Memo Reveals Evidence in State Contracts Case - NewsChannel5.com | Nashville News, Weather & Sports

NewsChannel 5 Investigates: Friends in High Places

Memo Reveals Evidence in State Contracts Case

(Story created: 1/3/05)

Al Ganier, a friend of former Gov. Don Sundquist, is now awaiting trial on federal obstruction of justice charges. Now, NewsChannel 5 has obtained a confidential memo that lays out the case against Ganier.

It's the second case from our Friends in High Places investigation of insider state contracts.

After a federal grand jury indicted Education Networks of America founder Al Ganier for obstruction of justice back in November, his lawyer dismissed it as "Plan B" in a failed investigation that turned up no evidence of contract fraud.

Now, in a memo -- filed under seal, but inadvertently released by court clerks -- prosecutors have put Ganier on notice that they are prepared to fight back at trial.

"The investigation has revealed evidence of illegal and otherwise inappropriate activity with the award of the first ConnecTen contract to ENA," the memo says.

Included, they say, are "allegations that Defendant had a romantic relationship with, and received inappropriate assistance" from a woman involved in the contracting process.

Prosecutors add that they plan to introduce that evidence only if Ganier, during the defense phase, tries to claim he had nothing to hide.

The memo also notes that Ganier "had no Internet services company" until the Sundquist administration gave him a no-bid contract to connect Tennessee schools to the Internet.

His newly formed company, Technology Partner, later became Education Networks of America -- which won two long-term contracts worth almost $200 million.

Prosecutors said Ganier's secret partner, from the beginning, was another Sundquist friend, John Stamps.

The confidential memo also provides clues about what ENA vice president Bob Collie may have told a federal grand jury.

After the grand jury subpoenaed state e-mail relating to ENA's contract in December 2002, Collie e-mailed the company's in-house lawyer saying, "I've spoken with Al and here is what he wants... his e-mail set to delete after six months..." as well as getting rid of former employees' e-mail after six months.

The lawyer, Michael Bressman, responded: "We should not be doing any mass deletion of emails or other documents."

Despite that warning, prosecutors say Ganier later called his secretary at home on a Sunday to get her computer password.

"The secretary gave Defendant her password. Defendant never before had asked for her password or, for that matter, called her at home on a weekend. After speaking with Defendant, the secretary called the FBI," the memo says. Agents has previously interviewed her.

Five days after that call, agents raided ENA's headquarters.  Prosecutors say they found evidence that Ganier had deleted memos written to Sundquist's deputy governor, Alex Fischer, about plans to pump millions more into ENA's state contract.

The discussions with Fischer included a $1 million federal grant from the Appalachian Regional Commission in 2002, just after Sundquist became co-chairman of the multi-state federal agency.

According to the prosecution memo, "Fischer instructed SDE [the state Department of Education] to prepare and submit an application" for a reading project involving ENA, "without any consideration of whether SDE supported the project or even wanted to apply for the grant."

Together with other state and federal funds, that grant would have led to an $8 million contract extension, the memo says. 

Because of the controversy surrounding the ENA contract at the time, state finance officials refused to sign off on it.

Prosecutors say the deleted evidence also includes notes regarding a political fundraiser for Texas governor Rick Perry, at a time when ENA was trying to land a contract there.

Ganier's lawyers want that stricken from the indictment, saying it has nothing to do with Tennessee contracts.

But prosecutors say it shows "how ENA attempts to influence and curry favor ... with state officials."  They say there's no evidence of any wrongdoing by Perry.

Fischer did not return a phone call to his home.

In a statement to NewsChannel 5, Ganier defense lawyer Aubrey Harwell said:

"That document should never have been released to the press and the public.  The very face of the document suggests the possibility of Mr. Ganier being prejudiced if it's released. Nonetheless, regardless of why it occurred, Channel 5 has seen the document. Mr. Ganier maintains his innocence just as he has from the beginning.  The government has taken bits and pieces of information and attempted to complete a picture suggesting Mr. Ganier acted illegally. Nothing could be further from the truth, and when the full story is told, that will be obvious."

Prosecutors also write that they filed their memo under seal partly because it involves matters still under investigation.

Ganier's trial is scheduled to begin March 29.

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