Tennessee Republican under scrutiny after being accused of cash-back scheme

The Tennessee Registry of Election Finance is looking into a complaint that state Rep. Paul Sherrell wrote checks from his campaign account to local fire halls and asked for cash back, potentially pocketing it while campaigning this year.

Sparta resident Dale Walker, director of the Tennessee Pastors Network, filed the sworn complaint asking for an investigation into Sherrell’s campaign donations after speaking with Cassville Volunteer Fire Chief Teddy Stockton. Stockton told him that Sherrell wrote a campaign check to the fire department for $100 then requested and received $90 in cash back during a March 19 breakfast event, Walker said.

“Is this a cash-back scheme?” using tax-free money that should be for campaigning only, Walker said.

The pastor noted he filed the complaint only after being notified by several people that Sherrell wrote checks and got cash back.

Walker added that it would be similar to him writing a check to his church, “leaving God with $10,” and failing to show where he donated the rest.

In his complaint, Walker said the chief informed him the department has a copy of the check from the Sherrell campaign. Apparently irked by the incident, the fire department plans to adopt rules against cashing checks, according to the complaint.

Chief Stockton told Walker that Sherrell might have cashed checks at the Eastland and Cherry Creek volunteer fire departments, as well.

According to the complaint, Walker also spoke to White County Sheriff Steve Page, who told him in late March he had heard from “concerned citizens” about Sherrell cashing checks at local events. Page said he had spoken with Sherrell about the matter and told him he needed to “straighten this out,” according to the complaint.

Walker filed the complaint March 30, and it is to be discussed Wednesday by the Registry of Election Finance, which could set a show-cause hearing for Sherrell to explain his actions.

Sherrell defended himself in a letter to Bill Young, executive director of the Bureau of Ethics and Campaign Finance Ethics Commission, saying the cash received from the $100 checks was “not retained for personal use.”

“It was used to pay for breakfast/meals at campaign events,” Sherrell, a White County Republican, wrote.

Sherrell had $65,940 in his campaign account at the beginning of the first quarter of 2022, according to his latest filing.

He wrote two checks for $100 apiece listed as contributions to Eastland Volunteer Fire Department in February and March and $100 checks to Cherry Creek Volunteer Fire Department in February and Cassville Volunteer Fire Department in March.

Sherrell also made four $100 contributions in the filing period for the last quarter of 2021 but did not specify where the money went.

In addition, Sherrell spent $750 for research and polling and $500 in 2020 for advertising with Phoenix Solutions, a bogus company formed by Cade Cothren, the former chief of staff for ex-House Speaker Glenn Casada, that made money on Republican lawmakers and the House Republican Caucus and funneled funds to Casada and former Rep. Robin Smith.

Smith resigned this year before pleading guilty to fraud, according to federal documents. Casada and Cothren have not been indicted in the federal investigation.

Tennessee Lookout is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Tennessee Lookout maintains editorial independence. Contact Editor Holly McCall for questions: info@tennesseelookout.com. Follow Tennessee Lookout on Facebook and Twitter.

Tennessee GOP lawmaker confirms he was served with federal subpoena

Only one state House member other than Speaker Cameron Sexton admitted Wednesday to being subpoenaed this week to testify before a federal grand jury.

Rep. Bud Hulsey confirmed to the Tennessee Lookout he was served Tuesday as part of a federal probe into corruption on Capitol Hill.

Hulsey speculated the grand jury wants to interview him because he did business with former House Speaker Glen Casada for a constituent survey in 2020.

The FBI raided the offices and homes of Casada, now-former Rep. Robin Smith and Rep. Todd Warner in January 2021, an investigation that led to a wire fraud guilty plea by Smith two weeks ago shortly after she resigned her House post.

Smith pleaded guilty to working with Casada to pressure House Republicans to use a new campaign vendor, Phoenix Solutions, which was run by Cade Cothren and made more than $200,000 off members and the House Republican Caucus. Casada is identified as a former House Speaker from January 2010 to August 2019, and Cothren is thinly-veiled as his resigned chief of staff.

A spokeswoman for Gov. Bill Lee said no one in the governor’s office was subpoenaed.

