Some are using a stalking horse to undermine ethics laws

By Bill Britt
Alabama Political Reporter

The greatest challenge before the Alabama State Legislature when it returns in February is not the budget, schools or Medicaid. It is the slight of hand chicanery used to undermine the State’s ethics laws.

Since the conviction of former Speaker of the House Mike Hubbard on 12 felony ethics violations, a coordinated effort has been underway to weaken those laws, with particular focus on how they identify a “principal.” Read More

State May Come After Hubbard’s Assets

By Bill Britt
Alabama Political Reporter

MONTGOMERY—Under the 2014 Forfeiture Act, the State can seize Mike Hubbard’s assets, because they were used in the commission of a crime. Hubbard, on June 10, was found guilty of twelve felony counts of public corruption for which he faces up to twenty years in State prison, and $30,000 in fines for each count.

The Criminal Proceeds Forfeiture Act provides that “any property, proceeds, or instrumentality of every kind, used or intended for use in the course of, derived from, or realized through the commission of a felony offense, as defined in this act, or as inducement or attempt or conspiracy to commit such offenses, is subject to civil forfeiture.”
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More Indictments Likely

By Bill Britt
Alabama Political Reporter

MONTGOMERY—When asked if there would be more indictments, Acting Attorney General W. Van Davis said, “No Comment.” That statement should strike fear in the heart of anyone named in the counts on which Mike Hubbard was found guilty.

Hubbard was found guilty on seven counts of receiving a thing of value from a lobbyist or a principal under Section 36-25-5.1 (a) which forbids “[a] public employee or public official or family member of the public employee or family member of the public official shall solicit or receive a thing of value from a lobbyist, subordinate of a lobbyist, or principal.”
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Hubbard Trial Day Seven: Only The Jury Knows

By Bill Britt
Alabama Political Reporter

OPELIKA—On Day seven of the Speaker Mike Hubbard criminal public corruption trail, we heard testimony from Bobby Abrams, Rob Burton, and Jimmy Rane.

Abrams, who owns the company Capitol Cups, paid Hubbard $10,000 a month ostensibly to sell cups. Abrams admitted that if Hubbard had secured the letter for his patent in a timely fashion, it would have saved him millions of dollars. And while Hubbard was successful in moving the process forward, it was too little-too late; but he really appreciated his help. It was evident that Hubbard would not have had any success if he were not Speaker of the House.
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Special Grand Jury Still Empaneled to Investigate Hubbard, Others

By Bill Britt
Alabama Political Reporter 

MONTGOMERY—After months of testimony, millions of pages of documents, and 23 felony indictments retuned against the Speaker of the House, Mike Hubbard, the Lee County Grand Jury still remains empaneled.

In the latest court filings in the lead-up to Hubbard’s criminal trial in October, it was revealed that the Special Grand Jury in Lee County continues to meet as “an investigatory body charged with the responsibility of determining whether or not a crime has been committed.”

Hubbard criminal defense attorney J. Mark White has accused the State of continuing the Grand Jury as a means to “intimidate and menace” his client and others. The prosecution dismissed White’s argument stating, it has every right to continue to investigate wrong doing.

White claims the Special Grand Jury can no longer be employed to gather evidence against Hubbard. The State agrees that it can no longer use the Grand Jury to investigate the 23 felonies already filed against Hubbard, but has a legal right to investigate whether “Hubbard or other individuals have taken other actions that fall within the Grand Jury’s jurisdiction that could be charged in another indictment.” 

In a letter from Attorney General Luther Strange to Supernumerary District Attorney W. Van Davis, dated January 31, 2013, the mission of the investigation is related in broad terms: “…to assume oversight of the State’s interests in the current investigative matters relating to State Representative Mike Hubbard to include all criminal matters arising from that investigation.”

In answering White’s motion to dismiss, the State makes it known that not only is the Lee County Grand Jury still at work, but that it continues to inquire into other potentially illegal activities, which may involve Hubbard and others under its original purview.

