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Reggie helps in case vs. Clinton aide
Source says calls taped as part of plea
Friday, April 22, 2005
By Gordon Russell and Martha Carr
Staff writers

New Orleans media consultant and Democratic Party operative Ray Reggie worked with the FBI to secretly tape phone conversations that are expected to figure in the case against U.S. Sen. Hillary Clinton's former aide David Rosen as he is tried next month on charges of filing false campaign finance reports, according to a source close to the case.

Reggie's cooperation with the federal probe surfaced Thursday as he pleaded guilty to two federal bank fraud charges unrelated to the Rosen case. One of the bank fraud charges cost Hibernia National Bank $3.5 million, prosecutors said.
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Reggie, 43, signed documents essentially conceding his guilt in the bank case in August 2002, yet he was not charged by the government until Feb. 2. In the 30-month gap, Reggie became a government witness in hopes of securing a lesser sentence, the source said.

On Thursday, the New York Sun newspaper, citing court records in the Rosen case, reported that a "mystery witness," described as a Democratic fund-raiser, recorded conversations with Rosen in September 2002. The witness "tried to elicit statements from the former Clinton staffer about financial irregularities involving an August 2000 Hollywood fund-raising event."

The paper also noted that the witness was involved in Clinton's successful Senate campaign in New York and had pleaded guilty to bank fraud.

Reggie's attorney, Mike Ellis, would not confirm whether his client was cooperating in the Rosen case. Rosen's attorney, Paul Sandler of Baltimore, declined to comment. Acting New Orleans U.S. Attorney Jim Letten and David Dugas, U.S. attorney for the Middle District of Louisiana -- where one of Reggie's bank fraud charges originated -- also refused to comment.

A source close to the case confirmed Thursday that at least one phone call between Reggie and Rosen was taped with Reggie's knowledge. Reggie worked on Clinton's campaign alongside Rosen, helping the Democratic candidate raise millions of dollars for her Senate campaign.

Clinton is not considered a target of the probe, which is led by the public integrity section of the Justice Department. No conversations between Reggie and Clinton were recorded, the source said.

Other cases mentioned

The Sun's article, without naming Reggie, attributes to the "mystery witness" several other characteristics that describe him. A November 2004 memo by prosecutor Peter Zeidenberg, for instance, notes that the "CW (confidential witness) is related to an extremely prominent and well-known political figure."

Reggie's sister, Victoria, is married to U.S. Sen. Ted Kennedy, D-Mass. His father, retired Crowley city Judge Edmund Reggie, is a longtime Democratic Party power broker and a close confidant of former Gov. Edwin Edwards.

The documents cited by the Sun suggest the FBI has sought to use Reggie as an informant in other probes as well. In the same memo, prosecutors wrote that the federal investigators wanted to use their witness in an inquiry into "a prominent political figure who may be involved in illegally soliciting foreign nationals to contribute to national political campaigns," the Sun reported.

The FBI also asked the witness to tape calls "with targets of an investigation into alleged political corruption in Louisiana," the newspaper said. The scheme described in the memo involved an unnamed state senator and a "fraudulent contract worth $5 million."

Though Reggie has close ties to former Mayor Marc Morial, whose administration has been under close scrutiny by Letten's office, the Sun makes no mention of Reggie providing information related to that probe.

Hard money, soft money

The Rosen case involves alleged violations of complex federal regulations governing campaign donations -- in particular the distinction between "hard" money, which can be spent directly on behalf of a campaign, and "soft" money, which must be used for more general advocacy.

In brief, the government claims that the Clinton campaign underreported the cost of a lavish, star-studded Hollywood event that Reggie helped plan. The effect was to increase the residual amount of hard money available to the campaign.

Rosen is charged with three counts of filing fictitious reports in connection with the gala, a combination fund-raiser for Hillary Clinton and tribute to outgoing President Clinton. Federal prosecutors allege that Rosen reported the event's cost at $401,419 when it actually cost at least $1.2 million. The event raised more than $1 million, according to the indictment against Rosen.

As the chief finance director for Hillary Clinton's campaign, Rosen was responsible for all planning for the event, according to the indictment. Rosen is also accused of obtaining and delivering a false invoice stating that the cost of a concert staged as part of the event was $200,000, when it actually cost more than $600,000.

The gala's organizers included Hollywood producer Peter Paul, a convicted felon now facing stock fraud charges in New York, and charity fund-raiser Aaron Tonken, who pleaded guilty in 2003 to charges of diverting hundreds of thousands of dollars from donors and underwriters of Hollywood events he organized, including the August 2000 gala.

Paul reportedly has been cooperating with prosecutors.

The indictment comes at a time when Hillary Clinton is considered a potential Democratic presidential candidate in 2008, and faces the prospect of challenges in 2006 for her Senate seat from former New York City Mayor Rudolph Giuliani and New York Gov. George Pataki, both Republicans.

Clinton lawyers have said her Senate campaign committee is fully cooperating with the investigation and that they expect Rosen to be cleared.

