Congressman spent tax dollars on vendor owned by a member of his staff

WASHINGTON — U.S. Rep. Jim Hagedorn likes to boast on mail he sends to his constituents that his postcards are, “Proudly printed in Minnesota!”

What the Minnesota Republican fails to mention, though, is he paid a Texas-based company owned by one of his staff members more than $100,000 of taxpayer money to do some of that printing — a business relationship Congressional ethics experts say is a clear violation of government ethics rules.

Hagedorn also paid hundreds of thousands of dollars for printing to a separate, mysterious company that has existed for less than a year and seems to have gone to great lengths to conceal its ownership, according to publicly available Congressional spending records and business registration filings. 

Both Hagedorn’s office and that company, Abernathy West LLC, did not respond to multiple requests asking who owns the business.

On Friday —  just more than a week after the Minnesota Reformer asked the office about the transactions — Hagedorn fired his chief of staff, Peter Su, over concerns about “irregular spending,” according to the Daily Caller. Hagedorn’s spokesman and interim chief of staff did not respond to requests asking to confirm the report. Su did not respond to a LinkedIn message seeking comment.

Hagedorn: Highest-spending Congressman

Hagedorn, a self-described fiscal conservative who represents the state’s 1st District, has the distinction of being the highest-spending Congressman so far this year, blowing through more than half a million dollars in the first three months of 2020 — nearly 40% of his yearly taxpayer-funded office budget. He’s spent almost twice as much as the average House of Representatives office, according to Legistorm, a company that tracks congressional budgets.

Hagedorn spent roughly $280,000, or about 19% of his entire annual budget, just on printing and sending mail to constituents between Jan. 1 and March 31, according to Congressional spending records. That’s close to what the average Congressional office spent on payroll and expenses combined during that time frame, Legistorm found.

Of that amount, Hagedorn spent $60,240 on printing with a company called Invocq Technologies LLC. He also previously spent $41,088 with that company in September 2019, according to congressional spending records. Those records only reflect spending through the end of March, as records for the second quarter of the year are not yet publicly available.

Texas business registration documents show that Invocq Technologies was formed in 2011 and is owned by John Brevard Sample, of Houston. Sample is listed as the chief financial officer, chief technology officer and director of the company as well as its registered agent.

Sample used to work with Su in the Virginia state government, and since January 2019, Sample has drawn a $45,000 annual salary from Hagedorn’s office as a part-time employee handling digital media, according to public listings of congressional staff.

“Well that’s a problem,” said Meredith McGehee, executive director of Issue One, a bipartisan democracy reform nonprofit. “Anyone who is in your employ in any shape or form, you shouldn’t be doing business with.”

Although Congressional conflict of interest rules are notoriously opaque, McGehee pointed to the House Ethics Manual, produced by the House Ethics Committee, which lays out specific rules about how congressmen can or can’t spend their office budgets. The manual includes an example that McGehee said applies cleanly to this case.

“Member B‘s district manager is part owner of a building in the district. B may not rent space in the employee‘s building for the congressional district office,” according to the manual.

A similar rule is printed in the Members’ Congressional Handbook, a rulebook produced by the House Administration Committee, which oversees all money Congress spends on its own staff, facilities and other internal matters.

“Unless specifically authorized by an applicable provision of federal law, House Rules, or Committee Regulations, no Member, relative of the Member, or anyone with whom the Member has a professional or legal relationship may directly benefit from the expenditure of the [members’ official budget],” according to a clause in the handbook.

The House Ethics Manual, referring back to that clause in the Members’ Congressional Handbook, states that, “it appears that these rules preclude a Member or committee from contracting with a staff member for the acquisition of goods, or of any services outside of the employment context.”

‘Consistent with all regulations’ until not

When contacted by the Reformer last week, Hagedorn’s office, maintained this spending was not against the rules.

“John Sample is a part-time staffer and also has an ownership interest in Invocq Technologies LLC, which acted as a vendor for Congressman Hagedorn’s office,” a Hagedorn spokesman said in an emailed statement. “We confirmed that relationship was consistent with all regulations promulgated by the House Committee on Administration.”

At the time, Hagedorn’s spokesman did not respond when asked several follow-up questions, including why the office believes spending taxpayer money on a staff member’s business is permissible, what specific services the company provided and whether the office pre-cleared the transactions with the House Ethics or House Administration committees.

