Photo: Chris Steller, MnIndy

As the Minnesota Independent reported yesterday, a business merger has scuttled a lawsuit that implicated a Norm Coleman benefactor in a money-funneling scheme. Now Coleman tells the Star Tribune he’s glad for the imminent demise of the Texas civil-court complaint that has dogged him (though it doesn’t name him) since last October. The suit, which alleges that Nasser Kazeminy sent Coleman secret cash via Coleman’s wife’s employer, “obviously” hurt him at the polls. The former senator says:

There was never, never, ever anything involved in this that had anything to do with my wife or me in terms of any monies being traded. Nothing. And yet the allegations played out and the election is over and now the suit goes away and I’m glad it has.

The Strib’s Tony Kennedy writes that FBI officials continue to refuse to comment on the bureau’s investigation into Coleman and donor Nasser Kazeminy. Few details have emerged about the investigation, but in May, the Huffington Post and the local dailies reported that agents had interviewed a Minnesotan as part of the probe.

The FBI investigation came up during my interview Tuesday with Casey Wallace, the Texas attorney who filed the suit on behalf of Paul McKim, an ex-CEO fighting with the owners of his former company, Deep Marine Technology.

Wallace generally disavows any intent or interest in the political aspects of the lawsuit, which is in large part devoted to an unrelated dispute about the handling of the business, which Kazeminy controls.

But when I asked Wallace about the future of the charges concerning Kazeminy and Coleman, now that the current lawsuit looks doomed, he mentioned the FBI investigation as one avenue, besides Deep Marine legal action, that could turn up information. Does he know of anyone who has been interviewed?

“There are people who have been interviewed” was all Wallace said he could tell me.

Photo: Chris Steller, Minnesota Independent

The lawsuit alleging that Nasser Kazeminy funneled $75,000 to Norm Coleman because “senators don’t make shit” should be discontinued, according to the attorney who brought the civil case in a Texas court last year.

That’s because Kazeminy, a Minnesota businessman who is a friend and donor to the former senator, has since manipulated the structure of the company at the heart of the dispute — leaving the plaintiff without standing to sue.

“Our goose got cooked,” said Casey Wallace, who represents Paul McKim, the former CEO of Deep Marine Technology and a minority shareholder in the company.

The value of the Deep Marine stock McKim owns was reduced to a penny after a merger that Kazeminy helped engineer, Wallace said, leaving his client with no choice but to ask the judge to discontinue the suit in a court hearing on Monday at which the defendants urged dismissal.

The case will come to an end either way, as long as the judge agrees with one side or the other, in a ruling expected by week’s end.

That would be a victory for Kazeminy, who Wallace said used delays — ordered by the court for what turned out to be a “whitewash” investigation that “ratified” the defense’s position — to complete the merger.

The lawsuit’s end would also leave unresolved the question of whether Kazeminy forced Deep Marine Technology, the Texas company he controls, to make a series of payments to Hays Companies, the St. Paul insurance firm that employs the former senator’s wife, Laurie Coleman.

But Wallace said the Kazeminy-Coleman charges, along with the rest of the suit, could be revived in future legal action, either by McKim or other minority shareholders.

Checks entered into evidence show that Deep Marine sent $75,000 to Hays Companies, and two sworn statements say Kazeminy, out of concern for the Colemans’ financial situation, wanted yet another $25,000 to be disbursed.

Coleman isn’t named as a defendant in the case, and the suit alleges only that Kazeminy directed the money to Hays with the Colemans in mind. Despite immediate and continuing claims that the case amounted to nothing more than political blackmail, “We never tried to connect the dots to the Colemans,” Wallace said.

Indeed, although the cash-funneling charges have been the focus of media attention since the lawsuit was filed, shortly before the election last fall, Wallace said they are “very near the bottom — no, on the bottom” among a litany of financial misdeeds that McKim’s suit alleges.

Photo: Chris Steller, Minnesota Independent

Being out of office has its privileges. One consolation for Norm Coleman after finally conceding defeat to Al Franken: seeing ethics complaints and investigations in his rearview mirror.

Most of the complaints lodged against Coleman over the past year won’t survive his transition to former U.S. senator, but at least one federal investigation and allegations made in civil court continue. Here’s a rundown.

Rentgate
Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint with the U.S. Senate Select Committee on Ethics last summer regarding Coleman’s living arrangements in the nation’s capital, following reports that the then-senator leased a basement apartment from GOP operative Jeff Larson for a mere $600 per month.

“We imagine our ethics complaint will die — as the committee no longer has jurisdiction over Mr. Coleman,” said CREW’s Peter Bjork.

Donorgate
Shortly after Minnesota’s inconclusive U.S. Senate election last November, the advocacy group Alliance for a Better Minnesota filed complaints with the Senate Ethics Committee and the Federal Bureau of Investigation (FBI) about allegations that friend and benefactor Nasser Kazeminy had funneled $75,000 to Coleman via a business arrangement with Coleman’s wife’s employer.

