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.

Keller is one of three media staffers Bachmann employs — an unusually large number in the House.

Last year, Laurie Coleman, wife of former U.S. Sen. Norm Coleman, was named to The Hill’s list.

Here’s some of what The Hill had to say about Keller:

She has brown hair that falls just below her shoulders and brown eyes to match; she dresses stylishly but would rather have a meal with her family than go shopping; and she won her hometown beauty contest at the age of 17. …

Keller also volunteers through her church. Once a month she helps elderly people in Washington’s Anacostia neighborhood with work on their houses and yards.

One recent weekend she was in charge of stripping paint from the side of a house using a power-washer.

“I recently discovered that I’m very good with a power-washer,” Keller says. “I ended up getting soaking wet. But it was worth it, just to know you’re helping someone.”

Also on The Hill’s list this year is U.S. Rep. Aaron Schock (R.-Ind.-Ill.), the youngest Member of Congress and a Minnesota native. Of the “boy wonder” from Peoria, The Hill writes: 

He was born in Minnesota, the land of 10,000 lakes, and spent his first 10 years there, explaining his love for waterskiing and jet skiing. He still has family in the state’s west-central town of Morris and says he practices water sports on his retreats to the family cabin.

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.

(Photos: The UpTake)

In what could be the last time the forces of Al Franken and Norm Coleman clash within the same four walls, yesterday’s drama at the Minnesota Supreme Court didn’t disappoint.

The star power alone was enough to short out the huge, eye-like chandelier that hung over the proceedings.

First there was Coleman himself, greeted at the sidewalk by a clutch of cameras, making his courtroom entrance (with entourage) 25 minutes before the proceedings. No longer on crutches and moving with seeming ease, Coleman schmoozed with both sides. “Excellent job, by the way,” he purred to Franken lawyer Kevin Hamilton.

Associate Justice Alan Page, a former Minnesota Viking and the only justice to gain his seat on the bench via election, held the reins in the courtroom in the absence of recused Chief Justice Eric Magnuson.

Glasses propped above his eyebrows and wearing a brightly colored bowtie, Page asked the most questions, and the most basic: “Do we have authority to do anything here?” “Where is the purposeful and and intentional discrimination to create the equal protection claim?”

Page had picked the three lower-court judges who presided over the election contest trial and found Franken the 312-vote victor. Coleman was in court to ask Page and his colleagues to reject that ruling and return the case to the three-judge panel for more ballot-counting.

Each side was allowed three attorneys at its table; Coleman took a chair at his and sat studying the justices’ reactions as his lead lawyer, Joe Friedberg, parried their interruptions and inquisitions. To an inexpert eye, the court didn’t seem to be giving up many clues by their facial expressions and body language, but Coleman’s gift with people likely includes special skills at reading them.

Friedberg was Coleman’s point man and justices’ lightning rod. A prodigious trial attorney with zero election-law experience, Friedberg kept his famous folksiness mostly in check — beyond an opening line that ostentatiously undercut a Coleman miscue in front of the same five justices last December (before Friedberg joined the team).

“Minnesota is quite different from other states,” Friedberg declaimed, an approach 180 degrees from that of Roger Magnuson (no longer with the team) who tried to tell the justices that Minnesota suffered from Florida’s flaws in the 2000 presidential election.

Friedberg had a ready reply, if not always a satisfactory one, for the many questions directed his way. (”Absolutely, 100 percent, unequivocally: No!” was one.) But the expressive Friedberg seemed glum from the outset, perhaps in anticipation of what proved to be a brutal grilling from the bench.

Doug Kelley, Coleman’s attorney in another matter (the civil suits alleging that donor Nasser Kazeminy steered him unreported cash), made a surprise appearance, joining legal clerks and the former senator’s deep bench in chairs behind the main table.

A former assistant U.S. Attorney with a lot on his plate (handling the dissolution of Tom Petters’ empire for one), Kelley nonetheless showed himself capable of the most delicate of finger-waves as he headed back to Coleman’s side of the room following a round of introductions to the Franken team.

Coleman had more attorneys present, but the legal team for his Democratic opposite formed a more cohesive group on the courtroom floor. Before the proceedings all but Marc Elias (Franken’s presenter) joked and goofed; afterwards, the four huddled with smiles all around.

