Thursday, July 28, 2011

MN Supreme Court Rules Say Bachmann's Right to Practice Law Should Be Suspended

Presidential candidate appears to have registered at state for past three years under old address.

By Karl Bremer

Throughout her political career, Michele Bachmann has rarely passed up an opportunity to burnish her lawyerly credentials by claiming that she’s a “tax litigation attorney.” And for almost as long, Bachmann hasn’t even been authorized to practice law in her home state of Minnesota.

Now, it appears that Bachmann’s license to practice law in Minnesota should not only be unauthorized, but suspended and placed on “not in good standing” status for failure to comply with the “Rules of the Supreme  Court on Lawyer Registration.”

Lawyers licensed to practice law in Minnesota are required to register annually with the Lawyer Registration Office in the Minnesota Judicial Branch. They’re also required to pay an annual registration fee that varies depending on the lawyer’s active/inactive status, income level, residence and years in the profession.

The Supreme Court Rules also require that “Every lawyer or judge must immediately notify the Lawyer Registration Office of any change of postal address. Every lawyer or judge who elects to use the online registration system must immediately update their online registration profile to reflect any change of their postal address and email address.”

That rule is clearly referenced on the Minnesota Judicial Branch website on Updating Lawyer Registration.

Bachmann paid her most recent annual registration fee on July 11, 2011. Her address listed on her registration is 1801 Johnson Drive, Stillwater, MN. But Bachmann hasn’t lived at that address for nearly four years.

That would appear to put Bachmann in noncompliance with the Supreme Court Rules—not just this year, but for at least the past three years.

“A lawyer or judge who fails to meet all of the criteria to be on either active or inactive status is placed on non-compliant status, and the right to practice law in this state is automatically suspended,” the Supreme Court Rules state. “A lawyer or judge on non-compliant status is not in good standing. A lawyer or judge on non-compliant status must not practice law in this state, must not hold out himself or herself as authorized to practice law, or in any manner represent that he or she is qualified or authorized to practice law while on non-compliant status. Any lawyer or judge who violates this rule is subject to all the penalties and remedies provided by law for the unauthorized practice of law in the State of Minnesota.”

Did Bachmann simply ignore the rule requiring immediate notification of any change of address? Or did she knowingly continue to file under a false address since she moved from the City of Stillwater to West Lakeland Township in 2008?

This is only the latest in a long history of sloppy record-keeping, tardy legal filings and questionable campaign reports that litter Bachmann’s political career. Will anyone care enough to enforce the law this time?

Wednesday, July 27, 2011

Ripple in Stillwater files Campaign Finance Board complaint over Stillwater lobbyist who's not a lobbyist

Stillwater Mayor Ken Harycki: 'Really, he doesn't do any lobbying.'

Ripple in Stillwater author Karl Bremer has filed a formal complaint with the Minnesota Campaign Finance and Public Disclosure Board (CFB) over the alleged lobbying of unregistered lobbyist Mike Campbell on behalf of the City of Stillwater.

On April 19, Stillwater entered into an agreement with Michael Campbell of the Conach Group in Stillwater for “Legislative support for the St Croix River Crossing extension of the State Trail system, support for the New Armory Project and Phase III of the Levee Wall project.”

According to the contract with the City, the Conach Group is “To secure the required support of the Federal Government State of Minnesota and any administrative Department of either entity for the approval and funding of the pending St. Croix River Crossing at Stillwater” and “To secure Minnesota Legislative funding for the State purchase of the MN Zephyr Railroad Right of Way as an extension of the State Trail system, support for the New Armory Project and Phase III of the Levy Wall Project." According to the contract, “Consultant services will be rendered largely at the Consultant office and the State of Minnesota Capitol.”

But neither the lobbyist, Mike Campbell, nor anyone else with his firm, the Conach Group, are registered with the Minnesota Campaign Finance and Public Disclosure Board (CFB) or with the U.S. Senate or Congress. In fact, there are no lobbyists representing the City of Stillwater registered with the state at this time.

However, Stillwater Mayor Ken Harycki continues to insist that Campbell is not a lobbyist at all, even though he told the Stillwater Gazette: “Campbell is a well-connected person and has helped get two bills passed at the legislature, he is getting results.”

"Really, he doesn't do any lobbying," Harycki told the St. Paul Pioneer Press, apparently with a straight face. "He doesn't make calls to legislators for us. He tells us what the status of bills are, what some of the pitfalls are that are facing us and who we should call to address those pitfalls or to make that final push."

Although the city's contract states that Campbell's work will be "rendered largely at the Consultant office and at the State of Minnesota Capitol," Harycki told the Pioneer Press: "Usually, a lobbyist will go to the Legislature on your behalf and talk to them--he doesn't do that."

What exactly Campbell is doing for his $1,500 a month in taxpayer "legislative consulting" fees is unclear. Harycki and the Stillwater City Council rejected an attempt to require him to file monthly progress reports with the Council.

According to Council minutes, “Mayor Harycki suggested that any published reporting may impede some of the ongoing discussions.” The contract states only that “The City will rely upon the Consultant to put forth such effort as is reasonably necessary to fulfill the spirit and purpose of the Contract” and that “the nature of the work done by consultant will be reviewed at least quarterly to determine whether work should be deleted or added based upon changed circumstances.”

If Campbell were legally registered as a lobbyist, as it appears he should be, he would be required to keep detailed records of expenditures and file reports with the CFB. According to the CFB Lobbyist Handbook:

Records must be kept separately for administrative lobbying, legislative lobbying or the lobbying of a metropolitan governmental unit in the following categories:
Disbursements for:

  • preparing and distributing lobbying materials;
  • media advertising;
  • telephone and all other communication services;
  • postage and distribution costs associated with lobbying activities;
  • fees, allowances, public relations campaigns including consulting and other expenses related with those services;
  • entertainment;
  • food and beverages;
  • travel and lodging;
  • administrative costs and salary of support staff attributable to lobbying; and
  • all other disbursements including general administration and overhead and any other lobbyist disbursements not reported in other categories,
  • gifts or benefits paid or given to officials, and
  • other sources of funds of more than $500 in a calendar year given for purposes of lobbying, including fees or salary paid to a lobbyist as compensation.
Records must be kept for four years.

