FBI found no merit in secret report

Friday, Feb. 16, 2001 | 11:08 a.m.

The FBI found no merit in a confidential intelligence report on top Nevada officials that it received from the attorney general's office four years ago, Las Vegas FBI chief Grant Ashley said Thursday.

The 21-page report, written in December 1996 by an investigator for Attorney General Frankie Sue Del Papa, was turned over to the FBI in March 1997 by one of Del Papa's trusted deputies.

It contained unsubstantiated allegations that several of Del Papa's well-known fellow Democrats, including former Gov. Bob Miller, Sen. Harry Reid and former Sen. Richard Bryan, could be bribed on gaming matters.

All three men, who were in office at the time, have denounced the once-secret memorandum, which is filled with accusations from unnamed second- and third-hand sources.

"The FBI is aware of the contents of the report compiled by the Nevada Attorney General's office during 1996," Ashley said in a prepared statement to the Sun Thursday. "The report, neither then nor now, contains sufficient information upon which to initiate an investigation.

Ashley said he was departing from the FBI's normal "no comment" in such cases because of the "unusual circumstances surrounding this situation."

He did not explain what he meant by unusual circumstances, but he is believed to have been referring to the uncorroborated bribery allegations about the high-ranking elected officials, all of whom have reputations for impeccable integrity.

The report also quoted unnamed informants as saying prominent gaming lawyer Frank Schreck would serve as a conduit for bribes to then state Gaming Control Board Chairman Bill Bible, a political adversary of Del Papa's.

And the report included a claim that the Central Intelligence Agency was using the gaming industry to launder money.

Del Papa testified under oath last month that she never saw the intelligence report before her loyal aide, Deputy Attorney General David Thompson, gave it to the FBI. Thompson had been hired to spearhead a secret investigation of Bible and other top gaming regulators.

The report was kept secret for three years until it was made public last April in a District Court lawsuit filed against Del Papa by Mike Anzalone, one of her former investigators.

Anzalone alleged in the suit that he was forced to resign in February 1996 because he wouldn't participate in what he described as an intelligence probe of top gaming regulators.

Control Board member Bobby Siller, who was in charge of the Las Vegas FBI office four years ago, said Thursday that he never saw the attorney general's confidential memorandum, which was written by Ron Wheatley, another former Del Papa investigator.

"During my watch, at no time did I ever see this report, nor was I advised of this report," Siller said. "There was no investigation of any individuals as a result of this report."

In a March 31, 1997, confidential memo to Del Papa, Thompson acknowledged that the accusations against the ranking officials had not been "verified" before he faxed the report to Richard Jessinger, who headed the FBI's White Collar Crime Squad, which handled political corruption cases.

Thompson told Del Papa it would be unwise to release the information because it might harm reputations and "prejudice whatever investigation the FBI might take."

On Wednesday, Bryan, a former attorney general now practicing law in Las Vegas, said it would be "highly unusual" for Del Papa not to have seen the confidential report before Thompson gave it to the FBI.

"That's not routine," Bryan said. "That is a matter of considerable significance, when you're talking about potential corruption of high-level officials. That should have been called to her attention."

Allen Lichtenstein, general counsel for the American Civil Liberties Union in Las Vegas, said Thursday that Del Papa's claim of ignorance about the document does not bode well for the way her office has been managed.

"If she in fact did not see it, and things are going on there totally without her knowledge, it does raise some questions about how the place is run." Lichtenstein said. "It raises questions about the chain of command and how decisions are being made and by whom."

Lichtenstein said he also is concerned about the allegations that Del Papa's office had conducted an intelligence investigation.

"The idea of the attorney general doing these kinds of investigations is also very troubling because that seems to be beyond the realm of what the attorney general's office is out there to do," he said.

State Sen. Mark James, R-Las Vegas, who chairs the Judiciary Committee, said in a telephone interview from Carson City that he's bothered by the way the unsubstantiated allegations about the high-profile officials wound up in the writings of a state agency.

"The whole thing is a concern," said James, who is considering a bid for attorney general in 2002. "I find it surprising that someone out there would level these kinds of allegations against these individuals and that it would materialize into a report."

Del Papa has insisted her office does not conduct intelligence investigations.

But records have surfaced in the Anzalone case that show background checks were done on Bible, Schreck and some of Bible's employees at the Control Board.

Anzalone and Gary Wright, another former investigator with the office, have alleged under oath that Thompson wanted them to obtain Bible's bank records without a subpoena, a charge Thompson has denied.

Thompson's secret investigation was conducted under the cover of a criminal probe into the slot cheating activities of former Control Board electronics expert Ron Harris.

In his 1997 memo to Del Papa, Thompson said the investigation "never got beyond the stage of taking reports."

Wheatley, however, in a Nov. 17 deposition made public this week, suggested their still were ongoing investigations into the allegations contained in his confidential memorandum.

Asked at the deposition about the CIA money laundering allegations, Wheatley said: "I'm not going to go into that portion of this document. "There are continuing investigations, to the best of my knowledge, and I will not discuss it."

Wheatley took a civilian job as a crime analyst for the Metro Police Department after he left the attorney general's office in 1999.

His intelligence report also contains unsubstantiated allegations of questionable conduct involving his boss, Sheriff Jerry Keller, when Keller was a police commander.