FBI probe targets governor

Jack Cardetti, Missouri Democratic Party spokesman, said Blunt improperly gave his political supporters control of the state’s 183 driver’s license offices during his administration’s mid-2005 privatization initiative.

However, that practice is nothing new. For decades the state has maintained operation of some of its license offices while friends of the governor operate the others through contracts with the state’s Department of Revenue. In 1952, for example, 110 state license offices were privately run.

The politically charged system has often drawn the ire of the party not residing in the governor’s mansion. License offices are powerful gifts that can generate up to $700,000 in annual revenues for those fortunate enough to land them.

This situation may be more than the usual political bickering, though.

The FBI probe may validate Cardetti’s accusation that Blunt abused his power by forming a system of umbrella companies established through Kansas City law firm Lathrop & Gage LC to run the state’s licensing network.

Cardetti speculates that Blunt’s scheme is to line his own pockets with revenues from the license offices through mysterious funding channels.

“That is the $64,000 question,” Cardetti said. “That is what is ultimately at the heart of this whole scandal.”

The next question is whether Blunt broke the law.

“If the governor is doing a public action, and then people close to him are enriching themselves off that action, and there’s an attempt to conceal who ultimately profits from those actions, that would certainly be illegal and I think that’s exactly why the FBI is looking into these (actions),” Cardetti said.

Shadow investigation

Though the investigation is common knowledge, spokesmen in the FBI’s Kansas City and St. Louis offices would neither confirm nor deny its existence. As a matter of policy, they can’t comment unless charges are filed.

Bud Cummins, the U.S. attorney for the Eastern District of Arkansas, would probably decide if charges should be filed, pending the investigation. Cummins, and not one of the two U.S. attorneys from Missouri, would likely handle the case in order to avoid conflicts of interest.

Catherine Hanaway, the U.S. attorney in St. Louis, is also a Republican and is a former speaker of the Missouri House.

Bradley Schlozman is the U.S. attorney for the state’s Western District, which is based in Kansas City and holds authority over Springfield and Jefferson City. He would likely head the Justice Department’s effort but for a possible conflict of interest generated by his predecessor, Todd Graves.

Graves stepped aside as U.S. attorney March 24, failing to give a reason for his resignation in the official news release dated March 10.

Speculators say Graves resigned to avoid controversy during an investigation. The Graves family has connections to Blunt. Graves’ wife and brother-in-law both run Kansas City-area license offices, awarded to them by Blunt about a year ago.

“It just looks too fishy that he would step down just out of the blue sky,” Democrat Cardetti said.

Don Ledford, spokesman for the U.S. attorney’s office in Kansas City, couldn’t confirm or deny an investigation or his office’s role in it.

A slip in rhetoric, and a rebuttal

Cherith Beck, spokeswoman for the U.S. attorney in Arkansas, also couldn’t confirm or deny the investigation.

However, when asked when she thought she could give confirmation of the investigation, Beck gave backdoor affirmation, saying, “I would say that’s something still under investigation, and there’s no way to know. It’s going to depend on what they come up with in the investigation whether or not we have something we can (release).”

Every official contacted, including Blunt’s spokesman Spence Jackson, admitted to hearing about the investigation, though no one said the FBI had come calling.

“We have no reason to believe that there is any sort of investigation under way,” Jackson said, while dispelling Cardetti’s claims of poor transparency within Blunt’s license office system. “There are a lot of things that we’ve done to make (the offices) more customer focused.”

Office operations were granted based on submitted business plans. At the time, the governor’s office said the moves were to cut costs after a combined $2.5 million loss in fiscal-year 2004.

“We’ve also made (the offices) less lucrative for operators,” Jackson added.

Office operators must now buy their own equipment and pay their own employees’ salaries, which wasn’t always the case, he said.

Jackson also said the governor can legally receive campaign contributions from license office operators, just as he can from any other private business owner.

Local ties

According to Leslie Carter and Ben Newhouse, the two operators of license offices in Springfield, there wasn’t any mystery to how they landed their offices last year.

Carter said she, not Blunt, established LTC LLC and PGF LLC in order to operate her three area license offices – 3061 S. Fremont Ave. and 149 Park Central Square in Springfield and 103 E. Church St. in Ozark. Springfield attorney John M. Carnahan III is the registered agent of Carter’s two corporations, according to state records.

Newhouse, who operates the 1534 S. Glenstone Ave. office, said he personally organized his office under Springfield Collection Agency LLC without any direction from Blunt. Newhouse, a financial adviser and attorney, is his own registered agent.

Both Carter and Newhouse insist their revenues stay in house.

“My understanding is that the license offices are run the way that they have always been run, whether it’s the Democratic Party or Republican Party (in the governor’s office),” Carter said.

Both Springfield license bureau operators have ties to the governor.

Carter was co-coordinator in Christian County for Blunt’s gubernatorial campaign, and her husband, Tom Carter, has been a friend of Blunt’s for more than 20 years.

Newhouse co-sponsored some local campaign functions for Blunt and has known the governor for about 10 years.

Both said they were aware of the investigation but neither has been contacted by the FBI.

“It’s just business as usual,” Leslie Carter said.