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Justice Department Moves to Clear Some in Check Scandal

September 9, 1992

WASHINGTON (AP) _ The Justice Department today began notifying an unspecified number of lawmakers they were cleared of criminal wrongdoing in the politically charged House bank scandal.

The move by special counsel Malcolm R. Wilkey leaves other House members under a lingering legal and political cloud less than eight weeks before Election Day.

″On the evidence we have reviewed, I have concluded that there is no basis for pursuing a further inquiry regarding possible criminal violations concerning your account,″ Wilkey’s letter said.

A separate Justice Department statement said ″the process of issuing clearance letters has begun. The letters are being issued to account holders at the former banking facility ... who were identified by the House ethics committee as having overdrawn their account.″

The statement said it is Wilkey’s ″firm expectation that the vast majority of members and former members under review will receive clearance letters.″

The department did not release names of those who received the letters and it was not immediately clear how many lawmakers would receive the notification.

Wilkey said in the letter that he would notify any member that he or she was cleared ″as soon as we have satisfied ourselves that the records do not disclose any conduct which would warrant further inquiry.″

Wilkey prepared the letter after reviewing thousands of bad checks drawn on 329 accounts by current and former members of Congress during the 39-month period ended last Oct. 3. Another 170 accounts had no overdrafts and have not been part of the probe.

Lawmakers wrote more than 24,000 overdrafts without financial penalty, in effect giving them interest-free loans. The House ethics committee conducted its own study of the situation.

The check scandal, which erupted in the spring of 1991, already has led to the defeat of several members of Congress.

In the letter, Wilkey cautioned that ″some accounts are more voluminous and complex than others,″ raising the possibility that some lawmakers would not know their status by election day.

Wilkey also said that ″if additional information came to our attention, we would be required to re-evaluate our conclusions.″

Attorney General William Barr appointed Wilkey last March to conduct a criminal investigation of the bank accounts.

Legal experts said Wilkey would try to determine whether a variety of banking, fraud, theft and campaign finance laws may have been violated.

One focus of the investigation likely involves check kiting. This occurs when someone covers overdrafts on one bank account by writing overdrafts from a second account. The kiting is accomplished by taking advantage of the ″float,″ the time it takes for checks to clear. Such an action could violate federal mail fraud, wire fraud and bank fraud statutes.

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