McDonnell Trial: Former Virginia Governor Says CEO's Loans Were Not Inappropriate

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    NEWSLETTERS

    In Richmond, former Governor Bob McDonell took the stand for a third day in a row speaking more in depth about the loans and gifts he received from wealthy businessman Jonnie Williams. (Published Friday, Aug 22, 2014)

    Former Virginia Gov. Bob McDonnell testified Friday about nearly every interaction he had with wealthy businessman Jonnie Williams, saying he didn't find it inappropriate to accept two loans from him totaling $70,000 because Williams didn't ask him for anything significant in return.

    "All he'd asked me for was to call his father for his 80th birthday, which I did," McDonnell testified.

    The McDonnells are on trial in federal court, accused of accepting more than $177,000 in gifts, loans and trips from Williams, the former CEO of Star Scientific Inc., in exchange for promoting his company's dietary supplements.

    When asked whether, in his heart and mind, he is innocent of the charges, the former governor -- once regarded as a possible candidate for vice president -- responded emphatically.

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    "Absolutely, I know that in my heart," McDonnell said. "I spent 38 years in service and I wouldn't give that up for a round of golf."

    His attorney asked him if he had ever committed any crime while governor of Virginia.

    "No, I did not," McDonnell said.

    Earlier in the trial, prosecutors spent three weeks painstakingly laying out their case, alleging that when Williams lavished the McDonnells with gifts and loans, his company got a boost from the governor's influence.

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    But the jurors heard a much different interpretation on Friday from the former governor, who maintains he didn't do anything official for Williams. Over and over again, McDonnell testified that he didn't consider the gifts or loans he knew came from Williams to be inappropriate.

    McDonnell said he personally negotiated two of the three loans from the businessman: a $50,000 loan in March 2012 and a $20,000 loan in May of that year. Both checks came out of Williams' Starwood Trust account and were written to MoBo Realty, a small real estate company the governor operated with his sister.

    The company was facing an operating loss. McDonnell testified they decided to turn to personal loans rather than bank loans to deal with it.

    McDonnell's lawyer asked, "Did you feel it was inappropriate to take a loan from Mr. Williams for MoBo?"

    McDonnell replied simply: "No."

    Prosecutors allege that McDonnell tried to hide the loans, never disclosing them on the Statement of Economic Interest form he must file each year.

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    McDonnell responded, "They were corporate liabilities. On the Statement of Economic Interest, I always understood it to be personal liabilities."

    The open question: whether the jury believes McDonnell's explanation.

    Political analyst Robert Holsworth said of the jurors, "Do they think this is a reasonable way of operating your finances or do they think Bob McDonnell was trying to find some way to utilize Jonnie Williams to make up for poor financial decisions he and his sister made?"

    The former governor also had an explanation for an event that looked very incriminating in the prosecution's case.

    The very night he drove Williams' Ferrari back from vacationing at Williams' lake home, McDonnell sent an email to his health secretary, asking that a top aide be at the mansion the next morning for a meeting with Williams and the first lady of Virginia on research of Anatabloc, a supplement made by Williams' company.

    But McDonnell testimony suggests it wasn't payback -- he said when he heard about the meeting that night, he wanted a health expert there to monitor it.

    "No one asked me to do this," McDonnell testified. "It was my decision."

    He also testified that he took the second loan from Williams because it was offered. McDonnell said Williams had told him that if he needed more money, he should just ask.

    McDonnell said he did so when he found out that two vacation rental homes he owned with his sister, through their company MoBo Realty, were still operating in the red.

    McDonnell said that he and his sister, Maureen C. McDonnell, decided to seek a $50,000 loan to cover the 2012 operating costs of their real estate company's Virginia Beach properties because they had put in their own money in 2011 and were concerned about the sister's credit report due to her husband's finances, the former governor testified.

    He said he had about $67,000 in cash and $200,000 in credit that could have covered the operating costs.

    McDonnell learned in late January 2012 that Williams was willing to loan the money and discussed with Williams in early February about what he thought would be a $50,000 cash loan.

    But then Williams began discussing a stock loan McDonnell could use as collateral for cash. McDonnell said he would have to confirm he would be able to do that.

    "All I wanted was operating cash; I wasn't interested in in the stock," McDonnell testified.

    Williams and McDonnell had a short meeting on Feb. 29, 2012 in the governor's conference room. After that, McDonnell said he was still waiting for confirmation that a margin loan would work, and he thought negotiations were still underway when Williams sent a $50,000 check to his sister Maureen March 6.

    In May 2012, in need of another $20,000 in operating cash, MoBo sought another loan from Williams because he had repeatedly made it clear that was possible, and McDonnell and his sister stuck to their decision that 2011 would be a loan year, the former governor testified.

    "Let me know if Va. Beach needs cash," read one April 2012 text from Williams.

    McDonnell testified he did not report the loan because it was corporate, not personal.

    "I did not think that a MoBo, LLC loan needed to be reported," he said.

    McDonnell did acknowledge that he should have disclosed golf outings with Williams.

    "Those probably should have been recorded," he admitted.

    But the former governor said that a $15,000 wedding gift was not included on his 2011 Statement of Economic Interest form because he believed it was intended for his daughter, not himself.

    "It was very clear to me that it was a wedding gift to Cailin," he said.

    McDonnell also had an explanation for the prosecution's evidence that showed he amended loan documents after first learning of the corruption investigation. He said the first couple had already decided to refinance, and that he noticed that the applications had errors.

    Then his wife was interviewed by state police -- an interview that McDonnell said the couple thought was related to the investigation of a chef stealing food from the mansion.

    Instead, it was about Jonnie Williams.

    “I was darn angry,” McDonnell said, believing state police misrepresented the interview.

    Two days later, McDonnell said, he completed the refinance application, filling in the blank information and adding more that he previously believed wasn’t necessary, including the retirement accounts, Star Scientific stock and Starwood Trust loans.

    “I didn’t personally think the Starwood loan needed to be included, but after what happened that week, I figured it was better to include anything related to Mr. Williams, just to be safe,” McDonnell testified.

    McDonnell first took the stand late Wednesday afternoon. On Thursday, the former governor dropped just the latest bombshell in the case when he revealed that he and his wife, Maureen, are living separately and that he has moved into the rectory of a Richmond church.

    McDonnell said he moved out of his home with Maureen the week before the trial started.

    "I knew that there was no way I could go home after a day in court... and revisit things every night with Maureen,'' the former governor said during an often emotional day of testimony that began with an examination of his marriage, which he said is "basically on hold.'' 

    Maureen McDonnell's lawyer is expected to question Bob McDonnell when trial resumes next week.

    McDonnell has testified that as his political career advanced, his relationship with his wife became increasingly strained. Maureen McDonnell grew uncomfortable being in the public spotlight, the former governor testified.

    "I got to the point that I just couldn't come home to that," he said.

    But McDonald testified that while he believes his wife had an emotional attachment to former Star Scientific Inc. CEO Jonnie Williams, she never had a physical relationship with him.

    Defense attorneys have suggested that the McDonnells could not have conspired because their marriage was crumbling and they were barely talking.