As it stands, whatever the public wants to know about what Campbell is doing for $1,500 a month or how he's spending taxpayers' money must be gleaned from his quarterly report filed with the City Council.

For his part, Campbell, a business agent for Cambria. told the Pioneer Press he was perplexed about the CFB complaint.

"It makes it seem as if something dastardly is going on. If I was going to the Capitol and lobbying, I would simply register as a lobbyist. I don't want to register as a lobbyist."

After reviewing the complaint, the CFB will determine whether to proceed with an investigation of the matter. According to the CFB, within 30 days, the board will make a public finding of whether or not there is probable cause to believe a violation has occurred.

Sunday, July 24, 2011

When Is a Lobbyist a Lobbyist?

City of Stillwater paying $1,500 a month for "legislative consultant" who isn't a legally registered lobbyist. Does it pass the smell test?

By Karl Bremer

Since April, the City of Stillwater has been paying $1,500 a month to what appears by any definition to be a lobbyist to secure state and federal funding and approval for the Bachmann Boondoggle Bridge and other projects. But neither the lobbyist, Mike Campbell, nor anyone else with his firm, the Conach Group, are registered with the Minnesota Campaign Finance and Public Disclosure Board (CFB).  In fact, there are no lobbyists representing the City of Stillwater registered with the state at this time.

On April 19, Stillwater entered into an agreement with Michael Campbell of the Conach Group in Stillwater for “Legislative support for the St Croix River Crossing extension of the State Trail system, support for the New Armory Project and Phase III of the Levee Wall project.”

According to the contract with the City, the Conach Group is “To secure the required support of the Federal Government State of Minnesota and any administrative Department of either entity for the approval and funding of the pending St. Croix River Crossing at Stillwater” and “To secure Minnesota Legislative funding for the State purchase of the MN Zephyr Railroad Right of Way as an extension of the State Trail system, support for the New Armory Project and Phase III of the Levy Wall Project." According to the contract, “Consultant services will be rendered largely at the Consultant office and the State of Minnesota Capitol.” 

That sounds a lot like lobbying.

According to the CFB’s Lobbyist Handbook, “You must register as a lobbyist within five days after you … are engaged for pay or other consideration and receive more than $3,000 from all sources in any year, for the purpose of attempting to influence legislative or administrative action or the official action of a metropolitan governmental unit by communicating or urging others to communicate with public officials or local officials in a metropolitan governmental unit.”

A penalty of up to $1,000 can be assessed for failure to file lobbyist registration.

The City of Stillwater has paid Campbell and his group $6,000 to date. 

However, according to the novel assessment of Stillwater Mayor Ken Harycki, Campbell isn’t a lobbyist at all, but a “legislative consultant.” There is a “fine line” between lobbying and legislative consulting, Harycki told the Stillwater Gazette. 

Campbell is a well-connected person and has helped get two bills passed at the legislature, he is getting results,” Harycki says.

That sounds an awful lot like lobbying, too.

Campbell is a former director of intergovernmental affairs for the City of St. Paul, a job also once held by Michael Wilhelmi, co-chair and registered lobbyist for the Coalition for St. Croix River Crossing. Campbell was appointed to that position by Mayor Norm Coleman, He was director of governmental relations (lobbyist) for the Davis Family Holdings, and is former executive director of the Senate Republican Caucus.

According to Stillwater City Councilor Micky Cook, Campbell “advised” Harycki on his mayoral race and has “advised” other members of the council as well.

Harycki has been trying to get Campbell and his group on the city payroll since at least 2007. At Harycki’s request, according to City Council minutes, Campbell pitched the City of Stillwater on a lobbying proposal in February 2007, but the City balked at taking on a new lobbyist at the start of the legislative session.

Stillwater had contracted with local lobbyist Ed Cain in 2006 at a rate of $75/hour, to a maximum of $46,000 a year. Cain, who was also a lobbyist for the fraudster known as "Bobby Thompson,"  had been paid tens of thousands of dollars over the years to lobby on the city’s behalf, mostly for the Stillwater bridge. However, the city appears to have gotten little for Cain’s efforts. Cain last contracted with the City of Stillwater in 2008, according to CFB records.

Michele Bachmann and Stillwater lobbyist Ed Cain

Campbell’s 2007 proposal to the City for “State and Federal legislative services” stated they would “meet with all levels of elected officials their staffs and governmental officials to advocate for the listed and approved legislative agenda,” which included funding for the Stillwater bridge.

That also sounds a lot like a lobbyist.

In his 2007 proposal for “State and Federal legislative services,” Campbell lists himself, former state representative Tom Osthoff and former General Mills and Gelco executive Jack Bell as principals in the Conach group. However, there are no records of state lobbyist registrations for any of them on file with the CFB as far back as 2005. 

Campbell’s hiring didn’t come without considerable discussion, raised chiefly by Cook, the City Council’s lone Bachmann Boondoggle critic.

Cook questioned the qualifications of the group and suggested that due diligence be done before hiring them. But City Administrator Larry Hansen and Mayor Harycki rose to Campbell’s defense, citing Campbell’s past volunteer work on the Brown’s Creek project and the fact that Campbell has “lots of connections.”

Cook questioned the lack of competitive bidding for the position and, according to minutes from the April 19 Council meeting, Hansen “noted that the City did go through the interview and RFP process for lobbying services a number of years ago and he was not very impressed with many of the candidates and the costs considerably higher.”

Cook also challenged the transparency of the process and the position. She argued that the contract language describing the time devoted to work was vague and ambiguous and suggested that Campbell provide the City with monthly reports on what the group was working on. Cook was concerned that the bulk of the work would be done on the Bachmann Boondoggle at the expense of the armory, Zephyr trail and levee projects, which she supported.

But according to Council minutes, “Mayor Harycki suggested that any published reporting may impede some of the ongoing discussions,” so that was rejected. The contract states only that “The City will rely upon the Consultant to put forth such effort as is reasonably necessary to fulfill the spirit and purpose of the Contract” and that “the nature of the work done by consultant will be reviewed at least quarterly to determine whether work should be deleted or added based upon changed circumstances.”

