WASHINGTON — A report on misconduct in the Justice Department released Thursday paints a picture of a rudderless and sometimes dysfunctional public corruption unit under the man who has since become the face of President Barack Obama's effort to crack down on officials who leak government secrets.
The 525-page report offers a rare and unflattering glimpse behind the scenes of the 2008 prosecution of then-Sen. Ted Stevens, a criminal case that imploded. The prosecution was supervised by William Welch and, although a special prosecutor credited him with trying to correct many problems, the new report portrays Welch as out of the loop and preoccupied, even as others alerted him and other senior managers to signs of trouble.
The document reopens an embarrassing chapter for the Justice Department, which withheld evidence from Stevens' attorneys so often that Attorney General Eric Holder, in his first months on the job, asked that the senator's conviction be overturned. Stevens, 86, died in a plane crash in Alaska in August 2010.
Special prosecutors heaped much of the blame on lower-level prosecutors. But the report also offers an unusually candid look at Welch, who went on to lead two major investigations that accused officials of the Espionage Act for talking to journalists. Those cases also have been marred by missteps that earned rebuke from judges.
Journalists and open government groups have criticized the Obama administration and Welch for using the Espionage Act, a World War I-era law prohibiting aid to the enemy, against officials suspected of giving secrets to reporters. Those groups describe the officials as whistleblowers, not criminals.
Welch led the prosecution of Thomas Drake, a former senior National Security Agency official who faced 35 years in prison for disclosing government waste and mismanagement for a reporter. The case crumbled last year. A federal judge lambasted the government's handling of the case and sentenced Drake to community service and probation for one misdemeanor
"It was not proper," U.S. District Judge Richard Bennett said. "It does not pass the smell test."
Welch is also leading the prosecution of former CIA officer Jeffrey Sterling, who is accused of disclosing information about a botched intelligence operation in Iran to Pulitzer-winning New York Times journalist and author James Risen. In that case, the Justice Department was late in disclosing evidence about two key witnesses, prompting a federal judge to bar them from testifying.
In the Stevens case, the longtime Alaska senator was charged with lying on Senate disclosure documents about home renovations and other perks he received from his friend, a wealthy oil contractor named Bill Allen. Allen became the key witness against Stevens, testifying that he and his employees lavished the senator with freebies.
A jury convicted Stevens on all charges in October 2008.
Almost immediately, however, things began to unravel for Welch and his team. An FBI agent – a government whistleblower – stepped forward and told a federal judge that prosecutors had withheld evidence that undercut Allen's testimony and called his credibility into question. A federal judge held Welsh and his prosecutors in contempt and appointed a special counsel to sort it out.
The special counsel's long-awaited report does not recommend criminal charges against anyone. But it blames prosecutors Joseph Bottini and James Goeke for intentionally withholding and concealing evidence. The report is also critical of prosecutor Nicholas Marsh but, because Marsh committed suicide before the report was finished, the investigation doesn't issue a finding on his conduct.
Though Welch was the chief of the public corruption unit, the special counsel said Welch "perceived himself effectively to have been eliminated from the `chain of command'" because of the unusual involvement of senior Justice Department managers in the case in 2008 during the Bush administration. And because his deputy was also the lead trial prosecutor, Welch was busy managing other cases.
The effect was that, on the Stevens case, everyone thought someone else was in charge of reviewing the evidence and deciding what to give to the defense team, a process known as a Brady review.
Brenda Morris, the lead prosecutor, told investigators that she asked Welch for help before the trial started.
"I recall around this time going to Bill and saying, look, there's some Brady issues. You got to, you got to help me with this. You got to focus on this," Morris said.
Bottini said that didn't happen.
"What we needed was someone cut loose to specifically to deal with a project-manager type role for this thing," Bottini told investigators. "And we didn't have that."
The special prosecutor, Henry Schuelke, credited Welch for always erring on the side of turning over information to Stevens.
But because Welch was busy with other cases, he became involved with that only when asked, Schuelke concluded. And there were warning signs long before the case began to unravel.
Problems with Allen's testimony, for instance, were foreshadowed in emails one year before trial, when questions arose about whether, in an unrelated case, Allen had persuaded a young woman to lie under about their sexual relationship when she was underage. If true, prosecutors would have had to tell Stevens and his lawyers about it.
Welch was one of several prosecutors who received an email with handwritten notes from an FBI interview that strongly suggested Allen had persuaded the woman to lie. He said he didn't read the document until much later, relying instead on his subordinate's conclusion that they were ambiguous.
Welch said he didn't read the document until the middle of trial and then immediately disclosed it to defense attorneys.
In response to the report, Welch's lawyers said the case was hamstrung by unusual micromanagement of the case by the top prosecutor in the criminal division, Assistant Attorney General Matthew Friedrich. Even so, Welch's attorney's wrote in court documents, Welch urged his team to provide all evidence to Stevens.
As soon as Welch learned about other problems with the case in 2009, attorneys said, he immediately urged Justice Department leadership to throw out the indictment and overturn Stevens' conviction. Days later, they did.
Other prosecutors named in the report, however, said the special prosecutor unfairly spared managers like Welch while heaping blame on low-level lawyers, even though the senior attorneys were aware of potential pitfalls in the case.
"The Schuelke report does not even attempt to explain how Mr. Goeke intentionally violated his Brady obligations," Goeke's attorneys wrote, "while others with significantly more seniority and experience, such as Ms. Morris and Mr. Welch did not."