(Don Carrington, Carolina Journal executive editor, discusses the legal and ethical questions raised by former Gov. Mike Easley's Cannonsgate land deal. Carrington offered these comments during an interview with Donna Martinez for Carolina Journal Radio (carolinajournalradio.com) Program No. 314. Video courtesy of carolinajournal.tv.)
(Then U.S. Sen. Barack Obama greets North Carolina Gov. Mike Easley with a "fist bump" after Easley introduced Obama at an event at the state fairgrounds in Raleigh. Circa June 2008)
Next step in Easley case: Prosecutor
Members of the State Board of Elections spoke in a unanimous voice Friday: Mike Easley should be investigated on suspicion of committing crimes while he was governor of North Carolina.
They imposed a $100,000 penalty against his campaign organization, saying the Mike Easley Committee broke laws when Easley took free flights and failed to disclose them.
They also said Easley's campaign illegally solicited $9,000 in donations for the state Democratic Party, while promising that the money would be funneled back to Easley's committee. The party is forfeiting that money.
Board members said new laws are needed to hold candidates responsible for their campaigns and expressed frustration that Easley's campaign is likely out of money and won't pay.
Reaction from all sides credited the board for putting campaigns and candidates on notice.
"It's a sad day when evidence justifies referring a governor for criminal investigation," said Bob Hall of Democracy North Carolina, a campaign watchdog group that filed a complaint about the state party. "But it's in the best interest of the public and of the thousands of candidates who are acting properly."
State Republican chairman Tom Fetzer: "No one should take satisfaction in this embarrassing spectacle, the net effect of which has been to reduce and diminish the citizens' confidence in their government."
In asking a prosecutor to take up the case, the board's three Democrats and two Republicans singled out Easley and said that testimony over four days this week brought to light evidence of crimes.
The board's referral covers anyone who possibly broke laws in the case. The board did not specify which laws it thinks could have been broken.
Easley, a two-term Democratic governor who left office in January, denies wrongdoing and his lawyer said he welcomed more review by authorities, an acknowledgment that state and federal agents are already probing controversies that have stained his record.
The board watched and listened to Easley under oath this week for five hours. They asked about a free car, the free flights, campaign money and repairs to his house that he didn't pay for.
Easley gave answers on a range of subjects that differed significantly from the answers of others. He said he had little involvement with his own campaign.
Contradictory Testimony
Much of the contradictory testimony concerns home repairs that McQueen Campbell, the former chairman of the N.C. State Board of Trustees, oversaw on behalf of Easley in late 2004 and the middle of 2005. Campbell said he paid more than $10,000 for the repairs.
Campbell, a pilot and longtime friend of Easley's, outlined a scheme in which Easley didn't pay him from personal accounts.
Campbell said he understood a conversation with Easley to mean that he should bill $11,077.50 for repairs to the campaign, but file bogus invoices listing the payment as for travel.
Easley also accepted a $5,451 check on an insurance claim made against the repairs that Campbell paid for.
Easley contended that he thought Campbell was billing for reimbursement from a realty management company that handled rental details on his home at East Lake Drive in Raleigh.
Easley said he thought the bogus invoices from Campbell were for past travel in the first case and future travel in the second.
At the time, it would have been legal for Easley to have his campaign pay for the repairs. But submitting a false report would be illegal.
Elections director Larry Leake said he would not comment in detail on Easley's testimony.
"The only proper response to make is that the board referred the case to the district attorney -- and that would be suggestive of something," said Leake, a Democrat from Mars Hill.
Board member Anita Earls, a Democrat, said she had difficulty reconciling Easley's testimony with that of others, especially Campbell, his old friend.
"I could not conclude that this was a misunderstanding, a miscommunication," said Earls, who is on a short list for a federal judgeship in the middle part of the state.
She said there was evidence that Campbell told the truth. "My vote speaks to that, and that the board unanimously came to a conclusion, speaks to that," she said.
Board members said that, by law, they could not automatically honor Easley's surprising request Thursday to refer the case. They had to decide on their own that there was evidence of crimes.
Completely reviewed
Easley's lawyer, Thomas Hicks, said that he believes prosecutors will look just as strongly at the actions and behaviors of Campbell. "For justice to be done appropriately, this matter needs to be completely reviewed by the agencies that have the resources to do it," he said.
