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VOL. 124 | NO. 160 | Monday, August 17, 2009

Paul Stanley's Fall From Grace

By Andy Meek

Print | Front Page | Email this story | Email reporter | Comments ()

Jim Kyle, a Memphis Democrat who serves as minority leader in the state Senate, gave the first lunchtime address of 2009 to the Memphis Rotary Club.

Rotarians got a bird’s-eye view of the state’s financial picture from Kyle, who described choices needed to close the state’s budget shortfall. Kyle this week announced his candidacy in the 2010 gubernatorial race.

Paul Stanley

Seated a few tables away from the rostrum at that Jan. 6 meeting was one of Kyle’s colleagues in the Shelby County legislative delegation – state Sen. Paul Stanley. At the time, the Germantown Republican and investment banker brimmed with confidence, looking every inch the GOP stalwart he’d become during a nine-year stint in the Legislature.

Things would be changing soon in Nashville, he told at least one person in the crowd that day after listening to Kyle speak.

Stanley was referring to the new majority his party enjoyed in the state House this year. In retrospect, his words also point to Stanley’s life as a public figure, which was brought to an unpleasant end not long after the legislative session drew to a close.

A few months into the term, Stanley began a brief sexual relationship with Austin Peay State University student McKensie Morrison. She was a legislative intern who worked for the Senate Commerce, Labor and Agriculture Committee Stanley chaired.

That committee is the first stop for all major business legislation in the state Senate. Throughout April, Morrison was a fixture two seats to Stanley’s right when the committee conducted business.

Stanley resigned his committee chairmanship and then his Senate seat last month after private, emotionally fraught conversations with his wife, Kristi, director of government affairs for the Memphis Area Home Builders Association.

His departure stemmed from public disclosure of the affair and a messy series of events surrounding it, including an extortion attempt by Joel Watts, Morrison’s former boyfriend. Watts tried to get Stanley to pay $10,000 in exchange for what a Tennessee Bureau of Investigation agent described as “provocative” photos of Morrison that Stanley took in his Nashville apartment.

All that was still months away from unfolding when Stanley spoke to a reporter after the January rotary meeting wrapped up.

First, he expressed skepticism about parts of Kyle’s presentation, which pegged the state’s budget shortfall at $1 billion over the next two years. Stanley then turned his attention to the fact that Republicans today control both houses of the General Assembly for the first time since the late 1800s.

What he said next illustrates the dizzying speed with which his political career collapsed.

“We’ve got to govern,” Stanley said, as the lunchtime crowd made its way out of a conference room at the Memphis Cook Convention Center. “It’s our time to govern.”

The governing will continue, but Stanley will have cleaned out his office and returned to the private sector by the time the Legislature reconvenes in January. His resignation took effect earlier this week.

Dangerous liaisons

What adds to the tragic arc of the former lawmaker’s story is his relationship with Morrison appears to have begun around the time or not long after his former employer, Stanford Financial Group, was shut down in February by federal regulators on charges of securities fraud.

Stanford’s former principals remain the focus of civil and criminal court cases in Texas. The company’s namesake, the Texas billionaire and jet-setting financier R. Allen Stanford, has been awaiting trial in a federal detention center about 40 miles north of Houston.

Stanley was one of about 50 people who worked for Stanford’s Memphis brokerage office in the East Memphis Crescent Center. He was not charged or connected by regulators to the massive Ponzi scheme Stanford’s chairman is accused of running.

Not long after regulators shuttered Stanford’s Memphis office, New York-based investment firm Oppenheimer & Co. Inc. snapped up several of Stanford’s Memphis advisers and used them to start an Oppenheimer branch in the city. Then in June, Oppenheimer decided to pull the plug on the branch it had opened across the street from The Crescent Center.

Stanley was out of work for the second time this year.

A recent article in The Wall Street Journal mentioned one of Stanley’s former colleagues rocked by the same professional upheaval. Investment adviser and former Stanford employee Jon Barrack sank into a deep depression twice after regulators shut down Stanford and he didn’t have any income until April, according to the paper.

