If not for a falling out between Wisconsin & Southern Railroad president William Gardner and a former woman "friend," Gardner's violation of campaign finance laws might never have come to light.
Gardner, a major Scott Walker donor who, according to court documents, pledged to raise $30,000 for the Walker campaign by the end of 2009, was charged in Washington County Monday with two felonies for making illegal campaign contributions to Walker as he mounted his successful campaign for governor.
A criminal complaint alleges Gardner, 63, exceeded the state's $10,000 limit for a gubernatorial candidate and also asked employees to contribute to Walker's campaign, then illegally reimbursed them in order to skirt the financial limits on campaign contributions.
State law prohibits anyone from making political contributions in another person's name. It also prohibits political contributions from corporations.
The joint investigation against Gardner was conducted by the state Government Accountability Board and the Milwaukee County District Attorney's Office.
In May of 2010, Walker returned to Gardner $44,800.
Walker's action came around the same time Gardner publicly disclosed his campaign finance law violations on May 18, 2010, a week after the Government Accountability Board launched its investigation, and a month after Stacie Long, Gardner's friend, who also made a contribution to Walker at the behest of Gardner, went to the Government Accountability Board with the allegations after she and Gardner had a falling out.
Officials with the GAB and Milwaukee District Attorney's Office said at a news conference Monday they had received permission from Long to revel her identity.
The criminal complaint alleges that Gardner solicited several employees to contribute $5,000 to the Friends of Scott Walker campaign and then reimbursed these employees with company receipts for the donations.
Some employees, concerned about the legality of the contributions, refused to write checks to the future governor's campaign, according to the complaint.
In a statement today, Gardner claimed "I did not realize I was violating the law."
But the criminal complaint alleges that he did.
The investigation also found that Gardner made contributions to Democratic Assembly Speaker Mike Sheridan and the Assembly Democratic Campaign Committee of $2,000 each in November 2009.
But a state assemblyperson can only receive $500 from one individual per election cycle. Gardner ultimately reissued a check to Sheridan for $500 and one to the ADCC for $3,500.
"This gives rise to the fair inference that Mr. Gardner was informed as to the law of campaign contribution limits," the complaint states.
Gardner had previously been fined $1,000 in 2005 by the Government Accountability Board for making a $5,000 donation to Walker, who was then in a primary fight for the Republican gubernatorial nomination.
Gardner, a lobbyist at the time, and thus prohibited from making the contribution, donated the money back through his daughter, Stephanie Schladweller, on Nov. 17, 2005, the same day the Walker campaign had returned the contribution to Gardner.
Under Gardner, Wisconsin & Southern has forged deep ties with the state. The company has received tens of millions in state Freight Railroad Preservation Program grants. The company is by far the most frequent recipient of such grants.
Last month Walker awarded Wisconsin & Southern $14 million of $25 million in grants for the preservation or upgrade of freight rail infrastructure.
In a statement, the Government Accountability Board said Gardner agreed to plead guilty to the two felony counts, and the company has paid a civil forfeiture of $166,900. Under the plea deal, Gardner would serve two years probation.
Seven Wisconsin & Southern employees will pay $250 fines.
Jonathan Becker, an administrator with the GAB's ethics division, said two of Gardner's employees turned down Gardner's requests to donate money to Walker. Another agreed to make a donation, but instead kept the $5,000, Becker said.
The GAB statement said the plea deal was reached with Gardner in part because he owned up to the infractions and cooperated with investigators.
"The forfeiture paid by the railroad is the single largest forfeiture ever paid to the Government Accountability Board or to either of its predecessor agencies, the State Elections Board or the State Ethics Board," said Kevin Kennedy, director and general counsel of the Government Accountability Board. "The forfeiture reflects the size and scope of the money laundering scheme engineered by Mr. Gardner. The railroad's employees, while violating the law, had little choice after Mr. Gardner personally asked them to make the contributions with a promise of reimbursement."
Bruce Landgraf, a Milwaukee County assistant district attorney, said there is "inherent coercion involved" when someone in a position like Gardner asks his employees to do something for him.
Jay Heck, executive director of Common Cause of Wisconsin, said the fines are "not huge" and "will not hurt the company."
"But on the other hand, the bad publicity may have a chilling effect on them doing something like this in the future," Heck said.
Heck pointed to the fact Gardner came forward to alert authorities to the violations and the fact Walker returned the money as reasons why Gardner is paying fines rather than serving jail time.
In 2007, Dennis Troha, a millionaire from Kenosha who operated a large trucking company and was proposing to build an $800 million casino, was convicted of making illegal contributions to Democratic Gov. Jim Doyle that far exceeded the $10,000 limit.
"With Troha, there was no coming forward before hand," Heck said. "And Doyle didn't return the money. It was much more contentious."
Although Wisconsin & Southern Railroad is headquartered in Milwaukee, Gardner was charged in Washington County, where he is a resident of Hartford.
In an email documented in the complaint, which Gardner sent to Walker in April of 2010 after he met with the future governor personally, Gardner drove home the point that Wisconsin & Southern operates hundreds of miles of state-owned rail in Wisconsin.
Gardner closed the email saying, "Keep up the good work and I will do everything I can do to get you in the Governor's Mansion."
Despite the fact one of Walker's first moves as governor-elect was to reject $810 million in federal funds to build a high-speed passenger rail system in the state as part of a proposed Midwestern rail initiative, the state's relationship with Gardner has flourished.
According to published news accounts, the company stands to gain substantially from a possible deal with the state to buy 50 miles of track between Madison and Reedsburg, and another 20 miles of track in Madison. Under the deal, the state would take ownership of the tracks, and Wisconsin & Southern would operate them, making the company eligible for more FRPP grant money, including potentially between $35 million and $60 million to rebuild the Merrimac Rail Bridge.
According to the complaint against Gardner, Wisconsin & Southern's chief financial officer told investigators that the revenue from the state is "essential" to the operation of the railroad, and the company employs a government liaison charged with lobbying federal and state agencies for "railroad-friendly legislation" and increased funding for track and rail line structure upgrades.
Investigators have been in the midst of a John Doe investigation into Gardner's campaign donations, which included company emails, bank records and company financial records.
In addition to asking company executives to donate money to Walker, for which they were reimbursed with company receipts, Gardner also asked Long to donate $10,000 to Walker, for which she was reimbursed with a personal check from Gardner, the complaint states.
In the midst of these transactions, however, Long told investigators that "she left William Gardner during an argument in December, 2009," then stopped payment on the check before it cleared the bank. She then gave Gardner his money back.
Long later contacted the Government Accountability Board, which prompted the investigation.
The criminal complaint also states the Walker campaign was aware of Gardner's $30,000 pledge. Friends of Scott Walker staffer Joe Fadness noted the pledge in an email that was produced by the campaign for investigators.
Reporter Jessica Van Egeren contributed to this report.