The Michigan Militia Corps'

Weekly Update
Internet Edition

Volume 5, Issue 35

Week of October 5, 1998

House Approves $100M for Anti-Saddam Groups

The House overwhelmingly approved a bill that would provide $100 million in direct military aid to Iraqi groups whose aim is to overthrow Saddam Hussein. By a vote of 360-38, the bill authorizes $97 million in direct aid, including military equipment and training, to Iraqi dissidents. However, it does not call for direct intervention by U.S. troops. It also allocates $2 million to radio and TV broadcasts designed to undermine Hussein, according to the Washington Times. President Clinton said he does not oppose the bill, which is expected to go before the Senate this week.

New bill will allow police to "steal cash" from travelers, warns Libertarian Party

WASHINGTON, DC -- It may soon be a crime to get on a plane or drive down the highway in America with too much money, the Libertarian Party warned today.

That's because a bill before the Senate Judiciary Committee would allow police to assume that anyone traveling with more than $10,000 in cash in so-called "drug transit areas" is a drug dealer -- and confiscate all their money.

"Tourists and business travelers, take note: You may soon have to fear being mugged by your own government," warned Steve Dasbach, Libertarian Party national director.

"Your government wants the power to label you a criminal and seize all your money with no proof that you've committed a crime. In other words, your government is about to give police a license to steal."

The bill in question -- the Drug Currency Forfeitures Act -- is sponsored by Senators Max Cleland (D-GA) and Charles Grassley (R-IA). The senators say their bill is designed to "hit drug dealers where it hurts the most: In the wallet."

The bill allows police to seize cash from any American traveling through a drug transit area -- defined as an airport, highway, or port of entry -- and would force citizens to go to court to try to get the money back.

"Accusations without proof? Punishments without trials? Welcome to America in 1998," said Dasbach. "With this bill, two U.S. Senators want to gut the Constitution -- and strip away fundamental rights like the presumption of innocence and the right to carry money without having to explain your actions to the government."

One of the most repugnant provisions of the bill, Dasbach said, is that people who want their money back will face a "rebuttable presumption" of guilt. In other words, they most prove they are innocent.

"Senator Cleland complained that courts frequently throw out money-laundering cases for lack of evidence, so his innovative solution was to stop requiring evidence -- and simply allow police to steal your money," Dasbach said. "Instead of the government proving that you are guilty, you must prove that you are innocent."

But why would anyone carry around $10,000 in cash, if they're not a drug dealer?

"It's none of the government's business -- period," Dasbach said. "The idea that any American should have to explain to the police where their money came from is offensive, and the idea that the police can pocket your money if they don't like your answers is downright criminal."

In previous well-documented cases, he noted, the government has seized money from a business traveler who had planned major cash purchases for his company, and from a foreign-born American who was bringing cash to relatives in another country. In both cases, the courts ruled that the seizure was improper, and the victims got most of their money back from the government.

This bill would reverse those kinds of cases, Dasbach predicted, by essentially creating a new type of crime: Driving While Rich and Flying While Affluent -- all in the name of the War on Drugs.

"What the Drug Currency Forfeitures Act really shows is that once again, the War on Drugs has become an all-purpose excuse for a War on Your Rights, such as the right to a fair trial and the right to get on an airplane or drive down the highway without having to explain yourself to a policeman," Dasbach said. "If Americans don't put a stop to this, the politicians will not only steal all our money -- they will also steal all our Constitutional rights."

White House Accused of Data Theft

WASHINGTON -- A Republican-led House subcommittee accused President Clinton and the White House of "theft of government property" Wednesday in transferring data to the Democratic Party for fund-raising purposes.

Seeking to gain the attention of impeachment investigators, a stinging report written by Republican congressional staffers detailed evidence they contend conflicts with some of the White House's earlier assertions about the use of a $1.7 million taxpayer-financed database created inside the executive mansion.

"The committee issues this report to expose the evidence of the president's possible involvement in the theft of government property and his abuse of power," said the report by the investigative subcommittee of the House Government Reform and Oversight Committee.

