|In a career knotted with family ties, Rep. William Jefferson has long been hounded by ethics questions|
Sunday, November 19, 2006
By Gordon Russell - NOLA.com
Two weeks ago, when U.S. Rep. William Jefferson ran first in a field of 13 candidates but was forced into a runoff for the first time since his 1990 election, he spoke directly about the cloud hanging over his campaign: a sprawling federal probe into whether the congressman accepted bribes.
"It's been a long time and a whole lot of struggle, but I can look you in the eye and tell you I am innocent of any unproven allegations," Jefferson told supporters on election night. "And that's all they are, unproven allegations. I ask you to trust me on 26 years of service, not 18 or 19 months of rumors."
Jefferson has asked voters to look past the federal probe and focus on his entire career in public service, though accusations that he skates close to the ethical edge long preceded his current problems. They date to the very outset of his political career in the late 1970s, when Dutch Morial, then trying to become New Orleans' first African-American mayor, dubbed the aspiring public official "Dollar Bill" Jefferson.
The tag might not have stuck but for recurring questions regarding Jefferson's integrity. The congressman's business dealings and those of his family members have run a broad gamut -- including state-supported nonprofits, real estate ventures, school uniform sales and dialysis clinics -- and have sparked controversy time and again. Despite the wide variety of the pursuits, the common denominator has been the entanglement of Jefferson's legislative agenda with his and his relatives' business interests.
"Nothing improper has ever been found in the congressman's dealings on any of these issues," said Jefferson's spokeswoman, Melanie Roussell. "He has done a great deal of good in this district, and he will continue to do that."
Jefferson's major problem heading into the runoff remains that he's the stated target of an investigation centering on a telecommunications deal involving a Kentucky businessman seeking to enter the market in Nigeria. Already, the probe has yielded two guilty pleas: one from the businessman, who admitted paying $400,000 to a company controlled by Jefferson's family, and the other from a former aide, who acknowledged helping to set the deal in motion.
Investigators also taped Jefferson telling an investor to give him $100,000 to bribe a Nigerian official, according to a federal affidavit. The FBI found $90,000 of the money, all of it in marked bills, in the freezer of Jefferson's Capitol Hill home.
Revelations like those spawned the large field of challengers, nearly all of whom said the investigation has hurt the New Orleans area at a time it needs effective advocates in Washington the most. The proof: House Democrats removed Jefferson from the powerful Ways and Means Committee.
In his defense, Jefferson notes the probe has lasted 20 months and has yet to result in charges against him. He says that at some point he will deliver an "honest explanation" for the refrigerated money. For now, he has been urging voters to remember that he, like anyone else, is entitled to the presumption of innocence.
Family firm is born
It was the late 1970s, and Jefferson's firm was among several that helped challenge a rule on behalf of Morial, then a judge, that said judges had to step down before running for other offices. While most of the lawyers worked for free -- it was considered a civil rights matter -- Jefferson hounded Morial for payment.
Four years later in 1982, when Jefferson, by then a state senator, unsuccessfully challenged Morial for mayor but forced the incumbent into a runoff, an irate Morial began using the "Dollar Bill" nickname at every opportunity.
About the same time, Jefferson launched one of his earliest ventures, in the rent-to-own appliance business. that was, like others that would follow, a joint project with several siblings, in this case brothers Mose and Bennie and sister Betty, a former School Board member who is now a city assessor. Through Jefferson Interests, a company they founded, the group acquired four REMCO stores starting in the early 1980s, after Jefferson had joined the Legislature.
Some called the business predatory. In 1986, Rudy Lombard, one of Jefferson's opponents in his second bid for mayor, noted in debates that some public-housing tenants in Algiers late on payments had complained of being "harassed and intimidated" by REMCO officials.
Lombard also ripped Jefferson for sponsoring a bill that would have allowed theft charges to be filed against renters who did not return appliances on time. Jefferson denied sponsoring such a bill at first, but the next day he conceded he had when reporters confronted him with the evidence. The bill never passed.
