Signal Mountain Republican Rep. Patsy Hazlewood and other House Republicans regret using mysterious out-of-state vendor Phoenix Solutions for a taxpayer-funded legislative mailer in 2020.
“It would be good to know who you’re doing business with. I thought I did, but maybe not,” said Hazlewood, appointed by House Speaker Cameron Sexton this year to chair the House Finance, Ways and Means Committee.
The vendor, which registered as a limited liability corporation in Santa Fe, New Mexico in December 2019, received more than $202,000 in payments from House Republicans before coming under scrutiny when FBI agents raided the Cordell Hull Building and the homes of three lawmakers in early January. The company also received independent expenditures for work on two Senate campaigns, according to reports.
Phoenix Solutions used the same postal code as the Faith Family Freedom Fund, another new vendor, which made independent expenditures to pay for attack mail against now-former Rep. Rick Tillis. He ran an anonymous Twitter feed critical of former House Speaker Glen Casada, who is a subject of an FBI investigation. Federal agents started looking into House action in 2019 when Casada held the vote board open for nearly 45 minutes to work the chamber to break a tie on Gov. Bill Lee’s education savings account bill.
First-term Republican Rep. Todd Warner of Chapel Hill, who defeated Tillis in the GOP primary last year, also hired an Alabama vendor, Dixie Strategies, which used the same postal code as Phoenix and yet another new group called Faith Family Freedom Fund, raising questions about illegal coordination between a dark-money group and candidate’s campaign. Warner said it was “coincidental.”
The Chattanooga Times Free Press reported over the weekend that Phoenix Solutions told a potential client it did work for Warner, even though his campaign finance disclosure did not list any expenses on Phoenix.
The FBI raided the homes and offices of Casada, Warner and state Rep. Robin Smith, as well as the office of Rep. Kent Calfee, and the home of Casada’s former chief of staff, Cade Cothren. Three other staffers are subjects of the probe too.
Hazlewood, who paid $3,257 for a legislative mailer, said she didn’t hire Phoenix Solutions directly to put together the constituent mailer and noted she had no reason at the time to be concerned about the vendor.
Speculation centers on whether Cothren was running Phoenix Solutions after Casada’s ouster by the House Republican Caucus.
“Everything I’d heard about Phoenix Solutions was that it was a legitimate company started by a couple of people who used to be with another company in upper East Tennessee or Virginia,” Hazlewood said.
She pointed out the company did what she hired it to do, put together an informational mailer for constituents in District 27, which makes up part of Hamilton County. But the company’s head, Matthew Phoenix, appears to have vanished, according to news reports, and can’t be reached for comment since reporters started asking questions. The company’s phone number is not in service.
Republican state Rep. Johnny Garrett, a Goodlettsville attorney who serves as caucus whip and handles the vendors for campaign work, has said he spoke to Phoenix but now questions the company’s validity.
Despite her newfound concerns, Hazlewood’s campaign also paid the vendor $1,737 for mailing in the first reporting period of the 2020 campaign and $5,565 for a consulting fee in November 2020, state reports show. In addition, her campaign gave $1,500 to Smith’s Leadership Pioneers PAC, though she also donated to Tillis’ campaign.
Rep. Smith, meanwhile, reportedly steered Republican legislators to use Phoenix Solutions. Smith, a Hixson Republican and former Tennessee Republican Party chairman, spent heavily with the vendor, and her political action committee, Leadership Pioneers, reported spending $34,675 with Phoenix.
In a December 2019 email to former House Chief of Staff Scott Gilmer, Smith wrote that she was assisting several legislators with their legislative update and survey. Gilmer responded that the legislative update was approved and told her she could send the invoice to the Speaker’s Office.
Smith declined to comment about Phoenix in January but said she is cooperating with the FBI. Her attorney said she is not a target of the investigation.
Other lawmakers who used Phoenix also expressed reservations, including Republican state Rep. Jay Reedy of Erin, who paid $4,263 to Phoenix for a constituent survey mailer funded by taxpayers.
Reedy, who said he wasn’t made aware of who was running the company, acknowledged that constituents have asked him whether he used tax dollars inappropriately.
“I say, wait a minute, everything was approved by the Speaker of the House and drawn up by the caucus,” Reedy said.
He was adamant, though, in saying he would not use Phoenix again if he knew then what he knows now about the company. Reedy noted he normally tries to use Tennessee businesses, and even in his locksmith company, he avoids Chinese-made products.
Others who used Phoenix for taxpayer-funded constituent mailers were Republican Reps. Tim Rudd of Murfreesboro, Paul Sherrell of Sparta, Kent Calfee of Kingston and Mark Hall of Cleveland.
Rudd said he used Phoenix for a survey but never communicated with the company and didn’t know who ran the company.
“I just did everything through the caucus,” he said.
Rudd, a former political consultant, said the caucus had used Phoenix in previous election cycles. But state records showed no expenditures to Phoenix Solutions in 2018 or 2016.
He noted that when the caucus uses out-of-state vendors, it insists they use a Tennessee printer. Consequently, if several consultants use the same printer, they could have the same postal code, he said.
Calfee, who has said he got “hood-dooed” into using Phoenix, also paid the vendor $15,650 for campaign materials and $750 for research and polling.