For a while, the revelations of Gov. Bob McDonnell’s financial non-disclosures were like the drip, drip, drip of a leaky faucet. The spigot was opened a bit with the revelation of the $6,500 Rolex watch and even wider with the Final Four trip. Last night’s bombshell Washington Post report, carried in both The Virginian-Pilot and The Richmond Times-Dispatch today, blew the spigot to smithereens. Forget a trickle, this is a flood.
A prominent political donor gave $70,000 to a corporation owned by Virginia Gov. Robert F. McDonnell and his sister last year, and the governor did not disclose the money as a gift or loan, according to people with knowledge of the payments.
The donor, wealthy businessman Jonnie R. Williams Sr., also gave a previously unknown $50,000 check to the governor’s wife, Maureen, in 2011, the people said.
The money to the corporation and Maureen McDonnell brings to $145,000 the amount Williams gave to assist the McDonnell family in 2011 and 2012
I watched this interview of McDonnell broadcast last night. Although it took place before the Post article, when you combine it with the early evening announcement that the governor had cleared his public schedule for today, you have to wonder what he knew in advance about it.
Up til now, McDonnell has said that he has complied with Virginia’s rather lax campaign disclosure laws. It appears now that is not the case. More than that, I have to wonder what else is left to be disclosed. After all, would the feds be looking into things if it were just violations of Virginia’s laws?
As I said last week, this reflects poorly on Virginia. If McDonnell didn’t clear his calendar to announce his resignation today, it might be a good use of his time. His houses in Virginia Beach aren’t the only things under water.
VIVIAN J. PAIGE | All Politics is Local 
What exactly is Williams getting for his money??
Someone else posted that he got an event at the mansion, a picture of the governor holding the product that has been used for advertising, the First Lady hawking his product and a sit-down with the Board of Health. We don’t know what else he may have received.
Well the WaPo article did say that it seemed as if McDonnell had disclosed that money as a loan on his disclosure forms. I saw it mentioned on another blog that it seems as if McDonnell has/had sought legal advice on how to do all of this without technically breaking any laws. I have a feeling its this “too clever by half” attitude that has brought the attention of Federal Authorities for possible violations of the Hobbs and/or Travel Act. Hobbs because of the Chef matter and the Travel Act because of the Final 4 trip and that it covers violations of state laws where interstate travel and/or commerce is involved.
Did I misread that? I thought the Post said the loan was not disclosed:
As for the law – seems there doesn’t have to be quid pro quo.
It said that, but then it has this…
“On state-mandated disclosure forms, McDonnell indicated that a member of his immediate family owed money to an unnamed individual creditor in 2011 and 2012. In one year, he described the creditor as someone in “medical services.” In the other year, the governor said the creditor was in “health care.” Star Scientific makes nutritional supplements.
The form did not specify the exact amount owed; the governor checked a box saying it was between $10,001 and $50,000.”
Obviously I’m not the tax expert, but can’t income or a loan to an LLC be counted as individual income for tax purposes?
I read that part differently, because I thought it a stretch to imply it was the Williams’ loan. The loan was made to an LLC owned by him and his sister. I’m not a lawyer but I wouldn’t think his sister constituted his “immediate family.”
Loans are not income.
But what about loans with no repayment terms or interest charges that are called loans to avoid being called something else?
As for immediate family, according to the state code section that makes of the conflicts of interest act.
§ 2.2-3101. Definitions.
“Immediate family” means (i) a spouse and (ii) any other person residing in the same household as the officer or employee, who is a dependent of the officer or employee or of whom the officer or employee is a dependent.
If you go further in the act to actual prohibited conduct, it seems like it would be pretty easy to nail McDonnell on several of these…
§ 2.2-3103. Prohibited conduct.
No officer or employee of a state or local governmental or advisory agency shall:
1. Solicit or accept money or other thing of value for services performed within the scope of his official duties, except the compensation, expenses or other remuneration paid by the agency of which he is an officer or employee. This prohibition shall not apply to the acceptance of special benefits that may be authorized by law;
2. Offer or accept any money or other thing of value for or in consideration of obtaining employment, appointment, or promotion of any person with any governmental or advisory agency;
3. Offer or accept any money or other thing of value for or in consideration of the use of his public position to obtain a contract for any person or business with any governmental or advisory agency;
4. Use for his own economic benefit or that of another party confidential information that he has acquired by reason of his public position and which is not available to the public;
5. Accept any money, loan, gift, favor, service, or business or professional opportunity that reasonably tends to influence him in the performance of his official duties. This subdivision shall not apply to any political contribution actually used for political campaign or constituent service purposes and reported as required by Chapter 9.3 (§ 24.2-945 et seq.) of Title 24.2;
6. Accept any business or professional opportunity when he knows that there is a reasonable likelihood that the opportunity is being afforded him to influence him in the performance of his official duties;
7. Accept any honoraria for any appearance, speech, or article in which the officer or employee provides expertise or opinions related to the performance of his official duties. The term “honoraria” shall not include any payment for or reimbursement to such person for his actual travel, lodging, or subsistence expenses incurred in connection with such appearance, speech, or article or in the alternative a payment of money or anything of value not in excess of the per diem deduction allowable under § 162 of the Internal Revenue Code, as amended from time to time. The prohibition in this subdivision shall apply only to the Governor, Lieutenant Governor, Attorney General, Governor’s Secretaries, and heads of departments of state government;
8. Accept a gift from a person who has interests that may be substantially affected by the performance of the officer’s or employee’s official duties under circumstances where the timing and nature of the gift would cause a reasonable person to question the officer’s or employee’s impartiality in the matter affecting the donor. Violations of this subdivision shall not be subject to criminal law penalties; or
9. Accept gifts from sources on a basis so frequent as to raise an appearance of the use of his public office for private gain. Violations of this subdivision shall not be subject to criminal law penalties.
So I was right: his sister would not be considered immediate family, so that was not the Williams loan on the financial disclosure.
The terms of the loan as per the article:
“One person familiar with MoBo’s finances indicated that corporate records show the governor and his sister agreed to a low-interest loan with Williams. Terms of the loan dictated that they would make no payments for three years but return the $70,000 by 2015.”
I think that is inconsistent. A low interest-loan would indicate that the amount owed would be more than the principal at the end of 3 years. The loan appears to be non-interest-bearing.
There are tax rules to require imputation of interest when a loan carries no interest. But unless there is no repayment, the loan couldn’t be counted as income.
As for the influence – I do think McDonnell was influenced by Williams’ gifts and loans, just not in the traditional sense. See that item I linked above.
Definitely inconsistent. Which makes one wonder if there is any actual written proof of terms of repayment. If there are no written terms of re-payment, then is it really a loan? Like Sen. Peterson said on his blog;
“If you have a six-figure payment made to a family corporation (which is underwater due to some bad real estate decisions) and none of those “loans” are being repaid, then it sounds like …
A gift”