Feds: DC mayor knew of illegal 'shadow campaign'

AP News
Posted: Mar 10, 2014 10:45 PM

WASHINGTON (AP) — District of Columbia Mayor Vincent Gray knew about an off-the-books "shadow campaign" to support his 2010 bid for the office and personally requested the funds from an influential district businessman, federal prosecutors said Monday.

Gray, who's seeking a second term and faces seven challengers in the district's April 1 Democratic primary, dismissed the allegations as false and said he thought all the fundraising for his campaign was legitimate.

The explosive allegations were revealed in court documents detailing the activities of Jeffrey Thompson, the multimillionaire former owner of a well-connected accounting firm who pleaded guilty Monday to two conspiracy charges.

According to the documents, Gray met Thompson for dinner at the apartment of another admitted conspirator in August 2010 and presented Thompson with a one-page budget of $425,000 needed for get-out-the-vote efforts. Thompson agreed to pay that amount by funneling it through another company, the documents said.

During an earlier meeting, Thompson told Gray he would fund his campaign but that the contributions would not come from him or anyone associated with him, the documents said. Thompson told Gray to say the money came from "Uncle Earl." Earl is Thompson's middle name. After the meeting to discuss the shadow campaign, Gray thanked Thompson and referred to him as "uncle," the documents said.

Gray has not been charged with a crime, and on Monday he reiterated his longstanding denial of any wrongdoing.

"I have always been clear that I was not aware of any illegal activity related to my 2010 campaign. I have spent my entire adult life serving the community and have done so with an unblemished record," Gray said in a statement. "I cannot say this any more clearly: The allegations against me are false and I will steadfastly fight them."

U.S. Attorney Ronald Machen declined to say whether the mayor would be charged. The investigation is ongoing.

"What you learned about today was really only the tip of the iceberg," he said.

In addition to Gray, Thompson admitted funding a $608,000 shadow campaign for Hillary Rodham Clinton's 2008 presidential bid and shadow campaigns for seven candidates for local office in the district, prosecutors said in the documents. Clinton was not aware of the illegal expenditures on her behalf, they said.

The total value of Thompson's illicit contributions was $3.3 million, prosecutors said.

"Today's guilty plea pulls back the curtain on years of widespread corruption," Machen said. "With Mr. Thompson's cooperation, we have the opportunity to hold many wrongdoers accountable and to usher in a new era of honesty, integrity and transparency in D.C. politics."

Thompson's expenditures on Gray's campaign totaled $668,000, and they were never reported to the city's campaign-finance office, prosecutors said. The money went toward consultants, supplies and a massive get-out-the-vote operation centered east of the Anacostia River, where Gray defeated then-Mayor Adrian Fenty by huge margins.

Following the election, Thompson gave $10,000 to a close relative of Gray to help settle campaign debts, prosecutors said. And after Gray took office, Thompson spent $40,000 on home improvements for a "close personal friend" of the mayor, according to the documents.

Prosecutors alleged that in 2006, Thompson ran a $278,000 shadow campaign for mayoral candidate Linda Cropp, who ended up losing to Fenty. But they said they had no evidence that Cropp knew about the shadow effort. She also received contributions from Thompson and his associates that were included on her financial statements.

Thompson paid $350,000 to another candidate, Michael A. Brown, to drop out of the race and endorse Cropp, according to the documents. He later funded shadow campaigns for Brown, who was elected to a D.C. Council seat in 2008. Brown lost his re-election bid in 2012 and is now awaiting sentencing in an unrelated bribery case. He is cooperating with prosecutors, who said he requested the shadow funds from Thompson. Brown did not immediately return a telephone call Monday night seeking comment about prosecutors' allegations that he took money to drop out of the mayoral race.

The most recent race Thompson sought to influence, prosecutors allege, was that of Vincent Orange, who ran for and won an at-large council seat in 2011, and is now one of the candidates competing with Gray for mayor. Orange has acknowledged handing over documents related to the 2011 campaign to federal investigators. Thompson financed a $148,000 shadow campaign for Orange, according to the documents.

Federal authorities searched Thompson's home and offices two years ago. Since then, Machen has built a case against Thompson by targeting his associates, five of whom have pleaded guilty to felonies.

Two of Gray's close friends who worked on his 2010 campaign were among those who pleaded guilty. Two others pleaded guilty to making straw contributions to political candidates on Thompson's behalf, and another acknowledged using illicit funds to help Clinton's presidential bid in Texas and other primary states.

Thompson's network of donors included employees, business associates, friends and relatives, many of whom made large donations to his chosen candidates on the same day, campaign finance records show. After the allegations surfaced, several candidates donated the amount they received from Thompson to charity.

Thompson, a Jamaican immigrant, founded an African-American-owned accounting firm that received millions of dollars in local and federal government contracts. He was also the sole owner of D.C. Chartered Health Plan, a managed-care provider for district residents that had the single largest contract in city government, worth more than $300 million annually. The managed-care firm went bankrupt amid the investigation, and Thompson left the accounting firm.

After Gray's election, Thompson contacted him through an intermediary and asked the mayor to expedite a settlement that benefited the health care company, according to the documents. The D.C. Council ultimately approved the $7.5 million settlement by a thin margin, and administration officials strongly denied any wrongdoing related to the action.


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