Charlotte Observer Oct. 22, 2006

N.C. land deal hints at power of political ties
Easley staff urged buy; 13 with ties to landowner soon donated $56,000

By BRUCE HENDERSON
bhenderson@charlotteobserver.com

LENOIR - At the urging of Gov. Mike Easley's office, a state
environmental board approved $13.5 million three years ago to buy
thousands of acres in the Caldwell County foothills.

The governor's 2004 re-election campaign soon got a financial boost.

On a single day three weeks after the land changed hands, 10 donors
contributed a total of $40,000. An additional $16,000 from three more
contributors and one of the original names rolled in over the next 10
months.

All 13 people had connections to the owner of the Caldwell County
land.

More than half of the donors are registered Republicans. Easley is a
Democrat. Each gave $4,000, the most allowed for a single election. Two
of the donors were 19 and 20 at the time, barely old enough to vote.

None had contributed reportable amounts to Easley's previous state
campaigns.

The donors willing to comment say they simply liked the governor.

Easley's staff says the governor knows none of them and knew nothing
about the land buy until it came before the Council of State, a few
days before the state took ownership.

Sherri Johnson, Easley's communications director, said the sellers
never offered money for the governor's campaign. An executive order
signed by Easley prohibits public officials from using their position
to reap direct or indirect financial benefits.

If there had been any hint of impropriety, Johnson said, "Gov. Easley
would have stopped this deal in its tracks."

Easley's staff wouldn't make the governor available for an interview.
As a result, his perspective on the land sale and campaign
contributions is not known.

But the acquisition shows how political access can influence how
public money is spent. And it reveals some of the pressures on the
Clean Water Management Trust Fund, which quietly doles out about $100
million in grants each year and provided most of the money for the
Caldwell County land.

How the deal developed

Set on the eastern lip of the Blue Ridge 15 miles north of Lenoir, the
forested Caldwell County property sweeps across high ridges surrounded
by steep ravines and valleys. A portion extends into Wilkes County.
Streams flowing through the property form part of the headwaters of the
Yadkin River. The Buffalo Cove Game Land, as it is now called, is open
to the public for hunting, fishing and hiking.

The property had been owned by a family trust, the Mingo Tribal
Preservation Trust. Trustee Jesse Horton, who lives near the mountain
community of Deep Gap, said the trust was set up in the early 1990s to
assemble and preserve large blocks of land.

Mingo, Horton said, refers to an Indian tribe from which his family
descended.

The trust also owns other property in Western North Carolina -- tax
records show more than 3,300 acres in Wilkes County alone -- as well as
in West Virginia and Idaho, Horton said. The N.C. Wildlife Resources
Commission had agreed to pursue 3,550 acres of the same Caldwell County
tract in 1999, officials said, but the deal fell through.

The land buy resurfaced in 2003, this time involving about 5,600
acres. That August, the wildlife commission again voted to pursue the
purchase. The agency's staff then applied for a Clean Water grant.
Support for the grant from Easley's office helped Horton, who was the
state's primary contact from the trust. Horton, who lives in Wilkes
County, wanted to sell quickly for tax purposes and had met with Easley
advisor John Merritt to pitch the deal.

A member of Easley's senior staff called the chairman of the Clean
Water board, who later told his colleagues that the acquisition of the
Caldwell County land was "the governor's top priority."

The board approved its second-largest grant to help buy it.

The application for the money leap-frogged others before the Clean
Water board. Some members complained they were being hurried into a
decision at a time when the trust fund was financially strained.

A former board member from Mecklenburg County, who voted against the
grant, said the pressure from Easley's office made her uncomfortable.

The executive director of the wildlife commission said the governor's
legal counsel, Ruffin Poole, had also expressed hope the commission
would "step up to the plate" in supporting the buy. That didn't take
much arm-twisting, director Richard Hamilton added, since the
commission had tried to buy part of the same tract before Easley took
office.

Johnson, the governor's spokeswoman, said the sale unfolded like most
state conservation purchases: It fit the state's goal of protecting
natural areas. It had the backing of conservationists and local elected
leaders. And it was approved by the state's top elected officials.

Johnson initially told the Observer the governor's staff had supported
buying the land in response to broad support from environmental groups.

But three of the four groups she cited say they never advocated for
the acquisition. Easley's office then said its first answer was based
on a former staffer's faulty memory.

Support did come from the Conservation Fund, a national group with an
N.C. office that brokered the land sale to the state.

In applying for the Clean Water grant, the wildlife commission lauded
the land's wildlife and trout streams, as well as its protection of the
Yadkin basin.

While the 5,621-acre tract was a rare find because of its size, some
state environmental agencies called it unremarkable. One recommended
against buying it.

Clean Water staff endorsed the purchase but, in evaluating the land's
ability to protect streams, gave it only average marks.

