Shot
In The Dark > Story Index "Welcome
to Politics in Minnesota"
Mike Hatch,
American Bankers and the Twin Cities Media
Part 2: The Check
The law in Minnesota is about as
clear as laws ever are; corporations may not make contributions to
political campaigns in the state. Corporate
money can go to the national parties. From there,
depending on who you ask, the money either is launched into a
random void from which it may or may not ever come back to Minnesota,
or it comes directly back to the state after going through the
formality of a trip to the national headquarters. Both
the Republicans and the Democrats have organizations that exist to
take corporate contributions, and filter them back to the
states. Technically, there is no way to know if the money from
any given corporate contribution will ever get to the candidate that
the donor intended. One
source calls the law "legal money-laundering". The
upshot is this; direct corporate donations, bad. Donations
through the national office that are sent anonymously back to the
state campaigns, good. The
Republican National State Elections Committee (RNSEC) is the national
GOP body that accepts state contributions and recirculates them to
state campaigns. The
Strategy It's
clear that American Bankers had adopted the strategy of "going
political", as Attorney General Hatch calls it. The Legislative
Auditor's Report notes that it "found
evidence to support the Attorney General’s assertion that, in August
2002, American Bankers Insurance employed a "political
strategy" to help the company resolve its regulatory problems
with the State of Minnesota". In a telephone interview
found in the report, the company's general counsel, Jerome Atkinson,
said:
When… Governor Ventura
announced he wasn’t running for reelection, my view was, let’s do
what we can to ensure that Commissioner Bernstein goes with him.
And take our chances on whomever the
next commissioner is going to be, because it can’t be any worse than
trying to negotiate a settlement on this matter. You know,
our view wasn’t, you know, we wanted to influence the outcome of the
settlement. It was to get a reasonable mind... [and] to talk to this
person about this deal. The fact
that it was Republican or Democrat, we didn’t care [as long as] it
wasn’t Bernstein.
Tim Thornton, American Bankers'
local counsel, also noted:
I regarded Mr. Bernstein
as a bully populist who lost sight of what was in the interest of the
regulated community and the consumers of the state of Minnesota for
his own self-aggrandizement. And almost anybody in the commissioner’s
office would have been an easier person to settle with than Mr.
Bernstein.
Depending on who you
ask, the "Political Tack" supplemented or supplanted the
company's negotiation and litigation strategies during the late summer
of 2002. "As tawdry as it seems, this is not illegal,"
a source at the capitol tells me, "and, in fact, is business as usual in the political world",
.
Part of the strategy, of
course, involved hiring lobbyist Ron Jerich.
The Caller
Ron Eibensteiner is the chairman
of the Minnesota Republican Party.
One of the main responsibilities in leading the
party is raising funds. When someone wants to donate money - especially a
lot of money - to the Minnesota GOP, he's the go-to guy. In
2002, after the Republican state convention endorsed Tim Pawlenty
to run for governor, Eibensteiner was doing a lot of it. "After
the endorsement and during the Pawlenty campaign, I got a lot of calls
from people who wanted to help - people who wanted to volunteer wit
the campaign, and people who wanted to contribute", says
Eibensteiner. "I
told my staff, corporate contributions are illegal. People can
give to the Republican National State Elections
Committee". In
August of 2002, says Eibensteiner, someone began calling the state GOP
office, wanting to make a donation to the Pawlenty campaign. "This
guy calls, and says he wants to give $15,000 to Pawlenty. He
says "I want to make a corporate contribution". We
said "No, you can't do that!" says Eibensteiner. "My
staff tells me this guy keeps insisting. We gave him the address
for the RNSEC. But when the check came, it was addressed to the
Minnesota Republican Party." After that, Eibensteiner says,
staffers sent the $10,000 check to the RNSEC office in Washington. "And
that's it!", Eibensteiner concluded. The
"guy", according to Eibensteiner, was Ron Jerich. The
Other Check At
about this time, another check is sent to the Democratic Party, from
American Bankers, arranged by Ron Jerich. According
to sources at the state DFL who spoke off the record, no check was received. Attempts to reach DFL officials for on-the-record
comment went unanswered. The
checks apparently went directly to the national Democratic party, in
accordance with state law. The
Letter When
a check is received at the GOP's office, on Cedar Street in downtown
Saint Paul, the details are entered into a computer. The
computer then generates a "thank you" form letter. The
staff periodically brings a stack of these letters to Ron
Eibensteiner. He signs them. "I
sign thousands of them!" Eibensteiner exclaims, in the tone of a
guy who knows how to say "writers cramp" in several
languages. A
copy of the letter is among the appendices
to the Legislative Auditor's Report. It includes two marginal
notes, in Eibensteiner's looping script, and a postscript at the
bottom: "P.S. Since we're not sure who to thank at American
Bankers Insurance, if you would do that on our behalf, I would
appreciate it". According
to Eibensteiner, the postscript was added by a staff member. "We
never talked with them. We never dealt with them. We
didn't have their address, no phone number - no nothing! That's
it!" Eibensteiner
signed the letter. "This all took place in a split
second!". The
letter was mailed to the lobbyist that arranged the payment - Ron
Jerich. Jerich Ron
Jerich is a registered
lobbyist. He's best known, sources tell me, for working with
DFL candidates, although he works both sides of the aisle. He is not an "issues"
guy", says a source at the Capitol who knows Jerich well. He is a
behind-the-scenes player with
extensive connections. His specialty is getting folks together. By
all accounts, including Federal
Election Commission records, Jerich is fairly ecumenical - he'll
work with anyone. "He
is a Democrat and works mostly with the DFL but has several
Republican friends, including me", says the capital source. The source
also noted that "Mike Hatch was one of his closest
friends". Jerich
has worked for Hatch in the past. Sources also claim that
Jerich and Hatch own a condominium together in Naples Florida - a
claim that Hatch's press secretary Leslie Sandberg says is completely
false. On Saturday, October 5
(according to Attorney General Hatch's testimony to the Legislative
Auditor's office), Hatch went to Ron Jerich's house (note: this is
transcribed from the testimony transcript. Errors in spelling of
names are transcribed directly. Ellipsis means I've taken out
some garbled, conversational text).
