Madison Cawthorn May Have a New Ethics Violation to Handle

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Overpaying a staff member hardly seems like Rep. Madison Cawthorn’s biggest scandal these days, but a Daily Beast investigation into Cawthorn’s compensation for his chief of staff reveals a cut-and-dried ethics violation—one his office appears to have tried (and failed) to skirt.

Congressional pay data shows that North Carolina Republican paid his chief of staff, Blake Harp, $131,278 in 2021. That actually ranks Harp at the low end of compensation for chiefs of staff in Congress.

But why he was paid that specific amount could be highly relevant.

House ethics rules stipulate that senior congressional staff can only earn $29,595 in outside income each year. According to filings with the Federal Election Commission, Cawthorn’s campaign paid Harp a combined $73,237 in direct payments and payments to his LLC, EMP Strategies.

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That outside limit, however, only applies to aides who qualify as “senior” staff. Cawthorn’s office appears to have tried to avoid triggering that specific classification. The office’s congressional expense reports show that Harp made about $1,500 less than the annual threshold that would qualify him as senior staff.

But the ethics rules don’t calculate senior pay at an annual rate; the pay rate is calculated per every 90-day period. And that’s where they slipped up, paying Harp at a senior rate in the last quarter of 2021.

Before Q4, Harp’s top quarterly pay was $32,499.99. But the office bumped that up to $34,499 over the last three months of the year—a total of 92 days—for a daily pay rate of $374.99. The daily rate for senior staff in 2021 was $363.16.

That means Harp actually was senior staff in 2021. And that small daily increase carried thousands of dollars in ramifications, because it meant he was subject to the outside income limitations.

Cawthorn’s communications director, Luke Ball, acknowledged that the office believed Harp didn’t qualify as “senior staff.”

“Mr. Harp’s congressional salary is below the House’s threshold for the outside limitations to be applied,” Ball said. “The Daily Beast asserted otherwise, but refused to provide our office the information they alleged was at the center of their request.”

(Congressional pay is public information, and we did break down the rules.)

The reply from Cawthorn’s office is revealing in a number of ways. For one, it confirms that staff believed Harp wasn’t subject to the outside income limitations. For another, it doesn’t dispute that Harp made more than what would be allowable if the chief of staff—the most senior staffer in the office—was actually considered “senior staff.”

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The team also appears to have gone out of its way to try and blur the recipient of some payments, creating a shell LLC to obscure that Harp was the one getting the money. That company has also received tens of thousands of dollars from a PAC belonging to Harp’s mom.

Jordan Libowitz, director of communications for watchdog Citizens for Responsibility and Ethics in Washington, explained that nuances in the rules would retroactively apply to Harp’s income for the full year.

He laid out the scheme to The Daily Beast.

“After looking over Cawthorn’s filings, it appears they were trying to keep Harp just under the senior staff level to pay him well above what he’s allowed to make from the campaign, but may not have been able to successfully pull off the scheme,” Libowitz said. “While Harp stayed a couple hundred dollars under the senior staff limit for the year, the rule is actually making above that rate for ‘more than 90 days,’ which it appears that he did in the fourth quarter—which was 92 days.”

Libowitz said switching Harp’s salary to a newly made LLC doesn’t solve the problem, but “only increases them.” In the eyes of the House Ethics Manual, he explained, “it’s the same income.”

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Brendan Fischer, deputy executive director of the good government group Documented, agreed, saying it seemed Cawthorn and Harp tried to “game ethics rules” to max out his income.

“On the one hand, the twentysomething Harp does not appear to have relevant work experience, so it is questionable whether he merits a six-figure taxpayer-funded salary at all,” Fischer told The Daily Beast. “But on the other hand, by keeping his income just below $132,552 for most of 2021, Harp was freed from the outside earned income limits, allowing him to earn tens of thousands of dollars more from Cawthorn’s campaign.”

“My read of the rules is that the outside earned income limitation would kick in and be prorated to the point that Harp began getting paid at the senior staff level,” Fischer added. “So the campaign payments in the first three quarters of 2021 are probably kosher, but because Harp was paid at the senior level in the fourth quarter of 2021, he therefore could not earn above $7,398.75 (1/4 of $29,595) in that quarter. Not that this particularly helps him: Cawthorn’s campaign paid Harp’s LLC over $22,865 in the final quarter of 2021.”

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Libowitz argued that because the rules are pegged to the full calendar year, the previous campaign payments would be retroactively included when Harp tripped the senior staff scale. This reading means that Cawthorn’s office would have overpaid Harp by nearly $44,000 on the year. Ironically, had Harp taken the highest possible congressional salary and maxed out his outside income, he actually could have made more money.

All experts consulted for this report said there’s strong evidence of intent. According to corporate filings with the Texas secretary of state, Harp created EMP Strategies last April—just weeks before his campaign salary would have cracked the ceiling.

Kedric Payne, head of ethics at nonpartisan watchdog Campaign Legal Center, said the facts indicate a studied intent to beat the system, something likely to particularly irk investigators with the Office of Congressional Ethics.

“The OCE has investigated violations of income limits for years and it’s likely they will pursue this matter,” Payne said.

Libowitz and Fischer both noted another possible violation: Senior congressional staff aren’t allowed to be compensated for serving as an officer of a corporation. Business filings list Harp as an officer of EMP Strategies.

Furthermore, the Cawthorn campaign isn’t his only consulting client. So is his mom, a former congressional candidate. FEC records show that EMP Strategies has received tens of thousands of dollars from his mom’s old campaign committee, which she converted to a PAC last October.

“If Harp continued earning the same salary in 2022, then he would also violate the rules if his mom’s former campaign committee made excess payments to him through his LLC in 2022,” Fischer said.

Harp’s mom has paid EMP Strategies about $48,000 so far this year.

There’s more: The attempt to keep Harp’s salary under the limit also would have allowed him to duck the federal requirement that he report stock trades. And because he appears to have qualified as senior staff at the last minute, Harp’s 2021 salary would also require him to file a disclosure report this year accounting for his 2021 finances.

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“Rep. Cawthorn’s chief of staff has been in a position of real power and authority, but for most of 2021 was not subject to the rules that prevent him from exploiting his public position for personal gain,” Fischer said.

According to these experts, the violations strongly suggest the OCE will open an investigation.

There’s ample precedent to back this up. Ethics officials have taken action on violations of a much smaller magnitude.

In 2011, the OCE investigated Michael Collins, then chief of staff for the late Rep. John Lewis (D-GA), when he made just $450 above the outside income limit as a consultant with the Lewis campaign, finding it was evidence of a violation. Six years later, the OCE found that Collins slipped up again, nosing over the line this time by just $325.

In another case, the chief of staff for Rep. David Schweikert (R-AZ), Oliver Schwab, also blew through the outside earned income cap when he took campaign money through an LLC he controlled. In 2018, the OCE found substantial reason to believe Schwab broke the rules. Schwab resigned before the ethics probe was completed.

The Cawthorn campaign and Harp did not immediately respond to The Daily Beast’s questions.

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