A Very Reassuring Choice

As I've counseled concerned liberals here repeatedly--particularly as concern over Obama's potential choice to head the CIA flared up--the person Obama selects to head up the Office of Legal Counsel will be much more important in steering the country away from the policies of the last eight years than whoever he chooses to head up the CIA. As I wrote a while back: "The intelligence agencies will always want to do as much as they are legally permitted to do. The key is having someone at the OLC who respects the law and the Constitution and is willing to draw the lines where they should be."

Today Obama announced his choice to head the OLC: Indiana University Professor Dawn Johnsen. Given their presence on Obama's transition team and prior experience at the OLC, I figured (and hoped) that Obama would ultimately choose either Johnsen or Georgetown Professor Marty Ledermen to head OLC. Either would have been an excellent choice.

As Glenn Greenwald documents, Johnsen has been an outspoken critic of the Bush administration's legal policies, particularly its illegal surveillance and torture policies, which were justified by odious and deeply-flawed legal opinions issued by Bush's OLC (courtesy of John Yoo). It's hard to overstate how reassuring I will find it to have someone like Johnsen at the helm at OLC. The difference between Johnsen and Yoo couldn't be more stark.

This is an excellent choice and it will go a long way toward alleviating the fears that many have that Obama will continue on the legal trajectory set by the Bush administration.

The Obama Administration's First Test

An incredibly important case is scheduled for argument this Spring in the Supreme Court, and the Obama-led Justice Department won't have much time to decide how to handle it.  The government's brief is due February 20.  

It is the case of Ali al-Marri, a Qatari national who was arrested in his home in Peoria, Illinois shortly after 9/11.  For over a year, al-Marri was held on federal criminal charges.  Then, in 2003, on the eve of his criminal trial, he was transferred into military custody at the order of the President and has been held in a military brig in South Carolina ever since.  Much of that time he was held incommunicado for the purposes of interrogation.  

Al-Marri's case is particularly significant because he is the only person currently being held as an "enemy combatant" within the United States.  Though not a U.S. citizen (like Jose Padilla), al-Marri was a legal resident at the time of his arrest, and under long-established precedent, legal residents are entitled to the same due process under our criminal justice system as citizens.  
The Bush administration claims that al-Marri is an al-Qaeda "sleeper agent," and therefore the President has the authority, both inherently and under the AUMF, to militarily detain him as an enemy combatant until the "end of hostilities" (i.e. forever).    

When Obama takes office in a few weeks, his Justice Department team will have to make some immediate decisions regarding not just its legal position but the consequences of that position with respect to al-Marri's current state of detention.  If they conclude that the legal rationale underlying al-Marri's detention is untenable, they'll have to do more than edit their brief; they'll have to do something with al-Marri himself.  My guess is that they'll either institute criminal charges (as the Bush administration eventually did with Jose Padilla) or they'll commence deportation proceedings and detain al-Marri pursuant to the Patriot Act and immigration law.

If they do either of those things, they'll have the option of arguing that al-Marri's case is now moot, but my guess is that the Supreme Court wants to rule on this case and will find a reason to proceed to the merits.

So what position will the Obama administration take?  Will they agree with the four dissenting judges on the Fourth Circuit that combatant status is limited to those who fight on behalf of a enemy nation, not a stateless organization like al Qaeda?  My guess is no.  This position, while stronger on the merits than its critics give it credit for, is one that I don't imagine any administration would be willing to concede. 

I think the best case scenario is that we see a concession from the government that Congress has not authorized the President to military detain people found legally residing within the United States.  The phrase "within the United States" was intentionally left out of the AUMF, and for a reason.  Furthermore, the Patriot Act, which was passed just weeks later, specifically provides for a 7 day detention period for "terrorist aliens" found within the United States, after which criminal or deportation proceedings must be initiated.  In fact, as I've documented previously, the Bush administration pushed hard to have an indefinite detention power included in the Patriot Act.  Both Republicans and Democrats in Congress pushed back and the result was the 7 day detention period currently authorized by the law.   

Now, under ex parte Milligan, arguably even Congress does not have the power to authorize the military detention of U.S. persons when the courts are otherwise open and functioning.  But again, this strikes me as a position that no administration is likely to concede, particularly in light of ex parte Quirin and Hamdi.  

