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- 04/07/17--07:53: _Convicted scammer c...
- 04/06/17--08:12: _Workers cheated as ...
- 04/07/17--06:47: _More kudos for 'Pan...
- 04/10/17--13:18: _Center for Public I...
- 04/13/17--16:15: _Top federal electio...
- 04/14/17--18:01: _Center for Public I...
- 04/17/17--17:07: _Georgia special ele...
- 04/18/17--14:07: _Sen. Grassley deman...
- 04/19/17--13:13: _Donald Trump inaugu...
- 04/20/17--10:20: _Strange budget bedf...
- 04/25/17--15:01: _Center wins Edward ...
- 04/26/17--02:02: _Big tax cuts for th...
- 04/28/17--11:17: _Mercer family’s cha...
- 05/02/17--11:19: _Oil, gas and coal i...
- 05/05/17--02:55: _Meet Donald Trump’s...
- 05/05/17--11:08: _Pro-Trump super PAC...
- 05/12/17--08:10: _Bob Dole, Trump cam...
- 05/12/17--15:06: _Repeated warnings p...
- 05/16/17--18:16: _South Carolina lawm...
- 05/18/17--06:51: _UnitedHealth fudged...
- 04/07/17--07:53: Convicted scammer creates federal PACs from prison
- 04/06/17--08:12: Workers cheated as federal contractors prosper
- Federal agencies modified or granted contracts worth a total of $18 billion to 68 contractors with proven wage violations. Among them: health-care provider Sterling Medical Associates, Cornell University and Corrections Corporation of America
- Of all agencies, the U.S. Department of Defense employed the most wage violators — 49, which collectively owed $4.7 million in back pay to almost 6,200 workers. The department paid those 49 contractors a combined $15 billion.
- Violations by the 68 contractors affected some 11,000 workers around the country — about the same number of people who moved to D.C. in 2016.
- 04/07/17--06:47: More kudos for 'Panama Papers' project
- 04/10/17--13:18: Center for Public Integrity wins Pulitzer Prize for ‘Panama Papers’
- 04/13/17--16:15: Top federal election official: voting fraud ‘not an epidemic’
- 04/18/17--14:07: Sen. Grassley demands new scrutiny of Medicare Advantage plans
- 04/19/17--13:13: Donald Trump inauguration bankrolled by corporate giants
- 04/25/17--15:01: Center wins Edward R. Murrow Regional Award
- 04/26/17--02:02: Big tax cuts for the rich, less for the poor
- 05/02/17--11:19: Oil, gas and coal interests filling Donald Trump’s ‘swamp’ with cash
- Rescinding the Stream Protection Rule that banned dumping toxic heavy metals into waterways during the coal mining process
- Expediting the Keystone XL Pipeline and the Dakota Access Pipeline, two projects that had failed to win approval from the Obama administration
Rolling back the Clean Power Plan, which sets standards for carbon dioxide emissions from power plants, limits oil and gas extraction on federal land and establishes a moratorium on new coal leasing
- Repealing a requirement that energy companies disclose payments to foreign governments
- Requiring a review of national monuments created by the Antiquities Act, potentially opening up protected lands to drilling and mining interests
- Mandating a review of offshore drilling regulations that could roll back safety standards put in place after the death of 11 people during the Deepwater Horizon explosion and oil spill. The review could also open up marine sanctuaries to commercial drilling.
- 05/05/17--02:55: Meet Donald Trump’s messaging army
- 05/05/17--11:08: Pro-Trump super PACs have already spent $1 million on Election 2020
- 05/12/17--08:10: Bob Dole, Trump campaign aide to lobby for Congolese government
- 05/16/17--18:16: South Carolina lawmaker indicted by state grand jury
Angelo Pesce is serving a 10-year prison sentence in Illinois for “theft by deception.” While behind bars, he’s barred from voting.
But that hasn’t stopped Pesce from apparently creating “Impeach the Assole” — a crudely named federal political action committee formed last week to raise political campaign cash — and another dubbed “Angelo Pesce Defends Pedophiles.”
No federal law prevents Pesce from forming a PAC or soliciting money for it. And he doesn’t have to tell unsuspecting donors he’s an inmate at Taylorville Correctional Center, having scammed a woman out of nearly $100,000.
Pesce’s situation is the latest reminder of a nagging problem with political committees: While most PACs follow the rules, there are few safeguards against hucksters looking to make a buck.
With some PACs, “people donating think it’s a legitimate organization, but sometimes the creators take your money and run,” said Brett Kappel, a Washington, D.C., campaign finance lawyer.
“There is no rule that a PAC is barred from buying a boat and riding off into the sunset,” added Brendan Fischer, associate counsel at the Campaign Legal Center.
As a practical matter, that makes it close to impossible for a misled political donor to recover his or her money.
A message the Center for Public Integrity sent to an email address Pesce provided in paperwork filed with the Federal Election Commission was not returned. The prison where he’s an inmate doesn’t allow reporters to contact inmates by phone unless they appear on a pre-approved list.
Creating a federal political committee is relatively simple: just fill out a few forms and submit them to the FEC.
It isn’t clear from Pesce’s FEC paperwork whether he meant to create a traditional PAC, which may give limited amounts of money directly to political candidates’ campaigns, or a super PAC, which may raise unlimited amounts of money to independently promote political campaigns. Pesce won’t be required to reveal until mid-summer whether his PACs have raised and spent any cash.
Either way, this is at least the second political group created by an inmate in as many years.
Two years ago, the Center for Public Integrity reported that Adam Savader, a former political volunteer who had been convicted of cyberstalking and extortion, created a super PAC named Second Chance PAC. Savader’s super PAC ultimately reported raising no money.
Then there’s the curious case of Cary Lee Peterson, a self-styled “congressional lobbyist and election campaign guru” whose purportedly pro-Bernie Sanders super PAC seemingly scammed dozens of donors out of tens of thousands of dollars.
Among those donors: “James Bond” actor Daniel Craig, who in 2015 gave $47,300 to Peterson’s “Americans Socially United” super PAC, which has repeatedly ignored the FEC’s requests to comply with federal campaign finance disclosure laws.
The FEC has fined Peterson’s PAC, and agency officials confirmed Tuesday that this fine remains unpaid. There’s little evidence indicating Peterson’s PAC used more than a token amount of the money it raised to promote Sanders’ bid for the Democratic presidential nomination. Where the rest of the money it raised went remains a mystery.
And last year, the FBI arrested Peterson on unrelated criminal fraud charges related to his business ventures. The Securities and Exchange Commission also has a civil complaint pending against Peterson alleging multiple counts of securities fraud.
For example, the oft-gridlocked FEC, whose commissioners agree on almost nothing, have nevertheless been united in asking Congress for more authority to deal with scam PACs.
But to date, Congress has ignored the FEC’s requests.
Unscrupulous PACs could continue to hoodwink less sophisticated donors, commissioners and campaign finance experts say, as efforts to tighten PAC rules and increase oversight have so far failed.
In other words, the FEC can’t really do much to shut down these groups, even if they do have the mailing address of a state prison, as is the case with Pesce’s PAC.
(Update: 10:51 a.m., April 7, 2017:The FEC on April 6 sent Pesce a letter asking him to verify the accuracy of his "Impeach the Assole" PAC filing. The letter reminds Pesce that it's illegal to "knowingly and willfully" make a "materially false, fictitious, or fraudulent statement or representation to a federal government agency" and asks him either verify the accuracy of his PAC filing, amend any false information or withdraw the filing. Pesce has until May 6 to respond.)
In 2004, Pesce stole $93,534 from a woman by falsely presenting himself as a commodities trader, according to a DuPage County, Illinois, press release. Pesce pleaded guilty to theft by deception but fled before he was sentenced in absentia to 10 years in prison.
Police arrested Pesce in 2014. He began serving his sentence in Taylorville in 2015, according to Illinois Department of Corrections records.
Illinois Department of Corrections spokeswoman Nicole Wilson said inmates are permitted to receive money electronically. And while Illinois corrections law prohibits inmates from “engaging in an unauthorized business venture,” it’s silent on the specific issue of inmates forming political committees.
Pesce “would be wholly responsible for complying with any laws and regulations governing political action committees,” Wilson said.
The FEC forms he submitted included a notice that PAC filings with “false, erroneous, or incomplete information” are subject to civil and/or criminal penalties.
For 11 years, Karla Quezada assembled sandwiches at the Subway in the food court of the Ronald Reagan Building and International Trade Center, a sprawling complex in downtown Washington, D.C., owned by the U.S. General Services Administration.
She routinely worked more than 40 hours a week, with no overtime pay. She worked holidays, also without extra compensation. Her paychecks took a hit whenever she stayed home sick.
"I knew it was a federal building, but since everyone else was paying low wages, too, I just figured that's how it was supposed to be," Quezada, 40, said in a recent interview at her home in Arlington, Virginia.
Actually, that’s not how it’s supposed to be. But each year, thousands of contractors enriched by tax dollars skirt federal labor laws and shortchange workers. In fact, U.S. Department of Labor data show that upwards of 70 percent of all cases lodged against federal contractors and investigated by the department since 2012 yielded substantive violations.
But many of these violators go on to receive more federal contracts. An Obama administration effort to change that practice was derailed in late March by President Donald Trump.
The Center for Public Integrity examined a subset of 1,154 egregious violators — those with the biggest fines, highest number of violations or most employees impacted — included in the Labor Department’s Wage and Hour Division enforcement database and cross-referenced them with more than 300,000 contract records from the Treasury Department. The Center found that between January 2015 and July 2016:
Federal contractors account for almost a quarter of the American workforce and took in more than $470 billion in taxpayer funds in 2016, according to USASpending.gov. But the government’s methods for tracking labor-law scofflaws are unreliable, making it easy for violations to go unnoticed. Even when violations are documented, they rarely play a role in contracting decisions.
The Labor Department tried to address the problem in 2016 with a rule that would have required federal contractors to disclose wage and safety violations and come into compliance with the law if they wanted to keep doing business with the government. Invoking a statute rarely used prior to the Trump administration, however, Congress voted to undo the regulation — already on hold because of a legal challenge — and Trump sealed its fate with his signature.
In a statement in February, the White House said the rule “would bog down Federal procurement with unnecessary and burdensome processes…” Now that it has been repealed, labor advocates say more cases like Karla Quezada’s can be expected.
In 2013, having worked at Subway more than a decade, the native of El Salvador filed a complaint with the Labor Department, seeking thousands of dollars in back pay. She recalls regularly working up to 15 hours of overtime each week, but says she was never paid the time-and-a-half owed to her under the Fair Labor Standards Act. Some weeks, her pay stub wouldn’t explicitly say how many hours she had worked; other weeks, she would get two stubs — as if she had worked less than 40 hours at separate Subway locations.
“Sometimes, out of necessity, you just work,” Quezada said in Spanish. “I’m a single mom, and I would work from 6 to 6 sometimes, more than 40 hours. To me, the check seemed okay, but I’ve come to realize they were cheating.”
Quezada and other food-court workers at the Reagan building, organized by the labor group Good Jobs Nation, went on strike 15 times from 2013 to 2016. Management, she said, cut her hours sharply in response and threatened to call immigration officials on workers who were undocumented. Quezada, a permanent U.S. resident, said she encouraged them to continue striking.
In 2014, the White House recognized Quezada as a “Champion of Change" for her efforts. But the reduction in her hours forced her to quit, she said. She took on two part-time jobs that together pay less than her old one, and she and her 12-year-old son had to move into a single room in a relative’s apartment. Her two older children remain in El Salvador.
After two years, the Labor Department found in Quezada’s favor, but the statute of limitations and missing documentation led to an unsatisfying payout: $226.
“I’ve had to deprive my kids of many things,” she said. “We ended up completely screwed."
Investigators determined that the Subway in the Reagan building owed eight workers, including Quezada, about $3,000 in back wages. They opened investigations into the eight other Subways owned by Quezada’s employer, Amer Ghalayini, and found wage violations affecting 28 workers.
The Labor Department reached a settlement with Ghalayini, who agreed to pay more than $33,000 in back wages and damages while admitting no wrongdoing. The department also found overtime and minimum-wage violations at four other restaurants in the Reagan building’s food court.
The Subway that employed Quezada is licensed by Trade Center Management Associates, which holds a contract with the General Services Administration to operate restaurants in the Reagan building. Officials at Subway’s corporate offices and at Trade Center Management Associates declined to comment.
Reached by phone, Ghalayini disputed Quezada’s claims but declined to elaborate.
“What happened, happened,” he said.
‘I feel like I’m being robbed’
In theory, ensuring federal contractor compliance with labor laws should be easy. In practice, it’s complicated.
The task of policing the nation’s businesses lies with the Labor Department’s Wage and Hour Division. Established under Franklin D. Roosevelt and long housed in the department’s Employment Standards Administration, the division enforces laws governing pay, family and medical leave and visas, among other things. When the administration was abolished in 2009, its four components — Wage and Hour and the offices of Federal Contract Compliance Programs, Labor Management Standards and Workers’ Compensation Programs — became stand-alone divisions. Since then, the Wage and Hour Division’s budget has remained relatively flat; it was $227.5 million in fiscal year 2016.
The division relies heavily on complaints from workers to identify delinquent employers, placing the workers in a precarious position while they try to retrieve the wages they believe they're owed. Once a case enters the system, it can stagnate because of employer appeals or disputes over legal technicalities.
In fiscal year 2011, the division took, on average, six months to resolve a complaint and closed 33,000 cases. In fiscal year 2016, the average complaint was resolved in four months but only 29,000 cases were closed.
It’s often hard for workers to know what exactly constitutes wage theft — a $50 billion-a-year problem in the U.S., one 2014 study found — since it can take so many forms. Employers can skirt overtime regulations or artificially depress wages. Or, workers can be asked to perform increased responsibilities without a corresponding bump in pay, a potential violation.
Obama’sFair Pay and Safe Workplaces order, which led to last year’s rule, was supposed to ensure that wage and other labor violations were taken into consideration during the contracting process. The order came on the heels of a 2013report by Senate Democrats, which found that 49 companies collectively cited for 1,776 violations between 2007 and 2012 were awarded $81 billion in federal contracts in 2012.
When contractors don't follow the law, workers like Latoya Williams feel the squeeze.
As a senior customer service representative for a subcontractor to the Federal Emergency Management Agency, Williams spends her days helping agents, homeowners and mortgage companies untangle the details of the National Flood Insurance Program. Most calls are routine, but sometimes distraught homeowners need help filing a claim.
“You have to let people know that you care — like, you really care,” said Williams, who lives in Kensington, Maryland, and has worked at Lionel Henderson & Co. for six years. “Someone just lost their whole house underwater, [and] you want me to be on the phone just straight talking about policies? No. I want to know how you’re doing.”
Williams can empathize with the callers: She was homeless for her first two years on the job, paying friends who let her stay with them.
“I understand the struggle,” Williams said. “I understand what it is to lose everything, to not have somewhere to lay your head at night. I put myself [in their place] when they call.”
Williams is paid $14.28 an hour by Lionel Henderson, a subcontractor until recently to Aon National Flood Services Inc., which has a contract with FEMA, worth up to $163.4 million, to administer the flood insurance program. Under prevailing-wage classifications in the Service Contract Act, she should be getting between $16.24 and $18.74 an hour, according to the Communications Workers of America, which filed a complaint with the Labor Department in December seeking back wages for Williams and her colleagues. The department opened an investigation of Williams’ case in March.
Reached by phone at Lionel Henderson’s corporate office in Atlanta, the company’s human resources director, Alanna Smith, declined to comment.Torrent Technologies Inc. won the FEMA contract in September, but won't begin administering it until later this year. Torrent's chief executive officer, Ian Macartney, said the company had no role in deciding Williams's pay.
Today, Lionel Henderson’s starting pay for a customer-service representative with two years’ experience is 22 cents an hour higher than what Williams makes after six. Williams said she has trained company representatives who perform the same duties as she does but earn more. “And I’m just sitting there like — I feel like I’m being robbed.”
An asthmatic, Williams said she can’t afford inhalers on her current salary. Nor can she afford doctor copays. Some months, she gets donations from churches, takes out small loans or calls her parents to see if they can help with expenses. To supplement her income, she styles hair out of her home on weekends. She takes just a few clients because a bulging disc in her back makes it hard to stand for long periods.
“I’m a hard worker,” Williams said. “And, you know, when you tell people where you work, they’re like, ‘Aw, man, you’re working there? I know you making good money.’ But you’re just sitting there like, ‘Only if you knew.’”
Uncertain future for wage enforcement
It’s unclear how the Trump administration will approach enforcement of the nation’s panoply of labor laws, from the Family and Medical Leave Act, which provides employees with unpaid maternity and health leave, to the Davis-Bacon Act, which sets a prevailing wage for workers on government construction jobs.
