Attorney General Corbett announces criminal charges in second phase of legislative investigation - Part 2
The grand jury found that one of the largest and most successful of the campaign programs produced by GCR for the caucus was "Candidate Connect," which became a highly sophisticated computer program designed to guide, instruct and assist Republican candidates from start to finish on their campaigns. Candidate Connect was the idea of Feese staffer Al Bowman, who retained oversight and controlled the program throughout its existence.
The grand jury found that Candidate Connect became one of the fundamental campaign tools for the HRCC. The HRCC worked in 40 districts, while assisting many others through the assistance of Candidate Connect.
The development and maintenance of the Candidate Connect software, which had no constituent purpose, was used in campaigns from 2004 through 2006 and cost the taxpayers $1.4 million.
The program was deemed a success because it achieved its primary goal of providing valuable assistance to individual campaigns in a cost saving manner to the HRCC. Requests for access to Candidate Connect or assistance in operating Candidate Connect all came through Al Bowman and Jill Seaman.
GCR and Aristotle
The grand jury found that both GCR and Aristotle produced constituent service programs for use by the Republican Caucus members and their staffs. GCR's program was called RepNet, which was later replaced by Aristotle's CS-4 program.
The grand jury found that the caucus paid GCR $9,286,980 from 2001 through 2007, approximately $4.5 million of which was for work on campaign programs such as BlueCard, TelStar/Election Day Complete, Enterprise Database, The Edge, Candidate Connect and Contribution Tracker.
Aristotle received $6.2 million from the caucus, of which the majority was for their work on campaign programs such as BlueCard, ODS, and DataCon.
Label and Lists, Constituents Direct and Weiss Micromarketing
The grand jury found that the caucus spent millions of dollars purchasing voter data from private vendors to fuel the campaign programs such as the Enterprise Database, The Edge and Candidate Connect. The three primary vendors were Constituents Direct, Weiss Micromarketing and Labels and Lists.
Constituents Direct primarily obtained e-mail addresses of registered voters for the caucus and developed a web-based system to distribute the e-mails. From 2002 to 2007 they were paid $3,756,000.
Weiss Micromarketing Group is owned by Michael Weiss, a marketing and demographics expert. Through detailed analysis of voter data, Weiss developed predictive models for elections in legislative districts, including Perzel's, and developed plans on how the segmentation of voter data could help with fundraising, campaign advertising and get out the vote efforts. Weiss was paid approximately $400,000.
The caucus paid Labels and Lists, a leading national vendor of publicly accessible information about individuals, $500,000 for voter data purchases.
Republican Information Technology Staff Costs
The grand jury heard that virtually every member of the RIT between 2000 and 2007 provided direct evidence of the misuse of public resources. Many of the workers testified that they spent between 40 to 70 percent of their time dedicated to campaign efforts.
William Tomaselli, who was a close aide to Perzel, testified before the grand jury that he had been deeply involved in many of the campaign activities in the RIT office. Tomaselli stated that in 2007 he conducted an extensive study of the historical work and salaries of caucus employees and that from 2001 to 2007, RIT staff members spent approximately $800,000 working on campaign projects.
Perzel's Dirty Tricks Against Republicans
The grand jury found that Perzel punished a group of Republican House members who refused to adequately conform to his directives on how they should vote by directing untraceable "robo" or automated calls against them in their districts.
The calls were scripted in an extremely critical and damaging way against a representative in question and would often allow a constituent to directly connect to the representative's office to complain about the alleged misconduct portrayed in the call.
The grand jury found that Perzel used GCR to carry out the calls and they usually obtained a third-party phone vendor to make the calls. GCR charged the caucus for the calls, which cost approximately $3,200 each time they were implemented. Perzel directed robo calls against his own members about a dozen times.
Perzel's Ghost Employee
The grand jury found that after Perzel's narrow victory in the 2000 election, he vowed to keep a campaign office in operation year round. Perzel put his brother-in law, Samuel "Buzz" Stokes, in charge of the office and placed Don McClintock as the campaign office manager.
Republican Information Technology staffers, who are employed by the taxpayers to work only on the computer and technical needs of the Republican Caucus, treated Perzel's campaign office as their top priority.
The RIT staff installed, maintained, upgraded and supported all of Perzel's campaign computers and computer systems. The RIT staff took their direction directly from Stokes and McClintock.
In December 2000, Perzel put Stokes on the caucus payroll, although all of his time was spent on Perzel's campaign. Stokes' position as a caucus employee was hidden from nearly all of Perzel's Capitol and district staff. The grand jury found that even Perzel's district office manager, who would have been Stokes' supervisor, had no idea that Stokes was a state employee.
