Feds probing Perdue's '08 run

Democrats call timing political

staff writerOctober 23, 2010 

— The campaign of Gov. Bev Perdue is the subject of a federal criminal investigation.

Perdue released a written statement Friday shortly after The News & Observer reported that federal grand jury subpoenas had been issued to people connected to her 2008 run for the state's highest elected office.

"I have just learned that there is a federal investigation into my campaign for governor," Perdue said, according to the statement.

"As a citizen, a candidate for public office, and an elected official of this state, I have tried my best to abide by all applicable laws, and my administration has been one of the most open in history. I am proud of my record ... . "

Confirmation of the federal probe comes three weeks after Wake County District Attorney Colon Willoughby disclosed that he had asked the State Bureau of Investigation to examine issues related to the financing of Perdue's 2008 campaign.

Just 10 days before an election to determine control of the state legislature, questions about potential criminal activity involving people close to the Democratic governor arise at an inopportune time for her party.

Rumors have swirled in the capital for more than a year about a federal corruption investigation of Perdue's immediate predecessor, Gov. Mike Easley. Perdue has repeatedly tried to distance herself from Easley's troubles.

A spokeswoman for U.S. Attorney George Holding said Friday that she could not confirm or deny that any subpoenas had been issued for people tied to Perdue.

Holding is a Republican appointed by President George W. Bush, and the N.C. Democratic Party wasted no time Friday suggesting that any criminal investigation involving the sitting governor is politically motivated.

"Eleven days before a crucial election affecting the direction of our nation and state, we have learned that the Republican U.S. Attorney has apparently chosen to serve subpoenas and open yet another investigation into a Democratic elected official," said Andrew Whalen, the executive director of the state's Democrats. "The timing of these events would lead any reasonable person to have serious questions about this new investigation."

DA complains

News of the federal investigation broke after Willoughby said potential witnesses contacted in his investigation had received orders to appear before the federal grand jury.

Willoughby, who would not identify the individuals subpoenaed, said Holding's office had no communication with him before issuing the subpoenas. He said that as a result of the federal subpoenas, witnesses who had been speaking voluntarily to state investigators have clammed up.

"The federal subpoenas are hampering my investigation," said Willoughby, a Democrat. "I'm a bit disappointed that this has happened this way. ... [W]ithout any warning, bombs start falling and people start heading for cover. These witnesses were talking to us before they got the subpoenas. It has had a chilling effect."

Willoughby is investigating the failure of Perdue's campaign to properly disclose 42 flights she took on private aircraft provided by donors, as well as other issues involving campaign finance reports he said "appeared out of the ordinary."

Efforts on Friday to reach former Perdue chief of staff Zach Ambrose, campaign treasurer Oscar Harris and key fundraiser Peter Reichard were unsuccessful.

Easley aide takes plea

In January, a federal grand jury in Raleigh indicted former Easley aide Ruffin Poole on 57 corruption charges. Poole was allowed to plead guilty in March to a single count of income-tax evasion in a deal with prosecutors that could allow him to avoid a prison sentence. That was widely interpreted as an indication that he is cooperating with federal investigators.

Ambrose, who also served as Perdue's campaign manager in 2008, resigned from her staff the same day Poole was indicted, saying he wanted to spend more time with his family.

For much of the last year, Perdue, her lawyer and campaign officials have said that the failure to report her flights on private aircraft was the result of poor record-keeping. But a report in August by Kim Westbrook Strach, the lead investigator at the State Board of Elections, detailed a spring 2007 meeting between Ambrose and Will Polk, then Perdue's chief legal adviser in the lieutenant governor's office. They talked at length about how to report campaign flights properly.

According to Polk, who was interviewed as part of the elections board investigation, Ambrose created a template for a spreadsheet to track each flight. As the campaign progressed, flights were logged into that master spreadsheet.

Some donors at limit

Some of those flights were provided by donors who had already given Perdue the maximum $4,000 contribution allowed for that election.

Perdue's campaign failed to publicly disclose many of those flights until 2009, after reports surfaced about unreported flights provided to Easley. Last year the state elections board fined his campaign $100,000.

In a split decision days after Strach issued the report, the elections board fined Perdue's campaign $30,000 over the unreported flights. But the board's Democratic majority killed a push by Republican members to seek a criminal investigation, impose a larger fine or question Ambrose and other members of the governor's campaign staff under oath. As governor, Perdue appoints the elections board.

The board's decision was roundly criticized by Tom Fetzer, the chairman of the N.C. Republican Party. He released a statement Friday praising both the Wake district attorney and the U.S. attorney for pushing ahead with probes of Perdue.

"We have believed all along that it would take a criminal investigation to get to the truth," Fetzer said. "We still stand by our assertions that Gov. Perdue and her campaign broke laws and attempted to cover-up their actions with lies."

Staff writer Rob Christensen contributed to this report.

michael.biesecker@newsobserver.com or 919-829-4698

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