Street Talk: Firm Owner Has Thrived on His Low Profile

Posted February 20, 2009 at 5:54pm

It has been a vertiginous fall for Paul Magliocchetti, clearly the least-known of the city’s best-known lobbyists.

[IMGCAP(1)]Magliocchetti founded Paul Magliocchetti Associates, later renamed the PMA Group, in 1988. In less than two decades, his firm had secured a spot on everyone’s annual list of top 10 lobby practices.

Last year, the PMA raked in nearly $14 million in lobby revenues, had

more than 100 clients, and some 35 lobbyists on staff — huge numbers for a pure lobby shop that has grown organically from the ground up, not from acquisitions, and that started with only a handful of lobbyists and clients.

Six months ago the firm was prospering, and its patron saint, Rep. John Murtha (D-Pa.), was riding the tail end of his first cycle back in the chairmanship of the Appropriations Subcommittee on Defense.

Earmarks were flowing from members of the Appropriations Committee to PMA clients, PMA clients were shoveling monthly retainers into the PMA’s bank account, while those same clients — and PMA lobbyists — were showering campaign contributions on Appropriations Committee members.

It was, perhaps, too perfect of a money triangle, too close to that slippery “one thing for another,” and it eventually became fodder for a series of newspaper articles and, it appears, an ongoing federal investigation.

The PMA was raided by the feds in November, but amazingly the story never hit the papers until early February, when it was reported by ABC News.

The publicity appears to have pushed the PMA over the brink; five senior lobbyists, including Kalene Green, Dan Cunningham and John Lynch, who had been at the firm since its early years, bolted, along with three other lobbyists, and possibly several more to come. Three health care lobbyists had already split off from the PMA several months earlier.

Magliocchetti had been looking for an exit strategy for months, although it’s not clear whether the decision was forced upon him by the enveloping federal probe or whether his Amelia Island condo was beckoning him to spend more time there. He’ll never say, at least not to the media.

Magliocchetti was without a doubt the least voluble of any prominent lobbyist in town. He never talked to reporters on background or off the record, he simply never called you back. One of the only quotes ever attributed to him was in a Wall Street Journal article last year about the larding of Murtha’s western Pennsylvania district with earmark after earmark after earmark. “No comment. I’m just a former staffer,” Magliocchetti told Journal reporter John Wilke in a delicious bit of understatement.

Staffer Savvy

Magliocchetti is a former staffer, of course; but it was precisely his eight years as an Appropriations staffer that gave him the technical expertise — combined with a meticulous and aggressive personality — to become such a successful lobbyist.

Magliocchetti joined the committee staff in May 1980 from what was known as the General Accounting Office, where he had handled the Navy shipbuilding account. His tenure on the Subcommittee on Defense dovetailed with President Ronald Reagan’s military buildup, and in particular Navy Secretary John Lehman’s goal of a 600-ship Navy. “That was the biggest segment of the buildup. He was in the middle of all the ‘rah rah’ stuff,” a former colleague said.

Magliocchetti’s profile in the 1989 Almanac of the Unelected is glowing: “He knows more about what it costs to build a Navy ship than the Navy,” a Pentagon official said. “He is a tough taskmaster and a very artful negotiator,” an anonymous staffer said, adding, in a portentous foreshadowing of his lobby career, “He never gets himself in a situation he’s going to lose. He always has his bases covered.”

Magliocchetti also invented a business model that has been emulated at other defense lobby shops across town.

“He hired folks in his own image,” said one person who’s known Magliocchetti for nearly two decades. “He liked folks who understood the programs, combined with folks out of the liaison shops who understood the culture of the military. He went after that.”

In other words, his shop was top-heavy with program managers, captains, colonels, majors and lieutenant colonels as well as former Appropriations staff. His firm worked both the committee and the “building,” otherwise known as the Pentagon.

“He had folks from across DOD,” one former Pentagon official said. “Legislative liaison folks dealing with the authorizing committees, and budget folks, comptrollers and assistant secretaries at the service levels dealing with the appropriators. These were people who were very presentable and understood budget issues.”

Added the longtime acquaintance, almost wistfully: “Because of his work on the committee, he knows the details of how a program is performing, where to find money, and where the extra costs are loaded into a program. He was a wonderful analyst.”

Playing the Game

Magliocchetti also knew politics and played the political game hard and personal, forging strong and repeated donor relations with a wide range of Appropriations Committee members, not just Murtha. He is particularly close to Florida Rep. Bill Young, the longest-serving Republican Member of the House, who was on the subcommittee when Magliocchetti was a staffer and is its ranking member now.

In part, said one former House staffer, that stemmed from the culture of the House, where staff tend to be much closer with Members than in the Senate, and where Appropriations staff might even, on occasion, sit down with appropriators for a drink and candid conversation.

Being a practical, impatient man who liked to cut to the chase, Magliocchetti also understood that the currency of getting re-elected and being a successful Member was money.