Trump has tapped R. Alexander Acosta — dean of the Florida International University law school — to lead the Labor Department. Acosta is a former member of the National Labor Relations Board and a former U.S. attorney for the Southern District of Florida. The previous nominee, fast-food executive Andrew Puzder, withdrew amid outcry over his support of workplace automation, an undocumented housekeeper he employed tax-free, and domestic violence allegations stemming from his 1987 divorce.
Days after his inauguration, Trump issued an order to freeze hiring throughout the federal government, raising concerns that the much-criticized Wage and Hour Division may end up losing ground. Trump’s fiscal year 2018 budget calls for an overall Labor Department cut of 21 percent. The department did not respond to interview requests.
The Wage and Hour Division had been in the midst of an overhaul following missteps during the George W. Bush administration. In 2009, the Government Accountability Office reported that the division had mishandled nine of every 10 complaints lodged by auditors posing as victims of wage theft.
“Far too often many of America’s most vulnerable workers find themselves dealing with an agency concerned about resource limitations, with ineffective processes, and without certain tools necessary to perform timely and effective investigations of wage theft complaints,” the GAO concluded.
On one occasion, an auditor posing as a janitor claimed to have been paid less than the minimum wage. The Labor Department investigator didn’t try to call the fictitious employer until months later, didn’t respond to the complainant when he tried to follow up and ultimately suggested he look for another job instead of pursuing his case. The complaint was never recorded in the Wage and Hour Division’s database.
The sting operation was a black eye for the department and led to the hiring of about 300 investigators early in Barack Obama's first term.
In May 2014, the division got its first permanent administrator in a decade: David Weil, a Boston University professor who had been fiercely critical of the Labor Department’s ability to oversee work-on-demand employment and the proliferation of subcontractors hired to do what were once core company functions. The number of investigators had dropped steadily during the Bush administration, from a high of 949 to a 40-year low of 731 investigators in 2008, shortly before Obama took office.
Under Obama, the number of investigators jumped to about 1,000 — the highest level since the 1980s. Even so, the division is stretched thin: those investigators must monitor 7.3 million businesses.
The division investigated 2,025 cases involving federal contractors in 2016. It found violations in 77 percent of these cases.
“If you get the benefit of doing work for the public through a federal contract, you should be treating your workforce in the way we as a society have said is the appropriate way,” Weil said in an interview in December. “You should be models of what we do.”
Last fiscal year, the division found 32,487 violations of the Service Contract Act, which sets prevailing wages and benefits for workers on most service contracts, and 12,567 violations of the Davis-Bacon Act. The Contract Work Hours and Safety Standards Act, which applies to construction contracts, accounted for 4,044 violations in 389 cases.
In all, the division found, nearly 32,000 federal contract workers were owed slightly more than $50 million in back pay due to wage-law violations.
Violators during the 18-month period covered by the Center’s analysis include names familiar and arcane. Sterling Medical Associates, a healthcare provider that holds at least $53 million in contracts with the Department of Veterans Affairs and other agencies, was flagged for 730 violations and ordered to pay nearly $1.6 million in back wages. Cornell University, which received around $21 million worth of contracts with various agencies, recorded 1,460 violations and was told to repay nearly $200,000. Corrections Corporation of America, the nation’s second-largest private prison firm, received more than $500 million in contracts with the departments of Justice and Homeland Security. It had 750 violations and had to pay more than $600,000 in back wages.
Officials with Sterling Medical Associates and Cornell University did not respond to requests for comment. A spokesman for Corrections Corporation of America, recently rebranded as CoreCivic, said that both of the facilities where the Labor Department found wage violations are in compliance with the Service Contract Act today.
‘Burdensome new regulatory regime’
During the most recent fiscal year, the government entered into or modified contracts with nearly 70,000 companies or their subsidiaries to deliver hundreds of thousands of distinct goods and services.
To figure out which companies to hire, agencies begin by posting solicitations, usually on FedBizOpps.gov, where registered contractors can sift through opportunities. When an agency puts out a solicitation, dozens of companies might submit proposals. Each one, in theory, should be vetted to ensure it is a cost-conscious, responsible seller.
Federal guidelines offer some clues along these lines: How solid are the company’s finances? How did it perform on previous contracts, if any? Businesses that fall into certain categories — including small, veteran and minority-owned enterprises — may be given preference.
When contracting officers need to research a company’s history, they can access the Past Performance Information Retrieval System, or PPIRS. But the information kept in the database doesn’t include contractor compliance with labor laws. And some of the data PPIRS pulls in from other databases like the Federal Awardee Performance and Integrity Information System or FAPIIS, is not reliable.
The 2013 Senate report, for example, found that energy company BP had no misconduct entries in FAPIIS related to the 2010 Deepwater Horizon offshore oil rig explosion, which killed 11 workers and sullied the Gulf of Mexico with 4 million barrels of crude oil. The accident prompted the U.S. Environmental Protection Agency to ban BP from all federal contracts for 16 months, but the ban wasn’t reflected in the database.
The Office of Federal Procurement Policy, which oversees contracting standards, issued a memo in 2013 calling for staff to submit company performance reviews more often. It found that such reviews were entered less than 30 percent of the time at some agencies, leaving the government "vulnerable to poor acquisition outcomes in the future.”
Obama’s executive order expanded procurement guidelines to include a review of would-be contractors’ labor records. The subsequent Labor Department rule required contracting staff to consider a company’s history of compliance with 14 labor laws. Among them were the Fair Labor Standards Act, which covers wages; the Occupational Safety and Health Act; and laws forbidding discrimination on the basis of race, sex, religion and disability, to name a few. The rule required any company seeking a contract to check a box to indicate whether it had blemishes on its record, going back three years.
The vehicle for the rule’s undoing by Congress was the rarely used Congressional Review Act, through which recently finalized regulations can be dismantled by simple majorities in the House and Senate. The act prohibits federal agencies from crafting similar rules in the future unless authorized to do so by Congress.
Even without the short-lived regulation, companies that break the law on a federal job can be debarred or suspended from receiving further contracts. Last year, the Labor Department debarred 49 firms.
“The [Obama] executive order was not intended to deny a contractor an award, or to send them to suspending and debarring; it was about getting them into compliance,” said Lafe Solomon, who joined the Labor Department in 2014 to develop what became the Fair Pay and Safe Workplaces rule. Specialists would help agencies decide how to address violations by contractors. Companies with more serious violations would be allowed to develop corrective plans.
Among the 939 written comments on the rule sent to the Labor Department were letters of support from groups such as the International Association of Machinists and Aerospace Workers and individuals such as William Clegg, who used to work for a halfway house under contract with the federal government in Greensboro, North Carolina.
“If I hadn't been living with my mother, I would have been sleeping on the street with what I was getting paid and would have been forced to go on public assistance,” Clegg wrote. “How safe do you think our communities [will be] when we can't pay a living wage to those that assist with our safety?”
But the rule was wildly unpopular with many contractors and their trade associations. Associated General Contractors of America, for example, denounced an early version as “unfounded, unnecessary, unworkable and unlawful.”
The AGC’s regulatory counsel, Jimmy Christianson, elaborated in an interview. The government, he said, should improve its own contractor vetting instead of laying the burden on companies.
"You're the federal government,” Christianson said. “You're the ones that are citing the contractors, don't you have the information? Why does the contractor have to report it? Isn't that kind of a joke?"
Two other trade groups went further than AGC. In October, Associated Builders and Contractors and the National Association of Security Companies sued the Labor Department and other agencies responsible for the rule’s implementation weeks before its first phase was to kick in. The groups called the rule unlawful, saying contractors could be penalized for cases that had been settled with no admissions of guilt or were still being contested.
“A cumbersome and burdensome new regulatory regime is being created to implement this misguided executive policy, which … violates the rights of government contractors, at considerable cost and with no benefits to taxpayers,” the complaint said.
A federal district court in Texas agreed that the groups had a strong case. The night before the rule was to have gone into effect, Judge Marcia Crone, who was appointed by President George W. Bush in 2003, enjoined most of its requirements, though one aspect was preserved: paycheck transparency. Employers that received contracts after January 1 had to give employees breakdowns of their pay rates and benefits so they could monitor their own paychecks for accuracy.
On the Senate floor March 6, Sen. Elizabeth Warren, D-Mass., urged her colleagues not to side with vested interests and vote for a resolution that would spell near-certain doom for the rule. “Instead of creating jobs or raising wages, they’re trying to make it easier for the companies that get big-time, taxpayer-funded government contracts to steal wages from their employees and injure their workers without admitting responsibility,” she said.
But the political muscle of government contractors is hard to overestimate.
In fiscal year 2016, the defense industry, which did $297.5 billion in business with the government, collectively spent $126 million on lobbying and gave almost $13 million to candidates for federal office — 59 percent to Republicans and 41 percent to Democrats, according to data compiled by the Center for Responsive Politics.
The construction industry, whose contracting totaled $28.6 billion, spent $52.2 million on lobbying and gave $32.6 million to candidates for federal office – 67 percent to Republicans and 33 percent to Democrats.
‘We just get by check to check’
When the U.S. Army was deciding whether to keep doing business with a cleaning company it employed at Fort Belvoir in Virginia, it checked the company’s record in the Federal Awardee Performance and Integrity Information System. FAPIIS is supposed to record contractors’ most serious missteps; the company, Brown & Pipkins, had a clean record. It hadn’t been debarred or suspended, nor had it been found guilty of defective pricing, human trafficking, or anything else FAPIIS tracks.
What the record didn’t show was that in 2013, a Labor Department investigation found that Brown & Pipkins owed its cleaning staff about $330,000 in back wages. It owed several thousand dollars to one worker: Carlos Umaña, a union leader. He was abruptly fired in December 2012 after he and his colleagues came to work wearing hats bearing the Service Employees International Union’s logo.
“It was our way of showing that we do have a voice in this,” Umaña, 72, said in Spanish during a recent interview in his Silver Spring, Maryland, home.
Umaña began working at Fort Belvoir in 1997. Within two years, the janitorial staff decided to join SEIU to protect its wages. The Army gives Fort Belvoir’s cleaning contracts to different companies every few years; once Brown & Pipkins took over in 2012, it stopped paying Umaña and 67 workers the wages outlined in their collective bargaining agreement. The Labor Department found that workers were underpaid between $4.08 and $5.73 an hour and didn’t receive paid holidays and sick leave.
After Umaña’s union filed a complaint with the National Labor Relations Board, Brown & Pipkins reinstated him. But during the half-year he was idled, he could find only part-time work. His pay — and wages earned by his wife, Cecilia, who does janitorial work at Walter Reed Army Medical Center — weren’t enough to cover expenses.
“With these jobs, we can’t save,” Cecilia said. “We just get by check to check.”
The Umañas are still working their way through the debt they accumulated. Their financial troubles weigh heavily on their 22-year-old son, who shares his father’s name. Carlos is trying to earn an associate’s degree by taking online classes after work. When his father was fired in 2012, he put off going to college full-time to help with the family’s expenses.
“Who doesn't like seeing they're going to get a job [done] cheaper?” Carlos said. “But there are people attached to it. There's an income attached to it.”
Brown & Pipkins did not respond to requests for comment.
The company reached a settlement with the NLRB over the Fort Belvoir allegations in February 2017. In 2016, it received contracts totaling about $4.5 million from the Army, primarily for janitorial work in Virginia.
A spokesperson for the U.S. Army Contracting Command said the agency considered Brown & Pipkins’ labor record before awarding the contracts, but didn’t find the as-yet unproven allegations to be disqualifying. Data reviewed by the Center show that the Army contracted with 34 companies with wage violations from the beginning of 2015 until mid-2016, for a total of $20 billion.
Trump and federal contractors
In the weeks before Election Day, Donald Trump released a 30-second television message to voters that crystallized his philosophy on how to help the American worker.
The ad — “Deals”—focused on Trump’s plan to renegotiate trade agreements and cut taxes on manufacturers. The voiceover ended with this promise: “Donald Trump knows business and he’ll fight for the American worker.”
Some of Trump’s biggest fights, even before he took office, involved federal contractors.
He threatened General Motors with higher taxes for moving its operations outside of the U.S. He decried “out of control” costs for Lockheed Martin’s F-35 military fighter jet and Boeing’s contract for a new Air Force One, which he suggestedbe canceled.
Since his inauguration, Trump has claimed he spurred job creation by federal contractors Ford, Fiat Chrysler, Amazon, Walmart, GM, Intel, and Lockheed Martin. (All the companies said their investments were in place before Trump took office.)
In December, as president-elect, Trump negotiated with the Carrier Corporation to keep jobs from moving to Mexico in exchange for $7 million in tax credits over 10 years. Trump said the deal saved 1,100 jobs, but union officials said only 730 people would be retained in the U.S. while 553 positions would still move across the border.
Greg Hayes–CEO of Carrier’s parent company, United Technologies Corp. – said “there was no quid pro quo” and that federal contracts were not mentioned during the discussions. But in a CNBC interview, he implied that the company agreed to negotiate, in part, to ensure a good relationship with the administration.
“There was a cost as we thought about keeping the Indiana plant open,” Hayes said. “At the same time … I was born at night, but not last night. I also know that about 10 percent of our revenue comes from the U.S. government.”
United Technologies received about $5.6 billion in revenue from federal contracts in 2016.
Labor organizers such as Joseph Geevarghese, director of Good Jobs Nation, a grassroots organization that advocates for federal contract workers, are hoping Trump will become an ally.
“As the CEO of the United States government, you have an opportunity to negotiate for all federal contractors, right? To make sure that federal contractors don’t screw workers who serve the American people,” Geevarghese said.
Best-case scenario in his view? Trump does what the labor movement spent eight years trying to get Obama to do: give preference in federal contracts to employers that pay “living wages” of at least $15 an hour with benefits, and are neutral on workplace organizing. Worst case? The gains federal contract workers have seen — a higher minimum wage, more benefits and stronger protections against harassment or discrimination — are erased.
Debbie Berkowitz, a senior fellow with the National Employment Law Project and a former senior policy advisor with the Labor Department’s Occupational Safety and Health Administration, said the undoing of the Fair Pay and Safe Workplaces rule was “like the opening salvo of the war on workers.
“The president and [Congress], if they wanted to do something for the American worker, this [was] the rule to keep in place,” Berkowitz said. “It would assure that companies that get taxpayer money to build the planes, provide the food for the military, or build large projects are providing good jobs.”
On a snowy day in February, federal contract workers rallied by Good Jobs Nationgathered outside the Capitol. The rally had been organized to protest Puzder’s scheduled Senate confirmation hearing. When he withdrew the day before, it became a celebration.
“You are the ones who make America great!” Geevarghese shouted into a microphone. “You’re the ones who get up every day and serve the American people! And you should be proud!"
Some workers waved American flags, while others held up cardboard shields etched with the words “Good Jobs Defense,” a campaign of Good Jobs Nation. Supporters, including Warren, Sen. Bernie Sanders, I-Vt., and actor Danny Glover riled up the crowd.
“We have shown that we are watching, we are going to pay attention and we are willing to fight,” Warren said. “And we know that when we fight ...”
“We win!” the audience responded.
“When we fight ...”
“... we win!”
Federal workers, Geevarghese said in an interview, will remind Trump of his promises.
“You won because you said you’re going to be a champion for the working class. Do it. And if you don’t? If you betray us? We’ll resist.”
April 7, 2017: This story has been updated
The “Panama Papers” project published by the Center for Public Integrity’s International Consortium of Investigative Journalists has this week been honored in three prestigious journalism competitions, the latest in a series of awards for the landmark international collaboration.
“Panama Papers” won two prizes in the 2016 Investigative Reporters and Editors Awards: Innovation in Investigative Journalism — Large and the Gannett Award for Innovation in Watchdog Journalism. Judges said the international consortium “showed exceptional ingenuity and skill by developing new tools and approaches that facilitated the unprecedented collaboration, and demonstrated a new model for journalistic cooperation to expose dealings of hundreds of thousands of entities.”
Investigative Reporters & Editors, founded in 1975, is a nonprofit national organization dedicated to training and supporting journalists who pursue investigative stories.
“Panama Papers” also received the O’Brien Fellowship Award for Impact in Public Service Journalism from the American Society of News Editors. Judges in that contest said the project was honored “because of the breadth of its reporting, the strength of the partnership that yielded this effort and the global impact that resulted.”
(Update, April 7, 2017, 9:47 a.m.: The White House Correspondents' Association recognized the project with an honorable mention in its annual journalism awards, as well.)
These latest prizes marked the sixth, seventh and eighth major American journalism awards for “Panama Papers,” which was published last spring. The international consortium was a project of the Center for Public Integrity when the Panama Papers series was published but has since spun off into a separate entity.
The Center for Public Integrity has won a 2017 Pulitzer Prize in the category of explanatory reporting for the “Panama Papers,” a project of the International Consortium of Investigative Journalists. Sharing in the award were McClatchy News and the Miami Herald.
The sprawling, global investigation was spawned by a massive leak of 11.5 million financial and corporate documents that cracked open the world of offshore money laundering and tax dodging by world leaders.
