Novitzky was target of secret probe

Jeff Novitzky's investigations uncovered steroid use in sports, but he also was the target of a government probe.

(AP Photo/Jeff Chiu)

SAN FRANCISCO – By the time investigator Jeff Novitzky drove Barry Bonds to the federal building to testify before a grand jury in December 2003, agents from the U.S. Treasury Department had begun a probe into Novitzky and three other IRS agents over missing evidence and questionable conduct in the BALCO case.

The secret federal investigation, contained in a 150-page report of the Treasury Inspector General for Tax Administration (TIGTA) reviewed by Yahoo! Sports, may help explain why Victor Conte, the central figure in the BALCO case, never went to trial and was able to take a plea to serve only four months in prison with no requirement to cooperate with prosecutors. It also could help explain why two of his fellow defendants emerged from the case with no more than probation.

Furthermore, the TIGTA investigation and report – which never before has been publicly revealed – could harm the prosecution in Bonds' upcoming perjury case, legal experts suggest. Novitzky was a central witness for the government at two previous BALCO trials, and his testimony in the highly anticipated March trial of the home run king could be pivotal for the government. Legal experts say Bonds' attorneys could use the TIGTA investigation to attack Novitzky's credibility.

The TIGTA report establishes that $600 was missing from the money seized in the Sept. 3, 2003, raid on the home of Greg Anderson, Bonds' former trainer, although the report did not reach a conclusion on what happened to the money. TIGTA also investigated allegations by other drug task force agents that in connection with the BALCO case Novitzky had falsified reports and search warrants and had refused to bring in agencies more suited to probe potential drug violations. In addition, Novitzky gave a different account of his interest in a book deal to TIGTA investigators than he did under penalty of perjury in the courtroom of Judge Susan Illston – the same judge presiding over the Bonds case. The central evidentiary hearing in the Bonds case will take place Thursday at U.S. District Court in San Francisco.

Victor Conte wrote in his unpublished book, "BALCO," that the investigation into Novitzky helped him negotiate a plea deal.

"These are not events that you do high-fives over," Charles La Bella, a former U.S. attorney who is a criminal defense lawyer in San Diego, told Yahoo! Sports. "You don't want to see your case being jeopardized by the possibility that one of your witnesses is viewed as damaged goods."

Asked to comment for this story in general and about the TIGTA report in particular, Novitzky said, "I can't comment. I really do appreciate the offer. Thank you very much. I can't comment."

Novitzky's tenacity as an investigator and his poise in the courtroom have been firmly established during the seven-year BALCO probe that ostensibly began as an investigation into steroid trafficking and money laundering and morphed into catching world-class athletes in lies, including track star Marion Jones, sprint coach Trevor Graham, football player Dana Stubblefield and cyclist Tammy Thomas. One of the last targets of the government's BALCO probe may be the biggest – Bonds.

Novitzky, a bald, angular 6-foot-6 former college basketball player, extended his imprint beyond BALCO in 2007 when he provided the meat of the Mitchell Report by convincing former New York Mets trainer Kirk Radomski and Roger Clemens' personal trainer Brian McNamee to testify that they supplied numerous baseball players with performance-enhancing drugs.

And Novitzky was the star witness last March in the trial that resulted in Thomas being convicted of three counts of perjury and one count of obstruction of justice. In that trial, the defense grilled Novitzky for five hours about nearly every aspect of BALCO, and he came across as credible and composed.

"Jeff Novitzky is a formidable witness," said lawyer Paula Canny, who along with lawyer Mark Geragos represents Anderson. "For five-plus years he's been doing these investigations, and he's gotten everything he's wanted. He testified at the Tammy Thomas and Trevor Graham trials. Neither defense team did much damage."

The TIGTA report was not introduced as evidence in either the Thomas or Graham trials. Several sources said an internal government personnel investigation is extraordinarily difficult to obtain. Defense attorneys preparing for trial would be unaware of its existence unless the government voluntarily turned it over as exculpatory material or the judge ordered its disclosure.

Missing money, unprofessional behavior?

