The Alaska political corruption probe refers to a 2003 to 2010 widespread investigation by the Public Integrity Section of the U.S. Department of Justice, the Federal Bureau of Investigation, and the Internal Revenue Service into political corruption of nine then-current or former Alaskan state lawmakers, as well as Republican US Representative Don Young and then-US Senator, Republican Ted Stevens. Sometimes referred to as "The Corrupt Bastards Club" or the "Operation Polar Pen", the investigation focused on the oil industry, fisheries and for-profit prison industries.
By the spring of 2006, the FBI set up in a Baranof hotel suite just three blocks away from the capitol building in Juneau. From their position in the hotel suite, they gathered evidence, such as a videotape of VECO's CEO Bill Allen arranging paper money for legislators, and made other observations. By August 2008, the investigation resulted in indictments against six sitting or former Alaska Republican state legislators on corruption charges. In August 2008 US Senator Ted Stevens was indicted and, by October, he was convicted in Washington, D.C., on seven felony counts of failure to disclose gifts. The convictions, eight days before the November 2008 election, resulted in his narrow loss, after 40 years in the U.S. Senate, to Democrat Mark Begich. This makes him the most senior U.S. senator to lose a bid for re-election, defeating Warren Magnuson's record in 1980. His convictions were later set aside because of prosecutorial misconduct and the United States Department of Justice ended further prosecution.
In addition to the conviction of US Senator Stevens, two executives of the VECO Corporation, an oilfield services contractor, pleaded guilty to charges of bribery and conspiracy to impede the Internal Revenue Service. Alaska businessmen/lobbyists Bill Weimar (former for-profit halfway house owner) and Bill Bobrick, as well as Jim Clark, the former governor's chief of staff, also were indicted and convicted. Clark's guilty plea and sentence were later vacated before he was ordered to report to custody. That was followed by ex-Alaska State Rep. Bruce Weyhrauch's Supreme Court challenge to the honest services fraud statute. His case was decided on June 24, 2010, in association with the Skilling v. United States and Conrad Black case decisions. While the Court overturned the Skilling conviction, stating that the honest services fraud statute was not applicable to private citizens, the Court upheld, but narrowed the application of the honest services fraud statute by stating that it was applicable to public officials only, and remanding Weyhrauch's conviction to the 9th Circuit Court of Appeals.
Federal prosecutors later agreed not to retry Weyhrauch on felony charges in exchange for Weyhrauch's agreement to plead guilty to a single misdemeanor in an Alaska State Court. An Alaska state court judge then gave Weyhrauch a three-month suspended jail sentence and a $1,000 fine.
History The probe began in 2004 or earlier. By 2006 the name "Corrupt Bastards Club" (alternatively "Corrupt Bastards Caucus") began being used to designate Alaska legislators implicated in the federal corruption (a.k.a., "Polar Pen") investigation. The nickname originated in the spring of 2006 as a barroom joke among Alaska legislators after the publication of a guest article by Lori Backes, executive director of the All Alaska Alliance. It ran in Alaska's three largest newspapers and named 11 lawmakers who had received large campaign contributions from executives of the oilfield services company VECO Corporation. VECO had a long history of making substantial campaign contributions to Alaska politicians. The article also named Senate President Ben Stevens, son of U.S. Senator Ted Stevens, as having received large consulting fees from VECO.
In her article, Backes detailed the extent of political campaign donations contributed between 1998 and 2004 by the top seven VECO executives to Alaska lawmakers who were in office at the time her article was written. The figures were based on reports made by contributors and recipients to the Alaska Public Offices Commission.
Senator John Cowdery (R-Anchorage), Senate Rules Committee Chair: $24,550. Representative Pete Kott (R-Eagle River), former speaker of the House: $21,300. Representative Norman Rokeberg (R-Anchorage), House Rules Committee Chair: $18,000. Representative Vic Kohring (R-Wasilla), House Oil and Gas Committee Chair: $14,708. Governor Frank Murkowski (R): $6,500 (excluding donations to prior U.S. Senate races). Representative (later state Senator and Lieutenant Governor) Kevin Meyer (R-Anchorage), House Finance Committee Co-Chair: $12,300. Representative Mike Chenault (R-Nikiski), House Finance Committee Co-Chair: $12,000. Representative (later Senator) Lesil McGuire (R-Anchorage), House Judiciary Committee Chair: $12,000. Senator Con Bunde (R-Anchorage), Senate Labor and Commerce Committee Chair: $11,500. Senator Lyda Green (R-Wasilla), Senate Finance Committee Co-Chair: $9,000. Representative Mike Hawker (R-Anchorage): $8,050. Representative Tom Anderson (R-Anchorage), House Labor and Commerce Chair: $8,000.
Additionally, Backes noted the consulting contract Senate President Ben Stevens (R-Anchorage) had with VECO Corporation and financial relationships other lawmakers had with other companies active in the oil and gas industry, including ConocoPhillips and ASCG Incorporated, the latter a subsidiary of the Alaska Native-owned Arctic Slope Regional Corporation which is heavily involved in oilfield business in Alaska.
