FBI says Patriot Act used in Vegas strip club corruption probe

Associated Press ^ | 11-04-03

[Brian S]

LAS VEGAS (AP) - The FBI used the USA Patriot Act to obtain financial information about key figures in a political corruption probe centered on striptease club owner Michael Galardi, an agent said.

Investigators used a section of the Patriot Act to get subpoenas for financial documents, said Special Agent Jim Stern, a spokesman for the Las Vegas FBI office.

"It was used appropriately by the FBI and was clearly within the legal parameters of the statute," Stern said.

The Las Vegas Review-Journal reported Tuesday that records were subpoenaed from Galardi, the owner of Jaguars in southern Nevada and Cheetah's in Las Vegas and San Diego; his lobbyist, former Clark County Commissioner Lance Malone; former Commissioner Erin Kenny; County Commission Chairwoman Mary Kincaid-Chauncey; former County Commission Chairman Dario Herrera; and Las Vegas City Councilman Michael McDonald, who lost a re-election bid in June.

The Patriot Act, passed after the terrorist attacks of Sept. 11, 2001, was originally touted by the government as a tool to help federal law enforcers combat and prevent terrorism.

Civil libertarians have criticized the Bush administration for employing the wide-ranging act to also crack down on drug traffickers and child pornographers.

The measure lets federal investigators seek financial records of people suspected of being terrorists or laundering money.

Malone's lawyer called it an outrage that the FBI used anti-terrorism measures in an effort to gather information on his client.

"The Patriot Act ... clearly was not intended for this," Las Vegas lawyer Dominic Gentile said.

Gary Peck, executive director of the American Civil Liberties Union of Nevada, said the Patriot Act included provisions "that in no way had anything to do with the threat of terrorism, but could help them in your more garden variety criminal prosecutions."

Attorney Richard Wright, who represents McDonald, said he was unaware investigators had used Patriot Act powers.

"It isn't anything that's lawfully known," he said.

Federal authorities in San Diego say Galardi and Malone paid San Diego city officials to lift a ban on contact between topless dancers and their customers. Malone and three San Diego city councilmen await trial on public corruption charges.

A federal grand jury in Las Vegas also has been hearing evidence regarding allegations of public corruption in southern Nevada. No indictments have been announced in that case.

Information from: Las Vegas Review-Journal

[agitator]

By the way, the financial sections of the PA do NOT sunset.

[Tempest]

So the club owner is a terrorist?! Ashcroft better drop this case if he doesn't want the patriot act to look like a total farce.

[OneTimeLurker]

I honestly believe Ashcroft thinks Drugs and Sex represent the same threat to America that terrorism does.

[lelio]

I honestly believe Ashcroft thinks Drugs and Sex represent the same threat to America that terrorism does.

Tommy Chong, convicted of making glass into an Unapproved Shape, would agree.

[Brian S]

This article has a bit more information. I'm sure more will be forthcoming as the case develops...

CORRUPTION INVESTIGATION: LV FBI used anti-terrorism law

Defense attorney, ACLU say inquiry outside the purview of USA Patriot ActBy J.M. KALIL
REVIEW-JOURNAL

The FBI used the USA Patriot Act to obtain financial information about key figures in its ongoing political corruption probe centered on strip club magnate Michael Galardi, federal authorities confirmed Monday.

Investigators "used a section of the Patriot Act to get subpoenas for financial documents," said Special Agent Jim Stern, a spokesman for the Las Vegas field office of the FBI. "It was used appropriately by the FBI and was clearly within the legal parameters of the statute."

One source said two Las Vegas stockbrokers received faxed subpoenas on Oct. 28 asking for records for many of those who have been identified as either a target or subject of the investigation.

That list includes Galardi, the owner of Jaguars and Cheetah's topless clubs; his lobbyist, former Clark County Commissioner Lance Malone; former Commissioner Erin Kenny; County Commission Chairwoman Mary Kincaid-Chauncey; former County Commission Chairman Dario Herrera; and Las Vegas City Councilman Michael McDonald, who was defeated for re-election in June.

A second source confirmed that stockbrokers had been faxed subpoenas asking for information on Galardi, Malone, Kenny, Kincaid-Chauncey, Herrera, McDonald and and at least one of the former politicians' spouses.

The second source said the subpoena appeared to be a search for hidden proceeds that could be used as evidence of bribery in the case.

A source also indicated that records on Las Vegas City Councilman Michael Mack were also sought. Reached Monday, Mack declined to comment on the matter.

The Patriot Act, passed in the aftermath of the Sept. 11, 2001, terrorist attacks, was originally trumpeted by the government as a powerful tool that would assist federal law enforcement officials in combating and preventing terrorism.

