By Paul Kane
Washington Post Staff Writer
Tuesday, January 26, 2010; 3:25 PM
The Justice Department has shuttered its nearly four-year investigation into the personal finances of Rep. Alan Mollohan (D-W.Va.), freeing the 14-term lawmaker to pursue what could be a tough bid for reelection without the lingering cloud of a federal criminal probe.
The U.S. Attorney's Office for the District of Columbia had been overseeing an investigation of Mollohan, a senior member of the House Appropriations Committee, for steering roughly $250 million in line-item expenditures to several nonprofit organizations run by close friends, who also were real estate partners with him.
Mollohan's office was notified this month that the investigation had been closed without criminal charges filed. Federal prosecutors declined to elaborate on what the investigation had found.
"We're not going to get into any details, but I can confirm we've closed the investigation into Alan Mollohan," Ben Friedman, spokesman for the U.S. attorney's office, said Monday evening.
Mollohan, 66, is expected to notify House Speaker Nancy Pelosi (D-Calif.) and Rep. David R. Obey (D-Wis.), chairman of the Appropriations Committee, of the development in a letter Tuesday. That would clear the way for him to resume full control of a subcommittee that oversees the roughly $28 billion budget for the Justice Department and the nearly $8 billion budget for the FBI.
In a statement, Mollohan said the investigation was sparked by a conservative watchdog group's partisan actions. The probe was launched when he was serving as the top Democrat on the House ethics committee.
"For nearly four years, in the face of a politically-motivated assault on my character, I have continued to fight for jobs and the working families of West Virginia. With this behind me, I am more determined than ever to stand up for the people of the First Congressional District and fight for what matters," Mollohan said.
He recently filed to run for reelection, squelching whispers that he might join several other longtime incumbents who decided to retire rather than face a tough political environment in November.
In recent weeks, the independent political handicappers Cook Political Report and the Rothenberg Political Report have downgraded Mollohan's seat to "lean Democratic" status. The Republican Party did not field a challenger to Mollohan in 2008, but national party leaders have recruited several potential candidates while seeking to maintain a drumbeat of criticism related to the criminal investigation. They pivoted away from the ethics matter Tuesday and sought to focus on the state's economy.
"Alan Mollohan's support for Obama's war on Mountaineer State jobs proves that it doesn't matter whether he's in Congress or behind bars -- he stopped representing West Virginians a long time ago," said Andy Seré, spokesman for the National Republican Congressional Committee.
A federal grand jury issued a flurry of subpoenas to West Virginia-based nonprofits in 2006 and 2007, after a 500-page criminal complaint regarding Mollohan's finances in February 2006.
The complaint came from the National Legal and Policy Center, a conservative group that discovered discrepancies in Mollohan's personal financial disclosure forms. It raised questions about how his personal wealth rose -- according to congressional disclosure reports he filed -- from a minimum of $180,000 in 2000 to a minimum of $6.3 million in 2004.
Mollohan attributed much of that increase to a family inheritance and to the soaring property values of a condominium building he owns in the District's West End. After a self-imposed audit, Mollohan filed amended reports that corrected roughly 20 mistakes in his disclosure forms. He contended they were minimal in nature.
However, federal investigators continued to focus on multimillion-dollar earmarks that Mollohan steered to entities such as Vandalia Heritage Foundation, a historic-preservation group that was run by Laura Kuhns, a former Mollohan staff member.
The lawmaker's family also invested with Kuhns's family in North Carolina beach property, including a lot in Bald Head that went to foreclosure late last year.
Pete Flaherty, who co-founded the NLPC, questioned whether the Justice Department backed off the investigation because Mollohan is a loyal vote for the Obama administration. "Has Attorney General Eric Holder now made it legal for members of Congress to earmark money to their business partners? This is a horrible precedent," Flaherty said.
The Mollohan investigation came at the height of Democratic attacks on what Pelosi, then the minority leader, called the Republican "culture of corruption." Mollohan served as ranking Democrat on the ethics panel when it admonished House Majority Leader Tom DeLay (R-Tex.) in 2004 over fundraising activities. Mollohan also fought rules changes that GOP leaders imposed in 2005, leading to a virtual shutdown of the committee's work for several months.
Shortly after the investigation became public, Mollohan stepped down from the ethics committee. When Democrats claimed the majority in January 2007, Mollohan took over as chairman of the Appropriations justice subcommittee, but recused himself from voting on matters specifically related to the FBI and the attorney general's office.
In his statement Tuesday, Mollohan defended helping to fund the nonprofit groups: "These nonprofits are all about building West Virginia's economy and making our state a better place to live. I am very happy that they will be able to put this behind them and refocus on their core missions to create good jobs and improve the lives of West Virginians."