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Cisneros Indictment: Full Text

The complete, unedited text of Independent Counsel David M. Barrett's Dec. 11, 1997, indictment against former housing secretary Henry G. Cisneros and three co-defendants.

Note: Typographical errors from the original document are preserved. Others may have been introduced by the scanning process.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

HOLDING A CRIMINAL TERM GRAND JURY 97-1, SWORN ON JANUARY 31, 1997

UNITED STATES OF AMERICA
v.
HENRY G. CISNEROS,
LINDA D. MEDLAR,
SYLVIA ARCE-GARCIA,
and
JOHN D. ROSALES

Defendants.


INDICTMENT

Criminal No.

Violations:

18 U.S.C. § 371
(Conspiracy to Defraud; Conspiracy to Commit Offenses)
[COUNT 1 ]

18 U.S.C. § 1001
(False Statements and Representations; Concealment of Material Facts)
[COUNTS 2-17, 19-21 ]

18 U.S.C. § 1505
(Obstruction of Justice)
[COUNT 18]

THE GRAND JURY CHARGES:

BACKGROUND TO ALL COUNTS

At all times relevant to this Indictment:

Principal Entities

1. The United States Senate ("Senate") was a component of the Legislative Branch of the United States Government, established by Article I, Section 1, of the United States Constitution.

2. The President of the United States was vested with the power to nominate "Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments . . . shall be established by Law. U.S. Constitution, Article II, Section 2.

3. Any appointments made pursuant to such Presidential nominations were required to have been made "by and with the Advice and Consent of the Senate." U.S. Constitution, Article II, Section 2.

4. The Department of Justice was a department of the United States, charged with the duties and responsibilities of, among other things, representing the United States in legal matters generally, and enforcing the laws of the United States.

5. The Federal Bureau of Investigation (also referred to herein as the "FBI") was a component of the Department of Justice, charged with the duties and responsibilities of, among other things:

(a) investigating violations of federal laws;

(b) collecting evidence in regard to such violations; and

(c) "conduct[ing] personnel investigations requisite to the work of the Department of Justice and whenever required by statute or otherwise." 28 C.F.R. § 0.85.

6. The Special Inquiry Unit ("SPIN Unit") of the FBI was charged with coordinating full-field background investigations conducted by the FBI concerning, among other things, the potential nomination and confirmation of Cabinet-level designees, and providing the results of such investigations to President-elect William Jefferson Clinton or his designated representative on the Clinton-Gore Transition Team. Such results would then be provided to the Department of Justice Personnel Security Office.

7. The Clinton-Gore Transition Team was an entity formed at or around the time of the 1992 presidential election. One of its principal purposes was to "vet" highranking potential nominees of the President-elect in order to ensure that such individuals were "suitable" to serve in the Clinton Administration.

8. The Department of Justice Personnel Security Office was a component of the Department of Justice, Justice Management Division, charged with the duty and responsibility of, among other things, adjudicating whether high-ranking potential nominees of the President-elect were honest, trustworthy, and reliable so as to ensure (a) that their appointments would be consistent with the provisions of Executive Order 10450 and Executive Order 12356 and (b) that such individuals could receive top secret national security clearances. Pursuant to the terms of the Federal Personnel Manual, the Department of Justice Personnel Security Office's adjudicating authority was based on the "more critical question of whether the employment of [a Cabinet Secretary] can reasonably be expected to be clearly consistent with the nation's security interests."

9. The United States Department of Housing and Urban Development (also referred to herein as "HUD") was a department of the United States. The mission of HUD was, among other things, to oversee federal programs concerned with the Nation's housing needs, fair housing opportunities, and the improvement and development of the Nation's communities. For the years 1993 through 1996, HUD's annual budget was approximately twenty billion dollars.

10. The United States Senate Committee on Banking, Housing, and Urban Affairs ("Senate Banking Committee") was a committee comprised of members of the United States Senate charged, pursuant to its constitutional "Advice and Consent" power and responsibility, with reviewing, advising, and consenting to the nomination of the President-elect's designee to serve in his Cabinet as Secretary of HUD. The Senate Banking Committee, as well as other Congressional committees, also had "oversight responsibility" in regard to the conduct of HUD and its officials, including the Secretary of HUD.

11. The Internal Revenue Service ("IRS") was an agency of the United States, within the Department of the Treasury, charged with the duties and responsibilities of, among other things, collecting tax revenues and administering the tax laws of the United States.

The Clinton-Gore Transition Team And
The Background Investigation Process

1. On November 3, 1992, William Jefferson Clinton was elected as the 42nd President of the United States of America.

2. Pursuant to the Presidential Transition Act of 1963, in or around November 1992, President-elect Clinton and Vice President-elect Albert Gore, Jr. formed the Clinton-Gore Transition Team ("Transition Team").

3. The Presidential Transition Act of 1963 was promulgated in order "to assure continuity in the faithful execution of the law and in the conduct of the affairs of the Federal Government." Its principal purpose was "to promote the orderly transfer of the executive power in connection with the expiration of the term of office of a President and the inauguration of a new President."

4. The Transition Team's duties and responsibilities consisted principally of, among other things, (a) the selection and "vetting" of high-ranking nominees such as Cabinet officers to ensure their "suitability" to serve in the Clinton Administration and (b) the formulation of policy to be implemented during the Clinton Administration.

5. Pursuant to a Memorandum of Understanding ("MOU"), entitled "Federal Bureau of Investigation Background Investigations for the President-elect of the United States of America," the FBI was charged with conducting full-field background investigations at the request of the President-elect or his designated representative in order to ascertain facts and information relevant to potential high-ranking nominees of the Clinton Administration.

6. The MOU was executed by then-Attorney General William Barr on November 5, 1992. President-elect Clinton on November 6, 1992, and then-Transition Team Director Warren Christopher on November 10, 1992.

7. The results of the FBI background investigation were to be used to:

(a) determine the suitability for Federal government employment or retention in such employment in accordance with Executive Order 10450; and

(b) determine the honesty, reliability, trustworthiness, and good character for clearance for access to information classified under the provisions of Executive Order 12356.

8. Pursuant to the MOU, "[n]o person employed by the President-Elect [could] be given access to any classified information or materials until appropriate procedures for granting clearance for access to classified information and materials, [had] been established and/or completed, and clearance granted."

9. Chapter 732, Subchapter 4 of the Federal Personnel Manual, entitled "National Security Standard (Executive Order 10450)," provided the following, in pertinent part:

4-2. RELATIONSHIP BETWEEN SECURITY AND SUITABILITY

Suitability means fitness or eligibility for employment. Potentially disqualifying suitability factors are listed in FPM chapter 731. The focus of a suitability adjudication is on whether the employment of an individual can reasonably be expected to promote the efficiency of the Federal service. The focus of a national security adjudication is on the more critical question of whether the employment or continued employment of the individual can reasonably be expected to be clearly consistent with the nation's security interests.

Security adjudications under E.O. 10450 and related national security interest authorities are made subsequent to a favorable suitability adjudication and are based on standards and criteria which include the suitability standards and criteria.

10. Chapter 732, Subchapter 5 of the Federal Personnel Manual, entitled "Security Adjudication," provided the following, in pertinent part:

5-1. BASIC SECURITY CRITERIA

Executive Order 10450 specifies factors that should be considered when determining whether the employment, or retention in employment, of individuals in the Federal service is clearly consistent with the interests of the national security. The specified security criteria are:

  • Any behavior, activities, or associations which tend to show that the individual is not reliable or trustworthy.

  • Any deliberate misrepresentations, falsifications, or omissions of material facts.

* * * *

  • Any facts which furnish reason to believe that the individual may be subjected to coercion, influence, or pressure which may cause the person to act contrary to the best interests of the national security.

11. To discharge their duties and responsibilities fully, properly, and efficiently, Cabinet officers were required to possess and have access to classified information and materials.

12. Executive Order 10450, promulgated by President Dwight D. Eisenhower on April 27, 1953, entitled "Security Requirements For Government Employment," provided the following, in pertinent part:

WHEREAS the interests of the national security require that all persons privileged to be employed in the departments and agencies of the Government, shall be reliable, trustworthy, of good conduct and character, and of complete and unswerving loyalty to the United States; and

WHEREAS the American tradition that all persons should receive fair, impartial, and equitable treatment at the hands of the Government requires that all persons seeking the privilege of employment or privileged to be employed in the departments and agencies of the Government be adjusted by mutually consistent and no less than minimum standards and procedures among the departments and agencies governing the employment and retention in employment of persons in the Federal service . . . [t]he head of each department and agency of the Government shall establish [ ] an effective program to ensure that the employment and retention of any officer or employee within the department or agency is clearly consistent with the interests of national security.

