- The Washington Times - Monday, December 12, 2011

Senate disclosures show that former Rep. Charles W. Stenholm lobbied as recently as this summer for Open Range Communications, the now-bankrupt wireless company that owes U.S. taxpayers more than $70 million.

But the lobbying firm where he now works plans to drop his name from more than a year’s worth of lobbying-activity reports.

“It was just an oversight,” the Texas Democrat said in a recent interview. “My name is being retroactively removed.”

The decision to drop Mr. Stenholm’s name came after The Washington Times inquired about his seemingly dual roles as both lobbyist and corporate director for Open Range, which filed for bankruptcy in October after failing to pay back more than $70 million of a federal loan it received in 2008.

As an outside director, Mr. Stenholm is independent and oversees management, so being paid by management to lobby could raise conflict of interest concerns.

“At the least, you’ve got an appearance of a conflict here,” said Norman E. Bowie, senior fellow at the Olsson Center for Applied Ethics at the University of Virginia.

However, Mr. Stenholm said he stopped lobbying for Open Range shortly after he joined the company’s board of directors in 2009, though Senate papers list him as an Open Range lobbyist through this year.

While Mr. Stenholm appears not only as a lobbyist but as the lead contact for the lobbying assignment on disclosures, he said it’s the policy of the firm, Olsson Frank Weeda Terman Matz, to list the original lobbyist on disclosure reports. He said the actual filing is handled by support staff.

A few months after he joined the board, Mr. Stenholm said there was a discussion on outside contracts and the “observation was made that it probably didn’t make a whole lot of sense having a board member collect a retainer, and I agreed.”

Still, when management sought out a good lobbying firm to help communicate with the Department of Agriculture, Mr. Stenholm said as a director he did not hesitate to recommend Olsson Frank Weeda Terman Matz.

“I said well it just so happens that I work for a firm that is considered one of the best in D.C. regarding agricultural and rural issues,” he said. “I was pleased to recommend my company here to my company there, and that relationship continued until September of this year.”

Mr. Stenholm said there was no conflict of interest between his work at the firm and Open Range because he wasn’t getting any of the firm’s lobbying proceeds.

He isn’t the only former member of Congress tied to the Colorado-based wireless company. He said he first started working for the company as a lobbyist after getting a call from former Rep. Jon Christensen, a Nebraska Republican who served two terms in the 1990s. He said Mr. Christensen told him the company was working to put broadband Internet service in rural communities and “needed some Democratic help.”

After reviewing a prospectus, Mr. Stenholm signed on as a lobbyist in November 2007 but stopped shortly after joining the board in 2009. In 2008, the Department of Agriculture’s Rural Utilities Service announced it had awarded Open Range a $267 million guarantee, its biggest loan ever, to bring broadband service to hundreds of rural communities.

Now bankrupt, Open Range recently filed a detailed statement of financial affairs in court disclosing many of the payments it made to its outside contractors as well as key employees and directors in the weeks and months before the bankruptcy.

As a director, Mr. Stenholm was paid $10,000 within days of the bankruptcy filing.

Mr. Christensen received a $15,000 payment the day before the bankruptcy and another $60,000 in fees dating back to July, records show.

Open Range also paid its former chief executive, William S. Beans Jr., more than $170,000 just before the bankruptcy, though some of the money includes compensation for several months of future consulting work, paid time off and salary.

The company’s payments to outside lobbyists as well as to Mr. Beans and other executives could come under scrutiny in bankruptcy court as the case moves forward.

Bankruptcy law allows a trustee or debtor to try to recoup so-called “preferential payments” in cases where one creditor fared better than others when getting paid by the bankrupt company in the 90-day period before the bankruptcy filing.

The trustee or debtor also can claw back payments to “insiders” of the company, such as top executives and directors, a full year before the filing.

Bankruptcy lawyer Sam J. Alberts of SNR Denton U.S. LLP, while not commenting on the specific payouts in the Open Range case, said it’s not unusual for a debtor or trustee to go to court in an attempt to recover such payments. Once that happens, he said, the money can be distributed evenly to creditors.

“They’re bread-and-butter bankruptcy actions,” he said.

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