The Lookout talked Wednesday to some 25 House Republicans who were in leadership positions, did business with Phoenix Solutions or were offered perks for a vote on the governor’s voucher program.

Two other House Republicans, Rep. Paul Sherrell of Sparta and Rep. Jason Zachary refused to confirm or deny whether they were subpoenaed. Sherrell, who did business with Phoenix Solutions, declined to comment.

Zachary would only say, “I know what you know” and declined to comment when asked if he was subpoenaed.

Zachary, R-Knoxville, did acknowledge talking to federal agents on several occasions because of a political survey he had Casada do as a campaign consultant. When Casada stepped down from the Speaker’s post in mid-2019 amid a sexist and racist texting scandal and complaints about his management style, he also lost his job with a veterinary pharmaceutical sales company. He then started doing campaign consulting for House members.

Speculation was that 10 to 12 House Republicans were subpoenaed by the grand jury, but several who had Phoenix Solutions do campaign work or taxpayer-funded mailers denied being called to testify.

Speaker Sexton in a Tuesday statement said, “We have been fully cooperating with the federal authorities since I became speaker in 2019. It is not unexpected that I and other members would be called to appear before a grand jury to provide factual statements as part of this ongoing investigation.”

Casada’s office door at the Cordell Hull Building was locked, but Warner said Wednesday he had not been subpoenaed.

Rep. Kent Calfee, whose office was searched even though he is not a target in the investigation, said he was not subpoenaed. He has already been interviewed by the FBI.

The House Republican leadership team, including Majority Leader William Lamberth, Caucus Chairman Jeremy Faison, Caucus Whip Johnny Garrett and Deputy Speaker Ron Gant, who serves as Assistant Majority Leader, all said Wednesday they were not subpoenaed, based on information gathered by reporters.

Lamberth was in charge of writing checks for House Republican Caucus business, including a $45,000-plus expenditure with Phoenix Solutions, which was paid through the Tennessee Republican Party.

Garrett said Wednesday he initially spoke with a “Candice” when he first communicated with Phoenix Solutions about doing campaign work for the caucus. He quickly figured out the woman was not a political operative and asked to speak to “Matthew Phoenix,” who purportedly ran the business. According to Smith’s guilty plea document, Cothren posed as “Matthew Phoenix” and ran the company, giving kickbacks to Casada and Smith for directing business to him.

Speculation was that 10-12 House Republicans were subpoenaed by the grand jury. Rep. Jason Zachary, R-Knoxville, acknowledged talking to federal agents on several occasions but wouldn’t confirm or deny whether he was subpoenaed.

“Candice” is identified as a girlfriend of Cothren’s who helped him create a fake email chain about the company needing to be paid, according to Smith’s guilty plea. She is reportedly said to be Ava Korby, the daughter of Calfee’s former administrative assistant, Nadine Korby, who was suspended for more than a year and then fired shortly after Smith resigned.

“I did not think I was being hoo-dooed …,” Garrett said Wednesday. “But I realized she really doesn’t have a good grasp of some of the questions I was asking about campaign activity.”

He requested another phone meeting with “Phoenix,” and Smith “shepherded” the process.

“We probably spoke for an hour, and I was talking to a political operative who could answer my questions. But I had no idea at the time I was not speaking to ‘Matthew Phoenix,’” Garrett said. He believes that call took place around March 2020.

Democratic Rep. John Mark Windle said Wednesday he was not subpoenaed. He is believed to have been offered the position of general in the National Guard in return for his vote on the governor’s education savings account bill, which passed after Casada held the board open for nearly 45 minutes and worked the chamber for a tie-breaker in April 2019. Casada has denied making the offer, saying he didn’t have the authority.

Gov. Bill Lee has said repeatedly he doesn’t know anything about such an offer to Windle, though Calfee says he discussed the matter with Lee in a meeting in the governor’s office.

Ultimately, Zachary agreed to vote for the bill, enabling it to pass, with the understanding Knox County Schools would be removed as a voucher district. Under the program, which was found unconstitutional in two lower courts and awaits a ruling from the Supreme Court, low-income students in Metro Nashville Public Schools and Shelby County School could receive state funds, about $7,300, to enroll in private schools.

