Gov. Sam Brownback forced his Commerce secretary, Antonio Soave, to resign in June after he faced allegations of fraud and other financial misdeeds, according to court documents in a legal dispute between Soave and a business partner.
Soave, who is running for Congress, stepped down from his post in Brownback’s cabinet in June, two weeks after business partner Paola Ghezzo sued him in Johnson County District Court.
Ghezzo — who also held a consulting position with Soave’s state agency — alleges that Soave used funds from their Overland Park-based consulting business to pay his personal credit card bills and expenses related to state government business.
The case documents show that Soave’s side business was intertwined with the state agency during his tenure and say that Brownback’s chief of staff knew about the fraud allegations as early as February.
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Ghezzo and Soave were partners in Capistrano Italia, an Overland Park-based firm that offered consulting services to Italian companies seeking help entering foreign markets. Ghezzo put $500,000 into the business in 2015 after the two had been introduced by a Catholic nun the previous year.
Ghezzo’s complaint alleges that Soave almost immediately “began using the investment as his own personal piggy bank, in part, to support and finance his own lavish lifestyle.”
Soave, who is seeking to succeed U.S. Rep. Lynn Jenkins in Kansas’ 2nd congressional district, called Ghezzo’s allegations false in a court filing in August and asserted that they caused him “to lose his position as Commerce secretary.”
Brownback in June presented Soave’s decision to step down after a year and a half as stemming from a desire to pursue new opportunities.
“Secretary Soave added great vision to the Department of Commerce,” Brownback said in a statement the day of the announcement. “He brought enthusiasm for entrepreneurship and experience working with businesses in a wide range of industries. We wish him well in his new endeavors.”
Soave’s court filing paints a different picture and states that he faced significant pressure from the governor’s office to step down.
“Amidst this extreme pressure, Soave chose to resign as Kansas’s Commerce Secretary or be removed from office by the Governor,” the filing from Soave’s attorneys states.
The Commerce Department refused to comment on the allegations in the lawsuit involving the state agency and whether the lawsuit played a role in Soave’s departure.
Kevin Doel, a spokesman for Commerce, said in an email that “it would not be proper for our agency to comment on Mr. Soave’s resignation. That is a personnel matter.”
Brownback’s office also initially refused to comment this week on the reasons for Soave’s resignation, but the governor on Thursday denied forcing him to quit.
“Uh, no, no,” Brownback said. “He’s a, you know, he’s a good guy. But you’d need to ask him his own reasons for doing that. He’s a good man.”
During its two years of existence, Capistrano generated less than $20,000 in gross revenue after the initial investment of $500,000, according to Ghezzo’s filing.
Soave, a former semi-pro soccer player, does not dispute that fact, but asserts that he worked diligently to explore business opportunities, including possible investment in a minor league soccer team in Florida, among other ventures. He also says Ghezzo invested in the business with the knowledge that another Soave business, Capistrano Global Advisory Services, was operating at a loss.
Soave served as Capistrano Italia’s president, sole director, CEO, treasurer and secretary and was at one point compensating himself $8,000 a month, according to Ghezzo’s complaint.
Ghezzo, an Italian citizen who lives in Lawrence, is seeking damages in excess of $150,000, Soave’s removal from his position and the dissolution of the company, with all assets going to her.
She alleges that he spent her investment on personal expenses, his personal credit card bills, a costly life insurance policy and expenses related to his other business and state government.
Soave would not comment on the lawsuit or his resignation when reached by phone Friday.
His attorney, John Duggan, said that he and his client “look forward to our day in court showing that the allegations asserted against him are false and that the allegations against the other side are true.” Soave, in his response to Ghezzo’s suit, is seeking in excess of $375,000 in damages.
Her complaint does not provide details on what state government expenses would have been paid for with company funds. Neither Ghezzo nor her attorneys would comment on the case when reached by phone.
Soave admits to using his company credit card for nearly $43,000 in personal purchases over a two-year period, but states in his filing that he reimbursed the company for all expenses that could be characterized as personal.
Soave was appointed Commerce secretary in November 2015, less than a year after his business with Ghezzo was formed. Soave’s filing asserts that Ghezzo understood that his appointment to Brownback’s cabinet would cut into his ability to run the business, but that both agreed the contacts made in his role as Commerce secretary would benefit the business in the long run.
Ghezzo, then a University of Kansas lecturer on Italian and French, began serving as the agency’s international corporate liaison within months of Soave’s appointment and remained in that position until June of this year, the same month that the lawsuit was filed, according to her LinkedIn page.
The Commerce Department said that it had no personnel records for Ghezzo because she was a contractor rather than a state employee, but Soave’s court filing says Ghezzo was receiving $6,000 a month for her part-time consulting position at the agency.
Ghezzo also checked a box that she was an employee and listed the Department of Commerce — along with KU — on an ethics form filed last year with the secretary of state’s office.
Soave’s court filing states that Ghezzo was offered the consulting position with Commerce after she refused to take control of their business.
“Whereas Ghezzo lacked the expertise, experience, time, interest, discipline and entrepreneurial drive necessary to assume primary responsibility and directional control of Capistrano Italia’s operations, Soave believed Ghezzo could perform assigned consulting duties as part of a much larger team of Kansas Commerce Department workers,” his filing states.
Soave’s filing states that Ghezzo spent large periods of 2016 in Italy tending to a divorce and other personal matters, including after she was hired by Commerce.
“Referencing the stress of her pending divorce, Ghezzo indicated she needed time to rest, take her children to Italy, visit her elderly mother in Italy, spend time at the beach, and address her divorce,” his filing states.
Soave’s attorney would not answer a question about what services Ghezzo was providing to the agency to justify her $6,000 a month in pay while she was spending time on personal matters in Italy.
Soave did not move to terminate Ghezzo’s contract with Commerce until he was instructed by Jon Hummell, Brownback’s chief of staff, that all part-time consultants would have to become full-time state employees, something that would have been difficult to achieve because of Ghezzo’s Italian citizenship, according to his filing.
Soave claims that Ghezzo threatened to “contact the press and ‘spread bad news’ ” if he did not he reimburse her $425,000 from her investment in Capistrano.
She accused him of fraud, and these allegations were relayed to Commerce’s general counsel and Brownback’s office in February, according to Soave’s filing.
Ghezzo’s position at Commerce ended two weeks before the lawsuit was filed in June, according to Soave’s filing. He stepped down from the agency shortly after that.
Lawmakers said that they were unaware of the lawsuit against Soave but that his resignation came after a period of conflict with the governor’s office during which Soave’s expenses were under scrutiny.
Senate Majority Leader Jim Denning, an Overland Park Republican, said that Brownback’s staff “made it just unbearable on him to do his job … and even manipulated to where he had a hard time getting his personal expenses reimbursed.”
“The state reimburses our expenses really quickly ... about a week turnaround. And with him, I think they stretched it out to 60, 90 days just to put pressure on him,” Denning said.