Ohio jails accomplice of veterans fraudster "Bobby Thompson"

The man known as "Bobby Thompson" and George W. Bush

Meanwhile, Minnesota AG does nothing

about phony veterans group that fleeced

Minnesotans out of $1.5 million

By Karl Bremer

Blanca Contreras, an associate of the fraudster known as“Bobby Thompson,” was sentenced to five years in prison by a Cuyahoga County (OH) judge August 10 for her role in bilking Ohioans out of more than $450,000 in “Thompson’s” phony U.S. Navy Veterans Association charity. Contreras pleaded guilty on June 22 to one felony count each of theft, money laundering, tampering with records, and engaging in a pattern of corrupt activity.

According to Ohio Attorney General Mike DeWine’s office, “At various times, Contreras represented herself as the “Acting Treasurer,” “Acting Secretary,” and “Chief Fiscal Officer” of various state chapters of an organization that fraudulently solicited donations advertised to benefit Navy veterans that went by the name of the United States Navy Veterans Association. Of the nearly $2 million in donations solicited in Ohio, little if any were used to benefit veterans.”

"Bobby Thompson" and John Boehner

“Thompson’s” phony charity collected over $1.5 million in Minnesota from 2003-2009 under the not-so-watchful eye of the Minnesota Attorney General’s Office. Nationwide, it’s suspected of hauling in tens of millions more. Money collected under the guise of the USNVA appears to have been funneled to Republican politicians and campaigns across the country, including tens of thousands of dollars to Michele Bachmann, Norm Coleman, the Republican Party of Minnesota and other GOP candidates and entities.

While the Ohio Attorney General’s Office has waged an aggressive manhunt for “Bobby Thompson” and thrown one of his accomplices in jail, the Minnesota Attorney General’s Office seems to have turned a blind eye to his fleecing of thousands of Minnesotans out of $1.5 million and done nothing to investigate “Thompson” or the U.S. Navy Veterans Association.

"Bobby Thompson" and John McCain

Unlike the Attorney General’s Office, the Minnesota Campaign Finance and Public Disclosure Board conducted a lengthy investigation into “Thompson’s” fraudulent activities in Minnesota and in May fined him $21,000 for making seven state campaign contributions under a false identity.

The contributions were made under the name “Bobby Thompson” and “Maria D’Annuzio” to the Minnesota House Republican Campaign Committee (HRCC), the Republican-leaning Patriot PAC run by GOP political operative Joey Gerdin, the (Marty) Seifert for Governor Committee, and Citizens for David Carlson Committee, 67B, another GOP candidate committee.

Contreras and “Thompson” were both indicted by an Ohio Grand Jury in October 2010. Investigations of the Navy Vets charity also are underway in several other states and by the IRS and Veterans Administration. “Thompson” remains at large using an identity allegedly stolen from a man in Washington.

Concluded Ohio Attorney General DeWine:

“This case makes clear that Ohio will not tolerate scam artists who steal in the name of those who have served our country. I commend the work of our charitable investigators and special prosecutors who worked diligently to bring those who took advantage of Ohioans’ generosity to justice. However, it is important to note that our work in this case is not over until the man known as Bobby Thompson is apprehended and prosecuted for his alleged crimes.”

Anyone with information regarding the whereabouts of the man known as "Bobby Thompson" should contact the Ohio Bureau of Criminal Identification and Investigation at 800.282.3784.

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

State Campaign Finance Board fines 'Bobby Thompson' $21,000 for illegal GOP contributions

Republican recipients of Bobby Thompson's 'dirty money' are happy to keep it.

By Karl Bremer

The Minnesota Campaign Finance and Public Disclosure Board (CFB) this week fined the man representing himself as “Bobby Thompson” $21,000 for making seven campaign contributions with a false identity in an attempt to circumvent state campaign finance laws.

Now they just have to find him.

The contributions were made under the name “Bobby Thompson” and “Maria D’Annuzio” to the Minnesota House Republican Campaign Committee (HRCC), the Republican-leaning Patriot PAC run by GOP political operative Joey Gerdin, the Seifert for Governor Committee, and Citizens for David Carlson Committee, 67B, another GOP candidate committee.

