Attorney: First Lady Bought Star Scientific Stock

Friday, Aug 16, 2013  |  Updated 10:15 PM EDT
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Attorney: First Lady Bought Star Scientific Stock

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SPRINGFIELD, VA - AUGUST 21: Virginia first lady Maureen McDonnell speaks during a "What to Expect" baby shower August 21, 2012 in Springfield, Virginia. The DC Metro Chapter of Operation Homefront held the event, with parenting and pregnancy workshops, to celebrate with 100 new and expecting military mothers representing each branch of service from DC, Maryland and Northern Virginia. (Photo by Alex Wong/Getty Images)

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First lady Maureen McDonnell purchased stock in troubled nutritional supplements maker Star Scientific twice in the past three years without the governor's knowledge, according to an attorney representing her in an ongoing federal investigation into ties between Virginia's first family and the company and its chief executive.

Bill Burck, a Washington lawyer representing Maureen McDonnell in the criminal investigation, said late Friday that Maureen McDonnell bought 6,000 shares worth about $30,000 in the summer of 2011 for herself and her children. She then sold it in December 2011 at a substantial loss, $15,000, the attorney said.

Then, in January of 2012, the first lady bought back the shares.

The current disposition of the shares since they were transferred is not known.

The governor's family accepted more than $145,000 in business and personal loans and gifts from Star Scientific and CEO Jonnie R. Williams Sr. since he donated more than $100,000 to McDonnell's gubernatorial campaign and political action committee in 2009. The FBI and state investigators are trying to determine whether the authority of the governor's office was illegally used to benefit the company.

McDonnell announced last month that he and his family had repaid a $70,000 business loan that Williams made to a real estate business owned by the governor and his sister, and a $50,000 personal loan that Williams made to Maureen McDonnell. The governor also announced that gifts Williams gave to the first family, including a $6,500 Rolex watch inscribed to ``the 71st Governor of Virginia'' and checks of $10,000 and $15,000 to two of the family's daughters before their weddings, had been returned.

A separate written statement issued Friday evening by Rich Galen, a spokesman for the private legal team representing the governor in the investigations, stressed that McDonnell was never aware of the purchases his wife had made and that none of the transactions violated Virginia's personal finance disclosure laws.

Officeholders such as McDonnell are required by law to fill out annual statements of economic interests, including whether the elected official or a member of his immediate family owns stock valued in excess of $10,000 in one business.

In the January 2012 filing, which covers the year 2011, they checked the ``no' box to that question.

In June of 2011, Maureen McDonnell touted the benefits of the company's anti-inflammatory supplement Anatabloc to a gathering of doctors and investors in Florida. Then, in August 2011, the governor and first lady were hosts for a luncheon at Virginia's Executive Mansion to mark the launch of the supplement.

A state-funded review of the case last month by Democratic former Attorney General Anthony Troy found no evidence that the company or Williams ever realized any benefit from state government as a result of Williams' generosity toward the McDonnells. The review also disclosed that top Star Scientific officials had lobbied senior McDonnell administration members to include Anatabloc in the health benefits packages of state employees, but the request was denied.

McDonnell and his wife have retained separate counsel in the investigation, Burck said. He works independently of the governor's private team of lawyers headed by former U.S. Attorney John Brownlee.
 

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