From The [New Orleans] Times-Picayune
Businessman pleads guilty to paying bribes to Jefferson
Thursday, May 04, 2006
By Bill Walsh
Washington bureau
WASHINGTON -- Federal authorities ratcheted up their case against Rep. William
Jefferson, D-New Orleans, on Wednesday, when a Kentucky businessman admitted
in court to paying more than $400,000 in bribes to a bogus company controlled
by the congressman's wife and family in exchange for official favors.
Vernon L. Jackson's guilty plea is the second since January in the case, an
investigation into what prosecutors describe as Jefferson's four-year scheme
to promote a small technology company in the United States and in Africa for
secret monthly payments and a share of the company's stock and profits.
Jefferson has not been charged and said Wednesday that he was "surprised
and disappointed" by Jackson's plea. He again denied taking improper payments
for performing his public duties and said in a statement that "this simple
fact will be established in the proper forum, as I am innocent."
Despite the controversy swirling around him, Jefferson has maintained a high-profile
schedule, including flying with President Bush aboard Air Force One last week
to survey hurricane damage in his New Orleans district.
The Department of Justice, however, said Jackson's admissions are evidence of
a serious crime.
"Vernon Jackson got favorable treatment from a congressman because he paid
for it," said Assistant Attorney General Alice Fisher, who has been nominated
to lead the department's criminal division. "Public corruption is not a
victimless crime -- all of us lose when people believe public officials can
be bought."
A cut of sales
Jefferson is not named in the court documents, which refer to "Representative
A," but details in the allegations, including Jefferson's relationship
with Jackson, point to the eight-term congressman as the target of the criminal
probe that became public in August when the FBI raided his homes in New Orleans
and Washington.
As part of his plea to bribery and conspiracy to commit bribery, Jackson, 53,
told U.S. District Judge T.S. Ellis III that starting in January 2001, "Representative
A" demanded 5 percent of iGate Corp.'s gross sales over $5 million, and
then upped it to 35 percent as it appeared the business was gaining a foothold
in Nigeria. Jackson said the representative insisted that all payments go to
a company set up by the his wife and daughters.
"Representative A indicated that in order for him to continue working with
me, I would have to enter into an agreement with a company owned by Representative
A's wife and daughters," Jackson said. "I did pay money in exchange
for Representative A's influence. I take full responsibility for my actions."
Jackson faces up to 20 years in prison and $500,000 in fines.
Thousands in payments
Prosecutors said Jackson wired or wrote checks to the Jefferson family's company
and paid for travel totaling $455,445 over four years. The biggest single payment
was for $200,000 on Jan. 23, 2004. Jackson also transferred 30,775,000 shares
of Class A iGate stock, 24 percent of the company's shares.
Ellis told Jackson not to mention any names in court, but at one point he referred
to "Representative A's" spouse as "Andrea," the name of
Jefferson's wife. One of Jackson's court-appointed attorneys also slipped, mistakenly
referring to his client as "Mr. Jefferson," prompting Ellis to quip,
"All these presidents' names get mixed up, don't they?"
Jackson was accompanied to court by his wife, Sandra, who sat quietly in the
back of the courtroom as her husband acknowledged his role in the alleged bribery
scheme. His confident demeanor was a contrast to that of Brett Pfeffer, a former
Jefferson aide who pleaded guilty in January, saying Jefferson demanded bribes
from a wealthy northern Virginia woman who agreed to invest in iGate's African
telecommunications ventures.
Company booster
Court documents say Jackson was introduced to Jefferson in 2000 and that the
two found out they had something in common: Jefferson was active in promoting
trade in Africa, and Jackson was chief executive officer of iGate, then a fledgling
telecommunications company looking for investment opportunities.
Jefferson quickly gave iGate a lift by persuading the Army to test its products,
one of which allowed broadband video and audio signals to be transmitted across
copper telephone lines. Court documents say Jefferson also helped get iGate
listed on the General Service Administration's schedule of contractors, exposing
its products to all federal agencies. The technology ultimately was used at
Fort Stewart in Georgia.
But prosecutors say Jefferson soon demanded that Jackson sign a "professional
services contract" with a company controlled by the congressman's wife
and family. The company is not named in the documents.