Rosen told the confidential witness in the case that although the campaign reported spending $600,000 on the event, "We probably spent a million," according to a transcript of the conversation quoted in the Sun.

In the same conversation, Rosen is quoted as explaining that the cost of the event was a problem, leading to the shifting of funds. "You rarely wanna do 50 cents to raise a dollar," the Sun quoted him as saying. "You have to pay the percentage out of the income. So we would have to move hard to soft. Not the other way around."

Go-to guy

Reggie signed on as a fund-raiser and media strategist for Clinton's 2000 Senate campaign after years spent forging a close relationship with her husband.

A fast-rising star in Democratic fund-raising circles, Reggie volunteered in Bill Clinton's first bid for the White House in 1992. After Clinton became president, the two struck up a pen-pal relationship and eventually became friends.

Reggie was invited to state dinners, traveled with the president on Air Force One, and was among a select group allowed to spend the night at the White House.

Reggie was also Clinton's go-to guy whenever the president visited New Orleans. He regularly planned high-end fund-raising dinners, accompanied the president to fancy restaurants, and once persuaded the owners of Snug Harbor to make room for the ex-president in a sold-out show.

Family tradition

Reggie is a native of Crowley, an Acadiana hamlet that has produced an improbable number of Louisiana's best-known political figures, among them Edwards, former U.S. Sen. John Breaux, former U.S. Rep. Chris John and New Orleans lawyer and dealmaker William Broadhurst.

Reggie's father, Edmund Reggie, forged a close relationship with John F. Kennedy after persuading Louisiana's delegation to support Kennedy's failed bid to be the Democratic vice presidential nominee in 1956, four years before Kennedy won the presidency. In 1992, the marriage of Ray Reggie's sister to Ted Kennedy cemented the bonds between the two families.

Like his son, Edmund Reggie was the target of federal prosecutors. In 1993, he was fined $30,000 and sentenced to four months of home confinement after he was convicted on one count and pleaded no contest to another count of misusing bank funds.

Though Edmund Reggie is the only member of the family to have held political office, both he and Ray Reggie have acquired reputations as talented political fixers.

Two years ago, for instance, the Kennedy family asked Edmund Reggie to broker an agreement between warring political factions so green space resulting from the Big Dig project in Boston could be dedicated as a park honoring the Kennedy matriarch, Rose Fitzgerald Kennedy. The senior Reggie moved into a Boston apartment to get the deal done.

In addition to his work on campaigns for both Clintons, Ray Reggie worked on former Vice President Al Gore's 2000 presidential bid and helped raise money for U.S. Sen. John Kerry, a close friend who was the Democratic presidential nominee in 2004. Locally, he worked on the mayoral campaigns of Marc Morial and former New Orleans Police Superintendent Richard Pennington.

Legal about-face

In federal court Thursday, Reggie reversed earlier innocent pleas and pleaded guilty to one count of bank fraud and one count of bank fraud conspiracy involving three banks: Union Planters Bank in Baton Rouge, and Whitney National Bank and Hibernia National Bank in New Orleans.

U.S. District Judge Carl Barbier set sentencing for Oct. 26.

The conspiracy count carries up to five years in prison and a $250,000 fine, and the bank fraud charge carries up to 30 years in prison and a $1 million fine.

Though written terms of the plea agreement were not available Thursday, Ellis, Reggie's lawyer, said prosecutors have agreed in principle to "cap" Reggie's sentence at a maximum of five years in prison. The sentence could be far less -- depending, presumably, on the level of his cooperation.

Though judges tend to accept such agreements, they are not bound by them. Barbier, who was nominated by President Clinton, is free to ignore the agreement and use his discretion in sentencing Reggie, Ellis said.

According to a summary of the bank fraud case filed by Letten's office Thursday, Reggie's legal troubles date to 1999, when he began making "cross deposits" into business accounts at Union Planters and Whitney banks, artificially inflating the balances in both accounts.

At one point, the Union Planters account "was left with a negative balance of $4,230,793," the summary says. However, Reggie later made that bank whole, the summary says, in part by taking out a $6 million line of credit from Hibernia.

As collateral for the Hibernia loan, Reggie provided a contract worth $18.5 million that his company, Media Direct, had allegedly signed with the U.S. Census Bureau. But the contract, and other supporting documentation, was bogus, prosecutors say.

Some of the documents were signed under an assumed name by Lisa Blanchard, who worked for Reggie, the summary says. Blanchard purported to be a "contracting officer" at the Census Bureau named "Michelle A. Dinkins."

Blanchard has not been charged. Eddie Castaing, her lawyer, said he had no comment.

Hibernia lost "approximately $3.5 million as a result of the loan to Reggie," the case summary said.

. . . . . . .

Frank Donze contributed to this article.

Gordon Russell can be reached at grussell@timespicayune.com or (504) 826-3307. Martha Carr can be reached at mcarr@timespicayune.com or (504) 826-3306.