Lieutenant governor slams critics of ethics reform bill

By: - April 25, 2022 3:40 pm
Lt. Gov. Randy McNally slammed opponents of ethics legislation. (Photo: John Partipilo)

Lt. Gov. Randy McNally slammed opponents of ethics legislation. (Photo: John Partipilo)

In the waning days of the 112th General Assembly, Lt. Gov. Randy McNally is blasting opponents of his ethics reform legislation, accusing them of lying about the bill and even questioning whether they are “grifters.”

“There are many blatant untruths circulating regarding the ethics reform bill Speaker (Cameron) Sexton and I have introduced,” McNally said in a Monday statement,

The Oak Ridge Republican, who is sponsoring the bill with House Speaker Sexton, said the measure doesn’t censor or “otherwise curtail conservative activism or free speech in any way.” He noted conservative groups can continue their activism under this bill, yet they will have to start disclosing expenditures in the final two months of an election.

The legislation requires 501(c)4 groups to report any campaign expenses of more than $5,000 within 60 days of an election.

“It is amazing that various seemingly ‘legitimate’ groups are resorting to such disingenuous tactics to oppose it,” he said in his statement. “Is it because they are spending so much that Tennesseans would be appalled if they knew? Or is it that they spend so little that they fear they would be exposed as political grifters working to enrich only themselves?”

He noted neither the original Senate bill nor the current House bill require groups with 501(c) tax-exempt status to report donors, just expenditures.

“It is simply a lie to say otherwise,” he said.

McNally noted the legislation is designed to stop “bad actors” such as “fictitious Matthew Phoenix,” shell companies and “shadowy” political action committees used by some legislators to “line their own pockets.”

It is amazing that various seemingly ‘legitimate’ groups are resorting to such disingenuous tactics to oppose (ethics legislation.) . . . Is it that they spend so little that they fear they would be exposed as political grifters working to enrich only themselves?

– Lt. Gov. Randy McNally, in a Monday statement

Former Republican Rep. Robin Smith pleaded guilty to wire fraud this year for taking kickbacks, along with former House Speaker Glen Casada, from an upstart company called Phoenix Solutions, which did more than $200,000 worth of campaign work and taxpayer-funded mailers for House Republicans and the House Republican Caucus. 

Smith’s guilty plea details how Casada’s former chief of staff, Cade Cothren, formed the New Mexico-based company using a Post-Net box and pretended to be “Matthew Phoenix,” even signing a U.S. tax document using that phony name in order to do business with lawmakers.

Cothren, who used the bogus name so legislative leaders wouldn’t know he was behind the company after he resigned amid scandal in 2019, is also believed to be the operator of the Faith Family Freedom Forum political action committee. It helped defeat Republican state Rep. Rick Tillis, a political enemy of Casada and Cothren, in the 2020 campaign. He was defeated by Republican Rep. Todd Warner, whose home and office were raided by the FBI in January 2021, the same day federal agents searched the homes and offices of Casada and Smith.

Casada, Cothren and Warner have not been indicted.

The ethics reform bill, which increases financial reporting requirements for all legislators, staff and cabinet members and adds to membership in the Registry of Election Finance, was approved by the Senate on a 25-4 vote on April 14 and received an 87-3 vote in the House last week.

House and Senate versions of the bill still contain some differences, though, which could be worked out in a conference committee or beforehand. McNally and Sexton would appoint those committees to come up with final details, if necessary.

While reform effort would put strict new requirements on lawmakers, 501(c)4 group have made the most noise against the bill, which states they would be considered a political campaign committee and would have to file a report if they spend a total of $5,000 “in organizational funds, money or credits for communications that expressly contain the name or visually depict the likeness of a state or local candidate in a primary or general election” within 60 days of the election.

The National Rifle Association challenged the legislation early last week, then when some changes were made, it sent out a second letter contending the bill’s language still goes too far and could force communications with no election purpose to trigger a report.

It is requesting an exception be made for the definition of “communication” to allow for news and commentary in newspapers, magazines and web publications, mirroring federal campaign finance law, in addition to an exception to allow “grassroots lobbying” to continue.

NRA Tennessee State Director Matt Herriman said Monday the group’s opposition has nothing to with reporting “genuine election advocacy, which the NRA already does.”

“We oppose HB1201 because it redefines election advocacy communications to such a degree that a simple 10-minute radio interview during which a candidate is casually mentioned could trigger unprecedented disclosure requirements. That’s why dozens of non-profits have joined the NRA to oppose this bill,” Herriman said.

Americans for Prosperity–Tennessee, another vocal opponent of the legislation, continued to battle the legislation Monday. State Director Tori Venable said she stands by previous statements in which she called the bill “a sham of an ethics reform” to make it appear the Legislature is dealing with the scandal around Phoenix Solutions, which she said was a political action committee.

Phoenix Solutions wasn’t registered as a political action committee but did work as a campaign vendor. It hasn’t operated in the state since reporters started asking questions about it in early 2021.

Venable contends the House and Senate have refused to listen to “feedback” about the way the bill is drafted and said the portion dealing with 501(c)4 groups could “lead to confusion and/or trigger donor disclosure of non-profits.” Venable said the legislation wouldn’t have that much effect on Americans for Prosperity, which already has a political action committee, other than forcing it to put out its scorecard before the 60-day election window.

Nevertheless, it sent messages to lawmakers contending non-profit groups that engage in legislative or policy issues shouldn’t be treated as a “political entity” because they mention an elected official’s name with their voting record.”

“These groups serve as important watchdogs on legislation, educating the public and representing the interests of citizens who care about a myriad of policy issues. Treating these groups as though they are political campaign committees and subjecting them to additional reporting requirements sets a dangerous precedent,” the message says.

The message urges lawmakers to vote against HB1201 because Americans for Prosperity might include the vote in its legislative scorecard.

Lt. Gov. McNally appears to be unmoved by opposition from Americans for Prosperity and the NRA. 

“Openness and transparency in the political process are prerequisites to freedom. For too long liberals, big corporations and corrupt political actors have been allowed to exploit loopholes in our system and operate in darkness,” McNally said.

McNally wrapped up his statement saying voters “deserve” to know what groups are doing to influence elections and adds, “The fact this is even in question demonstrates the need for the legislation.”

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Sam Stockard
Sam Stockard

Sam Stockard is a veteran Tennessee reporter and editor, having written for the Daily News Journal in Murfreesboro, where he served as lead editor when the paper won an award for being the state's best Sunday newspaper two years in a row. He has led the Capitol Hill bureau for The Daily Memphian. His awards include Best Single Editorial and Best Single Feature from the Tennessee Press Association.