The prosecution stated in its Monday filings, grand jury investigations are “not fully carried out until every available clue has been run down and all witnesses examined in every proper way to find if a crime has been committed.” 

With approximately six months to go before Hubbard’s criminal trial on felony charges of public corruption, the Grand Jury may still bring up more charges against him and others in related criminal matters.

 

New Court Filings Show Matrix of Overlapping Attorneys May Have Shared Privileged Information

By Bill Britt
Alabama Political Reporter 

MONTGOMERY—Motions filed Monday in the felony case against Speaker of the House Mike Hubbard show, that through a complex structure of attorneys, Hubbard and others were able to share information about the inner workings of the Grand Jury investigation that led to his criminal indictments.

On Friday, Hubbard’s criminal defense team filed a Supplement to Motions to Dismiss Indictment based on Prosecutorial Misconduct and Support of its Motion to Quash.

Monday, the State responded with more revealing information about the investigation into Hubbard, who is charged by the State with 23 felony counts of public corruption.

A matrix of overlapping attorneys seems to have allowed a free flow of secret information between Hubbard and individuals who have been named as material witnesses in the Hubbard indictments.

These latest revelations show a pattern emerging that suggests not only was team Hubbard receiving confidential information under the guise of attorney/client privilege, it also reveals that four of the seven individuals named in the Hubbard indictments shared attorneys. 

The individuals who shared counsel with ties to Hubbard were Will Brooke, Jimmy Rane, Bob Riley and Minda Riley Campbell. These individuals are named as material witnesses by State prosecutors. 

Attorney General employee Claire Haynes, who was formerly employed by the Business Council of Alabama (BCA), also shared an attorney with ties to Hubbard’s team, according to the court filings.

“The only time you see arrangements like this is generally a mafia trial or large drug conspiracies,” said a attorney who spoke on background.

According to the latest filing, when Brooke appeared before the Lee County Grand Jury he was accompanied by his attorney, “Mark White – the same attorney representing Hubbard. Similarly, Jim Pratt, another attorney representing Hubbard, accompanied Jimmy Rane during his appearance before the Grand Jury. Also, Hubbard’s attorney, Rob Riley, represents both Bob Riley and Minda Riley Campbell and accompanied both of them to grand jury.” 

Rob Riley, the son of former Gov. Bob Riley, is represented by Bill Athanas, who once served under Chief Matt Hart when he was head of the White Collar Crimes Unit for the US Attorney’s Office in Alabama.

Haynes, who serves as legislative affairs director for the Attorney General’s Office, is represented by Michael Kidd.

Kidd sent a letter to the State on behalf of Haynes and copied the Court and counsel for Hubbard, Mark White.

“Strikingly, the version of the Kidd letter attached to Hubbard’s Supplement is different from the version the State received directly from Kidd, a copy of which is attached as Exhibit B,” states the prosecution.

The version attached to the recent filings by Hubbard’s attorney White is on different letterhead and was not signed, giving the impression that White had a copy ahead of time, or even, perhaps, wrote the original draft and forwarded it to Kidd for signing.

On several occasions, White has questioned the propriety of witnesses being questioned about why they selected a particular attorney, who suggested them and who was paying them.

The State has responded by saying, “Hubbard sharing legal counsel with these witnesses by itself provided a basis for the grand jury to inquire into the circumstances of the legal representation of those witnesses.”

Of course, this raises a larger question put forward by the prosecution: Why would some of the State’s leading white collar criminal defense lawyers not reveal the overlapping representation between Hubbard and their clients? 

A Motions Hearing is set for later this week on April 15.

In what increasingly appears to be a desperate attempt to avoid a criminal trial, Hubbard has offered memos by disgraced former Deputy Attorney General Henry T. “Sonny” Reagan, to show prosecutorial misconduct. Even though it has been revealed in court documents that Reagan was leaking Grand Jury information to Hubbard and the Riley’s as early as 2013.

The latest revelation about the matrix of attorneys will surely raise eyebrows, as the case marches toward the trial in October.

