Capitol Hill Blue July 23, 1998 Doug Thompson Internal Justice Department report finds "evidence" of campaign law violations by Clinton, Gore, others and urges independent counsel By Doug Thompson A confidential report from Attorney General Janet Reno's chief of the agency's campaign finance unit says there is evidence that both the President and Vice President of the United States, along with other high-ranking officials, violated federal election laws, Justice Department officials confirmed to Capitol Hill Blue Wednesday. But the Justice Department is not objective enough to handle the investigation and an independent counsel should be named, Charles La Bella told Reno in a report that is so confidential only two copies were made More than a dozen high-level attorneys and investigators at the Justice Department have resigned in a growing internal dispute over Reno's refusal to appoint an independent prosecutor to investigate fund-raising abuses during President Clinton's 1996 re-election campaign, sources said. La Bella, who returned to his home in San Diego this week to take over as interim U.S. attorney, outlined evidence against President Bill Clinton, Vice President Al Gore, former White House deputy chief of staff Harold Ickes and other top-level White House and Democratic party officials. The report said "sufficient evidence" exists to expand the investigation beyond the low-level campaign officials who have been the only ones prosecuted thus far. The report concluded that only an outside counsel could properly handle the investigation into the numerous campaign finance abuses that included fund raising activities within the White House, contributions from foreign companies and individuals and favors in return for campaign cash. LaBella is just the latest, but highest-profile, attorney to leave the Justice Department in an expanding protest of Reno handling of the issue. "We've lost over a dozen top-notch attorneys and investigators here over this mess," says one Justice Department attorney. "Morale around here is in the pits." Sources say some Justice Department attorneys speculate privately that Reno is fulfilling her part of a deal she cut with Clinton to keep her job after his re-election in 1996. Clinton wanted to replace Reno in a general reshuffling of his cabinet, but she kept her job after a series of meetings with the President. Others say Reno would never agree to such a deal and cite her approval of Whitewater prosecutor Kenneth Starr's expansion of his probe into the Monica Lewinsky as evidence she is not keeping the hounds at bay. But La Bella, speaking to his staff before his departure, said he thought the Attorney General was wrong to continue to refuse to seek an outside counsel. In his report to Reno, La Bella concluded that Reno had misinterpreted the law creating an artificially high standard to avoid invoking the independent counsel statute, officials said. La Bella's blistering report, coming from a respected federal prosecutor with full access to all grand jury evidence in the case, highlights just how serious the internal fight is within the Justice Department. The report will spur new Republican demands that Reno step aside and let an outside prosecutor take over. At this point, few expect Reno to change her mind. La Bella had urged her last fall to seek an independent prosecutor to investigate fund-raising telephone calls by Clinton and Vice President Al Gore. She rejected that recommendation and is expected to reject the recommendation in La Bella's latest report. Reno said she "carefully weighed the facts and the law before determining that the appointment of an independent prosecutor was not justified under the independent counsel law." When FBI Director Louis Freeh also urged her to seek an independent counsel, she defiantly stood her ground. Her stubbornness on the issue has infuriated Congressional Republican, who accuse the Justice Department of a politically-motivated effort to protect upper level Democratic Party and White House officials from the intense scrutiny of an independent counsel. La Bella's report comes on the heels of a tempestuous hearing last week, where Reno faced blistering questions by Judiciary Committee Senators. Sen. Fred Thompson, R-Tenn., who led Senate campaign finance hearings last year, confronted Reno by quoting a confidential memo that Freeh sent to Reno in November 1997, saying "it is difficult to imagine a more compelling situation for appointing an independent counsel." Justice Department officials confirmed Wednesday that Reno and Deputy Attorney General Eric Holder had received the report, but they would not discuss specifics. La Bella refused to discuss his report, saying it was a confidential matter between him and the Attorney General. La Bella produced only two copies of the report and gave one copy to Reno. He sent another to Freeh at home. Freeh's top agent on the case, James Desarno, has reviewed and approved Labella's findings, sources said Wednesday night. Reno reportedly me with her top advisers to discuss the report on Wednesday and sources say the meeting was marked with a lot or arguments over whether or not to respond publicly to the report. Reno's office had already received inquiries from a number of news organizations, including The New York Times and Capitol Hill Blue. No conclusions were reached. Reno has named David Vicinanzo, a prosecutor from New Hampshire, to replace La Bella.. Sources say the report confirms internal Justice Department speculation that La Bella decided to leave in the middle of the investigation because he did not believe the agency should be handling the probe. Only low-level fund-raisers have been prosecuted and La Bella told other Justice Department attorneys he did not feel the probe would ever focus on top officials at either the Democratic National Committee or the White House. In his report, La Bella told the Attorney General that there was "more than" sufficient evidence of wrongdoing by "high-level" officials to warrant the appointment based on "the mandatory and discretionary provisions of the independent counsel statute." The Justice Department, he added, could not objectively continue the investigation on its own. La Bella's report detailed his conclusions on the activities of Clinton, Gore and Harold Ickes, a former deputy chief of staff, who played an important role in supervising the campaign from the White House. He also recommended that an independent prosecutor investigate how both the Democrats and Republicans used party funds to finance television ads that were thinly veiled election messages for Clinton and Republican nominee Bob Dole. "What you have here is the top attorney handling this case telling the Attorney General of the United State that the President and Vice President of the United States should be investigated for possible violations of federal election laws," one source said Wednesday night. "And he said the Justice Department is not up to the job."