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Independent Counsel Has Plenty of Time and Money

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TIMES STAFF WRITER

So the Office of Independent Counsel, created to cope with Watergate-style crimes reaching into the White House, has now come to this: A well-liked local couple who run a commercial lighting business are set to go on trial here Thursday on charges that they secretly helped their sister purchase a home. The couple, Patsy and Allen Ray Wooten, signed the mortgage papers for her sister, Linda Jones.

The three were snared by an independent counsel appointed to investigate former Housing and Urban Development Secretary Henry G. Cisneros. Jones is his ex-mistress.

At first, the case against Cisneros looked minor. No one suggested he took any taxpayer money or corrupted a HUD program.

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Rather, he is accused of misleading FBI agents who were conducting a background check after his nomination. The offense: greatly understating payments he made to Jones after their affair ended.

But under the independent prosecutor, the case against Cisneros has mushroomed into a 2 1/2-year, $6-million investigation--with no end in sight.

A three-judge panel, led by a Ronald Reagan appointee, chose a former GOP fund-raiser and lawyer-lobbyist, David M. Barrett, to handle the probe. He in turn has hired 23 people, besides using six full-time FBI agents.

To critics, the Lubbock case shows the danger of setting loose a prosecutor with unlimited time and money on a single-minded pursuit of one case. The high-powered probe, like a West Texas tornado, has touched down here and there, and wreaked its own brand of havoc.

In September, Barrett indicted the Wootens on bank fraud charges for signing their names for a mortgage on an $85,000 home for Jones and her teenage daughter, Kristan. “The objective of their conspiracy” with Jones, the indictment says ominously, “was to obtain a mortgage loan.” The Wootens, prosecutors say, falsely stated that they, rather than their sister and niece, would live in the house.

Lawyers familiar with the case say they were astonished to see someone prosecuted for fraud when the bank lost no money.

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“Not a dime was lost. Good Lord! You can indict a thousand people every year here in Lubbock if you want to prosecute every parent who takes out a loan for their kids in their name,” said Floyd Holder Jr., a flamboyant and prominent local lawyer who once represented Jones.

“This has been an incompetent investigation from the start. Unsupervised. Out of control,” said a Washington attorney who is close to the defendants. “These guys haven’t found what they wanted, so they brought this outrageous, vindictive indictment in Lubbock. No normal prosecutor would ever bring such a case.”

Independent Counsel Barrett Flies Low

Unlike regular U.S. attorneys, independent counsels do not answer to higher authorities and need not explain their actions to the public.

“I have been called the ‘stealth independent counsel’ because we have flown low. It’s been my policy not to comment on the investigation, and that’s the way I intend to keep it,” Barrett said in a brief phone interview.

Last week, Cisneros, 50, pleaded not guilty to the charges that he lied to the FBI about the payments to Jones.

Those payments themselves were not illegal. Instead, according to the 21-count indictment, Cisneros “defrauded the United States” by “making false and misleading statements” to FBI agents. He reportedly told investigators he never paid Jones more than $10,000 a year, when in fact he paid her $250,000 from 1989 through 1994. Prosecutors say the payments were “hush money.”

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Cisneros has said there was nothing to hush up. In 1988, he publicly confessed to the affair with Jones, then known as Linda Medlar. Four years later, when he was named to lead HUD, he says he told President Clinton and key senators about the payments to help Jones get her life restarted. She used some of the money for a down payment on the Lubbock house.

Cisneros will be tried in November. If convicted, he could be given five years in prison on each count.

The payments became public knowledge in 1994, thanks to Jones. She had secretly taped her phone calls with Cisneros and sold the tapes for $15,000 to the TV program “Inside Edition.”

The report revealing that the HUD secretary had understated his payments triggered a Justice Department inquiry. When it became clear Cisneros had made false statements to the FBI, Atty. Gen. Janet Reno agreed to turn the matter over to an independent counsel.

Since then, Barrett’s probe has ventured far from Washington and affected the lives of dozens of people who never met Cisneros.

For example, a local bankruptcy lawyer who represented Jones has been subpoenaed four times to come to Washington. The attorney, Bruce Magness, appeared before a grand jury for a staggering 90 hours, answering questions.

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Friends say Magness, convinced that he would be indicted on a conspiracy charge, nearly suffered a nervous breakdown.

Phone-Tape Tampering and Erasing Suspected

For reasons that remain unclear, Barrett’s prosecutors theorized that Jones had tampered with her phone tapes and erased other incriminating tidbits.

They devoted an enormous effort to try to show the tapes were altered. One count of the indictment here accuses Jones of supplying “edited duplicates” of the original tapes.

Holder, who assisted Magness at an early stage of the case, had his entire seven-person staff ordered to Washington to answer investigators’ questions about the tapes. The government covers the cost of travel, lodging and meals, but not the time lost from work.

His secretary, Kathy Fowler, said she arrived as ordered on a Tuesday morning.

