CEO of D.C. Firm Uses Employees for Contributions Scheme
Every now and then we see the spotlight of investigation shine on an example of something that we all know is common practice and yet hope isn’t too illegal or too big to warrant everyone who does it being caught.
The spotlight and investigation have been on D.C. businessman Jeffrey E. Thompson for the last 15 months and now has broadened in public awareness to cover not only his federal political contributions, but also his contributions in the names of other employees of his former firm, Thompson, Cobb Bazilio & Associates. A new document indicates the scheme has been going on for ten years.
There are many employees of law firms, consulting firms, and lobby firms in the Washington, D.C., area who are probably breathing a sign of relief that it was not their firm in the spotlight. Pressure from a CEO, or a founding partner or managing partner, to contribute (and be a team player) is hard to avoid. And it is difficult to avoid a firm’s practice of employees making requested contributions on demand, and in some cases receive direct reimbursements from others or indirectly through yearly enhancements to a salary level, or even loosely documented bonus payments.
In an earlier example, Paul Magliocchetti pleaded guilty in 2010 to a contributions scheme that involved $386,250 in contributions to members of Congress from 2002 to 2008. The scheme involved his contributions in names of his son, daughter-in-law and employees at his PMA Group lobbying firm.
Last week, Lee A. Calhoun was charged by federal prosecutors with making contributions in his name, when the contributions originally came from someone else. In this case it appears to have been from the head of Thompson, Cobb Bazilio & Associates, Jeffrey Thompson.
In July 2012, Jeffrey Thompson, the CEO and majority shareholder, sold his stake in Thompson, Cobb, Bazilio & Associates (TCBA) to business partner Ralph Bazilio. The firm is now known as Bazilio Cobb Associates (BCA). The new firm released a statement on Friday stating an earlier internal review had determined “that significant amounts were contributed to various federal and local political campaigns over the last ten years by certain TCBA employees, family members and their friends at the direction of the former Chief Executive Officer of TCBA, who was also the majority shareholder at the time. BCA’s internal review also revealed that the former CEO may have violated federal campaign law by giving directions to reimburse, with his funds or with corporate funds, employees and others who made such contributions.” The statement also mentioned, “The current leadership has and will take responsibility for any actions or inactions that wittingly or unwittingly facilitated this conduct.”
The new firm hopes the cloud they have been under will lift soon, but it probably won’t. With one employee charged, there will probably be more, and with corporate funds involved, the company could face charges. There could also be requests for the many political candidates and committees who received the illegal contributions to return them or disgorge an equal amount to charity.
It is not known if the company sale agreement last year included a provision that Thompson would cover any future legal fees or fines of employees, or the company, relating to his actions at the old firm. But our guess is that it did, or it was taken into consideration when the sale price was set.
The cooperation of the company and its current employees could have a big impact on decisions regarding possible future prosecutions, fines and sentencing recommendations.
6/21 Update: Calhoun pleaded guilty on 6/20 to contributing $160,000 in his name and others when Thompson was the real donor. Stanley Slaughter also pleaded guilty to a similar type of violation.