Corrupt Bastards Caucus

Alaska political corruption probe

Alaska political corruption probe refers to a widespread investigation from 2004 to the present by the Public Integrity Section of the U.S. Department of Justice, the Federal Bureau of Investigation, and Internal Revenue Service into political corruption of lawmakers in the Alaska State Legislature and the Alaskan Congressional delegation, focusing in particular on lawmakers' official actions in relation to the oil industry, fisheries, and private corrections industry. As of August, 2008 the investigation has resulted in indictments against five current and former Alaska state legislators on corruption charges, as well as the indictment of US Senator Ted Stevens. In addition, there have been guilty pleas by two executives of the oilfield services company VECO Corporation to charges of bribery and conspiracy to impede the Internal Revenue Service. A number of Alaska businessmen, lobbyists and others have also been either indicted, convicted or otherwise implicated.

FIGURES OF NOTE

Name	Indicted	Pled Guilty/Convicted	Sentenced	Sentence	Started Serving	Current Location
Bill Allen	Yes	May 7, 2007	Delayed
Rick Smith	Yes	May 7, 2007	Delayed
Bill Bobrick	Yes	May 16, 2007	November 27, 2007	5 months		Taft CI
Tom Anderson	Yes	July 9, 2007	October 15, 2007	60 months	December 3, 2007	Sheridan FCI
Pete Kott	Yes	September 25, 2007	December 7, 2007	72 months	January 17, 2008	Sheridan FCI
Vic Kohring	Yes	November 1, 2007	May 8, 2008	3 1/2 years
Jim Clark	Yes	March 4, 2008	Delayed
Bruce Weyhrauch	Yes
Ted Stevens	Yes
John Cowdery	Yes
Bill Weimar	Yes	August 11, 2008	Sentencing Oct 29, 2008
Senator Don Olson	No
Ben Stevens	No
Don Young	No

Corrupt Bastards Club

The name "Corrupt Bastards Club" (alternatively "Corrupt Bastards Caucus") has been widely, if with limited accuracy, used to designate Alaska legislators implicated in the federal corruption investigation. The nickname originated in the spring of 2006 as a barroom joke among Alaska legislators after a guest article by Lori Backes, executive director of All Alaska Alliance, that ran in Alaska's three largest newspapers named 11 lawmakers who had received large campaign contributions from executives of the oilfield services company VECO Corporation, which has a long history of making large campaign contributions to Alaska politicians. The article also named Senate President Ben Stevens as having received large consulting fees from VECO.

In her article, Backes detailed the amount of political campaign donations contributed between 1998 and 2004 by the top seven VECO executives to Alaska lawmakers who were in office at the time her article was written. The figures were based on reports to the Alaska Public Offices Commission:

Sen. John Cowdery (R- Anchorage), Senate Rules Committee Chair: $24,550.
Rep. Pete Kott (R- Eagle River), former speaker of the House: $21,300.
Rep. Norman Rokeberg (R-Anchorage), House Rules Committee Chair: $18,000.
Rep. Vic Kohring (R- Wasilla), House Oil and Gas Committee Chair : $14,708.
Gov. Frank Murkowski: $6,500 (excluding donations to past U.S. Senate races)
Rep. Kevin Meyer (R-Anchorage), House Finance Committee Co-Chair: $12,300.
Rep. Mike Chenault (R- Nikiski), House Finance Committee Co-Chair: $12,000.
Rep. Lesil McGuire (R-Anchorage), House Judiciary Committee Chair: $12,000.
Sen. Con Bunde (R-Anchorage), Senate Labor and Commerce Committee Chair: $11,500.
Gov. Sarah Palin (R-Wasilla), Senate Finance Committee Co-Chair: $28,000.
Rep. Mike Hawker (R-Anchorage): $8,050.
Rep. Tom Anderson (R-Anchorage), House Labor and Commerce Chair: $8,000.

Additionally, Backes noted the consulting contract Senate President Ben Stevens (R-Anchorage) had with VECO Corporation and financial relationships other lawmakers had with other companies active in the oil and gas industry, including Conoco Phillips and ASCG Inc.

