Catastrophe (21 page)
Authors: Dick Morris
DODD GETS DOWNE A PRESIDENTIAL PARDON
After Downe pleaded guilty to wire fraud and tax evasion related to his insider trading, he was sentenced to 3,000 hours of community service. After reaching a settlement with the SEC on the insider trading charges, he was fined $11 million. He was forced to sell his Southampton home, his Florida condominium, and his art collection. Although he was permitted to keep his apartment in Manhattan, it will revert to the government on his death.
The charges against him were serious: according to the SEC, Downe “had exploited insider trading information and set up offshore bank accounts to hide millions of dollars of illegal profits for himself and members of his wealthy social circle.”
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Apparently, the information Downe picked up at his board of directors meetings was passed on to family and friends over drinks at his Southampton home and clubs, during poker games, and at other social events. The SEC estimated that Downe and his pals made in the neighborhood of $23 million in profit from the scam.
Downe could have been subject to serious jail time for his crimes. But Chris Dodd personally wrote to the sentencing judge in defense of his friend—and eight years later he also sent a personal letter to President Clinton seeking a pardon for his insider trading crimes. On January 19, 2001, the day before he left office, Clinton issued the pardon.
Dodd emphasized Downe’s remorse and good character: “The example[s] of Ed’s private goodness [are] extensive,” Dodd said, “but they all share one thing in common—they were all done quietly to help people, average people in need.”
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Did Dodd consider himself one of those average people in need who had benefited from Downe’s goodness? Whether he did or not, he certainly managed to help Downe in return. It’s no easy thing to get a prized presidential pardon. But an analysis of all of Bill Clinton’s controversial last-minute pardons indicates that there was one common denominator in those selected: personal access to the president or his counsel to make the case and circumvent the justice department.
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As the
New York Times
reported, Downe’s last-minute pardon application “bypassed the Justice Department” and “has been criticized by lawyers at the Securities and Exchange Commission.
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For someone in a position like Downe’s, Chris Dodd was a fortuitous friend to have. Dodd had been appointed chairman of the Democratic National Committee by Bill Clinton; he enjoyed easy access to the president and the White House. He’d spent years raising money for Clinton. Access was no problem. He could help Downe’s application get a hearing—no need to go to through regular channels Not only the S.E.C., but the Justice Department was blind-sided by the unexpected and blatantly political pardon.
As the
Times
wrote in an editorial about the controversial pardon:
Politics rather than a careful weighing of the merits also appears to have been the deciding factor in Mr. Clinton’s pardon of Edward Downe Jr…. Prosecutors in Ms. White’s office learned of the pardon decision last Friday—too late to effectively register their objections.
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It was the ultimate favor for Downe.
IRELAND: ANOTHER FREE RIDE
There is a magical place in western Ireland called Innishnee. Though only about an hour and a half away from the city of Galway, this small Connemara island is light-years away from anything urban or contemporary. As you drive out there, the landscape suddenly changes from the predictable Galway suburbs to dramatically beautiful scenes of rural county Galway, where mountains and lakes are bathed in golden sun and mauve shadows line the road to picturesque Roundstone, the closest mainland town to Innishnee.
A small bridge only about twenty to thirty feet long connects Roundstone to Innishnee, where unpaved roads that are wide enough for only a single car or two cows cross the small island. There’s not much traffic, but when two cars approach each other, local custom obliges one driver to back up to the nearest driveway to let the oncoming car pass by—even if that driveway is half a mile behind. Farmers slowly walking along the road with their cows also herd them into driveways to let the occasional car pass, even as the cows try to stick their large heads into the car windows.
It is a quiet, beautiful place where time has stood still. There are no
McMansions, no stores, and virtually nothing to compete with the unparalleled views.
On the southernmost tip of the island, atop a crest overlooking the water on three sides with mountains in the background, is a spectacular piece of property of almost eleven acres, with a pristine 1,700-square-foot dormered white house at its highest point. The sheer size of the property dwarfs all other plots on that end of the island. From the high point where the house stands, the property continues across a shallow inlet to ethereal mountains which are part of the plot. With the property extending on both sides of the water, the beautiful view is protected from the intrusion of any new buildings that would spoil the enchanted setting. To the right is the dramatic Bertaghboy Bay, which flows out to the Atlantic Ocean. Behind the house, at a much lower point, the bay separates Innishnee and Roundstone.
