MO’ PROBLEMS

04.02.13

Virginia Republicans’ One-Two Punch of Financial Scandals

Coming up on a pivotal governor’s election, two of the state party’s leading figures are fending off questions about their ties to a corporation under fire.

Just as Virginia Republicans gear up for November’s gubernatorial election—their first real opportunity to make up ground in the state after a brutal presidential year—the party has been hit with a one-two punch of potential scandals.

Over the weekend, The Washington Post published a pair of stories revealing questionable relationships between Star Scientific, a dietary and tobacco supplement company, and both outgoing Gov. Bob McDonnell and the presumed Republican nominee to succeed him, Virginia Attorney General Ken Cuccinelli.

Cuccinelli, the Post reported, did not disclose for nearly a year that he held over $10,000 of stock holdings in Star Scientific. This revelation is significant for two reasons. First, elected officials are required by law to disclose financial interests worth more than $10,000. According to Cuccinelli’s representatives, the omission was an oversight due to the fact that the value of the shares had dipped below the $10,000 threshold at the time 2010 disclosures were due. The attorney general’s filings were amended to reflect his interest in the company once he realized his holdings had grown to be worth much more.

The second reason is more of a headache for the candidate. Cuccinelli made one of his purchases of the company’s stock, worth about $10,000, two months after the company sued the state over a tax bill—a case in which Cuccinelli’s office is serving as the defense. 

Cuccinelli has been called on to recuse himself and his office from the case. “I think it’s important for attorneys, whether they are in private practice or the attorney general of Virginia, to avoid even the appearance of impropriety,” said Virginia’s House Minority Leader, David Toscano, a lawyer (and Democrat) from Charlottesville. An official at Cuccinelli’s office told The Daily Beast: “While this case has been handled like every other in the attorney general’s office, we are reviewing the handling of this case going forward, and there will be an announcement about the issue in the coming days.” 

But Cuccinelli’s connection to Star Scientific doesn’t end there. The company’s CEO, Jonnie Williams, is a friend of the attorney general’s, and a very generous friend at that, having provided Cuccinelli with lodging at his Richmond, Virginia, home; use of his lake house and boat; transportation to Kentucky; and thousands of dollars’ worth of his company’s dietary supplement Anatabloc.

Cuccinelli isn’t Williams’s only friend in high places. The Virginia businessman has developed relationships with several members of the upper echelon of the state’s Republican party, offering many politicians the use of his private jet. One of those friends is current Governor Bob McDonnell. Which brings us to our next scandal.

McDonnell’s relationship with Williams also has many layers. Between 2009 and 2012, Star Scientific and Williams himself contributed a combined $130,000 to Virginia officials, including McDonnell and Cuccinelli as well as a PAC that supports McDonnell. But Williams is more than just a donor. In 2011, the Post reports, Williams took care of the $15,000 catering bill for McDonnell’s daughter’s wedding at the governor’s mansion. The extravagant expense—and the fact that it was not disclosed by McDonnell as a gift—has raised eyebrows. Gifts to elected officials are permitted in Virginia, as long as those worth over $50 are disclosed, but gifts from relatives or “personal friends” need not be reported. Williams may be a friend of the governor’s, but he’s also a donor.

McDonnell’s spokesman told The Washington Post that paying for the party food was a wedding gift to McDonnell’s daughter and her husband—not to the governor—and therefore need not be disclosed. But the boundaries of the two men’s relationship are murky. On top of the tens of thousands of dollars’ worth of air travel Star Scientific donated during McDonnell’s 2009 gubernatorial campaign, Williams also had Virginia’s first family practically promoting his business. Prior to their daughter’s wedding, McDonnell’s wife, Maureen, spoke at a Florida seminar on behalf of anatabine, the key ingredient in Anatabloc, a new dietary supplement Star Scientific had just introduced, touting it as a way to lower Virginians’ health-care costs.

The company is currently being sued for allegedly misleading investors about Anatabloc’s efficacy, a charge the company refutes.

Months after their daughter’s wedding, the McDonnells hosted the Anatabloc launch party at the governor’s mansion. Anatabloc has even proudly posted a photo of the governor holding a packet of the supplement on its Facebook page. McDonnell’s spokesman told the Post that he did not authorize use of that photo. Still, he insisted, the McDonnell family’s effort to promote the product is simply what any governor would do to help his state’s businesses thrive. To drive home this point, McDonnell’s PAC, Opportunity Virginia, paid for the Anatabloc launch party. It was “one of numerous events hosted at the mansion in support of Virginia businesses and universities,” the governor’s spokesman said, insisting that the event was allowed “based solely on the benefit to the Commonwealth.” 

Both McDonnell’s and Cuccinelli’s camps have explanations for their connections to the controversial company. Yet even the swirl of questions and the air of scandal suggests bad news for the Virginia GOP’s big gubernatorial plans.