Federal agents have been looking into a range of perks Easley accepted, as well as government action that in some cases appears connected. They include a $137,000 discount on a lot Easley bought in a coastal development; Campbell was involved in the deal and claimed in writing to have received faster permits from the Easley administration because of political contacts.
Reports in The News & Observer this spring about a free car Easley's son was driving and then Easley's secret flights prompted the elections board to open an investigation, officials said. At the time of an interview with The N&O and afterward, Campbell refused to provide invoices or other proof for why he got the $11,000 from the Easley campaign.
The board's five-month probe then turned up the allegation that they were actually for home repairs.
By the middle of the hearing, Easley and his campaign had all but conceded that the free flights were not properly handled. The campaign has cut checks that it says cover a portion of those. And the penalty leveled against Easley included $60,000 for the value of the remaining undisclosed flights and a $40,000 fine to pay for the investigation.
The state case now will be handled by a special prosecutor, William D. Kenerly, a Republican who is the elected district attorney in Rowan County. Kenerly said he has not donated to Easley's campaigns.
The Wake County district attorney, Colon Willoughby, stepped aside because of a longtime friendship with Easley.
Easley's Campaign Fined; Criminal Probe Requested
North Carolina elections officials penalized former Gov. Mike Easley's campaign $100,000 today for not reporting flights provided by a political ally and asked prosecutors to investigate whether he or others broke laws by trying to hide them.
The unanimous State Board of Elections decision came after four days of hearings into the conduct of Easley, a two-term Democrat who left office in January, and the state Democratic Party.
The board found evidence that campaign finance laws were violated, and that evidence was sent to the Wake County district attorney, board Chairman Larry Leake said.
The board also told the Easley campaign to give up the cost of the flights — $60,000 — and to reimburse the elections board $40,000 for its investigation.
Easley attorney Thomas Hicks said after the hearing his client got what he wanted. In an unusual closing argument Thursday, Hicks said prosecutors would have more resources to examine whether criminal charges are necessary.
"When I go to a tribunal and ask for it and they give me what I want, that makes me happy," Hicks told reporters Friday. However, he repeated his claim that Easley has done nothing illegal.
The party also was ordered to forfeit $9,000 in campaign funds for two donations solicited by the Easley campaign, but the board didn't include the party in its request to examine potential charges.
Much of the case against Easley hinged on the testimony of one-time political ally McQueen Campbell, the former chairman of the trustees board at North Carolina State University.
Campbell, who piloted Easley on campaign flights going back to 1999, testified Easley suggested that he file invoices for flights to get reimbursed for repairs to Easley's Raleigh home that Campbell said reached $11,000.
Easley, who was attorney general for eight years before being elected governor in 2000, testified that he never told Campbell to falsify invoices, nor did he imply Campbell should. Campbell testified he filed two bogus invoices with Easley's campaign.
Campbell testified he hadn't been reimbursed for scores of campaign-related flights, which he valued at nearly $88,000, that the campaign never reported. But Easley said Campbell told him he had been reimbursed.
The activities of Campbell and Easley also have gotten the attention of federal prosecutors, and a grand jury has been calling witnesses to testify about a coastal subdivision where Easley and his wife purchased a lot and the hiring of former first lady Mary Easley at N.C. State University.
Easley: Go ahead and give case to Prosecutor
After four days of putting the campaigns of Gov. Mike Easley and the N.C. Democratic Party under the microscope, the State Board of Elections expects to decide today whether a criminal probe is needed.
On Thursday, Easley's personal attorney told them to skip the deliberation.
"The question is: 'Do you refer the case to the district attorney?' " said Thomas Hicks. "Please do."
Easley and his campaign committee are under investigation over free air travel and a free vehicle, home repairs billed to the campaign, and evidence that the campaign used the state Democratic Party to skirt contribution limits. On Thursday, attorneys for Easley, his campaign committee and the state party argued to the board that in many cases only minor transgressions occurred that should be resolved with fines from the board.
But Hicks' request that case go to a prosecutor drew a double-take from board Chairman Larry Leake, who asked whether Hicks had talked with his client before speaking. Hicks said the governor told him to say it, even though he and Hicks say there is no case.
"No matter what happens, the public is going to question, 'Did Mike Easley slip one over on the board?' " Hicks said. "He's saying refer it. That's his position."
Whether the district attorney could handle it is another matter. Wake County District Attorney Colon Willoughby, who would normally get the case, is a longtime friend of the governor. Easley's son, Michael Jr., a law student, worked for the prosecutor this summer.
