Jay Reiff, manager of former Gov. Mike Easley’s 2000 and 2004 campaigns, appeared at about 8:45 Wednesday morning at the U.S. Courthouse in downtown Raleigh, where a federal grand jury is hearing testimony in the investigation of Easley’s fundraising anomalies and other possible ethical violations involving the former governor and his wife.
Reiff was accompanied by Michael Weisel, a Wake County attorney and former candidate for state treasurer.
Reiff authored or is believed to have written a series of memos organizing what appeared to be an elaborate scheme letting large Easley donors evade campaign contribution limits. These fundraising strategies were a major focus of a recent hearing by the State Board of Elections on Easley’s campaign finances.
The plan, as outlined by several witnesses at the hearing, allowed donors who had provided the maximum $4,000 contribution to give additional money — in some instances tens of thousands of dollars — to the North Carolina Democratic Party and then designate those funds for Easley’s use. Individuals can legally provide unlimited donations to political parties but the parties, not the candidates, control how the money is spent.
A memo written by Reiff and presented to the board said that a “loophole” in campaign laws allowed donors to blow past contribution limits if the money was sent to the party’s “coordinated” campaign. In the memo, Reiff urged campaign manager Dave Horne to take advantage of that loophole.
Lanny Wilson, a real estate developer whose business provided $12.5 million in financing for the 285-acre Cannonsgate development where Easley owns property, testified that he was told that even though he and his wife had donated the maximum allowed by law to the Easley campaign, they could continue writing checks.
The money would be funneled through a “special account” of the state Democratic Party “for the use of” the Easley campaign, Wilson said.
Wilson, and Wilmington homebuilder Nick Garrett, testified that they wrote five-figure checks to the party while indicating on the payments that the money should be diverted to Easley.
The board tried to subpoena Reiff, but was unsuccessful because he was in Virginia and could not be compelled to testify. Reiff could not, however, duck a federal subpoena.
Reiff was not the only potential witness who did not appear before the election board. Ruffin Poole, Easley’s former general counsel, had his subpoena temporarily quashed by Wake County Superior Court Judge Henry Barnette. Poole argued that his dealings with Easley should be protected under the attorney-client privilege.
The N.C. Court of Appeals stayed that order, but only after the board had asked the Wake County District Attorney’s Office to consider filing criminal charges against Easley, and had assessed fines against the North Carolina Democratic Party and the former governor.
The grand jury is also believed to be investigating the Cannonsgate real-estate deal, the use of free or undisclosed flights and cars by the Easley family, and the nature of a $170,000-a-year job that N.C. State University provided former First Lady Mary Easley. The grand jury could continue hearing testimony Thursday and is expected to meet again in mid-December.
UPDATE (11:30 a.m.): Weisel and Reiff emerged from the courthouse after spending about two hours before the grand jury. Weisel spoke with reporters but had little to say, other than Reiff had cooperated with the grand jury.
Rick Henderson is managing editor of Carolina Journal. Additional reporting was provided by Executive Editor Don Carrington.