“It appears like one thing that might probably be a reasonably severe violation of marketing campaign finance regulation and the ethics guidelines
“It appears like one thing that might probably be a reasonably severe violation of marketing campaign finance regulation and the ethics guidelines,” stated Bryson Morgan, a former investigative counsel on the Workplace of Congressional Ethics, who now practices political regulation at Caplin & Drysdale. “They should pay fair-market worth for any house that the marketing campaign makes use of.”
The information follows different current revelations from the information web site Minnesota Reformer that painting a congressman ceaselessly skirting the road on congressional ethics. Hagedorn is going through scrutiny for having paid greater than $100,000 in taxpayer cash to a printing firm owned by a employees member; a special firm, owned by the brother of his former chief of employees, took in roughly $340,000 in public funds. Hagedorn additionally drew criticism for showing on an area radio present hosted by a marketing campaign vendor with out disclosing their monetary ties.
The allegations of unethical habits might value Hagedorn in November. His opponent, Democratic-Farmer-Labor candidate Dan Feehan, has made Hagedorn’s “private corruption” a central theme in his marketing campaign, and polls present a decent race. Feehan misplaced to Hagedorn by lower than half of a share level in 2018, at the same time as President Donald Trump carried the district by nearly 15 factors in 2016. The Democratic Congressional Marketing campaign Committee is now spending closely on the airwaves to grab the seat.
Quickly after POLITICO printed this investigation, Feehan blasted Hagedorn in a press release for “the gradual drip of revelations about ethics violations — and potential criminal activity.” Hagedorn’s marketing campaign responded with a Fb submit denying the info offered on this story, even whereas seeming to substantiate that it had gotten, on the very least, below-market use of house within the constructing in 2018.
If he does win reelection, Hagedorn could also be taking a look at a number of ethics investigations: A Minneapolis lawyer has filed a grievance with the Workplace of Congressional Ethics over Hagedorn’s congressional workplace spending, whereas Hagedorn himself financed an inside assessment of the spending, fired his former chief of employees and self-reported it to the Home Ethics Committee. Neither entity feedback on whether or not probes are ongoing.
A headquarters with no paper path
The historic Brett’s Constructing is amongst downtown Mankato’s premier workplace areas — forming with the adjoining Mankato Place mall a sprawling industrial-chic maze of presidency services, eating places, occasion halls and a movie show, with an connected Hilton Backyard Inn hugging a bend within the Minnesota River.
It’s additionally the place Hagedorn arrange store for his regional congressional workplace, distinct from the marketing campaign workplace, that has value $2,200 of taxpayer cash per 30 days for the reason that starting of 2019, in keeping with congressional spending data.
The cash Hagedorn’s congressional workplace makes use of to pay for house on the third ground of the Brett’s Constructing comes from his taxpayer-funded finances, which he can use just for official bills. Any use of that district workplace for marketing campaign functions or paying for a marketing campaign workplace with taxpayer cash could be unlawful. Marketing campaign finance laws require a strict separation between such funds, in order to not give incumbents an unfair benefit.
“If he will get that basement house as a part of the hire he is paying for his congressional workplace, then that’s arguably illegally utilizing congressional funds to pay for the marketing campaign workplace,” stated Larry Noble, a former high FEC lawyer who now teaches at American College in Washington, D.C.
However even when Hagedorn had been at present paying for his marketing campaign workplace utilizing taxpayer funds, that wouldn’t clarify the absence of funds that started earlier than he was elected to Congress in 2018. He first reported utilizing the house in 2013 for a failed congressional run towards now-Gov. Tim Walz.
Marketing campaign finance legal guidelines state a candidate should pay fair-market fee for all services. The workplace house is also donated, however then the marketing campaign would have needed to speak in confidence to the FEC that the proprietor of the constructing gave an “in-kind contribution,” a designation for a donation of products, companies, time or different noncash gadgets. And like regular money donations, in-kind donations have to be restricted to $5,600 per election cycle, with half of that designated for a major and the opposite half for a basic election.
Hagedorn’s marketing campaign has reported no in-kind contributions or funds for workplace house in any yr since his marketing campaign committee fashioned in 2013.
