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How Dennis Hastert’s sex abuse scandal led to him pleading guilty to a banking crime

Hastert was charged for the cover-up — because federal prosecutors have a lot of power to do that kind of thing.

Win McNamee/Getty Images

Former Speaker of the House Dennis Hastert pleaded guilty on Wednesday to a federal charge of violating banking law.

But no one really thinks the Hastert case is about banking. It's about Hastert's alleged sexual abuse of a child back in Hastert's high school coaching days, and the hush money he is accused of paying to keep that abuse a secret.

So why is there such a big discrepancy between what Hastert was charged for — the bank fraud charge he pleaded guilty to, and a charge of lying to federal investigators (which prosecutors will probably drop as part of his plea deal) — and what the case (if the leaks are accurate) is really about?

The answer boils down to this: both the banking violation, or "structuring," and lying to officials are crimes because they get between prosecutors and the truth. So even when prosecutors can't charge someone for real wrongdoing, they can at least get to something secondary. Hastert was charged for the cover-up — and it was enough to get him to agree to wrongdoing.

That's an incredibly powerful tool for prosecutors, and one that could be very easily abused, by indicting people simply for having secrets. In some ways — if the allegations are true — the Hastert case is proof that the system works, and can bring criminals to justice even if the original crimes can no longer be proven or prosecuted. But it's also a reminder that prosecutors have a tremendous amount of power to decide who's done something wrong and find a way to bring them into court from there.

What is "structuring," and why is it a crime to begin with?

Structuring is in the spirit of destruction of evidence — except that instead of destroying, it prevents evidence from being created to begin with. It's not an immoral act on its own, but it hides something the government wants to know about.

Under federal law, whenever someone deposits or withdraws $10,000 or more from a bank account, the bank has to report the transaction to the government. This is a tool the government developed to help investigators track large criminal enterprises — say, drug rings or groups supporting terrorists — by being able to tell when people were coming up with mysteriously big amounts of money.

Money. Chung Sung-Jun/Getty Images

If you are putting this much money into your bank account, or taking it out, the federal government might want to know about it!

Putting in or taking out $10,000 or more at a time isn't illegal — it just triggers a report to the government. But trying to keep the government from finding out about the transaction, by using multiple deposits or withdrawals of $9,999 or less? That is a crime. That's structuring.

"You're obstructing the government from its legitimate desire to trace funds to determine whether anything nefarious was going on," says Alex Little, a lawyer and former assistant US attorney. "It's another form of a lie" — or at least a secret that the government says you're not allowed to keep.

Why was Dennis Hastert charged for structuring?

Hastert and his legal team initially pleaded not guilty to both charges, but they appear to have decided the government was going to be able to prove at least the structuring charge in court (or at least, that the odds were good enough that they were better off taking a plea bargain and getting six months in jail instead of a few years). It's not hard to see why.

To convict somebody of structuring, the government typically has to prove that he knew what he was doing and was deliberately trying to fly under the government's radar. And Hastert's paper trail was pretty clear.

Hastert's first 15 withdrawals were for $50,000 apiece — well above the threshold for the bank to report them to the government. In fact, the indictment implies that the bank itself started asking Hastert questions about the money.

"He wasn't legally obligated to reveal to the bank why he was making the cash withdrawals. And most banks, in my experience, don't make such inquiries," says David Smith, a lawyer who used to work for the Department of Justice and now represents defendants in structuring cases. "Hastert should have just told the bank to go to hell, transferred his money to another bank, and continued making $50K withdrawals."

But he didn't. Instead, he started making withdrawals of $9,000 or so apiece. So federal agents, says Little, "were able to make the pretty clear inference that he had changed his behavior" to keep the bank from sending reports to the government.

When a "bald-faced lie" is a federal crime

As John Malcolm, a senior fellow with the Heritage Foundation, puts it: "If the allegations are true, [Hastert] tells them a bald-faced lie. He says, 'I just don't trust banks, I'm hoarding cash, I like holding on to a lot of cash, and I don't want to keep my money in the bank anymore.'"