It is this unique house and exquisite property that Chris Dodd bought with the help of yet another friend in 1994.
Dodd told the
Hartford Courant
that he first saw the stunning vacation property in the late 1980s and learned several years later learned that it was for sale. But, once again, while Dodd wanted to buy the property, he couldn’t afford it. It’s a common problem: How many of us have seen a beautiful house in a gorgeous setting in a foreign country and dreamed of buying it?
The difference is, the rest of us usually come to our senses and realize we can’t afford such a thing—and would hardly ever use such a distant vacation home anyway.
But not Chris Dodd. He wanted it and was determined to make it work. So what did he do?
He found yet another friend to pay for it—and to give him exclusive use of the property. Dodd has admitted that he couldn’t afford to buy the place on his own: “It would have been tight” to purchase it solo, he says.
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So who to turn to?
By 1994, Downe could no longer help: his felony convictions had made him radioactive. Even if he had had the financial resources to help out, Dodd couldn’t afford to share another deed with a convicted felon. So what could he do? Pay for the property himself? No way.
But he lucked out again. This time, an acquaintance agreed to pay for two-thirds of the property, leaving him responsible for only one-third.
And guess who that acquaintance was? An old college friend of Downe.
According to Kevin Rennie of the
Hartford Courant
, William “Bucky” Kessinger was a college friend of Downe and his partner in a Missouri real estate firm. Indeed, it was Downe who introduced Kessinger to Dodd.
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Talk about six degrees of separation! And there’s more: when the property was sold to Dodd and Kessinger, Downe was right there with them to witness the transaction and he actually signed the deed.
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Isn’t that what friends are for?
But what was Downe really doing there? Was he involved in the purchase of the property? Did he own part of it? Wait a minute. Was Kessinger actually a stand-in for Downe? Don’t start thinking that Kessinger was just a straw man standing in for Downe. Dodd has stated categorically that he wasn’t. So apparently that’s that.
According to Dodd, Kessinger thought that property in Ireland was a good investment. Unfortunately for Kessinger, he was apparently unaware of the rules of engagement when buying real estate with Dodd. It’s Dodd who makes the money; it’s the partner who spends it. So the professional real estate maven seems to have been the only landowner in Ireland who lost out on the incredible Irish property boom of the last decade—the largest increase in property values in the history of Ireland. Because when Dodd eventually bought him out, the price did not in any way reflect the meteoric rise in Irish property prices.
The original cost of the property was $160,000. But the new partners didn’t split the selling price evenly. Instead, Dodd bought only a third of the property and Kessinger two-thirds. Dodd claims to have paid $12,000 for his investment. But wouldn’t it have made more sense for them to buy the property in equal shares? Dodd told the
Hartford Courant
that he can’t remember why they did it this way. Really, who can remember every detail? Is it that important that Dodd only had to pay only $12,000 to get such a spectacular property? What’s the big deal?
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Hey, wait a minute
, you may be thinking.
Just why did Dodd and Kessinger divide that property in
thirds?
Wouldn’t that make more sense if there were three investors, not two?
Perish the thought that Downe was in for the
other third. Just because Downe had a history of chipping in on Dodd’s homes doesn’t mean he did so in Ireland. And just because he was there at the closing doesn’t mean he was an investor. And just because it was his partner who bought the property with Dodd doesn’t make him a partner, too. And just because another business associate of Downe’s tried to influence the local zoning board to approve renovations to the property doesn’t mean anything, does it? Surely it’s all just a coincidence. Dodd himself says that Downe had no ownership interest in the property; he merely visited from time to time.
