Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets

by Schweizer, Peter

  Even large corporations from halfway around the world have learned that all things must go through the Reids. The Chinese energy company ENN must have been reminded of its own country, where family payoffs and relationships are a regular part of doing business. ENN wanted to develop a $5 billion solar energy facility in Nevada when Harry Reid traveled to China in 2011 to meet with company executives. Shortly thereafter, executives at the company kicked in donations to two of Reid’s separate fund-raising committees. Mu Meng, the vice president of ENN, contributed $10,000 on July 19, 2011, to Reid’s Searchlight Tahoe Victory Fund. So, too, did the chief operating officer of the ENN Group, DeLing Zhou, who gave another $10,000 in two separate contributions on July 18 and July 20 of that year.26 On August 10, 2011, Zhou also sent $5,000 to Reid’s Searchlight Leadership Fund (his leadership PAC).27

  ENN also hired Rory Reid’s law firm to represent it. The firm helped to locate a 9,000-acre desert site for the project and managed to arrange for the Chinese firm to buy the Clark County land for well below its appraised value. (Rory Reid had been the former chairman of the Clark County Commission.) Meanwhile, in Washington, as Reuters put it, Harry Reid has been one of the project’s “most prominent advocates.”28 Back in Nevada, the senator tried to “pressure Nevada’s largest power company, NV Energy, to sign up as ENN’s first customer,” according to Reuters.29

  Extracting money from wealthy interests and companies is a family affair. The growing number of Reid family finance committees and fund-raising operations led the Reids in 2003 to ask the Federal Election Commission to give son Rory flexible status when raising money. Reid was on the Clark County Commission at the time and had raised money for his father. But he also wanted to raise money for the Nevada state Democratic Party, which Harry Reid controlled as well. According to the family’s filings with the FEC, they were asking for the government body to not consider Rory Reid “an agent of Senator Reid,” even though he acted “and continues to act as the Senator’s fundraising agent in certain circumstances.” The distinction was important because there were different limits on how much money you could donate to a federal candidate or a state political party. The FEC declared that “Rory Reid’s fundraising activities will only be attributed to a federal candidate or officeholder if he is acting on the authority of that candidate or officeholder.” The beauty of this arrangement is that Nevada state law permitted the party to raise “unlimited amounts from individuals, corporations, and labor organizations.” The FEC concluded, “So long as [Rory Reid’s] fundraising for the state party is not done on the authority of the Senator, then it is permissible under federal law.”30

  Just as the Las Vegas mob was able to move funds through a combination of front men and silent partners, the Reids have been able to shift money through a network of fund-raising operations that go well beyond a simple campaign fund-raising committee.

  Powerful companies or interests that have a stake in legislation in front of the Senate or that need help in Nevada can get tapped not only for a regular campaign donation but also by Reid’s leadership PAC, a joint fund-raising committee, and even a Nevada state party committee. And like the manager of any good operation, Senator Reid is able to move the funds around. His campaign committee Friends for Harry Reid has received cash infusions from the Reid Majority Fund, the Reid Nevada Fund, and the Reid Victory Fund.31 The Reid Majority Fund is a joint fund-raising operation that allows him to take in large donations. During the 2012 election cycle, for example, the largest contribution was $30,400 from a lobbyist at Elmendorf Strategies.32 Another entity, the Reid Victory Fund, is also a joint fund-raising committee, which enables the senator to receive large contributions from lobbyists or hedge fund managers like Roger Altman, who kicked in $10,000 in June of 2010.33 Many of the same corporate and labor PACs who give to Reid’s Leadership Fund also send money to his Victory Fund.34

  Harry Reid’s Searchlight Leadership Fund is almost completely funded by corporate and labor PACs and lobbyists. During the two-year election cycle from 2011 to 2012, the fund collected donations from more than 250 PACs, from the American Dental Association to the National Association of Home Builders, to the United Auto Workers. Reid was not up for reelection—he had just been reelected in 2010—but the fund took in $1.6 million in PAC contributions and another $817,000 in individual contributions. The majority of the individual donations were from executives at companies that had given PAC donations or were lobbyists.35

  Like the lobbyists who gathered at that D.C. steak house after the 2004 election to pay tribute to Reid, these lobbyists and corporations gave to Reid because they had to. Failure to do so would mean possibly getting screwed when an important bill came up for a vote.

