Editor's note: At the core of Democrats' criticism of solicitor general nominee Ted Olson is his inconsistent responses to questions about his involvement in the Arkansas Project, the $2.4 million investigation into the life of Bill Clinton, funded by conservative billionaire Richard Mellon Scaife and channeled through two nonprofit organizations run by the American Spectator magazine. Olson has adamantly asserted that he in no way played any part in managing the operation, and has claimed not to have heard about it until late in its life span, though he has been inconsistent in his answers about when he first learned of the project.
Now, on the day that Republicans are forcing a vote on Olson's confirmation, a friend and advisor to Ronald Burr, the deposed publisher of the American Spectator who once called for an internal "fraud audit" of the Arkansas Project, has written a letter faxed to Salon, reprinted below. According to previous reports in Salon, Olson was reported to have negotiated Burr's $350,000 severance package, which included "a provision that bars Burr from ever publicly discussing the circumstances surrounding his removal." Lemley says he played the role of "counselor and advisor to Ron during the events that led to his release by the American Spectator after thirty years of service." Lemley claims he learned from Burr that Olson knew of the Arkansas Project "if not in name then in its actions from the start, and Ted Olson led the charge to fire Ron Burr, the only executive at the American Spectator who had sought a forensic audit of the Arkansas Project."
Lemley alleges that Olson knew about the Arkansas Project more than three years earlier than he has said, because his "agreement in the winter of 1993-1994 to represent David Hale was a cornerstone of the project." David Hale, the chief witness against Clinton in the Whitewater investigation, was represented by Olson in order to quash a subpoena asking him to appear before the Senate Whitewater committee. Hale was the subject of a federal probe into whether or not Hale improperly received payments from Arkansas Project operatives. Burr could not be reached for comment Thursday about Lemley's letter. However, David Brock, a former American Spectator writer and now a chief Olson critic, told Salon, "I knew of Bud Lemley as an investment advisor to the American Spectator during years of the Arkansas Project. I knew at the time that they were close friends and that he was a confidante of Ron Burr." A call to Olson's office for comment was not returned by publication time. A Judiciary Committee staff member would neither confirm nor deny whether they had received the letter from Lemley.
The letter was copyedited and some relevant facts added in brackets.
My name is Ralph Lemley. I am a money manager with an office and business in Chicago, Illinois. I have been a personal friend of Ron Burr for 23 years. The following statement is a true rendition of my knowledge of the matter discussed.
I am releasing the statement because I have been approached by several reporters and asked about my relationship with my longtime friend Ron Burr, [co-founder and former publisher of the American Spectator], and my knowledge of the Arkansas Project. All my knowledge comes from conversations with Ron Burr during the year 1997, when I fell into the role of counselor and advisor to Burr during the events that led to his release by the American Spectator after 30 years of service. Recent news articles have suggested that Ted Olson discovered the Arkansas project in mid-1997 and sought an audit that closed down the project. These assertions are contrary to my firsthand knowledge of what really happened. Ted Olson knew of the Arkansas Project, if not in name, then in its actions from the start, and Ted Olson led the charge to fire Ron Burr, the only executive at the American Spectator who had sought a forensic audit of the Arkansas Project. And after Burr was fired, only a review and not an audit was conducted of the 501(c) 3 taxpayer-supported non-private foundation.
In my conversations with Ron Burr during 1997, Burr told me that Ted Olson was an integral part of the project because his agreement in the winter of 1993-1994 to represent David Hale was a cornerstone of the project. I spent the better part of 1997 counseling Burr, who had been with the Spectator since its inception in Bloomington, Indiana 30 years earlier. In our conversations, Burr said he was disturbed that over a three-year period almost two million dollars had been sent to a lawyer named Steven Boynton, at the direction of Spectator editor and co-founder Bob Tyrrell, to fund an operation named the Editorial Improvement Project. Burr told me the EIP was referred to as the Arkansas Project by those involved with it. [The money to fund the Arkansas Project came from Pittsburgh philanthropist Richard Mellon Scaife.] Burr, as publisher and treasurer of the American Spectator Foundation, had no idea how the money sent to Boynton had been spent.
In explaining his concern about the Arkansas Project, Burr told me he had received legal advice in 1995 and 1996 from two respected lawyers, William Lehrfeld and Mackenzie Canter, about IRS rules against excess benefits and"private inurement." Burr told me that he thought these proscriptions might apply to several directors of the foundation who were involved in the Arkansas Project, and result in the loss of tax-exempt status for the foundation. Because the Spectator was a charitable organization, the IRS was quite strict about directors being paid or receiving benefits greater than comparable work performed in the public sector. Burr also told me that the Spectator's regular auditor had raised questions on the same subject in a letter sent in early April 1997. Since the material in the letters was privileged, we didn't discuss the issue further, except that I urged Burr to obtain an audit of the project so that he would know how the money was spent.
