IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA



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W. L. MENG, et al.
   Plaintiffs,

   vs.

BERNARD L. SCHWARTZ
and LORAL SPACE AND
COMMUNICATIONS, LTD.,
 et al.    Defendants.
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)   Case No: 1:98CV02859 (RCL)
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PLAINTIFFS' OPPOSITION TO THE PRESIDENT AND

MRS. CLINTON'S MOTION TO DISMISS



Plaintiffs, by counsel, respectfully submit this Opposition to the President and Mrs. Clinton's Motion to Dismiss.

MEMORANDUM OF LAW

I. Introduction.

This shareholder derivative action seeks to recover the substantial damage done to Loral Space & Communication Ltd. ("Loral") by its Chairman Bernard L. Schwartz ("Schwartz") and others who caused the company to become embroiled in a scheme to bribe high level government officials, including the President of the United States, in order to obtain favorable treatment from the United States Government. Plaintiffs' Amended Complaint alleges that Schwartz secured favorable treatment for Loral by paying bribes in excess of $1,460,000 to the Democratic National Committee ("DNC") and obtained other organizations affiliated with the Democratic Party. See Amended Complaint at paras. 54, 60, 63-64, 72, 108. Plaintiffs' Amended Complaint thus raises breach of fiduciary duty and other claims against Schwartz, including a claim that Schwartz violated the Racketeer Influenced Corrupt Organizations Act ("RICO") by conducting Loral's affairs through a pattern of racketeering activity.

The Amended Complaint also alleges that Hillary Rodham Clinton devised, agreed to participate in and implemented this unlawful scheme, and that President Clinton and Vice-President Al Gore authorized, agreed to participate in, and also implemented the scheme. Id. at paras. 55-56. The Amended Complaint further alleges that President Clinton and Vice-President Gore accepted the benefits of the contributions generated by the scheme. Id. at 57. The Amended Complaint thus raises common law civil conspiracy claims against the President and Mrs. Clinton, as well as RICO conspiracy claims.

The President and Mrs. Clinton raise two (2) arguments in their memorandum. (1) First, they argue that the President is absolutely immune from a claim for civil damages arising out of his official acts. Because Plaintiffs seek only injunctive relief against the President, that claim is without merit. Second, the President and Mrs. Clinton claim that the predicate acts of racketeering activity alleged in the Amended Complaint lack the requisite "continuity" to state a claim for a RICO violation. This is simply wrong. The President and Mrs. Clinton's motion must be denied.

II. Factual Background.

Plaintiffs Amended Complaint alleges that, over a four (4) year period, from June 1994 to August 1998, Schwartz paid approximately $1,460,000.00 to the DNC, the Democratic Senatorial Campaign Committee ("DSCC"), the Democratic Congressional Campaign Committee ("DCCC") and other entities affiliated with the Democratic Party. (2) See Amended Complaint at paras. 63, 78-108. According to Federal Election Commission ("FEC") records, Schwartz made the following payments between this time period:

(a) On June 7, 1994, Defendant Schwartz paid $100,000 to the DNC;

(b) On April 24, 1995, Defendant Schwartz paid $25,000 to the DNC;

(c) On June 30, 1995, Defendant Schwartz paid $75,000 to the DNC;

(d) On June 30, 1995, Defendant Schwartz paid $20,000 to the DSCC;

(e) On September 30, 1995, Defendant Schwartz paid $20,500 to the DNC;

(f) On September 30, 1995, Defendant Schwartz paid $20,500 to the DSCC;

(g) On November 28, 1995, Defendant Schwartz paid $100,000 to the DNC;

(h) On February 15, 1996, Defendant Schwartz paid $15,000 to the DSCC;

(i) On April 24, 1996, Defendant Schwartz paid $50,000 to the DSCC;

(j) On June 10, 1996, Defendant Schwartz paid $100,000 to the DNC;

(k) On July 31, 1996, Defendant Schwartz paid $5,000 to the DSCC;

(l) On September 16, 1996, Defendant Schwartz paid $30,000 to the DSCC;

(m) On September 20, 1996, Defendant Schwartz paid $20,000 to the DCCC;

(n) On October 16, 1996, Defendant Schwartz paid $10,000 to the DSCC;

(o) On October 18, 1996, Defendant Schwartz paid $70,000 to the DNC;

(p) On October 24, 1996, Defendant Schwartz paid $5,000 to the DSCC;

