Bob Krause for US Senate Bob Krause for US Senate  

Sen. Chuck Grassley Blames Obama For a Scandal Caused By His Own Former Staffer

It never ceases to amaze that politicians spend millions, sometimes tens-of-millions, of dollars to go to Washington to serve the people as lawmakers and earn far less than the cost of even one campaign. It is even more curious that over the past five years Republicans spend copious amounts of their donors’ money and have done little else than search for a scandal involving the African American President they have proven to hate with a biblical passion. It is a travesty, and a mystery, why any American would vote for Republicans who not only do nothing for the American people, but spend the majority of their waking hours wasting taxpayer time and money investigating alleged White House scandals that, more often than not, are of their own making.

Darrell Issa has led investigations into the President for Issa’s scheme with an I.R.S. inspector general to target teabagger groups seeking tax-exempt status, the Benghazi attack Republicans caused by cutting embassy security funding, and George W. Bush’s deal to send guns into Mexico. Although Issa is the face of the investigations into the Obama Administration, he obviously has the blessings of Republican leadership, Fox News, the Koch brothers, and a plethora of behind-the-scenes conservatives. Not to be outdone, in the Senate a Republican thought he had seized on a White House scandal that did not develop the way he planned, and as usual, it is a scandal involving at least two Republicans who the Securities and Exchange Commission allege violated the law involving stock trades and privileged information.

Early last year, traders on Wall Street “mysteriously” discovered that the Obama administration was planning to make a policy change to Medicare before the news was even announced. Subsequently, there was a flurry of stock trades involving major health care companies that aroused suspicion of the Security and Exchange Commission (SEC); it also caught the attention of Iowa Republican Senator Chuck Grassley. Grassley took the typical Republican position and immediately blamed the African American in the Oval Office as the “source of the leak” and used his position as a member of the Senate Finance and Judiciary committees to investigate the Obama Administration. However, as is nearly always the case when Republicans accuse and attack the White House of wrongdoing, it turns out the insider trading leak originated with a House Republican; and a former aide to none other than Republican Senator Chuck Grassley.

In a Wall Street Journal story last week, it was reported that federal regulators and law enforcement officials are focusing their attention on a Republican health policy staffer in the House. According to a lawsuit filed by the Securities and Exchange Commission, investigators believe the staffer “may have been” the source of the leak. The SEC lawsuit sought to force the staffer to turn over records to investigators through the use of subpoenas, but he and the House committee refused to comply.

The SEC lawsuit claims that the House staffer, Brian Sutter, spoke with a lobbyist identified as Mark Hayes on the day of the leak; Hayes just happens to be a former aide to Senator Chuck Grassley. The suit alleges that Sutter was in touch with Hayes by both email and phone and that they discussed the upcoming Medicare policy change. The SEC also alleges that Grassley’s former aide, Hayes, then gave the information to a research firm, which distributed the flash that set off the flurry of stock trading. If the allegations are borne out, the, Republican staffer and Grassley’s former aide at the very least violated the 2012 law, Stop Trading on Congressional Knowledge Act, that forbids government officials from disclosing non-public information that could affect stock prices.

Grassley suspected the leaks regarding health policy changes came from the Obama administration since at least December 2011. He said “My concern is that these allegations suggest a continuing pattern in which Obama administration officials disseminate information to well-connected lobbyists in non-public settings.” In April 2013, Grassley became convinced the White House was guilty of wrongdoing when the story broke that the rash of stock trades followed the leak of the White House’s Medicare policy change. The change “reversed proposed funding cuts for private insurers and the leak became a market-moving event.” The very next day Grassley sent a letter to the acting administrator of the Centers for Medicare Services (CMS) claiming “the incident raises questions regarding political intelligence brokers’ ability to gather information from CMS in order to predict market moving events.

 

About a week later, Grassley aired his accusations on the floor of the Senate saying, “When information leaks from the administration that has the ability to cause significant market movement, it is wrong and quite possibly illegal.” He then asserted the leaks could have come from the “White House itself,” and intimated that the CMS administrator would have trouble getting to the bottom of the issue given that the leak lied deep within the administration. Grassley said, “I obviously do not believe that you can get the folks at Health and Human Services or the Office of Management and Budget or the White House without some help, so I am going to pursue this. So you inform them that I expect action to be taken, and I am going to get to the bottom of it one way or the other.” Senator Grassley did not get to the bottom of the so-called scandal, but the Securities and Exchange Commission and Department of Justice certainly did and predictably they filed a lawsuit and launched a criminal probe respectively; into Republicans.

Last Thursday, the Wall Street Journal reported that the top Republican health staffer on the House Ways and Means Committee, Brian Sutter, had been subpoenaed by both the SEC and Justice Department to testify before a grand jury in Manhattan federal court. The SEC demanded records from Sutter, as well as the House committee, and had to file another lawsuit when Sutter and the committee refused to comply with its subpoenas. Lawyers for the Republican House argued that the Constitution protected them from complying with anyone’s subpoenas they claimed “run afoul of the Constitution’s Speech or Debate Clause;” they will respond at their own convenience on those grounds.

