Vennes Info: Mariah Blake's Sloppy Reporting for Mother Jones Lets Michele Bachmann Off the Hook

Last week I wrote about Mariah Blake's lack of attribution in her Mother Jones article about Michele Bachmann's clawback of Vennes contributions - something the The Star Tribune & the AP published October 13,2013 and I reported back in June.

Like her godawful TNR article there's a bunch of sloppy statements in Blake's MoJo article:

1)"...Frank Vennes, a former North Dakota pawnshop owner who was recently sentenced to 15 years in prison for aiding and abetting fraud."

Frank Vennes pled guilty to two counts; aiding and abetting securities fraud and money laundering. Here is the plea agreement. According to the DOJ announcement of the second superseding indictment, had Vennes gone to trial he would have faced eight counts of securities fraud, two counts of mail fraud, six counts of wire fraud, three counts of money laundering, three counts of bank fraud, and two counts of making false statements on credit applications. Vennes was originally charged in an April 20, 2011 indictment with four counts of securities fraud and one count of money laundering.

2) "But she didn't return Vennes's donations—until now."

Well, not exactly. Bachmann attempted to dump some of the Vennes campaign donations early on - Karl Bremer wrote about that bizarre part of the pardon & campaign cash saga in his award-winning investigative series "Lawyers, Guns & Money: An Inside Look at the Political Pardon of Frank Vennes Jr." on the Ripple in Stillwater blog:

On Oct. 3, Ronald Rodgers in the OPA sent an email to Kenneth K. Lee, associate legal counsel for the White House who handled pardon applications.

“Ken, this is a pardon case that you asked us to take a second look at and we sent it through the wickets anew and then over to you on or about 1 July 2008 (redacted) no action by the President has been taken on the case.

“We just got a call from Congresswoman Michele Bachman’s (sic) office: they wanted to withdraw their letter of support that they submitted on behalf of the guy, though they didn’t specifically disclose the reason for it. It appears he is under investigation for a securities and/or wire fraud matter and they executed a search warrant last week in which he was implicated.”

Rodgers sent Lee a link to a September 26 Star-Tribune report on the Petters raid that named Vennes.

On Oct. 3, 2008, the OPA also sent a two-page fax, the contents of which are unknown, to Bachmann with the subject line “per your request.” However, the fax wasn’t sent to the congresswoman’s office, from which her pardon letters had been sent. It was sent to Bachmann’s campaign office in Minnesota.

That same day, displaying further signs of panic just weeks before the election, Bachmann tried to symbolically wash her hands of the Vennes’ most recent campaign contributions by donating the sum of $9,200—an amount equal to Frank and Kimberly Vennes’ June 30 donations to Bachmann, but only a small portion of Bachmann’s total take from the Vennes and Howse families—to Minnesota Teen Challenge, an organization closely linked with Vennes. That didn’t work out so well for the congresswoman either. Minnesota Teen Challenge returned the donation to Bachmann two weeks later.

“We didn’t want to be involved if it was dirty money,” said Rich Scherber, executive director of Minnesota Teen Challenge, which lost millions in the Petters Ponzi scheme after investing with Vennes. Scherber personally suffered a loss of $423,759 in the Petters Ponzi through investments with Vennes, according to court documents, some of which he may recover from Vennes’ seized assets.

(Bachmann ultimately donated the $9,200 to R3, a collaborative of Christian recovery groups that includes Minnesota Teen Challenge, but has kept the remaining $41,000 she got from the Vennes-Howse connection.)

3) "According to subsequent FBI wiretap recordings, Vennes knew he might face criminal charges..."

Tom Petters was recorded by a wire worn by his associate turned government witness Deanna Coleman (not a phone wiretap) talking about Vennes - not Vennes himself saying he knew he would face criminal charges. I am not aware of a phone wiretap of Frank Vennes talking about facing criminal charges. There's no way I can check Blake's source since her link is to the DOJ's collection of wire recordings and transcripts and not a specific recording or transcript.

4) "After being elected to Congress, Bachmann began lobbying for Vennes's pardon, an unusual step given that he lived outside her district:"

Blake does not explain why it is "unusual"for a congress member to help a non-constituent - there's a general ethics rule in Congress about devoting official resources to helping a non-constituent. This is from the House Ethics Committee manual from that time:

Assisting Non-Constituents

On occasion a Member’s publicized involvement in legislation or an issue of national concern will generate correspondence from individuals outside the district. A private citizen may communicate with any Member he or she desires. However, the Member’s ability to provide assistance to such individuals is limited.

The statute that establishes the Members’ Representational Allowance provides that the purpose of the allowance is “to support the conduct of the official and representational duties of a Member of the House of Representatives with respect to the district from which the Member is elected.”29 This statute does not prohibit a Member from ever responding to a non-constituent. In some instances, working for non-constituents on matters that are similar to those facing constituents may enable the Member better to serve his or her district. Other times, the Member may serve on a House committee that has the expertise and ability to provide the requested help. Of course, if a Member has personal knowledge regarding a matter or an individual, he or she may always communicate that knowledge to agency officials. As a general matter, however, a Member should not devote official resources to casework for individuals who live outside the district. When a Member is unable to assist such a person, the Member may refer the person to his or her own Representative or Senator.