SEC. 3. (a) The appointment of each civilian officer or employee in any department or agency of the Government shall be made subject to investigation. The scope of the investigation shall be determined in the first instance according to the degree of adverse effect the occupant of the position sought to be filled could bring about, by virtue of the nature of the position, on the national security, but in no event shall the investigation include less than a national agency check (including a check of the fingerprint files of the Federal Bureau of Investigation), and written inquiries to appropriate local law enforcement agencies, former employers and supervisors, reference, and schools attended by the persons under investigation.

13. In accordance with the terms of Executive Order 10450, the FBI was charged with developing information concerning, among other things, the following, in regard to Cabinet-level designees so that a "suitability" determination could be made by the Transition Team and a "national security" determination could be made by the Department of Justice Personnel Security Office:

(i) Any behavior, activities, or associations which tend to show that the individual is not reliable or trustworthy;

(ii) Any deliberate misrepresentations, falsifications, or omissions of material facts;

(iii) Any criminal, infamous, dishonest, immoral, or notoriously disgraceful conduct, habitual use of intoxicants to excess, drug addiction, sexual perversion, or financial irresponsibility;

(iv) An adjudication of insanity, or treatment for serious mental or neurological disorder without satisfactory evidence of cure; and

(v) Any facts which furnish reason to believe that the individual may be subjected to coercion, influence, or pressure which may cause him to act contrary to the best interests of the national security.

14. Executive Order 12356, promulgated by President Ronald Reagan on April 2, 1982, entitled "National Security Information," provided the following, in pertinent part:

This Order prescribes a uniform system for classifying, declassifying, and safeguarding national security information. It recognizes that it is essential that the public be informed concerning the activities of its Government, but that the interests of the United States and its citizens require that certain information concerning the national defense and foreign relations be protected against unauthorized disclosure. Information may not be classified under this Order unless its disclosure reasonably could be expected to cause damage to the national security.

15. One of the principal purposes of Executive Order 12356 was to ensure that classified information not be disseminated to individuals who were not approved to review classified information.

16. The Department of Justice Personnel Security Office promulgated a memorandum entitled "Identification and Resolution of Derogatory Information," which set forth criteria to be used by that Office in making its "national security" determination. Those criteria included the following categories, among others:

(i) whether the individual is unreliable, untrustworthy, or open to blackmail;

(ii) whether the individual is financially responsible; and

(iii) whether the individual is honest.

17. During the vetting process, on December 14, 1992, CISNEROS signed a "Memorandum for Prospective Appointees," which provided the following, in pertinent part:

This memorandum confirms in writing your express consent for the Federal Bureau of Investigation to investigate your background or conduct appropriate file reviews in connection with the consideration of your application for employment.

The FBI investigation will include the collection and use of relevant information concerning your personal history, and it is necessary that you authorize the disclosure of such information to the FBI. Information may be disseminated outside the FBI when necessary to fulfill obligations imposed by law.

By volunteering information concerning activities protected by the First Amendment, it will be assumed that you are expressly authorizing the maintenance of this information in the records of any Federal agency.

18. Previously, in August 1983, in regard to a previous appointment, CISNEROS had signed an "Authority To Release Information" ("Release"), which authorized the FBI to investigate CISNEROS's background. Pursuant to the Release, CISNEROS was informed of the following:

You should be aware that the authority to collect this background information is based on the President's executive powers in Article II of the Constitution. The information will be used to obtain necessary clearances to assist you in your work. The background information, which includes a review of FBI files, will be disclosed to another Federal agency, to assist in its process of clearing you. Willfully making a false statement, or concealing a material fact, may constitute a violation of Section 1001, Title 18, of the U.S. Code.

If you provide any information which indicates a violation of law, whether civil, criminal or regulatory in nature, it will be referred to the appropriate Federal, state, local or foreign agency.

19. On or about December 7, 1992, after executing the "Memorandum for Prospective Appointees," CISNEROS completed and executed a "Questionnaire for Sensitive Positions (For National Security)," commonly referred to as a Standard Form 86 ("SF-86"). The SF-86 provided the following, in pertinent part:

The U.S. Government has conducted background investigations for over 50 years. It does this to establish that applicants for or incumbents in sensitive positions, either employed by the Government or working for the Government under contract, are eligible for a required security clearance or for performing sensitive duties. We use the information from this form primarily as the basis for an investigation that will be used to determine your eligibility for a national security position.

The U.S. Government is authorized to ask for this information under Executive Order 10450; section 2165 of title 42, U.S. Code; parts 5, 732 and 736 of Title 5, Code of Federal Regulations, and other statutes authorizing background investigations.

Background investigations for national security are conducted to develop information to show whether or not a person is reliable, trustworthy, of good conduct and character, and loyal to the United States. The information you provide on this form, including any specific agency instructions of Question 14c, and any other special instructions, is confirmed by investigation. In addition to the questions on this form, inquiry also is made about a person's adherence to security requirements, mental or health disorders, dishonest conduct, sexual misconduct, vulnerability to blackmail or coercion, falsification, misrepresentation and any other behavior, activities, or associations that tend to show the person is not reliable, trustworthy, or loyal.

An interview with you is a normal part of the investigative process. This Personal Subject Interview is generally the first step in the investigation, and is conducted under oath, affirmation, or unsworn declaration. It provides you the opportunity to update, clarify, and explain more completely information on your form, which often helps to complete your investigation faster.

The U.S. Criminal Code provides that knowingly falsifying or concealing a material fact is a felony which may result in fines of up to $10,000, or 5 years imprisonment, or both. In addition, Federal agencies generally fire, do not grant clearance, or disqualify individuals who have materially and deliberately falsified these forms, and this remains a part of our permanent record for future placements. Because the position for which you are being considered is a sensitive one, your trustworthiness is a very important consideration in deciding your eligibility for security clearance. Your prospects of placement or clearance are better if you answer all questions truthfully and completely. In the course of an interview with a Federal official you will have adequate opportunity to explain any information you give on the form and make your comments part of the record.

20. The SF-86 further provided that any information contained therein may be provided to law enforcement agencies "responsible for investigating, prosecuting, enforcing, or implementing a statute, rule, regulation, or order."

21. On or about December 14, 1992, CISNEROS completed and executed a Supplement to the SF-86.

22. On or about December 30, 1992, CISNEROS was interviewed in Washington, D.C. by a Special Agent of the Federal Bureau of Investigation. That interview was conducted as part of the full-field FBI background investigation of CISNEROS.

23. On or about January 7, 1993, CISNEROS was interviewed in Washington, D.C. by Special Agents of the Federal Bureau of Investigation. That interview was conducted as part of the full-field FBI background investigation of CISNEROS.

24. CISNEROS's FBI interviews, the SF-86, and the Supplement to the SF-86, served as the principal bases for the FBI's full-field background investigation of him.

Cisneros's Extramarital Affair With Medlar1

[1 Medlar currently goes by the name "Linda D. Jones." For purposes of clarity and consistency, she is referred to herein as "Linda Medlar," her name at the time of most events set forth herein.]

1. While residing in San Antonio, Texas, MEDLAR began working as a fundraiser for CISNEROS. At the time, CISNEROS was serving as Mayor of San Antonio, Texas. CISNEROS served as Mayor of San Antonio from in or about May 1981 until in or about May 1989.

2. In or about March 1987, while the pair were in New York for a fundraising event, CISNEROS and MEDLAR, both of whom were married to others, became involved in an extramarital affair. In or about October 1988, media reports were issued about the affair between MEDLAR and CISNEROS. From in or about October 1988 through in or about the Fall of 1989, MEDLAR and CISNEROS periodically lived together in San Antonio, Texas.

Cisneros's Payments To Medlar

Beginning in or about 1989 and continuing through in or about January 1994, CISNEROS made payments to MEDLAR. The total amount of such payments exceeded a quarter of a million dollars. The payments were made by cash, wire transfer, and direct deposits into MEDLAR's bank accounts.

1. CISNEROS made the following payments, among others, to MEDLAR, which were in the approximate amounts of $2,500 or more.

