Part II. Confederacy of Scoundrels: Katrina Exposed, Part 2 of 5 by Russ Baker from WhoWhatWhy

August 25, 2015 | Russ Baker

Confederacy of Scoundrels: Katrina Exposed, Part 2 of 5

The backstory to the very bad boys Bush put in charge of FEMA

Former FEMA Director Michael Brown (right) was disgraced after the Hurricane Katrina disaster, but former President George W. Bush (middle) has never been seriously held accountable. Photo Credit: Jocelyn Augustino / FEMA Photo Library

WHO: Michael Brown, the disgraced head of FEMA during Hurricane Katrina

WHAT: The real story of how and why this hopelessly unqualified individual was placed in this sensitive post

WHY: A web of self-interest, undergirded by a philosophical contempt for government and the governed.

In the first part of this series, which you can read here, we learned about Michael Brown’s incompetence and how it manifested itself in the days after Katrina. But Brown’s incompetence, it turns out, was not something that bothered the Bush Administration. By all appearances, it was in fact Brown’s stunning lack of qualifications that made him the perfect person to help “downsize” government and outsource. The consequences of this ideological play would be catastrophic.  
BELOW: PART 2.
Why exactly would Michael Brown, an apparent incompetent, be tapped for a particularly sensitive, critical, top-level emergency services position in post-9/11 Washington?
The answer — spelled out in Part II of our Katrina series – tells us something important about why Americans increasingly feel that their government does not work for them. In fact, government officials often blatantly serve their own interests, and the media, which is constitutionally empowered to keep an eye on them, mostly fails to expose the endemic corruption that is undermining what George Washington called the American “experiment” in democratic governance..
The Bush administration’s disastrous response to the natural disaster of Katrina highlights what can happen when greed and corruption control the levers of power.
A Heckuva Job

Shorty after Katrina hit New Orleans, President George W. Bush praised Brown, saying “You’re doing a heckuva job, Brownie.” The feckless Brown was, of course, screwing up massively right under the president’s nose. But in another sense he was doing exactly what the president wanted.
Bush’s backers wanted to see government defunded, and its functions largely privatized — which meant handing it over to the profit-making enterprises they controlled.
With his spectacular incompetence, Brown demonstrated just that — the notion popularized by Ronald Reagan that government doesn’t work. And he seems to have made doubly sure that it didn’t work. The result?  People died, in part through unnecessary chaos in the response.
Today, as the public — especially self-interested parties — continue to question whether government can ever meet the public’s needs, we need to carefully study the past so we may avoid other Katrina-like outcomes in the future.
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The key to the mystery of Michael Brown’s rise to power lies in the career of Joseph Allbaugh, George W. Bush’s adjutant since 1994. Allbaugh first met Brown back in the 1980s when both were young men starting out professionally in Oklahoma.
“I’m surprised by that.”
As explained in Part 1, after Katrina struck, Joe Allbaugh had been pressed for answers about why he had appointed such a person as Michael Brown to run FEMA. And he had tersely replied that Brown was a lifelong friend in whom he had confidence. But nearly all of Allbaugh’s friends and acquaintances say they had never even heard of Michael Brown.
Typical of those baffled by the revelation of Allbaugh and Brown’s  “lifelong friendship” was Mike Williams, one of Allbaugh’s closest friends and a boating buddy. Williams, who stayed in regular touch with Allbaugh, said he didn’t know Brown at all.
As to Brown’s appointment at FEMA, “I’m surprised by that.” Williams said Allbaugh never had an entourage to bring along to Washington: “He didn’t really have any people. He was pretty much a one-man show. (Neither Allbaugh nor Brown consented to an interview.)
Contrary to widely-disseminated news accounts, Allbaugh and Brown, both in their early fifties at the time of Katrina, were not college roommates — nor did they even attend the same university. The two men’s public and professional lives, up until FEMA, look like parallel lines on a chart — distinct and unconnected.
Yet there were connections, but they only showed up through extensive records searches.
This reporter uncovered documents showing a first tenuous link between the two men: Allbaugh had lived next door to Brown’s brother-in-law. In the early 80s, Allbaugh moved into an Oklahoma City house next door to Bill Oxley, the brother of Michael Brown’s wife, Tamara. Oxley, Brown, and Tamara had all grown up together in the small Oklahoma Panhandle town of Guymon.
The first verifiable direct link between Allbaugh and Brown is in an obscure company called Campground Development Corporation, which Brown and Oxley formed in 1985. For two years, records show, Campground Development employed Allbaugh as a lobbyist.
Prior to that, Allbaugh had started an oil-and-gas partnership called Great American Resources, and brought in Oxley’s wife as a partner. The secretary and treasurer of that firm was Allbaugh’s then-wife, Gypsy Hogan, who said she had no idea what the business was about and wasn’t comfortable with large amounts of unexplained cash flowing in — or Allbaugh’s request that she sign a series of blank checks. When she began to demand answers, Allbaugh angrily warned her to mind her own business.
Hogan also remembers that, shortly before she asked him for a divorce, Allbaugh claimed to be in the CIA.
As Allbaugh was pursuing his private ventures, he was also moving up in the GOP firmament. He’d started in college as a driver for U.S. Senator Henry Bellmon — Republican of Oklahoma and longtime friend of George H.W. Bush. Then he became Bellmon’s field representative before becoming an operative for the national Republican Party. In 1976, he held a top post in the statewide Ford for President campaign. By 1980, Allbaugh was traveling widely, working on campaigns throughout the country.

