NewsChannel 5 Investigates: Capitol Hill Corruption
Senator Taps into Connections for Land Deal
(Story created: 2/24/03)
State Sen. Jerry Cooper isn't normally at a loss for words.
Still, he was reluctant to talk about how taxpayers helped finance a personal business deal.
"Why won't you talk to us on camera?" asks NewsChannel 5 chief investigative reporter Phil Williams, catching up with Cooper in the hallways of Legislative Plaza.
"Because I don't want to," Cooper replies.
Cooper sponsored last year's billion-dollar sales tax increase.
And, as chairman of the Senate Commerce Committee, the Warren County Democrat wields enormous power over legislation affecting Tennessee businesses.
But it's what he did to help his own business that's raising eyebrows.
"This is very, very serious -- and in many states, there would be a prosecution that would emanate from these facts," says Charles Lewis, executive director of the nonpartisan Center for Public Integrity.
Four years ago, as Cooper faced a staggering debt from his Warren County sawmill, the state senator found a potential buyer for part of his operation.
Tony Auyer, a contractor from Huntsville, says he wanted to produce crossties for the railroad industry.
But there was a problem: The property Cooper was trying to sell didn't connect to some nearby rail lines.
"The rail spur was a critical part of your plan?" Phil Williams asks Auyer.
"Yeah," Auyer replies, "it was critical. We needed it."
In fact, documents obtained by NewsChannel 5 show an appraisal indicated that "without a rail spur," the value of Cooper's property "would decrease."
Other documents show the senator's land was "not a viable option" without the railroad connection. Those documents also note that "the property has been on the market for some time and has not sold."
That's when the Commerce Committee chairman turned to his friends at the state Department of Economic and Community Development (ECD).
ECD officials approved the use of almost $300,000 of your tax money to build the rail spur to Cooper's land. That money came from the state's Tennessee Industrial Infrastructure Program, also known as TIIP.
Documents show the TIIP grant was approved "at the request of ... Senator Cooper."
"It looks like that you were helping yourself," Phil Williams tells Cooper, who replies:
"I'm sorry, Phil, you are totally wrong."
Cooper says it was his effort to bring jobs to that land.
"That piece of property was going to bring 40-50 jobs to my home county. Yes, I did -- could make money off that property if that rail spur came in -- without question."
"And you used your position?"
"But, Phil, I'd do that for everybody else."
The Center for Public Integrity's Lewis says, "It's an outrageous act by a sitting legislator -- one of the worst I've ever seen, in fact."
Lewis reviewed the documents uncovered by our NewsChannel 5 investigation.
"This was a state senator, who was in an important power position and used that power position to enhance the value of his land."
Then, with state approval for the rail spur in hand, Auyer was able to secure a federally guaranteed loan to buy Sen. Cooper's property. That $1.8 million loan would come from BankTennessee, a West Tennessee bank with its own Senate connection. It was guaranteed by the U.S. Department of Agriculture (USDA).
Among the bank's owners, the speaker of the Senate -- Lieutenant Governor, John Wilder.
Wilder did not respond to questions by NewsChannel 5 about his involvement, if any, in the transaction.
Documents show Auyer paid Cooper $1.3 million.
Of that, $800,000 paid off the senator's mortgage.
Cooper deposited the remaining $500,000 back into BankTennessee to guarantee Auyer's loan.
Then, with his own money at stake, Cooper admits he went back to his friends at the state and convinced them to give Auyer a $500,000 equipment loan, using federal Community Development Block Grant (CDBG) money.
All that despite Senate ethics rules that say it's a "conflict of interest" to act as a senator expecting a "direct monetary gain."
"Because I'm a state senator, you are going to penalize me," Cooper says. "Phil, I just don't think that's wrong."
State officials approved the loan despite a long list of concerns: that the "project was of above average risk," a "large amount of debt" was being incurred, "the deficiency of the collateral," and "the inexperience of the owner."
"How many Tennesseans, how many Americans, would actually get half a million dollars under these circumstances?" Lewis asks. "Ninety-nine out of a hundred of us would not get anything. But if we are friends of Sen. Cooper, well, that's a different story, isn't it?"
In fact, Auyer -- with hundreds of thousands of dollars of your money -- went bankrupt. He blames it on the downturn in the economy.
State officials were able to stop the rail project and save most of the $300,000.
But now state auditors suspect Auyer may have submitted bogus invoices for the equipment and pocketed much of the $500,000 equipment loan -- a charge Auyer denies.
"Phil, you're not treating me right, and you know that," the state senator insists.
As for Cooper, he got the $800,000 used to pay off his mortgage, but he lost the $500,000 he put down to guarantee Auyer's loan -- which he argues makes him a victim.
But when we tried to press him on the details, he had had enough.
"Phil, I'm done, honey. Now, I've been more than nice to you. Now, be nice to me -- as a person. Thanks."
Charles Lewis says taxpayers are the ones who should really be upset.
"It's just absolutely outrageous and unabashed by Sen. Cooper to think that he could get away with this."
State and federal auditors have been investigating the invoices submitted by Auyer, as well other claims he made to get the money. The matter is also being investigated by the Tennessee Bureau of Investigation.
So far, most of the attention has focused on him, not Sen. Cooper.
In fact, Lewis says -- because of weak laws passed by legislators to regulate themselves -- such conflicts may not be illegal in Tennessee.