The following is based on allegations and purported evidence contained in the US Attorney's indictment, not personal knowledge. Renzi and others named in the indictment are considered by the law to be innocent until proven guilty by a court of law - but that's lawyer-blather for "he's guilty as sin, we just gotta get 12 folks to see what's plain as day."
There are two major conspiracies at the heart of the case against soon-to-be-former Representative Rick "Dick" Renzi: how he stole from his own insurance clients to buy his way into Congress in the first place and then lied repeatedly to try to cover it up, and how he then abused his office to bully legitimate businesses into a shake-down and kick-back land deal to cover his own debts and then lied to cover that up, too.
Continue reading about what the indictment means after the click...
The main evidence against Dick will be the financial transactions tracing the stunningly obvious flow of money from Dick's business to his Congressional campaign, and from his co-conspirator James Sandlin through intermediaries to Dick's personal use. That will be supplemented by the many communications and official statements he and his confederates used to accomplish his frauds and to try to hide them. I wouldn't want to be facing this quality and amount of damning evidence as a defense lawyer, especially since these sorts of records are very difficult to prevent from coming into evidence.
To make matters much, much, much worse, Dick has co-conspirators who will almost certainly cut their own deals in exchange for testifying about the crimes they engaged in with Dick. James W. Sandlin (Dick's erstwhile business partner) and Andrew Beardall (the President and General Council for Dick's insurance company) are sophisticated, educated, propertied men of the world (albeit with incredibly poor judgment, apparently) and there is no way they are going to want to go to prison for a disgraced political lackey for the Bush regime like Dick Renzi.
AZ USA Humetewa has Dick dead to rights. He's completely hosed. He's going to fall hard, fast, and completely.
His corruption and peculations are far seedier and somewhat less flashy than those of a Duke Cunningham, less high-concept than a Jack Abramoff, and less politically motivated than a Tom Delay, but they are every bit as blatant. Yet Dick's crimes are an even greater indictment of our system (as improbable as that may seem) since it took more than 6 years for him to be held to account, despite, as you will see, being completely artless and amateurish in the execution of his crimes.
How Renzi used embezzled money to slime his way into Congress
The FEC has known for a very long time that there was something very wrong about the finances of Renzi's 2002 campaign. They sanctioned him for using more than $400,000 in corporate funds in violation of federal campaign laws. Their investigation has been long-standing and provided a huge red blinking light with klaxons blaring to anyone who cared to notice that there was something deeply wrong with the way Renzi was running his affairs.
It turns out that no only did he illegally use corporate funds to fuel his election to Congress, he stole all that money from his insurance company's customers.
This sordid chapter of RenziGate provide Counts 28 through 32 of the indictment. It comes near the end of the indictment, but it happened first, all the way back during his 2002 campaign for Congress, and it is the most blatant and commonly criminal of his acts.
What he did was clumsily embezzle $400K from his insurance company's trust account (which are premium payments from his clients), transfered those funds to his personal accounts, and then claimed to have personally loaned his campaign the $400K.
This is where the alarm bells should have gone off. Renzi immediately started lying to everyone, the FEC, insurance regulators, and his customers and policy originators, to cover his theft, explain away the defaulting policies, and explain where the money came from. Those many lies are the basis of Counts 33 through 35. The FEC finally pierced all his lies to determine that these funds were actually from a corporation, not personal loan from Renzi, late last year. The obvious question became, if that $400K didn't actually belong to Renzi, who did it belong to? That's when the shit hit the fan and the FBI raided his insurance company to get an answer to that question.
Dick Renzi stole $400K from his customers, lied repeatedly to cover
his theft, and parlayed that money into a Congressional seat. Once he
gained the legitimacy and political clout a seat in Congress afforded
him, he used his influence to hold off investigation of his crimes. He
also found that he had acquired the means with which to shake down the
people who needed his help.
