"You wrote stories about FOB JAMES?

Hell, he's a REPUBLICAN!

One of the

GOOD GUYS!

I hit that yeller button a couple of free chapters back and gave you all kind of money.

I want it back!"

"OK. Please tell me the amount and I will give you a  gift certificate redeemable at

THE STORE.

If you want to see what all you can get there,

GO HERE."

 

 
About the Bonus Chapters
1. The Matrix Man
2. The Governor's Money Pot
3. The $761,000 Web Page
4. The Gadfly
5. Emelle Enabler Makes a Mint
6. The Fob James Section
7. Notes on Journalism/Detritus
 

Bonus Chapter VI

The Fob James Section

-------------------------------------------------

Two-time Alabama Gov. Fob James

     The following was never a chapter, but was written for one of the earlier chapters leading up to the start of my work on the Siegelman administration. A heavily-abbreviated version is in the book. 

 

       My investigative work on the (Fob) James' administration -- the birth, you might say, of my suspicion that there was enough there to look into and look often -- originated with a cold-call made on a Sunday night in July 1995.

       Soon after James became governor, a number of legislators, mostly black, received audit notices from the state Revenue Department. When the AP's Phil Rawls reported this in May 1995, the governor assured legislators that, if indeed they were being audited, it wasn’t because the state tax agency was targeting legislators as a group. But if such a project were discovered, then “heads would roll,” James promised.

        In early July, a north Alabama legislator faxed me a Revenue Department memo on “Operation Public Servants” that someone had slid his way. It listed many of the legislators who’d complained, plus a number who hadn’t, and directed revenue agents to make it a “top priority” to commence audits of those on the list. The memo, of course, proved that there was a specific plan to audit legislators. This caused a shitstorm that would rage for months, and include demands for an investigation by then lieutenant governor Siegelman, his chief of staff Paul Hamrick and others.

          State Rep. Alvin Holmes, never one to shy from hyperbole, called it a “mini Alabama Watergate.”

Ralph Eagerton, James’s aged, overzealous Revenue Commissioner, had previously denied the existence of any such program. After the story, Eagerton was described by an aide as “flabbergasted.” He and James swore to get to the bottom of it.

         James chose to save his and Eagerton’s bacon by making a scapegoat of a long-time department official. It would turn out that Operation Public Servants began at Eagerton’s direction and was initially spearheaded by the chief of the income tax division, who retired in its midst. It was turned over to his replacement, Dwight Pridgen, whose chief sin would be to pursue the assignment with gusto.

         Within days of our story, it was announced that Pridgen had been placed on administrative leave. The following Sunday night I called him, sure that he’d refuse to speak with me. Instead, we talked for hours. He told of being held for much of an afternoon by two agents with what he understood to be a special unit of the Alabama Department of Public Safety. One, said Pridgen, yelled threats when he refused to sign a declaration that he was solely responsible for the audits, and accused him of being mentally unbalanced. “I have never met human beings like that in my life,” Pridgen said.

        I agreed not to write anything until he gave me the go ahead. The next day, he did, and I wrote the first of several stories on – and I couldn’t make this up if I tried – the Special Services Group, or SSG.

        “The Colonel (Gene Mitchell) would prefer not to discuss numbers,” a public safety spokeswoman said when asked the size of the unit.

        Legislators already riled up by the audits went nuts to find that the governor had authorized the creation of what amounted to his private intelligence unit. Were phones being tapped? Am I being followed? Those were the sorts of questions asked by lawmakers, especially those on the Democratic side

        Then-lieutenant governor Siegelman, who would be impossible to get on the phone a few years later, was more than happy to comment. He declared his interest in knowing the purpose of the SSG, whether it was legally authorized to do what it was doing, and “who it reports to.”

         After a bit I located the SSG headquarters in a strip mall in the outer reaches of Montgomery, and with a photographer in tow, drove there. A member of the unit saw us and walked out into the parking lot. Surprised at our visit – and as will be seen by the following quote, not media savvy – he said, in explaining their location and lack of markings on the door: “We don’t want the whole world to know we exist.”

