How an Alaska house re-do became a federal case

ANCHORAGE, Alaska — The idea to double the size of U.S. Sen. Ted Stevens' home in Girdwood, Alaska, by jacking it up and adding a new first floor was hatched by Veco employees over drinks at the Alyeska Prince Hotel, according to two of the participants.

"This is what I'm thinking — I want to expand Ted's house," former Veco chairman Bill Allen told two of his trusted employees, his nephew David Anderson and Robert "Rocky" Williams. "How can we do this?"

The conversation was recalled in interviews last week by Anderson and Williams, federal grand jury witnesses who may testify at Stevens' corruption trial, scheduled for September. They said it took place in a suite at the Girdwood hotel rented for the night by Allen probably in the spring of 1999 or 2000, Anderson said.

Anderson said he eventually supervised the start of the 2000 renovation project for Veco and continued to respond to maintenance requests by Stevens and his wife over the next few years. He said Veco paid for most of the work and Stevens should have known it.

Williams said he too had a supervisory role on the project and that he made no effort to conceal his employment with Veco when Stevens came around. Anderson described his recollections in a telephone interview last week from his home in the Matanuska-Susitna Borough. Williams was interviewed at his home in South Anchorage last week and in 2007.

Anderson said at least some of Veco's labor costs for the Stevens house work were passed along to a client or clients of Veco.

Stevens, who has represented Alaska in the Senate since 1968, was indicted Tuesday on seven federal felony counts of failing to disclose on his annual financial statements more than $250,000 in gifts he allegedly received from Allen and Veco starting in 2000. The Veco-organized house renovation, subsequent repairs and Veco-supplied furnishings were central to most of the alleged violations.

Stevens says he is innocent and has vowed to fight for acquittal. On Thursday, he asked for a speedy trial and got it. A judge set a date for Sept. 24 in Washington, D.C.

Stevens has declined to answer questions about the house except to say once that he paid every bill he received. His wife, Catherine, did not respond to e-mails to her husband's Senate and campaign offices for comment on this story and has previously declined to discuss the Girdwood remodeling.

Bill Allen pleaded guilty in May 2007 to federal conspiracy, bribery and tax charges and agreed to cooperate in a massive corruption investigation of Alaska politics. For the third time Friday, U.S. District Judge John Sedwick granted a Justice Department request to continue Allen's sentencing, this time until at least February 2009. The government's status report on Allen was filed under seal, prosecutors wrote, because "it discusses active criminal grand jury investigations and similar matters."


The interviews with Anderson and Williams provide new details about the allegations in the Stevens indictment from the perspective of two people involved in the construction project. Their stories closely track the allegations in the government's case, though in several instances they spoke about work and furnishings provided to the Stevenses that were not directly mentioned in the indictment.

Anderson, a certified welder by trade, grew up with Bill Allen's son Mark in Kenai. Bill Allen got his start there in the 1970s, with Veco getting contracts on the oil platforms in Cook Inlet. When Allen sold Veco last year, the company had annual sales of nearly $1 billion and 4,000 employees worldwide.

Anderson spent years working on the North Slope, then moved to Anchorage in the 1990s when Veco opened a metal fabrication shop in South Anchorage.

Anderson said Bill Allen began bringing him into his inner circle, first trusting him with making campaign contributions that Allen would later — and illegally — reimburse with cash. Anderson said he built the giant wheeled barbeque grill later used to roast pigs at fundraisers for Rep. Don Young. The cooker was originally built for a party Allen planned to host for a Louisiana senator that was canceled, he said.

"Pretty soon I'm out of the shop — I'm doing all of Bill's hotshotting," Anderson said.

One of those jobs took him to a chalet on Northland Road in Girdwood — the official Alaska residence of Ted Stevens. Anderson wasn't sure of the year, but based on other documented events, it probably was 1999.

"I took a crew out there and we cleaned up," Anderson said. "Like a spring cleaning thing." Anderson had two or three other Veco employees with him, and they spent four or five days removing downed limbs, taking out brush and other tasks.

Ted Stevens wasn't there, Anderson recalled, but Stevens' wife, Catherine, was at the home.

"Catherine kind of told us what she wanted done," Anderson said. "She was telling me, 'Lets get that out of there, and that out of there."

Allen had ordered the cleanup, and Catherine knew the crew was from Veco, Anderson said. "I know she didn't get a bill - I know because I was running the paperwork," Anderson said.

Before they were done, he said, Allen showed up.


"He was checking on it, and he brought Rocky (Williams) out, and (Allen) goes, 'We need to talk.' " They drove over to the nearby Alyeska Prince Hotel — now the Hotel Alyeska. Allen got a suite for himself and rooms for Anderson and Williams, the two employees said.