In the end, the only change to Campbell’s contract was to adjust the time required to terminate the contract from 90 days to 60 days—a move that Harycki initially resisted. The contract sailed through the Council with Cook casting the only dissenting vote.

With no accountability or transparency, it’s difficult to determine exactly what Stillwater is getting for its $1,500 a month in “legislative support.” It’s even more difficult to figure out how one works “to secure the required support of the Federal Government, State of Minnesota and any administrative Department of either entity for the approval and funding of the pending St. Croix River Crossing at Stillwater” without lobbying.

Mayor Harycki says there is a “fine line” between lobbying and legislative consulting. It will be interesting to see what the Campaign Finance and Public Disclosure Board makes of Harycki’s balancing act.

Something smells rotten in Stillwater, and it ain’t dead sheepshead on the beach.

UPDATE, JULY 27, 2011:

Ripple in Stillwater author Karl Bremer has filed a formal complaint with the Minnesota Campaign Finance and Public Disclosure Board (CFB) over the alleged lobbying of unregistered lobbyist Mike Campbell on behalf of the City of Stillwater. After reviewing the complaint, the CFB will determine whether to proceed with an investigation of the matter. According to the CFB, within 30 days, the board will make a public finding of whether or not there is probable cause to believe a violation has occurred.
Also, a check of federal lobbyist records shows no record of lobbyist registration for Mike Campbell or The Conach Group at either the U.S. Senate or U.S. House of Representatives.

Top photo: Stillwater Mayor Ken Harycki, right, walks lockstep with Gov. Mark Dayton, Michele Bachmann, and husband and political strategist Marcus Bachmann on a tour of the Stillwater Lift Bridge.

Friday, July 22, 2011

Michele Bachmann fails to file Financial Disclosure Statement on time for 5th consecutive year

Minnesota Congresswoman has a long history of sloppy paperwork and is currently under fire from the FEC for incomplete filings.

By Karl Bremer

Congresswoman Michele Bachmann has been granted yet another extension to file her  2011 Financial Disclosure Statement, which was due in the House of Representative’s Clerk’s Office May 16. But this isn’t the only time Bachmann has been tardy in filing her Financial Disclosure Statement. In fact, Bachmann has never filed her Congressional Financial Disclosure Statement on time since she’s been in office.

Bachmann’s 2007 Financial Disclosure Statement was due on May 15, 2007. She filed it on June 13, 2007.

Bachmann’s 2008 Financial Disclosure Statement was due on May 15, 2008. She filed it on June 16, 2008.

Bachmann’s 2009 Financial Disclosure Statement was due on May 15, 2009. She filed it on June 26, 2009.

Bachmann’s 2010 Financial Disclosure Statement was due on May 17, 2010. She filed it on June 16, 2010.

Bachmann’s 2011 Financial Disclosure Statement was due in the Clerk’s office on May 16. She’s now been granted a second extension to August 12 to file it.

Besides being late every year in filing her Financial Disclosure Statements, Bachmann’s 2008 statement remains incomplete. The financial portion for the Bachmann Farm Family LP in Independence, WI—the infamous Bachmann family farm that has harvested hundreds of thousands of dollars in federal farm subsidies—remains missing from the report three years after it was due.

Members of Congress are given a grace period of 30 days past the due date in which they can still file their Financial Disclosure Statement without penalty. The form clearly states that “A $200 penalty shall be assessed against anyone who files more than 30 days late." Based on that warning, Bachmann should have been fined $200 for her 2009 Financial Disclosure Statement, which was filed 42 days late.

Bachmann’s sloppy Financial Disclosure Statement history is nothing new for the congresswoman. The Federal Elections Commission (FEC) and the Minnesota Campaign Finance and Disclosure Board have found repeated discrepancies and shortcomings in her filings with those agencies over the years as well. Most recently, Bachmann’s so-called leadership Political Action Committee, MICHELEPAC, was called on the carpet by the FEC for incomplete reports.

Bachmann remains one of only 35 members of Congress who have failed to file their 2011 Financial Disclosure Statements yet.

Wednesday, July 20, 2011

Grand Jury indictment charges Frank Vennes Jr. with 24 counts of fraud, money laundering and making false statements

New indictment alleges Bachmann's friend and donor was in Petters Ponzi from 2001-2008, same years he sought a presidential pardon

By Karl Bremer

The Justice Department filed a superseding indictment against Frank Elroy Vennes Jr. in U.S. District Court in Minneapolis July 19 that brings to 24 the number of fraud, money laundering and false-statement charges the politically connected former felon now faces. The charges, which include the four counts of fraud and one count of money laundering in the indictment filed against Vennes April 20, are connected to Vennes’ alleged involvement in the $3.5-billion Tom Petters Ponzi scheme.

The superseding indictment also charges James Nathan Fry of Orono, MN, with nine counts of fraud and three counts of making a false statement to the U.S. Securities and Exchange Commission during the Petters investigation.

Vennes’ effort to secure a presidential pardon for federal money laundering and other crimes from the 1980s, along with his deep financial and personal connections to Minnesota politicians, was the subject of a recent Ripple in Stillwater investigation. Vennes’ political friends include presidential candidates Congresswoman Michele Bachmann, presidential candidate and former Minnesota governor Tim Pawlenty, former U.S. Senator Norm Coleman, former state GOP Chair Ron Eibensteiner, former Vice President Walter Mondale, and former State Sen. Ted Mondale, among others.

The indictment alleges that Vennes’ and Fry’s criminal fraud activity in the Petters Ponzi began in 2001 and continued until September 2008, when his and Petters’ homes were raided by federal agents. During that entire time, Vennes was vigorously trying to wipe his past criminal record clean with a pardon and soliciting letters of recommendation for a pardon from politicians to whom he and his family and lawyer were donating tens of thousands of dollars in campaign contributions.

Like Vennes, Fry has contributed heavily to Republican candidates and political funds.

The Petters Ponzi scheme involved investments of billions of dollars in fraudulent Petters Corporation Inc. (PCI) promissory notes. Investors were told their funds would be used to finance “vast amounts of consumer electronics and other consumer merchandise” to be sold to big-box retailers such as Sam’s Club and CostCo.

