Brian Kelsey

New TNJ edition alert: Kelsey hires new legal team, Griffey confirms departure, Sethi a no-go for Congress

Former Nashville Mayor Megan Barry and state Sen. Brian Kelsey’s new lawyer.

In this week’s edition of the print edition of The Tennessee Journal:

— Kelsey’s new legal team previously represented a certain mayor and some high-profile murder defendants. Trial has been scheduled for January.

— The uncertainty principle: Rising inflation complicates revenue projections.

— From the campaign trail: Griffey confirms departure from state House, Sethi won’t run for new-look 5th Congressional District.

— Fallings out: New books detail ousters of NRA lobbyist, Trump’s defense secretary.

Also: Miss Tootie passes away, Biden names Memphis attorney to 6th Circuit and Sewanee president to ambassadorship, the megasite loses its Memphis designation, and Lee rolls out the red carpet for out-of-state law enforcement.

As always, access your copy of the TNJ here or subscribe here.

Mark Green is getting involved where now?

U.S. Rep. Mark Green (R-Ashland City) has long been known for his pursuit of higher office, whether it is for governor, U.S. Senate, or beyond. He’s also been actively lobbying his former colleagues in the Tennessee legislature to not fundamentally alter his congressional district when they draw new political maps this winter.

But it turns out Green’s political interests aren’t limited to Tennessee — or even this hemisphere. The New York Times reports Green is now agitating in Brazil, where supporters of the country’s far-right leader Jair Bolsonaro are echoing many of the themes adopted by former U.S. President Donald Trump.

From the Times story:

Representative Mark Green, a Tennessee Republican who has pushed laws combating voter fraud, met with lawmakers in Brazil to discuss “voting integrity policies.” […] The American Conservative Union paid about $15,000 to send Mr. Green, the Tennessee Republican, according to a lobbying disclosure. His planned agenda included a discussion, over lunch, of voting laws with two Brazilian members of Congress who pushed to change Brazil’s.

The American Conservative Union has been in the news in Tennessee lately following the federal indictment of Green’s former state Senate colleague Brian Kelsey on charges he conspired to funnel campaign donations to the group through two political action committees. Kelsey has pleaded not guilty.

Report: Durham subpoenaed for Kelsey grand jury

Sen. Brian Kelsey (R-Germantown), right, attends a Senate Education Committee meeting in Nashville on April 16, 2019. (Erik Schelzig, Tennessee Journal)

Sam Stockard of the Tennessee Lookout has some interesting details on former Rep. Jeremy Durham (R-Franklin) being subpoenaed to testify to the grand jury about Sen. Brian Kelsey (R-Germantown), who was indicted last week on federal campaign finance and conspiracy charges.

UPDATE: Kelsey pleaded not guilty on Monday morning, per the Daily Memphian.

According to the Lookout, Durham was called to testify on March 11:

As part of the subpoena, Durham was required to provide copies of all documents and records related to Kelsey, Kelsey’s wife, Amanda Bunning, his wife, Jessica Durham, Josh Smith, Andrew “Andy” Miller, Zach Crandell, Matt Schlapp of the American Conservative Union, Dan Schneider, Ryan McGowan, Clifford Pintak, Kelsey for Congress, Red State PAC, VoteKelsey.com, American Conservative Union, Citizens 4 Ethics in Government PAC and any entity representing Kelsey and his associated political campaigns.

We know who the Kelseys and the Durhams are, along with Standard club owner Josh Smith and conservative donor Andy Smith. Here’s our best guess at some of the others named in the subpoena:

Schlapp is the chairman of the American Conservative Union, the Washington-based group that puts on CPAC conferences. McGowan is the ACU’s finance director, Dan Schneider is its executive director, and Crandell was the group’s creative director until September. Pintak is a political ad consultant based in northern Virginia.

Durham was also ordered to turn in all records relating to the funds transferred between the various entities and the Standard Club PAC, plus any relevant calendars, diaries, meeting minutes, receipts, or statements, along with emails, text messages, voice mails, phone calls, logs, and metadata. 

Kelsey in a Senate floor speech last week intimated that the chief witness in the case against him had been offered immunity in return for his testimony. Durham and Kelsey have long been close friends.

