Alaska News

Why is lead FBI agent in botched Ted Stevens case still employed?

In late spring 2008, FBI agent Mary Beth Kepner was in the throes of building a case against the late Ted Stevens, then one of the nation's most powerful senators.

The case hinged on whether Stevens lied on his Senate disclosure forms about work he'd gotten done to his cabin in Girdwood, a ski town south of Anchorage, Alaska's largest city. Some of that work had been done by his friend Bill Allen, the head of VECO Corp., then the largest oilfield services company in the state.

Kepner speculated Allen bribed Stevens by remodeling the senator's house when talking to a reporter in spring 2008. But "What was the quid pro quo?" she asked.

In the end, federal prosecutors wouldn't find one. Rather, they'd allude to special favors Stevens did for Allen and VECO in return for the company's remodeling of his cabin when they successfully prosecuted him in fall 2008 for failing to disclose the renovations on his Senate forms.

Yet Kepner's insistence in making a case against Stevens, even if the facts didn't all line up in her favor, coupled with federal prosecutors cutting corners, ultimately led to the judge in the case tossing the guilty verdicts against "Uncle Ted," as Alaskans called him before he died in a 2010 plane crash.

Now, for the first time, Alaskans have a better idea of just what Kepner and her prosecutor cohorts were up to when they conducted their case against Stevens.

An internal report released publicly by the Justice Department in late May outlines transgressions on Kepner's part, ranging from not documenting interviews to hiding evidence from Stevens' legal team.


This misconduct raises the question of why the FBI still employs Kepner. It also helps to vindicate Kepner's former partner -- an FBI agent-turned whistleblower who warned after Stevens was convicted by a federal jury that his partner was reckless on the job.

Joy of whistle-blowing

One of the more dramatic moments in the wake of the Stevens trial came in December 2008, when an FBI agent alleged misdeeds by prosecutors and the lead agent on the case.

Whistleblower Chad Joy, then an FBI agent assigned to Alaska's sweeping political corruption probe, alleged, among other things, that Kepner had hid information that Stevens' legal team should have been entitled to review, leaked grand jury testimony of a government witness, and didn't document interviews.

Joy said in his complaint that Kepner, his partner, acted inappropriately with sources -- including being too cozy with witnesses such as Allen, as well as overly chatty with the media -- while building cases against Stevens and other Alaska politicians. Joy also accused her of failing to properly document for a judge an order for a wire tap.

Joy further alleged that members of the federal prosecution team withheld evidence and even sent a witness back to Alaska from Washington, D.C. -- where Stevens was on trial -- in order to render him unavailable to the defense.

The eight-page memo was the straw that broke the prosecution's case.

In April 2009, under advice from U.S. Attorney General Eric Holder, a federal judge tossed the guilty verdicts against Stevens. Two reports -- one by a private lawyer assigned by the same judge, the other by the Justice Department itself -- documented the case and the allegations. Both reports are now public.

So far, two federal prosecutors based in Alaska at the time of the corruption probe have been fingered for wrongdoing in the botched Stevens case. The proposed punishment for the two is a temporary suspension from work for 55 days. Other members of the prosecution team were found sloppy and reckless, but exonerated.

Much has been made of those prosecutors and their punishments, or lack thereof. Less has been made of what happened to the two lead FBI agents, their roles in the prosecution of Stevens, and what happened to them after the Justice Department report found that at least some of Joy's complaints against Kepner were true.

Bottom line: Kepner is still working for the FBI and is still investigating cases, including criminal probes. Joy, the whistleblower, has left the agency.

Tale of two agents

Kepner has been with the FBI since 1991 and had worked on white-collar crime investigations in Philadelphia before she was transferred to Alaska in 2000.

The Stevens case was Joy's first as an FBI agent. Previously, he had served in the U.S. Air Force as a budget analyst and spent two years at the Department of Housing and Urban Development in Oklahoma.

In his whistleblower complaint, Joy wrote that he was "absolutely outside of my comfort zone."

"I don't want to be punished for coming forward," Joy wrote, adding that, "I hoped my concerns could be looked into without my name being known as the one who started the mess, to avoid any possible retaliation."

