Politics & Government

While Antonio Soave was in Brownback’s cabinet, friends profited at taxpayer expense

Antonio Soave is now running for Congress — and, until this week, he was working for a charity started by a businessman who received $324,000 in state money.
Antonio Soave is now running for Congress — and, until this week, he was working for a charity started by a businessman who received $324,000 in state money. File

Less than two months after he left Gov. Sam Brownback’s administration, Antonio Soave was hired to launch a program in Kansas City for a Texas-based charity that previously had no footprint in Kansas or Missouri.

Steve Riach, the founder of the One Heart Project, which serves at-risk youth, lauded the former Kansas commerce secretary’s passion and skill in an August news release.

It was not the first time the two had collaborated professionally. Over the last year and a half, the state agency that Soave ran has paid Riach’s Texas-based film production company more than $300,000 in taxpayer dollars to produce commercials to promote Kansas businesses.

Soave, an Olathe Republican, now is running for Congress in Kansas’ 2nd District. He launched his bid shortly after the One Heart Project announced his hiring. But that job came to an end Tuesday after The Star began asking questions about Riach’s contract with Soave’s former agency.

The Star reviewed hundreds of pages of documents, including more than 30 contracts signed during Soave’s time at Commerce, and spoke with multiple former Commerce officials, several of whom raised serious concerns about conflicts of interest and use of state resources.

At least nine of Soave’s friends or business partners, including his law school roommate, received Commerce Department contracts for consulting and marketing services, costing the state tens of thousands of dollars a month during Soave’s 18-month tenure as secretary.

“I believe we (the consultants) were a group of around 10 to 12 or so,” said Jamal Bafagih, one of the consultants. “These are people who knew Antonio Soave, the Commerce secretary. And in fact, he knew them. They were friends.”

Contractors reached by The Star gave similar accounts of their work for Soave: Many were longtime friends and acquaintances of Soave before his appointment to the Commerce Department. They said that he was a man of integrity and that he wanted to use their contacts to find business opportunities for Kansas.

They also could not identify specific opportunities that materialized.

Lawmakers of both political parties expressed shock when told of the Commerce Department contracts, which they said underwent little oversight during a period when the state was mired in a financial crisis.

“I wish we could get that money back,” Rep. Stephanie Clayton, an Overland Park Republican, said Thursday. “We need that money. I am just aghast at this.”

The initial contract with Riach’s SER Media was signed in February 2016 — a few months into Soave’s tenure at the agency — and the most recent extension was signed by Soave and Riach in May of this year, about a month before Soave stepped down from the agency and three months before he started working for Riach’s charity.

“Look where he ends up getting a new job,” said one former Commerce official, who still works in the state and spoke on condition of anonymity.

Changing Kansas’ image

Soave had a varied career before he took his position in Brownback’s cabinet in late 2015, including stints in the world of professional soccer and television. He was working as a college soccer coach the week before Brownback appointed him to his post. He also had been running an Overland Park consulting firm, which court records say was operating at a loss in the years immediately before his appointment.

Soave would not consent to a phone interview, but he did provide responses about SER Media’s contract and other contracts by email.

He asserted that there is “no connection between the contract with SER Media and my hiring at One Heart. In fact, my employment at One Heart was suggested and recommended by another One Heart board member” other than Riach.

Riach said in an email that he first met Soave in early 2015, but that he “went through a normative process for projects like this by submitting a proposal and budget. For over 25 years, our company has produced films, documentaries, television shows and spots that have aired on networks such as ESPN, Fox Sports and NBC.”

Riach said his company has “not seen nor been made aware of any perception of a conflict of interest. The entire process of SER Media gaining the work was an open, and as I understand competitive, process.”

Regarding Soave’s recent hiring by his charity, Riach said One Heart interviewed 15 candidates for the Kansas City executive director’s position. Soave’s hiring was approved on a 10-1 board vote, he said.

However, on Thursday a spokeswoman for the One Heart Project said Soave was no longer working there.

“The board engaged Mr. Soave to serve the organization for a 90-day period. That 90 days came to an end on Oct 31. Mr. Soave is now turning his focus back to his business and personal interests. We are grateful for his service,” the charity said in a statement.

