Wednesday, Nov. 5, 2003 | 11:39 a.m.
Section 314
Patriot Act Section 314: Cooperative efforts to deter money laundering
(1) REGULATIONS -- The Secretary shall, within 120 days after the date of enactment of this Act, adopt regulations to encourage further cooperation among financial institutions, their regulatory authorities, and law enforcement authorities, with the specific purpose of encouraging regulatory authorities and law enforcement authorities to share with financial institutions information regarding individuals, entities, and organizations engaged in or reasonably suspected based on credible evidence of engaging in terrorist acts or money laundering activities.
"I voted for the Patriot Act because I believed the legislation was necessary in the wake of the Sept. 11 attacks to help combat terrorism, and I remain supportive of the intent of the act," Reid said in a statement released by his office. "However, I am concerned about its use in this instance of the FBI's ongoing investigation.
"The circumstances surrounding the political corruption case are deplorable and investigators should get to the bottom of it so those who are guilty will be held accountable. But, it seems to me that the Patriot Act was used to circumvent existing laws in a case that had nothing to do with terrorism."
The FBI confirmed Monday that agents used the Patriot Act to get financial records as part of the ongoing political corruption probe involving strip club owner Michael Galardi's influence with local politicians.
Among those whose records were accessed were Clark County Commission Chairwoman Mary Kincaid-Chauncey, former commissioners Dario Herrera, Erin Kenny and Lance Malone, Las Vegas City Councilman Michael Mack and former councilman Michael McDonald, sources said.
Lawyers representing the other current and former politicians being investigated could not be reached for comment this morning.
Las Vegas FBI Special Agent in Charge Ellen Knowlton refused comment through a spokesman, citing the ongoing nature of the investigation.
"The Department of Justice has a policy that components and personnel shall not respond to questions about the existence of ongoing investigations or comment on the nature and progress of investigations," U.S. Attorney for Nevada Dan Bogden said in a statement released by his office. "Additionally Department of Justice regulations prohibit department personnel from commenting on investigative procedures used."
FBI spokesman Jim Stern said Monday: "A section of the Patriot Act was used appropriately by the FBI and clearly within the legal parameters of the statute" during the political corruption investigation.
Richard Wright, attorney for Kincaid-Chauncey, McDonald and Mack said he wasn't surprised that the FBI would use the Patriot Act in this manner.
"This is nothing new," Wright said. "The FBI and the government have always gotten laws passed and used those laws for other purposes. They're masters of the bait and switch."
Wright said that he hasn't fully evaluated the situation and didn't yet know if he would challenge the investigative technique, but did say he was concerned that the information was leaked in the first place.
"This should not even be known legally," Wright said. "It's a felony that this information was leaked and then the FBI confirms it and turns a blind eye."
Gary Peck, executive director of the American Civil Liberties Union of Nevada, said that he has already spoken with the ACLU's national office about the use of the Patriot Act in a case that doesn't appear to have any ties to terrorism.
"The national office is deeply concerned and troubled as we are locally," Peck said. "We're already involved in lawsuits challenging various provisions of the Patriot Act.
"It's unclear what we plan to do in terms of litigation in this case, but we plan to continue to be part of a growing movement to repeal portions of the Patriot Act."
According to a report by Las Vegas Sun columnist Jon Ralston, local criminal defense attorney Dominic Gentile, who represents Malone, is hoping to get the National Association of Criminal Defense Lawyers to weigh in on the issue, and plans to have a case in court in the next few weeks.
Reid said he has concerns that misuse of the Patriot Act could lead to widespread invasion of privacy.
"I am supportive of the effort to sunset certain provisions of the law in 2005 so we can correct any overreaching or infringing on civil liberties by law enforcement and the Justice Department," Reid said. "We have to be tough on terrorists but we also have to guard the privacy of American citizens."
According to the Patriot Act's provisions, the Treasury Department can request information from financial institutions, such as banks, in investigations dealing with suspected terrorists or money launderers.
Under section 314 of the Patriot Act, titled Cooperative Efforts to Deter Money Laundering, information can be provided on those "reasonably suspected based on credible evidence of engaging in terrorist acts or money laundering activities."
Peck said that section 314 tips the balance away from civil liberties and individual rights in three important ways:
No indictments have been released in connection with the investigation, which became public with the May raids by the FBI of Galardi's office and his Las Vegas clubs -- Jaguars, Leopard Lounge and Cheetahs.
Mack, who does work for Treasures strip club, has not been named in the corruption probe. He said through a city spokeswoman that he had no comment on the report that the FBI had accessed his financial records.
The other politicians reported as targets or subjects in the corruption probe include Kincaid-Chauncey, Malone, Kenny, Herrera, McDonald and Galardi.
In a parallel investigation federal authorities in San Diego raided the Galardi-owned Cheetahs there and the offices of three San Diego city councilmen on the same day the raids took place in Las Vegas.
Galardi pleaded guilty to one count of conspiracy to commit wire fraud in the San Diego case.
The San Diego investigation has also resulted in the indictments of Malone and three San Diego city councilmen.
Malone has pleaded not guilty to charges of wire fraud, extortion and racketeering in the case, and is free on $245,000 bond. Cheetahs San Diego manager John D'Intino also pleaded guilty to a charge of conspiracy to commit wire fraud.
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