Wednesday, October 8, 2008

Mc Cain, "The Keating Five," and Lobbyists

John McCain's life is anything but the "open book" he claims it is. Central to his political life was his deep involvement in the "Keating Five Scandal."
The story begins with colorful information on the role of organized crime in Arizona and Mc Cain’s ties to it. Kemper Marley was the big man in Arizona at the time. He was the protégé of Sam Bronfman, a close friend of Al Capone and Meyer Lansky, who visited Arizona in his company. He was also very close to Gus Greenbaum, a Lansky aide and Phoenix gambler.

Greenbaum and his wife were slain in 1948, setting off a mob war that Marley won. Marley became the state’s only billionaire. In 1948, Marley escaped prison while 52 of his prisoners went were incarcerated including henchman Gene Hensley, who would become John McCain’s father-in-law. He was general manager of Marley’s United Liquor. Hensley’s brother was a bootlegger and was also convicted. The court said Hensley must never get into the liquor business again, but when he got out he received a big Budweiser distributorship. Hensley also made money in dog racing, but sold his track to the Jacobs family of Buffalo. They were also linked to the Bronfman booze empire of Canada and the Lansky interests.

Marley headed the Valley National Bank, which lent Meyer Lansky’s man, Bugsy Seagal, the money to build the Flamingo casino . Seagel was killed for stealing from his bosses, and his nationwide gambling wire was turned over to Marley.

Marley ( d. 1990) was very generous with the Republican party and also controlled the Arizona Democrats. Many in major office there owed their jobs to him. Marley’s men included Dennis De Concini, a Democrat, and John McCain

Arizona Republic investigative reporter Don Bolles was killed in a 1976 car bombing. He had investigated crooked land deals that were tied to many of the rich and powerful and had also looked into Marley’s service on state commissions. This led to a 36 member team of investigative reporters coming to Arizona. It produced investigative team coming to Arizona. It produced The Arizona Project: How a Team of Investigative Reporters Got Revenge on Deadline. They believed but could not prove that the Marley gang was behind the murder of Bolles. But they produced a great deal of information on the mob in Arizona.

Astonishingly Bolles lived for eleven days after the explosion and said: “They finally got me. The Mafia. Emprise. Find John (Harvey) Adamson." There was no effort to find out who hired the man who gave Adamson contract. Anderson he was convicted of the car bombing said the Marley gang also wanted Attorney General Bruce Babbitt killed because he wanted anti-trust action against them.

John McCain married mob heiress Cindy Hensley. From the time of his arrival in Phoenix in 1979, the Hensley family sponsored his political career. He received a $50,000 a year salary in 1982 to tour the state as a PR man for the family beer Budweiser distributor firm, but of course he was beginning a Congressional campaign. Anheuser-Bush lobbyist Richard Scheffel said that Hensley used McCain as a channel to move money to politicians.

McCain does not seem to have done anything for the mob, but he must know it was that money that fuelled his career. Must also have met some mob people In 1995, sent “Happy Birthday” wishes to Joseph Bonasno, the head of the New York Bonano mob who had retired in Arizona. From the time of his arrival in Phoenix in 1979, the Hensley family sponsored his political career. McCain recused himself on voting on alcohol matters, but as a committee chairman he used his power to their advantage by not scheduling hearings. In 1997, important hearings that were scheduled never occurred. In 1996, he pushed to normalize relations with Vietnam just as Budweiser was preparing to enter that market.

. Banker Charles Keating also got into the business of befriending Arizona politicians. He gave a $55,000 campaign contribution to Bob Corbin, a former Marley employee, who ran unopposed for attorney general. He would supervise state-chartered banks. Keating got his start as a lawyer for Carl Lindner, who made great profits from the Vietnam War. One of the nation’s wealthiest men, Lindner owned 7 S &L that were to fail. By owning United Brands, he was in a position to reap profits from the government’s secret programs to fund and supply the Nicaraguan contras through Hondouras.

Keating purchased property for his office in Phoenix from a mob-connected attorney in 1980. He had a mansion in the Bahamas, where the same attorney family had a casino.
Prudential Insurance loaned him $2 million in 1985. He had numerous dealings with BCCI, which turned out to be the bank of crooks and criminals.

Keating had invested 17.5 million in TrendInvest without notifying his American Conmtinental board. Walter Bush, cousin to the current president, was involved with Continental, which later collapsed. There were many other baffling investments. Some think he was laundering CIA money involved in its Latin American operations.

Keating had a business relationship with Hensley. Keating was good at buying political influence, and he had a ten year close relationship with John McCain, donating about $112,000 to McCain campaigns. Nine times, he paid to transport McCain’s family and babysitter to his place in the Bahamas, often on a private plane. In addition, he permitted Cindy and her father to buy into a lucrative shopping center in California. In return McCain helped him convince Ronald Reagan to deregulate the Savings and Loan industry and place a Keating friend on the board that regulated it. Deregulation was a green light for Keating to build the Phoenician, a resort, in partnership with the rulers of Kuwait. The federal government seized it in February, 1989. His bellmen were permitted to remove 24 cartons of documents.


