(Updated 3/10/2014) WASHINGTON (AP) — District of Columbia Mayor Vincent Gray knew about an off-the-books “shadow campaign” to support his 2010 bid for the office and personally requested the funds from an influential district businessman, federal prosecutors said Monday.

Gray, who’s seeking a second term and faces seven challengers in the district’s April 1 Democratic primary, dismissed the allegations as “absolute lies” and said he thought all the fundraising for his campaign was legitimate.

The explosive allegations were revealed in court documents detailing the activities of Jeffrey Thompson, the multimillionaire former owner of a well-connected accounting firm who pleaded guilty Monday to two conspiracy charges.

According to the documents, Gray met Thompson for dinner at the apartment of another alleged conspirator in August 2010 and presented Thompson with a one-page budget of $425,000 needed for get-out-the-vote efforts. Thompson agreed to pay that amount by funneling it through another company, the documents said.

During an earlier meeting, Thompson told Gray he would fund his campaign but that the contributions would not come from him or anyone associated with him, the documents said. Thompson told Gray to say the money came from “Uncle Earl.” After the meeting to discuss the shadow campaign, Gray thanked Thompson and referred to him as “uncle,” the documents said.

Gray has not been charged with a crime and has denied any wrongdoing in the 2010 campaign.

“With respect to him raising money for my campaign, that I thought was being done in a perfectly legitimate fashion,” Gray told WRC-TV. “I’ve said that from day one, and I maintain that it was, to my knowledge anyway, it was a perfectly legitimate experience. So I maintain these are lies. These are absolute lies.”

U.S. Attorney Ronald Machen declined to say whether the mayor would be charged. The investigation is ongoing.

“What you learned about today was really only the tip of the iceberg,” he said.

In addition to Gray, Thompson admitted funding a $608,000 shadow campaign for Hillary Rodham Clinton’s 2008 presidential bid and other campaigns for seven local district office candidates, prosecutors said in the documents. Clinton was not aware of the campaign, they said.

The total value of Thompson’s illicit contributions was $3.3 million, prosecutors said.

“Today’s guilty plea pulls back the curtain on years of widespread corruption,” Machen said. “With Mr. Thompson’s cooperation, we have the opportunity to hold many wrongdoers accountable and to usher in a new era of honesty, integrity, and transparency in D.C. politics.”

Thompson’s expenditures on Gray’s campaign totaled $668,000, and they were never reported to the city’s campaign-finance office, prosecutors said. The money went toward consultants, supplies and a massive get-out-the-vote operation centered east of the Anacostia River, where Gray defeated then-Mayor Adrian Fenty by huge margins.

The most recent race Thompson sought to influence, the documents allege, was that of Vincent Orange, who ran for and won an at-large council seat in 2011, and is now one of the candidates competing with Gray for the mayorship. Orange has acknowledged handing over to federal investigators documents related to the 2011 campaign.

Thompson also ran a $278,000 shadow effort for Fenty when he was running for mayor in 2006, the documents allege. In the mayoral primary that year, Fenty defeated Linda Cropp, who prosecutors say also had received contributions from Thompson and his associates.

Federal authorities searched Thompson’s home and offices two years ago. Since then, Machen has built a case against Thompson by targeting his associates, five of whom have pleaded guilty to felonies.

Two of Gray’s close friends who worked on his 2010 campaign were among those who pleaded guilty. Two others pleaded guilty to making straw contributions to political candidates on Thompson’s behalf, and another acknowledged using illicit funds to help Clinton’s presidential bid in Texas and other primary states.

Thompson allegedly created a vast network of donors, including employees, business associates, friends and relatives, many of whom made large donations to his chosen candidates on the same day, campaign finance records show. After the allegations surfaced, several candidates donated the amount they received from Thompson to charity.

Thompson, a Jamaican immigrant, founded an African-American-owned accounting firm that received millions of dollars in local and federal government contracts. He was also the sole owner of D.C. Chartered Health Plan, a managed-care provider for district residents that had the single largest contract in city government, worth more than $300 million annually. The managed-care firm went bankrupt amid the investigation, and Thompson left the accounting firm.

After Gray’s election, Thompson contacted him through an intermediary and asked the mayor to expedite a settlement that benefited the health care company, according to the documents. The D.C. Council ultimately approved the settlement by a thin margin, and administration officials strongly denied any wrongdoing related to the action.
Follow Ben Nuckols on Twitter at https://twitter.com/APBenNuckols

Click for related articles:

Former Owner of D.C. Chartered Health Plan, Jeffrey Thompson, Charged with Funding Illicit Campaign Activity