Wednesday, August 13, 2014
RICHMOND, Va. (AP) — Former Virginia Gov. Bob McDonnell and his wife, Maureen, were swamped with heavy credit card debt and money-losing real estate investments when they turned to a wealthy businessman for financial help, an FBI agent testified Wednesday.
Prosecutors in the McDonnells' public corruption trial called agent David Hulser to the stand to bolster their claim that the defendants were in dire financial straits when they began doing favors for former Star Scientific CEO Jonnie Williams in exchange for more than $165,000 in gifts and secret loans.
The McDonnells are charged in a 14-count indictment with accepting the gifts and loans from Williams in exchange for helping him promote his company's products, primarily Anatabloc.
Hulser testified that the McDonnells owed nearly $75,000 on credit cards when the governor was inaugurated in January 2010. The debt increased to more than $90,000 by September 2010 before falling to just over $31,000 in April 2011, after Maureen McDonnell used some money from an inheritance to pay down the debt.
Financial records obtained by Hulser also showed that Maureen McDonnell made several credit card payments in May 2011, including $9,900 to one card held by her husband, within a couple of days after receiving a $50,000 loan from Williams and an additional $15,000 to cover catering costs for a daughter's wedding.
Hulser also analyzed financial records of two Virginia Beach rental properties owned by Bob McDonnell and his sister. Expenses exceeded rental income by about $43,000 in 2009 and $40,000 in 2010, he said.
Along with the financial records, Hulser presented detailed charts showing cellphone calls and text messages among the McDonnells and Williams around the time of meetings, free vacations, golf outings, a Manhattan shopping spree and other events that other witnesses have discussed since the trial began July 28.
Evidence also was introduced Wednesday showing that McDonnell revised a mortgage refinance application to disclose two loans from Williams three days after state police questioned his wife about the debts.
Nanette Bolt, a mortgage supervisor for Pentagon Federal Credit Union, testified that she was not surprised to see the undocumented loans totaling $120,000 added to McDonnell's loan application on Feb. 18, 2013. She also said McDonnell never mentioned to her that his wife had just been interviewed by investigators who asked about loans from Williams.
The charges against the McDonnells include two counts of submitting fraudulent documents to financial institutions.
The McDonnells were seeking to refinance loans on four properties — their primary residence in suburban Richmond, a second home in the Blue Ridge Mountains and the two beach houses — with the credit union known informally as PenFed.
An initial application did not list the Williams loans as a liability, nor did it disclose ownership of Star Scientific stock that also was added to the revised application. Prosecutors say McDonnell tried to conceal the loans and the stock, disclosing them only after police started asking questions.
But the former governor's attorney, John Brownlee, noted that McDonnell also added about $243,000 in assets — including an individual retirement account, a life insurance policy and a 2005 Toyota — when he submitted the revised application.
"Is it fair to say you were not surprised to see these edits?" Brownlee asked.
"Correct," Bolt said.
She also testified that the Williams loans were not reflected in the credit union's closing documents because McDonnell had indicated that no payments were due until 2015.
Virginia Beach Mayor William Sessoms, president of TowneBank's parent company, also testified that McDonnell never mentioned the Williams loans in an application to refinance a loan with his institution.
Sessoms said loans to a spouse or to a corporation do not have to be listed on an individual borrower's financial statement. However, in reply to a question from U.S. District Judge James Spencer, Sessoms acknowledged that bank officials need to know about any borrower's shared debts.
Assistant U.S. Attorney Michael Dry said prosecutors expect to wrap up their case Thursday. If that happens, Spencer said the jury will be given the day off Friday and begin hearing from defense witnesses next week.