Questionable Campaign Contributions

DCI questions donations from Fort Dodge casino supporters

The Iowa Division of Criminal Investigation is examining whether an Iowa company aligned with a casino proposed for Fort Dodge made improper contributions to Gov. Chet Culver’s re-election campaign, a state official and a target of the investigation have confirmed.

The key players are Dubuque-based Peninsula Gaming and three Fort Dodge casino supporters who made the contributions to Culver.

Spokesmen for Peninsula Gaming and the three contributors said nothing improper occurred.

Spokesmen for Culver’s administration and campaign said neither Culver organization has done anything wrong.

“I can confirm that we are working with the DCI in the investigation of this matter,” Bob Brammer, a spokesman for Iowa Attorney General Tom Miller, said Sunday.

Steve Daniel, one of the contributors facing DCI scrutiny, said Peninsula Gaming paid him and two partners $25,000 for their work on the license application process and for approaching the company as a potential backer. Campaign finance records show that the three gave $25,000 to Culver’s campaign late last year; Daniel says they have since given another $5,000. Daniel insists there is no link between the payment and contributions.

In Iowa, it is illegal to make, or knowingly receive, a political contribution in another’s name.Daniel said that he and his two partners in the Webster County project, James Kesterson and Merrill D. Leffler, contributed to Culver because they support him, and that they were not instructed to do so.

“I’ve never been told by Peninsula or anybody to make a contribution to Governor Culver,” said Daniel, a tire shop owner who has been trying to land a Fort Dodge casino for 10 years.

“We didn’t do anything wrong,” he added. “What I’m more concerned about is the perception and how that might harm our application.”

The investigation comes as the Iowa Racing and Gaming Commission is planning to rule May 13 on applications from Webster County and three other communities pursuing new casino licenses. It also comes as Culver, who is facing a difficult re-election challenge this year, has publicly urged the commission to approve all four licenses.

Making contributions in another’s name is a serious misdemeanor, not a felony offense.

But a finding of impropriety could jeopardize the Fort Dodge project, said Diane Hamilton, a former chairwoman of the Iowa Racing and Gaming Commission.

If Peninsula is found to have acted improperly, it could also jeopardize the company’s existing Iowa gambling licenses, she said. Peninsula operates Diamond Jo casinos in Dubuque and Worth County.

Senior aides to Culver declined to say whether Culver, Lt. Gov. Patty Judge or members of their official or campaign staffs had been interviewed by DCI. They also said they could not comment on an ongoing investigation.

“However, neither the governor’s office nor the governor’s campaign has any reason to believe that anyone with either organization is a target in the investigation,” Culver’s senior legal counsel, Jim Larew, said in a statement Sunday.

Larew said that contributions from proponents of the Fort Dodge casino had had no influence on Culver, who has supported the proposed casino since 2006. As a candidate for governor that year, Culver said that if new casino licenses were issued, Ottumwa and Fort Dodge should be next in line, because voters there had passed ballot measures to proceed with the applications.

Larew also said that Culver “has not made or taken any campaign contribution calls from any party associated with a license application once such a license application was submitted.”

Culver campaign officials said Sunday that the campaign on April 9 donated the $25,000 from the three Fort Dodge casino supporters to charity, one of two possible methods of dealing with questionable contributions, after it became aware there were questions about the money.

Peninsula money called ‘a consulting fee’

It’s routine for the DCI to check the personal and business backgrounds of all of the principals involved in casino applications. Questions relating to the Fort Dodge casino supporters’ campaign contributions arose during the course of the review of business and financial records, said Daniel and Matt Eide, a Des Moines lobbyist assisting with the Fort Dodge project.

Daniel, Kesterson and Leffler are among 10 Fort Dodge-area casino backers who formed Webster County Gaming last October and submitted the group’s application for a casino license Nov. 10. The group capitalized the limited partnership by investing $525,000. Daniel, Leffler and Kesterson invested $100,000 each, according to their application.

Daniel said the group had hoped to line up its own financing for the project, but went looking for a corporate entity after the Racing and Gaming Commission announced in October an expedited timeline for obtaining license approval.

That timeline required financing commitments for the casino project to have been obtained before Jan. 14, according to commission minutes.

Daniel’s group settled on Peninsula after first talking with the company in early November and after considering at least two other companies, he said.

Daniel said Peninsula paid him, Kesterson and Leffler the $25,000 last fall in part for inviting the company to the project, but also for the trio’s work as the local agent for the application. The three formed Webster County Entertainment, which aims to manage the proposed casino.

“It was a consulting fee,” Daniel said. “We take care of all the local issues. We have an office. We did all the application process. We did all the local work.”

Carrie Tedore, director of public relations for Peninsula Gaming, said that the $25,000 payment to Webster County Entertainment was “a payment of a consulting fee after a review by our external legal advisers and counselors.”

“The payment served as reimbursement to Webster County Entertainment for legal expenses they incurred during the initial stages of the application process,” Tedore said.

Tedore also said that the company has retained Mark McCormick, a Des Moines lawyer and former Iowa Supreme Court justice, to conduct an independent review of the issues involved with the payment.

Bonnie Campbell, a lobbyist for Peninsula and longtime Culver adviser, could not be reached for comment.

Fort Dodge investors are longtime Culver donors

Daniel has been a regular contributor to Culver. Kesterson and Leffler also have contributed to Culver’s campaign.

The three men, along with James Moench, another investor in Webster County Gaming, contributed a total of $8,000 during 2007 and 2008, but the largest contribution by any individual was $1,000.

Kesterson and Leffler could not be reached for comment.

Opponents of the Fort Dodge casino have also given to Culver. For example, Gary Kirke of West Des Moines, owner of Wild Rose casinos in Emmetsburg and Clinton, contributed $25,000 to Culver’s campaign last year.

Daniel said Culver asked him last fall to contribute to an annual fundraiser at the Wakonda Club on Nov. 20 in Des Moines.

According to Daniel: Donors were encouraged to spend $25,000 per table for the event, hosted by Des Moines lawyer Jerry Crawford. Daniel, Kesterson and Leffler combined for half of a table, $12,500. Daniel and Kesterson attended the event and talked with Culver.

Two weeks later, the three contributed to another Culver campaign event, this one hosted by Lt. Gov. Patty Judge at the Val Air Ballroom in West Des Moines. The three spent a combined $12,500 and, again, Daniel and Kesterson attended.

Eide said the three have since contributed another $5,000 to Culver’s campaign. Records of any contributions made this year will not be made public until after May 19, the deadline for campaign fundraising since the first of the year.

Culver campaign manager Donn Stanley said Sunday that the campaign had made contributions of $8,334 each to Door of Faith, Churches United and St. Vincent de Paul.