The year-long project included work by Süddeutsche Zeitung, McClatchy, the Miami Herald, Fusion, Swedish Television and more than 100 other news outlets from around the globe and was credited for creating a new model of collaborative journalism.
The Panama Papers project was also a Pulitzer Prize finalist in the category of international reporting.
"This is brilliant — best news ever," said Gerard Ryle, director of the International Consortium of Investigative Journalists. "It really is a testament to teamwork."
Said Center for Public Integrity Chief Executive Officer John Dunbar: “We’re intensely proud of the work of the consortium. Few projects in the history of the Center have had as much of an impact as the Panama Papers."
This is the second Pulitzer Prize for the Center for Public Integrity.
In 2014, a landmark Center investigation detailing controversial denials of black lung benefits to coal miners — “Breathless and Burdened: Dying from Black Lung, Buried by Law and Medicine” — won in the category of investigative reporting. The year-long investigation illuminated how doctors and lawyers working at the behest of the coal industry helped defeat benefit claims of coal miners who were sick and dying of black lung disease.
The Pulitzer is the latest in a slew of awards honoring the Panama Papers project.
Others include the George Polk Award for financial journalism, two prizes in the 2016 Investigative Reporters and Editors Awards the O’Brien Fellowship Award for Impact in Public Service Journalism from the American Society of News Editors and a recognition by the White House Correspondents' Association with an honorable mention.
The International Consortium of Investigative Journalists was a project of the Center for Public Integrity when the Panama Papers series was published last year. It has since spun off into a separate entity.
The Gold Medal for Public Service went to the New York Daily News and ProPublica. Other winners included the East Bay Times, the Charleston Gazette Mail, the Salt Lake Tribune, the Washington Post, the New York Times and the Wall Street Journal.
Founded in 1989, the Center for Public Integrity is one of the oldest and largest nonprofit news organizations in the country. Its newsroom is comprised of reporters, editors and computer-aided reporting experts who dig deep and deliver national and international investigative journalism of enduring significance.
In January, less than a week into his presidency, Trump toldlawmakers that between 3 million and 5 million illegal votes caused him to lose the popular vote — though not the election itself — to Democrat Hillary Clinton. He told senatorsa tale about ineligible voters being bussed into New Hampshire from Massachusetts. Trump then tapped Vice President Mike Pence to lead an investigation into voter fraud.
“You take a look at the registration, you have illegals, you have dead people you have this — it’s really a bad situation, it’s really bad,” Trump told Fox News host Bill O’Reilly in February when asked about election integrity.
That’s not how Matthew Masterson sees it.
The Center for Public Integrity last week spoke with Masterson about a range of election-related topics. Among them: voter fraud and suppression, U.S. House Republicans’ attemptstokill the Election Assistance Commission and his own goals for his one-year chairmanship at the tiny agency.
Formed by Congress after the 2000 presidential election’s Florida voting disaster — remember “hangingchads”? — the Election Assistance Commission largely exists to adopt voting system guidelines, promote election integrity and help states improve their balloting processes.
Masterson joined the Election Assistance Commission in 2014 after serving as a top elections official in Ohio.
This interview has been edited for length and clarity.
Center for Public Integrity:Every time you hear somebody say, “Was the election rigged?”, what do you say to them? Was the 2016 election rigged?
Matthew Masterson: No. The process had integrity. It was extremely well administered. And in the end, the people’s voice was heard and the process served voters well.
Center for Public Integrity:How concerned are you, writ large, about voting fraud, and is this something that is real and something people need to be concerned about?
Masterson: Any fraud at all is something to be concerned about. The reality — and this data and information comes from those who directly run elections — is that the state and local election officials, and specifically the secretaries of state across the country that looked into it, find that fraud happens. It’s not widespread. It’s not an epidemic. But where it happens, it needs to be identified and prosecuted … I would encourage any voter that if they suspect there is fraudulent activity going on to work with their election officials to say something about it, and they can dig into it to find out what the facts are. We really need to look at just the facts. Those who run elections have the facts about this.
Center for Public Integrity:What should voters know about the way elections are run across the country, and what degree of confidence should voters have going forward about the quality of the vote itself?
Masterson: Coming off this election with all the conversation about rigging, hacking and whatnot: Voters should have confidence in the process, that it’s accessible, that it’s accurate, that it has integrity. This year bore this out more so than ever. With all the talk that went on, we talked to state and local election officials coming off the presidential, this was one of the best run federal elections that we’ve had. And that’s a real credit to those who are the boots on the ground, local election officials and the poll workers. The process is secure. It can always get better … [Voters] should know one fact: This election – this election process, this vote, the voting machines – were not accessed, were not hacked. The process was secure. They should also know there are layers of security in place that start long before the election takes place. Election officials start very early with pre-election testing, securing the voting systems, chain of custody procedures. How they train and deploy poll workers and the steps that they take to secure the system. Post-election auditing. These are all steps election officials take to have layers of security in and around the vote tally systems to ensure the process has integrity. This is not new to election officials. This conversation was news to a lot of Americans. Quite frankly, I think election officials did a great job embracing the conversation, saying, let me show you how this process works, let me educate you on the steps we take. The most important thing any voter should know: If they have questions, if they have concerns, they can get involved. They should go be poll workers. They can go watch the election testing of the voting systems. In many states, you can watch the public count of the vote or the post-election audit procedures. There are so many ways for voters to get involved. And I don’t know of an election official in any jurisdiction in the country that wouldn’t take more poll workers and more people involved.
Center for Public Integrity:One concern is the issue of not voter fraud but voter suppression. How big an issue that is, and do you have any evidence of widespread suppression or trying to keep people away from the polls?
Masterson: It’s something election officials hear about all the time. I can tell you my experience in Ohio. When we dug into that. It was virtually non-existent. But to the extent that election officials could, they looked at their processes, looked at ways they could both educate the public on the process to serve voters. It is my opinion, in the vast majority of jurisdictions today in America, it is easier to vote today than it has ever been. We have more days of early voting, more resources available like online registration, more outreach to voters in the form of voter information tools that they know when they can vote, where they can vote, what’s on their ballot. They are all enfranchising matters that election officials across the country have taken. The election community as a whole has really embraced this discussion to say: How can we work to serve voters better? It’s as easy to vote today as it’s ever been.
Center for Public Integrity:You’ve been chairperson for several weeks now since taking over. Talk about some of your top-line goals for the next year.
Masterson: We’re focusing on three main areas moving forward. One is helping election officials both maintain and upgrade the election technology infrastructure. Election officials across the country have aging equipment and are either looking to upgrade or switch out that equipment. And, so, we’re providing a variety of resources to help them do that. That’s everything from requests for purchase that other jurisdictions are putting out across the country with a guide — 10 tips on purchasing new election technology that we have for them to use — and then talking to them about what’s available for them out there and what serves their needs. Voters are looking to vote in ways that fit into their everyday lives. Two: accessibility. Not just in the traditional serving voters with disabilities, which has been a focus for the EAC since it started. But it also means serving voters with language needs. We’re going to have a language summit coming out in the summer to really help those jurisdictions have some resources and some best practices on how to serve these voters who have language assistance needs. And then three: There is this conversation about critical [voting] infrastructure. For election officials, details matter. Any change, and new process, is uncertainty for them. We’re really trying to help cope with that uncertainty by facilitating a dialogue about giving them the resources they need.
Center for Public Integrity:Is your job more difficult in that there are some people on Capitol Hill who would like to see the EAC, as an independent organization, either go away or be wrapped into the Federal Election Commission? How does that affect the work you just described, if at all?
Masterson: Obviously, we’re aware of it, but honestly, it doesn’t impact us. We remain focused on serving the state and local election officials that we work with and making sure that they have the resources available to them. We’re coming off the conversation on Tuesday about critical infrastructure. We’re coming off the most interesting presidential election certainly any of us have ever seen and election officials have real needs and real questions about the security of the systems, the integrity of the process, so we’re working directly with them, as we have all along, to get them the resources they need to serve them well.
Center for Public Integrity:You and your colleagues have recently been to Capitol Hill. What happened?
Masterson: Senators had some questions for us about the security of the process and the steps the EAC took last year to help secure the process. We’re happy to inform them, talk to them, about the work we do, and the great work the election officials do across the country.
Center for Public Integrity:The EAC is celebrating its 15th anniversary as an agency. In your estimation, is the EAC as important today as it was when it was first conceived and created?
Masterson: Yes — absolutely. Our mission remains as important, if not more important as it’s ever been. [Since the Help America Vote Act of 2002], elections have become more and more technological, have evolved. Up to 40 percent of voters now vote before Election Day. That’s a dramatic change in the way we operate and run elections. We have all-vote-by-mail states and innovations around online registration. Our job at the EAC is to recognize those trends and to work with those folks who do really great work out there to share those practices around the country.
Center for Public Integrity:Internet voting is something that gets talked about all the time. Do you see this happening in the next couple of years – or the next couple of decades?
Masterson: Some states are already doing it to serve a very specific population – and that’s military and overseas voters. It’s our job, if that’s how they’ve best found to serve those voters, to provide resources to help them do that well. As far as the long-term discussion around widespread internet voting: It is one of the most common questions election officials are asked. But the security risks around it are real, and I think we heard a lot of that conversation this last election cycle. As we look at the implications of internet voting on a wide scale, likely the security challenges are too great to overcome right now, but it is a conversation that is going to continue on as we look to the future, because election officials are asked about it, and there’s an expectation. But we’re not there yet.
Center for Public Integrity:What states are doing a good job at running elections? And what states need improvement?
Masterson: It’s hard for me to judge one state over another. But there are lots of states out there doing great work on this. One example is the states that have joined data sharing efforts where they’re exchanging data both within the states and across states to really identify: Where do we have duplicates? Where do we have deceased voters? Where do we have voters who’ve moved, and how do we reach out to them to make sure their information is up to date? The voter rolls today are in the best shape they’ve ever been in because of efforts like that by the states.
Center for Public Integrity:When the president’s budget proposal came out, there was a number of smaller agencies that had their budgets zeroed out. The EAC was not on that list. Does it give you some confidence that the president believes that you’re an agency worth keeping?
Masterson: We were thrilled to see that we’re in the budget. It’s an affirmation of the work that we’ve been doing. The agency’s existence is serving its purpose. With that reaffirmation comes a recommitment to us to every day evaluate what we’re doing and how we can really serve voters and election officials to fulfill our mission. Sure, we’re pleased to see that. But at the same time it’s a chance for us to make sure we remain focused on our goals and mission moving forward.
Center for Public Integrity:That all being said, your budget from your creation to this day has slid over the years. You’re not as financially robust or funded as you once were. Do you have the resources internally that you need, as far as you’re concerned, to do your work?
Masterson: We don’t know our number yet. We just know we are not on that list. But if reflective of where we’ve been, I think the EAC has what it needs to move forward. We’ve done great work with the resources we have. That’s exactly what we’ll continue to do. If we continue to be funded at the level we’re at, we’re thankful for that, and we’ll take that and use it to fulfill our mission.
Center for Public Integrity:Do you see voting as a partisan issue? Has it become a partisan issue?
Masterson: Coming from a state like Ohio, certainly there’s a tendency to have that conversation within the legislature. What I can tell you is my experience with election officials is that most if not all the issues are completely nonpartisan. To be honest, that’s how we try to model ourselves here at the EAC, as well. The three commissioners work together incredibly well to serve voters and election officials in a way that benefits the process. That’s a nonpartisan issue. The ability for every eligible citizen to exercise their rights should be a nonpartisan issue. We should want that. That’s the attitude election officials have across the country.
Center for Public Integrity:What would you like voters to know going into the gubernatorial elections that come up in 2017, and of course the midterm elections in 2018, about how good the system is and how to make it better.
Masterson: What I’d like voters to know most is that every vote matters. If you look at state and local elections across the country, there are hundreds if not thousands decided by one or a tied vote. Every vote matters. They need to take that seriously and invest the time they need to go vote in all of these elections. If they have questions about the process, they should go get involved with their local election office.
The Center for Public Integrity has won the National Press Foundation’s 2016 Thomas L. Stokes Award for Best Energy Writing for its investigation into the nation’s worst fossil fuel polluters.
“CPI combined two databases to create a list of the worst of the worst polluters, producing a data-driven investigation exposing government laxity, coal industry indifference and the human toll on workers and communities. Methodically filing 50 state FOIA requests, the Center also unmasked state-level regulatory cutbacks at a time many areas seek to rein in pollution.”
The Center’s exhaustive coverage of energy and environmental issues previously won the Stokes Award in 2011 and 2014.
Honorable mention went to E&E News for “Dead Seas.” NPF judges said it is “a compelling classic explainer that shows how missteps and misjudgments turned the salt lakes of the West into toxic dust bowls.”
The winning entry, “Carbon Wars,” included stories "America’s Super Polluters,”"Get someone up here. We’re all dying" and "State cutbacks, recalcitrance hinder Clean Air Act enforcement."
The authors included Jamie Smith Hopkins, Jim Morris and Jie Jenny Zou. The striking graphic that accompanied the 'Super Polluters' piece was created by Chris Zubak-Skees.
"The project was a remarkable piece of work," said Center CEO John Dunbar. "The combination of the compelling narratives with the enormously useful and popular interactive feature made the package incredibly valuable to those who live in these at-risk communities."
The Center partnered with Gannett and Weather.com, which produced a documentary based on the series.
The Stokes Award was established in the spring of 1959 by friends and admirers of the late Thomas L. Stokes, the syndicated Washington columnist on national affairs. It is given annually for the best writing “in the independent spirit of Tom Stokes” on subjects of interest to him, including energy, natural resources and the environment.
This year’s judges were Rod Kuckro, a reporter for Energy & Environment Publishing; Ronnie Greene, Washington enterprise editor for Reuters; and Tom Davidson, senior director at Gannett Product. The judges noted the strength of the 49 entries for the Stokes award this year.
The primary mission of the National Press Foundation is to increase journalists’ knowledge of complex issues in order to improve public understanding. The nonprofit foundation recognizes and encourages excellence in journalism through its awards and programs.
Georgia’s 6th congressional district is filled with homey, community charm: tree-lined streets, meandering rivers and picturesque parks. Its solidly red politics are usually just as tranquil.
But Tom Price, the district’s longtime Republican U.S. House member, stepped down earlier this year to join President Donald Trump’s Cabinet. That sparked Tuesday’s specialelection to fill his seat, which has suddenly made the district the unlikely focus of national political interests willing to spend unprecedented amounts of money.
The barrage of TV ads, email messages and robo-calls, often from organizations headquartered hundreds of miles away, have left some district residents feeling like pawns, not players, in their own congressional election — and some candidates as if they’ve lost control of the race.
“I’m concerned that the election could be decided by the influences coming from the national level and not from within Georgia,” said Liz Hausmann, director of public affairs for the Greater North Fulton Chamber of Commerce.
Federal campaign finance disclosures bolster that notion: Through Sunday, super PACs, nonprofits and other groups independent of any candidate’s campaign have spent $9 million on the Georgia 6th race.
Just one of these outside groups spending money to influence the Georgia 6th election — Athens, Georgia-based Better Georgia Inc. — is headquartered within state lines. Better Georgia Inc.’s $1,070 in spending, all to support Democratic front-runner Jon Ossoff, accounts for less than one one-thousandth of overall non-candidate spending.
Said another way: When the candidates’ own campaign money is excluded, the Georgia 6th special election has attracted about one Georgia penny for every $10 in national cash, according to a Center for Public Integrity analysis of federal campaign finance disclosures.
Price, who is now Trump’s secretary of health and human services, had cruised to re-election every two years since he first won the seat in 2004, which means this special election is the first time the district has seen more than negligible spending by outside groups.
Many cash-flush organizations such as the pro-Republican Congressional Leadership Fund, the National Republican Congressional Committee, the 45 Committee, the National Rifle Association and Planned Parenthood, are spending money in the district for the first time this century.
The Congressional Leadership Fund’s ad blitz has been particularly scathing, with one spot panning Ossoff for his college glee club stylings and dressing up as Star Wars’ Han Solo. The super PAC is funded in large part by GOP megadonors such as billionaire casino mogul Sheldon Adelson and his wife, Miriam Adelson; Houston Texans owner Robert McNair and fossil fuel giants Chevron and Devon Energy.
So far, Ossoff has raised far more money than any of his 11 Republican opponents. In fact, he’s raised more than all of them put together.
But outside organizations have rushed in to make up the difference: about 65 percent of all non-candidate money spent so far — $5.8 million —has gone toward opposing Ossoff.
“This is a new experience for Georgia,” said Amy Morton, chairman of the Better Georgia, a nonprofit. “Georgians aren’t used to this saturated political environment.”
Even though Georgia’s 6th district has traditionally been safely Republican, Ossoff — a 30-year-old documentary filmmaker, small business owner and national security staffer for Rep. Hank Johnson, D-Georgia — is making a serious bid to win without a runoff election, a feat that would require him to get more than 50 percent of the vote Tuesday. Polls show him within striking distance of that mark.