“In reality,” the indictment states, “the transactions underlying virtually all PCI notes were fictitious. Documents evidencing the purported transactions were fabricated by Petters’ criminal associates, and the purported suppliers of the electronics goods were shell companies acting in concert with Petters. No retailers participated in the transactions underlying the PCI notes and there were no purchases and resales of consumer electronics or other consumer merchandise. Instead, Petters diverted hundreds of millions of dollars to his own purposes and paid purported profits to investors with money raised from the sale of new notes.”

“Petters’ inventory finance operation was a Ponzi scheme,” the indictment charges.

According to the indictment, Vennes began raising money from investors for PCI through his own company, Metro Gem, in 1995. From 1999 through September 2008, Vennes engaged in approximately 748 transactions involving hundreds of millions of dollars of money invested in PCI notes.

Between 2001 and 2008, the indictment states, Vennes made more than $80 million related to Metro Gem investments in PCI notes. That was in addition to the $60 million in commissions he raked in from the Palm Beach Funds investments in PCI.

Around 1998, the indictment states, Vennes began seeking larger sources of financing for Petters and PCI. But his previous convictions on federal money laundering, cocaine and gun trafficking charges prohibited him from obtaining institutional financing, so he began to work with others to set up hedge funds through which he could solicit institutional investments in PCI notes.

Two of those people were David William Harrold and Bruce Francis Prevost, owners and managers of Palm Beach, FL-based and offshore hedge funds, referred to as the “Palm Beach Funds.” Vennes recruited the two to raise money for Petters and PCI and, court documents state, from 2002 through September 2008, the Palm Beach Funds invested approximately $8 billion in PCI notes. The arrangement netted Harrold and Prevost more than $58 million in fees under their agreements with the Palm Beach Funds. Vennes earned more than $60 million in commissions paid by Petters and/or PCI for the Palm Beach Fund investments based on a percentage of the money he attracted.

Harrold and Prevost were indicted along with Vennes in April. They pleaded guilty to securities fraud in the scheme and reportedly are cooperating with federal authorities.

Vennes also collaborated with Fry, CEO of hedge fund investment advisors Arrowhead Capital Management, LLC, to raise money for Petters and PCI. From 1999-2008, according to the indictment, Arrowhead arranged the investment of more than $500 million of its investors’ funds in PCI. As of September 2008, Arrowhead funds had about $130 million invested in PCI notes. Vennes was the intermediary in almost every transaction between Arrowhead and PCI and made more than $48 million in “commissions” on the investments, according to the indictment. Fry made more than $41 million in fees from Arrowhead’s investments in PCI notes.

Both Vennes and Fry made “material misrepresentations and concealed material information about the PCI investments in order to induce investors,” the indictment charges. Also, the indictment states, Fry failed to disclose Vennes’ criminal record to institutional investors even though he knew such information was material to investors.

"By no later than August of 2008," the indictment states, “Vennes had been advised by Petters that there was fraud at PCI and that the PCI notes were “compromised;” Vennes knew that PCI had substantial problems paying more than a billion dollars of PCI Notes held by the Arrowhead Funds, the Palm Beach Funds and Metro Gem; Vennes knew that money invested with PCI was being used to pay existing PCI investors, rather than for financing consumer electronics tranactions; and Vennes was attempting to liquidate Metro Gem’s investments with PCI below the stated value of the notes. All of this information was material to Metro Gem investors. Vennes did not disclose it to investors.”

Vennes’ pardon petition was sitting at the White House by that time, apparently approved and ready to be signed later that year. If Vennes knew what the indictment says he knew about the Petters Ponzi at the time, he was probably more than a little anxious to get President Bush’s signature on it.

Now, instead of a pardon, Vennes faces a total of 330 years in prison on eight counts of securities fraud, two counts of mail fraud, six counts of wire fraud, three counts of money laundering, three counts of bank fraud and two counts of making false statements on credit applications.

Courtroom sketch of Frank Vennes Jr. by Ken Avidor

Friday, July 15, 2011

Lawyers, Guns & Money, Pt. 3: Buying Influence or Access?

Frank Vennes Jr. case highlights flaws in
 the presidential pardon process

A Ripple in Stillwater Exclusive Report

By Karl Bremer

The pardon trail of Frank Elroy Vennes Jr. is littered with more than $217,000 in political campaign contributions and letters of recommendation for presidential clemency from the very same politicians and political officers who benefited from Vennes’ thousands. The timing of many of these contributions is in close proximity to activity on his pardon petition, political letters of support or other events, such as Karl Rove’s fundraiser for Bachmann in Stillwater July 21, 2006.

Was Vennes trying to buy political support for a presidential pardon through the disbursement of tens of thousands of dollars in campaign contributions to politicians who might be sympathetic to his plight? While there is no conclusive evidence to prove that Vennes was buying influence with politicians who supported his pardon efforts, it’s hard to ignore the fact that he donated so much money to those whose support he sought and received, particularly those like Congresswoman Michele Bachmann (MN-6) for whom he wasn’t even a constituent. At the very least, money appears to have bought the ear of Minnesota politicians for Vennes.

“On the one hand, it’s not unusual for a member of Congress to write letters on behalf of their constituents, and these letters are sometimes helpful to the process,” says a former government official familiar with the pardon process. “On the other hand, it would obviously be problematic if these were made in exchange for campaign contributions, whether express or implied. It is highly unusual for someone to write a letter on behalf of a nonconstituent,” the official noted.

Indeed, the House Ethics Manual addresses that issue specifically.

“If a member has personal knowledge regarding a matter or an individual, he or she may always communicate that knowledge to agency officials,” the manual states. “As a general matter, however, a member should not devote official resources to casework for individuals who live outside the district.”

Bachmann—by far the largest recipient of Vennes/Howse campaign contributions with $50,200 total coming from both families—has yet to explain how much she knew about Vennes’ personal finances, as she indicated she did in her 2007 pardon recommendation letter. Nor has Bachmann ever explained why she abandoned her personal friend just weeks before the 2008 election—but 33 months before he was ever even indicted.