The fines were the result of an investigation into a complaint filed by myself with the CFB in July 2010 that alleged illegal campaign contributions by “Thompson.” “Thompson” was the subject of my award-winning investigative series that appeared on RippleInStillwater.com and DumpBachmann.com.

The series, largely ignored by the mainstream media, began with the revelation of “Thompson’s” $10,000 donation to Congresswoman Michele Bachmann’s fundraiser in April 2010. “Thompson” had donated tens of thousands of dollars more to Minnesota candidates and party units—all Republican—over several years before going on the lam in the wake of investigations by the St. Petersburg Times and attorneys general in several states.

“Thompson’s” suspected phony charity, the U.S. Navy Veterans Association (USNVA), collected over $1.5 million in Minnesota alone over a six-year period from 2003-2009. Nationwide, it’s suspected of hauling in tens of millions more. Money collected under the guise of the USNVA allegedly was funneled to Republican campaigns across the country.

The Minnesota Attorney General’s Office has shown little interest in pursuing “Thompson” and his organization, nor in joining other states’ attorneys general in tracking down the alleged fraudster. Attorney General Spokesman Ben Wogsland did not respond to a request for an update on that office’s investigation, if any, into “Thompson” and the Navy Vets group.

CFB RETRACES RIPPLE IN STILLWATER INVESTIGATIONThe CFB conducted an extensive investigation of its own and confirmed what my series already had revealed about “Bobby Thompson” and the U.S. Navy Veterans Association: that “Thompson” allegedly ran a sham organization in Minnesota that collected over $1.5 million from unsuspecting Minnesotans using nothing more than a UPS drop box and a forwarded telephone recording for an office.

The CFB subpoenaed records for the USNVA’s UPS box and phone records from Qwest Communications, and procured documents from the State of Ohio courts, Attorney General’s Office, and Minnesota campaign committees that received donations from “Thompson.”

Diane Johnson,, treasurer for the Seifert for Governor Committee, provided the CFB with a copy of a $500 money order and a handwritten note on USNVA letterhead that came with it. The note read “Marty: With my compliments, Bobby.” However, the name on the money order was “Maria D’Annuzio,” a name that the CFB determined was also fake and used by “Bobby Thompson” to circumvent campaign finance laws.

Johnson also provided the CFB with a copy of a $500 check to the Seifert for Governor Committee drawn on the personal account of “Bobby Thompson” located in Florida. There is an individual limit of $500 in aggregate donations to candidates for governor in nonelection years.

The CFB found that the two $500 donations made to the Seifert for Governor Committee under the names of “Bobby Thompson” and “Maria D’Annuzio” likely came from the same source and thus exceeded donation limits; they also violated Minnesota statutes prohibiting such donations to be delivered (bundled) together. However, it accepted Johnson’s explanation that the campaign assumed the two were spouses and thus the bundled donations legitimate, so it did not levy a penalty for the violation.

Among the items used to secure the USNVA’s St. Paul UPS box was a business card for “Bobby Thompson” bearing a photo and Social Security number. The Social Security number led to a Bobby Thompson in Bellingham, WA—the same Bobby Thompson the State of Ohio found whose identity had been stolen by the USNVA’s “Bobby Thompson.” The Ohio Attorney General’s Office has issued a nationwide arrest warrant for “Thompson” for identity fraud. “Thompson” also is wanted on a warrant for his arrest on an Ohio grand jury indictment for money laundering and aggravated theft,

The Ohio Attorney General has charged that donations to the USNVA found their way into political contributions. However, the CFB noted that “While other investigators have concluded that the individual known as Bobby Thompson misappropriated funds from the U.S. Navy Veterans Association, the scope of the Board’s investigation did not include determining the source of the funds used for the donations to Minnesota committees.”

WHAT ABOUT THE 'DIRTY MONEY?'
The CFB did address the disposition of campaign contributions received from “Bobby Thompson.”

