Ex-state GOP chief cleared

11/16/2005

BY PATRICK SWEENEY
Pioneer Press

The former chairman of the state Republican Party was acquitted Tuesday of charges that he helped a Florida insurance company make illegal corporate campaign contributions aimed at influencing Minnesota’s 2002 campaign for governor.

A six-person jury in Rochester, Minn., deliberated less than three hours before finding Ron Eibensteiner not guilty.

Eibensteiner was standing and facing the jury when the verdicts were read. He grinned slightly, nodded toward his lawyer, Bill Mauzy, then shook Mauzy’s hand.

The gross misdemeanor charges — part of a politically charged case in which Attorney General Mike Hatch, a Democratic candidate for governor, was a key witness — had hung over Eibensteiner since he was indicted in Mower County two years ago.

After the verdicts, Eibensteiner said the charges were politically motivated, and he accused Hatch of orchestrating them.

“I always thought, quite honestly, that this was a vendetta directed toward our governor and toward me,” Eibensteiner said.

“Obviously Hatch was the fellow who perpetrated this whole thing,” Eibensteiner said. “He’s the guy who leaked the story — quote, unquote — to the St. Paul Pioneer Press. He took the letter. He set everything in motion.”

Through a spokeswoman, Hatch refused to respond to Eibensteiner’s statement. “He’s declining to comment,” said spokeswoman Leslie Sandberg. “It was not our trial.”

Mower County Attorney Patrick Flanagan, who began the grand jury investigation that led to the charges, said: “We accept the jury’s decision.”

Eibensteiner was accused of aiding and abetting the American Bankers Insurance Co. of Florida in making $15,000 in illegal corporate contributions. He also was accused of soliciting and accepting illegal contributions by an insurance company.

District Judge Lawrence T. Collins instructed jurors that to convict Eibensteiner they must conclude he “intentionally aided” American Bankers in making an illegal contribution and that money “derived from this contribution” ended up being spent in Minnesota’s three-way gubernatorial campaign in 2002 between Republican Tim Pawlenty, Democrat Roger Moe and Independence Party candidate Tim Penny.

American Bankers and two executives of the firm’s parent company were indicted with Eibensteiner. But the company and the executives settled their felony charges in 2004 by agreeing, without admitting guilt, to pay $1 million to cover Mower County’s investigative costs.

According to several witnesses, American Bankers in 2002 gave $15,000 to Republican National State Elections Committee (RNSEC) and a similar sum to the Democratic Governors Association, also a Washington, D.C., campaign group.

Both those national committees were allowed to accept corporate donations. But Minnesota law bans corporate contributions and campaign donations by insurance companies to state candidates and parties.

No charges were filed in connection with the donation to the Democratic group.

Harry Bassett Jr., an executive indicted with Eibensteiner, testified last week that American Bankers was advised by lobbyist Ron Jerich to donate money to both the Republican and Democratic candidates for governor in 2002.

It was an anybody-but-Penny strategy aimed at defeating the candidate to ensure he would not reappoint Commerce Commissioner Jim Bernstein. Bernstein, an appointee of Independence Party Gov. Jesse Ventura, had waged a long-running regulatory action against the insurance company.

A key part of the prosecution’s case against Eibensteiner was a thank-you letter he signed for Jerich, the lobbyist.

The letter referred to American Bankers and made clear the company’s checks went to RNSEC. It also alluded to the state Republican Party’s attempt to raise money to help Pawlenty and U.S. Senate candidate Norm Coleman in their campaigns.

Eibensteiner said the thank-you was a form letter that he did not read before signing. He said he would not have signed it if he had noticed the money went to the national committee.

Hatch, a witness before the grand jury that indicted Eibensteiner and the first prosecution witness called in the trial, testified that he seized the letter while visiting Jerich’s home. Hatch, who told the grand jury the letter was evidence of a crime, said his aide — Sandberg — gave the letter to the Pioneer Press.

In March 2003, after American Bankers settled its regulatory dispute with the Commerce Department and before any of the criminal charges were filed, the Pioneer Press published an article about the settlement and the thank-you note.

The article suggested the insurance company got a better settlement from the state because of its contributions, and it quoted Eibensteiner saying, in an interview, that he ensured that the contributions sent to RNSEC were routed back to Minnesota.

During the trial, Eibensteiner denied telling Pioneer Press reporter Tim Huber that he arranged for the money to be sent to Minnesota.

Huber testified that the quotation was accurate. Eibensteiner did not seek a retraction.

In a closing argument in the case, special prosecutor Earl Gray said Huber’s testimony was the “most important piece of evidence in this case.” Gray argued that Huber got the truth from Eibensteiner before Eibensteiner changed his story in later interviews with other people, including Legislative Auditor Jim Nobles.

Mauzy reminded jurors of uncontradicted testimony by Eibensteiner and a string of defense witnesses, that Eibensteiner did not know Jerich, did not know anyone associated with American Bankers and knew nothing about the insurance company’s dispute with Bernstein and the Commerce Department.