State Rep. Tom Anderson pleaded not guilty Friday to a series of federal charges accusing him of selling his legislative office for $12,828 in bribes from a lobbyist representing private prison interests.
Anderson, a 39-year-old Republican who has represented Muldoon's District 19 since he was elected in 2002, was ordered freed Friday by U.S. Magistrate Judge John Roberts on an unsecured $10,000 bond following his arrest Thursday by FBI agents. Roberts said Anderson could travel to Mexico on a previously scheduled vacation next week with his wife, Republican state Rep. Lesil McGuire, who was elected to the state Senate in November, and their infant.
The 18-page indictment against Anderson said the lobbyist was secretly recorded July 21, 2004, boasting that for a price, Anderson would be "our boy in Juneau."
A week later, the same lobbyist was recorded telling a confidential informant, "If I was a Soviet spy and I was looking for a legislator to recruit, (Anderson) would be the one I'd get." Anderson "needs the money," the lobbyist said.
The government didn't charge the lobbyist. He is identified only by the letter "A," but the facts in the case point to Bill Bobrick of Anchorage, who represented Cornell Companies, a private prison firm Outside. Bobrick didn't return messages left on his home and cell phones Friday, and his business number wasn't working.
On Thursday, before Anderson's arrest, Bobrick said in an interview that he was getting out of the lobbying business and was in the process of handing off his clients. He gave "health issues" as the reason.
Anderson, who did not seek re-election this year and formally leaves office next month, is the first legislator charged with corruption in office since two state senators faced charges in the early 1980s. One, George Hohman, was convicted of bribery in 1981, while the other, Ed Dankworth, successfully appealed his 1982 conflict-of-interest charges and never faced trial.
Anderson's seven-count indictment accuses him of going into league with lobbyist "A" to promote a private prison somewhere in Alaska and a private juvenile treatment facility in Anchorage.
In return for the money, it said Anderson got himself appointed to legislative committees with jurisdiction over prisons and treatment, lobbied other elected officials, agreed to align his votes with the correction company's interests, wrote letters, and publicly spoke on behalf of company projects.
Anderson disguised the source of the money in his reports to the Alaska Public Offices Commission, the indictment charged.
A second private prison advocate secretly worked with the government to record conversations of the lobbyist and Anderson. The informant, identified only as "CS-1," used money provided by the FBI in the payoffs.
The private prison company was identified only as "Corrections Company" in the charges, but the facts squarely match Cornell Companies Inc. of Houston, a publicly traded corporation with facilities in 17 states. Cornell operates six halfway houses in Alaska from its buyout of Anchorage-based Allvest Corp. With partners Veco and Allvest founder Bill Weimer, Cornell failed to win public support for private prison proposals in Anchorage, Delta Junction, Kenai and Whittier.
The proposals were all highly controversial in the communities, though they often sailed through legislative committees. During a House Finance Committee hearing May 9, 2004, Rep. Eric Croft, D-Anchorage, said the effort was corrupting the state.
"What I see, over and over, is repeated sole-source, pre-arranged, heavy-money deals that go to specific contractors. ... It's never been a clean, competitive proposal," Croft said at the time, the only member of the committee to object. "We are going to see somebody indicted and probably imprisoned over this series of proposals."
A prepared statement from the Justice Department and released Friday said the corrections company was never told about the payments to Anderson "due to the undercover nature of the operation." It said the company "was not implicated in the corrupt activities that are alleged in the indictment."
Christine Parker, a spokeswoman for Cornell in Houston, said, "There's nothing that we knew of, or were aware of, until this indictment was issued."
Anderson arrived for his arraignment in federal court Friday wearing a bright yellow jumpsuit with the word "PRISONER" across his back. His legs were shackled as he rose for the judge alongside his defense attorney, Jeffrey Feldman of Anchorage. The hearing lasted 19 minutes. His trial was set for Feb. 12.
