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Stealing the Statehouse

Updated: Hubbard Enters Session Under Cloud of Grand Jury Investigation

Bill Britt

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By Bill Britt
Alabama Political Reporter

It is said there is nothing new under the sun. So it is that Alabama lawmakers returned to Montgomery this week again under the noxious cloud of an investigation into alleged government corruption. Only this time the stench is drifting from a Republican-controlled House.

Speaker Mike Hubbard is the apparent subject of an Attorney General’s probe into whether state laws were broken when perhaps millions were funneled from the Alabama Republican Party and other PACs to companies owned by Hubbard during his tenure as ALGOP chairman.

Hubbard – who not long ago proclaimed himself the corruption-fighting “new Sheriff in town” –has in the past denied any wrongdoing.

Tuesday was the first official gathering of legislators since a Special Grand Jury began hearing evidence, including financial records from the Alabama Republican Party during Hubbard’s reign. And the anticipation that comes with a fresh legislative session was notably darkened by increasing paranoia, particularly among House Republicans once close to Speaker Hubbard.

“When I came here I was new to how I believed in the leadership operated,” said a freshmen representative, who did not want to be identified, “now, that I know what is really going on, I am keeping my distance [from the speaker], frankly I’m scared that I may be some how involved and didn’t know it.”

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At the heart of the investigation are the many ways Hubbard used campaign funds either directly from the PACs he controlled or indirectly—as in the case of  subcontractor to notorious political operatives, called Majority Strategies, based in Ponte Vedra, Florida—to enrich himself.

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As the state investigation proceeds, the Alabama Political Reporter has continued to examine the flow of cash from the state Republican Party, various political organizations and legislative candidates to businesses and PACs controlled by Hubbard.

Our reporters have identified hundreds of thousands of dollars in payments to Hubbard’s companies – transactions that are in addition to those currently being examined by investigators. But it remains unclear exactly how much money Hubbard profited, personally, and to what extent his businesses were propped up political money during the historic 2010 elections.

Here we are examining Hubbard’s  2010 use of PAC transfers to an anti-gambling group that waged a $1 million-plus campaign against the “Sweet Home Alabama” plan to regulate e-bingo.

At the height of the 2010 anti-gambling fervor, Hubbard used PAC-to-PAC transfers to funnel more than $400,000 to an anti-gambling group linked to Indian gaming casinos in Alabama.

The group, Citizens for a Better Alabama (CBA), in turn hired Hubbard’s private companies to create and saturate the Alabama airwaves with anti-gambling ads – some or all of which were produced by one of Hubbard’s privately owned companies.

Citizens for a Better Alabama

Citizens for Better Alabama (CBA) was a Birmingham-based, tax-exempt group that was the public face of opposition to Sweet Home Alabama, and to shut down legal casinos operated at VictoryLand and Country Crossings. According to archived versions of its website, the CBA – run by Birmingham lawyer A. Eric Johnston – has “been an advocate for the family since 1991.

But its origin, funding and objectives are never quite transparent.

According to the Associated Press, CBA started out as “Citizens Against Legalized Lottery” but changed its name in 2001 after an investigation by the U.S. Senate Committee on Indian Affairs disclosed the group was “a vehicle by which Mississippi casino interests opposed legislation in Alabama that threatened their market share on gaming.”

Nearly a decade later, in 2010, the CBA surfaced again in a bitter and expensive campaign against VictoryLand and Country Crossing. Again, it used Indian gaming money, in part, to fund its political battle. The Montgomery Advertiser reported late last year that the Poarch Band of Creek Indians gave $100,000 in 2010 to a national Republican organization the same day that organization donated $100,000 to CBA.

According to the Advertiser, “a check log from the Republican State Leadership Committee shows the group received a $100,000 check from the Poarch Band of Creek Indians on June 10, 2010. State campaign-finance documents filed by the RSLC show the GOP group made a $100,000 donation that same day to Citizens for a Better Alabama.”

For Speaker Hubbard, Opposing Gambling is Good Politics and Even Better for Business…

Speaker Hubbard’s role in raising money for – and receiving money from – the CBA group is only beginning to be fully explored.

Based on 2010 campaign finance and other records, the CBA was a crucial aspect of Hubbard’s political strategies – and a potentially lucrative aspect of his financial bottom-line.

According to the IRS Form 990 tax returned filed by CBA for 2010, the tax-exempt 501c4 group took in a little over $1 million in donations.

Of that amount, $413,750 came from Hubbard’s personal leadership PAC – the Auburn-based Network PAC – between February and October 2010.

Here are a few of the PAC to PAC transfers that went to CBA and then to at least one owned Hubbard businesses :

February 2, 2010:  Alabama Republican Party (controlled by Mike Hubbard) sends $50,000 to Network PAC (controlled by Mike Hubbard)  http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0109997.PDF

NETWORK PAC shows receipt of the $50,000 from the Alabama GOP THE SAME DAY (2/2/2010) http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110802.PDF

and immediately writes a check to CBA THAT SAME DAY (2/2/2010) http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110805.PDF

On 2/1/2010 Sanford P. Brass, the CEO of Gulf Coast Asphalt – who now employ BOB RILEY as a lobbyist – wrote a check for $50,000 to NETWORK PAC http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110802.PDF

The NEXT DAY (2/2/2010) that $50,000 was passed on to CBA http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110805.PDF

The $155,000 passed through NETWORK PAC to CBA on March 1, 2010 is a truly remarkable example of political money laundering.  MIke Hubbard ran precisely $155,000 through 5 PACS (three of them controlled by Bob Riley’s nephew and niece, one controlled by Riley’s political consultant Dax Swatek, and one controlled by Hubbard himself) BACK INTO NETWORK PAC and then sending that exact $155,000 to CBA.