I do expect that the Obama administration will make some concessions, though.  The most likely, it seems to me, is a concession that the basis for originally detaining al-Marri was improper.  Remember, al-Marri was already in federal custody and facing trial on criminal charges when the Bush administration transferred him to military custody.  There's little question that this move was made for interrogation purposes.  The government had been trying to pressure al-Marri into talking, but he was intent on going to trial.  So instead they transferred him to military custody and held him incommunicado for 18 months in order to extract information from him (probably by unlawful techniques).   

Even if you assume that the President, pursuant to the AUMF, has the authority to military detain al Qaeda "combatants" found legally residing within the U.S., the justification for such detention has to be limited to incapacitation, to preventing the combatant from returning to the "battlefield" and doing more harm.  That's the purpose of detention under the laws of war.  In this case, al-Marri was already in custody on a criminal matter.  He was incapacitated and there was no chance of him "returning to the battlefield."  Under those circumstances, transferring him to military custody is not justified, even if you accept all of the government's premises.  

This a real test for the Obama administration.  If they don't back off at least some of the positions taken by the Bush administration in this case, it will leave a lot of people (myself very much included) very disappointed and angry.  

Why No Posts Lately?

It's a combination of being busy at my real job and being not particularly interested in most of the debates that have been raging in the blogosphere lately.  For the record, though, Rick Warren is a wanker and I wish he didn't have a role in the inauguration.  

I'll get back to posting before long.  

The Taxpayer Bill for Madoff's Fraud

Felix Salmon at Portfolio.com makes an overlooked point regarding the tax implications of Bernard Madoff's massive fraud: because investors losses will be categorized as "theft losses," they will be entirely deductible. Not only that, but these same investors will be entitled to a rebate of all the taxes they've paid on fictitious capital gains over the years (Madoff's supposed trading strategy involved high turnover, thus requiring recognition of capital gains).

These tax benefits won't even come close to making up for the losses Madoff's investors are going to incur, but they do mean that the federal government is going to share in the misery. Salmon writes:

I haven't seen estimates of the total cost of the Madoff fraud to the US government, but it's surely in the billions, and quite possibly in tens of billions. Which is real money even by government standards.

Indeed, it's probably in the same ballpark as the pricetag for bailing out the auto industry.

What Possible Grounds Are There For Withholding OLC Opinions?

I somehow missed this story this other day:

A senior Justice Department official said Tuesday that "99.8 percent" of the department's work with President-elect Barack Obama's transition team has gone smoothly. The 0.2 percent snag: The department has reservations about granting the team's request to review classified legal opinions related to secret CIA and National Security Agency programs.

In other words, they're withholding the highly-controversial opinions that authorized torture, warrantless surveillance, etc. What reason are they giving for withholding these memos?

At the roundtable, Mukasey said OLC opinions are issued at the request of other agencies with their "own equity or interest in the information."

"And so what we try to do is determine whether, and to what extent, we can clear that information and try to do it as quickly as we can so as to get it to the transition team so that they're aware of all the things that they need when they take over on the 21st," Mukasey said, according to a transcript provided by the department.

That's nonsense. As Marty Lederman (a former OLC lawyer) has stressed continually over the last few years, the argument for keeping OLC memos from the public (at least in redacted form) is tenuous in itself. There is no defensible reason whatsoever for withholding those memos from Obama's Justice Department transition team. They're going to see them in a month anyway. Why be so difficult about it now? Is there some reason they're more worried about the content of those memos leaking now (as opposed to a month from now)?

The good news is that I have a feeling Lederman's views will eventually prevail. Why? Because he's on the transition team:

Obama's Justice Department transition team is led by Wilmer Cutler Pickering Hale and Dorr's David Ogden. Also on the team are OLC veterans Dawn Johnsen, a professor at Indiana University School of Law; Martin Lederman, a professor at Georgetown University Law Center; and Christopher Schroeder, a professor at Duke University School of Law.

I hope he stays on after the transition.

"A stunning fraud that appears to be of epic proportions"

(updated)

This is pretty nuts:

The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

"We are alleging a massive fraud — both in terms of scope and duration," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable."

Andrew M. Calamari, Associate Director of Enforcement in the SEC's New York Regional Office, added, "Our complaint alleges a stunning fraud that appears to be of epic proportions."