The one exception to those guidelines is that any contribution price lower than $200 doesn’t need to be reported. When reached by cellphone, Thomas Datwyler, who handles funds for Hagedorn’s marketing campaign, stated he believes that will have been what occurred.
“We had been in-kinded, however I feel it was below $200. I wish to say, it was like a $200 in-kind. In order that’s in all probability why it did not present up,” he stated. “They principally simply took a share of the particular house itself, which was very minuscule, and that is how they calculated it out. And that is why they bought to be like 200 bucks for the complete yr. Actually, I am fairly optimistic.”
Datwyler stated he would make clear the difficulty and reply with extra info, however he didn’t achieve this and didn’t return subsequent calls and messages concerning the difficulty.
The reason additionally would recommend Hagedorn’s marketing campaign is paying nicely under market fee. The typical tenant within the constructing pays hire of $Eight to $27 per 30 days per sq. foot, in keeping with a ground plan and pitch by the constructing’s supervisor obtained by POLITICO. By these prices, Hagedorn’s marketing campaign workplace would have needed to be no bigger than a couple of sq. ft to be price solely $200 over the course of two years. The ground plan exhibits Suite 7 is considerably bigger than that, with an entry room opening into two again rooms.
The declare is additional undercut by the truth that the marketing campaign has beforehand reported in-kind donations as small as $114.75.
Lastly, failing to reveal this particular in-kind donation would in all probability be a violation of marketing campaign finance regulation as a result of the one that owned the constructing, Gordon Awsumb, has already been an enormous donor to Hagedorn. If all he gave was a small in-kind donation, it wouldn’t need to be reported, however since he’s donated greater than $200 in money in the course of the previous a number of elections, the FEC would require the marketing campaign to reveal in-kind contributions of any worth in any respect from him.
A key donor, with shifting explanations
For a lot of the years Hagedorn listed that tackle as his marketing campaign headquarters, the Brett’s Constructing was owned by Awsumb, an area developer who rehabbed the construction after Brett’s Division Retailer, there since 1868, shuttered in 1991.
Awsumb has given greater than $8,500 to Hagedorn’s marketing campaign since 2015, together with $4,300 this election cycle — all listed as money donations, not in-kind contributions. That opens up the potential of yet one more violation: In-kind donations reflecting the true worth of the workplace house might put Awsumb over the authorized contribution restrict, that means the marketing campaign must return some cash to him.
When initially reached by cellphone, Awsumb stated he has moved to Texas and doesn’t know a lot concerning the Hagedorn marketing campaign workplace, though he’s nonetheless listed because the administration contact for the constructing.
When requested whether or not the marketing campaign makes use of an area within the basement, he replied, “Not any longer, I don’t assume. Mainly, he saved indicators there.”
When requested why there have been no hire funds, he replied: “I do not know what you are speaking about.”
However in follow-up emails, Awsumb had a special story to inform. He stated the marketing campaign truly by no means had an workplace within the constructing and {that a} Suite 7 by no means existed.
“The Hagedorn Marketing campaign doesn’t now and has by no means up to now leased workplace house within the Mankato Place Complicated/Brett’s constructing,” Awsumb stated through electronic mail. “No rent-free workplace house has been offered to the Hagedorn Marketing campaign. In truth, Suite 7 doesn’t exist as a bodily workplace location throughout the constructing.”
In its Fb submit after the story was printed, Hagedorn’s marketing campaign echoed Awsumb, saying that Suite 7 by no means existed: “no bodily location is tied to that tackle. Suite 007 will not be workplace house.”
Nevertheless, a July 2018 GOP invite instructed volunteers to reach on the “Hagedorn Marketing campaign Workplace; 11 Civic Middle Drive; Suite 007; Mankato.” And over the course of a number of months that yr, from at the least July to September, a variety of photographs posted on varied social media accounts and information shops present Hagedorn in an workplace outfitted with cubicle dividers and a sofa, its naked stone partitions lined with Hagedorn marketing campaign indicators and a cardboard standee of the late President Ronald Reagan. In response to Roll Name, his marketing campaign workplace included a framed portrait of Trump. Hagedorn’s personal Twitter account recognized the place as “Hagedorn Headquarters in Makato.”
