The Alaska political corruption investigation

An overview of the key figures, events and players

A broad federal investigation of public corruption has been under way in Alaska since at least 2004, although it didn’t become widely known until Aug. 31, 2006. That’s when teams of federal agents executed search warrants at more than 20 locations around the state, including the offices of six state legislators.

In all, twelve people have been convicted, pleaded guilty or charged and awaiting trial or sentencing.

On April 7, 2009, the conviction was dropped in the highest profile case -- that of former U.S. Sen. Ted Stevens -- after the Justice Department admitted serious misconduct by prosecutors. It's unclear to what extent the decision to drop the Stevens case will have on the ongoing investigation. In the aftermath of the Stevens dismissal, government officials would only say that the overall inquiry remains active, but have provided no details.

On June 4, 2009, the Justice Department delivered a bombshell: It asked a federal appeals court to release two former state lawmakers convicted in 2007 -- Pete Kott and Vic Kohring -- saying their trials were tainted by the failure of prosecutors to adequately disclose favorable information.

Authorities have repeatedly declined to discuss the overall shape of the inquiry, where it’s headed or what’s being investigated. In 2008, they disclosed the government's name for it: "Operation Polar Pen," which stems from the investigation of efforts to build a private prison in Alaska by a private joint venture that includes the oil services and construction company Veco.


WHO IS CONDUCTING THE INVESTIGATION?

It’s being run by the FBI and the IRS and prosecuted by the U.S. Justice Department’s Public Integrity Section, which focuses on government corruption cases. Two prosecutors from the Alaska U.S. Attorney’s Office have been assigned to the effort.


TRIED, CONVICTED, CHARGES DISMISSED

- U.S. Sen. Ted Stevens. He represented Alaska in the Senate for 40 years and was the most senior Senate Republican in history. As chairman of the Appropriations Committee, he was among the Senate's most powerful members, and steered hundreds of millions of dollars in federal money to Alaska programs. On Oct. 27, 2008, a jury in Washington, D.C. convicted him of all seven counts of lying on his financial disclosures. Two weeks later, he lost his bid for re-election. Stevens was indicted on July 29, 2008 - a year after federal agents raided and searched his Girdwood home. He was granted the speedy trial his lawyers pushed for, but lost his bid to have the trial moved to Alaska.

On April 1, 2009, the U.S. Justice Department moved to drop the case against him in light of new information that prosecutors withheld key information from Stevens and his lawyers during the trial, and on April 7, the judge agreed. "In nearly 25 years on the bench, I've never seen anything approaching the mishandling and misconduct that I've seen in this case," U.S. District Judge Emmet Sullivan said.

The case focused on the the renovation of of Stevens' Girdwood home begun in 2000 and his relationship with the Allen. The indictment charges Stevens with making false statements by failing to disclose "things of value" he received from Veco Corp., the now-defunct Alaska-based oil services and construction company, and from its chairman, Bill Allen, in a scheme that stretched over seven years. At the same time, according to the indictment, Allen and other Veco employees asked Stevens to intervene on their behalf with the government, and Stevens sometimes obliged.


TRIED, CONVICTED, CASES NOW UNDER REVIEW

- Former Alaska House Speaker Pete Kott of Eagle River. Indicted May 3, 2007, and convicted on Sept. 25 of bribery, extortion and conspiracy for selling influence to executives of the oil services and construction firm Veco Corp. to do their bidding during debate on oil taxes during 2006. Jurors acquitted him of a fourth felony, wire fraud. On Dec. 7, 2007, he was sentenced to six years in prison with an additional three years probation and fined $10,000. Jurors found Kott took payoffs and was promised a job from Veco to help push an oil-production tax favored by the industry through the Legislature in 2006. On June 4, 2009, the Justice Department asked that he be released, along with former Rep. Vic Kohring, while their cases are sent back to U.S. District Court in Alaska to review new information that prosecutors failed to adquately disclose information.

During his trial, prosecutors played nearly five dozen secretly made audio and video and also relied on the testimony of two former Veco executives. The evidence showed Kott received $1,000 cash, a $7,993 check, a political poll for his campaign, and the promise of a job, perhaps as a Veco lobbyist. Kott's defense tried to portray him as a hard worker, both as a legislator and in his flooring business, who never asked for anything from Veco. They just had the common goal of working for a natural gas pipeline, his lawyer argued. Download the charges against Kott here. He's serving his sentence at the federal prison at Sheridon, Ore.

