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Verizon Paid Lawmaker $38 Million|In Bribes, Irate Shareholder Says

WILMINGTON, Del. (CN) - Verizon Communications paid more than $38 million in bribes to Pennsylvania state Sen. Vincent Fumo in exchange for his corrupt support on regulatory matters, a shareholder says in a demand for books and records. She says Verizon Pennsylvania's former president Daniel Whelan made the "surprising revelations" in January while testifying in Fumo's federal corruption trial in Philadelphia.

"After raising issues about the scope, manner and timing of plaintiff's requested document production and a proposed confidentiality agreement, Verizon de facts forced plaintiff to file this complaint to enforce her statutory rights as a shareholder," P.E. Lucas says in her Chancery Court complaint.

Fumo was convicted on March 16 this year on 137 counts of fraud, conspiracy and obstruction of justice, according to this complaint, which continues: "In January 2009, Whelan, the former president of Verizon Pennsylvania, testified in Fumo's corruption trial. Whelan was called to testify by the prosecution. Among other things and in sum, Whelan testified that he, on behalf of Verizon, had entered into secret deals with Fumo that resulted in Verizon paying millions of dollars to various for-profit and purportedly nonprofit enterprises. Whelan and, through him, Verizon expected that by doing so, Fumo would, and in fact, did support the company with state regulatory matters.

"From Whelan's testimony, it was revealed that in or about 2000, while Verizon was involved in litigation with the Pennsylvania Public Utility Commission ('PUC Litigation') dealing with the proposed split of Verizon into wholesale and retail units, Verizon, through Whelan, entered into a Faustian, secret handshake with Fumo to resolve the litigation. Fumo's settlement demand called for payments by Verizon of about $50 million to various entities with ties to Fumo.

"In exchange for Verizon's (i) deposit of $10 million into a bank owned by the Fumo family and in which Fumo was the largest shareholder, (ii) payment of $10 million purportedly for neighborhood development in Fumo's district, (iii) payment of $15 million to a small Philadelphia charity run by Fumo, (iv) payment for $3 million over the course of three years to the Philadelphia law firm Obermayer, Rebmann, Maxwell U & Hippel ('Obermayer') purportedly for future legal services, and (v) payment of $500,000 to the 'Philly Pops' headed by a friend of Fumo among other payments, the PUC Litigation was thereafter resolved without reaching the merits of the litigation. ...

"Verizon's involvement in Fumo's corruption scheme remained nonpublic until Whalen testified in Fumo's trial as a prosecution witness in January 2009. Whelan, a trained lawyer, knew Verizon's actions were improper and probably illegal, as well as a waste of the company's corporate assets."

Lucas says Verizon stiff-armed her Jan. 30 demand for books and records.

She is represented by David Finger with Finger, Slanina & Liebesman.

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