His campaign message reflects the race’s national tinge: “Make Trump Furious.” And a big chunk of his own $8.3 million campaign war chest comes from people who don’t live in the Peach State.
About $4 out of every $5 dollars Ossoff’s own campaign has raised from big-dollar donors — those giving more than $200 — come from outside of Georgia, according to a Center for Public Integrity analysis of federal campaign finance records. That’s a sign of the high stakes the race has for Democrats nationwide who are eager for a win.
William Pearce, a California professor who gave Ossoff $240, said he’s hoping his contribution helps counteract megadonors who give outside groups seven-figure checks.
“I wish all politics were truly local, where local money would go to local elections, but that’s just not the system that campaign finance laws have given us,” Pearce said.
Ossoff has also raised $5.6 million from small-dollar contributors who aren’t required to publicly disclose their names or addresses.
Keenan Pontoni, Ossoff’s campaign manager, said that the average contribution to Ossoff’s campaign for a small-dollar donation is $42. Pontoni sees this average as proof of Ossoff’s grassroots support base.
In contrast Republican candidates are relying more heavily on home-grown donations, but they’re getting far fewer.
For example, just 23 percent of Republican candidate Karen Handel’s big-dollar contributions — more than $200 per donor — came from out-of-state sources, but she’s only raised $421,000. About 44 percent of the big-dollar donations Republican candidate Bob Gray received came from outside the state – he’s raised just over $230,000.
The Republicans, though, are getting far more outside help. The Congressional Leadership Fund and the National Republican Congressional Committee, both headquartered in Washington, D. C., have funneled millions into Georgia, mostly in the form of television advertisements to either boost a candidate they like or malign one they don’t.
“The NRCC has invested in this race because we intend to keep the seat out of Jon Ossoff’s hands,” NRCC spokeswoman Maddie Anderson said.
The NRCC’s partisan counterpart, the Democratic Congressional Campaign Committee, hasn’t spent money on TV ads or other pro-Ossoff messaging, according to records filed with the Federal Election Commission.
Nevertheless, the DCCC has been firing off a string of Georgia 6th-themed fundraising messages to supporters, such as one Monday with a subject line that whines: "kiss all hope goodbye." The message reads: “It’s going to take a tremendous wave of grassroots support to fund the resources we’re rushing to Georgia TONIGHT. Will you pitch in $1 before midnight to defeat Republicans in Georgia and nationwide?”
A DCCC representative did not return requests for comment.
Pontoni, Ossoff’s campaign manager, says national conservative interests are spending big simply because they’re afraid of “someone with a background of rooting out corruption threatens their stranglehold over purse strings in Washington.” Therefore, he added, it is “not surprising that they’ve spent millions of dollars on cynical, partisan attack ads in a desperate effort to distract voters and prevent us from having a substantive discussion of the issues.”
Handel, the leading Republican candidate in the crowded special election field, has benefitted from more than $1 million spent by conservative super PACs to boost her.
But not all conservatives do: right-leaning group Club for Growth Action has put in nearly $440,000 to oppose her, mostly in the form of negative television and online ads. Handel’s campaign did not return the Center for Public Integrity’s request for a comment.
Keith Grawert, another Republican candidate, is concerned that the fractured Republican field and independent spending by Republican-allied outside groups will splinter the voter base, giving Ossoff the victory.
“It’s not value-added stuff,” said Grawert, who argued negative attack ads from outside groups distract from the problems of the people in his district.
Grawert added that money is “drowning out the opportunity for the people of Georgia have their voices heard.”
Cobb County, Georgia, resident Amber Harris said she saw pro-Ossoff campaign advertisements on TV and decided to vote for him.
“I usually vote Republican, but I think they are turning a blind eye to what Trump is doing. I’m angry and I know a lot of other women feel the same way,” said Harris, who said her vote is motivated by her strong opposition of Trump, not necessarily her support for Ossoff. “I see a lot of Ossoff yard signs on lawns of people I know usually vote Republican.”
If Ossoff fails to win more than half the vote Tuesday, a special election runoff between the top two finishers would be scheduled for June 20— giving national political groups more than two more months to fight their proxy battle in suburban Atlanta.
Sen. Chuck Grassley, R-Iowa, wants federal health officials to tighten scrutiny of private Medicare Advantage health plans amid ongoing concern that insurers overbill the government by billions of dollars every year.
Grassley, the influential chairman of the Senate Judiciary Committee, has asked Centers for Medicare and Medicaid Services (CMS) officials to explain why they failed to collect nearly $125 million in potential overcharges identified at five Medicare Advantage plans audited in a single year.
In an April 17 letter to CMS Administrator Seema Verma, Grassley cited an article on alleged overcharges published in January by Kaiser Health News and the Center for Public Integrity. The story said that Medicare had potentially overpaid five health plans $128 million in 2007, but under pressure from the insurance industry, collected just $3.4 million and settled the cases.
“The difference in the assessment and the actual recovery is striking and demands an explanation,” Grassley wrote.
CMS officials did not respond to requests for comment.
Medicare Advantage is a popular alternative to traditional Medicare. The privately run health plans have enrolled more than 18 million elderly and disabled people — about a third of those eligible for Medicare — at a cost to taxpayers approaching $200 billion a year. The plans also enjoy strong support in Congress.
Medicare is supposed to pay the health plans higher rates for sicker patients and less for people in good health using a formula called a risk score.
Yet CMS records reveal that billions of tax dollars are wasted annually partly because some health plans exaggerate how sick their patients are by inflating risk scores and boosting their payments improperly.
Grassley asked in his letter what steps CMS is taking “to ensure that insurance companies are not fraudulently altering risk scores” and how many audits are now being conducted.
“By all accounts, risk score gaming is not going to go away. Therefore, CMS must aggressively use the tools at its disposal to ensure that it is efficiently identifying fraud and subsequently implementing timely and fair remedies,” he wrote.
Grassley also noted that CMS needs to step up oversight audits because Medicare Advantage plans are expected to grow substantially in coming years.
“The use of these tools is all the more important as Medicare Advantage adds more patients and billions of dollars of taxpayer money is at stake,” Grassley’s letter said.
The Government Accountability Office, the watchdog arm of Congress, has sharply criticized CMS for its failure to ferret out overcharges and in April 2016 called for “fundamental improvements” in audits of Medicare Advantage plans. GAO also found that CMS has spent about $117 million on Medicare Advantage audits, but recouped just under $14 million overall.
Medicare Advantage plans have been the target of at least a half-dozen whistleblower lawsuits alleging patterns of overbilling and fraud. In March, the Justice Department joined one such suit against insurance giant UnitedHealth Group. The suit alleges that the health plan submitted claims for underpayments to the government, but ignored examples in which it had received too much money.
The audits disclosing the $128 million in overpayments to health plans were part of a cache of confidential CMS documents released through a Freedom of Information Act lawsuit filed by the Center for Public Integrity.
The CMS records identify the companies chosen for the initial Medicare Advantage audits as a Florida Humana plan, a Washington state subsidiary of United Healthcare called PacifiCare, an Aetna plan in New Jersey and an Independence Blue Cross plan in the Philadelphia area. The fifth one focused on a Lovelace Medicare plan in New Mexico, which has since been acquired by Blue Cross.
In the audits, CMS repeatedly found that the health plans couldn’t document their patients were as sick as the insurer had claimed.
For example, auditors couldn’t confirm that one-third of the diseases the health plans had been paid to treat actually existed, mostly because patient records lacked “sufficient documentation of a diagnosis.”
Overall, Medicare paid the wrong amount for nearly two-thirds of patients whose records were examined; all five plans were far more likely to charge too much than too little. For 1 in 5 patients, the overcharges were $5,000 or more for the year, according to the audits.
America’s Health Insurance Plans, an industry trade group, has denied that Medicare Advantage plans overcharge. The group argued in a June 2016 position paper that the auditing method used by CMS was “not yet stable and reliable.” The group also said that conducting audits “could disrupt the care being provided by plans that are working hard to meet the needs of their enrollees.”
Grassley cited reports by the Center for Public Integrity that improper payments to Medicare Advantage plans cost taxpayers as much as $70 billion from 2008 to 2013. He said that CMS’ estimate that it had overpaid the five health plans $128 million “appears low and could very well be just the tip of the iceberg.”
Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation. Schulte, formerly of the Center for Public Integrity, is now a senior correspondent at Kaiser Health News.
Numerous corporate powerhouses and individual business titans — including fossil fuel, financial and food and beverage interests with lucrative business before the federal government — helped fund President Donald Trump's inauguration, according to a new disclosure filed with the Federal Election Commission.
The donations earned contributors exclusive access during inauguration weekend to Trump, his family, top administration officials and exclusive events conducted on January 20 and January 21 in Washington, D.C.
Top individual donors were led by billionaire casino mogul and top Republican donor Sheldon Adelson, at $5 million, according to an initial Center for Public Integrity review of the Trump inauguration disclosure.
At least six National Football League franchise owners each gave Trump's inaugural committee $1 million: Dan Snyder of the Washington Redskins, Shahid R. Khan of the Jacksonville Jaguars, Stan Kroenke of the Los Angeles Rams, Robert McNair of the Houston Texans, Woody Johnson of the New York Jets and Robert Kraft of the New England Patriots through his holding company, Kraft Group LLC. (The NFL's marketing and promotions arm, NFL Ventures LP, added $100,000.)
Dallas Cowboys owner Jerry Jones also appears to have given $1 million — in a most roundabout fashion. The Trump inauguration disclosure lists "Glenstone Limited Partnership" of Texas as a $1 million donor. State corporate records list a "Glenstone I Limited Partnership." This entity has one director: Glenstone Corporation, which lists "Jerral W. Jones" as its president. All Glenstone entities share the same address — 1 Cowboys Way.
Other Trump inauguration donors in the million-dollar club are Russian-American businessman Alexander Shustorovich, hedge fund honcho Robert Mercer, investor Charles Schwab, Chicago Cubs owner and one-time Trump foe Marlene Ricketts, investor and Trump economic adviser Andy Beal, coal baron Christopher Cline, businessman Hushang Ansary, Shahla Ansary, hedge fund executive Paul Singer, self-storage forture heir Bradley Wayne Hughes Jr., coal executive J. Clifford Forrest, billionaire founder of GoDaddy.com Bob Parsons, investor Stephen A. Cohen, Claudine Revere, philanthropist Jeanne Sorensen Siegel, financial services firm Cantor Fitzgerald Chairman Howard Lutnick and Scott Bessent, who for several years oversaw liberal megadonor George Soros' personal fortune. The Wall Street Journal in 2000 reported that the Republican National Committee rejected a $250,000 contribution from Shustorovich, citing the businessman's ties to state-owned Russian companies.
R.W. Habboush, an international investor who this year reportedly has pressed Trump officials to lift sanctions against Venezuela, gave $666,000.
Billionaire Texan Kelcy Warren, whose company is building the controversial Dakota Access Pipeline for which the Trump administration in February gave final approval, sent $250,000 to Trump's inauguration committee in December. Peter Thiel, the PayPal co-founder who spoke at the Republican National Convention, added $100,000.
At the $1 million level, Trump's roster of top inaugural donors include powerful and well-known companies such as tobacco company Reynolds American, airline and defense company Boeing, AT&T, the Madison Square Garden Company, online payment company Allied Wallet, international holding company Access Industries, ethanol producer Green Plains and MacNeil Automotive Products Ltd., maker of WeatherTech floor mats. Conservative nonprofit advocacy group American Action Network, which has deep financial ties to the health and pharmaceutical industries, also gave $1 million.
The next most-generous companies listed are Quicken Loans ($750,000), Wynn Resorts ($729,217), Chevron ($525,000), American Financial Group ($500,000), Intel ($500,000) JPMorgan Chase and Co. ($500,000), Citgo Petroleum ($500,000), oil comapny BP Corporation of North America ($500,000), casino developer and Ultimate Fighting Championship parent Fertitta Entertainment ($500,000), Manhattan real estate investment firm Tahl Propp ($500,000) and the MacAndrews and Forbes Group ($500,000), which owns military contractor AM General, among other companies.
And other six-figure contributors include: General Motors ($498,650), Impala Asset Management ($325,000), Coca-Cola ($300,638), Murray Energy Corporation ($300,000), real estate investment firm The Witkoff Group ($300,000), Pilot Travel Centers LLC ($300,000), Google (285,000), Ford Motor Company ($250,000), Liberty Media Corporation ($250,000), Charter Communications ($250,000), Nextera Energy ($250,000), Pepsi ($250,000), Comcast Corp. ($250,000), United Parcel Service ($250,000), IBC Bank ($250,000) healthcare company Centene ($250,000), engineering outfit Fluor Corporation ($250,000) Florida retirement mecca The Villages ($250,000), beer giant Anheuser Busch ($250,000), the San Manuel Band of Mission Indians ($250,000), power and coal plant developer White Stallion Energy LLC ($175,000), Wal-Mart ($150,000), Consol Energy Inc. ($150,000) and dental company Managed Care of North America ($135,000).
Health insurers Anthem, MetLife and The Travelers Indemnity Company each contributed $100,000. Also giving $100,000: Verizon, Qualcomm, energy giant Southern Co., oil company Valero, Anadarko Petroleum, the United States Sugar Corporation, defense contractor Northrop Grumman, food company Chiquita Brands and — play ball! — the Office of the Commissioner of Baseball, the FEC disclosure indicates. Visa and accounting firm Ernst & Young each chipped in $50,000.
“The amount of funds raised for the inaugural celebration allowed the President to give the American people, those both at home and visiting Washington, a chance to experience the incredible moment in our democracy where we witness the peaceful transition of power, a cornerstone of American democracy,” inauguration committee Chairman Tom Barrack said in a statement.
Other less-than-household names nevertheless also offered up significant cash.
MILLField Global Strategies, a Washington, D.C.-based firm that advertises "representing an international array of private and public entities to the world’s most influential governments and sectors," gave Trump's inaugural committee $125,000.
Ryan LLC, a Dallas-based tax firm that boasts of "liberating our clients from the burden of being overtaxed," gave more than twice that — $275,000.
Public relations firm Off the Record Strategies, led by George W. Bush White House alumnus Mark Pfeifle, sent an on-the-record $50,000 to the Trump inauguration.
Frog Fitness Inc. of Texas, which claims to have developed the "single most effective total body training device ever invented," donated $25,000. So, too, did Apollo Education Group, which owns the for-profit University of Phoenix, payday lender Checks Into Cash Inc. the U.S. Chamber of Commerce and law and lobbying firm Mintz Levin.
Also contributing $25,000 to Trump's inaugural committee on Jan. 6 was the Affleck-Middleton Project, a production company Oscar Award-winning actor and producer Casey Affleck formed in 2014 with John Powers Middleton.
Earlier this year, after the Center for Public Integrity reported that the Affleck-Middleton Project has contributed $5,000 to Trump's presidential transition effort, Affleck told BuzzFeed he was "appalled."
Affleck added that he had "no knowledge of it, was never asked, and never would have authorized it. I will get to the bottom of it. The policies of the Trump administration, and the values they represent, are antithetical to everything I believe in.”
Many of these corporate donors regularly lobby the federal government or are otherwise affected by decisions the federal government makes on a wide range of issues, from taxes and health care to immigration policy and military purchasing. Trump in November defeated Democrat Hillary Clinton in part on an anti-establishment platform peppered with slogans such as "drain the swamp."
In all, Trump's inaugural committee raised $106.7 million — about twice what President Barack Obama’s committee raised in 2009 to mark the incoming Democrat’s first inauguration. Trump put few limitations — for one, it capped corporate contributions at $1 million — on who could give to his inaugural committee and how much.
Obama's first inauguration committee strictly limited money from lobbyist and corporate sources and prohibited donations greater than $50,000. By his second inauguration, Obama had loosened some restrictions, allowing corporate interests to play a larger role.
President George W. Bush capped the amount of money donors could give to his two inaugurations at $100,000 in 2001 and $250,000 in 2005.
By federal law, presidential inauguration committees aren’t required to file detailed financial disclosures with the FEC until 90 days of an inauguration, meaning Trump's committee wasn't required to disclose its bankrollers until now.
When Trump's committee did, officials hand delivered the document to the FEC's office in Washington, D.C., on Tuesday.
The FEC posted the 508-page document Wednesday morning — a scanned paper document, as opposed to the easily searchable, electronic financial disclosures commonly submitted by most federal candidates, including Trump's own presidential committee.
A few of the big-dollar donors listed were obscure limited liability companies, the leaders of which weren't easily deciphered.
One such Trump inauguration donor, HFNWA LLC of Chattanooga, Tennessee, gave $1 million. The Center for Public Integrity previously reported that HFNWA LLC gave Democratic super PAC Senate Majority PAC $1 million in 2014. HFNWA LLC has addresses in Arkansas and Washington, D.C., and is managed, according to Arkansas Secretary of State records, by Franklin L. Haney, a Democratic political patron and real estate mogul.