A. Payments To Medlar Before Cisneros's Tenure As HUD Secretary 1990 Payments

1. On or about January 2, 1990, CISNEROS made a payment to MEDLAR in the amount of $2,500.

2. On or about February 1, 1990, CISNEROS made a payment to MEDLAR in the amount of $3,000.

3. On or about March 5, 1990, CISNEROS made a payment to MEDLAR in the amount of $2,500.

4. On or about April 10, 1990, CISNEROS made a payment to MEDLAR in the amount of $2,500.

5. On or about May 3, 1990, CISNEROS made a payment to MEDLAR in the amount of $2,500.

6. On or about May 31, 1990, CISNEROS made a payment to MEDLAR in the amount of $4,500.

7. On or about June 29, 1990, CISNEROS made a payment to MEDLAR in the amount of $3,000.

8. On or about September 13, 1990, CISNEROS made a payment to MEDLAR in the amount of $3,900.

9. On or about October 5. 1990, CISNEROS made a payment to MEDLAR in the amount of $4,000.

10. On or about October 12, 1990, CISNEROS made a payment to MEDLAR in the amount of $5,100.

11. On or about November 1, 1990, CISNEROS made a payment to MEDLAR in the amount of $3,000.

12. On or about December 4, 1990, CISNEROS made a payment to MEDLAR in the amount of $4,000.

13. On or about December 8, 1990, CISNEROS made a payment to MEDLAR in the amount of $4,000.

14. The total of the payments made by CISNEROS to MEDLAR in 1990 was approximately $44,500.

1991 Payments

1. On or about January 9, 1991, CISNEROS made a payment to MEDLAR in the amount of $6,000.

2. On or about February 2, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

3. On or about February 26, 1991, CISNEROS made a payment to MEDLAR in the amount of $12,000.

4. On or about April 17, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

5. On or about April 18, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

6. On or about May 1, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

7. On or about May 31, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

8. On or about July 3, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,582.

9. On or about July 18, 1991, CISNEROS made a payment to MEDLAR in the amount of $2,500.

10. On or about August 2, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

11. On or about October 2, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,500.

12. On or about November 5, 1991, CISNEROS made a payment to MEDLAR in the amount of $3,925.

13. On or about December 2, 1991, CISNEROS made a payment to MEDLAR in the amount of $4,000.

14. On or about December 31, 1991, CISNEROS made a payment to MEDLAR in the amount of $2,500.

15. The total of the payments made by CISNEROS to MEDLAR in 1991 was approximately $73,000.

1992-1993 Payments

1 . On or about March 2, 1992, CISNEROS made a payment to MEDLAR in the amount of $3,000.

2. On or about April 3, 1992, CISNEROS made a payment to MEDLAR in the amount of $2,500.

3. On or about May 5, 1992, CISNEROS made a payment to MEDLAR in the amount of $4,000.

4. On or about June 2, 1992, CISNEROS made a payment to MEDLAR in the amount of $2,500.

5. On or about July 6, 1992, CISNEROS made a payment to MEDLAR in the amount of $2,500.

6. On or about August 3, 1992. CISNEROS made a payment to MEDLAR in the amount of $4,000.

7. On or about September 2, 1992, CISNEROS made a payment to MEDLAR in the amount of $2,500.

8. On or about December 3, 1992, CISNEROS made a payment to MEDLAR in the amount of $4,000.

9. On or about December 16, 1992, CISNEROS made a payment to MEDLAR in the amount of $8,000.

10. On or about December 18, 1992, CISNEROS made a payment to MEDLAR in the amount of $8,000.

11. The total of the payments made by CISNEROS to MEDLAR in 1992 was approximately $67,500.

12. On or about January 4, 1993, CISNEROS made a payment to MEDLAR in the amount of $4,000.

B. Payments To Medlar During Cisneros's Tenure As HUD Secretary

1. On or about January 28, 1993, CISNEROS made a payment to MEDLAR in the amount of $5,000.

2. On or about February 10, 1993, CISNEROS made a payment to MEDLAR in the amount of $7,500.

3. On or about February 16, 1993, CISNEROS made a payment to MEDLAR in the amount of $ 15,000.

4. On or about February 24, 1993, CISNEROS made a payment to MEDLAR in the amount of $15,000.

5. On or about March 15, 1993, CISNEROS made a payment to MEDLAR in the amount of $10,873.45.

6. On or about July 16, 1993, CISNEROS made a payment to MEDLAR in the amount of $ 15,000.

7. On or about October 12, 1993, CISNEROS made a payment to MEDLAR in the amount of $4,000.

8. The total of the payments made by CISNEROS to MEDLAR in 1993 was approximately $79,500.

Cisneros's Nomination And Confirmation As Secretary Of HUD

1. On or about December 17, 1992, President-elect Clinton publicly announced his intention to nominate CISNEROS to be Secretary of HUD.

2. On or about December 29, 1992, in accordance with the terms of the MOU, and as part of one of its lawful, authorized, governmental functions, the FBI began a full-field background investigation of CISNEROS.

3. On December 30, 1992, as part of the FBI's background investigation of him, CISNEROS was interviewed by a Special Agent of the Federal Bureau of Investigation.

4. On January 7, 1993, as a result of information developed during the course of its background investigation of CISNEROS, and based upon CISNEROS's responses during the course of the December 30, 1992 FBI interview, CISNEROS was interviewed by Special Agents for the Federal Bureau of Investigation for a second time.

5. On January 12, 1993, pursuant to its constitutional advice and consent power and responsibility, the Senate Banking Committee held hearings regarding CISNEROS's nomination to be Secretary of HUD.

6. On or about January 21, 1993, CISNEROS was formally appointed and confirmed as Secretary of HUD.

Cisneros's Position Of Public Trust

1. As Secretary of HUD, CISNEROS was the senior official in charge of the Department of Housing and Urban Development, a member of the President's Cabinet, and twelfth in line to succeed the President of the United States, should it have become necessary.

2. As Secretary of HUD, CISNEROS was entrusted by the United States Congress and the United States taxpayers with the responsibility of overseeing an annual budget of approximately twenty billion dollars.

3. As Secretary of HUD, CISNEROS was responsible for and required to exercise personal leadership in establishing, maintaining, and carrying out HUD's ethics program, a principal part of which included adherence to the Code of Federal Regulations' Standard of Ethical Conduct for Employees of the Executive Branch.

4. As Secretary of HUD and a Cabinet Officer, CISNEROS was an employee and official of the United States. As such, he held a position of public trust and thus had a responsibility to the United States, its citizens, the officers and employees of the Administration, and HUD, to abide by the following general principle, among others, set forth in the Code of Federal Regulations' Standards of Ethical Conduct for Employees of the Executive Branch, 5 C.F.R. 2635: "Public service is a public trust, requiring ... loyalty to the Constitution, the laws and ethical principles."

5. That public trust included duties (a) to obey the criminal and civil laws of the United States and (b) to disclose to the government, including officers and employees of the Administration, material information as required by law.

Medlar's Lawsuit Against Cisneros For Breach Of Contract And Fraud And Cisneros's Press Release

1. On or about July 29, 1994, MEDLAR filed a lawsuit against CISNEROS in the 72nd District Court of Lubbock County, Texas, Case Number 94-547, 854. The Complaint sought damages based on allegations of breach of contract and fraud, allegedly arising from CISNEROS's promise to support MEDLAR financially.

2. After being advised of the lawsuit, while still serving as Secretary of HUD, CISNEROS issued a Press Release through HUD's Public Affairs Office, entitled "Statement of Henry G. Cisneros, July 29, 1994." In that statement, CISNEROS stated the following, among other things:

In 1988 in San Antonio I acknowledged a romantic relationship with MEDLAR. That relationship subsequently ended.

* * * *

When I was nominated to become Secretary of Housing and Urban Development, I explained to Ms. MEDLAR that I would now be on a fixed government salary and would not be able to assist as I had, but would use some of my savings to give her some assistance so that she could transition to a job over the forthcoming year.

I have not provided any assistance since assuming office in January of 1993. I felt that I had done everything a person could reasonably do, especially since I had assisted her for the better part of three years.

The Inside Edition Episode

1. On September 12, 1994, MEDLAR appeared on a broadcast of the television program Inside Edition. During the Inside Edition program, MEDLAR asserted, among other things, that CISNEROS, then-Secretary of HUD, had lied to the FBI during the course of its background investigation of him. Specifically, MEDLAR asserted that CISNEROS had lied to the FBI about, among other things, the amount of the payments that he had made to her. During the episode, Inside Edition also broadcast a deposit slip reflecting a payment made by CISNEROS to MEDLAR in the amount of $4,500, an amount larger than the $2,500 figure that CISNEROS had told the FBI was the largest single payment he had ever made to MEDLAR.