State Rep. Bob Ramsey, R-Maryville, said Wednesday he was offered a new jail pod in return for his vote on the ESA bill. He declined without hearing from his sheriff.

Tennessee Lookout is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Tennessee Lookout maintains editorial independence. Contact Editor Holly McCall for questions: info@tennesseelookout.com. Follow Tennessee Lookout on Facebook and Twitter.

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Tennessee Republican indicted for allegedly violating federal campaign finance laws

Sen. Brian Kelsey has been indicted for allegedly funneling money from his state account to his failed 2016 congressional campaign, a violation of federal law.

A Nashville grand jury returned a five-count indictment against Kelsey, 43, a Germantown Republican, on Friday charging him and Joshua Smith, 44, owner of The Standard Club, with violating multiple campaign finance laws as part of a conspiracy to bolster his 2016 congressional campaign, according to the U.S. Attorney's Office.

The feds have been investigating Kelsey, an attorney, for more than four years, with hints of the probe leaking occasionally. The Dispatch, a conservative news site, reported in early October that investigators talked to Matt Schlapp about the American Conservative Union's endorsement of Kelsey in 2016, according to the Tennessee Journal.

Kelsey chairs the Senate Education Committee and was appointed to serve on Gov. Bill Lee's steering committee to review the Basic Education Program and come up with a new K-12 funding formula. But according to the Tennessee Journal, Senate rules give indicted members 10 days to request a hearing before the Ethics Committee or be removed from their chairmanship or other leadership posts.

Sen. Ferrell Haile, a Gallatin Republican who chairs the Senate Ethics Committee, said Monday he knew about the indictment.

“It's really sad," he said, declining to comment further.

Lt. Gov. Randy McNally sent out a statement reserving comment on Kelsey until his case is adjudicated.

I am obviously saddened by this news. It is important to remember that under our laws, Sen. 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," McNally said.

Federal prosecutors say Kelsey and Smith conspired with others from February 2016 through mid-October 2016 to violate campaign finance laws and illegally shift “soft money," funds not subject to Federal Election Campaign requirements, from the senator's state account to his federal campaign committee, according to a statement from the U.S. Attorney's Office.

One of the unindicted conspirators is former state Rep. Jeremy Durham of Franklin, who was expelled from the House after an investigation found he sexually harassed 22 women.

The indictment accuses Kelsey and others of using a national political organization to make illegal, excessive contributions to Kelsey's federal campaign committee by secretly coordinating with the organization on advertisements supporting his federal candidacy and to cause false reports of contributions and expenditures to be filed with the FEC.

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 five years in prison and a $250,000 fine on each count, according to the U.S. Attorney's office.

Among other accusations, the filing claims Kelsey gave Smith a check for more than $106,000 in July 2016 during a gathering at The Standard to be transferred from his campaign account to The Standard political action committee.

Kelsey's future wife, Amanda Bunning, director of government affairs for the American Conservative Union at the time of the incidents, also sent emails to Smith asking him about making contributions to her organization. She now works in the American Conservative Union's office in Washington, D.C.

In addition, Kelsey sent emails to the ACU touting his accomplishments as a state legislator.

In 2016, the FEC limited campaign contributions to $2,700 from any one individual or organization to any one candidate in each election, according to the U.S. Attorney's Office.

The indictment alleges that Kelsey, Smith, and other unindicted co-conspirators orchestrated the concealed movement of $91,000 to a national political organization, the American Conservative Union, to fund 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.

During the 2016 campaign in which he finished fourth, Kelsey's state political action committee, Red State PAC, contributed about $20,000 to state legislators who then gave funds to his congressional race, according to reports.

The Campaign Legal Center and Democracy 21 filed a complaint in June 2017 with the Federal Election Commission and requested the Department of Justice investigate whether Kelsey's congressional campaign committee engaged with the American Conservative Union, Citizens 4 Ethics in Government, Standard Club PCA and several state legislators to knowingly and willfully violate federal campaign finance laws.