“The Board recognizes that, with the benefit of this and other investigations, some committees that accepted contributions from the individual claiming to be Bobby Thompson may find it inconsistent with their policies or philosophy to retain those contributions,” it wrote. It noted that Minnesota statutes limit campaigns’ charitable contributions to $100 per charity per year.

Campaign committees also may make unlimited donations to the state’s general fund to salve their conscience for accepting “dirty money.”

A central figure in the “Bobby Thompson” money story is Joey Gerdin, who was HRCC finance director in 2008 when “Thompson” made his initial $5,000 donation to the committee. Gerdin is also founder and chair of the GOP-leaning Patriot PAC, which received a $5,000 donation from “Thompson” last year—the largest single donation her PAC received besides her own contributions.

Gerdin met “Thompson” at the 2008 Republican National Convention in St. Paul and told Ripple in Stillwater last year: “I would just call anyone and everyone. I honestly don’t even remember if I cold-called him or he cold-called me. He was coming in for the RNC (Republican National Convention), and I was having a fundraiser downtown with the House caucus.”

Gerdin says “Thompson” attended her fundraiser.

“He seemed like a nice guy, completely congenial, supportive of veterans. Seemed like your typical patriot to me.”

Gerdin wasn’t interested in talking about “Thompson” today, however. She hung up the telephone without responding to my request for comment on the CFB findings or the disposition of the $5,000 in allegedly fraudulent campaign contributions her PAC took from “Thompson” last year.

Minnesota Speaker of the House Kurt Zellers, chair of the HRCC, and Jenifer Loon, HRCC treasurer, did not respond to telephone and email requests for comment on the CFB findings or the disposition of the $7,000 in allegedly fraudulent campaign contributions “Thompson” made to the HRCC.

The CFB’s investigation did not include contributions to the Republican Party of Minnesota through federal political action committees. However, the state GOP received a total of $10,400 from “Bobby Thompson” through committees run by Michele Bachmann’s and Norm Coleman’s campaigns.

Deputy Minnesota GOP Chair Michael Brodkorb did not respond to telephone and email requests for comment on the CFB findings or the disposition of the $10,400 in allegedly fraudulent campaign contributions from “Thompson” to the Republican Party of Minnesota.

NO HELP FROM THE A.G.
It’s not likely any of the duped donors to the U.S. Navy Veterans Association Minnesota Chapter will ever recover their money, particularly if the Attorney General fails to investigate them.

The CFB findings ordered the CFB Executive Director to “monitor other states’ efforts to locate the individual using the name “Bobby Thompson” to make political contributions in Minnesota.” If he’s located, the CFB Director is to work with the Attorney General to try to collect the $21,000 in penalties levied.

Meanwhile, the Minnesota Attorney General’s Office has refused repeated requests for information about its own investigation—if any—into “Bobby Thompson” and the whereabouts of the $1.5 million he collected from Minnesotans under the guise of a charitable veterans organization. And Republican recipients of “Thompson’s” largess no longer seem interested in talking about him or his money either.

Wanted poster graphic by Avidor.

Michele Bachmann isn't the only presidential candidate to take money from alleged fraudster "Bobby Thompson"

Besides Michele Bachmann, one other Republican candidate for president can be found on "Bobby Thompson's" contribution list: former Massachusetts Gov. Mitt Romney.

"Bobby" kicked in $2,300 to the Romney for President campaign in 2007.

Frank Vennes Jr., friend and fat-cat donor of Bachmann and Pawlenty, indicted on fraud and money-laundering charges

Did convicted money launderer and alleged Petters Ponzi pal try to buy a presidential pardon from Minnesota pols?

By Karl Bremer

Convicted money launderer and cocaine/gun runner Frank Vennes Jr., a close personal friend and major campaign contributor of Minnesota presidential candidates Michele Bachmann and Tim Pawlenty, has been indicted on federal fraud and money-laundering charges for his alleged role in the $3.5 billion Tom Petters Ponzi scheme.

Vennes became implicated in the Petters Ponzi in 2008. Millions of dollars worth of his assets have been seized and are being liquidated to pay back some of the victims of the multibillion-dollar scam—the largest in Minnesota history. But until now, Vennes had not been charged with a crime for his involvement in the Ponzi scheme, which sent Petters to the U.S. Penitentiary at Leavenworth Federal Prison for 50 years.

