- Associated Press - Thursday, September 4, 2014

RALEIGH, N.C. (AP) - The campaign of Gov. Pat McCrory says it will give to charity more than $10,000 in political donations tied to a North Carolina paving company involved in what federal prosecutors say was bid-rigging and kickback scheme involving nearly $88 million in government highway construction contracts.

The owners of Boggs Paving Inc. hosted a March 2012 fundraiser for then-candidate McCrory at the spacious Waxhaw home of company president Carl A. “Drew” Boggs, III. He pleaded guilty in U.S. District Court last week to conspiracy to defraud the U.S. Department of Transportation and money laundering. Boggs, 50, now faces up to 25 years in prison and $500,000 in fines.

According to a federal indictment, Boggs and seven co-defendants conspired to get federal and state contracts by claiming a minority-owned small business would do part of the work. Prosecutors say millions in payments to a bank account in the name of Styx Cuthbertson Trucking that were later funneled back to Boggs Paving. To help hide the fraud, magnetic decals featuring the name of the minority-owned firm were affixed over the Boggs logo on the doors of trucks at the construction sites.

McCrory campaign director Bill Constangy told The Associated Press that the Republican governor’s campaign will give to charity an amount equal to the political donations from the Boggs family and their employees.

“Taking advantage of a program designed to help disadvantaged businesses is wrong,” Constangy said this week. “Our campaign will not be associated with these actions.”

Records show Boggs Paving, based in Monroe, has received at least $6 million in contracts from the N.C. Department of Transportation since McCrory became governor in January 2013.

Drew Boggs did not respond to phone messages seeking comment.

Campaign finance records reviewed by The AP show Boggs, a brother who co-owns the paving business, members of their immediate family and company executives gave at least $28,000 in cash and in-kind contributions to the campaigns of state officials from both parties between 2003 and 2013, the years during which prosecutors say the fraud occurred.

Records show Drew Boggs gave $2,000 in 2011 to the campaign of state Senate leader Phil Berger Sr., a Republican.

Boggs and his family also gave $4,000 to the campaign of former Gov. Beverly Perdue and $5,000 to former Gov. Mike Easley, both Democrats.

The Boggses also sent $8,300 to the political action committee of the Carolina Asphalt Pavement Association, which distributes campaign money to scores of state legislators.

Constangy said the family hosted a March 2012 fundraiser at the home of Drew Boggs, attended by the future governor. According to tax records, Boggs lives in a 9,500-square-foot house valued at $2.2 million.

“We are not aware of any other personal interactions between our campaign and anyone associated with this company,” Constangy said. “Our campaign was not made aware of any improper activity either before or after this event.”

Constangy added that the governor’s campaign “continues to adhere to the election laws in North Carolina and maintain its high ethical standards.” He said checks totaling the amount of the donations tied to Boggs will be donated to the Durham Rescue Mission and the Joe Martin ALS Foundation.

It is the second time McCrory’s campaign has disgorged money from donors later charged with crimes. Last year, McCrory’s campaign gave to charity $18,000 tied to political donors related to the Internet sweepstakes industry who were later indicted.

One of those donors was sweepstakes game software provider Chase E. Burns of Anadarko, Okla., who last year pleaded guilty in Florida to two criminal counts of assisting in the operation of a lottery. As part his plea deal, prosecutors agreed to drop 205 felony counts against Burns while he agreed to forfeit $3.5 million from bank accounts seized as part of the investigation.

As AP reported last year, one of the accounts prosecutors say was used to launder proceeds from Burns’ company was used to send $235,000 in checks to the campaigns of more than 60 North Carolina officials - including McCrory, Berger and state House Speaker Thom Tillis, who is currently running for U.S. Senate.

Records show that nearly all of Burns’ political giving was handled by the Charlotte offices of Moore & Van Allen, the law and lobbying firm where McCrory worked until days before he was sworn in as governor. McCrory has denied any involvement in distributing the checks, which may have violated state laws prohibiting corporate money from being used to “directly or indirectly” fund political campaigns.

The N.C. Board of Elections have been investigating for at least 18 months whether the Burns donations violated state law, but no results of that probe have yet been made public. The governor appoints the elections board.


Follow Associated Press writer Michael Biesecker at Twitter.com/mbieseck

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