Former attorney general Richard G. Kleindienst describes the incidents that resulted in his indictment Tuesday as a perfectly honest deal between a lawyer and his client.
Back in 1976, the former top legal official of the Nixon administration used the telephone to introduce Teamsters Union President Frank Fitzsimmons to then-California insurance promoter Joseph Hauser. What he did, court papers filed there revealed, was call Fitzsimmons, an old friend, and ask that the union award millions of dollars in its insurance contracts to a Hauser firm.
In return, Kleindienst received a $250,000 legal fee that he split with his partners.
That fee has become a large source of embarrassment to Keindienst because, like an unwanted piece of flypaper, it has clung to the former White House official, prompting various state and federal investigations and tying him to what investigators describe as a multimillion-dollar insurance swindle engineered by Hauser.
Kleindienst has repeatedly denied any wrongdoing. But his role in the affair again took center stage when a Maricopa County grand jury indicted him late Tuesday on 14 perjury counts related to the complicated insurance deal.
Specifically, the indictment charges that Kleindienst committed perjury before an Arizona State Bar committee probing his role in the Hauser affair. The indictment cites 14 instances where Kleindienst allegedly lied to investigators about what he knew concerning Hauser's financial manipulations.
The extent of Kleindienst's knowledge about Hauser has been a central question in the tangled matter for nearly six years. The state bar had spent almost a year investigating Kleindienst. Officials recommended in January that he be suspended from practicing law for one year for unethical conduct and for allegedly lying before a U.S. District Court in Washington.
The alleged misstatement made by Kleindienst to the U.S. District Court concerned his denial that he had suggested that funds from an Arizona insurance company should be placed out of state so that insurance officials here couldn't freeze them.
The issue of whether Kleindienst suggested that the funds be transferred first surfaced in an Arizona civil suit brought against him, Hauser and others in 1977. That case involved Arizona's Family Provider Insurance Co., which lost $1.75 million when assets from the firm were transferred to another company that Hauser controlled through an illegal dividend arrangement, according to papers filed in the suit.
Shortly after Family Provider obtained the funds from the Teamsters Union Central States Health and Welfare Fund, Hauser allegedly diverted the money to a parent company he controlled, the suit said.
When state officials threatened to revoke Family Provider's insurance license because the money was supposed to be kept in an unencumbered reserve fund, Hauser, Kleindienst and others gave assurance that the money would be returned to Family Provider, according to the suit.
The money eventually was transferred back. But unknown to state officials, the funds were pledged for collateral in a separate deal involving another company called American Financial Corp., the suit said. Kleindienst has denied in court papers knowing that the Family Provider funds were already encumbered when they were returned to the company.
In the Arizona civil law suit, Kleindienst, Hauser and several others were accused of "wanton, willful and malicious" conduct that caused the $1.75 million financial loss to Family Provider.
Kleindienst and the other defendants reached an out-of-court settlement with Arizona insurance officials when prosecutors were preparing to take a second sworn statement from a key witness, James Evans, the general counsel of American Financial.
Court records indicated authorities were preparing to question Evans about statements he made to a Senate investigator. Evans reportedly told the investigator that Kleindienst told Evans in a telephone conversation that the Family Provider funds were unencumbered.