If convicted, Vennes could go to federal prison for the second time in his life on such charges—and also be in need of a second presidential pardon.

Besides each taking tens of thousands of dollars in campaign cash from Vennes and his family, Bachmann and Pawlenty—along with former Minnesota Sen. Norm Coleman and former Minnesota GOP Chair Ron Ebensteiner—unsuccessfully sought a presidential pardon from President George W. Bush for Vennes’ federal crimes from the 1980s. Vennes donated heavily to Bachmann’s congressional campaign, Pawlenty’s gubernatorial campaign, Coleman’s senatorial campaign, the state House Republican Campaign Committee, the Minnesota GOP and other GOP candidates, all during the time the four Republicans heartily endorsed his candidacy for a pardon.

The timing of Vennes’ largesse has led many to speculate that it was part of a “pay-for-pardon” plot.

WHO IS FRANK VENNES JR.?

Frank Elroy Vennes Jr. was convicted in 1987 on federal charges of money laundering, cocaine distribution and illegal firearms sales, to which he pleaded guilty and no contest. The charges stemmed from an undercover operation in which Vennes and his co-defendants received $370,000 from federal agents and deposited the money in bank accounts in Switzerland, the Bahamas and the Isle of Man in a series of transactions. In the last transaction, Vennes personally delivered $100,000 to Switzerland, where his associates allegedly either lost or stole it.

Vennes was sentenced to five years in Sandstone (Minn.) Federal Correctional Facility, where he reportedly found God, and was released in 1990. Following his release from prison, Vennes filed a petition for a pardon.

Vennes also sued the federal government for more than $10 million, claiming that he was entrapped by federal agents even though he pleaded guilty and no contest to the charges, and that his attorney rendered him “ineffective assistance” in representing him. Among his claims, Vennes charged that the undercover agent for whom he had delivered and then lost $100,000 had revealed himself to be a member of the Chicago underworld and threatened to kill Vennes and his family if he didn’t come up with the lost 100 grand. Those threats prompted Vennes to begin illegally selling firearms and cocaine to federal agents, Vennes alleged.

Vennes’ claims ultimately were rejected in 1994 following a series of appeals.

THE PETTERS PONZI

It didn’t take long after his appeals were rejected for Vennes to fall into bad company again. Starting around 1995, according to the grand jury indictment filed April 20 against vennes and two hedge fund managers, Vennes began a business association with Tom Petters, the now-convicted mastermind behind a massive Ponzi scheme that Petters had hatched just two years earlier.

Court documents state that Vennes raised money from investors directly and also induced hedge funds to raise money from investors to purchase short-term, trade finance promissory notes in Petters’ company, PCI. In return, Vennes allegedly earned more than $105 million in commissions from 1995-2008.

The PCI notes were represented to investors as being used to finance the purchase of electronics goods and other consumer goods from suppliers for resale by PCI to big-box retailers.

“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.

Around 2002, according to the indictment, Vennes introduced Petters to 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 described himself to Harrold and Prevost as “Petters’ financier” and said that he “knew Petters’ business intimately,” according to the indictment.

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.

According to the indictment, Vennes had a similar arrangement with another hedge fund from which he obtained more than $45 million in commissions on money he raised for PCI.

The grand jury indictment also named Harrold and Prevost as defendants and alleges that they, along with Vennes, made false representations to Palm Beach Fund investors about the PCI investments and also failed to notify investors about delayed payments and approaching defaults on the PCI notes.

Instead, beginning in February 2008, the three allegedly engaged in a series of “note swaps” in which they would exchange PCI notes that were on the verge of defaulting with other PCI notes that had later maturity dates. Harrold and Prevost, through Vennes, engaged in over 35 of these “note swap” arrangements involving over 250 PCI notes worth about $1 billion, according to the indictment.

“They created the appearance that the PCI notes had not defaulted, and were intended to conceal (from Palm Beach Fund investors) PCI’s inability too pay,” court documents state.

