Life's sweet for Alaskan at center of corruption probes

Two Alaska state legislators bribed by Bill Allen for a pittance of his wealth are broke and behind bars, and two others who are likewise accused are preparing expensive criminal defenses. U.S. Sen. Ted Stevens faces criminal charges over alleged gifts from Allen, and Allen's contributions to Rep. Don Young are part of an ongoing federal investigation.

So what has Allen, the source of all that trouble, been up to since he pleaded guilty to bribery and conspiracy on May 7, 2007?

The former chairman of the defunct oil services company Veco has yet to see a day in jail. His sentencing has repeatedly been delayed as he continues to cooperate with federal prosecutors and the FBI in their ongoing inquiry into Alaska corruption. It was recently pushed back again, to February 2009.

In the meantime, Allen and members of his family have suddenly found themselves cash rich. The sale of Veco to Denver-based CH2M Hill 11 months ago produced a windfall of $146 million divided among privately held Veco's six owners, chief among them Allen and his three grown children.

According to sales documents, the estimated payment to each of the children was about $30 million before taxes; they were told to each set aside about $8.5 million for the IRS, the documents said. Allen's share, through his Shelby Trust, was estimated to be about $7 million.

The family has kept control of another $70 million in former Veco assets that CH2M Hill didn't want, including ownership or uncollected accounts of several foreign subsidiaries, the documents said. The current status of most of those properties and assets couldn't be determined.


The three children earlier were beneficiaries of Allen's plea deal with the government — they received immunity from prosecution for any crimes uncovered in the long-running investigation. No such crimes have been disclosed or alleged by the government in any public case file.

In January, seven months after his plea, Allen and two of his three children became the new owners of a twin-engine executive jet. While the price that newly created Allen Transportation LLC of Anchorage paid for the 30-year-old plane couldn't be determined, its Aircraft Bluebook value is around $2 million. The British-made Hawker HS125 700A seats between eight and 11 passengers.

Since taking delivery Jan. 10, the Allen jet has been flying about the West. While there's no way to know from public records whether which, if any, members of the Allen family was actually on board a given flight or whether the jet was being chartered to someone else, the plane made numerous trips to cities with the homes of their many relatives and to airports near racetracks and other attractions, according to FAA records. All of Allen's children are licensed to own racehorses by the state of New Mexico.

Allen is free on an unsecured $10,000 bond and has no passport restrictions — unlike Stevens, who was forced to give up his passport at his arraignment last month. A special typewritten requirement that Allen get written court approval each time he wanted to leave Alaska was scratched out on Allen's conditions for release signed by U.S. District Judge John Sedwick more than a year ago.

Though Allen still owns his home near downtown Anchorage, a property valued at $571,400, he now spends some of his time in Roswell, N.M., according to his attorney, Bob Bundy, and to people who know him there.

Dick Cappellucci, a New Mexico licensed horse trainer from El Paso, Tex., who used to work for Allen's son, Mark Allen, and once owned a race horse with Mark, said Bill Allen is living on his son's Double Eagle Ranch. The county lists the ranch as a 46-acre property.

Mark Allen himself "is building a fancy, fancy place over there," Cappellucci said.

Prosecutors say that Bill Allen is cooperating with their ongoing investigation. He has been the star witness at the trials of Reps. Pete Kott and Vic Kohring and will certainly testify against Stevens if that case goes before a jury.

Allen could eventually face a sentence of nine to 11 years.

In the meantime, at least some of the Allen family spending has been in the public arena. Because horse racing is highly regulated, the family's activity in that industry is easier to track than their ongoing construction or oil-field work overseas.

Last August, about a week before the Veco sale was consummated, Mark Allen, 49, spent nearly $726,000 for eight horses at the Ruidoso Select Quarter Horse sale in New Mexico, one of the breed's premiere events. His Double Eagle Ranch, in Roswell, paid the highest price for any horse at that sale -- $460,000 for a colt, according to Ruidoso Downs, the track that conducts the sale. The month before he bought a New Mexico-bred thoroughbred for $7,500.

So Long Birdie, a winning but injured thoroughbred once owned by a partnership that included Ted Stevens and nine of his friends, including Bill and Mark Allen, is now exclusive Allen property, according to Double Musky restaurateur Bob Persons, who managed the partnership. So Long Birdie stands at stud at the Buena Suerte Equine Clinic neighboring the Double Eagle Ranch, where his services fetch $2,000 a mare, according to the clinic's Web site.

The horse partnership that once owned the horse was Alaska's Great Eagle LLC in deference to Stevens, a WWII transport pilot. Persons said in March that the Allens bought So Long Birdie from the others.

Recently, the Allens have been showing up big at horse sales, Cappellucci said. "They've spent a lot of money in the horse business."

The Allens have also been spending money closer to home. Through Sting Ray LLC, a company organized in November 2007, the four Allens bought the Little Su Lodge and a Cessna airplane based there for about $720,000, according to a sales document obtained by the Daily News. The property had been owned by Allen's neighbor in Anchorage, Jim Weeks.


