Politics & Government

Witness called FBI about Grimes campaign after ‘unpleasant’ call with Jerry Lundergan

Jerry Lundergan left the federal courthouse on in Lexington after his first appearance on campaign finance charges in 2018.
Jerry Lundergan left the federal courthouse on in Lexington after his first appearance on campaign finance charges in 2018. cbertram@herald-leader.com

A witness testified he contacted the FBI about potential illegal campaign contributions after Lexington businessman Jerry Lundergan paid for some services for the campaign of his daughter, but refused to pay the entire bill.

Stephen A. Smith, president and chief officer of Axxis Inc., said he called Lundergan in 2016 about more than $14,000 that was overdue for events Axxis staged for Secretary of State Alison Lundergan Grimes in her race to unseat Republican U.S. Sen. Mitch McConnell in 2013 and 2014.

Axxis is a production company in Louisville that provides equipment, such as stages and lighting, for events.

Lundergan said he wasn’t going to pay the rest of the charges, Smith said.

“It was unpleasant,” he said.

Smith said he contacted the FBI after that.

Lundergan allegedly used money from his companies to pay for campaign services for Grimes but didn’t seek reimbursement for the spending, making it an illegal corporate contribution.

Lundergan and Dale Emmons, a veteran political consultant from Richmond who helped on Grimes’ campaign, face conspiracy and other charges in the case.

Testimony in their trial in federal court in Frankfort started this week and is likely to continue for several weeks.

Lundergan, a former state representative and two-time head of the Kentucky Democratic Party, and Emmons have adamantly denied doing anything wrong.

On Friday, Smith testfied that Axxis helped put on three events for Grimes during her U.S. Senate campaign: the initial kick-off in Lexington in July 2013; a rally with Hillary Clinton in Louisville in October 2014; and a rally the night of the election in November.

Alison Lundergan Grimes
Alison Lundergan Grimes hugged her dad, Jerry Lundergan before she announced her intentions to run for re-election in 2015 as secretary of state. Herald-Leader

Smith said Abby Lundergan, who is Grimes’ sister and worked at a catering company owned by their father, hired Axxis for the events.

The total bill for the three events was nearly $63,000, according to invoices introduced at the trial.

Checks showed that one of Lundergan’s companies paid the $10,715 bill for the July 2013 kick-off promptly. But Lundergan companies made several payments in 2015 on invoices for the other events, one as late as December, checks showed.

Prosecutors have said Lundergan paid some bills for Grimes campaign events through his companies only after federal authorities began investigating.

Lundergan’s attorneys have acknowledged he paid for some campaign services without quickly seeking reimbursement from the campaign, but said that was because of oversights, not criminal conduct.

Lundergan billed Grimes’ campaign when the mistakes came to light, and the campaign reimbursed him and reported the spending as required, defense attorney J. Guthrie True told jurors earlier.

On Friday, Smith said his company never received full payment for the events Lundergan’s company booked for Grimes.

Smith said his brother, who also is involved in the company, called him in early 2016 to ask him to collect the overdue payments from Lundergan’s company.

Smith said he called Lundergan, who “basically said that he wasn’t going to pay the bill.”

Smith said he had staged events for a number of campaigns before working for Grimes, and in every other case had billed and collected from the campaign.

Smith said he couldn’t understand why Lundergan was paying bills from Grimes’ campaign events.

Smith said his lawyer advised him to contact the FBI, which later took billing documents from Axxis as part of its investigation.

After jurors left the courtroom, one of Lundergan’s attorneys, Mark E. Elias, argued to U.S. District Judge Gregory F. Van Tatenhove that he should be allowed to question Smith about making contributions to McConnell.

The contributions could indicate bias on Smith’s part, Elias said.

Smith gave McConnell $1,000 on three separate occasions: once in early 2014 and others in 2017 and 2018.

Assistant U.S. Attorney Robert J. Heberle argued that one $1,000 contribution before the 2014 vote is not admissible evidence of bias by Smith, so jurors shouldn’t be allowed to hear about the donations.

Van Tatenhove said he would rule later.