Former House Republican Chief of Staff George Gallo Pleads Guilty To Direct Mail Kickback Scheme
Posted to: Campaign Finance, Courts, Election 2008, Election 2010, Election 2011, Election 2012, Election 2013
Former House Republican Chief of Staff George Gallo pleaded guilty Monday to steering Republican candidates to a direct mail company in Florida.
The federal government told the court that from 2008 until December 2013 Gallo made $117,000 from the scheme to steer Republican candidates for office to Direct Mail Systems Inc. in Clearwater, Fla.
Gallo, who worked at the time for former House Minority Leader Lawrence Cafero, told U.S. District Court Judge Vanessa L. Bryant on Monday that he failed to disclose his previous financial relationship with Direct Mail Systems when he recommended them to candidates, including his boss.
Gallo said he chose not to reveal the 10 percent commission he was getting from Direct Mail Systems for steering business, “because the House Republican leader would not have allowed that.”
According to court documents, Cafero directly confronted Gallo about receiving vendor compensation in September 2012 and Gallo lied to him knowing Cafero “would end any such arrangement.”
Since 2008, Connecticut Republican candidates, Republican Town Committees, PACs, and the Republican House Campaign Committee spent nearly $2 million with Direct Mail Systems, according to State Election Enforcement Commission filings.
As chief of staff for the House Republicans, Gallo was also in charge of the House Republican Campaign Committee apparatus where he was in the unique position to recommend campaign vendors to candidates.
Gallo, who headed the state Republican Party between 2005 and 2007, became familiar with Direct Mail Systems in that capacity and saw an opportunity to give them more business with the implementation of the Citizens Election Program. The program allows candidates to raise small contributions in order to get a state funded grant that’s about four times the amount they raised.
U.S. Attorney Christopher Mattei said that meant a larger number of House Republicans were well-funded and had money to spend. He said Gallo was in a unique position to provide them “one stop shopping” for all their campaign needs. He said Gallo told Direct Mail Systems that if they paid him 10 percent of the revenue he sent them then they would have access to a whole new crop of well-funded candidates.
Mattei told the court that they are recommending a sentence of 15 to 21 months, restitution, and a fine.
Gallo’s attorney, Hubert Santos, pointed out during the plea hearing that Gallo reported all of that income he received from the scheme to the Internal Revenue Service. Santos said there is some dispute about the $117,000, but they will wait to challenge that during sentencing.
“Mr. Gallo did not defraud the vendor, he did not defraud the IRS, he defrauded Republican candidates,” Mattei said.
Gallo told the court Monday that he believes the candidates who used the vendor paid market rate for their services “but they probably paid more with my commission on top of it.”
Gallo resigned his position in February 2014 after being mentioned as a person of interest in the federal investigation. He told the court that he is not currently employed but he is the full-time caregiver for his wife, who has breast cancer.
He posted a $200,000 non-surety bond Monday and was warned not to travel out of Connecticut without the court’s permission. Gallo said he has to drive his wife to New York for her cancer treatments every three weeks or so. Bryant said as long as he keeps the court informed, he should be able to make arrangements for that type of travel.
Gallo is scheduled to be sentenced on July 29.
House Minority Leader Themis Klarides said the guilty plea, “serves as a keen reminder that those in the public eye have an added responsibility to adhere to the strict rules that they may have a hand in shaping.”
In order to conduct their investigation, the Federal Bureau of Investigations set up shop at the Legislative Office Building last year where they interviewed lawmakers who had used two direct mail companies. The subpoenas regarding the scheme were issued in February 2014. A grand jury was convened on March 4, 2014. It’s unclear why it took so long for Gallo to reach a plea deal. Gallo, who was making small talk with reporters before the proceedings started Monday, declined further comment following the plea.