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Controversies in the Virginia Gubernatorial Election
The Virginia gubernatorial race has been filled with controversial reports on both sides of the ticket. Candidates Terry McAuliffe and Ken Cuccinelli have been under a microscope as party investigators attempt to uncover as much dirt as they can on the other candidate to try and draw attention away from the scandals of their own side. The current governor of the state, Bob McDonnell, and his own questionable activities brought Virginia to the nation's stage earlier this year and it seems the cameras have never left. He is ineligible to run in the upcoming election because of term limits. Terry McAuliffe's controversy surrounds his association with electric car company Greentech Automotive, while Ken Cuccinelli is riding the wave of the Star Scientific scandal that fellow Republican Governor McDonnell started surfing earlier in the year. While McDonnell's bad press seems to be calming down, Cuccinelli's and McAuliffe's is expected to continue until the election on November 5th, when the winner will likely be the candidate who happens to be getting the least amount of negative attention while voter's are on their way to the polls.
Terry McAuliffe and Greentech Automotive
McAuliffe's scandal leaves the state of Virginia and travels all the way to China. That is where the Greentech Automotive Company, McAuliffe's electric car company, went to get their investors. The Chinese investors would supply the company with $500,000 in exchange for one thing; a permanent resident green card. This is all possible, and legal, due to a program Congress started in 1990 called EB-5. Foreign entrepreneurs and their families can make an investment to a United States company that will create at least ten full time jobs in exchange for permanent residence. The program requires investors spend $1,000,000, or $500,000 if the company is in a rural area or a town with high unemployment. This program, which gives out 10,000 visas a year, naturally raises concerns over national security and fraud, so applicants are vetted very closely. This creates a long wait list which companies, many in a hurry to get their funding, do not appreciate.
This is where the controversy surrounding Terry McAuliffe comes into play. In an effort to move the process along more quickly, McAuliffe started setting up meetings with officials in higher offices. In 2011, he and Greentech's lawyers reached out to any contacts they had at the Department of Homeland Security, finally landing a meeting with Alejandro Mayorkas. This meeting even included a few moments with Janet Napolitano, the Secretary of Homeland Security. Mayorkas, who is now under investigation, was able to expedite the process and $25 million in Chinese investments came to Greentech by way of 50 green cards. In order to manage this, Mayorkas had to meet with Napolitano and a clean energy liaison from the White House to overrule the offices of Citizenship and Immigration Services. One of Greentech's lawyers noted that the meeting was set up through Vice President Joe Biden's office but neither Biden's chief of staff or Napolitano's office could confirm that.
While they were busy clearing the way for the investors, McAuliffe hired Anthony Rodham, Hillary Rodham Clinton's brother to recruit them. The plan was for Rodham to find interested foreign entrepreneurs and help them with the EB-5 process if they agreed to invest their $500,000 in Greentech. Rodham did not end up playing a big role in this project as Greentech's lawyers were responsible for most of his sent e-mails, and his relationship to the Clinton's did not do him any favors in China as many in China still harbor bad feelings towards the family from diplomatic offenses while Bill Clinton held office. This connection between the Clinton family and the scandal will likely to be brought up against Hillary in any future campaigns, as she is holding a fundraiser for McAuliffe later this year.
McAuliffe had hoped that GreenTech would produce tens of thousands of cars and bring hundreds of jobs to the community, but currently the company has 80 employees at a temporary plant that hopes to produce a few hundred cars this year. As a shareholder he still maintains the largest amount at 25%. McAuliffe wanted Greentech's appearance on his resume to endorse him as a jobs creator for the 2013 election, but instead the story has kept him in the controversial lime light.
Ken Cuccinelli and Star Scientific
Like Gov. Bob McDonnell, Ken Cuccinelli's controversies center around his acceptance of gifts from Star Scientific CEO Jonnie Williams. Cuccinelli, the current Attorney General for the state, accepted $18,893 in gifts between 2009 and 2012. While Bob McDonnell is returning all of his received gifts totaling $125,000, Cuccinelli has stated the type of gifts he received can not be returned. Cuccinelli received gifts that included Thanksgiving dinner, flights, and vacations. Along with those, McDonnell received personal and business loans given to him during his time as governor.
