Use of statute in corruption case unprecedented, attorneys contend

By J.M. KALIL and STEVE TETREAULT, REVIEW JOURNAL

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.