That constituted lying to federal officials. Again, Hastert didn't have to say anything. But he did, and what he said was a lie.

The FBI could legally have gone after Hastert even if he'd never been a couple of heartbeats away from the presidency. And while it's relatively rare for a structuring charge to be used in a case like this, it's incredibly common for someone to get charged with lying to federal officials — it's so common that both Little and Malcolm refer to it as "1001," a reference to its section in the US Code.

I. Lewis “Scooter” Libbey, former chief of staff to Vice President Dick Cheney. He was convicted after an especially independent investigation by a special counsel. Mark Wilson / Getty

Scooter Libby is a member of the indicted-on-1001 club. Are you? (Mark Wilson/Getty)

To an extent, lying to a federal official is illegal because it wastes the government's time and money by stymieing an investigation. But it's also another crime of concealment. Little, quoting the prosecutor who charged George W. Bush administration official Scooter Libby with lying to federal officials about the outing of a covert CIA agent, calls it "throwing sand in the umpire's eyes" — preventing prosecutors from figuring out what is going on and whether it's criminal.

"All of these cases that are sort of peripheral investigations, that look to be peripheral, really come from that desire to get to the bottom of the case," Little says.

In this case, the charge of lying to federal officials served an additional purpose: a bargaining chip in the plea deal. Hastert and prosecutors worked out a deal in which he pleaded guilty to one charge — structuring — instead of going to court and running the risk of being convicted on two charges.

If they'd only brought the structuring charge to begin with, there wouldn't have been much reason for Hastert and his lawyers to accept a deal: either way, the worst-case scenario was serving one federal sentence. But since going to trial ran the risk of getting sentenced for two crimes, there was more reason to accept the plea deal for the one.

"They want to know whether anybody would have an ability to blackmail you"

There's been increased criticism of structuring laws in libertarian circles lately — especially in cases where people are depositing money, and then getting that money seized because it was deposited in $9,000 increments. In fact, according to the Heritage Foundation's Malcolm, the Department of Justice has recently told prosecutors that if the only crime someone committed is structuring a deposit, they shouldn't bring the case.

The Hastert case is obviously about withdrawals rather than deposits — and as Little points out, the paper trail is sort of a best-case scenario for prosecutors to make the case that the structuring was a deliberate attempt to evade federal scrutiny. But there's also another reason Dennis Hastert might have attracted the interest of federal agents for drawing large sums of money where someone else might not.

"I think one of the questions they had, probably at the beginning, was, 'What is he spending this money on?'" says Little. "This is a guy who was number three from the presidency. Had he given over foreign secrets to a foreign government agency and now was being blackmailed to keep that quiet? Was he trying to extort someone else?

"One of the things when you have a high security clearance they want to know about, particularly at his level, is whether anybody would have an ability to blackmail you. There's so many reasons you would care about a government official at that level being involved in something which they are not willing to report."

Little and Malcolm both speculate that the fear of official misconduct is what led federal agents to ask Hastert about the withdrawals in December 2014. And that's when Hastert stuck his foot in his mouth.

Why was Hastert charged when he might have been the victim of blackmail?

Dennis Hastert

Good question! (Nuccio DiNuzzo/Chicago Tribune/TNS via Getty)

For one thing, while the indictment implies that Hastert was paying hush money to the person called "Individual A," it's not clear that Individual A was actually blackmailing Hastert by asking for the money to begin with. Hastert could have taken the initiative to pay the money himself.

If "Individual A" was blackmailing Hastert, it's still theoretically possible that he's also being prosecuted. "Maybe there's a sealed indictment somewhere. Maybe they're going to be bringing charges in the future," says Malcolm.