2. During the September 12, 1994 episode, Inside Edition also broadcast excerpts from tape-recorded conversations between CISNEROS and MEDLAR. CISNEROS and MEDLAR had conversations before, during, and after CISNEROS's FBI background investigation and Senate Banking Committee confirmation hearing.

Subsequent Investigations Of Cisneros; Medlar's Violation Of Her Immunity Agreement

1. As a result of the allegations made by MEDLAR during the Inside Edition program, in or about September 1994, pursuant to the Independent Counsel Reauthorization Act of 1994, Title 28, United States Code, Section 592, et seq., United States Attorney General Janet Reno initiated an inquiry concerning allegations regarding whether CISNEROS lied to the FBI during his background investigation.

2. On or about September 28 and 29, 1994, Special Agents of the FBI interviewed MEDLAR in Lubbock, Texas. During the interviews, MEDLAR stated, in substance, and among other things, that she was then furnishing to the Special Agents for duplication original cassette tapes of her conversations with CISNEROS and others. The tapes she provided, however, were not originals.

3. In or about September 1994, as a result of MEDLAR's lawsuit and reports of the size of the payments that CISNEROS made to MEDLAR, the Internal Revenue Service initiated an investigation of CISNEROS.

4. On or about October 14, 1994, the Department of Justice initiated a preliminary investigation.

5. On or about March 13, 1995, at the conclusion of the preliminary investigation, Attorney General Reno filed an "Application to the Court Pursuant to 28 U.S.C. § 592(c)(1) for Appointment of an Independent Counsel" asking a Special Division of a United States Court of Appeals for the District of Columbia Circuit to appoint an Independent Counsel to investigate and, if appropriate, prosecute allegations concerning, among other things, CISNEROS's false statements to the FBI regarding the payments that he made to MEDLAR.

6. On or about May 24, 1995, a Special Division of the United States Court of Appeals for the District of Columbia appointed David M. Barrett as Independent Counsel in In re: Henry G. Cisneros, authorizing him to investigate, and, if warranted, prosecute certain matters.

7. On or about October 31, 1995, pursuant to the Court of Appeals's May 24, 1995 Order, a Federal Grand Jury began investigating, among other things, whether CISNEROS committed violation(s) of federal criminal law by making, or conspiring with others to make, false statements to the FBI during the course of its background investigation of him.

8. Since on or about October 31, 1995, Special Agents of the FBI, among others, assisted the Federal Grand Jury in its investigation.

9. On or about November 27 and 28, 1995, pursuant to the advice of counsel, MEDLAR entered into an "Immunity Agreement" with the Office of Independent Counsel. Pursuant to the terms of the Immunity Agreement, MEDLAR agreed, in pertinent part: (a) to waive her Fifth Amendment constitutional right against self-incrimination; (b) to provide truthful, full, and complete information to the Office and to law enforcement personnel, including the FBI; (c) to answer truthfully, fully, and completely all questions concerning the subject matter of the Office's investigation; and (d) not to attempt to protect or implicate anyone through false information or omission.

10. In violation of the terms and conditions of the Immunity Agreement, MEDLAR made the following false statement, among others, to Special Agents of the FBI who were assisting a Federal Grand Jury in its investigation: MEDLAR falsely advised Special Agents of the FBI during an interview in Washington, D.C., among other things, that she provided the original tapes of her conversations with CISNEROS and others to the IRS on May 31, 1995.

The Defendants

1. HENRY G. CISNEROS was the Secretary of HUD from in or about January 1993 through in or about January 1997. He was the Mayor of San Antonio, Texas from in or about January 1981 through in or about May 1989. He also served as Deputy Chairman of the Federal Reserve Bank of Dallas from 1991 through in or about August 1992.

2. LINDA D. MEDLAR was a former campaign fundraiser for CISNEROS in San Antonio, Texas, a former political consultant, and CISNEROS's former girlfriend.

3. SYLVIA ARCE-GARCIA was a former employee of CISNEROS, employed by Cisneros Communications in San Antonio, Texas, who later became a Personal Assistant to CISNEROS at HUD.

4. JOHN D. ROSALES was a former employee of CISNEROS, employed by Cisneros Communications in San Antonio, Texas, who later became a Personal Assistant to CISNEROS at HUD.

Other Individuals And Entities

1. Michael A. Wooten was MEDLAR's nephew and a principal of West Texas Lighting, Co., Inc. ("WTL").

3. Patsy J. Wooten was MEDLAR's sister and Michael A. Wooten's mother, and the President of WTL.

4. Allen R. Wooten was Patsy J. Wooten's husband, Michael A. Wooten's father, and a principal of WTL.

5. WTL was a business with its principal office in Lubbock, Texas, engaged in the business of electrical contracting.

6. Vera N. Jones was the mother of MEDLAR and Patsy J. Wooten, and a resident of Lubbock, Texas.

7. Morris D. Jaffe, Sr. was a San Antonio businessman and a personal and political benefactor of CISNEROS and others.

8. Cisneros Communications was a sole proprietorship owned by CISNEROS, located in San Antonio, Texas, engaged in the principal activity of arranging speaking engagements for CISNEROS.

9. Cisneros Asset Management Company ("CAMCO") was a business principally owned by CISNEROS, located in San Antonio and Houston, Texas, engaged in the business of managing pension funds for institutions and organizations.

10. Broadway National Bank was a federally-insured bank located in San Antonio, Texas, where MEDLAR maintained a checking account into which CISNEROS, personally and through others, made numerous cash deposits.

11. First National Bank of Lubbock was a federally-insured bank located in Lubbock, Texas, where MEDLAR maintained a checking account into which CISNEROS, personally and through others, made payments to MEDLAR.

12. Crestar Bank was a federally-insured bank located in Washington, D.C., where CISNEROS maintained a checking account, which he utilized to transfer payments into MEDLAR's account at First National Bank of Lubbock.

13. Lincoln Benefit Life Company was a life insurance company located in Lincoln, Nebraska, where CISNEROS had purchased an annuity, some of the proceeds of which were paid to MEDLAR.

COUNT ONE

(CONSPIRACY TO DEFRAUD THE UNITED STATES; CONSPIRACY TO COMMIT OFFENSES AGAINST THE UNITED STATES)

1. The paragraphs contained in "Background to All Counts" of the Indictment are realleged and incorporated by reference as though fully set forth herein.

I. THE CONSPIRACY AND ITS OBJECTS

1. From a date unknown to the Grand Jury, but at least by in or about the Summer of 1992, through on or about September 12, 1994, within the District of Columbia and elsewhere, the Defendants,

HENRY G. CISNEROS,
LINDA D. MEDLAR,
SYLVIA ARCE-GARCIA,
and
JOHN D. ROSALES,

did unlawfully, knowingly, and willfully, combine, conspire, confederate, and agree, together, with each other, and with and among other persons, both known and unknown to the Grand Jury:

A. To defraud the United States:

1. By impeding, impairing, obstructing, and defeating the lawful government functions of:

i) the United States Senate in the proper exercise of its constitutional duty and responsibility to advise and consent to the nomination of persons nominated by the President to be Cabinet officers;

ii) the FBI in the proper exercise of its lawful, authorized, governmental function to conduct background investigations as a means of ascertaining facts and information relevant to a putative Cabinet Officer's suitability for government employment in accordance with Executive Order 10450 and trustworthiness for clearance for access to information classified under the provisions of Executive Order 12356;

iii) the Department of Justice Personnel Security Office in the proper exercise of its lawful, authorized, governmental function to adjudicate the honesty, reliability, good character, and trustworthiness of a putative Cabinet Officer, so as to determine whether such individual warranted (a) a top secret national security clearance for access and exposure to information classified under, among other things, the provisions of Executive Orders 10450 and 12356 and (b) service as a Cabinet Officer; and

B. To commit offenses against the United States, including:

1. Violations of Title 18, United States Code, Section 1505, Obstructing and Endeavoring To Obstruct Inquiries Being Conducted by the United States Congress;

2. Violations of Title 18, United States Code, Section 1505, Obstructing and Endeavoring To Obstruct A Pending Proceeding Being Had Before the United States Department of Justice;

3. Violations of Title 18, United States Code, Section 1001, Making False and Misleading Statements to and Concealing Material Information from Government Departments and Agencies, including the FBI and the Department of Justice, Justice Management Division, Personnel Security Office; and

4. Violations of Title 31, United States Code, Section 5324(3), Structuring, Assisting In Structuring, And Attempting To Structure And Assist In Structuring, Transactions With A Financial Institution For The Purpose Of Evading The Financial Reporting Requirements of Title 31, United States Code, Section 5313(a).

