Lachlan Markay digs into power, money and corruption in DC.
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Senate Armed Services Chairman Bought Raytheon Stock, Then Dumped It When Asked About It


Just days after signaling his support for unprecedented levels of U.S. defense spending, Sen. James Inhofe (R-OK), the chairman of the Senate Armed Services Committee, reported purchasing tens of thousands of dollars of stock in one of the nation’s top defense contractors.

After PAY DIRT asked about the purchase, Inhofe’s office said the senator had contacted his financial adviser to dump the stock and instructed him to avoid defense and aerospace purchases going forward.

Inhofe, who took over the top spot on Armed Services after the death of Sen. John McCain (R-AZ) in August, has repeatedly pressed President Donald Trump to dramatically scale up the Pentagon’s annual budget, which currently stands at $717 billion. Last week, after Trump hinted he would like to scale back parts of that budget, Inhofe met with the president and Defense Secretary James Mattis, after which it was announced that the administration would seek even more defense funding: a record $750 billion for fiscal year 2020.

News of that budget request broke Sunday. On Tuesday, Inhofe’s financial adviser bought him between $50,000 and $100,000 in shares of defense contractor Raytheon, according to documents filed with Senate ethics officials.

Federal lawmakers are prohibited from trading stock based on non-public information. But since news of Trump’s massive Pentagon budget request was already public when Inhofe purchased the stock, it likely would not have run afoul of congressional insider-trading laws even if Inhofe himself were behind the transaction.

But the Raytheon stock purchase still raised a flag for government ethicists, who said it underscored the moral hazard of lawmakers owning assets in areas of industry affected by legislation they are in positions to author and shepherd into law. No federal rule or regulation would prohibit Inhofe’s investment adviser, or any other, from trading stocks based on the actions of their congressional clients, even without direct input from those clients. Nor is Inhofe prevented from seeing which companies’ stocks are in his portfolio. The latest share purchases were posted publicly on a Senate database.

“We have no way of knowing what kind of relationship Inhofe has with whoever is managing his money/trust and it’s wild to take it on good faith that he has some kind of puritanical self-imposed barrier in place that prevents him from communicating in any way with his broker about his trades,” Alex Baumgart, a researcher at the Center for Responsive Politics, wrote in an email.

Read the rest at The Daily Beast

Top U.S. Political Consultants Still Seeking Work in Ukraine Even After Manafort

Some big names in U.S. and British political consulting headed to Ukraine over the summer at the expense of an oligarch in the country whose past payments to President Donald Trump drew the scrutiny of federal investigators.

Employees of consulting firms owned by Democratic operative Joe Trippi and British political consultants Lynton Crosby, Mark Textor, and Mark Fullbrook—all of the consulting firm the Crosby Textor Group, a top vendor for Britain’s Conservative party—traveled to Ukraine to explore “potential consulting services for a domestic project” in the country, according to a recent filing with the Department of Justice.

The filing came from Doug Schoen, a famous Democratic pollster, who served as a pass-through for money for the trip from EastOne, the company owned by Schoen client Victor Pinchuk. Pinchuk has been under scrutiny in the U.S. of late for a payment he made in 2015 to the Donald J. Trump Foundation in exchange for a video appearance by the then-presidential candidate at his annual Yalta European Strategy conference.

Ukrainian politics have been at the center of intrigue and controversy surrounding the federal investigation into Russian meddling in the 2016 presidential election. It was one-time Trump campaign chairman Paul Manafort’s illicit work for the country’s deposed former president, in part, that resulted in an investigation into his finances and his conviction on financial fraud charges. That work ended up ensnaring Tad Devine, the former Bernie Sanders top strategist, in legal drama as well.

Despite the taint, Ukrainian politics remains a draw for top consulting talent in the U.S. and abroad.

Trippi rose to fame by managing former Vermont Gov. Howard Dean’s 2004 presidential campaign. More recently, he advised the campaign of Alabama Sen. Doug Jones, who managed to flip a Senate seat to the Democratic side during a special election in late 2017.

