Justice Dept. How-To Manual : FBI Went ‘by the Book’ in Sting on State Legislature

SACRAMENTO — When the FBI tipped off Gov. George Deukmejian that a bill headed toward his desk was the product of its Capitol sting operation and should be vetoed, the agents were doing their jobs “by the book.”

When they turned a Senate aide into an informant, offered campaign contributions to legislators in exchange for favors and secretly taped meetings with lawmakers at a Sacramento hotel, the federal authorities also were, in each case, following “the book.”

The book, in this case, is a compilation of suggested tactics for investigating political corruption, a colorful how-to manual that attempts to lead prosecutors and federal agents past the many obstacles that can easily derail a promising probe.

Although the 487-page tome was published in February, well into the FBI’s 3-year-long Sacramento sting, it is in fact a recounting of long-followed Justice Department practice regarding the conduct of corruption investigations. It reads like a road map to the thinking of federal authorities as they established and carried out what many consider to be the most serious investigation of the California Legislature in the state’s history.

The sting, code-named Brispec for “bribery-special interests,” involved the creation of phony companies that sponsored legislation and then paid money to politicians. At least two informants are known to have been wired with recording devices.

So far, Assembly Republican Leader Pat Nolan of Glendale, Assembly members Frank Hill (R-Whittier) and Gwen Moore (D-Los Angeles) and Sen. Joseph B. Montoya (D-Whittier) have been named in the probe. Paul Carpenter, a former Democratic senator from Norwalk who is now a member of the State Board of Equalization, and four others have also been implicated. No charges have been filed.

Since word of the sting broke in late August, legislators, lobbyists, reporters and others have scrambled to make sense of its many parts. With the FBI and the U.S. attorney’s office refusing to comment publicly on the case, there has been no shortage of questions about why the federal authorities did things the way they did. The Justice Department manual, titled “Prosecution of Public Corruption Cases,” provides some of the answers.

2 Bills Involved

The sting centered on the legislative activity surrounding two bills, one in 1986 and one in 1988, that were written to benefit only the FBI’s phony companies, which claimed to be planning a shrimp-processing plant in the Sacramento area.

Political observers around the Capitol guessed that the bills were narrowly drafted because such measures often need well-placed campaign contributions to win passage. But the Justice Department manual suggests another reason, recommending that investigators exercise “minimum intrusion” into the legislative process.

“If a bill is introduced, it should be narrow, special-interest type of legislation that affects no one in the jurisdiction except the entity providing cover for the FBI,” the manual states. Departure from this practice could have serious consequences, the book warns:

“Care must be taken to make sure that . . . the Justice Department does not buy and pay for legislation that will affect the lives of the citizenry. It is simply not acceptable to cause a dry county to go wet or a state to legalize gambling no matter how many crooked legislators are caught in the process.”

Once a bill is introduced, the guidebook suggests that the FBI make every effort to derail it prior to enactment into law. This probably explains why an FBI agent tipped off Deukmejian, who vetoed both measures.

“In some cases, the FBI could bribe a legislator into getting a bill introduced, but no amount of money or suasion could stop it from being favorably voted on,” wrote Gerald E. McDowell, chief of the Justice Department’s public integrity section, in one section of the manual. “If it is feasible, the governor of the state should be informed so that the legislation can be vetoed.”

Start With Minor Figures

A key element of the FBI sting was the way agents started with minor figures--the president of a nonprofit economic development corporation and two legislative aides--and worked their way to the lawmakers.

Marvin Levin, a Sacramento-area developer, helped get the investigation moving in 1986 by becoming the FBI’s first informant in the case. He introduced federal agents to Senate aide John Shahabian, who was stung while soliciting political contributions for then-Sen. Carpenter. In the fall of 1987, the agents confronted Shahabian and persuaded him to work as an informant.

Mark E. Robinson, a former top Justice Department official who authored part of the manual, suggested that agents consider a “carefully orchestrated confrontation” in which the subject of the investigation is shown some of the evidence against him and asked to cooperate. The basic pitch, Robinson writes, is that “the train is leaving the station and I don’t much care whether (the subject of the investigation) is on it or under it.”

Robinson’s advice meshes well with what is known of the day when federal agents confronted Shahabian. The agents surprised Shahabian at a 7 a.m. meeting, showed him enlarged photos of himself meeting with undercover operatives and made it clear that he might go to prison if he refused to cooperate. He accepted their offer.

The book suggests that agents exercise great care when negotiating to “turn” a subject into an informant.

“Don’t give up more than you have to,” Stephen S. Trott, a former associate attorney general who is a federal judge, advises in his section of the book. “Total immunity from prosecution should be used only as a last resort.”

Indeed, say sources close to the Capitol investigation, Shahabian at first was told that federal agents would “put in a good word for him” with prosecutors if he cooperated. Only after Shahabian had proven his value as an informant was he promised full immunity from prosecution as long as he continued to help federal authorities.

‘Most Powerful Tool’

When immunity is used, the book says, it can be “the most powerful tool available to federal prosecutors seeking to obtain cooperation of corruption witnesses.” Immunity, writes Robinson, can be “the dynamite that blasts a corruption investigation wide open.”

Once Shahabian was on board, the FBI used him as a conduit to legislators. He helped point them toward lawmakers who might pressure the agents--posing as businessmen--for contributions or honorariums. But the guidebook advises agents to use care when contributing to a political campaign.