While Bachmann wasted no time in trying to wash her hands of Vennes and a portion of his money when the Petters Ponzi came tumbling down, neither Norm Coleman, Tim Pawlenty nor Ron Eibensteiner ever withdrew their recommendations for Vennes’ pardon nor dispensed with his cash. Did Bachmann know something about Vennes’ involvement with Petters back then that the others did not?

Minnesota Republicans who once professed their faith in this supposedly rehabilitated, born-again convicted felon—and took tens of thousands of dollars in campaign contributions from him—now are reluctant to talk much about their relationship with him. Former DFL State Sen. Ted Mondale and his father, former Vice President Walter Mondale, who apparently helped get Vennes started in his pardon process, declined interview requests.

Bachmann and Pawlenty—both of whom are running for president—and Coleman have refused repeatedly to respond to inquiries from myself about Frank Vennes Jr.  But one common thread connects them—and former President George W. Bush—to the convicted money launderer: the controversial faith-based drug/alcohol rehab ministry Teen Challenge.

Bachmann responded vaguely to WCCO-TV’s Esme Murphy in October 2008 about her relationship with Vennes, which she said began with Minnesota Teen Challenge:

“I knew Frank Vennes through Teen Challenge and saw that he had made a remarkable transformation in his life, and he told me his goal was to give as much money as he could to charity so that more people could find freedom in their life. And I thought that was great, so I supported him.”

Coleman, responding to an inquiry about Frank Vennes Jr. from MinnPost reporter Eric Black last April, also said he knew Vennes through Teen Challenge but added: “I am not privy to, or aware of, what role he may have played in the Petters saga. My advocacy for Frank nearly a decade ago pre-dated anything I am aware of that had to do with Tom Petters.”

Although he has never been clear about his relationship with Vennes, Pawlenty shares a common interest with Vennes in Minnesota Teen Challenge too. Besides steering Minnesota Teen Challenge investments to Petters’ company, Vennes served on the Minnesota Teen Challenge Board of Directors with Mary Pawlenty, Tim Pawlenty’s wife. And in 2009, Pawlenty donated nearly $86,000 from his defunct gubernatorial campaign fund to Minnesota Teen Challenge.

Teen Challenge was a favorite charity of President Bush’s as well. He spoke highly of the organization in the 2006 video below. He went to bat for them in his first term as governor of Texas when a state agency threatened to take away Teen Challenge’s operating license for failing to follow regulations, according to this Frontline report. Bush was keynote speaker at the 2010 Teen Challenge Wisconsin Banquet in Milwaukee.

If Vennes was going to be granted his pardon by President Bush before he left office, as Vennes claimed, that means that it was headed for denial until the White House asked the Office of Pardon Attorney to “take a second look” at it.

Was it President Bush himself who asked for that second look when he saw a kindred soul in Vennes’ deep involvement with Teen Challenge? Or was someone else running interference for Vennes at the White House?

And if Vennes was going to be granted a pardon, how did he pass muster with the FBI only five months before they recorded Tom Petters implicating him in the Ponzi scheme? It’s hard to fathom that Vennes wasn’t on the FBI’s radar until those recordings were made.

One government official familiar with the pardon process concurred that the record doesn’t reflect well on the FBI.

“I think it’s quite strange that the FBI didn't give the Pardon Attorney a head’s up, at a time when the FBI had to know that Vennes was the target of an ongoing investigation,” the former official noted. “Instead, the Pardon Attorney had to learn about it from the press, like everyone else. I have no reason to think that it was anything other than the left hand not knowing what the right hand was doing, that the Pardon Attorney asked the background unit to address a narrow issue and the FBI didn't think to check any further.

“But even so, that's hardly an excuse. The FBI's failure to connect the dots nearly resulted in a pardon that would surely have been a great embarrassment to the President, which is one of the reasons that supposedly justifies the Justice Department's advisory function in the first place.”

The pardon process of Frank Vennes Jr. points up other long-standing concerns about undue influence on the way the Office of Pardon Attorney operates.

After looking at the documents produced under FOIA, a former federal official familiar with the pardon process said that “it appears that someone with influence must have contacted the White House about the case between the time DOJ sent its denial report in April of 2006 and the time the White House told the Pardon Attorney to 'take another look' at the case (code for 'we want a different recommendation') in July of 2007. But that sort of lobbying happens all the time, and there really isn't anything wrong with it. In fact, I think the White House showed quite a lot of respect for the Justice Department's process by sending the case back for reconsideration.

“What is more interesting is what the documents reveal about the extensive and inefficient meddling with the Pardon Attorney by the Deputy Attorney General's office, which delayed the processing of Vennes' application for years and showed no respect for the official whose job it is to make recommendations to the president. The DAG sent the case back to OPA at least three times between 2002 and 2006, and finally had to direct the Pardon Attorney to change what had been a favorable recommendation to a denial. In 2008, after the White House indicated that it wanted to grant the pardon, the DAG again interfered, this time directing a new Pardon Attorney to make a favorable recommendation.

"Honestly, it is a real shame that the Pardon Attorney can't command more respect in his own agency -- which is precisely what has made the Justice Department so unhelpful to the President in clemency matters over the past 20 years.”

The role of political money in Vennes’ pardon story also is troubling.

Over the course of a decade, from 1998 to 2008, Vennes, members of his family, his personal lawyer, Craig Howse, and his wife donated a total of $217,800 to Michele Bachmann, Tim Pawlenty, Norm Coleman, Amy Klobuchar, Ted Mondale, the Minnesota House Republican Campaign Committee and the Republican Party of Minnesota. During eight of those 10 years, Vennes was pursuing a presidential pardon through the same politicians and political entities who were benefiting from his largess.

“In part, the failure lies with the Justice Department for failing, as a matter of routine policy, to not look at this issue,” says one former federal official. “They deliberately don’t look at it because they don’t want to know.”

Checking Federal Election Commission records for donations made to politicians by pardon applicants for whom those politicians have written letters of recommendation should simply be a part of the pardon investigation process, the official suggests.

“How can you judge the credibility of one of these letters if they don’t know that important information?”

Some in the academic and legal community who follow presidential pardons closely fear that cases such as Vennes’ could taint the process so that less-politically-connected pardon candidates won’t get a fair shake. Or, that politicians will fear recommending a pardon for anyone, regardless of the merits of their case.