  When Rory Reid decided to run for governor of Nevada in 2010, it quickly became clear that the apple had not fallen far from the tree. Rory’s campaign set up an elaborate network of no less than ninety-one separate political action committees that could serve as conduits for money to his campaign. These were shell PACs formed in the fall of 2010 and then dissolved on December 31, 2010.36 Veteran Nevada reporter Jon Ralston of the Las Vegas Sun broke the story. Ralston also discovered that all the PACs had the same Las Vegas residential address, which happened to be the home of Joanna Paul, a member of the Reid campaign’s finance staff. (Ironically, she was in charge of compliance.)37 Harry Reid solicited high-dollar donors for the Economic Leadership PAC, which subsequently brought in more than $800,000 over a five-month period. A PAC can give only a maximum of $10,000 to a candidate, but with the ninety-one PACs set up, the donations were disbursed in $10,000 increments to these other PACs, which then in turn quickly funneled the money to Rory Reid’s campaign account. This arrangement allowed people like California film producer Steve Bing to funnel $200,000 to Reid’s campaign.38

  In April 2013, Harry Reid set up two new fund-raising organizations which he could use to extract donations and move money around.39 The Reid Searchlight Fund was organized on April 5, 2013, according to FEC records.40 Five days later, Senator Reid set up the Searchlight Lake Tahoe Victory Fund.41 Both list Chris Anderson, the finance chair of his campaign committee, as the treasurer.42 Apparently, one can never have too many fundraising committees.

  While “Mr. Cleanface” runs the Democratic Party’s toughest family extortion syndicate, on the other side of the aisle few Republican families can compete with the Blunts.

  Roy Blunt grew up and spent much of his young adult life in southwestern Missouri, a decidedly less exciting place than Las Vegas. There’s no evidence that he had to fight battles with the mob. His father sold milking equipment to dairy farmers, work that perhaps was prophetically symbolic. Like the Reid family in Nevada, the Blunts set up a “milking” operation in Missouri that would produce a strong brew of government power and profit-making potential.43

  Roy Blunt was a schoolteacher who ran for county clerk as a young man. When he decided to run for Congress in 1996, he made a pilgrimage to Washington, where he met and consulted with a brash and powerful congressman named Tom DeLay. The Texas Republican was a fund-raising machine, which meant he was rising rapidly in the GOP ranks. Blunt took notice, and when he won his House seat race, he became an instant protégé to DeLay. Blunt and DeLay were equally impressed with each other. After only one term in Congress, Blunt was selected by DeLay to be chief deputy whip, the highest appointed position for House Republicans. His job was to be the chief vote-counter. But he also became a liaison between House Republicans and lobbyists. He followed DeLay’s lead in setting up numerous political action committees, which allowed him to extract donations and establish a power base in Congress.44

  As the Washington Post put it, Blunt came to “build a political machine of his own that extends from Missouri deep into Washington’s K Street lobbying community.”45 The operation became known as “Blunt, Inc.” As George W. Bush’s White House political director Ken Mehlman put it, “There’s nothing that happens in Congress that Roy Blunt isn’t a major archite
ct of.”46 And this architect didn’t come cheap.

  Blunt took responsibility for day-to-day meetings with lobbyists and formed an informal leadership team of twenty-five specific lobbyists to set the agenda. DeLay was constructing a political machine that included his congressional office and lobbyists who funneled money through a network of PACs and political committees run by his current and former staffers. At the center of the nexus was the Alexander Strategy Group, a lobbying firm founded by DeLay’s former chief of staff. DeLay’s wife, Christine, was on the payroll. Blunt made a similar arrangement in July 1999 with the Rely On Your Beliefs (RoyB) leadership PAC. Like DeLay’s operation, RoyB was run by the Alexander Strategy Group. Blunt was able to transfer those funds to Missouri Republican organizations, which in turn could transfer the funds to help his son, Matt, who was running for secretary of state.47

  Missouri Republicans nicknamed Matt Blunt “Baby Blunt” because he was young, just twenty-eight, when he announced his bid to become Missouri’s secretary of state. Younger brother Andrew served as his campaign manager.48

