Massachusetts: Illegel Campaign Contributions

Developer donated to Calif. treasurer
Gifts were followed by Hub investment
By Casey Ross Globe Staff

Among the dozens of illegal campaign contributions developer Arthur Winn and his company allegedly made to get public support for his Columbus Center project, three in particular stand out.

Each was unusually large, at $10,900, and sent in January 2006 to the campaign account of California’s then-treasurer, Philip Angelides, a trustee of the state’s powerful public pension fund. The fund’s money manager was weighing a major investment in Columbus Center.

About two months later, as Angelides was running for governor of California, Winn announced that the pension fund and its money manager agreed to invest in the massive Boston project.

The donations to Angelides, newly disclosed in federal court documents in Boston, are perhaps the clearest example of what prosecutors allege was an illegal effort by Winn to give large sums to politicians in order to get public funds to support his $800 million project.

Last week the 72-year-old developer and one of his companies, Winn Columbus Center Limited Partnership, agreed to plead guilty to making illegal donations through intermediaries to hide the source of tens of thousands of dollars in contributions made between 2002 and 2009. Winn faces up to six months in prison and $200,000 in fines. The company has agreed to pay a fine of nearly $1.6 million.

It is only now, years after the fight over Columbus Center ended, that details are emerging about how Winn allegedly tried to game the system while the project’s opponents fought to keep it from receiving public subsidies.

“Political contributions like this make voters even more cynical and undermine what should be a legitimate decision making process based on what is best for taxpayers,’’ said state Representative Martha Walz, a Democrat from Boston who spent years fighting Columbus Center.

Weighed down by the massive costs of building over the Massachusetts Turnpike and facing a hostile lending environment, the project collapsed in 2007, ending Winn’s plan to unite Boston’s Back Bay and South End neighborhoods with a towering complex of condominiums, a hotel, and stores. The California pension fund, known as Calpers, said it lost about $91 million on the investment.

In a statement, Angelides said he did not take any action to support the investment in Columbus Center and does not recall discussing the project with Winn or the Calpers money manager, MacFarlane Partners. Angelides lost the 2006 California governor’s race to Arnold Schwarzenegger and most recently served as chairman of a federal panel investigating the causes of the financial crisis that erupted in 2008.

A Calpers spokesman said the decision to finance Columbus Center was made by MacFarlane, which had broad discretion to choose real estate investments for the state fund, and that Angelides and other board members never voted to specifically give money to the project. MacFarlane said in a statement it did not even know of the donations from Winn, nor did its executives discuss the Columbus Center investment with Angelides.



While the investment in Columbus Center was not announced publicly until March 2006, Winn’s attorney, Robert Popeo, said that MacFarlane had signed an agreement to fund the project in April 2005 - months before Winn gave any donations of Angelides.

“That means to me there was no quid pro quo,’’ Popeo said. “The inference is illogical - you would not sign an agreement and thereafter make political contributions to a state treasurer in consideration of that.’’

In the plea agreement he signed last week, Winn reserved the right to argue before a judge that the Angelides donations cited by prosecutors were not illegal.

Neither Angelides nor any of the other politicians named in court documents as receiving illegal donations from Winn are accused of wrongdoing. The donations went to an array of politicians, including Governor Deval Patrick; Mitt Romney when he was governor; US Senators John F. Kerry and Charles Schumer; several congressmen from Massachusetts; Boston Mayor Thomas Menino; and former state senator Dianne Wilkerson, a longtime Columbus Center supporter who last year admitted to accepting bribes in unrelated real estate cases and is serving a 3 1/2-year prison sentence.

But in court papers filed last week federal prosecutors pointedly note that Columbus Center ended up getting much of the public support Winn and his company had sought. In addition to the Calpers investment, Winn’s project won approval for about $60 million in grants, tax credits, and low-cost loans from the state and the city of Boston. Separately, the US Department of Housing and Urban Development approved $32.5 million in tax-exempt bonds.

In some instances, prosecutors said, Winn asked for - and received - specific favors from public officials who wrote letters, filed legislation, and took other actions to help him secure taxpayer money for the project. However, the documents do not link individual politicians to specific actions taken on Winn’s behalf.

While his quest for funding was unfolding, prosecutors said, Winn and executives at his company orchestrated a scheme in which they induced relatives, friends, and vendors to give donations to public leaders, and then secretly reimbursed them to hide the source of the money.

According to court documents, the former California treasurer was the biggest beneficiary of illegal giving by Winn and his company, collecting $42,700 in donations between January and June 2006. Those were separate from the $17,300 Winn donated to Angelides in November 2005, according to California campaign finance records. All were made during a critical time for Columbus Center, which was seeking capital to help pay escalating costs for the project, which started at about $400 million in 2004 and soared to about $800 million by 2007.

Prosecutors said the $42,700 given to Angelides is part of $157,900 Winn and his company funneled to various politicians while trying to move forward with the project.

Winn himself has agreed only to plead guilty to a small fraction of those donations - $4,500 given to US Representatives Stephen Lynch and Michael Capuano. Many of the other illegal donations alleged by prosecutors occurred beyond a statute of limitations that Winn declined to waive. No date has been set for Winn’s sentencing.

The company, meanwhile, agreed to plead guilty to nine counts of illegal campaign donations, one of which is a felony because the total amount in that count exceeded $10,000.