Senator, Alaska politics under siege

Wide-ranging corruption probe threatens to change the face of state government

Posted: Wednesday, August 08, 2007

GIRDWOOD - U.S. Sen. Ted Stevens' home sits on a quiet, graveled street where black bears occasionally ramble and traffic is a rarity.

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So his neighbor, Julie Pederson, was startled when a caravan of SUVs pulled up to the senator's shuttered home at midmorning July 30, just as she finished preparations for a smoked-salmon brunch to honor a friend's birthday.

Men and a few women dressed in black poured out of the cars and surrounded the house. Pederson called a local trooper to report what was an FBI raid of a sitting U.S. senator's home.

The agents opened the door with the aid of a locksmith, and they didn't leave until about midnight as they sought evidence of a major campaign contributor's involvement in the remodeling of Stevens' home.

"I don't know how the senator feels about this," Pederson said. "But if this happened to me, I would feel so violated."

An extraordinary political drama is unfolding in Alaska as the FBI and federal grand juries investigate Stevens, the nation's longest-sitting Republican senator, and his son Ben Stevens, a former state Senate president whose office was twice searched by federal agents last year.

The wide-ranging public-corruption investigation started with bribery allegations in the Juneau statehouse. It now threatens one of the most powerful Republican politicians in Washington, D.C., and could reshape politics in the state.

"Our state needs to grow up and clean up," Alaska's GOP governor, Sarah Palin, said last week. "We need to prove to the rest of the nation that our government is as clean as our environment and ... that we can do it right."

Ted Stevens, 83, is a national icon whose legislative prowess directed billions of federal aid and development dollars to his state. Here, he commands respect for his dedication to Alaska. Through the course of his 39 years in the Senate, he weathered the loss of his first wife in a 1978 plane crash and personal financial challenges.

A master at bare-knuckle politics, he's known for his charm and sharp temper.

Stevens is a close ally of the Boeing Co., and the fishing and oil industries he champions are important to Washington's economy.

He has said little about the investigation, but last week issued a statement asking Alaskans "not to form conclusions based upon incomplete and sometimes incorrect reports in the media."

Ben Stevens, 48, is a much more enigmatic figure. He worked his way up from cook to skipper in the Bering Sea crab harvest, the most dangerous fishery in America.

He later launched a lucrative consulting career with companies that also sought legislative help from his father, and he continued consulting after being appointed to the Alaska state Senate. There, he earned a reputation as an abrasive Republican who seemed to turn a blind eye to conflicts of interest before retiring from public office last year.

"He displayed an arrogance when it came to politics that he was entitled to it because of who his dad was," said Wev Shea, an Anchorage Republican and former U.S. attorney in Alaska.

Family friends say there was another side to Ben Stevens; that he was a devoted father to his four children, offering them time that was often difficult to obtain from his own father.

Ben Stevens couldn't be reached for comment for this story.

The raid was a wrenching turn of events in a state where bumper stickers boasted, "We don't care how they do it Outside."

Prosecutors drawn from outside, with the help of additional FBI and IRS agents called in from the Lower 48, are deep into the marathon corruption investigation. So far, four former state lawmakers have been charged, including one who was found guilty of bribery charges last month.

Those under scrutiny include Trevor McCabe, a former aide to Ted Stevens, and Rep. Don Young, the state's only member of the U.S. House.

The investigations have touched two pillars of the state's economy: fish and oil.

In December, several Seattle-based fishing companies received subpoenas for contracts detailing financial ties to Ben Stevens. Federal investigators have followed up with some interviews, including talks with officials of one Washington-based seafood company, according to sources familiar with the investigation.

The investigators' most visible efforts surround the oil industry, which generates almost all the state's tax revenues. Bill Allen, the former chief executive of the oil-services contractor VECO, has pleaded guilty to bribing state lawmakers in exchange for votes favoring the oil industry. Allen, a friend and political backer of Ted Stevens, has pledged to cooperate with federal officials.

One of the alleged co-conspirators is identified in a federal indictment as state "Senator B" who began serving in the Legislature in 2001. That appears to be Ben Stevens, because he was the only state senator who gained office that year.

Though Alaska occupies a vast realm, it has a small population, and business, social and political relationships are often intertwined.

Individuals with ties to VECO have given more than $88,000 in campaign contributions to Ted Stevens from 1989 to 2006, according to the Center For Responsive Politics. Allen also was a business partner with Ted Stevens in a racehorse-owning partnership.

And it was Allen's involvement in Stevens' Girdwood remodeling project that apparently led to last week's raid.

For years, Ted Stevens' official Alaska residence was a cabin. In a state where past business scandals on the North Slope tallied millions in bribes and kickbacks, some Alaskans find irony in the renovation of this modest home becoming a focus of investigation.

The house, initially 1,200 square feet, sits at the base of the Alyeska ski resort, which in the summer still draws thousands of tourists to a deep-cut valley about 40 miles south of Anchorage.

Though there are plenty of posh retreats here, the Stevens home - even after the remodel expanded it to 10 rooms and three baths - is not among them. It's drab, with peeling paint and an overgrown backyard. Perhaps the most striking feature is a sculpture of three enormous salmon that sits on the porch.

Stevens is an infrequent visitor here, but he lets family and friends use the house, according to Clem Tillion, a former Alaska legislator and longtime friend of Stevens.

