This has been diaried or mentioned before by others, here, here, and here. However, I think it deserves another diary, because the others were submitted late last night and frankly, didn't get as much attention as they deserved.
The fact is, the local news organizations are barely touching this story, given it's explosive allegations and the proximity to the election. Coleman's campaign is trying to make it quietly go away, at least until the election is over, and it looks like they may succeed.
I've aggregated what we know about this story so far below the fold.
First off, let's be clear that most of this information comes from a civil lawsuit filed by the founder of a company who has been marginalized by major stockholders. I think it is likely that the allegations in the suit are at least partially being used as leverage to get the defendants to settle. And as of yet, we have little collaborating evidence (although it seems like that could easily change if the story were pursued by the local press.)
Ther facts are these: On Monday, Paul McKim, the founder and CEO of Deep Marine Technology, Inc. filed suit in District court in Texas alleging misconduct on the part of Nasser Kazeminy and others. Nasser Kazeminy is an Iranian businessman who has lived in the US for 35 years. He is a long time friend of Norm Coleman's and he and his family have given tens of thousands of dollars in political contributions to Coleman. He is the person that was recently alleged byHarper's magazine to have bought Coleman's suits, prompting the infamous non-denial denial voiced by one of his campaign spokesmen:
(Coleman later stated on his campaign web site that "Nobody except my wife or me bought my suits")
Here is what is alleged, from the court filing itself:
In March 2007, Kazeminy began ordering the payment of corporate funds to companies and individuals who tendered no goods or services to DMT for the stated purpose of trying to financially assist United States Senator Norm Coleman.
Kazeminy was (and remains, I believe) a controlling shareholder in this privately held company and as such, holds a lot of influence over Deep Marine Tecnology (or DMT). The lawsuit alleges that he used that clout to funnel money from DMT to to Coleman's wife, Laurie:
In March 2007, Kazeminy telephoned BJ Thomas, then DMT’s [CFO]. ...Kazeminy told Mr. Thomas that “U.S. Senators don’t make (expletive deleted)”...Kazeminy told Mr. McKim that [Kazeminy] would make sure there was paperwork to make it appear as though the payments were made in connection with legitimate transactions, explaining further that Senator Coleman’s wife, Laurie worked for the Hays Companies [in Minneapolis]...and that payments could be made to Hays for insurance.
When Mr. McKim made ...objections, Kazeminy repeatedly threatened to fire Mr. McKim, telling him “this is my company” and that he and Mr. Thomas [the CFO] had better follow his orders in paying Hays. Subsequently, Kazeminy caused Hays to produce a document entitled “Disclosure of Service Fee” which purported to legitimize the basis of the payments to be made...
[Kazeminy coerced] Mr. McKim into signing the Disclosure of Service Fee document...and further coerced him into approving the first monthly payment of $25,000.00 from DMT to Hays...
When McKim, having misgivings from the start of the scheme, refused to play along further despite Kazeminy's threats, Kazeminy apparently went behind his back:
Two additional payments of $25,000 each were made without Mr. McKim’s approval. DMT received and made payment on three separate invoices from Hays...on May 16, 2007, June 1, 2007, and September 4, 2007. A fourth invoice was received on December 11, 2007. When a fourth payment of $25,000 was in the process of being made, Mr. McKim found out about it and stopped [it].
Well, so what? Why couldn't DMT and Kazeminy pay the Hays Company, Laurie Coleman's employer, for insurance? Or, as Coleman's campaign is now saying, since Laurie Coleman is a “licensed insurance representative,” the “senator’s wife has the right to work for a living." Right?
But there are some problems. First of all, the suit alleges:
Laurie Coleman never provided any type of services or products to DMT, nor has any other person on behalf of Hays provided any type of services or products to DMT. Furthermore, at no time has Hays been licensed to broker insurance in the State of Texas. ..Hays was not then and is not now licensed with the Texas Department of Insurance.
[Another company] AON Inc was, and continues to this day, to provide for DMT’s insurance, risk management and employee benefits needs.
(My bold.) And if it was all above board, why would they try to hide it?
Mr. Thomas’ successor as chief financial officer of DMT is John Hudgens, an affiliate of Kazeminy [who lives/lived in Minneapolis]...On or about August 19, 2008, Mr. Hudgens attempted to hide at least one invoice by ordering employees of DMT to pull the detail on the Hays payments and delete such data from the books and records of DMT.
Again, my bold. A number of other Minneapolis associates of Kazeminy's are also named in the suit, including John Ellinboe and Eugene DePalma, both of who served on the Board of directors and (the suit alleges) "directly participated in the wrongfull conduct".
