IS BILL FRIST A CROOK? OF COURSE. BUT WILL HE GO TO PRISON?
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Tennessee Senator and GOP Senate Majority Leader, Bill Frist wants people to think it's just a coincidence. And in Tennessee many people may. But law enforcement authorities won't. Because it clearly wasn't. Frist, already one of the 2 or 3 richest men in the Senate just became considerably richer by selling millions of dollars of shares in his family's hospital corporation based on insider info just before the shares plummeted. Maybe he thinks he needs the money to finance his presidential run in 2008.
He sold all his stock in his family's Nashville-based Hospital Corporation of America about two weeks before it issued a really bad earnings report that caused the stock price to fall by 15%. Although Frist's shares are in a "blind trust" (a complete joke), he instructed the trustee managing the assets to sell all his, his wife's and their kids' HCA shares. (HCA, always in trouble with the law for shady dealings and stealing money from MediCare is the largest for-profit hospital chain in the U.S., the McDonald's of hospital care.
Frist, who refuses to say what his haul from this dubious transaction was, gained as much as $35 million from his lucky sale-- considerably more than the pittance Martha Stewart gained by her use of insider info a couple years back.
Blind trusts were set up to avoid conflicts of interest for government officials but are routinely used by Republican pols (and corporate Democrats) to avoid the APPEARANCE of a conflict of interest. In a state like Tennessee, where voters don't seem to mind this kind of corruption, it's relatively safer for a crook like Frist to game the system to the tune of tens of millions of dollars than it would be for someone to shoplift a loaf of bread to feed a starving family.
Still some Tennesseans concerned with simple ethics, have been criticizing Frist since he was elected to the Senate in 1994, for maintaining the holdings while dealing with legislation affecting the medical industry and managed care. The Frist family is worth over a $1 billion, financially, although other ways to value worth would find them extremely impoverished. HCA, of course, has been a top contributor to the senator's campaigns, donating almost $85,000 since 1989, according to the Center for Responsive Politics. Wonderers are wondering again how much of an impact the ethically-challenged Senate Majority Leader has been able to have on the family business from which he and his have benefited so richly, often at the expense of patients, employees, communities and, most of all, taxpayers.
posted by DownWithTyranny @ 8:12 PM
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It only took a few days but the mainstream media is starting to cover the fact that the Senate Majority Leader, "Dollar Bill" Frist, is probably headed for prison in the not too distant future. An AP story ran today:
TWO TOP REPUBLICANS FACING INVESTIGATIONS
-Donna Cassata, AP
WASHINGTON (Sept. 23) - Heading into a midterm election year, Republicans find themselves with not one, but two congressional leaders - Bill Frist in the Senate and Tom DeLay in the House - fending off questions of ethical improprieties.
The news that federal prosecutors and the Securities and Exchange Commission are looking into Frist's sale of stock in HCA Inc., the hospital operating company founded by his family, comes as a criminal investigation continues of Jack Abramoff, a high-powered Republican lobbyist, and his ties to DeLay of Texas.
Less than a week ago, a former White House official was arrested in the Abramoff investigation.
For Republicans, the timing couldn't be worse.
"The last thing you needed was a Martha Stewart problem," Marshall Wittman, a one-time conservative activist who now works for the centrist Democratic Leadership Council, said of Frist. "He doesn't even have a good clothing line or a popular television show."
Stewart, the homemaking doyenne, served five months in federal prison for lying to authorities about a stock deal and nearly six months more in home confinement.
The midterm elections occur in just over 13 months and Republicans face the historic reality that the party controlling the White House typically loses seats in non-presidential years.
Shadowing the GOP outlook is President Bush's diminishing approval ratings as the war in Iraq, rising oil prices and the need for billions in federal spending after devastating hurricanes threaten to overwhelm a second-term agenda.
"It may not cost the Republicans any seats directly, but it's something they don't need right now," said John J. Pitney, a professor at Claremont McKenna College in California who once worked as a research analyst for House Republicans. "They've got plenty of problems as it is."
