Steele Defends Payment to Sister

RNC Chairman Says Campaign Costs Were Legitimate and Documented

Michael S. Steele on
Michael S. Steele on "This Week." (By Lauren Victoria Burke -- Abc News Via Associated Press)
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Washington Post Staff Writer
Monday, February 9, 2009; Page A06

Michael S. Steele, the new chairman of the Republican National Committee, said yesterday that there was nothing improper in a payment of more than $37,000 to his sister's company for work on his 2006 Senate campaign and that he would work with the FBI "to clear up my good name."

In his first public comments on the inquiry, Steele said on ABC's "This Week" that the FBI is "winding this thing down," although he did not explain how he knew that.

In recent days, federal agents have contacted his sister, Monica Turner, according to a spokesman for Steele. Steele said those contacts were for "purposes of closing out" the matter. He said he will be "proactive" in gathering information to give to the FBI.

"I'm not going to wait for them to come to me," Steele said. "I'm going to take it to them. I'm going to give them everything that they think they need, and if that's not enough, we'll give them more, because I want to clear up my good name. This is not the way I intend to run the RNC, with this over my head. We're going to dispense with it immediately."

Steele, who was Maryland's lieutenant governor from 2003 to 2007, said the claim of improper payments to his sister's defunct business and other allegations reported Saturday in The Washington Post were leveled by a "convicted felon" and are "all false."

The man behind the allegations is Alan B. Fabian, a once-wealthy GOP fundraiser who was finance chairman for Steele's Senate run. Fabian, 44, made the claims last year during plea negotiations with the U.S. attorney's office in Maryland after he was charged with orchestrating multimillion-dollar frauds unrelated to the campaign, according to a confidential court document.

Hoping prosecutors would recommend a lighter sentence, Fabian provided them with information about Steele and said he would be willing to testify against him, according to the document, a sentencing memorandum prepared by Fabian's attorney and filed under seal in the fall before Fabian's sentencing in federal court. The U.S. attorney's office did not recommend a shorter prison term, and Fabian was sentenced in October to nine years behind bars.

The sealed document was inadvertently sent to The Post by the U.S. attorney's office after the newspaper requested the government's sentencing memorandum, which was not filed under seal.

In the defense memorandum, Fabian cited four specific transactions. In addition to the payment to Steele's sister, Fabian said that the candidate used money from his state campaign improperly, that Steele paid $75,000 from the state campaign to a law firm for work that was never performed and that Steele or an aide transferred more than $500,000 in campaign cash from one bank to another without authorization.

Curt Anderson, a spokesman for Steele, said the payments from Steele's state campaign fund were proper. In the case of the law firm, Baker & Hostetler, it was paid $75,000 for earlier work on a redistricting challenge in Maryland, according to Anderson and a lawyer who worked on the case. In the case of the bank transfer, Steele had authority over the account in question, Anderson said.

The payment to Steele's sister was the focus of questions yesterday.

Campaign records indicate that $37,262 paid to Brown Sugar Unlimited covered catering and Web services. But it came 11 months after Turner, a pediatrician who lives in Potomac, had legally dissolved the company.

In the ABC interview, Steele said that not paying his sister for her work would have been a violation of campaign finance law. He criticized The Post for publishing a story where "there is no story" and said he provided receipts to prove the expenses were legitimate. On Friday, a spokesman for Steele provided a receipt for catering costs totaling almost $15,000 for two events, about half the total. The spokesman said they were searching for receipts to document the rest.

When asked about the timing of the payment, after Turner had dissolved the company, Steele told host George Stephanopoulos:

"That, I don't know about. What I do know about is the fact that, as she understood it, the company was still in existence. Her lawyers were telling her they were in the process of dissolving the company, so at the time when the checks were written back to her to reimburse her, she just said, 'Go ahead and write the checks to the company,' because the company had, you know, done the services that were provided."

U.S. Attorney Rod J. Rosenstein and federal public defender James Wyda, who was one of Fabian's attorneys, have declined to comment on Fabian's allegations.

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