Ex-Va. Gov. McDonnell: CEO's Loans Not Inappropriate

By: AP
By: AP
Former Virginia Gov. McDonnell says businessman

( Alex Wong / Getty Images )

Aug. 22, 2014

RICHMOND, Virginia (AP) — Former Virginia Governor Bob McDonnell said Friday that there was nothing inappropriate about accepting gifts and loans from a wealthy vitamin entrepreneur who had asked nothing of him other than routine political courtesies and calling his father on his 80th birthday.

Back on the witness stand for a third day in his public corruption trial, McDonnell said he was initially unaware that former Star Scientific Inc. CEO Jonnie Williams sent a $50,000 check after a potential deal involving a loan of stock failed to materialize. But the cash loan was what he really wanted to plug an operating shortfall at two Virginia Beach vacation rental homes he owns with his sister, McDonnell said.

A little more than two months later, in May 2012, McDonnell texted Williams to ask for an additional $20,000 loan because the properties were still in the red. He said Williams had told him if he needed more money, he should just ask.

"I considered him to be a friend at that point," McDonnell said, explaining why he thought it was appropriate to ask for the loan.

McDonnell and his wife, Maureen, are charged with accepting more than $165,000 in gifts, trips and loans from Williams in exchange for promoting his company's products, particularly the tobacco-derived anti-inflammatory Anatabloc.

Williams, testifying under immunity, said earlier in the trial that he was not friends with the McDonnells and that he spent lavishly on them and their children solely to buy their influence as he sought state-backed research for Anatabloc.

"I liked the guy," McDonnell said, adding that he wanted Star Scientific to prosper just like any other Virginia business.

McDonnell said he did not think there was anything inappropriate with either Williams' loans or pricey vacations Williams paid for, including a trip to Cape Cod. The former governor testified Thursday that he was unaware of many of the flashier gifts Williams had given to his family, including designer clothes and a Rolex watch.

McDonnell said he gave Williams no special treatment in exchange for the gifts and loans McDonnell was aware of, only typical constituent service. For example, McDonnell said there was nothing out of the ordinary about a July 31, 2011, email request to Secretary of Health and Human Services Bill Hazel to send an aide to meet with Williams and Maureen McDonnell at the Executive Mansion the very next day.

"This kind of email I would have sent many, many times," McDonnell said.

The request came the same day the McDonnells returned to Richmond via Williams' Ferrari after vacationing at the businessman's Smith Mountain Lake house.

When asked by one of his attorneys if he would have taken Williams' loan if he thought it was corrupting his office, McDonnell replied: "Absolutely not."

He said his wife and his former brother-in-law, who managed the real estate venture's business affairs, first reached out to Williams about the $50,000 loan. Williams later spoke to him directly about loaning 50,000 shares of stock that could be used as collateral for a loan from a brokerage, but the deal never came to fruition.

McDonnell said he was preoccupied with the final week of a legislative session and was initially unaware that Williams sent a $50,000 check to the rental business.

"The last time I talked to Mr. Williams, we were still negotiating," McDonnell said.

McDonnell said he and his sister used low-interest loans instead of their own money to pay for the properties because they thought it was a smart financial move.

He also disputed some of Williams' previous testimony. McDonnell denied telling Williams that he owned Star Scientific stock. Williams also said that after a meeting about the possible stock loan, McDonnell had told him he was wrong when he said a handshake deal is legally binding in Virginia. McDonnell denied saying that.

McDonnell also denied agreeing with Williams to keep the $50,000 loan between the two of them.


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