Lawyers, Guns & Money: An Inside Look at the Political Pardon of Frank Vennes Jr.

Documents obtained through the Freedom of Information Act shed light on a controversial presidential pardon involving Michele Bachmann, Tim Pawlenty and Norm Coleman

A Ripple in Stillwater Exclusive Report

By Karl Bremer

U.S. Office of Pardon Attorney (OPA) documents obtained by Ripple in Stillwater suggest that the politically charged presidential pardon of Frank Vennes Jr. went through several unusual permutations of approval and denial as it was volleyed back and forth between the Pardon Office, FBI, Deputy Attorney General and the White House over nearly eight years before it was ultimately recommended for approval in 2008.

And, based on the sequence of events outlined in those documents, it appears something happened at the White House regarding Vennes’ pardon petition sometime between April 2006, when the OPA recommended the White House deny the pardon, and Summer 2007, when the White House returned Vennes’ pardon case to the OPA and asked that they “take a second look at” it.

Frank Elroy Vennes Jr. was convicted in North Dakota of money laundering and illegal firearms and cocaine trafficking charges in 1987, served 38 months in federal prison in Sandstone, MN, and a decade or so after his release, began laying the groundwork for a presidential pardon. Vennes and his family were major campaign contributors to presidential candidates Congresswoman Michele Bachmann and former Minnesota Governor Tim Pawlenty, former U.S. Senator Norm Coleman, and state Republican Party entities.

Vennes and his family also contributed to Sen. Amy Klobuchar and former State Sen. Ted Mondale, who now chairs the Metropolitan Sports Facilities Commission.

Bachmann, Coleman, Pawlenty and then-Minnesota GOP Chair Ron Eibensteiner all recommended Vennes for a presidential pardon during the decade Vennes and his family and personal lawyer showered tens of thousands of dollars on Minnesota politicians.

Vennes and his family were among Bachmann’s biggest campaign contributors. Bachmann wrote a letter of support for Vennes’ pardon in 2007, even though Vennes, a resident of Shorewood, MN, and Jupiter, FL, was not and never had been a constituent. Vennes, his wife, brother and sister-in-law already had donated $26,800 to Bachmann’s 2008 congressional campaign when she wrote the letter; Vennes’ personal lawyer, Craig Howse, and his wife had donated another $11,200 to Bachmann’s campaign; and by June 2008, the Vennes and Howse families would pour another $12,200 into Bachmann’s campaign coffers for a total of $50,200.

Coleman, who received a total of $16,000 from Frank Vennes and his brother, wrote a letter of support for Vennes on behalf of himself, Pawlenty and Eibensteiner in 2002 to "President George W. Bush c/o Mr. Karl Rove." Rove was then senior advisor to President Bush. Coleman sent a second letter of recommendation for Vennes to the OPA in 2004.

Pawlenty received a total of $28,550 from Vennes, his family and lawyer during his Minnesota political career, and he has other connections to the convicted money launderer as well.

SO CLOSE

Former federal officials familiar with the pardon process who examined documents obtained by Ripple in Stillwater through the Freedom of Information Act confirmed that Vennes’ pardon was headed for approval after it went to the White House for the final time July 1, 2008.

But then on Sept. 24, 2008—less than six weeks before the election—the Shorewood, MN, home of Vennes was raided by federal agents in connection with the $3.5 billion Tom Petters Ponzi scheme. Two days later, Vennes’ $6 million Jupiter, FL, home was raided in the Petters investigation.

This was not good news for Bachmann, who was in the midst of a tough re-election fight against DFLer Elwyn Tinklenberg. One of her top campaign contributors and personal friends for whom she had solicited a presidential pardon for earlier crimes of money laundering was now implicated in the largest Ponzi scheme fraud in the history of Minnesota.

News of Vennes’ alleged involvement in the Petters Ponzi broke Sept. 26, 2008. Bachmann’s office began to move quickly to put some distance between Bachmann and her good friend and donor. By October 2, Bachmann had written a letter to the Office of Pardon Attorney withdrawing her earlier letter of support for Vennes’ pardon. Curiously, she made no mention of the reasons why she had had a change of heart.

Coleman, while also engaged in a tight re-election race with Al Franken, never withdrew his letters of support for Vennes.

Wrote Bachmann: “About a year ago, I wrote you to share my thoughts on Mr. Frank Vennes, who was seeking a Presidential pardon. I had known Mr. Vennes for some time and was familiar with his good works with local charity organizations. Like so many others, I was under the impression that he had turned his life around and was seeking to do right by those less fortunate.

