The Alaska political corruption investigation

Posted by David Hulen and Rich Mauer

Posted: May 8, 2008 - 1:12 pm

Overview of the key figures

A broad federal investigation of public corruption has been under way in Alaska for more than three years, although it didn’t become widely known until Aug. 31, 2006. That’s when teams of federal agents executed search warrants at the offices of six state legislators and elsewhere around the state. The government has since brought indictments and won three guilty verdicts from juries and several guilty pleas.

The investigation continues, with grand juries hearing secret testimony in Anchorage and Washington, D.C.

In July, federal agents searched the Girdwood home of U.S. Sen. Ted Stevens, drawing national attention.

Authorities have said very little about the overall shape of the inquiry, where it’s headed or what’s being investigated. Here’s some of what’s known:

Also see: Ongoing coverage of investigations, indictments, trials and convictions.

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Who is conducting the investigation?

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

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Tried and convicted

- 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 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 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. Prosecutors played nearly five dozen secretly made recordings 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.

- Former 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. He 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.

- Former Anchorage state Rep. Tom Anderson. 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 also a paid consultant for Veco, the oil field services and engineering company at the center of the broader investigation, although none of the charges against him concerned Veco. It was revealed during his trial that federal agents were investigating corruption in the Alaska Legislature as far back as early 2004.

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Pleaded guilty

- Longtime Veco CEO Bill Allen. 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. For more than two decades, Allen was a major political fundraiser for Alaska politicians and a strong presence in Juneau. He resigned from Veco after his guilty plea and awaits sentencing. 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.

- 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. Read or download Smith's plea agreement here, and details of what he pleaded to here.

- 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’s scheduled to be released from federal custody June 8.

- Lawyer and lobbyist Jim Clark. As former 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 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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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. 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.

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Others connected with the investigations

- U.S. Sen. Ted Stevens. He has represented Alaska since 1968 and is the most senior Senate Republican in history. As chairman of the Appropriations Committee, he was among the Senate's most powerful members, and steered at least hundreds of millions of dollars in federal money to Alaska programs. He is the ranking Republican on Commerce Committee and on the Defense Appropriations Subcommittee. The Daily News reported last June that a federal grand jury in Washington, D.C., was examining the 2000 remodel of Stevens’ Girdwood home and his relationship with the oilfield services and construction company Veco. In July, agents from the FBI and IRS searched the house. Veco’s Allen oversaw a construction project in 2000 that doubled the size of Stevens’ Girdwood home, and investigators have been trying to learn if at least some of that work was an improper gift. Allen testified in Kott's and Kohring's corruption trial that Veco employees worked on the remodeling. Stevens has come under political attack from fiscal conservatives and others for his use of earmarks to direct programs and money to Alaska. Some of the earmarks benefited his son Ben and a former aide, Trevor McCabe, and their clients. In 2003, the Los Angeles Times cataloged actions by Ted Stevens that benefited companies that paid Ben. The Associated Press, citing anonymous sources, reported in late October 2007 that federal investigators are looking at whether fisheries legislation pushed by Stevens benefited his son.

- 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 Ben 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 fishery 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.

- 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 1989, he received more than $212,000 in campaign donations from Allen, Smith and other Veco executives, making the company by far his top contributor. The Wall Street Journal, citing anonymous sources, reported in July that federal investigators are examining Young's relationship with Veco. McClatchy Newspapers, citing an anonymous source, said 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. One of Young’s aides has pleaded guilty in the Jack Abramoff lobbying scandal, and Young himself has ties to the lobbyist, as has his key staff. Young reported in January 2008 that he has spent more than $854,000 in campaign funds on unspecified legal fees during 2007; neither he nor his campaign would describe the nature of the legal work. 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 also produced all the documents they asked for, he said. "Cooperating and providing records and materials is very expensive," said the lawyer, John Dowd.

- Frank Prewitt. Former state corrections commissioner who became a consultant to Cornell Cos., a private prison company that wanted to build a large prison in Alaska (at one time teaming with Veco). Prewitt was being investigated by the FBI in 2004 when he agreed to work for the government to root out corrupt legislators and lobbyists. He passed out money and recorded conversations, providing the foundation for the Anderson case. He also recorded secret video of a conversation with Kohring, and testified at his trial for the government.

- Sens. John Cowdery, R-Anchorage, and Donald Olson, D-Nome, also had their offices searched in August 2006, but have not been charged. Ex-Veco Vice President Rick Smith testified in Kott's trial that Cowdery, who was chairman of the Rules Committee while Ben Stevens was Senate president, was among the lawmakers that he bribed for help in passing the oil profits tax that was favored by the company and the oil industry.

- Trevor McCabe. Seward native and former legislative director to Ted Stevens, he became partner in a consulting business with Ben Stevens, and lobbied Congress on behalf of a Southeast salmon group that obtained federal funds from Ted Stevens. An attorney and lobbyist, McCabe has represented other seafood interests as well. With two partners, McCabe sold property to the Alaska SeaLife Center in Seward at a price substantially above its appraisal after Ted Stevens provided the money in an earmark.

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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.

- Alaska SeaLife Center. The Seward research center and visitor attraction was built, in part, with settlement money from the Exxon Valdez oil spill, and run with heavy federal financial support engineered by Ted Stevens. Investigators are examining a deal in which the SeaLife Center bought property from former Ted Stevens aide Trevor McCabe and partners at a price substantially above its appraisal after Stevens provided the money in an earmark.

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Other coverage

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

>"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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