"We all met up there in Bill's stateroom," Anderson said. "Bill busts out the wine."

Allen had a question. "He goes, 'How can we expand Ted's house? I want to give him some more room.' "

Anderson, in the middle of the yard work project, had been having a rough time convincing the neighbors to spruce up their own places, he recalled. He said he told Allen that expanding the Stevens house horizontally toward the property lines of the quarter-acre lot would only put it closer to the neighbors &mash; not necessarily a good idea.

"Me and Rocky started talking about it — why don't we just jack the house up? Which is what we did."

In two interviews last year, Williams recalled that at the time, there was talk of Stevens stepping down — especially if he could win approval of oil drilling in the Arctic National Wildlife Refuge, a goal that has proved elusive.

"Ted had actually wanted to retire a few years ago and Catherine never liked the original place," said Williams, who said he had conversations with both about the house.


Before any work could begin, Anderson said, a huge tree overhanging the Stevens home had to be removed.

"I had to go in to Girdwood and I found these rustic-hippy tree cutters to come out there and cut that tree down. That was a big deal, cutting that tree down so that it didn't fall on the cabin," Anderson said.

The stump was about four feet in diameter, he said. Anderson didn't recall how much it cost to fell the tree and buck up the logs.

"It was fairly spendy — that was a big tree — but Veco, not Stevens, paid for it," Anderson said. "Ted had firewood — they knew what was going on."

Anderson's next step was to get Veco engineers to design the addition. A Veco employee, John Hess, led the team, Anderson said.

"John Hess comes out, meets with me, meets with Rocky, and we started walking around looking at stuff, kicking it around — how in the hell are we gonna do this?"

The initials "JCH" are on the plans filed with the city's building department — though the documents themselves have no reference to Veco, which, according to Anderson and the Stevens indictment, paid for the design work.

When the Anchorage Daily News interviewed Hess in June 2007, he declined to talk about the Stevens project. Asked then whether he drafted the plans, he said, "That's possible."

The city permits for the remodel were filed in July 2000 by Robert Persons, the Double Musky restaurateur and a longtime friend of the Stevenses. Persons monitored the progress of the project when neither Ted nor Catherine were around, Anderson and others said, and he is referenced in the Stevens indictment, though only as "Person A."

Persons didn't return several messages left on his phone and in person at the Double Musky over the last two weeks. In a brief interview in March, Persons said he doesn't doubt that Stevens believes he paid everything he owed on the house. That's the way Stevens conducted business in a racehorse partnership managed by Persons, he said: whenever the partners were required to invest more cash, Persons said, Stevens insisted on being the first to put in.

"This shouldn't be happening," Persons said. "He's very strict about that sort of thing."


Going through the Yellow Pages, Anderson found a house mover in Anchorage, Toney Hannah, to lift the house.

In an interview last year, Hannah said he first met with Ted and Catherine Stevens about the project in 1999, but the work actually took place in the fall of 2000.

Once Hannah jacked up the house, Anderson said, "it was me, Rocky and Bob Persons, and we were putting in floor joists." Allen dealt with Stevens, he said. "I'm just the supervisor."

Hannah said in the interview last year that he sent a bill to Stevens. Catherine paid by check, he said. He couldn't recall how much and couldn't look up the figure, he said, because the FBI had his files.

Veco hired Christensen Builders for the carpentry work, owner Augie Paone told the Anchorage Daily News last year. Paone said he sent his invoices first to Veco, then faxed them to Stevens, who paid by check. He thought Stevens paid him at least $100,000 over the course of the project.

Paone's wife, Ruth, an officer of the company, said two weeks ago that neither she nor her husband would comment about the case now.

Stevens told reporters last year that he paid every invoice he received on the remodel.

"As a practical matter, I will tell you. We paid every bill that was given to us," Stevens told reporters last July. "Every bill that was sent to us has been paid, personally, with our own money, and that's all there is to it. It's our own money."

In a hand-written note sent last summer to Wev Shea, the former U.S. Attorney for Alaska, Stevens said he paid $130,000

"This is a sad portion of my life — it will take time to explain," Stevens said in the two-page note, which was seized by the FBI after Shea told a Seattle Times reporter about it. "Catherine and I personally paid over $130,000 for the improvements to our chalet in Girdwood. Someone — or more than one — keeps telling the FBI that's not so. Takes time to go back over five years to prove they are wrong."

In the indictment, prosecutors accused Stevens of misleading friends and staff about the Girdwood project, but it doesn't say whether his note to Shea will be used as evidence of that allegation.