Later, the indictment charges, “Instead of receiving cash payments and then reinvesting that cash in new PCI notes as they had done in the past, Harrold and Prevost, aided and abetted by Vennes, simply exchanged old PCI notes for new ones in a cashless exchange of paper.”

From February 2008, when the “note swaps” began, through September 2008, when the Petters Ponzi came crashing down, Vennes convinced Harrold and Prevost to raise more than $75 million in new investor money, the indictment states.

Vennes, Harrold and Prevost were charged with four counts of securities fraud on April 20. On April 21, Harrold and Prevost pleaded guilty and indicated they were cooperating with prosecutors in their case against Vennes.

Vennes also was charged with one count of money laundering involving a check he wrote to the law firm of Howse & Thompson, P.A. for $98,814.12. The money was derived from securities fraud, according to the indictment. Craig Howse formerly was Vennes’ personal lawyer.

VENNES AND TEEN CHALLENGE

Howse also was chairman of the Fidelis Foundation, a nonprofit organization “organized to assist Christians in discerning, clarifying and implementing God’s call and direction in their life,” according to the group’s tax filings. Fidelis invested over $27 million in the Petters Ponzi, more than $4 million of it from Minnesota Teen Challenge. Fidelis also donated over $1.4 million to Minnesota Teen Challenge.

In earlier lawsuits, Vennes is alleged to have been used by Petters to lure primarily Christian organizations into investing in Petters’ companies through Metro Gem — one of Vennes’ companies — or through the Fidelis Foundation. Among those investors was Minnesota Teen Challenge, which allegedly lost $5.7 million in investments in Petters companies.

“In true Ponzi scheme fashion,” one lawsuit filed by investors against Petters and his associates alleges, “each time one of Plaintiff’s promissory notes expired, Petters secured a new note via Metro Gem and, again via Metro Gem, paid the interest due on the old note, presumably with funds obtained from other investors.”

The investment connection between the Fidelis Foundation, Petters and Teen Challenge is detailed in a federal affidavit authorizing seizure of Petters’ assets. The affidavit states that Petters implicated Vennes in his alleged fraud scheme in recorded phone conversations.

“In these recordings, Petters repeatedly admits executing the fraud scheme by providing fraudulent information to investors,” the affidavit states. “Petters also attributes knowledge of, and participation in, the fraud scheme to (Deanna) Coleman, (Robert) White, Vennes (investor broker), and (Larry) Reynolds (vice president of NIR). Petters states that Vennes told Petters that they are “a little paper manufacturing plant.” On one occasion, Petters states that he and Vennes would be jointly implicated in a scheme to defraud investors out of $130 million.”

In the recordings, the affidavit states, “Vennes cautions that if investors send auditors out to visit warehouses where the merchandise is located, that the scheme would implode. Vennes also asks that Coleman prepare purchase orders to be submitted to investors so that the investors will extend the due date on a debt.”

The affidavit states that evidence shows Vennes was the broker for five investors who are owed approximately $1.2 billion by Petters and his companies, and that as a broker he earned at least $28 million in commissions for delivering investors to Petters and PCI.

Coleman, White, Reynolds and Michael Catain (another Petters associate) all pleaded guilty to charges in the fraud investigation and all fingered Petters as the kingpin in the massive Ponzi scheme.

Minnesota Teen Challenge was forced to lay off 22 employees because of losses from its investments in Petters’ businesses. The organization only obliquely referred to its endangered investments in an oddly worded letter posted on its website:

“About seven years ago, one of our major donors recommended that we consider building a strong reserve fund for Teen Challenge — a nest egg — for use in case of emergency or for program expansion. The donor suggested that we work with the Harvest Fund, and later the Fidelis Foundation, organizations that work with many other Christian ministries, and consider investing some of his large charitable gifts in the Petters Companies, a once strong, respected corporate entity in Minnesota.”

The letter goes on to note that “For seven years this investment bore a healthy return and helped us expand our programming and outreach.” But it made no mention of the precarious situation those investments were in, nor did it name the mysterious “major donor” who recommended the investment in Petters’ company.

