Bloomberg News

Ex-Governor’s Late Fees Shown as Financial Insecurity

August 26, 2014

Former Virginia Governor Robert F. McDonnell incurred bank late fees for not making mortgage payments on time, a prosecutor said in a corruption trial while questioning his claims he was financially secure.

Assistant U.S. Attorney Michael Dry began the first day of cross-examination of McDonnell in federal court in Richmond, Virginia, with questions about the value of resort properties owned by the former governor and his family.

McDonnell and his wife, Maureen, are accused by the U.S. of accepting more than $170,000 in loans and gifts from Jonnie Williams, the former chief executive officer of Star Scientific Inc., now operating as Rock Creek Pharmaceuticals Inc. (RCPI:US) In exchange, McDonnell used state resources to promote Anatabloc, a dietary supplement Williams was marketing, prosecutors said. McDonnell has denied that allegation.

McDonnell’s lawyers have argued the former governor and his family weren’t in dire financial straits, owning two beach resort properties and a third in the mountains.

Under Dry’s questioning yesterday, McDonnell said several financial institutions, including Bank of America Corp. (BAC:US), Wachovia Corp., Monarch Financial Holdings Inc. and SunTrust Banks Inc. declined to provide traditional refinancing on the properties.

Dry presented a series of e-mails, showing the McDonnells were incurring late fees because they weren’t making mortgage payments on time.

Payments Made

Williams lent the McDonnells $70,000 to help shore up their resort investments. He also paid $15,000 for a wedding luncheon for one of McDonnell’s daughters and in 2012 he sent a $50,000 check to MoBo Real Estate Partners, a company McDonnell ran with his sister, according to prosecutors.

McDonnell, once seen as a possible Republican presidential contender in 2016, has testified he was upset about the loan, believing it to be unnecessary. Still, he later asked for more financial help from Williams, who wrote another check for $20,000, prosecutors said.

McDonnell said his wife, a former National Football League cheerleader, had a habit of inappropriately asking people for money and that behavior “went back 25 years.”

“Did your wife ever ask you to do anything for Jonnie Williams in exchange for gifts and loans?” Maureen McDonnell’s lawyer, William Burck, asked McDonnell earlier yesterday.

“No, she did not,” McDonnell replied.

Travel, Vacations

Dry questioned defense assertions that relations were so strained between the McDonnells that they were barely on speaking terms.

During one 22-month period, the McDonnells traveled or vacationed together 18 times, according to Dry. Their trips included a vacation at Kiawah Island resort in South Carolina paid for mostly by Richmond philanthropist William Goodwin at a cost of $23,000, several trips to an oceanfront beach house at a Virginia National Guard base at Virginia Beach, a trip to Washington to attend a reunion of former Washington Redskins cheerleaders, a trip to Florida and an expenses-paid trip to a lake-front house owned by Williams in Virginia.

The former governor said he didn’t know about his wife’s activities helping Williams promote his product Anatabloc. He said he didn’t know much about her involvement in using the executive mansion in Richmond on Aug. 31, 2011, for the national rollout of Anatabloc.

McDonnell said he didn’t know researchers from Johns Hopkins University, the University of Virginia and Virginia Commonwealth University would attend, as well as top executives from Star Scientific.

“I had planned to make a 30-minute appearance towards the end of the luncheon,” he said. McDonald’s aides persuaded him later not to attend another Anatabloc event in Richmond.

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: Peter Galuszka in federal court in Richmond, Virginia, at pgluszka@comcast.net

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


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  • RCPI
    (Rock Creek Pharmaceuticals Inc)
    • $0.24 USD
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  • BAC
    (Bank of America Corp)
    • $17.04 USD
    • 0.27
    • 1.58%
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