        Well, "the world" soon thereafter knew. Shortly after our story reporting its existence and vague purposes, the SSG was disbanded. Eagerton, despite additional efforts by the James administration to shift blame from him and to Pridgen, resigned not long after.

         The James administration, facing a political disaster – the exposed, systematic auditing of legislators – had responded not by fessing up, but by seeking to unload on a defenseless merit system employee.

        From that point on, I was suspicious of the James' administration. If I saw a rock, I was going to look under it.

 

------

 

        About a year later, in May 1996, I was reviewing state bond deals in the Finance Department for a story on investment banking fees paid by the state to the professionals who put together these multi-million dollar borrowing arrangements. During this review I came across a $100,000 payment to a Mobile-based firm that cited services by a Frank Daniel, which was a new name to me. I punched his name in some databases (so long ago, but I believe it was on Compuserve -- a name from the past) and found that he was president of a Florida company called Financial General Corp. of America.

     The name seemed familiar. I recalled seeing it among the expenditures from the governor’s contingency fund.

      Governors and their staffs draw from this fund to pay for all manner of expenses, from the office coffee to legal fees. The contingency fund, as Siegelman would later prove in spades (See another bonus chapter, called, "The Governor's Money Pot"), is always worth reviewing for odd payments and story leads. I had a source who sent me print-outs of fund expenses every month or so. I reached in my desk, pulled out my contingency fund records, and sure enough, there was Daniel’s Florida company, next to a payment for $49,374.

       As is customary when researching business types, I punched “Daniel, Frank” into the Alabama Secretary of State corporations database. I about crapped when up popped a Huntsville-based corporation called Joint Capital Ventures LLC (See record below) formed in July 1995, and dissolved seven months later.

      In addition to Daniel, its incorporators were: Bobby Davis, Phillip Williams, and H.E. Mitchell. Was it possible that this was the Bobby Davis, as in James’ chief of staff? And wasn’t Phillip Williams the name of the new finance director? As for H.E. Mitchell – could E. stand for Eugene, the common nickname for which is Gene, as in Public Safety Director Gene Mitchell?

       It was cherries on all three.

       Then I put Daniel’s name in a newspaper database. Up popped a story published just weeks earlier. It reported that a top south Florida Democratic Party official had been convicted of failing to pay taxes on funds prosecutors described as payments routed to the official from Daniel in return for the official’s help in awarding bond business to Daniel’s firm. When I called the prosecutor in the case, she described Daniel as having been an “unindicted co-conspirator.”

       With the magic of search engines – back then not near what they are now – I’d made these connections within a few hours on a Friday afternoon. I told my editor, Paul Cloos, and we agreed to hold off and make our move on Monday. We couldn’t imagine anyone else having this, and there wasn’t enough time left in the day to contact everyone and put it all together. There might well be a perfectly innocent explanation for a situation that, on its surface, suggested a worst-case scenario of an investment banker kicking back portions of his fees to leading members of the James’ administration.

        When Monday finally arrived I called James' spokesman, Alfred Sawyer. I described the story I was working on, and because of the complexity of the matter, agreed to fax him our questions. I did this in the morning, and told him we intended to run the story the next day.

        Not long after, Alfred called Stan Tiner, then the Register's editor. He asked – hard to believe but he did – for the paper NOT to run such a story. No particular reason why we shouldn’t. Nor did he offer any facts to explain why some of the highest ranking cabinet members had formed an investments company with the administration’s new bond darling. Their panic was palpable from 180 miles away.

        Needless to say, Tiner did not accede to the request.

        The next day's story literally blew a hole in the administration. James held a press conference and called the threesome “stupid.” While the governor said he didn’t suspect his friends of wrongdoing, he said their actions were “embarrassing, humiliating and defied comprehension.”

         They either resigned or were fired – it was hard to tell. In any event, Davis and Mitchell, old friends of James’ who’d served in his first term, were gone, and James had to set about filling three of the most important cabinet positions.

         As with most big stories, this one begat many more. Daniel, as I would learn, was a Montgomery native turned investment banker and a partner of sorts in (now Mississippi governor) Haley Barbour’s Washington lobbying firm. Through Barber, Daniel had apparently played some role in getting the national Republican Party to pump hundreds of thousands of dollars into the James’ campaign in the final days of the campaign, when an upset win over Jim Folsom Jr. came to seem possible. Daniel had also donated $10,000 himself.

