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Virginia governor: No special favors for company in probe

Published: Wednesday, May 1, 2013 5:30 a.m. CDT

RICHMOND, Va. – Gov. Bob McDonnell said Tuesday his administration never gave special treatment to a dietary supplement company that is under a federal securities investigation and whose chief executive gave more than $100,000 in political contributions and thousands of dollars more in gifts to McDonnell’s family.

McDonnell said on WTOP radio he and first lady Maureen McDonnell have been friends with Star Scientific CEO Jonnie Williams for four or five years. He acknowledged receiving gifts from Williams, including a $15,000 check to his daughter to help her pay for her June 2011 wedding.

Williams’ gifts to McDonnell and to state Attorney General Ken Cuccinelli, both Republicans, have come under growing scrutiny in the past two months. It intensified after the former Executive Mansion chef Todd Schneider was charged with stealing food from the mansion and alleged that his prosecution by Cuccinelli was politically motivated.

Cuccinelli is running for governor this year; McDonnell, elected in 2009, can’t run because Virginia is the only state that doesn’t allow its governor to serve consecutive terms.

The FBI is looking at the relationship between McDonnell and Williams, according to two people who spoke on condition of anonymity because their roles preclude them from talking publicly. Neither is charged with wrongdoing.

Federal authorities began questioning people close to the McDonnells as an outgrowth of the securities probe, the two people said. FBI agents have asked about gifts the McDonnells received and whether the governor or his administration aided the company in return.

McDonnell said he appeared at an event promoting Star Scientific at the Executive Mansion in August 2011, but said the company has received no state economic development incentives from his administration.

“During my time as governor, neither Jonnie Williams nor Star Scientific or any other person or any other company that’s come before our administration for something regarding the budget or legislation or anything else has been given any special treatment,” McDonnell said on his monthly call-in radio show.

News of the FBI probe was first reported Monday by The Washington Post. A day later, Circuit Judge Margaret Spencer barred attorneys from discussing the case.

The investigation was revealed after the former chef at the Executive Mansion alleged in court papers that he gave FBI and state police investigators evidence a year ago of wrongdoing by McDonnell and his family. It included documents showing Williams paid Schneider’s private catering company $15,000 for McDonnell’s daughter Cailin’s wedding reception, court records showed. Schneider had been the mansion chef.

McDonnell did not disclose the gift on his January 2012 statement of economic interests, saying state law does not require the disclosure of gifts to family members.

“I made the determination – and I believe it was correct – that it was a gift to my daughter, and therefore under the current laws it did not need to be disclosed. I think obviously from the attention it has gotten, it has certainly now been disclosed,” he said.

McDonnell has acknowledged signing the catering contract. Court documents filed by Schneider claim he paid a deposit for the services and Maureen McDonnell received a $3,500 check for overpayment of catering expenses.

Asked if he’d allow his daughter to accept the gift again, McDonnell struggled with the reply.

“That’s hard to say in retrospect. Obviously there’s been a lot of attention to that. It’s caused a fair amount of pain for me personally I’m a governor but I’m a dad and I love my daughter very much,” he said.

Williams has given McDonnell’s political action committee nearly $80,000 and gave his 2009 campaign for governor $28,584, according to the Virginia Public Access Project, a nonprofit group that tracks of money in Virginia politics. McDonnell received personal gifts totaling $7,382 from the company in 2012, according to the group.

Based just outside of Richmond, Star Scientific started as a cigarette company in 1990, focused on ways to remove harmful compounds from tobacco. The company incurred annual losses for most of that time, including a $22.9 million loss last year.

In November, Williams, who has been CEO since 1999, announced he was cutting his salary from $1 million a year to $1 a month until the company becomes profitable. A month later, the company, which has 23 full-time employees, said it would shift its focus to its anti-inflammatory supplement, Anatabloc.

Schneider headed the mansion kitchen operations from 2010, when McDonnell moved in, until last year, when he was dismissed during a state police probe. He was later charged with four counts of taking state property worth $200 or more.

Schneider’s motion said he told federal and state investigators that the mansion staff and other state employees had witnessed him being instructed to take state-purchased food as payment for personal services, and that they saw others “openly taking cases of food and other supplies from the governor’s mansion.”

The motions said the charges against him should be dismissed on the grounds that Cuccinelli had a conflict of interest because he had also accepted thousands of dollars in gifts from Williams and Star Scientific.

Cuccinelli filed a motion last week to recuse his office from prosecuting Schneider. A hearing was scheduled Thursday.

Political and official aides to Cuccinelli dismissed the motion by Schneider’s attorney, Steven D. Benjamin, as a further effort to politicize and sensationalize a criminal trial. Brian Gottstein, a spokesman for the Virginia attorney general’s office, said the case “will be tried in court and not in the media.”

Just before Schneider’s indictment in March, defense lawyers said Cuccinelli’s office ignored Schneider’s information “concerning the use of the mansion by Williams, the promotion of Williams’ food supplement by the governor and first lady,” according to the motion.

Benjamin said Cuccinelli sold 1,500 shares of Star Scientific stock last summer at a profit of $7,000. He also noted Cuccinelli’s free use of Williams’ Smith Mountain Lake vacation lodge for a summer 2012 vacation worth $3,000 and another stay there for Thanksgiving in 2010, complete with a catered holiday dinner worth $1,500.

Cuccinelli did not disclose the gifts until last week.

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