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Star Scientific, formerly a maker of dissolvable smokeless tobacco products, sued Virginia over a disputed tax bill in 2011. Attorney General Ken Cuccinelli's office is defending the state, despite his appearance of a conflict of interest.
Friday, April 5, 2013
RICHMOND — Attorney General Ken Cuccinelli has appointed two private lawyers to defend Virginia in a lawsuit over a $700,000 tax dispute filed by Star Scientific Inc., a company in which Cuccinelli owns stock.
The presumptive Republican gubernatorial candidate tapped Republican former state solicitor general William Hurd and Democratic former Attorney General Stephen Rosenthal. The company sued the state in 2011, and the case has been dormant since August 2011.
The move follows reporting by The Associated Press and The Washington Post about Cuccinelli's $10,000 to $50,000 investment in the struggling maker of nutritional supplements. The news organizations also reported that Cuccinelli has received gifts from the company's chief executive officer, Jonnie Williams, worth about $13,000. Among the gifts was a box of food supplements worth $6,000 and lodging at Williams' home a few miles beyond Richmond's westernmost suburbs.
Last weekend, the Post reported that Cuccinelli purchased some of his stock in the company after it sued the state. It is Cuccinelli's lone stock investment.
Cuccinelli had said there is no conflict of interest and no reason for his office to recuse itself in the case. The spokesman for the office, Brian Gottstein, said Cuccinelli changed his mind in "an abundance of caution."
"To be clear, there was absolutely no conflict of interest with the attorney general's office. But in an abundance of caution and to move past what has become an unnecessary distraction for the office and the attorney general, the case was given to outside counsel," Gottstein said.
Democrats had hammered Cuccinelli not only for his refusal to distance his office from the Star Scientific litigation but for his decision not to resign while running for governor. They called Friday's announcement "too little too late."
"Stepping back from the case now doesn't explain why he took it in the first place, why it went nowhere for two years or why he bought more Star Scientific stock after they sued Virginia to avoid paying taxes," said Democratic Party of Virginia spokesman Brian Coy.
Public pressure has mounted over the past two weeks for Cuccinelli to recuse his office from the case since AP first reported his ties to Star Scientific and its CEO last month and the Post's disclosures last week.
Star Scientific, formerly a maker of dissolvable smokeless tobacco products, is also the subject of a federal securities investigation. In addition, the Post reported gifts that Williams had made to the family of Gov. Bob McDonnell that had not been disclosed in his statements of economic interest.
Cuccinelli, in pursuing his gubernatorial bid, has broken with a custom observed by six attorneys general since 1985 of resigning from the office to run full time for governor. He is unopposed for the Republican nomination to be formalized at a statewide GOP convention on May 18 in Richmond.
His Democratic opponent will be former Democratic National Committee chairman Terry McAuliffe, who served as master fundraiser for the presidential campaigns of Bill and Hillary Clinton.
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