That morning, I went over the Ron
Jerich's home. He was acting as a host for a number of people who
were door knocking for ... Senator [Jim] Metzen, and
Representative Pugh. And when you do these door knocks, you
show up and they hand you a map and a bunch of literature, and you
drive out and knock on doors...And usually beforehand, the host...or
hostess will have coffee and orange juice and some donuts.
And which Val Jerich [Ron Jerich's wife] did have, what I recall was
quite a spread.
In other words, a fairly typical
campaign-season literature drop. Hatch continues, from the
transcript.
And I was drinking coffee, talking
to Ron Jerich, and noticed...We were in his office talking.
And there was a bust of Ronald Regan (sic) on his desk. And I
said, gee, that's an interesting bust. Why have you got Ronald
Regan (sic)? And he said he just got it from the Republican
Party for a ten thousand dollar contribution. I asked him why
were you making a ten thousand dollar contribution, and he said that
he had been retained by American Bankers Insurance Company.
That they wanted to get involved in Minnesota. And that they
wanted to make contributions to the Moe campaign and to the Pawlenty
campaign. He had indicated that he had contacted Tim
Commers... and I said, well, who made the contributions. And
he said, the company. I said, well, what do you mean, the
company? I mean, was it an officer of the company? Was
it you? How did you...? And he said no, the company made
the contributions. I said, well, how did they do that?
And he said...and I said, more out of curiosity, how did you make a
corporate contribution?
Hatch continues, talking about
campaign law:
I had been chair of a political
party. This was news to me. And he that, well, he called
Tim Commers, who was the campaign chairman o the Pawlenty campaign,
and Vic Moore, who was...I don't think he was active on the campaign,
but certainly a close associate of Roger Moe. And he had
commented that Commers knew how to get it done. He told them
where to send the contribution, but that the Moe campaign really
didn't know how to do it, because they cut a check and he sent it to
the DFL party and they refused it. And he said they really
screwed up. They don't know how to take corporate
contributions. And I'm thinking the whole time, what the hell
is going on here? ...So how does the Republican Party
send you a bust if you send corporate contributions to the Pawlenty
campaign?
The letter returns:
And he hands me this letter.
Pulls a letter out of a desk and hands it to me and it's a letter
from Ron Ebensteiner (sic), who is the chairman for the state
Republican Party. So now I'm trying to figure out how does the
state Republican party send a thank you letter when it was a
contribution to Commers?...I'm looking at this and I"m
thinking, this doesn't make sense. The letter itself says it's
from American Bankers, because there is a note at the bottom saying
let me know who I should thank at America Bankers. And then I look
at it, you know. I'm just kind of reading it and trying
to figure out what this is all about. And it says it's to the
Republican National State Committee.
Hatch acts:
I take the letter. [Emphasis
added] Do the door knock that day. I mean, I'm tring to figure
out what's going on here. This is troubling to me. I
know that mischief is afoot here. I know why American Bankers
is doing this. I don't think Jerich did. He wouldn't
have told me if he...I mean, they knew. I mean, it's not any
secret my feeling about many insurance companies, and it's not
secret what I think about a company like American Bankers. And
I really don't think he knew.
Hatch took Ron Jerich's letter
from Ron Eibensteiner. Accounts differ as to whether Hatch took
it with or without Jerich's permission, or active connivance.
According to the Legislative Auditor's report:
Mr. Jerich
acknowledged that he showed Attorney General Hatch and others who
had come to the "door knocking" event the letter from Mr.
Eibensteiner. However, he said that the letter subsequently
disappeared, and he didn’t know who took it.
Sources close to this story with
personal knowledge of Hatch and Jerich's relationship, however, say
that it's "equally likely" that Jerich gave Hatch the
letter. Jerich did not respond to several attempts to reach him
for his comment.
In any case, that was the last anyone
heard of the check, at least publicly, until after the inauguration of
Tim Pawlenty. On
Election Eve So, let's
recap what happened between the beginning of August and October 5,
2002:
- American Bankers retains Ron
Jerich.
- The company withdraws from
negotiations with the Commerce Department.
- Ron Jerich sends checks to the
Minnesota GOP and the Democratic National Committee. The
Minnesota GOP forwards their check to the RNSEC.
- The check's receipt generates a
form letter, which Ron Eibensteiner signs.
- One fine October morning, Mike
Hatch happens to start discussing the subject with Ron
Jerich. He reads the form letter from Ron Eibensteiner, and,
depending on whose account you're reading, either palms the letter
or Jerich slips it to him under the table. This letter forms
the basis for much of the future brouhaha on this case.
November, 2002
In November, Tim Pawlenty won the
gubernatorial election. He appointed Glenn
Wilson, a mortgage
banker who'd been president of Ginny Mae in the eighties, as his
Commerce Commissioner.
This takes us to January 6, 2003 -
Inauguration Day for the Pawlenty Administration, and, according to
Mike Hatch, the day a new plan was hatched to deal with American
Bankers Insurance.
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