Forum Post: governor ultrasound

By Rosalind S. Helderman and Laura Vozzella, Published: March 30

Gov. Robert F. McDonnell and his wife, Maureen, had about 200 guests to Virginia’s historic Executive Mansion for their daughter Cailin’s wedding in 2011.
The $15,000 worth of fine dining came courtesy of Jonnie R. Williams Sr., the chief executive of a company that has made major contributions to McDonnell’s campaigns and that is the subject of a federal securities investigation.

The wedding gift, which was not disclosed by McDonnell, is just one element of the McDonnells’ close relationship with Williams and his company, a relationship that has included rides on Williams’s corporate jet, personal gifts to the first family and efforts by the governor and his wife to promote the company.

Events surrounding the first daughter’s wedding show the extent of the bond.
Just about the time Cailin McDonnell got married, Williams’s company, Star Scientific, was introducing a dietary supplement called Anatabloc, whose key ingredient is found in tobacco and other plants.
Anatabloc was crucial to the future of the company, which has been losing money for years. But the science behind the product — an anti-inflammatory the company hopes might be helpful to people with such ailments as Alzheimer’s and multiple sclerosis — was unproven.

Three days before her daughter’s June wedding, Maureen McDonnell flew to Florida, where she spoke at a seminar for scientists and investors interested in anatabine, the key chemical in Anatabloc. The governor’s wife told the group that she supported the product and touted the pill, which is not regulated by the Food and Drug Administration, as a way to lower health-care costs in Virginia, the attendees said.

About three months after the wedding, the McDonnells and Star Scientific were together again, this time at the governor’s mansion for the official launch party for Anatabloc. McDonnell and Williams both declined to be interviewed for this article. Through a spokesman, the governor responded to a list of questions. Jeff Caldwell, said Williams picked up the catering bill for the wedding as a gift to Cailin and her husband, Chris Young. Because it was not a gift to the governor, Virginia law did not require McDonnell to include it on his annual disclosure form, Caldwell said.
Caldwell said the first family’s efforts on behalf of Virginia-based Star Scientific were typical of what any governor would do to promote the state’s businesses and products.
Boosters of the company’s stock have cited the connection to the McDonnells as a reason to believe in Star Scientific, despite its shaky finances.
A photo of the smiling governor holding a packet of Anatabloc has appeared on the Anatabloc Facebook page. In addition, launching Anatabloc with a luncheon at the mansion, a 200-year-old landmark that is the nation’s oldest continuously occupied gubernatorial residence, gave the company a boost.

“It was an event that was designed to try to make a big splash,” said John Clore, a professor at the Virginia Commonwealth University School of Medicine. “That was the week it was showing up in stores.”

Star Scientific denies allegations that it misled investors about research on the potential health benefits of dietary supplements that the company sells.
Maureen McDonnell’s presence at the Florida event, hosted by the Sarasota-based Roskamp Institute, caused a stir. Her brief speech at Roskamp, which is conducting research on Anatabloc under a royalty agreement with Star Scientific, was a “communique that wowed attendees,” California investor John Faessel wrote in an online posting.
“She spoke briefly about the company and the work they were doing, and how she believed it would be important not only for the people of Virginia but for society in general, to help them ward off this inflammation,” Faessel said in an interview. Patrick Cox, a stock adviser from Maryland who also attended the event, said Maureen McDonnell “expressed support” for Anatabloc.

Spokesman Caldwell said that neither Maureen McDonnell nor the governor led an effort to encourage the use of Anatabloc. But in a news release, the company mentioned plans for a special event at the governor’s mansion to mark Anatabloc’s launch. “A group of Richmond area physicians and healthcare providers are gathering at the Virginia Governor’s mansion today to learn more about the state of research on Anatabloc,” the release said. The company also used the luncheon at the mansion to award research grants to scientists at the University of Virginia and Virginia Commonwealth University. McDonnell’s political action committee, Opportunity Virginia, paid for the lunch

‘Super Salesman’

Although Williams isn’t the biggest donor in Virginia politics, he has access to something that makes him especially valuable: a private jet.
He has offered the plane to his friends, and his friends have included a number of Republicans who have run for Virginia’s highest offices.
Kilgore received more than $27,000 in donations and in-kind travel from Williams, according to the Virginia Public Access Project, a nonpartisan group that tracks money in politics.
Williams helped found Star Scientific in 1990 as Star Tobacco, More recently, Star has branched out into biotech, first introducing a product that reduces the urge to smoke and, later, focusing on its dietary supplement, Anatabloc. Last year, the company introduced a facial cream that also contains anatabine.

Over eight months during the 2009 gubernatorial election, Star Scientific donated more than $28,500 worth of air travel to McDonnell’s campaign. That commitment increased after McDonnell took office; Star reported donating nearly $80,000 in flights to Opportunity Virginia, the governor’s PAC. “They used the company plane to get from A to Z all the time,” Kilgore said. There were personal gifts, as well. On his financial disclosure forms, McDonnell said he had received more than $9,600 worth of food, lodging, transportation and entertainment from the company and from Williams in 2011 and 2012.
Elected officials in Virginia are allowed to accept gifts, provided they disclose those worth more than $50. Gifts to family members don’t have to be disclosed, nor do gifts from a relative or “personal friend.”

The food at McDonnell’s daughter’s wedding was provided by Seasonings Fine Catering and Event Planning, a Richmond company owned by Todd Schneider, whom the McDonnells hired to serve as the mansion’s executive chef in 2010. Schneider, a well-known Richmond personality who had trained with Martha Stewart, left his mansion job in 2011 amid a state police investigation into alleged improprieties involving kitchen operations. He was recently indicted on four embezzlement charges. He declined to comment through his attorney.

At the time of the wedding, a McDonnell spokesman said the family had paid for the event. But Caldwell now says that McDonnell’s daughter and her fiance decided to pay for the wedding expenses and that the gift from Williams helped them cover much of the cost of food. He said McDonnell doesn't know whether other wedding expenses were paid through gifts to the couple.

In financial filings, Star Scientific has made clear that it needs Anatabloc to be a success. This month, the company reported that it had lost $22.9 million in 2012, the 10th consecutive year Star had lost money. The company slashed its workforce last year, part of a decision to end production of all tobacco products and focus exclusively on dietary supplements.
Star also has been fighting skeptics’ claims that the science behind Anatabloc is overstated. On Monday, a Star Scientific investor filed suit in federal court in Richmond, alleging that the company misled stock holders about Anatabloc’s promise.

Heather M. Snyder, director of medical and scientific operations at the Alzheimer’s Association, “there really is no data to support this product at this time.” Star Scientific denies allegations that it misled investors about research on the potential health benefits of dietary supplements that the company sells.
Because it is a dietary supplement and not a drug, it is not regulated by the FDA.

The investigation

As Star Scientific struggles with questions about the science, the company is facing a new challenge: a federal investigation.
A spokesman for the U.S. Attorney’s Office for the Eastern District of Virginia declined to comment about the company. But in an annual report filed this month, Star Scientific said it received subpoenas from the U.S. attorney’s office in January and February as part of an investigation thought to be focused on transactions involving the company’s securities.
Star disclosed the existence of the investigation because it is a risk factor that could affect the company’s chances of success. The company said it believed the investigation to be “principally focused” on “private placements,” stock trades offered to a small group of interested investors, sometimes at a discount, rather than on the open market.
Asked whether McDonnell, his wife or any other member of the administration has been interviewed about their relationships with Star Scientific and Williams, Caldwell said it would be inappropriate to comment, given the publicly disclosed federal investigation into the company.