How Renzi parlayed a land swap into almost million dollars of graft
Renzi's first crime was amateurish and blatant. Once he got to Congress he learned quickly how to pull a much more intricate and remunerative grift. First, he sold a half-interest in a closely-held land development shell company to co-owner Sandlin for a million dollars. The value of his interest wasn't a market value - most likely, his interest was worth far, far less. He took $200K up front and promissory note for $800K. That promissory note became the means by which Sandlin and Renzi laundered a direct tit-for-tat political payoff. Basically, Sandlin wrote Renzi a fat IOU in exchange for a half interest in an company at an inflated value, and then passed him an equally fat bribe in exchange for that bogus IOU. The reality is a bit more complex, but this is essence of how Renzi got paid.
If Renzi is able to mount a defense, it will be in the legitimacy of the transaction between Sandlin and Renzi that generated that fat IOU. How Renzi's lawyers might attempt to defend his blatant embezzlement from his insurance company isn't nearly so apparent.
The mechanism by which Sandlin and Renzi were to generate the needed cash to provide both Renzi's bribe and Sandlin's illicit profit was a federal land swap. The federal government will often exchange a valuable property right for other property rights of 'equal value' when there are public policy reasons to do so.
Often the House Natural Resources Committee, on which Renzi sat, would have to approve such swaps. Renzi's role was to ensure that Sandlin's piece of property with a low commercial value was included in a land swap, thus making that land much more valuable than it would otherwise be.
The mark in this grift was a company that owned mineral rights under some federal land in Renzi's district, who were willing to pay well for suitable lands to swap for the surface rights above a big copper deposit they wanted to develop. Renzi's job was to ensure that Sandlin's property would be included in any swap that he would allow to be approved by his committee (the committee gives a lot of deference regarding transactions inside a member's district - a policy that RenziGate highlights as a source of possible corruption). You will hear the phrase, "No Sandlin property, no bill," a lot around this case, I suspect. This is what Renzi allegedly told the mark. It is the smoking gun of Renzi's and Sandlin's stick up.
Sandlin had the investors over a barrel. If they wanted their surface rights to mine their copper, they had to have his patch of dirt: Dick Renzi said so. So they paid through the nose for a patch of dirt, the only use of which was to grow cattle fodder and suck 1/5th of the endangered San Pedro River's annual flow. They paid Sandlin a total of $4.6 million dollars for his critical piece of dirt.
This public value of the Sandline property for water conservation is another point upon which Renzi's lawyers are likely to dwell in his defense. They will surely argue that Renzi was only looking after the public interest by helping to retire agricultural land of little value to avert the threat to one of the few viable riparian areas left in Arizona. That's true, except the part about the public good being the only interest Dick had in the deal; the undisclosed debt owed by Sandlin to Renzi is the undisclosed interest in the deal, and that lack of disclosure is the illegal bit.
One of the great ironies of this case is how Renzi managed to turn one of the few good pieces of public policy he was able to effect as a Congressman into a dirty piece of graft to line his own pockets and those of his crony, Sandlin. An even greater irony is that Renzi was responsible for the exemption of Ft. Huachuca from the requirement to protect the San Pedro River, which helped further endanger that environment. Dick giveth, and Dick taketh away.
Once Sandlin got his payday, he turned right around and paid Renzi's $800K IOU after laundering the money through a title company. The kick-back was complete. Sandlin pocketed a cool $3.8 million and Renzi got to pay his back taxes and keep the wolves from his door. Not a bad grift.
Unfortunately, the pair weren't nearly as scrupulous in covering their tracks and keeping their plan from being glaringly obvious to their mark. No doubt the investors who were held up for $4.6 million will be testifying against Renzi. No doubt it was also they who dropped a dime to the FBI regarding Renzi's grift.
This scheme to extort money, and to cover up the political pay-off in the form of a big $800K IOU for a closely-held business transaction, are the basis for Counts 1 through 26 of the indictment.
This sly grift will certainly get a lot of ink due to Renzi's obvious abuse of power that made it possible, but to my mind the crime more revealing of Renzi's true character is the original scam that got him into office: a slimy embezzlement from his own insurance clients. How terribly seedy, low and common. It has none of the glamor and panache of his later political long con, but it perfectly sums up the kind of man Dick Renzi really is.
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