New donors had tie to trust

Apart from their generosity, Easley's newfound campaign donors had one
thing in common. All had direct or indirect connections to the Mingo
Tribal Preservation Trust.

The relatives of two Mingo trustees, two Mecklenburg County lawyers
associated with the trust and a woman whose company had sold land to
the trust gave money to the Mike Easley Committee after the sale went
through.

"I like the guy," said trustee Robert Testa, a Wake County real estate
investor who contributed along with his wife, daughter, brother and
sister-in-law. "He's a hunter -- he takes his son hunting. He's a
family guy."

Bob Hall of Democracy North Carolina, a campaign-finance watchdog
group, said it's hard for him to believe that the gifts from the 13
donors were coincidental. With two exceptions, none had ever given
reportable amounts -- more than $100 -- to any state-level candidate in
the past decade.

"It is very suspicious to see a name that suddenly gives $4,000 and
doesn't show up as having given to anybody earlier," Hall said. "That's
the kind of situation that begs for an explanation. People just don't
give $4,000 who are not regular political donors" without specific
reasons.

Trustee had sale deadline

Horton said he and Charlotte lawyer David Johnston, general counsel
for the Mingo trust, met with Merritt, the Easley advisor, before the
Clean Water grant was made. Easley's office confirms the meeting but
said the governor's staff wasn't involved in negotiations for the
property.Horton offered to sell the land to the state -- but only if
the deal could be closed by the end of 2003.

He said he wanted to reinvest money from the sale in more real estate,
a commonly used transaction that defers capital gains taxes. Tax law
says the new land has to be purchased within six months of selling the
old property.

Given the rising price of mountain land, Horton said, "We felt like it
was a great opportunity for the state."

He said he got no commitments from Easley's senior assistant, John
Merritt, and decided to "just let the process work its way through."

Merritt said he referred Horton to the state's natural resources
agencies but didn't brief Easley on the meeting and never talked to
Horton again.

Horton, a political independent, said he likes Easley but has never
met or contributed to him. Two sons and a daughter-in-law, however,
donated a total of $12,000 six months after the sale.

Len and Steven Horton aren't involved in the Mingo trust and didn't
know about the land sale, their father said. Neither could be reached.

Horton said his family wasn't part of a plan to repay the support from
the governor's office. It's illegal in North Carolina to make political
contributions in someone else's name.

"If anybody was going to give a contribution, I would have been the
one to do it," Horton said.

"I can only say that what my sons do as it relates to the political
process, and who they choose to support, is their choice. I didn't put
them in a position where I said, `You've got to do this or do that.' "

Horton didn't return later phone calls.

Deal called a steal for N.C.

The Mingo trust paid about $2 million for the tracts it sold to the
state, says an appraisal Horton commissioned, although some
transactions didn't reflect the lands' true value.

Horton's appraisal, which envisioned the land being developed for
resort homes, put its market value at $27.6 million. He accepted the
lowest of two state appraisals, $21.5 million.

The state's Ecosystem Enhancement Program, which offsets damage to
streams and wetlands from road construction, paid the remaining $7.5
million needed to close the deal. That's the second-highest amount the
three-year-old program has paid for land. The state Natural Heritage
Trust Fund contributed $1 million.

Dick Ludington, who negotiated the purchase on behalf of the national
Conservation Fund, said the state got a steal.

Increased development makes it rare to find such a big block of raw
land relatively close to Piedmont cities. Just north of the Mingo
tract, home sites at the new mountain development of Laurelmor start at
$500,000.

"We are not going to be buying (mountain) land at $3,800 an acre again
in our lifetime," Ludington said. "I look back on this as one of the
great property acquisitions of the past five years."

Not all were keen on deal

But state scientists weren't as enthusiastic.Clean Water staff scored
the land 90 on a 165-point scale, about average for the 16 other
acquisitions the board funded during the same period. The state
Division of Water Quality recommended against the acquisition because
of the "bits and pieces" of streams that would be protected.

The state's Natural Heritage Program rated the tract as only of county
significance, the lowest of four rankings.

Still, Clean Water Chairman Robert Howard repeatedly told his board
colleagues that Easley wanted the sale to go through. The governor
appoints seven of the board's 21 members. House Speaker Jim Black
appointed Howard.

"I got a telephone call from the governor's office that relayed to me
that this is the governor's top priority, and it's also the wildlife
commission's top priority," Howard told trustees at an August 2003
meeting, according to a transcript.

In an interview, Howard said the governor's office told him
environmental groups supported the sale. Howard said Easley's staff
asked him to do "the best I can" on the grant if it met the trust
fund's cri-teria.

Clean Water Executive Director Bill Holman said Poole of the
governor's staff occasionally asked about the status of the grant, but
that he didn't find the interest unusual.