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- Former state Rep. Vic Kohring of Wasilla. The former chairman of the Special Committee on Oil and Gas was indicted May 1, 2007, and convicted on Nov. 1 of bribery, conspiracy and attempted extortion. He was sentenced to 42 months in federal prison May 8. On June 4, 2009, the Justice Department asked that he be released, along with former House Speaker Pete Kott, while their cases are sent back to U.S. District Court in Alaska to review new information that prosecutors failed to adquately disclose information.

Kohring was accused of accepting $2,100 to $2,600 in cash from Veco boss Bill Allen during the 2006 legislative session, arranging a $3,000 summer job for Kohring's nephew with the company, and attempting to get another $17,000 from the Veco executives to pay off a credit card bill - all in exchange for supporting the company's position on the oil tax. A member of the Legislature when indicted, he later resigned under pressure from constituents and Republican House leaders. Find coverage here. Find all the audio and video exhibits, plus testimony here. After spending the morning waving to voters on the Glenn Highway on June 30, he began serving his sentence. He's serving his sentence at a prison in Taft, Calif.


TRIED AND CONVICTED

- Former state Rep. Tom Anderson of Anchorage. He was sentenced to five years in prison on Oct. 15 - and is the first person to the go jail in the corruption investigation. On July 9, a federal jury convicted him on seven felony charges including bribery, conspiracy and money laundering connected with taking payoffs from a consultant for a private prison company who was working undercover for the FBI. Cornell Cos. didn't know about the scheme. Anderson was a paid consultant for Veco, the oil field services and construction company at the center of the broader investigation, although none of the charges against him concerned Veco. (More on Anderson's consulting contracts here). It was revealed during his trial that federal agents were investigating corruption in the Alaska Legislature as far back as early 2004. Anderson, who is married to Anchorage state Sen. Lesil McGuire, is serving his sentence at the federal prison in Sheridan, Ore.


PLEADED GUILTY, AWAITING SENTENCING

- Longtime Veco CEO Bill Allen. A longtime power broker in Alaska politics, he is a central figure in most of the corruption cases brought so far. He pleaded guilty May 7, 2007, to charges of bribery and conspiracy for his dealings with four legislators: former Reps. Pete Kott, Bruce Weyhrauch and Vic Kohring, and former Sen. Ben Stevens (described in the plea as “State Senator B”). The first three were charged; Stevens has not been. Allen also admitted paying a “bonus” in company funds to executives for illegal campaign contributions in 2005 and 2006.

In July, federal Judge John Sedwick said he was tired to repeated delays in sentencing and scheduled Allen to be sentenced on Oct. 28.

For more than two decades, Allen was a major political fundraiser for Alaska politicians, both state and federal, and a strong presence in Juneau. Long a presense in the North Slope oil fields, his company was the prime contractor in the cleanup of the Exxon Valdez oil spill, and Veco published the Anchorage Times newspaper. In 2000, he chaired George W. Bush's Alaska presidential campaign. He resigned from Veco after his guilty plea and awaits sentencing, and sold his interest in the company. Read or download Allen's plea agreement here. Read or download details of what he pleaded to here. Listen to portions of his testimony in Kott's bribery trial here. Secretly recorded video presented by prosecutors in the trial for former state Rep. Vic Kohring show Allen passing several hundred dollars in cash to the lawmaker in Veco's hotel suite.

Allen pushed legislation that would benefit the oil industry in Alaska, and the charges largely involve his actions regarding a controversial oil industry tax being debated in 2006. In a telephone call secretly recorded by the FBI in 2006, Allen tells Conoco Phillips Alaska chief Jim Bowles how he had then Rep. Pete Kott and then Senate President Ben Stevens - to whom who he later admitted paying bribes - working to stop a version of the tax that the industry didn't like. Conoco Phillips and the other oil producers have said they had no knowledge of any illegal acts by Veco.

After months of surveillance, including recorded phone calls and video from Veco's Juneau hotel suite, Allen was taken into custody and questioned extensively by the FBI the day before the August 2006 raids of legislative offices, and he agreed to cooperate with the authorities. He testified in the trials of Kott and Kohring that he bribed multiple lawmakers, and that Veco employees had done extensive remodeling work on the Girdwood home of U.S. Sen. Ted Stevens.

