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Culture of Corruption

Feb 18, 2013, Vol. 18, No. 22 • By MATTHEW CONTINETTI
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Caribbean-based company ICSSI had seen its lucrative contract to X-ray the cargo entering the Dominican Republic languish for years when, in 2011, it began searching for an investor with political pull. Perhaps someone with the right connections would be able to pressure the Dominicans into enforcing the contract, which was valued at somewhere between $500 million and $1 billion over 20 years. And that special someone, it seemed, was Salomon E. Melgen, a Dominican-born ophthalmologist and businessman in South Florida, who had acquired a reputation as a powerful and expansive donor to Democratic politicians de los Estados Unidos. Melgen bought a controlling stake in ICSSI. Maybe he could succeed where others had failed.

Senator Menendez (D-NJ)

Newscom

Last year, in the middle of the presidential election, Melgen’s medical practice donated some $700,000 to Majority PAC, a “super” political action committee founded by former staffers to Senate majority leader Harry Reid. As a super-PAC, Majority PAC is allowed under federal law to accept unlimited contributions for “independent expenditures” not coordinated with candidates or campaigns.

The particular expenditures Majority PAC was interested in making independently were on behalf of Democratic Senate candidates, including $582,000 in support of New Jersey Democrat Bob Menendez, who was facing a rather inconsequential, don’t-worry-be-happy challenge from Republican state senator Joe Kyrillos. And who happened to be a longtime pal of Dr. Salomon E. Melgen. And who suddenly developed an active and vocal interest in contract law.

Wasn’t it a problem, Menendez asked during a July 31, 2012, hearing of the Senate Foreign Relations subcommittee on the Western Hemisphere, that Latin American and Caribbean nations were not fulfilling legally binding obligations? There was, for instance, one “company that has American investors that is seeking to—has a contract actually given to it by the—kind of ratified by the Dominican Congress—to do X-ray of all of the cargo that goes through the ports, which have been problematic and for which in the past narcotics have been included in those cargo. And they don’t want to live by that contract either.” So what was the United States government going to do about it?

Menendez raised similar concerns in conversations with State Department officials. What the U.S. government ended up doing about it, however, was probably not what he’d intended. For what the U.S. government, in the form of FBI and Department of Health and Human Services personnel, ended up doing was raiding the West Palm Beach offices of Dr. Melgen over the course of two days during the final week of January 2013. These federal personnel, according to reports, left with some 30 boxes of evidence. And that evidence would seem to pertain, also according to reports, to not one but two ongoing investigations. One involves allegations of Medicare fraud. The other involves allegations of public corruption.

This is bad news for Menendez. Melgen and his family, having contributed during the 2010 cycle more than $30,000 to Menendez, and more than $60,000 to the Democratic Senatorial Campaign Committee, which Menendez chaired at the time, are some of the senator’s biggest donors. But Melgen is more than that. He also seems to have assumed an unofficial and unpaid position as Menendez’s travel agent, ferrying the New Jersey Democrat to and from exclusive properties in the Dominican Republic on his private jet.

We know, for example, of three trips the friends made to the Caribbean in 2010. And we know that, up until about, oh, a month ago, Menendez had disclosed payment for only one of them: $5,380 for a trip in May 2010. Reimbursement for the other trips, the senator told reporters last week, sort of “fell through the cracks.” After all, Bob Menendez is a very, very busy man. “I was in a big travel schedule in 2010.”

It took two years, and the filing of an ethics complaint, for Menendez to acknowledge the remaining trips. He did this by writing a personal check to Melgen for the hefty amount of $58,500, suggesting the eye doctor charges payday-loan levels of interest. The senator and his office argue that the reimbursement settles the question of whether the previous nondisclosure violated ethics rules. And they are all too happy to reject and denounce accusations that Menendez and Melgen hired prostitutes, which is legal in the Dominican Republic, on their foreign trips. You know how it is: What happens in Casa de Campo .  .  .

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