The report cites testimony from top Democratic fund-raisers who acknowledged they got names and addresses from the White House Database on a regular basis and used them to solicit donations or plan White House events for donors

"Richard Sullivan, the DNC finance director, himself testified that he obtained lists of attendance at White House CEO lunches and the White House Economic Conference and that he used those lists to raise money," the report states.

Originally, presidential aides insisted White House staff and the database were used only for official purposes and none of it was misused for fund raising. Federal law prohibits the use of government resources for fund raising or other political or private purposes. Those who misuse such resources can be charged with stealing government resources.

White House officials said Wednesday the DNC was only authorized to use its data for invitation lists, and if information was used for anything else that was inappropriate.

"This White House, like the Bush and Reagan White House, keeps names and addresses of our supporters, and tries to ensure that they are included in White House events," spokesman Barry Toiv said.

Toiv charged the subcommittee report was "irresponsible and deceptive and highly partisan" and excluded "information that contradicts" its allegations.

The report directly accused Clinton of knowing about and instigating the misuse of federal resources for political purposes.

Among the examples it cited were internal White House documents indicating that the president instructed that information he obtained from official White House e-mail or other sources be sent to his political campaign.

"Quite frequently the president will ask that certain names and addresses be added to the supporter file. ... Attached is a list of supporter file information," a 1994 White House memo said, asking that the information be forwarded to a separate campaign database Clinton instructed be built in Arkansas.

White House officials said there was nothing wrong with Clinton forwarding to his campaign, for example, business cards he had received at the White House and said there was no evidence he sent wholesale portions of government data.

The report also cites a document showing Clinton authorized a job description for a top aide, Marsha Scott, that included a responsibility for "insuring ... supporters were involved in fund-raising activities" such as the controversial White House coffees.

Presidential aides defended Scott's job description, noting political appointees aren't forbidden by law from doing political work provided they don't solicit donations.

The subcommittee also referred White House deputy counsel Cheryl Mills to the Justice Department for criminal investigation, alleging that in 1996 she located two subpoenaed documents suggesting that Clinton and his wife, Hillary, sanctioned the use of te White House database for political purposes but withheld them from the committee for months -- until after the 1996 election. It also accused her of lying about aspects of the database to the committee

Ms. Mills has said she did not believe the documents were responsive to the subpoena when she first reviewed them and sought the advice of her superiors who agreed. She denies any effort to mislead investigators. And the top Democrat on the Government Reform committee wrote the Justice Department saying he disagreed with the GOP referral, saying Ms. Mills may have made a mistake but there was no evidence of willful obstruction.

The release of the report is part of a broader effort by Republicans in Congress to make public information that they think should be considered in the impeachment inquiry the House is set to approve Thursday.

Rep. David McIntosh, R-Ind., said Wednesday it was "premature" to predict whether his findings would be incorporated into the House Judiciary Committee's impeachment investigation on the president's relationship with Monica Lewinsky.

"This isn't about sex. This is about abusing his official privilege for personal and political gain," McIntosh said.

The inquiry into the database, which contained the names of individuals who have contact with the White House or president, has been conducted over the last two years without the same fanfare of higher profile investigations of Ms. Lewinsky, Whitewater, FBI files and the White House travel office firings.

Nonetheless, the investigators said they found White House documents with official government data -- including holiday card lists -- at the DNC and the Clinton campaign. White House officials said some of the list were accidentally sent by vendors.

Disney opposes porn bill

Lobbyists for the Walt Disney Co. joined an effort to stop a popular child protection Internet bill because it would keep them from marketing adult movies on line, congressional sources say.

The Child On-Line Protection Act, which restricts sexually explicit material on the Internet, sailed unanimously through the Senate in July as an amendment to a Commerce appropriations bill, and appeared headed for an easy ride in the House.

Then the bill ran into an unusual coalition of opponents, including lobbyists from Disney, America Online, Microsoft and the Motion Picture Association of America, House and Senate staffers said.

Although Disney is mainly noted for classics such as "Snow White" and recent releases such as "The Lion King" and "The Little Mermaid," its Touchstone and Miramax subsidiaries market R-rated films that include intense violence and strong sexual content.

