History > 2008 > USA > FBI (II)

W. Mark Felt,

Watergate Deep Throat,

Dies at 95

December 19, 2008
The Newx York Times
By TIM WEINER

W. Mark Felt, who was the No. 2 official at the F.B.I. when he helped bring down President Richard M. Nixon by resisting the Watergate cover-up and becoming Deep Throat, the most famous anonymous source in American history, died Thursday. He was 95 and lived in Santa Rosa, Calif.

His death was confirmed by Rob Jones, his grandson.

In 2005, Mr. Felt revealed that he was the one who had secretly supplied Bob Woodward of The Washington Post with crucial leads in the Watergate affair in the early 1970s. His decision to unmask himself, in an article in Vanity Fair, ended a guessing game that had gone on for more than 30 years.

The disclosure even surprised Mr. Woodward and his partner on the Watergate story, Carl Bernstein. They had kept their promise not to reveal his identity until after his death. Indeed, Mr. Woodward was so scrupulous about shielding Mr. Felt that he did not introduce him to Mr. Bernstein until this year, 36 years after they cracked the scandal. The three met for two hours one afternoon last month in Santa Rosa, where Mr. Felt had retired. The reporters likened it to a family reunion.

Mr. Felt played a dual role in the fall of Nixon. As a secret informant, he kept the story alive in the press. As associate director of the Federal Bureau of Investigation, he fought the president’s efforts to obstruct the F.B.I.’s investigation of the Watergate break-in.

Without Mr. Felt, there might not have been a Watergate — shorthand for the revealed abuses of presidential powers in the Nixon White House, including illegal wiretapping, burglaries and money laundering. Americans might never have seen a president as a criminal conspirator, or reporters as cultural heroes, or anonymous sources like Mr. Felt as a necessary if undesired tool in the pursuit of truth.

Like Nixon, Mr. Felt authorized illegal break-ins in the name of national security and then received the absolution of a presidential pardon. Their lives were intertwined in ways only they and a few others knew.

Nixon cursed his name when he learned early on that Mr. Felt was providing aid to the enemy in the wars of Watergate. The conversation was recorded in the Oval Office and later made public.

“We know what’s leaked, and we know who leaked it,” Nixon’s chief of staff, H. R. Haldeman, told the president on Oct. 19, 1972, four months after a team of washed-up Central Intelligence Agency personnel hired by the White House was caught trying to wiretap the Democratic Party’s national offices at the Watergate complex.

“Somebody in the F.B.I.?” Nixon asked.

“Yes, sir,” Mr. Haldeman replied. Who? the president asked. “Mark Felt,” Mr. Haldeman said. “Now why the hell would he do that?” the president asked in a wounded tone.

No one, including Mr. Felt, ever answered that question in full. Mr. Felt later said he believed that the president had been misusing the F.B.I. for political advantage. He knew that Nixon wanted the Watergate affair to vanish. He knew that the White House had ordered the C.I.A. to tell the bureau, on grounds of national security, to stand down in its felony investigation of the June 1972 break-in. He saw that order as an effort to obstruct justice, and he rejected it. That resistance led indirectly to Nixon’s resignation.

Mr. Felt had expected to be named to succeed J. Edgar Hoover, who had run the bureau for 48 years and died in May 1972. The president instead chose a politically loyal Justice Department official, L. Patrick Gray III, who later followed orders from the White House to destroy documents in the case.

The choice infuriated Mr. Felt. He later wrote that the president “wanted a politician in J. Edgar Hoover’s position who would convert the bureau into an adjunct of the White House machine.”

Hoover had sworn off break-ins without warrants — “black bag jobs,” he called them — in 1966, after carrying them out at the F.B.I. for four decades. The Nixon White House hired its own operatives to steal information, plant eavesdropping equipment and hunt down the sources of leaks. The Watergate break-in took place six weeks after Hoover died.

While Watergate was seething, Mr. Felt authorized nine illegal break-ins at the homes of friends and relatives of members of the Weather Underground, a violent left-wing splinter group. The people he chose as targets had committed no crimes. The F.B.I. had no search warrants. He later said he ordered the break-ins because national security required it.

In a criminal trial, Mr. Felt was convicted in November 1980 of conspiring to violate the constitutional rights of Americans. Nixon, who had denounced him in private for leaking Watergate secrets, testified on his behalf. Called by the prosecution, he told the jury that presidents and by extension their officers had an inherent right to conduct illegal searches in the name of national security.

