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The attorney general and gubernatorial candidate should recuse his office from a tax suit because of his financial ties.
Tuesday, April 2, 2013
For more than a decade, Star Scientific Inc. has contested a state sales and use tax assessment on its tobacco-curing barns in Mecklenburg County. In 2011, the Glen Allen-based company sued the Virginia Department of Taxation after the agency rejected Star Scientific’s claim that the barns should be exempt from the tax.
The stakes are significant for Star Scientific, which is making a push to market a plant-based dietary supplement designed to reduce inflammation. The company could be on the hook for at least $1.7 million in taxes, penalties and interest if it loses the dispute, according to a filing with the Securities and Exchange Commission.
The tax department is represented in the case by the office of Attorney General Ken Cuccinelli, who happens to be an investor in Star Scientific. Cuccinelli, the presumptive Republican nominee for governor, owns more than $10,000 worth of stock in the company, according to the Virginia Public Access Project.
The lawsuit may languish well beyond Cuccinelli’s term as attorney general. But Cuccinelli must recognize that, for now, he is running the state’s law firm. And in this case, he has a conflict of interest. He should recuse his office from the case and hire a private law firm to litigate it.
Cuccinelli acquired Star Scientific stock in 2010 and 2011 but didn’t disclose the holdings until the middle of last year. A campaign consultant told The Washington Post that Cuccinelli amended his economic disclosure after realizing the total value of his holdings eclipsed the $10,000 reporting threshold. His initial failure to disclose the investment is curious, since it is his only stock interest worth more than $10,000.
Cuccinelli also has received more than $13,000 in gifts from Star Scientific CEO Jonnie Williams, including the use of a lake house and boat. Williams and Star Scientific have been even more generous to Gov. Bob McDonnell. The Post reported that Williams picked up the catering tab last summer when McDonnell hosted his daughter’s wedding at the governor’s mansion. McDonnell has taken more than $100,000 worth of trips on Star Scientific’s plane as a candidate and as governor.
His spokesman said Cuccinelli had no role in assigning staff attorneys to the case and wasn’t even aware of the lawsuit before seeing recent media reports about it. But, in the wake of those reports, the office is reviewing its handling of the case.
The spokesman characterized the Star Scientific lawsuit as “a small, but very typical, tax dispute.” Cuccinelli’s financial interests and political ambitions make the case neither small nor typical. He should step away immediately.
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