According to Chenault, one of the lawmakers named in the article: "Somebody walked up [in the bar] and said, 'You corrupt bastards,' and that name stuck." Hats with the label "CBC," standing for "Corrupt Bastards Club" or "Corrupt Bastards Caucus," were later printed up, but according to Chenault "that was the extent of the CBC deal."
In the first week of August 2006, an ill Representative Carl E. Moses returned to the state capitol in Juneau after receiving medical treatment in Anchorage, to cast a critical vote that ensured passage of a bill giving tax breaks to the oil industry. The vote took place, shortly after Moses received campaign contributions from Bill Allen and five other VECO executives, the only Democrat to receive any from that source.
The FBI had set up in a Baranof hotel suite just three blocks away from the capitol building in Juneau. There they videotaped VECO's CEO Bill Allen, peeling off bills for legislators to stuff in their pockets. According to the Juneau Empire, Ray Metcalfe said he had spoken with FBI agents about the case, but didn't know how the feds first got interested in Alaska. "I think the jury is still out on what started this," said Metcalfe. Juneau Mayor Bruce Botelho, the longest-serving attorney general in the state's history, appointed during the successive administrations of Republican Wally Hickel, and Democrat Tony Knowles said it appeared that those state agencies responsible for ensuring ethical government had failed to do their jobs, but it was too soon to tell for sure.
Raids on legislative offices On August 31 and September 1, 2006, the FBI served some 20 search warrants in Anchorage, Juneau, Wasilla, Eagle River, Girdwood, and Willow, primarily on the district and capitol offices of several legislators. Republican legislators whose offices were searched included Senator John Cowdery, Senate President (and son of U.S. Senator Ted Stevens) Ben Stevens, Representatives Vic Kohring, Bruce Weyhrauch, Pete Kott and Bev Masek as well as Democratic Senator Donny Olson. The warrants permitted the search of computer files, personal diaries, Alaska Public Offices Commission reports, and any other items showing evidence of financial ties between legislators and the oilfield services company VECO Corporation, as well as clothing items with the phrase "Corrupt Bastards Club" or its related acronym printed on it. A search warrant for Sen. Olson's Juneau office, made available by his office to the public, specifically authorized the seizure of documents relating to VECO Corporation executives Bill Allen (CEO), Richard Smith (vice president), Pete Leathard (president), and Roger Chan (chief financial officer). The warrant also authorized the seizure of clothing, including hats, bearing the logos or phrases "VECO," "Corrupt Bastards Caucus," "Corrupt Bastards Club," or "CBC" printed on them.
John Cowdery was indicted for bribery and extortion under official right and bribery concerning programs that receive federal funding.
Management of corruption investigation It later emerged that the investigation of political corruption in Alaska was being managed not by the Alaska U.S. Attorney's office, but rather by the Public Integrity Section of the U.S. Department of Justice in Washington, D.C., with FBI agents working out of the FBI building in downtown Anchorage acting as lead investigators. The FBI raids on legislative offices on August 31 and September 1 involved dozens of extra FBI agents brought up from the Lower 48 but returned home after the initial round of searches and interviews. Other agencies, including the Internal Revenue Service, were also involved.
The Public Integrity Section, created in 1976, is charged with the investigation of election fraud, misconduct by federal judges, and corruption of elected officials in all levels of government — federal, state, and local. While U.S. Attorney offices also investigate and prosecute public corruption cases, because U.S. Attorneys are political appointees in local jurisdictions, they are sometimes recused from particular cases.
Brooke Miles, then-executive director of the Alaska Public Offices Commission, reported that the FBI began to collect public campaign reports and financial disclosure records on selected Alaska legislators perhaps a year prior to the raids, and returned at the start of 2006 to obtain such records for all legislators.
Investigation widens
Fisheries The FBI conducted a second search on the legislative office of Republican State Senator Ben Stevens on September 18, 2006, seizing among other items documents related to the proposed natural gas pipeline and the oil and gas tax law which had been discussed in the Alaska Legislature during the regular and two special legislative sessions in 2006, as well as items related to his work on the Senate Ethics Committee and documents related to fisheries. Stevens disclosed to the Anchorage Daily News that the FBI seized items during both searches of his office related to the Alaska Fisheries Marketing Board (AFMB), created under legislation by Ben Steven's father, U.S. Senator Ted Stevens, to distribute federal grants to promote Alaska seafood. Ben Stevens had been chair of AFMB until early in 2006. He had received consulting fees from at least three organizations that had benefited from the grants — over $250,000 during the time he served on the board. Other documents related to fisheries were also seized in the September 18 FBI search. One of these was a copy of an affidavit by Victor Smith, a salmon fisherman from Friday Harbor who alleged that Stevens had been paid by a seiners association to lobby his father and that he failed to disclose that income as required by Alaska law.
Private corrections