If the government was making a point to other potential defendants in its ongoing investigation into corruption, the message was tough. Nicholas Marsh, a trial attorney from the Justice Department's Public Integrity Section in Washington, D.C., told the court the charges carried penalties ranging from a maximum of five years and a $250,000 fine for conspiracy to a maximum of 20 years and $500,000 for each of three money laundering charges. Anderson was also accused of two counts of extortion (20 years and $250,000) and one count of bribery (10 years and $250,000).
The activities alleged in the indictment took place long before the coordinated raids of Aug. 31, when the FBI searched the offices of 10 percent of the 60-member legislature. Anderson's office wasn't among them, and it's unclear how his case is related. Marsh, Assistant U.S. Attorney Joseph Bottini, and FBI agent Mary Beth Kepner, a leader of the corruption probe, left quickly after the arraignment and declined to answer questions.
The conspiracy alleged in the indictment began in July 2004 and continued through the following March. It said that Lobbyist "A" set up a shell company called Pacific Publishing that existed solely to launder money to Anderson. The company would pay Anderson to write articles about politics that would be published on its Web site, but Anderson was paid without ever scribbling a line.
"CS-1" paid Lobbyist "A" $24,000 in three payments. The cover story was that the money was for advertising on the Web site, but they agreed the money was really for Anderson's pocket, with "A" taking a sizeable cut.
The indictment said "CS-1" had worked for the corrections company as a lobbyist "at various times." The identity closely matches Frank Prewitt, a former Alaska Corrections commissioner appointed by Gov. Wally Hickel and who later went to work for Cornell.
In an e-mail exchange with the Daily News on Friday, Prewitt suggested he was the source, though he stopped short of confirming it.
"At this time it is inappropriate for me to talk about the voluntary role that I and others may have played in the Anderson investigation," Prewitt wrote. "Over the next year I believe you will find that this was only the beginning of the end of a sad, but healthy chapter in Alaska history. My prayers are with Representative Anderson and his family during this difficult time for all."
The first recorded conversation cited in the indictment occurred July 16, 2004, when the lobbyist suggested to the confidential source that they "try with (Cornell) to help out Tom Anderson." Five days later, the lobbyist told the source that Cornell should hire Anderson through him.
Rather than report Cornell, with its interest in legislation and other government action, as the source of the money, Anderson said he was paid for writing for the Pacific Publishing Web site.
Anderson himself was recorded Aug. 17, 2004, telling the confidential source: "APOC only needs to know (Bobrick) pays me and then we're all safe."
The source paid the lobbyist the first $8,000 Aug. 19, 2004, the indictment charged. Out of that, Anderson received $3,328, which he deposited Aug. 23 into the account of his personal consulting firm, Alaska Strategic Consultants.
In a recorded call Oct. 20, 2004, the source told Anderson he had prepared the next $8,000 payment and planned to pass it on to the lobbyist.
"Awesome. Awesome. I appreciate it," Anderson is quoted as saying.
Anderson received a $3,500 advance from that payment, the indictment charged.
The source made his last $8,000 payment on Dec. 21, 2004. Anderson got $4,000.
But late in the scheme, the indictment alleged, Anderson was showing signs of unhappiness over splitting the money with the lobbyist. According to excerpts of recordings, the confidential source appeared at first to encourage the disaffection, saying it wasn't the lobbyist who was speaking out and voting for Cornell, but rather Anderson.
"I know," Anderson said.
But then the source suggested the lobbyist might become "estranged" if he were cut out of the deal. The source thought that he could make a separate payment direct to Anderson.
"If there's a way you can think of that, that would be nice," Anderson replied.
The source obliged, handing Anderson a $2,000 check Dec. 21, 2004. The indictment said the check was made payable to Tom Anderson.
Daily News reporter Richard Mauer can be reached at rmauer@adn.com or 257-4345. Reporter Lisa Demer can be reached at ldemer@adn.com. Reporter Tom Kizzia can be reached at tkizzia@adn.com.
By RICHARD MAUER, LISA DEMER and TOM KIZZIA
Anchorage Daily News