Probe faults FBI, IRS agents in Stevens case

An investigation of the bungled criminal prosecution of the late Sen. Ted Stevens has concluded that prosecutors never conducted a comprehensive review of material favorable to the senator.

A report released Thursday from a special counsel says agents of the FBI and Internal Revenue Service conducted an inadequate review of documents in the Stevens case. The report says some of the agents were unfamiliar with the facts or were unfamiliar with legal requirements about turning over material to Stevens' legal team.

The investigation by special counsel Henry F. Schuelke III revealed that prosecutors also failed to review their own notes of witness interviews containing significant information that was never disclosed to lawyers for the senator.

"Not only was the ... review unsupervised, the prosecutors themselves were unsupervised," Schuelke's report said.

Handwritten notes taken by prosecutors and two FBI agents during interviews with two key witnesses contained significant information that "was never disclosed to Senator Stevens' attorneys," Schuelke's report stated.

Schuelke found that two federal prosecutors intentionally withheld and concealed significant information.

In response, Stevens' attorneys said the report "provides evidence of government corruption that is shocking in its boldness and its breadth."

"Corrupt prosecutors obtained an illegal verdict against Senator Stevens on October 27, 2008," they said in a statement. "As a result, a sitting senator lost certain re-election and the balance of power shifted in the United States Senate."

In a statement, the Justice Department said it has cooperated fully with Schuelke's inquiry "and provided information throughout the process."

"While the department meets its ... obligations in nearly all cases, even one failure is one too many," the department said.

A jury convicted Stevens in October 2008 of seven felony counts of lying on Senate financial disclosure documents to hide hundreds of thousands of dollars in home renovations and gifts from wealthy friends, including a massage chair, a stained-glass window and an expensive sculpture. A few days later, Stevens lost re-election to the seat he'd held for 40 years, making him the longest-serving Republican in the Senate at the time.

U.S. District Judge Emmet Sullivan dismissed the conviction in April 2009 after the Justice Department admitted misconduct in the case. Stevens died in a plane crash on August 9, 2010. The judge ordered Schuelke's 2 1/2 year criminal investigation, saying he had never seen such misconduct in 25 years on the bench. However, Schuelke did not recommend criminal contempt charges because the judge never issued a direct order spelling out the rules of evidence.

Stevens' attorney Brendan Sullivan "was not aware when he gave his opening statement, and never learned during or after the trial, that the prosecutors possessed evidence that directly corroborated Sen. Stevens' defense," the report said. "The prosecutors never disclosed" that the foreman for the renovation "had the same understanding and belief as Sen. Stevens and his wife."

The government's star witness, Bill Allen, the millionaire founder of an Alaska company that supported oil producers called VECO Corp., testified that he oversaw extensive renovations at Stevens' home and sent his employees to work on it. Stevens' defense was that the senator and his wife understood that VECO's costs for its employees' work on the renovation were included in the bills the senator received.

"The statements by the foreman, Rocky Williams, corroborated a defense which the prosecutors had anticipated for over a year," said the report.

Yet none of the information provided to prosecutors in their interviews of Williams was written down. Instead, the only information that was written down was helpful to the prosecution and "gave a misimpression of the substance of what Mr. Williams had said during the interview," the report added.

The report by Schuelke prompted Stevens' lawyers to say Thursday that "the government hid critical witness statements that would have bolstered the testimony of both the senator and Catherine Stevens."

Schuelke concluded that prosecutors Joseph Bottini and James Goeke intentionally withheld and concealed significant information which they obtained from Williams. Schuelke also found that Bottini and Goeke concealed information about alleged misconduct by Allen that could have been used to undermine his credibility as the government's chief witness. Finally, said the report, Bottini failed to correct false testimony by Allen.

However, the report added, the evidence is insufficient to establish beyond a reasonable doubt that Bottini and Goeke violated the criminal contempt law, which applies in court proceedings.

A few days before the trial began, and after Williams did poorly on a mock cross-examination conducted by one of the prosecutors, the prosecutors determined that Williams was in poor health and needed medical attention in Alaska, and they returned him to Alaska on Sept. 25, 2008, the day opening statements were given, the report said.

Two of the prosecutors never disclosed, and Stevens' legal team never learned, that Williams told prosecutors repeatedly that he had the same understanding as Stevens and his wife -- that VECO's expenses were supposed to be included in the bills, said the report.

In their statement Thursday, Stevens' legal team said that the government "even sent the witness back to Alaska so that the witness providing these statements would not testify."