Coleman isn’t named in the lawsuit (or in a similar suit pending in Delaware), but he is implicated by charges that Kazeminy ordered officers of a business he controlled, Houston-based Deep Marine Technology, to send $100,000 to Hays Companies, the St. Paul insurance firm where Coleman’s wife, Laurie, works.

The two former Deep Marine executives who brought the suit have given sworn testimony that although the payments were ostensibly for insurance advice, they don’t know of any such service being rendered. And, they claim, Kazeminy introduced his instructions by saying, “United States senators don’t make shit.”

Coleman charged that the lawsuit, filed shortly before last November’s election, was meant to damage his campaign. He blamed his political enemies, including Franken — a charge the Democrat denied.

The deposition was part of a civil lawsuit filed by Thomas and former Deep Marine CEO Paul McKim in Texas in October 2008. The suit implicates Minnesota businessman Nasser Kazeminy in a scheme to funnel funds to then-U.S. Sen. Norm Coleman, R-Minn.

According to the allegations, an insurance-consulting contract required Kazeminy-controlled Deep Marine to pay the Hays Companies — the insurance firm  where Coleman’s wife, Laurie, works — $100,000, of which $75,000 was actually sent.

The deposition took place in Houston. The raw transcript text was uploaded to the St. Paul Pioneer Press’ Political Animal blog on Friday. The Minnesota Independent has excerpted two long passages that deal directly with the Hays Companies and the Colemans.

The excerpts appear below, reformatted for easier reading. The first excerpt contains questioning of Thomas by Deep Marine attorney K.B. Battaglini. In the second excerpt the questions are from Casey Wallace, attorney for Thomas’ co-plaintiff, McKim. Thomas’ own lawyer, Charley A. Davidson, also speaks. According to the original transcript, the deposition took place over a full work day at the offices of Davidson’s firm, Locke Lord Bissell & Liddell, LLP.

Q. (BY MR. BATTAGLINI): …Now, before we leave the subject of insurance, did the company ever end up doing business with — did DMT or DMH ever end up doing business with the Hays Company?

A. Directly?

Q. Directly.

A. Yes.

Q. Okay. When was that?

A. That would have been in ‘07.

Q. Okay. And what was the nature of the business that the company was doing with the Hays Company?

A. There was an insurance consulting agreement.

Q. Okay. And is that something that you had looked at and signed off on?

A. And it was something that was sent to us, and the direction from Mr. Kazeminy was that we would enter into that agreement and pay the Hays group.

Q. What was the nature of the arrangement, what was Hays supposed to be doing pursuant to this agreement?

A. Consulting work related to insurance.

Q. All right. Prior to that time was anybody doing consulting work for your insurance program?

A. No.

Q. You had not had a consultant?

A. Not an outside consultant, no.

Q. All right. Did you have a basic understanding of the services that are performed by an insurance consultant?

A. Basic, yes.

Q. Okay. What was your understanding at the time of what an insurance consultant would offer a company?

A. An outside consultant for insurance?

Q. Yes.

A. I — we never employed one. I didn’t investigate it. I apologize. I misunderstood the question. I understood what our broker was doing.

Q. Okay. Separate and apart from what your broker was doing, did you have an understanding of what an insurance broker — I mean, excuse me, an insurance consultant would offer?

A. No. Not really.

Q. Was it ever explained to you the services that would be provided under such an agreement?

A. No.

(Exhibit 17 marked)

Q. (BY MR. BATTAGLINI) I’m going to hand you — and this is slightly out of order — Exhibit 17. I’ll go back to 16 later. It’s several pieces of paper with a paper clip on it attaching them together. I merely attached them for convenience. And I’d like to kind of walk you through what this is. Have you seen many of these documents before?

A. Yes.

Q. All right. Let’s take them in order. The one on the top is called a Disclosure of Service Fee. And it’s on Hays letterhead. And it’s dated March the 30th, 2007. It appears to be signed by Paul McKim. Do you recall having seen that page before?

A. Yes.

Q. All right. How did you come to have seen this page before? And I’m talking about back on or about March the 30th, 2007.

A. I believe it was e-mailed to me.

Q. All right. From the Hays Company?

A. I believe so, yeah.

Q. And did you have an understanding of what it was when you received it?

A. It was an agreement for consulting services.

Q. Okay. Well, the one page, at least, is a disclosure of a service fee, correct?

A. Correct.

Q. A fee was going to be assessed in exchange for services provided?

A. Yes.

Q. Was that your understanding?

A. That’s my understanding.

Q. Okay. Would you prefer to get that back in front of you?

A. Yes, please.

Q. All right.

(Pause in proceedings)

A. Okay.

Q. (BY MR. BATTAGLINI) Okay. And the amount of the service fee reflected on this first page of the exhibit is $100,000, correct?

