Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, October 2, 1993 TAG: 9310020096
SECTION: VIRGINIA PAGE: C1 EDITION: METRO
SOURCE: DAVID M. POOLE STAFF WRITER
DATELINE: LENGTH: Long
Cranwell's opponent attacked him for refusing to testify in 1990 before a federal grand jury looking into allegations that Selbe embezzled $250,000 from American Chemical Co. in Roanoke.
"As Cranwell campaigns in your neighborhood, ask him what he had to hide," an announcer says Selbe in a radio commercial for Republican Bud Brumitt.
Cranwell, a Roanoke County Democrat, responded with his own radio ad that accuses Brumitt of misrepresenting the facts and running a negative campaign.
"All he can do is make personal attacks," Cranwell said.
The Cranwell campaign anticipated the "Selbe issue" in the race for the District 14 seat in the House of Delegates.
The issue emerged briefly in Cranwell's unsuccessful bid for House Speaker two years ago. But this is the first time that Cranwell, the second-ranking Democrat in the House, has addressed the issue in a political campaign.
Cranwell and Selbe were law partners for several years, beginning in the 1970s. They also were partners in several business ventures, including a deal to buy American Chemical Co. in 1979.
They parted ways in 1984 when Cranwell and his partners discovered that Selbe, entrusted to run the day-to-day operations of American Chemical, had diverted more than $200,000 from the company to his own bank account.
In an interview, Cranwell said he knew he would pay a political price if he refused to testify before a grand jury convened in 1990 to investigate American Chemical.
"People assume the worst," he said. " `There's Dickie Cranwell rigging things in his favor.' Not true. I have been charged with nothing. Nobody has indicated I have done anything wrong at any time."
Cranwell said his attorney, Tom Murphy of McLean, advised him to avoid testifying before the grand jury, even if he had nothing to hide.
By that time, Selbe was trying to cut a deal with the U.S. Attorney's Office in Roanoke by telling prosecutors that he could provide them with evidence that Cranwell had committed a variety of crimes, including tax violations.
Cranwell said he was concerned that the grand jury could give Selbe and a Republican-run Justice Department an opportunity to ambush him.
"My lawyer told me, `If I were the U.S. attorney, I would love to get a shot at someone like you. That's a career builder.'
"I already had given a statement under oath to the IRS. My lawyer said, `They have reams of this stuff already, why else would they want you there?' "
Cranwell did not appear before the grand jury after Murphy told the U.S. Attorney's Office that Cranwell, if called, would invoke his Fifth Amendment right to avoid self-incrimination.
Assistant U.S. Attorney Karen Peters said it is not unusual for someone to refuse to testify at the grand jury stage of an investigation.
"Lots of people take the Fifth," she said.
Selbe made a number of allegations against Cranwell, but he apparently never came forward with evidence to back his claims.
Today, Selbe contends that Cranwell and three other American Chemical partners employed a complex set of transactions to defraud the Internal Revenue Service in 1984.
Selbe gave this account of the alleged scheme:
After they discovered Selbe had taken money without authorization, the four remaining partners reorganized American Chemical so they each could write off $40,000 as a "theft loss" on their individual tax returns for 1984.
Selbe said the reorganization required unanimous agreement by shareholders, but said he never gave his consent even though he still owned 20 percent of the company.
Selbe contends that Cranwell knew the reorganization was invalid and took steps to cover their tracks with the IRS so he could, in effect, defraud the government for $40,000.
Cranwell denies any wrongdoing, saying a team of tax attorneys and accountants signed off on the reorganization plan.
Cranwell said Selbe's theory is flawed because Selbe no longer had a stake in American Chemical in late 1984.
"I have a signed document where he acknowledges he is no longer a shareholder," Cranwell said.
Peters, the lead prosecutor in the American Chemical case, declined to say whether the tax write-offs were a subject of the grand jury investigation.
The government later indicted Selbe on tax evasion charges. He pleaded guilty in 1992 and was released from custody after serving 75 days at a federal correctional facility in West Virginia.
Selbe became an issue in last fall's congressional race when it was learned that Democrat Steve Musselwhite had written to the judge on Selbe's behalf asking for leniency.
Republican Bob Goodlatte, who won the race, accused Musselwhite of being soft on white-collar crime.
In trying to distance himself from Selbe, Cranwell portrays himself as a victim of his former law partner. Selbe, he claims, stole his money and then tried to steal his reputation.
"I've got to feel certain that I'm clean, or I wouldn't be sitting here, because I'll tell you they picked over every bone I have," Cranwell said.
Keywords:
POLITICS
by CNB