somebody doing something

Who’s Paying Beth Lavach These Days?

I dunno. But I bet we’ll know in about 60 to 90 days.

What’s Going On

So, the National Forensic Science Technology Center (NFSTC), a nonprofit organization, founded a for-profit consulting corporation, the Forensic Innovation Center (FIC). Kevin Lothridge, the CEO of the NFSTC, is also the President of the FIC.

This is a problem for a number of reasons.

First of all, prior to the founding of the FIC, the NFSTC was ~99% funded by the federal government (according to their own tax form). So… how can they have a for-profit, “subsidiary” anything? There should be men in bad suits knocking on the door and asking for the keys to that place at any minute.

Secondly, the FIC purports to do most of the things as a for-profit that the NFSTC has established clearly in their articles of incorporation to do as a nonprofit.

Legally, you can’t have an officer or board member of a nonprofit giving preference to a for-profit over the nonprofit. The idea that the nonprofit itself would be giving away opportunities to a for-profit is essentially raising a big red flag to the IRS saying, “Please come take my nonprofit status away so I can’t receive any more money. Thanks! XOXO.”

To make matters worse for themselves, prior to incorporating the FIC, the NFSTC contracted with the “partner companies” of the FIC to deliver services. This just proves that the NFSTC could fulfill any of those services that the FIC would purport to sell.

But the FIC also claims to deliver defense-related goods and services. That’s a problem, too.

The NFSTC has been receiving millions of dollars in earmarks over the past few years through the Defense Appropriations Bill for things like “Expansion of the Forensic Intelligence Technologies and Training Support Center of Excellence.” The NFSTC even provided trailers to the Army for mobile laboratories.

All this was before the incorporation of the FIC. That means that the NFSTC can do anything that the FIC can do. Therefore, the FIC cannot legally take opportunities from the NFSTC.

But all this is mind-numbingly boring compared to the fact that someone in this mess may be using a lobbyist who is registering under a non-existent corporation.

Funny Story…

One of the “partner companies” currently listed on the website of the FIC is FLIR Systems, Inc.

FLIR is a decent sized company (~3,200 employees) that makes thermal imaging equipment that is bought, largely, by the defense sector. FLIR has about $1.6 billion in revenues per year, a good operating margin, and about $375 million in cash.

When the FIC was founded in August 2010, one of the “partner companies” was ICx Technologies, Inc. ICx Technologies was in the process of being acquired by FLIR. The acquisition was completed on October 5, 2010.

The lobbyist for ICx Technologies prior to the buy-out was Elizabeth Lavach (ELS & Associates). Beth Lavach is also the lobbyist for the Consortium of Forensic Science Organizations (CFSO).

The CFSO is the lobbying organization of

  • American Society of Crime Laboratory Directors (ASCLD)
  • American Society of Crime Laboratory Directors/Laboratory Accreditation Board (ASCLD/LAB)
  • National Association of Medical Examiners (NAME)
  • American Academy of Forensic Sciences (AAFS)
  • International Association for Identification (IAI)
  • Society of Forensic Toxicology (SOFT)
  • American Board of Forensic Toxicology (ABFT)

Forensic Quality Services (FQS), the crime lab accreditation body created by the NFSTC as a competitor to ASCLD/LAB, was also a member of the CFSO at the time all this occurred. FQS recently pulled out of the CFSO, just prior to being acquired themselves.

ICx Technologies had been Beth Lavach’s highest paying client.

Oddly enough, ICx Technologies is still Beth Lavach’s highest paying client.

That’s the problem.

According to the Lobbying Disclosure Act, there should be exactly zero lobbyists registered for ICx Technologies, Inc., since ICx Technologies ceased to exist on October 5, 2010.

When two companies merge, the company that “survives” the merger becomes the company that has to register as having a lobbyist.

The real problem for the company is that it’s the lobbyist who actually files the lobbying disclosure paperwork.

If Beth Lavach was still lobbying for ICx Technologies as a subsidiary of FLIR, she should have noted the name change to FLIR in her lobbying disclosure forms. In other words, she should be registering as a lobbyist for FLIR (this according to the real, live people at the Clerk of the House of Representative’s office, after much discussion on the subject).

Instead, there was absolutely no change from the third quarter of 2010 (the quarter before the merger) through any of Lavach’s filings for the next year; Lavach still registered as lobbying for ICx Technologies, Inc.

