By David Ingram and Gary Robertson
Jan 21 (Reuters) - Former Virginia governor Robert McDonnell and his wife were indicted on Tuesday by a federal grand jury and charged with accepting bribes in the form of money and gifts from the chief executive of a dietary supplements maker.
An indictment with 14 counts was filed in U.S. District Court for the Eastern District of Virginia against McDonnell, who is only 10 days out of office, and his wife, Maureen. Court appearances for the couple were set for Friday in Richmond.
They accepted gifts from the head of supplements-maker Star Scientific Inc including cash, golf fees and clothing and in exchange arranged for company executives to meet government officials who could help their business, the indictment alleges.
The McDonnells, both 59 years old, believe they have done nothing illegal and plan to fight the charges in court, they said in separate statements through their lawyers.
"We did not violate the law, and I will use every available resource and advocate I have for as long as it takes to fight these false allegations," Robert McDonnell said in his statement.
If convicted, the McDonnells could face decades in prison and fines totaling well over $1 million.
McDonnell, a Republican, said in July he had repaid $120,000 in loans from Jonnie Williams, a major campaign donor and the founder of Star Scientific. He also apologized for the embarrassment the gifts and loans to him and his family had caused Virginia.
Williams resigned as Star Scientific chief executive in December.
McDonnell had acknowledged that he and his family received more than $160,000 in gifts and loans from Williams. The gifts from Williams ranged from a $6,500 Rolex watch for McDonnell, to wedding and engagement presents and money for his daughters, and a $15,000 shopping spree for first lady Maureen McDonnell.
Attorney Abbe David Lowell, who represents Star Scientific, said the company is cooperating with authorities.
The relationship started with McDonnell's staff asking Williams if McDonnell could use his jet aircraft during the 2009 gubernatorial campaign, said prosecutors, who referred to Williams only as JW.
But after McDonnell won the election, the relationship grew, according to the indictment.
Maureen McDonnell tried to have Williams pay for an Oscar de la Renta dress she could wear to the inauguration, and clashed with McDonnell's staff who dissuaded her from accepting the dress.
In an email, Maureen wrote to McDonnell aides: "I need to talk to you about Inaugural clothing budget. I need answers and Bob is screaming about the thousands I'm charging up in credit card debt."
"We are broke, have an unconscionable amount in credit card debt already, and this Inaugural is killing us!!" Maureen McDonnell wrote, according to the indictment.
While she was forced to decline that offer, prosecutors said she soon asked again for help in shopping for designer clothes.
In April 2011, Williams took Maureen to Oscar de la Renta, Louis Vuitton and Bergdorf Goodman in New York, racking up nearly $20,000 in bills shopping for her daughter's wedding and other parties, prosecutors said.
Williams later provided many other favors, including a $50,000 loan, a $15,000 "gift" to cover wedding expenses, and the Rolex watch engraved with "71st Governor of Virginia" on the back, they said.
In exchange, the Justice Department said, McDonnell introduced the company to Virginia health officials and promoted Star's products including to Virginia universities which it suggested conduct related studies.
NEW GIFT LIMIT
Current Gov. Terry McAuliffe, a Democrat, issued a statement saying he was troubled by the charges and "the message that this period in our history sends about how government in this Commonwealth is run."
On the day he was inaugurated as governor, Jan. 11, McAuliffe issued an executive order imposing a $100 limit on any gifts that he, his family or members of his administration may receive.
The order also provides for an ethics commission to enforce the new standards on members of the executive branch, and to answer questions from employees.
Larry Sabato, director of the Center for Politics at the University of Virginia, suggested that the disclosures in the indictment set a new standard for misbehavior.
"I'm not going to say the state hasn't had corrupt officials, but they have been relatively few - and none at the level of Governor and First Lady," Sabato said.
"It's a real shock to those of us who have lived in the state all our lives and know the culture," he said.