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Welcome to PAYDIRT!
I’m your host, Daily Beast White House reporter Lachlan Markay, and I hope you’ll join me once a week as we dig into the ugly underbelly of our nation’s capital in this newsletter focusing on corruption, campaign finance, and influence-peddling. Despite unprecedented interest, reporters too often use the amazing muckraking tools at our disposal to produce dry and unintelligible texts. Instead, I aim to bring you along as I dig into the data and public records and other voluminous sources of information on our elected officials and their purse-masters. Investigative reporting is fun, and I want you to enjoy it with me. So let’s dive into this inaugural edition as we tease out some of this week’s hidden stories of grift and influence.
The Brotherhood Tries to Buy a House Seat Local 98 of the International Brotherhood of Electrical Workers just made its biggest federal political contribution of the cycle by far. Late last month, the Philadelphia-based union chipped in $200,000 to a new super PAC called Middle Class PAC, whose treasurer, Tara Chupka, is Local 98’s “special events coordinator.” It’s the only money the PAC has received since it was formed on March 26—the same day the union’s donation came in.
Interestingly, Local 98 listed it as a “non-federal” contribution on its FEC forms even though the funds appear to have been explicitly headed for a congressional race. Just a few weeks after the check cleared, Middle Class PAC spent exactly $200,000 on ads supporting Rich Lazer, a former Philadelphia deputy mayor and now a Democratic candidate for Pennsylvania’s recently redrawn fifth congressional district. Middle Class PAC told the FEC that it exists solely to back Lazer’s candidacy. The union has also donated to his campaign directly.
Local 98 donates to numerous state and federal candidates, but it’s rarely if ever invested so much in a single House race. So why the sudden generosity? Well, Lazer isn’t just an IBEW ally. According to personal financial disclosure forms on file with the city, he’s also a former consultant for Local 98, and his wife is the union’s executive assistant. After working directly with the union, Lazer spun through the revolving door to a labor-focused post under mayor Jim Kenney, one of a number of city officials whose conversations with Local 98 leader “Johnny Doc” Dougherty were picked up on FBI wiretaps as part of a federal criminal investigation into the labor leader.
Dark Money and Terrorist Sympathizers
Politico’s Eliana Johnson had a crazy scoop on Tuesday on a dark-money group, the American Exceptionalism Institute, that’s buying ads accusing Sen. Rand Paul of siding with terrorists by opposing the nomination of Gina Haspel to lead the Central Intelligence Agency. Follow me down the rabbit hole of dark-money flows and shady political operatives involved with this effort, which has some very interesting connections to people in the orbit of Senate Majority Leader Mitch McConnell.
There’s very little information in public records about the AEI. We know that it was incorporated last year in Columbus, OH, “to promote the common good and general welfare of the Citizens of the United States of America,” as its bylaws state, somewhat comically. Fortunately we have two other solid breadcrumbs: the names of the group’s spokesman and registered agent. A little digging on these two guys reveals that the AEI is part of a sprawling network of dark-money groups pouring money into midterm election contests in ways that are explicitly designed to hide the sources of those funds.
Brian Kinnett, the AEI’s spokesman, runs a group that is basically everything campaign-finance reformers hate about the post-Citizens United political money landscape. It’s called Americans United for Values, and it launders anonymous six-figure sums from 501(c)4 dark-money groups, taking checks from the ostensibly non-partisan nonprofits and immediately using the funds to directly advocate for or against federal political candidates.
AUV isn’t even subtle about it. It formed on January 18, 2016, and got its first cash infusion the next day: a $112,000 contribution from the American Policy Coalition, a dark-money group whose directors included a Kentucky presidential delegate who would later recall being pressed to support Donald Trump in the state’s Republican presidential caucus. On January 20, a day after its APC donation, AUV spent exactly $112,000 on ads attacking Sen. Ted Cruz’s presidential campaign. The next day, APC wrote the group another check for $15,000. That same day, AUV spent another $14,900 hitting Cruz. Later that year, on October 13, 2016, AUV got a $90,000 donation from another dark-money group called A Public Voice, whose president happened to be Brian Kinnett, the spokesman for AEI. The group was formerly called Protect Your Vote Ohio, and was created for political advocacy in the Buckeye State. On the same day that it donated to AUV, the super PAC passed along $80,000 to a group called Fighting for Ohio Fund, which, also on that same day, bought ads attacking Democratic senate candidate Ted Strickland.
The trend has continued this cycle. APC gave the super PAC a quarter of a million dollars on March 28, 2017. Starting on the same day, and over the next two weeks, AUV spent $215,000 attacking Bob Gray, a candidate in the House special election in Georgia. On May 11, 2017, APC chipped in another $106,000. From May 9-11, AUV spent $105,184 hitting Rep. Ralph Norman and backing his opponent, state representative Tommy Pope, in a House special election in South Carolina.
The arrangement is almost self-evident: donors to the Americans Policy Coalition and other dark-money groups, who can remain anonymous by virtue of their nonprofit status, financed political ads and contributions, with AUV serving as a conduit for money ostensibly devoted to apolitical “social welfare” activity. Donors who want to fund political activity unencumbered by FEC disclosure requirements can just write a check to the nonprofit, which will pass it along to a super PAC that can spent freely on politics, depriving voters of information about who is funding political persuasion campaigns.