The TIGTA investigation began, coincidentally, on Oct. 16, 2003, the same day Novitzky testified to the federal grand jury in San Francisco about his highly publicized raid on the Bay Area Laboratory Co-Operative one month earlier.

The day before Novitzky testified, he and two other IRS agents had gone to a Bank of America branch to deposit $63,920 in cash seized in one of the BALCO raids. TIGTA reported that the agents discovered that $600 was missing.

The money, confiscated in the search of the home of Greg Anderson, Bonds' personal trainer, was key evidence in the steroids case – and the raid was conducted by agents of the Internal Revenue Service. They demanded that the bank clerk recount the cash.

But they still were short six $100 bills. And the money was never recovered.

Novitzky didn't believe it was his mistake. Through his attorney, he would give a statement to TIGTA investigators that it was his "first thought" that three other IRS agents "screwed up when they did the initial [money] count on October 8." The report documents that the other agents also pointed fingers and provided inconsistent accounts about the events surrounding the missing money.

Meanwhile, other agents working on the BALCO case came forward to criticize Novitzky. In late 2003 three agents talked to a reporter working on a BALCO story for Playboy magazine about what they considered to be unprofessional conduct by Novitzky. (Editor's note: Jonathan Littman, the author of this story, wrote "Gunning for the Big Guy," the May 2004 Playboy article.)

The agents alleged at the time that Novitzky had falsified reports and search warrants, and refused to conduct wiretaps or bring in agencies more suited to investigate federal drug violations, such as the Drug Enforcement Administration. The agents described Novitzky as a publicity hound and said he openly talked of his hope to write or participate in a book about the case. Novitzky and the U.S. Attorney's office declined at the time to comment on the allegations. But the IRS referred the statements and questions – recorded in a voicemail – to TIGTA, and they were transcribed into the official report.

Conte benefits from questions about Novitzky

TIGTA opened up a second prong of its internal investigation into Novitzky in February 2004, focusing on the allegations made by his fellow BALCO agents. The timing of the criticism was problematic for Novitzky and the prosecutors in their prosecution of Conte.

Federal prosecutors were attempting to build a case against Conte for drug trafficking and money laundering, as well as develop a strategy for targeting Bonds and other elite athletes for allegedly lying about their suspected use of performance-enhancing drugs. Conte was indicted Feb. 12, 2004. It wasn't an ideal time for Novitzky to be grilled by federal investigators about the missing money and the larger issues of his objectivity and professional conduct.

Assistant U.S. Attorney Jeff Nedrow, who has prosecuted nearly every BALCO case, was interviewed by a TIGTA investigator one week after the Conte indictment. Wrote TIGTA: "Assistant U.S. Attorney Jeffrey Nedrow advised that the impact of the missing money was not known, but that the agents credibility would be at issue if they were called as witnesses at any future trial."

In his unpublished manuscript, "BALCO," Conte wrote that he gained leverage when his attorneys won the right to an evidentiary hearing in June 2005. In anticipation of the hearing, Judge Illston ordered the government to turn over exculpatory material, which forced prosecutors to deliver to Conte something of which he had been totally unaware – the TIGTA report.

"I began to imagine newspaper headlines such as, 'IRS Agent Investigated for Missing Cash from Bonds' Trainer's Home,' " Conte wrote. "Novitzky and his colleagues were possibly headed for the witness stand and this was all going to come out. We knew they would not want this information to surface in the media and were therefore going to be receptive to a favorable plea bargain.

"I felt it was time for me to seize the moment."

The prosecution cut a deal with Conte in which the 42 counts against him were reduced to one count of distributing steroids and one count of laundering $100. He faced a potential sentence of several years behind bars had he been convicted on all counts, but he served only four months at a minimum-security prison camp and four months of home detention with work privileges. He did not have to cooperate against other defendants or name any athletes.

Anderson, Bonds' former trainer, received an even lighter sentence than Conte – three months in prison and three months home detention – although Anderson did serve a year in prison beginning in 2006 for refusing to testify before the grand jury against Bonds. The other two defendants, track coach Remi Korchemny and BALCO vice president James Valente, pleaded guilty and got straight probation.