Hogan also remembers that, shortly before she asked him for a divorce, Allbaugh claimed to be in the CIA.

In 1984, he rose to be deputy regional coordinator for the Reagan-Bush reelection campaign, responsible for 11 Western States. That year, by his own account, he met George W. Bush, who was in Oklahoma City on behalf of his father’s campaign.
As Allbaugh was helping elect Republicans, he was also helping himself along the way.
Among investors in his oil and gas company, Great American Resources, were several big GOP donors, including Mabel McPhaill, a wealthy widow from Visalia, California. According to her grandson, Russell Gates, who accompanied her to several fundraising events, “All she did was give money.”  And not just to the GOP.
Not One to Pay His Debts — or Admit it
Records obtained by this reporter show that in 1984, while running the regional Reagan-Bush reelection campaign, Allbaugh personally borrowed $24,000 from McPhaill. He never repaid the bulk of the debt.
When McPhaill died in 1996 at age 92, her $3 million inheritance had shrunk to a net worth of $50,000 — with much of her fortune, according to Gates, her grandson, going to GOP causes and dubious investments like Allbaugh’s.
It is doubtful whether, prior to his meeting George W. Bush, Allbaugh’s business ventures ever made money for anyone, himself included. Archives in Fort Worth, Texas, contain a file from 1990 detailing bankruptcy proceedings in which Allbaugh and his second wife, Diane, unloaded nearly $300,000 of debt, ranging from a $65,000 home loan to a $400 balance on a Foley’s Department Store charge card — while their gross income was over $80,000 annually.
Allbaugh neglected to disclose the bankruptcy and related lawsuits during the Senate hearing to confirm his appointment as FEMA director, in 2001. On a sworn disclosure form, when asked whether he had ever been a party to any administrative proceeding or civil litigation, he simply wrote “no.”
That’s a potentially problematical answer, and of heightened relevance because of Cheney aide Scooter Libby’s indictment on charges of lying to a grand jury and to investigators. G. Jack Chin, an expert on testimony and Co-Director of Arizona University’s Law, Criminal Justice and Security Program, said “People don’t forget going bankrupt, so I’d think a strong case could be made for perjury.”
That Allbaugh would not want his insolvency made public is not surprising.
As George W. Bush’s campaign manager, he would preside over a record-breaking fundraising spree, engorged on promises to credit issuers that new laws would make it more difficult for ordinary citizens to declare bankruptcy. He also might have faced scrutiny over some of his business associates: Grant Forth, another limited partner in Great American Resources, would later be convicted in a Nevada federal court of mail and wire fraud and serve time in federal prison.
In Oklahoma, Allbaugh was perhaps best known for his fearlessness in pursuing deals that raised grave conflict-of-interest questions.
In 1987, he was again working for Henry Bellmon, now governor of Oklahoma, as a top aide who interacted with highway officials. In December of that year,  Allbaugh took a $30,000 bank loan guaranteed by a large road contractor who was engaged in a steady stream of disputes with the state over shoddy work practices.
Allbaugh never repaid the loan and,in 1990, the court ordered that his wages be garnished. Neal McCaleb, the man who ran Oklahoma’s Transportation Department at the time, would later be appointed by President George W. Bush as U.S. Assistant Secretary of the Interior for Indian Affairs. (Shortly thereafter, Allbaugh’s wife would be accused by a McCaleb subordinate of improperly lobbying McCaleb, a Chickasaw Indian, on behalf of client tribes seeking beneficial gaming decisions.)
From there, the stakes got higher. In 1988, Allbaugh left government to take a job with Stephens Inc., a  CIA-connected investment-banking firm run by an old Bellmon friend. When Allbaugh arrived, Jack Stephens was busy currying favor with Vice President George H.W. Bush. He gave $100,000, the legal maximum, to Bush’s campaign and helped bail out his son, George, by arranging for a Saudi oil magnate to buy an ownership stake in Harken Energy, the struggling oil company with which George W. was involved.
“Golly, what a coincidence.”
Allbaugh’s ability to hop back and forth between the letting and the getting of contracts was clear to all — including Allbaugh himself. When a reporter from the Daily Oklahoman observed to Allbaugh that he had gone from serving as Bellmon’s Oklahoma Turnpike Authority liaison to working for Stephens Inc., which was hoping to do business with the Authority, Allbaugh replied, “Golly, what a coincidence.”
In September 1990, Allbaugh left Stephens for reasons unknown.
