Probe of Sundquist Deals Intensifies - | Nashville News, Weather & Sports

NewsChannel 5 Investigates: Friends in High Places

Probe of Sundquist Deals Intensifies

(Story created: 10/30/03)

It's an investigation that began more than a year ago. Now, the criminal probe into state contracts appears to be intensifying.

It all began with our own "Friends in High Places" investigation.
That investigation first exposed how the Sundquist administration handed millions of dollars in contracts to friends of the governor.

The question now: could indictments be far behind?

"The longer the matter goes on and the more seriously it's taken by the government, the more likely it is that an indictment will issue," says former federal prosecutor Gary Blackburn.

The criminal investigation first went public in October 2002 when FBI and TBI agents hauled away records from Workforce Strategists in Chattanooga.

That's a company that was owned by a friend of the governor.

Then came a raid that December on another. Inside Education Networks of America (ENA), agents carted away boxes of documents and copied computer hard drives.

Now, inside the U.S. courthouse in downtown Nashville, a federal grand jury meeting in secret has been hearing from a parade of witnesses in recent months. The focus: state contracts awarded by former Governor Don Sundquist's administration to two friends of the governor, John Stamps and Al Ganier.

In fact, NewsChannel 5 has learned that among those who've testified is Sundquist's Labor Commissioner Mike Magill and Education Networks of America vice president Bob Collie.

Recently, a former state employee (who asked not to be identified) testified. The witness reportedly had been granted immunity.

"Immunity means that the government agrees not to prosecute you for something that your information may suggest is criminal," Blackburn adds. Two decades ago, Blackburn represented one of the defendants in the public corruption investigation that ultimately sent former Gov. Ray Blanton to prison.

"There's obviously reasons to grant immunity," agrees retired FBI supervisory agent Ben Purser. A decade ago, Purser supervised the investigation of how gamblers corrupted state government.

"That could very well mean that person has a low-level involvement in a violation, and a decision has been made that it warrants giving this person immunity to get their testimony."

State education officials recently complied with a federal grand jury subpoena for more records relating to a no-bid contract given to Technology Partners, as ENA was originally known.

The subpoena also demanded the personnel records of former Education Department employee Jacqueline Shrago, who supervised ENA's contract.

In addition to all the grand jury activity, the contracts investigation is also shaping up to be a clash among some of the titans of Nashville's legal community.

For the prosecution: U.S. Attorney Jim Vines, himself a Republican appointee.

Leading the investigation is Vines' chief assistant, Zach Fardon -- a top-gun public corruption prosecutor from Chicago. There, Fardon spearheaded a major investigation involving friends of Illinois Gov. George Ryan.

"They used the RICO statute, which was originally designed to go after mobsters, against white-collar political operatives," says Chicago political reporter Ed Marshall.

As for Sundquist, he has responded by hiring criminal defense lawyer Bill Farmer. A former federal prosecutor, Farmer was one of the attorneys to whom former Davidson County Sheriff Fate Thomas turned when agents targeted him.

Sundquist friend John Stamps has hired Hal Hardin. Hardin was the U.S. Attorney who oversaw the Blanton case and helped orchestrate the governor's early removal from office.

And Al Ganier has hired noted white-collar defender Aubrey Harwell. Harwell's clients have included former San Francisco 49ers owner Eddie DeBartolo in a case involving former Louisiana Governor Edwin Edwards.

"Intelligent people who are involved in an investigation need the advice of competent attorneys," Harwell says. "The very fact that they seek counsel doesn't suggest any guilt."

Blackburn adds, "If I were advising a client in this circumstance, I would tell them to pick up the flag sooner rather than later."

In other words, cut a deal. Blackburn says, while every corruption investigation is different, they usually follow a predictable pattern.

"Typically, the government would start at the bottom and work up the food chain, as it were, to the point that you had those individuals who had the ability to control what had occurred."

Prosecutors and investigators have refused to comment on the status of the case.

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