Frank Elroy Vennes Jr., now of Cocoa Beach, FL, was indicted on April 20, 2011, on four counts of securities fraud and one count of money-laundering. He entered a not-guilty plea on May 3. Two other defendants charged with securities fraud along with Vennes—David William Harrold and Bruce Francis Prevost—already have pleaded guilty and reportedly are cooperating with federal authorities.

Once headed for a pardon by President Bush for his earlier crimes, Frank Vennes Jr. could be headed for prison again instead. It’s a strange twist of fate for a former North Dakota pawnbroker-turned-multimillionaire and felon who once counted among his friends two current candidates for the White House and some of Minnesota’s leading political figures.

Vennes’ fraud and money-laundering trial is scheduled to begin in U.S. District Court in Minneapolis February 6, 2012—right in the middle of presidential primary season. That might focus enough attention on Vennes’ pardon to get some politicians to explain their cozy relationship with him. It might also spur others to address the concerns expressed above about flaws in the pardon process itself.

Stay tuned--things could get very interesting before this is all over.

UPDATE: Vennes indicted July 19 on 24 counts of fraud, money laundering and making false statements.

Additional research and graphic artwork by Ken Avidor.

Read Part 1 of "Lawyers, Guns & Money" here.

Read Part 2 of "Lawyers, Guns & Money" here.

Tuesday, July 12, 2011

Lawyers Guns & Money, Pt. 2: The Twisted Trail of the Frank Vennes Jr. Presidential Pardon

A Ripple in Stillwater Exclusive Report

By Karl Bremer

Convicted money launderer and gun/cocaine trafficker Frank Elroy Vennes Jr. filed his application for executive clemency—a presidential pardon—with the U.S. Department of Justice Office of Pardon Attorney on July 12, 2000.

On that same day, John D. Raffaelli, one of Capitol Hill’s leading lobbyists with The Washington Group, sent a letter to Bruce R. Lindsey, assistant and deputy counsel to President Bill Clinton, in support of Vennes’ petition for a pardon.

Raffaelli had spent four years as counsel to Sen. Lloyd Bentsen (D-TX). He got to know Vennes through Walter Mondale, who as a U.S. Senator was good friends with Bentsen. Mondale had asked Raffaelli to help Vennes with his pardon petition at the request of his son, former State Senator Ted Mondale, who knew Vennes.

Ted Mondale joined Tom Petters’ Petters Group as an executive vice-president in 1998, so it’s likely he met Vennes through his work there. Mondale’s campaign for governor in 1998 received a $2,000 donation from Vennes—Frank’s first political contribution.

Ted Mondale did not respond to phone and email requests for an interview about Frank Vennes Jr. Walter Mondale’s Minneapolis law office, Dorsey & Whitney, said Mondale was too busy for an interview.

“My involvement with Frank Vennes began and ended in 2000,” recalls Raffaelli. Walter Mondale asked Raffaelli to “help (Vennes) figure out how Washington works” as a favor for Ted. “I met (Vennes) several times in the process. He came to D.C., told me his story, gave me his materials.”

Vennes’ story impressed Raffaelli. “I was touched by him and thought it was certainly worth it to look at it.” Vennes told him he needed a pardon because “at that time, he was doing a prison ministry thing. He couldn’t go into any federal prison because of his conviction.”

After examining the record of his conviction, he says, “It really does look like a pretty strong case of entrapment.”

Raffaelli referred Vennes to Margaret Colgate Love, a private practice attorney who served as U.S. Pardon Attorney under the Clinton Administration from 1990-1997. Love now represents pardon applicants, and she ended up representing Vennes in his pardon petition process.

“I didn’t have any idea how the pardon process works,” says Raffaelli. “I had never been asked to recommend one before … I compared it to trying to get the church to approve an annulment.”

Raffaelli wrote his letter of recommendation for Vennes to the White House on July 12, 2000—the same day the OPA received Vennes’ pardon application.

“There are a number of unusual and questionable governmental actions surrounding the original conviction of Mr. Vennes,” Raffaelli wrote. “But more importantly, since his release from prison, he has been a model citizen and humanitarian. His story is very compelling ... I am confident that President Clinton will find him a worthy applicant for a pardon.”

When he met with Vennes, Raffaelli says, “He seemed like a guy who was pretty proud of what he did in business. I talked to him quite a bit. I probed him quite a lot about what he was doing. I guess he was a pretty good talker.”

When informed of the details of Vennes’ most recent indictment on fraud and money laundering charges, Raffaelli replied sorrowfully: “I’m still just shocked … I’m really sick about Frank.”

President Clinton never acted on Vennes’ pardon petition.

Vennes’ pardon petition was referred to the U.S. Attorney’s Office November 6, 2000, returned to the Office of Pardon Attorney November 27 and then referred to the FBI on March 29, 2001. It already had been referred to Vennes' probation officer and the U.S. Attorney's office in North Dakota where he was prosecuted--standard steps in preliminary investigations of pardon petitions.

Vennes made his next political contribution on October 25, 2001—$1,000 to Minnesota Republican Norm Coleman, who was running in his first campaign for the U.S. Senate. He followed up with another $1,000 to Coleman two days later, and his brother Gregory Vennes gave another $1,000.

Vennes made his first donation of $250 to Tim Pawlenty in December 2001($250), and his and his brother’s family dropped another $8,000 into Pawlenty’s campaign in January 2002. Vennes’ personal lawyer, Craig Howse, gave $550 to Pawlenty in February.

On May 1, 2002, Vennes took the unusual step of making restitution to the federal government on the remainder of the $100,000 he lost in the money-laundering scheme. Restitution had been reduced to $50,000, which Vennes had paid off in 1996.

“Since his release from prison, Mr. Vennes has been very active in the Christian faith and in conveying the teachings of Jesus Christ and the Bible to others,” wrote Leo F.J. Wilking, Vennes lawyer, in an affidavit to U.S. District Court in North Dakota.

