Justice Department officials charged former Speaker of the House Dennis Hastert with making “materially false, fictitious and fraudulent statements and representations” during an investigation into $1.7 million in cash withdrawals he’d made over the last four and a half years. He is also charged with breaking the law in how he withdrew the funds.
You can read the brief indictment here. The first rule of discussing indictments is to remember that authorities get things wrong all the time, but here’s what we know from the indictment:
Prior Bad Acts
In 2010, Dennis Hastert agreed to pay an individual $3.5 million “to compensate for and conceal his prior misconduct” with said individual. We don’t know anything about this individual other than that he or she lives in Yorkville, Illinois, and has known Hastert for much of his or her life. That’s where Hastert moved in the 1960s to teach high school economics and coach wrestling. From 1981 to 2007, Hastert represented the area in the Illinois state legislature and as a representative to the U.S. Congress. Since 2008, Hastert has worked as a lobbyist for D.C. firm Dickstein Shapiro.
We don’t know anything about the misconduct other than that it was something Hastert was willing to pay $3.5 million to conceal. As my colleague David Harsanyi said, “It must have been something pretty terrible for him to agree to $3.5 million and lie to the Feds. I haven’t done anything that’s worth paying $3.5 million. Maybe, like, $50,000 worth of bad. Tops.”
Some believe that the indictment gives a clue by beginning with the sentence, “From approximately 1965 to 1981, defendant JOHN DENNIS HASTERT was a high school teacher and coach in Yorkville, Illinois.” Having said that, there are no charges related to the misconduct. That could mean, among other things, that the bad conduct wasn’t illegal or, if it was, that the statute of limitations ran out.
Was This Blackmail?
Does this sound like Hastert was being blackmailed? Indeed it does sound like that is a possibility. The indictment mentions that the feds were investigating whether the payments were part of a criminal extortion attempt. But it’s also entirely possible that this was simply a contractual agreement to not disclose information. As an attorney said for a separate story of a congressman giving money to someone in exchange for keeping quiet:
“It’s never illegal to resolve things, in a civil sense, by paying money. That happens all the time,” said Lisa Rasmussen, another criminal defense attorney[…]. “You can always go to someone and say ‘I’ll give you a thousand dollars if you don’t say anything about it.’ ”
The issue, however, is whether such payments trigger concern at the IRS or FBI or any number of other busybody agencies.
The Cover-Up And The Charges
So if the misconduct wasn’t even necessarily illegal and if paying people money to stay quiet isn’t illegal, what’s the problem? The first count he’s charged with is lying to the feds. If you lie to the feds, you better be darn sure you’ll never get caught. Because they will nail you with that one.
The second count is that Hastert was engaged in structuring, which is when you break up financial transactions to get around the federal reporting requirements. Under the law, banks have to report withdrawals, deposits and transfers of $10,000 or more. They also have to report if clients seem to be breaking up financial transactions to avoid reporting requirements. Hastert structured transactions at four banks, withdrawing $952,000 in less than $10,000 increments on at least 106 occasions.
It is worth noting, perhaps, that structuring laws are awful. They are used by federal agents to destroy people’s lives and livelihood. Here’s a recent video of how someone was accused of structuring simply for running a cash business, and had his assets stolen by the federal government as a result:
(Nevermind that Eliot Spitzer wasn’t charged for his structuring.) Structuring laws violate banking privacy and are a great demonstration of over-criminalization of American life.
Scandalously Large Bank Account
Apart from the general guidance that you should never do anything that you have to pay $3.5 million to someone to keep quiet, the real scandal in this story is that Dennis Hastert could throw around $3.5 million in the first place.
This is a man that went from being a high school teacher to an elected official where his top earnings should have been around $174,000. From a Chicago Tribune story in 2006:
Hastert entered Congress in 1987 a man of relatively modest means, worth no more than $290,000. His financial disclosure forms, which provide broad-range estimates, reported that he and his wife held assets totaling between $120,000 and $275,000. The largest: farmland from his wife’s family in southern Illinois and a half-interest in a building in Plainfield, Ill., that had housed his father’s Clock Tower Restaurant. He listed total debts of between $70,000 and $165,000.
The disclosure did not require him to list the equity he had built in his home at the time. But Hastert had just seven months earlier purchased a home in Yorkville for $225,000, Bonjean said. County records show that he had taken a mortgage of $140,000 when he bought the property.
Now his net worth appears to be more than $6.2 million, a figure that his staff does not dispute.
And that was before he retired from Congress to become a lobbyist that helps corporations and government navigate the federal trough.
Hastert’s defense at the time was simply that he’d been really good with real estate investment. Perhaps. The story shows, if you can believe it, that a $207 million federal earmark for an expressway that would run right by some of Hastert’s properties also helped the Hasterts turn a $1.8 million profit in two years. So stuff like that might have also helped.
So to sum up: Something $3.5-million-worth of bad happened in Hastert’s past, someone was paid money to keep quiet, federal criminalization of banking is out of control, and Hastert’s bank account is suspiciously large.