A. Correct.

Q. What was your understanding at the time of what the $100,000 was to pay for?

A. That was to pay for Hays doing some consulting services.

Q. All right. And who was Hays going to consult with?

A. That is not particularly clear.

Q. It’s not clear from this page that we’re looking at or –

A. Correct.

Q. Okay. Did you have an understanding at the time of who Hays was going to consult with?

A. My best guess at the time was that they were going to be consulting with Mr. Kazeminy.

Q. Is that because under an oversight agreement that insurance discussions like that were going to be had with Mr. Kazeminy rather than with the people at DMT in Houston?

A. Mr. Kazeminy was quite capable of setting the degree of, his degree of involvement on any of those things.

Q. Okay. Prior to your receipt of this disclosure of service fee, who had the insurance company or the insurance broker, Aon, been dealing with on a regular basis in terms of the placement of insurance?

A. Merely myself as well as Paul McKim.

Q. Okay. Once this service fee document was signed by Mr. McKim, did you have any communications with Hays regarding insurance coverage?

A. I’m not sure as to the last time I would have had dinner with Mike Prinz, if it was subsequent to this or not.

Q. Okay. Do you know if Hays Company was having communications with someone in Minnesota working for Mr. Kazeminy, for example, regarding the placement of insurance coverage and consulting services in conjunction with that?

A. Do not know.

Q. Okay. If it did happen, it wasn’t reported to you?

A. Correct.

Q. Did you communicate with anyone in Minnesota working with Mr. Kazeminy’s companies for the purpose of discussing insurance?

A. Yes. The previous year we had gone through a quite a bit of analysis regarding where we were placing our, where we were placing our Jones Act coverage. And there was a, a new underwriter on the market that was offering some extremely low rates.

Q. Uh-huh. And who did you discuss that with?

A. Paul, myself, John Ellingboe, and Nasser were involved in that conversation.

Q. All right. On a routine basis, did you consult with people from time to time in Minnesota?

A. Regularly.

Q. Okay. And who did you normally consult with on administrative matters including insurance?

A. John Ellingboe and Dan Erickson.

Q. All right. Do you know whether or not Ellingboe or Erickson talked with the Hays Company about the insurance that was contemplated by this disclosure of service fee?

A. I have no — no. I don’t know.

Q. It’s possible; you just don’t know?

A. Absolutely.

Q. Okay. Now, it says here, for coverages, all property, executive risk, casualty and marine coverages associated with the operation known as Deep Marine Technology. Is that a fair summary of the types of coverages that you would expect to see on your business?

A. Yes.

Q. Okay. It didn’t exclude anything in particular?

A. Not that I’m aware of.

Q. Now, if you’ll go to the fourth, starting at the fourth page and carrying on to the fifth page, there is an insurance summary for DMT. Is that something that you prepared or had prepared for you?

A. This is something the Aon would have prepared for us.

Q. All right. That’s reflective of Aon’s coverage for 2006 to 2007?

A. Yes.

Q. And was this something that Hays wanted to see so that they could consult with the company about coverage?

A. I — you know, I believe they probably requested it. This was something that we received from Aon as just a normal course of their providing coverage.

Q. Okay. Now, following that, following the pages that we just looked at, there are some invoices, correct?

A. Yes.

Q. And let’s look at the first invoice. This is the Invoice No. 119056 dated April the 24th, 2007 from Hays Company to DMT. In fact, to your attention.

A. Yes.

Q. And it’s a quarterly installment in the amount of $25,000 designated as a service fee on the invoice. I see Paul McKim’s signature on there. Do you see that
in the middle of the page?