II. MANNER AND MEANS

1. It was part of the conspiracy that during the late Summer of 1992 through early 1994, CISNEROS continued to pay MEDLAR in order to ensure her public silence regarding, among other things, their relationship and the nature, purpose, and extent of his payments to her and to another woman, so that he could be nominated, confirmed, and serve as Secretary of HUD.

2. It was further a part of the conspiracy that CISNEROS would and did discuss with representatives of the President-elect the possibility of making additional payments to MEDLAR, including a "lump-sum" payment.

3. It was further a part of the conspiracy that in addition to his average monthly cash payments to MEDLAR of approximately $5,000 for the years 1990 through 1993, CISNEROS provided MEDLAR with an additional $16,000 in cash payments in $8,000 increments on or about December 16, 1992, and December 18, 1992, respectively, so that MEDLAR could use those funds to purchase a house in Lubbock, Texas, in her sister Patsy J. Wooten and her brother-in-law Allen R. Wooten's names, and CISNEROS and MEDLAR could conceal the identity of CISNEROS as the true source of the $l6,000 payment.

4. It was further a part of the conspiracy that after the President-elect announced his selection of CISNEROS to be HUD Secretary on December 17, 1992, CISNEROS continued to make cash payments to MEDLAR through on or about January 2l, 1993, when the Senate confirmed his nomination to be HUD Secretary, and thereafter, in order to ensure her public silence regarding, among other things, their relationship and the nature, purpose, and extent of his payments to her and to another woman, so that he could be nominated, confirmed, and serve as Secretary of HUD.

5. It was further a part of the conspiracy that CISNEROS would and did direct certain of his employees, including ARCE-GARCIA and ROSALES, to conceal from the FBI during its background investigation of CISNEROS information concerning his relationship with and payments to MEDLAR.

6. It was further a part of the conspiracy that CISNEROS would and did promise certain of his employees, including ARCE-GARCIA and ROSALES, as well as certain of his associates, jobs on his staff at HUD should he be confirmed.

7. It was further a part of the conspiracy that ARCE-GARCIA and ROSALES, as well as other employees and associates of CISNEROS, concealed information from and lied to the FBI during the FBI background investigation about CISNEROS's relationship with and payments to MEDLAR.

8. It was further a part of the conspiracy that CISNEROS, ARCE-GARCIA, and ROSALES, among others, would and did conceal from and misrepresent to the FBI during its background investigation facts and circumstances concerning the financial condition of Cisneros Communications.

9. It was further a part of the conspiracy that the conspirators would and did agree to conceal from the FBI, and through it, the Department of Justice Security Office, and the United States Senate, the true facts and circumstances concerning CISNEROS's payments to MEDLAR and to another woman.

10. It was further a part of the conspiracy that CISNEROS would and did conceal from and lie to the FBI about the true facts and circumstances concerning his payments to MEDLAR in order, among other things, to ensure that:

(i) the President-elect did not withdraw his selection and/or nomination to be HUD Secretary;

(ii) he was granted a top-secret security national security clearance, which was a prerequisite to service as HUD Secretary;

(iii) the United States Senate confirmed him as HUD Secretary; and

(iv) the IRS did not initiate an investigation into facts and circumstances surrounding his payments to MEDLAR, including any potential gift tax implications for him arising from such payments.

11. It was further a part of the conspiracy that MEDLAR would and did decline to answer questions concerning CISNEROS during the FBI background investigation of CISNEROS.

12. It was further a part of the conspiracy that CISNEROS would and did conceal from members of the Senate, including the Senate Banking Committee, certain information regarding the true facts and circumstances with respect to his relationship with and payments to MEDLAR and to another woman.

13. It was further a part of the conspiracy that CISNEROS would and did enlist the assistance of others to make payments to and arrange employment for MEDLAR in order, among other things, to reduce the amount of funds CISNEROS was personally to pay MEDLAR.

14. It was further a part of the conspiracy that CISNEROS, during his service as HUD Secretary, would and did continue to make payments to MEDLAR in order to continue to ensure her public silence concerning, among other things:

(i) the true facts and circumstances concerning his payments to her prior to his selection to be HUD Secretary;

(ii) the true facts and circumstances concerning his payments to her after he was selected to be, but before he was confirmed as, HUD Secretary;

(iii) his agreement with her, among other things, to conceal the true facts and circumstances concerning his payments to her from the FBI and through it, the Department of Justice Personnel Security Office and the United States Senate;

(iv) his payments to her during his tenure as HUD Secretary;

(v) his efforts to enlist the assistance of other persons to make payments to and arrange employment for MEDLAR in order to, among other things. reduce the amount of funds that he had to pay her; and

(vi) his false statements to the FBI during his background investigation.

15. It was further a part of the conspiracy that the co-conspirators would and did misrepresent, conceal and hide, and cause to be misrepresented, concealed and hidden, the acts and the purposes of the acts done in furtherance of the conspiracy.

III. OVERT ACTS

In furtherance of the aforesaid conspiracy, and to effect the objects thereof, in the District of Columbia and elsewhere, one or more of the defendants and other co-conspirators committed and caused to be committed one or more of the following overt acts, among others:

1. On or about November 22, 1992, CISNEROS executed an "Authorization for Release of Information," authorizing the FBI to obtain information about him for his background investigation.

2. On or about November 24, 1992, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR conversations CISNEROS had with the President-elect concerning CISNEROS s potential selection as a Cabinet officer.

3. On or about December 2, 1992, by telephone from a location in Texas, CISNEROS discussed with MEDLAR his potential appointment as United States Senator for the State of Texas and his potential selection to be a Cabinet officer.

4. On or about December 3, 1992, CISNEROS caused $4,000 in U.S. currency to be deposited in MEDLAR's account at the Broadway National Bank.

5. On or about December 3, 1992, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR the possibility that MEDLAR would make public disclosures concerning CISNEROS.

6. By on or about December 8, 1992, CISNEROS caused a Standard Form-86 (Questionnaire for Sensitive Positions), which he had completed and executed on or about December 7, 1992, to be provided to representatives of the President-elect in Washington, D.C.

7. On or about December 8, 1992, by telephone from Washington, D.C., CISNEROS had telephone conversations with MEDLAR.

8. Between on or about December 8, 1992, and December 9, 1992, CISNEROS met with representatives of the President-elect in Washington, D.C. and discussed issues that could potentially have affected his selection by the President-elect to be Secretary of HUD.

9. On or about December 11, 1992, by cellular telephone from a location in Texas, CISNEROS discussed with MEDLAR meetings he had in Washington, D.C. with representatives of the President-elect concerning his relationship and payments with MEDLAR.

10. On or about December 11, 1992, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR a meeting he was to have in San Antonio, Texas with a representative of the President-elect concerning his relationship with and payments to MEDLAR.

11. On or about December 11, 1992, in San Antonio, Texas, CISNEROS met with a representative of the President-elect and discussed issues that could potentially have affected the President-elect's selection of him for the position of Secretary of HUD.

12. On or about December 11, 1992, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR a meeting he had in San Antonio, Texas with a representative of the President-elect, which concerned his relationship with and payments to MEDLAR.

13. Between on or about December 13, 1992, and on or about December 14, 1992, by telephone from Little Rock, Arkansas, CISNEROS discussed with MEDLAR meetings he was going to have in Little Rock, Arkansas with the President-elect, and representatives of the President-elect, concerning his relationship with and payments to MEDLAR.

14. Between on or about December 13, 1992, and on or about December 16, 1992, CISNEROS met with the President-elect, and representatives of the President-elect, in Little Rock, Arkansas to discuss issues that could potentially have affected CISNEROS's selection to be Secretary of HUD.

15. On or about December 14, 1992, CISNEROS completed and executed a Supplement to the Standard Form-86.

16. On or about December 15, 1992, CISNEROS provided a completed and executed Supplement to the Standard Form 86 to representatives of the President-elect.

17. On or about December 16, 1992, at the direction of CISNEROS, ARCE-GARCIA deposited $8,000 in U.S. currency in MEDLAR's account at the Broadway National Bank.

