Donation woes, job criticism put Ken Cuccinelli on defensive

When Attorney General Ken Cuccinelli decided to run for governor, Democrats and even some establishment Republicans believed the tea party conservative’s stances on issues such as abortion, gay marriage and climate change would be his greatest challenge with independent voters.

But with two months left in the race to be Virginia’s 72nd governor, Cuccinelli and his supporters find themselves defending the attorney general on another front — his actions in the office that he has refused to relinquish during his run for the Executive Mansion.

The intersection of Cuccinelli’s responsibilities as the state’s top lawyer and the demands of running for its highest office have presented conflicts that compelled the attorney general to withdraw from a number of politically sensitive cases.

They have also left him vulnerable to partisan attacks that question his initial failure to disclose some gifts, and the recent conduct of an assistant attorney general in a case involving a major Cuccinelli campaign contributor.

Republicans, meanwhile, have challenged Democratic nominee Terry McAuliffe’s business credentials.

They have questioned McAuliffe’s integrity over job creation claims for two struggling companies he started in the run-up to the governor’s race. And they’ve questioned whether the Democrat used his political connections in Washington to secure visas for foreign investors for GreenTech Automotive, the struggling electric car company he founded that is now part of a federal investigation.

In a brutal and bitterly contested campaign that appears more focused on character than policy, the candidate who emerges the least battered from a summer of slams may have the advantage heading into November.

“Cuccinelli’s ability to portray McAuliffe as a seedy businessman who has cashed in on his Washington connections was always premised on the idea that Cuccinelli himself was a straight shooter who would never bend rules or cash in on connections,” said Quentin Kidd, director of the Wason Center for Public Policy at Christopher Newport University.

“And the last few months have considerably tarnished the shine on that lamp.”

Staying on as AG

Cuccinelli announced in December 2011 that he would run for governor and that he would complete his term as attorney general. Early criticism of his decision to stay on as attorney general focused largely on how much time he could devote to the job — the reason every elected Virginia attorney general since 1985, including Bob McDonnell, had cited for an early exit.

“A campaign for governor demands a full-time candidate,” McDonnell said in announcing his decision to step down as attorney general in February 2009.

“The office of the attorney general is the commonwealth’s law firm, and demands a full-time attorney general,” he added, calling it “the right and proper thing to do.”

Cuccinelli downplayed the potential for trouble and said he intended to keep his promise to voters to serve his full term.

“I ran for attorney general to be attorney general,” he said.

The issue gained traction this spring — not over split duties, but over potential conflicts, highlighted by the gift controversy involving the governor and donor Jonnie Williams Sr., the CEO of Henrico County-based dietary supplement maker Star Scientific.

In March, Cuccinelli obtained an indictment of former Executive Mansion chef Todd Schneider on felony embezzlement charges.

That led to revelations that McDonnell and his family had received more than $166,000 in gifts and loans from Williams, including $70,000 to shore up a family real estate company and $15,000 to help cover Schneider’s catering bill for the Executive Mansion wedding of the governor’s daughter Cailin in June 2011. McDonnell and his family have since repaid much of that to Williams.

The revelations also opened a door on the attorney general’s relationship with Williams, who had given Cuccinelli and his family more than $18,000 in gifts.

Cuccinelli initially neglected to disclose roughly $5,000 worth of those gifts, including a flight to New York and two gifts he solicited from Williams — a vacation stay at Williams’ house at Smith Mountain Lake and a catered Thanksgiving dinner and stay at the lake house.

At first Cuccinelli said he would not return the gifts, noting they were consumables and saying “there are some bells you can’t unring.” Then later he said he would return the monetary value of the gifts if he could, but his family’s needs prevented him from doing so.

Larry Sabato, head of the Center for Politics at the University of Virginia, said he was “taken aback” by the revelations about Cuccinelli’s gifts.

“Cuccinelli’s part in Jonnie Williams’ giveaway program isn’t nearly as corrupt as Bob and Maureen McDonnell’s,” he said. “But nonetheless Cuccinelli looks like a garden-variety pol who just wanted his share of the goodies.”

The attorney general also neglected to disclose holdings of more than $10,000 in Star Scientific stock. In April, he met with reporters to announce that he was amending his disclosure forms to reflect the omissions. He said the unreported gifts were an oversight and said that he didn’t realize his holdings in the stock had exceeded the $10,000 threshold required for reporting.

In July, a report by Richmond Commonwealth’s Attorney Michael Herring concluded that Cuccinelli had not violated Virginia’s law on the disclosure of gifts. It requires reporting of all gifts valued at $50 or more but exempts gifts to spouses and immediate family members. Failure to disclose a gift is only a crime if it is determined that the officeholder deliberately omitted the gift from his statements of economic interests.

Cuccinelli strategist Chris LaCivita said the attorney general would draw partisan fire regardless of whether he was still on — or off — the job. He said the difference is in how both candidates have handled challenges to their personal ethics.

“When the attorney general realized he made a mistake, he owned up to it, sat down with the media and discussed it, invited a review from a commonwealth’s attorney of the opposite party, was cleared and now has proposed a serious set of reforms that would fundamentally change disclosure and ethics laws for the better,” LaCivita said.

