Cisneros Prosecutor Alleges Coverup

Times Staff Writer

After about 10 years and $21 million spent investigating former Housing Secretary Henry G. Cisneros, the last independent counsel from the Clinton era officially ended his probe Thursday, complaining he needed more time to unravel what might have been a massive “coverup at high levels of our government.”

David M. Barrett, a former Republican lawyer and lobbyist who was appointed in 1995 to investigate the Democrat, issued a 474-page “Final Report of the Independent Counsel.” With it, he released a one-page statement to the media that alleged a coverup. “An accurate title for the report could be ‘What We Were Prevented From Investigating,’ ” Barrett said in his statement.

“It would not be unreasonable to conclude as I have that there was a coverup ... and it appears to have been substantial and coordinated,” Barrett said. “The question is, why? And that question regrettably will go unanswered.”

His report offered no evidence of a coverup. It did say that numerous officials at the Justice Department and the Internal Revenue Service were not impressed by his allegations that the former San Antonio mayor might have cheated on his federal income taxes prior to 1992. When the Bush administration came into office in 2001, its top officials also refused to give Barrett permission to dig into old tax files.


In 1999, Cisneros pleaded guilty to a misdemeanor charge of lying to the FBI about how much money he had given to a former mistress. For at least four years afterward, Barrett continued to spend $2 million a year pursuing his theory that his probe had been thwarted.

Several officials who had dealt with Barrett reacted angrily to his final report.

It “is a fitting conclusion to one of the most embarrassingly incompetent and wasteful episodes in the history of American law enforcement,” said Robert S. Litt, a Washington lawyer and a former Justice Department official during the Clinton administration. Barrett wasted millions in tax dollars “in the pursuit of his hallucinatory obstruction investigation,” Litt said.

Barry Finkelstein, a veteran tax lawyer at the IRS, said he “was hauled into the grand jury on approximately 30 occasions” by Barrett to answer questions as to why no tax investigation was launched against Cisneros.


“Let me set the record straight,” Finkelstein wrote in an attachment to Barrett’s report. “I am not political, and I resent the independent counsel for implying as much. The reason the independent counsel uncovered no evidence of obstruction of justice over the last eight years is ... because there was no obstruction of justice to unearth.”

Barrett’s probe was not the most expensive investigation by an independent counsel. Kenneth W. Starr and his successors spent about $71.5 million in what began as the Whitewater investigation. In second place is Lawrence Walsh’s $48-million probe of the Iran-Contra affair during the Reagan administration.

But Barrett has long held the unofficial title for having spent the most to accomplish the least. The case also helped to bring an end to the system of independent counsels. Both Republicans and Democrats came to believe that these open-ended investigations were unwise, and the law authorizing them was allowed to lapse.

At its start, his inquiry was seen as a minor matter that could be wrapped up in months.


Cisneros was not alleged to have abused his power in office nor of having misspent public money. The charges grew out of a pre-employment interview by the FBI.

Cisneros had stepped down as San Antonio’s mayor in 1989 after admitting an affair with one of his aides, Linda Medlar Jones. When incoming President Clinton nominated him to be secretary of Housing and Urban Development, Cisneros told FBI agents doing a background check that he had given his former mistress about $10,000 a year to help her restart her life.

In fact, the amounts were much larger. In 1991, for example, the payments came to $73,000.

Jones secretly taped her phone calls with Cisneros. And after her relationship with Cisneros soured, she sold the tapes for $15,000 to a tabloid TV program. She also accused the HUD secretary of having lied to the FBI.


Her revelations launched the investigation of Cisneros -- and eventually led to her own imprisonment. When Barrett’s staff realized that Jones had doctored the tapes, they turned on their chief witness and indicted her for lying and obstruction of justice.

Barrett also brought indictments in Lubbock, Texas, against Jones’ sister and brother-in-law for alleged bank fraud. The couple had signed a mortgage loan so that Jones and her daughter could have a house to live in. Barrett alleged this was a fraud because the house was not for the sister and brother-in-law. The couple pleaded guilty to one count of making a false statement. All other charges were dropped, and they were put on probation.

Barrett also brought charges against two aides to Cisneros, but those charges were dropped.

Cisneros resigned from the Cabinet in 1996 to contest the charges. After four years of investigation, Barrett brought an 18-count indictment against Cisneros, but lacked a strong case because his own prosecution had shown his lead witness, the former mistress, to be a liar.


Cisneros agreed to plead guilty to a misdemeanor and was fined $10,000, and the rest of the charges were dropped.

“During my background interview, I was not candid with the FBI about a personal matter. I regret my lack of candor,” Cisneros told U.S. District Judge Stanley Sporkin in 1999.

With that, the Cisneros investigation appeared to be over. But Barrett had other ideas.

The independent counsel turned his attention to the possibility of a coverup. An IRS inspector in Texas had sent Barrett a memo in 1997 alleging “possible improprieties” in the handling of Cisneros’ taxes.


The Texas investigator said the key tax records had been shipped to Washington, and that some tax lawyers at the IRS had a “very cozy relationship” with lawyers for Cisneros.

Barrett launched a new probe into whether there had been a coverup among political and career lawyers at the Justice Department and the IRS.

But by 2003, the three judges who had appointed Barrett in the first place said they had heard enough. They ordered him to wrap up his investigation and to write his final report. That would take three more years.

The final report ends on an uncertain note.


“The investigation left numerous questions unanswered,” Barrett wrote, but the evidence is “at least suggestive of the fact that some officials of [the Justice Department] and IRS acted with a predisposition not to allow an independent counsel investigation of possible Cisneros tax offenses to go forward.”

On Thursday, two Republican lawmakers called Barrett’s allegations “very troubling,” and one said they warranted further investigation. Many pages of the report were redacted by the three-judge panel that supervised its release.

“I first want to commend David Barrett for his nonpartisan work on behalf of the American people,” said Sen. Charles E. Grassley (R-Iowa).

“As we continue digging into the details of the report, I’ll know just how significant the redactions are and will be able to determine how to proceed in the coming months.”


Rep. Jim Ramstad (R-Minn.), who heads an oversight subcommittee in the House, also praised Barrett for his “hard work” and “his extensive report.”

But Rep. Henry Waxman (D-Los Angeles) criticized Barrett’s lengthy and costly investigation.

“This is the only alleged conspiracy I’ve ever heard in which the Clinton administration, the Bush administration and the judiciary are all involved,” Waxman said. “It’s outrageous that taxpayers were charged $22 million over 10 years for so little.”

Cisneros became chief executive of Univision, the Spanish-language television network, in Los Angeles. In 2000, he returned to San Antonio, where he and his wife founded a nonprofit organization that builds affordable housing.


Clinton pardoned Cisneros before leaving office.