Thursday, November 18, 2010

CAMGATE: The Court cases that kicked open the Barn Door

UncleMilty With each passing day, it appears that the investigation into the recruitment of Cameron Newton is a very small part of a much, much larger investigation into corruption, greed and power-wielding in the state of Alabama.  The corruption could span from the state house in Montgomery to the President’s Mansion at Auburn University.  In terms of public information, if you wanted to find one event that kicked the barn door open and shed light on the rat pack’s deeds, this would have to be it.

On October 12, 2010, a Federal Judge in Birmingham, AL denied a motion by Milton McGregor—wealthy dog track owner, casino investor and influential political figure—to seal all documents related to his indictment on charges of bribery and corruption.

Those documents describe all of the evidence against McGregor and his accused co-conspirators, and include transcripts from recorded telephone conversations between lobbyists trying to influence an upcoming vote on statewide gambling in Alabama and legislators who were key swing votes on the bill. Those telephone conversation transcripts include offers of bribes, political threats and discussions of such things as arranging “uh, entertainers” for the indicted conspirators.

While the flow of public information began with the indictment of McGregor and his alleged co-conspirators, the actual genesis of the myriad of investigations began on August 14, 2009, when the Alabama State Banking Department, regulators for state-chartered Colonial BancGroup, seized Colonial Bank and appointed the FDIC as receiver. Colonial filed for bankruptcy protection approximately two weeks afterwards. At its height, Colonial was worth $26 billion. The failure of Colonial was the largest of the year, and was said to have cost CEO Bobby Lowder more than $160 million in personal wealth.  The failure threw the books open to federal regulators and forensic accountants.

Milton McGregor was on the Board of Directors of Colonial BancGroup, as was Patrick Fain Dye, the former Auburn Head Football Coach and Athletic Director, who still maintains an office on the campus at Auburn University. McGregor has donated at least $1 million to the University for facilities construction. Lowder however, was the big dog in the pack. Lowder sits on the Board of Trustees for the University, and has been accused of micromanaging and interfering with every aspect of the University’s existence, from academics to athletics.

On June 15, 2010, after nearly a year of investigations, depositions and grand jury hearings, the Department of Justice indicted Lee Farkas, Chairman and CEO of Taylor, Bean & Whitaker Mortgage Corp, which at the time was one of, if not the largest originator of home mortgages in the country.  Farkas and Taylor Bean were one of Colonial's largest customers, using Colonial’s “warehouse” lending unit to finance the origination of mortgages which Taylor Bean then packaged and sold to Fannie Mae and Freddie Mac.  Farkas was indicted on multiple counts conspiracy and fraud, with the biggest charge of attempting to defraud the United States Government’s Troubled Asset Relief Program (TARP).

image According to the indictment, Farkas and an unnamed “Colonial Bank Officer” conspired and engaged in a complicated check kiting scheme to conceal Taylor Bean’s nefarious financial dealings.  Later, as things began to unravel during Spring 2009, court documents show that Farkas conspired with a “Senior BancGroup Officer” to conceal a fraudulent scheme to obtain TARP funding from the government.  It is not known who the “Colonial Bank Officer” was that helped Farkas conceal transactions from regulators.  The “Senior BancGroup Officer” is believed to be Bobby Lowder.

It is also believed that during the course of the investigations of Colonial and Taylor Bean, federal agents became interested in and learned details of the political scandal that erupted in the state during the 2010 Alabama Legislative Session.  On the agenda for the session was a controversial bill to allow casino-style gambling in the state. McGregor, a race track owner and casino investor, was naturally an ally of that legislation and deployed an army of lobbyists to influence the vote.  Those investigations culminated in the indictment of McGregor, his lobbyists, and four state Legislators on charges of fraud, extortion and bribery. As mentioned above, a major portion of the evidence against the McGregor Gang are dozens upon dozens of recorded phone conversations between McGregor, his lobbyist army and the Legislators they sought to compromise.

There has been some speculation that these two investigations are unrelated; that the FBI learned of the impending pay-for-votes scheme independently of the Colonial investigation. However, it’s important to note that both cases were handled from the Washington DC office and all indictments and court filings in both cases are with the Federal Court in Alexandria, Virginia.  US Attorney office sources, speaking on the condition of anonymity, have said that it is customary for separate offices to forward cases to the office or region in which the possible criminal activity is believed to be taking place, and that having the court in Alexandria handle both indictments is telling.

There is further speculation that the federal agents’ interest in the Cam Newton recruiting saga is also independent. There is scant information to support this conclusion, but more than ample circumstantial information to suggest that it’s part of the probe that first started with the fall of Lowder’s banking empire. 

Some sources of unknown credibity allude to taped conversations between a current Auburn coaching staff member and one or more of the indicted conspirators, in which the coaching staff member makes much more incriminating statements. Those statements are left unrepeated until their legitimacy can be established.

This is why it appears that the Auburgeddon that appears to be looming on the Plains is so much bigger than one star quarterback and a father with his hand out. This is also why the Cam Newton investigation is certainly not an orchestrated campaign by enemies of Auburn University or jealous conference competitors. It’s not really about Cam, and it never was.  It also didn’t start when John Bond went public, or when ESPN and the New York Times ran their stories about the pay-for-play deal on November 4.  This has been going on since August 2009, and it’s not about football.  


Anonymous said...

This article had so much promise until your sole connection between the Newton investigation and the political investigation comes from an Alabama message board post.

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