Wow. Where do I start with this one?  It's the kind of day that's Christmas if you're a political reporter, but Black Friday if you're a voter.

Over breakfast today, I figured I'd judge the seriousness of the State Board of Elections' case against New Hanover Dem Thomas Wright by who showed up to watch.  When I got to the hearing, the IRS and the SBI were already warming seats. The FBI showed up after lunch.  Since these guys aren't prone to wasting their time on spectator sports, I'd have to say it's pretty serious.

Important Note:

The following are allegations by SBOE Chief Investigator Kim Strach.  She did testify under oath to her findings. But we never heard Wright's side of the story, because he took the 5th.   So just keep in mind:  What's below is one side of the story. But what a story.

The Beginning: Hugo Neu

The investigation started over a landfill proposal by Sims Hugo Neu. SHN wanted to build an "auto fluff" dump across the river from Wilmington in neighboring Brunswick County.  The proposal got rolling in earnest back in '03, when Wright still represented that area. The '04 redistricting removed the Brunswick coast from Wright's district, but Wright was still very much in the picture as an influential friend to then-House Speaker Jim Black.

Wright received campaign contributions from SHN employees back in March 06, but reportedly told his constitutents he didn't take their money - even as he argued (unsuccessfully) against a landfill moratorium  that eventually killed SHN's plans.   Wright then delayed reporting the SHN contributions until they wouldn't affect his elections. 

In a nutshell, that's what got state elections officials' attention - with a little help from Joe Sinsheimer and said constituents.  But when investigators started looking into Wright's books, what they found there made the Hugo Neu affair look like small potatoes.

The Museum and the Mortgage

Back in '02, Rep. Wright cut a deal with James and Helyn Lofton, the parents of Wayne Lofton, one of Wright's community campaign volunteers. The Loftons owned an historic building across the street from where the 1898 race riots started.  Wright proposed turning the building into a community health center and 1898 museum.

The Loftons held a 140K mortgage on the property, which was worth about 315K.  So Wright set up the deal this way: he'd put 15K down, get a 150K bank mortgage to pay off the old loan, and borrow the equity value - 150K - from the Loftons. 

Wright asked a friend for help: Torlen Wade, head of the Dept. of Rural Health at DHHS.  Wade wrote this letter to Wright, promising him a 150K state grant for his project by June 2002.  Wright took that letter to the bank, which then granted him his 150K mortgage.

Trouble is, the money was never there.  Wade's department *couldn't* make that grant.  Wade told state investigators that he told Wright as much.  Wright reportedly told Wade the money was already "lined up" in the legislature - the letter was just window dressing.  But no bill was ever introduced.  Payments weren't made. The bank foreclosed, and the Loftons lost their stake as well.

Torlen Wade also pleaded the 5th, by the way. Attorney Doug Kingsbury said he recommended Wade take the 5th because Kingsbury hadn't had enough time for a thorough review of the case.

The Foundation

As part of the deal to buy the museum building, Wright formed a non-profit foundation, the Community's Health Foundation.  But it came in handy for other uses, too, .like fundraising.  Except for one small problem - the IRS says the Federal Tax ID number on the CHF letterhead wasn't registered to anyone.

Wright solicited $8900 for the foundation from corporate donors - see a sample letter here.  But when the checks came in from AT&T, Astra-Zeneca, and Anheuser-Busch, the money never found its way into the CHF's account.  Instead, it went into one of Wright's four accounts in which he mixed political and personal money. 

No checks were ever written on behalf of the CHF.  But plenty were written on Wright's behalf - to Food Lion, Home Depot, Family Dollar stores, Sears, CVS, AutoZone, Circuit City, Amazon, and my personal favorite, Victoria's Secret - more than $400 on one trip.  Oh, boy.

Where's the money?

Wright allegedly maintained as many as five accounts.  One was purely personal, one was just for the campaign.  The other three?  A little of both, apparently.  Elections investigators say those accounts held most of the 220K in campaign donations Wright failed to report since 2000.

Those donations included checks from the NC Dental PAC, the NC Hospital Assn., the NC Assn of Trial Lawyers, Duke PAC, Beer and Wine Wholesalers PAC, the NC Long Term Care Assn., NC Nurse Anesthetists, and NC Radiology PAC, just to name a few.  None ever showed up on any of Wright's campaign reports, but donors confirm the checks were cashed.

Where did the money go?

Kim Strach testified that, as far as the state can determine, Wright brought in about $473,000 in campaign donations from 2000-2006.  He spent about $230,000 on campaign expenses.

The rest? Well, as far as the state can tell, Wright earned about $189,000 in that time, but spent as much as $411,000 on personal expenses. 

If you do the math, there's about $250,000 in campaign money unaccounted for - close to the difference between what Wright earned and what he spent.  Elections Board Chair Larry Leake said today it appears Wright used some or all of that money for non-campaign expenses.

Caveats

1. Strach told the board today she can't be sure about how every "non-campaign" dollar was used. She said the state did its best to account for any expenses that were clearly campaign-related.  But some of the 250K outstanding may have been used for campaign purposes, too.  They just can't tell, and Wright isn't saying - at least not for now.

2. Until October '06, legislators could use campaign money for anything they wanted - it was legal, as long as they reported it.  So the issue, as far as the Elections Board is concerned, isn't so much what Wright did with the money as what he reported he did with it.  Hear Chairman Larry Leake explain it here. (Of course, the IRS sees it differently. See below.)

Further charges

There were allusions and implications in today's hearing that never came up in testimony.  Board members asked about a nurse anesthetist fundraiser, about payday lending, and about cash contributions that never showed up on reports.

Wright's former campaign treasurer Daryle Parker said he stopped being treasurer in 2002, yet was apparently still functioning in that capacity to some extent as of 2006.  His ex-wife and former co-treasurer, Karen Parker-Davis, said she doesn't remember signing some checks that bear her signature, but also says she didn't sign blank checks for Wright to fill out, either.  So is it forgery, or perjury?  Or just a misunderstanding?

What's next?

The Elections Board voted unanimously to refer the case to Wake Co. DA Colon Willoughby for investigation and possible criminal prosecution.  From the looks of it, the IRS may be in line, too.  Wright faces tax liability for any campaign money he spent but failed to report as income. And then there's that fictitious federal tax ID number....

Meantime, the banking police will also want their day in court over the fraudulent use of fictitious state money to "secure" the bad loan on the Lofton's property.

And the FBI and SBI are loitering in the wings.

Meantime, after the hearing, Wright said he's "not worried" about the case. When asked if he plans to resign, he responded, "Absolutely not." 

Please remember --

Again, the above is only one side of the story (albeit a pretty well-researched side), presented by the State Elections Board.  Wright offered nothing in his own defense today - no testimony, no witnesses, not even an argument by his counsel, Christopher Brook.  That doesn't mean Wright doesn't have his own story to tell, but if he does, he wasn't telling it today, which means all we have for now is the state's word.  Stay tuned.

Comments? Drop me a line.