  • Beth Lavach’s Lobbying Disclosures for ICx Technologies, Inc.
  • Why would someone do this and risk getting caught?

    Because getting caught filing “defective” lobbying disclosures does not usually carry a hefty penalty.

    What Happens Next

    To understand what happens with enforcement of the Lobbying Disclosure Act, you first need to understand what happens when laws are passed…

    Lots and lots and lots of lobbyists have lots and lots and lots of input on what goes into the laws. Period.

    Therefore… this is what happens when someone files a “defective” disclosure under the Lobbying Disclosure Act:

    • First, the Secretary of the Senate or the Clerk of the House notifies the lobbyist of the “defective” filing and the lobbyist has 60 days to correct it.
    • If the “defective” filing is not corrected within 60 days, OR the lobbyist, client, whoever fails in some other way to comply with any other provision of the Act, they MAY be subject to a CIVIL penalty of NOT MORE THAN $200,000.

    As we’ve seen before (1, 2, 3)… when you get to set your own rules, there aren’t really any consequences for breaking them.

    However… there’s also this interesting little part…

    Whoever knowingly and corruptly fails to comply with any provision of [the Lobbying Disclosure Act] may be imprisoned for not more than 5 years or fined under title 18, United States Code, or both.

    And the Guidance to the Lobbying Disclosure Act on the House website makes specific note of the False Statements Accountability Act of 1996, stating

    The False Statements Accountability Act of 1996, amending 18 U.S.C. § 1001, makes it a crime knowingly and willfully: (1) to falsify, conceal or cover up a material fact by trick, scheme or device; (2) to make any materially false, fictitious, or fraudulent statement or representation; or (3) to make or use any false writing or document knowing it to contain any materially false, fictitious, or fraudulent statement or entry; with respect to matters within the jurisdiction of the Legislative, Executive, or Judicial branch. The False Statements Accountability Act does not assign any responsibilities to the Clerk and Secretary.

    Therefore, the real issue is proving all that “knowingly” and “willfully” and “corruptly” stuff. Also note that the Guidance states

    The False Statements Accountability Act does not assign any responsibilities to the Clerk [of the House of Representatives] and Secretary [of the Senate].

    In other words, those two offices know the rules and can give guidance but they can’t really enforce them.

    So, if someone files a “defective” lobbying disclosure form or other filing under the Lobbying Disclosure Act and then says, “I’m sorry, I didn’t realize…” they can argue ignorance.

    However, if the person has a demonstrated history of knowing better, it’s pretty damn hard to argue ignorance.

    SAIC and AMTI

    One of Beth Lavach’s other clients used to be Applied Marine Technology, Inc. (AMTI).

    In December 2006, AMTI was acquired by Science Applications International Corporation (SAIC). SAIC is a Fortune 500 company that specializes in science, engineering, and technology applications for clients in the defense, intelligence, and homeland security community, among others.

    Lavach’s contract with AMTI was carried over to SAIC for about two years before being terminated in 2008.

    Lavach’s lobbying disclosure form in 2006 show that Lavach was lobbying for AMTI. The line for the client name reads

    AMTI, Incorporated

    However, the very next lobbying disclosure form filed by Lavach after AMTI was acquired by SAIC reflected the merger. The line for the client name reads

    SAIC (FORMERLY AMTI)

    Therefore, Beth Lavach knows that a merger requires a name change on a lobbying disclosure form to reflect the surviving company.

    Interesting Developments

    After my last post, Beth Lavach filed her lobbying disclosure forms for the fourth quarter of 2011. Just yesterday, as a matter of fact.

    Her fourth quarter lobbying disclosure form for ICx Technologies now claims that she is lobbying for “ICx Technologies, Inc. now FLIR” (line 7, “Client Name”). No amended reports were filed for the previous year’s worth of filings.

    There are several interesting things about this filing.

    FLIR has its own in-house (staff) lobbyists who are registered as lobbyists for FLIR, plus one outside lobbying firm they have used in the past which is also registered as a lobbyist for FLIR.

    However, in 2011, FLIR appears to have only used their in-house lobbyists. The single outside lobbying firm left that is registered to FLIR was not paid and had no lobbying activity. FLIR’s staff lobbyist is the only lobbyist to file lobbying disclosure forms with any lobbying activity for FLIR.

    Also, FLIR has had lobbyists for other subsidiaries and divisions of the corporation in the past and has registered those lobbyists properly, crediting the lobbying to FLIR.

