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TMCNet:  Indicted

[January 22, 2014]

Indicted "I did nothing illegal," he says Ex-governor, wife each face 13 felony counts in gifts case [Virginian - Pilot]

(Virginian - Pilot Via Acquire Media NewsEdge) By Julian Walker | The Virginian-Pilot RICHMOND Former Gov. Bob McDonnell and his wife, Maureen, have been charged with violating federal public corruption laws in a 14-count indictment handed up Tuesday, stemming from the McDonnells' relationship with former Star Scientific Inc. chief executive Jonnie R. Williams Sr.


The felony charges - 13 each for McDonnell and his wife - are the culmination of a monthslong investigation by state and federal authorities into whether McDonnell sought to illegally promote a Star health supplement after taking thousands of dollars in gifts and loans from Williams. They also bookmark a dubious new chapter in Virginia history: McDonnell is the first former governor to be indicted for conduct while in office.

The McDonnells are scheduled to make an initial appearance in federal court Friday morning when their arraignment is scheduled, a striking fall from grace for a Republican figure once considered a possible 2016 presidential contender.

McDonnell and his wife face a maximum penalty of roughly 70 years in prison each and more than $1 million in fines if convicted on all counts, according to the U.S. attorney's office.

A Justice Department spokesman declined to say whether a plea deal was discussed before the indictment, and McDonnell's lead attorney, former federal prosecutor John Brownlee, did not return a message seeking comment.

In a statement released by his lawyers Tuesday, McDonnell said he "did not violate the law." He again apologized for the episode and has steadfastly maintained that he never gave special treatment to Star Scientific or Williams.

The former governor also promised to "use every available resource and advocate I have for as long as it takes to fight these false allegations, and to prevail against this unjust overreach of the federal government." In a brief public appearance Tuesday evening, McDonnell reiterated those sentiments. He appeared with his wife, daughter and son-in-law and did not take any questions after, including whether prosecutors offered him a plea agreement.

The U.S. attorney's office alleges the McDonnells used the governor's position "to enrich themselves and their family members" by soliciting more than $135,000 in payments such as gifts, loans, thousands of dollars worth of golf outings and other items of value.

In exchange, prosecutors say the governor arranged a meeting between Williams with officials, hosted events at the governor's mansion to encourage Virginia university researchers to study Star products and encouraged physicians to suggest them to patients.

The indictment further alleges that McDonnell and his wife tried to conceal from the public their relationship with Williams and misled government investigators about it. For instance, it says that McDonnell tried to route things of value through his family and personal business interests to avoid disclosing items he had received.

And it claims that McDonnell last February signed loan paperwork submitted to a lender without disclosing loans taken from Williams.

The indictment charges McDonnell and his wife, both 59, each with one count of conspiracy to commit wire fraud; three counts of wire fraud; one count of conspiracy to obtain property under color of their official office; six counts of obtaining property under color of official name; and one count of making false statements to a federal credit union.

The former governor also is charged with an additional count of making a false statement to a financial institution, and Maureen McDonnell is charged with one count of obstruction of an official proceeding.

The 43-page indictment is the government's detailed chronicle of a four-year relationship the McDonnells had with Williams, beginning with Bob McDonnell's use of Williams' jet during his campaign for governor as early as March 2009 - eight months before he was elected governor.

A month later, the indictment alleges, the McDonnells attended a political event at the Four Seasons Hotel in New York City, where they met with Williams. Maureen McDonnell later told one of her husband's senior staffers that Williams had agreed to buy her a designer dress by Oscar de la Renta for her husband's inauguration.

The staffer told her that would be inappropriate, whereupon she "became upset," the indictment says.

She sent the staffer an email saying: "I need to talk to you about Inaugural clothing budget. I need answers and Bob is screaming about the thousands I'm charging up in credit card debt. We are broke, have an unconscionable amount in credit card debt already, and this Inaugural is killing us!! I need answers and I need help, and I need to get this done." Maureen McDonnell subsequently told Williams she couldn't accept the dress at that time, but would take a "rain check," according to the indictment.

In October 2010, the indictment says, Williams let the governor use his jet to fly to a political event in California and flew back to Richmond with him. Williams used the opportunity to tout the health benefits of his company's products and stressed the need for scientific studies to demonstrate them.

The governor allegedly told Williams he would put him in touch with the state secretary of health and human resources, Dr. William Hazel. A few days later, a McDonnell staffer emailed Hazel, "(T)he Governor would like you to review the attached," and included a copy of a news release from Williams' company announcing clinical trials of anatabine for treatment of Alzheimer's disease.

Anatabine is an alkaloid in the tobacco plant.

Soon after, in a meeting arranged by a McDonnell staffer, Williams met with Hazel to discuss the health benefits of Star Scientific's products. Hazel was skeptical of his claims, the indictment says, because the products had not been scientifically proven to be effective. He declined Williams' suggestion that he visit the Roskamp Institute, a Florida-based research group with financial ties to Star Scientific that had begun scientific studies of anatabine.

In April 2011, the indictment says, Maureen McDonnell decided to cash her "rain check," asking Williams to take her shopping in New York for the Oscar de la Renta dress. She and her husband would be attending a political event there, she explained, and she would ensure that Williams would be seated next to the governor.

