Prosecutors contend Lexington executive lied about campaign donations as trial opens
Federal prosecutors told a jury Tuesday that a Lexington real estate executive went to great lengths to cover up his scheme to funnel money to co-workers and family members, who allegedly used the money to make illegal donations to candidates for Lexington city government two years ago.
Timothy Wayne Wellman, an executive with CRM Companies, told co-workers to lie to FBI agents and a federal grand jury, and created false documents to cover up where money for those campaign contributions came from, federal prosecutors said.
“This case is about obstruction of justice,” Assistant U.S. Attorney Ken Taylor said during opening arguments Tuesday of Wellman’s trial in federal court in Frankfort.
Kent Wicker, Wellman’s lawyer, painted a different picture for jurors. He said Wellman often loans money to people without asking to be repaid and contends a disgruntled businesses competitor hired a law firm to investigate him and spread unfounded rumors.
Wellman faces multiple counts of lying to federal investigators and convincing others to lie about campaign contributions to Lexington council candidates during the May 2018 primary.
In court documents, federal prosecutors allege Wellman circumvented state campaign finance limits that prohibit individuals from donating more than $2,000 to a candidate by giving money to more than a dozen straw contributors and then reimbursing them.
Taylor said some of the straw contributors didn’t know they were committing a crime. Some of Wellman’s co-workers who gave money to the campaigns were not wealthy and some did not live in Fayette County.
Wicker said Wellman frequently loaned employees money in case of emergencies. Wellman rarely cared if he was repaid, Wicker said.
Prosecutors, though, said some of the individuals admitted under questioning by the FBI that they had been reimbursed by Wellman. Others fabricated stories, prosecutors said. One employee said he was being reimbursed for tax preparation and other tried to say a check from Wellman was for work on a website, Taylor told jurors. That employee then produced fake invoices for a company that didn’t exist, he said.
Another employee claimed that the money Wellman paid her was for tax preparation services. Wellman gave her a fake W2 tax form, Taylor said. But the woman eventually recanted her story and admitted she had been reimbursed for a campaign contribution, he said.
Wicker, though, accused the FBI of intimidating the employees into changing their stories. Agents promised those employees they would not be prosecuted if they told federal investigators what they wanted to hear, he said.
CRM Companies, where Wellman was an executive, was one of four bidders on a new city government center for the city of Lexington. CRM Companies’ proposal — to renovate and expand the Lexington Herald-Leader building on Midland Avenue —was picked as the winning bid. The council ultimately voted not to move forward on a new city government center in September 2018.
The candidates who received the contributions from the straw contributors were Vice Mayor Steve Kay and former council member Kevin Stinnett, who was running for mayor in May 2018. Federal prosecutors have not alleged any wrongdoing on the part of Kay and Stinnett.
Wicker told the jury that it was a losing bidder, Cowgill Properties, that hired a law firm to investigate CRM Companies after it lost the bid for the city government project. It was investigators with the McBrayer law firm who turned information over to the FBI about the alleged straw contributors, Wicker said.
Rumors about the FBI investigation killed the city hall deal, he said, which is what Cowgill wanted.
Officials with Cowgill Properties and McBrayer could not be immediately reached for comment.
Lexington city officials have repeatedly said that a team of employees scored the bids for the city hall project and there was no manipulation of the bid. No council members were on the committee that scored the bids.
Wicker said Wellman was not involved in the Lexington city hall project. That project was pushed by Craig Turner, the president and CEO of CRM Companies. Wellman had nothing to gain financially from the project, Wicker said.
Wellman was concerned that Cowgill and McBrayer were pushing and supporting certain council candidates. He wanted to support candidates that Cowgill and McBrayer were not, Wicker said.
FBI Agent Christopher Darmand, a forensic accountant, told the jury Tuesday that he examined bank records of Wellman and his employees. In some cases, Wellman wrote a check to an employee on the same day that person made a donation to campaigns for Stinnett and Kay for the same amount, Darmand said.
Darmand said he also discovered that Wellman wrote a check to himself from a CRM Companies’ accounts to cover the total amount he reimbursed employees. Some employees were reimbursed from a CRM Company account that Wellman controlled, Darmand said.
The trial is expected to last five days. In addition to the FBI, CRM employees are expected to testify during the trial.
Wellman also faces 16 state charges in state court related to allegedly violating state campaign finance laws. That case is still pending.
