Former Virginia governor cross-examined in corruption trial

Government prosecutors got their first chance Monday to cross-examine former Virginia Gov. Bob McDonnell, suggesting that his dire need for cash was the driving force behind his questionable relationship with a local millionaire.

McDonnell has insisted that his financial problems have been overstated, testifying last week that he did not need the $50,000 loan that health supplement manufacturer Jonnie Williams made to McDonnell’s wife in 2011, and that he was upset when he learned about it.

But Assistant U.S. Atty. Michael Dry painted a picture of the McDonnells’ increasingly strained finances, quizzing the onetime rising Republican star about a series of credit card transactions in which McDonnell was forced to juggle balances from one account to another, sometimes paying fees of as much as $400 each time.

Dry also portrayed McDonnell as sounding increasingly desperate in a string of emails with family members about how to cover a shortage of funds to pay expenses for two Virginia Beach rental properties and a $1,001 monthly payment on a loan from a friend to cover previous shortfalls at the rental houses.

The issue of the McDonnells’ finances is important because the prosecution is trying to build a case that Bob and Maureen McDonnell urgently needed Williams’ assistance.

The two are charged with 14 counts of conspiracy and defrauding the citizens of Virginia for allegedly helping Williams get publicity for his products and introducing him to state officials who could conduct government research on his products. In return, prosecutors say, Williams provided loans and gifts to the couple and their children.

Dry started his long-awaited cross-examination with a staccato series of questions that each began, “You don’t deny,” listing at least a dozen gifts or loans from Williams to McDonnell or his family.

“No,” the onetime vice presidential hopeful responded to many of the questions. In one exchange, Dry noted that six minutes after McDonnell emailed Williams to ask for money, he sent another email to his policy advisor asking about the possibility of Virginia universities studying Williams’ product.

Last week, McDonnell insisted that his wife was responsible for most of the contacts with Williams. He has also said their marriage has long been troubled, suggesting they could not have conspired together because their relationship was so poor.

On Monday, Dry seemed to question that characterization by displaying recent photographs that showed the couple holding hands and walking close to each other.

McDonnell’s demeanor was markedly different than it was during three days of questioning from his own lawyer last week, when he appeared comfortable and confident.

On Monday, McDonnell started off quiet and subdued, so much so that Judge James R. Spencer twice ordered him to speak up and answer the questions.

McDonnell wore a dark gray suit and blue Joseph A. Bank tie — “my designer,” he quipped to a reporter during a break, referring to the men’s clothing chain. He was apparently seeking to emphasize his modest taste as a contrast with his wife, who accepted from Williams $19,000 in designer clothes plus a gown for her daughter’s wedding.

Dry sought to demonstrate that the two Virginia Beach rental properties McDonnell bought with his sister at the height of the housing bubble were a constant headache. Even during the pressures of the legislative session, the governor was preoccupied with such details as finding cash to pay a pest-management company for “a serious bed bug problem” and finding an inexpensive bocce set to make the house more attractive to renters.

McDonnell struggled to refinance his mortgages — which eventually were greater than the properties’ values — as well as a $50,000 high-interest loan from a friend.

McDonnell agreed under questioning that he and his sister faced an annual shortfall of $40,000 to $60,000 from the rental houses, which they had to scramble to cover every year.

While he was in the middle of such a scramble in 2011, Williams came into their financial lives. Williams was promoting his new dietary supplement, Anatabloc. McDonnell was in his second year in office.

Williams befriended Maureen McDonnell and eventually the governor, lending the couple $120,000 to pay off credit card debt, which at one point reached $70,000, and to help them cover expenses for the rental properties.

Williams paid for clothes, golfing trips and equipment; the use of expensive cars, a boat and his airplane; and numerous other items that prosecutors say were worth $177,000 when combined with the loans.

Dry attempted to demonstrate a link between the gifts and McDonnell’s efforts to help Williams’ business.

He showed McDonnell a letter Williams wrote to the governor indicating that Williams was interested in studies of his dietary supplement at two state medical schools.

McDonnell said he only skimmed the letter, which came “a couple of weeks” after Williams wrote $65,000 in checks to McDonnell’s wife and daughter.

“You never called Mr. Williams and said, ‘I think I should return that money?’” Dry asked.

“No,” McDonnell responded.

Dry’s cross-examination is expected to continue Tuesday.

tim.phelps@latmes.com