Eibensteiner testifies in financing trial

By Matthew Stolle

Since the start of the trial, one of the central props in the case against Ron Eibensteiner, the former chairman of the state Republican Party, has been a thank-you note signed by the one-time GOP honcho.

Prosecutors have cited the letter as evidence of Eibensteiner's role in facilitating an illegal corporate contribution into the 2002 gubernatorial race. State law bars contributions from corporations to state campaigns.

Thursday morning, defense attorneys sought to undermine that evidentiary strut by calling to the witness stand the alleged author of the letter, Ron Eibensteiner himself.


During more than an hour of testimony, Eibensteiner admitted signing the letter but said he had nothing to do with drafting, revising or editing the note. It was one of thousands of computer-generated letters the former GOP chairman said he signed in acknowledgment of donations received by the party.

"I thought it was a typical thank-you letter that I had signed hundreds and hundreds of times," said Eibensteiner, who faces four gross misdemeanor counts of violating state campaign finance laws.

The letter thanks Ron Jerich, a lobbyist, for a $10,000 check on behalf of American Bankers Insurance, a company facing regulatory difficulties in the state of Minnesota.

Eibensteiner, who was chairman from 1999 to 2005, also contradicted the testimony of a St. Paul Pioneer Press reporter, who testified that in an interview in late February 2003, Eibensteiner told him that corporate contributions sent to the national GOP party in Washington would be sent back to the state party in an apparent money-laundering scheme.

But when his attorney William Mauzy asked him whether he made such a statement, Eibensteiner emphatically denied it.

"No, I did not," Eibensteiner said.

If convicted, Eibensteiner faces up to a year in prison and a maximum fine of $3,000 on each gross misdemeanor count.

Eibensteiner's trial takes place against a backdrop of turmoil for the national Republican Party amid allegations of scandal and corruption.


U.S. Rep. Tom Delay of Texas has been indicted for similar campaign finance improprieties. I. Lewis "Scooter" Libby, Vice President Dick Cheney's chief of staff, has been indicted for perjury and obstruction of justice. And Senate Majority Leader Bill Frist, a Republican from Tennessee, is being investigated for possible insider trading.

Eibensteiner's trial is being heard by a six-person jury in Olmsted District Court and presided over by Judge Lawrence Collins. The charges were originally filed in Mower County, where Eibensteiner is alleged to have bought air time on KAAL-TV on behalf of Tim Pawlenty's campaign. The case was moved because of pretrial publicity.

The trial stems from a political strategy American Bankers mounted in the fall of 2002 to influence the outcome of the gubernatorial race. The insurance company didn't want Independence Party candidate Tim Penny to win the election, because of his intention to reappoint Jim Bernstein as state commerce commissioner.

American Bankers was looking at a $3.4 million fine as part of a settlement negotiated by Bernstein, and the company hoped to get a more lenient settlement through the appointment of a different commissioner, either from a Democratic or Republican governor. The company consequently wrote checks for $15,000 to both the national Republican and Democratic parties.

In February 2003, after Gov. Tim Pawlenty won the election, American Bankers settled its disciplinary action by agreeing to pay $200,000 in fines and $1.8 million in investigatory costs.

While on the stand, Eibensteiner insisted he would not have sent the thank-you note if he had been familiar with its contents.

Eibensteiner said he was only concerned about thanking contributors to the state Republican party, not the national party. The note sent to Jerich thanks him for American Bankers' donation to the Republican National State Election Committee, a Washington-based committee also known as RNSEC.

RNSEC would eventually send the state GOP party $2.6 million in support of state races. Prosecutors allege money from RNSEC was part of a quid pro quo, but a RNSEC official has denied such a possibility. He said the organization maintained strict walls between corporate and individual accounts and only money from individual accounts would have made its way to Minnesota.


Eibensteiner also claimed that he had no knowledge of American Bankers or its regulatory problems.

Special prosecutor Earl Gray passed on the opportunity to cross-examine Eibensteiner, indicating he would prefer to wait until Monday when the trial resumes.

Eibensteiner's attorney has indicated that he plans to call half a dozen more witnesses, including Jerich, the person to whom Eibensteiner sent the letter. The case could be submitted to the jury as early as Tuesday.

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