“This is like neon signs flashing red signals all over the place. This is a real test of the Ethics process.”  – Norm Ornstein, a government ethics expert, American Enterprise Institute.

Sample did not return an email, phone call, text message, Facebook message, LinkedIn message and Twitter direct message requesting comment and Hagedorn’s office did not reply to a request to make Sample available for an interview. 

On Saturday, both Hagedorn’s spokesman and his new interim chief of staff, Carol Stevenson, who previously ran his district office, did not respond to emails asking whether Hagedorn still believes this spending was permissible. Another request to reach Sample was not returned.

However, Hagedorn’s office released this statement to the Daily Caller:

“When I became aware of this matter approximately two months ago, I took immediate action by hiring outside counsel to perform an independent review, making senior-level personnel changes, and reestablishing best practices for staff and the acquisition of services.

“I also advised the House Committees of jurisdiction, House Administration and Ethics, of our independent review, which remains ongoing. Moving forward, I will continue to provide the Committees with findings from our review and offer recommendations to improve House franking operations.

“While these relatively routine duties were fully delegated to my former Chief of Staff and our finance officer, I acknowledge responsibility for the oversight of my office and will continue to make any necessary management improvements.” 

An aide for the Committee on House Administration declined to comment on the specifics of the case, but acknowledged Hagedorn informed the committee in a letter about an internal review of the franked mail process in his office. The letter was shared with the committee by an outside ethics lawyer working on Hagedorn’s behalf, the aide confirmed.

A spokesman for the House Ethics Committee declined to comment. 

Invocq emerges

In the nearly 10 years since Invocq Technologies was founded, it seems to have done no significant business. The company’s simple website states the “small firm prides itself in building connections between worlds, fostering cultural appreciation and new markets.” It lists no past work and makes no mention of the owners. 

Records kept by the Texas Comptroller of Public Accounts show the company was founded in 2011 by Sample and Catherine Keszei, a New York City-based creative designer. Sample and Keszei filed tax forms for a few years, but by 2016, Invocq Technologies’ business charter had been forfeited for failure to pay a franchise tax, according to filings held by the Texas Secretary of State’s office. 

A Twitter account associated with the company mostly tweeted about emerging technology, but the account hasn’t uttered a peep since 2012 and the company’s Facebook page has been deleted.

Then, on Nov. 5, 2018, one day before the elections that brought Hagedorn into office, Sample reinstated the company without his former business partner, after paying all the fees and taxes. He also filed to allow Invocq to do business under an assumed name, Love Natural Gas Coalition. Little to no information exists about business conducted under that company name.

Keszei, who has no known connection to politics or political work, died in December at the age of 32. Her brother, Michael, said in an interview that the family was never really clear what the company did and could rarely find any information about it.

Sample, meanwhile, lists on his resume digital and broadcast video production for Arizona Sen. John McCain’s failed 2008 presidential run, former New Jersey Gov. Chris Christie’s 2009 gubernatorial victory and former Massachusetts Sen. Scott Brown’s upset victory in 2010.

Since then, other than co-founding Invocq Technologies, he worked in former GOP Virginia Gov. Bob McDonnell’s administration as a marketing and information security employee for the now defunct Virginia Department of Business Assistance. 

The department was headed by Su, who became Hagedorn’s chief of staff in January. Sample joined the payroll a week later.

Abernathy connection

Hagedorn’s office also did not respond when asked who owns Abernathy West, a company that was formed in August 2019.

Hagedorn paid Abernathy West nearly $340,000 for printing services between October and March, according to his office’s spending records, with more than a dozen payments ranging from about $7,000 to more than $62,000.

Public records don’t reveal who owns the company because the owner set it up to keep that information private. 

The business was incorporated as a limited liability company in Delaware on Aug. 20, 2019, using LegalZoom, an online platform that allows people to create businesses, according to records kept by the Delaware Division of Corporations. As an LLC, Abernathy West doesn’t have to file annual reports, and since the company was created through a third-party registered agent, the records don’t reflect who owns or manages the company. A spokesman for the Delaware Division of Corporations said the state doesn’t even have that information.

The company’s website, abernathywest.com, was bought on Aug. 19, 2019, in a private transaction using Domains by Proxy on GoDaddy.com, which allows the domain owner to keep personal information secret. A Twitter account associated with the company, also created in August 2019, has never tweeted.