18. On or about December 18, 1992, at the direction of CISNEROS, ARCE-GARCIA deposited $8,000 in U.S. currency in MEDLAR's account at the Broadway National Bank.

19. On or about December 22, 1992, in Washington, D.C., CISNEROS met with representatives of the President-elect to discuss CISNEROS's impending Senate confirmation hearing.

20. On or about December 22, 1992, CISNEROS caused a "Statement for Completion by Presidential Nominees," as required by rules of the Senate, to be transmitted via facsimile from San Antonio, Texas, to representatives of the President-elect in Washington, D.C.

21. On or about December 24, 1992, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR his forthcoming Senate confirmation hearing.

22. On or about December 30, 1992, in Washington, D.C., as part of the FBI's background investigation of him, CISNEROS met with a Special Agent of the FBI.

23. On or about December 30, 1992, by telephone from a location in Texas, CISNEROS discussed with MEDLAR his interview by a Special Agent of the FBI, which took place earlier that day.

24. On or about December 31, 1992, in San Antonio, Texas, CISNEROS had a discussion with, among others, ARCE-GARCIA and ROSALES, concerning the background investigation of him being conducted by the FBI.

25. On or about December 31, 1992, in San Antonio, Texas, as part of the FBI's background investigation of CISNEROS, ARCE-GARCIA met with a Special Agent of the FBI.

26. On or about December 31, 1992, in San Antonio, Texas, as part of the FBI's background investigation of CISNEROS, ROSALES met with a Special Agent of the FBI.

27. On or about December 31, 1992, ARCE-GARCIA caused to be transmitted via facsimile to Washington, D.C., from San Antonio, Texas, an executed Form SF-171 with respect to her potential employment as a Special Assistant to the HUD Secretary.

28. On or about January 1, 1993, in Lubbock, Texas, Vera N. Jones met with a Special Agent of the FBI.

29. On or about January 4, 1993, CISNEROS caused $4,000 in U.S. currency to be deposited in MEDLAR's account at the Broadway National Bank.

30. On or about January 4, 1993, by telephone from Washington, D.C., CISNEROS discussed with MEDLAR investigative activity being conducted by the FBI concerning his background investigation.

31. On or about January 6, 1993, in San Antonio, Texas, as part of the FBI's background investigation of CISNEROS, ROSALES met with a Special Agent of the FBI.

32. On or about January 7, 1993, in Washington, D.C., as part of the FBI's background investigation of him, CISNEROS met with Special Agents of the FBI.

33. On or about Januarv 8, 1993, by telephone from Washington, D.C., as part of the FBI's background investigation of him, CISNEROS spoke with a Special Agent of the FBI.

34. On or about January 8, 1993, in Lubbock, Texas, as part of the FBI background investigation of CISNEROS, MEDLAR was contacted by a Special Agent of the FBI. Medlar declined to answer questions and requested that the FBI not recontact her.

35. On or about January 8, 1993, in Washington, D.C., CISNEROS attended a "mock confirmation hearing" and discussed with representatives of the President-elect answers he would provide to questions concerning, among other things, his relationship with, and payments of money to, MEDLAR.

36. Between on or about January 11, 1993, and on or about January 20, 1993, CISNEROS reviewed with representatives of the President-elect the contents of the FBI report of his background investigation.

37. In or about January 1993, in Washington, D.C., CISNEROS met with Senator Donald K. Riegle, then-Chairman of the Senate Banking Committee, and discussed issues relating to CISNEROS's confirmation as Secretary of HUD.

38. On or about January 12, 1993, in Washington, D.C., CISNEROS testified at his Senate Banking Committee confirrnation hearing, which hearing was conducted pursuant to the Senate's constitutional advice and consent power and responsibility.

39. On or about January 15, 1993, CISNEROS requested a complete liquidation of an annuity account he maintained at Lincoln Benefit Life Company.

40. On or about January 15, 1993, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR both the FBI's investigative activity and his January 12, 1993 confirmation hearing.

41. On or about January 15, 1993, by telephone from San Antonio, Texas, CISNEROS discussed with MEDLAR the formation of a HUD management company.

42. On or about January 19, 1993, ROSALES caused to be transmitted via facsimile to Washington, D.C., an executed Form SF-171 with respect to his potential employment as a Special Assistant to the HUD Secretary.

43. On or about January 19, 1993, CISNEROS caused $1,000 in U.S. currency to be deposited in MEDLAR's account at the Broadway National Bank.

44. On or about January 21, 1993, by telephone from Washington, D.C., CISNEROS discussed with MEDLAR investigative activity conducted by the FBI with respect to his background investigation and conversations he had with members of the Senate concerning MEDLAR.

45. On or about January 21, 1993, in Washington, D.C., CISNEROS took an oath of office and became Secretary of HUD.

46. On or about January 28, 1993, CISNEROS caused $5,000 in U.S. currency to be deposited in MEDLAR s account at the Broadway National Bank.

47. Between on or about January 21, 1993, the date of CISNEROS's swearing-in as HUD Secretary, but before on or about March 31, 1993, by telephone from Washington, D.C., CISNEROS discussed with Michael A. Wooten the formation of a HUD management company.

48. On or about February 9, 1993, CISNEROS opened a checking account at the Crestar Bank, in Washington, D.C. in his own name.

49. On or about February 9, 1993, in Washington, D.C. CISNEROS caused to be deposited $29.686.06 of the $49,686.06 in proceeds from the liquidation of his annuity account with Lincoln Benefit Life Company into the Crestar Bank checking account.

50. On or about February 9, 1993, by telephone from Washington, D.C., CISNEROS discussed with MEDLAR the wiring of funds to MEDLAR.

51. On or about February 10, 1993, at Washington, D.C., CISNEROS caused $7,500 to be wire-transferred from his Crestar Bank checking account into MEDLAR's account at the First National Bank of Lubbock.

52. On or about February 16, 1993, at Washington, D.C., CISNEROS caused $15,000 to be wire-transferred from his Crestar Bank checking account into MEDLAR's account at the First National Bank of Lubbock.

53. On or about February 24, 1993, at Washington, D.C., CISNEROS caused $15,000 to be wire-transferred from his Crestar Bank checking account into MEDLAR's account at the First National Bank of Lubbock.

54. On or about March 15, 1993, at Washington, D.C., CISNEROS caused $10,875.45 to be wire-transferred from his Crestar Bank checking account into MEDLAR's account at the First National Bank of Lubbock.

55. In or about March, 1993, by telephone from Washington, D.C., CISNEROS discussed with MEDLAR the status of payments he was making to her.

56. On or about July 1, 1993, CISNEROS caused a $25,000 check drawn on a bank account maintained by CISNEROS and his wife Mary Alice Cisneros at Washington Federal Savings Bank, Washington, D.C. to be provided to the law firm of Wheatley & Sharpe, LLP, San Antonio, Texas.

57. On or about July 16, 1993, MEDLAR deposited into her account at First National Bank, a Cashier's Check dated July 8, 1993, in the amount of $15,000, which had been purchased by Wheatley & Sharpe, LLP, made payable to CISNEROS, and endorsed by CISNEROS over to MEDLAR.

58. On or about October 12, 1993, CISNEROS caused $4,000 in U.S. currency to be provided to MEDLAR in Lubbock, Texas.

59. On or about November 4, 1993, by telephone from Louisville, Kentucky, CISNEROS discussed with MEDLAR the payments of funds to MEDLAR on CISNEROS's behalf, via a third party.

60. Between in or about November and December 1993, MEDLAR caused letters regarding CISNEROS's payments to her, and other related matters, to be transmitted via facsimile to CISNEROS at his HUD office in Washington, D.C.

61. On or about December 3, 1993, CISNEROS provided $1,300 in U.S. currency to MEDLAR.

62. In or about January 1994, at the direction of MEDLAR, Michael A. Wooten traveled from Lubbock, Texas to San Antonio, Texas, to discuss with a third party the payment of funds on CISNEROS's behalf to MEDLAR, via that third party.

63. After he assumed the position of Secretary of HUD, from between on or about January 28, 1993 through on or about December 3, 1993, CISNEROS made a series of payments to MEDLAR, which totaled approximately $73,000.

64. On or about July 29, 1994, CISNEROS issued a Press Release through HUD's Public Affairs Office, entitled "Statement of Henry G. Cisneros, July 29, 1994," in which CISNEROS stated, among other things, that he had made no payments to MEDLAR since assuming the position of Secretary of HUD, in January 1993.

