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  • Key stories: Cisneros Investigation

  •   Counsel Has Previous HUD Connections

    David M. Barrett
    David M. Barrett, the independent counsel investigating Henry Cisneros.
    By Dan Morgan
    Washington Post Staff Writer
    Monday, August 30, 1999; Page A17

    David M. Barrett, the independent counsel prosecuting former housing secretary Henry Cisneros, brings a unique perspective to the job: Before Barrett was selected four years ago to investigate Cisneros, his own dealings with high-ranking officials at the Department of Housing and Urban Development were scrutinized by an independent counsel looking into a Reagan administration scandal.

    No wrongdoing was ever alleged against Barrett, 62, a Republican activist who has had a varied career as a lobbyist, lawyer and Washington deal-maker. But that brush with prosecutors is part of a background that includes a number of twists and turns unusual for an independent counsel.

    It includes close associations with at least two former HUD officials who were convicted in the HUD scandals of the 1980s. Barrett himself was questioned by prosecutors as part of the investigation.

    Years later, after Barrett was chosen to look into Cisneros's statements about whether he lied to the FBI about payments to his ex-mistress, Linda Jones, a company Barrett set up to receive revenue from a Washington television tower came under scrutiny by another independent counsel, this one investigating the late Commerce Secretary Ronald H. Brown. Barrett did not report on his financial disclosure form that he was an officer and director of that company in 1994.

    Although the independent counsel statute expired June 30, Barrett's mandate to complete his $9 million investigation of Cisneros continues under terms of that law. Cisneros's trial on 18 felony charges that he lied to the FBI and the Clinton presidential transition team about payments to his ex-mistress is now scheduled for September. In July, Barrett agreed to drop criminal charges against two former Cisneros aides.

    While Barrett's friends praise his probity, critics say his selection underscores the mysterious--and, some say, erratic--way that independent counsels have been selected by a special judicial panel.

    The 1978 law responded to concerns that the attorney general would always be perceived as biased when investigating the president and high administration officials. As a result, critics of the counsel selection process say, it is imperative that those holding the uniquely sensitive and powerful position be free of the slightest trace of partisan taint, personal conflicts or background questions.

    Barrett "would not seem to most people to be an 'A' choice," said Charles Lewis of the Center for Public Integrity. "Why he was chosen is frankly mystifying." Barrett's history of being "deeply enmeshed in the housing contract culture," Lewis said, makes for a "peculiar juxtaposition" with his current role.

    Friends in Barrett's circle of Washington judges and lawyers bridle at any criticism of his ethics or qualifications. "He has a wonderful sense of decency and integrity that you don't find in this town very often," said Washington lawyer Robert J. Higgins.

    Barrett declined to be interviewed, and Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit, who has presided over the judicial selection panel for more than six years, did not respond to written questions about the Barrett appointment.

    In a short letter to The Washington Post, Barrett said that "the screening process [by the judges] included thorough inquiry into my past work, including all matters involving HUD."

    At Senate hearings in April, Sentelle defended his screening system, saying he and his fellow judges "cross-examine [candidates] pretty thoroughly" and have eliminated those with "something that would have caused a bad appearance."

    But neither of the two independent counsels who oversaw the investigation of abuses at HUD, Arlin M. Adams and Larry D. Thompson, could recall being contacted by Sentelle about the Barrett appointment.

    "There's no way of knowing what due diligence they [the judges] do," said Georgetown University law professor Julie O'Sullivan, an expert on the counsel law.

    Barrett is a lawyer with a significantly different profile than many of his predecessors--without either extensive experience in criminal prosecution and defense or an illustrious title in his resume such as former federal judge.

    Instead, Barrett spent much of his career as a commercial lawyer with an eye for business opportunities, often involving HUD. When appointed, Barrett was a registered lobbyist for a large manufactured-housing company.

    Barrett said in his letter to The Post that he had no contact with HUD officials after his appointment and gave up clients with matters before HUD "at some personal sacrifice." During the year after his selection, while he was launching the Cisneros inquiry, Barrett reported earning $302,793 in outside legal fees and received more than $1 million in stock options from a Pennsylvania environmental company.

    After brief stints as an assistant U.S. attorney in Washington and county attorney in Indiana, he made a failed bid for a U.S. House seat from Indiana in 1968. Barrett subsequently labored as a GOP fund-raiser, organizer and activist, volunteering for Lawyers for Reagan in 1980. The group's chairman, Edward L. Weidenfeld, remembers that Barrett was "politically seasoned and seemed to know a lot of people."

    The Reagan administration seriously considered Barrett for a federal judgeship, but he "could not afford to take it," according to Fred Fielding, Ronald Reagan's White House counsel. Instead, Barrett threw himself into lobbying, law and business, concentrating heavily on HUD. In 1988, he was well-heeled enough to lay out $500,000 as a one-time premium for a life insurance policy, according to his financial disclosure reports.

    Information gathered during the investigation of Reagan administration HUD Secretary Samuel R. Pierce Jr., along with inquiries by congressional committees and the HUD inspector general, shows that Barrett was part of an interconnected group of lobbyists, consultants, and current and former HUD officials who benefited from high-level access to HUD at a time when corruption in the department was rampant.