In February 2008, the ADN reported that the Anchorage Police Department had reopened a criminal investigation into whether Allen had sex with an underage girl in the 1990s. In June, police reported they had suspended the investigation because they had trouble locating witnesses.

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- Veco vice president Rick Smith, who ran the company’s government affairs operations. He worked part of the year out of Suite 604 in Juneau’s Baranof Hotel, which was being secretly monitored by the FBI in 2006. On May 7, 2007, he pleaded guilty to the same charges as Allen. He admitted, with Allen, to making more than $400,000 in payoffs to elected officials, including an illegal campaign-contribution scheme involving Veco. Read or download Smith's plea agreement here, and details of what he pleaded to here.

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- Lawyer and lobbyist Jim Clark. As Gov. Frank Murkowski’s chief of staff, he was once the most powerful unelected official in Juneau. But on March 4, he pleaded guilty to a single conspiracy count, admitting to working with Veco officials, while he was Murkowski's chief of staff, to secretly channel $68,550 of Veco’s money in a failed effort to re-elect his boss in 2006. Acknowledging he had “a lot of atonement to do,” Clark agreed to cooperate with the government in its ongoing investigation. His sentencing was delayed till at least September. Clark told reporters Murkowski was unaware of his illegal activities.

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PLEADED GUILTY AND SENTENCED

- Former state Rep. Beverly Masek. On March 11, 2009, prosecutors charged Masek with one count of bribery for accepting money from Bill Allen to kill an oil tax bill he didn't like during the 2003 legislative session. She pleaded guilty and on Sept. 24 was sentenced to six months in prison and three years probation. She was also ordered into residential treatment for alcohol abuse.

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- Private prison advocate Bill Weimar. In November 2008, he was sentenced to six months in prison plus six months in home detention and a $75,000 fine for making illegal payments to an unnamed candidate for the Legislature, and a consultant, in return for candidate's support for private prison. He was charged on two felonies and pleaded guilty in August. In November, he was sentenced to six months in prison followed by six months of home confinement, and fined $75.000.

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- Lobbyist Bill Bobrick. A longtime lobbyist at the city level and one-time executive director of the Alaska Democratic Party, he pleaded guilty May 16, 2007, to conspiracy for bribing Anderson while working for a private prison company, Cornell Cos. He testified against Anderson. On Nov. 27, he was sentenced to five months in jail, five months under house arrest, two years probation and 800 hours of community service. He completed his sentence in June 2008.

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- Former state Sen. John Cowdery. He was indicted on July 10, 2008, on conspiracy and bribery charges. On March 10, 2009, he was sentenced to six months home confinement, three years probation and a $25,000 fine. The Anchorage Republican was accused of scheming with Veco Corp. executives to buy the vote of another senator in the battle for an oil tax favored by North Slope oil producers. According to the 16-page indictment, Cowdery and others conspired in 2006 to give another senator - Sen. Donny Olsen, D-Nome - $25,000, characterized as campaign contributions.

 


CHARGED AND AWAITING TRIAL

- Former state Rep. Bruce Weyhrauch of Juneau. Charged with bribery, attempted extortion, conspiracy and mail fraud, Weyhrauch is accused of switching his vote on the oil tax after receiving instructions from Kott and Bill Allen. He’s also accused of soliciting work for his legal practice from Veco in exchange for his vote. He pleaded not guilty and was originally scheduled to stand trial with Kott in September 2007. The case was split when the government decided to appeal a judge’s decision about what evidence can be considered in the case. No trial date is scheduled.


Others connected with the investigations

- U.S. Rep. Don Young. Alaska’s sole U.S. representative since 1973, Young has been widely reported to be under investigation over his own ties to Veco and use of earmarks, although details of what is being examined are unclear. Since early 2007, he has reported spending more than $1.2 million in legal fees but has refused to say what the legal work was. In February 2008 Young grew testy when pressed about the legal fees at an Anchorage press conference. The next day, one of Young's attorneys disclosed that Young has met with Department of Justice investigators and answered their questions. Young produced all the documents they asked for, he said. "Cooperating and providing records and materials is very expensive," said the lawyer, John Dowd.

