Eibensteiner trial examines path of ‘illegal’ contribution

11/10/2005

Dane Smith,
Star Tribune
Last update: November 9, 2005 at 9:24 PM

ROCHESTER - A spirited exchange Wednesday between the prosecutor and the defense attorney on the third day of the trial of former Republican Party Chairman Ron Eibensteiner crystallized the essential dispute about whether he arranged an illegal campaign contribution.

Defense attorney William Mauzy, arguing that the prosecution had failed so far to show that the party actually received a prohibited corporate contribution, asked Judge Lawrence Collins to acquit Eibensteiner on all four counts against him.

Prosecutor Earl Gray protested that “it doesn’t matter whether the money is one account or another account” and that the $15,000 given by a Florida insurance company to the National Republican State Elections Committee actually ended up in Minnesota.

Later in the trial, Gray began to use the phrase “money laundering” while questioning a witness. Mauzy angrily objected, accusing Gray of using “inflammatory” language and pointing out that Eibensteiner is not accused of that crime.

Collins denied the motion, and the trial, one of the more serious charges in Minnesota’s campaign finance realm in recent years, appears likely to continue into next week.

Eibensteiner was indicted for allegedly receiving an illegal contribution during the 2002 gubernatorial campaign from American Bankers, a Florida insurance company that was in trouble with the state Commerce Department for alleged wrongdoing to consumers.

The company’s executives have publicly acknowledged that they wanted to remove Commerce Commissioner Jim Bernstein, then serving under Gov. Jesse Ventura of the Independence Party. Former U.S. Rep. Tim Penny was running on the IP ticket and had indicated he would retain Bernstein if elected. The group’s goal was to help defeat Penny. Republican Tim Pawlenty eventually won the governor’s race.

American Bankers officials at first sought to contribute the money directly to the Republican or DFL parties. But when informed that corporate contributions are illegal, they gave $15,000 each to Republican and Democratic national committees that contribute money to state campaigns.

A former IRS criminal investigator, Paul Walsh, a defense witness who was commissioned to examine the state party’s records, said that the national Republican group contributed more than $250,000 to the Minnesota Republican Party from its operating account.

But Walsh testified that he could find no contribution from the national group’s separate corporate account, to which the American Bankers contribution was sent, or from any other corporate entity.

Much of the rest of the day’s testimony came from defense witnesses who attempted to discredit allegations that the election of Pawlenty resulted in reduced fines for American Bankers.

The company had refused a Commerce offer under Bern- stein to pay about $3.5 million in penalties and then settled for about $2 million shortly after Pawlenty took office in 2003.

Gary Lavasseur, who was then and is now enforcement director for Commerce, said the case against the company was going badly in court and that the $2 million settlement, along with an agreement to quit doing business in the state for five years, was the harshest penalty ever imposed against an insurance company in Minnesota.

Eibensteiner and Pawlenty have stoutly denied that they knew anything about the matter before it became public in March 2003 and that there was no connection between the contribution and the settlement.