Several days later Burr told me that he was being strongly opposed in his request for an audit by Bob Tyrrell and Ted Olson. During this time period Tyrrell sought to appoint Dave Henderson, who was a director of the foundation, to an oversight capacity in regard to Burr. In conversations about this appointment, Burr and I concluded that this appointment was the result of Burr seeking an audit of the project. Burr told me at this time that Henderson was Scaife's representative on the board of the American Spectator Foundation, and that Henderson, with the concurrence of Richard Larry of the Scaife foundations, had been instrumental in Olson joining the foundation's board in 1996.
The addition of Henderson to a management position at the American Spectator Magazine was discussed in full at a board meeting at the Waldorf-Astoria in New York in May 1997. In conversations with Burr before and after that meeting, he told me that Ted Olson had seconded the motion to give Henderson the management job and that the funding of the Arkansas project had been discussed. The reason Burr and I conversed about this meeting was that Burr saw the appointment of Henderson as an attempt to forestall his attempts to obtain an audit. Burr told me the Arkansas project was discussed at this meeting because the Scaife funds were behind in their payments and Burr was worried about paying Henderson's salary at the magazine, since Henderson was being paid by the Arkansas project. He also told me that mention of the Arkansas Project was not in the minutes of the meeting because a director had suggested that the minutes not reflect this discussion.
After Henderson joined the magazine, Burr and I agreed that Henderson's position in the management of the magazine was making running the magazine difficult. We agreed that something had to be done. Burr requested a meeting, which Tyrrell suggested take place at Ted Olson's office, to discuss Henderson's employment by the magazine. Things were heating up in Washington, and Burr and I surmised that perhaps Henderson, who couldn't assert lawyer-client privilege as Boynton could [because he served as a lawyer for the Arkansas Project] had been placed on the magazine staff so that he could assert First Amendment protection if any investigation of the American Spectator occurred. Burr told me that he didn't want Henderson in the office every day because he had never run a magazine and had little operational knowledge.
At the start of that meeting on July 10th in Olson's office, Burr later told me, Tyrrell walked into the meeting and immediately stated that Dick Larry of the Scaife foundation had accused Ron of misallocating Arkansas project funds. Tyrrell specifically did not say Editorial Improvement Funds, and Burr told me later that Olson was quite aware of what was being discussed.
Burr was quite shaken by the allegation, especially since it was being delivered by a supposed friend of 30 years who actually had been in charge of disbursements for the project. After the meeting Burr called me and we had a long conversation. We arrived at the obvious conclusion that Tyrrell and Olson were trying to encourage Ron to stop seeking the audit of the project, and I suggested to Burr that Tyrrell and Olson seemed to be setting Burr up for some kind of fall. I urged Burr to immediately write a letter to Dick Larry demanding an immediate retraction of Tyrrell's allegation and reiterated that a forensic audit of the Arkansas project was now clearly an absolute necessity to find where the money had gone. I suggested to Burr that perhaps Tyrrell and Olson knew where the money had gone and that perhaps that was why they didn't want the audit. Burr said he didn't necessarily agree with me, but he agreed that a forensic audit was necessary. Burr and I spent the next few days composing the letter, which he faxed to Dick Larry on July 14, 1997.
In our conversations during this time, Burr told me the project had always been under Tyrrell's direction, with Olson becoming involved in it from time to time, and Henderson, a non-lawyer, running it with no internal controls. Burr was the odd man out.
During the rest of the summer of 1997 Burr sought executive approval for a forensic audit. Burr contacted [the accounting firm] Arthur Anderson and asked them to make a proposal for an audit that would include looking for fraud. Burr wanted the fraud part of the audit because of the accusation conveyed by Tyrrell, which we both agreed was absurd but which we both knew could only be answered by a forensic audit. Burr told me that when for a moment or day Tyrrell would agree to an audit, he would only would agree to an in-house audit or a routine audit conducted by the regular Spectator accounting firm. I told Burr that an outside audit was the only way general accounting principles could be observed since folks working for the Spectator couldn't be independent and the audit by the regular accounting firm had not sought to audit the undocumented spending at the time it did its yearly audits. Only a forensic audit by Arthur Anderson would give an unequivocal answer.
In late September the conflict seemed to be coming to a head. Tyrrell suggested that Burr take a six-month leave of absence. Burr refused. In our conversations Burr told me that his stewardship of the Spectator over the years had often been difficult. Burr said that he owed it to the Spectator's many contributors to try to keep the original purpose of the magazine alive. Ron told me he felt that Scaife, with Henderson and Olson on the board and Tyrrell obsessed with getting Clinton, was exerting too much power over the magazine's editorial policy.
On the night that the American Spectator Board met secretly to fire Burr, we spent the evening composing a memorandum to Tyrrell reiterating the reasons for a fraud audit. We did this in reply to a Tyrrell memo to Burr rejecting any audit of the Arkansas Project. Burr was fired the next day. During this time Burr was told by Tyrrell to negotiate a severance agreement with Olson and John Von Kannon, a director of the Spectator who had been with Burr at the start of the magazine in Bloomington and who also voted to fire Burr.
This is a true account of my conversations with Ron Burr in the first ten months of 1997.