Young was long closely associated with Veco, and starting in 1989, received more than $212,000 in campaign donations from Allen, Smith and other Veco executives, making the company by far his top contributor.

Young faces scrutiny on multiple fronts. The Wall Street Journal, citing anonymous sources, reported in July 2007 that federal investigators were examining Young's relationship with Veco. One of Young’s aides has pleaded guilty in the Jack Abramoff lobbying scandal, and another was indicted in March 2009. McClatchy Newspapers reported the Justice Department was investigating whether Young took campaign cash in return for securing $10 million for construction of a proposed Florida highway ramp that would give a windfall to a local real estate developer. McClatchy produced a package of stories, describing how, when he was chairman of the House Transportation committee, Young collected hundreds of thousands of dollars in campaign contributions from people and business interests around the country who benefited from highway projects he funded.

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- Former state Sen. Ben Stevens. He has been charged with no crimes. But in his plea agreement, Veco's Bill Allen admitted making improper payments of $243,250 to “State Senator B” — a clear reference to Stevens, an Anchorage Republican the former state Senate president. Ben Stevens’ office was searched in the August 2006 raids and was later visited again by FBI agents seeking information about his fisheries interests and benefits he may have received from legislation written by his father. He was paid hundreds of thousands of dollars as a consultant for various commercial fishing companies and groups, and chaired a federally funded panel created in an earmark by his father (see below), that awarded grants to some of those entities. In 2005, the Daily News reported that Ben Stevens held a secret option to buy into a seafood company on Adak Island at the same time his father was creating a special Aleutian Islands fishery that would supply the company with pollock worth millions of dollars a year. He was silent about the investigation until September of 2007 when he called in to a talk show on an Anchorage radio station and talked at length about the investigation and insisting he did nothing illegal.


Entities connected with the investigations

- Veco Corp. An oil field services and engineering company that has operated extensively in Alaska and elsewhere, Veco has been among the most politically active companies in the state for many years. It lobbied in Juneau for legislation beneficial to the oil industry and aggressively supported pro-development candidates in Alaska and Outside. Allen and Smith are the only two Veco executives charged. The company received more than $170 million in federal contracts for logistic support of National Science Foundation while Ted Stevens was Appropriations Committee chairman, and later, when he chaired the Commerce Committee, which has oversight over the foundation. Bill Allen stepped down earlier this year as company chief, but his family kept control of a majority of the company. It was sold in September to Denver-based CH2M Hill.

- Alaska Fisheries Marketing Board. Created by Sen. Ted Stevens in 2003 to boost the North Pacific fishing industry, the nonprofit board has distributed some $30 million in federal money to seafood companies and other entities to promote their products. Ben Stevens served as chairman of the board until last year, and while he was in that role the board awarded millions in grants to groups that paid him consulting fees. Last November, a grand jury in Anchorage issued subpoenas to several North Pacific seafood companies and groups demanding records on their dealings with the marketing board, Ben Stevens, McCabe (who also sat on the board) and others.


What's the"Corrupt Bastards Club?"

In March 2006, an opinion column appeared in several Alaska newspapers from the director of a Fairbanks-based group promoting an all-Alaska natural gas pipeline. The column, critical of then-Gov. Frank Murkowski's plan for building a pipeline, pointed out that Veco and its executives were the biggest source of oil industry campaign money, and listed lawmakers who received the most Veco money. That led some lawmakers to joke about being members of the "Corrupt Bastards Club." When federal agents served search warrants on legislative offices in August 2006, among the the items agents were looking for: "Any physical garments (including hats) bearing any of the following logos or phrases: 'CBC,' 'Corrupt Bastards Club,' 'Corrupt Bastards Caucus...'" During his corruption trial, the girlfriend of former House Speaker Pete Kott testified she embroided 100 hats with the initials "CBC." The term is now commonly used as a shorthand reference to the entire corruption investigation and those implicated, although it hasn't officially been used as such by the FBI or Justice Department.


Other coverage

> Did oil producers know about Veco illegal acts? (ADN, 10/2/07)

> CIRI suit: Fishing lodge, free rides and shredded papers figure in the accusations (ADN, 12/31/06)

>"I'll Sell My Soul to the Devil" - Corruption Scandals Involve Alaska's Biggest Political Names (Washington Post, 11/12/07)

> Stevens and Alaska: A Longtime Partnership (New York Times, 8/17/07)

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