Still, in the Republican-controlled Congress, Democrats have more Senate seats to defend - 17 to the GOP's 15 - and redistricting has made fewer House seats competitive.
Charlie Black, a Republican consultant with close ties to the White House, expects Frist to be cleared by next year and any whiff of scandal to be gone.
"I suspect the DeLay matter and this matter will be resolved long before November '06," Black said.
Frist cultivated a political outsider image when he ran for the Senate in 1994. "I don't want a career in Washington. I want change," said the Tennessee heart surgeon, who didn't register to vote until 1988 and didn't vote until he was 36.
The year 1994 marked the Republican revolution, when the GOP seized control of Congress after decades of Democratic rule in the House and years in the Senate. The GOP portrayed their rivals as beholden to special interests and corrupt after years of entrenchment.
More than a decade later, Republicans are trying to avoid the perception that they resemble the Democrats they replaced.
"The overall problem the Republican Party has is it is increasingly looking like Tammany Hall," Wittman said. "An odor of sleaziness is enveloping the Republicans and seeping into the administration."
Democrats seized on the latest development, with party chairman Howard Dean criticizing Frist and arguing that Republicans "have made their culture of corruption the norm."
The challenge for Frist is to clear his name in a federal investigation while trying to maintain his hold on the post of Senate majority leader.
Frist came to power in 2002 when Republicans forced out Sen. Trent Lott, R-Miss., after he made racially tinged remarks in support of former Sen. Strom Thurmond, R-S.C., a one-time segregationist.
If Republicans see Frist and the probes as a drag, he could suffer the same fate as Lott. Frist also is a lame-duck leader who has indicated he won't seek another term.
Chris Lehane, a Democratic consultant who has managed scandals, said Frist's political strategy would be to get information out, but that approach is hardly what a lawyer would advise his client.
An insider trading investigation also raises the possibility of civil action by shareholders and a discovery process that "disgorges all kinds of documents," Lehane said.
"Even information benign in another type of environment - what about this phone message from your brother" - has added significance, Lehane said.
Frist has been mentioned as a potential presidential candidate in 2008 - a prospect that looks less likely with the federal probe and his break with conservatives on embryonic stem-cell research.
"That romance was over before it started," Wittman said.
FRIST LIED WHEN HE SAID HE DIDN'T KNOW ABOUT BLIND TRUST INVESTMENTS
Jonathon M. Katz and Larry Margasak, AP, September 24, 2005
WASHINGTON - Senate Majority Leader Bill Frist, R-Tenn., was updated several times about his investments in blind trusts during 2002, the last time two weeks before he publicly denied any knowledge of what was in the accounts, documents show.
The updates included stock transactions involving HCA Inc., the hospital operating company founded by Frist's family.
Frist's sale of HCA stock is under scrutiny by the federal government. Nashville, Tenn.-based HCA said Friday it had received a subpoena from prosecutors for the Southern District of New York, asking for documents the company believes are related to Frist's sale of company stock this past summer.
Prosecutors also have contacted the senator's office, Frist spokesman Bob Stevenson said Friday. He said neither the senator nor his office had received a subpoena.
Frist's office confirmed the Securities and Exchange Commission was looking into the sale.
"Senator Frist had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock," Stevenson said in a statement.
Frist sold his HCA stock from several blind trusts this summer, at a time when insiders in the company also were selling off shares worth $112 million from January through June. Frist aides say he sold his stock to avoid any appearance of a conflict of interest.
Frist, asked in a television interview in January 2003 whether he should sell his HCA stock, responded: "Well, I think really for our viewers it should be understood that I put this into a blind trust. So as far as I know, I own no HCA stock"
Frist, referring to his trust and those of his family, also said in the interview, "I have no control. It is illegal right now for me to know what the composition of those trusts are. So I have no idea."
Documents filed with the Senate showed that just two weeks before those comments, the trustee of the senator's trust, M. Kirk Scobey Jr., wrote to Frist that HCA stock was contributed to the trust. It was valued at $15,000 and $50,000.