“Although Mr. Vennes is under no legal obligation to make any further payment on the Order for restitution,” Wilkings noted, “he has the financial resources to do so and feels he has a moral obligation to make such a payment.”
Copy of a check for $47,822.64 from Frank Vennes Jr. to the U.S. Treasury, which was placed in his pardon petition file.

"The defendant's motion is indeed a pleasant surprise," wrote District of North Dakota U.S. Attorney Drew Wrigley in a May 2, 2002 response to Vennes' payment. "Mr. Vennes had no legaal obligation of any kind to make this offer. His willingness to do so represents genuine rehabilitation."

Vennes cut a check to the U.S. Treasury for $47,822.64. A copy of the affidavit and the check were placed in his pardon petition file.

The Vennes money pipeline continued to flow to Republicans. Vennes gave $10,750 to the Minnesota House Republican Campaign Committee (HRCC) in June 2002, $8,000 to Norm Coleman’s Rally for leadership Fund in July, and $3,000 to the Republican Party of Minnesota in August. Colby Vennes, Frank’s son, chipped in $2,000 to the Pawlenty’s gubernatorial campaign in August.

Vennes’ pardon petition was referred back to the U.S. Attorney’s Office September 4, 2002.

On December 20, Senator-elect Coleman wrote a letter to “President George W. Bush c/o Karl Rove” on behalf of himself, Governor-elect Tim Pawlenty and Minnesota GOP Chair Ron Eibensteiner supporting Vennes’ petition for a pardon. By then, Vennes and his family and lawyer had contributed more than $35,000 to Coleman, Pawlenty and Republican Party committees.

“Being well-acquainted with Frank and his wife Kim, I want to encourage President Bush to give Frank a pardon,” Coleman wrote. “Frank is a very successful businessman, known for his integrity and fine character. He has shared his success with others by being seriously involved in a number of faith-based outreach organizations and being a more than generous financial contributor to those organizations. His efforts and contributions have had a significant influence for the good of Minnesota. Frank is indeed an example of successful rehabilitation.”

Coleman went on to write that he wanted to join “my friend, (former Minnesota GOP Chairman) Ron Eibensteiner and Governor-Elect Tim Pawlenty in urging President Bush to grant Frank Vennes a Presidential Pardon.”

The roles of Pawlenty and Eibensteiner in seeking a pardon for Vennes are unclear; Freedom of Information Act requests did not turn up pardon letters from either. Pawlenty has refused to respond to repeated requests for explanations of his relationship with Frank Vennes Jr. or his role in Vennes’ pardon request.

This wasn’t the first time that the paths of Pawlenty, Coleman and Rove had crossed. Pawlenty and Coleman each came to their respective races in 2002 as a result of Rove’s and Vice President Dick Cheney’s intervention in 2001. Pawlenty originally had intended to challenge Paul Wellstone for the U.S. Senate, but then on April 18, 2001, according to a Star-Tribune report, Rove called Pawlenty and urged him not to run for Senate. Pawlenty intended to go ahead with his plans, but a second call from the White House—this one from Dick Cheney—changed his mind.

"On behalf of the president and the vice president of the United States, [Cheney] asked that I not go forward. . . . For the good of the party, for the good of the effort (against Wellstone) I agreed not to pursue an exploratory campaign," Pawlenty said at a news conference.

The White House confirmed that Bush, Cheney and Rove had discussed the Minnesota Senate race and that Coleman enjoyed strong support in the White House.

Less than a month later, after Coleman sent his first letter of support for Vennes to Rove, Vennes’ file was referred to the Deputy Attorney General.

Vennes wrote a $10,000 check to the House Republican Campaign Committee in May 2003.

Normally, according to sources familiar with the process, the Deputy Attorney General would sign off the OPA’s recommendation and send it on to the White House. In this case, however, Deputy Attorney General Larry Thompson sat on it for six months and then returned it to the OPA.

Vennes made an end-of-the-year 2003 campaign contribution of $5,000 to Coleman’s Northstar Leadership PAC, and the spigot kept flowing from various members of the Vennes family to Pawlenty and the GOP. Frank Vennes dumped another $10,000 on the HRCC in August 2004.

On December 3, 2004, Coleman wrote a second letter urging approval of a presidential pardon for Vennes, this time to Samuel Morison and Roger Adams in the Office of Pardon Attorney.

“I personally know Mr. Vennes and find him to be trustworthy, extremely dedicated to his community and compassionate about serving others less fortunate than himself, and a talented successful businessman,” Coleman wrote.

Coleman touted Vennes’ numerous business endeavors and his work with faith-based groups and prison ministries. He stated unequivocally that “Mr. Vennes’ moral and ethical standards more than justify your consideration of his pardon application; the pardon will eliminate the continuing stigma of a conviction which limits Mr. Vennes’ ability to reach out and share with others in similar situations as Mr. Vennes’ past. Mr. Vennes’ faith is very real.”

Four weeks later the Vennes file was referred back to the FBI for a second time, where it stayed for only a week before being returned to the OPA January 6, 2005.

On April 11, 2005, Frank, Gregory and Stephanie (Gregory’s wife) Vennes gave $5,000 each to the HRCC.

On April 29, Frank’s file was sent back to the Deputy Attorney General, and Roger Adams in the OPA sent a memo to Deputy Attorney General James B. Comey with an apparent recommendation to approve it.

Then, on June 30, 2005, four members of the Vennes family, including Frank, made their only donations to a Democrat—$2,000 each to U.S. Senate candidate Amy Klobuchar.

Vennes’ file was referred back to the Office of Pardon Attorney from the Deputy Attorney General in December 2005, apparently one more attempt to get the Pardon Office to recommend a denial.

Within the next two weeks, the Vennes family gave $2,250 to Pawlenty, and then Bachmann got on the Vennes gravy train with a whopping $16,800 from Frank, Kimberly (Frank’s wife), Gregory and Stephanie Vennes before the end of the year.

Six members of the Vennes family, along with Vennes lawyer Craig Howse, jump-started Tim Pawlenty’s 2006 gubernatorial campaign with $2,000 each in January. In March, Vennes’ case was referred to the FBI for a third time. That was followed by a flurry of activity in April between the FBI, Pardon Attorney and Deputy Attorney General.

