Possible payoffs investigated

Federal investigators are seeking information about possible payoffs to state officials, as well as four major coastal developments assembled by businessmen with ties to former Gov. Mike Easley.

In a round of subpoenas issued this week, the FBI contacted six officials from the state Department of Environment and Natural Resources and asked for specific information about whether they have been paid by a long list of people associated with developers Gary and Randy Allen.

A lawyer for Gary Allen said Thursday that the brothers qualified for their permits and other approvals by producing well-designed neighborhoods that merited approvals.

"There were no payments or gifts or favors given by the Allen brothers," said Raleigh lawyer Stephen Smith.

The subpoenas are part of a secret federal grand jury investigation. Little about the probe is public; charges may never be brought. The six subpoenas issued to the state environmental agency were made available Thursday because they were received by a state agency. Subpoenas seeking the same information are often issued to private individuals.

The grand jury meets next week. While the scope and nature of its inquiry are not known, investigators have sought information and summoned witnesses about a wide range of issues connected to Easley, a Democrat who left office in January. A lawyer for Easley said he could not comment. A spokesman could not immediately be reached.

The subpoenas were issued Tuesday and Thursday to a high-level environmental official who oversees most of the agency's regulatory matters; the now-retired director of the Division of Water Quality; a midlevel chief at the water quality section; and three lower-level officials who handle permits.

They specifically mention four waterfront developments spearheaded by the Allens: Cannonsgate in Carteret County, Summerhouse in Onslow County, Cutter Bay in Pamlico County and Oyster Harbour in Brunswick County.

Easley got a lot in Cannonsgate as he started his second term. Records obtained by The News & Observer have shown that Easley received a special discount of $137,000 at closing, a deal Easley had not disclosed. The lawyer for the Allens has declined to comment on how the discount came about.

Oyster Harbour was in the news in recent weeks as part of a State Board of Elections investigation. Elections officials produced records that showed Gary Allen gave a $50,000 donation to the state Democratic Party at the same time he was seeking help with a key dock permit for that project. He later got the permit. He testified that he did not think his donation was connected to the permit.

The federal investigators want records from the state environmental agency about those four developments. The authorities also listed a number of Allen development officials and asked the state officials if any gave any payments, land deals or other such favors.

A spokeswoman for the agency, Diana Kees, said officials are not aware of any wrongdoing at the agency and would cooperate as best they can with the requests from federal investigators.

Saving the club's grass

Two of the people issued subpoenas were involved in a matter that was made public in The News & Observer last month: An exclusive golf club that had waived Easley's golf dues was able to secure access to a creek and pump water to save the course's grass during the severe drought of 2002.

One of them, Tom Fransen, who then headed the river basin management section, was opposed to the golf club pumping water at the same time the state was ordering people to curb their use of water. But a state memo indicates that after Fransen questioned the pumping, higher-level officials - including an unnamed person or people from the Governor's Office - got involved. The state didn't block the pumping.

In interviews, neither Fransen nor the memo writer, Jim Mead, could recall the specifics of what happened. They are now being asked to appear before the grand jury.

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