Local Politics

Easley denies allegations he bent campaign finance rules

Posted October 28, 2009 4:27 p.m. EDT
Updated October 29, 2009 7:04 a.m. EDT

— Former Gov. Mike Easley spent nearly five hours on the witness stand Wednesday trying to blunt allegations that he and his 2004 campaign violated state campaign finance rules.

Despite being out of the public eye for 10 months, Easley displayed the touch of a veteran politician during his appearance, smiling and cracking jokes while testifying and working the room when the State Board of Elections took a break in the hearing. In a somewhat awkward moment, he even shook hands with federal investigators who have been monitoring the hearing to gather evidence for a grand jury probe of Easley's dealings with friends and contributors while in office.

While on the stand, he worked point by point to refute the testimony donors and former staffers had piled up against him on Monday and Tuesday.

Raleigh businessman McQueen Campbell said Monday that he used his private plane to fly Easley to dozens of campaign stops from 1999 to 2004 and was never reimbursed for almost $90,000 in flight time and expenses.

Easley said he was stunned by the admission, saying Campbell told him several times that he had been paid for all the flights he provided. Easley said he told Campbell last fall that, if there were any unpaid flights, he needed to bill the campaign to have the matter settled.

"If we owe anybody any money, we ought to pay it," he said.

He said he took the same stance with a used GMC Yukon that Fayetteville car dealer Bobby Bleecker provided to his family in 2003. Bleecker said Monday that he had an informal lease agreement with Easley and wouldn't collect any money on the SUV until the Easleys returned it.

Easley said he thought Bleecker had been paid, but when he learned this year that he hadn't, he said the family settled up with him.

WRAL News will provide live coverage of the hearing, along with expert analysis, beginning at 9:30 a.m. Thursday on WRAL.com, WRAL Mobile, over-the-air channel 50.3 and Time Warner Cable channel 252.

Campbell also testified Monday that he arranged for about $11,000 in repairs at Easley's home in Raleigh in 2004-05 and that, when he asked to be reimbursed for the costs, the governor suggested he bill the campaign and list the reason for the invoice as campaign travel expenses.

Easley flatly denied the allegation, saying Campbell could have simply sought money for the repairs from the campaign without any pretense. Before a change to state law in 2006, campaign money could be used for such personal expenses.

"I didn't tell him to send (fraudulent invoices). I didn't indicate to him to send them. I didn't express or imply or give him any indication or suggestion that he should do that or that I would approve it or that I would condone it," he said. "It never, ever happened."

Rebecca McGhee, a former campaign staffer, testified Monday that she questioned one of Campbell's invoices in June 2005 because there was no documentation about any flights for which he was asking to be paid. She said Easley called her directly and told her to pay it.

Easley said he was busy at the time trying to push the state lottery through the legislature – it was one of several times during his testimony that he noted his political accomplishments – and he didn't want to deal with questions about campaign expenses.

"My state of mind was, 'Can't you all work this out?'" he said. "I don't have time to mess with this."

At the time, he said, Campbell was complaining that he hadn't been paid for flights. Easley said Wednesday that the two invoices Campbell submitted to the campaign, which he hadn't seen previously, were for those flights.

"These two invoices are totally unrelated, at least in my mind, for anything to do with the house," he said as he looked them over.

Easley stated again later that he was befuddled by Campbell's allegation that there was a link between the flight invoices and the repairs done at his house.

"He never, ever mentioned anything about repairs to the house when we were talking about invoices," he said. "I don't understand a lot of this."

Bob Hall, executive director of campaign watchdog group Democracy North Carolina, said Easley and Campbell cannot both be right, and how the elections board handles the discrepancy in their testimony will be key to the findings in the case.

"He didn't say, 'I don't recall. I don't recall. I don't recall.' He made an effort to try and explain things," Hall said.

The elections board could take no action or issue a fine or reprimand in the case. The board's findings also could be turned over to the Wake County District Attorney's Office for possible criminal prosecution.

No responsibility for campaign law compliance

Two Wilmington businessmen, Lanny Wilson and Nick Garrett, testified Monday that they gave large sums to the state Democratic Party after Easley campaign staff members suggested the party would funnel the money back to the campaign. Both men had already given the maximum $4,000 allowed to the Easley campaign.

Touting his accomplishments in office, Easley said he hired a team of people to run the campaign, including monitoring the legality of contributions. He said he on many decisions in the campaign, preferring to focus on governing the state.

"I had people paid to do that, and as I think of everybody who was involved with the campaign – the campaign manager, the staffers, the fundraisers, the (get out the vote people) – I was the only one with a full-time job," he said. "At some point, you have to let go."

He said his campaign treasurer, Davis Horne, would have been ultimately responsible for ensuring his campaign finances were above board.

Horne testified Tuesday that the campaign really didn't have anyone in charge of ensuring compliance with state laws.

"I knew enough to know that I didn't know all of the election laws," Easley said, noting that's why he hired "people with integrity" to handle his campaign operations.

Easley also said he was unaware of any plan hatched by his campaign staff to skirt campaign finance laws by channeling money through the Democratic Party. He said he would have checked out the legality of the maneuver if he had known of it, but he doubted it would have come to pass anyway because the party usually keeps a tight rein on money donated to it.

Larry Leake, the Democratic chairman of the State Board of Elections, said the hearing will likely wrap up Thursday after members question Scott Falmlen, the former executive director of the Democratic Party, about its handling of contributions from Easley donors.

Leake said Wednesday afternoon that he was pleased Easley decided to answer questions and not invoke his constitutional right not to testify.

"The governor certainly met every question head-on," he said. "With regard as to how it fits with all the other testimony, I don't think we can pass judgment on that until we get to the end."

Bill Peaslee, a Republican member of the elections board, said he has a hard time getting Easley's and Campbell's story to jibe.

"Sometimes the truth is a matter of perspective. It's been a long time, and people's memories are different," Peaslee said.

Hill Allen, Campbell's attorney, said in a statement late Wednesday that Campbell told the truth about the flights and the bill for the home repairs.

"My client was subpoenaed to testify, and he did so honestly and to the best of his abilities," Hill said. "I will not comment on the testimony of other witnesses because I feel that would be inappropriate."

Jane Pinsky, the director of the North Carolina Coalition for Lobbying and Government Reform, said Easley's legacy could hinge on resolving who telling the truth about the

"If the governor and his campaign made a mistake in reporting campaign finances, people in North Carolina would be willing to forgive him on that," Pinsky said. "If they deliberately lied or they've just sort of managed to hide things, then we're not going to forgive him for that."