Veco was sold last Sept. 7 to the engineering and construction firm CH2M Hill, an employee-owned company, and the formal stock-purchase agreement was filed publicly with the Securities and Exchange Commission. That document and other records connected with the sale obtained by the Daily News showed that the Allen family and two former Veco executives, Roger Chan and Peter Leathard, owned shares in Veco either directly or through trusts.

The Veco owners shared in the proceeds according to their ownership percentages, with the Allen family together holding more than 80 percent, according to sales documents.

According to the CH2M Hill purchase agreement, the total value of the sale was $380 million. But after adjustments, assumptions of debt and the issuance of $15 million in CH2M Hill stock to Veco employees who joined CH2M Hill, the owners were left to divide $146 million in cash. Another $70 million was withheld but payable by 2010 -- a guarantee against hidden or unexpected issues arising.

Among those issues: Veco could still be charged criminally as a corporation. Allen has testified he tried to get immunity for the company but couldn't. In its SEC filing, CH2M Hill said such an event would be "potentially detrimental to CH2M HILL's reputation in the business community or impact our future business operations." The new owners said they would continue to cooperate with ongoing investigations and have had a "productive dialogue" with the U.S. Justice Department.

In other documents produced for the sale, Veco disclosed it was also being investigated by the Treasury Department related to its projects in Sudan, run by an overseas Veco subsidiary. The U.S. government has limited sanctions against Sudan as a result of the conflict in its Darfur region, but the nature of the inquiry couldn't be determined. A treasury spokesman declined to comment.


While Allen couldn't make an immunity deal with prosecutors for Veco, he was able to protect his family, according to his plea bargain. Assuming Allen cooperates fully, "the government will not charge Allen's son Mark Allen, or other family members of Allen with any criminal offense arising out of the government's investigation or that have been disclosed to the government," the plea agreement says.

The family's legal exposure, if any, could not be determined. Messages left on the phones of Allen's children -- Tammy Kerrigan, Mark Allen and Shannon West -- were not returned.

Allen's attorney, Bob Bundy, said, "He put it in there -- that was in the plea agreement -- but I don't know that his kids were really in any jeopardy."

All three children and their spouses or ex-spouses were major campaign contributors in Alaska over the years. David Anderson, a nephew of Bill Allen who grew up with Mark Allen, his cousin, in Kenai, said that Allen used to reimburse his and Mark's campaign contributions, a violation of Alaska law. Allen's indictment says that Veco, Allen and two unnamed top executives -- but not family members -- violated state and federal law by reimbursing executives for campaign donations. Allen described what prosecutors called Veco's "special bonus program" in testimony in one of the bribery trials last fall, but wasn't specific about who gave money.


Millions of dollars of Veco assets were not included in the sale to CH2M Hill. A spokesman for the Denver company, John Corsi, said CH2M Hill was not interested in subsidiaries that didn't operate in the energy sector, such as the Veco construction company that built a prison in Barbados, made infamous in an FBI recording of former House Speaker Pete Kott asking Veco for a job as warden there.

CH2M Hill shunned Veco energy assets in two countries with U.S. trade sanctions, Sudan and Syria. It didn't want Ingeniera Veco de Venezuela, where Hugo Chávez, the fiery anti-U.S. president holds power.

Some of Veco's oil field assets in Russia were also retained by Allen and the others, as was a construction business in Canada and an engineering company in Mexico. They retained the Times Publishing Co., which publishes the conservative, $5,300 in gold nuggets, and real estate owned by Veco in Homer, Kenai, Fairbanks and Slana. They also kept the 34-acre yard at 101 E. 100th Ave in Anchorage where the Veco subsidiary Norcon had a facility. The Anchorage assessor valued that property at $10.2 million this year.

Veco International LLC, formed in Austin, Texas, on Aug 31, 2007, is one of the companies created to accept the assets that Allen and the others are retaining, according to the public sales agreement. Another is AEL LLC of Seattle, which got most of the real estate and other assets, and MST Ventures Inc., also of Seattle, which will attempt to collect receivables in Sudan and Syria, the documents say

Tom Corkran, a former Veco official, continued on as AEL general manager and MST president. He declined to answer questions about the sale earlier this year and couldn't be reached recently. Anchorage lawyer David Bundy, who represented Veco in the sale and filed the papers in Texas for Veco International LLC, didn't return a call left at his office.

Allen's personal defense lawyer, a former U.S. Attorney for Alaska, Bob Bundy, said Allen's legal troubles created a huge opportunity for CH2M Hill.

"He took a pretty big haircut because of all of this," Bundy said. "Whatever people think of the events of 2006, the fact is that Allen built the company, going from nothing to a company that was doing a billion worth of business, and then he had to sell at a fire sale price because of all the trouble he got in."

Allen didn't have to direct $15 million from the sale toward CH2M Hill stock for Veco employees, but did anyway, Bundy said.

Bundy said Allen doesn't have much to do these days.

"He's just kind of marking time -- he's just kind of waiting for the ax to fall, that's all," Bundy said. "He went from a guy who was leading a pretty good life, being a CEO with people respecting him, to somebody that's just waiting now. It's not a very happy situation."

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