RICHMOND — With his Virginia Beach rental properties hemorrhaging tens of thousands of dollars each year, thenVirginia Gov. Robert F. McDonnell turned repeatedly to family and wealthy benefactors for large loans, a man who helped manage the properties’ finances testified Monday.
McDonnell received more than $100,000 from his father, the manager testified. He received $50,000 from a radiologist friend, the manager said. And with the properties still losing money, McDonnell picked up a final $70,000 from Richmond businessman Jonnie R. Williams Sr. — the man at the center of the federal corruption case against the former governor and first lady, the manager said.
The testimony from Michael Uncapher — which came on the 11th day of the trial of McDonnell and his wife, Maureen — provided prosecutors with their strongest evidence yet that financial problems motivated the McDonnells to seek cash from Williams.
Uncapher — who was once married to the governor’s sister and managed the finances of the two beach rental homes she and McDonnell co-owned — offered a detailed accounting of how much money the pair’s real estate company was losing and what they were trying to do to stop it.
Prosecutors also continued to build their case on Monday that the governor kept even his closest aides in the dark about the loans and luxury goods that Williams was bestowing on his family. Martin Kent, McDonnell’s former chief of staff, said he knew nothing of the $70,000 that Williams had lent his boss — though he acknowledged at defense attorneys’ questioning that he and the governor did not generally discuss the McDonnell family’s finances.
The McDonnells are charged with accepting Williams’s largesse in exchange for lending him and his dietary supplement company, Star Scientific, the prestige of the governor’s office.
According to e-mails and Uncapher’s testimony, McDonnell and his sister, who shares the first name Maureen with the governor’s wife, seemed to seek the loans when other efforts failed. In March 2011, for example — with each owing $12,000 a month just to keep up with mortgage payments — the two considered refinancing. But their mortgage broker, Ted Yoder, told them that the bank would not be able to help them because of “insane” government regulations, e-mails show.
Yoder wrote that they should consider a “private solution” that he would work on with Virginia Beach developer Bruce Thompson, the e-mails show.
“You are the best governor in our great nation and I am sure Bruce and I can find supporters to help you out,” Yoder wrote.
The following year, Williams lent $70,000 to the governor’s real estate company — called MoBo, a combination of the first letters of the governor’s and his sister’s names.
Jurors had already heard some of the first lady’s complaints about her family’s debts. Perhaps most notably, her chief of staff testified that she once bought her boss a pair of inaugural shoes because Maureen McDonnell’s credit card was maxed out. But Uncapher spoke of more significant financial difficulties concerning the rental properties.
The value of those properties, Uncapher testified, began to sink almost immediately from the time they were purchased at the height of the real estate market. Between 2008 and 2012, he estimated that the governor and his sister were losing $50,000 to $60,000 a year on them.
Federal prosecutor David Harbach showed Uncapher a series of e-mails dating to 2009 that showed that the governor and his sister tried to sell the properties but were concerned that they were not going to get a good price. They considered finding an investor who would pump more money into them — a person Uncapher referred to as a “magical partner.” The governor’s sister once wrote: “In other words, we are in trouble and need to act NOW.”
The governor and his sister had already received a $100,000 loan from their father. They soon received $50,000 from Virginia Beach radiologist Paul Davis, agreeing to pay him back with 7.5 percent interest in five years.
That loan, notably, came with significantly more documentation — including a promissory note requiring monthly payments — than did Williams’s loans. Davis, who has since died, told The Washington Post in an August 2013 interview that he was pleasantly surprised in March 2012 when the governor and his sister paid off his loan in full. He said he was told by the governor’s sister that she and her brother had just inherited money. That was the same month they received Williams’s loan.
At the questioning of McDonnell defense attorney Daniel Small, Uncapher said that the properties were purchased primarily for the family to enjoy and that because of that, the governor and his sister were willing to tolerate an annual shortfall. Uncapher said that the governor’s sister — whom he divorced this year — made $500,000 in 2012 and that just days after MoBo received a $50,000 loan from Williams, she received a $70,000 bonus at work.
Uncapher acknowledged that his mismanagement of MoBo’s accounts also was somewhat to blame for the company’s financial situation. Uncapher said he sometimes moved money out of the real estate company’s accounts into others, and he acknowledged that after his then-wife had a difficult pregnancy in 2008, managing MoBo’s finances moved to the bottom of his priorities.
Prosecutors used the governor’s closest aide Monday to show just how little his staffers knew about McDonnell’s relationship with Williams.
Kent testified he had never heard of Williams before learning that the governor’s family was staying at his vacation lake house in July 2011.
Shortly after, Kent learned from members of the governor’s state police protection detail that McDonnell had driven Williams’s Ferrari home from the trip. Kent said state police complained to him that that spin had “hurt morale”; the troopers generally drive the governor everywhere he goes.
“I asked him not to do that again,” Kent said.
But Kent testified that he didn’t know Williams had paid for the catering at the wedding of the governor’s daughter, spent thousands on golf for the governor and lent $120,000 to the first lady and MoBo.
Kent also testified that the governor was “visibly upset” after Maureen McDonnell was interviewed by Virginia State Police and the FBI in February 2013 about the relationship with Williams, complaining that state police had not been honest about the purpose of the session. The head of the state police had requested the session, indicating it was needed to help wrap up a probe of allegations that the executive mansion chef had been stealing food.
Still, even after that interview, McDonnell did not tell Kent about borrowing money from Williams, Kent said. Only after the story became public in The Washington Post did Kent ask the governor directly about the issue. McDonnell responded that he was discussing the matter with his newly retained attorneys and that the two should not discuss it further.