(q) On December 20, 1996, Defendant Schwartz paid $6,000 to the DNC;

(r) On January 31, 1997, Defendant Schwartz paid $50,000 to the DSCC;

(s) On April 25, 1997, Defendant Schwartz paid $5,000 to the DCCC;

(t) On June 27, 1997, Defendant Schwartz paid $100,000 to the DNC;

(u) On July 14, 1997, Defendant Schwartz paid $50,000 to the DSCC;

(v) On October 27, 1997, Defendant Schwartz paid $1,000 to the DCCC;

(w) On December 15, 1997, Defendant Schwartz paid $10,000 to the DSCC;

(x) On December 19, 1997, Defendant Schwartz paid $50,000 to the DCCC;

(y) On December 23, 1997, Defendant Schwartz paid $50,000 to the DNC;

(z) On January 21, 1998, Defendant Schwartz paid $30,000 to the DNC;

(aa) On March 2, 1998, Defendant Schwartz paid $25,000 to the DNC;

(bb) On April 22, 1998, Defendant Schwartz paid $100,000 to the DNC;

(cc) On or about May 21, 1998, Defendant Schwartz reportedly contributed $217,000 to the Democratic Leadership Conference, a "think tank" closely associated with President Clinton and the Democratic Party; and

(dd) On August 14, 1998, Defendant Schwartz paid $100,000 to the DCCC.

See Amended Complaint at paras. 63, 78-108.

Plaintiffs' Amended Complaint also alleges that Schwartz made these contributions to secure favorable treatment for Loral from the Clinton Administration. The favorable treatment alleged in the Amended Complaint specifically consists of the following:

(a) participation in the U.S. Department of Commerce foreign trade mission to China from August 25, 1994 to September 2, 1994, led by then- Commerce Secretary Ron Brown (id. at paras. 63-70);

(b) a waiver signed by President Clinton on February 6, 1996 allowing Loral to launch a commercial communications satellite from China (id. at para. 137);

(c) the transfer on March 14, 1996 of export licencing authority from the U.S. Department of State to the U.S. Department of Commerce, which had more lenient licensing requirements than did the State Department (id. at paras. 117-132);

(d) a second waiver signed by President Clinton on July 9, 1996 allowing Loral to launch additional communications satellites from China (id. at para. 138);

(e) a third waiver signed by President Clinton on February 18, 1998 that not only allowed Loral to launch even more communications satellites from China, but also effectively forestalled any criminal prosecution of Loral and/or Loral officials as a result of an grand jury investigation by the U.S. Department or Justice into the unlawful transfer of highly sensitive, missile technology to the Chinese (id. at paras. 172-180); and

(f) an export licence granted by U.S. Commerce Department on March 23, 1998 allowing Loral to export a commercial communication satellite for launch in China. (3) Id. at 181.

Since Plaintiffs filed their Amended Complaint, they have uncovered additional payments by Schwartz to the DNC, DSCC and DCCC between August 1998 and June 1999 totaling another $595,000.00. According to FEC records, Schwartz also made the following payments during this time period:

(a) On August 11, 1998, Defendant Schwartz paid $250,000 to the DNC.

(b) On October 26, 1998, Defendant Schwartz paid $50,000 to the DNC.

(c) On November 6, 1998, Defendant Schwartz paid $100,000 to the DNC.

(d) On February 16, 1999, Defendant Schwartz paid $50,000 to the DSCC.

(e) On March 23, 1999, Defendant Schwartz paid $20,000 to the DNC.

(f) On April 20, 1999, Defendant Schwartz paid $25,000 to the DNC.

(g) On May 14, 1999, Defendant Schwartz paid $25,000 to the DNC.

(h) On May 14, 1999, Defendant Schwartz also paid another $25,000 to the DNC.

(i) On June 28, 1999, Defendant Schwartz paid $50,000 to the DSCC.

In addition, Schwartz and his wife just recently paid yet another $40,000 to a special fundraising account created to assist Mrs. Clinton in her bid for the U.S. Senate. See Saffir, Barbara J., "Hillary's Senate run gets a holiday boost: Big donors attend Washington Gala," The Washington Times, January 15, 2000, attached as Exhibit 2. In exchange, they were rewarded with an invitation to the President and Mrs. Clinton's taxpayer-financed New Years Eve gala at The White House, where they sat at Mrs. Clinton's table. Id. Also improperly attending the "incestuous" event was Attorney General Janet Reno, whose Justice Department is supposed to be conducting a criminal investigation of Schwartz and Loral. See "White House Millennium Guest List," Associated Press, December 31, 1999, attached as Exhibit 3.

