Political News

Pruitt’s Coziness With Lobbyists Includes Secretly Buying a House With One

Posted May 3, 2018 1:27 p.m. EDT

Since moving to Washington, Scott Pruitt, the head of the Environmental Protection Agency, has attracted the attention of federal investigators because of his unusual association with lobbyists, including his rental of a condominium last year owned by the wife of a lobbyist with business before the EPA.

As a state senator in Oklahoma 15 years ago, Pruitt went even further: He bought a home in the state capital with a registered lobbyist who was pushing for changes to the state’s workers’ compensation rules — changes that Pruitt championed in the legislature.

And as with the condominium rental in Washington, Pruitt never publicly disclosed his financial relationship with the lobbyist, who, like Pruitt, lived in the home when in Oklahoma City on business.

The lobbyist, Justin Whitefield, represented as many as a dozen organizations, including some that sought business-friendly changes to Oklahoma’s workers’ compensation rules.

Pruitt pressed for the changes, often bemoaning the high costs to businesses of the existing rules and suggesting that lawyers were enriching themselves off the system. Another of Pruitt’s business partners, Robert Funk, who owned a local baseball team with him, ran a large staffing company that would benefit from relaxed rules; he also joined Pruitt in pushing for the changes.

The home in Oklahoma City was registered to a shell company owned by Pruitt, Whitefield and four other associates. The New York Times reported last month that the house was bought at a steep discount from a lobbyist, Marsha Lindsey, who worked for a telecommunications company with business before the Oklahoma state Legislature.

Pruitt’s business relationship with Whitefield has not been previously reported. A spokesman for the EPA said that Whitefield held a one-sixth stake in the company and had “received taxable income” from it. Two of the other owners, The Times previously reported, were Kenneth Wagner, a law school friend of Pruitt’s who now holds a top political job at the EPA, and Jon Jiles, a health care executive who contributed to Pruitt’s political campaigns.

“Whitefield was a practicing lawyer who had business in Oklahoma City,” said the spokesman, Jahan Wilcox. “Pruitt was a practicing lawyer and a part-time legislator who only stayed in the house when he was in Oklahoma City for business.”

Whitefield died in a plane crash in 2006. A relative confirmed to the The Times that he had shared the home with Pruitt.

Pruitt is now facing 11 federal investigations into matters including his condominium rental in Washington and his spending on travel and security at the EPA. The Times reported Tuesday that Pruitt had allowed another lobbyist friend to play an unusually central role in arranging his agenda during a visit to Morocco in December. Just months after the trip, the Moroccan government hired the lobbyist, Richard Smotkin, as a $40,000-a-month foreign agent.

Pruitt, Whitefield and the other investors in the shell company bought the Oklahoma City home in December 2003 for $375,000, a discount of about $100,000 from what Lindsey had paid a year earlier. Her employer, the telecom giant SBC Oklahoma, now AT&T and formerly known as Southwestern Bell, used a relocation firm to handle the sale and picked up the shortfall under her retirement package. AT&T said the home had been appraised twice, for an average value of $390,000, before the sale.

A month later, in January 2004, Pruitt held a news conference at the state Capitol to announce a bill that he said would reduce workers’ compensation costs for businesses by eliminating unnecessary litigation.

In a news release, he cited figures from the National Council on Compensation Insurance, a workers’ compensation industry group, which said his proposal would save employers in Oklahoma at least $100 million. At the time, Whitefield was a lobbyist for the group, according to state disclosures.

Whitefield later became a registered lobbyist for Oklahomans for Workers’ Compensation Reform, a political committee co-chaired by Funk, the businessman who owned the minor league baseball team with Pruitt and several others.

Funk attended the news conference in January 2004, and a February 2005 update from the political committee, co-written by Funk, noted Pruitt’s work on legislation that would cut “litigation and the expensive cost drivers that are present in our lawyer-rich system.”

The workers’ compensation battle played out for years in Oklahoma, and news reports at the time referred to Pruitt as a leading Republican in dealing with Democrats and the governor’s office on the issue. Ultimately, after a partisan struggle, a compromise bill was signed into law in June 2005, with Pruitt as a main negotiator.

Pruitt described the outcome as “a small step in the right direction,” according to a report at the time in The Journal Record, a business and legal newspaper in Oklahoma. But when he ran for lieutenant governor in 2006, he cited his efforts on workers’ compensation among his main achievements. Funk served as the chairman of that unsuccessful campaign. When Pruitt left the state Senate that year, his fellow lawmakers applauded his advocacy on workers’ compensation. In his parting remarks, Pruitt told colleagues: “I’ve always tried to approach what we do here in this body with a commitment to sound policy and trying to do things for the right reason. I believe that good politics is doing the right thing.”

Pruitt and the other investors in the shell company — Capitol House LLC — sold the Oklahoma City house in 2005 for $470,000. It is unclear whether any of the proceeds went to Pruitt. The group also had at least one paying tenant, Jim Dunlap, then a Republican leader in the state Senate, who said he rented a room above the garage.

Jiles, the investor who is listed as manager of Capitol House, said in an email that each investor owned 16.66 percent of the company, and while none of them lived permanently in the house, they all had a right to stay there. The company, he said, should not be referred to as a shell company since it “acquired assets consisting of the house and its furnishings and incurred liabilities, filed tax returns and issued K-1’s to it’s members as required by law” — a reference the tax form known as a Schedule K-1.

“Nothing about the transaction, Capital House, LLC or the investment was unusual, inappropriate, illegal or otherwise objectionable to anyone involved on either side of the transaction,” Jiles said.

At a hearing last week in Washington of the House Energy and Commerce Committee, lawmakers asked Pruitt about the house purchase and the use of a shell company — a lawful practice that is often used to obscure the people who have a financial interest in it, and typically is set up as a limited liability company. Pruitt’s name does not appear on any public documents related to the company; nor does Whitefield’s.

Pruitt said the company was not a shell company, but a limited liability company.

“Which is normally how you buy real estate in Oklahoma,” he said.