Prosecutors Allege Stevens Failed to Report No-Interest Loan

Posted August 15, 2008 at 11:26am

Alaska Sen. Ted Stevens (R) failed to declare an interest-free $31,000 loan that allowed him to turn a quick profit of more than $100,000 from a Florida real estate deal, federal prosecutors alleged in court documents filed Thursday.

Federal prosecutors detailed the property deal — along with allegations that Stevens also received a free home generator and sought employment for his son and grandson — in court documents listing evidence the government will introduce at the September trial in the U.S. District Court for the District of Columbia.

Stevens was indicted in late July on seven counts of filing false financial statements to conceal the receipt of more than $250,000 in gifts over an eight-year period. Stevens has denied wrongdoing and pleaded not guilty at his August arraignment.

According to the government’s announcement Thursday, Stevens and his wife, Catherine, agreed to purchase a Florida condominium valued at $360,000 in early 2001.

Although the property is not identified in court documents, Taxpayers for Common Sense announced Friday it identified the location: the Carroll Walk Condominium Project, “a fifteen-story waterfront luxury-condo project ‘right at the heart of South Florida’s hottest and most exciting area — the Gold Coast.’” The condo is located on Bay Harbor Island in the Miami area.

Federal prosecutors contend that Stevens agreed to pay a $36,000 down payment on the property but paid only $5,000. The remaining $31,000 was paid by “Person C” with a personal check “for the benefit” of Stevens and his wife.

According to government attorneys, Stevens used the $31,000 as an interest-free loan for 10 months, although he never reported the funds as a liability on his 2001 financial disclosure form.

Stevens subsequently sold the condominium in August 2001 to a “Company B” — where “Person C” served as a partner — for $515,000, earning Stevens a profit of about $103,000 after taxes.

In addition, the government’s court filing details other “gifts” that Stevens allegedly received from the Alaskan oil field services firm VECO and former CEO Bill Allen, including an electric generator for his Girdwood, Alaska, home.

“The United States will prove this through, among other evidence, an October 10, 1999 email written by Stevens to a personal friend, in which Stevens wrote: ‘Incidentally, I asked Bill Allen to hook up a generator to our chalet for Y2K – JUST IN CASE!!,’” the filing states.

Prosecutors assert that Stevens never paid for the generator or its installation — echoing a host of allegations about extensive renovations made to Stevens’ Girdwood home detailed in the original indictment — and never reported receiving it as a gift.

Stevens has previously asserted that he personally paid outside contractors for the home renovations although he has said VECO personnel did review bills from those contractors.

Stevens also allegedly sought employment for both his son and grandson from VECO.

According to the government’s transcript of an intercepted telephone conversation in 2006, Stevens used an intermediary, identified as “Lobbyist A,” to seek Allen’s help in finding employment for his son.

“I saw [Senator Ted Stevens] at lunch and, and he asked if I, asked if you – I’m not sure why he mentioned it to me – but he asked me to, I think, find out if you had any business contacts in Phoenix with respect to his son . . . who is down there, who finds himself without a job at this point,” Lobbyist A said, according to court documents. “Do you have anything down in (unintelligible) — that’s what he was interested in, and I thought I would pass that along to you ’cause you’re going to see [Stevens] next week.”

The oil services firm subsequently hired Stevens’ son for its Alaska operations. “Stevens’ son accepted the position with VECO, and also received a personal loan from Allen,” prosecutors wrote.

Stevens earlier sought employment for his grandson in 2003, who had been an “off-and-on” VECO employee. The company agreed to hire Stevens’ grandson, court documents states, and to pay more than $10,000 for his tuition, room and board at a “technical training program at a vocational institute in Alaska.”

Court documents also reveal that Stevens was aware of the ongoing federal investigation into state and federal corruption in Alaska that has now netted eight convictions.

According to government evidence, Stevens sent two e-mails to an individual identified as “Person A” on Sept. 1, 2006, the day after FBI agents executed search warrants for several properties in Alaska, including ones related to his son, former Alaska State Senate President Ben Stevens, other state legislators, VECO offices and Steven’s Girdwood home.

Stevens wrote in his e-mail: “[P]ress releases say the FBI served a warrant in Girdwood??? Did they hit our house? T.”

In addition, the government will seek to prove that Stevens sought to influence the testimony of “Person A” in May 2007 in advance of grand jury proceedings.

“Stevens sent Person A two emails that discussed Person A’s upcoming grand jury testimony,” the government asserts. “In the first email, Stevens told Person A that ‘I hope we can work something out to make sure you aren’t led astray on this occasion.’

“In the second, Stevens was more explicit: ‘don’t answer questions you don’t KNOW the answers to.’”

Stevens attorney Brendan Sullivan earlier sought to dismiss the indictment Thursday in a series of motions asserting that the government’s actions violate the Constitution’s “Speech or Debate” clause, as well as separation of powers.

Stevens has also requested the trial be moved to Alaska, asserting that the majority of witnesses reside there, as well as a desire to campaign for his re-election.

The government has opposed that motion, noting that Stevens sought and received a trial date in advance of the November elections.

A hearing on Steven’s venue change motion is scheduled for next Wednesday.