Bill Allen, a welder who took the Veco Corp. from a small Kenai oil-field company to a billion-dollar international contractor and a major political force, pleaded guilty Monday to bribing at least four Alaska legislators, including former Senate President Ben Stevens.
In a plea bargain with the U.S.Justice Department’s Public Integrity Section, Allen and Rick Smith, Veco’s vice president for community and government affairs, each pleaded guilty to three identical felony charges - bribery and two counts of conspiracy.
Both men accepted responsibility for making more than $400,000 in illegal payments and benefits to public officials or their families. More than half the money went to Stevens in the form of phony “consulting” fees, the government charged.
Stevens, son of U.S. Sen. Ted Stevens, has not been charged. He was named in the plea documents as “State Senator B,” but his identity was unmistakable.
In return for special consideration at sentencing, Allen, 70, and Smith, 62, agreed to cooperate in the ongoing federal investigation. The government also promised to not seek charges against Allen’s son Mark, a Veco official, his daughter Tammy Kerrigan, or any other relative.
The federal plea bargain doesn’t bar state prosecutors from seeking additional charges against Allen and Smith. Both men acknowledged violating state campaign finance laws in their plea.
The plea deals were formalized in secret last week and opened in U.S. District Court Monday morning in unannounced back-to-back hearings before Judge John Sedwick, each lasting about 40 minutes.
Allen, in a gray suit, white shirt, red tie and black cowboy boots, sat hunched over the defense table beside his lawyer, former U.S. Attorney Bob Bundy. Allen is hard of hearing and asked Sedwick to repeat several of his questions, but not the questions about how he would plea.
“Guilty,” he repeated three times in a gravely voice to each of the charges.
Taking prosecutors’ recommendations, Sedwick released the men on $10,000 unsecured bond and ordered them to report weekly to federal probation officers. They were allowed to keep their passports and may travel freely pending sentencing, which was held off indefinitely. They could face about 10 years in prison and up to $750,000 in fines, but cooperation could substantially reduce the penalties.
On Friday, federal authorities acting on bribery and conspiracy indictments arrested Rep. Vic Kohring, R-Wasilla, and former Reps. Pete Kott, R-Eagle River, and Bruce Weyhrauch, R-Juneau.
Veco, Allen and Smith showed up in those indictments as “Company A,” “Company CEO” and “Company VP.”
It appeared from those charges that the FBI used electronic surveillance of Veco’s suite in Juneau’s Baranof Hotel to capture incriminating dialogue and images. The indictments spoke of payments by Allen and Smith of several thousand dollars and promises of jobs to the legislators. In return, the legislators agreed last year to vote for the oil production tax favored by the oil industry, the government alleged.
Those indictments referred to an unnamed state senator who allegedly played a role in one part of the conspiracy - a plan by Veco to farm out legal work to Weyhrauch, an attorney, in return for his vote on oil legislation. The description of that unnamed senator was ambiguous - Stevens was one of three senators it could have been.
But one of two unnamed state senators in Monday’s charges against Allen and Smith is clearly Stevens. The Veco “consulting” payments of $243,250 between 2002 and 2006 documented in the charges precisely match the amount Stevens reported on his financial disclosures as consulting income to his firm, Ben Stevens and Associates.
Over the years, Stevens has refused to disclose what work he did for that money or for any of the other consulting jobs he has listed, mostly for fishing industry clients. Former state representative Ray Metcalfe, in complaints to the Alaska Public Offices Commission and to federal authorities, challenged Stevens, saying the payments were thinly disguised bribes.
Nothing came of Metcalfe’s APOC complaints - the state agency said that Stevens adequately described his work. It refused Metcalfe’s demands to look deeper and investigate whether Stevens actually worked for his money.
But in their admissions to federal prosecutors, Allen and Smith appeared to vindicate Metcalfe.
“Although Allen and Veco characterized these payments … as being for consulting services, Allen acknowledges that in actuality the payments … were in exchange for giving advice, lobbying colleagues, and taking official acts in matters before the legislature,” prosecutors said.
Only once in five years did Stevens consult for Veco on a matter not involving his legislative job - a task involving a sunken boat at an unidentified location where Veco wanted to build a dock. Stevens worked less than 20 hours on that project, the prosecutors said.
Allen also promised an executive job to Stevens when he left office. On June 25, 2006, Stevens said he’d take that job, the charges said.
Stevens’s attorney, John Wolfe of Seattle, declined to respond to specifics in the charges, but said his client did nothing wrong.
“Ben Stevens denies engaging in any criminal conduct and maintains that he is innocent,” Wolfe said. “Mr. Stevens is surprised to learn that Bill Allen has pled guilty to various federal crimes and hopes that Mr. Allen is not falsely accusing former and current members of the Alaska Legislature in order to mitigate his admitted criminality.”
One other unnamed state senator, a “state elected official,” and two unnamed Veco executives also show up in the charging documents against Allen and Smith.
The senator in question was not accused of taking illegal payments but was listed as a member of the conspiracy to bribe and extort. That senator attempted to enlist the support for Veco-backed legislation of the “state elected official” through an illegal campaign contribution scheme.
Four state senators match the description of that person, two of whom had their offices searched by the FBI in August: John Cowdery, R-Anchorage, and Donald Olson, D-Nome.
The unnamed senator is likely Cowdery, said Kevin Fitzgerald, his defense attorney. As to what that means for Cowdery, Fitzgerald said he’s investigating the allegations laid out in the case against Allen.
Cowdery is in poor health. He’s been hospitalized in Juneau with pneumonia and a lung infection, Senate majority spokesman Jeff Turner said on Monday.
The “state elected official” was impossible to identify from the information in the charges, although he or she never received Veco’s campaign contributions. It’s possible the official was helping the government in the investigation.
The two unnamed Veco executives were accused of participating in a scheme to use corporate money to reimburse political campaign contributions by Veco officials - crimes under federal and state law. Allen and Smith admitted violating federal tax laws by taking deductions for illegal activity.
Veco executives routinely donate to political campaigns, giving tens of thousands of dollars to candidates in last year’s primary races alone.
Allen, in his plea, admitted reimbursing Rep. Kott for a $1,000 donation Kott made in the governor’s race. The contribution wasn’t further described in the charges, but APOC records show that Kott donated $1,000 to former Gov. Frank Murkowski’s re-election bid on May 31.
Many of the allegations listed in the indictments Friday against Kott, Kohring and Weyhrauch show up in the Allen and Smith admissions as well. But there are also new allegations, such as from May 7, 2006, when Kott was on the floor of the House and his cell phone rang. Allen and Smith were calling to give Kott “instructions on how to vote on the particular pice of legislation,” prosecutors said.
Some time later, Kott called them back with a report on the status of the vote “and the projected outcome,” the charges said.
Veco, meanwhile, is continuing to conduct its business, the company said in a statement.
Allen is listed as an owner of 5 percent of Veco’s stock in the company’s 2006 biennial report to the state. But the company’s attorney in the criminal case, Amy Menard, said he no longer has an ownership interest.
Allen is also the publisher of the Voice of Times, a half-page opinion section in the Anchorage Daily News. It is what remains of the Anchorage Times, which Allen owned for two years before it lost the newspaper war to the Daily News.
Asked whether the Daily News will continue to publish the Voice of the Times, Publisher Mike Sexton said, “We are troubled by recent developments and are reviewing the entire situation.”
As to the status of Allen and Smith at Veco, they still held their titles on Monday, Menard said. But that could change.
“I can tell you that in light of today’s events, we expect the board of directors to be meeting this week and making decisions about appropriate actions,” Menard said.
