They've got muck; we've got rakes. TPM Muckraker
A few days before Christmas in 1980, Jonnie Williams shuttered his shop, Colonial Opticians, in Fredericksburg, Va., and skipped town. Williams was in his mid-20s, and he left behind him tens of thousands of dollars in debt (including the balance on a $45,000 Small Business Administration loan), hundreds of frames and lenses and other optical equipment, and a reputation as a flamboyant "super salesman" with a taste for the good life.
"Jonnie Williams could sell a snowball to an Eskimo," a former employee of Williams' told a newspaper reporter a few weeks later, in January 1981. "But when it came to backing up what he was selling, now that was another story. Let's face it, he was a salesman through and through."
The story jumps to this week. Weeks after news first broke of the federal investigation into the relationship between himself and Williams, Virginia Gov. Bob McDonnell (R) -- who has called Williams a "family friend for four or five years" -- announced that he and his family had repaid $124,115.17 in loans given to them by Williams in recent years.
"I am deeply sorry for the embarrassment certain members of my family and I brought upon my beloved Virginia and her citizens," McDonnell said in a written statement. "I want you to know that I broke no laws and that I am committed to regaining your trust and confidence."
The political scandal brewing in Virginia has been seen as a possible threat to both McDonnell's presidential potential and Attorney General Ken Cuccinelli's ongoing gubernatorial campaign. But so far the links between McDonnell, Cuccinelli, Williams, and the dietary supplement company Star Scientific remain unexplained. Gifts were given (to both Cuccinelli and McDonnell.) So were campaign donations (to McDonnell.) Stocks were purchased (by Cuccinelli.) Some gifts were not disclosed, but by the letter of Virginia disclosure laws, that might be OK. Some stocks were not disclosed. An "oversight" has been blamed. McDonnell and Cuccinelli have both come forward to combat the suggestion of any wrongdoing. Williams, meanwhile, who people used to say could "talk his way out of anything," has remained silent.
Williams' spokesman and lawyer, former Virginia Attorney General Jerry Kilgore (R), has declined to comment about his client to a number of news outlets, including this one. (He did speak briefly with TPM last week about his own past financial ties to Williams and Star Scientific.) A look back at the public records available about Williams' life and career show a man with a gift for reinventing himself, and for winning people to his cause.
"Money can be fun -- spending it is definitely fun -- but it's not the most important thing to me," a 20-something Williams told The Fredericksburg Free Lance-Star in 1979. "Money to me is the most accessible grading system to tell me if I'm doing a good job, because the things I'm learning how to do, the deals that are really successful, pay a lot of money."
Williams graduated from high school in Stafford County, Va. in the early 1970s. According to the feature on Williams that ran in The Free Lance-Star in August 1979, Williams took a year off between his freshman and sophomore years of college to make money. He sold cars at Purvis Ford in Fredericksburg. He quickly became the dealership's top salesman. After subsequently graduating from a two-year program at what is now Johnson & Wales University in Providence, R.I., Williams returned to Fredericksburg and got into real estate.
But Williams' had his sights set higher than sales. In February 1978, he became a partner in Colonial Opticians. By the end of the year, he was shop's outright owner. Just a few months later, Williams was driving around Fredericksburg in a gold Mercedes 450SL. And yet, already, there were small signs of trouble: in April 1979, a local court fined Williams $100 for fitting contact lenses without a license.
In the fall of 1979, on the advice of mentor, Williams enrolled in a master's program at Johns Hopkins School of Advanced International Studies in Baltimore. Williams apparently did not spend long in the program, but his time at John Hopkins proved pivotal. It was there that Williams met Frank O'Donnell, a hotshot, charismatic medical resident who would become Williams' business partner.
Before Williams left Colonial Opticians behind, according to a 1988 feature in The Boston Globe (pdf), O'Donnell regularly traveled to Fredericksburg to examine patients, in an apparent violation of Johns Hopkins' policy against residents moonlighting. (In an interview with the Globe, Williams denied that O'Donnell worked out of the shop, but acknowledged acknowledged O'Donnell saw patients in Fredericksburg in the late 1970s, and referred some to Williams for glasses.)
'The Borderline Between Business And Medicine'
According to the Globe, Williams and O'Donnell parted ways for a few years after Williams ditched Colonial Opticians. In 1981, O'Donnell was hired by St. Louis University in Missouri to be head of ophthalmology, becoming one of the youngest medical school department chairmen in the country. Williams moved up to the Boston area, and spent time selling cars in Norwell, Mass.
At St. Louis University, O'Donnell hired a number of top professors, and "pushed through construction of a $10 million eye institute at the university-affiliated Bethesda General Hospital," according to the Globe. He also hatched a money-making plan: he would produce training videos for ophthalmologists and later other medical specialists, to help doctors keep up with advances in their fields. O'Donnell got some of the biggest names in medicine to give on-camera lectures, and institutions like Johns Hopkins and Harvard-affiliated Beth Israel Hospital in Boston to provide studio time for the production.
In 1983, according to the Globe, O'Donnell began to have second thoughts about the venture's non-profit status. That's when Williams entered the picture. By the middle of the year, the pair had organized their first company, CME-SAT Inc., and sold $ 2.2 million worth of stock to the public. On Securities and Exchange Commission filings, O'Donnell was listed as the company's chairman, medical director and "eye series editor" for the company's videos. Williams was listed as its president and treasurer. For the next several years, Williams and O'Donnell operated, as the Globe put it, "at the borderline between American business and biomedical science."