A. Yes.

Q. Why would his signature appear on an invoice like this?

A. To approve it.

Q. Would he normally approve something like this?

A. Yes or no. It depends.

Q. Would it first have to go by you in order to be approved by Mr. McKim?

A. No. It could have gone straight. You know, it wasn’t required to go to me before it went to Paul McKim.

Q. Okay. Do you recall having discussed this particular invoice, I’m talking about 119056, with Paul McKim?

A. I remember discussing it.

Q. Okay. What was the nature of the discussion, do you know?

A. The discussion was related to the invoice coming in and the related service agreement.

Q. Okay. Was there a discussion about whether or not it should be paid or anything of that nature?

A. Yes.

Q. What was that discussion about?

A. The discussion was about the contract with Hays and the question of what we were getting for it and did we, that this was something that Nasser wanted and so we needed to proceed along.

Q. Did you participate in any telephone call or meeting with Nasser Kazeminy or anyone else working from Minnesota having to do with this particular invoice where the nature of the call was why do we need to pay this invoice?

A. No.

Q. Did you take it upon yourself as CFO to look into this to see whether or not it should be paid?

A. No. We were already directed to enter into the agreement.

Q. Directed by whom?

A. Mr. Kazeminy.

Q. And what specifically do you remember by way of a direction to enter into this agreement? Did you participate in a phone call?

A. Mr. Kazeminy called me. We discussed. He indicated that this was a, he was going to work something like this out and, you know, that was to be expected.

Q. Did he explain to you on the telephone during this call why it was necessary to engage Hays for this service fee?

A. Mr. Kazeminy said he wanted to use Hays.

Q. Did he say for what purpose?

A. You know, there was a discussion about, about Hays and who was at Hays and that was somebody he wanted to use. And this — so this was, this was where things were going.

Q. Did you have an understanding following the phone call with Mr. Kazeminy of why DMT was paying $25,000 a quarter of a service fee to Hays?

A. Because Mr. Kazeminy wanted to. And he had an oversight agreement, and he was an over-50-percent shareholder. And this was something he wanted to do.

Q. Okay. But other than the fact that this was something that he wanted to do — and you’ve been clear about that — did you have an understanding of what the purpose was, the actual purpose?

A. I was not necessarily very clear on it. I was aware and convinced that Mr. Kazeminy wanted to do it and honestly believed that he had the authority to request it.

Q. Okay. Was there anytime when you said to Mr. Kazeminy or anyone else that the company should not pay $25,000 a quarter for this service fee?

A. Mr. McKim and I discussed the payment, the arrangement and payment to Hays and questioned what we, we were getting from it. And that was as far as we went.

Q. Okay. So you had no communication, direct communication with Mr. Kazeminy or anyone else in Minnesota where you said to the person on the other end of the phone, we’re not going to pay this amount?

A. I did not, no.

Q. Do you know if anyone else had such a conversation? Did you observe, did you hear anybody else have such a conversation?

A. No.

Q. Now, there were — if we keep flipping through the pages, there are a total of three invoices, correct?

A. Yes.

Q. Okay. And it’s your understanding that all three of those were paid?

A. Yes.

Q. And were you part of the approval process on any of these three?

A. Yes. I signed off on the last one, and then Paul signed off on it.

Q. Okay. So in conjunction with the approval and payment of these three invoices that are attached to this exhibit, was there any follow-up communication or disagreement or dispute that you recall regarding the payment of these invoices?

A. I was not involved in that. No.

MR. DAVIDSON: Take a brief break?

MR. BATTAGLINI: Sure.

(Break from 2:04 to 2:15)

Q. (BY MR. BATTAGLINI) Mr. Thomas, let me ask you one more question about Exhibit 17 before we turn to Exhibit 16. Exhibit 17 is the grouping of the documents that we were just talking about about the insurance payments to Hays.

A. Yes.

Q. Is there any document on there that, that was signed off by you or Mr. McKim that was falsified?

A. No. Not that I’m aware of.

Q. In other words, it appears to be consistent with your internal procedures for approving invoices and the payment of invoices?

A. Yes.

Q. Okay. Thank you.

Q. (BY MR. WALLACE): … Do you recall your testimony with Mr. Battaglini with respect to the consulting services provided by Hays that are referenced in Thomas Exhibit No. 17?

A. Parts of it.

Q. Okay. You were asked that, about the fact that that represents Hays was to provide consulting services to DMT from April 1st, 2007 to April 1st, 2008, right?

