Superlobbyist indicted in finance scheme

Accused of using straw donors to make campaign contributions

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A federal grand jury has indicted one-time superlobbyist Paul Magliocchetti on charges of making hundreds of thousands of dollars in illegal campaign contributions through straw donors to favored members of Congress.

Mr. Magliocchetti headed the PMA group, an Arlington lobbying firm that specialized in getting its clients earmarks from key members of the House Appropriations defense subcommittee. He arranged for large amounts in donations to, among others, three powerful Democratic members of the subcommittee - John P. Murtha of Pennsylvania, James P. Moran of Virginia and Peter J. Visclosky of Indiana.

The charging documents mention no members of Congress by name, and a Justice Department statement accompanying the indictment said members who received the funds were not aware of the scheme.

Prosecutors said that in order to evade the legal limits on individual contributions and the outright ban on corporate contributions, Mr. Magliocchetti made illegal donations by reimbursing straw donors - family members, associates and employees - who made the gifts in their names, allowing him and PMA to take credit for the contributions.

“As the founder and president of the company that bore his name, Magliocchetti sought to enrich both PMA and himself by increasing the firm’s influence, power and prestige - both among the firm’s base of current and potential clients, as well as among the elected public officials to whom PMA and its lobbyists sought access,” prosecutors said in the 18-page indictment.

His son, Mark, who worked as a lobbyist for the PMA group, is cooperating in the probe. He pleaded guilty Thursday to one count of making illegal corporate campaign contributions and agreed to testify before any grand juries and trials in exchange for consideration of a reduced sentence, according to his plea agreement.

Mr. Magliocchetti is a one-time congressional staffer who worked with Murtha on the powerful House Appropriations defense subcommittee in the 1980s. He built the PMA Group into one of the 10 top-grossing lobbying firms in Washington before it imploded after federal agents raided it and his home in November 2008.

The firm made more than $16.4 million in lobbying income in 2007, according to Senate records, and was the go-to lobbyist for contractors who wanted earmarks - especially from the defense appropriations subcommittee, which Murtha headed. Murtha died in February.

Last year, the federal grand jury subpoenaed records from the office of Mr. Visclosky and his chief of staff. Earlier this year, the House ethics committee found no reason to charge seven members of the Appropriations defense subcommittee with exchanging campaign contributions for earmarks.

“While the indictment holds that the campaigns did not know the cash was illegal, it is also clear that Magliocchetti’s successful business model was to secure earmarks by giving cash,” said Steve Ellis, vice president of Taxpayers for Common Sense. “PMA was a cog in the earmark machine where thousands in campaign contributions turn into millions in taxpayer dollars.”

According to the indictment, from 2003 through 2008, Mr. Magliocchetti used personal and corporate money to advance funds to or reimburse family, friends and associates for the contributions they made on his behalf.

The Washington Times reported in December on a number of unlikely campaign contributors associated with Mr. Magliocchetti who did not appear to have had the financial means to make the donations listed in their names or who gave to candidates to whom they normally would not be expected to contribute.

For example, the indictment charges that he got two unnamed acquaintances who lived near his Florida vacation home to write checks out of their personal checking accounts to specific candidates for federal office. He then reimbursed them by giving them personal and company checks and by putting them on PMA’s board “even though the acquaintances lived in Florida, never worked as lobbyists and never attended board meetings,” according to the indictment.

Records indicate the two were John Pugliese, a wine sommelier, and Jon Walker, a marketing director of a golf club. The two men who were going to open a restaurant with Mr. Magliocchetti in Florida each gave $80,000 in a three-year period to members of Congress favored by Mr. Magliocchetti, records show.

The Times reported in December that although the two men were registered Republicans they each gave more than $66,000 of their donations to Democrats supported by PMA. The source of their funding was unclear since both men had histories of borrowing against their homes.

Mr. Magliocchetti is also charged with getting his employees to donate and then disguising the reimbursements by falsely listing them on the books as salary or bonus payments. The indictment says he tracked campaign contributions of the straw donors on spreadsheets and employees were led to believe that failure to make the donations would adversely affect their employment.

The 11-count indictment filed in U.S. District Court in Alexandria charged Mr. Magliocchetti with four counts of making illegal campaign contributions in the name of another, four counts of making illegal campaign contributions from a corporation, and three counts of causing federal campaigns to unwittingly make false statements.

Paul Magliocchetti made an initial appearance in Alexandria federal court Thursday afternoon. He was released in return for providing a $2 million personal unsecured bond. His arraignment was set for Aug. 13.

He is to have no contact with any potential witness or defendant in the case with the exception of his son, Mark, with whom he must not discuss the case.

According to court documents, Mark Magliocchetti admitted to receiving payments from an unnamed person and an unnamed company with the understanding that the money he received was to be used for federal campaign contributions. Sources close to the investigation have confirmed that the unnamed person is Paul Magliocchetti and the unnamed company is the PMA group.

Mark Magliocchetti’s sentencing is scheduled for Nov. 16. His attorney, Adam Hoffinger, declined to comment.

Court documents say that after Mark Magliocchetti and his wife started making donations in 2002, they were reimbursed by check. Mr. Magliocchetti later put his wife, Leslie, on the payroll as a consultant. The indictment says that after a while Mark realized the reimbursements were illegal but subsequently made between $120,000 and $200,000 in reimbursed donations.

The Times reported in December that Mr. and Mrs. Magliocchetti gave $475,794 to federal candidates and committees. Mark Magliocchetti’s biography says he worked for a member of the House Appropriations Committee when he got out of college. He was named to the PMA board in 1998 and became a lobbyist for the firm in 2002.

Mark and Leslie Magliocchettis’ finances also are heavily tied with Mr. Magliocchetti, records show. Since September 2003, the couple has lived in the Fairfax Station, Va., house that Mr. Magliocchetti and his ex-wife, Nancy, owned, acquiring the title just last year.

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