Senator's Way to Wealth Was Paved With Favors
Circle of Influence
ANCHORAGE â€" He wielded extraordinary power in
Washington for more than three decades, eventually holding
sway over nearly $800 billion a year in federal
But outside the halls of the U.S. Senate, which is a world
of personal wealth so rarified some call it "the
Millionaires' Club," Sen. Ted Stevens (R-Alaska) had
Then, in 1997, he got serious about making money. And in
almost no time, he too was a millionaire â€"
thanks to investments with businessmen who received
government contracts or other benefits with his help.
Added together, Stevens' new partnerships and investments
provide a step-by-step guide to building a personal fortune
â€" if you happen to be one of the country's
most influential senators.
They also illustrate how lax ethics rules allow members of
Congress and their families to profit from personal
business dealings with special interests.
Among the ways that Stevens became wealthy:
â€¢ Armed with the power his committee
posts give him over the Pentagon, Stevens helped save a
$450-million military housing contract for an Anchorage
businessman. The same businessman made Stevens a partner in
a series of real estate investments that turned the
senator's $50,000 stake into at least $750,000 in six
â€¢ An Alaska Native company that Stevens
helped create got millions of dollars in defense contracts
through preferences he wrote into law. Now the company pays
$6 million a year to lease an office building owned by the
senator and his business partners. Stevens continues to
push legislation that benefits the company.
â€¢ An Alaskan communications company
benefited from the senator's activities on the Commerce
Committee. His wife, Catherine, earned tens of thousands of
dollars from an inside deal involving the company's
Stevens, in a written response to questions submitted by
The Times, said that in all these cases his official
actions were motivated by a desire to help Alaska, and that
he played no role in the day-to-day management of the
ventures into which he put money.
"I am a passive investor," Stevens said of his real estate
dealings. "I am not now nor have I been involved in buying
or selling properties, negotiating leases or making other
All in the Family
In these deals and others, Stevens' brother-in-law,
William H. Bittner, played a pivotal role. An Anchorage
lawyer and lobbyist, Bittner represents major business
interests for whom the senator has repeatedly gone to bat.
In one instance, Stevens engineered a $9.6-million federal
appropriation that chiefly benefited a Bittner client, part
of South Korea's Hyundai conglomerate.
Stevens tucked a single line into a must-pass
appropriations bill that used federal tax dollars to buy
the company out of a coal-loading facility in Seward.
Stevens said he did it to lower the company's costs and
keep it from canceling an agreement to buy Alaskan coal.
Bittner did not respond to questions from The Times.
Stevens' relationship with Bittner fits an increasingly
widespread pattern in Washington: Senior senators do favors
for special interests that pay hundreds of thousand of
dollars in lobbying and consulting fees to the senators'
children, spouses and other relatives.
As The Times documented in a series of articles in the
summer, Sens. John B. Breaux (D-La.), Trent Lott (R-Miss.)
and Orrin G. Hatch (R-Utah) did favors for companies and
groups that paid their sons as lobbyists and consultants.
Sen. Harry Reid (D-Nev.) has pushed through federal land
trades and other provisions benefiting Nevada interests
that employ his sons and son-in-law.
The Times also reported that Stevens had continually
supported interests that paid his youngest son, Ben,
hundreds of thousands of dollars as a consultant.
The senators all said their decisions on policy issues and
legislation had not been influenced by their relatives.
But Stevens' dealings have carried him a step further. His
official actions have helped individuals and companies from
which he himself draws financial benefits, a six-month
Times examination found.
His required financial statements have fallen short of
complete disclosure â€" especially on the
activities of a small investment corporation owned by his
wife and her family, a company that is covered by the
The Senate has few ethics rules governing such
arrangements. Although accepting expensive gifts and
speaking fees is banned, the conflict-of-interest rules are
much less explicit. For example, nothing clearly bars a
senator from sponsoring legislation that benefits the
clients of family members who lobby. Nor are lawmakers
prohibited from going into business with people receiving
Mainly, the Senate relies on an ill-defined injunction not
to bring shame upon the body.
Senate Ethics Committee Chairman George Voinovich (R-Ohio)
declined to discuss the issues raised by The Times
House Ethics Committee Chairman Joel Hefley (R-Colo.) said
he hoped to convene an advisory panel of current and former
House Ethics Committee members next year to examine a range
of ethics questions, including how to address the issue of
lobbying by relatives.
"I do think we ought to revisit this," he said. He declined
to comment on the issue of lawmakers' financial
Lawmakers should be careful about their business
relationships, John D. Saxon, a former Senate Ethics
Committee counsel, said, speaking generally and not about
Stevens in particular.
