Timothy D. Russell (left) and Kevin Kavanaugh appear in Milwaukee County intake court Thursday. Credit: Michael Sears

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Two Milwaukee County officials appointed by Scott Walker when he was county executive were charged Thursday with embezzling more than $60,000 intended for veterans and their families, instead using the stolen funds on everything from Caribbean cruises to wedding expenses to renewing Walker-for-governor websites.

Prosecutors are accusing the two men - Timothy D. Russell, Walker's one-time deputy chief of staff, and county veterans official Kevin Kavanaugh - with multiple felonies as part of the ongoing John Doe investigation into Walker staffers. The pair is accused of stealing the funds at different times using separate means.

Prosecutors also charged a third man - Brian Pierick, Russell's domestic partner - with two felonies for child enticement.

Walker, in an eight-minute conference call Thursday with reporters, said he was "very disappointed" about the alleged theft but emphasized that his office had been responsible for raising initial concerns about bookkeeping at Operation Freedom, an annual military appreciation day held at the Milwaukee County Zoo. Tom Nardelli, his chief of staff at the time, had contacted prosecutors about discrepancies in Operation Freedom's past records under Kavanaugh.

Walker did not directly respond to questions about his decision to later put Russell, one of his top Milwaukee County aides, in charge of the finances of Operation Freedom. The charges allege Russell then siphoned off thousands of dollars from the group's bank account for his personal use.

Prosecutors accuse Russell with using the stolen money to help pay for his trip to Atlanta to attend a weekend political strategy session in December 2010 with Herman Cain and his chief of staff, Mark Block, to discuss Cain's now-defunct presidential campaign. Russell also used some of the funds, the complaint alleges, to pay to renew the domain names for several Walker gubernatorial campaign websites.

The first-term Republican governor said he didn't believe the charges would have any impact on the ongoing attempt to force a recall election against him.

"In terms of the recall, obviously anyone can try and twist things, but I - in the end - think people will realize it was my office at the time that brought this to the attention of the district attorney's office," said Walker, who was in Washington, D.C., for speaking and fundraising events.

On Wednesday, Walker's campaign removed Russell as the official registrant for his current campaign website. Before that, Pierick had been listed as the campaign website registrant.

"The campaign has been working for many months to transfer ownership of the domain to our provider of Web services," said Walker campaign spokeswoman Ciara Matthews.

More charges possible

Milwaukee County District Attorney John Chisholm emphasized at a news conference that his office was following the evidence without regard to politics.

"We go where the evidence leads, and partisan politics plays no role in any decision by this office," Chisholm said.

Sources told the Journal Sentinel that Chisholm's office continues to pursue a number of different angles in its longstanding investigation of Walker's past and current staffers and county contracts. Additional charges of other individuals are possible, sources indicated.

Russell, 48, was charged with two felonies and one misdemeanor count of embezzlement carrying a combined maximum penalty of more than 13 years behind bars and fines totaling $45,000 if convicted.

The criminal complaint says he stole more than $21,000 from Operation Freedom during 2010 - slightly more than half the money raised by the group that year. Among those who gave money for the event during that time were U.S. Sen. Ron Johnson and his wife, Jane.

"Put another way, measured in terms of the 2010 donations to Operation Freedom, Tim Russell stole more than fifty cents of every donation dollar," the complaint says.

Russell appeared in court Thursday afternoon, wearing handcuffs and dressed in a T-shirt and jeans. He was released on a $20,000 signature bond. Russell pleaded not guilty to a single misdemeanor embezzlement count, for taking $550 from the campaign fund of a County Board candidate, Larry Spicer. He is also accused of stealing another $3,000 from another County Board candidate, Chris Kujawa, and repaying him with funds earmarked for the veterans event.

A preliminary hearing on Russell's two felony embezzlement charges was set for Jan. 23.

His attorney, Michael Maistelman, declined to comment on the criminal complaint.

Kavanaugh, 61, of Cudahy is charged with five felonies for theft and fraudulent writings by a corporate officer. He faces a maximum combined penalty of 34 years in prison and fines totaling $65,000.

Prosecutors say he stole more than $42,000 in donations intended to honor veterans and help the families of U.S. service members killed or wounded in Afghanistan and Iraq. The majority of the stolen funds, the complaint says, was supposed to go to Operation Freedom.

