Former Cabinet Members Subpoenaed by Federal Grand Jury - | Nashville News, Weather & Sports

NewsChannel 5 Investigates: Friends in High Places

Former Cabinet Members Subpoenaed by Federal Grand Jury

(Story created: 12/3/03)

How did friends of former Gov. Don Sundquist land millions of dollars in state contracts? It's a question that two former members of Sundquist's Cabinet were forced to answer before a federal grand jury Wednesday.

It's all part of a criminal investigation, sparked by our own Friends in High Places investigation.

Former Sundquist Labor Commissioner Mike Magill (pictured above) emerged from the federal courthouse, after about an hour before the grand jury.

It was the second time he had testified this year.

Earlier in the day, former Education Commissioner Jane Walters also testified for about an hour, saying afterward she had no reason to believe she is a target of the investigation.

"Is Mr. Magill a target of the investigation?" NewsChannel 5's chief investigative reporter Phil Williams asked Magill's lawyer, Peter Strianse.

"Absolutely not," Strianse replied. "Mr. Magill is merely a witness in the investigation. He's here today in obedience to a subpoena. He has testified and cooperated fully with the investigation."

A Chattanooga company, Workforce Strategists, appears to be the focus of the questions for Magill, who approved a $1.9 million, no-bid contract for the company. The company was started by Sundquist friend John Stamps.

As NewsChannel 5 first reported, Magill wrote a memo saying the company was "the only company in Tennessee that has experience" for the job. That was written just six days after the company was incorporated.

In fact, our NewsChannel 5 investigation discovered that Magill had unsuccessfully tried four months earlier to get state finance officials to sign off on that same contract.

The question: did someone pressure him to approve the contract?

"Do you believe he has knowledge of criminal activity?" Williams asked Strianse.

"That's something for the grand jury to determine," the lawyer replied.

Strianse declined to discuss specifics of the case.

As for Walters, she approved the first of two multimillion-dollar contracts with Education Networks of America to connect Tennessee schools to the Internet. That company was started by Stamps and Sundquist friend Al Ganier, who got into the business with a no-bid contract.

A year ago, agents raided ENA, carting away boxes of evidence.

Now, the grand jury is hearing from the former governor's inner circle before it decides if there was a crime in high places.

As usual, prosecutors declined to discuss the investigation.

Sundquist's lawyer, Bill Farmer, did not return a phone call seeking his comment.

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