A specific review by the grand jury of thousands of e-mails and documents of Stokes' work product from 2000 through 2007 found that Stokes' time was spent on campaign activities and little to no evidence was uncovered that Stokes performed any legislative work.
Over a six year period, from 2000 through 2006, Stokes was paid a total of $196,808 by the taxpayers for doing campaign work for Perzel. A grand jury review of Stokes' personnel file indicates that Preski twice recommended raises for Stokes.
Perzel Fundraising Operation
The grand jury found that Perzel had many staffers perform campaign fundraising duties during normal working hours and used government computers. A key staff member in Perzel's district office stated that, "fundraising was made part of my job."
The grand jury found that many of Perzel's staff members spent hundreds of hours of their taxpayer paid time preparing fundraising mailings for Perzel's re-election efforts. Perzel sent solicitation letters to his constituents, which he dubbed "the little people," who made contributions of small amounts, often as low as $5 or $10.
In addition to his own staff, Perzel also tasked the RIT staff to assist in his fundraising efforts. The grand jury found that one RIT computer programmer was directed to develop a fundraising website and database which ultimately became known as the Speaker's Ball management tool. The programmer spent three months on the project.
The Speaker's Ball, a charity fundraising event initiated by Perzel, was held in conjunction with a fundraiser for Perzel's re-election efforts.
Additionally, the grand jury found that Perzel took advantage of the taxpayer funded resources of GCR and Aristotle for his own campaign fundraising purposes. In July of 2005, Aristotle was developing a comprehensive, full-service fundraising program called 360, which would manage campaign financing. It was paid in part at the expense of Pennsylvania taxpayers.
While the 360 program never became fully operational, Perzel's taxpayer-paid staff made extensive use of the fundraising program.
While Aristotle was working on the 360 program, Perzel staffers also directed GCR to develop a web-based fundraising tool. GCR programmers spent three months, again at the expense of Pennsylvania taxpayers, developing a program called Contribution Tracker that would "mine" data from campaign finance reports, so that the names of individuals who contributed large sums of money could be easily identified and put into a database.
The House Republican Caucus has employees located throughout the state that were hired to assist elected Republican representatives in their district offices and aid them with a variety of tasks, including constituent outreach programs and helping newly elected members establish practice and procedures in their district offices. These employees are assigned to a department called District Operations.
The grand jury found that from 2001 through 2006, and to a lesser extent after 2006, District Operations was a subsidiary of the House Republican Campaign Committee, which was under the direction of Perzel and Feese.
The grand jury found that most of the District Operations employees hired during this time were hired because of their campaign and or fundraising skills. For the majority of the new hires, who worked out of their homes, it was clearly understood that as part of their legislative job that they would work on campaigns.
The District Operations employees, under the direction of Feese, recruited candidates for legislative seats, assisted in getting Republican candidates on the ballot, getting opponents off the ballot through nominating petition challenges and conducted opposition research, all at the taxpayers' expense.
Greystone and SKP
The grand jury found that Perzel's overarching plan in developing data-driven, technologically proficient campaigning programs at the taxpayers' expense was motivated not only by his desire to obtain and keep political power, but also to personally enrich himself.
Perzel and Preski formed a business with their wives Sheryl Perzel and Kelly Preski, called Greystone, which later became SKP. The business plan was to market and sell the campaign programs, which the RIT employees and GCR had developed, to candidates around the country. The goal, in the words of Preski, was "to make us millionaires."
Although there appears to be little evidence that their business venture was successful, it demonstrates that Perzel, Preski, and their wives, attempted to personally profit from the programs and software that was developed and paid for the by taxpayers of Pennsylvania.
Obstruction of Justice: Perzel's Missing Boxes
As was previously stated, Corbett said that agents and prosecutors from the Attorney General's Office encountered numerous impediments and obstacles created by the defendants and others during the course of this investigation with respect to records and information. One such incident, which can be revealed at this time, occurred in late February 2008.
Corbett said that on Feb. 26, 2008, the grand jury served a series of subpoenas upon the House Republican Caucus seeking an array of information related to this investigation. The caucus was ordered to produce "any and all evidence of campaign work" and listed a number of employees who may have performed the campaign work.
Two days later, Corbett said, an employee of the Pennsylvania Legislature came to the Attorney General's Office and stated that boxes containing campaign materials were being removed from room B-02, a basement storage room assigned to Perzel in the Capitol Complex.
After further investigation, Corbett said a grand jury subpoena was issued the next day, February 29, ordering the immediate production of any and all documents or materials removed from the storage room on February 26 or during the prior 60 days. It also ordered the disclosure of the location of any and all materials removed from the room.
