The federal investigation of Charter Communications Inc. appears to be heating up.
A Seattle newspaper reported that company chairman Paul Allen has turned over business documents to prosecutors that involve dealings between Charter and Allen's personal investment vehicle, Vulcan Ventures Inc.
The Seattle Times
said Allen and Bill Savoy — a Charter director and the president of Vulcan Ventures — also hired prominent criminal defense attorneys.
Vulcan, Allen's primary private-investment vehicle, is based in Seattle.
In a statement, Vulcan spokesman Michael Nank said Vulcan does not discuss its investments, retention of counsel, nor litigation.
"It should be noted, however, that Vulcan routinely retains expertise in areas in which it is unfamiliar, and a grand jury investigation certainly falls into that category," Nank said in the statement.
The statement added that Vulcan is not the subject of any grand jury investigation.
According to the paper, sources close to Allen and Savoy said they hired the attorneys as a precaution, given the aggressive prosecution of corporate crimes relating to accounting scandals at Enron Corp. and WorldCom Inc.
Sources speculated the documents turned over might be connected with tax issues. Vulcan reportedly arranged to benefit from tax losses incurred by Charter in return for refunding them once the company reported a profit.
"That's not criminal, but it's not looked upon favorably," said one analyst who asked not to be named.
The federal grand jury investigation has been going on since August, when Charter announced that it had been subpoenaed by the U.S. District Court for the Eastern District of Missouri.
The court is looking into allegations that Charter may have improperly counted subscribers and other accounting issues.
According to Charter, no member of the company's board of directors — including Allen or Savoy — is the subject of the investigation.
Vance on board
Allen is said to have hired Seattle attorney Jenny Durkan, while Savoy has retained Cyrus R. Vance Jr., son of the former secretary of state and a long-time Seattle criminal lawyer.
Durkan was brought in to assist Allen and find attorneys for Savoy and other Charter employees the Times
Durkan is the daughter of former Washington state Sen. Martin Durkan and served as general counsel to former Washington Gov. Mike Lowry. Her political connections reached all the way to the White House — she was said to have helped former President Clinton select federal judges.
Vance is an adjunct professor at Seattle University School of Law and has had several high-profile criminal cases. He represented Joseph Meling, a Seattle insurance salesman who was convicted in 1991 of the Sudafed poisoning deaths of two people during an attempt to kill his wife.
The analyst added that he wasn't as surprised about Vulcan turning over documents as he was that Allen and Savoy felt the need to hire criminal defense counsel.
"The scary thing is the need to go to that level," the analyst said. "I don't know if there is anything substantive to be read into it, but given the seriousness of the inquiry it probably makes sense to have the best defense you can.
"But criminal defense as opposed to securities lawyers? It's a little different. When it gets to this point, it's taken a step in an eerie and awkward direction."