“Terry McAuliffe? He has demonstrated that he believes investigations into his fundraising, business practices and political deal-making are nothing more than the cost of doing business.”

Cases and conflicts

Cuccinelli’s relationships with Williams and the governor led to accusations from Democrats and lawyers for Schneider, who argued the attorney general had a conflict in the chef case.

Steven Benjamin, one of the chef’s lawyers, argued that Cuccinelli should have withdrawn from the Schneider prosecution in the fall of 2012 when he reportedly first learned of Williams’ involvement in the case.

Instead, Cuccinelli held on to the Schneider case and sought the indictment in March. A month later, the attorney general’s office sought to withdraw from the case, a motion that was granted by Richmond Circuit Court Judge Margaret Spencer.

In November, the attorney general had referred evidence to Herring about the governor’s gifts from Williams.

Cuccinelli, who technically is the governor’s lawyer on state matters, also appointed a former attorney general, Anthony Troy, as outside counsel to represent McDonnell in the chef’s case and all related matters.

Troy’s first bill to taxpayers, for roughly one month’s work, along with colleagues at the Eckert Seamans law firm, was roughly $53,000.

Cuccinelli’s relationship with Williams also opened him up to criticism on another matter before the attorney general’s office — a lawsuit that Williams’ company filed in 2011, challenging a $700,000 tax assessment of Star Scientific tobacco barns that had mushroomed to $1.7 million with penalties.

Democrats criticized how Cuccinelli’s office handled the case, saying it dragged its feet. The attorney general said he was unaware of the litigation filed by Williams’ company and had handled the case properly.

The Richmond commonwealth’s attorney’s report concluded that Cuccinelli’s personal financial interest in Star Scientific did not affect his judgment.

“Any suspicion that the pace and or substance of the litigation has been affected by his ownership of company or his relationship with Williams cannot be confirmed by this investigation,” Herring wrote in his report on Cuccinelli’s financial disclosures.

After the tax case was brought to the public’s attention, Cuccinelli recused his office from the matter and assigned it to outside counsel who agreed to handle it for free. The case is pending.

Consol Energy

Staying on the job has also opened Cuccinelli to criticism on a matter related to one of the largest donors to his campaign.

In June, a federal judge said she was shocked to learn of emails from one of Cuccinelli’s assistant attorneys general offering advice to attorneys for two energy companies involved in a potential class-action litigation with Southwest Virginia property owners over natural gas rights.

One of the companies, Pennsylvania-based Consol Energy, is among Cuccinelli’s largest political donors, having provided more than $100,000 to the attorney general’s campaign over the past two years.

Cuccinelli’s office acknowledged that the tone of the emails was “overzealous” but vigorously denied any donor connection to the handling of the case, saying the office was simply defending Virginia law in its role as adviser to Virginia’s Gas and Oil Board.

“We all know that Cuccinelli has run one of — if not the most — political AG offices in Virginia history, so by staying in office it almost guaranteed that active work in the office was going to become an issue in the campaign,” said Kidd, with CNU’s Wason Center.

“If he had left the post, he would have been able to put real distance between him and anything that would come up.”

Trading ethics charges

LaCivita said challenges to Cuccinelli’s performance as attorney general and candidate are not credible.

“If they watched the news, read a newspaper or logged on to the Internet, they would know the attorney general’s office has had record-breaking success prosecuting child predators, stopping Medicaid fraud, breaking up human trafficking rings and securing millions for local law enforcement funding without tax dollars,” the strategist said.

“We gladly would compare Ken’s public service record over the last two years against Terry McAuliffe’s entire career of self-service any day of the week.”

Sabato said Cuccinelli may have been right in principle in that an attorney general has no obligation, ethical or otherwise, to resign. He also said that leaving office does not necessarily rid a candidate of controversies.

“The Jonnie Williams gifts are just as toxic whether you’re in office or not,” he said. But when you are out of office, he noted, “some of your AG controversies become old news, because there’s nothing staler than a former anything.”

The McDonnell gift scandal has changed the script of the campaign, according to Sabato.

“No one saw this coming — no one,” he said. “McDonnell was always thought to be squeaky clean. It has surprised and even shocked voters enough to push ethics toward the top of the campaign agenda.

“McAuliffe has his own sleazy image, and now Cuccinelli has acquired one, too. It has made Virginians more cynical and more regretful about the choice on the ballot.”

Over the past month, both candidates have attempted to pivot from challenges to their ethics by proposing reforms on the state’s gift laws — and by attacking the other guy.

Democrats called on Cuccinelli to return the value of the $18,000 in gifts he received from Williams.

Cuccinelli, meanwhile, tried to put some distance between himself and McDonnell by proposing a special session of the legislature to tackle gift-law reform. McDonnell turned him down, saying lawmakers should take up the issue in January.

“Ethics are important here,” said CNU’s Kidd. “But if both candidates take a hit on that issue, then they probably cancel each other out.

“There is little advantage to being the least soiled, when both guys are totally covered in mud.”

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