04.28.11

Bachmann and Pawlenty's Ponzi Pal

Tim Pawlenty and Michele Bachmann sought pardons for a major campaign donor now accused of fleecing faith-based charities in a Ponzi scheme. The 2012 presidential hopefuls should answer for helping make Frank Vennes Jr. respectable, writes Michelle Goldberg.

Last week, Frank Vennes Jr., one of the more bizarre characters in the history of recent financial scandal, was indicted on fraud and money-laundering charges in a U.S. District Court in Minnesota. A former North Dakota pawnshop owner who ostensibly found Jesus while serving a prison sentence in the 1980s, Vennes emerged as a pillar of Minnesota’s conservative Christian community. Then, according to the indictment, he channeled millions into a Ponzi scheme run by the businessman Thomas J. Petters, who is now serving 50 years in federal prison. Much of the money Vennes raised seems to have come from faith-based charities, pastors, and ministers, some of who have lost their life savings.

On its own, Vennes’s story would be a strange tale about audacious cynicism and religious gullibility. But Vennes’s entanglement with two likely presidential candidates, Minnesota Congresswoman Michele Bachmann and former Minnesota Governor Tim Pawlenty, gives it added weight. Vennes was a major donor to both politicians, and both politicians sought pardons for him in order to wipe away the taint of the crimes that first landed him in prison. Vennes’s respectability in conservative Minnesota circles seems to have enabled his crimes. Both Bachmann and Pawlenty should have to answer for bolstering that respectability.

The Vennes saga, which has been diligently chronicled by Minnesota writer and blogger Karl Bremer, began in 1987. Arrested after an undercover investigation, Vennes pleaded guilty to one count of money laundering and no contest to charges of illegally selling a gun and facilitating the distribution of cocaine, and was sentenced to five years in federal prison. While there, he claimed to experience a religious conversion, and when he was released, he built a career as a successful businessman and became a well-known evangelical philanthropist.

The two identities were very much intertwined. Religious groups trusted him with their money because of his faith. According to the indictment against him, from 1995 until 2008, he raised money from investors for Petters’ company, PCI. A class-action lawsuit against Petters claims that Petters and his companies “used Vennes to access Plaintiffs because of Vennes’s connections and stature in the Twin Cities Christian community.” Through Vennes, religious investors poured money into what turned out to be a multibillion-dollar Ponzi scheme. Petters claimed to be buying large lots of consumer merchandise and then reselling them to big-box stores like Sam’s Club and Costco. In reality, according to the Vennes indictment, “the transactions underlying virtually all PCI Notes were fictitious. Documents evidencing the purported transactions were fabricated by Petters’ criminal associates, and the purported suppliers of the electronic goods were shell companies acting in concert with Petters.”

Vennes’s respectability in conservative Minnesota circles seems to have enabled his crimes.

While it lasted, this fraud made Vennes very rich. “Investors, including faith-based organizations, put billions of dollars into Petters's company on Vennes' advice,” the Star Tribune reported last week. “For his work, the government says he collected more than $105 million in commissions from investment funds.” Such wealth, in turn, increased Vennes’s influence in Minnesota’s conservative Christian circles. He donated several thousand dollars to Tim Pawlenty’s 2002 gubernatorial campaign, and sat on the board of Teen Challenge, a faith-based drug rehab program, with Pawlenty’s wife, Mary. In 2006, according to the Star Tribune, he was the top donor to Michele Bachmann’s congressional campaign.

Vennes never showed much repentance for his earlier crimes. When he was released from prison, he filed a strange lawsuit claiming that the undercover agent who busted him had posed as a Chicago mobster and threatened to kill him and his family if he didn’t recoup $100,000 that was lost during one of his money-laundering transactions. “Prompted by these threats, Vennes agreed to sell firearms illegally to undercover agents of the Bureau of Alcohol, Tobacco and Firearms, and to sell cocaine to undercover agents of the Drug Enforcement Administration,” said a court’s summary of his argument. The case was thrown out. Vennes appealed and lost. “The record reveals that at one point, Vennes purchased cocaine from his own source in Florida after haggling with an undercover agent supplier about price and speed of delivery,” noted the ruling. “This is not the conduct of one coerced or entrapped into crime.”

Despite Vennes’s absence of remorse, a number of Republicans tried to help him get pardoned. In 2002, Senator-elect Norm Coleman, another recipient of Vennes campaign cash, wrote a letter to Karl Rove saying he was joining Texas attorney Jack Ladd, Minnesota GOP Chairman Ron Eibensteiner “and Governor-elect Tim Pawlenty in urging President Bush to grant Frank Vennes a Presidential Pardon.” In 2007, Michele Bachmann wrote her own letter in support of a Vennes pardon. “Mr. Vennes is truly a unique man in that he is not asking for a pardon that he may achieve personal success,” she wrote. “By the grace of God, this has been done. Mr. Vennes is seeking a pardon so that he may be further used to help others.” She specifically pointed out that the stain of his earlier conviction hindered his work in finance, lamenting, “Despite his success, Mr. Vennes still encounters the barriers of his past and especially in the area of finance loan documents.”

The next year, the extent of Petters’s fraud was revealed, and the investigation into Vennes’s role began. Bachmann quickly wrote a letter withdrawing her request. Pawlenty, though, still hasn’t distanced himself from Coleman’s letter. Recently, when Pawlenty was speaking in Chicago, James Merriner, an investigative journalist and author of a forthcoming book about Petters’s Ponzi scheme, asked him about Vennes. “He hemmed and hawed and said he didn’t remember,” Merriner told The Daily Beast. “The Pawlenty-Vennes relationship is murky.” Neither Bachmann nor Pawlenty responded to requests for comment. But if they are serious about running for president, eventually they’ll have to answer some questions.

Michelle Goldberg is a journalist based in New York. She is the author of The New York Times bestseller Kingdom Coming: The Rise of Christian Nationalism and The Means of Reproduction: Sex, Power and the Future of the World, winner of the 2008 J. Anthony Lukas Work-in-Progress Award and the Ernesta Drinker Ballard Book Prize. Goldberg's work has appeared in Glamour, Rolling Stone, The Nation, New York magazine, The Guardian and The New Republic. Her third book, about the world-traveling adventuress, actress and yoga evangelist Indra Devi, will be published by Knopf in 2012.