Clearly, Schwartz' payments to the DNC, DSCC and DCCC and other organizations affiliated with the Democrats and the Democratic Party continue even up to present. These additional payments likely constitute compensation for past quid pro quos, or are compensation for additional quid pro quos that Loral already has received or expects to receive in the future, so long as the President and Mrs. Clinton remain in positions of authority where they can provide illicit favors to Schwartz and his corporate enterprises.

III. Discussion.

A. The Predicate Acts of Racketeering Activity Set Forth in the Amended Complaint Clearly Satisfy RICO's Continuity Requirement.



A "pattern of racketeering activity" requires the commission of at least two predicate acts as defined by RICO. 18 U.S.C. 1961(1) and (5). The U.S. Supreme Court has made clear, however, that in addition to the requisite number of predicate acts, a plaintiff must show "that the racketeering predicate acts are related, and that they amount to or pose a threat of continued criminal activity." Edmonson & Gallagher v. Alban Towers Tenants Association, 48 F.3d 1260, 1264 (D.C. Cir. 1995), quoting, H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989) (emphasis original). The Supreme Court declared that the latter concept, "continuity," refers "either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition." Edmonson & Gallagher, 48 F.3d at 1264, quoting, H.J. Inc., 492 U.S. at 241. The predicate act can be neither isolated events nor sporadic activity. H.J. Inc., 492 U.S. at 237-39.

This Court has noted that continuity is "primarily a temporal concept." Pyramid Securities, Ltd. v. International Bank, 726 F. Supp. 1377, 1383 (D.D.C. 1989), aff'd, 924 F.2d 1114 (D.C. Cir. 1991), cert. denied, ___ U.S. ___, 112 S.Ct. 85, 116 L.Ed.2d 57 (1991). While there is no clear rule defining a substantial period of time, the case law leaves little doubt that a four-year period of time is sufficient. Edison Electric Institute v. Henwood, 832 F. Supp. 413, 417 (D.D.C. 1993) (citing examples). In addition to the length of the period of time, other factors that may be relevant to the continuity issue include the number and variety of predicate acts, the number of victims, and the occurrences of distinct injuries, among others. Id. at 417-18.

In Edison Electric Institute, the plaintiff brought a RICO claim against a supplier alleging that the supplier had bribed and/or paid kickbacks to one of its employees in exchange for making purchases from the supplier or businesses associated with the supplier. The plaintiff identified thirty-three (33) fraudulent invoices that it had paid over a four (4) year period as a result of the bribery and kickback scheme. Edison Electric Institute, 832 F. Supp. at 418. The Court found that the plaintiff's allegations satisfied "closed-ended" continuity, and, because "the allegations of defendants' organized and ongoing patterns of dealings with the plaintiff suggest[ed] that the acts were part of their 'regular way of doing business'" with the plaintiff, satisfied "open-ended" continuity as well. Id.

Plaintiffs' Amended Complaint clearly alleges predicate acts that are both related and demonstrate the requisite "continuity" to constitute a "pattern of racketeering activity." Even if the (10) additional payments between August 1998 and December 31, 1999 set forth above are not considered, the Amended Complaint identifies thirty (30) separate payments by Schwartz to the DNC, DSCC, DCCC or organizations affiliated with the Democrats, and at least seven (7) instances of Loral receiving taxpayer-financed government services and/or favorable treatment from the United States Government. Moreover, these payments-in-exchange-for-campaign-contributions occurred continuously over a four (4) year period of time, again not including the newly-identified payments in 1998 and 1999. They clearly were neither isolated nor sporadic.

In addition, each of the thirty (30) payments and each of the seven (7) taxpayer-financed services and/or favors caused a separate injury. See Edison Electric Institute, 832 F. Supp. at 418, citing, Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406 (3d Cir. 1991), cert. denied. ___ U.S. ___, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991).

