July 01, 2006

Lewis Scandal Spreads

The cosy connection between Representative Jerry Lews, head of the appropriations committee and Copeland Lowery has been very lucrative for the lobbyists and the Congressman. Recently the Center for Responsive Politics reported that the clients of Copeland Lowery have contributed $6.2 million to the Political Action Committees (PACs) of the members of the appropriation committee, with 15% of that going to Lewis' PAC. And Lowery's firm has done quite nicely too.

As a lobbyist, Lowery and his partners built a firm that reported federal lobbying income totaling approximately $7.4 million in 2005—nearly double its income two years earlier. The bipartisan firm has announced it will disband along party lines, as scrutiny of the Republican partners’ business dealings has intensified.

Their study looked at what Copeland Lowery and what the members of Congress got out of the clients, but not at what the clients got in return.

To determine the extent of Copeland Lowery’s influence on the appropriations committee, the Center analyzed contributions made by the lobbyists and current and former for-profit clients from 1997 through roughly the first three months of 2006. Many of Copeland Lowery’s clients retained other lobbying firms as well. In 2005, for example, Boeing reported retaining 17 other lobbying firms in addition to a staff of in-house lobbyists.

In addition to its for-profit clients, Copeland Lowery works for numerous non-profit hospitals, state and local governments and other agencies. From 1998 through 2005, these clients paid Copeland Lowery at least $13.5 million for federal lobbying.

The Center chose to exclude these non-profit clients from its analysis of contributions. Nonprofit organizations and governments typically cannot make or direct political contributions in the same way businesses can, and their employees are rarely large contributors.

Yet, it seems like some of those nonprofits are actually quite good at using lobbyists to further their own goals. Yesterday, those wonderful muckrakers at TPMmuckraker decided it would be quite interesting to dig into some of the clients that came up in the newly updated financial disclosures from Copeland Lowery.

A few days ago, Jason Rood reported that Copeland Lowery had restated their financial disclosures to the tune of almost $2 million dollars which had been missed in their original filings. Somehow, they forgot to disclose fees obtained from dozens of their clients and they felt it was important to get those reports corrected earlier this year when they realized the investigation started by the Cunningham scandal was not going to pass them by.

"We have never ever seen a case like this," said Keith Ashdown of Taxpayers for Common Sense. The DC-based watchdog group tracks lobbying and earmarks. "I have never seen a lobby firm in Washington go through every client and file amendments on dozens of clients they've had for the past five years.

"The way it was done," Ashdown said, "done days before it was first reported Lewis was under investigation -- this definitely looks like an effort to cover their legal butts."

The firm's lobbyists are in serious legal jeopardy, says Brett Kappel, a Washington, DC lawyer who specializes in money and politics. That's exactly why, if he was their lawyer, he would advise them to conduct just such a review as they did. " I would have told them. . . if you haven't been hit with subpoenas yet you will be, and they're going to match your financial records against your public reports. And if they don't match you better fix them. Because it looks a hell of a lot better at sentencing," Kappel said.

The amount of underreported income is "pretty astonishing," Kappel told me. He was almost certain that congressional officials would refer the discrepancies to the Justice Department, where they would provide fodder for criminal prosecutions of anyone signing the original disclosure forms. The likely charge -- making a false statement, a felony -- has been used by prosecutors in recent corruption investigations to win plea bargains.

"Mr. Lowery's in serious trouble," Kappel said, referring to Bill Lowery, a firm partner and close friend of Jerry Lewis who signed a number of the erroneous reports.

What Justin also noted was that there were a very few clients in the list of newly disclosed statements that were responsible for the majority of those unreported fees.

From these four key clients, Copeland Lowery failed to report ...

- at least $260,000 from ADCS, the San Diego-based defense contractor owned by accused briber Wilkes;
- at least $270,000 from the San Diego-based Foundation for the Improvement of Math and Science Education (FIMSE);
- at least $210,000 from the Rochester Institute of Technology;
- at least $210,000 from the South Coast Air Quality Management District (SCAQMD).

And because he just can't let a mystery go uninvestigated, Justin felt compelled to do some more digging into these clients and, my goodness, he definitely uncovered an interesting tidbit in regards to FIMSE.

One underreported client that stood out was something called the Foundation for the Improvement of Mathematics and Science Education (FIMSE). Lowery's firm lowballed their fees by approximately $270,000.

So I dig some digging. And what do you know? The group (like most Lowery clients), has done very well for itself, bagging $2.45 million in earmarks during its five year existence, according to an analysis by Taxpayers for Common Sense. At least one of those earmarks came from convicted felon Rep. Duke Cunningham (R-CA), who bragged in a press release about securing $450,000 for the group. And lobbying disclosure forms show that the group has sent some of those earmarked funds back to Lowery's firm in the form of $500,000 in lobbying fees.

But most intriguing of all is the failure of the group to report any of this in their IRS returns. According to the group's 990 forms, the foundation is a 501(c)(3). All of the experts I spoke to agreed that the group was required to report both the lobbying fees and revenue from earmarks. “The obligation of nonprofits to account for lobbying expenditures is a matter of law," Rick Cohen, the Executive Director of the National Committee for Responsive Philanthropy, told me. "“Every expenditure, every piece of income needs to be reported," agreed Naomi Seligman of Citizens for Responsibility and Ethics in Washington.

And what is the goal of FIMSE? Why to "improve" the San Diego schools by privatizing them through grants. This innocent little foundation was awarded an earmark (aka: our taxpayer dollars) that was greater than any other science and technology institution including Cal Tech.

Justin notes that we know that this organization spent around a half a million of their extremely lucrative grant on lobbying - but they've neglected to report where the rest of the money has gone. It sounds like that's another trail that needs to be explored further. Folks, this story is just getting going.

Posted by Mary at July 1, 2006 03:51 PM | Corruption & Graft | Technorati links |