“Regrettably, it now appears that I may have too hastily accepted his claims of redemption and I must withdraw my previous letter … While Mr. Vennes showed public regret, he still clearly needs to reconcile his inner struggles and I am no longer convinced that he would be an appropriate candidate for a Presidential pardon,” Bachmann concluded.

Documents obtained from the OPA indicate that this was the first that office—and the White House—had known of Vennes’ alleged involvement in the Petters Ponzi investigation.

On Oct. 3, Ronald Rodgers in the OPA sent an email to Kenneth K. Lee, associate legal counsel for the White House who handled pardon applications.

“Ken, this is a pardon case that you asked us to take a second look at and we sent it through the wickets anew and then over to you on or about 1 July 2008 (redacted) no action by the President has been taken on the case.

“We just got a call from Congresswoman Michele Bachman’s (sic) office: they wanted to withdraw their letter of support that they submitted on behalf of the guy, though they didn’t specifically disclose the reason for it. It appears he is under investigation for a securities and/or wire fraud matter and they executed a search warrant last week in which he was implicated.”

Rodgers sent Lee a link to a September 26 Star-Tribune report on the Petters raid that named Vennes.

On Oct. 3, 2008, the OPA also sent a two-page fax, the contents of which are unknown, to Bachmann with the subject line “per your request.” However, the fax wasn’t sent to the congresswoman’s office, from which her pardon letters had been sent. It was sent to Bachmann’s campaign office in Minnesota.

That same day, displaying further signs of panic just weeks before the election, Bachmann tried to symbolically wash her hands of the Vennes’ most recent campaign contributions by donating the sum of $9,200—an amount equal to Frank and Kimberly Vennes’ June 30 donations to Bachmann, but only a small portion of Bachmann’s total take from the Vennes and Howse families—to Minnesota Teen Challenge, an organization closely linked with Vennes. That didn’t work out so well for the congresswoman either. Minnesota Teen Challenge returned the donation to Bachmann two weeks later.

“We didn’t want to be involved if it was dirty money,” said Rich Scherber, executive director of Minnesota Teen Challenge, which lost millions in the Petters Ponzi scheme after investing with Vennes. Scherber personally suffered a loss of $423,759 in the Petters Ponzi through investments with Vennes, according to court documents, some of which he may recover from Vennes’ seized assets.

(Bachmann ultimately donated the $9,200 to R3, a collaborative of Christian recovery groups that includes Minnesota Teen Challenge, but has kept the remaining $41,000 she got from the Vennes-Howse connection.)

On Oct. 6, Rodgers emailed Lee at the White House with more details on Vennes’ involvement in the unfolding Petters investigation. That afternoon, Lee responded from the White House:

“Ron -- Wow—quite a surprising turn of events. Thanks. Ken”

On October 24, Vennes withdrew his request for executive clemency, the White House returned his case to the Office of Pardon Attorney and the case was “no actioned” and closed.

Bachmann went on to win re-election with the Vennes’ substantial financial support and barely a mention of her close relationship with the convicted money launderer and Ponzi suspect in the local mainstream media. Coleman lost to Al Franken in the closest statewide election in Minnesota history. And Tim Pawlenty now is running for president along with Bachmann.

But now that Bachmann and Pawlenty have entered the presidential arena, they are facing renewed scrutiny of their relationship with Frank Vennes Jr., particularly since things turned for the worse for the convicted money-launderer last spring.

Thirty-three months after his homes were raided and his assets seized by federal agents, Vennes was indicted for his alleged role in the $3.5 billion Tom Petters Ponzi scheme April 20. He pleaded not guilty and was released on $100,000 bond on May 3. His trial on fraud and money laundering charges stemming from the Petters Ponzi is scheduled to begin in February 2012 —right in the thick of presidential primary season.

FRANK VENNES JR.’S RAP SHEET

Frank Vennes Jr.’s legal troubles began in August 1986, according to federal court documents.

“IRS agents investigating suspected money laundering by certain North Dakota car dealers were told that Vennes, a Bismarck pawnshop owner, had made numerous trips to Switzerland and might have experience in transferring funds to a foreign country. An undercover agent, posing as a Chicago investor, contacted Vennes and asked for help in transferring cash abroad. Vennes later admitted that in the next three months he and his codefendants received $370,000 from the undercover agent and transferred it, minus their substantial commissions, to the Bahamas, the Isle of Man, and Switzerland without complying with federal currency transaction laws.”