“Timely cash infusions into a corrupt candidate’s coffers prior to an election may give a crook all the resources he needs to win the election,” the book says. “It would be ironic if an undercover investigation of a corrupt politician served as a cash cow that helped keep the bad guys in power.”

During the first round of the sting in 1986, the FBI used only campaign contributions, not honorariums, in their sting. Assembly Speaker Willie Brown (D-San Francisco) got $1,000. Carpenter received $20,000, and Assemblywoman Moore was given $8,500. She returned $5,000 of that to the contributors.

The manual warns that it may be difficult to establish that a campaign contribution was accepted as a bribe because contributions are “frequently given with the hope, if not the expectation, that the recipient will vote in a particular way.”

That may be why the FBI this year added honorariums--or gifts, usually in the form of speech-making fees--to its bag of tricks. Unlike campaign contributions, which legally cannot be used for the personal gain of the recipient, the honorariums can go directly into a lawmaker’s pocket.

Sen. Montoya said he was given a $3,000 fee; Assemblyman Hill, according to sources, received an honorarium of about $2,500; and Sen. Alan Robbins (D-Van Nuys) said he was offered but turned down a similar speaking fee.

The fact that the FBI paid what it considered to be bribes shows that the agents were convinced that they had a serious case. According to the manual, every payment of a bribe must first be approved by FBI headquarters in Washington.

Before a bribe is approved, the FBI field office is required to show, through tape-recorded conversations, that a public official has a clear “predisposition to demand and/or accept bribes.” It is not enough, the manual warns, to take the word of a “middleman” acting as an intermediary.

“The prosecutor should remind the investigating team that when a middleman throws out a public official’s name as being corrupt--it ain’t necessarily so,” the book says. “Predication beyond this bare bones should be obtained before paying a bribe.”

Taping Recommended

The best way to do this, the book suggests, is to get the politicians on tape. Some subjects of the Sacramento sting were captured on videotape meeting with agents at the newly opened Hyatt Regency across the street from the Capitol.

“Videotaped evidence of a crime has enormous impact at trial, particularly in public corruption cases where the defendant’s criminal intent is often the principal issue,” wrote William A. Keefer, deputy chief of the Justice Department’s public integrity section.

The sting’s cover was blown on Aug. 24 when the FBI confronted Nolan aide Karin Watson and tried to turn her into an informant. Agents are always mindful that the potential informant will balk and go public with word of the probe.

So when Watson refused, about 30 agents who were standing by in a nearby hotel quickly swept into the Capitol, searching offices and interviewing legislators and aides.

The Justice Department manual provides a clue to why FBI agents confronted Watson when they did.

“Undercover corruption investigations should not surface between September and early November,” the manual advises. “This is election season, and some malcontent will always charge the government with attempting to manipulate the outcome of the election.”

Now that a federal grand jury is weighing evidence to determine if indictments should be handed down, Capitol insiders are wondering whether prosecutors will file charges before the Nov. 8 elections.

One source close to the investigation says this question may be moot because prosecutors are still several weeks away from seeking indictments of legislators or aides. Bank records and other documents are still being gathered, and this is a slow process. Also, FBI agents only recently began interviewing people who might have evidence of Capitol corruption, something they could not do during the sting because it might have blown their cover.

Guidance Offered

But if an investigation of a legislator is completed before Election Day and prosecutors are forced to decide whether to move forward with indictments, they can look to the Justice Department manual for guidance.

The handbook notes that such a decision is “particularly difficult.” Some prosecutors believe it is unfair to indict public officials shortly before an election when they will not have time to defend themselves at trial; others think that voters have a right to know about the allegations before they go to the polls.

“The rule most prosecutors follow is that the decision to indict the public official should be made without considering its effect on an election,” the book says. “The indictment should be returned when it is ready--not earlier or later. To do otherwise is to favor a party or a candidate or to create the appearance of doing so.”

Times staff writers Paul Jacobs and Dan Morain contributed to this article.

ADVICE FOR RUNNING A STING Here are some excerpts from the Justice Department’s primer on undercover operations: “Legislatures--from city councils to the United States Congress--make the laws which govern us all. When you suspect that some of these laws are bought and paid for by bribery, an undercover operation is often the best way to gain evidence of the corruption. Care must be taken to make sure that in the course of our investigations, the Justice Department does not buy and pay for legislation that will affect the lives of the citizenry. It is simply not acceptable to cause a dry county to go wet, or a state to legalize gambling no matter how many crooked legislators are caught in the process.’

“Once an “undercover” bill is introduced, the FBI should make every effort to derail it prior to passage. This is easier said than done. In some cases the FBI could bribe a legislator into getting a bill introduced, but no amount of money or suasion could stop it from being favorably voted on. If it is feasible, the governor of the state should be informed so that the legislation can be vetoed.’

“Timely cash infusions into a corrupt candidates’s coffers prior to an election may give a crook all the resources he needs to win the election. It would be ironic if an undercover investigation of a corrupt politician served as a cash cow that helped keep the bad guys in power.’

“To the extent it can justifiably be prevented, undercover corruption investigations should not surface between September and early November. This is election season, and some malcontent will always charge the government with attempting to manipulate the outcome of the election if a Federal corruption case surfaces during these months. If luck and good foresight are with you all your corruption undercover operations will end between January and March.’

“Finally, there should be no leaks--no leaks--no leaks!’