John Stuart Mill Representative Government
FRIDAY MARCH 31, 2000
ALL THE PRESIDENT'S SCANDALS
Gore's e-mail MIA for next 6 months White House tampered with Zip disk against orders from federal judge
By Paul Sperry
© 2000 WorldNetDaily.com
E-mail sent to Vice President Al Gore's office is still not being recorded for subpoena searches, the White House's top lawyer revealed yesterday. And she claims the 625 back-up tapes of that e-mail can't be fully searched until around the November election.
In a related matter, the lawyer also revealed that the White House recently searched through a disk full of Monica Lewinsky e-mail -- a move that may have violated a court order.
White House Counsel Beth Nolan told Congress that all e-mail sent to Gore's office, located across from the White House, is "not being captured" by an automated archive system. And she testified that the White House "has not been able to correct the problem."
But she maintains that the messages are being recorded on emergency back-up tapes. She says the tapes, which number 625, are in the custody of the White House security office.
Nolan says the White House has hired a private contractor to convert the Gore tapes, as well as thousands that back up missing White House Office e-mail, to a format that can be easily searched.
"We could have the back-ups searched within six months," Nolan said -- which would delay until September compliance with several outstanding subpoenas from Congress, the independent counsel, the Justice Department and public interest law firm Judicial Watch Inc. All are conducting probes into various White House scandals, ranging from Chinagate to the Lewinsky case to Filegate.
The Chinagate scandal covers fund-raising abuses by Gore, including his 1996 hosting of a felonious fund-raiser at a Buddhist temple in Los Angeles.
Nolan stressed that the six-month projection is "preliminary" and is "subject to amendment as the project proceeds."
She claimed that it will take more than two months just to set up the equipment in the White House needed to restore the lost e-mail.
Nolan made the statements at an initially packed hearing held by the House Government Reform Committee, which is exploring whether the White House obstructed justice by not telling Congress and federal prosecutors about the missing e-mail.
One noteworthy visitor was President Clinton confidant Bruce Lindsey, who has been tasked with damage-control duties in past scandals. He lent support to Nolan during her testimony in this, the latest Clinton scandal -- "e-gate."
Much of the mainstream press attended the hearing, including New York Times and Washington Post reporters, as well as CNN correspondent Bob Franken. (Several weeks ago, Franken interviewed e-mail whistle-blower Sheryl Hall, a seven-year Clinton White House veteran, but his network has still failed to air the tape.)
To restore the missing e-mail, White House spokesman Jim Kennedy, who also attended the hearing, said the White House has hired a contractor -- Springfield-Va.-based ECS Technology -- as well as a subcontractor -- Fairfax, Va.-based Systems Research and Applications Corp.
Kennedy told WorldNetDaily that the White House inked contracts with the companies on Wednesday. Combined cost: $3 million.
After some quizzing, Nolan also disclosed that the White House recently took the liberty of opening a so-called Zip disk under subpoena by Judicial Watch in its Filegate lawsuit.
Larry Klayman, the watchdog group's chairman, told WorldNetDaily the disk was put "under seal" by U.S. District Judge Royce Lamberth. He argued that the White House flouted Lamberth's order not to tamper with the expanded-storage disk, which contains a large cache of e-mail from Lewinsky to the White House.
"They weren't supposed to touch that disk," said Klayman, who plans to file a complaint to Lamberth.
After White House officials opened the disk full of Lewinsky e-mails, which was made by a non-government technician, they decided to make their own disk.
They "couldn't read" all of the files in the original disk they opened, Nolan explained. So they got on the Northrop Grumman technician's computer and copied all the files off his hard drive onto the new Zip disk.
Nolan says the new Zip disk was turned over to Charles Easley, the White House security chief. But she failed to say what became of the original disk.
Panel chairman Dan Burton, R-Ind., vowed to subpoena both disks. He also said he will subpoena the hard copies of the Lewinsky messages that the technician, Robert Haas, printed from a file on his hard drive and handed over to the White House counsel's office in 1998.