Leake and other board members said they would not make a referral based on Easley's request. They said they can make referrals only when they suspect a crime.
Defense: Nothing illegal
Lawyers for the state Democratic Party and Easley's campaign committee had no desire to roll the dice with prosecutors. They said that the transgressions involving unreported flights and the vehicle were minor and were corrected once brought to their attention. They said they did not scheme to launder illegal contributions through the party to help Easley.
"I have not heard evidence, and there is no evidence, that the Mike Easley Committee engaged in illegal fundraising activities in any way," said John Wallace, a Raleigh lawyer representing the Easley campaign.
Witnesses and campaign documents have suggested that the campaign asked donors to give sums to the party above that exceeded what they could legally give directly to Easley. The party, which can take unlimited donations, then would channel that money to the campaign, according to witnesses and documents.
Scott Falmlen, the party's executive director from 1999 to 2005, took the stand Thursday and denied any scheme to raise funds illegally. He said he had complete control of money raised by the Easley campaign that had been turned over to the party.
The board introduced more documents indicating that such a scheme was afoot within the Easley campaign, including one that included a diagram of a "soft money" pyramid that made clear the advantage of collecting big money from a few instead of smaller amounts from many. Other documents showed that the party had taken on basic campaign expenses, such as paying the salary and benefits of Easley campaign employees.
"This is where we are going," said Bob Hall, executive director of Democracy North Carolina, a nonpartisan campaign watchdog that supports public financing of elections. "You can set up a shadow campaign within the party."
Hall urged the board to start a criminal investigation.
The board may be limited in what action it can take. Many of the events took place more than two years ago, past the statute of limitations on misdemeanors. The board could find that the Democratic Party and Easley's campaign knowingly filed false reports, which is a felony and not subject to that limit.
Conflicting accounts
The board will also be weighing contradictory stories from Easley and McQueen Campbell, a longtime friend and fundraiser .
Easley's testified Wednesday that he never told or implied to Campbell, a private pilot who often flew Easley, that he should bill $11,000 in home repairs to the campaign under the guise of air travel. Campbell dropped that bombshell when he took the stand Monday.
Hicks told the board that Campbell was caught in one lie and then told another to get out of it, only to find himself in even more trouble.
"I would suggest to you that there are a lot of things going on with McQueen Campbell that this board should scrutinize very closely," Hicks said.
He acknowledged outside the hearing room that a criminal probe could hit Easley with numerous charges relating to his relationship with Campbell, including fraud and conspiracy.
"McQueen Campbell is saying, 'I did a crime. But I conspired with the governor to do it. The governor conspired with me to defraud his campaign,' " Hicks said.
Pointing fingers at GOP
Hicks' request for a criminal investigation wasn't the only surprise Thursday. The Easley campaign had a private investigator testify that three GOP gubernatorial candidates had not reported paying for some flights during their campaigns.
Two candidates, Fred Smith of Clayton and Bill Graham of Salisbury, either own or co-own their planes.
Smith said Thursday night that he had gotten the approval not to bill his campaign from the Board of Elections. Board staff told him that because he owned the plane he could treat it as he would a car.
The Democratic Party also attacked the allegations that it channeled money to Easley. The party's attorney, Jim Cooney, said GOP contributors who met limits in former Charlotte Mayor Richard Vinroot's 2000 gubernatorial campaign, went on to give to the Republican Party. Combined they gave $80,000 to the party, almost to the dollar what the party gave to Vinroot's campaign.
"Folks who have maxed out to a candidate can and often do make contributions to the party," said Andrew Whalen, the N.C. Democratic Party's executive director.
Easley coolly contradicts Campbell's take on finances
Former Gov. Mike Easley gave sworn testimony Wednesday about free flights, the use of a vehicle and campaign-funded repairs to his home that directly contradicted earlier statements in a state Board of Elections hearing.
Easley, a two-term Democratic governor who left office in January, said he never instructed supporter McQueen Campbell to submit false invoices that led to his campaign's paying $11,000 for repairs to Easley's Raleigh home. He said he believed that Campbell had been properly reimbursed for dozens of times he flew Easley on campaign and personal trips.
Easley's five-hour appearance on the third day of the board's hearings was a rare sight: a former governor being questioned about possible crime by five members of a state board, three of whom he appointed.
Easley grimaced when asked about Campbell, his longtime friend, political ally and pilot. Campbell had testified Monday that he flew Easley without getting paid and fixed Easley's house in Raleigh, then had to pester the governor for reimbursement -- which eventually came from campaign money.