When offered by electronic mail earlier than publication of this story with that info, Awsumb stated the room is an “unfinished storage room and was by no means leased as an workplace suite to any tenant.” He stated the Hagedorn marketing campaign did use a convention room that’s out there to tenants and neighborhood teams.
“That is offered as a part of the lease for the tenants and sometimes for no payment for neighborhood teams,” he stated. “The Hagedorn Marketing campaign did make use of that house in 2018. Our data present that the Hagedorn Marketing campaign did pay a payment for using that neighborhood convention house.”
The marketing campaign, in its Fb submit after the story printed, additionally confirmed it had used what it described as “unfurnished house within the basement of the outdated Brett’s Constructing from March 2018 by means of November 7, 2018.”
“We paid the proprietor $100 and listed that on our FEC report. Case closed,” the marketing campaign wrote.
Nevertheless, FEC recordsdata don’t present any payment paid by the Hagedorn marketing campaign to be used of that house in 2018 or some other yr, and the marketing campaign didn’t present proof of the disclosure. Moreover, $100 for using an area for 9 months seems to be nicely under market fee. As an example, Minnesota spending data present the Blue Earth County Republican Get together paid $100 per 30 days for its half of an area within the advanced shared with one other native Republican group.
Lastly, Awsumb stated Hagedorn merely used Suite 7 as a mailing tackle and was given permission to take action by the county group. Nevertheless, the ex-officio chairwoman of the group stated she by no means agreed to permit Hagedorn to make use of any house.
“The [Hagedorn] marketing campaign workplace was down within the basement, I imagine, the decrease stage of the Brett’s constructing,” stated Willa Dailey. “In truth, our treasurer is such a stickler that we didn’t even permit use of our house for something campaign-related. You possibly can’t combine federal with state.”
One other former chairman of the county Republicans, Minnesota state Rep. Jeremy Munson, stated Hagedorn’s marketing campaign has by no means had an workplace within the constructing, however has made use of a neighborhood convention room and a P.O. field.
“I do know that they’ve a P.O. field there,” Munson stated. “Lots of people have P.O. containers there, and I do not assume Gordon fees individuals to have a P.O. field to get their mail delivered there.”
That was Hagedorn’s clarification on Fb, too. Nevertheless, directories of the constructing posted on-line and within the foyer of the constructing present a Suite 007, indicating that at the least in some unspecified time in the future in time, it did exist as a bodily house within the constructing. The tackle can also be notably listed as a collection quantity, not a P.O. field tackle.
However even when it was a P.O. field tackle, Hagedorn’s marketing campaign would have needed to pay truthful market fee for it and even for the short-term use of house to carry marketing campaign occasions, in keeping with marketing campaign finance legal guidelines. And that may nearly actually be greater than $200 over the course of an election. The united statesStore in Mankato, as an example, fees a minimal of $25 per 30 days for his or her P.O. containers.
Home spending data present hire funds for Hagedorn’s congressional district workplace had been made in 2019 to Awsumb’s firm, Minnesota Workplace Investments Inc., and in 2020 to Mankato Place 1 LLC, an organization that purchased the constructing for $12 million from Awsumb final yr.
Mankato Place 1 LLC is registered in Delaware and doesn’t disclose its possession. Awsumb declined to say who owns the corporate.
A contact quantity listed for Mankato Place 1 LLC, nevertheless, reached Mike Kahler, one other regional businessman who’s a companion with Awsumb within the deliberate development of a Marriott Spring Hill Resort in Mankato, in keeping with the Mankato Free Press.
“Everybody in our constructing pays hire so far as I do know,” Kahler stated. “I will need to dig into it and get again to you.”
Kahler didn’t circle again, nor did he reply to subsequent cellphone calls. However Ronald Groth, a Minneapolis-based lawyer who was listed as Mankato Place 1 LLC’s counsel when it purchased the Brett’s Constructing, stated in a press release that Hagedorn doesn’t have a marketing campaign workplace there.