"It's a very slippery slope for a member of Congress to be
entangled with someone in a business dealing and then use
their official position to help them, even if it's on
something completely different," he said.
Today, Stevens is the longest-serving Republican in
the Senate, and as president pro tempore stands just behind
the vice president and the speaker of the House in the
constitutional line of succession to the Oval Office.
For more than 20 years, he has been chairman or ranking
member of the Senate's Defense Appropriations Subcommittee.
Since 1997, he has been chairman or ranking member of the
full Appropriations Committee, which must approve every
dollar of federal discretionary spending each year.
Stevens' position as a senior member of the Commerce
Committee adds to his clout â€" especially in
telecommunications policy, which is under the committee's
In Alaska, Stevens exerts unparalleled influence. No state
is so dependent on federal dollars and decisions. The
federal government still owns 60% of all its land,
generates one-third of all jobs, and holds the keys to
economic growth through regulation of its major industries
â€" oil and gas, fishing, timber and
Federal spending in Alaska, known locally as "Stevens
money," runs as much as 70% above the national average on a
per capita basis.
Since his first day in the Senate in 1968, Stevens has
delivered for Alaska.
He has won tax breaks for Native businesses, bailouts for
fishermen, a pipeline for an oil consortium and restoration
of an abandoned Army post as a tourist attraction for a
He got $28 million for a rail terminal open only during the
summer and $40 million for a commercial space satellite
Almost every institution, region and segment of the
population in the state has benefited from Stevens'
efforts, from its schools and social programs to its
transportation system, its urban areas and the far-flung
villages of Alaska's Native peoples.
But during the period Stevens has grown wealthy, some
longtime supporters say, the senator has become less
willing to hear their views.
"I've been here a long time, and always had a great deal of
respect for Sen. Stevens' enormous power and the good he's
done for Alaska," Terry Haines, a veteran commercial
fisherman from Kodiak Island, said recently. "But lately
he's become extremely rigid and doesn't seem to be
listening to his constituents much."
Theodore Fulton Stevens was born Nov. 18, 1923, in
Indianapolis. At the outset of the Great Depression, when
Stevens was 6 years old, his parents divorced, according to
his campaign biography.
Stevens went to live with his grandparents after the
divorce, helping out by selling newspapers and working
evenings and weekends in a drugstore. He later moved in
with an aunt and uncle in Manhattan Beach, Calif., where he
graduated from high school. Both his father and grandfather
died of cancer, Stevens has said.
Stevens joined the Army Air Corps during World War II,
flying cargo planes "over the Hump" in the Himalayas
â€" some of the most dangerous missions of the
war. He won two Distinguished Flying Crosses and two Air
Medals, his biography says.
The biography describes how he graduated from
UCLA and Harvard Law School. After working in the 1952
Eisenhower campaign, he was hired by a Washington lawyer,
but soon took a new job as a lawyer in Alaska, which was
still a territory.
He played a leading role in the successful campaign for
statehood, but Alaska's voters rejected Stevens the first
two times he ran for the Senate.
Winning a seat in the state Legislature, he became House
majority leader and go-to man for Gov. Walter J. Hickel. In
1968, when Sen. E.L. "Bob" Bartlett died unexpectedly,
Hickel picked his ally to fill the vacancy.
In the Senate at last, Stevens worked hard to master
legislative details and committee politics.
But increasing political success was accompanied by
In 1978, his first wife, Ann, died along with four others
when the executive jet carrying them home crashed at the
Anchorage airport. Stevens was one of two survivors.
At that point, the Stevens' five children were adults. Two
years later, he remarried, and soon had a daughter, Lily,
who recently graduated from college.
In the 1980s, Stevens and his new wife, the former
Catherine Bittner, suffered a serious financial
Along with her younger brother, William Bittner, and other
partners, Stevens invested in the construction of a
$2-million crab boat, records show. Before it was finished,
costs soared and the crab market crashed, plunging Stevens
The unexpected inheritance of a 54-foot yacht helped
Stevens to regain his financial footing. Records show the
boat was a bequest from the late Charles Willis "Bill"
Snedden, publisher of the Fairbanks Daily News-Miner, a
longtime friend of Stevens'. Stevens sold the boat for
about $400,000, according to a source involved in the
transaction who did not want to be named.
Stevens' financial problems underscored the disparity
between his personal situation and that of his wealthy
In a news interview in the late 1980s, he lashed out at
Alaska voters for failing to appreciate the personal and
financial sacrifices he had made for them.