Because Disney and MPAA feared COLPA would forbid them from marketing such films on line, the lobbyists stalled the bill through high-level meetings last week with House members, said David Crane, legislative assistant for Sen. Daniel Coats, Indiana Republican.

Mr. Coats, who retires this term, has been working for a year to pass the legislation, which he sees as a crowning achievement of his 18-year congressional career. The legislation may end up as a last-minute addition to another bill.

COLPA will be offered on the House floor for passage today as a freestanding bill, but its chances do not look good.

"By stalling this, it'll be extremely difficult to get this bill accomplished," Mr. Crane said. "The Appropriations Committee is jettisoning items, not taking new ones on. But if the leadership says we want this bill, it will go in. The bottom line is: This is money vs. families."

Mr. Coats' options, he says, are to either offer COLPA as an amendment to the Democratic sponsored Internet Tax Freedom Act, which prevents states or cities or counties from taxing Internet commerce, or to get it passed on voice vote, an unlikely possibility during a week when Congress is struggling to pass many bills.

"Sen. Coats will use every right as a senator to get this bill in," Mr. Crane said. "If this is the last hour of the last day of the 105th Congress, he will be here on the floor to see this bill is signed into law and if not, he will make sure the Internet tax moratorium legislation is dead."

Disney, AOL and Microsoft representatives refused comment on their lobbying efforts.

COLPA was widely popular with both political parties because it limited commercial distribution of pornography to children. But the Motion Picture Association of America saw problems with the legislation because COLPA could apply to commercial film studios.

"We want it defined to apply to those whose business is to produce material harmful to minors," which means full-time pornographers, MPAA spokesman Richard Taylor said.

Disney said in a statement it "has been working with members of Congress to improve the language" of the measure, adding that the company "is extremely concerned that children be protected from exposure to inappropriate content on the Internet."

MPAA spokesman Rich Taylor said: "We have concerns that the current language is too broad. We support changes to the language that would target and impact commercial adult Web sites."

There was no immediate comment from Microsoft.

Court Says Federal Reserve Shielded

WASHINGTON -- The Supreme Court today let stand rulings that shield the Federal Reserve from being sued over contract disputes.

The justices, without comment, rejected the appeal of a North Carolina research institute that sought to collect another $284,000 for work it did for the Fed.

Lower courts ruled that the government agency is entitled to sovereign immunity and cannot be sued in federal court without its consent.

The Fed, which wields great influence over the national economy by serving as a central bank and controlling short-term interest rates, hired the Research Triangle Institute in 1988 to conduct a survey of small-business financing. The contract price was nearly $573,000 but later was amended to almost $616,000.

Citing extra work added by the agency, the institute later sought another $284,000 for its work, but its request was rejected. It sued the Fed in 1996, seeking to be paid for unforeseen costs.

The institute was organized by three universities -- North Carolina, North Carolina State and Duke -- and is based in Research Triangle Park, N.C.

U.S. District Judge Frank Bullock Jr. threw out the lawsuit, and the 4th U.S. Circuit Court of Appeals upheld that dismissal last December. The Fed's board of governors "cannot be sued in contract in federal court," the appeals court ruled after finding no intent by Congress to waive the board's sovereign immunity.

In the appeal acted on today, lawyers for the institute argued that while the board enjoys such immunity from lawsuits over its regulatory acts or personal injuries, it should not be shielded from lawsuits stemming from its contractual obligations.

The case is Research Triangle Institute vs. Board of Governors, 97-1759.

Who rescued whom?

Last month's $3.6 billion bailout of the high-flying hedge fund Long-Term Capital Management by an array of leading financial institutions has raised some sticky conflict-of-interest questions for the firms and the executives that work for them.

Because of the secrecy and lack of regulation surrounding the hedge fund industry, some experts expect the answers may not be available any time soon.

The question: If financial executives had their own money and their firm's money invested in a hedge fund, whose interests are they protecting when they gallop in like white knights to save the day?

Were they saving the global economy by keeping the fund afloat or were they protecting their own pocketbooks?

A good example of this tricky question is what's going on at Merrill Lynch & Co., which was closely involved in financing and setting up the 4-year-old Long-Term Capital fund.