 

Hubbard Cries Poor With Millions In Assets

By Bill Britt
Alabama Political Reporter

MONTGOMERY—Documents released on Friday by the State’s prosecution in the corruption case of Speaker of the House Mike Hubbard show that Hubbard claimed he was on the brink of financial ruin, even though he had millions in personal assets.

Emails released, at the request of Hubbard’s criminal defense attorney, J. Mark White, paint a picture of a man desperate to earn money by receiving financial support from former Governor Bob Riley and some of the State’s wealthiest individuals. These documents were made public at the request of Hubbard’s legal team, as part of a motion for a more defined statement of indictments made to Lee Count Circuit Judge Jacob Walker III in December 2014, who imposed a dateline on the prosecution to respond by February 27, 2015.

In emails from 2011 and 2012, Hubbard expressed a fear of impending financial ruin if he did not find employment and investors in his business interest, Craftmaster Printers, Inc., even though his net worth ran into the millions with liquid assets in the hundreds of thousands.

The court filing contains a copy of Hubbard’s personal finance statement given to Regions Bank, in which he states total assets of $8,380,000. He lists his personal net worth as $7,778,000, with liquid assets totaling $865,000 (liquid assets meaning cash or its equivalent) with an annual income of over $400,000.

Hubbard’s personal finance statement was included in a request for extension contract for a $600,000 revolving line of credit for Craftmaster Printers, Inc., which it had received from Regions Bank in February 2009 extending the maturity date to April 12, 2013. The remaining balance was $534,000.

Hubbard had other restructuring agreements including a bankruptcy of Craftmaster as reported by this publication in 2012.

The agreement with Regions bank outlines the “turnaround” strategy that Hubbard had proposed to the bank. The extension of the loan from Regions was to be secured by Craftmaster’s accounts receivable which the bank listed the gross annual revenues at $4,129,000—total amount of receivables was $720,000 of which $699,000 was current.

The terms of the loan’s extension are laid out with an enumerated statement of the turnaround process.  “Our extension agreement will retain the basic terms and require the following:”

LIST TERMS 

1) completion of the plan to raise $1.5 prior to 12/31/12

2) Regions retains the right to engage a turn around consultant to analyze the plans

3) complete debt repayment plan

4) complete conversation of existing shareholder debt*

5) borrower to provide monthly borrowing base report

6) Regions took a security interest in all equipment and inventory

7) maintain an advance rate of 85 percent on accounts receivable

(*The current shareholder debt that totaled $898,500 was converted to $68,000 shares of common stock and $35,000 in preferred share options to be distributed equally among Hubbard, Whatley and Dye. The value of the stock to these three shareholders was valued at $299,500)

According to the extension application, Hubbard’s business interest owed Southern States Bank $465,000, Heidelberg Press $326,000, delinquent payroll taxes $350,000, note to P. Cole $9,000, and Regions loan reduction $350,000.

According to the Regions document, due to the cash flow shortage during FY2011, “the borrower [Hubbard] slowed in payroll tax payments and is currently delinquent for approximately $350,000.”

Withholding tax, as it is commonly referred to, is the amount of an employee’s pay withheld by the employer and sent directly to the government as partial payment of income tax.

As emails released by the State show, Will Brooke, financial adviser for Harbert Management Corporation and BCA Board member, was solicited by Hubbard to help him raise the needed capital.

A series of emails recount how Hubbard pursued and then persuaded Brooke and others to provide him with financial help.

Hubbard emailed Brooke on September 6, 2011, and said: “I know you have a lot more important things on your mind, but I wanted to touch base on my situation that we discussed a few weeks ago to see if you’ve had any more thoughts. I am starting to get very nervous and am anxious to pursue any options you might suggest.”