A. Yes, sir.

Q. And it was for consulting services, right?

A. Yes, sir.

Q. To your knowledge did DMT ever receive any consulting services from Hays?

A. Not that I’m aware of.

Q. But how much money was paid to Hays for those alleged consulting services?

A. Seventy –

Q. To your knowledge.

A. — five thousand while I was there.

Q. Okay. Okay. During your testimony with Mr. Battaglini, you said — and I’m going to quote you, quote: You know there was a discussion about, about Hays and who was at Hays and that somebody he wanted to use. And this — so this was, this was where things were going. Who was it and during — let me start over. You were having an exchange with Mr. Battaglini about conversations you had with Mr. Kazeminy and Hays, right?

A. Yes, sir.

Q. Do you recall saying in your testimony with Mr. Battaglini, quote: You know, there was a discussion about, about Hays and who was at Hays and that somebody he wanted to use. And this — so this was, this was where things were going. Do you recall that testimony?

A. Yes.

Q. All right. And when you say he wanted to use, who was he?

A. He being Nasser Kazeminy.

Q. And who was it that Nasser Kazeminy wanted to use at Hays?

A. Laurie Coleman.

Q. And who is Laurie Coleman? If you know.

A. She’s the wife of Senator Coleman.

Q. Okay. In March of 2007, did you have a telephone conversation with Mr. Kazeminy about you, about Senator Norm Coleman?

A. That — there was just that one conversation.

Q. Okay. Now, that services agreement that you have before you which is Exhibit No. 17; is that right?

A. Yes, sir.

Q. It’s for services beginning in April of 2007?

A. Yes, sir.

Q. And in March of 2007 you had a telephone conversation with Mr. Kazeminy about Senator Norm Coleman, right?

A. Well, it could have been in March.

Q. Okay. You’re not sure?

A. I’m not sure. It was sometime — if I’m going to put a timeline to it, I’m going to estimate sometime that first quarter of ‘07.

Q. Okay. Fair enough. Sometime before the existence of the document that you have before you which is Exhibit No. 17?

A. Yes, sir.

Q. Okay. In that conversation that you had with Mr. Kazeminy, did he tell you, quote, United States senators don’t make shit, close quote? Or words to that effect?

A. Yes, sir.

Q. Do you have any idea what he meant when telling you that by the context of the conversation you were having?

A. Other than the fact that senators don’t make a lot of money, not really. I’m not very good at reading more into it other than that.

Q. Fair enough. And I don’t want you to read anything into it that you can’t. Okay? Please don’t let me try to put words in your mouth. Can we have that agreement?

A. Sure.

Q. Okay. In this telephone conversation, it was specifically about Hays insurance, though, right? And about the use of Hays?

A. Yes, sir.

Q. And he introduces in that conversation the subject about United States senators don’t make shit, correct?

A. That’s how the conversation started.

Q. And who works at Hays? That you know of personally.

A. Mike Prinz. Laurie Coleman. Well, I — you know, look. I can’t say that I know personally. I have heard that.

Q. Fair enough.

A. Mike Prinz I know works at Hays.

Q. That’s a fair testimony. You don’t have any personal knowledge that Laurie Coleman works there, correct?

A. Correct.

Q. Okay. Did you later approach Mr. McKim asking him whether it was appropriate to follow Mr. Kazeminy’s orders to use Hays?

A. We talked about this after the conversation.

Q. And what was Mr. McKim’s reaction?

A. Our first reaction for both of us was somewhat of a sense of relief in that the previous year we had gone through the discussions with the e-mail that I ultimately sent to Mr. Kazeminy relating to the use of Hays and an associated firm here in Houston to transfer our offshore insurance, or our insurance brokerage to. Neither one of us were very excited by that kind of move. We were very well taken care of by Aon. We were comfortable with the level of service and knew that the company was benefitting from the arrangement. We had ongoing use for Aon on a variety of issues and really did not want to change to an unknown entity that was significantly smaller in size.

Q. Okay. I’m a little bit confused by your response. Did you say at first you were relieved?

A. Yeah. We were relieved because this meant that we weren’t going to be getting our chops busted about changing to Hays. For doing — for, actually, the brokerage of our insurance and the ongoing, and the ongoing brokerage arrangement and who was going to be taking care of and servicing us.

Q. I see. Because all Hays was going to do was provide consulting services as opposed to providing insurance.

A. Yes, sir.

Q. Okay. But from the date of the conversation when he told you U.S. senators don’t make shit until the expiration of a year later, to your knowledge, DMT never got any consulting services from Hays?