  Roy Blunt leveraged his position to steer money to the race. How could a D.C.-based lobbyist or corporation be motivated to send checks to a candidate for an office in Missouri with no real powers? Simple: by extraction. Roy was on the powerful Commerce Committee and was assigned to finance, telecommunications, and trade subcommittees. So checks arrived for the Missouri secretary of state race from Freddie Mac executives and railway transportation companies, as well as from Washington lobbyists. (Even famed motion picture industry lobbyist Jack Valenti sent a donation.) Never mind that as secretary of state, Baby Blunt would have no power to affect any of them. What mattered was that Roy Blunt had made it clear that he wanted the money to flow to his son. And with important legislation before his committees, they were eager to comply.49

  Altria (parent company of Philip Morris) sent $100,000 to the Seventh District Congressional Republican Committee. (Roy Blunt represented Missouri’s Seventh District.) The committee in turn donated $24,200 to Matt Blunt’s campaign—the maximum amount permitted.50 On March 16, 2000, Friends of Roy gave $50,000 to the same party organization. Eight days later, that committee transferred $40,000 to Missourians for Matt Blunt.51 Later, an attorney for Roy Blunt would make a $3,000 payment to the Missouri Ethics Commission and admit that RoyB had violated campaign rules.52

  Matt Blunt was elected secretary of state on November 7, 2000, in a tight race. He was the youngest person ever to win statewide office in Missouri. Days after he was sworn into office, his younger brother and campaign manager, Andy Blunt, registered as a lobbyist. By age twenty-six, Andy Blunt would boast an impressive list of clients that included Philip Morris, Miller Brewing Company, Southwestern Bell, UPS, and railroad companies Burlington Northern and Santa Fe.53

  Blunt saw that government power gave you leverage over wealthy industries and companies that could be translated into money. He moved to solidify his relationship with the lobbying community. In 2003 his longtime chief of staff, Gregg Hartley, left to become vice chairman of the massive lobbying firm Cassidy & Associates. It didn’t constitute a break with Blunt so much as simply a job change. “Blunt and I both conclude that I could still be a valuable part of his team,” Hartley told Washington Post writer Robert Kaiser in an interview for Kaiser’s book So Damn Much Money.54 Indeed, Cassidy & Associates would become a key component in the Blunts’ power structure. Andy Blunt would soon sign on as a consultant for Cassidy & Associates. “Mr. Blunt is available, on assignment, to augment Cassidy and Associates legislative and executive branch advocacy campaigns, at the state and federal level,” said the lobbying outfit. The Cassidy website points out that Andy’s clients include “Fortune 500 and 100 companies, state government vendors, and state trade associations.”55 Older brother Matt would also join Cassidy in 2009.56

  Roy Blunt’s climb to the top continued when he was elected majority whip in 2003. At the time nobody knew that the married Blunt was dating a lobbyist for Altria named Abigail Perlman on the side.57 Surely not coincidentally, Blunt quietly tried to insert a provision in a Homeland Security bill that would prevent the Internet sale of tobacco products. It would have been a big win for Altria, which was the new name for Philip Morris, but the gambit was discovered by his Republican colleagues, who promptly killed it. Not only was Ms. Perlman a lobbyist for Altria, but so was Blunt’s son Andy in Missouri. Later, Roy Blunt would divorce his wife and marry Abigail, who remains a high-profile lobbyist to this day. For their wedding, Blunt made sure to obtain a waiver from the House Ethics Committee from “all financial reporting requirements regarding all wedding gifts.”58

  Blunt became adept at using his powerful position in the House to do favors for his family members’ lobbying clients. For example, his son Andy represented UPS. Roy Blunt inserted a provision into the Iraq War Emergency Appropriations Bill that would have required the U.S. military to move cargo only by majority-owned U.S. firms. It was a bid to block foreign competitors from getting any shot at winning some of the lucrative postal business shuttling supplies and packages between the United States and Iraq.59

