Graham will return any GenPhar-tainted funds

Lindsey Graham

MOUNT PLEASANT -- U.S. Sen. Lindsey Graham went to bat for the GenPhar biotech firm because he saw potential to protect America's troops, not to haul in campaign dollars, his office said.

The South Carolina Republican helped GenPhar secure $19.6 million in federal grants between 2004 and last year to fund research into vaccines for deadly dengue fever and the Ebola and Marburg viruses.

During that time, GenPhar's founders became big donors and allegedly steered $31,000 in illegal contributions to Graham and his political action committee, according to a federal indictment.

GenPhar President Jian-Yun Dong also is accused of defrauding the government out of nearly $4 million.

Graham's office said he intends to return any improper contributions from Dong and his estranged wife, GenPhar scientist Danher Wang. They are accused of using straw donors and foreign cash to skirt campaign-finance laws.

Graham's office and federal prosecutors have said that Graham has cooperated with investigators and that he had no knowledge that the donations were suspect at the time they were made. Graham spokesman Kevin Bishop said any donations deemed illegal will be turned over to the U.S. Treasury.

"Senator Graham believes those who receive taxpayer dollars have both a legal and moral obligation to use the funding in an appropriate manner," Bishop said this week. "If an individual violates that trust, there should be serious consequences."

Political backing

Dong, 54, is accused of siphoning off $3.6 million of the federal grant money GenPhar received and improperly spending it on travel, lobbying, personal expenses and the construction of his firm's new $33 million headquarters behind Oakland Plantation.

Graham played a key role in GenPhar getting that funding. Most recently, Graham and former U.S. Rep. Henry Brown helped land a $1.3 million earmark for GenPhar last year to aid in the dengue vaccine research, according to earmark-tracker LegiStorm.

As a member of the Senate Armed Services Committee, Graham championed the research because of its potential to yield vaccines that could protect U.S. troops from potential biological warfare, Bishop said. "To that end, the Navy, who partnered with GenPhar in this research, was very supportive of the vaccine potential," he said.

During this period, Dong and his wife became substantial donors to Graham's campaign and his PAC, the Fund for America's Future. They donated thousands more to other conservatives candidates and causes as well.

U.S. Sens. Jim DeMint and John McCain were among those the couple supported, as were former Rep. Brown and the National Republican Congressional Committee, records show.

Bishop said Graham learned of GenPhar's research in 2003 through Jerry Zucker, a self-made Charleston billionaire businessman and philanthropist who died three years ago.

After getting promising reports on Dong's work, Graham helped set up a meeting on behalf of GenPhar with then-Senate Majority Leader Bill Frist in April 2003, he said.

Dong and Wang later pledged to raise $25,000 for Graham's 2008 campaign, according to an indictment. Bishop said the couple did so on their own accord. Graham met the couple at a handful of fundraising events for his campaign and PAC, but they played no formal role in his operation, Bishop said.

To fulfill their fundraising commitment, authorities said, Dong persuaded a German investor in GenPhar to wire $36,000 from a Frankfurt bank account. The money was then donated to Graham through various straw donors -- including Dong's minor daughter -- to allow the couple to skirt federal campaign laws, the indictment states.

In September 2007, Dong sent an email to his German connection commenting on a recent development in obtaining government funds for a GenPhar project, noting that "This is your money at work," the indictment states.

The indictment doesn't state what that the development was, but records from the National Institutes of Health show GenPhar received a $1.1 million grant around that time for an evaluation of its Marburg vaccine.

The explanation

Dong, a native of China, maintains that the fuss over his donations is a big misunderstanding stemming from his unfamiliarity with this country's campaign-finance laws.

As for the $36,000 from Germany, Dong said that money was compensation for work he had done and had nothing to do with fundraising for Graham. Dong said the German investor had interrupted an around-the-world-in-10-days trip Dong was taking with Wang, and the investor vowed to compensate him for time lost on that $100,000 excursion.

Dong also insisted that he was seeking no special favors from Graham. He said he had been impressed with how the senator had gone to bat for GenPhar at a time when the federal government was awarding millions to companies in other countries to conduct vaccine research.

Graham shared his belief that the money -- and the resulting jobs -- belonged here in the United States, he said.

"I was deeply moved, and I said I would do everything I could to help a great leader like him," Dong said.

Dong also is accused of improperly using federal money to pay for lobbying efforts in the nation's capital.

Federal records show that GenPhar spent $280,000 between 2003 and 2009 on lobbying by American Defense International, a Washington-based firm chaired by Van D. Hipp Jr., former chairman of the S.C. Republican Party.

Michael Herson, president of ADI, said his firm had no knowledge of alleged wrongdoing by GenPhar at the time ADI was lobbying on the company's behalf.

"Obviously, we had no idea and could have no idea what they were doing there," he said Wednesday.

ADI terminated its relationship with GenPhar two years ago after learning that federal investigators had raided the biotech company's Mount Pleasant offices, Herson said.

Reach Glenn Smith at 937-5556 or on Twitter at @glennsmith5.