“They said, ‘Wait around. We will get to you later in the week,’ ” she said. Finally, that Friday, she spent eight hours giving grand jury testimony she said largely amounted to verifying that she had typed just what she heard on the tapes.

A Democratic political advisor said he endured an unpleasant day of questioning from a lawyer from Barrett’s office and an FBI agent.

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“Their first question was, ‘Give us a list of women Henry slept with.’ I was dumbfounded. That’s an outrage,” said the advisor. “Don’t use my name. I don’t want those . . . people at my door again.”

Probe, Indictments Are Met With Anger

In West Texas, the lengthy probe and subsequent indictments have been met with anger by those who know the Wootens.

“People say, ‘What’s the deal here? What is this investigation about?’ ” said Bruce Simmons, a longtime family friend. “Patsy and Allen Ray are simple, honest people. They just wanted Linda and Kristan to have a nice place to live, and they were willing to take on the liability. They don’t know any secrets about Henry.”

In 1992, with her affair with Cisneros ended and her reputation ruined, Jones returned to Lubbock bankrupt and unemployed. The Wootens allegedly signed their names for a mortgage on the house and falsely stated they planned to live there.

The 18-count indictment portrays this as conspiracy to defraud the bank. Three years later, when Jones could no longer make the payments, the house was sold for a small profit. The indictment refers to the profit as proceeds from “money laundering.”

Late last week, with the trial approaching, Barrett’s prosecutors began to talk of offering a plea bargain to the Wootens.

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The defendants probably cannot pass up an offer. Patsy Wooten, 55, and Allen Ray, 58, could be sentenced to prison for several years if convicted on any of the fraud counts.

They cannot speak about the case, however, because U.S. District Judge Sam Cummings in Lubbock has imposed a gag order.

The General Accounting Office said Barrett spent $3.8 million as of March 31, and was spending at a rate of $2.9 million a year. If his spending maintains that pace, he will hit $6.7 million by next March 31.

The independent-counsel law, which emerged after the Watergate scandal that forced President Nixon from office in 1974, was intended to remove politics from investigations of high-level Washington officials. It surely has not succeeded in that aim.

In the 1980s, Republicans complained that congressional Democrats turned political disputes into criminal probes against advisors to Presidents Reagan and Bush.

In the 1990s, the sides have been reversed. Democrats are now complaining about endless criminal investigations of President Clinton, his wife and three Cabinet officers.

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Many complaints have focused on Judge David B. Sentelle, 54, a Reagan appointee who heads the three-judge panel that selects independent counsels.

There are no guidelines or standards for selecting an independent counsel. But Barrett, 60, would appear to be an unusual choice to probe a HUD secretary.

He was an assistant U.S. attorney in 1967 and an Indiana county prosecutor in 1968. Since then, he has been in private practice and an active Republican in Washington, known for his ability to obtain grants from HUD. During the 1980 presidential campaign, he headed the group Lawyers for Reagan.

To those who investigated HUD corruption in the late 1980s, Barrett is familiar. “He is someone who profited handsomely” from HUD, said Stuart E. Weisberg, who was staff director of the House subcommittee that investigated the agency when Democrats controlled the House. Barrett has not been charged with wrongdoing.

Under Reagan’s HUD secretary, Samuel R. Pierce Jr., HUD officials gave out grants for subsidized housing projects based on political connections. Intended as money to help the poor, HUD became a “slush fund” for lawyers and developers who had connections with top department officials, said Alfred DelliBovi, who took over as HUD undersecretary in 1989 with a mission to clean the mess.

“I recall seeing him [Barrett] at Republican fund-raisers, and I knew he did a lot of business at HUD,” DelliBovi said.

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Barrett and his then-law partner Lynda M. Murphy are mentioned repeatedly in the report from the House subcommittee, “Abuse and Mismanagement at HUD,” as politically connected lobbyists who used influence to win grants.

For example, when probers subpoenaed the phone records of Assistant Housing Secretary Thomas T. Demery, who was later indicted, they found he had “received 65 telephone messages from Barrett or his office between Nov. 18, 1986, and June 29, 1988. . . . Demery and Barrett had dozens of meetings, lunches, dinners or parties.”

The frequent contacts paid off. Barrett obtained grants for a series of projects in Oklahoma. He profited both as a lawyer and a developer, according to the report.

When the committee subpoenaed the bank records of Lance H. Wilson, Pierce’s former executive assistant, they discovered “a check for $40,000 [dated Dec. 30, 1987] from attorney David Barrett,” the report continues.

On Sunday, Barrett declined a request to comment on his former involvement with HUD.

Sentelle, along with the two other panel members, Judges John D. Butzner of Richmond, Va., and Peter T. Fay of Miami, were asked in writing by The Times whether they knew of Barrett’s links to the HUD scandal before appointing him as an independent counsel. They did not respond.

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