June 21, 2008 05:09 PM UTC

Scab Ripped Off Schaffer-Linked Fraud Case

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• by: Colorado Pols

Before we begin, we’d like to express a little surprise.

Everyone got the message loud and clear from Dick Wadhams, the detailed explanation as to why the recent conviction of Denver businessman William Orr for defrauding the government had no relationship whatsoever to Senate candidate–and former board member at Orr’s defunct National Alternative Fuels Foundation—Bob Schaffer. True, maybe it wasn’t such a “detailed” explanation, but it was emphatically delivered. And it’s true that some people may find Wadhams’ denials a little too emphatic to be wholly believed, but how many news cycles ago was this story hot? Mission accomplished, Dick. Tip back a cold one.

But for some reason, despite all of Wadhams’ effort, the angry pre-emptive phone calls to reporters and their bosses, the Rocky Mountain News reports this morning:

Scott Shires’ name is everywhere in the secretary of state’s campaign finance reports.

The Aurora Republican in 2006 was the “registered agent” for 80 clients, including Bob Schaffer’s state Board of Education race. The 55-year-old West Point graduate’s business was responsible for filing campaign finance reports with the secretary of state or IRS as needed.

Shires also worked off and on for a colorful character named William Orr, owner of Octane International, a Colorado company that won a $3.6 million federal grant to study alternative fuels.

It was Shires in 2004 who recruited Schaffer to serve on the board of directors for a nonprofit foundation Orr created to handle the grant. It’s a move Shires now regrets.

“If you like someone, you hope not to embarrass them in any manner,” he said.

By joining the board, Schaffer’s name forever became linked with that of Orr, who later was accused by the U.S. attorney of misleading investors and falsifying documents to obtain the grant. [Pols emphasis]

The same week that a federal jury found Orr guilty on fraud and other counts, the Colorado Republican Party nominated Schaffer for the U.S. Senate…

Can you hear that noise? It’s Dick Wadhams screaming into his pillow. The latest scandal the Schaffer campaign desperately hoped voters would never read about is in the wild.

Attorneys said Schaffer has no connection to the trial. Schaffer said “it’s a stretch” for Democrats to try to link him.

But liberal blogs and Democratic supporters of Schaffer’s Senate opponent, U.S. Rep. Mark Udall, D-Eldorado Springs, believe otherwise.

“Lingering questions from Schaffer-linked fraud cause” read the headline on ColoradoPols.com on June 7.

Udall’s campaign spokeswoman, Taylor West, questioned what Schaffer actually did for National Alternative Fuels Foundation when he served on the board.

“Bob Schaffer just doesn’t get to sit on the board and reap the benefits of saying he was involved in alternative fuels,” West said. “At what point does he show some responsibility, fulfill his fiduciary duties?”

Shires said a number of blog postings from “overactive Democratic attackers” are wrong, particularly speculation that Schaffer was the congressman who obtained the questionable grant for Orr.

Schaffer’s campaign manager, Dick Wadhams, shared Shires’ frustration.

“These stupid blogs can make things up,” Wadhams said.

Remember, in the posting cited here we only briefly touched on the questions surrounding the awarding of the original $3.7 million earmark for Orr’s fraudulent research. Far more important to us was the question of how Schaffer could have found himself wrapped up in a fraud investigation but continued to employ the man who put him in this situation, Scott Shires. After all, Schaffer claims he resigned from NAFF as soon as he learned a criminal investigation was under way, and Wadhams has claimed that Schaffer joining the NAFF board was all Shires’ idea.

As Roll Call reported last month:

Wadhams also said Schaffer’s interest in NAFF – and his decision to join the board in 2004 – came about on the recommendation of longtime political associate Scott Shires.

Shires ran some of Schaffer’s local and statewide political campaigns, including fundraising operations and campaign committees.

So why would you ever possibly trust this guy again? Why put him in charge of your next campaign in 2006? It doesn’t make any sense, unless, as we said before, it’s a cover story with a hole big enough to drive a bus through.

As part of a plea agreement, Shires testified at Orr’s trial and pleaded guilty to three misdemeanor charges of failing to file corporate tax returns on behalf of Octane International.

Shires faces up to a year in prison and a $75 fine when he is sentenced Monday in U.S. District Court in Denver.

Shires volunteered to work on Schaffer’s 2004 U.S. Senate campaign but said the hubhub over the trial and his conviction has caused him to stay away this year… [Pols emphasis]

Shires said Orr told him the earmark was inserted into the bill by a key House committee staffer at the direction of a non-Colorado congressman, and that a “very expensive bottle of whiskey” changed hands.

Schaffer said he was invited to serve on the board of directors in October 2004. The board officially voted on his membership in November, and he began his duties Dec. 1, 2004. Schaffer said he toured the research facility, talked to scientists and read reports.

The next month, the EPA froze Orr’s grant.

Schaffer said Orr claimed the EPA did so because the research he was undertaking would disprove the agency’s policy on fuel additives. Schaffer said the board discussed the situation, although he doesn’t remember the details. [Pols emphasis]

Schaffer said he was not aware that Orr was under investigation until a Department of Justice investigator interviewed him in February. Schaffer resigned from the board the next month, March 2005.

“The subsequent decisions that the board was involved in were all about Bill Orr and his activities and that was not a distraction I cared to spend a lot of time on,” he said. Schaffer estimated he was paid $1,500 for his service on the board… [Pols emphasis]

Bottom line: after collecting money from–remember that Wadhams explicitly denied Schaffer was paid anything for his role at NAFF–and lending his good name to what was then being investigated as (and now proven to have been) a criminal enterprise, Schaffer didn’t care to “spend a lot of time on” the “distraction” of figuring out what Orr had done with the money. Worse, Schaffer continued to closely associate with Scott Shires for years, the man who recruited him to serve on the board of this fraudulent organization.

Shires tries admirably to fall on his sword for Schaffer in this interview, citing his own bad judgment in ‘leading’ Schaffer into such an embarrassing situation, but the issue is really more about the Republican candidate for the US Senate’s judgment, and rightly so.

Because after hearing about how Schaffer “knew nothing” about his corrupt charter-school operator friends until after their unprecedented campaign-finance violation penalties, how he “knew nothing” about Jack Abramoff’s campaign to thwart immigration reforms in the Mariana Islands while eagerly abetting it, and now how he knew enough to resign from this criminal enterprise masquerading as a nonprofit in 2005 but apparently not enough to cut ties with the man who got him into the situation to begin with…

No. It’s not about Shires, Abramoff, or David Brennan anymore. This is about Bob Schaffer. This is about Bob Schaffer’s judgment. This is about the company that Bob Schaffer keeps. This is about the sense of responsibility Bob Schaffer doesn’t feel when things go to hell all around him, which seems to have occured with disturbing frequency in his career. Over-arching questions about Schaffer’s judgment are what tie all of these disparate narratives together, from Scott Shires to White Hat Schools to Saipan.

And a distinctly unflattering–at least a few Republicans we know are now using the word “unelectable”–picture emerges.