One of the SER Media commercials featured Garmin’s chief product architect, Wai Lee, talking about immigrating to Kansas from Malaysia. Another highlighted the work of Overland Park-based engineering giant Black &Veatch, while another profiled Wichita-based fast food chain Freddy’s Frozen Custard & Steakburgers.

The former Commerce official questioned the commercials’ effectiveness in spurring business for the state and said they diverted money from other agency projects.

“He wanted these workforce commercials to be shown all across the country,” the former official said. “How the hell do you spend that much money and people haven’t seen them?”

Soave stood by the marketing strategy.

“The perception by many companies outside of Kansas was that the state was a ‘fly-over state’ and not a destination state. That is the perception we worked diligently to change,” he said.

“Well-produced television commercials were part of that strategy. We aired those commercials nationally on Fox Business Channel, MSNBC, CNBC and Bloomberg precisely to tell the story about the state of Kansas. In fact, we received many positive comments about those commercials from business people across the nation.”

Garmin's Chief Product Architect Wai Lee discusses his passion for art and technology, and why Kansas is a great place to live and work.

But a list of successful deals that Soave sent this week that he said were struck while he was Commerce secretary included Garmin, Airbus, Cargill and the University of Kansas — entities that had expanded but were doing significant business in Kansas long before he arrived at the agency.

Rep. John Carmichael, a Wichita Democrat who sits on the House commerce committee, expressed concerns about the contract when informed that Soave had gone to work for a charity founded by Riach.

“This administration has a long history of self-dealing and back-slapping,” Carmichael said. “… If what you say is correct, this appears to be one of the most dramatic examples of the cronyism and backscratching ever since Gov. Brownback and Lt. Gov. (Jeff) Colyer arrived at the statehouse.”

The timeline of events raises questions that Kansas should investigate, said Stephen Spaulding, an attorney and chief strategist for Common Cause, a national group that advocates for greater government accountability.

“It stinks,” he said. “I think there are legitimate questions about whether and how taxpayer dollars were spent to reward friends of this guy ... and in exchange for what. ... I think the appropriate bodies should take a close look at who paid who for what and when.”

Rep. Russ Jennings, a Lakin Republican, agreed that Soave’s decision to go to work for Riach’s charity raises questions.

“Would it raise someone’s eyebrows? Sure,” Jennings said. “Is it a technical violation of our ethics laws? Perhaps not, but it certainly would raise eyebrows to the extent you might say, ‘How wise is that?’ 

Brownback said last week that he was not aware Soave had gone to work for a charity run by the owner of a company that secured a state contract under Soave.

“I’ll take a look at it,” Brownback said. “I didn’t know who he was working for.”

Gov. Sam Brownback discussed Antonio Soave’s tenure as secretary of Commerce as he entered the Capitol on Oct. 24. Soave, a candidate for Congress, accepted a job in August with a charity founded by a man who had a lucrative state contract during

‘We’ve got a lot of contracts’

Brownback said he and Soave parted ways amicably, but Soave’s former chief of staff, Martin Kupper, described to The Star a period of tension during the last year.

“By the beginning of 2017, an atmosphere of intimidation had developed in the Governor’s office and this was placing undue pressure on us to the point that it was interfering with our ability to do our job,” he said in an email.

Kupper held a $5,000-a-month consulting contract with the agency for six months before taking on the position of Soave’s chief of staff. Kupper said he had worked with Soave in the past on both business and charitable projects before accepting his position at Commerce.

Soave currently faces a lawsuit from another business partner he brought to Commerce: Paola Ghezzo, a native of Italy who lives in Lawrence.

Ghezzo had a $6,000-a-month consulting contract. The arrangement ended about the time she sued Soave for fraud in June.

Ghezzo accused Soave of using her $500,000 investment in their Overland Park company, Capistrano Italia, “as his own personal piggy bank, in part, to support and finance his own lavish lifestyle.” Soave has denied the allegations, but he blamed them for causing Brownback to force him to resign in a court filing.

Brownback avoided answering directly when asked last week if he had concerns about Soave hiring Ghezzo and other associates for state contracts.

“We’ve got a lot of contracts as a state,” Brownback said. “Commerce has a lot of different contractors. We’ve had contract employees (a) long time. It’s not an unusual practice. It’s been — we’ve had contracts. It’s been a pretty regular practice.”

