Fictitious employees and kickbacks: What to know about TN's latest campaign finance scandal – Tennessean
With Rep. Robin Smith’s charge for federal wire fraud Monday, she now becomes the second Republican lawmaker in recent months accused of taking part in illegal schemes involving campaign firms and money.
The charge against Smith, a Republican from Hixson, is connected to a shadowy political consulting firm with ties to former House Speaker and current Rep. Glen Casada, R-Franklin, and his former chief of staff Cade Cothren.
Prosecutors allege Smith schemed with Casada and Cothren to shield the true origins of Phoenix Solutions, which they marketed to statehouse colleagues as a legitimate consulting firm.
Smith later worked with Cothren to help the firm gain official state vendor approval, and Cothren allegedly cut kickbacks to the two lawmakers from Phoenix profits, according to court records.
Smith’s campaign and a political action committee tied to her also spent around $75,000 with Phoenix Solutions, according to a Tennessean analysis.
Smith joins Sen. Brian Kelsey, R-Memphis, who was indicted in October 2021 on charges violating multiple campaign finance laws as part of a conspiracy to benefit his unsuccessful 2016 campaign for U.S. Congress.
Kelsey is accused of secretly and illegally shuffling money from his Tennessee state Senate campaign committee to his federal campaign committee.
Dick Williams, chairman of Common Cause Tennessee, said both charges show why people have very little confidence in the campaign finance system.
“You’re will always have someone, no matter the system, try to work around it,” Williams said. “But, the Citizens United decision was devastating for our ability to have any limits on this so that it’s not just the wild west.”
Smith and Kelsey join a long list of members of the General Assembly, Democrats and Republicans, charged over the years.
Operation Tennessee Waltz in 2005 and Operation Rocky Top in 1989 and 1990, are two of the most notable cases where multiple representatives were charged. Both operations involved bribery schemes.
Following the indictment, Kelsey maintained he is “totally innocent.” He announced he would not run for reelection this year. Kelsey’s trial is scheduled for Jan. 23, 2022.
In Smith’s case, she was scheduled to appear before a federal judge regarding a plea agreement Tuesday. Smith resigned her seat Monday.
Smith’s charging document refers to Casada and Cothren as Individuals 1 and 2, respectively. Neither have returned a Tennessean request for comment, nor have they been charged in the case.
Here’s what to know so far about Smith’s case.
Smith as long been a fixture in Tennessee Republican politics.
A registered nurse, Smith was elected state chair of the Tennessee Republican Party in 2007. She was elected to the House in 2018.
Prosecutors allege Cothren created Phoenix Solutions along with the help of Smith and Casada to conceal a kickback scheme.
Cothren established the company around November 2019 — after he lost his job in Casada’s office — to offer consulting and mail services for legislative members in competitive primary races, according to court records.
The trio told General Assembly members that an “experienced political consultant” named Matthew Phoenix ran the firm, but prosecutors allege he didn’t exist. Prosecutors allege Cothren was pretending to be Phoenix, according to court documents.
A Tennessean analysis of campaign finance records found eight representatives and two political action committees spent almost $200,000 with Phoenix solutions.
This includes nearly $75,000 by Smith’s campaign account and Leadership Pioneers, a political action committee affiliated with her.
An unnamed girlfriend of Cothren’s was also involved in Phoenix Solutions, according to court records.
Individual 3, referred to as Cothren’s girlfriend pretended to be a fictitious Phoenix employee, fabricating an email exchanged with Cothren, according to the charging document.
Cothren went further to conceal the true ownership of Phoenix Solutions.
In January 2020, Smith learned guidelines had changed and the House Speaker’s office wanted to work with third-party vendors directly, according to her charging document.
Smith notified Cothren the state couldn’t pay Phoenix Solutions for its services without a W-9 on file, which prosecutors allege Cothren falsified under Matthew Phoenix’s name.
An email enclosed in the charge document alleges Cothren received 30% of Phoenix Solutions profits, while Casada and Smith received 25% each. The remaining 20% was reinvested back in the business, according to the court records.
Casada and Cothren are also being investigated by the Tennessee Registry of Election Finance for their connections to Faith Family Freedom Fund PAC.
In shades of similarity to the scheme in Smith’s charge, the PAC’s treasurer testified in January to the registry she opened the PAC for Cothren, who was her boyfriend at the time, but she said she had no further involvement in its operations.
Cothren declined to appear after the registry issued a subpoena. Cothren’s lawyer said her client invoked his 5th Amendment right against self-incrimination, according to a letter sent to the registry’s board on March 2.
Adam Friedman is The Tennessean’s state government and politics reporter. Reach him by email at firstname.lastname@example.org.
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