Contrary to White House claims that recovering lost e-mail would be a long and costly task, computer-forensics experts tell WorldNetDaily that they doubt recovering the subpoenaed messages would take months.
Apparently experts are telling Burton's committee the same thing. Staffers there have been flooded with computer specialists from around the country offering their services to retrieve the missing e-mail.
"I've gotten e-mail and phone calls from all these computer people saying, 'Hey, my company can do it, and it doesn't take that long at all. It's really easy. All you have to do is write a program. We could have all the stuff in three weeks,'" said committee spokesman Mark Corallo.
The White House used a similar excuse when the Senate Whitewater committee subpoenaed e-mail for its probe in 1995.
On Jan. 7, Sen. Alfonse D'Amato, R-N.Y., complained to ABC News that the White House told him it couldn't send over e-mail to his panel because it would be "too expensive to retrieve."
It turns out that the White House counsel's office knew about the e-mail archiving problem as early as January 1998. And the White House chief of staff's office knew about it in June 1998, if not earlier.
Yet the White House never told Congress or any of the other investigative bodies that the subpoenaed records it was sending over had potentially huge gaps in them.
Nolan, who took over as chief counsel in September 1999, confessed she was briefed on the problem this past January.
But she failed to inform Congress until after the story broke in the Washington Times last month.
Lindsey, Clinton's deputy White House counsel, turns up on the list of White House officials whose in-coming e-mail wasn't archived from 1996 to 1998.
Asked if he knew his own e-mail account wasn't being archived, Lindsey replied frostily: "No." He then got up from his chair and walked off.
Paul Sperry is Washington bureau chief for WorldNetDaily
March 31, 2000
Local travel company agrees to settlement with trade commission
The Federal Trade Commission recently announced a settlement with two Pennsylvania-based travel companies and their owner and managers, under which the defendants will pay $145,000 in consumer redress and $18,500 in receiver's fees and expenses.
They will also be prevented from any future violations of Section 5 of the Federal Trade Commission Act and the Commission's Telemarketing Sales Rule (TSR) which, among other things, prohibits deceptive phone solicitations.
Under the terms of the agreements, individual defendant Frederick F. Zeigler III of Chalk Hill and corporate defendants Commonwealth Marketing Group, Inc. (CMG), Hopwood; Great Escape Vacations & Tours, Inc. (GEV); and individual defendant Robert E. Kane, will be required to post performance bonds of up to $150,000 before either selling travel-related services or conducting telemarketing activities, including helping other companies or individuals engage in telemarketing in the future.
The agreements settle charges that the defendants targeted consumers through the use of direct mail vacation ``certificates'' and outbound telemarketing calls representing that they had won a ``fantasy cruise holiday" to Florida and the Bahamas, when, in fact, they had won nothing.
According to the FTC, the consumers instead had to pay a ``promotional fee'' of $598 per couple, and up to $300 or more in additional charges when they were ready to travel. In addition, the FTC said the vacation packages received did not provide the ``luxury'' accommodations promised unless consumers paid yet more money in ``upgrade'' fees.
``There's no question that these telemarketers were selling fantasy travel packages,'' said the FTC's Director of the Bureau of Consumer Protection Jodie Bernstein.
``But in these cases, fantasy was just another word for fraudulent. Unfortunately, consumers spent real money buying into the misrepresentations, and that's something the FTC doesn't tolerate. Nobody wants to get tripped up when it comes to vacation plans.'' When contacted through CMG, Kane released a statement saying he was pleased that its two-year battle with the FTC was over.
``The owners, employees and customers of CMG perceive this settlement as a clear victory over the FTC's illegal and barbaric attempt to permanently close one of Fayette County's largest employers,'' he said.
Kane said CMG agreed to establish a $145,000 fund to be used to issue refunds to any consumers who request their money back, but pointed out that if no consumer refunds are needed, the FTC will keep the money.
``As a part of the settlement agreement, CMG has agreed to drop the $20 million lawsuit that was filed against the FTC and its attorneys,'' he said.
According to the FTC's complaint, CMG used outside telemarketers to target consumers throughout the United States by offering vacation ``certificates'' that invited them to call and ``receive a vacation,'' and through the use of direct marketing calls to consumers who had previously submitted ``registration forms'' handed out at events such as county fairs.
