Dunleavy's Texas brother donates more to shadow campaign than Alaskans gave to 'real' Dunleavy campaign
Continuing the pattern that began in January, the biggest donations in the Alaska governor's race over the past couple of weeks have come from Texas, home of former Sen. Mike Dunleavy's rich brother.
Francis Dunleavy, a former JP Morgan executive, gave $26,000 more to the Dunleavy shadow campaign on Aug. 7 and 13, bringing his total so far to $331,000.
The "real" Dunleavy campaign has raised $311,000 in small donations, while the shadow campaign, which has offices just across the street in Anchorage and can accept unlimited amounts of money, has raised more than $743,000. The shadow campaign has performed many of the functions normally paid for by real campaigns to get Dunleavy's name before the public.
The Associated Press reported July 25 that "Dunleavy said he doesn't even speak with his brother to avoid any suggestion of impropriety."
Mike told Alaska Public Media this week that there is nothing wrong with his brother helping him with hundreds of thousands of dollars.
“I have a brother whose only concern is that he cares about his brother,” Dunleavy said.
“I can assure Alaskans, there’s nothing illegal, immoral or unethical that’s occurring, with regard to a family member donating to a campaign to see another family member get elected,” Dunleavy said.
Translated, his brother is trying to buy the election for him.
There may be nothing illegal, immoral or unethical, but Alaskans deserve a full explanation from Mike Dunleavy about his brother's behavior in activities that led to a major investigation by the Federal Energy Regulatory Commission and a $410 million settlement in 2013.
Francis Dunleavy was the head of an office within JP Morgan in Houston that developed what FERC claimed were a dozen strategies to manipulate short-term electricity rates in California and the Midwest, earning a windfall for JP Morgan Energy Ventures Corp., starting in 2010.
Some have compared this to the much more costly ENRON debacle of 2000-2001.
Dunleavy had worked for Bear Stearns, a company that collapsed in 2008 near the start of the financial meltdown. The company was bought for pennies on the dollar by JP Morgan, which acquired some antiquated and inefficient power plants as part of the deal. Under Dunleavy's leadership, the Houston office developed ways to mislead the California utilities into paying above market rates for the energy produced by the plants, FERC charged.
"The bids under investigation were developed by JPMVEC’s Houston-based Principal Investments unit, then headed by Francis Dunleavy," FERC said in its 2013 settlement.
In October 2010, Francis Dunleavy's unit provided corporate executives a spreadsheet showing that JP Morgan could use the manipulative bidding strategies to make net profits of $1.5 billion to $2 billion by 2018, FERC said.
Francis hired a man who had boasted of discovering the flaws in the bidding system.
In some cases, JP Morgan offered to give electricity away for free and even pay utilities to take it, a move that the computer tracking didn't recognize for what it was, triggering other calculations in the software that resulted in the payment of extra millions to JP Morgan.
In other cases, the company bid $1 per megawatt hour and used other bidding gimmicks to fool the system to pay $999 per megawatt hour.
In its agreement with FERC, JP Morgan admitted to using the bidding strategies and making many millions that way, but "neither admitted nor denied the violations."
"JPMVEC’s purpose in submitting the bids was not to make money based on market fundamentals, but to create artificial conditions that would cause the CAISO (California Independent System Operator) system to pay JPMVEC outside the market at premium rates," FERC said.
"These schemes distorted a well-functioning market in several ways," FERC said in its 2013 enforcement report.
The Houston unit that Dunleavy had led agreed to pay a civil penalty of $285 million and "disgorge alleged unjust profits" of $125 million.