Federal grand jury sought documents, interviews regarding Nathan Deal

By Aaron Gould Sheinin and James Salzer

The Atlanta Journal-Constitution

A federal grand jury subpoenaed records and testimony from a top state official last month involving gubernatorial candidate Nathan Deal and a business arrangement he had with the state for nearly 20 years.

Georgia Revenue Commissioner Bart Graham was subpoenaed to appear before the grand jury in June, according to documents obtained Tuesday by The Atlanta Journal-Constitution through the Georgia Open Records Act.

Deal's attorney, Randy Evans, said Tuesday evening that his client has not been subpoenaed and is not the subject of an investigation. "We became aware of an investigation and my office inquired if the U.S. attorney considered Nathan Deal to be a target, and we were told no," Evans said. He declined to say anything further regarding the inquiry.

The subpoena, issued May 24 by Assistant U.S. Attorney Robert McBurney, ordered Graham to appear June 8 and provide documents "concerning the contents of the sidebar discussion between Commissioner Graham and then-U.S. Representative Nathan Deal" last year in the office of the governor's chief of staff. The AJC reported last year that Deal called the meeting in the hope of preserving his business with the state.

The same day the subpoena was issued, Graham met in his Department of Revenue office with an FBI agent and McBurney.

Little else, however,  is known about the inquiry. Graham, the U.S. attorney's office in Atlanta and the FBI all refused to comment Tuesday. It is not clear whether the grand jury met June 8 or whether Graham testified.

The AJC reported in August 2009 that Deal personally intervened with Graham and other state leaders to protect an obscure state program that earned his company nearly $300,000 a year. The newspaper's report led to a congressional ethics investigation that determined Deal possibly violated U.S. House rules. But Deal resigned from the U.S. House before any formal accusation against him was made.

Following the release of the report by the Office of Congressional Ethics in late March, a Washington-based watchdog group asked the U.S. Justice Department to launch a criminal investigation. It is unclear if the request by Citizens for Responsibility and Ethics in Washington led to the current inquiry.

Deal has said he did nothing wrong and that he acted as a public servant and not in an attempt to protect his own interests.

Deal is locked in a runoff with former Secretary of State Karen Handel for the Republican nomination as governor. Handel herself was the subject of a complaint filed Monday with the State Ethics Commission alleging she improperly used money raised for her secretary of state campaign to pay advisers to her bid for governor.

Evans, Deal's attorney, questioned the timing of the U.S. attorney's inquiry.

"I am not aware of any facts that would merit an investigation," he said. "It would be highly inappropriate to do such things in the context of the primary because of the obvious appearance of attempting to influence the outcome of the Republican primary."

The AJC reported last year that Deal on three occasions met with Graham to discuss the way Georgia inspects rebuilt salvaged vehicles. Deal's chief of staff, Chris Riley, who is now working on his gubernatorial campaign, used his congressional e-mail account to contact Georgia Senate and Revenue Department staff to discuss the plans and to set up appointments for Deal with officials, including Lt. Gov. Casey Cagle.

Deal and Ken Cronan own and operate Recovery Services Inc., also known as Gainesville Salvage & Disposal, which for nearly 20 years enjoyed a lucrative agreement with the state. From 2004 through 2008, the agreement earned the company $1.5 million, according to state records. Deal personally earned up to $150,000 a year from the enterprise, according to reports he filed with the U.S. House.

Vehicles that are badly wrecked and then repaired must be inspected before the state will issue a clean title to its owner. Deal's company provided a location and equipment for state inspectors to examine salvaged vehicles. The vehicle owner would pay Deal and Cronan a $100 fee. Deal and Cronan never had to compete for the business, state officials said.

Deal and Cronan ended their relationship with the state in October after Graham succeeded in privatizing the inspections and opening them up to more locations. Deal and Cronan have said they believe the new system sacrifices driver safety and they did not want to contribute to allowing potentially unsafe cars on the road. Graham said the inspections were never intended to check for road safety but to ensure parts were not stolen and that the vehicle had headlights and other components.

The federal grand jury subpoena specifically asks Graham to provide documents related to the final meeting he had with Deal and Cronan on the salvage program. The meeting took place March 27, 2009, in Ed Holcombe's conference room at the Capitol. Holcombe is Gov. Sonny Perdue's chief of staff.

A federal grand jury is empaneled to review evidence presented by the the U.S. attorney's office and to determine whether a criminal indictment is warranted. Under the Federal Rules of Criminal Procedure, grand jury proceedings are secret. The AJC obtained a copy of the Graham subpoena and other documents by filing an open records request with the state Department of Revenue.

Graham would not comment Tuesday, but he told the AJC in 2009 that Deal and Cronan made it clear they did not want the inspection system changed.

"Without a doubt, " Graham said at the time.

In documents the Department of Revenue provided to the Office of Congressional Ethics, the subject of the March 27 meeting was "Questions regarding privatization of salvage inspection program."

State Rep. Doug Collins (R-Gainesville), who represents Deal and Cronan in the Legislature, was there and, according to the Revenue Department, "challenged integrity of budget answers BLG [Graham] provided; Deal discussed illegal immigrants becoming inspectors. Cronan questioned Commissioner Graham why governor wasn't paying more attention to the issue."

Graham told the congressional ethics office that the meeting was "contentious," according to the report. And Riley, Deal's then-chief of staff, described the meeting as "hostile."