A. No, sir. Not that I’m aware.

Q. But they were paid $75,000 of corporate money for that?

A. Yes, sir.

Q. Okay. Was there — did Mr. McKim later ever make an objection to any of the payments to Hays, to your knowledge?

A. Paul was very unhappy about making the payments and grumbled whenever, whenever one of the invoices came through.

Q. Did he grumble to Mr. Kazeminy about it?

A. I don’t know if he did or not.

Q. Did Mr. Kazeminy ever let it be known to you in some form of communication that this was his company and that you and Mr. McKim better just follow his orders in paying Hays?

A. He did not — I did not have that portion of a conversation with Nasser ever.

Financial ties between Laurie Coleman’s employer, Hays Companies, and a Coleman benefactor’s marine-exploration company led to charges of money-funneling that exploded in two civil lawsuits filed outside Minnesota shortly before Election Day.

A postponement in a Texas case has forestalled for now any further detonations there, while a motion to dismiss could snuff out a suit in Delaware. But a Coleman aide says the former Republican senator still wants to use campaign money to defuse the charges.

The suits allege that the St. Paul insurance company received money meant for Coleman disguised as payments from a Texas firm — Deep Marine Technology — controlled by Coleman friend and benefactor Nasser Kazeminy.

Coleman denied the charge and in December — after news leaked of an FBI inquiry into the allegations — said he’d ask for permission to spend campaign funds on lawyers and investigators to disprove it. An aide announced Coleman’s intention to request an OK from Federal Election Commission: “We will be seeking the necessary approvals at the proper time to ensure that this is done in strict accordance with all appropriate laws and rules,” the campaign said.

“The proper time” was apparently not during the Senate recount or election contest trial, which adjourned last week. (The three-judge panel is now deliberating whether Democrat Al Franken should retain his slim lead over Coleman.) Nothing from Coleman has surfaced among the Federal Election Commission’s official list of pending advisory opinion requests.

But a Coleman request is, indeed, still in the works. Says Coleman staffer Tom Erickson, as reported by MinnPost: “We’ve been in contact with FEC and are in the process of providing them with all of the detailed information they need, and require, to adequately address our request.”

The FEC already has the question before them. In December Alliance for a Better Minnesota filed a complaint asking the FEC to rule on Coleman’s stated intent to write checks from his campaign fund to cover legal costs of fending off the civil lawsuits. The Alliance tells the Minnesota Independent that the FEC has taken no action on the complaint.

How will the FEC handle Coleman’s request for an advisory opinion in light of the Alliance’s complaint already pending? FEC spokeswoman Mary Brandenberger told MnIndy it’s likely the commission would respond to Coleman first, since by law the commission must answer a candidate’s request within 60 days. (She said FEC policy is not to comment on requests until they become official, so she couldn’t confirm Erickson’s version of what’s going on.)

For those implicated in the lawsuits, the legal costs could be high. Coleman hired Douglas Kelley, a Minneapolis-based defense attorney. Kelley’s job is to “work cooperatively with authorities when such an investigation is conducted, and to quickly expose these allegations for what they are, and to hold those who made these false allegations against the Senator accountable,” a Coleman aide said.

Meanwhile, Laurie Coleman; her employer, Jim Hays; and Kazeminy also hired attorneys — “four of Minnesota’s biggest legal guns,” as news reports called them. Laurie Coleman retained Earl Gray, and Hays hired Doug Peterson. Kazeminy chose Joe Friedberg, who soon joined Norm Coleman’s legal team for his election contest trial.

But while Friedberg and Coleman have been busy with the election aftermath, Kelley’s been handling in his court-appointed role as receiver for accused Ponzi-schemer Tom Petters‘ business empire.

In a separate ruling today, the FEC told the Democratic Senatorial Campaign Committee it could set up a fundraising account to help Franken cover election contest expenses. The commission had “no opinion,” however on whether the Franken campaign could do the same.

Republican groups can take the opinion as applying to them as well — a welcome development for the Coleman campaign, whose own fundraising took a hit after a database-leak scandal erupted last week.

Paul McEnroe and Tony Kennedy said today they had sought an interview with Coleman for days and warned his campaign that without one they’d have to raise the issue at an Oct. 29 campaign event. And the record shows that by that time local reporters had been trying to get answers from Coleman for at least three weeks.

“They knew the cameras were there,” Coleman told WCCO-TV on Sunday. “They could have gone back and had a quiet conversation if that was the purpose. My point being they appeared in a Democratic Party ad four days before an election on something that never happened.”