When the press first asked Coleman about the lawsuit, he clammed up and made for a waiting car:
The reason I'm re-diary-ing this story is that it was nearly hushed up earlier this week- McKim pulled the suit when the defendants enter settlement talks with him, and only reinstated it yesterday, when the talks fell through. And to date, I have seen nothing published about it in the St. Paul Pioneer Press, and the Star-Tribune has covered only the barest of details. (Update: the Strib now appears to be pursuing the story) And as of last night, to my knowledge only a single local news broadcast was mentioning it. It has been covered by The Nation and The Huffington Post as well as a local blog, the Minnesota Independent.
We need to be careful about all this- these are allegations only, and all of those (so far) are contained within the suit. The campaign calls these "a vicious, defamatory attack on the senator and his wife less than one week before the election," although McKim denies that politics had nothing to do with the timing of the filing.
It should not be difficult for the press to talk to the Hays Company and find out if they acknowledge the receipt of $75,000 from DMT, and what work was done in exchange for these monies.
Coleman is now saying he will address the allegations in a press conference in Moorhead, MN, where he is campaigning this morning. I will update as I can.
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Update:
Coleman denied it all this morning:
Sen. Norm Coleman said Friday that allegations in a lawsuit that a friend and donor funneled $75,000 to an insurance company that employs Coleman's wife are "false and defamatory."
Coleman addressed the lawsuit at a brief press conference Friday in Moorhead, where he was campaigning for reelection. Coleman said he believes Minnesotans will "see it for what it is - sleazy politics - and reject it out of hand."
Kazeminy could not be found locally; he may be at his house in Florida:
Messages left with Kazeminy at his Minneapolis company, NJK Holding Corp., were not returned Thursday and Friday; a woman answering the phone there said he was traveling. A woman who answered the door at his Edina home on Thursday said he was in Florida.
Also, for what it's worth, this lawsuit is no partisan attack:
According to federal campaign finance records, McKim has been a small-dollar donor who supported Republicans. In 2006, he gave a combined $650 to GOP Senate candidates John Spencer from New York, Kay Bailey Hutchison from Texas and Katherine Harris in Florida.
Update 2:
A little potential movement in the case. Apparently McKim's lawyer has/had handed over some documents to the Star Tribune:
A lawyer for Paul McKim -- who is accusing Coleman pal Nasser Kazeminy of funneling cash to the Laurie Coleman -- handed over internal accounting sheets to the Minneapolis Star-Tribune.
...The documents, intended to bolster a lawsuit McKim filed Monday against Kazeminy over the latter's handling of the company's finances, includes an invoice for an April 2007 payment of $25,000 to the Hays company and a wire transfer showing the payout.
But the most interesting exhibit in an apprent ledger of "past due" payments to vendors that includes a $25,000 Hays payment -- circled in pen, with the handwritten instruction: "Please pull this detail and delete... 8/19/08"
Another document in the packet contains a possible, more vanilla explanation: payment of an annual $100,000 for "property...casualty and marine" coverage for the company, Deep Marine Technology.
(my bold)
The story doesn't say who the "more vanilla explanation" payment is to; if it is to the Hays Co. and they can show that they insured DMT for it, then it would seem to be exculpatory. (Update: it is to the Hays Co, but is not for insurance- see below)
Update 3:
The Hays Co has released a statement:
We believe the allegations in the lawsuit referenced in a story in today's Star Tribune newspaper -- a lawsuit to which we are not a party -- are libelous and defamatory, and we intend to protect our name and our reputation vigorously with whatever means necessary.
The allegations that we are not licensed to perform services in Texas are simply false, as are other allegations contained in this disreputable lawsuit that refers to Hays Companies.
Laurie Coleman, who is fully and legally licensed to sell insurance in Minnesota, has been an Independent Contractor for Hays Companies since 2006. We are pleased with her work, and we find any allegations that she accepted money for work she was not responsible for to be outrageous and contemptible.
Laurie Coleman receives no compensation related to the services we provide for our client Deep Marine Technology. In the first half of 2007, we were retained to provide our risk management consulting services, and that work continues at this time.
Two comments:
After 2 years of work at Hays, Laurie Coleman is only an "independent contractor" there?
Some of this reads as a closely-worded non-denial. "The allegations that we are not licensed to perform services in Texas are simply false"- but no one alleged they were not licensed to "provide services", the allegation is that they are not licensed to insure companies in Texas, which is not addressed. They go on to say that Ms. Coleman "is fully and legally licensed to sell insurance in Minnesota", which is immaterial to the case, the allegations within, or their explanation of what they were doing for DMT. Instead, they lay claim to "risk management consulting services" which is a bit nebulous and a little odd, given that DMT was insured by another company, and presumably would get "risk management" advice from them.