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Updates: Day 10 of the McDonnell corruption trial

August 8, 2014
Former Virginia first lady Maureen McDonnell heads into the federal courthouse Thursday in Richmond, where the federal corruption trial against McDonnell and her husband, former governor Robert F. McDonnell, continues. (AP Photo/Richmond Times-Dispatch, Bob Brown)

Former Virginia first lady Maureen McDonnell heads into the federal courthouse Thursday in Richmond, where the federal corruption trial against McDonnell and her husband, former governor Robert F. McDonnell, continues. (AP Photo/Richmond Times-Dispatch, Bob Brown)

Former Virginia Gov. Robert F. McDonnell (R) and his wife, Maureen, are battling a 14-count public corruption indictment that alleges they lent the prestige of the governor’s office to a Richmond area businessman, and in exchange, the businessman lavished them with gifts and money. Jurors on Friday resumed hearing testimony from witnesses during a trial in federal court in Richmond.

 Interactive: McDonnell gifts list | Twitter: Latest | Previous days: The trial | Photos | Indictment

  • Laura Vozzella
  • ·

Judge James R. Spencer dismissed witness John Piscitelli, the McDonnell’s stockbroker, and called it a day.

“We made it through another week,” he told the jury. “I don’t know about you, but I’m really thanking God it’s Friday.”

Testimony resumes Monday at 9:45 a.m.

  • Laura Vozzella
  • ·

Maureen McDonnell’s lawyers tried to paint her as too unsophisticated to engineer an end-of-year stock transfer that prosecutors say was intended to dodge state disclosure laws.

“Is it fair to say she’s not a sophisticated stock purchaser?” William Burck, one of the first lady’s defense lawyers, asked stockbroker John A. Piscitelli.

Piscitelli said that she was not. Star was the only stock she had ever bought through Piscitelli. He said he had warned her that it was a highly risky stock, saying that investing in a company “that has no earnings is more than a gamble,” he testified. “I did warn her it was speculative.”

But beyond that advice, he said he did not try to talk her out of plowing more than $30,000 into the stock. He said as a broker, he never wants to be in the position of talking someone out of what could, against all odds, be a winner. In early 2012, however, he said sent Maureen McDonnell a news article that put the company in a negative light.

When prosecutor Michael Dry got another pass at the witness, he tried to counter the defense’s theme that Maureen McDonnell was not capable of the alleged stock-disclosure scheme. Dry reminded Piscitelli that when first interviewed by law enforcement officials, the broker said the first lady was no dummy.

“She might not have been a sophisticated investor, but you thought she was a smart woman?” Dry asked.

Piscitelli agreed he had told investigators that.

Dry wrapped up by asking the broker to share the purpose of Maureen McDonnell’s sale and repurchase of stock at the end of 2012 and the start of 2012, and her transfer of most Star shares at the end of 2012.

“As you sit here now, in your mind, is there any confusion on your part” that the first lady made those stock moves to avoid reporting requirements?

“I believe that was the case,” he said.

  • Rachel Weiner
  • ·

Maureen McDonnell has long been an enthusiast of “nutraceuticals” and seemed genuinely excited by Star Scientific’s product, her stockbroker testified Friday.

Under questioning by Daniel Smalls, a defense attorney for Robert F. McDonnell, John Piscitelli confirmed that he had told a grand jury that the first lady “had drunk the Kool-Aid” when it came to Star and thought it would “revolutionize” health care. She was interested in nutraceuticals “from way back,” Piscitelli said Friday.

The stockbroker also agreed that although the governor had thanked him during a conference call for helping his wife, no one on the call went into specifics about what that help entailed. Piscitelli never talked to the governor about a letter he sent to Maureen McDonnell about blind trusts and financial disclosure, he confirmed, and Bob McDonnell was not involved in his wife’s stock purchases.

That line of questioning is meant to emphasize the lack of concrete proof that the governor was involved at all in his wife’s purchasing of Star Scientific stock in 2011 and 2012. Small also tried to suggest that a note Maureen McDonnell gave to Piscitelli in 2011 detailing her financial situation for that stock account was inaccurate. The implication was that the first lady had not gone to her husband for the information, a line of questioning cut off by the judge.