Here is how it worked:  The Alabama Republican Party contributed exactly $35,000 to AGPAC (controlled by Bob Riley’s nephew Johnny Adams and his wife Kim Adams) on 2/18/2010 http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0111353.PDF

AGPAC then wrote two checks (the next two written after receiving the money from the state GOP) to NETWORK PAC for $20,000 on 2/26 and 23,000 on 3/1 (total $43,000) http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0111355.PDF

Then the AL GOP wrote a check to Common Sense PAC (controlled by Riley nephew Johnny Adams – again on 2/18 – for $25,000 http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0113497.PDF

On 2/27 Common Sense PAC wrote a check for $8,000 to Network PAC and on 3/1 wrote a check for $11,000 to Network PAC ($19,000 total) http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0113498.PDF

Victory PAC – controlled by Riley nephew Johnny Adams and his wife Kim – was next, getting $45,000 from the Alabama Republican Party (again on 2/18/2010) http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0113500.PDF

This money was passed on to Hubbard’s Network PAC disguised as three checks – one for $2500 on 2/26, one for $22,000 on 2/27, and one for $21,000 on 3/2 ($45,500 total)  http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0113501.PDF

Dax Swatek – longtime consultant for both Bob Riley and Mike Hubbard – received $15,000 from the AL GOP for his DSA PACon 2/16  http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0111592.PDF

He passed $9,000 of that along to Network PAC on 2/27 http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0111593.PDF

The Alabama GOP itself directly passed along $35,000 to NETWORK PAC on 2/17 http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110802.PDF

The Alabama GOP – controlled by Mike Hubbard – contributed precisely $155,000 to NETWORK PAC and the 3 PACS controlled by Bob Riley’s nephew and niece and the PAC controlled by his political consultant – all between 2/16/2010 and 2/18/2010.

AGPAC – $35,000; AL GOP – $35,000; Common Sense PAC – $25,000; DSA PAC – $15,000; Victory PAC $45,000.  TOTAL: $155,000

These PACS then turned over almost that exact sum to Hubbard’s NETWORK PAC ($151,500) and Hubbard DID give exactly $155,000 to CBA on 3/1/2010. http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110805.PDF

And on 3/17 2010 the Alabama GOP gave $57,000 to NETWORK PAC – money that had originated in a $150,000 donation from Poarch Creek Indian money conduit RSLC PAC on 3/18 http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110567.PDF  and then was split into a $93,000 donation to Bob Riley’s GOV PAC and a $57,000 donation to Hubbard’s NETWORK PAC dated 3/12/2010 http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110569.PDF ; this money also ended up being passed to CBA http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110805.PDF  on 3/17/2010.

The contributions are rife with irony. Consider that in February 2010 Hubbard said of ethics reform proposals before the legislature, “PAC-to-PAC, that’s going to end. I’m not someone who wants to limit what people or groups can spend supporting the people who they want in office, but whatever anybody contributes should be known. I think we want transparency. I know the word gets used a lot. But that’s really what we’re talking about, pulling the curtain back and seeing where the money comes from and where it goes,” Hubbard was quoted as saying in an AL.COM story.

But while PAC-to-PAC transfers were legal, and practiced by Democrats and Republicans alike, the Hubbard transfers were unique because an unknown amount of the money ended up with Hubbard businesses.

The CBA does not disclose in its tax returns, or in state filings for the Political Action Committee it operated at the time, where it spent more than $1 million in contributions. However, Hubbard has acknowledged that the advertising wing of his family of businesses was hired by the CBA.

CBA raised and spent over $1 million in 2010 after never taking in over $50,000 in a year ever before.  The contributors do not appear to be listed but on this form at “part IV, line 2” it indicates that this form MUST include a list of contributors (“schedule b”).  It does not. Link for the 990: http://www.guidestar.org/FinDocuments/2010/631/031/2010-631031538-07846083-9O.pdf

In an April 2010 story in the Huntsville Times, Hubbard said that his media companies were placing anti-bingo advertising for the CBA. The Times reported that “even though his company is benefiting financially from placing the anti-gambling ads, Hubbard said “that would not stop him from voting” on the bill to allow voter referendum on legalized gambling. http://blog.al.com/breaking/2010/04/leftover_riley_pac_money_would.html

According to the waka.com website, in February 2010 (when Hubbard’s PAC money began flowing to CBA) the group began airing the first of its statewide ads. “CBAs spots accuse gambling interests of misleading Alabamians to approve a tainted casino bill,” waka.com reported.  http://www.wakacbs8.com/news/1167-bingo-battle-extends-to-tv-airways.html

Anti-Gambling Deal Under Scrutiny? 

The Attorney General’s investigation appears to focus on spending by the ALGOP and other Hubbard controlled PACs during Hubbard’s tenure as chairman. Those close to the Attorney General’s office say that these types transaction between Hubbard and CBA are part of the on going investigations, into allegations that Hubbard enriched himself using campaign contributions.

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