McDonnell (R) and his wife, Maureen, would have been charged with working together to illegally promote a struggling dietary-supplement company in exchange for gifts and loans from its chief executive, the people said.
The plan to seek the felony charges this week changed, however, after attorneys for the state’s first couple met with Deputy Attorney General James M. Cole on Dec. 12.
The attorneys argued that the governor had done nothing improper to assist businessman Jonnie R. Williams Sr. In particular, they focused on the credibility of a key witness, said a person familiar with the presentation. They also argued that if prosecutors proceeded with charges, they should wait until after McDonnell left office Jan. 11 to allow a smooth transition of power to Gov.-elect Terry McAuliffe (D).
Some element of the lawyers’ arguments apparently persuaded the Justice Department to delay, according to people with knowledge of the case. The people spoke on the condition of anonymity because of the sensitivity of the case.
On Friday, the day after the meeting, McDonnell’s attorneys were told that the decision would be put on hold, the people said. A final decision about whether to press charges is now not expected before Jan. 2 and could come as late as February, they said.
Jason Miyares, a spokesman for McDonnell’s legal team, and William A. Burck, an attorney for McDonnell’s wife, declined to comment. Boente and a spokesman for the Justice Department also declined to comment. McDonnell has maintained that he has done nothing wrong.
It is not unusual that a high-profile target, especially a sitting governor, would be allowed a chance to appeal a U.S. attorney’s charging decision to top officials of the Justice Department. It would be very rare, however, for the Justice Department to ultimately overturn a decision made by a U.S. attorney.
Federal prosecutors have been investigating the McDonnells’ relationship with Williams for most of this year. Williams provided more than $165,000 in gifts and loans to the governor and his family. The gifts came as the McDonnells took steps to promote Williams’s company, Star Scientific Inc., including hosting a lunch at the Executive Mansion to mark the launch of a new product. The McDonnells also helped company executives secure meetings with state officials.
McDonnell has apologized for the relationship, but he insisted that he treated Star just as he would have any other Virginia-based business. The company received no state grants, contracts or board appointments.
He has said in several recent interviews that he would like to see the investigation concluded as quickly as possible.
“I’m hoping it will all be resolved in the very near future,” he told The Washington Post last month.
But privately, as prosecutors signaled their intent to file charges, McDonnell’s attorneys have been pressing Justice Department officials to reconsider or delay — at least long enough for McDonnell to complete his four-year term and avoid becoming the first sitting governor in state history to face criminal charges.
The investigation has focused on whether McDonnell violated the Hobbs Act, which makes it a federal crime for a public official to receive payments or other financial gifts, knowing that those payments are in return for the official’s promise to take action in his government role.
To prove the crime, it is not necessary to show that the public official actually took the steps or that any of the official acts resulted in benefits to the person making the payments. Private citizens can also be charged under the law if they caused the public official to take actions or make such promises.
McDonnell is also the subject of a state investigation into whether his annual financial disclosures complied with Virginia law. It is a misdemeanor under Virginia law for an elected official to knowingly submit false or incomplete information on annual financial disclosure forms.
McDonnell has said he complied with state law, which allows elected officials to accept gifts of any value provided they disclose those worth more than $50; they are not required to disclose gifts to their families or loans to their businesses.
Attorneys working for Attorney General Ken Cuccinelli II (R) learned in March 2012 of allegations that McDonnell’s forms might be incomplete. As required by law, Cuccinelli designated a local prosecutor to conduct a full investigation, turning the case over to Richmond Commonwealth’s Attorney Michael Herring in November 2012.
But Virginia law requires prosecutors to press charges within a year of being alerted to possible legal violations. That statute of limitations is expiring, which has become a factor in both the state and federal investigations.
Herring had reached an agreement with McDonnell’s attorneys to extend the statute of limitations into this month, said a person familiar with its terms. But the state probe has been on hold while federal prosecutors decided whether to proceed with more serious felony charges, and federal prosecutors felt pressured by the looming state deadline, the person said.
On Friday, all sides agreed to extend the deal on the state charges — known as a tolling agreement — into early February. That allows more time for federal authorities to make a final decision.
Herring would not comment on the federal probe other than to say that he is “awaiting a final decision from the Justice Department.”
“But,” he added, “I have to plan for other contingencies as well, such as the matter being returned back to my office.” Herring would not provide information on the tolling agreement.
Witnesses at issue
The McDonnells’ attorneys argued to the Justice Department last week that key witnesses were problematic, a person close to the case said.
Among other issues, the attorneys have been telling federal prosecutors that there could be weaknesses in the testimony of Mary Shea Sutherland, the former chief of staff to Maureen McDonnell.
E-mails obtained under a freedom of information request show that Sutherland was intimately involved in the planning of an event held at the governor’s mansion in August 2011 that marked the launch of a Star Scientific dietary supplement called Anatabloc.
Prosecutors believe that the luncheon event was one way the couple helped Williams’s company, people with knowledge of the case said.
Attorneys for the McDonnells have argued that they could convince a jury that Sutherland was trying to curry favor with Williams, including by helping to organize the mansion event, according to a person close to the case.
Sutherland corresponded with Star Scientific executives before the company issued a news release touting the event. She also urged the governor’s scheduler to ensure that the governor attended. When the scheduler suggested that McDonnell might be busy, Sutherland wrote back, “The [first lady] isn’t going to be happy about it.”
In that same time frame, Sutherland was given an expensive dress by Williams on a New York City shopping trip during which Williams also bought $15,000 in high-end clothing for the first lady, the people said.
The defense attorneys also point to a draft of a 2011 contract they said shows that Williams and Sutherland were in negotiations for Sutherland to leave her government job and work for Williams through an independent event planning firm.
The employment contract was never executed. Ted Bruns, an attorney for Sutherland, declined to comment. He has previously said Sutherland never worked for Williams and has called the idea that Sutherland attended a Star event without the first lady’s knowledge “curious.”
The event was held at the governor’s 200-year-old official residence, and the first lady served as host. The governor attended as well. It was paid for by the governor’s political action committee.
Asked about the Star Scientific mansion event in March, a spokesman for the governor said all requests for use of the mansion are approved by the governor’s chief of staff. “The decision to have the event was based solely on the benefit to the Commonwealth,” spokesman Jeff Caldwell said in a statement then.
Matt Zapotosky contributed to this report.