MEMORANDUM OF INTERVIEW DAVID STEVENS for those two flights". ATTORNEY WORK PRODUCT Additionally, Mr. Stevens located a check from the McCain household account for $900 dated August 18, 1986 (Exhibit 9). This apparently was for reimbursement of Senator McCain's family's trip from Phoenix to Miami on August 23, 1986. Brace snumberI don't know, where it Tomes from In summary, Senator McCain used ACC aircraft for personal flights totally $12,093. Of that The only over payment I suspected ions the Flights On other matters, Mr. Stevens recalls Senator Riegle's and Senator Cranston's visit to ACC. but does not recall any specifics. He also does not recall any specifics about the February 10, 1988 checks to the Center for Participation in Democracy and the Forum Institute that were given to Senator Cranston upon his visit. Mr. Stevens had no knowledge of the April 1987 meetings between the five Senators and the Federal Home Loan Bank Board Regulators. He was also not aware of any transactions between the Senators and ACC or Lincoln. Mr. Stevens did state that he recalls discussions between John Rousselot, the former congressman who sought to buy Lincoln prior to ACC's bankruptcy, and Jim Grogan, ACC MEMORANDUM OF INTERVIEW DAVID STEVENS ATTORNEY WORK PRODUCT officer, relative to Mr. Rousselot's solicitation of support for the sale of Lincoln. Mr. Stevens said he has no specific recollection of these discussions. Additionally, he has no knowledge of any discussions that any other ACC or Lincoln official had with any of the Senators regarding support for the proposed sale. In closing, I asked Mr. Stevens if, in his filing of the various tax returns for ACC and Lincoln's subsidiaries and joint ventures, he was aware of any ownership by any of the Senators of ACC or Lincoln's properties. Mr. Stevens stated that he was only aware of the investment in Fountain Square by Senator McCain's wife and his father-in-law. Bruce Penczek William N. Jackson I am writing concerning my testimony before the Senate Ethics Committee on December 10, 1990. I have reviewed the videotape and feel a need to emphasize a few points to clarify the record. During cross examination, I indicated that I had wished that I had written my letter dated October 26, 1990 differently. This has been misinterpreted in many press accounts, and I want to make sure the Committee understands what I meant. What I was trying to say is that I wished that I had left my opinion out of the letter and restricted it to the facts and the analysis. It is the responsibility of the Committee to draw conclusions from the facts, not mine. Like any citizen, I have my own opinion, but I am not an investigator, a prosecutor, or an adjudicator. The central facts stated in the letter which formed the basis for my conclusions have not been contradicted. These facts are summarized on the computer schedule labeled as Exhibit 597. Briefly stated, here are the applicable facts reflected on the exhibit and supporting documentation: 1. Mr McCain and his family took several flights on ACC corporate aircraft and chartered aircraft. 2. Prompt reimbursement was made for only one of the flights (August of 1986). The reimbursement check indicates payment for J. McCain. Mr. McCain's internal documentation indicates that the check "covers John's flight on the American Continental corporate plane" (see page 25 of the transcript of Chris Koch's testimony on November 20, 1990). Although family members were on that flight, there is no indication of any contemporaneous reimbursement for them. 3. Somewhat delayed reimbursement was made in February of 1986 with respect to two 1985 flights. Again, the checks indicate payment only "for John." Although Mrs. McCain wrote the checks and accompanied Mr. McCain on the flights (along with a babysitter), there is no indication of an effort at 4. No reimbursement was made for any of the other flights until after ACC filed for Chapter 11 and Lincoln was taken into conservatorship. This happened about three months after I first contacted someone who I considered to be an authorized representative of the Senator. As for my original conversation with Mr. Smith, I wish that I could remember it verbatim. I do recall that I was frustrated because it appeared to me that I was not going to get any help from him on flights taken by family members. I did not understand exactly what his position was, but I expected him to make the appropriate contact with the Senator. By the time he responded in March, it was too late to change the outcome of the IRS audit. I noticed that a copy of the March 7, 1989 letter was sent to McCain's office. Since it was too late for my purposes and since my original goal was not necessarily to obtain reimbursement but to settle an IRS audit, I decided to let the matter drop unless they got back with me. By the way, the March 7, 1989 letter by Mr. Smith says "If there were other trips made by Senator McCain that I am not aware of..., I can assure you that our intention would be to arrange appropriate reimbursement." To me, that statement does not show an evidence of intent to reimburse for family members. Once again, I have nothing to gain personally by making sure that you understand these facts. Nobody put me up to this. I was merely fulfilling a duty I thought I had as a citizen to share information that I thought you should be aware of. cc. Senator Warren Rudman✓ Mr. Robert Bennett Sincerely, Dand Mean David E. Stevens VX 1081 1092 1093 ANALYSIS BY WILLIAM K. BLACK OF THE AGREEMENT AND MEMORANDUM OF UNDERSTANDING ("MOU") Entering into a MOU was contrary to Bank Board policy set by its office of Enforcement ("OE"). MOU's are not even listed as either a formal or informal enforcement remedy under current enforcement policy. Appendix A. All the factors that indicate the appropriate severity of an enforcement remedy pursuant to that policy were present in the case of Lincoln. Id. The Agreement and MOU Limited the Bank Board's Powers First, the Agreement apparently authorized what 1 The NOU between Lincoln and the Bank Board is Appendix B to this analysis. The Agreement between these parties made on the same date as the MOU is Appendix C. L/BMV7-3 10/25/89 Maria 63331-720-2647 to sell a project and purchase a "replacement" direct investment. (Lincoln achieved this result through subtle legal draftsmanship of paragraph 8(a) of the Agreement. The key clause is: "the dollar amount.") Every other thrift could only grandfather specific projects. If those projects were sold, the thrift could no longer claim grandfathering treatment for the dollar amount of the project sold. The Agreement also gave Lincoln the opportunity to seek a waiver of the rule so that it would not have to dispose of its more than $600 million in unlawful direct investments and could in fact increase its direct investments to over $2 billion dollars. Appendix C, paragraph 10. Another clause apparently barred the Bank Board from requiring Lincoln to increase its net worth due to the excessive risk of its direct investments. Id., paragraph 8(a). The MOU gave up the Bank Board's authority to use any of the findings of the San Francisco district's 1986 examination to take "any administrative or enforcement" action against Lincoln, ACC, and all of their officers, directors, employees and agents (e.g., outside accountants). Appendix B, paragraph 2, and the final "Whereas" clause of the MOU. This grant of immunity was unprecedented. It continues to prejudice OTS', and perhaps FDIC's efforts, to enforce the law. Compounding the problem is the fact that the MOU is so poorly drafted (from OTS' perspective, not SPECIAL COUNSEL 2. |