According to Rep. Mike Chenault (R-Nikiski), one of the lawmakers named in the article, "Somebody walked up [in the bar] and said, 'You corrupt bastards,' and that name stuck." Hats with the label "CBC," standing for "Corrupt Bastards Club" or "Corrupt Bastards Caucus," were later printed up, but according to Chenault "that was the extent of the CBC deal."

Raids on legislative offices

On August 31 and September 1, 2006 the FBI served some 20 search warrants in Anchorage, Juneau, Wasilla, Eagle River, Girdwood, and Willow, primarily on the offices of several legislators. Legislators whose offices were searched included Sen. John Cowdery (R-Anchorage), Senate President Ben Stevens (R-Anchorage) (son of U.S. Senator Ted Stevens), Rep. Vic Kohring (R-Wasilla), Rep. Bruce Weyhrauch (R-Juneau), Sen. Donald Olson, (D-Nome) and Rep. Pete Kott (R-Wasilla). The warrants permitted the search of computer files, personal diaries, Alaska Public Offices Commission reports, and any other items showing evidence of financial ties between legislators and the oilfield services company VECO Corporation,, as well as clothing items with the phrase "Corrupt Bastards Club" or its related acronym printed on it. A search warrant for Sen. Donald Olson's Juneau office, made available by his office to the public, specifically authorized the seizure of documents relating to VECO Corporation executives Bill Allen ( CEO), Richard Smith (vice president), Pete Leathard (president), and Roger Chan (chief financial officer). The warrant also authorized the seizure of clothing, including hats, bearing the logos or phrases "VECO," "Corrupt Bastards Caucus," "Corrupt Bastards Club," or "CBC" printed on them.

As of July 10, 2008, John Cowdery has now been handed indictments on two charges, and has through his attorney pled not guilty and will face trial on bribery and extortion under official right and bribery concerning programs that receive federal funding. The indictment includes information on Frank Murkowski's planned natural gas line that was mostly worked out in secret with the major oil companies with an interest in the project.

Management of corruption investigation

It later emerged that the investigation of political corruption in Alaska was being managed not by the Alaska U.S. Attorney's office, but rather by the Public Integrity Section of the U.S. Department of Justice in Washington, D.C., with FBI agents working out of the FBI building in downtown Anchorage acting as lead investigators. The FBI raids on legislative offices on August 31 and September 1 involved dozens of extra FBI agents brought up from the Lower 48, but sent home after the initial round of searches and interviews. Other agencies, including the Internal Revenue Service, were also involved.

The Public Integrity Section, created in 1976, is charged with investigation of election fraud, misconduct by federal judges, and corruption of elected officials in all levels of government — federal, state, and local. While U.S. Attorney offices also investigate and prosecute public corruption cases, because U.S. Attorneys are political appointees in local jurisdictions, they are sometimes recused from particular cases.

Brooke Miles, executive director of the Alaska Public Offices Commission, reported that the FBI began to collect public campaign reports and financial disclosure records on selected Alaska legislators perhaps a year prior to the raids, and returned at the start of 2006 to obtain such records for all legislators.

Investigation widens

Fisheries

The FBI conducted a second search on the legislative office of Sen. Ben Stevens on September 18, 2006, seizing among other items documents related to the proposed natural gas pipeline and the oil and gas tax law which had been discussed in the Alaska Legislature during the regular and two special legislative sessions in 2006, as well as items related his work on the Senate Ethics Committee and documents related to fisheries. Stevens disclosed the Anchorage Daily News that the FBI seized items during both searches of his office related to the Alaska Fisheries Marketing Board (AFMB), created under legislation by Ben Steven's father, U.S. Senator Ted Stevens, to distribute federal grants to promote Alaska seafood. Ben Stevens had been chair of AFMB until early in 2006. He had received consulting fees from at least three organizations that had benefited from the grants — over $250,000 during the time he served on the board. Other documents related to fisheries were also seized in the September 18 FBI search. One of these was a copy of an affidavit by Victor Smith, a salmon fisherman from Friday Harbor who alleged that Stevens had been paid by a seiners association to lobby his father and that he failed to disclose that income as required by Alaska law.

