He wasn’t born Rich. No, he was born Marc David Reich in Belgium in 1934 to a working-class Jewish father. Fearing the Nazis, his family fled to America in 1942, changed their name to Rich and tried to start life all over again.
Forty-one years later, Marc Rich was fleeing again, but this time the feared authority was not Adolph Hitler, but the assistant U.S. attorney for the Southern District of New York, Morris (Sandy) Weinberg. Rich’s crimes included tax evasion, fraud and “trading with the enemy” — Iran, during the hostage crisis.
Rich, by now a multimillionaire, was in Switzerland on the day his indictment came down and decided to stay. Once again, Rich started his life afresh, leaving his old wife Denise for a young blond model, changing the name of one of his Swiss firms and starting a new business.
On Jan. 20, President Clinton gave Rich a chance for a third “do-over.” Clinton wiped all the criminal charges off of Rich’s record with a presidential pardon on his last day in power. The Rich pardon has received special attention because Denise Rich raised and donated more than $1 million to the Democratic Party in recent years and also provided the Clintons directly with a $10,000 contribution to their legal defense fund and $7,300 worth of furniture.
Even left-wing newspapers and columnists have rebuked Clinton for pardoning Rich. Sen. Joseph Lieberman, D-Conn., declared himself “troubled.” Bush White House lawyers looked into overturning the pardon, and House Government Reform Committee Chairman Dan Burton, R-Ind., has launched an investigation.
The strange case started with the Emergency Petroleum Allocation Act of 1973, which established a system of price controls on crude oil produced in or imported to the United States. In 1980 and ’81, the Energy Department classified oil that came from wells that produce 10 barrels a day or less as “stripper” oil and exempted it from the price caps.
According to his 1983 indictment, Rich saw this regulation as a potential gold mine, setting up a scam to have his company’s oil relabeled “stripper” oil by a reseller, and thus seemingly exempted from the price controls.
To hide this activity and the illegal profits it produced, says Sandy Weinberg, the lead prosecutor in the case, Rich allegedly had a reseller claim Rich’s profits were really its own and then hand over the money through sham transactions to companies Rich controlled in Panama.
This led the government to charge Rich and his partner Pincus Green with fraud and the evasion of $42 million in taxes.
On top of that, Weinberg alleges, Rich bought crude oil from the Ayatollah Khomeini’s Iran while Iran was holding U.S. citizens hostage. This was in direct violation of a U.S. trade embargo — and, in effect, helped to arm the Iranians by giving them needed cash.
Bring all of these activities together into a concerted effort to make illegal profits, and you’ve got what the prosecutor called racketeering — violating federal criminal statutes designed for busting the Mafia.
Rich’s attorneys — at the time of the investigation as well as in the consideration of the pardon — uttered cries of “over-prosecution.” They hoped an agreement could be reached. Rich’s and Green’s attorney, Edward Bennett Williams, met with Weinberg a few times in 1983 to offer a deal: The companies would pay $100 million if all charges were dropped.
This was on top of the $50,000 per day that Marc Rich was paying in contempt-of-court fines for not turning over certain documents. Every Friday, Rich paid $200,000, and every Monday, $150,000. The payments eventually equaled $21 million.
Rich started paying the fines only after the feds, following an anonymous tip, “reeled in a plane on the runway at JFK” (Weinberg’s words) and found it was carrying a paralegal from a New York law firm who had checked on board with two steamer trunks full of subpoenaed documents.
The plane was on its way to Europe.
Weinberg recounts a June 1983 meeting with Williams, in which Williams put his feet up on the prosecutor’s desk and made the pitch. In Weinberg’s view, and in the view of his boss, then-U.S. Attorney Rudy Giuliani, Rich and Green deserved nothing short of jail time. If wealthy criminals could buy their way out of their misdeeds, the prosecutors felt, then they were effectively above the law.
Rich and Green, according to a few sources, were in Europe at the time of the negotiation. When Weinberg told Bennett, “No deal,” the two businessmen decided not to come back. Three months later, a federal grand jury handed down an indictment for fraud, tax evasion and trading with the enemy.
The resellers who were the main co-conspirators in the “stripper oil” fraud were convicted and served 12 months in jail. Rich’s companies pleaded guilty to 78 counts and paid over $150 million, while Rich and Green remained fugitives. Attempts at extradition failed.
That did not mean that they could not profit off the U.S. government. As then-Rep. Bob Wise, D-W.Va, unearthed in hearings in the early 1990s, while Rich was a fugitive the U.S. mint was contracting to buy metal from one of his companies.
Between fiscal years 1989 and 1992, the mint issued at least 21 separate contracts for nickel, zinc and copper to the company. Also, in 1988, the Defense Logistics Agency lifted its bar on contracting with the same company.
Wise characterized the scandal of dealing with the fugitive Rich this way: “I wonder how the average American taxpayer feels when they go to the shopping center and they reach into their pockets to pull out some change, some coins to pay the sales tax, which they are obligated to pay. And as they pull out that change and put those coins on the desk, they find that the person who provided the metal to the mint and is benefiting is accused of evading the very taxes that the citizen is paying. I don’t think that sits very well with the American taxpayer.”
But President Clinton completely ignored standard procedures in finally pardoning Rich. His action bypassed the Justice Department and blindsided Mary Jo White, the U.S. attorney who serves in the district formerly presided over by Giuliani.
Various lawyers had tried to get White to accept a plea-bargain from Rich for years. One of these lawyers, according to the New Yorker, was Lewis Libby, now chief of staff to Vice President Cheney. (Cheney’s office did not return calls on the matter.)
But when Jack Quinn, Clinton’s former White House counsel, took Rich as a client, things changed. Israeli Prime Minister Ehud Barak, the Anti-Defamation League and, of course, mega-fundraiser Denise Rich all submitted letters directly to Clinton, through Quinn, requesting a pardon.
Burton and Sen. Arlen Specter, R-Pa., now intend to investigate how the pardon came about. Did Clinton do it out of the kindness of his heart, or was there another consideration?
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