The documents filed by the trustees of Frist's blind trusts were obtained by The Associated Press on Friday.
On Nov. 20, 2002, Scobey wrote Frist that 14,781 shares of HCA were sold, along with three other investments. The same day, Scobey wrote that four other investments were sold, none of them HCA stock.
On May 16, 2002, Scobey advised Frist that four investments were contributed to a Frist blind trust, including HCA stock valued at $500,000 to $1 million. A second letter the same day mentions the same four investments going into a different trust, but with different valuations, including HCA stock valued at $250,000 to $500,000.
On Jan. 14, 2002, a trustee for Frist's children notified the secretary of the Senate that two investments were added to the blind trusts of Frist's sons Jonathan and Bryan — including HCA stock valued at $5,000 to $10,000. It was not clear whether Frist received a copy of the letter.
Stevenson, the Frist spokesman, said he could not comment on the updates received by the senator. He added that Frist properly notified the Senate Ethics Committee this summer that he was initiating the sale of all remaining HCA shares, a requirement under Senate rules. All the stock was sold by July 1, including shares owned by his wife and children.
"As with the SEC, the majority leader will provide the U.S. attorney's office with any information that it needs with respect to this matter," Stevenson said.
The SEC also contacted HCA on Friday to informally request copies of the subpoenaed documents, said company spokesman Jeff Prescott. "We of course will comply with that request," he said.
Herb Haddad, a spokesman for the U.S. attorney's office in Manhattan, said the office had no comment on the matter. SEC spokesman John Nester declined to say whether the agency had contacted Frist's office.
David Becker, who was general counsel at the SEC from 2000 to 2002, noted that both Frist and HCA were being put under scrutiny.
In insider trading cases, "you connect the dots not by simply going from one dot to another but by starting at both dots and working toward the middle," Becker said. "The facts that are public don't come close to demonstrating wrongdoing. It's way too premature to have any judgment."
HCA, the nation's largest for-profit hospital company, was founded by Frist's father, the late Thomas Frist Sr. His brother, Thomas Jr., was formerly its CEO and chairman and remains on the board of directors. Frist is a heart surgeon by training.
Frist asked a trustee to sell all his HCA stock in June, near a 52-week price peak of $58.40 a share. Reports to the SEC showed HCA insiders sold about 2.3 million shares.
Frist's sale came about two weeks before the company issued a disappointing earnings forecast that drove its stock price down almost 16 percent by mid-July and still have not recovered. HCA rose $1.70 Friday, closing at $47.60.
The value of Frist's stock at the time of the sale was not disclosed. Earlier this year, he reported blind trusts with all holdings valued at $7 million to $35 million.
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And Steve Soto makes some great points in a piece on THE LEFT COASTER called "Bill Frist's Strange Timing:"
OK, let’s take a short walk through Bill Frist’s minefield.
While in the United States Senate, Frist has owned stock in his family’s HCA Incorporated for years, without recusing himself from debates and floor votes that served to benefit his family’s healthcare and hospital management company. He has defended himself from conflict of interest charges during this time by telling everyone that his assets were in a blind trust and not under his active control.
Now, with HCA’s directors finding out about a poor earnings report, it is suddenly revealed that Frist’s “blind trust” wasn’t blind after all. Frist did in fact have enough active control over this “blind trust” to order the sale of his HCA assets in advance of this earnings report, to maximize income or long-term capital gain. So all these years, while HCA's stock price more than doubled since 1999, and Frist was acting on legislation that helped his family’s company, Frist did in fact have control over his assets, which means that a conflict of interest did exist all these years.
Frist’s story is that his blind trust in fact allowed him to order the sale of his HCA assets, (which made up by one account 89% of his total trust) if holding HCA creates a conflict of interest or creates even an appearance of such a conflict. Yet Frist retained the right to make such a determination all these years he has been in the Senate, but has never seen fit to determine that a conflict of interest or appearance of one existed until he was faced with watching the devaluation of 89% of his trust. Frist never thought such a conflict existed while he shepherded the Medicare Part D benefit through the Senate, he never thought such a conflict existed while he dealt with Medicare and Medicaid reimbursement issues every year over the last decade, helped kill the patient bill of rights, or passed medical malpractice limits through the Senate.