A Walker appointee to the Milwaukee County Veterans Service Commission, Kavanaugh was the treasurer of a Milwaukee Purple Heart chapter at the time of the dispute over the missing funds for Operation Freedom.

Kavanaugh was released on a $20,000 signature bond on his five felony counts related to plundering the Purple Heart funds.

Pierick, 48, was charged with two felony counts for child enticement and causing a child to expose himself. If convicted, his two charges have a combined maximum penalty of 28½ years in prison and fines totaling $110,000.

The charges are a result of computer equipment and cellphones seized as part of a December 2010 search warrant of Russell and Pierick's former house on Milwaukee's west side.

Pierick was an office assistant at the state Department of Public Instruction dealing with education for homeless children and youth, according to the agency's website. Patrick Gasper, a spokesman for DPI, said Pierick was being let go from his job Thursday per orders of the agency's human resources staff and state schools Superintendent Tony Evers.

In the state job, Pierick was making about $29,000 a year. He started in October 2011 at the civil service job and was still in his six-month probationary period, and, as a result, can be fired for any reason, Gasper said.

"We're drafting the letter right now," Gasper said.

Gasper said Pierick had no contact with children as part of his office job and underwent and passed a background check at the time of the hire. He said to his knowledge, Walker's office played no role in getting Pierick the job, which was not a political appointment.

No 'partisan politics'

At his news conference, Chisholm said authorities launched the John Doe investigation in May 2010 after Nardelli, Walker's then-chief of staff, asked prosecutors to investigate what had happened to $11,000 raised in 2007 for Operation Freedom.

Chisholm said the lengthy probe was wrapping up its investigation and entering its "prosecution phase." He said Judge Neal Nettesheim had authorized him to release details about the cases that were charged Thursday in criminal complaints, but Chisholm declined to take any questions from reporters at a noon press briefing.

Nettesheim is overseeing the John Doe case. A John Doe investigation is a secret probe in which authorities can compel witnesses to testify and turn over evidence.

Chisholm denied that any leaks about the investigation had come from his office, an allegation raised by some Republican critics.

"Partisan politics plays no role in any decision made by this office," said Chisholm, a Democrat. "We did not independently initiate this investigation; it was brought to us by the previous county executive's administration."

Milwaukee County prosecutors sought technical help from the state Department of Justice in the probe, but it was denied by Atty. Gen. J.B. Van Hollen, Chisholm said. At Van Hollen's suggestion, the district attorney sought and did get technical help from federal prosecutors and investigators.

Walker set up the annual Operation Freedom as a military appreciation day at the zoo for veterans, who got free admission and food. It was run through the county executive's office. Russell was the coordinator of the event and worked on it with Darlene Wink, another former Walker aide at the county who has been under investigation in the John Doe probe.

But the financing setup for the event drew ethics scrutiny in 2006, when two county Ethics Board members questioned the practice of county officials asking private companies for money for public programs, saying it raised conflict-of-interest questions.

Walker said then that he was trying to save taxpayer dollars and that he'd resolve ethics concerns by asking a veterans organization to solicit funds for the event. Walker got legal advice that the fundraising should be handled by a separate charitable entity.

As a result, starting in 2006, Milwaukee Purple Heart Chapter 96 began overseeing the checkbook for Operation Freedom.

The criminal complaint accuses Kavanaugh, the finance officer for the chapter, of embezzling more than $42,000 from the organization. Of that sum, the complaint says, nearly $35,000 had been earmarked for Operation Freedom.

He is accused of siphoning money that came to the Purple Heart chapter from three different sources: former state Rep. Mark Gundrum (R-New Berlin), a grant from the Rolfs Family Foundation and the Purple Heart's own foundation.

Gundrum, now a state appeals court justice, donated more than $28,000 of his legislative salary to the Purple Heart while he was on active duty in Iraq in 2008; Kavanaugh peeled off $4,800 of that amount, the complaint said.

That year, Gundrum's wife wrote nine checks to the Military Order of the Purple Heart Relief Fund. While transferring those funds to the Purple Heart general fund, Kavanaugh got $300 to $800 cash back each time, according to the complaint.

"My wife and I are just saddened that at least a portion of the money we donated to aid veterans wounded in war appears as if it may never have been used for that purpose," said Gundrum. In a 2010 interview with the Journal Sentinel, Kavanaugh said he was unaware that there was any concern by prosecutors over some $11,000 in Operation Freedom funds believed missing at the time.