New TNJ edition alert: A deep dive into the case against Kelsey

Sen. Brian Kelsey (R-Germantown), right, confers with then-Rep. Matthew Hill (R-Jonesborough) on the House floor in Nashville on April 30, 2019. (Erik Schelzig, Tennessee Journal)

With the special session on dialing back COVID-19 restrictions still churning away, this week’s edition of The Tennessee Journal takes a deep dive into the indictment on the indictment of state Sen. Brian Kelsey, including:

— Details of the alleged conspiracy and our best estimates about the identities of the unnamed coconspirators and other people named in the complaint.

— An apparent split between longtime friends Kelsey and ousted Rep. Jeremy Durham.

— A look at the legal team representing Kelsey and Josh Smith, the owner of the private Standard club in Nashville.

— A primer on some of Kelsey’s greatest hits that gave him the nickname “Stuntbaby of Germantown.”

Also: An overview of the latest special session and Jack Johnson’s acknowledgement that it goes against “the tenets that we’ve held very sacred,” Bill Ketron pays his $135,000 fine, and no more take-home whiskey bottles at receptions.

As always, access your copy of the TNJ here or subscribe here.

Kelsey steps down as chair of Education Committee following federal charges

Sen. Brian Kelsey walks in the state Capitol in Nashville on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Sen. Brian Kelsey (R-Germantown) has announced he will stop down as chair of the Education Committee while fighting federal conspiracy and campaign finance charges.

Kelsey in his floor comments erroneously cited The Tennessee Journal as reporting the chief witness in the case had been granted immunity from federal charges. We have previously reported that the attorney for former Rep. Jeremy Durham (R-Franklin), who is included in the complaint as an unindicted coconspirator, said in an unrelated court appearance that federal prosecutors told him his client wasn’t going to face criminal charges. But Durham’s attorney, Peter Strianse, said nothing about immunity or any connections to the Kelsey matter.

It’s possible Kelsey was referring to someone other than Durham, but the Journal hasn’t reported about immunity for anyone else in the case.

Here are Kelsey’s full comments on the Senate floor, along with responses from two colleagues.

KELSEY:

Thank you, Mr. Speaker. Per Senate rules, I’m requesting a temporary suspension from chairing the Education Committee based on allegations of intent to violate campaign finance laws. Colleagues, let me be clear: I’m totally innocent. And I look forward to clearing my name through the judicial process.

If you will indulge me for a brief moment, there are three points about the government’s investigation I did want to emphasize.

No 1., and most important, I understood I was operating within campaign finance rules, and I believe the donation at issue was legal. It was made on the advice of counsel. No. 2, ad I’m sure you saw in The Tennessee Journal, according to his lawyer, the government’s lead witness was given immunity from federal charges. And No. 3, the timing of the government’s investigation is questionable because they waited five years and a change of administration to pursue it.

And there are several other issues that I will not mention here because my lawyers won’t let me.

But I’m confident that these will become apparent during the course of the legal proceedings. And like many of you, I entered public service as a calling. While regretfully partisan politics these days often comes into play, and we may not agree on every issue, I hope that you will agree that for 17 years – 17 years – I, like you, have always voted for what I thought was best for Tennesseans.  And we must find a way in state governmetn and our nation to heal these divisions, to work together on behalf of the people, to move past this extremely divisive time, and to not use political attacks on one another to discourage good people from running for office and participating in our vital government processes.

I hope and pray that we can all truly come together again in the peace, strength, and unity that defines our great state of Tenenssee and our nation. You know, my faith in the lord, it will get me through this challenge. And I am extremely blessed with the strongest and most supportive wife that I can ever imagine and a joyous 2-year-old daughter, too. I have the tremendous honor to represent the people of my county and my state.

And I cannot close without expressing my sincere appreciation for the encouragement that many of you have recently offered. I trust in time the truth will prevail and I will resume my leadership role o the Education Committee. Thank you, Mr. Speaker, for your time and support.

