Wednesday, January 12, 2005

Michael Chertoff - Where the Questions Should Start

It's been a bit more than 24 hours since the nomination of Michael Chertoff for DHS Secretary. In that short span of time, there has been no shortage of blogosphere opinions published on the suitability of Chertoff to fill the position.

On the left, the consensus argument seems to be that he's no civil libertarian. Well, duh. If that was the criteria for denying appointment, George Bush wouldn't have a cabinet right now. In the center and on the right, Chertoff's receiving some degree of praise for his post-9/11 work, for almost the same reasons as the left is nervous about him.

Let's get past all of that for a moment, and assume that his nomination is going forward. Perhaps his nomination process should be used, in part, as forum for completing a piece of the 9/11 puzzle that remains pretty much cloaked in secrecy - Operation Diamondback. Interestingly enough, while in private practice in New Jersey back in the late 1990's, Chertoff had some tangential connections to the people and events of this clandestine attempt to infiltrate terrorist networks inside the U.S.

In an earlier posting on the Chertoff nomination, a quick link was provided to a article published on in September, 2004. The article ties together a variety of northern New Jersey "bad actors" of Arabic descent in telling a piece of the September 11, 2001 saga. Here's what it boils down to:

  • In 1995, A New Jersey neurologist, Magdy Elamir (a 20 year Egyptian national resident of the U.S.) started an HMO in New Jersey which ultimately failed three years later.

  • In 1998, Congressman Ben Gilman was given a foreign intelligence report suggesting that money was being skimmed from the HMO and funneled to Osama bin-Laden's terrorist network.

  • The State of New Jersey ultimately bailed out the HMO and found that $16.7 million was illegally diverted, about $5.7 million of which is unaccounted for and diverted to offshore banks (in other words, impossible to trace).

  • In late 1998, Elamir retained Michael Chertoff (then in private practice) as his attorney to represent him in litigation with the State of New Jersey and HMO creditors seeking reimbursement.

  • Elamir's brother Mohamed was apparently up to his hips in smuggling weapons for use by terrorist networks; in fact, both Magdy and Mohamed fess up to funding at least one arms smuggler with Al Qaida connections.

  • Both Elamir's (also spelled 'el Amir') figured prominently in Operation Diamondback, a well-buried precursor to 9/11 that was discussed in (apparently) some depth during the congressional 9/11 investigation, but much testimony remains classified.
Here's a brief description of Operation Diamondback:

Randy Glass is a con artist turned government informant participating in a sting called Operation Diamondback. [Palm Beach Post, 9/29/01] He discusses an illegal weapons deal with an Egyptian American named Mohamed el Amir. In wiretapped conversations, Mohamed discusses the need to get false papers to disguise a shipment of illegal weapons. His brother, Dr. Magdy el Amir, has been a wealthy neurologist in Jersey City for the past twenty years. Two other weapons dealers later convicted in a sting operation involving Glass also lived in Jersey City, and both el Amirs admit knowing one of them, Diaa Mohsen. Mohsen has been paid at least once by Dr. el Amir.

In 1998, Congressman Ben Gilman was given a foreign intelligence report suggesting that Dr. el Amir owns an HMO that is secretly funded by bin Laden, and that money is being skimmed from the HMO to fund terrorist activities. The state of New Jersey later buys the HMO and determines that $15 million were unaccounted for and much of that has been diverted into hard-to-trace offshore bank accounts. However, investigators working with Glass are never given the report about Dr. el Amir. Both el Amirs have not been charged with any crime. Mohamed now lives in Egypt and Magdy continues to practice medicine in New Jersey. Glass's sting, which began in late 1998, will uncover many interesting leads before ending in June 2001 (see also July 14, 1999, Early August 2001 and August 2, 2002). [MSNBC 8/2/02]

In looking at this whole scenario, what I wanted to dig into was Mr. Chertoff's depth of involvement with Magdy Elamir, as his attorney -- a "follow the money" approach, if you will. Here's where the story of Chertoff's involvement starts: Medical Economics magazine, Oct. 25, 1999:

The HMO Graveyard: Why was this doctor allowed to start a health plan?

