Tue, May 21

35-count indictment issued against Congressman Renzi

Rick Renzi

Rick Renzi

PHOENIX -- Rick Renzi has been charged with extortion and other crimes after he allegedly used his position as a member of Congress -- and specifically the House Natural Resources Committee -- to engineer a land sale that ultimately would put money into his pocket.

The 35-count indictment, unveiled Friday, also contends that Renzi, in the year before first being elected to Congress in 2002, embezzled more than $400,000 from clients of his insurance agency. Some of that cash, the charges state, ultimately was used for his successful campaign to represent Congressional District 1 which stretches from the state's northern border through Flagstaff and eastern Arizona down to the Pima-Pinal county line.

In a prepared statement, Renzi's lawyers said their client did nothing wrong.

"We will fight these charges until he is vindicated and his family's name is restored,' said Reid Weingarten and Kelly Kramer.

They also slapped the timing of the indictment, noting that Renzi's father, Major Gen. Eugene Renzi, who died earlier this month, was buried just Thursday. But Sandra Raynor, a spokeswoman for the U.S. Attorney's Office in Phoenix, said they were unaware of the death.

The indictment also caps an investigation that has taken years and may have played a role in the 2006 firing of Paul Charlton, who had been the U.S. Attorney for Arizona. Questions had been raised about whether Charlton was forced out by the Department of Justice.

Charlton himself told House investigators last year that his office had received a call from Brian Murray, Renzi's chief of staff, about the investigation. That followed a raid by the FBI on the offices of an insurance company owned by Renzi's wife - a company that Renzi put in her name in early 2004, after the alleged embezzlement had taken place.

Murray, in a prepared statement at the time, said he simply was "seeking information.'

But Diane Humetewa, who succeeded Charlton, said there has been "tremendous support' from the Department of Justice.

All totaled, Renzi faces 35 separate charges. The most serious of these -- wire fraud, extortion, money laundering and conspiracy -- each carry a potential maximum penalty of 20 years in prison.

He was served with a summons and is set to be arraigned 11 a.m. March 6 at U.S. District Court in Tucson.

The indictment lays out the history of the relationship between Renzi and James Sandlin, a Texas real estate investor and business associate.

The pair had jointly owned a piece of property in Kingman they were hoping to develop. In 2003, the indictment states, Sandlin took control, paying $200,000 to Renzi at the time and signing a promissory note for another $800,000.

At the beginning of 2005 there was still $700,000 unpaid.

That year, Resolution Copper sought to acquire federal land near Superior for mining. To get that, it would have to engineer a swap of other property the government wanted, a swap that would have to get congressional approval.

And all land trades go through the House Natural Resources Committee on which Renzi served.

The indictment says that Renzi directed company officials to purchase another piece of property Sandlin owned in Cochise County and include it in their land swap proposal. In fact, the indictment states, Renzi told the company "no Sandlin property, no bill.'

Renzi did not disclose his financial links to Sandlin to the company, the indictment states.

When that deal fell through, the indictment states Renzi then "insisted' the investment group purchase Sandlin's property "as part of its land exchange proposal' and told the group "it would receive a 'free pass' through the House Natural Resources Committee, on which Renzi served.

The Wall Street Journal has identified the investors as the Petrified Forest Group.

And the indictment states that Renzi filed a false 2006 financial disclosure statement, required of all members of Congress, failing to list either the outstanding debt from Sandlin or the $737,000 in payments.

The indictment also details a series of transactions, which allege that Renzi deliberately tried to cover his financial trail.

For example, it says, while Sandlin owed the money directly to Renzi, the payments were made through corporate entities. And it

says Sandlin and Renzi "used the services of escrow companies to distribute the proceeds, making the transactions more difficult to trace for tax authorities, investigators and others.'

Humetewa said there clearly is a "money trail.'

"Essentially he used his official authority as a United States Representative to move forward that federal land exchange if it were to include the land that was owned at that time by Mr. Sandlin,' she said.

Sandlin faces 27 separate charges in the indictment. A call to his attorney was not returned.

The insurance charges stem from the year before Renzi was first elected.

The indictment says Renzi took money from clients for premiums but did not forward that cash to the insurance companies. The result was that these companies canceled coverage.

But Renzi, seeking to conceal what he had done, sent letter to the customers claiming that their coverage had been moved to another company. Those events also led to four charges filed against Andrew Beardall, a Virginia attorney who also served as president and general counsel of Renzi's insurance company.

Lucius Outlaw III, who represents Beardall, said his client "committed no action with the intent to defraud the government.'

Renzi announced last year he would not seek reelection. He also removed himself from his committee assignments at that time.

In a release late Friday, House Minority Leader John Boehner, R-Ohio, said Renzi should "seriously consider whether he can continue to effectively represent his constituents under the circumstances.'

"The charges contained in this indictment are completely unacceptable for a member of Congress,' the statement said. Boehner said he hopes to meet with Renzi "at the earliest possible opportunity to discuss this situation and the best option for his constituents, our Conference and the American people.'