Pro-slots donations probed by U.S.

Federal investigation looks into group formed by an ally of Ehrlich's

February 15, 2004|By David Nitkin | David Nitkin,SUN STAFF

With the odor of money surrounding Maryland's slot machine gambling debate growing stronger, the U.S. attorney's office in Baltimore is making fresh inquiries into links between political figures and industry donations designed to influence votes and public opinion.

An investigator for U.S. Attorney Thomas M. DiBiagio began calling slots opponents last week, seeking information on a secretive group established by Richard E. Hug, the campaign finance chairman for Gov. Robert L. Ehrlich Jr. and a member of the state university system Board of Regents.

Hug is soliciting donations from horse-racing and gambling interests for a nonprofit group, Citizens for Maryland's Future, that plans to run advertisements supporting Ehrlich's slots initiative. But the man who raised more than $10 million for Ehrlich's 2002 election has refused to disclose whom he has contacted, who else is involved in the effort and exactly how the money will be spent.

Hug, who did not return telephone messages yesterday, has said he is not required to reveal the information. But critics say that because he is a close ally of the governor and an influential higher-education appointee, the solicitations give the appearance of a shakedown. And the secrecy, critics say, is hiding the intentions of the individuals and corporations behind the donations.

"I would think Dick Hug, as a member of the Board of Regents, would want to have full disclosure," said W. Minor Carter, head of the anti-gambling group StopSlotsMaryland, who had a half-hour conversation with a federal investigator Thursday. "I think they realize if these names come out, it is going to be a big blow to their cause. They want to keep this a secret."

Carter said investigator Carl P. Jaworski asked him whether he had observed new trends in the gambling debate this year; Carter said he thought it was the same as last year.

The willingness of the U.S. attorney's office to gather information on Hug's activities reflects DiBiagio's desire to pay attention to public corruption cases. Maryland has a long tradition of federal prosecutors aggressively pursuing top public figures, including former Gov. Marvin Mandel, a Democrat who was convicted of charges related to helping the horse-racing industry in exchange for cash. The conviction was overturned on a technicality. More recently, the FBI has undertaken a preliminary inquiry into donations made by Maryland track owner Joseph A. De Francis to a national political group led by Senate President Thomas V. Mike Miller, a slots proponent.

Other DiBiagio public investigations include the Baltimore City Council's use of free parking passes, a look at an anti-crime office led by then-Lt. Gov. Kathleen Kennedy Townsend and an indictment of former state pension fund manager Nathan Chapman.

The gambling debate is ripe for inquiry, said Del. Luiz R.S. Simmons, a Montgomery County Democrat and sponsor of legislation to limit gambling donations in Maryland.

"For whatever reason, gambling has always been a magnet for political corruption," Simmons said. "Ehrlich campaigned against what he called the culture of corruption in Annapolis. I think what the Hug affair shows is that he does not intend to put an end to it. He merely intends to open it under new management."

James Browning, executive director of Common Cause/Maryland, said yesterday that he spoke with a federal investigator twice last week about potential ties between Ehrlich and Hug's fund-raising committee. Although Ehrlich aides said they knew of the effort before it started, they said they have not been involved. Hug says the group does not have to disclose donors because it was formed under federal tax rules that allow for issue-based advertisements; it would violate federal law for such groups to coordinate their efforts with politicians or campaigns.

The investigator was "asking if we had evidence of the two campaigns being coordinated," Browning said. "The evidence is Dick Hug himself. That is fact number 1. Beyond that is the long list of people in racing who are already supporting Bob Ehrlich."

The interviews with federal officials were first reported in The Washington Post yesterday.

Shareese N. DeLeaver, a spokeswoman for Ehrlich, said yesterday that the governor's office "did not have any involvement" with Hug's group.

"It is our understanding that Mr. Hug's actions are not illegal or unethical in that he is acting as a private citizen," DeLeaver said. "Hypothetically speaking, obviously the governor will not tolerate any unethical or illegal conduct."

A spokeswoman for DiBiagio did not return telephone messages yesterday.

Common Cause released an analysis this month showing that gambling and horse-racing interests donated $170,000 to Maryland politicians in the past year. The governor and Lt. Gov. Michael S. Steele were the largest recipients of the contributions, collecting $34,725 over the 53-week period examined.

Ehrlich has promised extensive budget cuts if his slot-machine gambling plan is not adopted this year. Simmons, the Montgomery delegate, said the Hug effort shows a "kind of desperation" among allies of the governor to get slots passed.

Carter, the lobbyist for the anti-slots group, has filed a complaint with the State Ethics Commission, saying that state ethics laws require Hug to disclose the largest donors and the dollar amounts because the expenditures are intended to influence state legislation. The General Assembly is considering Ehrlich's latest slots plan, which the governor says would yield as much as $900 million yearly for public education.

"I realized that slots was a full-employment act for lobbyists," Carter said. "I didn't realize it was a full-employment act for federal investigators as well."

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