Besides providing a mountain of loans to Long-Term Capital, Merrill and its executives also had personal investments in the hedge fund.

The firm reported that 123 executives -- including Chairman David Komansky who had $800,000 invested -- had $22 million in the fund. The company had $2 million, as well, down from an initial $15 million investment.

Critics are wondering whether Merrill's deep ties to Long-Term Capital affected any of its decisions in granting credit to the fund or in kicking in $300 million toward the private bailout.

On the surface, at least, they seem to think there may be a conflict of interest.

"It's clear there will be lawsuits alleging that the directors breached their fiduciary duties to shareholders," said Frank Partnoy, a former Wall Street investment banker and law professor at the University of San Diego. "Shareholders should and will sue. Based on the facts I have seen they have a good argument."

But the firm, the nation's biggest investment bank, strongly disagrees.

"This assertion is ridiculous and unfounded," said Merrill Lynch spokesman Tim Gilles. "No decision was ever made that was adverse to the interest of Merrill shareholders. "Indeed, Merrill's shareholders have not lost a dime in connection with Long-Term Capital Management."

Merrill Lynch was not the only Wall Street firm with a personal connection to Long-Term Capital. But it is the one, so far, that is the most revealing about its ties to the hedge fund, an unregulated investment club for wealthy individuals and institutions.

James Cayne, Bear Stearns Cos. chief executive, and Donald Marron, PaineWebber Group Inc.'s chairman and chief executive, also were among the executives with personal investments in Long-Term Capital. Neither firms participated in the bailout and there's no word on whether they ever lent any money to the fund. Spokespersons for the two firms refused to comment.

No one is suggesting Merrill Lynch did anything illegal. But they are saying the firm probably should have been a bit wiser in avoiding anything that could even be perceived as a conflict -- giving the appearance that decisions might be made especially to protect the personal interests of the firm and its executives.

"That just seems radioactive," said Jack Broughton, a professor of finance at Chapman University near Santa Ana, Calif. "It's a scenario that should never play out. There would definitely be that aroma."

Critics also question whether the personal stakes made it easier for Long-Term Capital to get loans, which helped it to make its gigantic bets that almost brought down the house and rocked the foundations of an already fragile global economy.

Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan, among others, have suggested that some of the blame for Long-Term Capital's losses lies with its lenders.

Although regulators, politicians and others wonder whether institutions were too liberal and didn't properly assess the risks when they eagerly made loans to Long-Term Capital, no one can say whether the hedge fund received attractive terms or favorable treatment from Merrill Lynch.

Merrill Lynch has said that its $1.4 billion in exposure to Long-Term Capital is fully secured by cash, U.S. Treasury and agency securities. And Gilles denies that the firm treated Long-Term Capital differently than any other client to which it provided money.

"The same credit and risk management requirements and procedures were applied to Long-Term Capital Management as to any other hedge fund or large institutional client," Gilles said. Moreover, the dual relationship in which Merrill was an investor along with its executives in Long-Term Capital as well as being a lender was not unusual for the company or the industry, he said.

A spokesman for the Securities and Exchange Commission, which regulates investment firms, refused to comment on the issue. The Securities Industry Association, an industry trade group, agreed with Merrill's assertion that there was nothing improper or unusual about a securities firm lending money to a client in which it had a personal stake.

"There's is nothing that prohibits firms from doing that," said Stuart Kaswell, general counsel at the industry trade group. "It seems to me like putting your money where your mouth is. As part of its myriad of investments, a firm like Merrill makes investments like that all the time."

But according to Joseph F. Sinkey, a finance professor at the Terry College of business at the University of Georgia in Athens: "The point is whether or not the proper controls and procedures were followed in the organization. In my mind that is the important thing."

Dr. James Weber, an associate professor and director of the Beard Center for Leadership in Ethics at Duquesne University in Pittsburgh, said many corporations would prohibit any kind of activity that gives the perception of impropriety or that might place the company in legal jeopardy.

"It's a riot. It's as if an officer at a bank had taken a personal stake in a real estate project then caused the bank to loan money to the developer," said a securities lawyer and academic, who did not want to be quoted by name for fear of jeopardizing his relationship with Merrill and other firms.

