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Feds seek to link D.C. mayor to illegal campaign scheme

By Bill Mears, CNN Senior Producer
updated 5:57 PM EDT, Mon March 10, 2014
STORY HIGHLIGHTS
  • For first time, prosecutors say Mayor Vincent Gray knew about campaign finance irregularities
  • Local businessman pleads guilty to masterminding "shadow campaign," prosecutors say
  • Mayor has long claimed he did nothing wrong in 2010 and is running for reelection

(CNN) -- Prosecutors on Monday for the first time sought to link Washington Mayor Vincent Gray to campaign finance irregularities stemming from his successful 2010 bid as well as an effort to cover them up.

The allegations were made during a hearing at which a local businessman, Jeffrey Thompson, pleaded guilty to conspiracy for masterminding a nearly $670,000 illegal "shadow campaign" for Gray in 2010, federal prosecutors said.

Moreover, prosecutors publicly claimed Gray was aware of the illegal fundraising and had agreed with Thompson to cover it up.

Thompson was expected to cooperate with the government and could receive a reduced sentence.

Gray has not been charged with any wrongdoing.

But his campaign has been the focus of a long-running federal investigation. Four of his top campaign aides as well as others have pleaded guilty to felonies related to the shadow campaign.

The probe had clouded much of his lone term. With his eyes set on reelection this year, Gray has adamantly denied having anything to do with Thompson's activities and repeated that through his campaign manager on Monday.

"I have already responded to that again and again and again and again and again," Gray told CNN last year, "I didn't do anything -- period."

His campaign manager, Chuck Thies, said Thomson is difficult to believe.

"Jeff Thompson has lied and conspired and manipulated elections and politicians and people for years. It is impossible to believe anything he says. His actions prove that he is not to be believed," Thies said.

"I think the voters in D.C. are smart enough to know that an admitted felon is difficult to believe. And when given the choice to believe Vince Gray or Jeff Thompson, that can be no choice," he said.

Gray's challengers are now leveling allegations of cronyism and pay-to-play against Gray and have tried to make ethics are major aspect of the campaign.

According to prosecutors, Thompson allegedly used the code name "Uncle Earl" when dealing with Gray.

They alleged in court documents that Thompson, 58, used his companies to funnel millions of dollars in off-the-book contributions to various federal and city candidates.

None of the candidates were identified by name in the charging documents, but prosecutors said in court Gray was a key recipient of the funds.

Thompson and his unnamed co-conspirators allegedly disbursed "approximately $668,800 in excessive and unreported corporate contributions to pay for campaign services and campaign materials in coordination with and in support of" Gray's campaign, the papers said.

Thompson was also charged with passing on more than $600,000 in unreported campaign contributions to a presidential candidate in 2008.

"In the Thompson charging documents, boilerplate language is used to describe all the campaigns that Thompson sought to illegally influence: (Hillary) Clinton's, Gray's and many others," said Thies.

"We urge the media to be cautious when reporting the facts of this case and avoid the innuendo that our political opponents will gladly promote as gospel," said Thies.

"Mayor Gray called for this investigation. Mayor Gray has always said he did not break any laws," he added.

CNN's Dan Merica contributed to this report.

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