A vast and long-running federal investigation has now implicated D.C. Mayor Vincent Gray.

Businessman Jeffrey Thompson pleaded guilty to conspiracy, admitting that he funneled more than $2 million into illegal campaign contributions, including hundreds of thousands of dollars to a shadow campaign to help elect the Democratic mayor.

But the bombshell is that Thompson says Gray knew about the secret and illegal effort to help his cause.

The Washington Post explains:

"In court Monday, prosecutors laid out a detailed new set of allegations that portrayed the mayor as having intimate knowledge of Thompson's campaign finance schemes and the need for them to be secret to protect Thompson's business interests.

" 'Mayoral candidate A is Vincent Gray,' Assistant U.S. Attorney Michael Atkinson said, before laying out months of intermittent conversations between Gray and Thompson. After Gray launched his campaign, he personally appealed to Thompson three days before a campaign finance deadline to 'accelerate his fundraising,' prosecutors said. Thompson came through with checks, many of them 'straw donations' from other individuals that were later reimbursed by Thompson.

"Later in the campaign, a key figure in the shadow effort asked Thompson for more than $400,000 to fund a get-out-the-vote campaign, Atkinson said. Thompson insisted that Gray ask for funds himself, and the two men met at a Gray associate's apartment. There, Gray presented him with a one-page budget and 'expressed gratitude' to Thompson for his assistance as the meeting ended."

As we reported back in December, this investigation has tarnished Gray's first term, but he still decided to seek a second term, saying he "did nothing wrong" in 2010.

Gray, it is important to note, has not been indicted. But Thompson is the fifth person close to him to plead guilty to crimes stemming from the shadow campaign.

Washington City Paper reports that prosecutors also say Thompson made other payments to Gray.

"Among them: payment for a driver and luxury SUV in 2010, a $10,000 payment to a 'close relative' of Gray's, and $40,000 in home improvements and work for an unnamed Gray friend," the paper reports.

So why would Thompson do this? Assistant U.S. Attorney Michael Atkinson said Thompson later appealed to Gray through a third party to "expedite" a "pending settlement involving his firm, D.C. Chartered Health Plan."

The D.C. primary, which generally decides the general election in the highly Democratic district, is scheduled for Tuesday, April 1. Gray has been leading in the polls.

Update at 7:11 p.m. ET. 'Absolutely False':

In an interview with WRC-TV, Mayor Vincent Gray said everything he has heard today are "absolute lies."

He always thought Thompson was raising funds for his campaign in a "perfectly legitimate manner."

"The things that I've heard today are fabricated," Gray said.

Update at 6:44 p.m. ET. Election After Election:

In a press conference, U.S. Attorney Ronald Machen said Thompson's plea agreement exposes "widespread corruption." The schemes he was involved with revealed "off the book" payments in "election after election."

He showed a printed graphic that showed the thousands of dollars he pumped into elections dating back to 2006.

Matt Zapotosky, of the Washington Post, tweeted this picture:

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