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State GOP boss indicted on alleged campaign violations; others wait for next shoe to drop
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Ron Eibensteiner, the indicted GOP chairman, declined to discuss the current investigation, although he has previously denied any wrongdoing. (MPR file photo)
State Republican officials have acknowledged that party chair Ron Eibensteiner has been indicted on charges he violated campaign finance rules. The Mower County attorney has been investigating campaign donations made by a Florida-based insurance company during last year's gubernatorial contest. Eibensteiner has denied any wrongdoing.

St. Paul, Minn. — The indictment stems from a $15,000 contribution last year from American Bankers Insurance. The company made the donation to a Republican National State Election Committee, but the funds may have been funneled back into the state party. Corporate contributions are illegal in Minnesota.

State GOP Executive Director Corey Miltimore, however, says there was nothing improper about the donation.

"Justice is going to ultimately prevail here. And it will be clear to Minnesotans that these politically-charged accusations are completely without merit and are designed to use our judicial system to score partisan points," he said.

Ron Eibensteiner, the indicted GOP chairman, declined to discuss the current investigation, although he has previously denied any wrongdoing. After the company made the donation, Eibensteiner sent American Bankers a thank-you letter in which he outlined campaign plans to promote the candidacy of then-candidate Tim Pawlenty.

The letter says the company's contribution will "help us accomplish our budget goal." An American Bankers spokesman refused comment. But in previous statements, company officers have acknowledged the donations were intended to influence the outcome of the governor's race.

My suspicion is... the next shoe to fall ought to be the indictment against American Bankers.
- David Schultz

Mower County Attorney Pat Flanagan says he's unable to provide specifics of his investigation. But outside observers say the probe is likely to stretch beyond Eibensteiner.

"You have to find an illegal corporate contribution to be able to then also find somebody who aids and abets," says David Schultz, a professor of public administration at Hamline University, and a former head of Common Cause in Minnesota. "And so my suspicion is, unless something very strange, is that the next shoe to fall ought to be the indictment against American Bankers."

Gov. Tim Pawlenty says, to his knowledge, that neither he nor anyone in his administration or campaign faces an indictment. He says he believes Eibensteiner will eventually be cleared of any wrongdoing.

"It's going to have to work its way out through the legal process. But I'm confident that at the end of that it'll show that the chairman didn't do anything wrong and he'll be vindicated," Pawlenty said.

American Bankers also gave $15,000 to a Democratic national committee, expecting the contribution to aid DFL gubernatorial candidate Roger Moe. Republicans say the emphasis on Eibensteiner and the GOP donation indicates the Mower County investigation is politically motivated.

DFL Attorney General Mike Hatch has provided $10,000 from his office to help the investigation proceed. GOP director Miltimore says that undermines the investigation's credibility.

"This case raises some serious questions about the appropriateness of the office of the Minnesota attorney general funding litigation against its political enemies," Miltimore said.

Chief Deputy Attorney General Kris Eiden says Hatch's office routinely provides staff assistance to county attorneys. In this case, however, she says Hatch offered financial help rather than assign a staff person. Eiden says it was likely that Hatch himself would be called upon to testify, which could have created a conflict of interest for a staff member working on the case. Eiden does acknowledge, however, that Hatch has been an outspoken critic of the American Bankers donations.

"He believed from the outset that this was an improper corporate campaign contribution. He's made those statements publicly; he's made them to the media; he's made them to the governor; he's made these kinds of statements very often," according to Eiden.

Flanagan says he's using the $10,000 to retain St. Paul attorney Earl Gray as a special prosecutor. Flanagan says the attorney general's office had no input in selecting Gray. Gray himself did not return phone calls seeking comment.

The insurance company contributions generated controversy earlier this year when former commerce department officials alleged they influenced the Pawlenty administration to act leniently when settling charges against American Bankers. An independent review by the non-partisan Legislative Auditor found no concrete evidence to substantiate that claim.

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