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Welcome to PAY DIRT, the Daily Beast’s new weekly roundup of corruption, campaign finance, and influence-peddling news. Every Thursday, White House reporter Lachlan Markay will be delivering exclusive research and investigations into the money and power driving The Swamp from behind the scenes.
With Lawyers Like These: Rudy Giuliani may have put his new client, the president of the United States, in a very bad spot. But not, it appears, in the way he thinks.
In Fox News interviews on Wednesday night and Thursday morning, Giuliani disclosed, among other pertinent details, that hush money paid to the porn star Stormy Daniels in October 2016 came from Trump’s personal attorney, Michael Cohen, but that Trump reimbursed him for the $130,000 paid to ensure Daniels’ silence on her alleged affair with the president.
Giuliani insisted in an interview with Sean Hannity on Wednesday night that that does not amount to a violation of campaign-finance laws. But in detailing the structure of the payments, Giuliani and Trump may have admitted to an entirely different legal violation.
As noted by former White House ethics lawyer Norm Eisen, Cohen’s payments were, by the Trump camp’s admission, a de facto loan that he knew would be repaid by his client. But Giuliani is insisting that the loan was to Trump personally, not to the campaign. But that presents a whole new problem: Trump disclosed no such disbursement on his personal financial disclosure form covering 2016 and early 2017. That likely amounts to a violation of the Ethics in Government Act, according to Eisen’s group, Citizens for Responsibility and Ethics in Washington.
It’s also worth noting that when Trump filed his financial disclosures last year, his attorneys tried, unsuccessfully, to ensure that he wouldn’t have to sign them and subject himself to potential legal liabilities for misstatements and omissions. One wonders if they knew something like this might arise.
The Swampiest House Race in the Nation
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In last week’s PAY DIRT, we examined a network of dark-money groups highly active in, among other races, the special election in South Carolina’s 5th Congressional District last year. One of those groups, Conservative Leadership Alliance, has spent more than $540,000 trying to elect State Rep. Tommy Pope in that race. When he narrowly lost to Rep. Ralph Norman, the group went dormant. But it re-emerged in Ohio this week with $113,000 in ad buys, with half attacking Christina Hagan, a state representative running for Congress in the state’s 5th District, and the other half boosting Anthony Gonzalez, Hagan’s opponent and a former Buckeyes and Colts wide receiver.
The race is already rife with allegations of illegal politicking. The Washington Examiner had the scoop on Monday on an Federal Election Commission complaint alleging that Gonzalez’s campaign illegally coordinated with a super PAC funded entirely by his father. That complaint focuses on a pair of suspiciously similar mailers, one from the campaign and one from the super PAC, sent within two days of each other.
The Conservative Leadership Alliance hasn’t been accused of anything illegal. But it does signal efforts by some deep pockets to meddle in the race without being identified. Like other dark-money groups involved in direct electioneering activity, CLA is very hush-hush about its funders and its activities. The group hasn’t existed long enough to file an annual tax form with the IRS; its website offers little to no information; and its treasurer, Marc Himmelstein, didn’t respond to numerous requests this week for additional information about the group.
But presented with the information that I could glean from public records, the Hagan campaign told me they suspect CLA is a corporate front for Ohio energy interests who are angry at Hagan for denying them what she characterizes as a “bailout.”
Connecting Dots:
Himmelstein isn’t just a Republican political operative; he’s a veteran DC lobbyist with a roster of big-time energy clients. One of them is Ohio utility FirstEnergy, which since 2010 has enlisted the advocacy services of National Environmental Strategies, the firm that Himmelstein founded in 1990 with former Mississippi Gov. Haley Barbour. Himmelstein continues to personally lobby for FirstEnergy.
The Akron-based utility, which didn’t respond to my questions about CLA, has already taken sides in the OH-05 race. FirstEnergy’s PAC has donated the maximum $10,000 to Gonzalez’s campaign. Its CEO, CFO, and senior VP have also donated to Gonzalez, as have its former CEO and the current president of its nuclear-energy division.
The latter is of particular note given what the Hagan campaign is alleging about FirstEnergy’s involvement in the race. “I didn’t bow to corporate interests because I believe in the free market and Ohio citizens shouldn’t be forced to hand out corporate welfare to a mismanaged company,” Hagan told me. Campaign spokesman Harlan Hill elaborated: “FirstEnergy hates Christina Hagan. She blocked a bailout vote from coming to the House floor as a member of the Public Utilities Committee.”
The bill, which would’ve propped up FirstEnergy’s struggling Ohio nuclear plants—the ones directly overseen by one of Gonzalez’s donors—was indeed scuttled in committee, though it’s not clear what role Hagan played behind the scenes. But one thing is clear: FirstEnergy believes Gonzalez would be the better ally in Congress. It’s pouring money into his campaign as it seeks a federal bailout from the Trump administration, which The Wall Street Journal recently described as “an unprecedented emergency action that experts say would effectively end America’s largest competitive electricity market.”
Does FirstEnergy’s support for Gonzalez, and the fact that its lobbyist runs CLA, indicate that the company is funding the political outfit? With dark-money groups, it’s impossible to say for certain. And that’s the idea.
Trump Tariff Lobbying Blitz:
My colleague Betsy Woodruff and I examine the skyrocketing sums paid to K Street firms—including some very close to President Trump—hired to navigate the administration’s ad hoc tariffs and other punitive trade measures.
This Week at The Trump Hotel
T-Mobile CEO John Legere. He snapped a few photos at the hotel on the same day that T-Mobile announced a planned merger with Sprint, which will need sign-off from Trump’s Justice Department. As spotted by Zach Everson—who, by the way, you should be following on Twitter if you’re interested in Trump DC goings-on—Legere later deleted Twitter and Facebook posts of him at the hotel.
The MAGA Coalition, a political group run by fringe right-wing conspiracy theorists, plans to host a fundraiser at the hotel featuring former Alaska Gov. Sarah Palin—with whom you can snap a photo for a mere $2,500 contribution.
Tom Barrack, a close Trump friend who also ran his inaugural committee, was pictured hanging out with a pair of Turkish businessmen, including the head of the American Chamber of Commerce in Turkey.
From Water Wars to Washington
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Securities and Exchange Commission corporation search.
In 2014, a Texas state representative went to war with his local water district authority. Rep. Lance Gooden began filing open-records requests, and even testified before a state grand jury, in an attempt to expose what he claimed was rampant mismanagement at the Tarrant Regional Water District, which supplies water to nearly two million people in the Dallas-Fort Worth area.
Around the same time, it just so happened that one of Gooden’s largest financial backers, Dallas hotel magnate Monty Bennett, was embroiled in a years-long legal fight with the district to prevent a new water pipeline from running across part of his ranch. He appears to have teamed up with a grassroots group in Texas that aired widespread allegations of voter fraud after its two preferred Tarrant Water District candidates lost in 2015. The water district relented and settled with Bennett last year.
Now Bennett is single-handedly financing efforts to get his ally in the statehouse elected to Congress. He and a company he owns are the only reported donors to a new super PAC, Our Conservative Texas Future, which has spent $385,000 since February backing Gooden’s congressional run and attacking that of his opponent, Republican activist Bunni Pounds. It’s the only race on which OCTF is spending.
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