In April 1996, the Medford, OregonMail Tribune questioned Cooley's statement in the 1994 Voter's Guide that he had served in the Army Special Forces in Korea.[1] Charges also arose that Cooley and his wife kept their marriage secret for several years in order for her to continue to receive veteran's benefits from her prior marriage.[1] Cooley was unopposed for renomination in the May primary and vigorously denied the charges; however, he came under increasing pressure from fellow Republicans, including his campaign manager Greg Walden and House speaker Newt Gingrich, to step down.[2] Walden even went as far as to announce an independent run for the seat, but implied that he would serve as a Republican if elected.[2]
In August 1996, Cooley withdrew from the race.[3] A special nominating convention chose former six-term incumbent Republican Bob Smith, who had retired two years earlier, to replace Cooley on the ballot.[1] Smith went on to defeat Democrat Mike Dugan in the November election.[4]
In December, Cooley was indicted for lying about his military service in the 1994 voter's pamphlet.[5] While claiming that the documents proving his claim were destroyed in a fire, Cooley later accepted a plea agreement in which he was convicted of lying in an official document and sentenced to probation, community service, and ordered to pay a fine.[6]
Tax evasion conviction
On January 29, 2009, Cooley was indicted in California for his role in an alleged investment scheme associated with the sale of shares of Bidbay.com.[7]The Oregonian reported that prosecutors alleged more than $10 million was defrauded from investors in the Bidbay sale of shares based on false statements. Cooley was charged with six counts of money laundering and one count of filing a false tax return in 2002 in an attempt to conceal more than $1.1 million in illicit income.[8]
In December 2012, Cooley was sentenced to a year and a day in prison after pleading guilty to hiding $494,000 in income from the Internal Revenue Service. He was further ordered to pay back taxes of $138,470 and restitution of $3.5 million to the victims of the Bidbay investment fraud scheme.[9]
