The Case of the Tainted $25,000

MIDWESTERN MONEY: Suppose you’re a Santa Barbara attorney and the state of Iowa wants you to investigate a gambling-money case. Gambling? In the Corn Belt state of Iowa? A tainted $25,000 donation to the governor? Get out!

Actually, garish casinos—17 so far and more to come—have become bonanzas for once-sleepy cities and towns, generating badly needed jobs and cash to fatten civic budgets.

These days, every town wants one, including (sob!) once-tiny Ottumwa, Iowa, where my mother’s family once lived near their prosperous farm. Photos I’ve seen of these neon-flashing pleasure palaces make our own Chumash Casino, object of much disdain, look like a bland church retirement home.

If you try to mix gambling, politics, and money, controversy can get hot enough to boil vats of sweet corn. But Santa Barbaran Larry Scalise, one of the coffee-drinkers at Vices & Spices, didn’t hesitate to take on the prickly job of probing whether the law was broken by a suspect $25,000 donation to Gov. Chet Culver.

Why Scalise decided to take the special prosecutor to task, I don’t know. He’s a happy man living in semi-retirement here and in Iowa. Yet he eagerly took on the investigation, which is still in its infancy. It happened that Sue and I were in the capital of Des Moines last weekend for a family reunion and cornered Scalise in his favorite Italian restaurant, Sam & Gabe’s.

A genial, soft-spoken man, Scalise wouldn’t talk about the gambling-money case. But it looks like he’s the ideal man for the job. He was once Iowa’s attorney general. He knows Iowa politics backward and forward, and also took part in a federal investigation of former San Antonio mayor Henry Cisneros, who later pleaded guilty to lying to the FBI over payments to his mistress.

I don’t know if Gov. Culver or anyone else broke the law; but for a man facing a tough reelection campaign next November, he did not heap himself with glory in the eyes of the honest Iowa folk by soliciting donations from at least two of the four groups when their applications for casino licenses came up last year.

But Culver’s people pointed out, in stories I read in the Des Moines Register, that since he wasn’t on the commission that decided on the licenses, there was no conflict of interest or anything improper. In fact, the governor supported all four applications. (Why alienate anyone, especially voters who are just aching for all those jobs plus oodles of tax cash, right?) What happened, according to the newspapers, is that a group with an interest in one of the applications supposedly gave $25,000 to three men who handed it to the governor. That may happen in California all the time and no one thinks twice, as far worse things happen here. But it might be a violation of the Iowa law banning these kinds of hidden, third-party donations. In any case, Iowans do not like them. After the fuss erupted, Gov. Culver donated $25,000 to charity.

(In the end, only one of the four applications was approved, and not the one that forwarded the money. One of those denied was that of an Ottumwa group, which, I am happy to report, did not give any money to the governor, directly or indirectly.)

Not only was Gov. Culver aware that the three-way money was actually from the gambling applicant; he even sent a letter of thanks. After all, if you want to donate cash to a politician, what good does it do you if he doesn’t know who it came from?

I have no idea who’s right or wrong or who, if anyone, broke the law, but I wish coffee-drinking Santa Barbaran Scalise all the luck in the world figuring it all out. No one has been indicted yet and maybe no one will be indicted. In the meantime, Culver’s Republican opponent on the November ballot, former governor Terry Bransted, is taking shots at Culver over the case. He suggests it was a pay-for-play deal.

But wait. The Register pointed out that Branstad, who took more than $200,000 from gambling interests this year, was himself under scrutiny for accepting questionable money back in 1982. Branstad, then the state’s lieutenant governor, got $3,250 from a group of for-profit nursing home operators wanting to boost their state subsidy.

Questions about where the money is coming from also led to the town of Ottumwa’s downfall. Turned out that the outfit promoting the proposed Rippling Waters Casino—sounds so down-home charming, doesn’t it?—wasn’t operating with its own money. The dough was actually coming from Morgan Stanley, the Wall Street investment bank. And, not surprisingly, Morgan Stanley was reluctant to have its employees subject to Iowa’s required background checks.

So much for Ottumwa’s hopes for a 50,000-square-foot casino with a 100-room hotel generating up to $35 million a year plus over $8 million in taxes. Maybe. When I return to Ottumwa for the next family reunion, I won’t be completely surprised if I find Rippling Waters’ neon lights brightening the Iowan skies and the slots spinning.

Mom’s gone now, but I kind of think she’d get a kick out of it.