Eroding defense…
by James A. Bacon
The McDonnell trial resumed yesterday as the prosecution brought in more witnesses to dot i’s and cross t’s on its case that Maureen and Bob McDonnell conspired to grant official favors to Star Scientific President Jonnie Williams Sr. in exchange for more than $150,000 in loans and gifts. There were no big surprises in the day’s testimony, but details emerged that put the spotlight, long focused on Maureen’s outrageous behavior, back on Bob.
We now have a clearer idea of what a drain the real estate investments caused for the first family, which relied primarily upon Bob’s $175,000-a-year governor’s salary to pay its bills. We also have a better idea why Bob was so eager to obtain those $70,000 in real estate loans from Williams.
Last week, I laid out some numbers suggesting that the cost of maintaining McDonnells’ house in the West End of Richmond was costing the family roughly $1,000 more than it could generate in rent.
Yesterday’s testimony alluded to the fact that the McDonnells also owned a propertycalled Blue Ridge Heaven in the Wintergreen mountain resort — providing more evidence of the family’s financial over-reach. While Wintergreen does rent out privately owned properties, generating some income for absentee owners, it is entirely possible that Blue Ridge Heaven also represented another drain on family finances.
The most interesting testimony came from Michael Uncapher, recently divorced from McDonnells’ sister Maureen. He testified that Bob and sister Maureen had purchased two houses across the street from one another in Virginia Beach as a gathering place for the McDonnell clan. Although they planned to rent the houses, the 2005 purchase was never seen as a money-making investment; the property was primarily for the family’s enjoyment.
Bob’s sister, it transpires, is a successful business executive. According to Uncapher, she earned more than $500,000 in 2012 — a fact the defense elicited to counter the prosecution’s claim that Bob and (wife) Maureen were financially desperate. Her ability to meet her share of the obligations was never in question. Only a few days after Bob accepted loans from Williams, she earned a $70,000 bonus.
The defense seems weak. MoBo Real Estate Partners was experiencing difficulties. Between 2008 and 2012, the business was losing between $50,000 to $60,000 a year. Under cross-examination, Uncapher, who had managed the two properties, conceded that his financial mismanagement contributed to the partnership’s money problems. The partnership borrowed $100,000 from McDonnell’s father John in 2007 and another $50,000 from Dr. Paul Davis, a radiologist in 2009 before borrowing $70,000 more from Williams in 2012. If piling up $220,000 in extra debt over seven years is not a sign of financial desperation, what is?
While many of the first couple’s financial problems can be laid at the doorstep of the free-spending first lady, MoBo was a partnership between Bob McDonnell and his sister, the stated purpose of which was to create a place where the families of brother and sister could enjoy vacation time together. There is nothing in the testimony that wife Maureen had anything to do with that investment. While the circumstances are still unclear, my working hypothesis is that the Virginia Beach real estate investment was Bob’s doing.
I’m surprised the prosecution hasn’t done a better job of piecing together the McDonnell family finances. Maybe we’ll see more testimony as the trial continues. As a juror, I would want to know exactly how much money the McDonnells owned on their Wintergreen, Henrico and Virginia Beach properties, how large their Principal/Interesting/Taxes/Insurance payments were, how much they were spending on maintenance, how much they were generating in rentals, and how big the negative cash flow was. The drain could have been immense, and it could explain a lot of the McDonnells’ behavior.
Update: Subsequent testimony revealed that late fees were imposed 18 times for late payment on the smaller of the two beach house mortgages and 29 times for the larger loan.