On April 10, 2006, Roger Adams in the Office of Pardon Attorney sent a memo to Deputy Attorney General Paul J. McNulty with what appears to be a recommendation to deny Vennes’ pardon and asking for “your review and signature.”

On April 18, Adams sent a memo to Harriet Miers, counsel to the President, which appears to recommend denying pardons in two separate cases.

“Attached are two letters of advice signed at the direction of the Deputy Attorney General recommending that the President (redacted) pardon in the following cases,” Adams wrote. Because the Pardon Attorney signed them, it appears the recommendation to the White House was to deny both pardons. Vennes was one of them.

On June 1, 2006, a little over a month after his petition was referred to the White House, Frank Vennes gave $50,000 to the Minnesota House Republican Campaign Committee. On June 28, he dropped another $10,000 into the Bachmann Minnesota Victory Committee. Lisa Howse, Craig Howse’s wife, donated a total of $9,200 to Bachmann’s campaign committee and victory PAC that same day. And on July 26, Frank Vennes threw another $10,000 at the Minnesota GOP. In the midst of all these political contributions, Karl Rove appeared at a July 21 fundraiser for Bachmann in Stillwater, Bachmann’s hometown.
White House Deputy Chief of Staff Karl Rove gets the bum's rush from Stillwater after attending a July 21, 2006 fundraiser for Congresswoman Michele Bachmann.

It appears Vennes’ case was referred back to the Pardon Office by the White House in July 2007 and then to the FBI for a fourth time, according to OPA documents. The White House, according to an Oct. 6, 2008 email sent from Ronald Rodgers in the OPA to Kenneth Lee in the White House, had asked the OPA to “take a second look” at Vennes’ pardon petition sometime prior to July 1, 2008.

After receiving a total of $38,000 in campaign contributions from the Vennes family and Frank’s lawyer’s family over the previous 24 months, Bachmann wrote a glowing letter of recommendation for Vennes’ pardon on December 10, 2007. Vennes was not then and never had been a constituent of Bachmann’s. That was the same month that Vennes suspected that Petters was running a fraudulent operation, according to information obtained by federal investigators through secretly recorded conversations in 2008.

“As a U.S. Representative, I am confident of Mr. Vennes’ successful rehabilitation and that a pardon will be good for the neediest of society,” Bachmann wrote to the Office of Pardon Attorney. “Mr. Vennes is seeking a pardon so that he may be further used to help others. As I know from personal experience, Mr. Vennes has used his business position and success to fund hundreds of nonprofit organizations dedicated to helping the neediest in our society.”

Bachmann noted that Vennes needed a pardon because he “still encounters the barriers of his past and especially in the area of finance loan documents.” Bachmann has refused to further explain the nature of her “personal experience” with Vennes or provide clarification of the finance loan documents to which she refers in her letter.

According to documents obtained from the Office of Pardon Attorney, on March 7, 2008, Vennes’ pardon petition was returned from the FBI for the fourth and final time.

Three weeks later, Vennes’ lawyer, Craig Howse, donated another $1,000 to Bachmann’s campaign.

Ronald Rodgers, who had taken over as Pardon Attorney after Adams left in December 2007, sent a memo to Deputy Attorney General Mark Filip on June 3 with an apparent recommendation to deny Vennes’ petition.

On June 24, Mark Krickbaum, counsel to the Deputy Attorney General, sent a memo about Vennes’ case to Rodgers that stated "Per the DAG’s instructions (redacted)," an apparent reference to a directive to change the pardon denial to a pardon approval.

Rodgers responded to Krickbaum the next day in a memo that stated: “In response to the DAG’s instructions conveyed via your memorandum of June 24, 2008, the proposed report has been revised to recommend that the President (redacted) executive clemency in the form of a pardon to Frank Elroy Vennes Jr.” The reference to a revision of a “proposed report” appears to be a reference to the OPA’s earlier recommendation to deny Vennes’ pardon.

On June 30, Vennes and his wife sweetened Bachmann’s campaign fund with $9,200 more and Craig and Lisa Howse gave another $2,000 to Bachmann.

July 1, the day after the Vennes’ and Howse’s final donations of $11,200, Rodgers sent a final memo to the Counsel to the President that read: “Attached is a report signed by the Deputy Attorney general (redacted) executive clemency in the form of a pardon for Frank Elroy Vennes Jr.”

Vennes’ pardon petition remained at the White House, apparently awaiting the end-of-term pardon approvals by the president. It was returned to the Office of Pardon Attorney October 24 following the raids on Vennes’ homes in Minnesota and Florida.

Based on secret FBI recordings of conversations of Tom Petters from September 8, 2008, it’s now known that Vennes was expecting his pardon to be granted.

In those recordings, made by Petters associate and cooperating FBI witness Deanna Coleman while she was wearing an FBI wire, Petters discussed Vennes’ fears of going to jail in the Ponzi scheme:

PETTERS: A month ago. He (Vennes) said I think you’re gonna go down. That was when I said what do you mean I’m gonna go down. He goes I just think one of us should be saved. I am going to get a pardon next year and I said,  I said oh, so you should be saved but I shouldn’t. And I said, I said, well, I’ve got news for ya. I don’t think we were both goin’ down and I think I’ve got a plan with Fortress and I have a plan with these guys overseas and that’s when I got them to start believe again.


PETTERS: Now I got ‘em believing that we can get him a way out.

Petters couldn’t have been more wrong. Two weeks after that conversation took place, the homes of Tom Petters and Frank Vennes Jr. were raided by federal agents, their assets were seized and the whole Ponzi scheme came tumbling down. Petters was convicted and is now serving 50 years in Leavenworth Federal Prison. Vennes was indicted on charges related to the Petters Ponzi 33 months later on April 20, 2011.

Additional research and artwork by Ken Avidor.

In Part 3 of “Lawyers Guns & Money,” Ripple in Stillwater looks at how the case of Frank Vennes Jr. raises questions about the integrity of the presidential pardon process and how it might be improved.

Read Part 1 of "Lawyers, Guns & Money" here.

Friday, July 8, 2011

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.

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 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 8th 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 8th Circuit Court of Appeals and lost, and he was denied appeal to the U.S. Supreme Court.

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