  • Rachel Weiner
  • ·

When Robert and Maureen McDonnell danced together at a recent joint 60th birthday party, it was at their daughter Cailin’s urging, a witness agreed Friday.

Stockbroker John Piscitelli, a friend of the family, testified earlier that he had seen the couple dance “in a loving way” at the party. But under cross-examination by Daniel Small, a defense attorney for Bob McDonnell, Piscitelli confirmed that the couple spent most of the night apart and only came together because Cailin “surprised” them by “calling them up and challenging them to do a dance together, at their daughter’s request.”

Defense attorneys are still trying to show that the couple’s marriage was too fractured to support a conspiracy in 2011 and 2012, when businessman Jonnie Williams Sr. was lending them money and buying them expensive gifts, and that Maureen McDonnell had a “crush” on the Star Scientific executive. Throughout the trial, the two defendants have arrived and departed from court separately and have not interacted with each other. However, several witnesses have testified that they did not see any romantic interest in Williams from the first lady and that the governor and his wife appeared romantic with each other.

  • Laura Vozzella
  • ·

Maureen McDonnell’s request to transfer her Star Scientific stock to her five children before the end of 2012 came right down to the wire.

The McDonnell children provided the broker with some of the necessary paperwork so late in the day on Dec. 31 that the transfer couldn’t actually be processed until the next business day.

Because the family’s paperwork arrived on New Year’s Eve, the stock transfer was legitimately backdated as having taken place in 2012, the broker said, allowing then-governor Robert F. McDonnell to avoid having to disclose his wife’s stock holdings on his financial disclosure form for that year.

Maureen McDonnell had notified broker John Piscitelli by Dec. 26 that she was ready to move ahead with plans to transfer most of her 6,700 Star shares to her five children. She wanted to give each of the five children 1,000 shares, he testified.

Piscitelli said a series of text messages from Maureen McDonnell arrived in the following days, in which she expressed frustration that her children had not yet turned in the documents necessary for the broker to complete the transfer.

The last of that paperwork arrived late in the New Year’s Eve work day, so late that many of the staffers needed to complete the transfer were already gone for the day. Piscitelli said the transfer could not be completed until the next work day, but he said it was legitimately logged as having taken place on Dec. 31 because that’s when the directive from his client came.

Before the transfer, Maureen McDonnell had $17,883.67 in Star Stock, well above the $10,000 threshold that triggers disclosure requirements. Afterward, she was below that threshold, with shares valued at $3,513.91.

Another change after the first of the year: for reasons Piscitelli said he could not recall, he stopped sending stock statements to the family’s home in Glen Allen. The new address was a P.O. Box.

  • Rosalind S. Helderman
  • ·

The McDonnells’ stockbroker John Piscitelli said he opened a separate segregated account to use to accomplish the deal the McDonnells had described to him in a joint conference call. This idea was to have the McDonnells borrow against Star stock that Jonnie Williams Sr. would continue to own.

But then nothing happened. At some point, Piscitelli said he asked Maureen McDonnell whether the deal was still going to happen.

“She responded, ‘No. We decided to go in another way,’” Piscitelli said.

He said he did not ask the first lady to describe that other way. “It was not my business,” he said.

“Were you relieved?” asked Assistant U.S. Attorney Michael Dry.

“Relieved is a good word,” Piscitelli said.

Ultimately, Jonnie Williams loaned $50,000 directly to MoBo, a limited liability corporation owned by the governor and his sister. McDonnell did not disclose the loan, he has said, because Virginia law does not require elected officials to disclose corporate liabilities.​

  • Rosalind S. Helderman
  • ·

On Feb. 24, 2012, stockbroker John Piscitelli forwarded first lady Maureen McDonnell a blog item he’d found online that raised doubts about Star Scientific and its chief executive Jonnie Williams Sr.

He said he sent the blog to be sure she knew what she was getting involved with by having financial interactions with Williams. Under questioning from Assistant U.S. Attorney Michael Dry, Piscitelli acknowledged that he would not ordinarily send this kind of advice to a client and, indeed, he had used his personal e-mail address to send it in this instance for that reason.

