet staffing hiccup. The typically confident president repeatedly said that the appointment scandal was his responsibility and apologized over (and over) again.

“I believe, on Tom’s part, that, you know, ordinary people are out there paying taxes everyday and whether it’s an intentional mistake or not, it was sending the wrong signal,” he told Couric, “so again, this was something that was my fault.”

“I’ve got to own up to my mistake which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules. You know, one for prominent people and one for ordinary folks who have to pay their taxes,” Mr. Obama told NBC.

“I’m frustrated with myself, with our team,” he added, “and I’m here on television saying I screwed up and that’s part of the era of responsibility, is not never making mistakes; it’s owning up to them and trying to make sure you never repeat them and that’s what we intend to do.”

ABC’s Charles Gibson asked President Obama what type of message he thought investigations into three of his appointee’s taxes sent. Responded the president: “Well, I think it sends the wrong one. And that’s, you know, something I take responsibility for.”

“I think I made a mistake. And I told Tom that. I take responsibility for the appointees,” Mr. Obama told CNN. “I think my mistake is not in selecting Tom originally.... But I think that, look, ultimately, I campaigned on changing Washington and bottom-up politics. And I don’t want to send a message to the American people that there are two sets of standards, one for powerful people, and one for ordinary folks who are working every day and paying their taxes.”

And, just to make sure no audience members were missed, the apologetic president told Fox News, “I take responsibility for this mistake.” He promised to “make sure we’re not screwing up again.”

In total, President Obama said the word “mistake” twelve times during the five interviews. He also used the phrase “I take responsibility” three times and the word “regret” twice.
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It was a little late to be worrying about sending a bad message to the American people about double standards. But only the blessed Barack Obama could have national media outlets describing this fiasco of the first order as a “cabinet staffing hiccup.” The Daschle nomination was a Shrek-sized stink bomb from start to finish. The limousine liberal’s tax evasions were the least of his problems. Tom Daschle is the personification of all that Obama professed to detest during his campaign of Hope and Change—a consummate Beltway insider who parlayed his public service (where he earned a $158,000 yearly salary) into a $5.2 million personal fortune as one of Washington’s biggest influence peddlers along with his lobbyist wife.

Did Obama forget that GOP Senator John Thune defeated Daschle the Dodger in 2004 after news broke of Daschle’s bogus property-tax homestead exemption claim on his $1.9 million D.C. mansion—which he listed as his primary residence despite voting in South Dakota, claiming it in order to run for re-election? Did Obama forget that Daschle worked for the legal and lobbying firm Alston & Bird, scratching backs, making phone calls, offering advice, trading on his name and connections, and doing everything short of registering as a lobbyist? President Obama bashed corporate executives for flying in lavish planes—even as the Senate Finance Committee was investigating his HHS nominee’s repeat flights on the $31 million luxury jet of a scandal-ridden educational charity called Educap, owned by one of the Daschles’ closest friends, Catherine Reynolds.
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“Even without the tax issue,” the
UK Telegraph
’s Toby Harnden correctly noted, “Daschle is the kind of guy who epitomises the Washington way of doing things, the ‘broken politics’ that during his campaign Obama promised to sweep away.”
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Nevertheless, Obama steadfastly praised Daschle’s devotion to “public service.” The president expressed “sadness and regret” that his nominee got tripped up by his “mistake,” but not an iota of remorse to the American people for his lack of good sense and judgment in nominating his wheeler-dealer Beltway buddy in the first place.

PERFORMANCE CZAR NANCY KILLEFER TAKES A DIVE

Just hours before the jaw-dropping Daschle announcement came the withdrawal of Nancy Killefer. She was tapped to be President Obama’s “Chief Performance Officer” overseeing compliance, organizational effectiveness, and waste management across every federal agency. Obama had also asked her to serve as deputy director at the Office of Management and Budget. But the former Clinton Treasury official and head of the Washington office of the prestigious management consulting firm McKinsey & Company, Inc., couldn’t be bothered to manage her own household help effectively. While she climbed the corporate ladder, she hired two nannies and a personal assistant to manage affairs at home, where her economics professor husband and two children lived. The management guru failed for a year and a half to pay employment taxes on her household help and had an outstanding $1,000 tax lien on her home.

Degrees out the wazoo, the woman whose reputation rested on her meticulousness with numbers did not have enough smarts or care to dot her I’s and cross her T’s on her own tax forms in a town that had been through several infamous Nannygate crises during the past two administrations. Mimicking her would-be boss’s penchant for playing the “distraction” card when caught in an ethical pickle, Killefer issued a withdrawal statement that deflected blame to those who took tax lapses seriously: “I recognize that your agenda and the duties facing your Chief Performance Officer are urgent. I have also come to realize in the current environment that my personal tax issue of D.C. Unemployment tax could be used to create exactly the kind of distraction and delay those duties must avoid.”
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