Vast ‘shadow campaign’ said to have aided Gray in 2010

A secret $653,000 effort funded by one of the District government’s most prominent contractors corrupted the 2010 mayoral race and helped Vincent C. Gray get elected, the city’s top federal prosecutor said Tuesday.

U.S. Attorney Ronald C. Machen Jr. said the well-funded, well-equipped “shadow campaign” went to work for Gray but was not reported to campaign-finance authorities or disclosed to the voting public.

The revelations came as Jeanne Clarke Harris, a 75-year-old public-relations consultant, admitted in U.S. District Court as part of a plea deal that she helped disburse and conceal the funds spent by businessman Jeffrey E. Thompson.

The secret money bought about 10,000 yard signs, 6,500 T-shirts and 200 umbrellas in addition to banners, lapel stickers, posters, consultants, canvassers, drivers, laptop computers, radios and a public-address system. Many items had logos and designs identical to Gray’s official campaign materials, and many — “if not all” — of the items were delivered to Gray’s campaign headquarters, prosecutors said in a court filing.

At a news conference after Harris’s guilty pleas, Machen decried political corruption in the city, saying that the mayoral race was “compromised by backroom deals, secret payments and a flood of unreported cash.”

“Today’s plea confirms the sad truth that many of us have long feared: that the 2010 mayoral election was corrupted by a massive infusion of cash that was illegally concealed from the voters of the District,” he said.

Prosecutors did not allege that Gray had knowledge of the “shadow campaign,” but they said that the effort was “coordinated” with members of his campaign. And Harris testified that although Thompson wrote the checks, he did not conceive of the scheme.

“The money was from” Thompson, she said in court, “but the plan was developed by another person.” That person was not named Tuesday.

On Tuesday, through spokesman Pedro Ribeiro, Gray declined to comment.

Thompson was not named in court Tuesday or in prosecution filings, but three people familiar with the investigation confirmed that Thompson — owner of a health-care company and a prominent accounting firm — is the “co-conspirator” referred to by authorities. His attorney, Brendan V. Sullivan Jr., has not responded to requests for comment.

Tuesday’s revelations greatly expanded concerns — first raised by minor candidate Sulaimon Brown — that the city’s 2010 mayoral election was corrupted by illicit payoffs. Two Gray campaign operatives have pleaded guilty to federal felonies related to Brown’s allegations that he was paid during the campaign to verbally attack the incumbent, Adrian M. Fenty.

Machen said that although the “shadow campaign” appeared legitimate — with vans, yard signs and stickers — its funding was “sinister.” Of the $653,800 that came from Thompson’s accounting firm, Machen said, about one-third went to pay staff. Nearly $130,000 paid for campaign materials, $58,000 went toward field worker supplies, and the rest went toward other expenses including vans and hotels.

“The ‘shadow campaign’ was entirely off the books, financed with secret corporate money so that D.C. voters had no idea what was influencing them at the ballot box,” he said.

Bill Lightfoot, who chaired Fenty’s 2010 campaign, said the scope of the effort “brings in to question the legitimacy of the Gray administration.”

“This $650,000 is enough money to buy a local election, and it appears it bought the mayor’s office for Vincent Gray,” he said.

Still, Gray won the September 2010 primary by nearly 10 percentage points — 13,000 votes. His vote total was boosted in part by a better-than-expected turnout east of the Anacostia River, where Gray campaign workers have said the “shadow campaign” was focused.

The Gray campaign ended up raising $2.8 million, but it had $331,825 on hand a week before the Democratic primary. The better-financed Fenty campaign, at the time, had more than double that amount.

According to prosecutors, much of the shadow campaign’s money and manpower was focused on the two weeks before the primary.

Harris said Thompson opted to hide his campaign largesse in large part to avoid angering Fenty, whose administration his businesses relied on for contracts. The Medicaid deal held by his D.C. Chartered Health Plan is the city’s largest contract: It is worth more than $300 million yearly.

“He did not want the sitting mayor to find out he was supporting his opponent,” Harris said. “If somehow the sitting mayor won, he would be in some serious contractual problems.”

Harris, a veteran of city politics and a close Thompson associate for more than a decade, appeared before Judge Colleen Kollar-Kotelly to plead guilty to three charges, including conspiring to evade federal and local campaign finance laws and obstruct justice.

The conspiracy charges pertained to “straw donor” arrangements said to have stretched back to 2001. Harris admitted working with Thompson to have her relatives, friends and employees give political donations that would later be reimbursed by Thompson, thereby evading federal and local limits on campaign contributions.

“He would bundle the checks, or put them together and give them to the candidate,” Harris said in court, describing Thompson’s typical practice.

Machen said the straw-donation schemes sent “tens of thousands of dollars” to federal and local campaigns, but the total amount of donations funneled from Thompson to candidates is likely to stretch into the hundreds of thousands of dollars.

To Gray’s 2010 campaign alone, Thompson is said to have sent $38,000 through Harris.

Harris said she did not think there was a law against reimbursing political donors. “There’s no one I got money from who would have had $2,000 to give to a candidate,” she said. “Later, I found out it was illegal, and I’m sorry for that.”

Under federal sentencing guidelines agreed to by Harris and prosecutors, she faces a sentence of 30 to 37 months in prison and a fine of up to $60,000, although Kollar-Kotelly is free to depart from those suggestions. A sentencing date has not been set, but a status hearing was scheduled for October.

Besides the conspiracy counts, Harris pleaded guilty to a felony count of fraud and false statements connected to her efforts to conceal the “shadow campaign.”

Harris admitted to working with Thompson, who gave her a letter to disguise political expenditures as work performed by Harris. She then amended her company’s 2010 tax return, which had illegally deducted more than $900,000 in political expenditures as business expenses, with a promise from Thompson that he would pay any tax penalties. She also admitted to destroying paper and electronic records and considering a suggestion that she move to Brazil for a time to evade investigators’ scrutiny.

Harris said in court that the original suggestion was to stay in Brazil for five years. “Then it was three months,” she said. “The answer to both was ‘No.’ ”

Machen said the statute of limitations would have run out in five years.

He added that prosecutors saw similar obstruction with Gray campaign aides Howard Brooks and Thomas W. Gore, who recently pleaded guilty relating to their roles in paying Brown.

“The truth is going to come out in the end, and you’re far better off to come to us on your own rather than wait for us to approach you,” Machen said. He said Harris should be commended for coming forward early.

As if answering critics that his office is targeting black politicians, Machen said political corruption is not limited to “any one political party, any one race of an elected official or any one particular region of the country.” He pointed to lobbyist Jack Abramoff and Rod Blagojevich, former governor of Illinois.

Harris, whose mobility issues required a cane and wheelchair in court, was by far the most colorful and talkative of the recent parade of political officials and others who have pleaded guilty to various charges this year.

At times, she laughed, was tearful, and appeared frustrated by the judge’s questions and conversations with her attorneys.

At various points during the three-hour hearing, she asked the judge to repeat questions. When the judge asked her if she knew that the straw donation was illegal, her response was, “I’m just saying I don’t have a halo over my head.”