        After James beat Folsom, Daniel moved back to Montgomery and became associated with the Mobile-based investment banking firm Gardnyr Michael Capital, which saw him as an intro with the new administration. Daniel appeared set to haul in big money on bond deals for the next four years and eight if Fob won a second term.

         Soon Daniel was submitting bills seeking payment for what he claimed was some vital contribution by him in resolving issues between the state and Mercedes-Benz and related to incentives pledges made by the Folsom administration to lure the German automaker to Alabama. With a few exceptions, like Fob James and Bobby Davis, Daniel was largely alone in this assessment of his role in a deal that involved a multitude of big players. Mercedes, for example, recalled almost no dealings with him.

         But word came from above, from Davis, that the Finance Department was to pay a $100,000 bill submitted by Daniel. Finance Director Jimmy Baker – not a friend of Davis’s, and a doubter of Daniel’s -- required the investment banker to itemize his time and expenses.

         I requested the supporting documentation behind the $49,374 paid to Daniel’s Florida firm out of the contingency fund, and found a surprise. The bill contained identical travel costs -- including a $13,000-plus bill for fight aboard the Concorde -- that were listed in the $100,000 bill There were also duplicate time charges. We reported as much, and Gardnyr Michael, the Mobile firm, severed its ties with Daniel.

         Soon after I got a tip that he’d submitted an even larger bill to the non-profit, industry funded Economic Development Partnership of Alabama, which played a major role in recruiting Mercedes. Daniel claimed he’d been short-changed by the state for his work on Mercedes. The EDPA -- at the urging of the governor's office, and quite reluctantly -- agreed to pay him about $70,000, not near what he sought.

          Daniel's EDPA bill contained, for the third time, the now familiar travel charges, including the $13,000 bill for flight aboard the Concorde.

          Daniel, his days doing bond work for the state of Alabama over, blamed clerical errors by his secretary for the multiple travel billings.

          An Ethics Commission investigation cleared the cabinet members, but then again, that’s been par for the course there since the retirement of the commission’s first director, Melvin Cooper. The director then was E.J. "Mac" McArthur, who at the time was working closely with the James' group and their lawyer in an ill-fated ethics complaint against a former top Folsom official.

           McArthur was not fit to be ethics commissioner. This bloated cigar-chomping figure went from being Alabama's ethics policeman to head of the state employees union, where he's orchestrated backroom deals that, among other things, have enriched himself and his lobbying buddies.

          As readers of the book know, I have little regard for the ethics commission. It specializes in clearing big fish, and justifies its existence by catching tadpoles.

         McArthur claimed that he and his staff conducted an exhaustive investigation and found that Bobby James, Gene Mitchell and Phil Williams violated no laws in their dealings with Daniel. The fruits of that investigation -- such as, supposedly, the complete records of Joint Capital Ventures LLC -- were not made public. According to McArthur, they showed that the company never did anything.

         Despite the truly awful appearances and my lack of faith in the ethics commission and especially McArthur, my sense is that it was the correct finding.

         To the extent that I can sense sleaze, I didn't, at all, with Davis, Mitchell or Williams. Of the three, Davis had done by far the most to help Daniel. I researched him up down and backwards, called all sorts of people, and found him to be what he appeared in the first place – a hard-working, life-long bachelor, frugal and rumpled as he was bald.

        Unquestionably, though, Davis had gone out of his way to aide someone who was at the time a business partner. He'd used his influence to win bond-related fees for Daniel and apparently strong-armed a company facing problems with the state insurance department to hire Daniel as a lobbyist. I suspected he did so with James’ approval, possibly even his encouragement, but couldn't prove it either way. And in any event, there was nothing to indicate that his cabinet members told him they'd formed an investments partnership with Daniel.

        After our stories, the three only made it worse for themselves.

