Thursday, March 27, 2014

Former REPUBLICAN Virginia Governor Bob McDonnell's Federal Corruption Indictment

Case 3:14-cr-00012-JRS Document 1 Filed 01/21/14 Page 1 of 43 PageID# 1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division UNITED STATES OF AMERICA No. 3:14cr \dw Count 1: 18 U.S.C. § 1349 (Conspiracy to Commit Honest Services Wire Fraud) ROBERT F. MCDONNELL (Counts 1-13) Counts 2-4: 18 U.S.C. § 1343 (Honest-Services Wire Fraud) and Count 5: 18 U.S.C. § 1951 (Conspiracy to Obtain Property under Color of Official Right) MAUREEN G. MCDONNELL, (Counts 1-11,13-14) Counts 6-11: 18 U.S.C. § 1951 (Obtaining Property under Color of Official Right) Defendants. Counts 12-13: 18 U.S.C. § 1014 (False Statements) Count 14: 18 U.S.C. § 1512(c)(2) (Obstruction of Official Proceeding) Forfeiture Notice January 2014 Term - at Richmond, Virginia INDICTMENT THE GRAND JURY CHARGES THAT: At all times relevant to this Indictment, unless otherwise stated: General Allegations A. The Defendants 1. Defendant ROBERT F. MCDONNELL was the Governor of the Commonwealth of Virginia. He previously served as a member of the Virginia House of Delegates and as the 1 Case 3:14-cr-00012-JRS Document 1 Filed 01/21/14 Page 2 of 43 PageID# 2 Attorney General of Virginia. ROBERT MCDONNELL was sworn in as the 71st Governor of Virginia in January 2010. 2. Defendant MAUREEN G. MCDONNELL was the wife of ROBERT MCDONNELL and served as the First Lady of Virginia. B. Relevant Individuals and Entities 3. MoBo Real Estate Partners, LLC ("MoBo") was a Virginia limited liability company engaged in the business of owning and renting vacation homes in Virginia Beach, Virginia. ROBERT MCDONNELL was one of two members of, and had a 50% personal financial interest in, MoBo. 4. Star Scientific, Inc. ("Star Scientific") was a Delaware corporation with its principal executive offices located in Glen Allen, Virginia. Star Scientific was a publicly traded company on the NASDAQ Global Market under the ticker symbol "STSI." Star Scientific was involved in and its activities affected interstate commerce. 5. C. JW was the Chief Executive Officer of Star Scientific. The Governor and the Governor's Office 6.
The Governor and the Office of the Governor of the Commonwealth of Virginia ("OGV") performed a wide range of official actions. Those actions included, among other things, appointing directors and key administrators of state departments, agencies, and boards; authorizing expenditures of certain grant funds; proposing a budget and overseeing the expenditure of state funds; conducting meetings and hosting events for the purposes of fostering Virginia business and economic development; directing other government officials to conduct such meetings and events; speaking at events in and outside Virginia about Virginia businesses and economic development; coordinating with state boards, commissions, and institutions, Case 3:14-cr-00012-JRS Document 1 Filed 01/21/14 Page 3 of 43 PageID# 3 including universities, about uses of state labor and funding resources; and otherwise setting priorities and direction for the Commonwealth of Virginia. 7. Throughout his campaign for Governor, ROBERT MCDONNELL made it clear that one of his highest priorities as Governor would be acting to promote the matter and cause of economic development for businesses and industries in Virginia, e.g. his campaign slogan was "Bob's for Jobs." Throughout his tenure as Governor, ROBERT MCDONNELL customarily performed official actions to promote the matter and cause of economic development of Virginia businesses and industries, and he touted his efforts and activities in support of the same. D. Background of Star Scientific's Dietary Supplement Products 8. Star Scientific described itself as a "technology-oriented company with a mission to promote maintenance of a healthy metabolism and lifestyle." Beginning in or about 2007, the company focused on utilizing certain alkaloids in the tobacco plant, namely anatabine, to address issues related to the desire to smoke. Star Scientific subsequently began evaluating anatabine's potential for treating chronic inflammation that the company believed might be associated with disorders such as thyroiditis, diabetes, arthritis, Alzheimer's disease, and multiple sclerosis. 9. Star Scientific, through a wholly owned subsidiary, engaged in the development, manufacture, marketing, and sale of two anatabine-based dietary supplements: CigRx®, a tobacco alternative; and Anatabloc®, for anti-inflammatory support. 10. The types of claims that Star Scientific could make under applicable federal law regarding its dietary supplements CigRx® and Anatabloc® differed substantially from those allowed for drug manufacturers. While drug manufacturers could claim that their products would diagnose, cure, mitigate, treat, or prevent a disease, dietary supplement manufacturers such as Star Scientific were legally prohibited from making such claims. These legal limitations Case 3:14-cr-00012-JRS Document 1 Filed 01/21/14 Page 4 of 43 PageID# 4 made it more challenging for Star Scientific to gain widespread consumer acceptance of the potential health benefits for its dietary supplement products. 11. To overcome the difficulties in gaining consumer acceptance for its products, Star Scientific sought to legitimize the potential health benefits of its dietary supplements by encouraging scientific studies of anatabine, which was an active ingredient in CigRx and Anatabloc®. Star Scientific would then present the results of those studies to physicians in the hope thatthe physicians would recommend Star Scientific's dietary supplements to their patients. 12. Another of Star Scientific's goals was to have scientific studies of human use of anatabine, including in clinical trials, that would allow the company to develop drugs for the treatment of diseases such as thyroiditis, diabetes, arthritis, Alzheimer'sdisease, and multiple sclerosis. E. Background of the Defendants' Relationship with JW 13. In or about March 2009, as a result of requests from ROBERT MCDONNELL'S staff to JW, ROBERT MCDONNELL began using a jet aircraft owned by JW during his campaign for Governor of Virginia. Priorto this time, ROBERT MCDONNELL and JW had never met, and they had no personal or professional relationship. 14. On or about November 3,2009, ROBERT MCDONNELL was elected Governor of Virginia. While ROBERT MCDONNELL and JW had met briefly during the campaign as a result of ROBERT MCDONNELL'S use of JW's aircraft, they had no personal relationship and were merely professional acquaintances at the time that ROBERT MCDONNELL became Governor-Elect.