Campaign signs already can be seen around Shelby County for state Rep. Brian Kelsey’s bid for Paul Stanley’s Senate seat. The Kelsey campaign also planned to go door to door over the weekend in various spots around District 31. -- AP PHOTO/MARK HUMPHREY

Like Stanley, he went to work for Oppenheimer in Memphis. He and Stanley were among 20 Stanford executives hired by the New York firm who were put on the chopping block, according to the WSJ.

Word of Stanley’s affair became public about a month after news of Oppenheimer’s Memphis closure. Small wonder he summed up his 2009 so far to The Memphis News this way: “I’ve had a crappy year.”

Stanley has publicly conceded more than once his marriage may be a casualty of the intern scandal. He told The Memphis News he’s trying to make amends with his wife.

Around midday on the day he resigned, Stanley sent a text message to The Memphis News that he’d be in touch shortly, presumably with an answer about his political future. That afternoon, he said he and his wife had gone back and forth, figuring out what he should do.

Media coverage was reaching a fever pitch. Shelby County Commissioner Mike Ritz, after learning a local television news crew was trailing the car of Stanley’s wife, e-mailed a message to his media contacts.

“She and her children do not deserve seeing cameras and reporters around their home and her place of work,” Ritz wrote. “Whatever you want to say and report on Paul, let it be about him and not the family. … This story can be covered without Kristi and the children. Their whole family needs our prayers.”

Stanley said he and his wife settled that day on resignation as the right course.

“We were both trying to make the best decision for our family,” he said. “That’s what we were vacillating on. I just finally – I took enough time to think through every possible scenario. Right now, I’m in a very difficult and trying time. There will be days I’ll be on top of the world, and everything’s going my way. I hope I have respect for God at that time to thank him for what I have at that moment.”

In a farewell note to supporters, Stanley wrote that input from his wife would in large part determine his future direction.

The aftershock of this summer’s intern scandal involving former state Sen. Paul Stanley will continue to be felt among lawmakers in Nashville, as well as closer to home in Shelby County. -- PHOTO COURTESY OF THE OFFICE OF GOV. PHIL BREDESEN

“My future course is uncharted, and I will rely exclusively on prayer and the advice and input of my wife, on which course I personally and professionally travel,” Stanley wrote.


That fits in with something he was telling people in the first few days after the intern scandal become public last month. It was the same week Stanley took the stand to testify during a preliminary hearing on extortion charges against Watts in General Sessions Court in Nashville.

Around that time, Stanley told at least one person to watch the Christian inspiration film “Fireproof.” He said the storyline of that movie mirrors his recent personal woes.

In the movie – which stars Kirk Cameron as an unhappily married captain of a firefighting team – the main characters are a husband and wife who fight regularly over money, housework and personal interests. As the marriage cools, the woman who plays Cameron’s wife grows close to a doctor at the hospital where she works in public relations, and she signals her interest in divorcing her husband.

The couple stays together after the husband begins working through “The Love Dare,” a popular book with marriage-strengthening activities published last year. “Fireproof” is not a typical Hollywood film, but its ending is vintage Hollywood; the husband and wife stay together and rekindle their love.

For Stanley, a similar outcome to the end of the affair – both his political and personal one – may prove to be much more elusive.

Since the week of July 20, details have trickled out about how a prominent, influential state legislator came to be sexually involved with an intern half his age who had a troubled past of her own. The reality that’s emerged is more complex than the two-dimensional version that appeared in the immediate aftermath of public revelations about the affair.

And it appears everyone directly or indirectly involved will either be picking up the pieces or dealing with the fallout of the scandal beyond its short-lived time in the center of the public spotlight.

Damage control

In the Aug. 17 issue of Newsweek, an image of Stanley appears prominently toward the front of the magazine in a feature called its “indignity index.” The magazine placed Stanley’s affair at 70 on a sliding scale of “dubious public behavior” from 0 to 100, with 0 being “mildly tacky” and 100 being “utterly shameless.”

Also listed on the same indignity index for the week is Boston Red Sox designated hitter David Ortiz, who reportedly tested positive in 2003 for performance-enhancing drugs. Earlier this year, Ortiz called for players caught using such drugs to be banned from baseball for a year.