According to the FTC, many of these consumers believed they were entering a drawing for a free vacation, and CMG played on this belief in its telemarketing pitches. Up to 1997, GEV was involved in the sales and fulfillment of CMG's vacation packages in conjunction with a credit card offer, said the FTC.
Upon calling the consumers, the FTC said CMG's telemarketer described an exciting vacation to Florida and ``luxury cruise'' to the Bahamas, concluding the pitch by offering the complete package for a small ``promotional fee'' of $598. Consumers were instructed to secure their vacation using a major credit card. Only after consumers gave their credit card numbers were they told that the package was nonrefundable and that in some, but not all, cases they would have to pay additional fees — often mischaracterized as ``port fees'' — when making their reservations, said the FTC.
When consumers received their packages, the FTC said they found that they had to pay more money for a vacation they believed was already paid for in full, and that they had, in fact, won nothing at all.
Many consumers then complained to the company, attempting to get a refund, but were told their purchase was nonrefundable. In fact, according to the FTC, while CMG did have a written return policy for the vacation packages, the company allegedly did not honor it, and consumers who returned their packages often had them mailed back several times.
Consumers who eventually did take the ``fantasy vacation,'' the complaint states, quickly discovered that the cruise was nothing more than a ferry ride to the Bahamas and back. Those wishing to stay in the better-known resorts advertised in CMG's brochures had to pay yet another ``upgrade'' fee.
Kane, however, said that CMG has maintained and continues to maintain that it has, at all times, operated within the boundaries of all federal and state laws.
``Consumers who purchased CMG's vacation were never told that they had won anything,'' he said. ``In fact, (all) of CMG's customers were informed of all the terms and conditions of the vacation purchase during a tape recorded portion of the telephone call.''
Under the terms of the settlement, each individual and corporate defendant will be permanently enjoined from violating the Telemarketing Sales Rule and Section 5 of the FTC Act — which prohibits deceptive or misleading practices in or affecting commerce — in the future. They will, accordingly, be prohibited from misrepresenting any material fact in connection with the marketing, offering for sale, or sale of any travel-related product or service. Each defendant also will be barred from misrepresenting the price of any product or service, the policy or practice of making refunds or returns, and the nature of a particular product or service.
Further, both orders go beyond the actions alleged in the complaint. This ``fencing-in'' relief in the Zeigler agreement, for example, prohibits the defendant from misrepresenting any material facts related to the sale of time share properties or credit card solicitations, based on his involvement in this practice in the past. The orders also prohibit the defendants from violating, or helping others to violate, the TSR in the future, regardless of the product or service they are selling — whether it involves travel and vacation packages or not.
Also under the orders, the defendants will pay a total of $145,000 in consumer redress, with Zeigler and his corporations paying $55,000 upon entry of the order and $80,000 no later than six months after. Kane will pay $10,000 upon entry of the order. CMG also will reimburse the Commission for more than $18,000 in receiver's fees and expenses which had been previously paid by the government.
Both Zeigler and Kane also will be required to post performance bonds prior to selling any travel-related services in the future, with the Zeigler order calling for a $150,000 bond and the Kane order requiring a $50,000 bond for five years from the date it is entered.
Finally, both orders contain provisions by which the commission can monitor the defendants' compliance with their terms, a five-year record-keeping and reporting requirement and a ``distribution of order'' requirement. They also provide that a counterclaim filed by the defendants in the commission's action will automatically be dismissed.
The FTC vote to authorize the staff to file the consent orders for permanent injunction and monetary relief was 5-0. Each order is subject to final approval by the court. They were entered by the U.S. District Court for the Western District of Pennsylvania on March 6.
Kane, meanwhile, said CMG is moving forward with its purchase of the Gabriel building on Bute Road in North Union Township, where it will move its corporate headquarters and telemarketing call center this summer.
Kane said CMG expects to employ more than 400 people by the end of the year.
``We're looking forward to becoming one of the largest employers in Fayette County,'' he said.