While McDonnell has become the target of federal grand jury investigations, Cuccinelli, as of now, is in the clear. McDonnell has been accused by some of insider trading, but the only large stock Cuccinelli held was Star Scientific and there has been no evidence of Cuccinelli receiving stock tips. Stock holdings over $10,000 must be reported, and Cuccinelli announced his stake when he realized his shares had grown to pass that benchmark. Investigators have noted that the selling and buying of the stock was closely timed to trips taken as guests of Williams, but Cuccinelli maintains that he never discussed his stock with the CEO. After he first purchased the stock in late 2010, Cuccinelli's family spent Thanksgiving at WIlliams' vacation home with a $1500 catered dinner. Cuccinelli purchased an additional 3,600 shares of stock a few months later. Then, after using Mr. Williams' lake house again in the summer of 2012, Cuccinelli sold a portion of his share for a $4,000 profit. Cuccinelli stated that was to "free up capital for personal expenses that were due shortly thereafter.”
Cuccinelli neglected to report some of the gifts, including the stays at Williams' house. He maintains that he had forgotten to include them and reported them as soon as an aide on his staff reminded him. In Virginia it is required that any gift over $50 be reported, but there is no penalty for an elected official who forgets to disclose gifts. Purposefully leaving out gifts is considered a misdemeanor. Cuccinelli's campaign has since drafted reforms to the current gift disclosure laws to prevent these scenarios from happening again. The law would enforce ten day reporting periods for gifts over $500 and provide forms for disclosing gifts that are easier to complete. The law would also close the family loophole, which currently allows immediate family to receive gifts without having to disclose them.
In early 2013, Star Scientific started experiencing slow sales and bad publicity as the McDonnell scandal grew in publicity. Its stockholders were being investigated and it experienced its biggest loss for the quarter. A financial adviser to Cuccinelli recommended he sell his remaining shares of the company, which he did, suffering a large financial loss in the process.
Cuccinelli remained out of Star Scientific spotlight for months but felt he should reveal his own shares and relationship with Jonnie Williams after reading the briefs from the ongoing controversy with McDonnell. At that point, Cuccinelli requested an independent investigation into whether or not he broke the law with his acceptance of gifts and relationship to Williams. Michael Herring, Richmond Commonwealth's attorney, led the investigation and released a public report stating that there is no evidence Cuccinelli broke any laws. "We find no evidence that in his statements the AG intentionally mischaracterized gifts and benefits from Star Scientific and Williams,” he said. After the investigation, Herring said that “one cannot help but question whether repeated omissions of gifts from Williams are coincidence or a pattern reflecting intent to conceal, the disclosure of several other gifts and benefits from Williams in his original statements suggests that the Attorney General was not attempting to conceal the relationship.”
- Green Tech Automotive (dead link)
- Report from Richmond Commonwealth’s Attorney Michael N. Herring on Cuccinelli and Star Scientific
- New York Times, Hopeful’s Connections Jolt Bitter Virginia Race, August 9, 2013
- U.S. Citizen and Immigration Services, Green Card Through Investment, accessed August 16, 2013
- Think Progress, Despite Ken Cuccinelli’s Claims, Records Show Deep Involvement In Bob McDonnell Ethics Controversy, July 10, 2013
- Newsplex, AP: Cuccinelli Says He Will Not Return Gifts From Star Scientific CEO Jonnie Williams, July 31, 2013
- New York Times, Virginia’s Attorney General Faces Scrutiny for Ties to Executive, July 15, 2013
- Times Dispatch, Cuccinelli discloses more gifts from Star Scientific CEO, July 17, 2013
- MSNBC, Cuccinelli cleared of wrongdoing in Star Scientific disclosures, July 18, 2013