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Every couple of days now it seems, the extent to which Sen. Conrad Burns has surrounded himself with people of questionable character (chief among them, of course, being Jack Abramoff) becomes clearer and clearer.

Today, the Montana State Auditor's Office announced it has begun legal proceedings alleging securities fraud against the former finance director for Burns' campaign, Pat Davison.  Conveniently (too conveniently, perhaps), Davison quietly left his position with Burns four weeks ago, so Burns can claim that he's totally uninvolved in this.  Except, of course, for the slimy associations he'd made in appointing Davison in the first place.

More below, with a huge tip of the hat to pontificator for alerting me to this.

The story originally broke over at TPM Muckraker and has yet to make its way through the more traditional media, though I suspect it will get picked up in at least Montana pretty soon, as the papers there don't seem to mind pounding on Conrad these days.  The Great Falls Tribune already has an article up on this scandal.
Davison is accused of persuading two families to invest $1.2 million into fake accounts he created, State Auditor John Morrison said. He said the department notified "appropriate criminal justice authorities" of its findings.

The FBI also is involved in the investigation, but declined to comment Friday.

"This is an ongoing investigation and it has sensitivities and it would be inappropriate for me to make any kind of comment," said FBI spokeswoman Jan Caldwell. "It's a little premature for me to say anything."

The Burns campaign -- when it's forced to react -- will likely respond by claiming that these allegations never had any connection to anything that Davison did while associated with the campaign, but rather cover a period of time in 2003 when Davison was a securities salesperson and investment advisor representative for UBS/PaineWebber.  The campaign will doubtless assert that it cannot be held accountable for Davison's actions from over two years prior to his affiliation with Burns.

But it's important to note that Davison didn't exactly come out of the woodwork in Montana politics.  Davison ran for governor that year, and finished second in the Republican primary, having emphasized his anti-tax platform.  So he's definitely been a player in state affairs for several years now.

It's also notable that today's actions, both the Notice of Proposed Agency Disciplinary Action and a Temporary Cease and Desist Order came of the State Auditor's Office, which is headed by John Morrison, who was Jon Tester's opponent in the Democratic primary earlier this year.  One can hope that this entirely proper use of his official position is a good indication that Morrison won't allow political considerations to preempt the execution of his responsibilities.

For details on the allegations, a press release (posted at TPM Muckraker) from Morrison's office notes:

These documents allege Davison committed securities fraud against two Montana families. Davison is charged with convincing these families to take in excess of $1.2 million from investment accounts they owned at UBS/PaineWebber, including an IRA account and giving the money to Davison. Davison then put the money into fake investments he created. One of the fake investments Davison created was a bond supposedly issued by the St. Labre Indian School Trust. Officials at St. Labre's Indian School have confirmed that no such trust exists and they do not issue any bonds.

Davison also allegedly took money from one of these families to invest in a promissory note he personally guaranteed. The family alleges they have yet to see any of the promised return on the note.
    --  --  --
The Securities Department alleges several counts of fraud, unethical and dishonest practices, as well as selling unregistered securities and conducting securities business in Montana while not properly registered to do so. . . . [UBS/PaineWebber] and Davison terminated their business relationship in early 2003. The following year UBS/PaineWebber handled several customer complaints lodged against Davison resulting in over $500,000 in restitution being paid by the company. UBS/PaineWebber is aware of the Department's allegations and is cooperating with the Department on this matter.

The Montana State Auditor's Office has notified the appropriate criminal justice authorities in this matter.

With friends like these, how can Conrad Burns hope to win?

Let's help put Jon Tester in the Senate by contributing to the August Fundraising Push.

Originally posted to The Maven on Fri Aug 25, 2006 at 03:01 PM PDT.

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Comment Preferences

  •  It's Almost Getting to the Point . . . (9+ / 0-)

    . . . where it will be easier to count the number of Republican senate campaigns not dealing with some sort of scandal than the ones that are.

    Except that it's a whole lot more fun to keep bringing those scandals up, one after another.

    As always, feel free to tip, recommend the diary and/or comment to your heart's content.

  •  ya know what they say about (5+ / 0-)

    the company you keep...

    birds of a feather i say.

    "after the Rapture, we get all their shit"

    send NYBri to the NY state senate!

    by lipris on Fri Aug 25, 2006 at 02:57:12 PM PDT

  •  Wow this is serious stuff (4+ / 0-)
    Recommended by:
    lipris, The Maven, docangel, gravitylove

    What is most important in my mind is that despite customers complaints and his disassociation with UBS/PaineWebber dating back to 2003, Burns brought this guy on as finance director of his campaign?  Burns is going to have a hard time explaning this.  Did he not know about these complaints and if not why didn't he?  There is no good answer here.

    •  My Understanding (2+ / 0-)
      Recommended by:
      bronte17, myrealname

      Not based on this case in particular, but I believe that as a general rule, complaints of this nature are almost always handled as investigations and arbitration proceedings within the National Association of Securities Dealers (NASD).  I'm pretty sure that most of the time, those records may be sealed and not publicly available; to the extent that they are available, the best place to look would be at the NASD Complaint Center and their BrokerCheck.

      My guess is that, here, Burns probably didn't bother with a careful financial background check, figuring that Davison had run for governor two years ago and had also spent several years on the Montana University System Board of Regents.  Since none of this had come out previously, Burns presumably thought the guy was clean.  Or he figured that none of this was as bad as his own ties with Abramoff, so what the heck?

      I have a friend who during this timeframe worked in the division at UBS/PW that dealt with monitoring these types of complaints against broker/dealers, and while I can ask if he was aware of any of this at the time, I doubt he'd be able to disclose any specifics about Davison because of confidentiality rules.

      •  I hear what your saying (0+ / 0-)

        having litigated with the NASD before, but wouldn't a prospective employer ask any potential employment applicant that has worked in the securities industry whether there are any pending complaints against him?  I understand that the details of such complaints are possibly sealed, but the existence of such complaints is not confidential and had to be known to Davison and UBS.

        •  One Would Think So (1+ / 0-)
          Recommended by:
          Southside

          But given the degree of corruption that Burns was already enmeshed in himself, he may just have felt that he didn't need to engage in any additional due diligence.  It certainly doesn't speak well for Burns' ability to deal with either ethical or fiscal oversight, but those have never exactly been his strong suits.

  •  Nothing new here (0+ / 0-)

    This is classic Burns. I don't think that he would have cared if he knew every detail.

  •  Morrison was doing his job. (0+ / 0-)

    Uhh, Mavin, I'm not taking you to task here, but concider this:  Morrison was just doing his job.

    Suggesting that Morrison is helping the Tester campaign will only give ammunition to that puss-filled growth, Jason Klindt.  I would ask you not to do that, but the choice is yours.

    •  That's Absolutely Correct (1+ / 0-)
      Recommended by:
      docangel

      I really only brought it up because, before the Democratic primary, Morrison got a lot of grief around here for being a DLC-type and the favored candidate of the Beltway establishment.  So I was trying to point out that Morrison is generally a good guy.  I'll try to rework the sentence, though.

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