A New Jersey man who has complained repeatedly about the Federal Home Loan Bank Board, the federal agency that regulates savings and loan institutions, has been investigated by private detectives hired by the agency's outside law firm.
The detectives were hired in June shortly after William Juliano, a New Jersey real estate developer, threatened to sue the bank board and its subsidiary -- the Federal Asset Disposition Association, or FADA. Juliano, who has sent letters to public officials and picketed the bank board, has charged he was unfairly refused information on how to bid for property the government has inherited from failed S&Ls and is trying to sell.
Rep. James J. Florio, (D-N.J.), whose staff has been investigating complaints about FADA from Juliano and other executives across the country, last week asked the Justice Department to probe FADA's business practices.
"To spend federal dollars to investigate private citizens who are simply unhappy with the performance of an agency owned by the federal government is simply intolerable," Florio said in a letter to Attorney General Edwin Meese III. "In addition, it is possible that criminal activity has occurred, supported by federal funds."
Florio said he is most disturbed by "FADA's response to consumers, and the use of federal funds to violate the privacy of those who complain about FADA's performance." He said he is concerned that FADA is trying to discredit critics rather than address their complaints.
Bank board chairman M. Danny Wall has asked the board's inspector general -- the agency watchdog -- to investigate FADA's handling of Juliano. Said bank board spokesman Karl Hoyle, "We understand the seriousness of the allegations, and we're taking them seriously."
Florio's request for a Justice Department investigation is the latest in a series of complaints about FADA, which was created in 1985 to market the many billions of dollars in property owned by S&Ls that failed and were taken over by the government. Complaints from developers that FADA is riddled with conflicts of interest in selling the property have spurred several lawmakers to examine the organization.
FADA president Roslyn Payne confirmed that detectives were hired to investigate Juliano but said her understanding was that the detectives were hired only to check public records to find out what was available on Juliano's financial condition and any previous suits. Lawyers for FADA said such checks are common when preparing for an anticipated lawsuit.
The controversy began last summer, when Juliano took out newspaper ads seeking other developers to join in a class action suit against FADA. Juliano and others have contended that they suspect FADA provides friends with information on how to bid on government-owned property but withholds the same information from the general public.
In anticipation of a lawsuit, FADA enlisted the services of Robert Strauss, a partner in the D.C. law firm Akin, Gump, Strauss, Hauer & Feld. Strauss, former chairman of the Democratic Party, said he is a friend of FADA's chief counsel, Robert Axley.
The law firm in turn hired The Fairfax Group of Annandale, an investigative agency that caters to governments and Fortune 500 companies. The Fairfax Group then hired the Acumen Investigation & Protection Services of Haddonfield, N.J.
The law firm and The Fairfax Group say they only authorized Acumen to do a search of public documents, such as court records, to get information on Juliano.
But Juliano says that an Acumen detective telephoned him and posed as an American Express executive selling credit cards to try to get information about Juliano's credit history and family.
In addition, Juliano contends that an Acumen detective telephoned his neighbor, posing as an employe of a delivery service and asking how one could determine if Juliano were home.
Acumen general manager Katherine Hailey would not comment on the allegations.
Last month New Jersey police discovered that someone had broken into Juliano's office in the middle of the night, apparently to try to remove eavesdropping equipment that had been placed in the ceiling, according to Florio and New Jersey police. The police said they are still investigating the incident.
Florio asked the Justice Department to investigate Akin, Gump's role, if any, in the incidents and to determine if any criminal or civil laws were broken. Neither Florio nor Juliano has alleged that Acumen is responsible for the break-in.
A partner in Akin Gump, Michael Madigan, said Friday that he finds Florio's request "outrageous."
Of Juliano he said, "Some wacko claiming that he's been burglarized is outrageous. What proof does he have? To claim that a burglary in September is related to a telephone call in June or July is absurd."
"I didn't know about any break-ins and I did not and would not authorize them," said Madigan. He said his law firm is conducting an internal investigation into the allegations