Vennes was charged in May 1987 with multiple counts of money-laundering charges, and illegal firearms and drug offenses that were allegedly related to the missing $100,000. The first firearms offense alleged that Vennes arranged to illegally transfer an automatic weapon from an acquaintance to a federal agent; the second involved the illegal sale of a firearm to a Mexican national who subsequently took the weapon out of the country.  The cocaine trafficking charge was related to the use of interstate telephone to facilitate the sale of cocaine.

Vennes pleaded guilty to one count of money laundering  and no contest to the firearms and cocaine charges. The remainder of the money-laundering charges were dismissed. He was sentenced to five years in prison—three years for money laundering and one year each for the firearms and drug convictions—and restitution of $100,000, which later was reduced to $50,000.

Vennes served 38 months in the Federal Correctional Facility in Sandstone, MN, was released in Dec. 12, 1990, on parole, and completed his sentence Sept. 25, 1992.

Following his release from prison, Vennes did not appeal his sentence or conviction. But he commenced a “Bivens action” against the federal government seeking $10 million in damages from “unnamed federal agents for entrapment, outrageous conduct, and willful violation of the tax laws.”

According to a judicial opinion from the 8^th Circuit Court of Appeals, Vennes testified that at the prompting of undercover agents posing as Chicago businessmen in North Dakota, “he made two trips to Switzerland to launder money provided by the agents. Vennes successfully laundered $100,000 on the first trip, but on the second trip, associates of Vennes made off with the other $100,000.

“When Vennes returned without the money,” the opinion states, “the Chicago businessmen revealed themselves to be members of the Mafia and threatened … to dismember his children if he failed to recoup this money (perhaps suspecting that their superiors would be none too pleased at the loss of $100,000 of government money). These newly-revealed mobsters then suggested that Vennes engage in illegal drug and firearms transactions in an effort to recoup the money and thereby avoid serious bodily harm to him and his family. Vennes did so, the efforts to recoup the money were unsuccessful, and Vennes was eventually charged with a panoply of crimes.”

Vennes told the court that “I did get involved with some drug deals, but I lost money on those too, or got ripped off, so that there was never any money to repay the agent.”

The District Court acknowledged that “the underlying factual situation … is wondrously bizarre. Especially fascinating is speculating about the scene which occurred when the undercover agents tried to explain the loss of $100,000.”

However, Vennes failed to convince the court that he was entrapped, most notably since he pleaded either guilty or no contest to the charges. In dismissing Vennes’ claims, North Dakota U.S. District Judge Patrick Conmy wrote that “The record reveals that at one point, Vennes purchased cocaine from his own source in Florida after haggling with an undercover agent supplier about price and speed of delivery. This is not the conduct of one coerced or entrapped into crime.”

Additionally, at sentencing, according to the appeals court record, “Vennes’s attorney stated that the presentence report was complete, fair and thoroughly professional. He further stated that he was not ‘in any way indicating that these government agents acted in an improper fashion.’”

Vennes argued that he pleaded guilty and no contest on the advice of his attorney, whom he accused of “ineffective assistance.”

Vennes appealed the District Court’s decision to the 8^th Circuit Court of Appeals and lost, and he was denied appeal to the U.S. Supreme Court.

PARDON ME

Vennes claimed to have found God in prison, and played that card on many occasions. When he was released in December 1990, he moved to Minneapolis, started Metro Gem, and built a successful business dealing in precious stones and rare coins. Along the way, he became involved in prison ministries.

In May 1995, Vennes began doing business with Tom Petters, through whom he eventually would make tens of millions of dollars in commissions for steering investors—many of them evangelical Christian groups and investors—to Petters’ Ponzi scheme. Three years later, Vennes began to lay the groundwork for his presidential pardon: cultivating Washington, D.C. power brokers, currying favor with Minnesota politicians by making hefty campaign contributions and eventually, soliciting them for letters of recommendation.

Vennes’ first foray into politics was a $2,000 contribution to Ted Mondale’s gubernatorial campaign on August 28, 1998. Mondale joined the Petters Group as an executive vice-president in 1998 also. And, according to a top Washington lobbyist who wrote Vennes’ first letter of recommendation for a pardon in 2000, it was through Ted Mondale, who worked with Vennes, and the connections of his father, former Vice President Walter Mondale, that Vennes first sought assistance for his presidential pardon.

In Part II of "Lawyers, Guns & Money," Ripple in Stillwater lays out the political and money timeline of the Frank Vennes Jr. pardon.

Research and graphics assistance by Ken Avidor