Corbett said on evening of February 29, an agent and a prosecutor from the Attorney General's Public Corruption Unit went to the Capitol Complex and inspected numerous boxes that reportedly had been removed from the storage room. They were escorted by Capitol security officers, attorneys for the Republican Caucus and Perzel's staff members John Zimmerman and Paul Towhey.
When questioned by the Attorney General's Office that evening, Zimmerman and Towhey, denied any knowledge of boxes containing campaign material being removed from the storage room.
Corbett said a subsequent investigation by agents found that the boxes containing evidence of campaign work performed by public employees had in fact been removed from the storage room on and before February 26.
Corbett said that testimony of caucus messengers, which is corroborated by Capitol security video footage, confirm that two cart loads of boxes were transferred from the storage room to Perzel's office suite located in the Main Capitol Building.
The grand jury found that prior to February 29, Perzel's secretary had twice gone to the storage room and examined the materials and told Towhey, who was then Perzel's chief of staff, of the existence of campaign materials. Towhey ordered her to have the materials transferred to Perzel's office suite and then to move the campaign materials and evidence of campaign work out of Perzel's suite to the House Republican Campaign Committee offices, which are located across the street from the Capitol Complex.
On February 27, the boxes were transferred by messenger to the HRCC office, which was confirmed by testimony of the messenger who delivered the boxes, messenger logs and testimony of the Executive Secretary of the HRCC, who received the boxes.
The HRCC Executive Secretary also testified that a few days after the boxes arrived, she received a call from Feese, who asked her if boxes from Perzel's office had been delivered a few days before.
The grand jury reviewed Towhey's phone records for the week of February 25 for the times pertinent to the hiding of campaign materials, including the time of the service of the subpoena and the inspection by the Attorney General's Office. Towhey's phone records indicate that during this time he was in frequent telephone contact with Perzel, Feese, Zimmerman and Perzel's secretary.
The grand jury found that Perzel, Feese, Towhey and Zimmerman engaged in obstructing the investigation and hindering prosecution by the removal of evidence, the hiding of evidence and/or the failure to disclose the existence and location of evidence.
Obstruction of Justice: Feese's Fraudulent Notes
Feese, who had been an elected member of the House of Representatives from Lycoming County, did not run for re-election in 2006 and was hired by the caucus in January 2007 as chief counsel to the caucus. Feese's yearly salary as chief counsel began at $155,000 and was increased to $196,999 in November 2008.
Feese, as was previously stated, was a confidant of Perzel and had been one of the most powerful members of the caucus, having previously been elected by members of the caucus as Minority Whip, Appropriations Chairman and Chairman of the House Republican Campaign Committee.
As chief counsel to the caucus, Feese was intimately involved in the collection and review of evidence sought by the grand jury regarding its investigation of the Republican Caucus.
Corbett said that not only was Feese aware of the materials being sought by the grand jury, he was also well aware of the growing frustration of investigators as a result of missing or incomplete information.
This frustration was clearly demonstrated at a series of contempt hearings before the Supervising Judge of the grand jury from October 2008 to December 2008, which was held for the purpose of forcing the caucus into compliance with subpoenas and court orders.
In December 2008, agents were provided with copies of several handwritten notes by Feese and his assistant, Jill Seaman, directly pertinent to the investigation. The notes purport to have been taken at meetings held by Feese in 2007 and 2008 with various employees of the caucus and some vendors.
The notes supposedly represent some kind of investigation conducted by Feese within the caucus beginning in February of 2007 into the illegal use of public resources for campaign purposes. The notes specifically discuss the GCR programs such as the Enterprise Database, The Edge, Candidate Connect as well as contracts with Aristotle, Labels and Lists, Constituents Direct and others.
The notes take great pains to state that Feese had no idea that these illegal activities had been occurring and stand in stark contrast with evidence and testimony before the grand jury.
The delivery of Feese's handwritten notes led to another extensive and time consuming avenue of the investigation.
The grand jury ordered that Feese turn over a complete set of the original handwritten notes to agents and in April 2009, a set of original handwritten notes was turned over to agents.
The grand jury found that handwritten notes produced by Feese and Seaman were fabricated for the intentional purpose of obstructing and hindering the investigation. The grand jury also found that the notes are demonstratively false and intentionally sought to mislead investigators into believing that Feese had been unaware and uninvolved in the use of public resources for campaign purposes.
Corbett said the defendants will be prosecuted in Dauphin County by Public Corruption Unit prosecutors Frank G. Fina, Patrick Blessington and Kenneth K. Brown II. They are scheduled to surrender tomorrow and be arraigned before Harrisburg Magisterial District Judge William C. Wenner.