U.S. Rep. Jim Hagedorn attended the Duluth re-election rally for President Donald Trump on Sep. 30, 2020. Photo by Ricardo Lopez/Minnesota Reformer.
The Office of Congressional Ethics, an independent, non-partisan entity charged with reviewing allegations of misconduct against members of Congress, on Thursday issued a 23-page report outlining why it says there is “substantial reason” to believe U.S. Rep. Jim Hagedorn committed ethics violations.
The matter was referred to the House Ethics Committee on a 6-0 vote from the OCE board.
The investigation stems from reporting from Reformer contributor Daniel Newhauser, who reported the potential ethics violations more than a year ago. The reporting revealed that Hagedorn’s office had spent more than $100,000 on mailers printed by a company owned by John Sample, a part-time Hagedorn staffer. More than $339,000 was paid to another company owned by Szu-Nien Su, the brother of Hagedorn’s former chief of staff, Peter Su.
The OCE report says more than $456,000 of taxpayer money was spent on franked mail between May 29, 2019 and April 16, 2020.
Newhauser later published a second report for Politico that outlined how Hagedorn apparently rented private office space in Mankato from a political donor for free or far below market value.
Here are the key findings from the report and supporting documents:
Lack of cooperation from Hagedorn and others involved
The OCE requested testimony from Hagedorn and others, including Sample, who is a digital media staffer; Su, former chief of staff; Melissa Carr, a budget analyst. The report says they refused to cooperate, but the “OCE collected evidence from third parties that corroborated some of the internal review report’s findings and demonstrated others to be inaccurate.”
The report says that while Su initially cooperated, “it became clear that Su was intentionally misleading OCE investigators and made a number of materially false statements during his interview.”
Unclear if Hagedorn was negligent, but he is still responsible for overseeing office spending, report says
Given how much his office spent on franked mail, Hagedorn should have conducted better oversight of the spending, OCE investigators said. His office spent 19% of his annual budget on franked mail in the first quarter of 2020; the average member, meanwhile, spent .8% of their budget on franked mail during that same period.
“Because Rep. Hagedorn refused to cooperate with the review, the OCE was unable to definitively determine whether he was aware of these issues,” investigators wrote. “While it is possible that Rep. Hagedorn was, to some degree, the victim of Su and Sample’s fraudulent conduct, evidence collected by the OCE, and Rep. Hagedorn’s refusal to cooperate with this review, suggest Rep. Hagedorn was aware or should have been aware of the irregularities and negligently permitted nearly half a million dollars of improper …spending to continue without objection.”
Hagedorn attorney disputes lack of cooperation
In response to the claim that Hagedorn did not cooperate, his attorney Elliot Berke pushed back, saying Hagedorn “self-reported” the matter and criticized the investigation, calling it a “waste (of) taxpayer resources.” He suggested Hagedorn would seek a rule change that would limit the OCE’s work. “We look forward to working with the next Congress on a rule change that can institute better fiscal discipline within the OCE,” Berke wrote.
Suite 7 at Mankato Place building not listed on finance disclosure reports
OCE investigators say Hagedorn’s campaign listed Suite 7 at 11 Civic Center Plaza, Mankato as its mailing address since its inception in 2013 and until at least February 5, 2021, but the campaign did not report rent payments in financial disclosure reports.
After Hagedorn won his election in 2018, it rented office space for the congressional office — as distinct from the campaign — in the same building and paid rent of $2,200 per month, according to House records.
Hagedorn responded to the Politico piece about the office space by claiming there was no physical space to the address and that it was only a P.O. box, despite social media posts showing otherwise.
David FitzSimmons, chief of staff to U.S. Rep. Michelle Fischbach, signed lease on Suite 7 office space
The OCE published supporting documents, including a copy of the lease agreement for the office space Hagedorn used free or at below market rate. Dated Feb. 19, 2018, FitzSimmons, then campaign manager for Hagedorn, signed the lease, which showed a monthly rent of $100 for Suite 7 at Mankato Place in the city’s downtown.
The OCE found that one other similarly-sized basement unit in the building rented for more than $900 per month. Other basement tenants paid between $300 and $337.50 in monthly rent.
“These comparable rent rates indicate that, conservatively, nine month’s use of the 879 (square feet) of the basement space at a fair-market rate — about $1 per square foot month — should have been valued at $7,911,” the report said. “If the same rate that was charged of the prior tenant for the same office space is applied, then the nine month’s use should be valued at $8,568.”
Reached by phone, FitzSimmons declined to comment.
The OCE board recommends subpoenas be issued to compel cooperation
It’s possible the House Ethics Committee will be able to interview the congressman. In its report, the OCE board recommends subpoenas be issued to Hagedorn, Su, Sample, and Carr, among others. Carr said she did not cooperate because she feared retaliation.
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