But the indictment appears to back up Paone's statements. It says invoices from "Company A," an apparent reference to Christensen Builders, were sent to Stevens and paid by the senator by personal check.

Those invoices, however, "did not include the labor costs of Veco employees and contractors and did not include the costs of materials provided by Veco," the indictment says. Veco employees "installed electrical, plumbing, framing, heating and flooring materials in the Girdwood Residence," as well as buying and installing fixtures and appliances, the indictment says. Between the summer of 2000 and Dec. 31, 2001, those costs totaled over $200,000, the indictment says.

The electricians on the job were Veco employees, and the plumber, Mark Tyree, was a private contractor hired by Veco, Anderson said.

Veco absorbed the costs of material and Tyree's services, Anderson said.

The electricians and other hourly workers from the Veco shop were charged to the account of an oil company module under construction at the time by Veco, he said.


Among the electricians' tasks was to wire up a switch for a generator that would automatically turn on whenever the power went out, Anderson said. Allen told him to buy an oversized power plant to install in the back yard. It was so heavy that Anderson had to order in a Veco crane from the shop to lift it over the garage from the driveway and set it in place in the back.

It was another gift that Stevens got for free, Anderson said. "I know, because I ran the paperwork — I did all the purchase orders."

The generator is not mentioned in the indictment.

Anderson said he himself did some of the Veco-paid steelwork — manufacturing a metal staircase for inside the home in the Veco shop, and making the external pillars that held up the second deck. Williams corroborated that account.

"He's a welder, he knows how to design. He knew everybody at the fab shop," Williams said of Anderson.

Before the project was completed, Anderson had to leave for Oregon to attend to family matters after the death of an aunt — Bill Allen's sister. Williams stayed on the project.

Stevens himself inspected the work about three times that fall, Williams said. There was no secret about Veco's involvement.

"I wore a Veco jacket the whole time," Williams said. "This was no big covert deal."

According to the indictment, Stevens thanked Allen multiple times for work on the Girdwood house, starting with the initial remodel. In 2000, the indictment says, Stevens sent Allen an e-mail praising a Veco employee whose name was redacted from the indictment

"(W)e've never worked with a man so easy to get along with as [name of a VECO employee], Plus, everyone who's seen the place wants to know who has done the things he's done. . . You and [PERSON A] have been the spark plugs and we are really pleased with all you have done. hope to see you and the chalet soon."

Williams said Catherine Stevens wanted to put her touch on the place, which she and Stevens had bought as a 12-year-old house in 1983.

"So she picked out the carpet, she picked out the tile," Williams said. "She made it her place and that was what Ted wanted because I don't think he planned to be in politics at this point in time."


Anderson returned to Anchorage and resumed work on the home the following spring, he said, building the ground-floor deck. The Viking Grill, cited in the indictment as another gift from Allen to Stevens, was lifted onto the upper deck and permanently plumbed to a gas line with solid pipe, Anderson said. Like the generator, it was so heavy it took a crane to install.

"I knew them," Anderson said of Ted and Catherine Stevens. "Usually Catherine would come by. Ted didn't come by that much," Anderson said. One day, there was a plumbing problem under the kitchen sink — Anderson called it a "blow out," using a term from the oil patch.

"Catherine called me and said, 'My God, we've got to get this stopped.' I had to drive out to Girdwood and fix it." Anderson didn't remember the date, but said it was shortly after the renovation project was completed.

Anderson and Allen had a serious falling out sometime after that. Anderson said that when he began dating one of Allen's girlfriends, Allen became enraged and Anderson lost his Veco job. In one of the corruption trials last year, the lawyer for former House Speaker Pete Kott attempted to discredit Allen by asking him if he ever threatened to kill Anderson. Allen said he hadn't. Allen said Anderson was blackmailing him, but didn't elaborate.

Anderson denied blackmailing Allen.

When he moved to a remote part of the Mat-Su Borough and adopted a low-key Alaska lifestyle, he thought he was done with Allen, he said.

Then one day a sedan appeared at his place. Inside were U.S. Treasury Department. agents, he said. He got a phone call from someone else — an FBI agent who couldn't find the place. The agent was directed to the house.

That was Aug. 31, 2006 — the day teams of federal agents swarmed legislative offices in Anchorage, Juneau and Wasilla, executing search warrants and giving the first public sign that a massive investigation was underway. Agents had questioned Allen for the first time the day before.

Anderson said the agents wanted to talk to him as a key witness. He said he told them he had nothing to hide and has been cooperating ever since.

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