Will the First Family of GOP Sleaze Wind Up Under the Microscope?

Bob Riley with one of his GOP pals

Recent news accounts have focused our attention on the Rileys, the first family of Republican sleaze in Alabama--and one of the nastiest conservative clans in the country.

Of course, it's not new for our attention to be focused on the Rileys; we've been reporting on their wickedness pretty much from the day this blog started four years ago, in June 2007. But we are seeing signs that the attention of others--the general public, the mainstream press, perhaps even law enforcement--is turning toward the Rileys.

Bob Riley, the governor of Alabama from 2003 to 2011, and his ethically challenged son, Homewood lawyer Rob Riley, have enjoyed the benefits of a Teflon coating that would have made Ronald Reagan proud. At least one national pundit, MSNBC's Joe Scarborough, has openly pushed for a Bob Riley presidential run in 2012--and Karl Rove reportedly has been intrigued because Riley's poofy 'do reminds him of Reagan. Meanwhile, we hear from numerous sources that Rob Riley is itching to run for governor, perhaps as early as 2014.

But for the first time since the Rileys rose to statewide power--on the backs of an election that almost certainly was stolen from Democrat Don Siegelman in 2002--we are seeing signs and hearing reports that Bob and Rob's fortunes might take a turn for the worse before too long. Given the pathetic performance of the Obama Justice Department, I'm not holding my breath. But there is reason to believe that the Rileys luck might not hold out forever.

(A couple of notes: First, we should acknowledge that our headline is a tad misleading. The true first family of GOP sleaze certainly is the Bushes. But the Rileys--with their ties to Jack Abramoff, dirty gambling money, and what probably amounts to an organized-crime network--certainly deserve a place in the pantheon of Republican underhandedness. Second, we need to come up with a phrase other than "GOP sleaze." We are learning that, at least in Alabama, there are some individual Republicans who possess a conscience. In fact, we know of some Republicans who find the Rileys to be almost as repugnant as I do. If anyone ever brings the Rileys down, I suspect certain Republicans will play a helping hand.)

How is the landscape changing for the Rileys? First, let's consider recent reports that Bob Riley has been subpoenaed to testify, by lawyers for gambling magnate Milton McGregor, in the federal bingo trial that begins Monday in Mongtomery. When I first heard about this, my reaction was, "Ah, he will get off and almost certainly will not be forced to testify. And even if he does take the stand, the judge is likely to sustain so many objections from government lawyers that nothing substantive will come from it." But I'm hearing that McGregor's lawyers performed some intriguing groundwork in preparing for the subpoena--and that Big Bob might have reason to be genuinely concerned. We will stay tuned.

Second, new governor Robert Bentley has ditched a $13 million, no-bid computer-services contract that went to a shadowy company called Paragon Source under the Riley administration. The company--which had no Web site, phone number, or business address--received $7 million before payments were stopped in fiscal 2010, according to a report in The Huntsville Times. The mainstream press has largely taken a see-no-evil approach to the Riley clan, but reporter Bob Lowry is practicing some real journalism--and it will be interesting to see where it leads.

Even the Times' editorial page is asking questions about Teflon Bob and his gang of thugs:

When he first ran for governor, Riley repeatedly attacked Gov. Don Siegelman for his administration's fondness for no-bid state contracts. Additionally, Riley championed his efforts to improve government accountability and transparency as among his signal accomplishments.

Riley sent [finance director Bill] Newton, Riley Chief of Staff Dave Stewart and spokesman Jeff Emerson to meet with The Times' and Birmingham News' editorial boards in October 2009 to defend the contract from criticism.

Newton said Paragon President Janet Lauderdale was uniquely qualified to do the work because she helped install the original computer system in the early 1990s and helped the state meet a tight deadline for revamping its payroll system in 2006. . . .

Lauderdale may have been uniquely qualified, as Newton insisted, but awarding a multimillion-dollar contract without bids based on the opinions of a few people in the Finance Department -- government by good old boy? -- is hardly the way to conduct state business.

Should this become a matter for law enforcement? Well, consider that the entire Bullock County Commission recently was arrested on felony charges that they violated the Alabama Competitive Bid Law. Each of them faces a possible 10-year prison sentence, and that reportedly involved $85,000 for inmate food at the county jail. Meanwhile, the Riley administration p----d away $7 million of taxpayer funds on a no-bid contract, and we the people have zero to show for it. Which is the more serious matter?

Keep this in mind: The Bullock County commissioners are mostly black and apparently all Democrats. The attorney general who signed off on their arrests is a white Republican named Luther Strange who happens to be a best bud of Bob Riley. Gee, I wonder how that will turn out?

Rob Riley

How might Rob Riley fit into this picture? An Associated Press report states that federal law-enforcement officials will start holding individual health-care executives accountable in fraud cases that used to be aimed at their companies. Regular readers know that Rob Riley is an owner of Performance Group LLC, a rehabilitation-medicine company that has engaged in rampant Medicare fraud, according to a federal whistleblower lawsuit filed in 2008.

Rob Riley's entry into the health-care field seems to coincide with his appearance in a federal lawsuit against individuals and entities connected to Birmingham-based HealthSouth. Riley joined the case to become co-liaison counsel with G. Douglas Jones, a former U.S. attorney in the Clinton administration. Here's how we reported it in an earlier post:

According to Sam Stein at Huffington Post, Rob Riley abruptly joined the HealthSouth lawsuit on January 13, 2005, representing the New Mexico State Investment Council.

Sources tell Legal Schnauzer that a few months after entering the HealthSouth case, Riley and two partners formed a company called Performance Group LLC.

Performance Group, our sources say, is a Birmingham-based corporation that provides physical-therapy services. The company has clinics in Birmingham, Cullman, and Albertville.

Performance Group apparently has plans to grow. Our sources say Riley and his partners sold ownership interests in the company to some 20 Alabama physicians who referred patients to the Performance Group entities for physical therapy.

This arrangement, in which physicians refer patients to an entity in which they have a "compensation relationship," appears to violate federal law, our sources tell us.

That's not the only way Riley and his partners seem to be skirting the law. They also are filing false claims for reimbursement with federal health-care programs, sources say.

How ugly could this story get? Jones, Riley, and other lawyers clearly were grabbing for some serious cash--apparently using inside information they gleaned from the Don Siegelman/Richard Scrushy criminal case--and were rewarded with a percentage out of attorney fees that totaled more than $50 million.

On top of that, several of Riley's partners in Performance Group LLC are affiliated with the University of Alabama at Birmingham (UAB), which means taxpayer resources could have been used to help support health-care fraud--all while Rob Riley's daddy was governor of Alabama. Wouldn't that just be swell?

The whistleblower case against Performance Group LLC has been dismissed without prejudice, meaning it can be refiled. The dismissal was ordered by U.S. District Judge William M. Acker, an 83-year-old Reagan appointee who seems to have a habit of making blatantly unlawful rulings to help protect Alabama elites.

We soon will be exploring in detail a number of cases where Acker has made some highly curious rulings, including the whistleblower case against Rob Riley's company.

Will the Rileys and some of their enablers (Jones? Acker? Strange?) ever wind up in the glare of some mighty uncomfortable white-hot spotlights? I would not count on it happening. But I no longer think it's impossible.