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Grand jury indicts firm in campaign contribution probe
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Special prosecutor Earl Gray, left, and Mower County Attorney Patrick Flanagan discuss the indictment of American Bankers Insurance. (MPR Photo/Michael Khoo)
A Florida-based insurance company and two of its principal officers have been indicted by a Minnesota grand jury for allegedly making illegal corporate campaign contributions in last year's gubernatorial contest. The indictments follow charges brought against state Republican Party Chair Ron Eibensteiner for collaborating in the donations. The defendants, however, say the charges are baseless and are seeking to have the indictments invalidated.

St. Paul, Minn. — Attorneys and senior executives for American Bankers Insurance made their first appearance in a Mower County courtroom to answer charges that they illegally funneled dollars to the campaign of Republican Gov. Tim Pawlenty last year.

At the time of the donations, the company was under investigation for allegedly deceptive business practices in Minnesota, and the issue first attracted attention when fines proposed by then-Gov. Jesse Ventura's staff were significantly reduced by the Pawlenty administration.

A subsequent report by the non-partisan Legislative Auditor found no relation between the donations and the reduced fine. And attorney Jim Volling, who represents American Bankers, says the company's cooperation with the auditor's investigation renders it immune to further prosecution.

"These people were compelled essentially under the regulatory scheme for insurance companies in this state to produce evidence about all of this to the legislative auditor, participated in that whole investigation. And they did so. And now they've turned around and they've charged them. They've charged the company for which they work," he said.

The indictments name the company and two officers: Vice President Harry Bassett and General Counsel Jerome Atkins. Minnesota law makes it illegal for a corporation to make campaign contributions. Nonetheless, the auditor's report says that American Bankers attempted to donate $15,000 each to the campaigns of both Pawlenty and his DFL rival Roger Moe.

Those dollars were routed to branches of the respective national parties, but special prosecutor Earl Gray says he's convinced the reroute was merely a detour, and he says that in the case of the Republican donations, they money eventually found its way back to Minnesota.

Gray says there's no basis for arguing that cooperating with the earlier auditor's report should prohibit court action.

"Sounds like the person who goes out and kills somebody and then runs and tells a cop, 'I killed him, so now I'm immune,' if I killed him for the purposes of an insurance investigation," Gray said.

Front and center in the investigation is a letter signed by state GOP Chair Ron Eibensteiner thanking the company's Minnesota lobbyist for the initial donation and suggesting it will help elect Pawlenty. Eibensteiner faces four counts of aiding and abetting the donations.

Gray says he has no doubt about both the company's culpability and Eibensteiner's. "We will prove quite convincingly that the money came back. And if you look at the Eibensteiner letter, he thanks the defendants for the money. Why would a man in Minnesota be thanking them for the money? It doesn't make much sense if it didn't come back here, does it?"

Eibensteiner's indicated he would join with American Bankers in seeking to have the indictments thrown out. In a separate filing with the Ramsey County Attorney's Office, Eibensteiner's lawyer argues the thank-you letter was one of thousands of form letters that have no individual significance. He also provided financial records seeming to indicate that transactions between the GOP's state and national branches were carefully segregated to prevent any commingling of corporate and non-corporate accounts.

Lawyers for the company say they, too, believe the indictments are baseless. If the judge declines to grant the defendants the immunity they've requested, company attorney Richard Sharpstein says his client will vigorously contest the charges.

"When false allegations against innocent people are released to the press, it does nothing but damage the reputations of good people. And I'm sure the people of Minnesota appreciate that," he said.

A complaint based on the same circumstances has also been filed with the Ramsey County attorney by the state Commerce Department. Commerce officials took the step after an independent counsel advised there was cause to suspect a crime had been committed.

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