When the Feds started investigating Keating, McCain organized the “Keating Five” senators to put pressure on the Federal Home Loan Bank board to back off. At one point McCain even demanded that the chairman of that board not participate in the investigation of Keating.


When Keating began to get into trouble and marketed $230,000,000 in bad bonds, he came up with a scheme to cover them with profits from a water scheme. He and a partner bought up a lot of water rights and then had the legislature pass a law requiring Phoenix to first buy as much water as Keating could sell before going to other vendors. They planned to pump about a million acre feet of water in a year. De Concini would also profit because he had purchased some water rights. Such a scheme could only take place in a state where the press looked the other way and the politicians were largely corrupt. The Arizona Republic and the Phoenix Gazette were owned by the family of Dan Quayle.

The Arizona House of Representatives breezed the bill through in two days, but Jerry Gilespie held up things in the Senate. He found a way to stop it dead in its tracks, but he lost his seat in the next election. No wire service reported the story but it was covered by Phoenix Magazine in 1989. This doomed Keating.


As late as May, 1988, Keating thought he had won his battle against the Federal Home Loan Bank Board. On the 20th, he threw a big party because Senators Mc Cain and De Concini, with three others, had succeeded in having the investigation of his Lincoln Savings from San Francisco to Washington. In excitement, he removed his shirt to reveal a tee shirt with a skull and bones superimposed over the letters FHLBB. He had spent a million dollars buying politicians. It looked like he had won, but he was done in when the water scheme petered out.

Keating was eventually fined 3.6 billion and sent to prison. He has been called the father of the S &L crisis. McCain was investigated by the Senate Ethics Committee and was only told he exercised “poor judgment.” Almost as soon as he saw that he had a problem, he played the role of the repentant sinner and began to create the false reputation that he was an opponent of lobbyists and the improprieties seem to flow from their involvement in public life. To convince voters that he was a different sort of politician, he started calling for campaign finance reform.

McCain went on to gin up a reputation for integrity, but, in fact, he continued to run errands for contributors. Recently, McCain denied ever meeting Lowell “Bud” Paxson, even though there was a 2002 court deposition proving they had met. This is important because in 1999, MC Cain, then chairman of the Senate Commerce Committee, pressed the FCC hard to let Paxson Communications purchase a Pittsburgh television station. The FC claimed McCain’s request seemed like a threat and believed he had crossed the line separating propriety and impropriety. The firm had donated $20,000 to McCain. The firm had provided McCain transportation on a company jet on several occasions. Very briefly, the press raised questions about his relationship with a pretty young Paxson lobbyist who was often in his company in 2000. No solid evidence of a sexual relationship was found, so the press decided not to look into the rest of the story. The fact that McCain is clearly the darling of the press could have something to do with the drying up of the entire story.

When confronted with information about his conduct in the Paxson case, McCain said he was just prodding bureaucrats and then produced documents to show he had done the same thing in other cases involving large contributors. What chutzpah!

In 1999, McCain staff twice intervened to help wealthy contributor and close personal friend Donald Diamond obtain land from closed Army base Fort Ord in California. That deal allowed him to turn a $20 million profit, and another arrangement in 2005, again with McCain help, promises to be more profitable. This involves as many as 12,000 homes and benefits more than one McCain backer. Two former McCain staffers were hired as lobbyists in this complex deal to get him aboard. Twice in the 1990s, McCain introduced land legislation to help Diamond, and a third measure is now before the Senate.

In 2001, questions were raised about legislation he backed for the cruise industry and the large contributions it gave him. There are also questions about his close ties to the cable TV industry.


Recently, it was learned that John McCain had more lobbyists working for his 2008 campaign than any other presidential candidate. Even after 6 were forced to leave due to their ties to unsavory regimes, there are 59 who do nothing but raise money. One of them is Ralph Reed, who was shown to be taking advantage of Native American clients in hearings McCain chaired! Over time, 133 lobbyists have worked for the Straight talk Express.

Others do other things in the campaign. Rick Davis is campaign manager, and Charlie Black is senior political advisor. Among Black’s clients were AT%T, Rupert Murdock, and Blackwater. Twenty-one McCain people also represented AT&T. Black had also been paid to sheppard around Ahmed Chalabi, whose distortions helped get the US to invade Iraq. Could this be connected to McCain’s view that American troops must soldier on there, possibly indefinitely.


Two lobbyists were closely tied to the mortgage industry, which could explain why McCain has been so very friendly to the same industry. Randy Scheunemann, McCain’s foreign policy analyst, has represented the Republic of Georgia, and spoke on McCain’s behalf on this issue as recently as August 17. This could explain why McCain is so hawkish about the Russo-Georgian struggle. He speaks as though he is already president, keeping force and all other options on the table.

None of this information is to suggest Mc Cain is a crook. He is obviously very closely tied to the lobbyists and special interests that he frequently complains about. He cannot claim no links to the mob. There is no doubt that he has a history of going to bat for them—sometimes appearing to go to far. He has repeatedly promised to never doing anything that gives the appearance of impropriety, but his track record is just the opposite of this.

He probably is not a crook, and Mc Cain deserves great praise for his service in the Vietnam War. But he is only mortal and has a bad track record for consistency and truth telling, despite all his self-praise about honesty.

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