- Associated Press - Monday, March 10, 2014

WASHINGTON (AP) - District of Columbia Mayor Vincent Gray knew about an off-the-books “shadow campaign” to support his 2010 bid for the office and personally requested the funds from an influential district businessman, federal prosecutors said Monday.

Gray, who’s seeking a second term and faces seven challengers in the district’s April 1 Democratic primary, dismissed the allegations as false and said he thought all the fundraising for his campaign was legitimate.

The explosive allegations were revealed in court documents detailing the activities of Jeffrey Thompson, the multimillionaire former owner of a well-connected accounting firm who pleaded guilty Monday to two conspiracy charges.

According to the documents, Gray met Thompson for dinner at the apartment of another admitted conspirator in August 2010 and presented Thompson with a one-page budget of $425,000 needed for get-out-the-vote efforts. Thompson agreed to pay that amount by funneling it through another company, the documents said.

During an earlier meeting, Thompson told Gray he would fund his campaign but that the contributions would not come from him or anyone associated with him, the documents said. Thompson told Gray to say the money came from “Uncle Earl.” Earl is Thompson’s middle name. After the meeting to discuss the shadow campaign, Gray thanked Thompson and referred to him as “uncle,” the documents said.

Gray has not been charged with a crime, and on Monday he reiterated his longstanding denial of any wrongdoing.

“I have always been clear that I was not aware of any illegal activity related to my 2010 campaign. I have spent my entire adult life serving the community and have done so with an unblemished record,” Gray said in a statement. “I cannot say this any more clearly: The allegations against me are false and I will steadfastly fight them.”

U.S. Attorney Ronald Machen declined to say whether the mayor would be charged. The investigation is ongoing.

“What you learned about today was really only the tip of the iceberg,” he said.

In addition to Gray, Thompson admitted funding a $608,000 shadow campaign for Hillary Rodham Clinton’s 2008 presidential bid and shadow campaigns for seven candidates for local office in the district, prosecutors said in the documents. Clinton was not aware of the illegal expenditures on her behalf, they said.

The total value of Thompson’s illicit contributions was $3.3 million, prosecutors said.

“Today’s guilty plea pulls back the curtain on years of widespread corruption,” Machen said. “With Mr. Thompson’s cooperation, we have the opportunity to hold many wrongdoers accountable and to usher in a new era of honesty, integrity and transparency in D.C. politics.”

Thompson’s expenditures on Gray’s campaign totaled $668,000, and they were never reported to the city’s campaign-finance office, prosecutors said. The money went toward consultants, supplies and a massive get-out-the-vote operation centered east of the Anacostia River, where Gray defeated then-Mayor Adrian Fenty by huge margins.

Following the election, Thompson gave $10,000 to a close relative of Gray to help settle campaign debts, prosecutors said. And after Gray took office, Thompson spent $40,000 on home improvements for a “close personal friend” of the mayor, according to the documents.

Prosecutors alleged that in 2006, Thompson ran a $278,000 shadow campaign for mayoral candidate Linda Cropp, who ended up losing to Fenty. But they said they had no evidence that Cropp knew about the shadow effort. She also received contributions from Thompson and his associates that were included on her financial statements.

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