PAWLENTY AND VENNES

While Vennes raked in tens of millions from his association with Petters, he continued to press for his pardon. By 2001, he also began donating to political candidates and parties in earnest, including Tim Pawlenty, Michele Bachmann, Norm Coleman, Mark Kennedy, Amy Klobuchar, the Minnesota House Republican Campaign Committee and the Republican Party of Minnesota.

Vennes and his family donated a total of $10,000 to Pawlenty’s gubernatorial campaign in 2002.

In late 2002 just weeks after he was elected, Pawlenty, along with Coleman and former Minnesota GOP State Chair Ron Ebensteiner, sought a presidential pardon for Vennes in a December 20 letter Coleman sent to “President George W. Bush c/o Mr. Karl Rove.”

Coleman wrote that he was “well acquainted with Frank” and went on to describe him as “a very successful businessman, known for his integrity and fine character ... 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 or his role in Vennes’ pardon request.

Vennes, his family, and his personal lawyer continued to donate heavily to Pawlenty. Kimberly Vennes (Frank's wife), Gregory Vennes, Stephanie Vennes (Gregory's wife), and Colby and Denley Vennes, who have shared an address with Frank and Kimberly, each donated $2,000 to the Pawlenty for Governor Committee in 2002. Frank, Kimberly, Gregory, Stephanie, Colby and Denley Vennes each contributed $250 to Pawlenty in 2004 and $2,000 apiece in 2006.

Vennes’ lawyer, Craig Howse, and his wife, Lisa, contributed a total of $5,600 to Pawlenty’s gubernatorial campaigns from 2002-2006.

Howse—partner in the law firm through which Vennes allegedly laundered ill-gotten Petters Ponzi money—continues to be associated with Pawlenty. Shortly before leaving office last year, Pawlenty circumvented the Commission on Judicial Selection and appointed Plymouth lawyer Jamie L. Anderson to the 4th Judicial District Court. Anderson was a lawyer in Howse’s firm and also the wife of Pawlenty’s chief of staff, Paul Anderson.

Pawlenty and Vennes have another common interest: Minnesota Teen Challenge. 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.

BACHMANN AND VENNES

Bachmann’s political relationship with Vennes began in December 2005, when Vennes and his wife, Kimberly, along with his brother and his brother’s wife, Greg and Stephanie Vennes, made their first donations to Bachmann’s congressional campaign–$4,200 apiece. It’s not clear when her personal relationship with Vennes began. However, Bachmann told WCCO’s Esme Murphy in an Oct. 19 interview that she met Vennes through Minnesota Teen Challenge.

“Frank Vennes is an individual here in the Twin Cities who had a remarkable record of rehabilitation in his own life,” Bachmann told Murphy. “He was a person who put a lot of money in the community, Teen Challenge, for instance, which I believe very strongly in. It does a wonderful job taking people who are alcohol- or drug-addicted and trying to get them clean and sober.

“And 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.”

All this time, Frank Vennes Jr. and his family kept supporting Bachmann with campaign cash. Following the Vennes brothers’ and their spouses’ $4,200 contributions to Bachmann in 2005, Frank — who has never lived in Bachmann’s congressional district — dumped another $10,000 into her campaign coffers in 2006. Vennes’ personal lawyer and his wife, Craig and Lisa Howse, donated $9,200 to Bachmann from 2006-08.

In December 2007, Bachmann used the power of her congressional office to write a recommendation for a presidential pardon of Vennes:

“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 U.S. 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.”

In addition, 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.

On June 30, 2008 — six months after Bachmann wrote her pardon recommendation for Vennes — he and his wife gave another $9,200 to Bachmann’s campaign.

Then, on Sept. 24, 2008, federal agents raided Vennes’ $5 million Shorewood home on Lake Minnetonka in connection with the Petters investigation and seized “boxes and buckets of silver and gold coins, trays of jewelry, five stacks of $100 bills, boxes of gem stones, silver plates and Rolex watches,” along with diamond rings and artwork. His $6 million oceanfront home in Jupiter, Fla., was raided also and among the items seized was a briefcase containing “256 $20 gold pieces dated 1904, and eight uncirculated one-half dollar pieces.”

