WASHINGTON — The $450,000 of federal grant money that a grand jury charged former Mayor Jim Hayes and his wife, Chris, with misusing came from congressional earmarks provided by their longtime friend, Sen. Ted Stevens, R-Alaska.
Stevens provided almost $2.9 million over five years in congressional earmarks for the LOVE Social Services youth program that Chris Hayes managed and Jim Hayes helped found and guide.
In previous interviews, Stevens has said he had no indication that the money might be going to questionable ends prior to an FBI search of the nonprofit group’s offices in January 2006.
Stevens said through his spokesman Wednesday night that he was saddened to hear of the indictment of his friends, whom he has known for many years. He declined to respond to other questions.
Wednesday’s indictment does not mention Stevens or the earmarks. The indictment describes the money as grants from the two federal agencies through which Stevens directed the money — the Department of Housing and Urban Development and the Department of Justice.
The U.S. attorney announced the indictment a day after the Senate voted to rewrite its rules governing how such earmarks are delivered and disclosed. Stevens voted for the changes.
Most of the reforms passed in the House and Senate this month aim to make information on earmarks more public, but Stevens never hid the LOVE Social Services money. He announced it in news releases after each stage in the appropriations process over five years.
Stevens also briefly described the targeted program in news releases and discussed his relationship with the Hayes family in interviews with Alaska reporters.
In a 2004 interview, Stevens said Jim Hayes proposed the youth program. Stevens provided the first earmark, for $1 million, a month after LOVE Social Services incorporated in 2000.
“He had an idea to develop a center to assist some in the black community, and I helped get some money to do that,” Stevens said.
“There’s nothing personal in it,” he said in 2004. “They don’t get any personal gain out of it. It’s part of a cultural, social thing in the area. I don’t see anything wrong with that.”
Stevens said he understood that the LOVE Social Services money would help kids from low-income families, particularly those in the military.
Stevens said he had known Jim Hayes for many years, predating Hayes’ time as mayor of Fairbanks.
“He has a very good reputation as far as I’m concerned,” Stevens said last year after the FBI action.
Stevens said his wife, Catherine, first met Jim Hayes while they worked together for the state Department of Law. Jim Hayes was an investigator for the attorney general’s office in Fairbanks.
The Hayes’ son, James, went to work for Stevens in his Fairbanks office in the 1990s. Stevens then hired him as an aide in Washington, D.C., in 1999. The younger Hayes stayed at Stevens’ home for a time after arriving. He earned his law degree while working as a Senate Appropriations Committee aide, but left Stevens’ staff when the Alaska senator stepped down from the chairmanship of that committee in early 2005.
“Our families have been very close,” Stevens said in 2004.
Stevens said he didn’t see a potential conflict of interest in giving money to a friend’s program while also employing the friend’s son.
Stevens’ spokeswoman at the time said the younger Hayes did not help secure the LOVE Social Services money. Staff members are not allowed to work on spending items that might affect family members, she said.
Such intersections are common because Stevens often hires Alaskans as aides, and the senator’s work affects much of Alaska, she said.
The last earmark for LOVE Social Services was delivered in fiscal 2005, also the last year for which Stevens oversaw the spending bills as chairman of the Senate Appropriations Committee.
Stevens said shortly after the FBI search that he did not provide any money for the program in fiscal year 2006 because the group did not request any.
Stevens’ earmarks, found in reports accompanying the appropriations bills, sometimes identified the group’s name, a dollar amount and a brief statement of purpose, such as in the report on the first earmark, found in the fiscal year 2001 HUD spending bill: “$1,000,000 for the LOVE Social Services Center in Fairbanks, Alaska, for a facility to serve disadvantaged youth and provide other services.”
Sometimes the earmarks just provided a name and dollar amount, such as the language in a report for the fiscal year 2004 Justice Department spending bill: “$500,000 for LOVE Social Services in Fairbanks, Alaska.”
Many Alaska organizations have received earmarks in a similar fashion, Stevens said in 2006.
Stevens said his staff reviews earmark requests in a process called a “scrub.” The committee does not release documentation from the scrub. Neither is there any description in the bills or reports about how the money was to be used.
LOVE Social Services provided detailed plans in its grant applications to the agencies, though.
Once they had passed the money to LOVE Social Services, the federal agencies did not review how it was spent, according to documents obtained by the Daily News-Miner through a Freedom of Information Act request prior to the FBI action last year.
The agencies required detailed budgets before they released the money, but they did not determine whether the budgets were followed.
The agencies also required quarterly reports on how much LOVE Social Services had spent from the grants. The reports do not describe how the money was spent.
A spokesman for HUD in Washington last year said LOVE Social Services had complied with reporting requirements.
“They did, but clearly we’re going to go back through the written record now,” Brian Sullivan said after the FBI searches last year. “I was given every indication that what they gave us met their reporting requirements.”
The indictments were announced in Alaska after federal offices in Washington had closed Wednesday.
