By Andrea Gallo | The Advocate | March 31, 2022

Over the last 15 years, Attorney General Jeff Landry has funneled more than $420,000 from his campaign war chest into a staffing company that he owns, an unusual arrangement that circumvents the common practice of political figures around the state and ensures the public does not know who he is paying to work on his campaign.

Landry, who is widely expected to run for governor in 2023, has been far more successful at political fundraising than his presumptive opponents.

His practice of cutting campaign checks to companies he owns stretches back to at least 2007, but has accelerated in recent years. Last year alone, he paid $30,000 out of his campaign account to a company called UST Staffing, in monthly increments. The payments to UST represented about 8% of his campaign’s total spending last year. A political action committee that Landry chairs and that supports his campaigns also spent $25,000 over the past year with UST Staffing.

Filings with the Louisiana secretary of state show UST Staffing is the trade name for UST Environmental Services, LLC. Landry is the sole owner of that firm and earns more than $200,000 in annual income from it, according to his state ethics disclosure forms.

A Landry spokesman says the payments are perfectly legal, and that Landry simply runs his campaign staff payroll through UST Staffing because it’s efficient.

 

An unusual system

Landry is alone among statewide officials in using such a system, and the net effect is that Landry’s campaign reports do not show how many people work for his campaign, or who they are.

By comparison, for instance, one can review Gov. John Bel Edwards’ reports and see who is employed by his campaign and how much they are paid. Other statewide officials and political figures file similar reports and routinely disclose who they are paying, and for what.

It’s also unclear whether Landry profits from the arrangements. Staffing companies typically charge a fee for their services that ranges in size; it can be as much as the employee’s whole salary.

Brent Littlefield, a political adviser for Landry who works on his campaigns, would not directly answer questions about how much profit UST — and therefore Landry — earns from the arrangement. Littlefield said only that “the use of any entity for staffing and payroll services is not connected to profit or income.”

Rafael Goyeneche, president of the New Orleans-based Metropolitan Crime Commission, a watchdog group, said whether or not Landry is profiting, his reports don’t measure up in terms of transparency.

“I do not believe Jeff Landry is in compliance with campaign expenditure reporting requirements,” Goyeneche said. “And, in essence, he owns 100% of that company. It’s going to create the perception that he’s profiting from it when, in fact, he may not be, depending on the type of arrangement that his campaign has with them.”

 

Is it allowed?

Louisiana law broadly requires that politicians may only spend campaign money on items related to running a campaign or holding office.

But it’s silent on whether they may hire their own companies. In a 1993 ruling on the question, the Ethics Board said candidates could not pay themselves with campaign money.

“A candidate may not hire himself, his spouse or his minor child to be compensated with campaign funds,” an advisory opinion from 1993 states.

Several years ago, the Legislature passed a provision that also forbids candidates from making payments to a candidate’s immediate family members.

But candidates may spend money with an immediate family member’s business, provided the payments are “solely for campaign purposes.” The law also specifies they must be made through an “arm’s length transaction in which the value of the goods or services furnished is commensurate with the consideration provided.”

Louisiana law doesn’t directly address whether political candidates may spend campaign cash on their own companies.

A Landry spokesperson did not answer a question about whether Landry sought an opinion from the state’s Ethics Board, which oversees campaign finance laws, about whether it was kosher for him to make payments to UST. It appears that decades have passed since a candidate has asked the Ethics Board for guidance on a similar matter.

If the payment in question is to a relative’s business, the business must have operated in good standing and with proper licensing for at least one year.

 

Years old practice

Littlefield cited that portion of the law in fielding questions for this story, saying UST met that threshold. Littlefield said Landry’s practice of using campaign funds on his own companies is above board.

The Advocate | The Times-Picayune reviewed a decades’ worth of expenditures from every statewide elected official in Louisiana. None reported using staffing companies for campaign worker payments, and none reported spending money with a company they fully own.

Landry has been using the setup since his earliest days in politics.

