Photo: MnIndy

Minnesota businessman Nasser Kazeminy is asking a Texas court for $400,000 from a man who said Kazeminy funneled money to former U.S. Sen. Norm Coleman. A judge in Houston hears Kazeminy’s defamation complaint today.

Kazeminy, a friend and benefactor to Coleman, was targeted by a separate suit filed shortly before Election Day last year. That suit alleged that Kazeminy tried to strong-arm executives at a Texas business he controls into sending $100,000 to the St. Paul insurance firm where Coleman’s wife, Laurie, works.

Former CEO Paul McKim and another former official of Deep Marine Technology, Inc., made the allegation in sworn testimony as part of the lawsuit, which a judge dismissed in August — leaving the option for both sides to file new lawsuits.

Coleman, who was not named in the suit, has accused his Democratic challenger, Al Franken, and Star Tribune newspaper reporters of helping to orchestrate the charges days before the election.

Coleman contends the lawsuit hurt him in the election that he lost to Franken by 312 votes, a result affirmed by the Minnesota Supreme Court in June after a prolonged legal battle that kept Minnesota’s second Senate seat empty for six months.

Coleman’s own legal and other expenses related to the case could be covered by his campaign committee, the Federal Election Commission ruled.

People in Minnesota and Texas have been reported to have been interviewed by FBI agents investigating the money-funneling allegations.

Photo: Chris Steller, MnIndy

Has Dave Durenberger gone politically tone-deaf? The former Republican senator-turned-health-care blogger started off his scoop about another new gig for Norm Coleman with two scandal-tinged words that Coleman thought he’d put behind him: “Texas money.”

That phrase, for anyone who followed Coleman’s fortunes over the last year, carries seedy resonances thanks to allegations in a civil lawsuit that businessman Nasser Kazeminy funneled Coleman $75,000 via a company he controls in Texas.

Coleman denied it and wasn’t named in the suit; the plaintiffs claimed they weren’t even interested in whether he’d actually seen any of the cash. When a judge deep-sixed the suit this month, Coleman danced on its grave: “Now the suit goes away and I’m glad it has.”

This new “Texas money,” as Eric Black has fleshed out at MinnPost, comes by way of Bush I pal Fred Malek, the man putting together a new think tank called America’s Action Network, with Coleman at its helm. It’s separate from the Harvard University post CNN reported yesterday, and from the Republican Jewish Coalition gig Coleman took partway through his recount battle with now-Sen. Al Franken.

Here’s what Durenberger wrote on Wednesday:

Texas money is also funding a start-up non-profit called America’s Action Network, which is designed to give definition to a principled “role of government” approach to the Republican Party’s future. In the process, its founders hope to leave some of the “other issues” like those which firmed “the base” in the social values arena behind. New president of the right-of-center group will be former Minnesota Republican Senator Norm Coleman.

The think tank is so new, Google hasn’t heard of it, except for a flurry of Coleman-related news buzz:

As anticipated, Judge Michael Gomez of the Harris County District Court in Houston put a stop to the case that ex-CEO Paul McKim filed against his former firm, Deep Marine Technology, and Kazeminy, the Minnesota businessman who controls it.

Public attention to the lawsuit centered on the charges concerning Coleman, but he wasn’t named as a defendant. Indeed, McKim devoted only three of the lawsuit’s 30-plus pages to his allegation that Kazeminy had Deep Marine send $75,000 (and ask for $25,000 more to be sent) to the Hays Companies, the St. Paul insurance firm where Coleman’s wife Laurie works.

Both McKim and Kazeminy wanted the suit, filed a week and a half before Election Day 2008, to end. Gomez ruled that McKim no longer had legal standing as a minority stockholder to bring the case — the very order that McKim’s lawyer requested at a hearing on Monday.

But despite the judge’s stated reason for the suit’s demise, Coleman saw vindication in the lawsuit’s end and suggested villainy in its timing. The former senator told the St. Paul Pioneer Press, “I’m not surprised — the election is over and the lawsuit goes away. There was never anything to this.”

Kazeminy lawyer Robert Weinstine, in comments about retaliating against the plaintiff, told the Associated Press: “I don’t think we’re going to be in any position to give Paul McKim a free pass here.”

Does that mean Kazeminy, Coleman or Hays will sue to show that McKim’s charges and former Deep Marine CFO B. J. Thomas’ sworn testimony were lies?

Or with the lawsuit, will their protests simply … go away?

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: WDCpix

It’s too late now to help Norm Coleman’s re-election prospects, but a Texas judge is hearing arguments today on a motion to dismiss the civil lawsuit that alleges that Coleman friend Nasser Kazeminy secretly steered $75,000 to the former senator while he was in office.

The case pits the former CEO of a Texas firm called Deep Marine Technology against Kazeminy and other owners. Coleman isn’t a defendant and in fact is far from the focus of the lawsuit.

Soon after it was filed in Texas courts in the closing days of the 2008 election, the suit was withdrawn and then refiled, giving brief credence to Coleman’s assertion that the plaintiffs were using Coleman’s tight re-election contest as leverage to get a fatter settlement — with cooperation (alleged, never proven) from his Democratic opponent, Al Franken.

Should the Texas lawsuit get dismissed, that would be one fewer headache hanging over Coleman from his Senate days. A companion lawsuit in Delaware that’s been on and off may be on again, while an investigation by the Secret Service into a donor database breach is ongoing. Plus, the FBI won’t comment about a reported investigation into whether Kazeminy funneled Coleman money and paid for his suits.

Coleman sought and mostly received permission from the Federal Election Commission to spend campaign cash on legal costs and some other expenses related to the Texas case.

