Former Indiana State Senator arrested after FBI raid
CBS4 News
Sep 28, 2020 / 05:39 PM EDT
CBS4 News at 5: Former State Senator Bent Waltz has been arrested after an FBI raid at his home in Greenwood
https://cbs4indy.com/video/former-indiana-state-senator-arrested-after-fbi-raid/5890847/
https://www.ibj.com/articles/former-state-senator-local-gaming-firm-tied-to-illegal-campaign-contribution-scheme
Moar text to follow.
https://www.ibj.com/articles/former-state-senator-local-gaming-firm-tied-to-illegal-campaign-contribution-scheme
Editor’s note: The unidentified gaming company in this story was later identified by the Indiana Gaming Commission as Centaur Gaming. See latest story here.
A Republican strategist who worked for an Annapolis, Maryland-based consulting firm has admitted to taking part in a scheme to funnel corporate contributions to political candidates—including former Indiana Sen. Brent Waltz when he ran for U.S. Congress in 2016—in a case that is part of a federal crackdown on fraudulent political action committees.
The case also implicates an unnamed Indianapolis gaming company and its vice president and general counsel. In court records, the executive is described as Person A and the firm as Company A.
Chip O’Neil, 33, pleaded guilty to conspiracy in Alexandria, Virginia, federal court Thursday. He worked as vice president for the Strategic Campaign Group. President Kelley Rogers was sentenced last week to three years in prison for fraud; associate Scott Mackenzie is awaiting sentencing. The group came under federal scrutiny for amassing donations from small donors in the names of candidates who never received the money. But O’Neil pleaded only to a separate crime involving illegal contributions.
In court, he admitted that at least eight people, including his girlfriend, were used as conduits for illegal corporate donations from the Indianapolis gaming company to a U.S. House candidate in Indiana. Though the candidate is not named in court documents, Federal Election Commission records indicate that the recipient of the illegal funds was Waltz, who ran unsuccessfully for Congress in 2016.
In a text to IBJ on Thursday night, Waltz said he “was interviewed as part of an investigation of Mr. Kelly Rogers approximately 18 months ago. Mr. Rogers was a consultant for the campaign in the summer of 2015. I have answered every question asked of me by investigators.
“To the best of my knowledge all campaign contributions from my 2016 congressional campaign were legal. I will cooperate with any investigation.”
IBJ was not immediately able to confirm the identity of the gaming company, which investigators said gave $38,500 to the Strategic Campaign Group team through a fake contract for political work. That money was then funneled to Waltz through various conduits, according to prosecutors.
O’Neil, Mackenzie and Rogers all gave Waltz the then-maximum allowed individual contribution of $2,700. They wrote checks from the Strategic Campaign Group bank account to reimburse several others who also gave Waltz as much money as possible.
The Justice Department said O’Neil and his co-conspirators made the transfers “to evade the restrictions of corporate contributions to campaigns, to evade the limits placed on money that individuals could contribution to a campaign, and to disguise the fact that the gaming corporation was the true source of the funds.”
Investigators say one of the co-conspirators was the vice president and general counsel of the Indianapolis gaming firm, who transferred funds from the company to bank accounts associated with Strategic Campaign Group.
Waltz, 46, was a state senator from 2005-2017, representing southern Marion County and northern Johnson County. He sought election to the U.S. House in 2016 to represent the 9th District but was defeated by Trey Hollingsworth in the Republican primary.
O’Neil faces up to five years in prison when sentenced on May 8, but his attorney said in court that sentencing guidelines will call for roughly six to 12 months. O’Neil is also cooperating with authorities in the investigation, which could net future charges.
Strategic Campaign Group raised more than $20 million from more than 9,000 conservative donors between 2011 and 2018, convincing them that Republican firebrands needed their support against the establishment.
Less than 2% of the money actually went to those candidates. Company officials spent the rest trying to expand their various political action committees’ lists of potential marks, as well as on legal fees to defend their behavior.
The Justice Department is cracking down on “scam PACs” that extract money from donors by promising falsely to spend it on political campaigns.
Rogers was sentenced Jan. 17 in an Alexandria, Virginia, federal court to three years in prison. Two others have been convicted in other cases.
“I lost all focus,” Rogers, 56, said in court. “My conduct ruined my career.”
Mackenzie, the group’s treasurer, has pleaded guilty to lying to the Federal Election Commission.
“We need to have trust in those that are sending these messages,” Judge Liam O’Grady said.
Rogers’ PACs sent out thousands of emails stoking fears and anger toward then-President Barack Obama, the Internal Revenue Service and undocumented immigrants, looking for angles that would open wallets.
“Our donor base is old and dying,” Mackenzie wrote in one 2013 email to Rogers. “We need to give our donors a reason to give.”
They found one in Ken Cuccinelli, at the time running for governor of Virginia as a brash social conservative.
Cuccinelli lost the 2013 election to Democrat Terry McAuliffe. He later sued Strategic Campaign Group for using his name repeatedly in solicitations. Now a top immigration official at the Department of Homeland Security, Cuccinelli ultimately settled with the firm for $85,000.
Court documents show that Rogers and the others never intended to spend the money raised on Cuccinelli’s campaign; they wanted it all to go to expanding their donor list. That July, a vendor suggested to Rogers that their fundraising emails had gotten so much attention that it would be “a good investment to cut either a radio ad or a TV ad in support of” Cuccinelli.
No ad was ever made. Under pressure, Rogers agreed to donate just $10,000 to Cuccinelli’s campaign. According to prosecutors, during that time Rogers added 5,000 new donors to his lists.
Defense attorney Danny Onorato said Rogers never profited personally from the scheme. Several former clients, including a Maryland state delegate and the former chairman of the Fairfax County Republican Party, wrote to the court saying Rogers had been an effective, honest consultant on their campaigns.
“His intention was to raise money to grow his business,” Onorato said. “He saw opportunities in super PACs. He got into that fervor. He knew it was wrong, but he didn’t think it would catch up with him.”
Steven McCool, who represents O’Neil, called him “a decent young man who is prepared to accept responsibility for mistakes he made several years ago.”
Onorato argued that the solicitation emails had a “dual purpose” in raising awareness of Cuccinelli and other candidates, a position endorsed during an audit of one Strategic Campaign Group committee, the Conservative Majority Fund, by then-FEC Chairman Len Goodman, a Republican. The FEC ultimately faulted the fund for inaccurate documentation but dug no deeper.
Prosecutor Bill Gullotta called that argument “somewhat absurd,” saying the group’s mailings were “barely informational” and “really just to fan the flames of political fervor.”
Donors swayed by those mailings told the court the fraud had strained or severed their trust in the political system. One person called her donation a “heartfelt gesture of support for” Cuccinelli that never made it to him.
“Voting and monetary participation in campaigns is all the control most Americans exercise over the political process,” she wrote. “Fraud of this nature cheapens and weakens that control.”