Morrison recently told a Nashville TV station her relationship with Stanley morphed slowly from work duties into requests to pick up his dry cleaning and offers of payment to clean his apartment and then into something more. She’s otherwise kept her distance from reporters.

“If the Legislature starts asking every legislator to step down who has cheated on their spouse or had sex with an intern/staffer/lobbyist, then it’s going to be a lot more difficult to get a quorum.”
– State Rep. Stacey Campfield,

Other than college dean’s list notices, one of the first times her name turned up in the media was in a December notice in The Leaf-Chronicle newspaper in Clarksville. It mentioned Morrison’s selection for the Tennessee Legislative Internship Program for the 2009 legislative session, along with one other APSU student.

Requirements for the program include a minimum 3.0 grade point average, and applicants are scored partly on their potential for professional research, according to the newspaper.

The potential interns also are judged on their ability to form “successful personal interrelationships in the environment of a legislative session,” according to the Web site of the Tennessee General Assembly.

A stipend each intern gets amounts to a little more than minimum wage, plus reimbursement at a rate of 46 cents per mile of authorized travel between the intern’s home and Nashville. That’s limited to one round-trip per month.

The takedown

What set in motion the fateful turn of events that led to Stanley’s downfall and public revelation of his relationship with Morrison was a text message Watts sent to Stanley at 6:55 the morning of April 8.

“Good morning sir, how are you this fine day?” began the first of several messages Watts sent to Stanley that day. It was read aloud during Watts’ preliminary hearing last month.

“McKensie and I have been talking and I feel that I have a video and some pictures you might be interested in seeing. This is her boyfriend, that guy you met outside Walgreens. Contact me as [soon as] possible and have a splendid day.”

Stanley exchanged a flurry of text messages with Watts. He contacted the TBI for help when it became clear Watts wanted money in exchange for a disc with the photos of Morrison.

“How do we resolve this if you hang up on me?” Stanley texted Watts at one point April 8. “If I give you money, how can I be sure of what I am getting in return?”

Later, Stanley wrote: “Got the message. I don’t have that kind of money on hand, but I can have it by 2 or 3 tomorrow. I have a meeting every Thursday at nine that lasts two or three hours.”

Stanley told Watts he would be in touch once he had the money.

“Will this go away after this? I need your word,” he texted.

The TBI’s technical services unit downloaded Watts’ messages from Stanley’s phone. TBI special agent Doug Long was with Stanley later in the day April 8 when Watts sent more messages to the Senator’s phone.

The next day, the details for a meeting were in place, and TBI agents helped Stanley get ready. He drove a dark blue Lexus to an interstate exit in Davidson County that would take him to El Rey Azteca Mexican Restaurant and the meeting with Watts.

Stanley was wearing a wire and had with him 5 stacks of $2,000 in a plastic bag.

Long drove farther down the road once Stanley got to the restaurant. Other TBI agents were already on the scene and “had the eyeball,” as Long put it in court testimony.

After the exchange and Stanley’s departure, Watts tried to back up his car. Long maneuvered his car behind him, and other TBI agents swarmed onto the scene and took Watts into custody. Agents recovered the bag of money from the passenger seat of Watts’ car.

Watts was taken back to TBI headquarters in Nashville, read his Miranda rights and was interviewed by agents.

For locations, click here.

“He gave a statement acknowledging what he’d done,” Long said during Watts’ preliminary hearing. “He said he’d gotten the Senator’s phone number from McKensie. He said he’d gotten some of the ideas from watching movies as far as breaking it down into small bills and things like that.”

Media coverage of the scandal exploded across the state the day after that preliminary hearing last month.

Those family values

The first GOP official to call for Stanley’s resignation was not a public official at all.

Shelby County GOP chairman Lang Wiseman was the first to suggest Stanley step down, while figures such as Senate Majority Leader Mark Norris, Tenn. Lt. Gov. Ron Ramsey and others worked mostly behind the scenes.

On the day Stanley announced his resignation, Ramsey talked to him three times during the day and sent him a text message as the day wore on suggesting he think about resigning. Stanley and Ramsey also had talked about the matter the day before.

They started with the political pound of flesh Stanley would have to give – his chairmanship – before moving toward stepping down completely.