It has gotten to the point that every time Republicans target the Obama Administration for some purported scandal or wrongdoing, it is a safe bet they are guilty of precisely what they accuse the President of doing. Darrell Issa created the so-called I.R.S. scandal and is still wasting taxpayer time and money, and at the direction of Fox News, John Boehner initiated yet another investigation into the Benghazi attacks that Republicans are ultimately responsible for allowing. Now, Grassley’s big investigation into White House leaks initiated a pair of SEC lawsuits and a Justice Department criminal probe into a House Republican staffer and former aide to Senator Grassley.

At some juncture one would think Republicans would either get to doing the work they were sent to Washington to do for the American people, or at least delve deeply into who really is corrupt and scandalous in Washington. However, they will hardly investigate themselves, especially when there is a very visible Black man to blame for their actions and it reveals there obsession with President Obama is not borne of belief he is guilty of wrongdoing, but that he is an African American.

Grassley's Hunt For An Obama Insider Trading Scandal Backfires On GOP

The SEC lawsuit alleges that the House staffer, Brian Sutter, spoke with a lobbyist -- identified by the Journal as Mark Hayes, who happens to be a former aide to Grassley -- on the day of the leak. The suit alleges that Sutter was in touch with Hayes by both email and phone and that they discussed the upcoming Medicare policy change. Hayes then allegedly gave the information to a research firm, which distributed the flash that set off the trading, according to the SEC. A 2012 law, the Stop Trading on Congressional Knowledge Act, prohibits government officials from disclosing non-public information that could affect stock prices, the Wall Street Journal reported.

Grassley's office declined to comment to TPM about the latest development. He has also reportedly made inquiries into whether an aide to Sen. Orrin Hatch, his senior colleague on the Senate Finance Committee, had any role in the leak. Additionally, according to Politico, he has raised questions about Hayes’s role in the leaks. But the Obama administration appears to have been Grassley's initial and most public target when trying to identify the source of the leak.

Grassley has had suspicions about leaks from the Obama administration regarding health policy changes since at least 2011. For example, in a letter dated Dec. 12, 2011, the senator brought up his hunch with Marilyn Tavenner, who was then acting administrator of the Centers for Medicare and Medicaid Services.

Grassley’s letter said he was in contact with a “whistleblower within CMS” who had accused top administration officials of meeting with lobbyists and hedge fund brokers in non-public settings.

"My concern is that these allegations suggest a continuing pattern in which (administration) officials ... under the cover of reaching out and meeting with stakeholders, have disseminated information to well-connected lobbyists in non-public settings," he wrote.

Grassley’s suspicions were heightened in April 2013 when the Wall Street Journal broke the news about the stock trades that followed the leak of the Medicare policy change. The change reversed proposed funding cuts for private insurers and the leak became a market-moving event. Grassley sent a letter to Tavenner the day after the article was published, saying the incident "raises questions regarding political intelligence brokers’ ability to gather information from CMS in order to predict market moving events" and invoked his December 2011 inquiry.

Grassley took an even more forceful tone at a Senate hearing less than a week later. In the hearing, for Tavenner's confirmation to permanently take the administrator’s role, Grassley spent the entirety of his allotted time peppering her with questions about the leak.

"When information leaks from the administration that has the ability to cause significant market movement, it is wrong and quite possibly illegal," he said. He pointed to the litany of agencies where the leak could have come from -- including the White House itself -- and intimated that Tavenner might have trouble getting to the bottom of the issue given that the leak might lie deep within the administration.

"I obviously do not believe that you can get the folks at (Health and Human Services) or (the Office of Management and Budget) or the White House without some help, so I am going to pursue this," he said. "So you inform them that, if this is beyond CMS, I expect action to be taken, and I am going to get to the bottom of it one way or the other."

Meanwhile, the Justice Department has opened a criminal probe, and the Securities and Exchange Commission is pursuing a civil enforcement action, both in an attempt to get to the bottom of the leak.

On Thursday, the Wall Street Journal reported that Sutter, the top Republican health staffer on the House Ways and Means Committee, had been subpoenaed by both. The Justice Department wants Sutter to testify before a grand jury in Manhattan federal court. The SEC was seeking records from him as well as the House committee.

In a follow-up article on Saturday, the Journal reported the SEC had filed a lawsuit after Sutter and the committee refused to comply with its subpoenas. House lawyers, according to the SEC, had argued that the Constitution protected them from having to comply with the subpoenas. But as part of the suit, the SEC said that it had reason to believe Sutter “may have been" the source of the leak.

A spokesperson for the House Ways and Means Committee declined to comment. The counsel's office for the House, which is representing both Sutter and the committee in the lawsuit, told TPM that the subpoenas "run seriously afoul of the Constitution's Speech or Debate Clause, and we expect to respond in due course on that ground, among others." Hayes did not return a call or email seeking comment.

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