Since he geared up to run for attorney general in 2014, he has spent $147,979 out of his campaign account with UST — about 2% of his total spending over that time.

His Cajun PAC II has also spent another $37,716 with UST since 2019. The vast majority of those expenses are described on his campaign finance reports as “payroll,” though Littlefield said the payments “encompass all costs, including the actual net paychecks paid to the employees.”

During Landry’s past campaigns for U.S. Congress and the state Legislature between 2007 and 2012, he paid UST around $240,000 out of his war chest, state and federal campaign filings show.

 

Employee identities hidden through payments from Landry’s company

Campaign forms for Landry and his PACs do not list names of employees being paid through UST, even though state campaign finance law requires public servants to list “the full name and address of each person to whom an expenditure has been made.”

“I do not believe I will telegraph to campaign opponents, or potential opponents, a staffing structure,” Littlefield said in response to questions about how many employees were being paid through UST.

Goyeneche said that’s the part of the campaign finance law that Landry is skirting. After reviewing years’ worth of Landry’s payments to UST, Goyeneche said it’s problematic that Landry is not disclosing the names of employees being paid through UST or the type of services they are providing.

Landry’s expenditure descriptions are generally more vague than those of other statewide elected officials on campaign finance reports. Whenever he’s paying people, he often includes only the word “subcontract” in the payment description field without explaining what work the person is performing. Other statewide elected officials are typically more descriptive in their reports, identifying recipients of money as “campaign workers” and “field staff,” listing their names, and describing the type of work they perform, like holding up campaign signs.

Littlefield said putting campaign employees under the UST umbrella ensures “payroll compliance with applicable laws, regulations, and tax filings” for Landry’s campaign and PAC.

“Jeff Landry does not see his campaigns or political entities as profit centers,” Littlefield said. “Jeff Landry’s private sector experience is well known and his ownership in small businesses and sources of income are disclosed to the public fully as required by law.”

 

Is it transparent?

Steven Procopio, president of the state’s Public Affairs Research Council, another good-government group, said Landry’s transactions do not appear to violate the law.

“However, while they may be allowable under the law, it’s clearly worrisome that it could be a conflict of interest for a candidate to use private donations to support his own business,” Procopio said.

Procopio said contributors may not be happy about how candidates are spending their money.

“That’s why transparency is so important,” he said. “Campaign filings available for online public viewing let citizens judge for themselves if these actions are acceptable and if they want to support candidates who take such an approach, although more details should be required. Voters might want to hold the chief legal officer of Louisiana to a higher standard.”

Littlefield stressed that Landry has been open about the payments.

“Everyone has access to Jeff Landry’s personal finances and political committee finances, 24 hours a day and 7 days a week, with an internet connection,” Littlefield said. “You have access to this information for your inquiry because it has been publicly disclosed; it is transparent.”

 

Campaign money misuse can be criminal

Though it’s rare, Louisiana politicians have occasionally been prosecuted for converting campaign money to personal use. Walter Reed, the former tough-on-crime district attorney of St. Tammany Parish, was found guilty in 2016 on 18 counts of federal corruption in a case that partly centered on improper use of campaign finance funds.

Prosecutors zeroed in on payments Reed made through his campaign fund to companies belonging to his son, accusing the DA of overpaying for the services of his son, Stephen. They said it was wire fraud, because the payments were proven to be inflated for the services rendered.

Reed’s attorney, Rick Simmons Jr., argued unsuccessfully that the allegations against Reed were a matter for state ethics officials and not the federal Department of Justice.

After Reed’s conviction, former U.S. Attorney Kenneth Polite said Reed’s actions were not innocent mistakes.

“As a community, we are tired of hearing, and accepting, excuses from public officials who violate the public trust to enrich themselves,” said Polite in 2016, who today serves as an assistant attorney general for the DOJ in the Biden administration.

Reed was sentenced to four years in prison but was released about a year early in 2020 amid coronavirus concerns.