In describing how he first saw the property, Dodd has made it seem as if he somehow just landed there in the late eighties, but as Kevin Rennie reports, Downe has been known in the Roundstone-Innishnee area for some time; in fact, it may have been he who introduced Dodd to it.:
Someone might also have noticed that of all the affluent seaside towns in all the world, it’s the one where Dodd has a home that Downe and current wife, Mary, have in the past few years been sponsors of local events. Dodd and the Downes have even been sponsors of the same horsey Champion of Champions event in tony Roundstone.
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Given that Dodd says he talks to Downe every day, it’s hard to believe that Downe
wouldn’t
have mentioned the area to him. Rennie has also discovered other connections Downe may have had with the property: even as Dodd was just contemplating purchasing the property, another associate of Downe was trying to get county approval for renovations there:
In 1993, Irish planning officials were slow in approving renovations to the property Dodd wanted to purchase. A Galway businessman, John W. M. Moore, tried to hurry them up, writing a letter reminding the bureaucrat in charge that Dodd “was an excellent friend of Galway’s” as it tried to replace hundreds of jobs lost when Digital, the computer company, closed a facility.
Moore, by remarkable coincidence, was involved in Crystal Brands of Ireland, a crystal exporting company that also employed Downe, who is identified as a “network manager” on a Dun and Bradstreet document.
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What a small world!
In 2002, one year after Downe was pardoned by Clinton, Dodd and his second wife, Jackie M. Clegg, purchased Kessinger’s share of the property so that they would own the Innishnee property outright. Despite the rise in the value of Irish properties at that time, Kessinger made only $20,000 more than his original sale price in 1995.
The Innishnee purchase had appreciated by only 18 percent during the time Kessinger was part owner—a surprisingly poor investment, especially for such an experienced real estate businessman. “According to the Irish Department of Environment, Heritage and Local Government,” the
Hartford Courant
reports, “the price of existing homes throughout Ireland increased about 150 percent during those years.”
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Kevin Rennie compares the price Dodd paid to buy Kessinger out with other properties in the area:
Two years after the [housing] bubble exploded, homes smaller than Dodd’s and on smaller pieces of property than his are on the market for several times the maximum $250,000 Dodd has declared his is worth each year on his Senate disclosure forms since 2002.
Waterfront properties on the “Irish Riviera” don’t often come on the market. In today’s dire real estate market, a 750-square-foot, two-bedroom townhouse in nearby Roundstone is for sale for $750,000. A 900-square foot, three-bedroom semi-detached house, boasting of a view of Innishnee, the island where Dodd’s house stands high above Bertaghboy Bay, is offered for $700,000.
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So Dodd seems to have bought out Kessinger’s share at considerably below market price. He defended his purchase by showing the
Hartford Courant
an appraisal made a year before the sale went through that valued it at $190,000. At a time when smaller houses on lesser pieces of property were selling for three times the amount that Dodd paid, it’s hard to find a rational explanation for the appraisal Dodd’s property received; we’ll leave it to your imagination.
Dodd told the
Courant
that it was incorrect to assume that prices all over Ireland had risen. He speculated that Innishnee properties hadn’t gone up because the bridge had been in bad repair for years and couldn’t handle
heavy loads.
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Say what?
Hey Chris, don’t you remember that the bridge was fully replaced in 2001, the year before your appraisal? Dodd even seems to be puzzled at the ongoing interest in his ownership of the Irish property. HINT TO CHRIS: Maybe it has something to do with the price you paid (or didn’t pay)?
Without even seeing the outside of the house, anyone looking at the Dodd property today would would laugh at the idea that it’s worth no more than $250,000, as Dodd reports on his financial disclosure statement. Besides the beautiful setting and immense piece of land surrounded by water, the house is charming and the land is well kept. Stone walls in perfect condition surround the property; discreet signs indicate the name of the security company. A locked red iron gate keeps visitors at bay. Tranquil and isolated in its setting, it is only a five-minute ride to Roundstone, a lively fishing village that attracts many Dubliners for summer and weekend homes. Roundstone has restaurants and shops and is a lively center for horse and pony races, sailing, and art shows in the summer. The Dodd “cottage” is no little thatched-roof hut in the middle of nowhere. It’s a substantial home in a much desired area, on property that’s hard to equal.
