No Comment — November 20, 2007, 12:35 am

U.S. Attorneys Scandal: Removal of Canary Sought as Paulose Resigns

Just as the new attorney general has removed the Karl Rove-connected U.S. Attorney in Minneapolis, Rachel Paulose, he has received a request that he take similar steps against the U.S. Attorney who initiated the notorious Siegelman prosecution, Leura Canary.


Alabama’s number one power couple, suggests Time Magazine, consists of Leura Canary, the U.S. Attorney in Montgomery, and her husband William J. Canary, the state’s most prominent G.O.P. campaign advisor. Those on the other side of Mr. Canary’s campaign efforts have a strange habit of finding themselves the target of a criminal investigation led by Mrs. Canary. Conversely, criminal allegations involving Mr. Canary’s clients seem to disappear down a sinkhole located somewhere in Mrs. Canary’s office. (William Canary’s office did not reply to an email requesting comment.)

And now, for the second time in three years, Mrs. Canary is being accused of improperly involving herself in criminal proceedings in which her husband has strong business interests. In a 14-page letter dated November 16, 2007, directed to senior officials in the Justice Department including Attorney General Michael B. Mukasey, Montgomery attorneys Thomas T. Gallion III and Donald R. Jones, Jr. make the case that Mrs. Canary is abusing her office by launching a criminal investigation targeting persons who have recently raised corruption allegations against Alabama Governor Bob Riley and former Lieutenant Governor Steve Windom, clients of her husband. The letter is supported by 79 pages of exhibits.

The Montgomery lawyers state that they gave notice of their intention to take the depositions of Governor Riley, his son Rob, and Mrs. Canary’s husband, William. They were astonished to discover a response from Mrs. Canary in the form of a criminal investigation opened against their client. In a particularly abusive move, Mrs. Canary also served grand jury subpoenas against the lawyers, in a likely effort to block them from the further representation of their client. (Under legal ethics rules, a lawyer who is required to testify in a criminal matter involving his client is usually unable to continue the representation).

Gallion and Jones write to Mukasey that

It has become apparent that anyone who dares to challenge and/or cross Gov. Riley and any of his political cronies will be investigated and possibly indicted by Ms. Canary. According to the local and national news media, that is what allegedly occurred recently as to former Democratic Alabama Governor Don Siegelman. . . The investigation and threat of indictment of our client Goff follows an eerie and similar path. . . It is apparent that Goff is being subjected to the same political prosecutorial misconduct as alleged in the Siegelman case.

They proceed to cite a series of unmistakable connections between Goff’s suit raising corruption allegations against Riley, Windom and others, and the criminal counterpunch launched by Mrs. Canary. It appears that Mrs. Canary entrusted the case to Steven Feaga, the same assistant U.S. attorney whom she assigned to handle the highly controversial prosecution of Siegelman. It was recently disclosed that the two most senior career prosecutors assigned to the Siegelman case had concluded that the facts did not justify the pursuit of a criminal case against the former governor.

The Goff litigation concerns allegations involving Karl Rove, Jack Abramoff and Michael Scanlon in campaign fundraising for Governor Riley, apparently from Indian casino gambling sources. Karl Rove, a close friend of Mrs. Canary and her husband, resigned earlier this year from a position as President Bush’s senior political advisor. Jack Abramoff and Michael Scanlon (Riley’s former legislative assistant) sit at the center of a major political corruption investigation. Abramoff has been convicted, sentenced and is currently serving in a penitentiary. Scanlon pleaded guilty on November 21, 2005 on corruption counts and is currently free as he cooperates with criminal investigators. Abramoff and Scanlon are accused of having funneled substantial sums of money from their casino gambling clients into Bob Riley’s gubernatorial campaign. It is alleged that the Indian gambling money was funnelled into Riley’s campaign accounts in exchange for a pledge from Riley to block potentially competing Indian gaming interests. Riley in fact took several steps to block Alabama-based Indian gaming interests. In one such move, he appointed Mrs. Canary to a commission charged with reviewing a license, with the apparent expectation that it would be denied.

The letter details a close and long-standing business and financial relationship between William Canary and the Goff defendants, particularly Gov. Riley and former Lt. Gov. Windom.

Mr. Canary served as a political consultant forWindom, who ran for Governor against Gov. Riley in the Republican Primary. When Windom was defeated, Windom and Mr. Canary supported Gov. Riley against Siegelman. Moreover, Mr. Canary and/or companies he operates have been heavily involved in the campaigns of both Lt. Gov. Windom and later Gov. Riley, either personally or by and through various political action committees (PACs) over which Mr. Canary had influence or control. . .