        Instead of admitting to stupidity and poor judgment, the three -- represented by Montgomery lawyer/firebrand Tommy Gallion -- bowed up at a press conference at Gallion's office. They attacked James’ lack of loyalty in failing to publicly defend them. I asked if they would at least acknowledge a failure of judgment in forming an investments firm with Daniel. Had they not been so hard-headed, they would have admitted as much, told the press they had acted stupidly, and won some sympathy and trust.

       Instead, there was anger where there should have been humility and remorse.

       By forming an investments firm with Daniel, they had created what is commonly known as an "appearance of impropriety." A monster of one, really. James couldn’t have enjoyed firing old friends like Davis and Mitchell, but by their actions, they gave him no choice.

       Strangely enough, I would come to know the three, if not well, and couldn’t rid them of their insistence that an enemy in the famously divided James’ camp had handed me the story on a platter. I told them how I stumbled on the story, but they refused to believe me, preferring to see a conspiracy where there was none.

        To my knowledge, no one outside of its four incorporators were aware of Joint Capital Ventures until I came upon it while researching Frank Daniel.

 

------

 

        Many of my stories in the third year of the James’ administration focused on a Montgomery-based bridge-building company called McInnis Corp. After James became governor, his three sons partnered with the two McInnis brothers in a venture to build a toll bridge in Orange Beach. Subsequent to that, as the stories showed, McInnis Corp., had repeatedly benefited from rulings by the highway department and, especially, by the governor's appointed director, Jimmy Butts.

       “The Mobile Register recently reported that state Transportation Director Jimmy Butts has decided to pay McInnis Corp. an additional $828,437 for its work on the new Dog River Bridge, overruling engineers and committees who say the contractors don’t deserve that for the long-delayed bridge,” opined the Birmingham News in a December 1997 editorial following one of our many McInnis stories.

       Researching those stories -- pouring through thousands of pages of highway department project files and learning the agency’s processes -- was to serve me well in the Siegelman years, as it would in the final year of the James’ administration.

       A Montgomery man introduced to me by some folks who despised Fob told me that a lobbying/consulting firm called Capital City Consultants was enjoying remarkable success winning what were known as "Ice Tea" grants. The name is derived from ISTEA, the acronym for the federal law that funds such grants. (See records at bottom.)

        Ice Tea grants paid for so-called “enhancement projects” – things like sidewalks and bike and nature trails. Cities, towns, and other government entities submitted applications to the highway department and a low-level official ranked them according to various criteria. But the final call was made by the highway director, and during the James' administration, that was Jimmy Butts.

       Unlike other federal grant programs, with Ice Tea, the highway director wasn’t bound by the rankings. At all, as it turned out.

       The source said towns that engaged Capital City Consultants were enjoying unusual success in winning the grants. The firm, he said, was run by Johnny Moore, a lobbyist and key fundraiser for James and a pal of Butts. Also involved was super-lobbyist John Teague, a childhood buddy of Butts’ who’d hired Butts’ car-racing son Craig to work for his lobbying firm.

       I asked the highway department for the annual lists of all "Iced Tea" grant winners since James became governor. Then, using what is known as the Blue Book – a sort of phone book for Alabama government – I called all the winners. It took ages, gave me a bad case of cauliflower ear, but it was the only way to get it done. Many of the towns were too tiny for full-time staff, and their mayors were as likely to found at the hardware story as town hall. If I got someone on the other end in five calls, I felt good about it.

       For a follow-up story, I called all the applicants, well over 100, those that sought but didn’t win grants as well as those who received them.

       All that dialing allowed me to report that every town that hired Capital City won grants, often multiple grants; and that some who didn’t on the first go-round then hired the firm, and won the second time around.

       Dora, pop. 2,214, won three grants in one year, for almost $600,000. Only Birmingham, Mobile and the University of Alabama received more ISTEA money that year than Dora.

       Some of the towns provided me with their contracts. These revealed that that Moore’s firm only charged for its services if it delivered a grant. And if so, it was to be paid a fee equal to 10 percent, which usually came to $20,000, since most of the grants were for $200,000.

       The fee was due on the day of notification from the state that the grant had been awarded. That was when Capital City’s services concluded. In this way, the firm was unique among grant consultants.

       Traditionally, they are hired not just to apply for grants, but to manage them if the grants are awarded. The consultants are paid, piecemeal, during the process.

