Prosecutors grill ex-Gov. Bob McDonnell over loans from businessman

Former Virginia Governor Bob McDonnell (R) is accompanied by his daughter Cailin Young as they are surrounded by his legal team and journalists before entering the U.S. District Court for the Eastern District of Virginia August 26, 2014 in Richmond, Virginia. Chip Somodevilla, Getty Images

RICHMOND, Va. -- Former Virginia Gov. Bob McDonnell on Tuesday faced the most pointed questions yet about his dealings with businessman Jonnie Williams, whose gifts and money are at the heart of the ex-governor's corruption trial.

McDonnell has been testifying in his own defense since last Wednesday, when he first took the stand.

Prosecutors asked McDonnell about a series of emails and notes in February 2012 in which McDonnell was trying to finalize a $50,000 loan from businessman Jonnie Williams. While that was going on, McDonnell and his wife prodded state officials about doing research to help Williams' dietary supplement, Anatabloc.

In one sequence, jurors saw emails six minutes apart. McDonnell asked Williams about documents to finalize the loan, and then told his staffer to "see me about anatabloc issues" at Virginia Commonwealth University and the University of Virginia.

McDonnell responded forcefully when questioned about the emails.

"We don't make decisions based on money. No sir," McDonnell said. The most he did for Williams, he said, was try to get in him touch with the proper people who could evaluate his request.

Prosecutor Michael Dry also asked McDonnell about a former administration official's testimony that he asked her to meet with representatives of Williams' company nine days after the $50,000 check was deposited into the account of a real estate venture he owns with his sister. McDonnell said he did not remember making such a request.

McDonnell and his wife, Maureen, are charged with accepting more than $165,000 in gifts and loans from Williams, the former CEO of Star Scientific Inc., in exchange for promoting his company's tobacco-based supplement.

Although defense lawyers have tried to paint Maureen McDonnell as the one responsible for securing loans from Williams, the emails prosecutors have presented always use the words "us" or "we" indicating she was writing on behalf of her and her husband.

McDonnell said his email to his staffer and lawyer, Jason Eige, was "to ask him to get a phone call returned, which I've done thousands of times. It's basic constituent service."

Jurors also saw an email that Maureen McDonnell sent to Eige earlier that month in which she wrote "Gov wants to know why nothing has developed w/ studies."

Under the timeline developed by prosecutors, Maureen McDonnell sent the email while she and the governor were riding in a car together to a political event.

Bob McDonnell said he was not pressing for information on the studies, and he didn't know why his wife said as much in an email. Dry responded with incredulity.

"Your wife was misleading one of your most trusted advisers?" Dry said.

"I don't know. I'm saying that is not true," McDonnell said.

Instead of making a cash loan, Williams initially proposed letting McDonnell borrow 50,000 shares of Star Scientific stock that he could use as collateral for a loan from a brokerage. McDonnell denied that the stock transfer was scrubbed because it would have triggered public reporting requirements, saying he was still negotiating with Williams when the check arrived for the two Virginia Beach vacation rental properties he owns with his sister.

The properties lost $40,000 to $60,000 every year.

"Your view is that Johnnie Williams was giving loans to MoBo despite the fact that it was losing money since '06? You believe that he thought this was a good investment?" Dry asked. "MoBo had lost money for the last six years, but a businessman like Williams would still give 70k to the venture and expect to get his money back?"

McDonnell rejected Dry's suggestion that those losses were not sustainable, saying the goal was to build equity over the long haul.

Dry then played a television interview that showed McDonnell talking about cutting spending to balance the state budget. McDonnell told a Fox News' Sean Hannity that government has to balance its checkbook just like people do at home.

"You can't spend more than you have for any period of time or you go broke," McDonnell said.

Dry also questioned McDonnell closely on the status of his friendship with Williams. Prosecutors allege that Williams was not so much a personal friend to McDonnell as he was a source of cash to the McDonnells, who carried large personal debts. They pointed out numerous documents and emails in which McDonnell routinely misspelled Williams' first name.

"I misspelled his name, yes sir," McDonnell said. "I've misspelled other people's names."

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