Known as the infamous political rainmaker who admitted to subverting elections in the District of Columbia and other jurisdictions with more than $2 million in questionable campaign cash, Jeffrey E. Thompson earned at least part of his fortune winning contracts scrubbing the financial books of government agencies.
But Thompson, Cobb, Bazilio & Associates’ own books were riddled with false entries that aimed to cover up Thompson’s massive campaign finance conspiracy, charging documents released this week show.
The revelations raise questions about whether others in the firm knew about the illegal activity and whether the government should continue doing business with the company, from which Mr. Thompson resigned, selling off his interests soon after the FBI raided his offices.
“If, in fact, Thompson did these things while employed by the firm, there would indeed be a strong basis for a federal government suspension and debarment official to question the present responsibility of the contractor,” said Eric Feldman, managing director for corporate ethics and compliance programs at Affiliated Monitors, who served as inspector general for the National Reconnaissance Office.
The accounting schemes prosecutors outlined this week suggest Mr. Thompson had help — if only because of the sheer volume of paperwork required to operate the complex operation.
Referring to Mr. Thompson and unnamed individuals, prosecutors described a maze of ways to hide the illegal campaign payments, including fraudulent W-2, 1099 and 1120 Internal Revenue Service tax forms.
SEE ALSO: Hillary Clinton aide claims campaign funds from Jeffrey Thompson were legal
Thompson has pleaded guilty and plans to cooperate with the U.S. attorney’s office. Prosecutors are investigating politicians who conspired with Thompson, who made his political donations through a health maintenance organization and a Medicaid transport firm he owned.
Prosecutors said this week that D.C. Mayor Vincent C. Gray, a Democrat, knew about the illegal “shadow campaign” to help him get elected in 2010, though the mayor denied wrongdoing.
Other candidates have come under scrutiny, too. Thompson bankrolled illegal campaign efforts on behalf of Hillary Rodham Clinton in 2008, though U.S. Attorney Ronald Machen has said Mrs. Clinton did not personally know about the scheme.
Officials at Thompson’s old firm have said nothing about the charges against its founder.
Since the FBI raided Thompson’s office in March 2012, his old firm has done work for federal clients including the Pension Benefit Guaranty Corp., which paid the company more than $250,000 in the weeks that followed the raid. Overall, the firm has won nearly $20 million in federal contracts over the years, according to a federal spending database.
A spokesman for the PBGC said officials no longer have a relationship with the firm and its last contract ended last fall.
SEE ALSO: Prosecutors: Gray had firsthand knowledge of ‘shadow campaign’
Barbara Ley Toffler, an executive who left Arthur Andersen by the time the accounting firm imploded in the wake of the Enron scandal, said the structured nature of accounting firms makes it unlikely that Thompson acted alone.
“It’s a culture,” said Ms. Ley-Toffler, who later wrote a book about Arthur Andersen’s fall. “People are afraid to talk. There’s not much in the way of protection.”
Messages to partners Michael Cobb and Ralph Bazilio, both of whom gave generously to many of the same politicians and causes backed by Thompson, went unreturned Tuesday. Neither has been accused of wrongdoing.
Last year, the firm issued a rare public statement on the scandal. It said the firm cooperated with prosecutors and conducted its own internal review, which concluded that Thompson “may have violated federal campaign law by giving directions to reimburse, with his own funds or with corporate funds, employees and others who made such contributions.”
The firm — renamed Bazilio Cobb Associates — also said in the June 2013 statement that the federal probe has never called into question the firm’s products and services to clients. Officials said almost all of the firm’s professionals aren’t politically active, so they were “unaware of certain federal campaign contribution law requirements.”
Still, Mr. Bazilio and other top officials at the company have been well-known donors over the years, often giving on the same day and in the same amount as other donors tied to Thompson. The Washington Times reported in 2012 that Mr. Bazilio has faced misdemeanor criminal charges for unrelated election law complaints in Maryland.
A 2006 case against Mr. Bazilio was dropped after the political action committee where he was an officer paid thousands of dollars in fines and filed updated campaign reports.