Gilles declined to say whether Merrill Lynch had any similar dual relations -- as lender and investor -- with any other investment fund. The firm's total exposure to about 300 hedge-fund groups was $2.08 billion -- most of it secured. That's less than Chase Manhattan Corp.'s $3.2 billion but more than Bankers Trust's $875 million.

The unprecedented rescue Sept. 23 of Long-Term Capital was orchestrated by the Federal Reserve Bank of New York after the hedge fund faced crushing losses from bets that went sour after Russia devalued its currency and defaulted on its bonds -- sending a shiver through global financial markets.

Regulators were worried that the hedge fund would be forced to dump its gigantic portfolio of bonds on the market if it wasn't rescued, causing prices to fall, interest rates to rise, and rattling investor confidence all around the world. A recipe for economic chaos.

Merrill was one of 71 financial institutions that channeled money to Long-Term Capital to magnify its $2.2 billion capital base into a $90 billion investment portfolio. Those assets were involved in bets representing $1.25 trillion.

Officials Discuss Financial Crises


WASHINGTON -- Other major countries joined the United States today in expressing the urgent need to move quickly to combat a growing financial crisis before it topples more nations.

British Chancellor of the Exchequer Gordon Brown and Canadian Finance Minister Paul Martin said they would use meetings today of the world's seven richest industrial countries to push various reform ideas.

"As we meet here in Washington, we are conscious that more than a quarter of the world is in recession, that the second largest economy in the world, Japan, is in recession and that the social casualties of the Asian crisis are rising in numbers," Brown told reporters before the start of the Group of Seven meetings.

"There is a growing consensus on what needs to be done," Martin said.

Both Martin and Brown gave preliminary endorsements to a proposal unveiled Friday by the United States to allow the International Monetary Fund to provide emergency loans more quickly for countries threatened with the rapid loss of money from panicked investors trying to flee.

Martin called this idea a "crisis prevention fund." He said it had merit as did ideas being put forth by his country, Britain and other nations to reform IMF operating procedures and strengthen regulatory supervision.

Serving as hosts for today's meetings at the historic Blair House across the street from the White House were Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan.

The talks by the Group of Seven nations -- the United States, Japan, Germany, Britain, France, Canada and Italy -- were setting the stage for wider discussions at the annual meetings of the 182-nation IMF and World Bank which get under way Sunday.

In advance of the G-7 discussions, Rubin met separately with Japanese Finance Minister Kiichi Miyazawa. Rubin told reporters on Friday that the United States still believed that aggressive actions on the part of Japanese authorities to deal with weak banks and jump-start its economy were key to resolving the crisis that began in Thailand 15 months ago.

In remarks at the White House on Friday, Clinton suggested that the IMF provide emergency loans more quickly to countries threatened by the economic meltdowns that sent investors fleeing from three Asian nations last year and from Russia this summer.

Critics have attacked the IMF for pursing programs that so far have failed to contain the contagion that now threatens Latin America. The IMF provided more than $100 billion in bailout funds for Thailand, South Korea and Russia.

Rubin met Friday with Brazilian Finance Minister Pedro Malan, who has confirmed reports that Brazil is negotiating for a multibillion-dollar loan package from the IMF, the World Bank and private creditors.

There are expectations a package of $30 billion could be announced after Sunday's presidential election in Brazil as the United States works with the IMF to keep the largest economy in Latin America from becoming the latest victim of the crisis, which began in Thailand 15 months ago.

Rubin told reporters that the United States would be pushing a number of proposals to the finance ministers, but aides cautioned that some of the efforts were still in the preliminary stage and not likely to be approved during the IMF annual meetings.

"This country has got to lead," Clinton said. "We've got to be aggressive. We've got to stay on the balls of our feet."

He scolded Congress for what he called the "inexcusable" delay in approving the administration's request for $18 billion to replenish the IMF's depleted coffers.

Clinton said he would participate in discussions that Rubin and Greenspan will hold Monday with finance officials from 22 nations, both rich and developing countries, that will be held on the fringes of the IMF-World Bank sessions.