“Though Jim Hagedorn has his congressional workplace within the premises owned by Mankato Place 1, LLC, Congressman Hagedorn has by no means had a marketing campaign workplace within the premises in the course of the time that Mankato Place 1, LLC has owned the property,” he stated.
Neither Mankato Place 1 LLC, Minnesota Workplace Investments Inc., Awsumb, Kahler — nor anybody else for that matter — have been recipients of hire funds from Hagedorn’s marketing campaign, in keeping with FEC data, and the marketing campaign has not disclosed any in-kind contributions from these individuals or their corporations, or some other in-kind contributions for workplace hire.
The marketing campaign has paid periodic “marketing campaign occasion charges” from 2017 to 2020 to the Minnesota Republican Get together, which is chaired by Hagedorn’s spouse, Jennifer Carnahan. May a proof be that Hagedorn paid the state celebration, which then paid for the workplace? Not in keeping with FEC data, which present the state GOP has not paid any charges to any corporations related to the constructing.
Carnahan has been weathering some scandals of her personal currently, because the celebration’s govt director resigned with no clarification and data revealed Carnahan had requested for personal guided excursions from the Nationwide Park Service as a congressman’s spouse.
Empty places of work and lingering questions
Members of Congress who get free or low cost hire is a type of marketing campaign finance violations that pop up once in a while. However the thriller of Hagedorn’s marketing campaign workplace is deepened by the truth that Hagedorn’s workplace doesn’t appear to really be on the tackle listed on official FEC recordsdata — at the least, not anymore.
An FEC submitting as current as September lists 11 Civic Middle Plaza, Suite 7 as Hagedorn’s marketing campaign workplace, and his marketing campaign spokeswoman Rachael Grooms confirmed this month it’s the marketing campaign’s workplace. She didn’t reply to subsequent emails asking about any funds made for utilizing Suite 7. Hagedorn’s marketing campaign supervisor, Lon Firchau, additionally didn’t return a voicemail left on his cellphone.
But a go to to the Brett’s Constructing revealed that, very similar to the fading division retailer signal on the three-story constructing, Hagedorn’s marketing campaign workplace is a ghost.
The basement now has a Suite Eight and a Suite 6, however no Suite 7. A janitorial employee, who didn’t wish to be quoted by identify, stated Hagedorn used to have a marketing campaign workplace within the basement, but it surely has now been absorbed into Suite 11, which is residence to Choices for Girls, a counseling service that exists to dissuade girls from having abortions.
The employee stated a postal supply particular person additionally lately got here searching for Suite 7, however with no luck. The employee stated she thinks Hagedorn moved right into a Blue Earth County Republican Get together workplace within the adjoining Mankato Place mall.
A employee in Hagedorn’s district workplace on the third ground directed a reporter to an workplace in a neighboring constructing that’s occupied by Trump Victory, a joint fundraising committee of Trump’s marketing campaign and the Republican Nationwide Committee.
Each the county GOP and Trump Victory places of work had been empty and messages left on listed cellphone numbers weren’t returned.
A name made to a quantity listed on the Hagedorn marketing campaign’s Fb web page was returned by a Virginia man who recognized himself as Charles Harvey, whose identify and cellphone quantity are linked to a basis that exists to assist noncitizen U.S. army veterans apply for citizenship.
He stated he’s only a longtime good friend of Hagedorn’s who makes use of a Google Voice quantity to take messages and ahead them to the marketing campaign. He stated he doesn’t know the place the workplace is and does not dwell in Minnesota.
Morgan, the congressional ethics skilled, stated all this makes for an extremely complicated state of affairs, in addition to one other potential FEC violation; offering a false tackle to the company would even be unlawful.
“The query of the place a member of Congress’ marketing campaign workplace is positioned and what they’re paying for that workplace shouldn’t be a thriller that takes weeks of investigative reporting to trace down with conflicting, and kind of complicated, solutions,” Morgan stated. “It’s odd that there’s not a simple reply to what’s a quite simple query.”
Deena Winter contributed to this report.