RICHMOND — A government watchdog group called on the Internal Revenue Service Tuesday to investigate whether Gov. Robert F. McDonnell, first lady Maureen McDonnell and Attorney General Ken Cuccinelli II had failed to report and pay taxes on gifts received from Star Scientific and its chief executive.
Citizens for Responsibility and Ethics in Washington (CREW) filed formal complaints with the IRS, alleging that luxury items and monetary gifts should be considered income to the McDonnells and Cuccinelli, making them subject to income tax.
“Even if prosecutors have a tough row to hoe proving willful and knowing violations of gift and bribery laws, tax violations may be easier to pursue,” said Melanie Sloan, executive director of CREW. “Al Capone, after all, was convicted not of extortion or murder, but tax evasion. The IRS should investigate immediately.”
Federal and state investigators are probing gifts and $145,000 in payments or loans that Star chief executive Jonnie R. Williams Sr. provided to the McDonnells, who took steps to promote the company’s nutritional supplement, Anatabloc. The Republican governor has said their efforts were consistent with their promotion of Virginia businesses generally.
Cuccinelli, the GOP’s candidate for governor, initially failed to disclose his substantial stock in the company and $4,500 in gifts from Williams. Those were in addition to others gifts totaling nearly $13,000 that Cuccinelli had previously reported receiving from the executive or his company. A state prosecutor announced last week that he had found no evidence that Cuccinelli had broken the law.
Spokesmen for the McDonnells and Cuccinelli dismissed Crew’s announcement as politically motivated.
“A quick look at their [CREW’s] website shows they are pro-Democrat,” said Rich Galen, who is handling questions about the gifts scandal for the McDonnells. “It would be more ‘ethical and responsible’ for them to state that openly.”
Richard T. Cullen, a Cuccinelli campaign spokesman, said: “Let’s get one thing straight, CREW is a Democrat front group; it’s run by Democrats and for Democrats. I wonder how quickly they will launch an investigation into Terry McAuliffe and GreenTech’s inappropriate solicitation of EB5 visas.”
Cullen was referring to Cuccinelli’s Democratic rival for governor, Terry McAuliffe, and the electric car company he co-founded with financing through a program that grants visas to foreign investors. McAuliffe has said that the visa program has been widely supported by Republicans and Democrats.
In announcing its request for an IRS investigation, CREW noted that taxpayers must report “all income received.”
“A gift can only be excluded from income if it was genuinely given out of generosity with no expectation of receiving a benefit in return,” the CREW announcement said. “Similarly, only a bona fide loan — one the borrower expects to pay back and the lender expects to be repaid — may be excluded from reported income. Failing to report all income and pay taxes can result in fines and criminal liability.”