Bachmann should have been investigated for writing a highly improper letter to the Pardon Attorney on official stationery lobbying for a presidential pardon for non-constituent, big-time donor Frank Vennes. Specifically, she should have been asked whether there was there a quid pro quo.

5) "At the time, the Petters fraud, which brought in more than $36 billion over the course of a decade, was the largest known Ponzi scheme in US history."

Blake also used this figure in her TNR article describing the Petters Ponzi scheme as a "$36 Billion Ponzi swindle". $36 billion is the amount that may have passed through the Petters scheme, but the total amount is usually described as $3.7 billion by the DOJ.

6) "There's no indication Bachmann knew about Vennes's ongoing criminal activity"

As a tax attorney, you would expect Michele Bachmann would know that selling promissory notes are securities and selling securities without a license is a crime. Also, according to the SEC promissory notes are a notorious red flag for fraud. As a felon, Vennes could not have and did not have a license. Bachmann cannot say she did not know much about Vennes' business because she says in her letter to the Pardon Attorney; "I am confident of Mr. Vennes' successful rehabilitation" and " I know from personal experience, Mr. Vennes has used his business position…" -

Those statements on her letter to the Pardon Attorney are bold assertions that implied Bachmann had thoroughly investigated Vennes' business Metro Gem, a fraudulent enterprise that acted as a feeder fund for the Petters Ponzi scheme. After the 2008 raid, Bachmann made a careful statement that in no way addressed the fact that she had personally vouched for Vennes' honesty. As a congress member, Rep. Bachmann had access to government resources to look into Mr.Vennes' business. Lying to a Federal law enforcement agent is a felony and Bachmann's letter was addressed to the Pardon Attorney who is an Assistant U.S. Attorney. Martha Stewart went to prison for that crime. Reporters need to ask Michele Bachmann whether she lied to the Pardon Attorney when she claimed she was confident that Mr. Vennes was rehabilitated.

Also, if Blake had attended recent court hearings as I have, she would know that attorneys discussed in open court how Bachmann lobbied the White House for a pardon for Frank Vennes and that the Bachmann letter was used by Vennes to assuage nervous clients.

But, perhaps the worst aspect for me of Mariah Blake's sloppy reporting is her implied assertion - "as I have reported" - that she and only she has reported the story of Frank Vennes and Michele Bachmann.

In a November 2, 2011 article in Mother Jones reporter Tim Murphy credits Karl Bremer with the initial Bachmann/Vennes investigative legwork:

Following up on reporting by Karl Bremer at Ripple in Stillwater, Blake explains how Frank Vennes and his partner, convicted Ponzi schemer Tom Petters, made millions on phony investments and then poured hundreds of thousands of dollars into political campaigns in the 2000s. Vennes' donations seemed to have a clear motive: receiving a presidential pardon for a prior felony conviction.

Many reporters and bloggers have written about this story over five years beginning with the Star Tribune's Jon Tevlin. Much of the mainstream reporting on the Vennes case has had a business focus concentrating on the fraud rather than Vennes' political pals who helped facilitate the fraud. Without a doubt, Karl Bremer who died last January did the essential investigative reporting on the political aspects on the Vennes case. Karl wrote about the politics of the Vennes case for the Minnesota Independent, the Dump Bachmann blog and a book we co-authored with Eva Young published by Wiley and Sons in 2011. I like to think that I am continuing Karl's work on this blog.

Local reporters and bloggers often provide information that national reporters amplify to a larger readership. Smart national reporters know that the origin of the scoop is often as interesting as the scoop itself as was the story of how Bluestem Prairie's Sally Jo Sorensen discovered Tom Emmer's bizarre testimonial commercial while watching a local wrestling TV show.

Another more important reason for mainstream reporters to link back to the original authors is to give readers a source to read up more about the subject. In her February 2, 2013 article "Frank Vennes and the Petters Ponzi scheme: a long, mysterious tale" Minnpost reporter Beth Hawkins let her readers know that the Vennes Info blog was a source for ongoing information on the case.

Crediting local reporters and bloggers does nothing to diminish the reputation of national reporters. Here's a quote from a June 28, 2011 broadcast of Democracy Now! from reporter Michelle Goldberg:

MICHELLE GOLDBERG: Well, yeah, I mean, obviously—you know, the local bloggers in Minnesota have been doing amazing work on this for years now. And it’s amazing to me—I mean, I’ve written about it a little bit in The Daily Beast. It’s amazing to me that this issue hasn’t yet broken into the mainstream media, in part because it’s not just about Michele Bachmann, it’s also about Tim Pawlenty. And one of the interesting things about Frank Vennes is that, you know, the reason that he was able to kind of insinuate himself into Republican Party politics both—was both financial and ideological, right? He claimed to have found Jesus when he was imprisoned for cocaine—for money laundering and cocaine trafficking. And then he came out, having found Jesus, and made himself a kind of stalwart of Minnesota’s evangelical community. He, you know, kind of cultivated all of these powerful allies. And it was because of these powerful allies that he was able to accomplish his fraud.