Tillion, who spent one night in the remodeled home, said its most notable piece of furniture was a new bed. He also said the remodel was difficult and that Allen was helping Stevens with the project as a friend.

One of the contractors who worked on the home told The Anchorage Daily News that he was hired by Allen, and he was directed to provide bills first to VECO, where they would be checked for accuracy. When the invoices were approved, the contractor would fax them to Stevens.

A government document that accompanied Allen's plea agreement specifically says VECO is not a home-improvement company.

In a June 7 handwritten letter to Shea, the former U.S. attorney, Stevens said he and his wife, Catherine, paid more than $130,000 of their own money for the work.

Stevens said in the letter this was a time of "strife."

"This is a sad portion of my life - it will take time to explain," Stevens wrote. "Someone - or more than one - keeps telling the FBI that's not so. Takes time to go look over five years to prove they are wrong."

Like so many Alaskans, Ted Stevens came from out of state. He was born in Indianapolis and spent his late teenage years in Southern California, where he lived with an aunt and uncle.

He matured into a man of short stature and fiery determination, who after a World War II career as an Army pilot graduated from UCLA and then Harvard Law School.

In 1953, at age 29, he headed to Fairbanks, Alaska, where he was soon tapped for U.S. attorney. He cultivated an image as a tough prosecutor who would crush the crime that flourished in gambling and prostitution houses, according to Alaska historian Don Mitchell.

Alaska was less than a decade into statehood when Stevens was appointed senator in 1968. He helped set the stage for the state's economic explosion, crafting legislation that settled Native claims and enabled the construction of the oil pipeline.

In 1976, he worked with Washington Sen. Warren Magnuson to pass landmark federal legislation that claimed harvest rights over all seafood within 200 miles of the nation's coast.

Stevens opened his Washington D.C.-area home to young Alaska fishermen, who would plot strategy and drink beer in the basement as they lobbied Congress.

Ben Stevens is one of five children the senator had with his first wife, Ann Cherrington Stevens. Several family friends said she was a strong woman who helped keep the family together while the senator - often absent - was consumed by his work.

In the late 1970s, Ben Stevens shipped off to sea with one of the crab skippers, Bart Eaton, who had come to Washington to lobby for the fisheries legislation.

It was a wild, dangerous era when fortunes were made and many lives lost harvesting abundant stocks of king crab and other seafood. Ben Stevens stayed in the Alaska fisheries for some 15 years, working his way up to a skipper's job.

Several crabbers remember him as a hard-working man who rarely mentioned his famous father.

"Ben, to me, was always like a little bulldog," said Ron Briggs, a crab skipper who now lives in Oregon. "He just had this intensity and fortitude, that he was going to do it - and be successful. And he was very successful."

Ted Stevens also was attracted to the crab industry, investing in a commercial crab vessel. But his timing was bad and the boat came on line as the crab harvests declined.

It was a tough blow for a politician as some other Alaskans made their fortunes. Stevens was long a local advocate of raising congressional salaries, saying it was difficult for people who weren't already wealthy to stay in Congress.

In 1988, in an interview with the Anchorage Daily News, a 65-year-old Ted Stevens equated a decision to continue in Congress as a type of compact under which he would give up lucrative job opportunities for voters' pledge to support him.

"I see this election as determining whether the state wants someone with great seniority," he said. "I just want people to understand the commitment I'm making if I stay on.

"This is a period I could go out and make $1 million a year without any question," he said.

He stayed in office, and his financial fortunes improved as he entered into a series of real-estate and other investments with Alaska business associates.

In his 2005 financial disclosure form, Stevens reported assets worth between $1,073,000 and $2,445,000. In comparison, a 1995 disclosure form reported assets worth between $495,000 and $1,225,000.

Within the past decade, Ben Stevens also prospered.

He studied international business in Washington, D.C., and briefly sampled life as a lobbyist there before returning to Alaska to launch a business-consulting career. He showed no reticence in cultivating clients who also were helped by his father.

Ted Stevens pushed through legislation that created a seafood-marketing board that gave grants to seafood companies. Ben Stevens consulted for some of the companies that benefited from the grants, and he later became head of the marketing board.

Ted Stevens helped crab-boat owners secure a $100 million federal loan to help shrink an oversized fleet. Ben Stevens collected $42,500 in consulting fees from the Bering Sea Crab Effort Reduction Fund, according to a financial disclosure form covering his 2000 earnings.

One of the vessel owners who contributed to the fund was Gary Painter, of Oregon. Painter said he thought his money was going for lobbying to secure the loan program.

Ben Stevens also looked to Alaska's oil and gas industry for clients, and financial-disclosure documents indicate that VECO was his biggest client. Some of his friends say he was struck by his father's financial frustrations in political office - and he was reluctant to consider a political career of his own.

But in 2001, he was appointed to an open state Senate seat. He took the job, emerging as a staunch ally of the oil and seafood industries even as he continued consulting.

He also earned a reputation for his caustic comments.

In early 2006, he called Sarah Palin, then an upstart Republican candidate for governor, a "Pollyanna" for questioning what she called his conflicts of interest.

Then, Palin said in an interview last week, Ben Stevens warned her that she wasn't just running against Republican party leaders - "You're running against me."

By the end of last week, the clouds and rain had enveloped Girdwood. Along Ted Stevens' street, a few people drove by and gawked at the house, which had curtains drawn tight.

The investigation continues, and many Alaskans wonder what happens next. The answers are shrouded in the secrecy of the federal grand-jury process.

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