“Is is fair to say it’s a warning?” Dry asked him.

“Yes,” Piscitelli said.

  • Rachel Weiner
  • ·

Robert F. and Maureen McDonnell held a conference call in February 2012 with their stockbroker to discuss the possibility of borrowing money against Star Scientific stock, the broker testified Friday.

Robert F. McDonnell asked if a loan could be made against shares moved to the couple directly from Star Scientific. Broker John Piscitelli said he would have to have that approved because of the low price of Star Scientific stock. The couple told him that the account should be in Maureen McDonnell’s name only, he said, and should be segregated from an account she had previously used to buy Star Scientific stock.

“It was a bit puzzling” that a private company would be holding stock for the governor of Virginia, Piscitelli agreed under questioning from Assistant U.S. Attorney Michael Dry.

Dry referred Piscitelli to a transcript of his testimony before a grand jury, during which the stockbroker said that he didn’t ask the couple for more details because he did not really want to know, and that he assumed Bob McDonnell knew what was legal and what wasn’t. Piscitelli agreed that is what he said, but he testified he didn’t recall today his exact reason for not probing further.

Piscitelli also testified that during the call, Bob McDonnell thanked him for helping his wife with stock purchases. “‘I understand you’ve been helping Maureen,” Piscitelli recalled the governor saying. “‘I appreciate it. I just want to thank you.’” Attorneys and spokespeople for Bob McDonnell have said that he knew little of his wife’s decision to buy stock in Star.

The broker ultimately got approval for the loan, he testified Friday, but “ultimately it never happened.” Instead, Star Scientific executive Jonnie Williams wrote a $50,000 check directly to a small real estate company that the governor owned with a sister.

  • Laura Vozzella
  • ·

Maureen McDonnell asked her stockbroker for advice on how she could hide ownership of her Star Scientific stock, a request he told investigators made him uncomfortable, her broker testified just now.

Broker John Piscitelli said the first lady approached him in August of 2011 about how she could hide her ownership of more than 6,500 shares of Star stock. She had spent a little more than $31,000 on 6,000 shares that June, when they were selling for $5.18 a share. On Aug. 2, after telling the broker she had “a couple thousand dollars extra,” she plowed nearly $2,000 more into the stock, whose share price had by then dropped by to $3.82.

“She seemed to want some shares to remain in her name, but not necessarily wanting them to show up in her name,” Piscitelli said. “She had heard about a blind trust. ‘Was that a possibility?’”

Piscitelli said he understood that the first lady wanted to do something to “not have the shares show up on her year-end statement.”

She was apparently referring to the annual financial disclosure form that her husband filed as an elected official. While state law at the time did not require elected officials to report gifts given to relatives, it did require disclosure of any major stock holdings immediate family members held in any single company.

Jurors were shown a letter that Piscitelli wrote to Maureen McDonnell dated Sept. 9, 2011, a few weeks after their phone conversation.

“I don’t have the answer about how to avoid shares remaining in your name without transferring them to another entity,” he wrote. “You had mentioned the use of a blind trust.”

The letter then went on to say how such a trust would require her to forfeit control of her stock holdings.

Prosecutor Michael Dry asked Piscitelli why he had written the letter, and the broker said that it was because his conversation with the first lady had been “going a lot of different places.”

Dry reminded the broker that he had offered a different explanation when testifying before a grand jury prior to trial. Piscitelli had told grand jurors that he wrote the letter, in part, because Maureen McDonnell’s request had made him “uncomfortable” and that he wanted to document the fact that it was the first lady who had asked about a blind trust.

Had Piscitelli, indeed, been uncomfortable?

“There are different levels of discomfort,” Piscitelli said. He said he was more “puzzled” than anything else, but was also confident that as the McDonnells complied with state disclosure requirements, “they would do what is right and legal.”

Dry pushed: “As you sit here today, did the request make you uncomfortable?”

“Yes,” the broker said.