His resume suggests that he was then unemployed until February, 1991, when he reappeared back on the other side of the customer-service counter — this time as deputy secretary of transportation under Democratic Governor David Walters. (A grand jury later issued eight felony indictments against Walters, who pled guilty to one misdemeanor charge of violating state campaign-contribution laws.)
Brown, meanwhile, was racking up his own record of dubious public service throughout the late 1970s and 1980s.
In his first job, as assistant to the city manager of Edmond, Oklahoma, he was closely allied with the town’s mayor, Carl Reherman, who had been Brown’s political-science professor in college. His immediate boss, city manager Bill Dashner, characterized Brown as a “mole” for Reherman, providing him with information regarding controversial development projects. (Reherman denied it.)
Perhaps the biggest bone of contention over the years was a public-works project that became so expensive the city defaulted on its payments to the Army Corps of Engineers — the same highly politicized outfit with which FEMA is joined at the hip. Brown did not mention this experience during his confirmation hearings.
Brown would later be exposed, during the Katrina debacle, for having tried to exaggerate his credentials for FEMA by falsely telling the Senate that he was an “assistant city manager,” responsible for police, fire, and emergency services. As negligible as this position sounded, in truth, he’d been even less, a mere assistant to a city manager — “more like an intern,” the town’s PR liaison told Time.
The Gopher Burrows Up
Whether he began as gopher or go-getter, Brown moved quickly after his arrival in Edmond into a series of posts of increasing influence, including election to a short stint on the city council and a job with the state legislature, where he helped draft legislation creating the Oklahoma Municipal Power Authority (OMPA), a little-known public-power entity that he would later chair.
The attraction of this unpaid position was explained by Brown, who noted to others that it allowed him to interact with major bond-underwriting firms, all clamoring for the group’s lucrative business. When Brown was forced to relinquish his seat on the utility board because he had moved from Edmond, he found his way back by persuading the town of Goltry, Oklahoma, population 800 and one stop light, to join the energy consortium and make him its representative.
In a questionnaire he supplied to the Senate during his confirmation process, Brown wrote: “Michael D. Brown Hydroelectric Generation and Dam Project Named in my honor by the Oklahoma Municipal Power Authority Kay County, Oklahoma, 1988.”
That minor tribute (dubbed by one wag “Dam Michael Brown”) would amount to his sole pre-Katrina familiarity with the subject of flood control. But according to the longtime OMPA general manager, Roland H. Dawson, the facility itself is actually called Kaw Dam — the only tribute to Brown is a plaque from the board he chaired.
After passing the Oklahoma bar in 1982, Brown moved to the oil boomtown of Enid, where he was hired by the law firm of Stephen Jones, a flamboyant attorney who went on to defend Oklahoma City bomber Timothy McVeigh. There, according to his other sister-in-law, Marilyn Lackey, Brown bobbled a wrongful-death suit for a woman whose husband’s car was hit by a train when crossing signals failed to work.
When the firm busted up, literally — after a fistfight that left Jones sporting a shiner on the front page of the local paper — the partners divvied up the staff. Thirty-four staffers found immediate work. Brown was one of two staffers no one wanted. “When I saw Brown up there at FEMA, I had a premonition of bad things to come,” recalls Jones.
In the ensuing years, Brown would be sued for skipping out of shared law offices without paying his share of the rent — a piece of civil litigation he (like Allbaugh) neglected to include on forms submitted as part of his Senate confirmation proceedings to become deputy director of FEMA. This, despite the obligation that federal nominees disclose such litigation.
Brown’s sister-in-law also came to believe that Brown aided her brother, Bill Oxley, in changing their father’s will, so that it left the Browns and Oxleys living well, while she and her husband were reduced to virtual paupers.
During those years, if Brown’s resume is to be believed, he was also doing legal work on behalf of the Oklahoma Republican Party.
All of this was, of course, mere cold French fries compared to what would come. For Michael Brown, the good times would not begin to roll until early 2001, with a call from Joe Allbaugh. For Allbaugh himself, the good times began in early 1994, with a call from George W. Bush.
TOMORROW: In Part 3 of the series, we will delve further into Joe Allbaugh —
 Bush’s self-described “enforcer,” the man Bush put in charge of FEMA, and the one who hand-picked Michael Brown to succeed him. After that, well, you know what happened. But not why.
Related front page panorama photo credit: Gary Nichols / US Navy / Wikimedia
Next:  Part 3