KTUU.com | Alaska's news and information source | VECO execs Allen, Smith sentenced for corruption

VECO execs Allen, Smith sentenced for corruption

by Casey Grove and Lori Tipton
Wednesday, October 28, 2009

ANCHORAGE, Alaska -- A district court judge sentenced the key witness in the federal government's wide-sweeping investigation of Alaska political corruption to three years in prison and a $750,000 fine on Wednesday.

Former VECO Corp. CEO Bill Allen, 72, pleaded guilty in 2007 to bribery, conspiracy and extortion. Allen and VECO Vice President Rick Smith bribed numerous state lawmakers, and then helped federal prosecutors with wire taps, video-taped conversations, and testimony to convict most of the legislators caught up in the scandal.

Smith received a 21-month prison sentence and $10,000 fine later Wednesday morning.

"Democracy doesn't work if it's corrupt," Judge John Sedwick said before giving Allen his sentence. "We enjoy the benefits of a true democracy, and from time to time that democracy is threatened, as it was here."

Allen spoke about his desire to improve the oil tax situation in Alaska for what he considered the benefit of Alaskans. He told the judge he was just trying to further Alaska's best interests by pushing for a gas pipeline, but he acknowledged the way he went about that was not right.

"(I was) probably trying to push it too hard. I went over the line, I shouldn't have done that," Allen said. "I'd like to apologize to you and to the people here in Alaska. Instead of me really helping them, I pushed them down, really."

"I really harmed a lot of people who were my friends," he added.

Allen's testimony nearly convicted a sitting U.S. senator and his onetime friend, Ted Stevens.

But discrepancies in Allen's FBI interviews, which were not disclosed by prosecutors to Stevens' defense team, led the Justice Department to drop the senator's charges: seven counts of failing to properly disclose gifts Stevens received from Allen and VECO. The evidence would have been favorable to Stevens' defense, and therefore should have been made available to his attorneys, the Justice Department found.

Questions about Allen's credibility and other possible prosecutorial problems caused the Justice Department to order former state Reps. Pete Kott and Vic Kohring released from prison.

In federal court Wednesday, there was much talk from both the defense and prosecution about Allen's role in the conspiracy to bribe lawmakers who were preparing for a key vote on oil taxes in 2006. The federal prosecutors and Allen's defense team both spoke about the critical help Allen provided in exchange for a plea deal.

Allen's defense team argued that Allen was not the one responsible for organizing the conspiracy, as the prosecution contended.

"The actual illegal activity occurred after the solicitation by others," Allen's attorney, Robert Bundy, told the court. "They came to him and asked. He didn't organize them."

But federal prosecutor James Trusty disagreed, saying that there were specific legislators who reported directly to Allen.

"When Allen can look at a legislator and say ‘I own your hind quarters,' it says a lot about his role," Trusty said.

Still, Trusty said later, Allen's cooperation was crucial to the FBI's effort to root out corruption among Alaska politicians.

Allen participated in about 70 interviews with investigators, allowed closed-circuit video recording in his home or temporary residences at least 11 times, and testified at three trials, Trusty said. Though he seemed subdued for most of the morning's proceedings, Allen perked up when Trusty listed off the oilman's contributions to the cases.

And for further cooperation in ongoing cases, Allen could expect "sticks, not carrots" after his sentencing, Trusty said.

Allen's other attorney, George Terwilliger, spoke about the need to consider Allen's age and health, and a balance of proportionality while keeping a "keen sense of justice" in the sentencing decision.

"There's no question in doing what he did that he crossed the line," Terwilliger said. "He knows that."

The court should consider the good that Allen did after the crimes were committed, Terwilliger said.

"The extensive investigation before Allen didn't get the job done. Mr. Allen's cooperation got the job done," he said.

Nevertheless, prosecutor Trusty hoped Sedwick would not forget the significance of the crimes.

"He has tarnished a political institution in a way that is very visible and cries out for specific deterrents and general deterrents," Trusty said.

"These moments of graft, these moments of corruption, were devastating to Alaska, in general."

When it was Allen's turn to speak, he approached the microphone in the middle of the courtroom slowly and had to lean toward it for his voice to be heard.

"I can't talk as fast as these guys can, but I'll try," he said, referring to the attorneys on both sides.

"Most of us can't do that," Judge Sedwick said, which elicited a few laughs from the gallery.

Allen talked about his history as an oilman in Alaska, and specifically how he became involved in politics while trying to improve the situation for resource development in the state. Allen said that his good intentions for Alaskans caused him to seek clarity in oil taxation.

But when the FBI approached him with a recorded and damning phone conversation, Allen said he was embarrassed.

"They gave me a tape that really embarrassed me. I could tell I was half drunk and I didn't like what I looked at," Allen said.

He said he also tried hard to rectify the wrongs he had done.

"I worked with the government for two years. It was like a job," he said.

"We probably done five to seven days a week trying to get ready for all these trials."

"Your honor," Allen said, "Respectively, go ahead and sentence me. And try to remember that I've done some good."

With that, Sedwick took the opportunity to address the court.

"Mr. Allen might not have received much of an education, but I consider him to be a very smart man. He wouldn't have got where his is if he wasn't," Sedwick said.

But, he soon added, "It's a really stupid kind of crime to commit, because you're putting your future in the hands of other people, who are by their nature criminals."

There was little reaction from Allen as Sedwick read the sentence: 36 months in prison and the maximum fine of $750,000.

"Mr. Allen's behavior and that of those who associated with him indeed threatens the very foundation of our democracy, so this is a very serious offense," Sedwick said.

Smith also learned his fate Wednesday: 21 months in prison plus a fine of $10,000. Smith also apologized and said he will regret what he did for the rest of his life.

"My deep regret and shame for the actions I've been involved in, which have hurt and disgraced my family, my friends, Alaska and these are all the things that I have loved for many, many years," Smith said.

Sedwick said that in both cases he tried to set an example to urge others not to follow in the footsteps of Allen and Smith.

"The effect of corruption on our political process threatens all of us and all of our goals and ideals. A democracy doesn't work when it is corrupt," Sedwick said.

The judge did not set a date for them to report to prison. It's up to the Federal Bureau of Prisons to determine that.

Allen requested to serve his time in either Sheridan, Ore., or Tucson, Ariz., so he can be near family. Sedwick said he would make a recommendation supporting that.

Contact Casey Grove at cgrove@ktuu.com and Lori Tipton at ltipton@ktuu.com