  • Rosalind S. Helderman
  • ·

John Piscitelli, friend of Robert F. and Maureen McDonnell and stockbroker for the couple, has testified that Maureen McDonnell was emphatic about the need to sell her more than 6,000 shares of Star Scientific stock before the end of the 2011 calendar year.

He said she was still discussing potentially gifting the shares to her children, but as the end of the year approached, she decided to sell. “She wanted the statement at year end not to show that she owned Star Scientific,” he said.

But the direction came with a caveat: She wanted the stock shares repurchased after the new year began. Piscitelli did as directed and sold the first lady’s stock on Dec. 20, 2011. He said the two had a misunderstanding. She believed the shares would be automatically repurchased and was distressed to learn in January that Piscitelli had not yet repurchased shares.

Ultimately, he used nearly all of the proceeds of the sale to purchase back 6,672 shares of Star Scientific for the first lady on Jan. 20, 2012. He said she was “frustrated” the purchase took so long but that emotion eased when she learned that Star’s stock price had fallen, so the delay actually meant she had acquired more shares than she had anticipated.

Assistant U.S. Attorney Michael Dry asked Piscitelli: During any of these conversations, did the possible tax implications of the sale or purchase come up? No, Piscitelli said. That was not a part of the discussion.

This issue with Maureen McDonnell selling and rebuying her stock is a part of the prosecution’s case that the McDonnells were trying to hide their relationship with Star executive Jonnie R. Williams Sr. Virginia state law required elected officials to report all stock shares held by any member of that official’s family valued at more than $10,000. The first lady’s actions appeared to be motivated by a desire to avoid reporting her Star holdings, according to prosecutors.

The tax question appears intended to defuse a possible defense argument that her actions were actually motivated by a desire to take a loss in the 2011 calendar year for tax purposes.

  • Rachel Weiner
  • ·

Maureen McDonnell handed over a $30,000 check at daughter Cailin’s wedding to pay for Star Scientific stock the former first lady had earlier purchased, stockbroker John Piscitelli just testified.

McDonnell had come to him and told him she wanted to buy stock in the company on June 1, Piscitelli said under questioning from Assistant U.S. Attorney Michael Dry.

She had borrowed $50,000 from Star Scientific executive Jonnie Williams a few days earlier. Piscitelli started to make a joint account, he said, because he had done so for Robert F. McDonnell and his wife in the past. But Maureen McDonnell “quickly corrected me and said this should be an account only in her name,” said Piscitelli, who served as the former first couple’s stockbroker and is a longtime family friend.

After purchasing the stock, McDonnell had three business days to pay for it, Piscitelli testified, and he said she gave him a check that weekend when he and his wife attended Cailin McDonnell’s wedding. “She was pretty tied up, obviously, being the mother of the bride,” Piscitelli said, but he saw her briefly and she said, “‘Oh, I need to get you the check for the stock.’”

Piscitelli also said that when he asked Maureen McDonnell for some details of net worth and income, “she said she would need to speak to Bob to get the actual figures for me.” Numbers ultimately given for the account appeared to reflect the salary and worth of the entire household, Piscitelli testified. The address she used was for a house the family owned in the Richmond suburbs.

Prosecutors are trying to show that it’s unlikely that Robert F. McDonnell was not informed of his wife’s stock purchase, as a spokesman had previously told the news media. The first lady’s stock purchase came in the same year-long time span in which, prosecutors say, Williams lavished gifts and money on the McDonnell family, including $15,000 to cover catering at Cailin McDonnell’s wedding.

  • Rosalind S. Helderman
  • ·

John Piscitelli, who served as a stockbroker to Robert F. and Maureen McDonnell, has now taken the stand.

Before getting to the subject of money, however, Assistant U.S. Attorney Michael Dry has asked a few questions about love. It turns out Piscitelli has known the McDonnells since the late 1980s in Virginia Beach. He attended church and bible study with the McDonnells and is the godfather of Rachel McDonnell, one of the couple’s daughters.

Dry asked Piscitelli whether he recently attended a joint 60th birthday party for the former first couple. He said that he had. In response to questions, Piscitelli said that Bob and Maureen McDonnell spent much of the party apart. But before it ended, he observed the two of them dancing together.