Still, the FBI got busy doing damage control as soon as Joy's complaint became public in late 2008. Meantime, Alaskan bloggers and some in the state's media who were hot to see Stevens lose his political power chastised Joy and insinuated that his jealously of Kepner motivated allegations against his partner.

Robert Burnham, second in command at the FBI's Anchorage office who supervised both Kepner and Joy for some time during the Alaska corruption probe, told the Anchorage Daily News at the time that Joy was "meticulous with numbers." Yet, Burnham added that Joy was also "inexperienced and uncomfortable with the discretion that agents in the field sometimes need."

Burnham gave Kepner a more glowing review, telling the newspaper she was a "top-notch, creative investigator." He described her as "dogged and determined and so creative in developing cooperating witnesses, cooperating subjects."


He credited Kepner with moving from an investigation that had initially centered on corruption during attempts to get a private prison built in Alaska to the state's oil patch -- where tens of billions of dollars was at stake over how Alaska taxed the oil on its lands.

She focused on Bill Allen and VECO, a contractor that did work for some of the largest oil companies in the world. And soon she began a spinoff investigation that would rock the state, climaxing with the indictment of Stevens -- at the time the longest-serving Republican in U.S. Senate history and third in the line of succession to the presidency.

Kepner was trying to prove that Allen bribed Stevens by picking up some of the tab on the remodeling of his Girdwood cabin. As Kepner's case was leaked to the media and FBI agents searched his house, Stevens came out and denied the allegations, saying he and his wife had paid all of the bills Allen and VECO sent them.

She and the prosecutors ultimatly couldn't make that case, instead charging Stevens with failing to disclose some $250,000 in renovations to his home and other gifts from Allen, VECO and other friends.

When federal prosecutors finally indicted Stevens in summer 2008, he was up for re-election. Stevens, a lawyer himself, asked for a speedy trial, rolling the dice that he would prevail against the government and win another term to the Senate.

Instead, he lost his case and subsequently lost Alaska's Senate race by just a few thousand votes to then-Anchorage Mayor Mark Begich, a Democrat. Still, the trial had exposed cracks in the federal case against Stevens, and Uncle Ted wasn't giving up.

The aftermath was messy -- his guilty verdicts tossed, the Justice Department's Public Integrity Section tarnished, and prosecutors' reputations bruised (one committed suicide) -- but Stevens won in the end. He lived for another 17 months before dying in a plane crash in the soggy hills of Southwest Alaska in August 2010.

Kepner still an agent with the FBI

Three years after Stevens won his battle against the Justice Department, the branch finally released its own internal review of how it botched the case.


The report -- 672 pages released on May 24 -- hones in on FBI Agent Mary Beth Kepner's conduct in her failed quest to nail Stevens. It also addresses many of the allegations posed by her former partner, Chad Joy, and Stevens's own lawyers.

Many of the conclusions the authors of the report drew about Kepner's action are, however, redacted. So are comments about Joy.

Still, in what the public can read, the report clearly shows a different side to Kepner than the "top-notch" agent, as she was portrayed by her boss, Burnham. The report paints a picture of a woman who kept evidence from the defense, failed to follow FBI protocols, and who was, in her own words, "overwhelmed" and "disorganized" by the case.

The report also said that Kepner forged documents and appears to have lied about doing so.

Similar behavior is evident from nearly everyone involved in the prosecution of Stevens, according to the report. But Kepner's actions are particularly disturbing to those who authored the Justice Department's report.

FBI Director Robert Mueller told members of a U.S. House committee in early May that Kepner was the subject of an internal ethical review tied to her part in the Stevens case. The office that handles such reviews refused to comment when contacted by Alaska Dispatch. So did the Justice Department. Neither Kepner, nor her lawyer, returned calls.

FBI ethics reviews can take years. In the meantime, Kepner remains an active agent with the FBI in Anchorage and continues to investigate criminal cases.

Joy, on the other hand, was informed that he was to be taken off of criminal cases on June 22, 2009. Less than seven months later, on Jan. 2, 2010, he resigned. He sold his house in Eagle River and appears to have left the state. He could not be found for comment.

An illegal investigation?

After the Stevens case was dismissed in April 2009, a separate investigation into one of the many allegations against Kepner was launched.

