Monday, April 11, 2011

Railroad exec charged with two felonies for illegal campaign contributions

Railroad executive William Gardner was charged Monday with two felonies today for a scheme to launder illegal campaign contributions to Scott Walker and others, and his employer will pay one of the largest fines in state history for reimbursing those donations.

A criminal complaint details a pattern in which Gardner had Wisconsin & Southern Railroad employees and his daughter make political contributions and then reimbursed them with either personal or company funds.

Gardner, the president and CEO of the railroad, faces two class I felonies, one for making excessive contributions and the other for unlawful donations.

Government Accountability Board Director Kevin Kennedy said the $166,900 forfeiture the railroad has paid is the largest in the history of his agency. Milwaukee County John Chisholm said the size of the forfeiture would reinforce the obligation of corporate entities to follow the spirit and the letter of campaign finance laws. He said prosecutors didn't include jail time for Gardner in order to send the message that if violators cooperate early, "you will be treated differently."

Walker's campaign said in a statement it cooperated with the GAB in its investigation and regularly checks contributions to ensure full compliance. It returned $43,000 in donations last year following revelations about the illegal contributions.

"Immediately after this situation was brought to the attention of the campaign, any known contributions related to this donor were immediately returned," the campaign said.

As part of a plea deal, Gardner would serve two years on probation with a stayed prison term. The GAB said seven railroad employees will pay forfeitures of $250 each.

The complaint details how Gardner made donations and was reimbursed by the company, and then solicited others to do the same.

For example, Gardner made a $5,000 donation to Walker in November 2009 and then submitted a report to the company seeking reimbursement for an expense detailed as “Friends of Scott Walker” and “Contribution for Governor” for the exact amount of his contribution.

Gardner also personally made contributions to former Rep. Mike Sheridan, who was then the Assembly speaker, and to the Assembly Democratic Campaign Committee.

Gardner said in a statement that at the time he made the contributions, he did not realize he was violating the law.

The complaint notes that Gardner re-cut checks to Sheridan and the ADCC because his initial contribution of $2,000 to the Janesville Dem exceeded state contribution limits. He ended up giving $500 to Sheridan and $3,500 to the ADCC, which the complaint says suggests he was "informed as to the law of campaign contribution limits."

The ADCC later returned the money.

After soliciting one railroad employee to donate $4,900 to Walker's campaign, Gardner wrote in an e-mail to him "And lets (sic) not blab this around ..."

Gardner's attorney told investigators he wanted the employee to keep quiet "out of a concern for lavish political spending during tight economic times requiring Railroad wage cuts."

"Ignorance of the law is not an excuse," Gardner said in a statement. "More importantly, I had the obligation to make sure what the law was before getting myself, the company, and others involved. But I didn't. My employees had every right to assume that what I was asking them to do was legal. But it wasn't. I failed them and everyone else miserably."

The complaint details $60,800 in donations that were reimbursed by Wisconsin & Southern Railroad and another $12,000 made by others that Gardner reimbursed himself.

Of that, $57,800 went to Walker. Former Gov. Jim Doyle received $5,000, while state lawmakers Alberta Darling, Ted Kanavas and Mike Sheridan received $500 each and the ADCC received $3,500. Some of the donations were outside the statute of limitations.

Gardner stressed in the statement that neither Walker nor his campaign ever suggested he or the company would get anything in return for the contributions and he "never asked, suggested or even though I would."

The complaint includes an e-mail Gardner sent Walker following a meeting at Noodles & Co. in Madison thanking him for the time and expressing his hopes that the Republican would pick a Transportation secretary who understands the importance of rail in Wisconsin. He also wrote with adequate funding for capital upgrades on the state-owned rail lines, "Wisconsin & Southern Railroad Co. will continue to spur economic development throughout the state and do what we do best."

Milwaukee County Assistant DA Bruce Landgraf said campaign finance laws are "inherently a difficult type of violation to ferret out," and that law enforcement usually must rely on a tip to move forward with an investigation.

In the Gardner case, his former girlfriend Stacie Long notified the GAB of the potential violations in April 2010 after a domestic dispute with Gardner.

The complaint only identifies Long as a “former woman friend” of Gardner who contacted the GAB because a man she did not name asked her to make a contribution to a candidate using his funds. Though she didn’t name Gardner, a GAB investigator was able to determine it was him.

According to the complaint, she contacted the GAB in an attempt to force Gardner to return her personal property. She wrote in an e-mail that she had not disclosed Gardner's name to the GAB but would do so if she did not receive "all of my belongings, and I mean everything belonging to me" by April 30.

Gardner responded in an e-mail, "Knock yourself out. I did nothing wrong and have broken no law."

According to the complaint, Long stopped payment on the check for the $10,000 contribution Gardner asked her to make. A Long friend contacted Walker’s campaign in January 2010 to bring up the potential violations, officials said. He didn't explain the reason for the stop payment order on the check and was assured by the campaign that it had “methods to detect illegal contributions and that they were confident that there were no illegal contributions coming into the Walker campaign.”

Gardner has an initial court appearance scheduled May 2.

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