He said the two were interacting in what “appeared to be in a loving way.”

That tidbit could be important because defense attorneys have said the couple’s marriage was in shambles in 2011 and 2012, and they therefore could not have conspired to assist Jonnie Williams. In the two weeks since the trial began, Bob and Maureen McDonnell have carefully arrived and departed from court and have barely interacted with each other in the courtroom or in breaks in action.

  • Rachel Weiner
  • ·

A lawyer for Maureen McDonnell is trying to deflate testimony backing up executive Jonnie R. Williams Sr. and his claim that in 2011, he believed Robert F. McDonnell and his wife were helping his company, Star Scientific.

Stephen Hauss pointed out that Paul Perito, another top Star Scientific official, had also testified that Williams concealed from him the many gifts he gave the McDonnells. “He had not been forthright,” Perito said.

So, Hauss, argued, Perito had no way of knowing whether Williams was being truthful when, in 2011, he said that the governor and first lady would help secure grants from the Virginia tobacco commission. Perito then reminded the court that he an experienced lawyer himself.

“With all due respect, I think that’s a legal conclusion that you’re drawing, and that’s the provenance of the jury,” Perito said.

  • Laura Vozzella
  • ·

Judge James R. Spencer is showing some impatience with the defense.

Stephen M. Hauss, a defense attorney for Maureen McDonnell, was cross-examining Paul Perito, Star Scientific’s one-time board chairman. Hauss was continuing to push the theme that it was Maureen McDonnell’s chief of staff, not the first lady herself, who was the force behind an Anatabloc launch party for Star at the governor’s mansion.

Hauss asked if Perito was aware that Star Scientific chief executive Jonnie R. Williams Sr. had purchased a $1,600 dress for the chief of staff, Mary-Shea Sutherland. Perito said he was not.

Was Perito aware that when Williams had flown Sutherland to an Anatabloc conference in Florida in June 2011, he paid for her to get a facial at a spa? Perito said he was not.

And was Perito aware that at the time Sutherland was planning the mansion launch event, Williams had called to tell her he wanted her to work for him and was meeting her for meals to discuss her doing consulting work for him?

At that point, prosecutor David Harbach objected, and the judge was all for it.

“Sustained,” Spencer said. “He’s not aware, but we are, because we’ve heard it five times.”

  • Rosalind S. Helderman
  • ·

On Thursday, Robert F. McDonnell’s former director of communications, Tucker Martin, said he advised his boss to try to get ahead of media reports about Jonnie R. Williams Sr. by releasing everything there was to know about the relationship with the governor’s relationship Star Scientific executive at once. Martin said the story seemed to snowball after the publication of the first Washington Post story on March 31, 2013, and he wanted to see if the governor could find a way to the stem the flow.

Under questioning from Assistant U.S. Attorney Jessica Aber, Martin acknowledged that his advice was not taken.

So just what questions was McDonnell fielding at that time? For the first time, here you can check out the list of questions submitted by The Washington Post on March 27, 2013, in preparation for publishing that first story. The article focused on the fact that Williams paid $15,000 for the catering at the wedding of Cailin McDonnell, three days after Maureen McDonnell flew to Florida to attend a Star Scientific event and two months before Star was allowed to hold a lunch marking the launch of its new dietary supplement at the governor’s mansion.

You can also read McDonnell’s full written statement in response.

Note the questions McDonnell did not answer at the time, including whether Williams had given the McDonnell family any other gifts or whether he or his wife had been interviewed by law enforcement about the relationship. In fact, Maureen McDonnell was interviewed on Feb. 15, 2013.

  • Rachel Weiner
  • ·

A member of the Star Scientific board was asked to wear a wire during a lunch with board chairman and chief operating officer Paul Perito at Cafe Milano in Georgetown, according to defense attorney Henry Asbill.

Perito said he found out only recently that the board member, Leo Tonkin, was interviewed at all. Further questioning on the subject of what law enforcement hoped to gain from that lunch was blocked by the judge, who sustained an objection from prosecutors.