On Friday, less than a day after The Star published this story, Brownback recast his position on Soave’s time at Commerce and his practices in awarding contracts, and he said for the first time that Soave had been terminated.

“During his time as Commerce Secretary, Antonio Soave did a number of positive things but also presented a number of problems that resulted in his termination,” the governor’s office said in a statement. “Among those problems, he entered into several consulting contracts that reflected a lack of judgment and that the Governor felt were inappropriate. These contracts were either terminated or not renewed as appropriate under the circumstances.”

Soave subsequently issued his own statement on Friday, saying he had resigned “after mutual accord and agreement” despite his previous court filings that say he was forced out.

Regarding consultants’ contracts, Soave said Friday: “It is important to note that I followed all internal policies and procedures on all procurement matters, including with the hiring of consultants. ... Each and every procurement scenario required several signatures. We were very careful to comply with all existing policies.”

In his earlier email to The Star, Soave called it “customary for an incoming Secretary to bring some of his colleagues and/or business people with him to the Department. As a businessperson for many years, I desired to bring some new ideas and approaches to the Kansas Department of Commerce.”

The state has relied on business consultants in the past, but a former Commerce official, who served under multiple secretaries, said the state used fewer contractors and vetted them more thoroughly.

“I think where it was different was how those folks were chosen and just the number,” the former official said. “When we had contractors historically, they went through a pretty rigorous selection process. ... There were a lot of people who had an association with Antonio in one way or another.”

Joseph Germinaro, a Pittsburgh businessman who had a $1,000-a-month contract with the agency, said he had known Soave from when they were roommates at Michigan State University College of Law.

“We’ve always been close ever since that time,” Germinaro said. He recalled working for the Commerce Department with other people Soave knew.

“Ultimately, I think for most of the people on there, the driver was their relationship with Antonio,” Germinaro said. “That was the motivation, to do whatever we could to help his office do well.”

Germinaro said he knew of companies that gave Kansas a look and “did some sort of transaction” as the result of the consultants’ work, but could not immediately identify specific details.

Matthew Mitchell, a business consultant in New Mexico who bills himself on his website as the “bottom line prophet,” signed on with the Commerce Department in 2016. He was paid $5,000 a month.

Mitchell said he met Soave in the 1990s while Mitchell worked for Lucasfilm, a California movie studio founded by Star Wars creator George Lucas. Soave approached Mitchell to work as a consultant for Commerce because of his contacts in the business world, Mitchell said.

“I have clients that are very large companies,” Mitchell said. “I was going to make all that available to Antonio and the state of Kansas.”

Mitchell would not identify prospects he directed toward Kansas other than to describe one of them as a top investment banker in the Chicago office of Morgan Stanley. He said another effort involved trying to make Kansas the computer software coding center of the United States.

At least five of the contractors have donated to Soave’s congressional campaign. Bafagih, for example, in September gave Soave $2,700, the maximum donation before the primary. Bafagih said he thinks Soave would represent the interests of small businesses in Congress.

“I did it for a friend and did it for myself. As a small-business owner, he would be a great advocate for us,” said Bafagih, chief operating officer of Entilaq, a firm that helps U.S. companies find business opportunities in the United Arab Emirates.

Bafagih, who lives in Texas, signed a $1,000-a-month consulting contract with Soave on April 1, 2016, to find business leads for the Commerce Department.

“We found some that were interested and came and looked at the opportunities, but never came to fruition,” Bafagih said.

Bafagih said he worked for the Commerce Department for less than a year before he was told that budget problems had put an end to his contract.

“That’s why it didn’t work out,” he said. “I wish it continued for a little while; I’m sure we would have had success here.”

Pascale Henn, a Lenexa attorney who said she knew Soave socially, also received a contract from the Commerce Department in 2016. Hers was worth $5,000 a month.

As a lawyer, Henn advises small businesses. For the Commerce Department, she said, she encouraged her out-of-state clients to consider doing business in Kansas. She forward them marketing materials from the state agency.

“In my existing practice, I was working with businesses all the time,” Henn said. “If it was appropriate, I encouraged them to do business in Kansas. ... It was really to help generate business development in Kansas, if it was appropriate.”

Henn said her work with the Commerce Department lasted about three or four months.