Easley conceded that his campaign likely had not met its responsibility under state law to properly pay for flights that Campbell had provided, flights valued by Campbell at more than $100,000.
Board Chairman Larry Leake said he believes testimony showed the law was broken in that area: "Clearly, there was a violation."
Campbell's planes are owned by companies. Easley's campaign should have paid the companies for the flights because North Carolina bans corporate contributions. And those payments should have been disclosed. Even had Campbell owned the planes personally, the value of the donated travel far exceeds legal limits.
Easley said he had thought Campbell was being paid all along, and was assured of that even as The News & Observer raised questions before stories in May that detailed free flights from supporters.
"It didn't get to be an issue until April or May, when McQueen Campbell was in the paper saying, 'I didn't get paid,'" Easley said.
The governor said Campbell, a businessman who grew up in a political family, should have known to issue invoices. "He's not an imbecile," Easley said. He noted that the campaign had plenty of money.
Easley said he wants to pay anyone who is owed.
Easley took greater exception to the allegation earlier this week from Campbell about repairs to Easley's home on East Lake Drive in Raleigh.
Campbell said that he and Easley were part of a scheme to pay for $11,000 in fix-ups with campaign money. The payments were not reported as elections law requires because, Campbell testified, Easley wanted him to submit bogus invoices that listed the payments as being for travel.
"I didn't tell him to send them," Easley said. "I didn't indicate to him to send them. I didn't express or imply or give him any indication or suggestion that he should do that, or that I would approve it or that I would condone it," Easley said. "It never, ever happened."
Leake asked Easley what would make Campbell contend that was the case.
"I don't know," Easley said.
Invoices in question
At issue are two invoices Campbell submitted to the campaign.
One invoice was dated Dec. 29, 2004, for $4,777.50 to cover flying time to "various fundraisers" and "various events." Another was dated June 30, 2005, for $6,300 and covers flights from Nov. 5, 2004, to April 30, 2005.
Records show Campbell paid for work on the house before submitting both invoices. Easley testified that he believed both invoices to the campaign had nothing to do with his home.
A lawyer for Campbell said that he testified to the best of his ability.
Easley offered new versions of events.
He said that the second invoice was for future flying time with Campbell. "We decided he should get an advance," Easley testified.
That contradicts a memo that Rebecca McGhee, a campaign worker, wrote to the campaign treasurer when Campbell submitted the second invoice. She questioned why Campbell was getting paid for flights without producing flight logs.
Her memo says she wanted more documentation before cutting a check.
"The Governor said that he knows what the invoice says," she wrote in the memo. "He instructed me that we should go ahead and pay the invoice."
There is no mention at all of future flights, especially in late 2005 when Easley was into his second term and not planning to run for office.
Campbell's flight records show that he provided one campaign-related flight after that. It was in 2006 and was valued at about $850.
Easley bristled at questions about what happened on the phone call with McGhee. He said at the time he was focusing on the state lottery and other government matters.
"I get a call from Mr. Campbell that said they don't want to pay the invoice for the advance," Easley said. "My state of mind was, 'Can't you all work this out?' ... I don't have time to mess with these invoices."
Moreover, Easley disputed a central part of Campbell's testimony: that the money scheme arose after Campbell went to Easley to get reimbursed.
Elections board member Anita Earls asked Easley: "He never came to you and complained about not getting paid for the repairs?"
"No, ma'am," Easley said. "Never. He never, ever mentioned anything about repairs to the house along with any invoices."
Leake asked Easley how he thought the home repair work was being paid for.
Easley said he assumed that Campbell sought payment from Easley's personal secretary, who handled many personal bills, or a rental company that was managing Easley's home while he lived in the Executive Mansion.
The loaned SUV
Easley was also asked about a GMC Yukon that his son drove for several years. Easley offered a slightly different account than Robert F. Bleecker of Fayetteville, whose dealership owned the vehicle.
Bleecker had testified that he provided the car for Easley's son and that he understood he wouldn't get paid until Easley was finished with the SUV.
Easley said it was a campaign vehicle and that his son used it for campaign purposes. Easley acknowledged he could not say whether anyone else from the campaign used the car and said it was kept at the Executive Mansion, not at a campaign office.
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Sources: McClatchy Newspapers, Charlotte Observer, Newsobserver, Carolina Journal TV, Youtube, Google Maps
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