Bloomberg News

Virginia Ex-Governor Said by Sister Not to Need Bail-Out

August 20, 2014

Former Virginia Governor Robert McDonnell

Robert McDonnell once seen as a possible Republican presidential contender for 2016, faces with his wife, a former Washington Redskins cheerleader, a 14-count indictment that includes charges of conspiracy, honest-services fraud and making false statements. Photographer: Mark Wilson/Getty Images

Maureen Carney McDonnell, the sister and millionaire business partner of former Virginia Governor Robert McDonnell, told jurors in her brother’s public corruption trial that she had more than enough money to bail out their struggling real estate firm.

Maureen C. McDonnell, who has been an executive for International Business Machines Corp. (IBM:US) and other companies, had a net worth of about $1.3 million and an annual salary that sometimes exceeded $500,000, she said under questioning by her brother’s defense lawyers in a Richmond, Virginia, federal courtroom.

“If Bob needed money, could he come to you?” asked defense attorney Daniel Small. “Absolutely,” she replied.

Her testimony yesterday was aimed at undercutting prosecutors’ contention that the dire straits of the real estate company prompted Robert McDonnell and his wife to use state resources in a conspiracy to help a Virginia businessman promote a dietary supplement in exchange for benefits including loans for the business.

Robert McDonnell, 60, once seen as a possible Republican presidential contender for 2016, faces with his wife, a former Washington Redskins cheerleader, a 14-count indictment that includes charges of conspiracy, honest-services fraud and making false statements.

Defense lawyers have portrayed the McDonnells’ marriage as broken, making it impossible for them to conspire as prosecutors allege.

Defense Case

Robert McDonnell was a diligent public servant, putting in long hours at the office while he struggled to manage his wife, also named Maureen, who behaved erratically, bullied staff and sought gifts and favors from the entrepreneur, Jonnie Williams, according to defense testimony.

Williams gave one or both McDonnells vacations, plane trips, a Rolex watch and shopping sprees, plus $70,000 in loans for MoBo Real Estate Partnership LLC, the business set up by the ex-governor and his younger sister.

Maureen C. McDonnell, of Chesapeake, Virginia, testified that MoBo drifted into financial difficulty in 2009 while she was bedridden with a difficult pregnancy, her own marriage was falling apart, and her brother was busy running for governor.

“MoBo just wasn’t a priority for us,” she said.

Another complication was the recession, which put downward pressure on resort rentals in Virginia Beach, where MoBo owned two houses, Maureen C. McDonnell testified.

To help tide over the business, McDonnell and her brother borrowed $50,000 from a physician acquaintance, which they repaid early, she said.

FedEx Package

In March 2012, Maureen C. McDonnell testified, she received a series of text messages from her sister-in-law advising that she would be receiving a FedEx package containing a $50,000 check that shouldn’t be deposited until the two women spoke.

The check was from Starwood Trust, an entity controlled by Williams, who was seeking help marketing Anatabloc, a tobacco-based dietary supplement.

Williams testified earlier in the trial that Robert McDonnell met with him in a state office building in February 2012 to arrange a loan for the real estate business.

Maureen C. McDonnell said she didn’t know Williams and was wary of her sister-in-law. “I think there were two sides to Maureen and you were not sure what you were going to get,” a caring, compassionate person, or one who was “manipulative, unpredictable and deceptive,” she testified.

“I worked on this 4 a year,” the ex-governor’s wife texted her sister-in-law about the check, according to testimony.

‘Very Loud’

When Maureen C. McDonnell called her brother to inquire about the check, she heard her sister-in-law screaming in the background. “She was livid, very upset and was very loud,” the ex-governor’s sister said.

Ultimately, the check was deposited in the MoBo checking account.

Under cross-examination by Assistant U.S. Attorney Jessica Aber, Maureen C. McDonnell said the she went along with accepting the loan because she didn’t want to tap her own investments.

She said she thought it would be better to borrow the money and that a personal loan, as offered by Williams, was better than going through an institution.

In a further bid to bolster the notion that Robert McDonnell didn’t need Williams’s money, the defense called Allen Kosowsky, a forensic accountant, who reviewed the ex-governor’s tax returns, credit card statements and other records and pronounced his financial affairs “sound” around the time of the loan from Starwood.

The case is U.S. v. McDonnell, 14-cr-00012, U.S. District Court, Eastern District of Virginia (Richmond).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net; Peter Galuszka in federal court in Richmond, Virginia, at pgaluszka1@comcast.net

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

Robert McDonnell once seen as a possible Republican presidential contender for 2016, faces with his wife, a former Washington Redskins cheerleader, a 14-count indictment that includes charges of conspiracy, honest-services fraud and making false statements. Photographer: Mark Wilson/Getty Images

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