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UPDATE:

WASHINGTON (WUSA9) -- In a plea hearing on Monday, the man prosecutors say was behind the "shadow campaign" that helped get Mayor Vincent Gray get elected claims the mayor knew about it.

Jeffrey Thompson appeared at the U.S. District Court for the District of Columbia on Monday afternoon.

Thompson told federal prosecutors the mayor knew about the shadow campaign. In fact, Jeanne Clarke Harris and Vernon Hawkins, two people associated with the campaign, met first with him to discuss how the shadow campaign would work.

Thompson said he made clear he didn't want then-mayor Adrian Fenty to know about it and that any contributions he made would have to be made under-the-table.

According to prosecutors, in June 2010, Thompson met with Gray at Harris' apartment in upper Northwest.

The mayor allegedly presented a budge to Thompson detailing how much money would be needed and what it would be needed for -- in this case, to get out the vote. Prosecutors say Thompson then wrote a check for more than $500,000 for the Gray campaign.

ORIGINAL STORY:

According to court documents, Jeffrey Thompson, considered to be the mastermind behind funding the $653,000 "shadow campaign," is charged with two counts of conspiracy.

Conspiring to violate federal campaign finance laws and to submit false filings to the Internal Revenue Service is a federal offense. Conspiring to violate District of Columbia campaign finance laws by defrauding the District of Columbia's Office of Campaign Finance is a D.C. offense.

You can see the documents here: Thompson court documents

WUSA9's Bruce Johnson calls the federal charge a bombshell. Prosecutors allege that Thompson used his own money to fund a number of campaigns at the federal and local levels. Prosecutors claim Thompson used money from two companies:accounting company TCBA and DC Healthcare Systems Incorporated, which had contracts with the District of Columbia. President Obama's campaign and 13 federal candidates are mentioned in the documents. On the local level, prosecutors claim that Thompson used many conduits to funnel money through the system to city council candidates. Thompson is accused of having someone else donate to the campaign and then reimbursing that person. Johnson reports that Michael Brown is the Ward 4 candidate who got $20,000 from Jeff Thompson.

The big question is: who knew about it?

Back in January, our Bruce Johnson was the first to report that prosecutors were prepared to indict Thompson. At the time, sources told Johnson that Thompson's attorneys argued for misdemeanor charges, while the US Attorney pressed for felonies.

Some of Thompson's associates have already pleaded guilty in federal court. Two of them worked on Gray's 2010 campaign. Two other associates pleaded guilty to making straw contribution to political candidates on his behalf.

Mayor Gray continues to deny that he had any knowledge of any wrongdoing.

There will be a 1:30 p.m. plea hearing for Thompson at the U.S. District Court for the District of Columbia on Monday followed by a press conference with officials from the U.S. Attorney's Office for the District of Columbia, the FBI's Washington Field Office, and the Internal Revenue Service-Criminal Investigation at 5:30 p.m. We should find out more than about the agreement made between Thompson and prosecutors.

As for Mayor Gray, his current campaign manager Chuck Thies released the following written statement:

"The Jeffrey Thompson charging document should be read carefully," said Chuck Thies. "Common misconceptions espoused by our opponents and echoed in the media are not substantiated in the Jeffrey Thompson charging documents. Read carefully."

In the charging document, the following is written about Thompson's illegal support of a 2008 presidential campaign: "in coordination with and in support of a federal political candidate for President."

In the charging document, the following is written about Thompson's illegal support of a 2010 District of Columbia mayoral campaign: "in coordination with and in support of a political candidate for Mayor of the District of Columbia."

The language is identical.

"We anticipate that political opponents and some media outlets will use the language about the 2010 election to suggest, 'Gray knew,' while at the same time ignoring the language about the 2008 presidential election," said Thies. "Media outlets who give credibility to this innuendo are doing a disservice to justice and voters."

"For too long, Mayor Gray's political opponents, pundits and even news organizations have relied on innuendo instead of facts. No one has suggested that Hillary Clinton knew of Thompson's illegal activities. Mayor Gray has not been afforded the same presumption of innocence," said Thies. "In the Thompson charging documents, boilerplate language is used to describe all the campaigns that Thompson sought to illegally influence: Clinton's, Gray's and many others. We urge the media to be cautious when reporting the facts of this case and avoid the innuendo that our political opponents will gladly promote as gospel."

"Mayor Gray called for this investigation. Mayor Gray has always said he did not break any laws," said Thies.

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