Bob and Maureen McDonnell, businessman bonded over financial needs, prosecutors say

In their first real conversation beyond brief pleasantries, Jonnie R. Williams Sr. and the soon-to-be first couple of Virginia found themselves in a swanky hotel lounge in New York, chatting about a dress.

Maureen McDonnell fretted to the Richmond area businessman about expenses for her husband’s coming inaugural and wondered aloud whether she could ever afford a sufficiently elegant gown.

Williams said he knew designer Oscar de la Renta personally, people familiar with the conversation said, and he would be happy to help the new first lady get a dress for the big occasion.

The wealthy businessman didn’t know the couple well, having spoken with the then-candidate only in passing. He had earned this private audience in December 2009 by lending Robert F. McDonnell’s gubernatorial campaign his private plane earlier that year.

Williams’s reputation as a suave and garrulous Southern gentleman eager to make important friends was on full display, according to some accounts. But other accounts indicate that it was Maureen McDonnell who made a garish request of a new political supporter — and eventually got her $5,000 gown.

The exchange at the Four Seasons Hotel lounge was a critical moment in the relationship between Williams and the McDonnells and the beginning of a series of gifts Williams would bestow on the first family. It marked the merger of two parties with complementary — even symbiotic — needs, prosecutors say.

A central question about their exchanges will be argued in a federal courtroom in Richmond later this year: Did Williams bend over backward to ingratiate himself with the state’s governor for his company’s benefit, or were the McDonnells using their positions to make requests that were hard to refuse?

The relationship culminated in the dramatic downfall of a onetime presidential hopeful. The McDonnells were indicted Tuesday on charges of promising to help boost the fortunes of Star Scientific, Williams’s dietary supplement company, in exchange for $165,000 in luxury gifts, vacations and loans.

For two years, the McDonnells and Williams seemed to be close friends, e-mailing and texting one another often and traveling together. The McDonnells vacationed with the Williamses, who often visited the governor’s mansion and were invited to the wedding of the McDonnells’ daughter.

Behind the scenes, Star Scientific desperately needed validation and trust in its new product line. And the McDonnells needed a financial patron, as they privately struggled with mounting debt and clung at times to a luxury life beyond the means of a public servant.

Now they are set to square off on opposing sides in a historic public corruption prosecution that accuses the McDonnells of using the governor’s office for personal gain.

The prosecution’s star witness? Jonnie Williams.

“We had a very positive relationship for three or four years,” McDonnell told the Associated Press in August after he learned that Williams had been cooperating with investigators. “Right now, we’re just in a different situation.”

Details of the relationship between the McDonnells and Williams are outlined in the 43-page indictment filed against the former governor and his wife. Some were corroborated and fleshed out by Washington Post interviews with witnesses or people briefed on their accounts. The McDonnells say they accepted the gifts and loans from Williams but did nothing to help him or his company that they would not have done for any other Virginia business. Williams, they say, has lied about their relationship to get immunity from prosecutors. They have said they did not commit a crime.

An attorney for the former governor did not respond to a request for comment. Attorneys for Maureen McDonnell, Williams and a spokesman for the U.S. attorney declined to comment.

How they met

Both Williams and Governor-elect Robert McDonnell were facing financial worries when they met in late 2009. Prosecutors argue that it’s what drew them together.

Williams was a well-heeled businessman who had luxurious tastes and was generous with his wealth, earned in some profitable investments over the years. Some of Williams’s ventures had been flops, and the dietary supplement company in which he was then the principal investor was threatening to join them.

Star had endured seven years of operating losses and was pinning its future on a new “nutraceutical,” a supplement that didn’t face the regulatory standards of pharmaceuticals but claimed to have anti-inflammatory powers.

The product, Anatabloc, combined vitamins with alkaloids found in tobacco, most importantly anatabine. The company cited research suggesting that anatabine held promise as a possible miracle treatment for diabetes, Alzheimer’s and multiple sclerosis. But the product needed scientific validation to win sales in a crowded market.

McDonnell, a longtime state legislator, had served four years as attorney general and was about to serve four more as governor. His power and prestige were high, but his pay, $175,000 a year, was relatively low compared with the salary he could have commanded at Richmond law firms.