Let’s bring this all back to Kinnett and his new group’s attack ad against Rand Paul. Who’s behind it? There’s no way to know for sure. But some interesting connections merit mentioning. The American Policy Coalition—which, again, has funded the vast majority of Kinnett’s political activity over the last couple years—is incorporated in Kentucky, and was formerly called Bluegrass Votes. It was created by Mitch McConnell’s former campaign manager, Justin Bresell, for the explicit purpose of supporting McConnell’s political efforts. One of its directors, J. Todd Inman, is a Kentucky Republican operative and close McConnell ally who, in January 2017, moved to Washington to be a top deputy to Transportation Secretary Elaine Chao, McConnell’s wife.
Given all those connections, it’s worth noting that McConnell has as great an interest as anyone in getting Rand Paul on board with Haspel’s nomination.
Trump Lobbyist Shills For Assad Ally
The Beast’s Betsy Woodruff and Adam Rawnsley report that Brian Ballard, recently described as “the most powerful lobbyist in Trump’s Washington” for his closeness to the president, has signed a client with apparent ties to Bashar al-Assad’s brutal Syrian regime.
“Ballard’s firm, Ballard Partners, disclosed on March 15, 2018 that it has taken on an entity called ASM International General Trading LLC as a client. A Daily Beast analysis of open source materials––including website registration information, leaked offshore investment documents, and resume sites––indicates that ASM International General Trading is affiliated with a member of Syria’s wealthy Foz family of international businessmen, which reportedly has close links to the Assad regime. Reached for comment, Ballard told The Daily Beast his firm will cut ties with the company if it has links to Assad. ‘We’re going to do more due diligence,” Ballard said. “We’re not the CIA, but if it were to turn out that there was any connection at all, we would withdraw from our representation of the Dubai trading company.’”
Read the whole thing.
This Week at The Trump Hotel
The Trump International Hotel in Washington DC has become a locus of power and influence in Washington. PAY DIRT will be reporting on who’s been staying, eating, drinking, and hanging out at the hotel—and what their interests in courting favor with the Trump administration might be.
Spotted this week:
- Maine Governor
Paul Lepage, whose trips to the hotel have buttressed legal arguments that Trump’s ownership of the place violates an anti-bribery provision of the Constitution.
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Attendees of the Afghanistan-U.S. Business Matchmaking Conference, who are looking to beef up business and trade ties between the two countries.
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Kurt Herbrechtsmeyer, the chairman of the Iowa Bankers Association.
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The 2018 EB-5 Advocacy Conference, which aims to ramp up foreign investment in U.S. businesses in exchange for visas for foreign investors. Jared Kushner’s company has drawn SEC scrutiny over its extensive use of the EB-5 program.
DC health inspectors stopped by the Trump hotel last week for a routine inspection. A few of their more interesting findings:
- “The establishment has a ‘Hotel’ license but on the license the number of kitchens listed is ‘0’ (zero). The establishment has an ‘In Room’ kitchen, employee cafeteria, a banquet kitchen, and a pastry kitchen.”
- “Food is not stored in a manner to protect from cross contamination. Raw animal foods were stored above ready to eat foods.”
- “Containers of flour are stored adjacent to a handsink that lacks a full splash guard.”
No Country for Oil Men
The Trump administration does not like China. It also does not like foreign competitors to U.S. industry. So for a state-owned Chinese oil company looking to break into American markets, the policy outlook at present is less than ideal. Sinopec recently brought on some some big lobbying guns to help it navigate Trump’s Washington, and a new Foreign Agent Registration Act filing by one of the subcontractors on the account includes a contract between Sinopec and Global Strategist Ltd. that’s chock full of interesting details. Some choice excerpts:
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“One trend during the past year has been heightened attention by lawmakers on the actions of foreign (read Chinese) State-Owned Enterprises (SOEs). The election of Donald Trump, who regularly criticizes China and foreign businesses, may embolden those who seek to punish SOEs for what they see as cheating.”
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“Donald Trump has been a vocal opponent of the Joint Comprehensive Plan of Action, more frequently referred to as the ‘Iran Nuclear Deal,’ as have many Republicans in Congress…[Support for sanctions against Iran] has the potential to negatively impact foreign businesses that have dealings and interests in Iran, such as Sinopec, and we will monitor developments both with the Iran Nuclear Deal and with sanctions legislation on the Hill.”
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“Given the significant role and influence that the Heritage Foundation has had with and as part of the Trump transition team, it is advisable that Sinopec look to continue that relationship.”
All the Campign Manager’s Men
My colleague Asawin Suebsaeng and I reported last week on the amazing drama between former Trump campaign chief Corey Lewandowski and socialite Jill Kelley, of Petraeus scandal fame. One of the details we reported was that Lewandowski had arranged for a lobbyist at the firm Turnberry Solutions, which is based out of his Washington DC house, to work with the firm BGR in its advocacy on behalf of the governments of Poland and Azerbaijan. That lobbyist is Jason Osborne, also a former Trump campaign operative. Osborne’s colleague at Turnberry, Mike Rubino, has now registered to join him on those same two foreign accounts, per a new FARA filing.
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