The claim was that she had failed to tell a judge everything she knew about previous FBI activities in a request for a wiretap. Investigating that allegation was assistant U.S. Attorney Frank Russo, who is based in Anchorage.

Russo was not part of the Stevens case, but he works closely with the other prosecutors and agents who were, including the two who face temporary suspensions. He found Kepner didn't exclude anything "material" in her request to the judge.

Russo did find that that Joy had omitted material on an affidavit he had signed during the Stevens trial.


Those who know why that investigation was undertaken, who authorized it, and why it was so limited, aren't talking.

Kepner was taken off of the Alaska corruption investigation, but remained an agent in Alaska. Joy was taken off of all criminal cases, effectively ending his career, according to those who understand the way the FBI works.

Steve Kohn, head of the National Whistleblowers Center in Washington, D.C., and a lawyer who represents a number of FBI whistleblowers, believes Russo's investigation into Joy's complaint was illegal and should itself be investigated. Since the mid-1990s, Kohn said, there have been specific procedures that outline how to handle whistleblower complaints within the FBI. The procedures, he said, require investigations to be forwarded to the Inspector General for the Department of Justice.

In some cases, the Inspector General refers cases back to the FBI, but not whistleblower complaints. That should never happen, Kohn said.

It is unclear, however, if the Inspector General ever received Joy's complaint. A spokesperson for the agency refused to answer questions about the case, instead referring a reporter to the Justice Department, where another spokesperson refused to answer questions.

When asked for an opinion on whether the U.S. Attorney's Office in Anchorage performed an illegal or inappropriate investigation into Joy's complaint, Karen Loeffler, U.S. Attorney for Alaska, also refused to comment. FBI Alaska spokesman Eric Gonzales did likewise, but said he assumed the Inspector General received the complaint.


In any case, Joy's complaint should never have been investigated by the local office, Kohn said.

"This all very troubling. If someone blows on an issue, they are going to face retaliation," Kohn said. "Part of the defense is always to discredit the witnesses. That's why it's necessary to take the whistleblower case out of the hands of the locals.

"The manager should have known, because oftentimes the agents do not," he added.

Kohn believes the Inspector General should not only look into Joy's original complaint, but should begin an investigation into how the complaint itself was handled.

FBI rules bar a supervisor from taking retaliatory action against a whistleblower. Kohn said that because Joy's whistleblower memo helped trigger the investigation -- one that ultimately led to Stevens essentially be exonerated -- the review of the charges and the decision to take him off of criminal cases was a "retaliatory action."

Former FBI agent Jane Turner was treated much like Joy after she blew the whistle on fellow agents who had taken valuable mementos from Ground Zero following the 9/11 terrorist attacks. She took the FBI to court over her treatment and ended up winning her case against the agency after a jury trial.

When you blow the whistle on the FBI, "it's death by a million paper cuts," she told Alaska Dispatch.

Turner said that agents who violate the FBI's omerta -- those who internally challenge the agency -- are undercut and isolated.

"They do everything they can to get you to quit" she said.

What Joy did

Though much of the information on Joy and Kepner is blacked out in the Justice Department's internal report, there is an open review of one allegation Joy made about a prosecutor scheming to send a witness back to Alaska to keep the defense from interviewing him.

The report concludes that accusation was unfounded.

The witness was Rocky Williams, a VECO foreman who worked on the remodeling of Stevens's home. When interviewed by a reporter in spring 2008, Williams said he wasn't aware of any backroom deals between Stevens and Allen. In fact, he recalled, there was open agreement that everything had to be done above board to avoid any criticism.

Still, prosecutors were planning to call Williams as a witness. But just before the Stevens trial began in Washington, D.C., they asked him questions about the construction in pre-trial interviews, and he gave them answers that would have been favorable to the defense. Williams was at the time sick (he would die a few months later).

According to Joy's complaint, prosecutors used Williams's health problems as an excuse to ship him home. Joy called it a "scheme." Stevens' lawyers later talked to Williams after he'd returned to Alaska. When they realized the significance of what he might have said on the witness stand, they accused the prosecution of deliberately keeping Williams away and asked for a new trial.

U.S. District Court Judge Emmet Sullivan, who presided over the Stevens trial, subsequently ordered a full accounting of what happened. Joy, in turn, signed an affidavit that said Williams was sent home for health reasons.

