PATRIOT ACT: Law's use causing concerns(Use of statute in corruption case unprecedented)

The investigation of strip club owner Michael Galardi and numerous politicians appears to be the first time federal authorities have used the Patriot Act in a public corruption probe.

Government officials said Tuesday they knew of no other instances in which federal agents investigating allegations such as racketeering and bribery of politicians have employed the act.

"I don't know that it's been used in a public corruption case before this," said Mark Corallo, a spokesman for the Justice Department.

An attorney for one of the defendants in the Galardi case said he researched the matter for hours Tuesday and came to the same conclusion.

"I have discussed this with lawyers all over the country, and if the government has done this before, then this is definitely the first time it has come to light," said Las Vegas attorney Dominic Gentile, who represents former Clark County Commissioner Lance Malone, Galardi's lobbyist.

Two of Nevada's lawmakers blasted the FBI for employing the act in the Galardi probe, saying the agency overstepped its bounds.

Sen. Harry Reid, D-Nev., said Congress intended the Patriot Act to help federal authorities root out threats from terrorists and spies after the Sept. 11, 2001, attacks.

"The law was intended for activities related to terrorism and not to naked women," said Reid, who as minority whip is the second most powerful Democrat in the Senate.

"Let me say, with Galardi and his whole gang, I don't condone, appreciate or support all their nakedness. But having said that, I haven't heard anyone say at any time he was involved with terrorism."

Rep. Shelley Berkley, D-Nev., said she was preparing an inquiry to the FBI about its guidelines for using the Patriot Act in cases that don't involve terrorism. The law makes it easy for citizens' rights to be abused, she said.

"It was never my intention that the Patriot Act be used for garden-variety crimes and investigations," Berkley said.

But Corallo insisted lawmakers were fully aware the Patriot Act had far-reaching implications beyond fighting terrorism when the legislation was adopted in October 2001.

"I think probably a lot of members (of Congress) were only interested in the anti-terrorism measures," Corallo said. "But when the Judiciary Committee sat down, both Republicans and Democrats, they obviously discussed the applications, that certain provisions could be used in regular criminal investigations."

Federal authorities confirmed Monday the FBI used the Patriot Act to get financial information in its probe of Galardi and his dealings with current and former politicians in Southern Nevada.

"It was used appropriately by the FBI and was clearly within the legal parameters of the statute," said Special Agent Jim Stern of the Las Vegas field office of the FBI.

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

That list includes Galardi, owner of Jaguars and Cheetah's topless clubs; Malone; former Commissioner Erin Kenny; County Commission Chairwoman Mary Kincaid-Chauncey; former County Commission Chairman Dario Herrera; and former Las Vegas City Councilman Michael McDonald, 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 at least one of the former politicians' spouses.

That source said the subpoena appeared to be a search for hidden proceeds that could be used as evidence of bribery. A source also indicated that records on Las Vegas City Councilman Michael Mack were sought.

Sources said the FBI sought the records under Section 314 of the act. That section allows federal investigators to obtain information from any financial institution regarding the accounts of people "engaged in or reasonably suspected, based on credible evidence, of engaging in terrorist acts or money laundering activities."

Gentile, Malone's attorney, said he plans to mount a legal challenge once he confirms the Patriot Act was used to investigate his client. "My research today indicates that this is the first time the government has used Section 314 in a purely white-collar criminal investigation."

Attorney General John Ashcroft has touted the law as an effective homeland security tool, but coalitions of civil libertarians and conservatives concerned about a too-powerful federal government have led criticism against it.

Corallo said federal law enforcement officials have no qualms about using the act to pursue an array of criminal investigations that have nothing to do with terrorism, such as child pornography, drug trafficking and money laundering.

"I think most of the American people think the Patriot Act is a good thing and it's not affecting their civil liberties at all, and that the government should use any constitutional and legal tools it can, whether it's going after garden-variety criminals or terrorists."

But Gary Peck, executive director of the American Civil Liberties Union of Nevada, expressed outrage at Corallo's suggestion that lawmakers were largely aware the Patriot Act's provisions would equip the FBI with new investigative tools beyond the scope of terrorism investigations.

"Those comments are disingenuous at best and do little to inspire confidence that the act won't be systematically abused," Peck said.

Rep. Jim Gibbons, R-Nev., said it may be too soon to weigh its application to a Nevada investigation that still is largely under wraps. Prosecutors have announced no indictments.

Citing the ongoing investigation, Sen. John Ensign and Rep. Jon Porter, both R-Nev., declined to be interviewed.

Porter was not in Congress when lawmakers approved the Patriot Act, but the other four Nevada lawmakers voted as part of large majorities in favor of the measure.

The Patriot Act will expire in 2005 unless Congress renews it. "More activity like this is going to cause us to take a close look at what was passed," Reid said of the law being invoked in the Galardi probe.

Review-Journal writer Carri Geer Thevenot contributed to this report. Stephens Washington Bureau chief Steve Tetreault reported from Washington, D.C.

An analogy if you will:

War powers can be likened to a shotgun kept in a farmhouse within a glass display case with a warning "Use only in case of emergency".

One day the aged farmer's son comes into the house warning of a bear in the yard. He wants to use the shotgun. Wary of his son who has never been responsible with firearms, the farmer is reluctant. But after seeing what the bear did to his horses he gives his son the gun, but only after making him promise this time he will be careful and not abuse his trust.

So out of the glass case comes the shotgun. And the son chases off the bear. But later that evening, the son has drank a fifth of whiskey and is busy shooting at anything that moves. He even invites his neer-do-well friends over and they stagger about with a bottle of hooch in one hand and the shotgun in the other, randomly blasting shots into the air.

The next day, the son tells his dad the bear isn't dead and now he needs a rifle.

If the father gave him one, you'd think him a fool. Remember THAT when the feds try to get PATRIOT II passed!!!!!

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).

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