As state environment secretary in 2000, Holman had lobbied Howard on
behalf of former Gov. Jim Hunt, who wanted the state to buy mountain
land slated for development within DuPont State Forest. The Clean Water
board approved a $12.5 million grant for the deal.

Some were wary of pressure

The Mingo application came before the Clean Water board when the trust
fund was already under financial pressure.

The state had just transferred $12 million from the fund to settle a
lawsuit over DuPont State Forest. Its available balance was only $17
million.

"That was the only pressure I've felt, to try to capitalize on this
wonderful opportunity while at the same time trying to fund the other
grant applications before us," Howard said. "I feel like we did the
appropriate thing for the state."

At a September 2003 meeting where the grant was approved, some board
members objected.

To meet Horton's deadline, the grant had been considered two months
early. It was a lot of money, board members said, and a decision had to
be made quickly.

Former Mecklenburg board member Maggi Markey, one of three members to
vote against the grant, said she felt it was unfair to consider the
Mingo request before other applications.

"I really was uncomfortable, frankly, about the pressure being put on
us and that's why I voted against it," said Markey, a former
Mecklenburg County commissioner who now lives in Colorado. "I just felt
it was more (pressure) than we had been subjected to before."

Moving the application ahead, she said, exposed the board -- and the
governor -- to the appearance of favoritism.

Winston-Salem trustee William Hollan, who also voted against the
grant, said he was more concerned about the rush to make a decision
than the worthiness of the purchase.

"If every seller could say my project is urgent, we would never be
able to set our own priorities," he said.

But as mountain land prices soar, Hollan added, the buy now "looks
like a heck of a deal."

Even board members who approved the grant voiced reservations, the
meeting transcript shows.

Said Dickson McLean Jr. of Lumberton: "I do hope (Easley's) acting in
the best interests of the state in putting this much priority on this
one project."

About the 13 donors

Robert Testa, Rolesville
Connection: Mingo trustee.Occupation: Real estate owner/investor.
Registration: Republican.
Contribution: $4,000 on Dec. 31, 2003.
Quote: "I like the guy. He's a hunter, he takes his son hunting. He's
a family guy."

Rhonda Testa, Rolesville
Connection: Robert Testa's wife.
Occupation: Real estate.
Registration: Republican.
Contribution: $4,000 on Dec. 31, 2003.
Didn't return Observer call.

Samantha Testa, Rolesville
Connection: Robert Testa's daughter.Occupation: Retail.
Registration: Republican.
Contribution: $4,000 on Dec. 31, 2003.
Would not comment.

Louis Testa Jr., Raleigh
Connection: Robert Testa's brother.
Occupation: Pilot.
Registration: Republican.
Contribution: $4,000 on Dec. 31, 2003.
Quote: "We like Easley; typically we vote conservative ... I think he
mostly talked about schools, (and) we liked his positions."

Gwendolyn Testa, Raleigh
Connection: Louis Testa's wife.Occupation: Homemaker.
Registration: Republican.
Contribution: $4,000 on Dec. 31, 2003.

Tammie Jordan, Deep Gap
Connection: Company sold land to Mingo trust.
Occupation: Self-employed.
Registration: Democrat.
Contribution: $4,000 on Dec. 31, 2003.
Quote: "I vote more the person than I do the party. I just vote the
person who I think will do a good job. It just seemed to be a good
thing to do at the time."

Richard Kline, Cornelius
Connection: Did legal work for Mingo trust.Occupation: Lawyer.
Registration: Republican.
Contribution: $4,000 on Dec. 31, 2003.
Quote: "I am registered as a Republican but philosophically am
independent." Declined further comment.

Jayne Kline, Cornelius
Connection: Richard Kline's wife.
Occupation: Unknown.
Registration: Unaffiliated.
Contribution: $4,000 on Dec. 31, 2003.

David Johnston, Cornelius
Connection: Mingo trust's general counsel.Occupation: Lawyer.
Registration: Unaffiliated.
Contributions: $4,000 on Dec. 31, 2003; $4,000 on Oct. 29, 2004.
Didn't return Observer calls.

Patricia Johnston, Cornelius
Connection: David Johnston's wife.
Occupation: Homemaker.
Registration: Unaffiliated.
Contributions: $4,000 on Dec. 31, 2003.

Len Horton, Deep Gap
Connection: Son of Mingo trustee Jesse Horton.Occupation: Investor.
Registration: Democrat.
Contribution: $4,000 on June 4, 2004.
Didn't return Observer calls.

Rene Horton, Deep Gap
Connection: Len Horton's wife.
Occupation: Merchandiser.
Registration: Republican.
Contribution: $4,000 on June 4, 2004.
Didn't return Observer calls.

Steven Horton, Ferguson
Connection: Son of Mingo trustee Jesse Horton.
Occupation: Unknown.
Registration: Republican.
Contribution: $4,000 on June 4, 2004.
Could not be reached.

SOURCE: State Board of Elections