But maybe not. Federal prosecutors might have decided that Individual A did blackmail Hastert, but that he still shouldn't be prosecuted for it. Maybe, as Malcolm speculates, they made a judgment of compassion: "He was a victim of sexual molestation. The guy suffered enough harm already. We would rather give him immunity and use him as a witness." Or maybe they made a judgment of convenience — they could have been investigating both Hastert and Individual A, and the latter is the one who came to them and agreed to cooperate first.

Both of these options are plausible, and both would be perfectly legal. This is another aspect of the tremendous power that prosecutors have — they can find two people who have both done something wrong and use one of them to go against the other one. And the only thing separating a good reason (like not prosecuting a victim of sexual abuse) from a bad one (not prosecuting the person who happened to confess first) is prosecutors' own sense of judgment.

But why wasn't Hastert charged for alleged sexual abuse?

Former New York Governor Eliot Spitzer was also discovered to be structuring his bank withdrawals to pay for prostitutes. And former CIA Director David Petraeus lied to federal officials when they were trying to investigate whether he'd given classified info to his documentarian and lover Paula Broadwell. But neither of those men were charged for those particular crimes.

Little speculates that prosecutors thought Spitzer soliciting prostitutes wasn't as "grave" as Hastert, allegedly, sexually abusing a minor. But that just calls attention to the biggest question here: if the leaked allegations are true, why wasn't Hastert charged with sexual abuse?

eliot spitzer

Was Spitzer not charged for structuring because his conduct wasn't as "grave" as Hastert's? (Corey Sipkin/NY Daily News/Getty)

The answer comes down to a mix of what prosecutors can do and what they choose to do.

Because the details of the allegations against Hastert aren't known, it's hard to say why he isn't being prosecuted for whatever he did in the past (if, of course, he actually did it). But it's plausible that the statute of limitations has expired to bring sexual abuse charges against him. And it's also true that sexual assault charges are very hard to prove, especially for a case so far in the past. The structuring, on the other hand, happened quite recently — after Hastert left Congress — and there's a very clear paper trail of evidence.

"There are plenty of times, if you can't" charge someone for the biggest crime they're suspected of, "I'd rather you hit them with something you can," says Little. He brings up the example of convicting Al Capone for tax evasion. "You charge folks with what you can, and you prove it, and they're going to get the same punishment — they're going to go to jail one way or another."

Little's argument is that when something really serious has happened, it's important for prosecutors to be able to bring that person to justice — even if they're not being brought to justice for that particular crime. A less charitable way to put that is that, in the words of libertarian blogger Ken White of Popehat, "they targeted the man, and then looked for the crime."

White and other libertarians have raised serious concerns about the Hastert prosecution. They think that both of the crimes he was indicted for shouldn't be crimes at all. There's nothing inherently immoral about withdrawing $9,000 at a time. And as White asks, "What is the legitimate basis for giving the feds the power to prosecute people for exculpatory lies that have no impact whatsoever on their operation?"

In one respect, the Hastert prosecution isn't a tough call. It's clear that there was deliberate intent to evade the law to cover up underlying criminal activity. There's no question that what Hastert did (if the allegations in the indictment are true) was a crime — or even that what he did was the sort of thing those laws are designed to catch.

At the same time, though, he was charged with crimes that many other people commit and aren't charged for — and the leaked rumors of sex abuse imply he was targeted for something that wasn't charged, and probably couldn't have been charged, as a crime itself. And those restrictions exist for a reason. The government has made a deliberate choice that someone can't be prosecuted for sexual abuse after a certain number of years, and that there's a certain evidentiary standard for bringing a sexual abuse case. And if the rumors are true that Hastert was paying Individual A to keep quiet about sexual abuse, this is at heart a sexual abuse case.

How you come down on its morality depends on how you feel about the immense power and immense discretion prosecutors have. Is it a good thing that prosecutors have immensely powerful tools to bring people to justice "one way or another"? Or is it an invitation for them to target the man and then look for the crime?

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