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McDonnell indictment unclear, experts say

Legal experts say the Justice Department has leeway in dealing with ethics cases.

Bob McDonnell

Olympia Meola | Richmond Times-Dispatch

Saturday, August 24, 2013

RICHMOND — Attorneys and law professors are uncertain whether Gov. Bob McDonnell’s legal troubles could lead to a federal indictment.

But if McDonnell is indicted and declines to step down, Republican legislative leaders privately are steeling themselves to ask the governor to resign to spare the state from distraction as the government gears up to produce a two-year budget by December.

Andrew McBride, who spent seven years as an assistant U.S. attorney in the Eastern District of Virginia and three in the U.S. Department of Justice, said the case doesn’t fit exactly a classic public corruption model — an official act in exchange for some form of compensation.

“At the same time, it has some egregious facts that might well lead the U.S. Attorney’s Office to indict,” McBride said. “Or, I could very much see a situation, and this is authorized by the U.S. attorney’s manual, where they trade non-indictment of both the governor and the first lady in exchange for the immediate resignation of the governor.”

The story of gifts and loans that a wealthy donor gave to the McDonnell family has trickled out for months.

The details that the public is left wondering about, and which would better explain the relationship between the donor, Jonnie Williams, CEO of Star Scientific , and the first family, are the pieces that the case will likely turn on for prosecutors, said Henry Chambers , professor of law at the University of Richmond.

“The very things we’re not sure about are precisely the things that prosecutors look at to decide whether to indict,” he said.

Records could either bolster or dispute McDonnell’s claim that he did not know about some of the gifts to his family and the stock purchases when they were first made.

Chambers said that if there’s no indictment, there’s a chance people will never know what information the government had.

Frank Shafroth, director of the Center for State and Local Government Leadership at George Mason University, said he thinks “the odds are very small” that the governor will be indicted.

“Drawing that fine line between whether you provided a specific beneficial favor in return for a contribution is an exceptionally hard line to draw,” he said.

Charles James , a former federal prosecutor and state deputy attorney general, would not comment on the investigation, but recently wrote a cautionary overview of the law for his firm, Williams Mullen.

James said the penalties are high, including a prison sentence of up to 20 years, if the government “can prove that the thing of value was offered, solicited or accepted in exchange for an official act.”

“That’s a hefty punishment for a $250 gift card or other benefit,” he wrote in a commentary the firm circulated early this week.

The clear lesson, James wrote, is that “strict adherence to the highest ethical standards regarding gifts and gratuities is critical.”

“Even where no criminal charges are filed, long and expensive investigations can be personally and professionally crippling.”

A decision could be made within two weeks to avoid getting too close to the November election.

Williams, the Star CEO, is facing his own legal troubles. Leading the defense team for Williams are Richard Cullen, chairman of McGuireWoods and a former U.S. attorney for the Eastern District of Virginia, and Toby Vick, a former federal prosecutor.

Lawyers say he could have trouble with the income tax laws for cash gifts made to the McDonnells.

Federal investigators are probing whether McDonnell or his administration provided any benefit to Williams and his company in exchange for the more than $166,000 in gifts, loans and cash payments Williams provided to the first family — in addition to nearly $110,000 in campaign and political action committee donations.

The governor has maintained that Star Scientific has not received any special treatment from his administration.

Virginia law does not limit an official’s acceptance of gifts, but knowingly failing to report any gift over $50 in value is a crime. The law exempts from disclosure gifts that are given to family members, as well as gifts received from friends.

Williams’ gifts to the McDonnell family included a $15,000 New York City shopping trip for Maureen McDonnell, a $6,500 Rolex watch, $15,000 to cover the catering expenses at Cailin McDonnell’s wedding reception at the Executive Mansion, and a $10,000 gift to the eldest McDonnell daughter, Jeanine, in advance of her wedding.

In 2012, Williams provided $70,000 to a company owned by the governor and one of his sisters to manage their real estate holdings.

The governor says he repaid with interest the $70,000 in real estate loans and $50,000 given to Maureen McDonnell.

Part of that $50,000 to Maureen McDonnell was used to purchase about $30,000 in Star Scientific stock. A spokesman for the governor’s legal team and a lawyer for the first lady have said the first lady purchased the stock without the governor’s knowledge.

The first lady no longer owns any of the stock, having transferred ownership of the stock to her children, according to her attorney.

Michael Martz and Jim Nolan of the Richmond Times-Dispatch contributed to this report.

Saturday, September 14, 2013