Posted on 02/02/2003 9:03:56 AM PST by Liz
City officials swore they knew of no donors in a law firm that they employed, but later said an omission had created a misstatement.
City Controller Jonathan A. Saidel assured a judge "under penalty of perjury" that he knew of no campaign donations from a Philadelphia law firm - even though the firm was among the nation's top Democratic donors, and its lawyers had given to Saidel's campaigns.
Five days later, on Nov. 29, 1999, Saidel and a top aide to then-Mayor Ed Rendell sent a new letter attempting to correct their first one.
Their words are now at the center of an FBI investigation that produced a wave of grand-jury subpoenas last week.
Saidel's attorney said on Friday that the controller had done nothing improper, and that the first letter was written in haste, with no intent to mislead the judge.
The 1999 letters were part of a court battle over whether the firm, Barrack, Rodos & Bacine, should represent the city pension board in a California lawsuit that was likely to produce millions in legal fees.
The judge in that case, wary of the role of campaign money in the awarding of government legal work, had insisted that Philadelphia officials swear that such money had played no role in the hiring of the Barrack firm.
That's what prompted the letter from Saidel, the city's fiscal watchdog and a member of the pension board, along with board Chairman Michael Nadol, who was city finance director.
Their letter assured U.S. District Judge William H. Alsup that pension board members "do not know of campaign contributions made to public officials by any of the [Barrack] lawyers... . Political contributions are never a factor in the selection of counsel and they were not in this case."
The two officials asked the judge to treat their letter as a sworn statement, and said they were submitting it "under penalty of perjury under the laws of the United States of America."
In fact, Saidel's campaign fund had previously received $2,500 from Barrack lawyers - $1,000 from Leonard Barrack in 1997, and $1,500 from Sheldon Albert in 1995, records show. Some Saidel campaign records from the 1990s were not readily available last week.
Barrack is an expert class-action lawyer and is a former national Democratic finance chairman. Albert, who handled the 1999 case for the firm, was city solicitor under Mayor Frank L. Rizzo in the 1970s.
Albert, Barrack, Saidel and Nadol are all mentioned in the subpoenas delivered last week. Federal agents fanned out Tuesday evening and served as many as 50 grand-jury subpoenas at the homes of pension board members and others, seeking any documents related to the pension board's hiring of the Barrack firm and the letters written in the 1999 case.
The Nov. 24 letter was written just days before Saidel left on a trip to Israel, said his attorney, James Eisenhower 3d.
In the second letter, sent Nov. 29, Saidel and Nadol told Alsup that the first letter had a sentence "incorrectly typed." They said it should have read: "Except as otherwise disclosed to the court, the board and its members do not know of campaign contributions" from Barrack firm lawyers.
Eisenhower said the second letter noted that Alsup had previously received news articles about the Barrack firm's campaign donations - articles submitted by rival lawyers vying with Barrack for the role of lead counsel in the class-action suit.
"There is ample public record that Len Barrack is a major contributor," said Eisenhower, a former federal prosecutor.
It was not clear, however, whether the judge was ever told that Barrack lawyers had helped Saidel campaigns. Eisenhower said he was trying to determine what the judge had been told.
He noted that Leonard Barrack "was not a major financial supporter of Jonathan Saidel."
The $2,500 from Barrack lawyers was part of a Saidel campaign fund that totaled hundreds of thousands of dollars as the popular Democrat easily won reelection in 1993 and 1997.
Barrack, by then a nationally known Democratic fund-raiser and an overnight guest in the Clinton White House, joined Saidel at a campaign kickoff for the controller in late 1996.
Members of the Barrack firm gave an additional $3,500 to Saidel's fund in 2000 and 2001, after the letter to the judge.
Neither Barrack nor Nadol, the former Rendell appointee who now works for a private financial firm in Philadelphia, could be reached for comment on Friday. Two days earlier, Barrack said his many contributions to Democratic candidates, including Saidel, had nothing to do with his legal work.
"I personally support scores of candidates all over the country," he said, stressing that he would cooperate fully with the federal investigation.
He said his firm had no financial tie to Saidel or any other public official mentioned on the federal subpoenas. Saidel has said the same.
The Nov. 24, 1999, letter to Alsup arrived during a dogfight among some of the nation's top securities litigators over who would head up the class-action suit against Network Associates, a California maker of antivirus software whose stock price had crashed after it admitted bookkeeping problems.
Millions were at stake. Although all stockholders in class-action cases typically share in the settlements, the lead lawyers usually get the largest share of legal fees.
The Barrack firm would win that role if the judge agreed to let the Philadelphia pension board take the lead in the case. The board had been a major investor in Network Associates.
In an order on Nov. 12, 1999, Alsup said the pension fund could take the lead - provided it considered competing proposals from other law firms to make sure it was getting "the highest quality representation at the lowest price."
But Nadol and Saidel balked. In their Nov. 24 letter, they said they were satisfied with the Barrack firm's work and did not want to waste time or money looking for other lawyers.
And on Dec. 2, 1999, rather than heed the judge's call for competitive bidding, the city took the unusual step of declining the lead role in the case.
Last week, Gov. Rendell defended the city's reluctance to put the legal work up for bid. Through spokesman Ken Snyder, Rendell pointed out that a higher court later rejected Alsup's effort to have the city consider other law firms.
The FBI's visits last week left many mystified about the inquiry's focus.
"I don't get it," said David Volpe, Saidel's former top deputy and his representative on the pension board in 1999.
A federal investigation into Saidel's public and private roles began more than a year ago, after The Inquirer reported that the controller had sought city work for two law firms that paid him $500,000 over a number of years to drum up business. Saidel said he had done nothing improper.
Jeffrey M. Lindy, a former assistant U.S. attorney here, said that making a false statement to a federal judge could be viewed as a crime. But he said a quick correction, such as the one submitted by Saidel and Nadol, also might be significant.
"You can cure a false statement," Lindy said. "It happens all the time in IRS cases... . It's too easy to make mistakes."
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Contact Inquirer staff writer Joseph Tanfani at 215-854-2684 or jtanfani@phillynews.com. Inquirer staff writers Cynthia Burton, Nathan Gorenstein and Joseph A. Slobodzian contributed to this article.
FRegards,
Just what is your definition of sky?...dirt?
Clintoonian mind's I'm sure are in a ponder wondering.
I can't think of anybody else!!
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