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Special Counsel Sought to Investigate Cisneros

By Pierre Thomas and Guy Gugliotta
Washington Post Staff Writers
Wednesday, March 15, 1995; Page A01

Attorney General Janet Reno has concluded that Housing and Urban Development Secretary Henry Cisneros misled the FBI about payments to his former mistress, Linda Medlar. Reno asked a three-judge panel to appoint an independent counsel to determine whether he criminally concealed information or conspired with Medlar to do so.

In court documents released yesterday, Reno said a five-month Justice Department review determined Cisneros told the FBI before his Cabinet confirmation that he had never paid Medlar more than "$2,500 at a time, and no more than $10,000 per year, when in fact, many of his payments were substantially larger, and the yearly totals were between $42,000 and $60,000."

Cisneros told reporters yesterday that he did not intend to resign as HUD secretary, and "although I am disappointed" by Reno's decision, "I . . . affirm once again that I have at no point violated the public's trust."

Cisneros's celebrated affair with Medlar lasted three years in the late 1980s, cost him his job as mayor of San Antonio and threw his political career into a tailspin. Now it threatens to derail his comeback as HUD secretary and further embarrass the Clinton administration, already undergoing independent counsel investigations into the Whitewater scandal and the conduct of former agriculture secretary Mike Espy.

Cisneros's decision to stay at HUD came after a telephone conversation with President Clinton in which he offered to resign: "The secretary said, I don't want to do anything that would hurt you,' " White House press secretary Michael McCurry said.

Clinton "said that would not be necessary, and that they should stick together," McCurry said. "Nothing contained in the attorney general's statement today would have changed the president's determination to nominate Henry Cisneros."

Reno filed her request at the close of business Monday, after a day of intense deliberation over whether to seek the counsel. The three-judge appellate panel unsealed Reno's decision yesterday morning. The court is likely to appoint the counsel within a month.

"Our investigation developed evidence that Secretary Cisneros made false statements to the FBI during an interview conducted as part of his background investigation," Reno wrote, outlining the case to the panel.

An FBI background check is a standard, but critical, procedure in determining whether high-ranking nominees are fit for office. Investigators search not only for criminal behavior, but also try to unearth embarrassing material that could be used as blackmail.

Cisneros told the FBI and Clinton transition officials that he had made payments to Medlar from 1990 to 1992 to compensate her for her inability to obtain a job after their affair became public knowledge in 1988.

FBI officials favored an independent counsel on grounds that any deception violated federal law. During considerable debate in the Justice Department, however, some argued that no criminal violation existed unless Cisneros's false statements were "material" -- relevant to Clinton's decision to appoint him to the Cabinet or the Senate's subsequent decision to confirm him. There was also debate about whether such a narrow issue warranted an independent counsel. Sources familiar with the deliberations said Reno discussed the matter with department officials late Monday afternoon and that it was unclear what her decision might be until she made it.

In the end, Reno concluded that "although not all false statements are material as a matter of law, the materiality of Secretary Cisneros's false statements to the FBI is a close and difficult factual and legal issue that must be resolved by an independent counsel." Reno also said that the independent counsel must determine whether Cisneros and Medlar conspired "to conceal information concerning his payments . . . during the confirmation process."

If the independent counsel finds "materiality" or conspiracy, Cisneros could be indicted on criminal charges.

Reporters called to HUD headquarters yesterday waited nearly an hour until Cisneros appeared briefly with his wife, Mary Alice, beside him. He took no questions, but read a short statement expressing disappointment and saying "I'm hopeful that the investigation will be completed expeditiously. I'm confident the independent counsel will conclude that I did not engage in criminal wrongdoing."

Cisneros said he decided not to resign because he needed to "stay and fight" for HUD at a time when the department is undergoing a full-scale reorganization and trying to fend off efforts by congressional conservatives to abolish the department.

Sen. Lauch Faircloth (R-N.C.), who has introduced a bill to get rid of HUD, said yesterday he hopes to hold hearings on Cisneros's behavior. "When the independent counsel is appointed, I will ask for a meeting in order to determine whether congressional hearings would conflict with an ongoing criminal investigation," he said.

The payments to Medlar first came to light last July, when she filed suit against Cisneros for $256,000, claiming he breached an "oral contract" to pay her $4,000 per month until her teenage daughter graduated from college in 1999.

Medlar said that after the break-up, Cisneros had paid her close to $4,000 per month for more than three years, ending in mid-1993, several months after he became housing secretary. In all, Cisneros gave Medlar $213,000 over 3 1/2 years, records show. He made the last payment in June 1993, after he concluded he no longer could make regular payments on his $148,400 Cabinet secretary's salary.

The Justice Department took an interest in the case after Medlar accepted a $15,000 fee to tell her story on the tabloid television show "Inside Edition," suggesting that Cisneros had "lied" to the FBI about the payments during the background checks. She also provided 14 transcripts of secretly taped conversations with Cisneros.

© Copyright 1995 The Washington Post Company

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