    Rep. Tom Lantos (D-Calif.), who conducted hearings into the HUD scandal in 1989-90, denounced Barrett's 1995 appointment. He "clearly benefited from influence-peddling at HUD during the Reagan administration," said Lantos, who likened his selection to "appointing the well-fed fox to investigate missing hens at the chicken coop."

    At the Reagan housing department, Barrett was acquainted with Pierce's executive assistant, Lance H. Wilson, who had worked with him in Lawyers for Reagan and on the Reagan transition team.

    Barrett also befriended Thomas T. Demery, a former Michigan real estate operator and GOP fund-raiser who became federal housing commissioner in 1986.

    Demery told the independent counsel for Pierce that Barrett helped him get the job. Once Demery was situated at HUD, phone logs and other records show, Barrett was in frequent contact with him, organizing meetings, meals, parties and out-of-town travel. In a 1987 memo to GOP presidential candidate Pat Robertson, Demery said Barrett could provide fund-raising help "with the Republican machine."

    Two months later, Barrett's partner in two Tulsa housing developments wrote to Demery's office seeking an easing of HUD rules for an apartment building that was seeking federal subsidies.

    During questioning by a House committee, Demery initially denied that he had ever discussed the Tulsa projects with Barrett. But the committee introduced a May 1987 entry from Demery's phone log, noting that Barrett had called "re: Tulsa Hsg Auth . . . needs your help . . . A letter from him is in your box."

    Demery told the committee he did "not remember this particular situation."

    A week after the Barrett message, however, Demery's office sent a letter to Barrett's Oklahoma partner, George Carnes, approving the loosened rules. Carnes told HUD auditors in 1988 that he "needed Barrett's financial backing" and that Barrett was "well-connected in Washington," though he insisted that Barrett never provided special help to him at HUD.

    The mortgage company that made HUD-subsidized loans on the Oklahoma properties later pleaded guilty to concealing illegal payments to Wilson, who by then had left HUD, for his help in obtaining the loans. The illegal "finder's fees" involving the Oklahoma properties were featured prominently in the Pierce independent counsel's report released last October, well after Barrett had become the Cisneros independent counsel. Barrett's name was not mentioned in the report.

    Demery also figured in another HUD decision that benefited a client of Barrett's, according to the 1990 report of Rep. Lantos's committee. Demery's appointment schedule showed that he met in May 1987 with Wilson and a developer seeking HUD subsidies for a project in St. Louis. Two months later, the House report said, Demery allowed the project to proceed, despite objections from local housing authorities that the area was oversaturated with HUD-backed housing.

    A 1989 HUD audit of the project revealed that the developer paid Barrett's law firm $83,400 in 1987. Later that year, Barrett wrote a $40,000 check to Wilson for "HUD-related work," according to the Lantos report.

    Wilson invoked the Fifth Amendment rather than testify before the Lantos committee and declined to be interviewed for this article. A lawyer friend of Barrett's said the $40,000 payment was a private transaction between his law firm and Wilson, and noted that the independent counsel looked at the transaction and took no action.

    Wilson and Demery were convicted on HUD-related charges separate from their dealings with Barrett. Wilson's conviction was reversed on appeal. Demery received probation.

    Prosecutors for the Pierce independent counsel questioned Barrett for about an hour about his contacts with Demery and others, and also subpoenaed records of some of his clients, sources said. "It was my very clear impression that they viewed Dave's conduct in all respects as not inappropriate," said his lawyer at the time, Mark Tuohey.

    Soon after Barrett took office in 1995, a company in which he was involved was drawn into an investigation by an independent counsel probing the business dealings of the late Commerce Secretary Brown.

    Barrett set up Silverbar Communications Inc. in Delaware in 1994, and the company's annual report lists him and a law client, Fort Worth financier John A. Freeman Jr., as the sole officers and directors.

    In late 1994, Freeman--who had been a top official of a bankrupt Texas savings and loan--was involved in a complex series of transactions that ended with Silverbar taking over a note from the Resolution Trust Co. that gave the company the right to revenue from the Channel 50 television tower in Washington.

    Prosecutors came across Silverbar and Freeman when they were probing the business activities of Nolanda S. Hill, Brown's onetime business partner and former president of the company that owned Channel 50. They wanted to know if Hill or Brown had a hidden interest in the TV tower.

    When Barrett learned Silverbar was under investigation, he demanded that his name be removed from corporate papers, according to a friend. An attorney for Freeman said nothing unlawful was ever alleged about Freeman or Silverbar. Barrett reported on his federal financial disclosure form for 1994 that he received more than $5,000 in legal fees from Freeman that year. But he did not disclose that he was a director of Silverbar, as the statement he filed with the U.S. Office of Government Ethics appears to require.

    A friend said the apparent oversight occurred because Barrett had no financial interest in Silverbar and considered his involvement with it "de minimis."

    "Dave Barrett is a good, decent guy," he added. "If there are some chinks in his armor they are de minimis."

    © 1999 The Washington Post Company

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