NewsChannel 5 Investigates: Friends in High Places
Grand Jury Seeks Economic Development Records
(Story created: 4/9/04)
A federal grand jury is asking even more questions about how former Gov. Don Sundquist's administration spent your tax money.
It's the latest twist in the criminal investigation of insider contracts, which was sparked by our own "Friends in High Places" investigation.
Until now, the federal grand jury had subpoenaed records from the state departments of finance, labor and education.
Now, the grand jury has issued a subpoena for evidence from the state's department of economic development.
The subpoena comes a month after a former Sundquist Labor Department appointee was indicted, accused of helping to rig a $2 million contract for a friend of the governor, John Stamps.
Now, the grand jury has subpoenaed all documents relating to:
Grant applications submitted to the federal Appalachian Regional Commission (ARC) from 2001 to 2003;
Grant monies received from ARC during those same years;
Expenditures or disbursements of grant monies received from ARC during those years;
Contracts between the state and any private contractor whereby the contractor was to provide materials or services contemplated by a grant application submitted by the state to ARC during those years; and
Performance of state contractors working on ARC funded projects during the years 2002 to 2003.
"It's three years worth of documents," said Mike Kopp, the deputy ECD commissioner.
"One of the things that our program management people pride themselves on is keeping a lot of documentation. We're talking about literally hundreds and hundreds of files."
Among the contractors during that time: Education Networks of America.
ARC approved a $1 million grant for an advanced reading program using ENA's Internet connection to Tennessee schools.
ENA was started by two friends of the governor, John Stamps and Al Ganier.
In addition, a review of campaign financial disclosures shows that the on-going criminal investigation has apparently cost Sundquist some of his leftover campaign funds.
During 2003, Sundquist's campaign spent $17,668.50 on legal fees to the Nashville law firm of Farmer & Luna.
As NewsChannel 5 has previously reported, attorney Bill Farmer has represented the former governor behind the scenes during this investigation.
As of Dec. 31, 2003, Sundquist still had $1.8 million left over in his campaign account.
There was no comment Thursday from either prosecutors or former governor Sundquist.
Bredesen administration officials say they weren't told what the grand jury was looking for, that they're just giving the grand jury exactly what it wants.