U.S. Attorney Kevin Ryan said at the time the plea deal was spurred in part by weak steroid laws and by the fact that some of the substances were not banned at the time. Yahoo! Sports revealed in a Jan. 14 article that the Clear was not classified as a steroid under federal law until 2005.

"This case is bigger at this point than the defendants who were sentenced today," Ryan said Oct. 18, 2005, the day Conte was sentenced. "This case galvanized the debate about steroids."

Novitzky's word

Though Novitzky helped propel the BALCO investigation by persuading many athletes to talk to him without counsel, the agent's official response to TIGTA was made through his attorney, Luciano Cerasi, in June 2004. Novitzky's response, never before publicly revealed, has been reviewed by Yahoo! Sports.

The IRS agent's statement was written in a third-person narrative. It declared that Novitzky's account of the missing money was "covered under attorney client privilege." The response denied all allegations that he had targeted specific individuals, such as Bonds:

"He [Novitzky] has never provided confidential case information to reporters or others outside of the IRS relating to the BALCO investigation. He acknowledged being contacted by reporters about the investigation but most of those contacts occurred after the indictments were filed.

"He denied ever attempting to obtain 'a book deal' for his role in the investigation and opined that 'the book deal' could have been a misconstrued comment that was made as a joke and overheard incorrectly by others."

The TIGTA investigation formally ended Oct. 15, 2004, with an explanation that neither exonerated Novitzky nor determined guilt: "Solvability factors are not present and do not justify any continued investigation."

Conte's lawyers remained unaware of the TIGTA probe, which the government continued to keep secret. However, Conte's lawyers argued that Novitzky and others had made gross errors in the search of the BALCO laboratory and filed a motion to dismiss the indictment on the ground of outrageous government conduct.

On Oct. 29, 2004, two weeks after the issuance of the TIGTA report, Novitzky filed a declaration under penalty of perjury in Illston's court that included 17 numbered rebuttals to the Conte motion. Novitzky asserted that the BALCO investigation "was not initiated for personal reasons against any of its subjects or witnesses." But most significantly, before the central judge in the BALCO case, Novitzky gave an account of his interest in participating in a book deal that contradicted the account he had given to TIGTA four months earlier.

TIGTA could play hardball, and Novitzky might have known it. The agency, the most recent incarnation of the IRS Inspection Service, was created more than half a century ago in the wake of widespread IRS corruption. TIGTA agents have the power to serve search and arrest warrants for IRS employee misconduct allegations ranging from extortion to bribery, theft, taxpayer abuses, financial fraud – and making false statements.

With his job on the line during the TIGTA investigation, Novitzky acknowledged that he had talked about a book deal but insisted he was joking. However, the three other drug agents who heard the comments said in the Playboy article they believed he was serious.

In his declaration to Illston, Novitzky asserted that the conversation never took place: "I have never had such a discussion with anyone and have never had any involvement with a 'book deal' in connection with this case or any other."

It wasn't Novitzky's last brush with Illston. During court proceedings in 2004 over whether the government could keep 104 Major League Baseball testing records and urine samples seized by Novitzky in a search of Quest Diagnostic Labs, Illston condemned the tactics and questioned the candor of the agent. In December 2004, Illston quashed the subpoenas served on the labs, ruling that the government's conduct was unreasonable and constituted harassment.

"I think the government has displayed … a callous disregard for constitutional rights," Illston said in open court. "I think it's a seizure beyond what was authorized by the search warrant, therefore it violates the Fourth Amendment."

Legal experts say that Novitzky's conflicting accounts could pose a hurdle for the prosecution in the Bonds case.

"Anytime you can impeach the credibility of the lead agent, you can impeach the government's case," said Christopher Cannon, a San Francisco defense attorney with extensive experience in federal perjury cases.

Under discovery rules, the government is required to turn over exculpatory evidence, information that may be favorable to the defense. The Treasury investigation of Novitzky falls within that category, Cannon said. Bonds' attorneys won't know for certain whether Novitzky, who now works for the FDA, will be called as a witness until the trial unfolds.

The internal Novitzky investigation might have been a factor in Conte receiving a lenient sentence. In early March, in Illston's court, Bonds will find out if it could do the same for him.