But the Bush administration has increasingly attracted criticism from civil libertarians for employing the wide-ranging act to crack down on everything from drug traffickers to child pornographers.

The provision used to obtain the information in the Galardi investigation is Section 314, sources said.

That section allows federal investigators to obtain information from any financial institution regarding the accounts of people suspected of being terrorists or laundering money.

Malone's attorney said it is an outrage that the FBI is using anti-terrorism measures in an effort to gather information on his client.

"The Patriot Act was designed and was sold to the American people as being necessary to combat terrorism. It clearly was not intended for this," Las Vegas attorney Dominic Gentile said. "I'm confident that the citizens of the United States are on my side on this one."

Civil libertarians agreed.

"We at the ACLU have said from the beginning that the Patriot Act included provisions that the government sought for years that in no way had anything to do with the threat of terrorism, but could help them in your more garden variety criminal prosecutions," said Gary Peck, executive director of the American Civil Liberties Union of Nevada.

Because use of the Patriot Act in nonterrorism related probes is controversial, local FBI investigators sought approval from the top echelons of the Justice Department before using it, one source confirmed.

That source said agents proceeded only after receiving express permission from FBI headquarters and the office of the U.S. Attorney in Washington, D.C.

Law enforcement agents seeking financial records typically seek subpoenas through the U.S. Attorney's office and must submit evidence such as a sworn affidavit that establishes probable cause of a crime.

The provisions of the Patriot Act require fewer elements of evidence to establish probable cause to obtain such records.

"They wouldn't do it unless that was the only way they could get the information," one source said.

Besides that lower threshold, a request made under the Patriot Act rather than a typical subpoena can yield a wider scope of documents.

Attorney Richard Wright, who represents both Mack and McDonald, said he was unaware investigators had used Patriot Act powers.

"It isn't anything that's lawfully known," he said.

Federal authorities in San Diego say Galardi and Malone paid San Diego city officials to lift a ban on contact between topless dancers and their customers. Malone and three San Diego city councilmen await trial on public corruption charges.

A federal grand jury in Las Vegas also has been hearing evidence regarding allegations of public corruption in Southern Nevada, but prosecutors have announced no indictment in that case.

However, two of the key figures who search warrants identified as targets of the case now appear to have already pleaded guilty and are cooperating with the investigation.

Kenny was named as a defendant in a sealed criminal case filed in federal court in July. She has told friends she is cooperating with federal officials.

The Review-Journal reported late last month that Galardi has pleaded guilty during secret proceedings before U.S. District Judge James Mahan, but exact charges remain unknown.

Review-Journal staff writer Michael Squires contributed to this report.

[Shermy]

I honestly believe Ashcroft thinks Drugs and Sex represent the same threat to America that terrorism does.

Yep.

Ashcroft is a threat.

All promises about the Patriot Act were made to be broken, apparently.

[SSN558]

All promises about the Patriot Act were made to be broken, apparently.

You knew this was going to happen. It is much more fun for the boys to investigate women with large breasts, than a bunch of smelly old terrorists. Ashcroft still has a few things to learn about how federal bureaucracies work.

[jim35]

"Yep.
Ashcroft is a threat."

I wish he was the worst threat we had. I wish we had more threats just like him. Ashcroft for Pres. in '08!

[razorback-bert]

Just wail until the dem-o-rats get use this power.

[mrsmith]