In September 1995, the state of New Jersey was looking for HMOs to participate in its new mandatory Medicaid managed care program. Neurologist Magdy Elamir, who only the month before had been granted a state license to operate an HMO, was eager to take part. Initially approved to serve a single county, Elamir's HMO--American Preferred Provider Plan--was soon allowed into 13 counties and covered 42,000 Medicaid recipients.

Yet, barely three years after enrolling its first patient, APPP lay in financial ruins, its network doctors and hospitals were saddled with millions of dollars in unpaid claims, and its founder had retained the services of Michael Chertoff, a well-known criminal defense attorney. (Elamir, who declined to be interviewed for this story, continues to live and practice in New Jersey. Neither his lawyer nor the state would confirm or deny that the doctor is the subject of a criminal investigation.)...

Given that Chertoff was representing Dr. Elamir in financial legal proceedings related to the HMO, wouldn't it make sense that Chertoff and his firm would have had unfettered access to Elamir's books, particularly with the accusation by the State of NJ that $15 million was unaccounted for in "offshore banking"? Sure - and in fact, a story in The Record (Bergen County, NJ), dated 12/18/98 1, reported that during a hearing on the failing HMO before a NJ Superior Court Judge...

...Chertoff presented a thick document from Elamir's accountant, Mohamed Hanafy, offering explanations for the money transfers from [the HMO] to other Elamir-controlled corporations.

Neither the NJ Deputy Attorney General or the judge were satisfied with the accounting - and it turns out that indeed, Elamir had been cooking the books. On June 20th, 2000 The Record ran another article2 on Dr. Elamir being sued by the state over misappropriation of money from the failed HMO. In light of the Operation Diamondback story above, perhaps this paragraph takes on a bit more significance:

The state says it traced a good deal of the money transfers to the 17 affiliates, including medical imaging centers in Paterson, Passaic, Irvington, and Summit. But at least $ 5.7 million went "to unknown parties... by means of wire transfers to bank accounts where the beneficial owner of the account is unknown," the complaint says.

In other words, an offshore account for which no U.S. government agent could obtain information. And again in this article, Michael Chertoff is cited as Elamir's attorney.

Admittedly, this whole tale begins to take on strange proportions, particularly in light of the fact that one of the supposed defining qualities which Mr. Chertoff brings to the table is his apparent post-9/11 conversion in shutting down bin-Laden's financing network. Chertoff was the Bush administration's front man for Title III of the USA PATRIOT Act (also known as the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001). On January 29, 2002 Chertoff testified before the Senate Banking Committee:

Accordingly, preventing future terrorist attacks and bringing terrorists to justice is now the top priority of the Department of Justice. Law enforcement is currently engaged in a cooperative effort to identify, disrupt and dismantle terrorist networks. Terrorism requires financing, and terrorists rely on the flow of funds across international borders. To conceal their identities and their unlawful purpose, terrorists exploit weaknesses in domestic and international financial systems. As this Committee well knows, therefore, curtailing terrorism requires a systemic approach to investigating the financial links to the terrorist organizations.

Apparently, then-U.S. DOJ Assistant Attorney General Chertoff experienced a convenient lapse of memory - he had represented a client with direct (and admitted) links to potential terrorist networks. Not only that, given the nature of the proceedings against Dr. Elamir, the representation over the course of least a two year period had to have happened with full knowledge of the financial dealings of his client.

It's difficult to say where this story leads from here. There's a lot of coincidence that leaves room for investigation into the details of Mr. Chertoff's working on at least the fringes of a terrorist network. And maybe that's where the story of his nomination should lead.

Update, 7:30PM - from Allan Duncan (the author of the piece) comes a link to an article which takes a similar view of the Chertoff nomination at Mad Cow Morning News. It's also my understanding that major news organizations are starting to sniff around this story...

1 The Record, 12/18/1998, "Judge Orders Bond, Freezes Assets of Failing HMO'S Owner"
2 The Record, 6/20/2000, "State Sues HMO Founder to Recoup Millions"

You are not on the new, improved ASZ 2.0 homepage! Click here to get there!