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Update: Speculation swirls around lawsuit alleging indirect payments to Coleman

Sen. Norm Coleman, shown at an Oct. 23 rally.
MinnPost photo by Terry Gydesen
Sen. Norm Coleman, shown at an Oct. 23 rally.

A potentially sensational lawsuit filed Monday in Texas — later withdrawn (PDF) and then refiled — is generating a tremendous cloud of speculation over the last days of the Senate campaign in Minnesota.

A copy of the lawsuit was posted this afternoon on The Nation website (PDF). The key allegation is that a wealthy supporter of Sen. Norm Coleman used fraudulent means to steer $75,000 through a Texas firm he controlled to Coleman through Coleman’s wife’s job with a Minnesota insurance firm.

The Coleman campaign categorically denies that the Colemans received any money from any such arrangement and suggests there may be a political motive behind the filing of the suit so close to the election.

MinnPost has not verified any of the facts, other than that a lawsuit alleging them was filed Monday, withdrawn sometime after and then refiled Thursday. The lawsuit was based on a sworn statement by the plaintiff, Paul McKim. The document withdrawing the suit does not state the reasons it was withdrawn. But McKim’s lawyer, Casey Wallace, told MinnPost Thursday evening that the suit was withdrawn Monday during settlement negotiations but was refiled after those talks broke down.

McKim was until recently the CEO of Deep Marine Technologies, a Texas-based firm that provides underwater services to the offshore oil and gas industries. The controlling stockholder of DMT is Nasser Kazeminy, a wealthy Minnesota businessman and longtime supporter of Coleman. Kazeminy is the first-named and key defendant in the withdrawn lawsuit.

In the lawsuit, McKim alleges that he became aware of a plan, by Kazeminy, to funnel money for the purpose of benefiting Coleman through DMT to the Hays Cos., a Minneapolis insurance firm where Coleman’s wife, Laurie, is employed. (Again, Coleman’s campaign manager, Cullen Sheehan, told MinnPost that the Colemans had no involvement in any such arrangement.)

McKim says the chief financial officer of DMT told him of a conversation with Kazeminy in which Kazeminy said that “U.S. senators don’t make [expletive deleted]” and that he was going to find a way to funnel money to Coleman through DMT. McKim alleged that he tried to stop the scheme, and Kazeminy threatened to fire him. According to the lawsuit:

“Kazeminy informed Messrs. McKim and [B.J.] Thomas [the CFO] that Hays would funnel the money from DMT to Sen. Coleman through the payment of compensation to his wife, Laurie, and that there was nothing to worry about.”

 The alleged plan was for DMT to send $25,000 a month to Hays, even though McKim says Hays provided no services to DMT. McKim says that under Kazeminy’s pressure, he signed off on the first $25,000 payment and then refused to go along with any more. He says he later learned that two more monthly payments of $25,000 had been sent to Hays in May and June of 2007.

In December, when he found out about a fourth such payment, he put a stop to it. In his suit, he is asking that a receiver be appointed to oversee the two companies until the matter is resolved.

Without making any allegation that the Al Franken campaign or anyone else was behind it, Sheehan denounced the allegations in the strongest terms. “Totally false.” “Baseless.” He said he has not spoken to Kazeminy about it, but he knows that the Colemans have “not received one dime” from any such scheme. He suggested the timing of the suit, a week before Election Day, was politically motivated.

McKim’s lawsuit itself does suggest a possible nonpolitical explanation for the timing. McKim says the lawsuit is in response to claims made Oct. 10 by Deep Marine shareholders.

Sheehan also asserted that the withdrawal of the lawsuit made it a non-story and that other news organizations decided not to publish the story because the suit had been withdrawn.  However, the document withdrawing the lawsuit specified that the action was “without prejudice,” meaning that McKim reserved the right to refile the suit. A story in the Huffington Post quotes a source in the office of McKim’s lawyer stating that the facts in the lawsuit are valid.

Kazeminy is a longtime and major financial supporter of Coleman’s campaigns. Coleman has disclosed on Senate ethics forms in the past that he has received gifts from Kazeminy in the form of overseas flights for Coleman and family members on Kazeminy’s private jet.

MinnPost will continue to seek interviews with other players in the action.