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

Coleman got the minimum number of commissioners needed (four of six) to side with the more lenient of two draft advisory opinions released last week. One of the dissenters was Cynthia Bauerly, a recent addition who hails from Minnesota.

After promising to do so last December, Coleman finally requested an advisory opinion from the FEC about whether his campaign could pay for expenses arising from several lawsuits and ethics complaints. In civil suits filed in Texas and Delaware, Coleman friend and donor Nasser Kazeminy was accused of secretly funneling money to Coleman via a business transaction. Other complaints charged Coleman with accepting unreported gifts.

FEC spokespersons told the Minnesota Independent that — with the exception of one footnote-tweak regarding funds raised since the election — the commission adopted as its final opinion the language of Draft B, which states:

For the reasons discussed below, the Commission concludes that the Committee may use campaign funds to pay for the following legal services: reviewing the complaints to the Senate Ethics Committee; reviewing ABM’s letter to the FBI; representing Senator Coleman in an FBI investigation of alleged violations of Federal law or rules governing the office of a Senator or the conduct of campaigns; monitoring and representing Senator Coleman in the Texas and Delaware lawsuits; and responding to media inquiries.

The Committee may not, however, use campaign funds to pay for legal services representing Senator Coleman in an FBI investigation of allegations unrelated to Senator Coleman’s campaign or duties as a Federal officeholder.

Citizens for Responsibility and Ethics in Washington slammed the FEC for shrinking from applying federal election law to Coleman’s question and for ignoring CREW’s arguments submitted via the public comment process.

CREW did however applaud one aspect of the opinion: that, in CREW’s view anyway, the FEC was telling Coleman he can’t use funds raised for his post-election recount activities to cover outside lawsuit expenses.

But the commission seemed to go out of its way not to answer that question, re-wording a footnote to read:

This advisory opinion concerns only the use of campaign funds to pay for the requested legal fees and expenses.  Senator Coleman is involved in a continuing recount of the 2008 election. This advisory opinion should not be relied on as allowing the use of recount funds because it does not address the use of recount funds.

Coleman’s own cleverness in wording his original question to the FEC was key to his success before the FEC, CREW charged. In a statement, CREW executive director Melanie Sloan said:

To assert the Commission must put on blinders to avoid addressing any [Federal Election Campaign Act] issue other than the narrowly-tailored one raised by the requestor is irresponsible. It turns the advisory opinion process into a game whereby the requestor can obtain permission to engage in activities – and obtain immunity for doing so — by merely leaving out inconvenient facts.

Norm and Laurie Coleman (Paul Demko, Minnesota Independent)

Norm Coleman may not dip into his campaign coffers to cover all his expenses stemming from lawsuits and other complaints that allege misconduct by him or his donors. That’s the upshot of draft advisory opinions issued late Thursday (pdf) by the Federal Election Commission.

The FEC drafted two opinions to guide its consideration of Coleman’s inquiry about which legal bills federal law would let him pay with campaign funds.

Related lawsuits in Texas and Delaware contend that Coleman benefactor Nasser Kazeminy steered him $75,000 through a business relationship between a Texas firm Kazeminy controls and the St. Paul insurance firm where Coleman’s wife works. The FBI is looking into whether Kazeminy improperly paid for Coleman’s suits, an allegation that also prompted Citizens for Responsibility and Ethics in Washington (CREW) to ask for a Senate ethics investigation.

Here is the question Coleman asked the FEC:

May the Committee use campaign funds to pay legal counsel for the services described above in connection with the Texas and Delaware lawsuits, the FBI investigation, and the Senate Ethics Committee complaints?

The FEC will base its decision on two draft advisory opinions that reach somewhat different conclusions.

Opinion A says the law won’t let Coleman tap campaign accounts to pay for legal representation in the Texas or Delaware lawsuits or the FBI investigation, but the campaign can pay half the costs of monitoring the out-of-state lawsuits.

Opinion B says the law disallows only spending campaign funds for the FBI investigation into matters unrelated to his candidacy or elective office.

At their June 25 meeting, the commissioners will try to reach a decision about which draft opinion, or some combination of the two, represents their understanding of how election law applies to Coleman’s situation.

Draft Advisory Opinion A:

For the reasons discussed below, the Commission concludes that the Committee may use campaign funds to pay for the following legal services: reviewing the complaints to the Senate Ethics Committee; reviewing ABM’s letter to the FBI; representing Senator Coleman in an FBI investigation of alleged violations of Federal law or rules governing the office of a Senator or the conduct of campaigns; and responding to media inquiries.

For the reasons discussed below, the Commission concludes that the Committee may not use campaign funds to pay for the following legal services: representing Senator Coleman in the Texas or Delaware lawsuits; and representing Senator Coleman in an FBI investigation of allegations unrelated to Senator Coleman’s campaign or duties as a Federal officeholder. For the reasons discussed below, the Commission concludes that the Committee may use campaign funds to pay for 50% of legal fees for monitoring the two lawsuits.

Draft Advisory Opinion B:

For the reasons discussed below, the Commission concludes that the Committee may use campaign funds to pay for the following legal services: reviewing the complaints to the Senate Ethics Committee; reviewing ABM’s letter to the FBI; representing Senator Coleman in an FBI investigation of alleged violations of Federal law or rules governing the office of a Senator or the conduct of campaigns; monitoring and representing Senator Coleman in the Texas and Delaware lawsuits; and responding to media inquiries.

The Committee may not, however, use campaign funds to pay for legal services representing Senator Coleman in an FBI investigation of allegations unrelated to Senator Coleman’s campaign or duties as a Federal officeholder.

The FEC is taking public comment on the matter until noon on June 24.

More analysis to come.