Maureen McDonnell told Williams she needed dresses and accessories for her daughter's upcoming wedding and for her and her husband's upcoming anniversary party, the indictment says. Williams accompanied her as she spent $10,999 at Oscar de la Renta, $5,685 at Louis Vuitton and $2,604 at Bergdorf Goodman. As promised, Williams was seated next to the governor at the event that evening.

In May 2011, the indictment alleges, in a private meeting at the Governor's Mansion, Maureen McDonnell confided in Williams that she and her husband were having severe financial difficulties. She could help Star Scientific, she said, but she needed his financial assistance, asking for a $50,000 loan.

Maureen McDonnell also told Williams that she didn't know how she and her husband would pay for their daughter's upcoming wedding, the indictment says. Later, the governor explained the couple's financial difficulties to Williams, saying income from their rental properties in Virginia Beach wasn't covering the expenses. Williams agreed to make a $50,000 loan at 5 percent interest, saying no paperwork was necessary.

On several occasions, according to the indictment, Bob McDonnell, his two sons and his future son-in-law played golf at an exclusive Richmond-area course where Williams was a member, running up thousands of dollars on Williams' tab.

In June 2011, the indictment says, Maureen McDonnell bought 6,000 shares of Star Scientific stock and flew on Williams' private plane to the Roskamp Institute in Florida, where she announced she was making the Governor's Mansion available for the official launch of Star's product, Anatabloc.

That summer, the McDonnell family vacationed at Williams' multimillion-dollar home on Smith Mountain Lake, the indictment says. Maureen McDonnell called ahead to ask if Williams' Ferrari could be made available for the governor's use, and it was.

Shortly afterward, according to the indictment, the governor initiated a meeting at the Governor's Mansion attended by his wife, Williams and one of Secretary Hazel's deputies. At the meeting, Williams pushed the idea of clinical trials of Anatabloc at two state medical schools, Virginia Commonwealth University and the University of Virginia. He also suggested using state employees as a control group for such studies.

Around that time, according to the indictment, Williams bought a Rolex watch for the governor at his wife's request. Not long afterward, the McDonnells hosted the Anatabloc launch at the Governor's Mansion.

In September 2011, Maureen McDonnell allegedly told her broker that she wanted to get the Star Scientific stock shares out of her name in order to avoid annual disclosure requirements, the indictment says. She suggested the shares could be given to her children.

In December, she sold the stock, leaving no shares in her name at year's end, the indictment says. In January 2012, the governor filed his annual disclosure statement, listing no stock holdings by his family worth more than $10,000 invested in any one business. A few days later, the indictment says, his wife repurchased 6,672 shares of Star Scientific stock.

In the summer of 2012, according to the indictment, the McDonnells vacationed as Williams' guests at a luxury resort and spa in Cape Cod, Mass.

Insight into McDonnell's defense strategy was revealed in two defense motions his attorneys filed in federal court Tuesday.

Among other things, the motions raised questions about Williams' credibility and inquired about immunity he is receiving in exchange for his testimony.

Tuesday's indictment hit some Virginia Beach lawmakers especially hard because they had served with McDonnell, a former Beach delegate and state attorney general.

"I've know Bob for 23 years," said Sen. Frank Wagner, R-Virginia Beach. "I'm a little bit floored by some of this." Fellow Beach Sen. Jeff McWaters said he considers McDonnell a good man and an effective governor.

"When it's all said and done, I hope he'll be exonerated," added McWaters, a Republican who encouraged people to donate to McDonnell's legal defense fund.

Pilot writer Kathy Adams contributed to this article.

Julian Walker, 804-697-1564, julian.walker@pilotonline.com Bill Sizemore, 804-697-1560, bill.sizemore@pilotonline.com The charges The U.S. Attorney's Office alleges the McDonnells used the governor's position "to enrich themselves" and solicit more than $135,000 in gifts and loans. McDonnell and his wife face a maximum penalty of 70 years in prison each.

HIS STAND He said he never gave special treatment to Star or Williams. He said he did not violate the law. He previously announced the repayment of more than $120,000 in loans.

INSIDE House bill wouldn't dent gifts accepted by legislators, group finds. Hampton Roads Bob McDonnell's statement "My fellow Virginians, earlier today federal prosecutors notified my attorneys that they have filed criminal charges against me and my wife Maureen, alleging that we violated federal law by accepting gifts and loans from Jonnie Williams, the former CEO of Star Scientific. I deeply regret accepting legal gifts and loans from Mr. Williams, all of which have been repaid with interest, and I have apologized for my poor judgment for which I take full responsibility. However, I repeat emphatically that I did nothing illegal for Mr. Williams in exchange for what I believed was his personal generosity and friendship. I never promised - and Mr. Williams and his company never received - any government benefit of any kind from me or my Administration. We did not violate the law, and I will use every available resource and advocate I have for as long as it takes to fight these false allegations, and to prevail against this unjust overreach of the federal government." (c) 2014 ProQuest Information and Learning Company; All Rights Reserved.

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