As part of a long-running investigation into state Rep. Joe Armstrong’s financial dealings, the FBI and IRS have inquired about the veteran Knoxville lawmaker’s campaign financial records — documents that show spending of about $360,000 over the past decade.
Drew Rawlins, executive director of the state Bureau of Ethics and Campaign Finance, said Friday the federal agencies contacted him in “the fall of 2013” about Armstrong’s disclosures filed with the state Registry of Election Finance, although he could not provide a specific time and would not discuss details of his discussion with federal investigators.
Armstrong was indicted this week on federal charges of fraud and tax evasion related to the Legislature’s approval in 2007 of an increase in the state’s cigarette tax and pleaded not guilty. (Note: Video HERE.) He allegedly profited by buying state cigarette tax stamps through a middleman at 20 cents per pack before the increase, then selling them after the stamps rose to 62 cents per pack in value following the tax hike, which he supported.
Armstrong’s campaign financing is not mentioned in the federal indictment, perhaps indicating IRS and FBI agents found nothing related to their investigation. But a review of his filings over a 10-year period — including 2005 and going through 2014 — shows some curiosities insofar as state campaign finance laws go.
The Democratic lawmaker did not respond to a phone call seeking comment on the filings. Armstrong serves as his own treasurer in filing disclosures, although many lawmakers designate a separate person to serve in that capacity.
On at least three occasions in 26 years as a legislator, Armstrong has been threatened with civil penalties by the Registry, Rawlins said. All three cases were dismissed without penalty after he offered explanations for the matters involved or filed amended reports.
Most of the donations to Armstrong, who served for years as chairman of the state House Health Committee until Republicans took firm control of the House in 2011, came from a broad array of political action committees, as typical for most legislators.
In Armstrong’s case, the myriad of PAC donations include those from groups representing, for example, doctors, lawyers, bankers, real estate agents, teachers, unions, state employees, alcoholic beverage distributors, chiropractors, hospitals, nurses, dentists, lobbyist firms and pharmaceutical companies — the latter including Abbott Laboratories, a company Armstrong’s wife, LeTonia, served as lobbyist for most of the years covered.
The reports also show a substantial smattering of individual contributions — perhaps most notably from Bill Haslam, now the state’s Republican governor, who gave Armstrong $1,000 (two $500 contributions) while Haslam was mayor of Knoxville. The governor’s brother, James A. “Jimmy” Haslam, then president of Pilot Corp. and now CEO of family-controlled Pilot Flying J, gave Armstrong $250 in 2007.
On the spending side, Armstrong’s campaign disclosures show unusually high expenditures related to out-of-state travel — some perhaps tied to his two-year term as president of the National Caucus of Black State Legislators in 2013 and 2014. But there are various cases of out-of-state spending prior to that period, and Rawlins said some of the reported items may fall short of general disclosure requirements of state law — although that law is fairly broad in allowing use of campaign money for anything incidental to holding office, so long as it is not for personal gain without a political purpose.
If, for example, Armstrong attended a caucus event where his motel bill was covered by the caucus but not his airplane ticket, billing the plane ticket would be an appropriate charge to his campaign account under state law. Similarly, hosting a dinner for conference attendees outside scheduled events would also qualify as a valid expenditure of campaign money.
But Armstrong’s disclosures frequently show such entries as “Delta Airlines, travel, $3,241” — a listing in a 2011 — with no more information. Over the covered period, Armstrong listed more than $15,000 in such payments just to Delta Airlines. If other airlines are included, there are about $20,000 in plane travel expenditures with no specifics as to destination or purpose of the travel.
Rawlins said the Registry staff tries “to make sure that expense purposes (are reported so) that we can tell if they are allowable or not” when reviewing reports. Asked if the “Delta Airlines, travel, $3,241” listing met that threshold of providing adequate information, he said, “probably not.”
In that particular case, Rawlins said the listing “probably just slipped through the cracks.” But he said in many cases of minor matters or smaller amounts of money, Registry staff often simply contact the filer on minor matters to ask for clarification — failure to include the address of a donor, for example, or failure to explain the purpose of an expenditure.
Asked whether Armstrong had specifically been contacted, Rawlins said, “I can’t say for sure, but my guess would be yes … we contact almost all of them at some point for something.”
Armstrong’s disclosures show his campaign account has been charged for dozens of miscellaneous motel and restaurant bills at out-of-state locations — from San Juan, Puerto Rico, to Phoenix, Ariz., although most frequently Washington — and at some in-state facilities as well, from Knoxville to Memphis. Altogether, motel billings to the account total about $15,700 over the period.
The disclosures show Armstrong’s campaign account has made about $8,000 in payments — listed as rent of a campaign headquarters — to Arm & Rage LLC, a company Armstrong established to purchase and operate the Knoxville radio station now known as WJBE. Rawlins said that does not run afoul of state law, so long as Armstrong’s campaign was renting a portion of the facility for campaign purposes. The payments to Arm & Rage came in 2011 and 2012; before that, Armstrong’s campaign paid others for rent.
Armstrong has also donated from the account to dozens of charities, including church and school organizations, and to several Democratic candidates and caucuses.
Armstrong has not had a serious challenge to his re-election since initially winning the House District 14 seat in 1988 and has often been unopposed. In his most recent disclosure in January, he reported a cash-on-hand balance of $18,495 — a figure dwarfed by some other incumbent legislators.
House Speaker Beth Harwell, first elected to office in the same year as Armstrong, holds the biggest stash of campaign cash — $680,616 in her individual campaign account, plus $678,542 in the PAC she controls for a total of almost $1.4 million. Armstrong does not operate a PAC.