Jefferson Interests was out of the rent-to-own business by 1990, Jefferson said. These days, it's essentially defunct, Roussell said. It has nonetheless attracted the interest of federal investigators: Nigerian officials said recently that the FBI had asked them to help investigate Mose, Bennie and Archie Jefferson, as well as the firm.
Though it's no longer in operation, Jefferson Interests has served as a conduit for transfers of money among the congressman and his siblings. In 1996, for instance, the congressman reported on annual disclosure forms that he had loaned between $500,000 and $1 million to the group. In 2003, he reported receiving payment of at least $100,000 from the company. His latest filing, in May, said the firm still owes him $50,000. Roussell said Jefferson had merely used the firm's accounts as a mechanism to loan money to his siblings.
Long list of public clients
During his career, Jefferson has been dogged by critics who took note of the long list of public contracts landed by the law firm he helped found, then known as Jefferson, Bryan & Gray.
Jefferson had to sell his share of the firm, now known as Bryan and Jupiter, when he entered Congress in 1990. The firm still has not paid him that stake, partner Trevor Bryan said, one whose value Jefferson lists at between $250,000 and $500,000.
Though Jefferson says he has no direct continuing financial interest in the firm's success, its associations with public clients have continued, and Jefferson and allies of his have helped steer work to the firm since his departure.
Some of the firm's relationships go back decades. Since 1977, the firm has represented the Orleans Parish School Board on various matters, including bond work similar to those Jefferson has criticized his runoff opponent, state Rep. Karen Carter, for taking. Jefferson said Friday that most of the bond work he did was outside Louisiana.
The law firm also took on other work for the board, acting as plaintiff in a broad asbestos lawsuit and as defense counsel on other matters.
Jefferson also served as the School Board's floor leader in the Legislature at the same time his firm was under contract to the board.
Some of the firm's School Board work came during the time his sister, Betty, and a close friend, Carl Robinson, were board members. Those relationships had nothing to do with Jefferson receiving contracts for School Board work, Roussell said.
While the firm had other government contracts -- it landed bond work for the Regional Transit Authority in the late 1980s, for instance, and did a variety of work for the state attorney general -- its School Board work continued until 2005, when then-Superintendent Tony Amato fired it.
The week after Amato sent the pink slip, the City Council, whose budget chairwoman was then-Jefferson protege Renee Gill Pratt, hired Bryan and Jupiter to rewrite a section of the city code covering taxis and limousines. That work is still ongoing.
Jefferson's relationship with his old firm got the attention of ethics watchdogs in 1993 when it was reported that the congressman had arranged a meeting between the firm's members and top officials at the Treasury Department. Jefferson sought to reverse a decision by the Resolution Trust Corp. to stop giving work to the firm, which still owed Jefferson money.
At the time, Center for Public Integrity director Charles Lewis said Jefferson's intervention "gives the appearance that he is using his public office to achieve private gain."
Jefferson called the assertion "ludicrous," saying the firm's success or failure would have no impact on what it owed him, giving him no financial stake in landing the firm contracts.
Strong ties to Southern
Of the controversies kindled by the public work Jefferson's firm has done, none burned brighter than those ignited by its work for Southern University -- a relationship further tangled by Jefferson's deep ties to the Southern system.
Jefferson and his wife, Andrea, are both Southern alumni -- the couple met in the late 1960s, when he was student body president and she was "Miss Southern."
Andrea Jefferson has worked within Southern's framework for years: She was hired three years ago as the system's assistant vice president for development, for which she is paid an annual salary of $72,100. The job was created for her as part of the settlement of a lawsuit she filed in 2001; she also received a lump sum of $50,000.
She had sued Southern University at New Orleans after then-chancellor Joseph Bouie demoted her from a top administrative position she took at the school after resigning from Southern's Board of Trustees. She had previously jumped to the Board of Trustees from a high-level academic post at SUNO.
Bouie was demoted a year after sacking Andrea Jefferson, a punishment he blamed on his refusal "to participate in political nepotism."
