Anchorage Daily News

WASHINGTON -- The self-made Veco executive whose testimony could bring to an ignominious end to the 40-year Senate career of Ted Stevens took the stand Tuesday in the corruption case against his former fishing buddy and friend.

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Improvements to the Girdwood home of Sen. Ted Stevens can be seen in this series of photos entered into evidence by the prosecution. In this first photo, the home is shown before improvements.

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The Girdwood home of Sen. Ted Stevens during improvements.

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The Girdwood home of Sen. Ted Stevens after improvements when FBI agents executed a search warrant on the home. Prosecution lawyers say $188,000 worth of work was done by Veco workers at no charge to Stevens.

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Bill Allen, the founder of Veco Corp. and the star witness in Stevens' trial, spoke fondly and with admiration for the 84-year-old senator even as he began giving testimony in support of the felony case against Stevens.

"We kind of really liked each other," Allen said Tuesday afternoon, as prosecutors introduced a photo of the two men struggling to hold a Kenai king salmon in a net. "Had the same thoughts. Ted really worked hard. Ted loved Alaska and I loved Alaska."

Asked to point to the defendant, Allen extended his arm and index finger in the direction of Stevens and said, "Ted's over there." Stevens didn't look up. At the end of the day, as people began filing from the courtroom Allen stood in a knot of prosecutors on one side, Stevens with his lawyers, supporters and daughter Beth in another. They left at different times.

On the stand, Allen began highlighting a pattern of gift giving that is at the heart of the government case. Stevens, the longest-serving Republican in the Senate, is accused of failing to report on his annual financial disclosure forms more than $250,000 worth of gifts and home renovations, chiefly from Veco and Allen.

Prosecutor Joe Bottini, an assistant U.S. attorney from Anchorage, asked Allen whether Stevens ever paid him back for the estimated $5,000 to $6,000 cost of the backup generator the senator asked Allen to install in 1999, in advance of the Y2K scare.

"No," Allen said.

"To your knowledge, did he ever pay Veco back for the generator?"

"I don't know," Allen said. "I don't think so."

FRIENDSHIP WITH STEVENS

Allen, 71, is a key figure in the case against Stevens. He and former Veco vice president Rick Smith pleaded guilty in May 2007 to bribing state lawmakers as part of an effort to push through the Legislature an oil production tax favorable to North Slope oil producers. Both are cooperating with the government; neither has been sentenced.

In the three and a half days of testimony leading up to Allen's turn at the stand, jurors have heard from former Veco employees and others who described work they did on Stevens' Girdwood home. Prosecutors say Stevens never paid for $188,000 worth of renovations paid for by Veco, including a deck, an exterior staircase and extensive electrical work.

Allen, who will continue his testimony today, began by telling jurors the story of his hardscrabble origins and how he worked his way from a teenage welder in New Mexico to the wealthy owner of one of Alaska's biggest private employers. Veco was sold last year to the Colorado construction firm CH2M Hill for $380 million.

Allen also explained to jurors that his halting speech is the result of a brain injury from a 2001 motorcycle accident. He testified he has no memory problems but sometimes has difficulty speaking the words he is thinking.

Allen's speech and comprehension seemed vastly improved from his appearances at two trials in Anchorage last year of state legislators. Like Stevens, Allen listens to courtroom conversations with the aid of an audio headset that picks up sound by way of an infrared signal. In Anchorage, he frequently struggled with the device, but in Washington, the only problem was weak batteries that was solved with a new headset.

Allen's attorney, Bob Bundy, said Allen could only hear in Anchorage when he tilted his head a certain way. The Washington courtroom has many more infrared transmitters, allowing for a more natural audio environment, he said.

Allen described meeting Stevens for the first time in the early 1980s at fundraisers and events for Republican Frank Murkowski, who was running for the U.S. Senate and went on to a term as Alaska governor. Allen spoke wistfully of the former "close, personal friendship" between him and Stevens and how they used to go to "boot camp" in the desert Southwest. They'd foreswear beer and hard alcohol, drinking only wine, eating little and walking hard, "trying to get some pounds off."

Allen also described a 1999 transaction involving a new Land Rover he gave to Stevens in exchange for $5,000 and a 1964 Ford Mustang. Stevens wanted to sell the Mustang and buy his daughter, Lily, a car, Allen said. Allen offered to give Stevens a $44,000 Land Rover Discovery that he had bought for one of his grandsons but decided not to give it to him because he was unhappy with him.

Stevens estimated the Mustang was worth about $25,000. Allen thought it was worth closer to $15,000 to $20,000. When asked whether he thought he had gotten a good trade, he said, "Not at that time, no."

Then why did you enter the agreement, asked Bottini?

"Because I liked Ted," Allen said. More recently, Stevens wanted the Mustang back. Stevens' wife, Catherine, didn't like all the guns he owned, and so they decided to trade about five or six rifles and shotguns for the Mustang. Bill Bittner, Stevens' brother-in-law, lobbyist and Anchorage neighbor of Allen, came over to his house and told them they wanted the car back, Allen testified.

"I said, 'Ted, we shouldn't do that until you get out of the Senate,' " Allen said. He started to explain that his lawyer was also in the room at the time of that conversation, but couldn't finish the thought because the defense objected and the judge sustained the objection. In any event, that conversation would have occurred after the FBI investigation of public corruption in Alaska began focusing on Allen.

The Mustang remains parked in a garage in Seattle, where Stevens shipped it in 1999, Allen said. It's parked at the home of Allen's former girlfriend, Rita Ivanova, and hasn't been driven since Stevens shipped it from Washington, D.C., in 1999, he said.

BEN STEVENS WILL NOT BE NAMED

Allen's courtroom testimony and secret recordings he made of conversations with lawmakers and lobbyists were key to the Justice Department's seven previous successful convictions in a wide-ranging federal probe into corruption in Alaska politics.

If asked during testimony, Allen will not be allowed to specifically name one of the Alaska state lawmakers he pleaded guilty to bribing: former Senate President Ben Stevens, Ted Stevens' son.

In public charging documents connected to Allen's own case, Ben Stevens is referred to as "State Senator B." Allen named Stevens specifically in testimony in the trials last year of two Alaska legislators, but he has been instructed by government lawyers not to call "State Senator B" by name during the proceedings. Ben Stevens has not been charged with any wrongdoing.

U.S. District Court Judge Emmet Sullivan indicated Monday he would allow Ben Stevens to be named, but changed his mind by Tuesday. The government conceded the point without an argument.

Ted Stevens, who is up for re-election Nov. 4 and faces a spirited Democratic opponent, Anchorage Mayor Mark Begich, asked for a speedy trial so he'd have the opportunity to clear his name before Election Day.

Contact the reporters: rmauer@adn.com and ebolstad@adn.com

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