(All in violation of Title 18, United States Code, Section 371.)

COUNT TWO

(FALSE, FICTITIOUS, AND FRAUDULENT STATEMENT AND REPRESENTATION ON DECEMBER 14, 1992)

1. The paragraphs contained in "Background To All Counts" of the Indictment and in Count One of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about December 7, 1992, CISNEROS completed and executed the SF-86.

3. On or about December 14, 1992, CISNEROS completed the Supplement to the SF-86, and executed it immediately below the following statement:

I understand that the information being provided on this Supplement to the SF-86 is to be considered part of the original SF-86 ... and a false statement on this form is punishable by law.

4. Question 10S of the Supplement to the SF-86 provided, in pertinent part, the following:

Is there anything in your personal life that could be used by someone to coerce or blackmail you? Is there anything in your life that could cause an embarrassment to you or to the President if publicly known? If so, please provide full details.

5. On or about December 14, 1992, in a matter within the jurisdiction of departments and agencies of the United States, that is, the Federal Bureau of Investigation and the United States Department of Justice, CISNEROS knowingly and willfully, made and used a false writing and statement, knowing the same to contain a material false, fictitious, and fraudulent statement, by stating the following in response to Question 10S of the SF-86 Supplement:

COUNTFALSE, FICTITIOUS, AND FRAUDULENT STATEMENT
TwoCISNEROS stated, in substance, that there was no basis upon which he could have been subjected to coercion or blackmail.

(In violation of Title 18, United States Code, Section 1001.)

COUNTS THREE THROUGH FIVE

(FALSE, FICTITIOUS, AND FRAUDULENT STATEMENTS AND REPRESENTATIONS ON DECEMBER 30, 1992)

1. The paragraphs contained in "Background To All Counts" of the Indictment and those contained in Counts One and Two of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about December 30, 1992, CISNEROS was interviewed at the Presidential Transition Office, located at 1120 Vermont Avenue, Northwest, Washington, D.C., by a Special Agent of the FBI. That interview was conducted as part of one of the lawful, authorized, governmental functions of the FBI, that is, to conduct full-field background investigations of potential high-ranking government officials such as Cabinet-level designees.

3. Prior to beginning the interview, a Special Agent of the FBI advised CISNEROS, in substance, that the purpose of the interview was to ensure that complete, current, and accurate information would be available and obtained concerning CISNEROS's background.

4. The Special Agent of the FBI further advised CISNEROS, in substance, that such information was necessary in order to assist the FBI in conducting a thorough background investigation of him regarding his nomination for the position of Secretary of Housing and Urban Development.

5. CISNEROS previously had been advised, in substance, that it was necessary for him to be completely truthful and forthcoming during the background investigation, so as not to interfere with or impede the background investigation or the nomination or confirmation process.

6. The most critical portion of CISNEROS's background investigation, as in any background investigation, consisted of the FBI's background interviews of him.

7. CISNEROS knew that the information provided to the FBI during the FBI interviews would be utilized by the FBI in order to identify leads, determine whether to interview additional individuals, determine whether to ask additional questions of CISNEROS, and determine whether to provide to other law enforcement agencies such as the IRS adverse information developed during the interviews.

8. On or about December 30, 1992, in the District of Columbia, during an interview with a Special Agent of the Federal Bureau of Investigation, in a matter within the jurisdiction of departments and agencies of the United States, that is, the Federal Bureau of Investigation and the United States Department of Justice, CISNEROS knowingly and willfully, made the following material false, fictitious, and fraudulent statements and representations:

COUNTFALSE, FICTITIOUS, AND FRAUDULENT STATEMENT
Three CISNEROS stated that the completed and executed Standard Form 86 and the Standard Form-86 Supplement were accurate and correct.
FourCISNEROS stated that he was unaware of anything that could have been used to coerce or compromise him if he were to be nominated and confirmed as Secretary of HUD.
FiveCISNEROS stated that he had only "been with" one woman, other than MEDLAR, during his marriage to his wife.

(In violation of Title 18, United States Code, Section 1001.)

COUNTS SIX THROUGH NINE

(SCHEME TO FALSIFY, CONCEAL, AND
COVER UP A MATERIAL FACT BY TRICK, SCHEME, AND DEVICE)

1. The paragraphs contained in "Background to All Counts" of the Indictment and those contained in Counts One through Five of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about December 30, 1992, in the District of Columbia, during an interview with a Special Agent of the Federal Bureau of Investigation, in a matter with the jurisdiction of departments and agencies of the United States, that is, the Federal Bureau of Investigation and the United States Department of Justice, CISNEROS knowingly and willfully, falsified, concealed, and covered up, by means of trick, scheme, and device, material facts, in that CISNEROS:

COUNTACT OF CONCEALMENT
SixConcealed and covered up the fact that he was making payments to MEDLAR.
SevenConcealed and covered up the fact that MEDLAR threatened to disclose publicly that he was making payments to her.
EightConcealed and covered up the fact that he had "structured" certain payments to MEDLAR in order to avoid the triggering of a Currency Transaction Report, by paying MEDLAR $8,000 on December 16, 1992 and paying her $8,000 on December 18, 1992, so that MEDLAR could use those funds to purchase a house in Lubbock, Texas in her sister Patsy J. Wooten and her brother-in-law Allen R. Wooten's names, and CISNEROS and MEDLAR could conceal the identity of CISNEROS as the true source of the $16,000 payment.
NineConcealed and covered up the fact that, despite making payments to MEDLAR substantially in excess of $10,000 per year since 1990, he had not filed informational Gift Tax Returns with the Internal Revenue Service.

(In violation of Title 18, United States Code, Section 1001.)

COUNTS TEN THROUGH SIXTEEN

(FALSE, FICTITIOUS, AND FRAUDULENT STATEMENTS AND REPRESENTATIONS ON JANUARY 7, 1993)

1. The paragraphs contained in "Background to All Counts" of the Indictment and the paragraphs contained in Counts One through Nine of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about January 7, 1993, as a result of information developed during the course of the FBI's full field background investigation and the December 30, 1992 interview, CISNEROS was interviewed for a second time by the FBI.

3. That interview took place pursuant to a January 7, 1993 directive issued under the name of the Director of the FBI.

4. The January 7, 1993 directive instructed agents of the FBI to recontact CISNEROS. Pursuant to the directive, the agents were instructed to reinterview CISNEROS and address the following issues, among others:

a. Advise Mr. CISNEROS that he should be completely candid during this interview, that he should provide any information not previously provided, and that if there is any other information such as other affairs, payments made to any other individuals, etc., that it would be in his best interest to come forth with that information now.

* * *

b. Regarding affair with MEDLAR, did it cause the separation from his wife, or did it occur after they were separated?

c. Is he making payments to MEDLAR, or has he ever made payments to her, for what reason, and how much?

d. Does his wife know that he was/is making payments to Linda MEDLAR?

e. If she doesn't know, what would his wife do if she found out?

f. Who ended the affair between CISNEROS and MEDLAR (him or her), and for what reason?

g. When was his last contact with her?

h. Does he maintain any contact with her currently, or does she maintain any contact with him, or is he aware of any attempts by her to contact him (by phone, in writing, in person)? Does his wife know?

* * *

i. Interview of ROSALES indicates that he (ROSALES) took calls from MEDLAR at Cisneros Communications from 10/92 to 12/92, the most recent being on 12/29/92, when MEDLAR indicated that if appointee did not call her back, she would have "to take action." What did she mean by that statement? Did CISNEROS call her back?

5. On or about January 7, 1993, a separate directive was issued under the name of the Director of the FBI instructing that additional investigation was necessary in order to obtain further information concerning, and to determine, among other things, the veracity of statements made by CISNEROS's former accountant concerning the amount of payments made by CISNEROS to MEDLAR.

6. The January 7, 1993 interview took place at the Presidential Transition Office, located at 1120 Vermont Avenue, Northwest, Washington, D.C.

7. That interview was conducted by Special Agents of the Federal Bureau of Investigation pursuant to one of the lawful, authorized, governmental functions of the FBI, that is, to conduct full-field background investigations of potential high-ranking government officials such as Cabinet-level designees.