In another email dated March 19, 2012, Hubbard expressed that his work as Speaker was very time ­consuming and did not generate much income (Hubbard’s legislative salary and expenses totaled $71,000 in 2012). He also explained that his IMG contract was ending at the end of March. After expressing those concerns, Hubbard explained that he needed financial favors from Brooke in order to avoid resigning his position as Speaker and a member of the House, “…As you know, my concern is financial and the fact that serving as Speaker consumes a enormous amount of time and generates virtually no income. I have been in discussions with Governor Riley and believe I would have an opportunity to work with him and his company if I were to give up being Speaker and resign from the Legislature. Although I believe I am making positive changes in Montgomery, I need to think of my obligations to my family. Please keep me in your thoughts as I make this decision.”

On September 4, 2012, Hubbard’s email says that he is anxious to hear your thoughts, but I believe if I take the reins of the business, rIse [sic] the capital necessary to eliminate the debt—and most importantly take care of the tax debt—I can turn the company around. Failure is not an option as it means personal and political ruin.”

Brooke’s response to Hubbard’s email indicates that he was eager to help Hubbard fix his money problems to ensure that Hubbard would keep his job as Speaker: “There should be a solution to this. I have spoken to many business people about it, and have found no answer. I even spoke to Governor Riley about it, and he told me that you two had discussed it and were working on some options. I did not realize that path would lead to your resignation but, on reflection, I guess that is a given. It is quite a quandary.”

As a result of these pleas from Hubbard, Brooke gave Hubbard a free financial investment plan and advised Hubbard to raise $1,500,000.00 in capital from ten investors at $150,000.00 per person. In exchange for the money, each investor would be given preferred stock in Craftmaster, which would pay the investor interest and dividends over time. Hubbard later explained the plan to Riley in an email, “With regard to the Craftmaster deal I mentioned to you on Thursday, Will Brooke has helped me put together a scenario that I believe will work. If I can find 10 people to invest $150,000 (total of $1,500,000), I can pay all of the back payroll taxes, virtually all of the remaining debt (including 1/3 of the LOC) and free up roughly $40,000 per month in cash flow. The offer is to pay a 6% return on the investment beginning 3 months after the investment with a payback of the original $150,000 in five years.”

After meeting with Regions bank’s Trouble Asset Division, Hubbard emailed Brooke that he “laid out the plan that [Brooke] developed” in “a meeting with the [Regions’] Trouble Asset Division.”

In addition to providing the free financial plan, Brooke also personally invested $150,000.00 in Craftmaster. That is, even though Brooke is a “principal” for the BCA, Hubbard solicited and received from Brooke a free financial investment plan for Craftmaster and a $150,000.00 investment in Hubbard’s failing printing business.

Hubbard did so with the clear implication that Brooke’s failure to help Hubbard would very likely result in Hubbard stepping down as Speaker.

Hubbard also solicited the President and CEO of Stern Agee, Jim Holbrook, who, like Brooke, is a “principal” under the Ethics Law. Hubbard emailed Brooke as follows: “I met with Jim Holbrook today in B’ham. It went very well. He indicated that he would almost certainly do one of the $150,000 deals and may have its investors who would be interested on one []or two more!”.

In September 2012, Hubbard solicited Jimmy Rane, also a principal under the Ethics law, to participate in the Craftmaster investment scheme. When Hubbard approached Rane about the investment, Rane told Hubbard to speak with Great Southern Wood’s “financial person” Gene Woodham.

Hubbard told Rane that “failure is not an option…”.. In that same email, Hubbard added that Rane’s “[p]articipation would be a huge help.”(I d.). After Woodham signed off on the investment, Rane invested $150,000 of his personal funds in Craftmaster.

Hubbard also solicited Rob Burton, the CEO of Hoar Construction and principal under the Ethics Law, to invest in Craftmaster. In one of the emails Hubbard sent to Burton in the course of soliciting his investment, Hubbard wrote as follows: “I just wanted to check in with you regarding the investment in Craftmaster. I have received the money from three (3) of the six (6) investors thus far and am trying to get it all in so we can pay off Heidelberg (at a discount) as well as the other parts of the plan I outlined for you.” Burton later invested $150,000 of his personal funds in Craftmaster.

Hubbard’s solicitation and receipt of financial favors from lobbyists and principals to help Auburn Network obtain more clients: Counts 20-23.

 

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