SEC. 314. COOPERATIVE EFFORTS TO DETER MONEY LAUNDERING.
(a) COOPERATION AMONG FINANCIAL INSTITUTIONS, REGULATORY AUTHORITIES, AND LAW
ENFORCEMENT AUTHORITIES-
(1) REGULATIONS- The Secretary shall, within 120 days after the date of
enactment of this Act, adopt regulations to encourage further cooperation
among financial institutions, their regulatory authorities, and law
enforcement authorities, with the specific purpose of encouraging regulatory
authorities and law enforcement authorities to share with financial
institutions information regarding individuals, entities, and organizations
engaged in or reasonably suspected based on credible evidence of engaging in
terrorist acts or money laundering activities.
(2) COOPERATION AND INFORMATION SHARING PROCEDURES- The regulations adopted
under paragraph (1) may include or create procedures for cooperation and
information sharing focusing on--
(A) matters specifically related to the finances of terrorist groups, the
means by which terrorist groups transfer funds around the world and within
the United States, including through the use of charitable organizations,
nonprofit organizations, and nongovernmental organizations, and the extent
to which financial institutions in the United States are unwittingly
involved in such finances and the extent to which such institutions are at
risk as a result;
(B) the relationship, particularly the financial relationship, between
international narcotics traffickers and foreign terrorist organizations,
the extent to which their memberships overlap and engage in joint
activities, and the extent to which they cooperate with each other in
raising and transferring funds for their respective purposes; and
(C) means of facilitating the identification of accounts and transactions
involving terrorist groups and facilitating the exchange of information
concerning such accounts and transactions between financial institutions
and law enforcement organizations.
(3) CONTENTS- The regulations adopted pursuant to paragraph (1) may--
(A) require that each financial institution designate 1 or more persons to
receive information concerning, and to monitor accounts of individuals,
entities, and organizations identified, pursuant to paragraph (1); and
(B) further establish procedures for the protection of the shared
information, consistent with the capacity, size, and nature of the
institution to which the particular procedures apply.
(4) RULE OF CONSTRUCTION- The receipt of information by a financial
institution pursuant to this section shall not relieve or otherwise modify
the obligations of the financial institution with respect to any other
person or account.
(5) USE OF INFORMATION- Information received by a financial institution
pursuant to this section shall not be used for any purpose other than
identifying and reporting on activities that may involve terrorist acts or
money laundering activities.
(b) COOPERATION AMONG FINANCIAL INSTITUTIONS- Upon notice provided to the
Secretary, 2 or more financial institutions and any association of financial
institutions may share information with one another regarding individuals,
entities, organizations, and countries suspected of possible terrorist or
money laundering activities. A financial institution or association that
transmits, receives, or shares such information for the purposes of
identifying and reporting activities that may involve terrorist acts or money
laundering activities shall not be liable to any person under any law or
regulation of the United States, any constitution, law, or regulation of any
State or political subdivision thereof, or under any contract or other legally
enforceable agreement (including any arbitration agreement), for such
disclosure or for any failure to provide notice of such disclosure to the
person who is the subject of such disclosure, or any other person identified
in the disclosure, except where such transmission, receipt, or sharing
violates this section or regulations promulgated pursuant to this section.
(c) RULE OF CONSTRUCTION- Compliance with the provisions of this title
requiring or allowing financial institutions and any association of financial
institutions to disclose or share information regarding individuals, entities,
and organizations engaged in or suspected of engaging in terrorist acts or
money laundering activities shall not constitute a violation of the provisions
of title V of the Gramm-Leach-Bliley Act (Public Law 106-102).
(d) REPORTS TO THE FINANCIAL SERVICES INDUSTRY ON SUSPICIOUS FINANCIAL
ACTIVITIES- At least semiannually, the Secretary shall--
(1) publish a report containing a detailed analysis identifying patterns of
suspicious activity and other investigative insights derived from suspicious
activity reports and investigations conducted by Federal, State, and local
law enforcement agencies to the extent appropriate; and
(2) distribute such report to financial institutions (as defined in section
5312 of title 31, United States Code).

[mrsmith]

I think the article is in error about 314 being used.

[jim35]

I'm fine with that, too. You may have missed the fact that this is a tool to aid in investigation of crimes. If it's used as an excuse to persecute political enemies, the 'Rats will (big shock) be breaking the law. No revocation of any enforcement tool can prevent criminals in office from doing that. I see no big deal in the PATRIOT Act, in fact, I thought most of what's in it was already the law. I was rather shocked to find that some of these reasonable tools were not already being used.

[Imal]

The FBI used the USA Patriot Act to obtain financial information about key figures in a political corruption probe centered on striptease club owner Michael Galardi, an agent said.

I feel safer already.

[Brian S]

I was rather shocked to find that some of these reasonable tools were not already being used.

Makes one wonder how this country made it for 227 years without all these new "protections" and just that lowly Constitution as the "basis for order" to stand on...

For the children...bump!

[WackyKat]

Hanky-panky in the champagne room supports terrorism.

[First_Salute]

Upon the next "Democrat" administration, the environmentalist-wackos will no doubt find the "wiggle room" in the "P.A." to arrest people (not to mention hijack their finances) who try to maintain their property by trimming trees.

[Legerdemain]

I remember after the patriot act was passed I used the analogy of the camel asking the Arab if he could stick his nose in the tent because he was cold. The Arab having room said yes..well to make a long story short, The camel eventually moved into the tent and the Arab was outside freezing..

The unpatriot act is the same creature....don't worry about it, it is only for terrorist, it will not be used against citizens of the United States.

Less than 2 years later, it is being used against citizens to gain information in all sorts of investigations.

People, we need to take back control of the situation, Stop thinking, well, I do not have anything to hide, so why should I worry. Our Constitution is being stripped and the war on terror has made it easier to do.