A $50,000 Investment
In 1997, Stevens began making up for lost time.
"Money was never what Ted Stevens was about," one close
associate said of Stevens' sudden focus on accumulating
wealth. The associate attributed it to Stevens' age
â€" he turned 80 last month â€" and
to concern about his family.
Whatever the reasons for the change, sometime in 1997
â€" acting at the senator's request
â€" brother-in-law Bittner contacted a friend,
Anchorage real estate developer Jonathan B. Rubini, about
investment opportunities for the senator, Rubini said.
At the time, Stevens was making about $130,000 a year as a
senator, and his wife reported annual earnings of about
Rubini said he would be honored to help, the developer
recalled recently during extensive interviews in his
A lawyer and a Democrat known for representing liberal
clients, Rubini had a gift for engineering complex
Rubini and his partner, Leonard B. Hyde, made it a practice
to form a separate syndicate of investors for each project.
Bittner had often been among those participants. Rubini
arranged for Stevens to put up $50,000, giving him a 7.7%
interest in a new syndicate called JLS Properties.
Rubini, Hyde and another partner who came in on the deal
were required to personally guarantee, if necessary, debts
the partnership took on. They also agreed to contribute
more capital if needed.
Stevens was not asked to guarantee notes or promise more
money because he was brought in as a passive investor,
Rubini said. The senator said he asked for that status
because it shielded him from the kind of open-ended
financial obligation that had caused his "bad experience"
in the crab boat venture.
The deal began in characteristic Rubini fashion, with the
purchase of an $11-million collection of what he called
"ragtag" properties, whose out-of-state owners wanted to
unload. Rubini quickly resold several of the properties to
pay down debt.
Among the properties retained were a small office park near
the Anchorage airport and a modest two-story office
building downtown. Within three years, Rubini said,
Stevens' equity climbed to about $250,000.
Stevens also invested $50,000 in a separate Rubini
syndicate to acquire an apartment complex in Fairbanks in
1999, records show. Stevens' equity in that property has
grown too, Rubini said.
A Federal Contract
Stevens was soon in a position to do a favor for
When Elmendorf Air Force Base, immediately north of
Anchorage, was selected to participate in a new Pentagon
program to privatize base housing, Rubini and another set
of partners bid on the $450-million contract in 2000.
The chosen developer would take title to the existing
housing, upgrade and expand it, then rent the houses back
to service families. At 828 units, the Elmendorf contract
was far larger than anything Rubini had built before
â€" "a big reach for us," as he put it.
Yet with low-interest government construction loans and the
Air Force pledging to pay tenants' housing allowances
directly to the contractor for the next 50 years, it looked
like a moneymaker.
Bittner became an investor in the Elmendorf group that
Rubini put together, records show. Stevens did not, and he
said Monday that he had been unaware of Bittner's
The senator said he "strongly supported" privatization
because it improved housing for military families and "it
would greatly enhance the likelihood that Elmendorf would
not be closed in the next round of base closures."
When Rubini sought more time to prepare his bid, Air Force
officials noted in their records, he sent the senator a
copy of the request.
"I purposely CC'd Sen. Stevens to send a signal to the Air
Force that we would raise the issue with the Alaska
delegation if the Air Force acted unreasonably," Rubini
Although it was less than he wanted, Rubini was given a
With only the final paperwork to wrap up, Rubini was told
Then, in September 2000, days before the deal was to become
final, the Air Force reneged. One government memo said the
Air Force thought Rubini's group "lacked capacity and
adequate financing" â€" claims Rubini
Rubini, whose group had already spent $1 million on
preparation work, fought back. He filed a formal protest
and also wrote to Stevens, explaining the problem and
requesting help. Then he flew to Washington. First, he
tried to talk to Air Force officials, who refused to see
him. Next, he visited Stevens on Capitol Hill.
The meeting went so well that Stevens invited Rubini home,
where they watched one of the presidential candidate
debates between Al Gore and George W. Bush, Rubini
Stevens said he decided to get involved with the
"My involvement with the Elmendorf project was motivated to
ensure that the Air Force moved forward," he said in his
In addition, he said, he was "looking out for an Alaskan
company that was getting short shrift from the Department
Stevens did not answer questions about the specific actions
he took. He was quoted in an August Anchorage Daily News
article as saying he called Air Force generals. The article
reported on his relationship with Rubini.
Whatever he did, the Air Force began to feel some heat.