According to regulatory filings, the Madoff firm had more than $17 billion in assets under management as of the beginning of 2008. It appears that virtually all assets of the advisory business are missing.

Madoff founded the firm in 1960 and has been a prominent member of the securities industry throughout his career. Madoff served as vice chairman of the NASD, a member of its board of governors, and chairman of its New York region. He was also a member of NASDAQ Stock Market's board of governors and its executive committee and served as chairman of its trading committee.

UPDATE: This is Madoff speaking at a panel on October 20, 2007 entitled "The Future of the Stock Market":

[B]y and large in today’s regulatory environment, it’s virtually impossible to violate rules. This is something that the public really doesn’t understand. If you read things in the newspaper and you see somebody violate a rule, you say well, they’re always doing this. But it’s impossible for a violation to go undetected, certainly not for a considerable period of time. And when you consider the volumes of trading, the trillions of dollars of trading that go on today in Wall Street—I mean, our firm, for example, we trade an excess of $1 trillion dollars a year and that’s one firm—and you look at what we would consider to be the infractions, they’re relatively small, primarily because of all the regulation. Most firms do try to comply with that.

Unbelievable.

What Happens to the Blagojevich Case When Obama Takes Office?

Though there's no evidence whatsoever that Obama or his staff did anything improper in the Blagojevich matter, once Obama is sworn in, there is going to be pressure on the White House and the Attorney General's office to wall themselves off from the matter. There will be calls for the appointment of a Special Prosecutor. And that's not altogether unreasonable. If Obama's political appointees end up calling any of the shots in that case, it might at least create the appearance of impropriety.

Given that some Republicans are now making noise about holding up Eric Holder's confirmation, it might be wise for the Obama team to head off this issue now and have Holder announce that, once confirmed, he will designate Patrick Fitzgerald as a "Special Prosecutor" with respect to the Blagojevich case. Not only would that nip this issue in the bud, but it might well speed along Holder's confirmation. It would also underscore Obama's message that he has nothing to hide and is committed to transparency and good government.

Feeling Sorry for Jackson

Like David Kurtz, I'm inclined to think Jesse Jackson, Jr. is getting a raw deal here. The federal prosecutors who drafted the complaint made very little effort to hide the fact that "Senate Candidate 5" was Jackson. They also drafted the complaint in a way that makes Jackson look very bad without really marshaling any evidence that he actually did anything wrong. That may have been unavoidable given the state of the investigation and the need to move forward against Blagojevich, but it's still pretty unfair to Jackson.

The most damaging parts of the complaint, from Jackson's perspective, are these paragraphs:

On December 4, 2008, ROD BLAGOJEVICH spoke to Advisor B and informed Advisor B that he was giving Senate Candidate 5 greater consideration for the Senate seat because, among other reasons, if ROD BLAGOJEVICH ran for re-election Senate Candidate 5 would “raise[] money” for ROD BLAGOJEVICH, although ROD BLAGOJEVICH said he might “get some (money) up front, maybe” from Senate Candidate 5 to insure Senate Candidate 5 kept his promise about raising money for ROD BLAGOJEVICH. (In a recorded conversation on October 31, 2008, ROD BLAGOJEVICH described an earlier approach by an associate of Senate Candidate Five as follows: “We were approached ‘pay to play.’ That, you know, he’d raise me 500 grand. An emissary came. Then the other guy would raise a million, if I made him (Senate Candidate 5) a Senator.”)