Mr. Canary served as an advisor and consultant for Windom. This relationship continued until the end of Windom’s career in public service. However, based on information and belief, the two maintain a close relationship to this day.

In addition to the extensive support given Windom by PACs controlled by Canary and a business partner in the value of $74,600, the letter also details some $38,022 in payments by Windom to Canary, according to campaign funding disclosures. It also shows some $85,500 in Canary-related PAC payments to the Riley election effort in 2003, as well as sums paid in later election efforts. The letter goes on to detail Canary’s tight financial relations with a series of further prominent G.O.P. figures, including former Attorney General Bill Pryor, and U.S. Attorney in Birmingham, Alice Martin. According to Republican attorney Jill Simpson’s testimony before the House Judiciary Committee, Canary referred to Martin as one of “his girls” who would prosecute Siegelman. The other was, of course, his wife, Leura. In fact, both Alice Martin and Leura Canary commenced criminal proceedings against Siegelman. Mr. Canary was, at the time he made the remarks, deeply involved in the election campaign of Bob Riley, who was contesting the statehouse against Siegelman.

The letter suggests very strongly that Canary is once again using her office to protect the political interests represented by her husband. This has developed into a consistent pattern. And now the question passes to the Justice Department in Washington. Do they consider this appropriate conduct for a federal prosecutor?

Following this post, the Montgomery Advertiser has published a story, out on Wednesday morning, in which it notes that former Lt. Gov. Windom is “also” a subject of the FBI probe.

It was Windom who recom­mended Walter A. Bell to Gov. Bob Riley before the governor appointed him state insurance commissioner, and the appoint­ment gave Bell control over Goff’s state insurance contract. Goff said the Windom associ­ates demanded what would have amounted to a $200,000-a-year cut from his insurance sales commissions if he wanted to re­tain his contracts with the state.

Now a Montgomery lobbyist, Windom has denied wrong­doing, as have his associates. Windom declined further com­ment Tuesday. Gallion, Goff’s attorney, said he reported the attempted shakedown attempt to Bell’s of­fice. Shortly after the report was made, Gallion said Bell began denying Gallion’s law firm state legal work and began pursuing regulatory action against Goff.

The Advertiser also reports that the subpoenas issued to Goff’s lawyers were withdrawn on Friday. It also cites a statement by Mr. Canary, who failed to respond to my request for a comment. Mr. Canary told the Advertiser “I deny, without qualifica­tion, knowledge of any investi­gation other than that which has been publicly reported.” This is a classic nondenial denial, since he is excepting from his statement everything which has been publicly reported, which is essentially all that anyone would care to know about the investigation. His wife told the Advertiser that she “decided last month to cease all involvement with her office’s probe of Goff, in order to pre­vent the appearance of an ethi­cal conflict.”

Mrs. Canary’s statement suggests that she was involved in launching the matter, which raises serious ethics issues based on her acknowledgement. She also does not attempt to claim that she has recused herself from the probe. Under Department of Justice rules, recusal takes a formal process involving the preparation of paperwork which would require the reasons for the recusal and would involve the appointment of a different U.S. attorney to supervise this matter. Until this happens, Mrs. Canary would still be the U.S. attorney formally responsible for it. Moreover, correct practice also requires the removal of the case physically from her office. The subpoenas that Feaga issued showed the address from which the inquiry was being conducted as “131 Clayton Street, Montgomery, Alabama,” which is Leura Canary’s office.

To all appearances, however, Leura Canary has separated herself from the case just as thoroughly as she did with the Siegelman investigation and prosecution, which is to say, she’s all over it.

To hear 34-year-old Rachel Paulose tell it, she is the victim of a campaign launched by persons involved in the white slave trade. A more realistic assessment would be to say she is the victim of her own misconduct. Today the Department of Justice announced that Paulose had stepped down as U.S. Attorney in Minneapolis in order to take up a job at Main Justice. This occurred shortly after Minnesota’s Republican Senator Norm Coleman, who first supported and then was publicly critical of Paulose, paid a call on Attorney Gener Mukasey to discuss his concerns about conditions in the Minneapolis U.S. Attorney’s office. As Paul Kiel summarizes


She was the focus of an Office of Special Counsel investigation into whether she’d discriminated against office employees, including allegedly using the words “fat,” “black,” “lazy” and “ass” in remarks to one employee. And that was after four top attorneys in the office voluntarily demoted themselves in protest of Paulose’s Bible-quoting management style.

In addition she was under investigation for mishandling classified documents and taking retaliatory actions against a colleague who pointed that out to her.

And the mood in the U.S. Attorney’s office in Minneapolis? It’s described as “quiet but celebratory.”

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