SENATE SPEAKER RANDY MCALLY (R-Oak Ridge:

Thank you, Sen. Kelsey. I know it’s a very difficult time for you and your wife and daughter. And I want you to know that my prayers are with you and your family, and I appreciate the action that you have taken today. I think this will allow you to concentrate fully on your case and not be burdened with the issues of chairmanship. And I appreciate you as a senator and as a person. Thank you.

SEN. FRANK NICELEY (R-Strawberry Plains):

Thank you, Mr. Speaker. This would be a perfect time for me to not say anything. But I want to just give you something to think about. These campaign contributions are private dollars. They’re not tax dollars. And when the federal government, the U.S congressmen and U.S. senators, passed a law that we couldn’t use our money that we raised here in the state of Tenenssee to run for federal office, that was pure self-service. That was an incumbent protection act. They didn’t want us to use our money to run against them. I think the whole law is bad.

I don’t think I have a single contributor who would mind, if I was 20 years younger, me running for Congress and using that money. So I know they’ll never change it because they don’t want someone with three or four hundred thousand dollars in their Senate account running for Congress. And that’s exactly the reason that law was passed in the first place, keeping somebody like Jack Johnson using his state money to run for a federal seat. It’s self-serving and it’s not right.

Kelsey: ‘I’m totally innocent’

Sen. Brian Kelsey (R-Germantown) discusses his federal indictment on campaign finance charges on Oct. 25, 2021. (Screengrab from Zoom call)

State Sen. Brian Kelsey (R-Germantown) hosted a Zoom call with reporters on Monday to denounce his federal indictment as politically motivated. Kelsey appeared with the Senate chamber as the backdrop.

Here’s what Kelsey had to say:

Look, this is nothing but a political witch hunt. The Biden administration is trying to take me out because I’m a conservative and I’m the No. 1 target of the Tennessee Democratic Party. I won my seat only 51% to 49% last time, and the Democrats think this will make the difference. They’re wrong. These 5-year-old, unfounded allegations have been reviewed and re-reviewed. They were wrong then, and they’re wrong now. I’m totally innocent, and I look forward to being cleared at trial.”

Kelsey’s attorney Ty Howard also spoke on the brief call.

“Let me state clearly and empathically from the start, these allegations are false,” Howard said. “Sen. Kelsey committed no crime. He is innocent. And he very much looks forward to his day in court.”

“Despite this ill-considered indictment, Sen. Kelsey and his legal team have great faith in our justice system,” Howard said. “He looks forward to being fully vindicated in a court of law. Out of respect for the legal process, we will take no questions today and this will be our only public comment during the pendency of this matter.

Read the Kelsey indictment here

Brian Kelsey, center with folder in hand, awaits Gov. Bill Lee’s arrival for his second State of the State address in Nashville on Feb. 3, 2020. (Erik Schelzig, Tennessee Journal)

The indictment of Sen. Brian Kelsey (R-Germantown) has led to widespread speculation about the identities of people and organizations mentioned in the charges.

Some are are easier to pinpoint than others. For example, Unindicted Coconspirator No. 2 is described as a “member of the Tennessee House of Representatives from in or around January 2013 to in or around September 2016, when he was expelled.” That description only fits former Rep. Jeremy Durham (R-Franklin).

Political Organization No. 1 is listed as “a nonprofit corporation that hosted an annual political conference, published ratings on Members of Congress and State politicians, and issued political endorsements.” Presumably this refers to the American Conservative Union, which spent money in Kelsey’s congressional bid in 2016.

Individual No. 1 is named as the nonprofit’s director of government affairs who is now married to Kelsey. That description matches Amanda Bunning.

Coconspirator No. 1 is listed as “a Tennessee businessman and prominent political fundraiser and contributor,” who controlled a political action committee that received $30,000 from Smith’s PAC in July 2016. The Tennessean reported in 2017 the Standard Club PAC had given that amount to Citizens for Ethics in Government, the federal committee controlled by Andy Miller Jr.

Here is the full text of the indictment of state Sen. Brian Kelsey (R-Germantown):

I N D I C T M E N T

THE GRAND JURY CHARGES:

COUNT ONE

18 U.SC. § 371

(CONSPIRACY)

At all times material to this indictment unless otherwise indicated:

I.       Relevant Individuals and Entities

1.      BRIAN KELSEY was a practicing attorney and member of the Tennessee Senate, representing District 31, which includes parts of Shelby County, Tennessee. In 2016, KELSEY unsuccessfully ran for an open seat to represent Tennessee’s 8th Congressional District in the U.S. House of Representatives.

