Madison Cawthorn May Have a New Ethical Violation to Deal with

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Overpaying an employee doesn’t seem like Congressman Madison Cawthorn’s biggest scandal these days, but a Daily Beast investigation into Cawthorn’s compensation to its employees reveals a misbehavior. Very brief ethics violation – one of his offices seems to have tried (and failed) to the skirt.

Congressional pay data shows that the North Carolina Republican paid his chief of staff, Blake Harp, $131,278 in 2021. That actually ranks Harp at the bottom of chief executive pay. chamber in Parliament.

But why he gets paid that particular amount can be very relevant.

The state code of ethics states that senior congressional staff can only earn $29,595 in outside income per year. According to filings with the Federal Election Commission, Cawthorn’s campaign paid Harp a total of $73,237 in direct payments and payments to his LLC, EMP Strategies.

However, that outer limit applies only to aides who qualify as “senior” employees. Cawthorn’s office appears to have tried to avoid triggering that particular classification. The office’s congressional expense reports show Harp earns about $1,500 less than the annual threshold that qualifies him as a senior employee.

But the code of ethics doesn’t charge senior salaries at an annual rate; Payment rates are calculated for each 90-day period. And that’s where they rose, paying Harp at a high in the final quarter of 2021.

Prior to Q4, Harp’s highest quarterly salary was $32,499.99. But the office increased that number to $34,499 in the last three months of the year — 92 days in total — with a daily wage of $374.99. The daily rate for senior employees in 2021 is $363.16.

That means Harp is actually a senior in 2021. And that small daily increase brings in thousands of dollars in splits, because it means he’s subject to income limits. outside.

Cawthorn’s director of communications, Luke Ball, admitted that the office believes Harp does not qualify as a “senior employee”.

“Mr. Harp’s congressional salary is lower than the House threshold for applying external limits,” said Ball. they claim to be the heart of their claim.”

(Congressional pay is public information, and we broke the rules.)

The reply from Cawthorn’s office was revealed in a number of ways. First, it confirms that the employee believes that Harp is not restricted on outside earnings. For another, there is no question that Harp did more than would be allowed if the chief of staff—the most senior employee in the office—was actually considered a “senior employee.”

The team appears to have attempted to obscure the recipients of some payments, creating an LLC shell to conceal that Harp was the recipient of the funds. That company also received tens of thousands of dollars from a PAC belonging to Harp’s mother.

Jordan Libowitz, communications director for the Citizens Watch for Accountability and Ethics in Washington, explained that the nuances in the rule would apply retroactively to Harp’s earnings for the entire year.

He lays out the plan for The Daily Beast.

“After looking at Cawthorn’s record, it appears they are trying to keep Harp right below senior staff to pay him more than he was allowed to do from the campaign, but may not have been able to. successfully implemented this plan,” said Libowitz. “While Harp is still a few hundred dollars below the senior employee cap for the year, the rule is actually putting it above that for ’90+ days,’ which he apparently did in Q4 – which is 92 days.”

Libowitz said transferring Harp’s wages to a newly formed LLC does not solve the problems but “just increases them”. “It is equal income,” he explains in the Handbook of Family Ethics.

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Brendan Fischer, deputy executive director of the good government group Documented, agrees, saying that it appears Cawthorn and Harp have tried to apply “ethical rules of the game” to maximize their earnings.

“On one hand, the twentieth Harp doesn’t seem to have relevant work experience, so there’s the question of whether he’s worthy of the taxpayer-funded six-figure salary,” Fischer told The Daily Beast. “But on the other hand, by keeping his earnings to just under $132,552 for most of 2021, Harp is freed from outside earned income limits, allowing him to earn tens of thousands of dollars more from Cawthorn’s campaign.”

“I read the rules that there was a limit to how much outside earned income would arise and be prorated to the point where Harp started being paid at the senior staff level,” Fischer added. “So campaign payments for the first three quarters of 2021 could be kosher, but since Harp is paid at a higher tier in the fourth quarter of 2021, he cannot earn above $7,398.75 dollars (1/4 of $29,595) for that quarter. This doesn’t help him: Cawthorn’s campaign paid Harp’s LLC more than $22,865 in the final quarter of 2021.”

Libowitz argues that because the rules are tied to the full calendar year, previous campaign payments will be included back when Harp stumbles across senior staff size. This result means that Cawthorn’s office will have to pay Harp nearly $44,000 for the year. Ironically, if Harp took the highest possible congressional salary and maximized his outside earnings, he could actually make more money.

All experts consulted for this report said there was clear evidence of intent. According to company filings with the Texas secretary of state, Harp created the EMP Strategy last April — just weeks before his campaign salary would hit the ceiling.

Kedric Payne, head of ethics at the nonpartisan watchdog’s Campaign Legal Center, said the facts show intent has been studied to defeat the system, something that is likely. features that are particularly irritating to investigators with the Office of Congressional Ethics.

“OCE has been investigating income limit violations for years and it is likely they will pursue the matter,” Payne said.

Libowitz and Fischer both noted another possible violation: Senior congressional staff are not entitled to compensation while serving as a corporate official. Business records list Harp as an officer of EMP Strategy.

Furthermore, the Cawthorn campaign isn’t his only consulting client. So was his mother, a former congressional candidate. FEC records show EMP Strategies received tens of thousands of dollars from his mother’s former campaign committee, which she converted into a PAC last October.

“If Harp continues to earn the same salary in 2022, he will also be breaking the rules if his mother’s former campaign overpaid him through his LLC on 2022,” Fischer said.

Harp’s mother has paid EMP Strategies about $48,000 so far this year.

There’s more: Efforts to keep Harp’s salary below the cap would also allow him to refuse a federal requirement that he report stock trading. And because he appears to have qualified as a last-minute senior, Harp’s 2021 salary will also require him to file a disclosure report this year to calculate his 2021 financials. he.

“Ap beneficial,” said Fischer.

According to these experts, these violations suggest that OCE will open an investigation.

There is a lot of precedent to back this up. Ethics officials took action on violations to a much lesser extent.

In 2011, the OCE investigated Michael Collins, then chief of staff to the late Representative John Lewis (D-GA), when he earned just $450 above the outside income limit as a as a consultant to the Lewis campaign, found it to be evidence of a violation. Six years later, OCE discovered that Collins was slipping again, this time skyrocketing to just $325.

In another case, Congressman David Schweikert’s (R-AZ) Chief of Staff, Oliver Schwab, also overcame an outside income limit when he received campaign money through an LLC he owned. control. In 2018, OCE found substantial reason to believe that Schwab broke the rules. Schwab resigned before the ethics investigation was completed.

Operation Cawthorn and Harp did not immediately respond to The Daily Beast’s questions.

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