As chairman of Appropriations, Stevens is an ex officio
member of its Military Construction Subcommittee. The
chairman of that subcommittee, Conrad R. Burns (R-Mont.),
is one of Stevens' fishing buddies.
In October 2000, Burns wrote to the secretary of the Air
Force, F. Whitten Peters, threatening to take away the
Elmendorf privatization money because of the glitch in
awarding the contract.
Burns arranged for a similar letter to go to the Air Force
from the chairman of the corresponding House committee, and
House aides said they knew Stevens was interested in the
Burns did not respond to calls or written questions about
Meanwhile, Rubini tried one more move: joining forces with
the only other Elmendorf bidder â€" Hunt
Building Corp. of El Paso. Hunt was an established builder
of military housing, though the government had forced the
company to pay $8 million in compensation for construction
problems on an earlier project.
In early December 2000, the Air Force put aside its
reservations and decided Rubini and his new partner were
Rubini said he did not know specifically what Stevens did
on the Elmendorf project. Whatever it was, "Sen. Stevens
would have stepped up to assist any Alaska business," he
Air Force officials say they are happy with the work
Rubini's firm has done at Elmendorf, and recently announced
the Rubini group would get to do a second round of housing
upgrades without further competition â€" this
phase 50% larger than the first.
Stevens' efforts to help Rubini with Elmendorf came
just as Rubini was making a decision that transformed
Stevens from a modestly successful investor into a
In October 2000, while Rubini was enlisting the senator's
help with the Air Force, the developer acquired 30 acres in
midtown Anchorage that he planned to cover with gleaming
Like Elmendorf, this deal was a big step up for Rubini
â€" larger both in size and potential profits
than his earlier ventures.
And Rubini chose to make Stevens and JLS Properties part of
it. He said JLS had accrued equity in the properties it
already owned and thus could help with the new
Rubini could have financed the new development in many
ways. He could have used the financial resources of almost
any of his numerous successful holdings. Or, as he
frequently did in such cases, he could have attracted an
entirely new set of investors.
Why did he choose to use JLS to help with financing instead
of one of the other options? It was just a decision he
made, Rubini said.
Once again, the senator did not have to agree to guarantee
the new venture's debts, as the other JLS partners were
required to do.
The first new building to be constructed, called
Centerpoint I, is a striking $35-million edifice with
commanding views of snow-capped mountains. The remainder of
the 30-acre parcel is being developed as Centerpoint II.
Stevens is part of that project too.
Stevens has reported that his investments in JLS,
Centerpoint I and Centerpoint II, all stemming from his
initial $50,000 investment, are now worth between $750,000
and $1.5 million.
Rubini said there was no connection between Stevens'
intervention on Elmendorf and Rubini's decision to move the
senator into the Centerpoint deals.
"Clearly, a phone call from Sen. Stevens does not hurt,"
Rubini said, referring to the senator's contacts with the
Air Force on his behalf.
"But there was no quid pro quo, plain and simple," he
Today, Centerpoint I is fully occupied as the new
headquarters of the Arctic Slope Regional Corp., which is
paying $6 million a year on a 20-year lease.
Arctic Slope is no ordinary tenant. A $1-billion-a-year
business, it is the largest Alaskan-owned company in the
state. More important, the company â€" along
with 12 other regional Native corporations â€"
was created through legislation the senator took the lead
in drafting. And it has prospered through his continuing
efforts in the Senate.
Arctic Slope and the other Native regional corporations
were born in 1971 as part of a landmark bill called the
Alaska Native Claims Settlement Act, hailed as a
humanitarian alternative to the failures of traditional
Under the act, about 40 million acres and almost $1 billion
in working capital went to Native corporations and to some
200 much smaller village bodies to settle their claims to
land. They were to help their shareholders, the Native
people living in their regions, by making investments,
starting businesses and in other ways generating economic
Many of the Native corporations have found it hard to
fulfill their mission, but Arctic Slope, which represents
Inupiat Eskimos on the oil-rich North Slope, gradually
built a strong base providing support services to the giant
oil companies at Prudhoe Bay.
And Stevens is now fighting to authorize oil extraction
from the nearby Arctic National Wildlife Refuge, where
Arctic Slope owns petroleum rights to 92,000 acres.
Thanks to Stevens, Arctic Slope and the other Native
corporations also enjoy preferences when seeking federal
contracts that go well beyond anything available to blacks
or Latinos, even though Arctic Slope ranks among the
nation's 500 largest privately owned companies.
One set of preferences that Stevens inserted into his
annual defense appropriations bills recently enabled Arctic
Slope and another Native corporation to land a $2-billion
Pentagon deal without competitive bidding.