Private corrections

In October 2006, Rep. Vic Kohring's attorney, Wayne Anthony Ross, provided the Anchorage Daily News with a copy of the search warrant that had been served on Kohring on August 31, as well as a list of items seized. The warrant showed that federal investigators were also interested in information related to developer Marc Marlow and correspondence between Kohring and the Alaska Department of Corrections. Ross told the Anchorage Daily News that his client had been questioned by the FBI about Cornell Companies' effort in cooperation with VECO Corporation to build a private prison in Whittier, an effort which failed due to lack of local support. The Daily News observed, "Those documents, though lacking detail or context, suggest that the probe is wide-ranging and not focused on any one company, issue or individual."

Tom Anderson arrested on federal bribery and extortion charges

The observation by the Anchorage Daily News and other news organizations had a wider focus than legislators' ties to VECO Corporation was confirmed on December 7, 2006, when Rep. Tom Anderson (R-Anchorage) — whose offices had not been targeted by the August and September FBI raids — was arrested on allegations of extortion, bribery , conspiracy, and money laundering involving his support of a private corrections company. Anderson was accused of accepting money from a private corrections company through a shell corporation set up by a lobbyist, identified in Anderson's charging documents as "Lobbyist A" and later identified as prominent Anchorage lobbyist Bill Bobrick, to disguise the source of payments. Unbeknownst to Anderson or Bobrick, their contact with the private corporations company was a confidential source of the FBI working undercover. According to federal prosecutors, the private corrections company — unidentified in the court documents but widely believed to be Cornell Companies — was not implicated in the plot, and had been unaware of the FBI investigation until Anderson's indictment and arrest. The confidential informant in the case is believed to be Frank Prewitt, a former commissioner of the Alaska Department of Corrections who later took a job with Cornell Companies.

Subpoenas of fisheries businesses

More recently, additional subpoenas have been served on fishery executives involved with federal funding and the United Fishermen of Alaska who have had business associations with Ben Stevens.

Boating accidents involving Weyhrauch and Cowdery

During the ongoing criminal investigation, two of the parties involved experienced significant boating accidents.

On April 22, 2007, Bruce Weyhrauch's 15-foot Boston Whaler was found adrift near Juneau, Alaska, with Weyhrauch himself missing. At the time it was found, the vessels engine was still running. It has been reported that he had just dropped off his son and was returning to his home port. The United States Coast Guard immediately began searching for him.

Weyhrauch was found alive the next day and airlifted to a hospital. Subsequent reporting revealed that Weyhrauch had fallen overboard and swam to Coghlan Island in Auke Bay as his boat drifted away. He was treated for hypothermia after his rescue. His vessel was undamaged.

On August 1, 2007, State Senator John Cowdery's boat, the Johnita II, caught fire and sank near Esther Island off the coast of Whittier, Alaska. Cowdery was on the vessel with three other adults when they sent out a mayday distress call after the fire began. Cowdery and his companions were rescued by another vessel, the Live and Learn. Cowdery and his group were unharmed.

Indictment, arrest of Kott, Kohring and Weyhrauch

On May 4, 2007, former Representatives Pete Kott (R-Eagle River) and Bruce Weyhrauch (R-Juneau) were arrested and charged with bribery, extortion wire and mail fraud. Then-current Representative Vic Kohring (R-Wasilla) later turned himself in and was similarly charged. All three were arraigned in Juneau. Charges against the three involved allegations of soliciting and receiving money and favors from VECO chief executive officer Bill Allen and chief lobbyist Rick Smith in return for their votes on an oil tax law favored by the VECO that was the subject of vigorous debate during the 2006 legislative session and two special sessions in 2006.

Of the original 6 lawmakers who had their legislative offices searched, only State Senator Don Olson (D-Nome) has not been implicated in the scandal.

VECO executives indicted, plead guilty

On May 7, 2007, VECO CEO Bill Allen and Vice President for Community & Government Affairs Rick Smith pleaded guilty in U.S. District Court in Anchorage to charges of extortion, bribery, and conspiracy to impede the Internal Revenue Service.

