Facing a felony charge of invasion of privacy — and under investigation by a St. Louis grand jury and a state legislative committee — Gov. Eric Greitens and his staff are relying on two nonprofits to pay mounting legal bills.
While not unusual at the federal level, the creation of legal defense funds is a new wrinkle in Missouri politics.
And for a governor who’s faced relentless criticism about his penchant for secrecy and reliance on anonymous campaign donations, the funds also open up Greitens and his staff to renewed questions about donor influence, conflicts of interest and government transparency.
“The potential for corruption here is unbelievable because the governor is in dire straits,” said Craig Holman, government affairs lobbyist for Public Citizen, a liberal consumer rights advocacy group based in Washington, D.C. “This is a legal defense fund, not just a campaign fund. So the governor is desperate, and desperation breeds undue influence peddling.”
Earlier this month a handful of Greitens supporters filed paperwork with the Internal Revenue Service to create ERG Defense Fund. The governor's full name is Eric Robert Greitens.
The next week, Missouri GOP Chairman Todd Graves’ law firm announced that it had filed paperwork with the IRS to create the Missouri Legal Expense Fund. Its purpose is to pay legal expenses for the governor’s taxpayer-funded staff.
Both funds were created in the wake of Greitens’ indictment on a felony charge of invasion of privacy stemming from a 2015 affair. The governor is accused of threatening to release a nude photo of the woman with whom he was having an affair if she ever publicly disclosed the relationship.
He has admitted to the affair but has denied the blackmail allegations.
In addition to continued investigation by the St. Louis prosecutor and a grand jury, an inquiry also has been launched by a Missouri House committee — the first step toward possible impeachment.
The legal defense funds were each created as “527” organizations, a term that refers to the section of tax code that governs such entities.
Richard Reuben, a professor at the University of Missouri School of Law, said typically 527 organizations are political entities such as parties, candidates, committees or associations organized for the purpose of influencing an issue, policy, appointment or election.
They can raise unlimited funds from individuals, corporations, labor unions and even foreign entities, Reuben said, but they must register with the IRS and disclose their contributions and expenditures.
They also aren’t required to file any disclosure paperwork with the Federal Elections Commission or the Missouri Ethics Commission, Reuben said.
Politicians including New Jersey Sen. Robert Menendez, a Democrat who was accused of public corruption, and former Nevada Sen. John Ensign, a Republican accused of violating ethics and federal lobbying rules, set up 527 organizations to raise money for their legal defense.
More recently, a group called The Patriot Legal Expense Fund Trust was created to help defray the costs faced by aides to President Donald Trump drawn into the various Russia investigations.
Greitens’ legal team did not respond to a request for comment. Edward Greim, an attorney at Kansas City’s Graves Garrett law firm and one of three directors of the legal defense fund for Greitens’ staff, said too often the “price of being a public servant is you’re going to constantly get sued or called before a grand jury.”
“If there are people out there in their 20s or 30s who want to go out and engage in public service, regardless of party, you’d have to think twice if this becomes the new norm,” Greim said. “You’d have to think twice if you’d really like to serve.”
These funds help those who Greim said are the victim of “lawfare,” the idea of using the legal system against a political enemy.
“There are donors who just as a matter of principle want to give to these funds to prevent public officials from having to cough up their own money,” he said.
Congress set up rules to govern use of legal defense funds, such as donations limits.
But at the state level, there is “very, very little regulation of these legal defense funds,” Holman said.
“It provides an opportunity for businesses to throw money at the feet of the lawmaker or the governor or the president as a means of endearing themselves to the official, and that’s the biggest problem with these legal defense funds,” he said. “If they aren’t subject to source prohibitions and contribution limits, then they are wide-open avenues for special interest peddling. And that’s what we’ve seen.”
Holman noted that when former President Bill Clinton set up a legal defense fund during his time in office, “90 percent of the money came from corporations with business pending before the federal government.”
Greim said the fund will abide by an executive order signed by the governor last year banning executive branch employees from accepting gifts from lobbyists.
“I actually don’t think money that comes into the 527 is a gift,” he said, “however, the executive order defines gifts more broadly, so to avoid any appearance of impropriety, (the fund) will not accept donations from lobbyists.”
But even though the funds are required disclose donors, that won’t guarantee the public will learn who is actually paying the bills.
Nonprofits will be allowed to contribute to the funds. Because they don’t have to disclose their donors, the true origin of the money will be obfuscated.
Greitens has been criticized for similar behavior in the past.
During the 2016 campaign, a federal PAC spent nearly $4 million helping Greitens win the GOP nomination. When it finally filed disclosure reports, it reported only one donor — a Texas-based nonprofit.
After the primary, Greitens received a $1.9 million contribution from another federal PAC called SEALS for Truth. It was later revealed that it, too, had only one donor — a Washington, D.C.-based nonprofit.
In both instances, where the money actually came from will likely never be known.
“It’s rather easy to disguise the source of the funding,” Holman said.
The criminal investigation and legislative inquiry aren’t the only legal problems Greitens and his staff are facing.
Two St. Louis attorneys sued Greitens late last year over his office’s use of Confide, an app that deletes a text message after it has been read. The lawsuit claims use of the app violates the state’s open records laws.
Greim said the legal defense fund could “perhaps be used to defray legal expenses of staff in the Confide lawsuit, but to our knowledge, no staff are being individually represented in the Confide litigation, and there are no staff expenses.”
The attorneys suing Greitens have been clear they plan to question the governor's staff under oath, noting that a recent attorney general investigation found that five senior staff members admitted using the app as part of their government jobs.
The governor’s office recently changed attorneys in the Confide lawsuit.
Dowd Bennett, the St. Louis firm representing Greitens in the criminal case, was providing free legal representation in the Confide lawsuit.
On Monday, the attorney general’s office signed off on Greitens’ new attorneys — the Bryan Cave law firm in Kansas City.
The state will pay the firm a rate of $140 an hour for representing the governor’s office in the litigation.