"LMC IP" also gave Trump's transition $1 million. Its listed address in Bethesda, Maryland, is the same as the address for Lockheed Martin, the massive defense contractor.
An California-based entity called the "Papa Doug Trust" likewise gave $1 million. This trust, the San Diego Reader reported in 2012, is tied to Douglas F. Manchester, a hotel developer and former publisher of the San Diego Union-Tribune.
Trump's inauguration committee filing did not include information on how it spent the money it raised. Nor did it immediately indicate, as it promised it would, the names of charities to which it would give surplus money.
Federal law also requires inaugural donors who lobby the federal government to file separate disclosures in January — if they made inaugural donations during 2016.
Some indeed did. And a Center for Public Integrity’s review of these documents indicated that Pfizer Inc. and Dow Chemical Co. were among the corporate early birds, each making $1 million contributions to Trump’s inaugural committee in December 2016.
According to inauguration donor packages previously obtained by the Center for Public Integrity, donors in the “$1,000,000+” tier were to receive four tickets to a “leadership luncheon” billed as “an exclusive event with select Cabinet appointees and House and Senate leadership to honor our most generous inaugural supporters.”
Donors in the $500,000 tiers also got access to a dinner with Pence and his wife, a candlelight dinner with Trump and Pence, and other festivities. Donors in lower tiers received more limited ticket packages to inaugural events.
Microsoft Corp., Exxon Mobil Corp., Amgen Inc. and Altria Client Services LLC reported giving $500,000 each, a contribution that would have earned tickets to a similar list of events top-tier donors received.
According to Microsoft’s report, half its contribution was in cash and half in “in-kind contribution, products and services.”
Exxon Mobil Corp. reported making its contribution on Dec. 19, the week after Trump announced he would nominate Rex Tillerson, the company’s chairman and CEO, as secretary of state. The U.S. Senate confirmed Tillerson this year.
Carrie Levine, Chris Zubak-Skees and Rachel Wilson contributed to this report
There’s little doubt from the budget offered last month that Donald Trump wants to take the government in some radically different directions than that of his predecessor in the Oval Office, Barack Obama. Trump’s initial blueprint for fiscal year 2018 calls for massive increases in military spending and immigration enforcement, along with hefty reductions in foreign aid, environmental protection and a grab bag of social programs.
But beyond the headlines, deep in the agate type of their respective budget proposals, are areas in which the two Presidents of wildly differing ideologies actually agree— to a point. A Center of Public Integrity review found some 15 programs that both chief executives targeted for trims, albeit often to different degrees. More such programs may emerge when Trump presents a detailed budget plan in May.
No doubt some would argue that the programs highlighted here must have problems if both Trump and Obama are calling for cuts. But these line items also demonstrate how difficult it is to cut anything in Washington, as every initiative has some constituency of its own, a constituency certain to howl at the prospect of less money, never mind outright elimination. For some programs the mere fact they still exist is evidence of that, as Trump would hardly be calling for elimination now if Obama had succeeded in zeroing them out.
Behind these numbers is also evidence that crafting a budget at all has become a herculean task in the nation’s capital. Our comparisons below start with Obama’s proposals for fiscal year 2017, but virtually none of these were ever enacted because almost no appropriations bills were completed. Instead, a series of continuing resolutions has essentially frozen most 2016 budget levels in place.
But even as an academic exercise, it’s illuminating to see which programs neither Trump nor Obama was apparently an unabashed fan of. So here they are:
The Center for Public Integrity has won an Edward R. Murrow Regional Award for its collaboration with Retro Report on a documentary about deployment of police in schools.
The 12-minute piece, "Unraveling Zero Tolerance,” examines the roots and evolution of using police in schools, and the controversial consequences. Touted as critical to fending off school shootings, drug dealers and disorder, zero tolerance policies morphed over time into a blizzard of student suspensions and arrests for minor indiscretions, many of them involving manhandling of kids by over-aggressive cops. Now some are wondering whether the zero tolerance ‘solution’ is turning out to be worse than the problem it was designed to address.
Retro Report is a nonprofit documentary project that looks back at major news events or controversies through the lens of history, examining how legislative or societal reactions played out after the headlines faded.
The Center’s work on “Unraveling Zero Tolerance” was done by reporter Susan Ferriss, who has investigated harsh school discipline policies and school policing extensively.
In 2011, Ferriss looked at suspensions and expulsions of students amid broader concerns that children were being criminalized and pushed into a “school-to-prison pipeline.” In 2012, her stories probed school policing in Los Angeles, where the nation’s biggest school police force was issuing thousands of court citations to mostly Latino and black kids in low-income schools.
In 2013, Ferriss documented how students in rural California were expelled from regular school for disciplinary reasons — sometimes with police involvement — and forced to enroll in alternative schools so far away they had no alternative but home study. And in 2015, she investigated national school-policing data showing that Virginia led in student-police contact that disproportionately affected students with disabilities, and those who were black or Latino.
The Murrow Awards have been given since 1971 by the Radio Television Digital News Association, and are designed to honor outstanding achievements in electronic journalism.
A group of conservative think tanks wants the nation’s tax system to look more like North Carolina’s. But so far, for the working poor, that hasn’t been a great deal.
Experts from think tanks heavily subsidized by anti-tax, free-market groups such as the Charles Koch Foundation have descended on state capitals armed with scholarly research arguing that tax cuts for the well-to-do lead to economic growth.
North Carolina has been one of the laboratories for this approach. In the Tar Heel State, wealthy families had their state taxes lowered while poor folks saw their tax burden increased or go unchanged. In 2013, the state legislature cut state income taxes, which are progressive — meaning the rich pay a higher rate than the poor — and increased the sales tax, which is regressive, meaning the poor spend a disproportionate amount of their income on the tax.
In Washington, D.C., the Trump administration and Congressional Republicans have been considering a similar approach — lower federal income-tax brackets and a tax on imports — that some tax experts say would have comparable outcomes. Some of the same conservative groups that convinced states to change their tax systems have advised the Trump administration on economic and tax policy. Trump’s initial proposal, which he is expected to discuss Wednesday, may not include a border tax, but such a levy continues to be a key provision of what Congressional GOP members are pushing.
The effects on lower-income families are already playing out in a handful of states. Since 2010, besides North Carolina, Arkansas, Kansas, Oklahoma, Michigan, Mississippi and Maine have either reduced income-tax rates or repealed them altogether. At the same time, most have increased sales and user taxes, such as those charged on such every-day necessities as gasoline and soft drinks, which generally hit the poor harder. Half a dozen other states — Maryland, Illinois and Virginia among them — tried to do the same in this year’s legislative sessions.
If sales taxes “keep going up, I'm going to end up in the shelter with the ladies where I work,” said Juanita Maestos, who works as a counselor at a homeless service center in Seattle and has watched the state Legislature fail numerous times to institute an income-tax system to reduce Washington’s nearly 9 percent sales tax. “You keep doing stuff like this and nobody is going to win.”
Two of the biggest forces behind the tax reforms have been Arthur Laffer, a blast from the past who’s considered the father of supply-side economics, and the Tax Foundation, a Washington, D.C.-based think-tank that markets itself as a nonpartisan research group, but is heavily supported by conservative-led groups such as the Charles Koch Foundation and the John Templeton Foundation.
Laffer, now 76, developed the eponymous Laffer Curve, a nearly four-decade-old theory that holds lower tax rates can encourage people to work more, leading to higher tax revenue. The argument became the basis for President Ronald Reagan’s economic policies known as Reaganomics and later for the conservative tea party. Laffer’s policies have been debated endlessly. His opponents argue his theory led to soaring federal debt in the 1980s and higher poverty, leading many to discount the theory. Those in favor of his ideas point to higher economic growth during Reagan’s two terms.
Laffer founded the Laffer Center, whose mission includes “educating people on economic ideas, [particularly] the lessons of supply-side economics.”
In December 2012, Arduin, Laffer & Moore Econometrics, an economic and policy consulting research firm, published a report that identified a few of North Carolina’s economic “trouble spots,” including its “exceptionally high personal income tax rate — 7.5 percent at the top end — and an uncompetitive corporate income tax when compared with other southern states.
“Income taxes have a larger negative impact on economic growth than consumption-based taxes,” the report argued.
Just a month before, North Carolina voters had delivered both the governorship and the General Assembly to Republicans for the first time in more than 100 years.
Laffer said he spent about a day or two in North Carolina when the legislature was considering its tax code changes and spoke with many lawmakers. Laffer said he isn’t sure what influence he had on the tax legislation but added he’s proud he convinced legislators such as Republican Sen. Bob Rucho, who was then co-chairman of the powerful Senate Finance Committee, to think about what Laffer perceives as smarter tax policies.
Rucho said the report circulated among lawmakers and was the subject of discussions and seminars held at the state legislature building in Raleigh at the same time lawmakers were writing tax-reform legislation.
“People will, if they’re smart, look at what someone else has done and say, ‘Why wouldn’t I want to do the same thing in my state?’ ” said Rucho, who supported the changes.
In July 2013, the North Carolina General Assembly approved the reforms that replaced the state’s graduated state income tax rate, which had ranged from 6 percent to 7.75 percent of a citizen’s income, in favor of a lower flat rate of 5.8 percent, which dropped to less than 5.5 percent this year. (This month, the legislature passed, mostly on a Republican party-line vote, further cuts in the individual and corporate tax rates; both would be the lowest in the Southeast.) To cover lost revenue, lawmakers raised the state sales tax rate from 6.75 percent to 7 percent. The state also repealed its Earned Income Tax Credit, which had given more than 900,000 low- to middle-income North Carolinians a $125 to $500 reduction in state taxes.
But in Asheville, North Carolina, Maria Wilson-Taylor says she hasn’t benefited from the changes.
Last October, Wilson-Taylor, 27, started noticing the money she took home from her two jobs wasn’t lasting as long. After poring over dozens of receipts — Wilson-Taylor is a meticulous record keeper — she calculated she was spending more in sales taxes on various purchases. That meant less for her out of the $900 in monthly take-home pay from her job as a cashier at a Payless Inc. shoe store at the Asheville Mall and as a part-time banquet server at the upscale Asheville Crowne Plaza spa and fitness resort, a three-mile drive down I-240, but socio-economically worlds away from her red-brick, two-story subsidized apartment at Lee Walker Heights, where Wilson-Taylor and her son live.
That wasn’t the only tax hit Wilson-Taylor took. When filing her taxes last year, she learned her state income tax refund would be half, or about $250 less, than what she received in 2015, when she put the refund toward the purchase of a 2001 gold Toyota Camry with 120,000 miles. The car enabled her to better juggle getting to work and picking up her son 6-year-old son, Zyheim, from Vance Elementary School. Her refund this year will be smaller still.
The tax changes, Wilson-Taylor said, make it is harder to reach her dream: moving out of public housing. “I feel like I’ve taken two steps forward but then the taxes come,” and it’s one step back, said Wilson-Taylor, who recently was laid off from her Payless job because of the company’s financial struggles.
For Wilson-Taylor, the changes enacted by the state in the tax system led to an increase of $5 to $10 a paycheck — “nothing that I could save,” she said. And the increase in the sales tax ate that away and then some, she said.
Wilson-Taylor’s financial circumstances are the direct result of North Carolina lawmakers following the Laffer report, which was written in partnership with the John William Pope Civitas Institute. The group is a conservative North Carolina think tank that aims to “inform elected officials about citizen-based, free-market solutions to problems facing North Carolinians.”
The institute receives money from numerous conservative groups. It’s mostly supported by the John William Pope Foundation, headed by Arthur Pope, chairman and CEO of Variety Wholesalers, Inc., which owns discount retail chains. Pope has donated millions of dollars to conservative causes, including $1.3 million to Civitas, according to tax documents.
Pope is also friends with conservative mega-donors Charles and David Koch, and served on the board of the Koch-supported low-tax, free-market advocacy group Americans for Prosperity. In addition, Pope was the budget director for former Republican Gov. Pat McCrory when the tax changes were being considered by lawmakers.
Among Civitas’ other largest donors are the David Koch Foundation and the State Policy Network, which serves as a trade group for conservative think tanks. The David Koch Foundation gave a total of $55,198 to Civitas between 2010 and 2012, and the State Policy Network contributed $60,000 between 2012 and 2014, according to the latest available IRS tax documents.
The foundations, as well as Laffer, are among several conservative individuals and groups that are on a mission to repeal or reduce state income taxes nationwide, said Michael Leachman, director of state fiscal research at the left-leaning Center on Budget and Policy Priorities.
“They’re out there saying the entire South should be an income-tax-free zone,” Leachman said. “You can see this kind of institutional, national push from them.”
The Center on Budget and Policy Priorities is funded by liberal groups, including the Sandler Foundation, which also gives to the American Civil Liberties Union, the environmentally conscious Oceana and founded the investigative journalism group ProPublica. The foundation is among the Center’s largest donors, giving the group $7.7 million from 2011 to 2014.
But Brian Balfour, executive director of the Civitas Institute, disputes the idea that the tax reforms were supported by conservative groups only.
“To try to claim that was some far-right concoction or convention is simply not true,” Balfour said. He added that bi-partisan committees met for years about North Carolina’s tax system before the reforms were passed in 2013.
The Center and other liberal tax groups frequently butt heads with the conservative tax organizations when they go before state legislatures.
Spreading the tax-cut message
Laffer has also presented his tax theories to lawmakers in Washington state, Delaware, Kentucky and Puerto Rico. He’s usually invited by and receives compensation from independent groups like Civitas or lawmakers.
That’s what happened in Kansas before Gov. Sam Brownback signed into law the largest tax cuts in the state’s history in 2012. That year, Laffer visited Kansas three times and was paid $75,000 to be a consultant for Brownback’s tax-reform plan, which cut Kansas’ top income tax bracket by almost a quarter (from 6.45 percent to 4.9 percent), while reducing the bottom rate just 14 percent (from 3.5 percent to 3 percent). He also exempted from taxes “pass-through entity earnings” — money earned from organizations such as sole proprietorships and partnerships.
The 2012 plan reduced the sales tax a slight 0.15 percent to 6.15 percent. In 2015, however, lawmakers, facing a $400 million budget deficit, voted to increase the sales tax above its original level, to 6.5 percent.
Laffer contends that over the last decade, states without incomes taxes (there are seven in all) “have grown much, much faster” than those states with high income taxes.
But there’s little clarity on this issue.
Kim Rueben, project director for the state and local finance initiative at the Urban-Brookings Tax Policy Center, said states without income taxes like Texas and Alaska are struggling to pay their bills due to falling oil prices. Alaska introduced a bill this year that would reinstate the state income tax, which was abolished in 1986.
Like in North Carolina, Laffer downplayed his influence in Kansas, saying what he does is “ticky-talk, and [then] I go home.”
But Kansas Rep. Stan Frownfelter, a Democrat who attended Laffer’s 2012 presentation but eventually voted against Brownback’s tax cuts, called Laffer the “brainstorm” behind Brownback’s plan.
Brownback’s office didn’t respond to requests for comment.
Laffer distanced himself from the tax plan Brownback eventually signed into law. Laffer claims that Brownback initially wanted moderate tax cuts of about $90 million while the legislature passed cuts triple that amount. Republicans also underestimated the number of small businesses that would no longer pay taxes, resulting in a $50 million shortfall, Laffer said.
Brownback’s original plan also didn’t call for swapping income tax cuts for a sales tax increase, Laffer said.
The tax changes led to lower revenue and budget cuts, including a 30 percent reduction in services for the elderly and disabled, according to the Kansas Department for Aging and Disability Services.
Tax Foundation: Not what it seems?
The other big player, the Tax Foundation, is a Washington, D.C.-based think tank that researches state and federal tax policies, and meets with lawmakers, citizens, and journalists to provide expert advice on tax policy. The group’s mission is to “improve lives through smarter tax policy,” according to the foundation’s website.
Smarter tax policy, the foundation argues, includes making the tax code easier for people to understand and creating rules that don’t penalize individuals or businesses for earning more money or profits, two things that create jobs and economic growth, the group claims.
Ted Boettner, executive director of the West Virginia Center on Budget & Policy, a member of the liberal State Priorities Partnership, which researches how tax policies affect lower income families, said most people don’t fully understand how much the Tax Foundation influences state tax laws.
West Virginia considered a bill this year that would have introduced a flat income tax of 2.5 percent, which would decrease further if certain triggers are met. The bill would have also increased the sales tax from 6 percent to 8 percent, including reinstating a tax on groceries, and increasing taxes on electronic cigarettes, beer and soft drinks, levies that disproportionately hurt the poor.
Boettner said the Tax Foundation’s research is marketed as balanced, but in the end advocates conservative policies that push tax cuts for the wealthy while raising them for lower-income families.