He attributed bookkeeping problems to a shortage of help at the Purple Heart Chapter 96.

"I don't really know what they are talking about," he said, when asked about the concern over missing money.

A December 2010 story in the Journal Sentinel detailed Kavanaugh's tradition of placing wreaths on the graves of soldiers who died serving in Iraq. That story said that Kavanaugh earned a Purple Heart when he was hit by shrapnel from a booby trap in November 1970 while serving in the Army west of Chu Lai, Vietnam.

Because of concerns about how Operation Freedom's money was being handled, officials turned over control of the funds in 2009 to the Alonzo Cudworth American Legion Post No. 23.

But the group soon lost that responsibility when it was handed over to Russell and the organization he ran, Heritage Guard Preservation Society, in October 2009 - a decision personally signed off on by Walker as county executive.

Mike Herkowski, adjutant for the American Legion post, said that his group did bookkeeping and disbursing of the money but not fundraising.

He said Thursday he was in "total shock" over the allegations of theft from needy veterans and their families. "Anybody that would stoop that low to do something like that, I'm totally amazed," Herkowski said.

Herkowski said that he had been surprised when he was informed by Milwaukee County officials in 2009 that his group would no longer be handling the money and it would be handed over to Heritage Guard.

He said that he was told by Milwaukee County officials that the responsibility for the money was being taken away from the American Legion because it has an unusual nonprofit status that was difficult to explain to corporate donors. Milwaukee County wanted a more typical 501(c)3 type nonprofit to make it easy to understand the donations were tax-exempt so fundraising would be easier, Herkowski said.

"They said it would be easier to get the money," he said.

He said he had turned over all his information on the matter to investigators and answered questions from them.

Herkowski pointed out that the criminal complaint alleges that the Heritage Guard group may not have had a valid 501(c)3 status. Russell had control of the Heritage Guard group.

"Somebody just pulled the wool over somebody's eyes," Herkowski said.

In his brief news conference, Walker said Thursday the decision to transfer the funds from the American Legion to Russell's group had been made to safeguard the money.

"The focus was instead of moving around from one group to another it's probably best to have one group that just did this so the funds couldn't be comingled with anything else," Walker said.

Vacations, political trip

The criminal complaint accuses Russell of taking money from Heritage Guard just months after it began receiving money for Operation Freedom. In particular, the complaint accuses Russell, a top aide to Walker at the time, of:

Taking more than $10,000 and using it in part for vacations in the Caribbean and Hawaii, and a political trip to Georgia to help organize Cain's Republican presidential campaign.

Diverting $3,000 to cover a shortfall in the campaign account of Kujawa, a County Board political candidate whose campaign account Russell controlled. Russell had taken the $3,000 for personal use.

Kujawa ran for County Board in 2007 and lent his campaign $3,000 in a legitimate transaction. He lost and for two years after requested Russell to pay him the loan proceeds from the campaign account. Russell, though, had withdrawn the loan proceeds into his personal account, and in 2010 used the Operation Freedom money to repay Kujawa.

Kujawa told Russell he would go to Walker if Russell continued to drag his feet on repaying the loan. Officially, Russell's domestic partner, Pierick, was Kujawa's treasurer, but Russell actually controlled the account, the complaint alleges.

Swiping $550 from the campaign account of Spicer, another County Board candidate, though Russell was not listed as treasurer.

Spicer listed almost $2,500 in loans he made to his campaign in 2010. Months after the election, Russell withdrew $550 without Spicer's knowledge, the complaint says.

The Journal Sentinel first reported on the John Doe in August 2010 after authorities seized Russell's county computer.

A longtime political hand, Russell used to run former Gov. Tommy Thompson's Milwaukee office and had been with Walker since he ran for county executive in 2002. Russell did not get a job in the Walker administration in Madison.

Last year, Russell and Pierick had their Milwaukee residence foreclosed on, and the pair moved to the Madison suburb of Sun Prairie.

Even though Walker has left county office, local officials continue to hold an annual event very similar to Operation Freedom.

Jim Duff, acting director of the Milwaukee County Veterans Service Office, said his group hosted such an event in July at the zoo with some 15,000 veterans and their families in attendance. He said the group didn't need to raise any money for the event.

"There was nothing to pay for," Duff said Thursday.

Sharif Durhams, Dave Umhoefer and Bruce Vielmetti of the Journal Sentinel staff contributed to this report.