2.      Federal Committee 1 was KELSEY’S authorized federal campaign committee.

3.      State Committee 1 was KELSEY’S Tennessee State Senate campaign committee.

4. JOSHUA SMITH was the owner and operator of Social Club 1, a members-only social club in Nashville, Tennessee popular among politicians and Nashville businessmen. SMITH also controlled PAC 1, a Tennessee-registered political action committee

5.      Unindicted Coconspirator 1 (“UCC 1”) was a Tennessee businessman and prominent political fundraiser and contributor. UCC 1 controlled PAC 2, a federal independent expenditure-only committee.

6.      Unindicted Coconspirator 2 (“UCC 2”) was a practicing attorney and member of the Tennessee House of Representatives from in or around January 2013 to in or around September 2016, when he was expelled by a vote of the House.

7.      Political Organization 1 was a nonprofit corporation that hosted an annual political conference, published ratings on Members of Congress and State politicians, and issued political endorsements. Political Organization 1 registered with the Federal Election Commission (“FEC”) as a person or organization making independent expenditures.

8.      Individual 1 was the Director of Government Affairs for Political Organization 1 and a member of Political Organization 1’s senior management team from in or around late 2015 until in or around March 2017. In that role, Individual 1 managed Political Organization 1’s political expenditures during the 2015-16 federal election cycle. Individual 1 and KELSEY became engaged in or around July 2017 and married in or around January 2018.

9.      Individual 2 was a member of Political Organization’s senior management team. He oversaw Political Organization 1’s day-to-day operations, including managing its budget and finances. He worked closely with Individual 1 to direct all aspects of Political Organization l’s political activities, including political expenditures.

10.    Individual 3 was a practicing attorney with ties to Political Organization 2, a nonprofit corporation that publicly advocated on legal and judicial issues.

11.    Individual 4 was a longtime financial supporter of KELSEY’S political career.

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What does Kelsey indictment mean for Education chairmanship, leading role in Lee’s funding review?

Sen. Brian Kelsey (R-Germantown), right, attends a Senate Education Committee meeting in Nashville on April 16, 2019. (Erik Schelzig, Tennessee Journal)

The indictment of Sen. Brian Kelsey (R-Germantown) on federal campaign finance charges starts the clock on whether he will try to cling on to his chairmanship of the Education Committee.

According to the Senate’s code of ethics, members have 10 days from the indictment to ask for a hearing to challenge a suspension from a committee leadership position. If no such request is lodged, the suspension takes effect “as long as the indictment is being actively pursued.”

Vice Chair Jon Lundberg (R-Bristol) would presumably take over if Kelsey is suspended.

Senate Speaker Randy McNally (R-Germantown) issued the following statement:

I am obviously saddened by this news. It is important to remember that under our laws, Senator Kelsey is innocent until proven guilty. He will have the opportunity to answer this indictment in the coming days. I have confidence in our judicial system and will reserve judgment and comment at this point in order to allow the process to unfold.”

Gov. Bill Lee last week named Kelsey to his 12-member steering committee on overhauling the Basic Education Program school funding formula.

Lee spokeswoman Laine Arnold said Kelsey serves on the panel by virtue of his chairmanship, so there are “no changes now but we are monitoring the situation.”

Grand jury indicts Kelsey on federal campaign finance charges

Sen. Brian Kelsey (R-Germantown), right, confers with then-Rep. Matthew Hill (R-Jonesborough) on the House floor in Nashville on April 30, 2019. (Erik Schelzig, Tennessee Journal)

A grand jury has indicted state Sen. Brian Kelsey (R-Germantown) on five counts of violating federal campaign finance laws related to his failed 2016 bid for Congress.

According to the indictment, Kelsey and Josh Smith, the owner of The Standard social club in Nashville, conspired with others to “secretly and unlawfully funnel ‘soft money'” between the senator’s state account and his federal campaign.

