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Alaska corruption case clouded by prosecution's missteps

One of the Justice Department's most ambitious anti-corruption operations of the last decade ended modestly Friday after several reversed convictions and retrials. After two years, an investigation into prosecutorial misconduct continues.

October 23, 2011|By Kim Murphy, Los Angeles Times
  • Former Alaska lawmaker Victor Kohring pleaded guilty to a single felony count. His previous convictions were reversed on appeal.
Former Alaska lawmaker Victor Kohring pleaded guilty to a single felony… (Marc Lester, AP )

Reporting from Juneau and Anchorage, Alaska — The scene captured by a hidden FBI camera in Suite 604 of the Baranof Hotel in Juneau has become one of the most famous in a state well-versed since the gold rush days in what happens when money, ambition and alcohol intersect.

Victor Kohring, then a state legislator, showed up for a meeting with Bill Allen and Rick Smith, then the president and vice president, respectively, of Veco Corp., a large oil services company. Kohring tells the executives a hard-luck story involving a $17,000 credit card bill.

"Let me see what I can do with it," Allen says, handing over a small amount of cash, purportedly for Kohring to put in his daughter's Easter egg.

"What can I do at this point to help you guys? Anything?" Kohring asks. At the time, Allen and Smith were working hard to win passage of an oil tax bill pending in the state House of Representatives. Allen ticks off the legislators who need to be brought on board.

"You bet," Kohring says. "OK."

The video was hard to argue with, yet Kohring, who took $1,000 from Allen on another occasion, proved to be a tough "get" for prosecutors. Only on Friday, more than five years after the meeting at the Baranof, did Kohring and Alaska's former House Speaker Pete Kott plead guilty to a single felony count each — a modest conclusion to one of the U.S. Justice Department's most ambitious anti-corruption operations of the last decade.

The aim had been to bring down the alliance between Republican lawmakers and the oil industry, dubbed the "Corrupt Bastards Club," which had dominated Alaskan politics for years. To a degree, it succeeded. Six lawmakers and a former governor's chief of staff went to jail or paid fines; the nation's longest-serving Republican U.S. senator, Ted Stevens, was toppled. And in a memorable side effect, Sarah Palin was launched on her trajectory to the governor's office riding on an anti-corruption platform.

"That's 10% of the Alaska Legislature," Karen Loeffler, U.S. attorney in Anchorage, said after tallying the convictions Friday. "I think we have a better government today, where deals are not made in the backroom of a hotel, hidden from citizens."

But the probe dubbed "Operation Polar Pen" may have damaged as many careers in the Justice Department as it did in Juneau. Two investigations are still looking into charges of misconduct on the part of prosecutors. One of the lead federal attorneys in the case committed suicide. And some of the state's most powerful politicians — including Stevens' son Ben, who received $243,250 in consulting fees from Veco — were never charged. Indeed, many here say the network of oil, money and power that has long run Alaska still does.

In pronouncing the sentences Friday, U.S. District Judge Ralph Beistline called the 2006 legislative sessions "a truly dark moment in the state's history."

"I remember the words of President Gerald Ford after Watergate," the judge said. "I recognize the need to put this long state nightmare to an end."

The 72-year-old Baranof Hotel, squatting above the jewelry stores and souvenir shops that huddle in the rain below Juneau's stunning snowy peaks, passes for elegant in a frontier kind of way. Suite 604 is a retro retreat of pile carpeting, motel-style coffee tables and cheap upholstered couches. Veco executives used it as their private salon during the brief, intense sessions of the Alaska Legislature. There was always plenty of liquor.

Allen's main aim in 2006 was to get a tax bill approved that would provide oil companies with the comfort level they needed to build a multibillion-dollar gas pipeline from the North Slope. He and Smith spent much of the session holding chats at the Baranof, with the FBI watching.

Prosecutors began racking up cases, including the early conviction of Kott, and turned Allen their star witness. But they foundered when they reached the big fish — Sen. Stevens, who was accused of taking heavily discounted remodeling jobs on his home and other gifts from Veco and not reporting them.

He was convicted by a jury, but the case blew apart. Stevens' lawyers, and then other defense attorneys, discovered that prosecutors had failed to show the defense material that suggested Allen and others had sometimes given contradictory, and less incriminating, accounts of what happened. Not only that, but defense lawyers learned late in the game that Allen had been investigated on accusations of statutory rape involving teenage girls. It could be argued, an appeals court agreed, that the threat of prosecution for that could have induced Allen to testify to almost anything.

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