When interviewed by the Justice Department, Joy said he didn't write the affidavit -- it was written for him, apparently. And though it's true about the scheme, or "plan" as he later put it, the prosecution team "wouldn't have wanted to have that included in his affidavit."

He said that at the time the affidavit was written, he "didn't even consider putting 'the plan' in the affidavit." He seems to be saying that both things are true: that William was sick and needed to go home, but that the prosecution used that as an excuse to send him back.

Another Alaska-based prosecutor in the case, Jim Goeke, who now works in Washington state, seemed to say the same thing to the Justice Department. Goeke, whom the department found to have recklessly withheld information that he learned from Williams, said that because he was a bad witness, Williams was taken off the list.

"That was part of it," he said. "It wasn't the total reason … It was part of it, yes."

Nonetheless, because Joy signed the affidavit, he was, according to the investigation, "responsible for inconsistent statements and material omissions" and taken off criminal cases.

What Kepner did

FBI protocol dictates that when an agent interviews a witness, an official account of the interview -- called a 302 -- must be composed within five days, based on notes taken during the interview.

Mary Beth Kepner, as lead agent, was responsible for ensuring that those interviews were documented and that what was written stuck to the interview as much as possible. If an interview contained material that would help in the defense of a subject, that material would also have to be turned over to defendant's lawyers.

The Justice Department report cites numerous examples of Kepner not documenting her interviews -- in some cases because the interview wasn't favorable to the prosecution. Or, in her words, she didn't document some interviews because "we got no positive information" out of the witness.

Other 302s, the report found, differed substantively from notes taken by others who were present in the interviews. In some cases, she omitted statements. In other cases, she made additions to statements that would bolster the prosecution's case.

After the government repeatedly failed to turn over exculpatory information, Judge Sullivan ordered the Feds to turn over all of the FBI's 302s to the defense.

Because Kepner didn't document all of her interviews, she made them up following the judge's order, "backdating two of the 302s by more than two years, making it appear that they had been prepared the day after the interview when the events would have been fresh in her memory," the Justice Department report said.

In early interviews with the Justice Department, Kepner denied under oath that she had done this. But she later said she remembered doing so: "You know, unfortunately, you know, I was disorganized with this, you know, I was overwhelmed and, you know, I lost materials that had, you know, I lost notes, I lost 302s."

Kepner said she "was totally disorganized at that point in time. I had things everywhere. I had piles everywhere. You know, I'm embarrassed to tell you, but I had things -- they were in disarray."

In all, at least eight interviews she conducted with Bill Allen -- the key witness in the Stevens case and other Alaska corruption cases, including those against former state Reps. Pete Kott and Vic Kohring -- were never documented.

There could have been more interviews that she didn't record. Some of the ones that were discovered were only found because other agents or prosecutors in the room took notes. One interview with Allen was discovered after a technician found Kepner's notebook on a shelf in the FBI's supply room in Anchorage. Even though the judge ordered all of the 302s to be turned over to Stevens' lawyers, the Justice Department report still uncovered interviews that never made it to the senator's legal team.

Upon returning to Anchorage after the trail, one of Kepner's bosses, Dave Heller, spoke to her and another agent who had also backdated interviews about their failure to comply with FBI requirements.

According to the Justice Department report, Heller treated this as a "performance issue," and instructed another supervisor to put notes documenting the offense in their personnel files.

However, when DOJ looked through Kepner's and the other agent's files, the notes weren't there.

And so as of today, Kepner continues to work for the FBI.

Clarification: In an interview for this story, Frank Russo, the prosecutor who conducted the local investigation into agents Chad Joy and Mary Beth Kepner, said that his office had an "obligation to conduct the review to ensure that the rights of other defendants were protected in cases unrelated to Polar Pen."

Amanda Coyne and Tony Hopfinger are the co-authors of "Crude Awakening: Money, Mavericks and Mayhem in Alaska," which details Ted Stevens' political rise and fall, including how the U.S. Justice Department cut corners during his trial. Contact Amanda at or Tony at

Tony Hopfinger

Tony Hopfinger was a co-founder and editor of Alaska Dispatch and was editor of Alaska Dispatch News. He left the ADN in 2015.