Stewart Plea Deal Satisfies All Sides

Huddled around a table in a 36th-floor conference room in downtown Seattle, a cadre of attorneys haggled for months over dollar figures, ankle bracelets and misdemeanors in the campaign-finance investigation of Republican businessman Thomas Stewart.

But yesterday, after almost a year of secret grand-jury sessions and behind-the-scenes negotiations, the investigation reached a close when a federal judge accepted Stewart's guilty plea for making an estimated $100,000 in illegal campaign contributions since 1990.

The same conference room, in the U.S. Attorney's Office, was the scene of a news conference outlining the plea agreement, in which Stewart, one of his companies and his chief financial officer agreed to pay $5 million in fines for 25 misdemeanor counts of campaign-finance violations. Stewart, the state Republican party's top contributor, also will serve two months' home confinement beginning next week.

In the agreement's aftermath, attorneys said negotiations in the case were cordial but tough. And in the end, both sides secured concessions they considered central to their case.

"It took a while, but I felt we got exactly what we wanted," said T.G. "Chip" Holcomb Jr., a senior counsel in the state Attorney General's Office.

Federal and state prosecutors, who worked hand in hand on the investigation, tallied the third-largest fine ever issued in a campaign-contribution case.

And for their part, Stewart and his company, West Seattle conglomerate Services Group of America (SGA), avoided being branded with a felony - an inglorious distinction that would have been disastrous for his business.

"I truly believe this is a fair, appropriate sentence," said Stewart's attorney, Cyrus Vance Jr.

SGA isn't out of the woods yet. Its main subsidiary, Food Services of America, still needs to clear up questions surrounding the charges with the U.S. Defense Logistics Agency, a major customer.

Vance said the company is positioning for a food-service contract with the defense agency, and Stewart and SGA's chief financial officer, Dennis Specht, are scheduled to meet with agency officials next week in Washington, D.C.

The federal magistrate granted a request by Stewart and Specht to delay the start of their home-confinement sentences so they can resolve negotiations relating to the contract.

Stewart and Specht admitted giving SGA employees bonuses with the understanding that they, in return, would write checks to the company's political-action committee and individual campaigns. Both pleaded guilty to one misdemeanor, while Food Services of America admitted guilt in 24 misdemeanor counts.

Reverberations across country

Word of the $5 million fine reverberated across the country.

"This is an important message . . . to remind people that there are serious consequences for violations of campaign-finance laws," said Paul Hendrie, communications director for the Center for Responsive Politics in Washington, D.C.

Indeed, there were indications that the Stewart case will become one more notch in the government's broader effort to crack down on law-breaking campaign donors.

Craig Donsanto, director of the U.S. Justice Department's Election Crimes Branch, said the settlement will likely serve as a benchmark for several pending cases.

Donsanto said the government's main aim was to send a message of deterrence. These days, that's done with dollar figures.

Felony charge considered

A felony was on the table for at least part of the time in the Stewart negotiations, Donsanto said. But federal prosecutors ultimately let it go in exchange for a stiff fine, community service and home detention.

"It's a serious offense, but not the sort of thing where you have to take Mr. Stewart off the street to ensure the public safety," Donsanto said.

Stewart will be fingerprinted, photographed and outfitted with an electronic ankle bracelet.

Once the electronic monitoring begins, he'll be confined to his Vashon Island estate from 8 p.m. to 6 a.m. weekdays and all day on weekends, leaving only to commute to work.

The seven-figure fine, Donsanto said, "is a recognition of the magnitude of their offense, and signifies a deterrent to others."

Of the $5 million fine, $100,000 comes from Stewart and $100,000 from Specht; Food Services of America pays the rest.

Since the company is privately held and Stewart is the sole principal, he would be more personally affected by a corporate fine than the chairman of a publicly held company.

His attorney said the millions in dollars paid to the government yesterday is not being covered by insurance, nor is it tax-deductible.

The money will go mainly to victim-assistance programs, federal prosecutors say.

Donsanto said lawyers arrived at the figure based on calculations used in the case of Fireman, the Boston businessman who paid a fine of $6 million assessed to him and his aquatic-gear company for arranging $120,000 in illegal contributions.

Number-crunching was a key point in the Stewart case, particularly when it came to agreeing upon the amount of money that was funneled, attorneys from both sides said.

Two-year state probe ends

Part of the plea agreement resolves a two-year investigation by the state Attorney General's Office.

The state levied $570,000 in fines for civil infractions involving $60,000 in laundered donations in 1995. As a result of a previous investigation by the Seattle Elections and Ethics Commission, Stewart had acknowledged disguising SGA money given to a city-charter-amendment campaign.

State attorneys said their case against Stewart was unique in that much of the preliminary investigative work had already been done.

Much of the state's case boiled down to negotiating the consequences, Holcomb said.

But some Stewart supporters think the Attorney General's Office crossed the line by imposing such a steep fine.

Among state campaign-violation cases, Stewart's fine is the highest in state history.

Republican consultant Brett Bader said he thinks state Attorney General Christine Gregoire came down hard on Stewart "because it was a no-brainer" and because he is a top GOP donor.

He portrayed Stewart not as the conspiring "money man" described by federal and state prosecutors but as a well-meaning American who inadvertently ran afoul of the rules.

"Tom Stewart gives for what he believes in," Bader said. "This guy is a true believer."

Jake Batsell's phone message number is 206-464-2595. His e-mail address is: jbatsell@seattletimes.com