ABM’s ethics complaint likely died with Coleman’s hopes of regaining his Senate seat, but any action by the FBI — including, according to news reports, an investigation — would continue “[regardless] of the fact that an individual is in or out of office,” according to FBI spokesman Bill Carter.

Likewise, the civil lawsuits containing the allegations against Kazeminy will proceed regardless of Coleman’s status. “Whether he’s elected or not elected, is embarassed or not embarassed, has no bearing on the case,” says Casey Wallace, plaintiffs’ attorney in a business dispute that only tangentially involves Coleman.

Wallace contends an investigation by the board of Kazeminy’s company that cleared Kazeminy of all wrongdoing is itself “wrong,” and says a companion lawsuit, in Delaware, to the original complaint, in Texas, will soon be re-filed.

Suitgate
The FBI is also said to be investigating allegations that Kazeminy paid for Coleman’s suits. As with looking into the alleged cash gift, the FBI won’t confirm or deny.

Leakgate
When donors’ financial data leaked from Coleman’s campaign website, his lawyers said the U.S. Secret Service would investigate. That investigation is “still ongoing,” according to spokesman Ed Donavan. Whether it’s focused on malicious hackers or the website’s lack of safeguards is unclear. But “the fact that he’s out of office [doesn't matter],” Donavan said. “We’re still going to pursue the investigation.”

Helpgate
Coleman said last December that he would seek advice from the Federal Election Commission (FEC) about whether it would be legal for his campaign to pay for expenses related to the Kazeminy lawsuit, in which Coleman is not named as a defendant. That month, ABM asked the FEC to investigate whether the campaign was in fact already doing so. The FEC did — but it took six months, and in the end the commission decided most payments by the campaign to Coleman’s lawyers would be legal.

The FEC’s advisory opinion applied not only to expenses Coleman incurs in the Kazeminy lawsuits, but also to expenses related to ethics complaints. The FEC specifically avoided ruling on whether Coleman’s recount committee — as opposed to his election campaign fund — could cover his bills. (Coleman hadn’t asked them that question, commissioners said.)

Norm Coleman concedes. Photo: Chris Steller, MnIndy

All of the allegations contained in a pair of lawsuits detailing a purported scheme to funnel $100,000 to then-U.S. Sen. Norm Coleman are false, according to the findings of a Special Litigation Committee appointed by the company at the center of the legal dispute.

The lawsuits allege that Nasser Kazeminy and his allies were responsible for gross fiscal mismanagement of Deep Marine Technology, a Houston-based underwater services firm. Among the alleged waste: an attempt by Kazeminy to provide funds to Coleman through a Minneapolis insurance firm where the former senator’s wife was employed.

The lawsuits were filed in the final days before voters went to the polls in the hotly contested U.S. Senate race between Coleman and Al Franken, which was finally settled on Tuesday with Coleman conceding the race to Franken after a lengthy recount and legal appeal which went to the Minnesota Supreme Court.

Bruce Gilman, chairman and CEO of Deep Marine Technology and parent firm Deep Marine Holdings, declines to discuss the specific allegation involving Coleman.

“All I can tell you is that all the allegations were found to be without merit,” he said. “I will not single out every one of the allegations in there because there are many, many allegations.”

The Special Litigation Committee was appointed to look into the charges shortly after the lawsuits were filed. The committee interviewed 24 people and scrutinized thousands of pages of documents during the eight-month investigation, according to Deep Marine Technology.

The initial lawsuit was filed in Harris County District Court in Texas, and is currently pending. A separate lawsuit involving the company, filed in Delaware, contained almost the exact same allegation regarding a Coleman-Kazeminy payoff scheme. That case has since been dismissed, however, according to Deep Marine Technology.

Norm and Laurie Coleman at a 2008 campaign event (Photo by Paul Demko/Minnesota Independent)

Gilman says that the company will now seek to also have the Texas case thrown out. “We will move to dismiss the action in the Texas litigation as quickly as possible,” he said. “We were obviously waiting for this to be concluded.”

The announcement of the investigation’s findings comes just a day after Coleman conceded the protracted U.S. Senate contest to Franken. But Gilman insists that the timing is entirely coincidental.

“Frankly I’d never heard of Norm Coleman until this lawsuit,” he says. “Believe me we were trying to get this done as quickly as possible, because these things are expensive. But if you have an independent group doing this you can’t tell them what to do.”

Casey Wallace, the attorney representing McKim, argues that the investigation wasn’t independent, but rather was controlled by the company’s board of directors.

“We believe that the conclusions of the Special Litigation Committee are wrong, that the investigation was skewed to have a certain outcome,” he said. “The special litigation committee is the board; the board is the special litigation committee. We don’t believe it’s independent or serves any purpose.”

Wallace says the outcome of the investigation will have no affect on his client’s legal strategy. “We plan to go forward,” he said.