       For Capital City Consultants, it was get the grant, then vamoose.

      “They haven’t gone after one for us that we didn’t get,” said the pleased city clerk for Enterprise, which received four grants in two years.

       The mayor of tiny Double Springs said his town was rejected on its first try, but not the second time, thanks to Capital City Consultants.  “If I couldn’t get the grant without paying that 10 percent, then I needed to pay it, but it all seemed odd,” he said.

       Little towns with little budgets were being forced to play the big boy way, by paying a lobbyist tight with the James' administration.

       The stories showed more than $1 million going into the firm’s pockets, including $610,000 in 1997 alone.

        Butts, a short, gravel-voiced, aging country-boy roadbuilder, seemed to have walked into the highway department straight out of the 1950s. He claimed complete ignorance as to which grant applicants might or might not have hired Capital City Consultants. But the weight of the evidence rendered silly those claims. His boss, the governor, was not impressed by our stories. He responded by calling Butts the greatest highway director in Alabama history.

        The FBI thought more of them, and commenced an investigation.

        Butts, Moore, Teague and Butts’ son, Craig, would be indicted on charges related to the Capital City Consultants scam, as well as similar matters discovered by the FBI during its investigation. The older three pleaded guilty and received six month sentences in a deal that included dropping charges against the younger Butts.

        I still wonder if Butts could have cut a deal and burned the governor,  such as on the apparent favors for McInnis, the company in business with Fob's sons. My guess is that he could have, but that Butts -- an old-timer and practitioner of some roadbuilders’ version of omerta, the mafia’s code of silence – wouldn’t give his hunting buddy up.

       Certainly Butts was one of the more entertaining characters in the Montgomery of his day. In a telephone chat much later, he told me, in all innocence, that in awarding grants to Moore’s clients he was just trying to help out his son, and what father wouldn’t do that?

Below is the Alabama Secretary of State corporation computer site record showing

the incorporation of Joint Capital Ventures LLC. It revealed, at the least, remarkably bad

judgment on the part of two of Fob James's oldest friends and advisors.

Business Entity Details

Joint Capital Ventures, LLC
Entity ID Number 652 - 179
Entity Type Domestic Limited Liability Company
Principal Address 5710 TANNAHILL CIRCLE
HUNTSVILLE, AL 35802
Principal Mailing Address Not Provided
Status Dissolved
Dissolved Date 1-24-1996
Place of Formation Madison County
Formation Date 7-5-1995
Registered Agent Name WILLIAMS, PHILLIP W
Registered Office Street Address 5710 TANNAHILL CR
HUNTSVILLE, AL 35802
Registered Office Mailing Address Not Provided
Nature of Business MAKE INVESTMENTS INTO ANY LEGAL VENTURES/ANY LAWFUL BUSINESS
Capital Authorized
Capital Paid In
Members
Member Name WILLIAMS, PHILLIP W
Member Street Address Not Provided
Member Mailing Address Not Provided
Member Name MITCHELL, H E
Member Street Address Not Provided
Member Mailing Address Not Provided
Member Name DAVIS, BOBBY
Member Street Address Not Provided
Member Mailing Address Not Provided
Member Name DANIEL, FRANK W
Member Street Address Not Provided
Member Mailing Address Not Provided
Transactions
Transaction Date 8-28-1995
Miscellaneous Filing Entry     FILING OF LLC REPORT
Scanned Documents
Document Date / Type / Pages 7-5-1995     Articles of Formation     3 pgs.
Document Date / Type / Pages 8-28-1995     Miscellaneous Entry     1 pg.
Document Date / Type / Pages 1-24-1996     Dissolution     2 pgs.
 

Below is one of a number of press releases the Siegelman campaign mass faxed to the

media in the fall of 1998, and about the activities of the James administration. It's an

old copy recently located among my files, and the hen-scratch has been on it pretty

much since I first got it, in 1998. I'm fond of the press releases that, like this one, cited

my stories, since it shows the Siegelman campaign making use of my reporting against

a Republican foe, and diminishes, or so I believe, his claim that I and our paper

was somehow out to get him.

 

 

 

 

 

 

 
 

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