The PMA had a political action committee that doled out $388,000 in the 2008 election cycle, according to the Center for Responsive Politics, by far the largest in the city for pure lobby shops. And every associate, as everyone but a handful of the firm’s lobbyists were known, was expected to give the maximum $5,000 contribution to the PAC.

“Paul would encourage you to give the maximum you can, and most nearly everybody did,” one former associate said. “But we ended up doing some personals as well, where I had clients.

“We’d have a PAC meeting … and we’d have five pounds of invitations. And we’d figure out who ought to go and what makes sense.”

Magliocchetti led by example. According to the center, his total giving to party committees and Members and to his PAC from 1990 to 2008 was nearly $484,000.

More than most firms, there was a real culture of campaign contributions, a former employee said, adding that people would go to various lengths to find different ways to contribute.

According to a Roll Call analysis of Federal Election Commission records, Paul, his former wife, Nancy, daughter, Jennifer, son, Mark, and daughter-in-law, Leslie, gave more than $1 million beginning with the 1996 cycle through the end of 2008.

An Italian From Pittsburgh

Magliocchetti, who declined an interview request, is often described as an Italian from Pittsburgh, which variously implies a love of family, a temper and a strong sense of his Italian roots, which included a connoisseur’s interest in wine.

His lobby shop, especially in its earliest, smallest incarnation, was an extended family.

“He did things first-class,” the former associate said. “When we were still growing by leaps and bounds, we’d have our annual review meeting off-site. He’d take us down to the Ritz Carlton on Amelia Island. It cost a pot of money, but it was just as nice as it could be. I think he was a little bit hurt that not many people said, ‘Thank you.’”

Later retreats, as the firm got larger, took place in Northern Virginia.

In the early years, before the gift rules were substantially tightened, Hill staff were often treated to a lunch on a recess Friday at the Alpine, an unpretentious spot that bills itself as “One of Arlingtons oldest and most authentic Italian Restaurants.”

Associates received a company-provided Lexus. “You went over to the Lexus dealership in Alexandria,” another former associate recalled. “The only choice you had was the color. It was a really nice perk.”

Unlike some firms, with a complicated compensation system that tries to mirror how much work an individual spends on a client, Magliocchetti preferred to pay a straight salary and a percentage of the first year’s fees for client origination.

“Everybody was salaried by whatever you’d agreed to with Paul. It was like Senate staff, whatever the chairman says you’ll get,” a third former lobbyist at the firm said. And origination fees were not paid beyond the first year.

“I think he had a good point,” one of the former PMA lobbyists said. “He wanted everybody to work on an account and not have one person own it. His view was that there were enough different angles to approach for a client. You should never have to make a cold call. You should know somebody who knows somebody.”

At the weekly 8:30 a.m. Friday meeting, a light breakfast would be supplied and the firm’s lobbyists would spend an hour prepping for the week ahead.

“We’d go through everything, from administration BS to whatever was new and happening with the computer boys to ‘here’s what’s happening on the Hill for the House and for the Senate,’” one of the former lobbyists said. “Everybody would go around the table, ‘Well, I understand that Lt. Cmdr. So and So will be the one-star in command for procurement at DARPA,’ and, ‘The new chief of staff to John Sununu is my next-door neighbor.’”

The Only Star

As the firm grew, Magliocchetti slowed down his visits to the Hill. But the Don, as he was sometimes referred to behind his back, remained intensely client-oriented.

Around 2000, Magliocchetti made his most dramatic effort to diversify his defense appropriations business, bringing on several “ag” boys, including Tim Sanders, the former clerk of the House Appropriations Subcommittee on Agriculture, and Fred Clark, the former House Agriculture Committee counsel.

But while the business appeared to thrive, personality clashes between Sanders and Magliocchetti, according to one former lobbyist there, soon led to the departure of Sanders, Clark and three others to Cornerstone Government Affairs. Neither Sanders nor Clark could be reached for comment.

At the PMA, there was only boss.

“What is this, amateur hour?” one former PMA lobbyist recalled Magliocchetti reproaching a roomful of associates when a deadline was nearing and things were not going as well as planned.

He was not shy with Members, either.

“Fearless,” the former associate said. “Paul would see a Member to whom a fair amount of support had been given, money, meetings, and Paul would say: ‘Hey, we’ve supported you for years, and you really haven’t done much for us. What gives? If you want to tell me “No,” that’s fine. But let’s quit dancing around.’ Most everybody I know would hem and haw.”

Magliocchetti is the relatively rare lobbyist who combines substance with contacts. But even rarer, one person familiar with the Subcommittee on Defense said, even on the outside, he was able to maintain some of the power that committee staffers have.

“When you come out here, you don’t have much power,” noted the source, who now lobbies.

“But Paul figured out a way to influence the process. He could take an idea, develop it as something that’s good for the country, show it to a Member, and pick and choose clients that would also benefit.

“Lots of people in this town, they’ve been here for a long time, and think they know the system so well, they think they can get away with anything,” the source added.

“But Members can smell something that’s not right a mile off. And Paul never smelled. People trusted him, he was so damn knowledgeable. And he didn’t hire any stars. He was the only star.”