RICHMOND, Va. – Former Virginia Gov. Bob McDonnell revised a mortgage refinance application to disclose two loans from a wealthy businessman three days after state police questioned his wife about the debts, according to evidence introduced Wednesday in McDonnell's public corruption trial.
Nanette Bolt, a mortgage supervisor for Pentagon Federal Credit Union, testified that she was not surprised to see the undocumented loans totaling $120,000 added to McDonnell's loan application on Feb. 18, 2013. She also said McDonnell never mentioned to her that his wife, Maureen, had just been interviewed by investigators who asked about loans from Jonnie Williams, then the CEO of dietary supplements maker Star Scientific.
Most of the 14 counts against Bob and Maureen McDonnell allege that they accepted more than $165,000 in gifts and secret loans from Williams in exchange for promoting his company's products. But they also are charged with submitting fraudulent documents to financial institutions, and Maureen McDonnell faces one count of obstruction.
The McDonnells were applying to refinance loans on four properties — their primary residence in suburban Richmond, a second home in the Blue Ridge Mountains and two vacation rental properties in Virginia Beach — with the credit union known informally as PenFed.
An initial application did not list the Williams loans as a liability, nor did it disclose ownership of Star Scientific stock that also was added to the revised application. Prosecutors say McDonnell tried to conceal the loans and the stock, disclosing them only after police started asking questions.
But the former governor's attorney, John Brownlee, noted that McDonnell also added about $243,000 in assets — including an individual retirement account, a life insurance policy and a 2005 Toyota — when he submitted the revised application.
"Is it fair to say you were not surprised to see these edits?" Brownlee asked.
"Correct," Bolt said.
She also testified that the Williams loans were not reflected in the credit union's closing documents because McDonnell had indicated that no payments were due until 2015.
Virginia Beach Mayor William Sessoms, president of TowneBank's parent company, also testified that McDonnell never mentioned the Williams loans in an application to refinance a loan with his institution. Brownlee noted that the loans went to Maureen McDonnell and a real estate partnership owned by the former governor and his sister, and Bob McDonnell was the sole borrower on the TowneBank loan.
Sessoms said loans to a spouse or to a corporation do not have to be listed on an individual borrower's financial statement. However, in reply to a question from U.S. District Judge James Spencer, Sessoms acknowledged that bank officials need to know about any borrower's shared debts.
Assistant U.S. Attorney Michael Dry said prosecutors expect to wrap up their case Thursday. If that happens, Spencer said the jury will be given the day off Friday and begin hearing from defense witnesses next week.
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