Eight days later, on Oct. 2, Bachmann withdrew her letter of recommendation for Vennes’ pardon.

“I had known Mr. Vennes for some time and was familiar with his good works with local charity organizations,” Bachmann wrote to the Office of Pardon Attorney. “Like so many others, I was under the impression that he had turned his life around and was seeking to do the right thing 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.”

Bachmann’s motives in withdrawing her recommendation of a pardon for Vennes without ever having been indicted — other than to distance herself from a convicted felon and heavy campaign contributor in an election year — are unclear. She has never responded to my inquiries about her relationship with Vennes, or why she sought a presidential pardon for a convicted money launder who wasn’t even a constituent.

However, she told WCCO’s Murphy that “when the Tom Petters affair came open and Frank may have had a part in that affair, it wasn’t appropriate for me to recommend a pardon anymore. And so my office issued a letter, and we pulled that pardon back, because we don’t know what the answers are right now about his involvement with Tom Petters.”



Just days later, on Oct. 6, the assets and records of Vennes, Petters, Petters’ companies and other Petters associates were frozen by a federal judge. Most of Vennes’ assets are being liquidated to repay some of the victims of his alleged fraud under a court-ordered “work-out plan” just issued in January. According to that plan, two separate groups of creditors would split $29 million and Vennes would be left with only his personal effects, an automobile, one year’s living expenses of $62,400, and some money to cover legal expenses.

However, it wasn’t until April 20, 2011—more than two-and-a-half years later—that Vennes was formally charged with any crime in the case.

On Oct. 3, the day after Bachmann withdrew her pardon recommendation, she tried to symbolically wash her hands of Vennes’ most recent campaign contributions by donating the sum of $9,200—an amount equal to Frank and Kimberly Vennes’ donations to Bachmann earlier that year—to Minnesota Teen Challenge. 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. Scherber personally suffered a loss of $423,759 in the Petters Ponzi after investing with Vennes, according to court documents.

Scherber says that when Bachmann’s office made the donation, they explained the connection between the campaign’s charitable contribution to them and Vennes’ campaign contributions to Bachmann. Scherber’s staff brought the matter to the organization’s chairman, and he brought it before the board.

“The board had decided they weren’t going to take the check,” Scherber continues. “They sat on it for two weeks and we just returned the check.”

Bachmann ultimately donated the $9,200 to R3, a collaborative of Christian recovery groups that includes Minnesota Teen Challenge.

QUESTIONS REMAIN

Many questions remain unanswered about the apparently close relationship Frank Vennes Jr. once had—and may still have—with three of Minnesota’s most visible Republican politicians. Two of them—Bachmann and Pawlenty—want to be president. And Coleman just landed a job with one of Washington, DC’s top lobbying law firms.

Bachmann, Pawlenty and Coleman have been contacted multiple times in the past to respond to questions about Frank Vennes Jr. All were contacted with written questions for this story as well. Bachmann, Pawlenty, Coleman or their spokespersons have never responded.

Was there a “pay-for-pardon” scheme at work? At this time, there’s no evidence to prove that. Vennes clearly was trying to curry financial favor with the same politicians who would later write pardon recommendations on his behalf.

It’s also not known whether Vennes solicited Bachmann, Pawlenty and Coleman to write pardon endorsements on his behalf or whether they volunteered the services of their office. All have been asked and none have responded.

Then there is the matter of what to do with Vennes’ campaign contributions, which, like his other assets, almost certainly could be linked to illegal Petters Ponzi money. Bachmann only gave away $9,200 of the $27,600 she took from Vennes and his wife. Pawlenty spent his $23,500 in Vennes family contributions on his campaigns and never claimed to give any of it away. The donations to other politicians and party units goes well into six figures.

When Petters was indicted, most politicians couldn’t dump their contributions from him fast enough. Will they do the same for Vennes, whose contributions allegedly came from the same poisoned well, now that he’s been indicted?

George W. Bush left office without ever pardoning Vennes. So the question remains: Would a President Pawlenty or President Bachmann pardon their close personal friend Frank Elroy Vennes Jr.?

So far, neither one of them seems any too anxious to talk about it.