Crosby, Textor, and Fullbrook have made millions advising the government of British Prime Minister Theresa May. They jointly run a company, CTF Partners Ltd., that Pinchuk appears to have courted. Neither their firm nor Trippi responded to requests for comment on the potential consulting gig. EastOne also did not respond to inquiries.

Reached by PAY DIRT, Schoen was tight lipped about the arrangement. He insisted that he “had no involvement in anything they explored at all.”

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Pro-Trump Women’s Group Hit Up Obscure Consultant’s Trade Firm for Trump Hotel Cash

The pro-Trump super PAC Women Vote Smart was forced to go into debt this cycle in an effort to throw a lavish October gala at Donald Trump’s Washington, D.C. hotel. But the sources of funds for the event are shrouded in mystery and it remains unclear just where the money actually went.

WVS held its Women for America First Summit 2018 at the Trump International Hotel in October. The event featured addresses from Trumpworld luminaries such as Fox News personalities Sebastian Gorka, Jeanine Pirro, and Gregg Jarrett; Republican National Committee Chairwoman Ronna McDaniel; and senior Trump re-election campaign hands Lara Trump and Katrina Pierson.

The total cost of the event, all paid to the Trump hotel, was more than $88,000. But the group didn’t pay it all up front. It reported sending the Trump hotel a check for $48,623.37 (the precise amount is relevant, for reasons we’ll get into) and took on an additional $40,000 in debt to cover the difference. WVS’ chairwoman, conservative activist Amy Kremer, has declined to address the debt in discussions with other reporters. She didn’t respond to PAY DIRT’s inquiries.

Including the debt it later repaid to the hotel, the cost of the event ended up being nearly two-thirds of WVS’ total income during the 2016 election cycle, according to its most recent Federal Elections Commission filing. The event was so expensive, it seems, that the group was forced to take out a separate loan just to cover the sum it paid up front.

But that loan didn’t come from a bank or any other traditional source of credit. Instead, WVS took out a line of credit from an obscure company called the U.S. FED Group the day before its payment to the Trump hotel, FEC records show. The zero-interest loan was for $18,623.37, suggesting WVS put up $30,000 for that October payment to the hotel and borrowed cash to cover the difference. As collateral on the loan, WVS offered up the proceeds from its Trump hotel event.

The U.S FED Group’s full name is the United States Friendship and Economic Development Group, and its website boasts about its ability to obtain federal funding for domestic and foreign clients, among other services. The group’s principal is Alex St. James, an obscure Republican activist who’s been occasionally cited in news stories since he was certified as a candidate in the 2003 California gubernatorial recall election. More recently, he worked to draft former Secretary of State Condoleezza Rice as Donald Trump’s running mate during the 2016 campaign.

St. James, who did not respond to inquiries about his background and involvement in WVS, was a lobbyist for foreign governments including Madagascar and Somalia up until 2012. As part of his work for the former, he worked to arrange meetings between Madagascar’s president and various U.S. elected officials with the help of Bill and Hillary Clinton’s Clinton Global Initiative.

It’s unclear what St. James’ more recent business activities have entailed. The phone number listed on the U.S. FED Group’s website is disconnected. The address it lists is the office of a different organization. At least  three other political groups founded by St. James have been dissolved by the FEC for failure to file regular financial-disclosure reports.

A day after the election, WVS repaid the U.S. FED Group in full. What St. James’ company got out of it, we still don’t know.

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Rohrabacher Campaign Didn’t Disclose Hungarian Lobbyist Donation

Former Congressman Connie Mack is the Hungarian government's top lobbyist in Washington, and his marks in D.C. tend to be conservative members of Congress. In the six months ending Oct. 31, that included a May meeting with Rep. Dana Rohrabacher, the Russia-friendly California Republican who just lost his re-election bid.

That was in spite of a $2,700 max-out contribution from Mack, according to his most recent foreign-agent filing with the Department of Justice. That donation appeared in Mack’s filing, but it didn’t appear in Rohrabacher’s; there’s no record of a contribution from Mack in FEC filings for either Rohrabacher’s campaign committee or his leadership PAC.

Neither the campaign nor its treasurer responded to inquiries about why that might be the case.

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