“Kelsey and others also caused a national political organization to make illegal, excessive contributions to Kelsey’s federal campaign committee by secretly coordinating with the organization on advertisements supporting Kelsey’s federal candidacy and to cause false reports of contributions and expenditures to be filed with the Federal Election Commission,” according to a Justice Department statement.

The conservative news site The Dispatch reported earlier this month that federal investigators were scrutinizing the dealings of Matt Schlapp and the American Conservative Union about what one person called their “knowledge of the events leading up to the endorsement of Brian Kelsey.”

Kelsey reissued his standard statement on the investigation to The Dispatch: “I welcome any investigation because all donations were made in compliance with the law and on the advice of counsel.”

Here’s the full release from the U.S. Attorney’s Office in Nashville:

NASHVILLE – A federal grand jury in Nashville Friday, returned a five-count indictment charging Tennessee State Senator Brian Kelsey, 43, of Germantown, Tennessee, and Nashville social club owner Joshua Smith, 44, with violating multiple campaign finance laws as part of a conspiracy to benefit Kelsey’s 2016 campaign for U.S. Congress.  

Acting U.S. Attorney Mary Jane Stewart for the Middle District of Tennessee, Assistant Attorney General Kenneth A. Polite, Jr. of the Department of Justice Criminal Division, and Acting U.S. Attorney for the Western District of Tennessee Joseph C. Murphy, Jr. made the announcement.

According to the indictment, beginning in February 2016 and continuing through mid-October 2016, Kelsey and Smith conspired with others to violate federal campaign finance laws to secretly and unlawfully funnel “soft money” (funds not subject to the limitations, prohibitions, and reporting requirements of the Federal Election Campaign Act [FECA]) from Kelsey’s Tennessee State Senate campaign committee to his authorized federal campaign committee.  Kelsey and others also caused a national political organization to make illegal, excessive contributions to Kelsey’s federal campaign committee by secretly coordinating with the organization on advertisements supporting Kelsey’s federal candidacy and to cause false reports of contributions and expenditures to be filed with the Federal Election Commission. 

In 2016, the FECA limited campaign contributions to $2,700 from any one individual or organization to any one candidate in each election. 

The indictment alleges that Kelsey, Smith, and other unindicted coconspirators orchestrated the concealed movement of $91,000 to a national political organization for the purpose of funding advertisements that urged voters to support Kelsey in the August 2016 primary election, and that the conspirators caused the political organization to make $80,000 worth of contributions to Kelsey’s federal campaign committee in the form of coordinated expenditures.  The indictment alleges other meetings and communications between the conspirators, resulting in the illegal transfers, contributions, and expenditures associated with Kelsey’s federal campaign.

Kelsey and Smith are charged with conspiracy, illegally transferring “soft money” as a federal candidate and his agent, and illegally transferring “soft money” as a state officeholder and his agent. Kelsey is also charged with making excessive contributions to a federal campaign and accepting excessive contributions.  If convicted, they face up to 5 years in prison and a $250,000 fine on each count.

A summons has been issued by the Court and Kelsey and Smith are directed to surrender to U.S. Marshals in the Middle District of Tennessee on or before November 5, 202, at 10 a.m. and both will make an initial appearance before a U.S. Magistrate Judge.

This case was investigated by the FBI.  Assistant U.S. Attorneys Amanda Klopf of the Middle District of Tennessee and David Pritchard of the Western District of Tennessee and Trial Attorney John Taddei of the Criminal Division’s Public Integrity Section of the Department of Justice are prosecuting the case.

An indictment is merely an accusation.  The defendants are presumed innocent until proven guilty in a court of law. 

Report: American Conservative Union scrutinized as part of Kelsey campaign finance probe

Sen. Brian Kelsey (R-Germantown), right, confers with Rep. Matthew Hill (R-Jonesborough) on the House floor in Nashville on April 30, 2019. (Erik Schelzig, Tennessee Jounral)

A federal probe into campaign finance dealings by state Sen. Brian Kelsey (R-Germantown) is scrutinizing the dealings of Matt Schlapp and the American Conservative Union, according to a report by The Dispatch.

The conservative news site reports federal agents have interviewed current and former ACU employees about financial matters and about what one person called their “knowledge of the events leading up to the endorsement of Brian Kelsey.”

