The McDonnells paid back Star Scientific chief executive Jonnie R. Williams Sr. $52,278.17 for a $50,000 loan made to first lady Maureen McDonnell in 2011 and $71,837 for $70,000 provided last year to a real estate company the governor owns with his sister.
The announcement represents the first time McDonnell has expressed regret or said he and his family have embarrassed the state by accepting Williams’s largess, which has included gifts first reported by The Washington Post in March. The executive also provided the family with luxury items, a $10,000 engagement gift for one daughter and $15,000 in wedding catering for another. McDonnell’s statement referred only to the loans, but his daughter Jeanine has returned the $10,000 engagement gift, said someone familiar with the transaction who spoke on the condition of anonymity.
McDonnell’s repayment and apology appear to signal a shift in strategy since the governor brought on a new legal and public relations team this month to handle federal and state investigations into the family’s relationship to Williams and a few other gift-givers. The move comes less than a week after McDonnell released what was billed as an “external report” — one prepared, at state expense, by a lawyer representing him — that concluded that Star Scientific received no state contracts or other benefits from state government.
The governor’s move will not help him legally if federal prosecutors conclude that he swapped state favors for loans and gifts from Williams, said Jacob Frenkel, a former federal prosecutor.
“Repayment of the loan may be an important political gesture, but it makes no difference as to the intent in play at the time of receipt of the loan,” Frenkel said.
But it could help repair the public image of someone who has plunged from 2016 presidential hopeful to someone ensnared in twin investigations.
The statement, which did not suggest that the governor has returned any gifts from Williams, was issued in a week when he has had one public event on his schedule: a closed visit Monday to Walter Reed National Military Medical Center. McDonnell’s spokesman declined to disclose the governor’s whereabouts Tuesday, saying only, “He has been busy with state business all day.”
McDonnell’s statement fell short of what Sen. J. Chapman “Chap” Petersen (D-Fairfax) has been calling on him to do: return the gifts and explain them to the public or resign.
But Petersen applauded the governor for making what he called an important first step. “I support the governor, and I want to see him make this situation right,” he said.
The announcement brought McDonnell immediate praise from the state House Republican leadership.
“We appreciate his honesty and willingness to address this issue in a forthcoming manner,” said the written statement from House Speaker William J. Howell (Stafford) and other House Republican leaders. “This is an important step toward regaining the trust and confidence of the people of Virginia.”
Senate Republicans did not issue a statement, and at least one said privately that McDonnell’s apology was overdue.
But Sen. Bryce E. Reeves (R-Fredericksburg) welcomed McDonnell’s statement. “True leadership is the ability to accept criticism and make statements when you’re wrong, to accept responsibility and apologize,” he said. “That makes us human.”
But McDonnell’s move did not quiet some of his critics.
“I have a lot of former clients — criminal clients — who probably wished apologizing was all it took to get out of trouble, but the world doesn’t work that way,” said Del. Scott A. Surovell (D-Fairfax), a lawyer who stood by his recent call for the term-limited governor to step down. “I don’t see how you can devote your full time and attention [to governing] when you’re trying to defend yourself and your entire family from an investigation by the United States attorney’s office.”
McDonnell has been under scrutiny since late March, when The Post reported that the governor and first lady had promoted Star’s dietary supplement about the time that Williams picked up the $15,000 catering tab at the June 2011 wedding of their daughter Cailin.
The governor had not reported the gift on his disclosure form with the state but said he did not have to because it was a present to his daughter, not him. Virginia ethics laws, some of the loosest in the nation, allow officeholders to accept gifts of any value as long as they disclose any worth more than $50. Gifts to immediate family members do not need to be reported.
Since that time, more gifts from Williams have come to light, including a $6,500 Rolex for the governor and a $15,000 Bergdorf Goodman shopping spree for the first lady. Investigators are also looking into whether Maureen McDonnell received free cosmetic dental work from a Richmond dentist and jewelry from a state delegate, according to people who are familiar with the investigation.
McDonnell and his wife have taken steps to promote Star’s supplement, Anatabloc, an anti-inflammatory billed as holding promise for treating Alzheimer’s and other serious ailments. Alzheimer’s experts have questioned those claims, as have shareholders, who have filed a lawsuit claiming the company exaggerated the product’s promise.
Maureen McDonnell touted the product at a seminar for investors in 2011 and hosted an event at the governor’s mansion marking the launch of the product, which the governor also attended. The McDonnells have encouraged Virginia’s health secretary and one of his advisers to meet with Williams so he could make a pitch for his product. A Star salesman also met with Virginia’s top human resources official to request that the state consider having the health plan for state employees cover Anatabloc.
State officials have said Williams reaped nothing from those meetings, and the governor has said he and the first lady did nothing to boost Anatabloc that they would not have done to promote any Virginia-based enterprise.
McDonnell’s statement indicates that money to repay Williams came from the governor, the family business and relatives. Maureen McDonnell had been telling friends that the couple was facing financial stress as she was soliciting loans from Williams. Friends of the governor recently established a fund to help pay his legal bills.
A person familiar with the finances of the corporation that McDonnell owns with his sister has also said the company suffered with the collapse of the housing market and had accepted three loans from family and a friend before those from Williams.
Williams’s attorney, Jerry Kilgore, declined to comment on the governor’s repayment.
Williams also gave gifts of more modest value to Attorney General Ken Cuccinelli II, the GOP’s nominee for governor,
and Democratic candidate Terry McAuliffe has tried to make that an issue in the race. Cuccinelli failed to disclose substantial stock holdings in the company and two stays worth a combined $4,500 at Williams’s Smith Mountain Lake vacation house.
Those were on top of nearly $13,000 in other gifts that Cuccinelli had reported receiving from the executive or his company, including another stay at the lake house in 2011.
Cuccinelli said his reporting lapses were inadvertent. A state prosecutor investigated and announced last week that he found no evidence that Cuccinelli had broken the law.