"The agreement was designed to conceal the illegal nature of the payments
demanded by Representative A and to make them appear to be for legitimate consulting
services, while in fact those payments were designed to be in return for Representative
A performing official acts in promoting iGate products and business," according
to the statement of facts signed by Assistant U.S. Attorney Mark Lytle. "Representative
A's spouse signed the agreement on behalf of (the) company."
Andrea Jefferson could not be reached for comment.
The arrangement, according to the statement of facts, was for iGate to pay $7,500
a month to the Jefferson family company, 5 percent of gross sales over $5 million,
5 percent of all capital investments and 1 million shares of stock over 5 years.
Between 2001 and 2005, Jackson got "numerous false invoices" for consulting
services from the company, which "appeared to be signed by Representative
A's spouse," court documents say.
Jackson told investigators he was afraid to say no.
"Jackson believed that in the event that he did not pay these invoices,
Representative A would stop performing official acts on behalf of iGate and
take affirmative steps to impede the success of iGate," he said in the
plea agreement.
Expanding to Nigeria
In 2003, the business started to look overseas. Traveling to Nigeria, Jefferson
met with officials from Netlink Digital Television, a Nigerian company, and
introduced them to iGate's broadband technology. Soon, Netlink agreed to pour
$45 million in financing into a project in Nigeria and cut a check for $6.5
million up front to iGate.
A month later, according to Jackson's plea, Jefferson presented Jackson with
an "amendment" to the deal. The documents said he wanted 35 percent
of any iGate profits from its African business ventures.
Prosecutors went to great lengths in an effort to demonstrate that Jefferson
abused the power and resources of his elected office, a key element of the public
bribery statute. They said Jefferson used his congressional staff to book trips
to Nigeria, Ghana and Cameroon to promote iGate and relied on the U.S. Embassy
in Nigeria to arrange meetings with high-ranking government officials, including
the country's president and vice president. The documents also say Jefferson
wrote to several African officials on iGate's behalf using House of Representatives
letterhead and went to the Export-Import Bank of the United States to seek loan
guarantees for the company.
New source of money
The documents portray Jefferson as a dedicated business partner, working doggedly
to promote iGate's fortunes and keeping the company afloat when it was faltering.
Help was needed in the spring of 2004 when the Nigerian deal began to unravel.
Because of an unspecified dispute, Netlink decided to stop doing business with
iGate, leaving the company without a primary investor.
It wasn't long before a new one was lined up, court documents show. Pfeffer,
the former Jefferson aide, introduced Jackson and Jefferson to Lori Mody, a
multimillionaire from McLean, Va. She eventually agreed to fill the void left
by Netlink, pledging to invest as much as $45 million in iGate's Nigerian ventures
and to pay $3.5 million up front.
With the financing for iGate back on track, the documents say, Jefferson insisted
on another financial favor. He said a member of his family should be hired to
draw up the legal papers to set the new Nigerian arrangement in motion.
Mody is referenced in court documents as a "cooperating witness."
Sources familiar with the case say she recorded conversations with Jefferson
as part of the investigation.
In June 2005, she underwrote a trip for Jefferson, a member of his congressional
staff, Pfeffer and an iGate employee to Ghana to promote the company's venture.
It was the third West African nation in which Jefferson promoted iGate. Despite
his efforts, however, the company was still without a deal on the continent.
Jackson had hoped to ink an agreement with Nigeria's state-run telephone company,
Nitel. But in the summer of 2005, he got word that Nitel was considering doing
business with local telecommunications companies instead. Jackson, documents
said, once again turned to Jefferson for help.
On House stationery, Jefferson wrote to Nigerian Vice President Atiku Abubakar,
encouraging him to "look into the matter" with the managing director
of Nitel. Jefferson also paid a visit to the vice president's home in Potomac,
Md., "for the purpose of salvaging iGate's Nigerian deal."
Three weeks later, the FBI raided Jefferson's homes and the home of Abubakar.
Jackson is expected in court July 27 for sentencing.
. . . . . . .
Staff writer Bruce Alpert contributed to this story.