Politics & Government

Alaska's Ted Stevens charged with failing to disclose gifts

Ted Stevens of Alaska has been indicted on charges of failing to disclose gifts.
Ted Stevens of Alaska has been indicted on charges of failing to disclose gifts. Chuck Kennedy / MCT

WASHINGTON — Alaska Sen. Ted Stevens, at 84 the longest-serving Republican in the Senate and one of its most powerful members, was indicted Tuesday on seven felony counts alleging that he lied to conceal his acceptance of $250,000 in gifts and services from a now-defunct Alaska oil services and construction company.

Stevens notified senior Republicans that he'd abide by a Senate Republican rule and temporarily step down from his ranking posts on the Senate Commerce Committee and an Appropriations subcommittee.

The indictment, returned by a federal grand jury in Washington, charges that Stevens made false statements on his annual Senate financial-disclosure statements for the years 2001 through 2006 to conceal gifts from VECO Corp. and its chief executive officer, Bill Allen. If he's convicted, Stevens could face an unspecified fine and as much as five years in prison.

The indictment marked the latest turn in a sweeping, four-year-old federal investigation of public corruption in Alaska that already has led to seven convictions and also is focusing on veteran Republican Rep. Don Young. The investigation has revolved around VECO, whose executives have been the top donors to Alaskan political campaigns in recent years.

Stevens, the 11th sitting senator to be charged under federal criminal laws since 1808, issued a statement saying that he's "never knowingly submitted a false disclosure form required by law as a U.S. senator. . . . I am innocent of these charges and intend to prove that."

Most of the allegedly illicit gifts to Stevens from 1999 to 2006 came during a renovation that doubled the size of a house he owns with his wife, Catherine, in Girdwood, Alaska. VECO employees and contractors performed architectural design services, put the house on stilts and installed a new three-bedroom first floor, a finished basement, a garage, a Viking gas range and a wraparound deck, according to the indictment.

While Stevens paid a construction firm for its work, he never reimbursed VECO or its contractors, even while staying involved in the progress of the work, it said. In a 2000 e-mail, the indictment said, Stevens described Allen and his employee as "spark plugs" and told Allen, "Everyone who's seen the place wants to know who has done the things he's done . . . we are really pleased with all you have done. Hope to see you and the chalet soon."

Stevens also is accused of trading his vintage Ford Mustang and $5,000 to Allen in the spring of 1999 for a new Land Rover Discovery worth about $44,000, a car he told Allen he wanted for his daughter, Lily. Stevens' Mustang was worth about $20,000 at the time, according to the indictment.

Meanwhile, as Stevens then served as the powerful chairman of the Senate Appropriations Committee, Allen and VECO sought his help with international projects, grants from the National Science Foundation and funding for a natural gas pipeline on Alaska’s North Slope, the grand jury charged.

Allen and Richard Smith, a former VECO vice president of community affairs and government relations, pleaded guilty in May 2007 to making more than $400,000 in corrupt payments to public officials from Alaska. Allen’s plea probably was the biggest blow to Stevens, because he agreed to cooperate with investigators in return for leniency.

In announcing the indictment Tuesday at the Justice Department, acting Criminal Division chief Matt Friedrich stressed, however, that it doesn't charge Stevens with bribery or any other statute alleging that he traded his political clout for gifts.

Many voters outside Alaska don't know Stevens, but his indictment provides fresh ammunition for Democrats attempting to paint congressional Republicans as corrupt tools of corporate interests.

However, it's unlikely to have a significant impact on the presidential race. Republican John McCain is noted for his opposition to congressional "earmarks," the widespread practice of allocating millions of dollars for pet projects that's won Stevens acclaim in Alaska and scorn from budget watchdogs. Denmocratic hopeful Barack Obama has pledged, however, to make Alaska a "battleground" state and has opened offices there, the first Democrat to do so in decades.

The law under which Stevens was indicted, the federal Ethics in Government Act, requires senators to file financial-disclosure statements detailing their transactions during the previous calendar year, including the disclosure of gifts above a specified value and all liabilities greater than $10,000.

The value of the alleged gifts cited in the indictment would exceed Senate reporting thresholds, which ranged from $260 in 1999 to $305 in 2006.

A senior official of the Internal Revenue Service’s Criminal Division accompanied Friedrich at Tuesday's news conference. When Friedrich was asked why Stevens didn't face tax-evasion charges, he said he couldn't comment on the case, but "as a general matter, gifts are not required to be reported on tax returns."

The indictment puts Stevens, who faces a strong re-election challenge this fall, in the position of campaigning for an eighth six-year term under the cloud of charges that he violated the public trust. At Stevens’ campaign office in Anchorage, a spokesman said the campaign would be moving "full steam ahead."

Asked about the timing of the indictment, Friedrich said that prosecutors had heeded Attorney General Michael Mukasey’s recent memo saying that partisan politics should play no part in the handling of public-corruption cases.

"We bring cases when they are ready to be charged," Friedrich said. "And that’s what happened here."

Senate colleagues from both sides of the aisle reacted with surprise and sadness.

"I was shocked to learn of today's announcement," said Stevens' home-state Republican colleague, second-term Sen. Lisa Murkowski. "I know Ted Stevens to be an honorable, hardworking Alaskan who has served our state well for as long as we have been a state."

Stevens' closest Senate friend and fellow World War II veteran, Hawaii Democrat Daniel Inouye, said in a statement that, "In our legal system, a man is presumed innocent until proven guilty in a court of law. That is fundamental in our democracy. As far as I am concerned, Ted Stevens remains my friend. I believe in him."

Senate Majority Leader Harry Reid, D-Nev., called it "a sad day for him, us."

The broad federal investigation of public corruption in Alaska, which began in 2004, didn't become widely known until Aug. 31, 2006, when teams of federal agents executed search warrants at the offices of six state legislators, including Stevens' son, Senate President Ben Stevens, who hasn't been charged with wrongdoing. Since then, those convicted have included former Alaska House Speaker Peter Kott; former state Reps. Victor Kohring and Thomas Anderson; James Clark, former chief of staff to former Gov. Frank Murkowski; and lobbyist William Bobrick.

Two others are awaiting trial. The investigation continues, with grand juries hearing secret testimony in Anchorage and Washington.

(Marisa Taylor, David Lightman and Lisa Zagaroli in Washington and Sean Cockerham of the Anchorage Daily News in Anchorage contributed to this article.)

Related stories from McClatchy DC