Miami grand jury issues no charges against Sen. Menendez, but probe continues

12/04/2013 6:23 PM

12/04/2013 10:02 PM

Federal agents descended on the clinic of a South Florida eye doctor close to U.S. Sen. Bob Menendez last January — a dark-of-night raid that soon spiraled into a string of national news stories about trips on the physician’s private plane to the Dominican Republic and scandalous allegations of trysts with underage prostitutes.

Nearly a year later, the politically explosive allegations against the New Jersey Democrat have proved to be duds so far.

After subpoenaing records and witnesses, a federal grand jury in Miami has filed no charges against Menendez , a prominent Cuban-American lawmaker, or his friend and major campaign donor, Dr. Salomon Melgen, according to several sources familiar with the probe.

But the grand jury is still reviewing evidence of Menendez’s intervening with U.S. government officials on behalf of Melgen regarding the physician’s billing dispute with Medicare and his port-security contract in the Dominican Republic.

And Melgen’s legal problems are also far from over. Only two months ago, agents with the FBI and the U.S. Department of Health and Human Services conducted another search of Melgen’s West Palm Beach clinic, Vitreo-Retinal Consultants — a second raid stemming from a separate ongoing battle with authorities over his prolific Medicare billing.

For Menendez, a pronouncement that the grand jury probe of the alleged trysts has come to naught would be a public vindication from what he once called a “fallacious” smear campaign orchestrated by a right-wing blog hoping to derail his reelection bid last November.

But that won’t be coming.

Anonymous sources originally leaked that a grand jury investigation, which is supposed to be secret under federal law, had been launched to examine Menendez’s conduct. But unless an indictment is issued, the results of federal grand jury investigations remain confidential — even when they don’t bring charges against the targets of their probes.

Even the Senate Select Committee on Ethics, which could open an inquiry into Menendez’s unreported gifts from Melgen, won’t comment as a matter of policy.

Attorney Joseph DeMaria, a former federal prosecutor with the Miami law firm Tew Cardenas, said the principle of fairness has gotten lost in the process.

“There is something desperately wrong with our system when ‘anonymous sources’ leak secret grand jury information and then ... the Department of Justice does not publicly clear the good name of the innocent person,” DeMaria said Wednesday.

Menendez’s office declined to comment, but he has said in the past that he welcomed the investigation.

Melgen’s defense attorney, Kirk Ogrosky, with the Arnold & Porter law firm in Washington, also declined to comment.

The Miami grand jury, which heard testimony from people associated with the politician and physician, focused on allegations that Melgen had arranged encounters with prostitutes in his native Dominican Republic while he and Menendez stayed at the doctor’s seaside estate in the resort area of Casa de Campo. But the grand jury found no basis to file any charge on that matter, according to sources.

Meanwhile, Melgen continues to face a separate Medicare fraud probe of his South Florida eye clinics. A federal grand jury based in West Palm Beach is investigating whether the prominent ophthalmologist overbilled the government health-insurance program millions of dollars for medically unnecessary treatments.

In October, federal agents again raided his West Palm Beach clinic because of alleged inconsistencies in the medical and patient records he had already turned over to authorities, according to sources familiar with the case.

That investigation is based, in part, on a still-festering 2009 dispute between Melgen and Medicare over his billing and collecting more than $8 million for eye injections of a costly drug called Lucentis. The drug, manufactured by Genentech, is used to treat macular degeneration in mostly older adults suffering from loss of vision because of retina damage.

In August, Melgen’s legal team, Ogrosky and Matthew Menchel, both former federal prosecutors, sued the U.S. Department of Health and Human Services in Miami federal court to recover those Medicare payments for 2007 and 2008 — funds that the doctor had returned to the government during his administrative appeal.

Melgen’s dispute with Medicare became one of the areas of inquiry for the Justice Department’s Public Integrity Section in the Miami federal grand jury. Prosecutors, along with the FBI, investigated whether Menendez abused his official position to help Melgen while he made sizable campaign donations to the senator and provided him with free trips to the Dominican Republic, among other allegedly unreported gifts.

In 2009 and again in 2012, Menendez complained to top Medicare officials that it was unfair to penalize the doctor because the billing rules for administering Lucentis were ambiguous, the senator’s aides told the Washington Post after it broke the story in February.

When Melgen, who has invested in a variety of businesses outside his medical practice, needed help with a port security contract in the Dominican Republic last year, he turned to Menendez. The senator tried to get the State Department to revive the long-stalled, multimillion-dollar agreement at the Santo Domingo port with a company of which Melgen is part-owner.

Menendez’s official actions on behalf of his longtime friend came to light after federal agents raided Melgen’s clinic and two other South Florida offices in late January, which sent shockwaves from the Dominican Republic to New Jersey to Washington. Published reports noted that the doctor had donated more than $700,000 in 2012 to Menendez’s reelection campaign and those of other Senate Democrats.

The timing could not have been more sensitive because Menendez was poised to become chairman of the Senate Foreign Relations Committee in February. Despite the controversy, he ascended to the post that month.

In March, the Post cited anonymous sources saying a federal grand jury was convened in Miami to examine the senator’s conduct, including unreported free trips he took in 2010 on Melgen’s private plane.

By then, Menendez had already acknowledged that he did not properly disclose two trips, and quietly wrote a personal check for $58,500 to reimburse Melgen, as the controversy swirled around the lawmaker.

But even before those gifts came to light, FBI agents had already launched an investigation into their joint travels after receiving information from a shadowy tipster who used the name “Peter Williams” in his correspondence. He claimed the doctor flew Menendez on his plane to the Dominican Republic and that the two allegedly hired underage prostitutes.

The allegations, which were circulated by the tipster to the news media, were reported before the November elections by a conservative blog called The Daily Caller. In late January, Menendez blamed the accusations on an election-year conspiracy involving the website.

“Any allegations of engaging with prostitutes are manufactured by a politically motivated right-wing blog and are false,” Menendez’s office said in a statement at the time.

An ethics watchdog group that brought the tipster to the FBI’s attention also suspected that a partisan, political motive underpinned the allegation about the prostitutes.

FBI agents pursued the investigation, traveling to the Dominican Republic to question witnesses who knew Melgen, including maids at his Casa de Campo estate.

A turning point came in March, when the Dominican National police said a Santo Domingo attorney paid three women between $300 and $425 each to record videotaped interviews in October saying they were hookers who had had sex with a man named “Bob.”

The police announcement provided the strongest evidence yet contradicting accusations that Menendez flew in the doctor’s private plane to the Dominican Republic for sex parties at his vacation home

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