Greg LeRoy, the executive director of Good Jobs First, a national watchdog group that focuses on economic development, criticized the reliance on private consultants rather than state employees.

“That’s really problematic,” LeRoy said. “If I were running a commerce agency, I would never want that function fractured among multiple consultants because institutional memory counts for everything here.”

He said the fact that some of the consultants had other business interests with Soave raised questions about whether this was the best use of taxpayer dollars.

Soave said in an email that he selected “a group of business people from around the country who could provide us with great business leads from a number of locations at a reduced cost — much less than what we were paying to other consultants similarly situated. Their job as business development consultants or advisors was to generate new leads. Those leads would then be passed on to our people within Commerce to ‘work’ those leads and follow-up on those leads.”

Soave said that the use of consultants enabled him to cut the agency’s overall costs, contending that the people he contracted with provided better services that the state’s previous contractors for economic development.

“Having said that, there was no conflict of interest. I followed internal policies and procedures with all contracts and hiring,” he said. “I consulted our internal legal department within the Kansas Department of Commerce to ensure that all policies and procedures were followed at all times.”

Clayton, a member of the House commerce committee, was unimpressed with the results of the consultants and called for more oversight of such contracts.

“Nobody likes cronyism, and that’s what this is,” she said. “We let go Commerce positions that were actually valuable. ... We used to have people who actually brought people in and it’s replaced with this? It borders on corrupt. I’m so offended.”

Former Commerce officials also raised concerns about Soave’s expenses during his time as secretary.

“He made sure we ate very well,” a former Commerce official recalled about dinner meetings with Soave.

Soave spent $29,673 in state money on meals and travel during the 2017 fiscal year, according to documents obtained through an open records request.

The bulk of that money paid for flights and hotel costs as Soave traveled to Washington, Paris and other cities to promote the state’s business and to pay for meals when he hosted representatives from foreign countries and companies. But Soave also regularly took staff members and consultants out to dinner at expensive restaurants without any business prospects present.

“Travel and engagement are part and parcel of our work to generate more investment in Kansas, bring more business to Kansas, and create more — and better — jobs in Kansas,” Soave said.

Soccer buddies

One of Soave’s most frequent dinner companions, according to his receipts, was Stefano Radio. The two had worked together over the years as business partners and soccer coaches.

Under Soave, the Commerce Department paid Radio $3,500 a month for marketing services. The payments were routed through Radio’s company College Life Italia, a Kansas City firm that helps Italian student-athletes find placements with American universities.

A spokesman for the Commerce Department said the contract was for Radio, who opted to be paid through his existing limited liability corporation. That enabled him to take advantage of Kansas’ since-rescinded tax exemption for LLCs.

Before their time at Commerce, Soave and Radio ran soccer clinics together and organized tournaments. Radio said one of his special projects for Commerce was to organize soccer clinics in Garden City and Dodge City this year.

Soave_soccer2
Antonio Soave (center), the former Kansas Commerce secretary, instructs at a soccer clinic. Courtesy of Antonio Soave File

“I worked closely with local communities to ensure sponsorships. We were able to involve Sporting KC as well,” he said in an email.

A spokesman for Sporting Kansas City confirmed the team’s involvement in the events, which were originally scheduled for April but canceled because of a snowstorm. The Dodge City clinic took place in September, while a new Garden City event has yet to be scheduled, said Jonathan Kaplan, the team’s spokesman.

Several former Commerce officials questioned the event’s relationship to the agency’s mission of economic development. Soave called it a way to engage the region’s Latino community

Radio, a former professional soccer player and native Italian, said in an email that he led a direct mail campaign with a goal of attracting foreign companies to invest in Kansas.

“I was the main contact for European companies generating multiple leads for the State of Kansas. I worked closely with Atlantia, Savino del Bene, Salini Impregilo, De Cecco, Barilla and several other companies,” he said.

But one of the companies Radio mentioned, pasta manufacturer Barilla, said in a statement that it “is currently unaware of any business activity in Kansas City or the states of Missouri and Kansas more broadly.”

It also said it was unaware of Radio.

Bryan Lowry: 816-234-4077, @BryanLowry3

Steve Vockrodt: 816-234-4277, @st_vockrodt

Hunter Woodall: 785-354-1388, @HunterMw

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