His financial stress came, in part, from two Virginia Beach vacation homes he owned with his sister. The investment properties required $60,000 a year in mortgage payments, but the rental income fell short, forcing the family to make up the difference with loans from relatives and friends.

In public, McDonnell was cheered by the nation’s GOP elite as a rising star when he won election in a landslide that fall. But not long after, in private, his wife complained that he was scolding her for worsening their money woes.

“Bob is screaming about the thousands I’m charging up in credit card debt,” Maureen McDonnell wrote in an e-mail to one of her husband’s top advisers. “We are broke, have an unconscionable amount in credit card debt already, and this Inaugural is killing us!!”

McDonnell has said he admired Williams as a self-made man from a working-class background and thought they had much in common. Both were fathers of large families, in their 50s, and had begun their careers in health-care services and supplies.

“We had interesting early discussions about the field of health care and about our families,” he said in an August interview.

Luxuries from a friend

One of those discussions came in fall 2010, McDonnell’s first year in office. Williams offered up his private plane again — this time to take the governor to Sacramento for a political event. Williams and McDonnell flew together on the return trip to Richmond, using it as an opportunity to discuss Star’s products and the company’s need for state help to get independent research of anatabine, prosecutors say.

The governor said he would arrange for Secretary of Health Bill Hazel to meet with Williams about anatabine research, and a few days later, his staff was setting up the meeting, according to the indictment.

“[T]he Governor would like you to review the attached,” a McDonnell staffer wrote to Hazel that October, attaching some research of anatabine’s impact on Alzheimer’s.

Hazel was skeptical about an unproven product, and he told Williams that. Nothing came of their meeting.

Meanwhile, Maureen McDonnell was staying in close touch with the couple’s new friend.

Although Williams had offered to buy her an inaugural gown, she had told him she would take a “rain check” after one of her husband’s top advisers warned her that it was inappropriate to accept such a gift, the indictment said.

In April 2011, she called in her chit. She asked Williams to take her on a shopping trip to New York, according to court papers filed by prosecutors. She and her husband were attending a Union League Club dinner that night, and she promised to get Williams seated next to the governor. He bought her a jacket at Bergdorf Goodman, shoes at Louis Vuitton and two dresses at Oscar de la Renta, as well as other accessories — for a total of about $19,000.

After that, Maureen McDonnell seemed to have a never-ending list of requests for Williams, prosecutors charge. And while making her requests, she told Williams, in e-mails and texts laid out by prosecutors, that she would work on his priority: getting prestige and research for Anatabloc.

In May 2011, she confided that the family needed financial help and asked him for a $50,000 loan and $15,000 to pay the catering costs for her daughter Cailin’s wedding, the charging papers say. Williams said he had to talk to the governor about money, and he recounted how the governor explained the problems paying the Virginia Beach mortgages, prosecutors say. A spokesman for McDonnell has said that conversation did not happen.

Williams wrote the checks and hand-delivered them to Maureen McDonnell. A week later, the first lady spoke at a promotional event for the company in Sarasota, Fla., and announced that she and the governor would host the product launch for Anatabloc at the historic Executive Mansion in downtown Richmond.

In July, the first family was off to Williams’s resort home at Smith Mountain Lake, as a Star staffer was delivering Williams’s Ferrari to the house so the governor could drive it. On the last night of the vacation, July 31, Maureen texted Williams a picture of the governor driving the Ferrari, and the same night, the governor e-mailed Hazel, the secretary of health.

“[I] would like to have [one of your deputies] attend a short briefing at the mansion about 10 am with first lady on the Star Scientific anatablock [sic] trials planned in va at vcu and uva,” he wrote.

Sitting together before the Aug. 1 briefing, Maureen McDonnell admired Williams’s Rolex watch and eventually asked him to buy one for her so she could give it to her husband, prosecutors have alleged. The chief executive asked her whether a public official would feel comfortable wearing one but agreed to buy it. He had it engraved per her instructions: “71st Governor of Virginia.”

On Aug. 30, the McDonnells hosted the Anatabloc product launch at the mansion.