“As Deep Throat, Felt helped establish the principle that our highest government officials are subject to the Constitution and the laws of the land,” the prosecutor, John W. Nields, wrote in The Washington Post in 2005. “Yet when it came to the Weather Underground bag jobs, he seems not to have been aware that this same principle applied to him.”

Seven months after the conviction, President Ronald Reagan pardoned Mr. Felt. Then 67, Mr. Felt celebrated the decision as one of great symbolic value. “This is going to be the biggest shot in the arm for the intelligence community for a long time,” he said. After the pardon, Nixon sent him a congratulatory bottle of Champagne.

Mr. Felt then disappeared from public view for a quarter of a century, denying unequivocally, time and again, that he had been Deep Throat. It was a lie he told to serve what he believed to be a higher truth.

William Mark Felt was born in Twin Falls, Idaho, on Aug. 17, 1913. After graduating from the University of Idaho, he was drawn to public service in Washington and went to work for Senator James P. Pope, a Democrat.

In 1938, he married his college sweetheart, Audrey Robinson, in Washington. They were wed by the chaplain of the House of Representatives. She died in 1984. The couple had a daughter, Joan, and a son, Mark. They and four grandsons survive Mr. Felt.

Days before Pearl Harbor, after earning a law degree in night classes at George Washington University, Mr. Felt applied to the F.B.I. and joined it in January 1942. He spent most of World War II hunting German spies.

After stints in Seattle, New Orleans and Los Angeles, Hoover named him special agent in charge of the Salt Lake City and Kansas City offices in the late 1950s. Rising to high positions at the headquarters in the 1960s, he oversaw the training of F.B.I. agents and conducted internal investigations as chief of the inspection division.

In early 1970, while waiting in an anteroom of the West Wing of the White House, Mr. Felt chanced to meet a Navy lieutenant delivering classified messages to the National Security Council staff. The young man in dress blues was Bob Woodward. By his own description fiercely ambitious and in need of adult guidance, Mr. Woodward tried to wring career counseling from his elder. He left the White House with the number to Mr. Felt’s direct line at the F.B.I.

On July 1, 1971, Hoover promoted Mr. Felt to deputy associate director, the third in command at the headquarters, beneath Hoover’s right-hand man and longtime companion, Clyde A. Tolson. With both of his superiors in poor health, Mr. Felt increasingly took effective command of the daily work of the F.B.I. When Mr. Hoover died and Mr. Tolson retired, he saw his path to power cleared.

But Nixon denied him, and he seethed with frustrated ambition in the summer of 1972.

One evening that summer, a few weeks after the Watergate break-in, Mr. Woodward, then a neophyte newspaperman, knocked on Mr. Felt’s door in pursuit of the story. Mr. Felt decided to co-operate with him and set up an elaborate system of espionage techniques for clandestine meetings with Mr. Woodward.

If Mr. Woodward needed to talk, he would move a flowerpot planted with a red flag on the balcony of his apartment on P Street in Washington. If Mr. Felt had a message, Mr. Woodward’s home-delivered New York Times would arrive with an inked circle on Page 20. Mr. Woodward would leave his apartment by the back alley that night and take one taxi to a downtown hotel, then a second to an underground parking garage in the Rosslyn section of Arlington, Va.

Within weeks, Mr. Felt steered The Post to a story establishing that the Watergate break-in was part of “a massive campaign of political spying and sabotage” directed by the White House. For the next eight months, he did his best to keep the newspaper on the trail, largely by providing, on “deep background,” anonymous confirmation of facts reporters had gathered from others. The Post’s managing editor, Howard Simons, gave him his famous pseudonym, taken from the pornographic movie then in vogue.

By June 1973, Mr. Felt was forced out of the F.B.I. Soon he came under investigation by some of the same agents he had supervised, suspected of leaking information not to The Post but to The New York Times. He spent much of the mid-1970s testifying in secret to Congress about abuses of power at the F.B.I. Millions of Americans knew him only as a shadowy figure in the 1976 movie made from the Watergate saga, “All the President’s Men,” which made “Woodward and Bernstein” legends of American journalism. In the movie, Deep Throat (Hal Holbrook) gives Mr. Woodward (Robert Redford) probably the most famous bit of free advice in the history of investigative journalism. It was a three-word road map to the heart of the matter: “Follow the money.”