During the latter part of Jefferson's 11-year tenure as a state senator, meanwhile, Southern hired his firm to handle a long-running desegregation case. The arrangement raised eyebrows because Jefferson also sat on the Senate's Finance Committee, which controlled Southern's financing. Despite criticism, Jefferson never recused himself from voting on Southern's appropriations.
The desegregation case arose after then-Gov. Buddy Roemer launched an effort to merge the state's university systems, which Jefferson saw as a meddlesome scheme that could rob Southern of its identity and autonomy.
Roemer suggested Jefferson was just protecting a fiefdom.
"To have a law firm get paid large sums of money to represent an institution whose shape is being discussed by you as an elected representative is very dangerous stuff," Roemer said in a recent interview. "In many legislative bodies, that would have been considered out of bounds, and you would have had to step back from either the debate or the financial relationship. It just smacked to me of not being the proper way to conduct business."
Roussell countered that Southern never pleaded its case directly to the Senate panel. Rather, the university system gave its budget to the state Board of Regents, she said, which in turn submitted it to the governor, who eventually incorporated it into his own budget.
While legislators still exercised power over Southern's budget, Jefferson has said his votes were never influenced by his work for the system. He also noted that he did the work at a 20 percent discount and that the state Ethics Board ruled the arrangement was allowed.
"It was the congressman's position, and still is, that there was no conflict," Roussell said.
Friends, family at the wheel
In the federal probe into his Nigerian business dealings, Jefferson is recorded on tape telling a witness cooperating with investigators that he wanted to keep his involvement quiet. "I'm in the shadows, behind the curtain," he said, according to a federal affidavit.
While Jefferson was referring to a specific telecommunications deal, the preference he expressed is consistent with the background role he has taken in various endeavors involving family members and allies.
Earlier this year, a flap ensued over the use of 40 vehicles donated to the region after Hurricane Katrina by DaimlerChrysler, which called on Reps. Bobby Jindal and Jefferson to dole out 20 apiece. Jindal sent all of his allotment to public agencies.
Jefferson allocated 16 of the vehicles to the New Orleans City Council. Each member received two vehicles -- with the exception of Gill Pratt, Jefferson's former legislative aide, who ended up with four.
Jefferson acknowledges that he contacted Gill Pratt about the automaker's offer, but he said he had no other involvement, though one of his brothers wound up driving one of the vehicles.
Though DaimlerChrysler intended for the cars to be used by public agencies, Gill Pratt told her colleagues they were to be donated to nonprofits chosen by council members.
Gill Pratt steered two vehicles to Orleans Metropolitan Housing Development Corp., a nonprofit whose president is Mose Jefferson, the congressman's brother and Gill Pratt's longtime companion. Two more went to Care Unlimited, an organization with similarly close ties to the Jefferson family and one to which Gill Pratt, during more than a decade as a state representative, had funneled millions of dollars in taxpayer money.
Mose Jefferson wound up behind the wheel of a $30,000 Dodge pickup. Gill Pratt, meanwhile, after losing a re-election bid in May, wound up with a job at Care Unlimited, where one of the perks was the use of a $28,000 Dodge Durango sport utility vehicle that she had steered to the group. It was the same donated car she had driven for months after the storm in her role as a city councilwoman.
Roussell said Jefferson's role in the matter was extremely limited. DaimlerChrysler asked him to get the cars to the city, she said, and he contacted Gill Pratt because he had her phone number and because she was chairwoman of the council's budget committee.
Roussell said she was not sure whether the congressman was aware that his brother wound up with one of the cars, which were returned to the city after a public outcry.
"He just did what DaimlerChrysler asked him to do, which was to put them in touch with someone at the city level," Roussell said.
Agencies net public money
Gill Pratt's use of a car intended to help hurricane victims focused attention on the intertwining of the interests of members of the Jefferson family with nonprofits they controlled and financed with taxpayer money.