CME-SAT went on to suffer "almost continuous losses," according to the Globe. But Williams and O'Donnell made money by selling stock, often to same university faculty members that appeared in the company's films. As a result of his taking a salary from the company, O'Donnell was forced to quit as a department chair at St. Louis University. And yet by early 1985, Williams and O'Donnell were cashing out. The pair and some associates sold all their company stock for at least $1.2 million, and by summer they left the company. The company bounced around for a bit before landing in bankruptcy.
Following CME-SAT, Williams and O'Donnell found a new model. In 1985, they teamed up with O'Donnell's old mentor, A. Edward Maumenee, the former head of Johns Hopkins' Wilmer Eye Institute, to work on a new company, Spectra. According to the Globe, Spectra's plans rested on research done by another Maumenee protege, Scheffer C.G. Tseng. The research showed that a vitamin A ointment might help cure a variety of eye diseases. The group divided up shares of the company, and then went public at the end of 1985, selling millions of dollars worth of stock to the public. Further research then showed that the vitamin A ointment did not fulfill the original promise. Stocks tumbled, then recovered. O'Donnell, Williams, and associates sold off most of their shares in the summer 1987, for more than $1 million.
Williams and O'Donnell subsequently joined another company, C.A. Blockers Inc., which was "developing an additive to cut the activity of cancer-causing elements of cigarette smoke." It was the beginning of Williams' long association with tobacco products that continues to this day.
By 1988, according to The Globe, Williams was involved with a "laser technology company," and the stocks of almost all the companies Williams and O'Donnell were involved in were "under investigation by the federal Securities and Exchange Commission and several state securities divisions." According to Bloomberg, Williams ended up paying nearly $300,000 to the SEC to settle its investigation into Spectra. Spectra went bankrupt in 1990.
Lasers, Microwaves, And Politics
Williams would go on to get involved with several laser vision-correction technology companies -- including LaserSight, LaserVision, and VISX -- and, according to the Associated Press, he made successful investments in a company that was later acquired by Abbott Laboratories Inc., a large pharmaceuticals and health care products company. But starting in 1990, Williams got involved with a company called Star Tobacco.
Explanations of the beginnings of Williams' work with Star differ. According to Bloomberg, the company "emerged" after C.A. Blockers went out of business and sold its manufacturing operations to Williams and O'Donnell. But according to an episode of PBS' "Nova" that aired in 2001 about the search for a "safe cigarette," Williams and O'Donnell purchased "Star Tobacco, a small manufacturer of discount cigarettes," in 1990.
"I called my partner up, and I said, 'Frank, there's so much money changing hands in the tobacco business, and they're in so much trouble, there must be an opportunity here with this,'" Williams told "Nova," according to a transcript of the episode.
According to "Nova," Williams set out to make tobacco safer. He learned that tobacco in the field has few toxins, but by the time it makes it into a pack, it's full of carcinogens called Tobacco Specific nitrosamines or TSNA's. One theory was that bacteria in tobacco produces TSNAs during the curing process. Williams thought if he could impede the bacteria, he could lower the level of TSNAs in tobacco. On an apparent hunch, Williams -- a man with no formal scientific training -- turned to microwaves.
"I'll put it in the microwave and see what happens if I try to cure this tobacco in the microwave," Williams said.
Tests conducted at the University of Kentucky showed that the nuked tobacco indeed had lower levels of TSNAs. By 1998, Star had prepared its first commercial harvest of "Star Cure" tobacco. In April 1999, the tobacco giant Brown & Williamson offered to buy 1.2 million pounds of "Star Cure," according to "Nova." Over a year later, in 2000, the company, renamed Star Scientific, introduced its own brand of low TSNA cigarettes: Advance.
"Neither we, nor anybody else, can manufacture a 'safe' cigarette," Paul Perito, then Star's chief operating officer and currently its president and chairman of the board, told "Nova." "We do believe that we can manufacture a cigarette that does deliver less toxins, and we are hopeful that this will someday be shown through scientific research. It will take years, because the onset of cancer takes years."
Despite enjoying sales of discount cigarettes in 2000 that The Wall Street Journal pegged at $176.8 million, by 2007 Star Scientific had gotten out of the cigarette business, and a few years later all but gave up on low TSNA tobacco. The change has not been a good one, financially. The company has lost money for the past 10 years -- it lost more than $8 million in the first quarter of 2013 alone -- and has turned the focus of its business to a line of dietary supplements and cosmetic products. The products all involve anatabine, a compound found in tobacco and other plants. The company claims its biggest product, Anatabloc, helps maintain "lower levels of inflammation" in the body. The company also claims it is developing products that will provide "nutritional support" for a range of conditions including Alzheimer's disease, Parkinson's disease, multiple sclerosis, schizophrenia, and depression. In November 2012, Williams agreed to reduce his salary to $1 a month until the company became profitable.
Over the past decade, while his company lost more and more money, Williams and his company gave more and more donations to Virginia politicians, including Kilgore, McDonnell, and Cuccinelli. What is unknown so far is what, if any, purpose Williams and Star Scientific saw in their political contributions. For now, Williams, the super salesman, the ultimate talker, is staying quiet.
Correction: This article has been updated to remove a reference to the location of the Johns Hopkins School of Advanced International Studies. The school is located in Washington D.C. Past media reports, however, suggest that Williams met O'Donnell in Baltimore during the time Williams was studying at the school.