Monday, June 01, 2015

How Did Denny Hastert Get Rich Enough to Pay Millions to an Accuser?

By John Fund — May 31, 2015

Denny Hastert — the former House speaker now indicted for violating regulations on bank withdrawals that were originally meant to snare drug dealers — was a man of integrity according to his former House colleagues.

By the sketchy standards of Illinois politics, that might well have been true. But his fall from grace should prompt other questions about how a former high-school teacher who held elective office from 1981 to 2007 could leave Congress with a fortune estimated at $4 million to $17 million. When he entered Congress in 1987, he was worth at most $275,000. Hastert was the beneficiary of very lucky land deals while in Congress; and since leaving office, he has earned more than $2 million a year as a lobbyist. That helps explain how he could agree to pay $3.5 million to a former student to cover up an ancient sex-abuse scandal.
I saw him become passionate only once, when he defended earmarks.
Denny Hastert used to visit the Wall Street Journal, where I worked while he was the speaker. He was a bland, utterly conventional supporter of the status quo; his idea of reform was to squelch anyone who disturbed Congress’s usual way of doing business. I saw him become passionate only once, when he defended earmarks — the special projects such as Alaska’s “Bridge to Nowhere” that members dropped at the last minute into conference reports, deliberately leaving no time to debate or amend them. Earmarks reached the staggering level of 15,000 in 2005, and their stench helped cost the GOP control of Congress the next year.
But Hastert was unbowed. “Who knows best where to put a bridge or a highway or a red light in his district?” I recall him bellowing. I responded that the Illinois Department of Transportation came to mind, and we then agreed to disagree.

It wasn’t long after that the Sunlight Foundation reported on just how much Hastert thought himself qualified to steer earmarks back home. The foundation found that Hastert had used a secret trust to join with others and invest in farm land near the proposed route of a new road called the Prairie Parkway. He then helped secure a $207 million earmark for the road. The land, approximately 138 acres, was bought for about $2.1 million in 2004 and later sold for almost $5 million, or a profit of 140 percent. Local land records and congressional disclosure forms never identified Hastert as the co-owner of any of the land in the trust. Hastert turned a $1.3 million investment (his portion of the land holdings) into a $1.8 million profit in less than two years.

Hastert claimed at the time that the land deals had nothing to do with the federal earmark he had secured. “I owned land and I sold it, like millions of people do every day,” he told the Washington Post. Or, as George Washington Plunkitt, the former Tammany Hall leader in New York, once said of someone who made a killing in local land that later became part of a lucrative subway development: “He saw his opportunities and he took ’em.” Plunkitt called such “opportunities” a form of “honest graft.”
It’s no surprise that so many of our “public servants,” by the time they leave office, have accrued enough wealth to act like lords of the manor.
With a federal government so big and so awash in money that anything under $100,000 is routinely considered a rounding error, it’s no surprise that so many of our “public servants,” by the time they leave office, have accrued enough wealth to act like lords of the manor. Take another congressional leader, retiring Senate minority leader Harry Reid, who entered Congress the same year Hastert did and who also has become, while a “public servant,” a millionaire worth between $3 million and $10 million. In his last re-election campaign, Reid explained his wealth by saying, “I did a very good job investing.”

Perhaps, but using some unusual methods. In 2012, Betsy Woodruff reported for National Review Online:
In 2004, the senator made $700,000 off a land deal that was, to say the least, unorthodox. It started in 1998 when he bought a parcel of land with attorney Jay Brown, a close friend whose name has surfaced multiple times in organized-crime investigations and whom one retired FBI agent described as “always a person of interest.” Three years after the purchase, Reid transferred his portion of the property to Patrick Lane LLC, a holding company Brown controlled. But Reid kept putting the property on his financial disclosures, and when the company sold it in 2004, he profited from the deal — a deal on land that he didn’t technically own and that had nearly tripled in value in six years.
Like Hastert, Reid was a king of the congressional earmark process before it was largely shut down amid public outcry in 2011. During the heyday of earmarks, the watchdog group Judicial Watch reported that Reid
sponsored at least $47 million in earmarks that directly benefitted organizations with close ties to one of his sons, Key Reid. . . .
More recently Reid abused his authority to pressure the Department of Homeland Security (DHS) to expedite a $115 million foreign-investor visa deal critical to his son’s casino client. Reid got the DHS to override agency procedures to rush through hundreds of visa applications from foreign nationals who helped fund a Las Vegas hotel and casino that hired Rory Reid to provide legal representation for the project.
All of this self-dealing is a major reason that Americans hold Congress in such low esteem today. It helps explain why GOP presidential candidate Carly Fiorina is bringing audiences to their feet when she cites a recent Rasmussen Reports poll: It’s sad, she says that “82 percent of the American people now believe that we have a professional political class that is more focused on preserving its power and privilege than it is on doing the people’s work.” 

Denny Hastert is now in the clutches of federal prosecutors, and Harry Reid is riding off into the sunset, his misbegotten fortunes intact. But the current occupants are still tarred by their actions. Public cynicism about our elected officials continues to increase. A contributing factor is that when prosecutors do finally act, it’s too often to prosecute the likes of Dennis Hastert for falling into “a financial speed trap,” as David Smith, the former federal prosecutor who once managed asset-forfeiture litigation for the Department of Justice, recently described Hastert’s indictment. Meanwhile, Paul Ryan, the House Ways and Means chairman, has just written the Justice Department asking why it has not prosecuted anyone involved in the two-year old IRS scandal over the targeting of conservative nonprofit groups, despite abundant evidence of flagrant abuse. Ryan isn’t expecting a timely or responsive answer.

When the Founders established a government they hoped would be guided by a blind Justice, I doubt they had in mind our current situation — in which our Justice Department chooses to be blind to abuses.

— John Fund is national-affairs correspondent for National Review Online.

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