Less than three years after closing on a big federal loan deal, Open Range Communications has laid off most of its employees, stopped accepting new customers and filed for bankruptcy - owing the federal government more than $70 million.
Yet despite its dire finances, the Colorado-based company wants to hang on to its Washington lobbyist, Jon L. Christensen. A former Republican congressman who served two terms, he has earned more than a quarter-million dollars in lobbying fees from the company since last year, Senate records show.
Mr. Christensen now stands to earn up to $15,000 per month providing "government relations" services to Open Range during its bankruptcy, according to court documents.
Open Range filed for bankruptcy protection last month after closing on a $267 million loan deal from the U.S. Department of Agriculture (USDA) during the waning days of the George W. Bush administration.
Ethics watchdogs say there's nothing illegal about Open Range keeping Mr. Christensen even though it's bankrupt. They say the move underscores just how crucial corporations that do business with the government view their lobbying representatives in Washington.
"It seems hard to imagine why the company would need a lobbyist in this situation," said Melanie Sloan, executive director of the Washington-based watchdog group Citizens for Responsibility and Ethics in Washington.
"It just goes to show how instrumental lobbyists are if they're more important than customers and employees. Certainly, an explanation is warranted," she said.
Reached by phone, Mr. Christensen said he could not comment because of the ongoing bankruptcy. A bankruptcy attorney for Open Range did not respond to messages. A message left on the company's voice mail also was not returned.
In court filings, bankruptcy attorneys for Open Range referred to Mr. Christensen, among others, as a so-called "ordinary course professional" providing services outside the scope of the company's bankruptcy. The company said that without such professionals, Open Range would incur additional and unnecessary expenses by hiring others without the same background and expertise.
The filings also state that the continuation of the hiring arrangements would "avoid any disruption in the professional services required in the day-to-day operation of its business and are thus in the best interests of [Open Range] and its estate."
In an affidavit filed in the bankruptcy case, Mr. Christensen, a lawyer, said he represented the company as counsel and that it has requested him to continue to provide services during the bankruptcy case.
A development in the bankruptcy case occurred Tuesday with news of a potential buyer. Open Range plans to sell itself for $2 million to a Minnesota company called totheHome.com LLC, according to a report by the Denver Business Journal.
The article said an auction of Open Range's assets is scheduled for Nov. 14. If no higher bid emerges, the report said, closing the deal with totheHome.com would occur on Nov. 17.
Mr. Christensen has been lobbying for Open Range for years, Senate lobbying records show.
This year, he has earned more than $100,000 in fees from the company in lobbying Congress, the Federal Communications Commission and the USDA, Senate disclosure reports show.
Craig Holman, legislative representative for Public Citizen, another watchdog group, said that as a former member of Congress, Mr. Christensen is well-connected and can open important doors for the company.
"This is the revolving door," Mr. Holman said. "Former members of Congress are the most effective lobbyists on Capitol Hill."
Still, Mary Boyle, spokeswoman for Common Cause, said it's not clear why the company needs a lobbyist. "While we can't know all of the particulars, in general you can't lobby your way out of bankruptcy," she said.
When the USDA first announced the $267 million loan in 2008, plans called for the company to provide broadband service to more than 500 rural communities in 17 states. Out of the original $267 million loan deal, the USDA released $78 million to the company, with just $4.5 million repaid. It's unclear how much money taxpayers will be able to recoup.
"The loan with Open Range Communications was announced in 2008 and finalized days before this administration took office," USDA spokesman Justin DeJong said.
"In April 2011, USDA restructured the loan to reduce the government's exposure. USDA will be working with the Department of Justice on behalf of the American people to protect the federal government's interest in the loan," he said.
The Open Range bankruptcy has come under sharp scrutiny in recent weeks.
Last week, House Democrats called for an expansion of the congressional probe into bankrupt solar-panel maker Solyndra LLC to include a review of Open Range. Solyndra filed for bankruptcy in September, two years after the Obama administration awarded the company more than a half-billion dollars in federal loan guarantees.
Republicans on the House Energy and Commerce Committee started an investigation into Solyndra earlier this year. Documents uncovered during the probe have raised sharp questions about whether the administration ignored warnings about Solyndra's shaky finances before awarding the loans.
In a letter to Republican colleagues on the committee, Democratic Reps. Henry A. Waxman of California, Diana DeGette of Colorado and Edward J. Markey of Massachusetts last week called for similar scrutiny of Open Range's loan deal.
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