All told, Gill Pratt and her eventual replacement in the Legislature -- Rep. Jalila Jefferson-Bullock, one of the congressman's five daughters -- have earmarked more than $8 million for Care Unlimited, Orleans Metropolitan Housing and two other nonprofits with close ties to the family during the past 12 years. Those two organizations are Central City Adult Education, which was founded by Betty Jefferson, and New Orleans Drug Education Intervention Center, whose directors include Richard Chambers, president of Jefferson's political organization the Progressive Democrats, and Carolyn Gill-Jefferson, sister-in-law to the congressman and until recently a judge in Civil District Court.
It's difficult to find concrete evidence of the nonprofits' impact -- or of their existence. For instance, New Orleans Drug Education and Care Unlimited are both housed in an eight-unit building at 3313 S. Saratoga St. owned by Mose Jefferson that also contains a taxpayer-financed satellite office for Jefferson-Bullock. But someone strolling by would have no way of divining the groups were located inside.
Of the four charities, only Orleans Metropolitan Housing is listed in the phone book. Central City Adult Education's status is unclear, as it has not received public money for several years. While it's difficult to determine precisely what taxpayers have gotten for the money sent to the nonprofits, Louisiana law requires every nonprofit that received state financing to submit to an annual audit of its books by an accountant of its choice.
The audits don't necessarily shed much light on a group's activities. Each nonprofit, for instance, reports spending most of its state allocation on salaries and "contractual services." The recipients are not listed.
One line item is less subject to interpretation: rent, which has often gone to Mose Jefferson or another entity associated with the family.
Mose Jefferson purchased the South Saratoga Street building from Orleans Metropolitan Housing -- the nonprofit over which he presides -- for $10,000, the same amount the group paid for the property, using public money, in 1992. When Mose Jefferson bought it, the complex was bringing in at least five times that sale price each year in rents, records show. In other words, he was able to buy the building outright for less than three months' rent.
The building was producing at least $4,250 in rents per month from taxpayers. Gill Pratt kept a taxpayer-financed City Council office in the building at a cost of $1,800 per month. Jefferson-Bullock's legislative office yielded her uncle $650 per month. Care Unlimited paid about $1,200 monthly for office space, while New Orleans Drug Education paid about $600, records show.
The Jefferson stable of nonprofits is not unique: Many other urban legislators have created organizations run by associates to which they funnel money and from which the public might not see many results. But he helped create the system. The Urban Affairs funds date to the mid-1980s, when Gov. Edwin Edwards created them as part of a deal with the Black Caucus, of which Jefferson was a leader.
"It was a matter of caucus members saying they never got their social programs funded," Jefferson recalled. "This was a way to fund child care, senior programs, that sort of thing."
Jefferson said he never asked any of his relatives to set up or get involved with nonprofits. And though several of the charities tied to his family date to his tenure in the Legislature, Jefferson said his family wasn't involved in some of the groups in their infancy.
For instance, he said Orleans Metropolitan Housing was originally run by a Central City "housing lady" named Lois Martin.
Roussell added that Jefferson "did not tell his family members to go set up a nonprofit so you can take advantage of this money we just passed in the Senate. These funds were set up to help people in urban communities, and that's what they do."
Spat over school uniforms
Jefferson also played a bit role in another brouhaha after parents claimed they were pressured to buy school uniforms from a company with ties to his brother Mose.
Back in 1989, when the Orleans Parish School Board voted to encourage students to wear uniforms -- state law initially banned requiring them -- school principals were likewise urged to make arrangements with specific vendors.
One uniform supplier that succeeded in landing a number of deals was a company called Statewide Inc. Soon after, several parents complained they were being pushed by principals to buy from Statewide.
At the time, Betty Jefferson was a member of the School Board, while Statewide's attorney was Carolyn Gill, who would later marry Bennie Jefferson and become a judge.
Mose and Betty Jefferson both denied rumors that Mose had any relationship with the firm. But then the California company that supplied the uniforms to Statewide sued over an unpaid debt and named Mose Jefferson as a defendant.