Thomas Sowell
Judicial review

ONE OF THE UNFORTUNATE CONSEQUENCES of the media's preoccupation with presidential sex is that many people will never see the woods for the trees. The whole pattern of obstruction of justice that was used in the Lewinsky episode had been used before by both Clintons, time and again, going all the way back to their days in Arkansas.

Whether the particular issue at a given time was money, sex or power, the pattern has been the same. And it has been the same for Hillary Clinton as for Bill Clinton.

Just as Bill Clinton said that he "never had sex with that woman," so Hillary wrote in her newspaper column in January 1996 that she had been cleared of any involvement in the massive frauds that led to the collapse of the Madison Guaranty Savings & Loan Association in Arkansas. To add emphasis, she said that a "prominent Republican, former U.S. Attorney Jay Stephens, headed the inquiry" by the Pillsbury law firm that supposedly exonerated her.

Several months of Senate committee investigations, however, revealed an entirely different story. Jay Stephens not only did not head the inquiry, he had nothing to do with writing the report and refused even to review it, since he knew that doing so would make it look as if he were involved with it or approved it. "I refused to do that," he said, "because I was not involved."

Mr. Stephens was not involved because the White House went ballistic at the outset, when it was first suggested that he might be involved. The billing records of the law firm confirm that Stephens was quickly phased out of this investigation that Hillary Clinton claimed he "headed."

Two other members of the same law firm wrote reports and one of them said: "I don't think our reports exonerated anybody of anything." Their whole purpose was to determine whether it made economic sense to launch a civil lawsuit against Madison Guaranty, not to determine which individuals might be guilty or innocent.

In the same column, Hillary Clinton said that she did "minimal legal work on Madison." Yet records showed that she had dozens of meetings with the people for whom she did this "minimal" legal work.

More records might have revealed even more information, but Hillary had many of those records destroyed at the Rose Law Firm, where she was a partner. Other records were stolen from the same firm by Webster Hubbell and turned over to White House lawyer Vincent Foster. This is the same Vincent Foster who committed suicide on the day when the FBI began seizing documents in Arkansas.

This is the same Vincent Foster whose office was ransacked for hours after his death, despite requests from law enforcement officials that nothing be touched until they got there. This is the same Vincent Foster whose fingerprints were found -- along with Hillary's -- on billing records that got "lost" in the White House for two years after they were subpoenaed.

In all of this, we see the same utter disregard for the truth and the same pattern of destroying evidence and obstructing justice that most people have heard about only through the Monica Lewinsky scandal. Consider this column the "family hour" account of how the Clintons operate.

These would be mere incidental facts about individuals if those individuals did not have and wield the enormous power and influence that come with living in the White House. Their clout has been used to corrupt the processes of government for their own personal benefit. Such abuses of power are not just their "private lives" or "family problems that are nobody else's business."

The question is not even what the Clintons do or do not deserve. Ultimately, the issue is not what their past has been like, but what this country's future will be like if holders of powers can use their positions to put themselves above the law.

The fact that nobody is above the law has given the United States and a relative handful of other countries the freedom that makes us different from the corrupt despotisms that have been the norm over most of the planet and for most of history.

It isn't fashionable to talk about the blessings of this country in this politically correct time of complaint and condemnation. But, if we ever forget these blessings -- or let them erode because we have become fat, dumb and happy -- we will learn the hard way what blessings we once had, but only after it is too late.

Our Government at Work!

Ron Paul's Freedom Reports,

According to the Knight-Ridder News Service, the inscription on the metal bands used by the U.S. Department of the Interior to tag migratory birds has been changed. The bands used to bear the address of the Washington Biological Survey, abbreviated: Wash. Biol. Surv. until the agency received the following letter from an Arkansas camper:

"Dear Sirs:

While camping last week I shot one of your birds. I think it was a crow. I followed the cooking instructions on the leg tag and I want to tell you, it was horrible."

The bands are now marked Fish and Wildlife Service.

If you would like to submit an editorial, commentary, or news story from your perspective on something you have been keeping an eye on, please e-mail it to and it will be evaluated for entrance. Thanks.

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