8. On or about January 7, 1993, in the District of Columbia, during an interview with Special Agents of the Federal Bureau of Investigation, in a matter within the jurisdiction of departments and agencies of the United States, that is, the Federal Bureau of Investigation and the United States Department of Justice, CISNEROS knowingly and willfully, made the following material false, fictitious, and fraudulent statements and representations:

COUNTFALSE, FICTITIOUS, AND FRAUDULENT STATEMENT
TenCISNEROS stated that the payments made to MEDLAR did not constitute "hush money" payments.
ElevenCISNEROS stated that he was not "currently" making payments to MEDLAR.
TwelveCISNEROS stated that the highest single payment that he had ever made to MEDLAR was approximately $2,500.
ThirteenCISNEROS stated that the total payments that he had made to MEDLAR never exceeded $10,000 per year.
FourteenCISNEROS stated that MEDLAR never threatened, coerced, or ever tried to obtain money from him.
FifteenCISNEROS stated that he had not had substantial at length discussions with MEDLAR since early 1991.
SixteenCISNEROS stated that he had only had one extramarital relationship, other than that with MEDLAR, during his marriage to his wife.

(In violation of Title 18, United States Code, Section 1001.)

COUNT SEVENTEEN

(SCHEME TO FALSIFY, CONCEAL, AND COVER UP A MATERIAL FACT BY TRICK, SCHEME, AND DEVICE)

1. The paragraphs contained in "Background to All Counts" of the Indictment and those contained in Counts One through Sixteen of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about January 7, 1993, in the District of Columbia, during an interview with Special Agents of the Federal Bureau of Investigation, in a matter within the jurisdiction of departments and agencies of the United States, that is, the Federal Bureau of Investigation and the United States Department of Justice, CISNEROS knowingly and willfully, falsified, concealed. and covered up, by means of trick, scheme, and device, material facts, in that CISNEROS:

COUNTACT OF CONCEALMENT
SeventeenFailed to disclose to the FBI that, on or about December 31, 1992, he had directed defendants GARCIA and ROSALES, then-employees of his company, Cisneros Communications, not to inform the FBI about either the fact that he was making payments to MEDLAR or the amounts of such payments to MEDLAR.

(In Violation of Title 18, United States Code, Section 1001.)

COUNT EIGHTEEN

(OBSTRUCTION OF JUSTICE)

1. The paragraphs contained in "Background To All Counts" of the Indictment and those contained in Counts One through Seventeen of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about December 15, 1992, CISNEROS submitted to representatives of the Clinton-Gore Transition Team the completed and executed SF-86 and the Supplement to the SF-86 (collectively, "the SF-86").

3. The SF-86 provided, among other things, the following:

The U.S. Government has conducted background investigations for over 50 years. It does this to establish that applicants for or incumbents in sensitive positions, either employed by the Government or working for the Government under contract, are eligible for a required security clearance or for performing sensitive duties. We use the information from this form primarily as the basis for an investigation that will be used to determine your eligibility for a national security position.

4. In accordance with the terms of the SF-86, the SF-86 was subsequently utilized by the Federal Bureau of Investigation as a primary basis for its background investigation of CISNEROS.

5. Among other things, the SF-86 was utilized by the Federal Bureau of Investigation to identify questions to ask CISNEROS during his interviews, to identify leads, and to compile information to be included in its final background investigation report.

6. As part of the FBI background investigation of CISNEROS, which was conducted as part of one of the FBI's lawful, authorized, governmental functions, CISNEROS was interviewed by a Special Agent of the FBI on December 30, 1992.

7. As part of the FBI background investigation of CISNEROS, which was conducted as part of one of the FBI's lawful, authorized, governmental functions, CISNEROS was subsequently interviewed by Special Agents of the FBI on January 7, 1993.

8. CISNEROS's final background report was based substantially upon statements and representations made to the FBI by CISNEROS during the interviews and in the SF-86.

9. In or about December 1992, pursuant to the MOU, the Executive Orders, the SF-86, and the Department of Justice's statutory and regulatory authority, the Department of Justice Personnel Security Office, Justice Management Division, began the process of adjudicating whether to grant national security clearances to individuals such as CISNEROS who were nominated to serve in high-ranking Clinton Administration positions such as Cabinet Secretaries.

10. In conducting its national security clearance inquiry regarding CISNEROS, the Department of Justice Personnel Security Office relied on the veracity of the statements made by CISNEROS and others during their FBI interviews, which interviews were included in the FBI background report. It also relied on the integrity and accuracy of the statements and representations made by CISNEROS in the SF-86.

11. In January 1993, the Department of Justice Personnel Security Office completed its inquiry regarding CISNEROS and granted CISNEROS a top secret national security clearance. CISNEROS's top secret national security clearance was based upon the information contained in CISNEROS's FBI background report, and principally upon the information that CISNEROS provided to the FBI during his FBI interviews and in the SF-86.

12. In December 1992 and January 1993, in the District of Columbia, CISNEROS unlawfully, knowingly, and willfully did corruptly influence, obstruct, and impede, and endeavor corruptly to influence, obstruct, and impede, the due and proper administration of the law under which a pending proceeding was being had, which pending proceeding was being conducted by the United States Department of Justice Personnel Security Office, Justice Management Division, a component of the United States Department of Justice, a department of the United States, concerning whether to grant CISNEROS a top secret national security clearance, by making and causing to be made, false, fictitious, fraudulent, and misleading statements and representations, and concealing material facts and information, as set forth more fully and underscored in Counts Two through Seventeen of this Indictment.

(In violation of Title 18, United States Code, Sections 1505.)

COUNT NINETEEN

(FALSE, FICTITIOUS, AND FRAUDULENT STATEMENT AND REPRESENTATION ON FEBRUARY 13, 1995)

I. The paragraphs contained in "Background To All Counts" of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about February 13, 1995, ROSALES was interviewed by Special Agents of the Internal Revenue Service in connection with a criminal investigation.

3. Before the interview concluded, ROSALES submitted a sworn written statement to the Special Agents of the IRS, in which he made certain statements concerning CISNEROS.

4. On or about February 13, 1995, in the District of Columbia, in a matter within the jurisdiction of an agency of the United States, that is, the Internal Revenue Service, ROSALES knowingly and willfully, made and used a false writing and statement, which was made under oath, knowing the same to contain a material false, fictitious, and fraudulent statement, in that such writing stated the following: "I never knew of the payments to MEDLAR until I was in D.C. I was surprised when I heard and remember thinking that I didn't know where CISNEROS would get the money from."

(In violation of Title 18, United States Code, Section 1001.)

COUNT TWENTY

(FALSE, FICTITIOUS, AND FRAUDULENT STATEMENT AND REPRESENTATION ON AUGUST 21, 1996)

l. The paragraphs contained in "Background To All Counts" of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about August 21, 1996, ROSALES was interviewed by Special Agents of the Federal Bureau of Investigation in connection with a criminal investigation.

3. On or about August 21, 1996, in the District of Columbia, during the course of that interview, in a matter within the jurisdiction of a department and agency of the United States, that is, the Federal Bureau of Investigation, ROSALES knowingly and willfully, made the following material false, fictitious, and fraudulent statement and representation:

COUNTFALSE, FICTITIOUS, AND FRAUDULENT STATEMENT
TwentyROSALES stated that while he was employed at Cisneros Communications, he was not aware that CISNEROS was making payments to MEDLAR.

(In violation of Title 18, United States Code, Section 1001.)

COUNT TWENTY-ONE

(FALSE, FICTITIOUS, AND FRAUDULENT STATEMENT AND REPRESENTATION ON SEPTEMBER 17, 1996)

l. The paragraphs contained in "Background To All Counts" of the Indictment and within Count One of the Indictment are realleged and incorporated by reference as though fully set forth herein.

2. On or about September 17, 1996, MEDLAR was interviewed by a Special Agent of the Federal Bureau of Investigation in connection with a criminal investigation.

3. On or about September 17, 1996, in the District of Columbia, during the course of the interview with a Special Agent of the Federal Bureau of Investigation, in a matter within the jurisdiction of a department and agency of the United States, that is, the Federal Bureau of Investigation, MEDLAR knowingly and willfully, made the following material false, fictitious, and fraudulent statement and representation:

COUNTFALSE. FICTITIOUS. AND FRAUDULENT STATEMENT
Twenty-OneMEDLAR stated that she had provided to the IRS on May 31, 1995 the original tapes of her recorded conversations with CISNEROS, when, in truth and fact, as she well knew, on May 31, 1995 she furnished copies of those tapes to the IRS.

(In violation of Title 18, United States Code, Section 1001.)

A TRUE BILL:

Dated: December 11, 1997
DAVID M. BARRETT
INDEPENDENT COUNSEL

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