The public showdown (video) wasn’t the reporters’ first try or their first choice, they said. “We made every attempt to have a ‘conversation,’ as the senator put it, but we were continually stonewalled by his staff in the days prior to our attempt to talk to him during his campaign stop in St. Cloud,” McEnroe and Kennedy told Braublog.

In fact, Coleman was already griping about reporters’ questions on the topic and stonewalling them three weeks before Kennedy and McEnroe made their stand in St. Cloud, as Steve Perry explained in a Minnesota Independent post last November:

On October 10, Norm Coleman volunteered on the record that “Over the last several days I have received a fresh batch of questions from reporters, fueled by blogs, about personal issues concerning… my wife.” … 

At an October 8 press conference (here’s a Publius post with transcript) that’s been widely viewed on YouTube — the one in which Coleman rep Cullen Sheehan repeated the same boilerplate response about whether Nasser Kazeminy bought suits for Norm Coleman — Rachel Stassen-Berger of the Pioneer Press asks Coleman about his wife’s job at Hays Companies.

And speaking (as Coleman did on Sunday) of ads that run “four days before an election on something that never happened,” it’s worth noting that the former senator no longer talks about the charges he leveled against Franken in his own last-minute campaign ad (hat tip to commenter lenzy1000 at The UpTake’s live chat):

Al Franken’s eleventh-hour attack, phony accusations filled with lies delivered anonymously to a Minnesota paper before being filed in a Texas court, the vicious personal attack on my wife. This time Al Franken’s crossed the line. My name’s on the ballot. I’m fair game for his smears. My wife and family are not. In Minnesota this is as dirty as it gets. I’m Norm Coleman. I approved this message because there’s got to be a better way.

Coleman saw fit to make that accusation against Franken at the eleventh hour before the election. But now, at the whatever-hour of the election contest, reporters have become his target.

Coleman staffer Luke Friedrich told CNN that Kelley was brought on “to work cooperatively with authorities when such an investigation is conducted, and to quickly expose these allegations for what they are, and to hold those who made these false allegations against the Senator accountable.”

“To this date the Senator, nor his legal counsel, have been informed that any such investigation is underway,” he said in the statement. However, the FBI has acknowledged that it is reviewing components of two lawsuits, including one filed in Texas that alleges Kazeminy tried to funnel as much as $100,000 to Coleman through Hays, who employs his wife, Laurie.

Talking Points Memo has more.

Update: Politico reports that Coleman will use donations to his re-election fund to pay his legal bills. Spokesman Friedrich offers the rationale: “We intend to have any legal fees related to what we believe to be a politically inspired legal action to be covered by the Senator’s campaign,” he said.

So there is a circumstantial link between the payments and the house costs, a potential motive for Kazeminy to steer a sum like that to the Colemans, as two lawsuits allege and the FBI is now looking into. (The Republican senator has denied the charge and welcomed the investigation.) But it’s not yet a “gotcha” — as Lyden admits in a blog post. Like MnIndy, Fox 9 had been sniffing around Colemans’ remodeling project in relation to the Texas charges since before Election Day. Video, transcript and property tax record after the jump.

Another interesting tidbit: The Colemans paid a campaign donor $33,000 for design services on the project.

Here’s the Colemans’ property tax statement.

Here’s a link to the Fox 9 video report.

Here’s video released by the Minnesota DFL Party showing Fox 9 reporter Lyden trying to ask Coleman about the remodeling and Texas lawsuits after a press conference in Monticello, Minn.

And here’s a transcript of the Fox 9 report, which the Al Franken for Senate distributed by e-mail without comment this morning.

JEFF PASSOLT: Tonight, a federal investigation into an extreme home makeover. The home belongs to Senator Norm Coleman and his wife.

ROBYN ROBINSON: The timing and the cost of their home renovation raises new questions about an allegation a wealthy businessmen tried funneling money to the senator. Fox 9 investigator Tom Lyden has been digging deep into this and he joins us now with what he’s found.

TOM LYDEN: The FBI is now reportedly investigating these allegations that Edina businessman Nasser Kazeminy tried to funnel $75,000 to the U.S. Senator through the Senator’s wife, Laurie. But we couldn’t help wondering why a U.S. Senator, who makes about $180,000 a year, actually need the money? That’s what the Fox 9 investigators began looking about a month ago, and it lead us right to the Senator’s doorstep.