Coleman has said that all of the allegations are false and that the lawsuits are politically motivated. Kazeminy has also denied any wrongdoing in the matter.

Related: Texas firm “stonewalling” suit that names Coleman, lawyer says

Just days before the November election, Paul McKim filed an incendiary lawsuit against longtime Coleman patron Nasser Kazeminy in Harris County District Court. It accused Kazeminy and his business associates of financially sabotaging the company that McKim founded, Deep Marine Technology. It also accused Kazeminy of trying to funnel $100,000 to Coleman through a Minneapolis insurance firm where his wife worked.

An almost identical allegation was made in a separate lawsuit filed in Delaware. B.J. Thomas, the former chief financial officer for Deep Marine Technology, has since corroborated parts of the allegations in a deposition stemming from the Texas case. The Federal Bureau of Investigation is also investigating the relationship between Coleman and Kazeminy.

According to Casey Wallace, the attorney representing McKim, Deep Marine Technology is seeking to bog down the case. The company’s board of directors has formed a “special litigation committee” to investigate the allegations.

“The special litigation committee is doing everything to stonewall this whole deal,” Wallace says. “It’s phenomenal to me the positions that they’re taking.”

But he doesn’t believe the legal machinations are necessarily related to the political implications of the case, he said.

“I don’t have any reason to believe that it has to do with the Norm Coleman thing,” Wallace says. “Honestly the Norm Coleman issues are very small.”

There are no settlement talks scheduled in the case, and no trial date has been set.

Coleman is not a plaintiff in the case. He and his wife have denied receiving any money from Deep Marine Technology. Kazeminy has also denied seeking to funnel money to the former senator.

The lawsuit was filed by company founder Paul McKim. Coleman is not a party to the case, but the allegations upended his re-election bid in the final days of the campaign. A separate lawsuit filed in Delaware contains an almost identical description of Kazeminy’s attempts to provide money to Coleman.

McKim’s attorney, Casey Wallace, had argued that there was no need for a delay in the court case. “These are simple allegations,” he told MnIndy last month. “This is not an Enron-ish type case. They’ve had plenty of time to do their investigation.”

A lawsuit alleging that Norm Coleman’s longtime associate Nasser Kazeminy attempted to funnel $75,000 to the senator should proceed without delay, says attorney Casey Wallace.

Last week, lawyers representing Deep Marine Holdings, a Houston-based company of which Kazeminy is a primary stockholder, sought a stay that would delay proceedings in the case for at least two months. They argued that an internal investigation set up by the company should be completed before any more court proceedings are held.

But Wallace, the attorney representing plaintiff Paul McKim, the founder and chief executive officer of Deep Marine Holdings, insists there’s no need for a delay.

“These are simple allegations,” he said on the phone from Houston. “This is not an Enron-ish type case. They’ve had plenty of time to do their investigation.”

A pair of lawsuits making nearly identical allegations about Kazeminy’s efforts to funnel money to Coleman were filed in Texas and Delaware courts just prior to the November election. The accusation is just one detail in a messy corporate dispute involving Deep Marine Holdings that has McKim at loggerheads with his former business partners.

The Federal Bureau of Investigation has subsequently launched a probe into Coleman’s ties to Kazeminy.

Coleman has denied the allegations made in the suits, dismissing them as a last-second political smear. But as the U.S. Senate contest continues to drag on more than two months after election day, the cases have begun moving, albeit slowly, through the courts.

While McKim’s attorney believes the case should proceed without delay, he doesn’t see any political calculations behind the effort to postpone the lawsuit.

“Absolutely not,” Wallace said. “If there were I’d be happy to tell you yes. I absolutely do not believe that to be the case.”

A decision on whether to postpone the Texas lawsuit could come as soon as Monday, when a hearing is scheduled on the matter.

The case in Delaware, meanwhile, is also creeping forward. Arguments on a motion to dismiss the case are due by the end of next month.

“We entered into serious settlement negotiations,” says Wallace. “Those broke down today.”

Plaintiff Paul McKim

The lawsuit alleges that Kazeminy steered $75,000 through a Texas firm he controls to Coleman through a job his wife, Laurie Coleman, held with a Minnesota insurance firm. If Coleman received such a gift and failed to report it, the repercussions could extend beyond his reelection prospects. Earlier this week, Alaska Sen. Ted Stevens was convicted of seven felony counts after failing to report gifts from friends on federal disclosure forms.

Coleman campaign manager Cullen Sheehan has denied the allegation, calling it “baseless,” and claiming that the lawsuit is politically motivated.

Wallace denies this assertion. “It was absolutely, positively not done for political purposes,” he says. “It has nothing to do with the election.”

Previous MnIndy coverage:

Video: Sen. Norm Coleman flees reporters asking about pal Kazeminy’s Texas lawsuit
Latest Coleman & Kazeminy connection: The Star Tribune needs to tell the story
Coleman and Kazeminy redux: Here’s the legal complaint in McKim v. Kazeminy et al