In February, both Boettner and Tax Foundation policy analyst Jared Walczak presented tax plans to the state’s Select Committee on Tax Reform at West Virginia’s Statehouse in Charleston. Boettner told lawmakers that a worker making $26,000 a year would pay $946 more, an 82 percent increase, under the tax bill, according to the Charleston Gazette-Mail. He urged lawmakers to keep the state’s earned-income-tax credit to soften the financial blow on lower income families.
Walczak called the West Virginia tax proposal “groundbreaking,” and that “sometimes a state needs to consider bolder moves,” the Gazette-Mail reported.
The Tax Foundation has pushed for what critics charge are wealthy-friendly tax policies in other states. The group’s analysts encouraged lawmakers in Maine to consider a flat tax, told Minnesota legislators they should repeal the state’s estate tax, and urged lawmakers in Nebraska to lower its top state income tax rate.
The policies are similar to those of the groups who fund the Tax Foundation. Nine out of the foundation’s top 10 nonprofit donors support numerous conservative and libertarian causes such as limited government and low taxes, and accounted for a total of $1.1 million in grants between 2010 and 2015, according to the Center for Public Integrity’s search of the latest available IRS tax documents. None of the Tax Foundation’s top donors were liberal groups or organizations that represent lower income groups.
The Charles Koch Foundation and its sister organization the Charles Koch Institute together were the Tax Foundation’s second-largest donor, giving $488,131 between 2012 and 2015, according to the Center’s investigation. The John Templeton Foundation gave $189,000 in 2014. Templeton supports many conservative causes such as the anti-tax group FreedomWorks and the Atlas Network, whose vision is to create “a world where limited governments defend the rule of law, private property and free markets.”
The Earhart Foundation, a large funder of conservative think tanks such as the American Enterprise Institute and the Atlas Network, gave $148,000 to the Tax Foundation from 2010 to 2013. And the Chase Foundation of Virginia, which funds right-wing political and free-market groups, gave $75,000 from 2010 to 2015, according to the Center’s analysis.
“I don’t know if you consider them nonpartisan,” said Derwood Chase Jr., president of the Chase Foundation of Virginia, when asked about the group’s financial support of the Tax Foundation. “I don’t always agree with some of their positions. We are supporting them for their information.”
The Templeton Foundation declined to comment for this story. The Koch and Earhart foundations and the Atlas Network did not return calls requesting comment.
John Buhl, media relations manager for the Tax Foundation, declined to discuss the foundation’s donors in detail, but said no one grantee contributes more than 12 percent of the group’s overall operating funding.
“We support a tax code that’s simpler, more transparent, more neutral and promotes economic growth,” Buhl said. “Some people say that characterizes us as center-right or conservative, but we think it’s something all Americans support.”
Others see it differently.
The Tax Foundation is one of the leading proponents of tax cuts that disproportionately favor the wealthy over low-income families, said Meg Wiehe, director of programs at the Institute on Taxation and Economic Policy, a liberal tax policy group that receives much of its financial support from the Ford Foundation, the left-leaning Bauman Foundation and Coydog Foundation, which supports Planned Parenthood.
Trump, GOP — State Redux
Trump and the Republican-controlled Congress are readying separate tax reforms, but both plans mirror much of what Laffer’s and the Tax Foundation’s have pushed in the states. In fact, Laffer is one of four co-founders of the Committee to Unleash Prosperity, which advised the Trump campaign on economic policy.
And just like the states, if either Trump’s or the House plan, backed by House Speaker Paul Ryan, R-Wisc., becomes law, lower- to middle-income families will gain very little if nothing at all, while wealthy taxpayers gain the most, according to many tax experts.
Trump’s plan and the House Republicans’ proposal would collapse the number of income brackets from the current seven to three. The new tax brackets would be 12 percent, 25 percent and 33 percent. Details are still being worked out, however. Trump told Fox News in March that he “would like to see zero” taxes for those making up to a certain amount. He didn’t elaborate. Trump was scheduled to provide a basic outline of his plan on Wednesday. Published reports said his proposal might not include a tax on imports, but the border tax remains a key provision of what Republicans in Congress want.
The Tax Foundation, in a report released last year, calculated that lower income families would get a 0.2 percent to 0.5 percent increase in after-tax income versus 1.5 percent more for the top 10 percent of wage earners and a 5.3 percent increase for the wealthiest, the top 1 percent.
Kathleen Thomas, a professor of law at the University of North Carolina at Chapel Hill who specializes in tax law, is skeptical.
“I’m not optimistic that lower income people are going to benefit,” Thomas said. “We just don’t have the evidence throughout the past several decades that tax cuts work for lower-income taxpayers.”
Lawrence Zelenak, a tax law professor at Duke University, said low-income earners could gain more after-tax money under the GOP plan, but they would end up paying more on basic goods like clothing if Congressional Republicans’ proposed tax on imports remains part of the reform plan, having an effect much like an increase in state sales tax.
“It’s a tax on domestic consumption,” Zelenak said. “It would be passed through to people based on what they consume.”
While Congress prepares for the tax debate, single-parent Wilson-Taylor in Asheville worries that the proposed federal tax changes would only make life harder, as North Carolina’s tax reforms did.
“They’re going to come for every little penny that you have,” Wilson-Taylor said. “Where is the help when we need it?”
The megadonor Mercer family — one of President Donald Trump’s top patrons — dramatically increased its philanthropic giving in 2015 and routed millions of dollars to charities closely associated with the conservative movement, a new tax filing reveals.
The vehicle for the contributions was the Mercer Family Foundation, which is funded by Robert Mercer, the reclusive co-chief executive officer of hedge fund Renaissance Technologies, and run by his daughter, Rebekah. It gave out roughly $24.5 million in charitable grants in 2015, the most recent time period available, a 34 percent increase over 2014.
The 2016 election cycle brought the Mercers new prominence as political heavyweights. They were among the earliest to throw support behind Trump’s bid for the Republican nomination. And they’ve remained among Trump’s most steadfast and influential backers.
Some of the conservative think tanks the Mercer foundation supported in 2015 — the Federalist Society and the Heritage Foundation among them — have helped supply key personnel and policy ideas to the Trump administration since his victory in November.
The Mercers’ political, charitable and business spending also serves as something of a map of their close ties to some of Trump’s top White House advisers, including chief strategist Stephen K. Bannon, and Kellyanne Conway, whose title is counselor to the president.
The Mercers rarely comment publicly about the reasons behind their political and charitable giving, and did not respond to a request for comment from the Center for Public Integrity. During the 2016 election cycle, Robert Mercer contributed $15.5 million to a super PAC that first supported the Republican presidential bid of U.S. Sen. Ted Cruz of Texas, then backed Trump.
The foundation supports a grab bag of groups, from the obscure Oregon Institute of Science and Medicine (run by a scientist whom the Mercers have also supported as a candidate for Congress) to the Stony Brook Foundation (Robert Mercer and his wife live on Long Island) to the Heritage Foundation, a well-known Republican think tank that includes Rebekah Mercer on its board.
Rebekah Mercer is also on the board of the Museum of Natural History in New York, which received $575,000 from the Mercer Family Foundation in 2015. That’s significantly more than the $100,000 the Mercer Family Foundation gave to the conservative Heartland Institute, which questions whether humans contribute substantially to climate change.
Among the tax filing’s other highlights:
The Mercer Family Foundation’s largest single grant in 2015, $5 million, went to the George W. Bush Foundation, which runs the former president’s presidential library. The Mercer contribution was the largest single donation the Bush foundation received that year, per its own 2015 tax filing.
The Media Research Center, a media watchdog group run by conservative activist Brent Bozell, received $3 million. A Center for Public Integrity analysis of the Mercer Family Foundation’s tax filings reveals that the Media Research Center has received about $16.5 million since 2008, a larger amount than any other recipient of Mercer foundation dollars.
The Mercers also gave $2.3 million to the Federalist Society, “a group of conservatives and libertarians interested in the current state of the legal order.” The Mercer Family Foundation has given that group roughly $6 million since 2013.
The Federalist Society has guided Trump’s selection of nominees for federal judgeships. Among the names on its list of suggested nominees: Supreme Court Justice Neil Gorsuch, who was confirmed this month. Leonard Leo, the executive vice president of the Federalist Society, took a leave of absence to personally shepherd Gorsuch’s nomination through the Senate.
Two groups that included both Rebekah Mercer and Bannon on their boards before Bannon joined the Trump administration, the Government Accountability Institute and Reclaim New York, received seven-figure sums.
The Government Accountability Institute, a conservative investigative research group run by conservative writer Peter Schweizer, received roughly $1.7 million.
Schweizer is the author of “Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich.” Bannon helped found the group, which the Washington Postreported paid Bannon $376,000 over four years for serving on its board, even as he ran Breitbart News.
Rebekah Mercer chairs Reclaim New York, a watchdog group that received $1.25 million.
The Heritage Foundation received $500,000, the same amount it has received annually since 2013. The Citizens United Foundation received $250,000.At the time, it was headed by David Bossie, who later became Trump’s deputy campaign manager.
The Mercer Family Foundation also gave $500,000 to the Center for Union Facts. The anti-union group is one of a series of nonprofits run by public relations executive Rick Berman, once dubbed “Dr. Evil” in a segment of television newsmagazine “60 Minutes.”
Success Academy Charter Schools, a chain of New York charter schools, received $500,000 in 2015. The Mercer foundation gave the schools $550,000 in 2014.
Success Academy’s CEO, Eva Moskowitz, met with Trump after his election in November and was reportedly a candidate to be Trump’s secretary of education. Ivanka Trump, the president’s daughter and advisor, toured a Success Academy school in November.
The Center for Public Integrity news developer Chris Zubak-Skees contributed to this story.
This story was co-published by Salon.
President Donald Trump’s “swamp” is particularly rich in fossil fuels.
Oil, gas and coal interests together poured millions of dollars into Trump’s inaugural fund and re-energized their federal government lobbying efforts during the year’s first three months, according to a Center for Public Integrity analysis of federal disclosures.
It’s a two-pronged strategy that’s apparently paying dividends: The new administration has spent its early days ticking items off the industry wish list.
In all, oil, gas and coal companies and executives contributed more than $1 out of every $10 raised for Trump’s inauguration, for which he raisednearly $107 million overall. That’s significantly more than the $1 the sector contributed for every $34 President Barack Obama raised overall for his second inauguration, per an analysis from the Center for Responsive Politics.
Meanwhile, the oil and gas industry spent $36.1 million on federal lobbying efforts from Jan. 1 through March 31. That’s an 11 percent increase over the same period last year, Center for Responsive Politics data shows.
Corporations buying influence muscle during the early days of a new presidential administration is hardly a new tactic. For example, ExxonMobil — No. 2 on the Fortune 500 list— increased its lobbying expenditures during the months immediately following Obama’s 2009 and 2013 inaugurations, federal records show.
But increased oil and gas industry lobbying is a sign the industry executives expect the Trump administration to act on matters that could affect their companies’ fortunes.
So far, that’s exactly what’s happened.
During his first 100 days in office, Trump and the Republican-controlled Congress have moved to ease or remove restrictions on coal, oil and gas companies. The efforts, some of which are preliminary or may face legal fights, include:
During his campaign, Trump promised to “drain the swamp” — limiting the power of special interests and the lobbyists they employ.
But Trump chose not to ban or cap contributions to his inaugural committee from corporations, setting laxer limits on donations than his presidential predecessors, including Obama and George W. Bush.
Oil, gas and coal companies writing big checks to Trump’s inauguration included Chevron ($525,000), Citgo ($500,000), ExxonMobil ($500,000), BP Corporation of North America ($500,000) and coal mining company Murray Energy ($300,000). NextEra Energy, which operates nuclear, oil, gas, wind and solar power plants, gave ($250,000).
Industry executives gave, too.
Also contributing $1 million each: Hushang Ansary, a longtime oil executive and businessman, and his wife, Shahla Ansary.
Inaugural committee donors who gave at least $1 million were invited to a long list of exclusive events over the inauguration weekend, including dinners with the vice president and president and a luncheon with “select Cabinet appointees” and “select House and Senate leadership” — the same people making policy decisions that govern their businesses.
Trump is “blurring the lines between commercial oil interests and the state,” said Cassady Craighill, a spokeswoman for Greenpeace USA, an environmental organization.
Craighill said Trump’s decision to appoint former ExxonMobil CEO Rex Tillerson as secretary of state is an example of big oil companies’ influence over the federal government.
Spokespeople for both Chevron and ExxonMobil described their inauguration contributions as a good will effort to work with the new presidential administration and as something they do routinely.
Chevron, for example, donated $1 million to Obama’s second inauguration — more than the company gave to Trump.
And ExxonMobil spokesman Alan Jeffers said the $3.44 million the company spent on lobbying efforts during the first three months of 2017 is “reflective of the large number of issues impacting ExxonMobil’s business.”
ExxonMobil isn’t alone in its broad lobbying efforts. Oil and gas interests lobbied on topics ranging from energy to transportation and tax reform.
For example, BP contributed $500,000 to Trump’s inauguration, and it also spent $1.7 million during the first three months of the year lobbying in part on “issues related to arctic oil and gas development.”
Citgo, a subsidiary of state-owned Venezuelan oil company PDVSA (Petróleos de Venezuela), gave $500,000 to the Trump inauguration and spent an additional $410,000 on lobbying. Citgo lobbied both Congress and several federal government agencies on “sanctions related issues” and the “potential impact of U.S. energy and foreign policy restrictions on CITGO Petroleum Corporation's operations,” according to a disclosure filed with the U.S. Senate.
Kelcy Warren, CEO of the company behind the Dakota Access Pipeline, personally donated $250,000 to Trump’s inauguration. His company, Energy Transfer Partners, also spent $270,000 lobbying on “pipeline related issues.”
ExxonMobil reported lobbying on about 40 different bills and issues during the year’s first quarter.
The second quarter is looking just as busy.
Congress is moving toward a debate on tax reform that could put some of the industry’s most cherished tax breaks in jeopardy.
Trump has sent mixed signals on whether he’ll proceed with a campaign promise to withdraw from the North American Free Trade Agreement, known as NAFTA, or attempt to renegotiate it.
But ExxonMobil and Chevron are leaving nothing to chance.
Both listed NAFTA as a lobbying issue in first-quarter disclosure filings.
Jie Jenny Zou contributed to this report
This story was co-published by Grist.
Several organizations, including super PACs and politically active nonprofit groups, have lent President Donald Trump advertising and messaging support during the early days of his administration.
Here are the key pro-Trump groups to watch in 2017:
Group type: 501(c)(4) nonprofit
Why it matters: The new nonprofit is backed by Robert and Rebekah Mercer, the influential megadonors who jumped in to back Donald Trump during the 2016 elections. The group’s chief strategist is David Bossie, Trump’s former deputy campaign manager. In March, Making America Great launched a seven-figure ad campaign designed to highlight Trump’s achievements.
Group type: Hybrid super PAC
Why it matters: The Committee to Defend the President was formed in 2013 under a different name – Stop Hillary PAC. It officially changed its name in January, and has since run nearly $600,000 in ads boosting Trump’s 2020 re-election bid.
Group type: 501(c)(4) nonprofit
Why it matters: America First Policies grew out of Trump’s political operation. Headed by Brad Parscale, who ran the digital and data portion of Trump’s campaign, and featuring a coterie of former aides, it was meant to serve as a quasi-independent outside group providing support for the president’s initiatives. Parscale has said America First Policies had raised around $25 million. The group initially kept a low profile while some strategists and donors departed and rival groups launched. But in late March, it picked up Katie Walsh, a former deputy White House chief of staff, and in April, it created a $3 million ad campaign to support Republican members of Congress who backed a health care proposal.
Group types: Great America Alliance is a 501(c)(4) nonprofit and Great America PAC is a hybrid super PAC.
Why they matter: Both groups are run by Republican political operatives Eric Beach and Ed Rollins. Two prominent Republican supporters of the president are co-chairmen of the nonprofit: former New York City Mayor Rudy Giuliani and former Speaker of the House Newt Gingrich. The super PAC, for its part, spent roughly $23.6 million supporting Trump’s candidacy during the 2016 election cycle, according to federal records, and recently sent out a fundraising solicitation based on Trump’s military strike in Syria. Great America PAC has this year spent more than $765,000 on messaging supporting Trump and his 2020 re-election campaign.
Group types: 501(c)(4) nonprofit and super PAC
Why they matter: The 45Committee nonprofit is closely linked to Future45, a super PAC connected to the Ricketts family, the owners of the Chicago Cubs. According to federal campaign finance data tracked by the Center for Responsive Politics, the nonprofit spent $21.3 million supporting Trump’s presidential bid last year. The Future45 super PAC separately spent nearly $24.3 million on the presidential race, nearly all in opposition to Democrat Hillary Clinton. In 2017, the 45Committee has spent millions of dollars on ads promoting Trump cabinet picks.