Brendan Quinn, spokesman for the Campaign Legal Center, said Monday, it's “good news" when the Department of Justice takes a hard look at potential violations.

“This was a serious violation where Kelsey concocted a scheme to illegally transfer state money into his federal race and we're pleased that the Department of Justice has taken that violation seriously," Quinn said.

When it filed the complaint, the organization said “compelling evidence" shows Kelsey's Red State PAC gave $106,341 to Standard Club PAC, a political action committee formed out of the upscale private restaurant frequented by legislative leaders in Nashville and owned by Smith.

The Standard Club PAC then gave $30,000 to the American Conservative Union and $97,000 to Citizens 4 Ethics in Government, both of which reportedly made large independent expenditures for radio/digital advertising backing Kelsey's congressional campaign.

Neither Kelsey nor the Senate Republican Caucus responded to requests for comment Monday, but Kelsey tweeted that the charges are a “political witch hunt" cooked up by the Biden Administration.

Kelsey, who represents Germantown, East Memphis and Cordova, has maintained he did nothing wrong and that all of the financial moves were approved by his legal counsel.

He issued a statement previously saying he welcomed any investigation and noted he was “humbled" that his congressional campaign received donations from about 60 of his colleagues, most of whom never received donations from Red State PAC of his re-election committee.

“Both before and after these contributions were made, Red State PAC and my re-election committee donated to conservative candidates based on independent criteria including whether the candidate had a competitive race or had demonstrated political courage and leadership.

“I sought and was humbled to receive the endorsement of the American Conservative Union in my congressional race. My re-election committee has never made a donation to ACU, nor did I have any conversations with anyone at ACU during my congressional campaign after they publicly endorsed me," he said previously.

The indictment alleges other meetings and communications between the conspirators, resulting in the illegal transfers, contributions, and expenditures associated with Kelsey's federal campaign.

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

The 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.

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.

Tennessee Lookout is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Tennessee Lookout maintains editorial independence. Contact Editor Holly McCall for questions: info@tennesseelookout.com. Follow Tennessee Lookout on Facebook and Twitter.

'Rewarding them for choosing not to get vaccinated': Physicians fire back at Tennessee governor’s pandemic policies

Doctors across the state, including one who serves on Gov. Bill Lee's COVID-19 advisory panel, are challenging his COVID-19 policies and cheering three court decisions to overturn his executive order allowing parents to opt out of school mask mandates.

Dr. Erica Kaye, a pediatrician, oncologist and palliative care physician at St. Jude Children's Research Hospital in Memphis, in August drafted a letter to Gov. Lee and signed by thousands of medical professionals encouraging him to reverse course. She called the decisions by three federal judges to block Lee's executive orders in Shelby, Knox and Williamson counties, “critical steps in the right direction."

“As pediatricians and healthcare professionals, our primary mission is to save the lives of children," Kaye said. “Gov. Bill Lee has the power and the responsibility to protect the lives of Tennesseans, especially vulnerable young children who cannot yet be vaccinated. Since he has declined to do so, we are grateful that the courts have heard the concerns of those families whose children are most endangered and protected all children in these school districts. Every child, teacher and employee deserves the freedom to be safe in school, without exceptions."

U.S. District Judge J. Ronnie Greer ruled Friday that Knox County Schools must put a mask mandate in place to protect children with health risks. U.S. District Judge Waverly Crenshaw ruled the same day that Williamson County and Franklin Special school districts would be able to enforce mask mandates without exceptions.

Those decisions came in the wake of a ruling by U.S. District Judge Sheryl Lipman to block Lee's mask opt-out order and issue a preliminary injunction in Shelby County.

Lee declined to comment last week on the pending litigation and also said he isn't sure whether he will renew the executive order when it expires Oct. 5.

The majority of Tennessee school districts opened in early August without universal mask rules, except for Shelby County Schools, Metro Nashville Public Schools and a couple of rural school systems. In the past two weeks, the state has reported nearly 18,000 pediatric cases of COVID-19, and about 33% of cases statewide are found in children.

Gov. Lee said this summer on Fox News that children don't catch COVID-19. He later amended that statement to say the disease doesn't have the same effect on children that it does on older, health-compromised adults.