Asbill appeared to be attempting to shift focus from Robert F. and Maureen McDonnell to Perito and Jonnie R. Williams Sr., Star’s former chief executive. He asked whether Perito left his private practice for Star in hopes of “making a lot of money.”

“It was an incentive, but it was not the sole incentive,” Perito replied. “The law had been good to me…I could have done much better in private practice without the risk.”

The court is now on break for lunch and will return at 2:25.

  • Rachel Weiner
  • ·

Asked by a defense attorney for Robert F. McDonnell whether he knew that the governor had no control over the commonwealth’s tobacco commission, former Star Scientific board chairman Paul Perito said, “I know that now.” At the time the company was attempting to obtain grants from the commission, however, Perito said he did not know that.

Perito also argued that the governor did have some influence. “Even though he doesn’t directly control it, he could indirectly impact it if he thought it was meritorious,” Perito testified.

Three members of McDonnell’s Cabinet sat on the board during his tenure, along with other citizen appointees of the governor and a number of Republican lawmakers.​

  • Rachel Weiner
  • ·

Star Scientific’s former board chairman described how his hopes crumbled when two Virginia medical schools would not conduct scientific research critical to the firm’s untested dietary supplement.

Paul Perito, now a consultant to the now-renamed Rock Creek Pharmaceuticals, said that a conference call he had with University of Virginia officials in the fall of 2011 convinced him that the school was not going to research anatabine, the tobacco-derived compound that is the active ingredient in Anatabloc. Star had also been trying to get Virginia Commonwealth University to study it.

The purpose of the call was to get U-Va. personnel to get “decision-makers” to file a research grant application with the Virginia tobacco commission. But Perito said he found himself on the call with lower-level university officials who didn’t understand the science of his proposal. He described them as “bureaucrats” and “petits fonctionnaires.”

“We had lost support from the real decision-makers at these two institutions, and we were dealing with some bureaucrats … petits fonctionnaires, as I described them.”

He called Jonnie Williams to let him know how poorly the call went.

“Williams was furious,” Perito said. “I can’t understand, the governor and his wife are so supportive and suddenly the administration has no interest.”

  • Rosalind S. Helderman
  • ·

Defense attorney Henry Asbill has just gotten former Star Scientific board chairman Paul Perito to say that Jonnie R. Williams Sr. has a very good memory.

That’s clearly designed to get the jury to remember Wiliams’s first day of testimony, when he repeatedly said he did not remember details of various interviews he conducted with law enforcement.

Asbill asked Perito if because of Williams’s documented disability that makes reading difficult, does he tend to remember things well when told them orally? “Exceedingly,” Perito said.

“He has a very high IQ,” Perito said. “He’s a very bright man.”

That statement, clearly designed to help his friend Williams, could give the defense a bit of grist to work with. They are likely to repeatedly cast Williams as a brilliant though conniving man who took advantage of Maureen McDonnell.

  • Rosalind S. Helderman
  • ·

Former governor Robert F. McDonnell’s defense attorney Henry Asbill is now cross-examining former Star Scientific board chairman Paul Perito. It’s possible Perito was playing a bit with Asbill, who acknowledged earlier that he is friendly with the Harvard-educated, Washington-based lawyer.

Asbill asked Perito, when Jonnie R. Williams Sr. wrote to him in 2011 that he was in conversations about tobacco commission funding with two senior officials in Virginia, did Williams perhaps mean Bob McDonnell and Ken Cuccinelli? Cuccinelli was the attorney general of Virginia at the time and has acknowledged that he too took gifts from Williams. Some of them, he did not disclose until media reports about McDonnell and Williams, he has said because of oversight.

“Mr. Cucci-cucci?” Perito responded, tripping over the name. “Cateregli?” he tried again, referring to an Italian doctor who did research on Star’s product.

Asbill tried again, “Cuccinelli? I don’t know a Mr. Cuccinelli,” Perito said.

“Oh!” he said then, as if just understanding the question. “You’re talking about the former attorney general? No. He was talking about your client and your client’s wife.”

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