Mr. Felt never said it. It was part of the myth that surrounded Deep Throat.

    W. Mark Felt, Watergate Deep Throat, Dies at 95, NYT, 19.12.2008, http://www.nytimes.com/2008/12/19/washington/19felt.html

F.B.I. Struggles to Handle

Wave of Financial Fraud Cases

October 19, 2008
The New York Times
By ERIC LICHTBLAU, DAVID JOHNSTON and RON NIXON

WASHINGTON — The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis, according to current and former bureau officials.

The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

The pressure on the F.B.I. has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including Fannie Mae and Freddie Mac. The F.B.I. is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm. But some people inside and out of the Justice Department wonder where the agents will come from and whether they will be enough.

So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars.

Since 2004, F.B.I. officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.

According to previously undisclosed internal F.B.I. data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes like mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels.

Over all, the number of criminal cases that the F.B.I. has brought to federal prosecutors — including a wide range of crimes like drug trafficking and violent crime — dropped 26 percent in the last seven years, going from 11,029 cases to 8,187, Justice Department data showed.

“Clearly, we have felt the effects of moving resources from criminal investigations to national security,” said John Miller, an assistant director at the F.B.I. “In white-collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims.”

But Justice Department data, which include cases from other agencies, like the Secret Service and Postal Service, illustrate the impact. Prosecutions of frauds against financial institutions dropped 48 percent from 2000 to 2007, insurance fraud cases plummeted 75 percent, and securities fraud cases dropped 17 percent.

Statistics from a research group at Syracuse University, the Transactional Records Access Clearinghouse, using somewhat different methodology and looking only at the F.B.I., show an even steeper decline of nearly 50 percent in overall white-collar crime prosecutions in the same period.

In addition to the investigations into Fannie Mae and Freddie Mac, the F.B.I. is carrying out investigations of American International Group and Lehman Brothers, and it has opened more than 1,500 other mortgage-related investigations. Some F.B.I. officials worry privately that the trillion-dollar federal bailout of the financial industry may itself become a problem because it contains inadequate controls to deter fraud.

No one has suggested that a quicker response would have averted the mortgage meltdown, but some officials said a faster reaction might have deterred more of the early schemes that seized on loose federal lending regulations.

“They were very late to the game,” Representative Zoe Lofgren, a California Democrat who has quarreled with the F.B.I. over its financing priorities, said of the bureau’s response to the mortgage crisis. “They were not on top of this, and they’re just now starting to really do something.”

Republicans and Democrats in Congress are pushing for a more aggressive response by the F.B.I. Representatives Mark S. Kirk, an Illinois Republican who sits on the House appropriations committee, and Chris P. Carney, a Pennsylvania Democrat, called on Congress to triple the F.B.I.’s financing for financial crimes investigations.

“To fix our system and prevent a repeat of the events we now see,” they wrote in a letter this month to Robert S. Mueller III, the F.B.I. director, “we have got to set an example by bringing the full might of federal law enforcement against the people who illegally profited or destroyed companies at the expense of our country.”

In public, Mr. Mueller has said that the bureau is doing more with less, when it comes to criminal prosecutions. And Justice Department officials have repeatedly asserted the administration’s commitment to fight violent and white-collar crime even as they have not provided the bureau additional resources.

But current and former officials say Mr. Mueller has lost a behind-the-scenes battle with the Justice Department and the Office of Management and Budget to replenish the criminal ranks.

Interviews and internal records show that F.B.I. officials realized the growing danger posed by financial fraud in the housing market beginning in 2003 and 2004 but were rebuffed by the Justice Department and the budget office in their efforts to acquire more resources.

“The administration’s top priority since the 9/11 attacks has been counterterrorism,” Peter Carr, a Justice Department spokesman, said. “In part, that’s reflected by a significant investment of resources at the F.B.I. to answer the call from Congress and the American public to become a domestic intelligence agency in addition to a law enforcement agency.”

From 2001 to 2007, the F.B.I. sought an increase of more than 1,100 agents for criminal investigations apart from national security. Instead, it suffered a decrease of 132 agents, according to internal F.B.I. figures obtained by The New York Times. During these years, the bureau asked for an increase of $800 million, but received only $50 million more. In the 2007 budget cycle, the F.B.I. obtained money for a total of one new agent for criminal investigations.