He only thought about this conflict of interest when he knew he was about to lose money.
Media Matters has an update on how pathetic corporate media's coverage is of Frist's criminal activities. Compared it to the way the corporate media covered Martha Stewart, who did a lot less and pocketed a lot less than Frist's $35 million. And Martha was never in a position to influence government policies to benefit her stock. And she had fewer delusions of grandeur, never once claiming she was running for president.
NETWORK NEWS BROADCASTS GIVE SCANT COVERAGE TO FRIST STOCK SCANDAL
Despite having found the time to cover Kate Moss's purported cocaine use and to put one of its correspondents in a wind tunnel to demonstrate the effects of hurricane-force wind, ABC's World News Tonight has yet to mention the brewing scandal over the sale of Senate Majority Leader Bill Frist's (R-TN) stock in HCA Inc., the hospital chain founded by Frist's father, just two weeks before a bad earnings report caused the stock price to drop sharply. The nightly news broadcasts of CBS and NBC didn't do much more, both giving the story brief mentions on September 23.
Since September 19, when Congressional Quarterly quoted a Frist aide acknowledging that Frist had ordered the trustee of his blind trust to sell all of his, his wife's, and his children's HCA stock, the Associated Press picked up the story September 20, followed by The New York Times (September 21), The Washington Post (September 22), and the Los Angeles Times (September 24).
The AP reported on September 23 that federal prosecutors had served HCA with a subpoena for documents related to the sale of Frist's stock, and officials from the Securities and Exchange Commission (SEC) had contacted HCA to informally request the same documents. The AP also reported that Frist's office had been contacted by both the SEC and federal prosecutors.
Catching Frist in an apparent lie, The New York Times reported September 24 that in a statement to the National Journal two years ago, Frist had denied knowing whether his blind trust still held HCA stock, although Senate ethics rules require the manager of a blind trust to inform the owner if all of an asset is sold. Moreover, the AP reported September 24 that in a January 2003 television interview, Frist also denied knowing whether he owned HCA stock, although his trustee contacted him at least three times in 2002, informing him of transfers of HCA stock into his trust.
As of September 26, ABC's World News Tonight has yet to cover the Frist story, although the program devoted broadcast time on September 21 to reporting on model Kate Moss's purported cocaine use. On September 23, World News Tonight featured a segment in which ABC News correspondent Jake Tapper reported from inside a wind tunnel to demonstrate the effects of hurricane-force winds on the human body.
CBS' Evening News gave passing mention to the Frist story on September 23 but did not report the subpoena of HCA documents by federal prosecutors or the informal request for documents by the SEC. CBS also failed to report that Frist's office had been contacted by federal prosecutors and the SEC. NBC's Nightly News also briefly covered the scandal September 23, reporting the prosecutors' subpoena and the SEC's document request, as well as the contact between Frist's office and federal officials. As of September 26, however, none of the networks' nightly news broadcasts has reported that Frist was caught in a lie regarding the extent of his knowledge of his blind trust's contents.
From the September 23 broadcast of CBS Evening News:
BOB SCHIEFFER (anchor): Federal investigators are looking into Senate Republican Leader Bill Frist's sale of stock in HCA, a giant hospital company founded by his family. Frist had his blind trust sell all his shares in June, when the stock was near its peak. Then two weeks later, a disappointing earnings forecast drove the stock price down. Frist's office says the senator had no inside information when he ordered the sale.
From the September 23 broadcast of NBC Nightly News:
BRIAN WILLIAMS (anchor): Investigators are looking into Senate Majority Leader Bill Frist's sale of stock in a hospital operating company founded by his family. Soon after Frist sold his shares, the company issued a disappointing earnings forecast. That drove the stock down by about 15 percent. Frist's aides say the senator traded using only public information. They say prosecutors and the SEC have contacted them but that Senator Frist has not been subpoenaed. The company, however, says it has.
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