Bloomberg News

Virginia Governor’s Gifts From Businessman Probed by Prosecutor

May 22, 2013

Virginia Governor Robert McDonnell and Attorney General Ken Cuccinelli are being investigated by a Richmond prosecutor over the omission of gifts from their financial disclosure forms, according to statements from Cuccinelli’s office.

McDonnell and Cuccinelli have acknowledged not reporting gifts from Jonnie Williams, the chief executive officer of diet supplements maker Star Scientific Inc. (STSI:US), on disclosure forms.

Cuccinelli today confirmed that he appointed Commonwealth’s Attorney Michael Herring to look into McDonnell’s financial reporting forms. Herring was named “to conduct an investigation into possible violations of financial disclosure provisions” of the law, Cuccinelli said in a statement.

The controversy over the omissions has affected state and national politics because Cuccinelli is running for governor and McDonnell, who is term-limited, has enjoyed a high national profile as chairman of the Republican Governors Association in 2011 and 2012 and was seen as a potential running mate for former Massachusetts governor Mitt Romney in his failed bid for the presidency last year.

McDonnell omitted disclosing that Williams paid a $15,000 catering bill for the June 2011 wedding of the governor’s daughter. McDonnell has said he didn’t report the payment because it was a gift to his daughter. Virginia law allows public officials to accept gifts, as long as they are disclosed, while those to family members can go unreported.

He has described Williams as a family friend.

FBI Scrutiny

Gifts from Williams to McDonnell also have come under scrutiny by the FBI, which has asked people close to the governor whether his administration has provided assistance to Star Scientific.

Williams has donated more than $100,000 to McDonnell’s political funds, according to state filings.

Cuccinelli on April 26 appointed Herring to investigate his own failure to disclose gifts from Williams, including a family vacation worth $3,000. Cuccinelli said at the time that his failure to disclose was inadvertent. He filed amended disclosure forms.

Williams’s company has been fighting a $1.7 million tax assessment from Virginia in court. Last month, Cuccinelli’s office appointed an outside law firm to handle the case to address concerns about a possible conflict of interest.

Star Scientific has acknowledged being under federal investigation for 2006 securities transactions. The company also is the subject of shareholder lawsuits involving the marketing of a supplement called Anatabloc, which is sold as an anti-inflammatory agent.

Herring’s Appointment

Herring was appointed to investigate McDonnell’s disclosure forms in November, according to the statement today from Cuccinelli’s office.

The appointment didn’t come to light until it was reported today by the Richmond Times-Dispatch, which said it learned of the assignment through a Freedom of Information Act request.

Talhia Tuck, a spokeswoman for Glen Allen, Virginia-based Star Scientific, declined to comment on Herring’s involvement.

Representatives of Herring’s office didn’t immediately respond after regular business hours to a phone message seeking comment on the investigation.

“We are aware of the review and look forward to working with them as this process moves forward,” Paul Shanks, a spokesman for McDonnell, said in an e-mailed statement.

Mansion Chief

The controversy has been stoked by revelations in a criminal case involving Todd Schneider, McDonnell’s former executive mansion chef, who is accused of embezzling food from the mansion.

Schneider said he told the FBI about Williams’s efforts to ingratiate himself with McDonnell through gifts, including the wedding catering and the use of expensive cars and a private jet, according to a state court filing.

Schneider also has alleged that Cuccinelli had conflicts of interest in prosecuting him because he owned stock in Star Scientific and used Williams’s vacation home last summer, according to the filing.

The chef’s allegations about links between McDonnell and Williams were made to a team of investigators that included officials from Cuccinelli’s office, Schneider’s lawyers wrote in the filing.

The case is Virginia v. Schneider, CR13F-1960, Circuit Court for the Commonwealth of Virginia (Richmond).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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