News – Lounges in Washington DC

Tags: Jeanne Harris | Jeffrey Thompson | Vincent Gray

District of Columbia Mayor Vincent Gray was elected in 2010 with the aid of $650,000 in illicit funds from a city businessman, a Gray campaign consultant acknowledged in federal court Tuesday.

Eugenia "Jeanne" Clarke Harris's guilty plea confirmed that off-the-books payments were being used to pay for consultants, supplies and other expenses supporting Gray. The expenditures were never reported, and prosecutors described the effort as a "shadow campaign."

U.S. Attorney Ronald Machen said the plea casts a darker cloud over an election that was already tainted by revelations that Gray campaign operatives made illicit payments to a minor mayoral candidate who was assailing the then-incumbent mayor, Adrian Fenty. Two Gray campaign operatives have already pleaded guilty to their roles in that scheme.

"In 2010, the mayoral campaign was compromised by backroom deals, secret payments and a flood of unreported cash," Machen said. "The people of this city deserve better. They deserve the truth."

Gray defeated Fenty by 10 percentage points in the Democratic primary and cruised to victory in the general election in the mostly Democratic city. Gray ran on a pledge to restore integrity to the office, but he has been engulfed in scandal for nearly his entire term. The mayor has not been accused of any criminal activity and had no immediate comment about Harris' plea.

Although the businessman who supplied the shadow campaign funds was not named in court, two people familiar with the investigation identified Jeffrey Thompson as the source of the funds. The individuals spoke on condition of anonymity because they were not authorized to disclose the information.

Thompson has not been charged. His attorney, Brendan Sullivan, did not immediately return a message seeking comment late Tuesday. He also didn't respond to a message from The Associated Press on Monday.

Thompson is a partner in an accounting firm and the owner of a managed care company that has the single largest contract in district government, valued at up to $322 million annually. He and his network of donors — employees, associates and their relatives — have been major contributors to city politicians. They've also contributed to candidates for federal office, including President Barack Obama, Hillary Clinton and Delegate Donna Christensen, who represents the U.S. Virgin Islands in Congress.

Harris, a public relations executive, is a close associate of Thompson.

None of the shadow campaign funds were reported to the district's Office of Campaign Finance, said Harris, who pleaded guilty to a federal conspiracy charge, a local conspiracy charge and a federal charge of filing a false tax return.

According to Harris' plea agreement, her co-conspirator funneled $653,000 in illicit funds through her public relations firm that she then spent on campaign materials, consultants, supplies and other expenses. The money came in between late July and Sept. 14, 2010, the day of the primary.

Gray raised $2.1 million in legitimate campaign funds for the primary, while Fenty brought in $4.9 million. The shadow campaign cut into that disparity. Some people who worked on the campaign were aware of the off-the-books effort, said Machen, who did not provide further details.

"On the outside, the shadow campaign looked like any other. What made this shadow campaign sinister was how it was paid for," Machen said. "D.C. voters had no idea who was influencing them at the ballot box."

Harris later sought to cover up the way the funds were spent by amending her company's tax returns to claim a nonexistent business relationship between her firm and her co-conspirator's company, court documents show. Before amending the returns, she had improperly deducted the campaign expenditures from her company's returns to avoid having to pay taxes on the money, the documents show.

Harris, 75, can expect to receive roughly 2 ½ to 3 years in prison under federal sentencing guidelines. A sentencing date has not been set.

She also pleaded guilty to conspiring to make $44,000 in straw donations to Gray's campaign and more than $21,000 in straw donations to candidates for federal office in 2008. Her co-conspirator reimbursed her for those donations, the documents show. According to prosecutors, Harris and her co-conspirator have been making straw donations together at least since 2001.

Thompson could have spent large sums of money legally to support Gray by forming a super political-action committee. But Harris said her co-conspirator wished to conceal his funding of Gray from public scrutiny, in part to protect his contracts in case Fenty won.

Harris also admitted that she shredded documents that detailed her and her co-conspirator's involvement in the 2010 mayoral campaign, and that he offered last August to pay for her to leave the country for five years in order to flee the investigation. She refused, but later agreed to leave for three months and made plans to travel to Bahia, Brazil, but the trip was canceled. (FOX News)