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Iowa Watchdog

Grassley staffer questioned in insider trading scheme

8/7/2013

DES MOINES – A former health policy adviser to Republican U.S. Sen. Chuck Grassley who still has ties to the senator’s office is one of the targets of a federal investigation, according to Jill Gerber, a Grassley spokeswoman.

Mark Hayes, now a lobbyist and shareholder at Greenberg Traurig, is allegedly being investigated in relation to an insider trading scheme that put potentially hundreds of thousands of dollars into the pockets of Wall Street traders.

Sen. Chuck Grassley staffer interviewed by federal investigators regarding insider trading allegations.

Sen. Chuck Grassley staffer interviewed by federal investigators regarding insider trading allegations.

The U.S. Department of Health and Human Services’ Office of the Inspector General, Federal Bureau of Investigations and Securities and Exchange Commission are investigating the incident.  Specifically, they want to know how a major change in U.S. health care policy restored billions in funding to Medicare Advantage, which provides private Medicare insurance plans, before it was made public.

Investigators interviewed Grassley’s current health policy adviser, Rodney Whitlock, for four hours Thursday, Gerber confirmed during an interview Tuesday with Iowa Watchdog.

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Officials at the U.S. Department of Justice and Whitlock could not be reached for comment. Contact information for Hayes was not immediately available.

Grassley’s staff believe Whitlock was interviewed because of his interactions with Hayes, Gerber said. Hayes kept in contact with Grassley’s staff to check meeting schedules and provide guidance to Whitlock when he had questions with issues, including Medicare and Medicaid.

“Rod Whitlock is not a target of anyone’s investigation and any information he provided was part of the effort for Rodney and Senator Grassley’s office to help the Justice Department in any way we could,”Gerber said.

Grassley’s office provided federal officials with emails between Whitlock and Hayes and at least one employee at Greenberg Traurig, along with other private firms. Greenberg Traurig contributed more than $12,000 to Grassley’s campaign in 2008, according to records from OpenSecrets.org, a nonpartisan group that pushes for government transparency.

That conflicts with a Sunday Wall Street Journal article that cites an anonymous source close to the investigation as saying Grassley’s office held up the process and required terms of the interview be worked out in advance. Whitlock, also, refused to answer some questions, the article said.

Gerber called the article “presumptuous on many levels” and “erroneous,” but confirmed that Whitlock declined to answer questions, because they were related to another investigation in the U.S. Senate.

The Senate Judicial Committee is looking into insider trading allegations separately. Grassley, who is loosely known as the “patron saint of whistleblowers,” is a ranking member on the committee, according to Senate records.

Gerber said Whitlock had no involvement in tipping off investors. He might have unknowingly passed information onto Hayes during their conversations and Hayes used it to make an educated guess, she said.

Gerber said more people in the Obama administration knew Medicare Advantage was going to pass before it went public than congressional staffers.

“It’s unclear what happened – whether someone got advanced word of the decision and somehow leaked it to someone on Wall Street or made an educated guess,” Gerber said. “Rodney did not know of the decision in advance so the point we are trying to make is the Wall Street Journal disproportionally focused on Rodney when there are a lot of other people in the executive branch who knew about it.”

Contact Sheena Dooley at dooley@iowawatchdog.org. Sheena Dooley is the Iowa bureau chief for Watchdog.org, where this story first appeared.

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