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Bob McDonnell's sister: Loans were in plan for joint venture

Bob McDonnell's sister: Loans were in plan for joint venture

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Former Gov. Bob McDonnell’s youngest sister testified Monday that she had the financial wherewithal to help her brother out of any financial difficulty presented by a real estate business the two siblings owned.

Maureen Carney McDonnell also said she and her brother always planned to borrow money to fill the gaps between rental income and the mortgages and other costs — instead of using their own money — because the cost of borrowing was relatively cheap.

Bob McDonnell and his sister owned MoBo Real Estate Partnership LLC, which bought two Virginia Beach rental properties, one in 2005 for $1.15 million and another in 2006 for $850,000.

Bob McDonnell and his wife, also Maureen McDonnell, are on trial for accepting more than $45,000 in gifts and $120,000 in loans from Jonnie R. Williams Sr., then-CEO of Star Scientific — $70,000 of which the government alleges was to help the troubled real estate venture.

The trial, which began July 28 in U.S. District Court, has laid bare issues in the McDonnell family and on Tuesday the governor’s sister had to open up about her own troubled marriage, recent divorce, a bout with illness and difficulties with her late father’s estate.

But she has also apparently been successful in the business world with a financial expert testifying Tuesday that the former governor’s sister had savings and investments worth more than $1 million.

Earlier in the trial, Williams testified under an immunity agreement that he believed he was helping out the money-losing MoBo and that his aim was to buy the McDonnells’ help in testing and promoting his company’s dietary supplement, Anatabloc.

The former governor’s sister testified that she learned about the investigation when Bob McDonnell made a call to family members the night before a news article about the McDonnells’ relationship with Williams broke on Easter 2013.

She said she asked counsel if she could go and speak with prosecutors about her brother and to explain MoBo matters. She did so and also testified before a grand jury, she said.

The former governor’s sister said she has never had financial concerns as an adult. She said her prior job with IBM paid $250,000 to $300,000 a year and a job with Regent University, where she was vice president for university relations, paid $300,000 a year.

She went to work for Amerigroup Corp. in 2011 but left there this month after another company purchased the business and then reorganized.

She testified that in addition to her nearly $530,000 annual salary from Amerigroup, she had about $250,000 in stock that she could access at the end of 2012 and more in future years.

She said she began the search for a vacation property to buy on the advice of her accountant, to balance out her portfolio.

When she found a beach property in Virginia to buy, she asked her brother about investing with her, though she was financially capable of buying the property on her own, she said.

She said she was upset and angry when she found out a bank was charging MoBo late fees. She had just had a baby and was having health and marital problems at the time. MoBo, she said, was not a high priority in her life or that of her now ex-husband, Michael Uncapher, who was handling the books.

At one point the water was turned off at one of the homes because they owed $108. But she said she had plenty of money to cover everything and that there need not have been any late payments.

She said she and Bob McDonnell decided to test the market and put the properties up for sale. She wrote an email to a real estate agent April 24, 2009, that said, “I’d (like) to get it listed ASAP to relieve some financial pressure.”

She also wrote in a December 2009 email to her brother that the business was in trouble and that they “need to act NOW.” She said Tuesday that she was trying to get her brother’s attention.

Continuing to illustrate for the jury the governor’s sister’s financial condition, the defense attorney ticked off three retirement accounts she held as of September 2012 that had balances of $439,835, $257,795 and $50,000.

The defense attorney asked why MoBo used a loan from a person rather than through a convenience check from a credit card. The governor’s sister testified that she was mindful of her credit.

She said she had some “blemishes” on her credit from late payments made on a loan she co-signed for Uncapher, her now ex-husband.

The lawyer asked why she did not use her own money instead of the loan from Williams’ Starwood Trust.

She said “we sure could have” but that it made more sense for her to borrow it.

The governor’s sister testified that when she left her job at Amerigroup she received roughly $150,000 from the company. She said she discussed with her brother the possibility of paying off the MoBo debts, but he said not yet and that she could earn more investing it herself instead of paying down the loans.

She said that once the investigation was brought to light, it was easy for her to help pay back all the loans from Williams. “It was rather painless,” she said.

She also said she saw no signs of financial desperation on the part of her brother.

Under cross examination by Jessica Aber, an assistant U.S. attorney, she said that when they bought the Virginia Beach rental properties she and her brother took out equity lines of credit on their residences to make the down payments.

But the economy went bad, property values dropped, and fewer people were renting beach properties. By August 2009 she said in an email that they could sell the property at a loss or come up with $60,000 to meet the shortfall.

She conceded Tuesday that the mortgages to the properties were in her and her brother’s names — not MoBo’s — and that they were personally responsible. She also conceded that MoBo was not named in a promissory note for a $50,000 loan from a family friend.

Aber pointed out that $110,000 was borrowed from their father in 2007 and 2008 and asked if it made sense to borrow from him instead of using her own money to cover shortfalls.

“He and my family were fine with that,” she said.

Also under cross examination, Maureen told Aber that said she and her brother didn’t discuss bankruptcy or a short sale of property — an idea she once raised in an email.

The former governor’s sister also testified Tuesday that her sister-in-law, the first lady, had two sides.

“She can be very sweet and tender,” she said of the first lady. She said that when the McDonnells’ mother was dying at Walter Reed Army Hospital in 1994, the future first lady was a great comfort.

“But the other side of Maureen can be very manipulative, unpredictable, can be deceptive,” she said.

The former governor’s sister also said that there were two sides to her brother’s marriage. While publicly the couple seemed to be “pretty close,” there was considerable strain and “after he became governor, it sort of went from bad to worse.”

The first lady was uncomfortable with her public role and felt “trapped in the Executive Mansion,” the governor’s sister said. She testified that in a conversation about a possible get-together, the first lady told her “I’d like to see you before I got back to that prison mansion.”

The governor’s sister recounted that on a Friday in March 2012 she returned from a trip to Jamaica with her daughter and then-husband, a trip to try and work on the marriage. She said she was sick until that Sunday.

She checked her phone and saw messages from the first lady about a FedEx package. Inside the package was a check from Williams for $50,000 — another loan to MoBo.

She said her then-husband, who managed the MoBo properties, called the first lady but the first lady hung up on him.

The next day, the governor’s sister spoke with Bob McDonnell by phone and she could hear the first lady “screaming in the background.” She said she could hear the first lady saying: “Why is she calling you? I worked on the loan.”

She said the first lady was very upset and that it was distracting. Bob McDonnell told his sister: “I need to call you back, Mo.”

Prior testimony indicated that in a text message to her sister-in-law, Maureen McDonnell took credit for a $50,000 loan from Williams, whom she considered a friend, saying: “I’ve worked on this loan for a year, not Bob.”

Days later, the governor’s sister texted her brother, saying she was upset about the “relational tension” dividing the family.

Asked how Bob McDonnell responded when she complained about his wife’s behavior, the governor’s sister said: “He defended her, supported her, generally speaking.”

On March 24, 2011 — about three weeks before the infamous, Maureen-does-Manhattan shopping spree that has the former first lady and her husband in federal court on a corruption rap — Gov. Bob McDonnell signed into law legislation that he would have never dreamed might apply to him.


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