“We talked yesterday that we thought it would be best if he stepped down,” Ramsey said at The Grove Grill restaurant in East Memphis the day after Stanley resigned.

The response from Stanley’s fellow legislators ran the gamut from muted disappointment to partisan gunslinging.

Senate Majority Leader Mark Norris, a Republican from Collierville, told The Memphis News: “Life goes on. And there’s important work to be done.”

Kyle was equally circumspect. He said on a personal level the issue is between Stanley and his wife. Professionally, Kyle said it’s between Stanley and Ramsey.

Sen. Dewayne Bunch, a Republican from Cleveland and a colleague of Stanley’s on the commerce committee, was Stanley’s roommate in the Nashville apartment. Bunch stayed mum in the days between when the scandal first came to light and Stanley resigned, leading to speculation of what he might have known as a roommate in the apartment where the photos were taken.

Bunch is so reliably conservative in his political philosophy that at the first commerce committee meeting of 2009, Stanley quickly followed his introduction of Bunch, who was sitting to Stanley’s left, with a quip.

“That’s the only time I’ll ever say Sen. Bunch is to the left,” Stanley said.

Rep. Stacey Campfield, a Knoxville Republican, drew the ire of Democrats when he posted on his blog a quote from a legislator he did not identify speaking about Stanley’s situation.

“‘I guess this is just more proof Republicans are clearly irresistible to women,’” Campfield relayed on his blog.

When Democrats issued a press release condemning that Web post, Campfield pressed the issue further.

“Funny, I have not seen the press release from the Democrats calling to end the intern program,” Campfield wrote on his blog. “Wouldn’t bother me much. How ’bout them? Maybe the Democrats would like to do a press release on their goals to reform the system. Yea! There we go! That’s their plan! Do (an) in-depth study committee on how we can stop these evil old legislators from preying on these young innocent little interns!

“I know just the man they could send to head it. Democrat (House) Majority Leader Gary Odom. Come on back when you are ready for more press release ideas.”

Odom, a Nashville Democrat, married his former intern, Rachel Zamata, last year in Nashville.

Campfield was more measured in comments to The Memphis News.

“If the Legislature starts asking every legislator to step down who has cheated on their spouse or had sex with an intern/staffer/lobbyist, then it’s going to be a lot more difficult to get a quorum,” he said.

Turf issues

The ripples of the intern scandal are continuing to spread, reverberating to the crowded field of contenders angling to win the race to finish former Memphis Mayor Willie Herenton’s term that was due to end in 2011. The ripples may also stretch to the Shelby County Commission and alter the balance of power in Nashville.

A few candidates in this fall’s special mayoral election complained when what already was going to be a breakneck campaign cycle – with only about three months to set themselves apart from the pack – got 12 days shorter this month. And it’s a result of Stanley’s departure from his seat.

The special mayoral election originally scheduled for Oct. 27 has been moved up to Oct. 15 on the recommendation of the Shelby County Election Commission to coincide with a special set of primary elections Gov. Phil Bredesen is expected to order to fill Stanley’s seat.

Doing that means the city of Memphis doesn’t have to foot the estimated $160,000 bill for opening the polls. The state will pay the tab because of the Senate contest on the ballot.

It also means mayoral candidates have more than a week less than originally expected to campaign.

The County Commission may also have to deal with some of the political aftermath of Stanley’s departure. At least one, and perhaps two, members of the state House of Representatives will run in the special election to fill Stanley’s seat.

The County Commission likely would name an interim representative in the vacant House seat. The commission is controlled 8-5 by Democrats who could be expected to name a Democrat to the House seat. That would change the current 50-49 split in the House to 49-49.

Rep. Brian Kelsey of Germantown is running for Stanley’s Senate seat. He said it was too early to tell what would happen if a current representative wins the seat.

“I’ve been very proud of being able to work for keeping people safe in their homes and helping people feel secure in their jobs in the House, and I feel like at this point this is a chance to do it for the entire 31st District instead of just part of it,” Kelsey said.

PROPERTY SALES 56 289 2,908
MORTGAGES 55 226 2,009
BUILDING PERMITS 108 1,002 6,703
BANKRUPTCIES 42 248 1,225