Virginia Gov. Robert F. McDonnell and his family received gifts from the CEO of a dietary supplement company, including a $6,500 Rolex watch that the governor did not include on his annual financial disclosure forms. According to a Tuesday Washington Post report, witnesses close to the governor testified about the gift, which the governor reportedly received from Star Scientific CEO Johnnie R. Williams, Sr., during a grand jury investigation into the potentially improper relationship between Williams and the McDonnell family.

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The investigation so far indicates that Virginia’s first lady, Maureen McDonnell, set up a meeting between herself, Williams and an unnamed state health official. At that meeting, Williams and McDonnell lobbied the official to consider including Star Scientific’s new non-FDA approved anti-inflammatory supplement Anatabloc in the roster of medications given to medicare patients.

Witnesses say that Maureen McDonnell said that the supplement could provide a cost-cutting alternative to expensive medications covered under the state’s medicare budget. McDonnell denies that she said this. On her way into the meeting, she reportedly admired Williams’ luxury Rolex watch and suggested that he buy her a similar one to give to her husband.

Two weeks later, in August of 2011, McDonnell received his own Rolex, engraved with the phrase, “71st Governor of Virginia.” The Post said that this is the first of a trove of tens of thousands of dollars in undisclosed gifts from Williams that the governor is known to have used personally.

In addition, Williams paid $15,000 to cover the catering at the McDonnells’ daughter’s society wedding, although Williams insisted to the grand jury that the money was simply a wedding present to his family friends. Gov. McDonnell did report that he has received $9,650 in personal gifts from Williams since taking office in 2010 and that his campaign has received $108,452 in donations.

However, according to the investigation, Williams has spent tens, if not hundreds of thousands of dollars on members of the McDonnell family. Shortly after the governor was elected, Maureen McDonnell announced that she needed a dress for the inauguration, that she particularly wanted something by Oscar de la Renta and that she’d like Williams’ help getting one.

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A staffer advised Williams and McDonnell that such a gift would amount to an impropriety and the matter was dropped. A year later, McDonnell contacted Williams and reportedly proposed that he take her shopping at Bergdorf-Goodman’s in New York City. The resulting shopping spree cost nearly $15,000, according to witnesses.

In June of 2011, three days before her daughter’s wedding, Maureen McDonnell flew to Florida, where she touted Anatabloc and its cost-saving benefits to a conference of doctors and investors curious to learn more about its active ingredient. Later that month, the McDonnell family stayed in a lake home belonging to Williams on vacation. They drove Williams’ black Ferrari back to Richmond at the end of their stay.

Federal law requires that the Governor report all gifts given to him worth more than $50. His family members, however, are allowed to receive as much money from outside donors as they like.

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A spokesperson for the family said in a statement, “The governor and first lady never led an effort to lower health care costs in Virginia by encouraging the use of Anatabloc” or took any other action in return for the money and gifts with which the wealthy businessman showered them.

On August 30, 2011, Williams used the governor’s mansion for an elaborate launch event and luncheon to celebrate the release of Anatabloc. Maureen McDonnell organized the event and the governor attended, although he insisted to investigators that it was only to recognize Star Scientific for its public service and grants to universities.

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Gov. McDonnell has strenuously claimed as recently as Tuesday that he has complied with all rules and regulations concerning gifts to public officials. He also insisted that Star Scientific has received no special favors while he has been in office.

According the the Richmond Times-Dispatch, Star Scientific, a former tobacco company, has lost money every year for the last ten years it has been in business. The company is mired in a tax dispute with the state over $700,000 of back taxes and is currently the subject of a federal securities investigation.

The grand jury has also reportedly subpoenaed Republican state Del. David Ramadan (Loudoun) and Charlottesville socialite Patricia Kluge.

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McDonnell is known for his hard right-wing approach to governance, including a mandate that all women seeking abortion in Virginia must undergo a battery of medical tests, including a medically unnecessary transvaginal ultrasound.

[image of Gov. Bob McDonnell via Shelby Photography’s Flickr photostream, Creative Commons licensed]

[Hat-tip to TPM]