  In 2003 the family’s climb to power took another turn when the young Missouri secretary of state Matt Blunt announced his plans to run for governor. There were two “first-class gubernatorial” candidates who were also looking at the race: the State Senate president, Peter Kinder, and Congressman Kenny Hulshof. But they both knew how it worked: you didn’t run against the Blunts.60 They both demurred, so the office was young Matt’s for the taking. Andy, still a lobbyist, came over to run the campaign. They were joined by sister Amy Blunt, who served as a strategic adviser. Matt Blunt was only thirty-three, yet he won the election. Amy registered as a lobbyist for the firm Blackwell Sanders Peper Martin. The Blunts quickly announced that neither Amy nor Andy would lobby their brother. “My brother never lobbied the Secretary of State’s office and my brother has been very clear that he’s not going to lobby the executive branch of state government,” said the governor- elect.61

  Technically this was true. But there were easy ways around it. On December 9, 2004, Andy Blunt’s firm hired a new associate named Jay Reichard, who was registered to lobby all branches of government. Reichard and Andy soon shared seventeen clients, thirteen of which were new clients signed after Matt had been elected governor. “Jay Reichard is not related to the governor,” Andy Blunt said, “and is free to lobby anybody he wants.”62 True. And it was also true that Andy Blunt was right down the hall.

  Soon it became clear that if you wanted something done, you had to hire a Blunt to help you.

  In 2004 SBC Communications supported a Missouri state bill that would redefine competition between landline telephone companies and their wireless competitors. The bill would have given companies like SBC the opportunity to adjust their rates more quickly. But the bill died. In 2005 SBC hired Andy Blunt to “work behind the scenes” on the bill. Reintroduced as Senate Bill 237, it passed and was signed by his brother, the governor.63

  It was part of a broader pattern of family profiteering—or attempted profiteering. Sometimes, when the family business became too public, their deals fell apart.

  In 2005 Governor Blunt had to decide whether to sign a bill that would prohibit real estate brokers from offering homeowners bare-bones services in exchange for a low fee (H.B. 174). It was clearly an anticompetitive bill, and both the Justice Department and the Federal Trade Commission denounced it. But of course Realtors wanted it to pass, so they would be prohibited from undercutting one another’s rates. The National Association of Realtors hired Gregg Hartley of Cassidy & Associates, under a one-month lobbying contract. They paid him $50,000 “to assist in pursuing its government affairs objectives. The nature of these objectives shall be working to ensure the enactment of HB 174 [the bill in question].” Sam Licklider, the chief lobbyist for Realtors in Missouri, said he believed Blunt would veto the bill. So they hired his father’s old chief of staff to lobby him. The govern
or signed it.64 There was no major public flap about conflict of interest, and the family business prospered. Whenever you hear Republicans proclaiming themselves to be in favor of free markets, you had better make sure they have no family members who are paid to squash that freedom.

  On January 12, 2006, during his State of the State Address, Governor Matt Blunt pushed for a $25 million Healthcare Technology Fund. It was for the purpose of converting medical records into electronic records. Cerner Corporation, based in North Kansas City, was hoping to win a contract to help with the conversion. On November 12, 2005, Jeanne Patterson, wife of Cerner CEO Neal Patterson, had given $20,000 to the Republican Sixth Congressional District Committee, a party organization. Just four days earlier, the Sixth District Committee had transferred $10,000 to Blunt’s campaign. Sixteen days after the Patterson contribution arrived, the Sixth District Committee gave $10,000 to yet another party committee, the Thirty-Second Republican Legislative District Committee, which naturally gave $10,000 to Blunt’s campaign.65 Cerner’s lobbyist was a gentleman named Jewell Patek, a former state representative.66 His lobbying firm had listed Andy Blunt as “of counsel” on several lobbying bids.

  Also in 2006 Governor Blunt signed legislation requiring that gasoline sold in Missouri contain 10 percent ethanol. He also wanted full funding for an ethanol incentives fund, which would include a tax credit from the Missouri Agricultural and Small Business Development Authority. Andy Blunt was a founding member of a company called Central Missouri Biofuels, which was hoping to build a large ethanol plant that would produce 50 million gallons of ethanol per year. Partners in the project included the wife of Missouri congressman Sam Graves and a state representative and his wife. It fell to Sarah Steelman, the state treasurer and a fellow Republican, to kill the deal out of concerns relating to conflicts of interest. Andy Blunt was meanwhile also representing AGP, an Omaha, Nebraska, firm that was opening another ethanol production plant in Missouri.67