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Star CEO says he told McDonnell of loan to first lady [Richmond Times-Dispatch, Va.](Richmond Times-Dispatch (VA) Via Acquire Media NewsEdge) Oct. 20--Star Scientific CEO Jonnie R. Williams Sr. has told federal investigators that he met with Gov. Bob McDonnell before making a $50,000 loan to the governor's wife, Maureen, in 2011, according to a source close to the ongoing gift scandal investigation. Williams told investigators he insisted on the meeting in the governor's office to ensure that McDonnell knew about the loan, the source said. The Star executive provided the loan to the McDonnells at a time when the family was falling into debt from its real estate holdings, but Williams told investigators he was unaware that Maureen McDonnell turned around and invested a portion of the money in Star stock, the source said. A spokesman for the governor's private legal team gave a different version of events. "Governor McDonnell was not aware of Mr. Williams' May 2011 loan to Mrs. McDonnell until after the funds had been spent," spokesman Jason Miyares said in an email statement Friday. But Miyares confirmed that McDonnell spoke with Williams before the Star CEO gave $70,000 in loans in 2012 to MoBo Real Estate Partners, owned by the governor and his sister. "The governor did discuss the terms of the MoBo loans before they were made, as would be expected in any arm's-length transaction," Miyares said. The source's account of the meetings highlights McDonnell's direct knowledge of Williams' involvement in the personal and professional lives of the first couple. The McDonnells are under federal investigation for whether they improperly assisted Williams and his company in exchange for the more than $160,000 in gifts, cash and loans he provided them. "Mr. Williams and Star Scientific neither asked for nor received any special benefits from the McDonnell administration -- no state grants, no board positions, no loans, no taxpayer funds and no legislation," Miyares said Friday. McDonnell appears to have acknowledged the loans, without naming Williams, on his economic disclosure statements for 2011 and 2012. Virginia's statements of economic interests ask officials whether they or a member of their immediate family owe more than $10,000 to any one creditor. If so, the law requires the official to state the "principal business or occupation" of the creditor, but not the creditor's name. In late July, as public and legal pressure mounted, the governor said he had repaid the loans with interest and apologized for "the embarrassment certain members of my family and I brought upon my beloved Virginia and her citizens." Attorneys for McDonnell and his wife have insisted that the governor provided no special assistance to Williams or his company in exchange for the financial support, private airfare and personal shopping sprees he provided. Whether McDonnell provided or attempted to provide assistance to Williams could determine whether the governor is indicted in the ongoing federal investigation of the gifts he and his family received while in office. Williams has told investigators that he believed the McDonnells would help his company, according to the source. The investigation has found ample evidence that Williams sought the help of the governor, first lady, and other state officials in securing research grants and a place in the state employee health plan for the dietary supplement, Anatabloc, that his Henrico County-based company began marketing in 2011. A salesman for Star approached Sara Redding Wilson, director of the Department of Human Resource Management, in early 2012 about the possibility of including Anatabloc on the health plan formulary, but she rejected the request. Wilson said the salesman suggested that she talk to Williams about the supplement, but she did not do so. Wilson said neither the governor nor the first lady ever asked her to consider including the supplement in the state health plan. But she confirmed that McDonnell brought up the benefits of Anatabloc at a later meeting about health care issues. The governor produced a bottle of the supplement in the meeting, she said. "He was talking about how it had helped him." Wilson said the meeting had no bearing on the decision not to include the supplement in the plan. "(Star officials) already knew we could not cover it," she said. "It was not a drug. It was a supplement." Secretary of Health and Human Resources William A. Hazel Jr. previously has confirmed that he met with Williams in his Cabinet office at the governor's request in November 2010. Hazel said Williams talked about Star's development of Anatabloc but did not ask for favors or receive any. But either during or after the meeting, the Star CEO offered to fly him to Florida to meet with researchers at an institute that has worked closely with the company in touting the supplement's benefits. The Cabinet secretary said he declined the offer. Maureen McDonnell arranged a meeting at the Executive Mansion between Williams and an aide to Hazel on Aug. 1, 2011. Hazel said nothing came of that meeting, either. Williams and Star also sought grants from the Tobacco Indemnification and Community Revitalization Commission to sponsor research with Virginia Commonwealth University and the University of Virginia. On Aug. 30, 2011, Star gave a $25,000 research grant to each of the universities during a luncheon promoting Anatabloc at the Executive Mansion that was arranged by the first lady and attended by the governor. The governor's political action committee paid for the event. That fall, Star discussed possible research and development funding with staff of the tobacco commission and the universities, which would have had to apply for the grant on behalf of the partnership by Dec. 1, 2011. No application was filed. During the same period, Maureen McDonnell was traveling to Michigan and California on Williams' private jet to attend rollouts of Anatabloc. Prosecutors are expected to make a decision on whether to seek an indictment between Election Day and Thanksgiving, according to sources familiar with the investigation. Lawyers for the governor and first lady met with federal prosecutors in Northern Virginia last week to discuss the case, the sources said. Also last week, prosecutors received assistance from a ruling by the 4th U.S. Circuit Court of Appeals. It upheld a lower court decision to grant investigators access to two emails between McDonnell and one of his top aides. Sources say the aide was the governor's counsel and senior adviser, Jasen Eige, who is an attorney. The governor's private lawyers had sought to keep the correspondence from investigators, arguing that the emails were protected by attorney-client privilege. Details of the emails were not disclosed in the ruling. McDonnell also faces an ongoing state investigation into whether he knowingly omitted from his economic disclosure statements gifts he received from Williams and others. The governor maintains he has not violated the law. [email protected] (804) 649-6964 [email protected] (804) 649-6061 Twitter: @RTDNolan Staff writer Olympia Meola ([email protected], Twitter:@omeola) contributed to this report. ___ (c)2013 the Richmond Times-Dispatch (Richmond, Va.) 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