Group type: super PAC
Why it matters: Primarily an anti-Hillary Clinton attack dog in 2016, this super PAC’s biggest donor was Linda McMahon, the former professional wrestling executive and two-time U.S. Senate candidate who’s now Trump’s Small Business Administration administrator. Has been largely dormant in 2017.
Group type: super PAC
Why it matters: The super PAC, which was primarily funded by billionaire hedge fund guru Robert Mercer, initially backed Sen. Ted Cruz in the Republican presidential primary. It later supported Trump, mainly by bashing Clinton. Has done little in 2017.
Group type: super PAC
Why it matters: Great America Agenda’s chairman, Corey Lewandowski, was Trump’s first campaign manager and has since opened his own lobbying shop, touting his access to Trump. (On Wednesday, Lewandowski said he's leaving the firm.) The super PAC was created earlier this year and hasn’t yet had to file reports disclosing contributions and expenditures.
Group type: super PAC
Why it matters: Formed in April, this Massachusetts-based super PAC was registered with the Federal Election Commission by Charles Gantt, senior vice president for conservative political consulting firm Red Curve Solutions. Bradley Crate, Red Curve Solutions’ president, serves as Donald Trump’s campaign treasurer. It has yet to launch a messaging campaign and little else is known about its backers.
Group type: super PAC
Why it matters: Formed in April, this Florida-based super PAC plays on Trump’s “America First” slogan. The group’s registration paperwork lists its chairwoman as Lauren Pardo, a former aide to Sen. Marco Rubio, R-Florida, and current vice president of political consulting firm Groundswell Strategies.
President Donald Trump won’t face re-election for another three-and-a-half years.
No matter. A pair of super PACs have together already burned through $1 million to boost Trump’s 2020 bid, according to a Center for Public Integrity analysis of federal campaign spending records.
So much spending, so fast, is unprecedented in U.S. election history.
Trump himself is the prime instigator of this outside money onslaught. He filed his re-election paperwork on Jan. 20 — the day of his inauguration — and has since conducted campaignrallies, raised more than $7 million in campaigncash and even aired a campaignTV adtouting his nascent presidency.
With Trump’s candidacy declared, it’s easy for super PACs and certain nonprofit groups empowered by the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission to raise and spend unlimited amounts of money to promote the president’s political prospects.
That Election 2020 has already begun is too much for most Americans.
Nearly two-thirds of potential voters say the length of presidential campaigns should be limited, according to a new Center for Public Integrity/Ipsos poll.
Of those who favor limits, the vast majority — four out of five people — say presidential campaigns should last for one year or less, the poll indicates.
Democrats are most likely to want president campaign limitations, although most Republicans and independents want them, too. “Too long” was the most common answer poll respondents gave when asked to briefly describe Election 2016. “Long,” “crazy” and “bad” followed.
Trump supporters ‘increasingly engaged’
Election 2016 sure seemed to last forever.
But consider this: It took until mid-spring 2015 — about 27 months after President Barack Obama’s second inauguration — for political groups such as super PACs to collectively spend $1 million promoting or opposing the gaggle of Democrats and Republicans running to replace Obama.
Following Trump’s inauguration in January, political groups crossed the same spending threshold in a mere three-and-a-half months.
Driving Election 2020’s ultra-early spending are Great America PAC and Committee to Defend the President, a pair of “hybrid” super PACs that share the same treasurer, political consultant and election lawyer DanBacker.
On Monday, the groups officially spent $1 million during Election 2020 on a variety of pro-Trump communications and related items ranging from TV, radio and digital advertisements to robocalls and direct mail to renting the email addresses of prospective supports and donors, FEC records show.
By Tuesday, that spending figure had ballooned to $1.32 million.
“Our supporters demand we defend the president from day one, and that's what we are doing,” said Ted Harvey, a former Colorado state senator and chairman of Committee to Defend the President.
But aren’t people sick of non-stop campaign ads?
“We haven’t heard that,” said Eric Beach, a longtime Republican political operative and co-chairman of Great America PAC. “In fact, Trump’s supporters — our community — is increasingly engaged given the nasty, vitriolic, unamerican attacks by liberals and unfair media coverage.”
Trump administration officials declined to comment on the groups’ pro-Trump spending sprees or the Trump campaign’s own activities this year.
Questions about spending by outside groups “should all be directed to the super PACs,” White House spokeswoman Sarah Huckabee Sanders wrote in an email.
Both Great America PAC and the Committee to Defend the President experienced their share of controversy during and immediately after Election 2016.
Initially, in early 2016, Trump’s presidential campaign formally disavowed Great America PAC. It explained in a letter to the FEC that people might believe Trump was personally authorizing Great America PAC’s activities — he wasn’t. The Trump committee further lamented that people might donate money to Great America PAC thinking they were donating to the Trump campaign.
But by September, Trump’s misgivings apparently eased. Eric Trump, the president’s son, even appeared at a Great America PAC fundraiser. Around the same time, Great America PAC mistakenly published the email addresses and cell phone numbers of hundreds of its donors. Then, in October, it erroneously released the credit card information of another 49 contributors.
Reporters for The Telegraph of London, in an undercover sting where they falsely represented themselves as associates of a fake Chinese client offering $2 million in ostensibly illegal foreign money to Great America PAC, reported in October that PAC officials sought creative and legally dubious methods to secure the $2 million. (Great America PAC denied wrongdoing, and there’s no evidence any untoward transaction took place.)
The PAC cobbled most of this amount together from tens of thousands of small-dollar donor who responded to the PACs incessant fundraising emails and communications with contributions. It received a few large, late-in-the-campaign contributions, too, including $2 million from Houston Texans owner Robert McNair and $100,000 from businessman Richard Uihlein.
Committee to Defend the President, meanwhile, sprung into existence in May 2013 as “Stop Hillary PAC” — a name the FEC considered illegal because, according to federal regulators, it used the name of a political candidate without authorization.
Stop Hillary PAC refused to change its name. And during 2015 and 2016, it spent nearly $3.4 million on communications bashing Democratic presidential candidate Hillary Clinton. Like Great America PAC, it raised the majority of its money from small-dollar donors giving $200 or less.
In January, Stop Hillary PAC, without a Hillary to stop, finally did change its name: to Committee to Defend the President.
It also changed its tactics, morphing from an anti-Democrat attack dog to a pro-Trump messaging machine.
This made for some awkwardness. Guy Short, which Committee to Defend the President lists as a “founder” in federal documents, last year accused Trump of spewing “fiction” and trafficking in “insults, lies, distortion and vulgarity,” among other indignities.
“It’s very worrisome to wonder how a man like Trump would exercise the powers of the presidency,” Short wrote in an opinion piece published last year in the Colorado Statesman.
Short in January explained to the Center for Public Integrity that he started backing Trump when Trump became the Republican presidential nominee and now has Short’s “full support.”
Not all pro-Trump groups active
Several other seemingly pro-Trump super PACs have materialized during 2017, although they have yet to do much.
They include America First Agenda, a Florida-based super PAC that plays on Trump’s “America First” slogan.
The group’s registration paperwork lists its chairwoman as Lauren Pardo, a former aide to Sen. Marco Rubio, R-Florida, and current vice president of political consulting firm Groundswell Strategies. Pardo did not respond to phone and email messages seeking comment.
Another is America First Action, a Massachusetts-based super PAC registered with the FEC by Charles Gantt, senior vice president for conservative political consulting firm Red Curve Solutions. (Bradley Crate, Red Curve Solutions’ president, serves as Donald Trump’s campaign treasurer.)
Reached by phone, Gantt said he had no comment but would forward a message to people involved with the new super PAC. Gantt declined to name them, and they have yet to call back.
Aside from Great America PAC and Committee to Defend the President, other prominent, pro-Trump super PACs from the 2016 have largely gone dormant. Among them are Rebuilding America Now and Make America Number 1, each of which spent into the eight-figure range last year.
But several pro-Trump groups have nevertheless launched ad blitzes this year that, while not overtly Election 2020 campaign messages, do promote Trump’s legislative agenda or governmental goals.
Democrats striking back?
Democratic resistance to all things Trump has not — to date — included Election 2020 campaign ads.
But Priorities USA Action, the most moneyed super PAC to support Hillary Clinton during the 2016 presidential election, has been spending its cash on other political items, such as grassroots organizing, issue advocacy, polling and anti-voter suppression efforts.
“An effective persuasion campaign combined with historic investments in Democratic turnout are both required to maximize our wins in 2017, 2018, and beyond,” Priorities USA Action Chairman Guy Cecil wrote in an April 28 memo titled, “At 100-day mark, chinks seen in Trump’s so-called armor.”
In an email, Priorities USA Action spokeswoman Symone Sanders said she’d answer Center for Public Integrity questions about the super PAC’s activities but never did. Another top Democratic advocacy group, American Bridge 21st Century, is “committed to holding Donald Trump and his administration responsible” for their actions, even if that doesn’t involve Election 2020 campaign ads, spokesman Harrell Kirstein said.
Kirstein added that pro-Trump groups have been spending so much money in the rocky, early days of his administration because there’s “a lot of panic from Donald Trump’s allies.”
Nonsense, said Harvey of Committee to Defend the President.
Without it his group’s spending, “our supporters are left to sift through the dishonest media and national Democrats attacks,” Harvey said, “which I’m sure would be fine by liberals who oppose Trump.”
Chris Zubak-Skees and Rachel Wilson contributed to this report.
The troubled government of the Democratic Republic of Congo is pouring millions of dollars into a new Washington lobbying campaign featuring prominent Republicans.
Among those working on the Congolese effort: former U.S. Sen. Bob Dole and Adnan Jalil, who worked for Donald Trump’s presidential campaign helping it communicate with Congress.
Also involved is Jason Epstein, a longtime lobbyist who has represented the Turkish embassy and other foreign clients. Epstein is former director of legislative affairs at B’nai B’rith International, according to his online biography.
In an unusual arrangement, the lobbying campaign on behalf of the Congolese government is being coordinated by an Israeli security company, Mer Security and Communications, whose chief executive says it was chosen for its “personal relationship” with the country’s current leadership.
The African nation is paying Mer Security roughly $5.6 million this year in connection with the lobbying effort, according to a Center for Public Integrity review of disclosures filed with the Department of Justice. Already, the Congolese government has paid $4.5 million of that sum, a chunk of which Mer Security is using to hire Washington, D.C.-based lobbyists for the effort.
“That’s a lot of money,” said Joe Sandler, a lawyer and an expert in foreign lobbying.
Lobbying firms routinely receive seven-figure sums when advocating for foreign governments, particularly ones with bad reputations.
A prime example: South Sudan, which spent $2.1 million on K Street public relations and lobbying firms during 2014 and 2015, including the outfit led Democratic super-fundraiser Tony Podesta.
But rarely do foreign lobbying contracts command more than $5 million.
The Democratic Republic of Congo is experiencing political upheaval and civil unrest. The current leader, Joseph Kabila, has promised to hold elections before the end of the year, though opponents have questioned whether he’ll uphold the agreement.
The embassy of the Democratic Republic of Congo did not respond to requests for comment from the Center for Public Integrity.
Lobbying firm Alston & Bird, which employs Dole, received $500,000 from Mer Security on April 27.
Mer Security’s filings with the Justice Department describe the money as a “payment to engage in political activities.”
Under the Foreign Agents Registration Act, Alston & Bird is required to publicly disclose it is representing a foreign government within 10 days of agreeing to represent a foreign government.
It did not.
The firm’s letter of engagement said Dole would be lead attorney on the matter.
The $500,000 covers three months of Alston & Bird’s work.
Alston & Bird, Mer Security’s subcontractor, said its engagement terms said the firm would be offering advice on “strategic communications, policy issues and compliance with” lobbying disclosure laws.
The agreement terms “do not include or anticipate our representation of, or advocacy for, the Government of the Democratic Republic of the Congo before the United States government.”
Dennis Garris, the managing partner of Alston & Bird’s Washington office, did not respond to requests for comment. Nor did Dole, whose role only became public once the firm filed its disclosure.
Dole, the only former Republican presidential nominee who endorsed Trump before the GOP convention last summer, is a savvy Washington insider who most recently attracted notice for his lobbying on behalf of Taiwan. Dole’s efforts led to a stunning call between Trump and Taiwan’s president, angering China.
Dole’s retainer for the Taiwan work, which includes direct lobbying, is $25,000 a month, per federal disclosures.
Both Epstein and Jalil said in emails that the point of their work is to promote an “open, productive” discussion with a goal of improving the situation in the Democratic Republic of Congo.
Epstein’s disclosures show he is receiving $138,000 for three months of work.
“The Congolese people, their safety and human rights can only improve if the United States takes an active and engaging role in the largest country in Africa,” said Jalil, who has so far received $45,000, according to filings.
Jalil, who’s only current lobbying client is Mer Security, said he joined Trump’s campaign as a liaison to the House of Representatives in early spring of 2016 “and was part of a very small, loyal, and dedicated team in Washington.” Trump has been critical of Washington’s lobbying and influence industry, and in January, he issued an executive order banning administration officials from ever lobbying on behalf of a foreign government.
Seeking access to U.S. politicians
Mer Security said in its disclosure filings that it had agreed to advise Congolese officials on U.S. policy and political concerns regarding African security issues.
It will also advise the country’s government on the appointment of a special envoy to the United States and “strategic planning to the envoy’s engagement in bilateral diplomacy with the United States.”
A special Democratic Republic of Congo envoy is expected to visit Washington in June, according to the filings.
In describing its work on behalf of the Democratic Republic of Congo, Mer Security’s tells the Department of Justice that it has “agreed to generate interest in and participation at meetings of senior U.S. administration officials and key policy makers in various congressional committees.”
The Democratic Republic of Congo has experienced significant political turmoil in recent months.
The current leader, Joseph Kabila, was supposed to step down late last year. But he negotiated a deal to stay in power in exchange for a promise to hold elections by the end of 2017.
This week, Kabila named a new transitional government, something opponents said is a violation of the agreement allowing him to stay in power. Kabila has said election delays are due to logistical and budgetary challenges, which could prompt questions about his government’s decision to spend millions of dollars on a Washington lobbying campaign.
The U.S. State Department has warned Americans to avoid unnecessary travel to the Democratic Republic of Congo, citing security concerns.
The Obama administration sanctionedhigh officials in Kabila’s government. And earlier this month, Nikki Haley, U.S. ambassador to the United Nations, described the government as “corrupt” and said it “preys on its citizens.”
An unusual middleman
A review of federal disclosures shows no previous instance of Mer Security lobbying in the United States.
In public filings, the company said its main business activities are “manufacturing, supplying and installing telecommunications and electricity systems, developing command and control software, constructing command and control centers and integrating and implementing physical security systems.”
Omer Laviv, Mer Security’s CEO, said in an e-mail to the Center for Public Integrity that the company was hired “to explore opportunities through which the U.S. government can support the DRC government in its efforts to bring peace, stability and prosperity to the Congolese people.”
The company has “extensive experience” in advising and consulting with governments on national security, he said, and has operated for many years in the Democratic Republic of Congo.
“Personal relationship[s] that are characterized by a high level of trust have been established between MER and the leadership of the country,” Laviv wrote.
“This level of trust led the Congolese government to appoint MER to this assignment.”
The Democratic Republic of Congo had previously been represented in Washington by BGR Government Affairs, a prominent Republican firm.
Disclosures show BGR Government Affairs’ representation ended Jan. 31.
This article was co-published by TIME.
A series of warnings by state and federal experts, stretching back more than thirty years, preceded this week’s cave-in of a tunnel in Hanford, Washington that holds lethally radioactive debris from the U.S. nuclear weapons program, according to government documents.
A report in 1980 for the Energy Department, which oversees safety and cleanup work at the site, said that wooden beams holding up the tunnel had lost a third of their strength by then. A contractor for the department pointed to the issue again in 1991, warning that by the year 2001, the beams would be further degraded.
A group of academic experts, working under contract to the department, said more alarmingly in a 1,969-page report in August 2015 that the roof of the tunnel in question had been seriously weakened and that a “partial or complete failure” could expose individuals even 380 feet away to dangerous levels of radiation.
No action was taken by the department in response, and earlier this month — the precise date remains uncertain because conditions at the site were not closely monitored — a portion of the roof collapsed at the tunnel, creating a 20-foot square hole. Afterwards, the managers of the Hanford site were forced on May 9 to order 3,000 workers to shelter indoors. But instead of shoring up the beams inside the tunnel in question, they poured in 54 new truckloads of dirt.
The tunnel was one of two at the Energy Department’s Hanford reservation used as dumping grounds from 1960 to 2000 for radioactive machine parts, vessels, and other equipment. It was, in short, a tangible expression of the department’s policy of covering over some of its nuclear bomb-making detritus and effectively pretending it isn’t there.
The neglect followed a blunt warning 26 years ago from the State of Washington — cited in a 1991 Energy Department contractor’s report— that the tunnels were not a safe repository and that the wastes should be moved elsewhere.