The requests from Maureen McDonnell were so frequent that at times Williams felt a little used and put her off, according to several people briefed on his account to prosecutors.

The most awkward instance came when the first lady asked for help getting vehicles for her adult children, they said. One of those people said that after the Smith Mountain Lake vacation, when the governor’s sons drove Williams’s Range Rover home, the first lady asked whether the boys could take the vehicle back to the University of Virginia to drive around campus. He demurred.

Shortly after, the first lady called with a new idea, according to the person: Could he give her money to help Cailin buy a used Ford Explorer? Again, he declined.

That fall, Star officers were focused on how to get state tobacco commission funding for independent researchers at the state’s universities to conduct trials of anatabine. Both McDonnell and his wife repeatedly brought it up with the governor’s staff, prosecutors say.

The couple’s effort continued through February 2012, intertwined with Williams’s continued help on the beach houses.

“Gov wants to know why nothing has developed w studies after [Williams] gave $200,000,” Maureen wrote to the governor’s policy adviser on Feb. 10. “Gov wants to get this going w VCU MCV. Pls let us know what u find out after we return.”

Just before midnight on Feb. 16, the governor e-mailed Williams about their plan to have Williams transfer Star stock he owned into a brokerage account that could help pay the McDonnell beach house mortgages. “Know u have been slammed. Do u want me to call your lawyer on the certificates and the documents. Thanks for all your help. Gov.”

Six minutes later, the governor sent an e-mail to his policy adviser: “Pls see me about anatabloc issues at VCU and UVA. Thx”

Star never applied for or received the tobacco commission funding for state research. But Williams also hoped the state could give his product credence by examining whether state employees’ voluntary use of Anatabloc could reduce health care costs. In March 2012, the governor met with his secretary of administration, holding a bottle of Anatabloc, and telling her he personally took it and it worked well for him, the indictment says. The governor asked her to reach out to the “Anatabloc people” and meet with them about the health-care costs idea.

Former staffers say the governor’s attachment to Anatabloc was well known. Aides would listen for the sound of the small bottle of pills jiggling in his pocket as he walked down the hall to know their boss was approaching.

Two months later, in May, the governor texted Williams: “Per voicemail would like to see if you could extend another 20K loan for this year. Call if possible and I’ll ask [brother-in-law] to send instructions.”

Williams replied: “Done, tell me who to make it out to and address. Will FedEx.”

During this latter half of 2012, Williams shared with colleagues that he was mildly frustrated, according to two people with knowledge of his account to authorities. The McDonnells had been great public cheerleaders for Star, but for all the governor’s promise of help on state support and research, Williams wasn’t seeing tangible results. Some cautioned Williams that the McDonnells might be stringing him along.

Securities probe

The Williams and McDonnell bond started quietly to come apart in late 2012, as federal investigators began probing Star Scientific for possible securities violations. Officials were focused on whether company officers had tried to raise money for Star without disclosing it, as required, in corporate filings, according to people briefed on the case and public records.

In January 2013, agents went to visit Williams at his condo in Florida, joining state investigators who were looking at whether McDonnell properly disclosed gifts he received. The U.S. Attorney’s Office in the Eastern District of Virginia served subpoenas on Star soon after, eyeing private stock placements going back six years, the company soon revealed to investors.

The SEC issue was entirely unrelated to the McDonnells and has not been prosecuted. But in reviewing company records, attorneys for Star and Williams realized the huge volume of personal and corporate money that their chief executive had been spending on the governor and his family, according to two people briefed on his account.

At his attorneys’ urging, Williams began secretly cooperating with investigators.

What Williams handed to federal prosecutors in Richmond was the outline of a case far more serious and compelling than a routine breach of securities regulations. It was the biggest case some of the line prosecutors had ever handled.

Neither McDonnell knew of Williams’s cooperation until months later.

Even after federal agents began questioning the McDonnells directly in February, Maureen McDonnell appeared to hope they could all stay friends.

“Please know that we cherish our friendship with you and look forward to many more wonderful memories together ahead!” she wrote in a note to Williams when returning her designer dresses. “XOXO! Maureen McDonnell”

Alice Crites and Laura Vozzella contributed to this report.

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