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Comments (8)

  1. Submitted by Eric Hanson on 10/30/2008 - 08:10 pm.

    Seems Coleman is hoping to run out the clock. If he can win the election that way, even if he is forced to resign, he’ll be replaced by someone appointed by Tim Pawlenty. That seems to be his strategy. In by a strange tragedy, out by a bizarre scandal, but the seat preserved for the Republicans in both cases.

    It seems to me this story has been delayed for years. Perhaps because of an understandable fear of Republican power in Washington, there has been a lack of curiosity about a very odd senatorial career. Living arrangements are relevant. Who buys a senator’s clothes is relevant. Not to mention Coleman’s odd prosecutorial choices as chair of the committee of permanent investigations. (Going after Kofe Annan but not looking into the billions of fraud in Iraq or the corruption of K Street.)

  2. Submitted by James Monical on 10/30/2008 - 11:33 pm.

    No kidding…shocker. Glad MN Post is publishing this — we probably won’t see it on twincities.com, or it will be diluted…and strib may or may not blow it out of proportion, since they endorse Coleman but loathe conservatives.

    And how much of this filed-then-withdrawn lawsuit might be connected to the Franken campaign, directly or indirectly? Ironic that this was filed then withdrawn the same day (or within a day or whatever) of Coleman’s camp filing suit against Franken?

    This whole MN senatorial race is just dirty, stinky, and fairly representative of all that IS politics and all that politics should NOT be. Why is Franken running? He has the most boring and un-energetic campaign I’ve ever seen; he should take a page from Klobuchar’s playbook and actually become personable and kick up the energy a notch, and not beat the same old dead, hum-drum, BORING liberal mantras…we get it man, health care, education, blah blah blah… And I’m sorry — anyone else annoyed that he’s destroying the Wellstone name / legacy every time he tries to invoke the poor dead soul as part of his election bid? And anyone else wonder why he “suddenly” moved back to MN two years ago? Why wasn’t he such a home grown, good ol’ MN boy prior to two years ago? Oh, and get counter-strategists Al…that usually helps…then your whole money and comedy issues would be NON issues…duh…pff!!!

    I won’t say who I’m voting for, but I think you know who I’d suggest.

  3. Submitted by Elizabeth Dunn on 10/31/2008 - 12:00 am.

    Thank you for covering this! It’s great to have alternatives to the print dailies. Keep up the good work.

  4. Submitted by Joe Musich on 10/31/2008 - 07:22 am.

    Oh this is definitely a big deal. However we need to be reminded once again about the relationship between Coleman and the “suspectedvoter suppresion efforts of the Justice department and the relationship of the discredited appointment that was in place for a short period of time here in Mn. This is a scandal of gigantic proportions. Did not Paulose and Bachmann attend the same law school ? Or am I of in lala land with that one ? What a the reasons Coleman acted has he did in this case ? Quietly he’s possible our own Ted Stevens in that he will do whatever he needs to in order to advance himself and his name.

  5. Submitted by Aaron Petty on 10/31/2008 - 08:48 am.

    May shed a little light on the whole “The senator has disclosed everything he is required to disclose.” routine.

  6. Submitted by Tony Wagner on 10/31/2008 - 09:49 am.

    Relax, everybody. It is still WAY too early to be speculating about this, much less wider scandals and the prospect of resignations. Remember, no matter what your opinion of him, Norm is a fairly keen veteran politician, and there is some serious doubt that he would ever sign up for such a stupid plan as laid out in the initial suit.

    I’m giving him the full benefit of the doubt at least until the suit is re-filed, if it ever is.

  7. Submitted by Brian Simon on 10/31/2008 - 12:27 pm.

    I, for one, am amused that the Colemans would allege a last-minute lawsuit has been filed for ‘political purposes’, given their own propensity to file last-minute lawsuits. Delicious Irony!

  8. Submitted by Mark Gisleson on 10/31/2008 - 03:21 pm.

    And I’m giving the benefit of my doubt to a Texas businessman who is historically a consistent big donor to the Republican party. When Republicans sue Republicans, the only thing you can be sure of is that a Republican is guilty of something.

    Everything about Coleman smells funny from his suits to his wife’s “job.”

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