Under an agreement overseen by a federal court in eastern Washington, the department was supposed to start crafting a way to deal with the tunnel’s lethal dangers by September 2015, but it missed the deadline and promised to do it later this year as part of an overall agreement with the state and the Environmental Protection Agency to push back completion of the site’s overall cleanup from 2024 to 2042. (Hanford remains the most toxic site in America and the government’s most costly environmental cleanup task.)
“The Department of Energy has been aware for years that the…tunnels were a risk. They told the other agencies in charge of overseeing Hanford that it wasn’t a risk,” said Dan Serres, conservation director at Columbia Riverkeeper, an advocacy group in Washington state that has a seat on an Energy Department advisory panel about the site. “DOE assured the others that there was no immediate risk of a collapse like the one that happened.”
Asked for comment on the reports, and on the Energy Department’s failure to respond to the warnings, a spokesman in Washington did not respond. Secretary of Energy Rick Perry said in a statement on May 11, after the hole had been filled in, however that “thankfully, the system worked as it should and all are safe.” He promised the department would “identify and implement longer-term measures to further reduce risks.”
The tunnel with the collapsed roof was built in 1956 over a rail spur that extended 350 feet south from the east end of the complex’s massive factory for making plutonium, a key sparkplug for America’s nuclear weapons. Managers at the plant initially sought to use it as a storage locker for radioactive materials, and so they shored it up with creosoted railroad ties, and piled eight feet of dirt on top.
Within a few years, however, they started using it to store contaminated plant equipment. The tunnel was filled and sealed in 1964, and a second, parallel, and much longer tunnel was built next to it. That one was filled with radioactive equipment contaminated with plutonium, americium, cesium and strontium as the site’s bomb-making factory was dismantled. It was sealed in 2000.
It is unclear when contractors running the plant first became concerned that gamma radiation, which changes the molecular structure of wood cell walls, would significantly weaken the first tunnel’s timbers. As early as 1971 the integrity of the wood was checked and determined to be sound. The 1980 study said however that said the wood’s strength had deteriorated to 64.5 percent of its original strength. It predicted that the structure should be sound until at least 1982, by which time the authors anticipated it would be cleaned out.
A September, 1990, Department of Energy dangerous waste permit application for the two storage tunnels revealed that some of the parts stored inside were spewing radioactivity at the rate of 5 rem to 25 rem per hour. Since occupational health guidelines for workers in DOE plants limit workers to exposures of 50 rem a year, these would be serious exposures.
Washington state’s ecology department has now ordered the DOE to find the cause of the breach and take steps to fortify the tunnel. Citing its state toxic waste authorities, it gave the Energy Department until July 1 to assess the structural soundness of both tunnels, and until Oct. 1 to propose changes to its state-issued hazardous waste permit that involve strengthening the tunnels, according to the latest change to the DOE’s hazardous waste permit.
“This alarming emergency compels us to take immediate action — to hold the federal government accountable to its obligation to clean up the largest nuclear waste site in the country,” Maia Bellon, director of the Washington Department of Ecology, said Wednesday in a written statement.
“It’s not acceptable that the hole could have been open for four days,” said Alex Smith, the nuclear waste manager for the Ecology Department, according to an AP report.
In the 1991 report, by Los Alamos Technical Associates, Inc., the authors made clear after conducting an internal inspection of the tunnel that the DOE knew the timbers holding up the roof had been substantially weakened as early as 1980. It predicted that by 2001, they would be at 60 percent of their original strength and recommended another evaluation in 2001. But records indicate that it never happened.
A Department of Ecology inspection in 2015 noted that because the tunnels were closed up, “no permanent emergency equipment, communications equipment, warning systems, personal protective equipment, or spill control and containment supplies” were located inside — deficiencies that could complicate emergency efforts in the case of a tunnel fire or other safety incident.
A Government Accountability Office estimate in 2016 placed the total cost of cleaning up the toxic legacy of the U.S. nuclear weapon program at more than $250 billion.
South Carolina state Rep. Rick Quinn used his public office as a multimillion-dollar money funnel that enriched his family’s powerful political empire while doing the bidding of shadowy corporate interests in the Legislature, prosecutors said Tuesday.
Misconduct charges handed down as part of the ongoing Statehouse corruption probe paint a picture of influence and greed involving a key cog in one of the state’s oldest and more durable political machines.
Quinn, a Lexington Republican, is accused of failing to report more than $4.5 million that unidentified groups had paid to companies operated by him and his father, embattled political consultant Richard Quinn. He then improperly lobbied on their behalf, using his businesses and public office to influence government actions involving those groups, the indictment stated.
The scope of Quinn's alleged conduct is his entire legislative career, from January 1999 to April 15, and includes his 2006 run for state treasurer.
Quinn, 51, also is accused of using his position to improperly steer $271,881 in Republican House Caucus funds to family businesses in which he had a financial interest. He funneled campaign cash to his and his father's companies, as well, the indictment states.
Quinn is the fourth lawmaker snared in the ongoing corruption probe led by 1st Circuit Solicitor David Pascoe. His fate had been the subject of much speculation since news surfaced last year that he and his father had been named in a State Law Enforcement Division report detailing leads in the investigation.
House Speaker Jay Lucas, a fellow Republican, quickly moved Tuesday to suspend Quinn from office until the matter is resolved.
Quinn's father is a kingmaker in South Carolina politics, with a vast stable of clients and tentacles throughout state government. His firm represents more than 25 lawmakers, a couple of large state agencies and a quartet of the state's biggest corporations.
The younger Quinn also works as a campaign consultant and owns Mail Marketing Strategies, a Columbia-based direct-mail company that does work for politicians.
Rick Quinn is charged with one count of common law misconduct in office and one count of statutory misconduct in office. The first charge carries a penalty of up to 10 years in prison and an undetermined fine; the other, up to one year in prison and a $1,000 fine.
Quinn issued a written statement saying he has done nothing wrong and will ask for a speedy trial to resolve the case as quickly as possible.
"After nearly four years of investigation, Mr. Pascoe has accused me of conduct that the supervisory authorities said was legal and proper," he stated. "I have conducted myself in an honorable manner, and I look forward to clearing my family’s good name."
Quinn said the investigation has been unfair to him and his family, and he blamed his indictment on a political feud between Pascoe and Attorney General Alan Wilson, who last year tried to derail the special prosecutor's probe. Quinn said Pascoe is "a partisan Democrat" who covets Wilson's job.
"It is my belief that this public fight between them is the real motivation since I have worked for the Attorney General’s past political campaigns," Quinn stated.
Citing the ongoing investigation, Pascoe declined to comment on the statement or Quinn's indictment.
According to the indictment, Quinn routed business from the House Republican Caucus’s campaign and operating accounts to three companies in which he had a financial stake: First Impressions Inc., a business run by his father as Richard Quinn & Associates; Mail Marketing Strategies; and The Copy Shop. He served as House majority leader from 1999 to 2004, giving him considerable influence over the caucus and its members.
During this time, Quinn allegedly failed to disclose contributions and expenditures made to and from the caucus’ operating account, which were “improperly used for campaign purposes,” the indictment stated. He also used his position to drum up business for Mail Marketing Strategies from other lawmakers, the document said.
Quinn also is accused of filing fraudulent campaign disclosures and improperly benefiting from campaign donations by steering those funds to his and his father's firms.
The Post and Courier and the Center for Public Integrity first raised questions about Quinn's use of campaign donations in the 2015 series "Capitol Gains," which detailed how weak ethics laws allow South Carolina lawmakers to use their campaign war chests as personal ATM machines.
The series detailed how Quinn poured more than $105,000 into his own company and his father's since 2009, accounting for nearly 80 percent of the campaign funds he spent. He has continued to do so since that time.
A new tally last week showed Quinn has used campaign funds to pay Richard Quinn & Associates more than $82,000 since 2009 for consulting services, surveys and political mailings, even though he owns his own direct-mail firm. The lawmaker also has shoveled more than $52,000 in campaign donations into his own company for similar services.
In a 2015 interview, Rick Quinn told The Post and Courier he prefers to hire companies owned by him and his father because it costs him less money: “If there was someone cheaper, I would use them."
Richard Quinn also told the newspaper he saw no problem with the arrangement.
“Why not use a family member you trust?”
The elder Quinn, who has not been charged with any crime, did not immediately return a call Tuesday seeking comment on the charges against his son.
A bond hearing has not been set for Quinn. He will be allowed to accept service of the indictment and attend his bail hearing on the same date, according to a press release from Pascoe's office. The clerk of State Grand Jury would not comment Tuesday if a scheduled May 23 hearing in Columbia involving the Pascoe probe concerns Quinn.
Rep. Bruce Bannister, R-Greenville, said he was surprised by the indictment, as the charges seem to run counter to guidance given by the House Ethics Committee about the parameters of lawmaker conduct. Bannister served as House majority leader from 2012 to 2016.
“I know that the Ethics Committee has weighed in on all of these issues,” he said. “Some of the allegations are contrary to what the Ethics Committee has said are appropriate things.
“That struck me as an interesting question to answer. If the Ethics Committee tells you its OK, and then you’re indicted for it, that’s a difficult position to put members in,” Bannister said.
Over four decades, Richard Quinn has become something of a legend in South Carolina politics.
The indictment capped months of speculation surrounding the Quinns.
Investigators have collected records from Quinn's father's clients, including the University of South Carolina, BlueCross BlueShield of South Carolina and SCANA. Former lawmakers who worked with Quinn have gone before the State Grand Jury to testify. The State newspaper reported in March that investigators raided the firm's offices and hauled away boxes of records. Soon after, a Quinn client, Sen. John Courson, was indicted on accusations of laundering $133,000 in campaign money through the consulting firm.
The SLED report in which the Quinns were named was used in the case that led to the 2014 guilty plea by then-House Speaker Bobby Harrell, R-Charleston, for pocketing campaign cash. The report also mentioned suspect actions by state Rep. Jim Merrill when the Charleston Republican headed the House GOP Caucus. Merrill was indicted in December on 30 ethics charges dating back to 2001, including lobbying while in office.
Over four decades, Richard Quinn has built an empire in South Carolina politics. On the national level, his clients have included Ronald Reagan, Strom Thurmond and John McCain. But the firm’s influence is much more pervasive on the state level, where his clients have included Gov. Henry McMaster, former Senate Leader Glenn McConnell, U.S. Sen. Lindsey Graham and U.S. Rep. Joe Wilson. Wilson's son, Alan, became the third straight Quinn client to win the attorney general's office, in 2010. State Education Superintendent Molly Spearman and state Treasurer Curtis Loftis won statewide seats with Quinn's help.
Quinn's legislative clients have chaired committees that oversee the budget, education and legal issues. They also included three straight House GOP caucus leaders, including his son, who entered the Statehouse race at age 23 in 1989.
Rick Quinn serves on the House Judiciary Committee, a panel that is a key conduit for legislation affecting some of his father’s clients, including the S.C. Association for Justice, a trial lawyers group. He also formerly served on the House Education and Public Works Committee at around the same his father’s firm was working for the University of South Carolina to, among other things, help cut regulatory hurdles for colleges and win money needed to build the new $80 million law school.
Rick Quinn has said he and his father keep their business affairs separate. They do, however, operate in the same political sphere, share some of the same clients and operate out of family-owned buildings on the same block of Columbia's Gervais Street, just down the street from the Statehouse. Both also operated for a time out of side-by-side offices in a Cayce building owned by former state Rep. Kenny Bingham, a fellow Richard Quinn & Associates client and Republican who chaired the House Ethics Committee.
McMaster's office did not respond to a request for comment about the Quinn's indictment Tuesday. McMaster revealed Friday that he is not going to work with Richard Quinn & Associates in the 2018 race, instead hiring the campaign manager who led Nikki Haley to two wins as governor.
Quinn's indictment came just about a year after one of his allies, the attorney general, tried to fire Pascoe from the corruption probe. Richard Quinn & Associates ran Wilson's campaigns for attorney general in 2010 and 2014, and Wilson has continued to pay Quinn for work on his 2018 re-election bid. In all, Wilson has paid RQA $471,000 since 2009 for campaign-related work.
Wilson appointed Pascoe special prosecutor of the corruption probe but later tried to block the Dorchester County Democrat's efforts to use the State Grand Jury in the investigation, calling the move an overreach on Pascoe's part. Wilson torched the special prosecutor in a fiery news conference, calling Pascoe a liar, “tainted” and said he wasn’t even his fifth choice for the job. Pascoe, in turn, accused Wilson of interfering with the investigation.
The dispute landed before the state Supreme Court, which dealt Wilson a humbling blow by siding with Pascoe and allowing the special prosecutor to maintain control of the probe.
Post and Courier reporters Maya T. Prabhu, Andy Shain, Andrew Brown and Schuyler Kropf contributed to this report.
This story was published in The Post and Courier.
The Justice Department has accused insurance giant UnitedHealth Group of overcharging the federal government by more than $1 billion through its Medicare Advantage plans.
In a 79-page lawsuit filed late Tuesday in Los Angeles, the Justice Department alleged that the insurer made patients appear sicker than they actually were in order to collect higher Medicare payments than the company deserved. The government said it had “conservatively estimated” that the company “knowingly and improperly avoided repaying Medicare” for more than a billion dollars over the course of the alleged decade-long scheme.
“To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by health care providers and insurers,” said acting U.S. Attorney Sandra R. Brown for the Central District of California, in a statement announcing the suit. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need — not to line the pockets of participants willing to abuse the system.”
UnitedHealth denied the allegations.
Tuesday’s filing marks the second time that the Justice Department has intervened to support a whistleblower suing UnitedHealth under the federal False Claims Act. Earlier this month, the government joined a similar case brought by California whistleblower James Swoben in 2009. Swoben, a medical data consultant, also alleges that UnitedHealth overbilled Medicare.
The case that the feds effectively joined on Tuesday was first filed in 2011 by Benjamin Poehling, a former finance director for the UnitedHealth division that oversees Medicare Advantage Plans. Under the False Claims Act, private parties can sue on behalf of the federal government and receive a share of any money recovered.
UnitedHealth is the nation’s biggest operator of Medicare Advantage plans, covering about 3.6 million patients in 2016, when Medicare paid the company $56 billion, according to the complaint.
Medicare Advantage plans are private insurance plans offered as an alternative to Medicare’s traditional fee-for-service option.
Medicare pays the private health plans using a complex formula called a risk score, which is supposed to pay higher rates for sicker patients than for those in good health. But waste and overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity concluded that improper payments linked to jacked-up risk scores have cost taxpayers tens of billions of dollars.
Tuesday’s court filing argues that UnitedHealth repeatedly ignored findings from its own auditors that risk scores were often inflated, as well as warnings by officials from the Centers for Medicare & Medicaid Services (CMS) that the firm was responsible for ensuring the billings it submitted were accurate.
UnitedHealth argued that it had done nothing wrong, and said it would aggressively contest the case.
“We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS about our approach under its unclear policies,” UnitedHealth spokesman Matt Burns said in a statement.
Burns went on to say that the Justice Department “fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously.”
A spokesman for CMS, which has recently faced congressional criticism for lax oversight of the program, declined comment.
Central to the government’s case is UnitedHealth’s aggressive effort, starting in 2005, to review millions of patient records to search for missed revenue. These reviews often uncovered payment errors, sometimes too much and sometimes too little. The Justice Department contends that UnitedHealth typically notified Medicare only when it was owed money.
UnitedHealth “turned a blind eye to the negative results of those reviews showing hundreds of thousands of unsupported diagnoses that it had previously submitted to Medicare,” according to the suit.
Justice lawyers also argue that UnitedHealth executives knew as far back as 2007 that they could not produce medical records to validate about one in three medical conditions Medicare paid UnitedHealth’s California plans to cover. In 2009, federal auditors found about half the diagnoses were invalid at one of its plans.
The lawsuit cites more than a dozen examples of undocumented medical conditions, from chronic hepatitis to spinal cord injuries. At one medical group, auditors reviewed records of 126 patients diagnosed with spinal injuries. Only two were verified, according to the complaint.
The Justice Department contends that invalid diagnoses can cause huge losses to Medicare. For instance, UnitedHealth allegedly failed to notify the government of at least 100,000 diagnoses it knew were unsupported based on reviews in 2011 and 2012. Those cases alone generated $190 million in overpayments, according to the suit.
While Medicare Advantage has grown in popularity and now treats nearly 1 in 3 elderly and disabled Medicare patients, its inner workings have remained largely opaque.
CMS officials for years have refused to make public financial audits of Medicare Advantage insurers, even as they have released similar reviews of payments made to doctors, hospitals and other medical suppliers participating in traditional Medicare.
But Medicare Advantage audits obtained by the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit show that payment errors — typically overpayments — are common.
All but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid — often by thousands of dollars per patient. Overall, just 60 percent of the medical conditions health plans were paid to cover could be verified. The 2007 audits are the only ones that have been made public.
CMS officials are conducting more of these audits, called Risk Adjustment Data Validation, or RADV. But results are years overdue.
This story was produced by Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.