Regions Central Virginia

Star Scientific doesn’t expect to be prosecuted

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Glen Allen-based Star Scientific Inc. said  Friday it does not expect to be prosecuted as a result of any federal investigation by U.S. Attorney's Office for the Eastern District of Virginia .

Jonnie Williams Sr., the CEO of the dietary supplments company, has been a key figure in a federal probe of Gov. Bob McDonnell because of more than $165,000 in gifts and loans given by the executive to the governor's family and a family business.

Federal investigators also since January have been examining the Star's securities transactions, including private placements of stock.

“We cannot predict whether or the extent to which the ongoing investigation will result in any legal action against any individual or entity," the company said in a regulatory filing, "but on the basis of the results of the internal investigation, the cooperation with the USAO, (U.S. Attorney’s Office), and discussions and communications between our outside counsel and the USAO, we do not believe our company will be prosecuted for any of the matters that the USAO has been investigating.”

According to news reports, Williams has been cooperating with federal officials investigating McDonnell.

McDonnell did not report the gifts from Williams in state disclosure records. Virginia law does not require elected officials to disclose gifts to their families or their corporate liabilities.

After the extent of the gifts were revealed, however, McDonnell and his family repaid the loans and said they planned to return the gifts to Williams.

The governor says Williams and Star received no special treatment from his administration.

Star also reported on Friday a 74 percent increase in revenue during the second quarter, which ended June 30.

The boost was due mostly to increased sales volume of its dietary supplement Anatabloc. Net sales rose to $2.5 million, up from $1.4 million from the same quarter last year.

The company, however, reported a net loss of $8.7 million during the quarter, compared with a net loss of $8 million the year before because of an increase in legal fees related to a government investigation and the company’s internal investigation of its securities transactions, as well as increased sales and marketing expenses.

The company said the internal investigation was finished in late June so related expenses should decrease.

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