Tomorrow morning, three judges of the 9th U.S. Circuit Court of Appeals will gather in a courtroom inside an elegant 104-year-old building in Pasadena for an extraordinary hearing involving one of the co-conspirators in the Randy “Duke” Cunningham bribery scandal.
The court hearing will be closed to everyone – the public, the news media, the defense attorneys – save for the judges and a few lawyers from the U.S. Attorney's Office.
The extreme secrecy is highly unusual. Veteran lawyers could not remember another time when the appeals court held a completely closed hearing.
The subjects to be discussed are transcripts and documents related to the February guilty plea of Thomas Kontogiannis, a New York developer who admitted to a single count of money laundering in the Cunningham case. Kontogiannis' checkered past includes convictions for bribery and bid-rigging, an estimated $70 million fortune, and a knack for staying out of prison.
Now, the problem here, for District Court Larry Burns is that the government didn't say the contents of those hearings were classified until recently. Which is why we're at the Appeals Court in the first place.
The plea agreement itself was kept secret for four months, until federal Judge Larry A. Burns – who initially agreed to the closed proceedings – said there was no longer a compelling interest to keep the agreement from the public.
Burns also decided in June to unseal transcripts of the three February hearings and a fourth held in April. But prosecutors objected and invoked a provision of a federal law dealing with handling classified information as a reason why the documents have to remain secret.
When Burns turned that request aside, the prosecutors went to the appeals court. That court agreed to hear the appeal – and ordered all material to remain secret.
Now, I'm frankly not that surprised about the secrecy surrounding today's hearing. But I can easily understand why Ray Granger, the lawyer for Kontogiannis' nephew John Michael, is pissed about it. That's because the apparent cooperation that the plea deal permitted ended up netting Michael an extra money laundering indictment. And, more specifically, I suspect the subject of the sealed proceedings would be Michael's best means of impugning Kontogiannis as a witness.
You see, Kontogiannis' plea deal mentions a great deal of other money laundering Kontogiannis and Michael and others have done, while it never reveals why Kongtogiannis bribed Cunningham or engaged in the other money laundering.
Defendant, Michael, and others were involved in writing and selling fraudulent mortgages on various properties, including the property that was the subject of the fraudulent mortgage used to payoff [sic] Cunningham's second mortgage. Most of the properties involved were not built (and in some cases never built), or only partially constructed. Appraiser Steven Martini created appraisals for these properties, which enable defendant and Michael to write and sell the fraudulent mortgages. Both before and after this transaction (the payoff of Cunningham's second mortgage), defendant and Michael had regularly engaged in financial transactions involving the proceeds of unlawful activities, most mortgage/bank fraud, which transactions promoted these unlawful activities (such as mortgage/bank fraud).
Right there, in the middle of a plea deal, the allusion to a large number of crimes ... with no mention of ongoing investigation or prosecution or anything else. Details about which, I strongly suspect, is what the government is trying to keep sealed.
But to what end? Is this money laundering done in support of CIA operations, as seems likely? In which case, the argument that it needs to remain sealed would be understandable (albeit not necessarily defensible, from a public interest perspective). Or is this an attempt by the government to keep details on Kontogiannis' other illegal activities secret because he remains valuable, independent of the intent of these fraudulent activities? In other words, are they protecting security-related activities, or Kontogiannis, some of whose activities support purportedly security-related activities?
Here's one more thought, admittedly tinfoily, which is probably the product of my nasty YKos-induced cold and exhaustion.
What if the intelligence community is using corrupt practices (like money laundering) to find money to bribe Congressmen to ensure it gets the legal money it needs? It would work something like this: With the CIA's knowledge, Kontogiannis launders money through fraudulent mortgages. He uses that money to bribe Congressmen, who in turn approve of the earmarks and other programs Kontogiannis supports. Which gives the CIA taxpayer money for its budget, and separates the legitimate taxpayer money from the fraudulent illegal money by one Congressman and one money launderer. Much neater than engaging directly in the drug trade, you know?
I'm sure there's something wrong with this theory, but my cold-addled brain can't see it at the moment.
Whether my tinfoil has merit or not, though, the government seems to be claiming a compelling interest in preventing us--and John Michael--from learning the facts surrounding the other frauds Michael and Kontogiannis propagated.