For now, ex-lobbyist chooses to fight charges rather than cooperate with federal prosecutors

By Pete Yost, AP
Friday, August 6, 2010

Lobbyist: What stories does he have to tell?

WASHINGTON — Justice Department prosecutors made it clear in private discussions in recent months that once-prominent lobbyist Paul Magliocchetti could limit his legal exposure if he cooperated fully in a criminal investigation that could eventually spell trouble for members of Congress.

Never known for backing down from a fight, Magliocchetti refused to cooperate, people close to Magliocchetti say. On Thursday, Magliocchetti was hit with an 11-count grand jury indictment for allegedly making illegal campaign contributions.

His decision to battle it out in court means that, for the time being at least, the Magliocchetti probe isn’t likely to spill over onto Capitol Hill. However, that could change if he ultimately agrees to tell prosecutors what he knows, say people familiar with the investigation who spoke on condition of anonymity about the still-open criminal probe.

On Friday, Justice Department spokeswoman Laura Sweeney declined to comment on the Magliocchetti case.

Democrats on the House Appropriations defense subcommittee were favored recipients of donations by lobbyists in Magliocchetti’s firm, PMA Group Inc.

Legal proceedings in the Magliocchetti case are expected to move too slowly to add to Democratic woes in midterm political campaigns, with Democratic Reps. Charles Rangel of New York and Maxine Waters of California facing public trials in the House before election day.

For nearly two years, Magliocchetti’s long lobbying history on Capitol Hill has made him a focus of federal prosecutors looking into possible criminality in the awarding of “defense earmarks” — the hundreds of millions of dollars that members of Congress steer to defense contractors in a process that circumvents competitive bidding.

Defense contractors flood key members of Congress with campaign donations each year in the late winter and early spring, a ritual of giving that always occurs around the time key congressional appropriators decide which of the dozens of earmark requests they receive will go into the upcoming budget.

Magliocchetti made a career out of turning for help to the House Appropriations Subcommittee on Defense, where Magiocchetti had been a congressional staffer before he opened his lobbying boutique. Magliocchetti developed especially close ties with longtime defense subcommittee chairman, Rep. Jack Murtha, D-Pa., who died in February.

For now, prosecutors have only the cooperation of Magliocchetti’s son Mark, who pleaded guilty in the same investigation on the same day his father was indicted.

The younger Magliocchetti was a lobbyist at his father’s firm until it closed over a year ago, after FBI agents raided it in the probe of campaign donations and earmarks. Unlike his father, Mark Magliocchetti’s case involves a single violation of federal campaign finance law — making unlawful contributions to campaign committees and political action committees of various candidates. He could face little or no jail time

For the better part of two decades, Paul Magliocchetti played the Washington lobbying game better than almost anyone else in town.

One of the early successes that put him on the map in Washington was the work he did for New York Yankees owner George Steinbrenner, who received a $58 million bailout from Congress for his shipbuilding business.

The indictment alleges that from 2003 to 2008, Magliocchetti used hundreds of thousands of dollars in corporate funds to illegally advance money to or reimburse family members, acqaintances and the firm’s lobbyists for donations to “scores of campaign committees and political action committees of candidates for federal office.” The indictment alleges that Magliocchetti engaged in the illegal conduct “to achieve his twin goals of increasing PMA’s influence and enriching himself.”

In the Justice Department probe, a federal grand jury over a year ago subpoenaed documents from the office of Rep. Pete Visclosky, D-Ind., from some of Visclosky’s employees and from the congressman’s campaign committees.

The Congressional Ethics Office followed up with a Magliocchetti-related inquiry of its own into seven House members on the defense subcommittee, recommending that the House Ethics Committee look further into Visclosky’s conduct and that of Rep. Todd Tiahrt, R-Kan.

The ethics committee closed its probe of Visclosky and Tiahrt, concluding the evidence does not support a determination that any law, regulation, rule or other applicable standard of conduct was violated.

The Congressional Ethics Office turned over evidence gathered in its inquiry to the Justice Department probe in May.

The other five members of the defense subcommittee whose conduct was examined in the PMA-related inquiry by the ethics office were Democrats Murtha, Norman Dicks of Washington, Marcy Kaptur of Ohio and James Moran of Virginia, and Republican Rep. C.W. “Bill” Young of Florida. The ethics office recommended dismissal in all five instances and the ethics committee did so.

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