Later on December 4, 2008, ROD BLAGOJEVICH spoke to Fundraiser A. ROD BLAGOJEVICH stated he was “elevating” Senate Candidate 5 on the list of candidates for the open Senate seat. ROD BLAGOJEVICH stated he might be able to cut a deal with Senate Candidate 5 that provided ROD BLAGOJEVICH with something “tangible up front.” ROD BLAGOJEVICH noted he was going to meet with Senate Candidate 5 in the next few days. ROD BLAGOJEVICH told Fundraiser A to reach out to Individual D, an individual who ROD BLAGOJEVICH is attempting to obtain campaign contributions from and who, based on intercepted phone calls, ROD BLAGOJEVICH believes to be close to Senate Candidate 5. ROD BLAGOJEVICH told Fundraiser A to tell Individual D that Senate Candidate 5 was very much a realistic candidate for the open Senate seat, but that ROD BLAGOJEVICH was getting “a lot of pressure” not to appoint Senate Candidate 5. ROD BLAGOJEVICH told Fundraiser A to tell Individual D that ROD BLAGOJEVICH had a problem with Senate Candidate 5 just promising to help ROD BLAGOJEVICH because ROD BLAGOJEVICH had a prior bad experience with Senate Candidate 5 not keeping his word. ROD BLAGOJEVICH told Fundraiser A to tell Individual D that if Senate Candidate 5 is going to be chosen to fill the Senate seat “some of this stuffs gotta start happening now . . .right now. . . and we gotta see it. You understand?” ROD BLAGOJEVICH told Fundraiser A that “you gotta be careful how you express that and assume everybody’s listening, the whole world is listening. You hear me?” ROD BLAGOJEVICH told Fundraiser A to tell Individual D if there is “tangible political support (campaign contributions) like you’ve said, start showing us now.” Fundraiser A stated he will call Individual D on the phone to communicate ROD BLAGOJEVICH’s message. ROD BLAGOJEVICH responded that “I would do it in person. I would not do it on the phone.” ROD BLAGOJEVICH told Fundraiser A to communicate the “urgency” of the situation to Individual D.

As you can see, most of this stuff is just Blagojevich and his advisers plotting amongst themselves. Because of the Chicago Tribune story on Dec. 5 revealing the existance of the federal wiretaps, this plan to approach Jackson never actually took place.

The only part that suggests any inappropriate action on Jackson's part is Blagojevich's Oct. 31 claim that "We were approached ‘pay to play.’ That, you know, he’d raise me 500 grand. An emissary came. Then the other guy would raise a million, if I made him (Senate Candidate 5) a Senator.”

That certainly doesn't sound good, but there are several layers of separation here from Jackson himself. First, this is Blagojevich's interpretation of a conversation he had, and as the rest of the complaint makes clear, Blagojevich is more than a little delusional. Second, Blagojevich didn't talk to Jackson himself. He talked to an "emissary." We have no idea who this person was or whether they were authorized by Jackson to say whatever it was they said. And finally, even if you assume that this was an authorized communication and that Blagojevich is accurately characterizing it, I'm not sure it rises to the level of anything criminal. Keep in mind that what is allegedly being offered here is future help raising campaign money, not cash or a vacation home or a position on a Board. Raising campaign money is a fairly routine political favor. It's what politicians do for each other, right out in the open most of the time. This admittedly feels a little sketchier, but perhaps only because it's being discussed in such explicit terms. Again, though, the evidence that Jackson actually made such an offer is slim.

It may well be that more evidence will surface against Jackson, that we haven't seen the full picture yet. But I think it's unfortunate that his name is being dragged through the mud based solely on the sketchy details in this complaint. He may well have done nothing wrong here.

The Hunt for a New CIA Director

Back when John Brennan's name was being floated to head up the CIA, I wrote:

The universe of people who have sufficient knowledge and experience to competently run our vast and sprawling intelligence apparatus is not very large and most of the qualified candidates are likely to be tainted in some way by their connections to the Bush administration. So while Brennan may now be out of the running, there's a reasonable likelihood that whoever is ultimately chosen will have a similar track record of questionable statements and associations.

Today, Marc Ambinder reports:

Sources say that Obama's team is having trouble finding a potential CIA director who lacks politically incriminating links to controversial Bush Administration policies and yet commands the respect of the agency's rank and file.

I'm not surprised. This is a genuine conundrum, which is why I was willing to cut Obama some slack on this particular pick. Obviously you'd like to find someone who wasn't involved in any way in carrying out the Bush's administration's illegal policies. On the other hand, if there's any place where competence matters, it's at the CIA. We don't want another Iraq WMD fiasco. And if you take someone who has been sitting on the sidelines for the last eight years and put them in charge of everything, the learning curve is going to be very steep.

In light of that reality, it's encouraging to me that the Obama team is at least trying to find someone who is free of taint from the Bush administration. Ultimately, though, I think the person Obama selects to head up the Justice Department (Eric Holder) and the Office of Legal Counsel (not yet announced) will be much more important in steering the country away from the policies of the last eight years. The intelligence agencies will always want to do as much as they are legally permitted to do. The key is having someone at the OLC who respects the law and the Constitution and is willing to draw the lines where they should be.