Moreover, there were several victims of the unlawful bribery scheme. When Schwartz received a seat on the U.S. Department of Commerce trade mission to China, anyone who wanted to participate on the trade mission, but was not selected because they had not made the requisite $100,000 contribution to the DNC, became a victim of the scheme. Loral is also a victim, because it was Loral whose good name, reputation and business interest were harmed, and because, on information and belief, Loral's funds, laundered through the $36 million bonus Schwartz paid to himself, were used to make the payments to the DNC, DSCC, DCCC and other organizations affiliated with the Democratic Party. The United States Government and the American people also are obvious victims of this scheme. Not only has our political process and system of government been perverted and subverted by this unlawful bribery scheme, but U.S. national security have been harmed because of the unlawful transfer of highly sensitive, missile technology to the Chinese that resulted from the scheme. Also because of the scheme, this harm has been left unredressed. Finally, as Schwartz' recent payments to the DNC, DSCC, DCCC and organizations affiliated with the Democrats demonstrate, there is a very real a threat of continued criminal activity. In fact, Schwartz' recent contributions to Mrs. Clinton's U.S. Senate bid suggest that bribery has become a "regular way of doing business" for Schwartz and Loral. Clearly, Plaintiffs have satisfied both "closed-ended" and "open-ended" continuity.

By contrast, the facts of Edmonson & Gallagher, upon which the President and Mrs. Clinton rely, are clearly inapposite. In Edmonson & Gallagher, the plaintiff, a developer who sought to purchase an apartment building, alleged that a tenants association had tried to prevent the purchase through a pattern of racketeering activity. The Court found that the developer could not satisfy either "closed-ended" or "open-ended" continuity because the alleged predicate acts demonstrated only a single scheme to cause a single injury that took place over a very discrete period of time, from December 1986-January 1987 and again in the fall of 1988, and contained nothing that suggested any reason to expect that the defendants would again engage in RICO-violating conduct. Edmonson & Gallagher, 48 F.3d at 1264-65. Clearly, the facts of Edmonson & Gallagher have no bearing here. The President and Mrs. Clinton's claim that Plaintiffs have not plead the requisite pattern of racketeering activity must be rejected.

B. Plaintiffs' Amended Complaint Seeks Injunctive Relief Against the President.



In Nixon v. Fitzgerald, 457 U.S. 731 (1982), the U.S. Supreme Court held that the President of the United States is immune from liability for civil damages arising from his official acts.

It is clear, however, that the Supreme Court found the President immune from liability for civil damages only. (4) It did not hold that the President was immune from civil suits generally, or from civil suits that seek injunctive relief against him. The Court declared:

This case now presents the claim that the President of the United States is shielded by absolute immunity from civil damages liability. . . . Here a former President asserts his immunity from civil damages claims of two kinds. . . .Applying the principles of our cases to claims of this kind, we hold that petitioner, as a former President of the United States, is entitled to absolute immunity from damages liability predicated on his official acts.



Nixon, 457 U.S. at 748-49 (emphasis added). In fact, the President and Mrs. Clinton themselves only claim that the President is immune from liability for civil damages. There is nothing that prevents Plaintiffs from pursuing an action for injunctive relief against the President. Such a claim is entirely proper, and the President's and Mrs. Clinton's motion to dismiss must be denied in this respect as well.

IV. Conclusion.

For the foregoing substantial reasons, and for the substantial reasons set forth in Plaintiffs' oppositions to all of the Defendants' motions to dismiss, the President and Mrs. Clinton's motion to dismiss must be denied.



Respectfully submitted,



JUDICIAL WATCH, INC.







_____________________________

Larry Klayman, Esq.

D.C. Bar No. 334581







______________________________

Paul J. Orfanedes, Esq.

D.C. Bar No. 429716

Suite 725

501 School Street, S.W.

Washington, DC 20024

(202) 646-5172



Attorneys for Plaintiffs

CERTIFICATE OF SERVICE



I hereby certify that on January 26, 2000 a true and correct copy of the foregoing PLAINTIFFS' OPPOSITION TO THE PRESIDENT AND MRS. CLINTON'S MOTION TO DISMISS was served, via first class U.S. mail, postage prepaid, on the following:

Attorneys for Defendant Bernard L. Schwartz:



John J. Halloran, Esq.

SPEISER KRAUSE

2 Grand Central Tower

34th Floor

140 East 45th Street

New York, NY 10017

Elkan Abramowitz, Esq.

Richard D. Weinberg, Esq.

MORVILLO, ABRAMOWITZ, GRAND,

IASON & SILVERBERG, P.C.

565 Fifth Avenue

New York, NY 10017

Attorneys for Defendant Loral Space and Communications Ltd.:



Richard L. Posen, Esq.

David P. Murray, Esq.

Jeanne Luboja, Esq.