At least 14 public school employees, including teachers, have died from COVID-19 since the school year began, the Tennessee Lookout previously reported. More than 14,000 people have died from COVID-19 since the pandemic started, according to the Tennessee Department of Health.

Dr. Sarah Cross, Infectious Disease director at Regional One Health in Memphis and a University of Tennessee Health Sciences physician, previously criticized the governor's executive order enabling parents to opt out of school district mask mandates. Now, she's taking aim at his policy prioritizing monoclonal antibodies for unvaccinated people, or those likely to be the sickest from COVID-19 and the Delta variant.

“It's a very difficult situation," Cross said Monday. “On the one hand we are saving lives by giving monoclonal antibodies to the unvaccinated population because they are certainly at the highest risk of dying. On the other hand, we are rewarding them for choosing not to get vaccinated, thus prolonging this pandemic – the worst public health crisis of our time."

Cross pointed out only 52% of the state's residents have received at least one dose of the vaccine. She noted Tennessee has used “a lot" of monoclonal antibodies because of low vaccination rates.

“There is not an unlimited supply of these antibodies, but physicians should be the decision makers on who gets this treatment – not Gov. Lee or Dr. Piercey," Cross said of the state's health commissioner.

Cross is a member of the Governor's Coronavirus Task Force, which hasn't met since summer 2020. Yet she is critical of his executive order on masks, which she contends put people in danger, as well as the directive on monoclonal antibodies.

“Our hospitals and frontline physicians see unvaccinated patients come in every day who are critically ill, filling up our ICUs and stretching the availability of life-saving equipment like ventilators and ECMO units. And this is entirely preventable," Cross said in a statement. “The problem is that Gov. Lee and some radical politicians have made this a political issue from the beginning, seeking to divide us for political gain, instead of treating this pandemic as the health crisis that it is."

When Cross first spoke out about the danger of the Delta variant in mid-August, 11,276 cases of COVID-19 infections had been reported among school-aged children, and 50 were hospitalized. Two died at Le Bonheur Children's Hospital and eight were in the intensive care unit there.

The problem is that Gov. Lee and some radical politicians have made this a political issue from the beginning, seeking to divide us for political gain, instead of treating this pandemic as the health crisis that it is.

– Dr. Sarah Cross, Infectious Disease director at Regional One Health in Memphis

Lee continued to defend his stance last week against mask requirements as well President Joe Biden's vaccine mandate for businesses with more than 100 employees, saying he thinks mandates “counteract" the state's efforts to quell the pandemic.

The governor noted he has encouraged people to be vaccinated, with more than 112,000 getting the shot in the past week. But he declined to be photographed taking the vaccine and said he would not be involved in commercials encouraging people to take the vaccine.

In addition, Lee stood by his administration's directive for monoclonal antibodies to be used on the unvaccinated but gave himself an out on two fronts.

He noted the state is following guidelines set by the National Institutes of Health but said the ultimate decision about who receives monoclonal antibodies lies with clinicians.

“The good news is that the supply we're receiving from the federal government exceeds our demand for it right now and has so for the last several weeks. We believe that will continue because our case counts are dropping and our need for monoclonal antibodies will drop as well as hospitalizations do, or as infections do," Lee told reporters.

Asked why the state is following the guidelines if there is no shortage of monoclonal antibodies, Lee reiterated that the state gives guidelines to clinicians, who make the decision whether to use them.

“So the state has not directed that clinician to follow a guideline. They have given and passed along the National Institutes of Health guidelines."

The number of cases in Tennessee jumped by 5,638 Monday from the previous day, and deaths went up by 85. Hospitalizations, in contrast, dropped by 142 from the previous day, although 2,957 remain in the hospital for COVID-19 treatment.

Testing increased by 30,124 since Sunday with a 15.9% positive rate. More than 9.7 million tests have been taken.

Tennessee Lookout is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Tennessee Lookout maintains editorial independence. Contact Editor Holly McCall for questions: info@tennesseelookout.com. Follow Tennessee Lookout on Facebook and Twitter.