    What is most interesting is that Lavach claims in the new filing that she was paid $40,000 in the fourth quarter of 2011 by ICx/FLIR, but that she did not lobby for them. This is a “no lobbying issue activity” report; Lavach is simply reporting that she received $40,000 in income from ICx/FLIR.

    This would mean that Lavach is on retainer and is paid whether she is lobbying for ICx/FLIR or not.

    I can’t find any other example of FLIR paying any outside lobbyist during a quarter with no lobbying activity. None. Going back to 1998.

    Also, FLIR is a company that does business primarily in the Department of Defense and Homeland Security-related fields. All the lobbying activity Lavach has been reporting that she has been doing for ICx Technologies since the merger has been related to Department of Defense, Homeland Security, and military issues and funding.

    The bill containing funding for the Department of Defense and Homeland Security was winding its way through Congress during the fourth quarter of 2011 and was finally passed as part of the FY 2012 Consolidated Appropriations Act on December 17, 2011.

    As with most things that happen on the Hill, there was much debate, many proposed amendments, and a lot of horse trading going on prior to the vote. The idea that a defense-related company would pay their lobbyist $40,000 to sit around and do nothing while this was going on is hard to believe.

    FLIR’s in-house lobbyist was active during this period and registered as lobbying for FLIR on the FY 2012 Consolidated Appropriations Act, among other things.

    So, this still doesn’t quite add up.

    Why Would Someone Do This?

    Why would anyone file lobbying disclosure forms to hide the true client or source of their lobbying income?

    The reason the lobbyist would need to file the disclosure form is simple: to account for the income they are getting. They are a registered lobbyist. The income numbers on the forms filed with the House and Senate need to match pretty closely with the numbers filed with the IRS.

    A client might need to do this to hide the fact that they are lobbying Congress.

    What kind of client would need to hide their lobbying activity? There are a several possibilities here. For example,

    • Some person or organization who just plain doesn’t want to be known and has decided to go about it this way.
    • A client who isn’t supposed to lobby Congress or who has severe legal limitations how much lobbying they can do, such as a nonprofit organization.
    • Federal funds cannot be used for lobbying. That means you can’t use federal grant money to lobby Congress. Any organization that is using federal funds for lobbying would probably want to hide their lobbying activity.
    • A group of individuals or organizations that is trying to hide their relationship to one another.

    This last example- a group of individuals or organizations- is actually covered by the Lobbying Disclosure Act.

    Any member of any group (referred to as a coalition or association in the Guidance on the subject) that “contribute[s] more than $5,000 toward the lobbying activities of the registrant in the quarterly period, and actively participate[s] in the planning, supervision or control of the lobbying activities” must be identified in the filing.

    “Actively participates” has several definitions in the Guidance. Having a member or representative involved on a board, committee, or oversight group of the coalition or association is a pretty good signal that you are “actively participating.”

    However, the law also says that it doesn’t matter if the coalition or association is “formal or informal.” If you’re mingling around and throwing money at the same lobbyist for the same reason, you’re pretty much an association or a coalition and you need to be identified on the registration or the quarterly disclosure.

    So… what’s going on, then?

    So far, I have gotten no comment from Beth Lavach or FLIR.

    FLIR is still listed as a “partner company” on the website of the FIC.

    It is unclear how much involvement the “partner companies” of the FIC have in the actual corporation.

    One reason defense-related companies may have agreed to be attached to the FIC is because of the location and who represents that particular district in the House: Representative Bill Young.

    Bill Young has been in Congress for 41 years and is in his 21st term. Young sits on the House Appropriations Committee and chairs the House Defense Appropriations Subcommittee. Young usually ranks in the top 3 or 4 (out of 435 House members) in terms of the amount of earmark spending that goes to his home district.

    As a result, there are a lot of defense contractors that seem to have made sure that they have an office in Bill Young’s district.

    The NFSTC has just jumped on the defense earmark bandwagon with the vaguely named “Expansion of the Forensic Intelligence Technologies and Training Support Center of Excellence” earmark from Bill Young.

    However, word is that Young may announce his retirement any day now. The earmarks that the NFSTC has just started to pursue for their brand-new, ill-advised venture may be short-lived.

    So, it remains to be seen what will happen with Beth Lavach’s previous filings under the client name ICx Technologies, when the NFSTC’s 2010 tax form will pop up, and who might take an interest in the dealings at the FIC.