WILLKIE FARR & GALLAGHER

787 Seventh Avenue

New York, New York 10019-6099



Theodore C. Whitehouse, Esq.

WILLKIE FARR & GALLAGHER

Three Lafayette Center

1155 21st Street, N.W.

Washington, DC 20036-3384



Attorneys for Defendant Democratic National Committee:

Joseph E. Sandler, Esq.

SANDLER & REIF, P.C.

6 E Street, S.E.

Washington, DC 20003

Attorneys for Defendants Democratic Senatorial Campaign Committee

and Democratic Congressional Campaign Committee:



Robert F. Bauer, Esq.

Marc E. Elias, Esq

Andrea Anderson, Esq.

Brian G. Svoboda, Esq.

PERKINS COIE, LLP

607 Fourteenth Street, N.W.

Washington, DC 20005-2011



Attorneys for Defendants Albert Gore, Sandy Berger, Alexis Herman,

Harold Ickes and Melissa Moss:



Mary Hampton Mason, Esq.

Trial Attorney

Torts Branch, Civil Division

P.O. Box 7146

Ben Franklin Station

Washington, DC 20044-7146

Attorneys for Defendants William Jefferson Clinton and Hillary Rodham

Clinton:



David E. Kendall, Esq.

Nicole K. Seligman, Esq.

Julie C. Hilden, Esq.

WILLIAMS & CONNOLLY

725 12th Street, N.W.

Washington, DC 20005



Attorneys for Defendant Melissa Moss (co-counsel):

Stuart M. Gerson, Esq.

EPSTEIN, BECKER & GREEN, P.C.

Suite 700

1227 25th Street, N.W.

Washington, DC 20037-1156

Attorneys for Defendant Marvin Rosen:

Steven M. Salky, Esq.

Hillary A. Davidson,.Esq.

ZUCKERMAN, SPAEDER, GOLDSTEIN,

TAYLOR & KOLKER, L.L.P.

1201 Connecticut Avenue, N.W.

Washington, DC 20036



Attorneys for Terrence R. McAuliffe:



Richard Ben-Veniste, Esq.

WEIL, GOTSHAL & MANGES, LLP

Suite 700

1615 L Street, N.W.

Washington, DC 20036-5610



Attorneys for Defendant John Huang:

John C. Keeney, Jr., Esq.

Ty Cobb, Esq.

HOGAN & HARTSON, LLP

555 l3th Street, N.W.

Washington, DC 20004-1109







__________________________

Paul J. Orfanedes

1. The President and Mrs. Clinton also incorporate by reference the arguments raised in the memoranda of law filed by some of the other Defendants in this matter. Rather than reargue these same issues, Plaintiffs also incorporate by reference their oppositions to these memoranda.

2. These payments do not include contributions made by Schwartz to individual candidates nor any contributions by the "Loral Space & Communications Civil Responsibility Fund," both of which are substantial.

3. Schwartz also enjoyed, and still enjoys, continued access to the President and Mrs. Clinton. On information and belief, in a 1994 memorandum to President Clinton, then Deputy White House Chief of Staff Harold Ickes recommended that President Clinton call Schwartz to solicit contributions from him for a multi-million dollar political advertising campaign. "I have it on good authority that Mr. Schwartz is prepared to do anything he can for the administration," Ickes reportedly wrote. See Amended Complaint at para. 76. This is likely the same memorandum that is referred to in an FBI "302" investigative report regarding a November 11, 1997 interview President Clinton gave to the FBI about his campaign fundraising activities. According to the 302, the President was shown a September 20, 1994 memorandum from Ickes entitled "Telephone Calls to Vernon Jordan, Senator Jay Rockefeller and Bernard Schwartz for fundraising purposes. See FBI 302, attached as Exhibit 1, at 1-2. In the memo, Ickes asked the President to call Schwartz and to have breakfast with him, presumably for fundraising purposes. Id. Later during the interview, President Clinton admitted that he saw Schwartz "all the time." Id. at 12. Not coincidentally, according to FEC records, Schwartz and his wife also own a residence in Chappaqua, New York, approximately 4.5 miles from where the Clintons recently purchased a home so that Mrs. Clinton could run for the U.S. Senate in New York.

4. The failure of the recent impeachment action against President Clinton and the lack of congressional oversight in other, related scandals undercuts the Supreme Court's conclusion in Nixon that the President can be held accountable through means other than lawsuits for civil damages.