Mose Jefferson then acknowledged he had signed paperwork on the company's behalf, something he said he did as a favor to Richard Chambers, Statewide's founder, whom he described as a friend with credit problems.
Though at least one school principal, Dolores Berquist, said Mose Jefferson had visited her campus hawking Statewide's products, he denied any financial stake in the firm.
The next year, Betty Jefferson served on a School Board subcommittee that urged the adoption of a uniform requirement for elementary school students. A few months later, Statewide's assets were seized and auctioned by the Civil Sheriff's Office to settle the lawsuit with its supplier.
There were other ties between the Jefferson family and Chambers. For instance, Chambers has long been the head of the Progressive Democrats, the political organization headed by the congressman and led in the field by Mose Jefferson. He is also a director of New Orleans Drug Education Intervention Center, one of the nonprofit groups based in Mose Jefferson's building.
Chambers also landed a salaried job at the state Department of Insurance that was created with the help of William Jefferson. As a state senator, Jefferson sponsored a bill that created the post of deputy insurance commissioner for minority affairs; the bill also decreed the Senate would have to approve any nominee.
Chambers got the job in September 1988, five months before starting the school-uniform company. The position now pays $102,752 annually, records show.
Jefferson said he sponsored the insurance bill and two similar measures at the behest of the Urban League in order to "give African-Americans a better shot at being involved in the insurance industry."
That Jefferson's legislation wound up creating a job for a person who became a business partner of his brother is a coincidence, Roussell said. "To even attempt to make a connection between some of these things is a stretch," she added.
Growing interest in dialysis
The congressman had a similarly low-profile role in another recent flap: the abortive attempt to enter the dialysis clinic business by three of his siblings and one of his daughters, culminating with the sale of the faltering clinic to an industry leader.
The sale came as the congressman was becoming an increasingly outspoken advocate of legislation coveted by dialysis industry leaders. Among his fans was DaVita Inc., the nation's second-largest dialysis provider, which bought the clinic at 3839 Ulloa St. for between $700,000 and $800,000 in October 2004, company officials said.
The sale came four months after the congressman issued a news release touting a visit to a DaVita clinic on the West Bank that quoted company officials at length on the need for more generous Medicare reimbursements.
A month later, Jefferson announced his support for a bill that would do just that. At the same time, he collected a $2,000 donation from DaVita's political action committee.
There's no evidence that the congressman had a direct role in the clinic or its sale. The deal was spearheaded by Archie Jefferson, a convicted felon and disbarred lawyer and the youngest of Jefferson's three brothers. In short order, Betty and Bennie Jefferson became partners, as did Jamila Jefferson, the congressman's eldest daughter.
Certainly, though, the congressman was aware of the clinic. James Hotard Jr., owner of the building that housed the clinic, said he recalls meeting William Jefferson there on at least two occasions. Hotard said the congressman was "very polite" but that there was no discussion of the purpose of his visit.
Officials from DaVita strenuously defended the purchase. Starting a clinic from scratch typically costs the company at least $1.2 million, said company vice president Greg Hartmann. Although he acknowledged the clinic was not in an ideal location for the company, it was nonetheless well-situated and a good deal at less than $800,000, he said.
Roussell said Jefferson family members lost money on the clinic.
More important, she said, the congressman had no involvement whatsoever in the business or in arranging for its sale. He visited a DaVita clinic shortly before the sale because the company had seven clinics in the 2nd District, Roussell said, and Jefferson wanted to "bring local attention to a national issue."
"The DaVita visit was to highlight his involvement in dialysis legislation," she said, and there was no discussion of his family's clinic.
Roussell added that Jefferson has sponsored bills throughout his career dealing with kidney disease. His interest in the matter was heightened in 2001, when one of his aides, Stephanie Butler, began receiving dialysis. Butler has since had a kidney transplant.
"The congressman has become more involved (in recent years) because he knew what she was going through," she said.
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Gordon Russell can be reached at firstname.lastname@example.org or (504) 826-3347.