Now money is flowing the other way â€" to
A company executive, Conrad Bagne, said Arctic Slope did
not find out about Stevens' ownership in Centerpoint until
the company had finalized the deal. He said Stevens'
involvement had no effect on the company's decision to sign
the lease and that there was no impropriety.
"No one is more committed to public service than Sen.
Stevens," Bagne said.
Stevens now has a personal stake in his tenant's future. At
the same time, he continues to aid the company's bottom
line through his position as chairman of the Appropriations
Committee. This year, for example, he pushed through
legislation renewing the federal defense contract
In addition, Stevens has inserted a provision in this
year's pending appropriations bill that directs federal
agencies to consult with Arctic Slope and the other Native
corporations on equal footing with tribal governments. This
gives Arctic Slope, for one, new legal standing when
pushing to open the Arctic wildlife refuge to oil and gas
drilling â€" a position opposed by at least
some tribal leaders.
"I have and will continue to work with all Alaska Native
corporations â€" both individually and
collectively â€" in my official capacity," said
Stevens, noting that he does not deal directly with Arctic
Slope on its lease.
An Arctic Slope subsidiary has paid Bittner $120,000 since
2002 to lobby on appropriations and government
Business interests that look to her husband for
support have also enriched Catherine Stevens in a series of
transactions that went through Chamer Co., the private
family investment firm run by Bittner.
Sen. Stevens did not report some of these deals on his
financial disclosure reports; others were reported only
sketchily â€" without the details required by
One of the transactions was a quick stock deal involving
the Alaska Communications Systems Group that earned
Catherine Stevens at least $47,000, records show.
The company has benefited from the senator's influence over
communications policy as a senior member of the Commerce
For example, Stevens pushed through legislation in 1996
that created a subsidy for remote telephone service, and he
has fought efforts to dilute Alaska's sizable share of the
subsidy. Alaska Communications considers the subsidy,
called the universal service fund, an important revenue
Alaska Communications Chairman Charles Robinson said, "The
universal service fund is important to every telephone
company in Alaska." He said Stevens had "done a great job
in preserving it."
The senator said his actions had "benefited all Alaskans
and all Alaska communications companies."
Stevens stands to be an even more valuable ally in 2005,
when he's scheduled to take over as Commerce Committee
Robinson combined the Fairbanks and Anchorage phone
companies to create Alaska Communications in 1999, and took
it public in the fall of that year.
As is common before companies go public, a select group of
insiders was allowed to buy stock at a bargain price, in
this instance $6.15 a share, the documents show. In this
group were several financiers and others involved in
creating the company, including Bittner, who was and is the
company's Washington lobbyist.
Though she was not on record as an officer or financier for
the company, Catherine Stevens ended up with some of the
bargain shares. Robinson said he knew she had shares but
did not remember how she obtained them.
Alaska Communications issued 42,248 shares to Chamer Co.,
which Catherine Stevens owns with Bittner, their sister and
their mother. She purchased 16,250 of those shares and sold
them a year later, according to the Securities and Exchange
Ted Stevens did not report the shares on his ethics report
for 1999, the year Chamer acquired them.
Ethics rules require disclosure of activity by a
family-owned business, in detail and in the same year a
The deal was not reported until 2000, after Catherine
Stevens had sold her shares, most of them at $9.25, for a
profit of at least $47,000.
Rubini, the developer of Centerpoint I, said Chamer also
had an interest in that project. He said Chamer put up
$250,000 for a 3% short-term stake in Centerpoint I that
earned a 15% return on investment.
Records show Chamer also invested $125,000 in an earlier
Stevens did not disclose either of these investments on his
Senate financial forms.
Although Senate ethics rules encompass his wife's financial
activities as well as his own, Stevens sought to distance
himself from Chamer.
"I have no interest in that company, do not participate in
its meetings, nor do I participate in any decisions related
to its business activities," he said Monday. His wife did
not respond to telephone messages on Tuesday.
Back in Washington
Stevens continues to push for money and other
benefits for Alaskan interests â€" including
nearly $400 million in pending legislation to help tourism,
education, the environment, scientific research, roads,
fisheries and the war against fetal alcohol syndrome.
There's also $2.5 million to survey the seabed for a
fiber-optic cable connecting Kodiak Island, Anchorage and
the Kenai Peninsula; Alaska Communications Systems serves
both Anchorage and Kodiak.
Researcher Mark Madden in Washington assisted in this
report. Staff writer Judy Pasternak in Washington also
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