Welcome to Pay Dirt—exclusive reporting and research from The Daily Beast’s Lachlan Markay on corruption, campaign finance, and influence-peddling in the nation’s capital. For Beast Inside members only.
Taxpayers have paid nearly $10 million to a firm run by a top Republican consultant who has helped elect members of Congress, who have then hired that consultant to put out official congressional communications on their behalf.
Jeff Roe works for dozens of high-profile campaigns and party organs, most notably Sen. Ted Cruz’s (R-TX) 2016 presidential campaign, work primarily performed through his political consulting firm Axiom Strategies. But Roe also runs another firm called the Capitol Franking Group. And while Axiom works on the political end, CFG cashes four- and five-figure checks to craft ads and mail pieces for congressional offices—in some cases, the very offices that Roe’s other firm is working to re-elect.
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As its name suggests, CFG’s specialty is franked mail, or taxpayer-funded communications that, in theory, members of Congress use to keep their constituents apprised and to solicit their input on legislative activity. Members of Congress are barred from using franked mail for political purposes—such as asking for people’s votes—and can’t be sent at all within 90 days of an election.
But such mailers nevertheless serve an inherent political purpose by promoting members of Congress in the eyes of the voters whose support is crucial to their ever-impending re-election fights. And as PAY DIRT has previously noted, vulnerable members of Congress devote considerably more money on franked mail, on average, than colleagues in non-competitive districts.
Members fund their franked mail by dipping into their congressional office budgets—otherwise known as Members’ Representational Allowance (MRA)—but private firms like CFG are the ones who actually put the mail pieces together. CFG is just one a number of political consultancies that run parallel franked mail companies, with other large players including the firms Arena Communications and Majority Strategies. Though not unique, Roe’s dual roles underscore the inherently political nature of an industry that operates in a gray area between official, taxpayer-funded communications and explicitly political advocacy.
Though the business has been lucrative for Roe, his timing could have been even better. He opened that arm of his political operation right before Republicans took the House of Representatives in 2010 and proceeded to slash the MRA, or each congressional office’s annual budget.
Roe has nonetheless managed to grow his congressional practice considerably. Just two members—Reps. Sam Graves and Blake Luetkemeyer, both Republicans from Roe’s home state of Missouri—together paid CFG about $127,000 in 2009. Last year, the firm had 25 congressional clients, with revenue of more than $2 million.
More than half of those members of Congress’ campaigns have also paid Axiom Strategies since 2017, according to Federal Election Commission records, for services ranging from TV ad buys to bumper-sticker acquisition to general political consulting.
In the decade since it opened up shop, all of CFG’s clients have been Republicans. In a sense, that is to be expected from a Republican operative. But it also lends an air of partisanship to an activity—taxpayer-funded constituent communications—designed to avoid politics altogether.
But the actual contents of franked mail, despite the lack of any actual political ask, leave the unmistakable impression of a politician trying to pump himself up with voters, particularly by invoking issues and causes popular with the grassroots.
Take Rep. Mark Walker (R-NC), whose campaign and congressional office have both paid Roe’s CFG. His official congressional Facebook page—paid posts on which fall within the franking definition of an official mass communication, though Walker’s digital ads weren’t purchased by Roe’s firm—ran a host of ads that appeared in North Carolinians’ Facebook feeds right up until Aug. 8 of last year—the final day before the 90-day franked communications cut-off.
Those ads declared that Walker was “fighting to defend the 2nd Amendment,” “working to withhold federal funding from dangerous Sanctuary Cities,” and “working in Congress to defeat terrorism and destroy ISIS.”
In total, Walker’s congressional office has steered more than $210,000 to Roe’s company since he was elected to Congress. And another one of the messages those funds have paid to promote on Walker’s behalf is that he is “working to cut spending in Washington.”
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K Street Is Cashing In On the U.S.-China Trade War
The Trump administration’s hard line on China is turning into a K Street gold rush. Trade restrictions and national-security crackdowns have led to an unprecedented spike in the number of Chinese-owned firms seeking hired help to navigate the increasingly hostile policy arena.
Since 2017, companies that reported a Chinese ownership interest have collectively signed 48 new lobbying contracts, according to disclosure records. Since last year, such companies have inked deals with as many K Street firms as they did during the entirety of the Obama administration.
The sums of money changing hands are far larger as well. From 2017 through March of this year, federal lobbying firms reported receiving about $2.3 million from Chinese-owned companies. That’s about as much as they received from 2006 through 2016.
The dramatic rise in that lobbying activity makes sense. Rarely has the U.S. government so vehemently targeted not just Chinese interests in a general fashion, but specific companies. Firms such as Huawei, ZTE, and Hikvision have been specifically targeted by Congress and the administration over concerns about security, privacy, espionage, and unfair trade practices. That’s created a policy environment where the natural course of action is to bring on a team of Beltway influencers.
These lobbying numbers don’t include those reported under the Foreign Agents Registration Act, which governs lobbying disclosure on behalf of clients with deeper ties with foreign governments, such as the Chinese state. Rather, they show stepped up policy advocacy activity by firms that maintain at least nominal independence from the government, but have nonetheless found themselves caught up in policy fights that could potentially affect major strategic interests of both countries for decades to come.
For K Street, that sort of upheaval can be extremely lucrative. And some big names in lobbying have stepped in to represent the Chinese-owned firms seeking reprieve from that geopolitical tension. They include Mercury Public Affairs, which has represented ZTE, Hikvision, and Huawei. The latter has also enlisted the services of the firms Jones Day, American Continental Group, and Steptoe & Johnson.
The individual lobbyists themselves are bringing unrivaled expertise to the table. Among the roster of Jones Day’s advocates on Huawei’s behalf is Samir Jain, who, until recently, directed cybersecurity policy for the Obama White House's National Security Council.
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