The Tennessee Journal learned in 2019 that state lawmakers had been called in for interviews with Department of Justice investigators to discuss alleged straw donations to Kelsey’s 2016 fourth-place campaign for the Republican nomination for an open 8th Congressional District race. Candidates are prohibited from using money raised for state races in federal campaigns.

As first reported in 2017 by The Tennessean (and later augmented by a complaint filed with the Federal Election Commission), Kelsey’s state committee, Red State PAC, gave thousands of dollars in campaign contributions to fellow state lawmakers, who then turned around and gave donations to his congressional account. The former state Senate Judiciary chairman also had more than $100,000 from his state account transferred to the Standard Club PAC, which then gave money to the American Conservative Union — both directly and through another committee run by conservative businessman Andy Miller Jr. The national group then made independent expenditures on Kelsey’s behalf. Kelsey has denied any wrongdoing.

“It is often difficult to cut through confusing campaign rhetoric to figure out which candidate is the best conservative in a race, but we think this is actually an easy call,” Schlapp said at the time. “If voters in western Tennessee are looking for a proven leader with a conservative track record, the decision is easy. Brian Kelsey is the real deal.”

The nonpartisan Campaign Legal Center filed complaints against Kelsey, the ACU, and others with the the Federal Elections Commission and to the Department of Justice in 2017. Unidentified sources told The Dispatch they had been interviewed in recent months about the Kelsey endorsement.

“They asked me about Matt Schlapp and [ACU Executive Director] Dan Schneider’s involvement within the organization, how they were involved with the disbursements of money and the decision of who to financially support,” one person told the publication. “One of the questions that really stuck with me was, ‘Was Matt Schlapp in those meetings when they decided who to endorse?’ I said yes. And they said, ‘So was he directly involved with the decisions to financially support the candidates?’ I said, I don’t know. And they said, ‘But would it be weird if Matt Schlapp didn’t know?’ I said yes.”

The ACU issued a statement downplaying the probe.

“We are aware of campaign finance allegations lingering from the 2016 election cycle that were reported in multiple press outlets after a Soros-funded group complained,” spokeswoman Regina Bratton said. “We continue to believe ACU’s activities, which took place more than five years ago, were legally compliant. We have been assured that ACU is not a target of any review by the government at this time.”

The Campaign Legal Center, which was founded by Republican former FEC member Trevor Potter, has received donations from George Soros’ Open Society Foundations. The group has filed complaints against candidates of both parties.

A spokesman told The Tennessee Journal in late 2019 that Schlapp had neither been interviewed by federal investigators nor testified before the grand jury.

The statement’s emphasis on events having taken place more than five years ago could be an effort to point out the statute of limitations may have passed for events that took place in the summer of 2016, according to The Dispatch. But federal defense attorney Ken White told the publication that’s not necessarily the case.

“It depends really on whether they have any ongoing conduct,” White said. “For the statute of limitations, one of the many things in the feds’ bag of tricks is using ongoing conspiracies. Let’s say the ongoing conspiracy is to engage in defrauding the federal government in making false FEC filings: The statute on that conspiracy claim doesn’t begin to run until the last overt act in support of the conspiracy. So commonly, you do the FEC filings, and maybe you send someone money that’s the proceeds of the crime. Or you tell someone, ‘don’t talk to the cops’ in order to conceal the crime.”

The Campaign Legal Center’s chief of staff, former FEC lawyer Adav Noti, told The Dispatch the group had not yet received its customary notification that the complaint had been adjudicated despite the fact that it has “been pending a really long time.”

“The allegations in our complaint—they’re really quite bad,” Noti told the publicaiton. “This is not run-of-the-mill shenanigans. It’s true that $100,000 isn’t an overwhelming amount of money, but it’s not nothing for a congressional race in Tennessee, either. And the two-part scheme to route it back to the campaign — if that is indeed what happened, it’s a very serious violation. It’s not a ticky-tack or a technical issue.”

Kelsey reissued his standard statement on the investigation to The Dispatch: “I welcome any investigation because all donations were made in compliance with the law and on the advice of counsel.”