Rep. Don Young in Sights of Justice Department Alaska Probe

The Justice Department is investigating whether an Alaska oil contractor used golf tournaments to funnel cash to Rep. Don Young, people close to the corruption investigation said.

The contractor, Rick Smith, told investigators that Young personally received cash at the events. Once an important ally who helped raise tens of thousands of dollars for Young's election committee, Smith has become a key government informant.

As part of his cooperation, Smith allowed FBI agents to record his telephone calls with the Republican congressman in a corruption sting. The former VECO Corp. vice president has pleaded guilty to bribing state lawmakers to support oil-friendly legislation.

Details of Smith's cooperation against Alaska's 18-term congressman were confirmed by people close to the case who spoke on condition of anonymity because they were not authorized to discuss it publicly.

The case, which surfaced last year as a state bribery investigation, has spread from Alaska to Capitol Hill, where Young and Alaska Sen. Ted Stevens are under scrutiny. Two of the most powerful Republicans in Congress, Young and Stevens are influential figures in setting U.S. energy policy and have close ties to VECO, which services pipelines and builds oil exploration equipment. Young has spent more than $446,000 on legal fees this year, campaign finance reports show.

Golf outings have often been used by lobbyists and interest groups to curry favor with lawmakers. Politicians, including Young, also use them as fundraisers.

The events under FBI scrutiny, however, were different. Unlike the dollar-for-dollar accounting of golf fundraisers in Alaska, Washington state and Virginia, the events at the Moose Run Golf Course just outside Anchorage were informal and the prizes were cash. There is no record of them on the campaign or personal financial reports that federal lawmakers are required to file.

"That tournament had nothing to do with the campaign or anything official. It was just people getting together to play golf," said Young's campaign spokesman, Mike Anderson, who declined to discuss the tournaments or how often Young won. "The congressman finds it inappropriate to discuss anything connected to an ongoing investigation."

Moose Run manager Gary Sanford said he recalls the tournament being held about three times over the past several years. About 16 to 24 people played, mostly Anchorage businessmen, at maybe $100 each, Sanford said. Smith made the arrangements, handled the money and doled out the cash prizes, Sanford recalled.

Sanford said he was sometimes around when prize money was handed out and said he doesn't remember ever seeing Young receive cash he didn't win.

Sanford said he doesn't know whether records were kept. VECO attorney Amy Menard said she hasn't seen any documents related to the tournaments and Smith's attorney, John Murtagh, did not return messages seeking comment.

The events were normally held in August, shortly after Young's annual pig roast fundraiser, which has also attracted FBI attention. Smith organized that event, which drew up to 400 people and cost up to $15,000. The events, which Smith organized for years, were lucrative. The day after the 2006 event, Young's campaign reported nearly $45,000 in donations.

After the investigation surfaced, Young amended his campaign finance reports to show he reimbursed VECO founder Bill Allen about $38,000 for event expenses.

At a recent corruption trial, defense attorneys suggested Smith laundered money by cashing golf tournament checks at a bar under what he called a "phony account."

Some golf managers around Anchorage received letters from the Justice Department alerting them they'd been recorded on wiretaps of Smith's phone.

Jeff Barnhart, manager of the Settlers Bay Golf Course in Wasilla, Alaska, received such a letter. He said he's not surprised authorities are eyeing Smith's golf tournaments, but he said the businessman will be remembered in golf circles for his good deeds.

"He's done a lot for the community," Barnhart said, "and raised money for more charities than you can imagine."