In 2004, one senior F.B.I. official, Chris Swecker, warned publicly that a flood of fraudulent mortgage deals had the potential to become “an epidemic.” Yet the next year, as public warnings about fraud in the subprime lending markets began to approach their height, the F.B.I. had the equivalent of only 15 full-time agents devoted to mortgage fraud out of a total of some 13,000 agents in the bureau.

That number has grown to 177 agents, who have opened 1,522 cases. But the staffing level is still hundreds of agents below the levels seen in the 1980s during the savings and loan crisis.

F.B.I. officials said they had had no choice but to make the cuts in the criminal division, which they said were necessary to expand the bureau’s national security effort, particularly in the wake of criticism of the bureau’s performance in failing to detect the Sept. 11 plot.

In white-collar crime, they said the bureau has given up only lower-level cases of marginal significance that might have never been prosecuted anyway. They say they have focused the available criminal resources on public corruption and other difficult crime issues in which the F.B.I. can make a unique contribution.

“We only had a finite number of white-collar crime agents available to address the threat that mortgage fraud posed,” said Joseph Ford, who retired from the F.B.I. this year and once served as its chief financial officer.

The Justice Department is relying more than ever on the state and local authorities to pick up the slack through joint task forces. And private investigators say that companies victimized by fraud are turning to them in increasing numbers because they are unable to attract much attention from the F.B.I. anymore.

In some instances, private investigative and accounting firms are now collecting evidence, taking witness statements and even testifying before grand juries, in effect preparing courtroom-ready prosecutions they can take to the F.B.I. or local authorities.

“Anytime you bring to the F.B.I. a case that is thoroughly investigated and reduce the amount of work for investigators, the likelihood is that they will take the case and present it for prosecution,” said Alton Sizemore, a former F.B.I. agent who is a fraud examiner for Forensic Strategic Solutions in Birmingham, Ala.

One American company facing extortion demands last year from a computer hacker used private investigators from the Kroll firm to do much of the legwork in the case as the F.B.I. monitored and directed the situation behind the scenes, said Daniel Karson, executive managing director for Kroll. The private investigators even went undercover and set up a sting operation that led them to Germany, where the authorities made an arrest.

Mr. Karson said the F.B.I. no longer had the resources to take on such lower-level cases by itself. “When you come in with a garden variety, plain vanilla crime, you may have to stand in the queue,” he said.

Some critics question whether the shift indicates not just a lack of resources, but a lack of interest by the Bush administration.

After the collapse of Enron in 2002, the Justice Department moved aggressively against corporate fraud — too aggressively, in the view of some people within the administration. It set up a national task force to tackle the problem, garnered hundreds of convictions at companies like WorldCom, Adelphia and Enron, and forced the closure of Arthur Andersen, the accounting firm, for its role in the Enron collapse.

But several former law enforcement officials said in interviews that senior administration officials, particularly at the White House and the Treasury Department, had made clear to them that they were concerned the Justice Department and the F.B.I. were taking an antibusiness attitude that could chill corporate risk taking.

Justice Department officials said political pressures had never influenced the way prosecutors approached corporate cases. But the department’s approach has become noticeably more tempered in the last several years.

This spring and summer, as public concerns about the subprime mortgage crisis were growing, Attorney General Michael B. Mukasey rejected repeated calls for the creation of a national task force like the one used after the Enron collapse. The attorney general likened the problem to “white-collar street-crime” that could best be handled by individual United States attorneys’ offices.

In the last four years, the Justice Department has scored fewer of the big-name prosecutions that marked President Bush’s first term in office. Even when investigations have pointed to corporate wrongdoing, the Justice Department has agreed, in dozens of cases in the last four years, to “deferred prosecutions" that allowed companies to pay fines in order to avoid criminal prosecution.

Paul J. McNulty, who served as deputy attorney general under Alberto R. Gonzales, said the complexity of white-collar investigations and the shortage of investigators had driven a decline in high-profile cases.

“There’s no question that the department has been stretched thin when it comes to resources generally, and that has affected white-collar enforcement in a variety of areas,” Mr. McNulty said in an interview.

“What happened is that the first years after the Enron collapse, there were some very high profile, noticeable cases — the low-hanging fruit — that gave Justice the opportunity to rack up some very big wins,” he said. “Those cases played themselves out and it became tougher to find those big cases.”

    F.B.I. Struggles to Handle Wave of Financial Fraud Cases, NYT, 19.10.2008, http://www.nytimes.com/2008/10/19/washington/19fbi.html