Virginia entrepreneur caught in growing political drama

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Before Star began to focus on supplements, Mr. Williams was in a race against himself to try to “fix the tobacco industry.” He testified in a legal case over his patents that sought to use microwaves to reduce the cancer-causing toxins called tobacco-specific nitrosamines, or TSNAs, that develop during the tobacco curing process.

By the late 1990s, Star Scientific, formerly known as Star Tobacco and Pharmaceuticals, was selling cigarettes to make money while it tried to license its process to make less harmful ones. The “StarCured” method was at the center of a longstanding patent dispute that ended last year with Reynolds American Inc., the country’s second-largest tobacco company, paying Star Scientific $5 million as part of a confidential settlement agreement.

In the early 2000s, Star unsuccessfully test marketed a cigarette with very low-TSNAs under the Advance brand. It also began selling tobacco lozenges.

After years of losses, Star discontinued its cigarette business in 2007 and exited the smokeless tobacco business at the end of last year to focus on dietary supplements, including Antabloc and its CigRx supplement to reduce the urge to smoke. Star said its smokeless tobacco business had a “negative impact on our ability to interest leading scientific and medical research centers in undertaking clinical research.”

Its sales, almost all of which came from Antabloc, grew to $6.2 million last year, up from $1.2 million the previous year. Still, it lost $22.9 million last year, compared with a loss of $38 million in 2011.

Last November, Star Scientific said Mr. Williams and several shareholders were investing $20 million in the business and that he’d reduce his salary to $1 per month starting in 2013 until the firm is profitable.

Despite its losses, Star donated more than $255,500 to political campaigns, including those of Mr. McDonnell and Mr. Cuccinelli. Mr. Williams also gave them thousands in personal gifts.

The governor, who signed the catering contract, did not report the payment on state ethics forms because he said he considered it a gift to a family member and therefore exempt from disclosure.

Three days before the wedding, first lady Maureen McDonnell flew to Florida to speak to investors and scientists on behalf of the supplement. Months later, the governor hosted a luncheon at the Executive Mansion to help launch the product. A picture of Bob McDonnell smiling and holding the product was removed from the Anatabloc Facebook page after questions surfaced about their relationship.

Mr. McDonnell has said only that Williams and his wife, Celeste, are “close family friends” and that his work on behalf of the company was similar to his promotion of any other Virginia product.

After mounting scrutiny over previously undisclosed gifts from Mr. Williams and recently sold stock in Star Scientific, Mr. Cuccinelli, a Republican gubernatorial candidate, recused himself from representing the state tax department in a $700,000 tax dispute with the company.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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