[BEGIN VIDEO]

LYDEN: Norm Coleman’s home in Saint Paul’s Crocus Hill neighborhood is not lavish, but it’s a lot nicer than it used to be, thanks in part to contractor Jim Taylor, who helped remodel the senator’s home two years ago.

JIM TAYLOR: Actually put a second floor master bedroom bathroom – the bedroom was there, we just added the bedroom with a closet and a kitchen remodeling, turned into half the house remodeled by the time we painted and we finished the floors and did the landscape work.

LYDEN: The remodeled kitchen was even the backdrop for some of the senator’s campaign commercials.

LAURIE COLEMAN: Hey Norm, will you take out the trash?

NORM COLEMAN: I got it, honey.

LYDEN: The Fox 9 investigators learned the woman in charge of the project was Sherry Wilsey, an interior designer and along with her husband Roger longtime friends of the Colemans’ and financial contributors to the Senator’s campaigns.

The Wilseys’ even hosted a fundraiser for Senator Coleman during the Republican National Convention at their Summit Avenue mention just a few blocks from the Colemans’.

TAYLOR: She’s a designer, and she got us in contact with Norm. Pretty much we were done by the end of the year; there were a few things that lingered on into the spring.

LYDEN: The spring of 2007. That’s when, according to two lawsuits, Edina businessman Nasser Kazeminy began a series of three $25,000 payments to Coleman from Deep Marine Technology, a company he controlled in Texas, to Hays Company, a Minnesota insurance company where Laurie Coleman works.

Senator Coleman is not a party to the lawsuits, but he’s denied any wrongdoing, claiming it’s all politics.

NORM COLEMAN: The allegations regarding me and my wife in this suit are false and defamatory.

DAVID SCHULTZ: There’s no question about the fact that it doesn’t look good.

LYDEN: But government ethics professor David Schultz says tough questions are fair game when serious financial allegations are made which involve a U.S. Senator.

SCHULTZ: It speaks to, first in terms of credibility, in terms of what Norm Coleman has to say in terms of responding to allegations. Second, it speaks to also sort of the whole sense of motive, motive in terms of why he might at this point going, trying to get money through his wife from an individual in Texas.

LYDEN: We tried to talk to Senator Coleman about the home renovation project three weeks ago when he visited the Monticello nuclear plant. You would have thought we were radioactive.

Senator Coleman never did agree to sit for an interview, but his campaign did agree to share billing records of the remodeling project. Originally projected to cost $328,000, four months later it was up to $414,000, overbudget by $86,000.

[OVERLAY: ESTIMATE, OCT. '06
$326,000

ESTIMATE, FEB. 28, '07
$414,000

OVER BUDGET
$86,000]

LYDEN: Similar to the amount, and at the same time, the lawsuit alleges Kazeminy was trying to get money to Coleman.

According to the lawsuits, in March of 2007, Kazeminy said “U.S. Senators don’t make [s--t]” and he was going to try to find a way to get money to U.S. Senator Norm Coleman.

SCHULTZ: On the one level, it could just be a coincidence. On the other level, it could be that one of the reasons why he’s getting this money from elsewhere is to try to basically make up for his – to be able to pay off a loan, to be able to pay off a line of credit.

LYDEN: Records provided by the campaign showed Coleman paid his friend Wilsey, the general contractor, in full for the renovation, $414,000. And he did it in part by refinancing his home in March 2007, for $775,000. The Senator acknowledges that, like a lot of people in America, he now owes more on his home than it’s actually worth.

That isn’t a crime. What we know is this: the senator had costly and overbudget renovations to his home at the same time a contributor was allegedly trying to funnel him money. We don’t know if the Colemans’ really needed the money, or if the Kazeminy allegations are even true.

REPORTER: Why won’t the senator answer the question?

LYDEN: But on at least two occasions now, the senator has walked away from reporters claiming their motives are political. And yet the questions aren’t going away. [END VIDEO]

LYDEN: Couple of footnotes – the interior designer and general contractor, Sherry Wilsey, was paid $33,000 for her work. That’s important because, as a friend and a Coleman contributor, if she wasn’t paid for her services that would be a gift and would have to be reported to the Senate Ethics Committee.

Also want to clarify something Jeff said, the FBI investigation concerns the Kazeminy allegations and not the home renovations – at this point.