In addition to the three politicians arraigned on May 4, the new court filings mention illegal payments made to a former state senator, named as "Senator B" in court documents, who received over $240,000 from VECO Corp. over several years, income which Senator B reported as "consulting fees." In the May 7 guilty pleas by Allen and Smith, they admit that the only work done by Senator B in exchange for the funds was advancing VECO's agenda in the state legislature. The only former state senator who matches the information contained in court documents about Senator B is former Senator Ben Stevens (R-Anchorage), son of U.S. Senator Ted Stevens (R-Alaska). To date, Ben Stevens has not been indicted. Another state senator discussed in the court documents, identified as "Senator A" in court documents, has been identified by sources as John Cowdery.

On May 11, 2007 at a meeting of the VECO Corporation's board of directors and shareholders, Bill Allen resigned as the company's CEO and chairman of its board of directors, citing "the best interest of the corporation, all of our companies, and our many valued employees and customers." Allen's daughter Tammy Kerrigan will replace him as chairman of the board; a new CEO has not yet been chosen. At the same meeting, Rick Smith resigned from his position as vice president of community and government affairs. It is not clear from the VECO statement if Smith's position will be refilled.

Lobbyist Bill Bobrick charged, pled guilty in Tom Anderson bribery probe

On May 14, 2007, William (Bill) Bobrick, a prominent municipal lobbyist in Anchorage, was charged with one count of conspiracy to commit extortion, bribery, and money laundering in the same scheme for which Rep. Tom Anderson was indicted the previous December. Bobrick was the creator of the shell corporation, Pacific Publishing, through which money was allegedly funneled to Anderson. Bobrick also received money through the scheme. Bobrick appeared in U.S. District Court in Anchorage on May 16, where he entered a guilty plea. Bobrick will not be sentenced until after the trial of Tom Anderson, scheduled to begin June 25, where Bobrick will testify for the prosecution. Under sentencing guidelines Bobrick faces a possible 2 to 2-1/2 years imprisonment, but his sentence might be reduced depending upon his cooperation with prosecutors.

In reaction to Bobrick's part in the corruption scandal, the Anchorage Assembly on May 22 unanimously approved a measure which prohibits individuals who have been convicted of a felony within the past 10 years of registering as a lobbyist with the Municipality of Anchorage.

US Senator Ted Stevens investigated, charged

US Senator Ted Stevens is also under investigation by both the FBI and IRS. Authorities have been investigating a remodeling project done at Stevens' home in an area of Anchorage known as Girdwood. Unusual aspects of this remodeling project being investigated are that the project was supervised by VECO, and invoices for the work on the residence were first sent to VECO before being sent to the senator. Some of the issues being investigated are the extent of work done on the home, exactly who paid the invoices from the construction contractors and their sub-contractors, and the purpose and extent of VECO's involvement.

On the morning of July 30, 2007, agents from the FBI and the IRS raided the residence in Girdwood, a quiet neighborhood located within the extreme southern boundaries of Anchorage, Alaska. Photographs and video of the inside and outside of the residence were taken. Wine bottles in the home were photographed as objects of interest. The raid continued well into the evening.

On July 29, 2008, just a day short of the anniversary of the Girdwood raids, Stevens was charged with seven counts of false statements involving VECO, the oil services company in Alaska, and the renovations done on his home.

Jim Clark charged, agrees to testify against others

On March 4, 2008, James "Jim" Clark, the former chief of staff to ex-Governor Frank Murkowski, pleaded guilty to one felony conspiracy charge involving the Alaska political corruption probe. Clark admitted in court documents that he conspired to use an illegal monetary gift from Veco Corp to pay for a political poll to gauge the popularity of then-incumbent governor Murkowski. Sentencing was delayed to allow him to testify against other suspects in the case.

Murkowski has not been charged.

Bill Weimar charged with making illegal campaign contributions

On August 11, 2008 the Anchorage Daily News reported that Bill Weimar, a former operator of halfway houses for inmates in Alaska was indicted and charged with two felony counts alleging campaign finance violations. Weimar allegedly funneled money to an unnamed consultant for an unnamed state legislative candidate in 2004. Weimar agreed to plead guilty to the charges, and in exchange prosecutors will ask for a reduced sentence, a nonbinding agreement that the judge is free to modify.

Weimar subsequently pleaded guilty in federal court in Anchorage. His sentencing is scheduled for October 29, 2008.