The website presents the company as a business specializing in digital, print and social marketing, but does not list any owners or employees or any past clients. Requests sent via a contact form on the website were left unanswered and voicemail messages left at a contact number on the website were not returned. 

“This is like neon signs flashing red signals all over the place,” said Norm Ornstein, a government ethics expert and resident scholar at the conservative American Enterprise Institute. “This is a real test of the Ethics process. If you don’t crack down on something like this, you’ve really lost your way as an Ethics Committee.”

Bryson Morgan, a former investigator with the Office of Congressional Ethics who now works for a private law firm, cautioned that while the rules seem clear-cut in print, they’re often enforced loosely because “member offices are treated like these little fiefdoms that they control” by the overseeing committees.

“The reasonable conclusion to draw from that is that public funds should not be used to pay a printing company that is owned in whole or in part by a member of the congressional staff,” Morgan said. “But I don’t think it has quite the bite that the language of it might suggest.”

Morgan said that, if nothing else, these revelations raise questions about whether the congressman is overseeing his pool of government money wisely and getting services at a fair market rate, especially given Invocq Technologies and Abernathy West have no known history of doing the work Hagedorn contracted them to do.

Printed in Minnesota? 

In Congress, large printing costs usually mean the office hired a direct mail firm. These businesses help congressmen produce and send mailers advertising their services and accomplishments to people in their districts.

The system is called franked mail. While congressmen can’t spend their office budgets on political ads, they can blitz their districts with official mail using taxpayer money. It’s been a longtime, well-known loophole for members of Congress in battleground districts to juice up their name ID without having to spend a cent of political donor money. 

Hagedorn, who was endorsed by President Donald Trump on Aug. 10, won his district in 2018 by the smallest of margins, and polling this year shows another tight race in his rematch with the Democratic candidate, former Army officer and Pentagon official Dan Feehan.

There are regulations about what you can say and when you can send franked mail. Members are forbidden from sending it starting 90 days before a primary or general election, for instance, so it’s not unusual to see a lot of spending on printing at the beginning of an election year before the restrictions kick in.

Still, Hagedorn took the use of franked mail to new heights, spending far more than other members and sending more mail. In all, Hagedorn dispatched 22 of these communications during the first three months of 2020, ranging from letters announcing town halls to a robocall phone poll to a postcard advertising Hagedorn’s role passing a bill to combat African swine fever. 

The mailers can be sent without postage, but the shipping isn’t free; members reimburse the Postal Service out of their official budgets and have to pay the printing costs. Hagedorn outpaced all other members with more than $58,000 in franked mail reimbursements in the first quarter of the year, and that might go some of the way toward explaining why his printing costs were so high, too.

Contrast that with Rep. Pete Stauber, another first-term Minnesota Republican in a less perilous, but still competitive, district on the other side of the state. He sent five communiques during the same time frame. When Gov. Tim Walz occupied what is now Hagedorn’s seat, he hardly spent more than $2,000 on franked mail and printing combined in a quarter. Hagedorn sent even more franked mail than members in other states who are considered by pollsters more likely to lose their seats than him.

Also in stark contrast to Hagedorn, most offices who do spend big money on franking use established direct mail firms that have long histories of working with congressmen and are transparent, sometimes even self-promotional, about who owns them.

Neither Abernathy West nor Invocq Technologies appear to have done business with any congressional offices in at least the last 10 years, since congressional spending records have been available online. 

Sometimes, members of Congress avoid the big firms entirely and spend money with smaller printing businesses in their own districts. In fact, that’s what Hagedorn used to do. Records early last year show he spent a few thousand dollars at Blue Earth Graphics, based in Blue Earth, Minn., which Hagedorn counts as his home town.

Jamie Lemon, who co-owns and runs Blue Earth Graphics, said in an interview that she hadn’t given it much thought until a reporter called, but Hagedorn’s office hadn’t sent any work their way since last summer.

That was when the office began spending money on printing with Invocq Technologies and Abernathy West.

Around that same time, the postcards Hagedorn’s office sent to constituents that used to declare, “Proudly printed in Blue Earth, Minnesota!” got a small tweak. Now they simply read, “Proudly printed in Minnesota!”

Where exactly in Minnesota are they printed? When asked, Hagedorn’s office refused to say.

Correction: The story has been updated to correct Bryson Morgan’s previous employer. He is a former investigator with the Office of Congressional Ethics.