Rendell insider John Estey charged with stealing from an FBI sting operation, and is now suspected of being an FBI confidential informant. If so, when did he start cooperating with the feds?
Pennsylvania’s political establishment was jolted last Friday, April 29, when the U.S. Attorney’s office in Harrisburg announced that it was charging one of the state’s top political insiders, John Estey, with crimes related to an FBI undercover sting bribery operation dating back to 2011.
Photos of John Estey (left) and Adrian King, from their lobby disclosure statements.
Estey’s slow motion fall may yet shed light on the hidden workings of Pennsylvania government. So far it’s shed more light on Estey’s character, or lack thereof.
Perhaps, more importantly, the episode will illuminate the shadowy world of FBI and U.S. Justice Department confidential informant operations.
The government’s charges against Estey are wrapped in mystery.
But the U.S. Justice Department appears to be going easy on him with a plea deal.
All this has fueled speculation that the FBI some time ago may have flipped a state government insider who enjoys easy and trusted access to top state political circles, and converted him into a confidential informant, or “cooperating witness.”
The announcement of Estey’s arrest came on Friday afternoon, the traditional time to bury news.
And the U.S. attorney’s office broke the news of Estey’s arrest by issuing a cryptic and terse news release, the headline of which didn’t even mention Estey by name.
“Pennsylvania lobbyist charged with wire fraud,” read the news release.
Calling John Estey a lobbyist is like saying Ronald Reagan was host to the Twenty Mule Team Hour. While true, it drastically plays down recent roles played by Estey and those close to him in Pennsylvania government.
Estey served as chief of staff to Gov. Ed Rendell until 2008. In 2011, Estey was named general counsel of the $12 billion Hershey Trust, where he had other leadership roles.
The known facts of Estey’s arrest certainly shed critical light on Pennsylvania’s lax lobbyist disclosure laws and its wide-open campaign finance rules.
But the known facts also shed light on Estey as a misbehaving attorney and political operative, and raise questions about whether the FBI may have mishandled him as a confidential informant at various times in the past five years.
The known facts are contained in scant documents released by the U.S. attorney’s office: the press release, and three court documents: a charging document, a Joint Statement of Facts, and Estey’s proposed plea deal, which has yet to be approved by a federal judge.
(To view Estey’s court documents click here.)
The story these documents tell is wild.
The press release relates that, “the Federal Bureau of Investigation (FBI) conducted an undercover investigation of lobbying in the Pennsylvania General Assembly. In that investigation, the FBI created an undercover business and hired Estey as a lobbyist to influence passage of certain legislation beneficial to the undercover business. In 2011, as a part of that investigation, Estey agreed to secretly pay $20,000 in campaign contributions to members of the Pennsylvania General Assembly in connection with this legislation. When he was paid funds, Estey only passed through $7,000 in campaign contributions while secretly keeping $13,000.”
More detail is offered in the court papers.
“At all times material to this case, John H. Estey was an owner in a lobbying/government consulting firm based in Philadelphia, Pennsylvania (‘the Lobbying Firm’),” reads a Joint Statement of Facts agreed upon by Estey and the feds. “Among the services offered by Estey and the Lobbying Firm were lobbying of the Pennsylvania General Assembly, located in Harrisburg, Pennsylvania, within the Middle District of Pennsylvania.
“At all times relevant to this case, the Federal Bureau of Investigation operated an undercover company, hereinafter referred to as ‘the UCC,’ to investigate allegations of public corruption in Pennsylvania,” the document continues.
Elsewhere, on an Information document enumerating the charges, the government writes, “Estey was a lobbyist who, along with others, created a lobbying and consulting firm.”
Neither document names Estey’s lobbying firm, nor the name of the FBI’s fake company. Nor, significantly, are others named who “along” with Estey “created” the unnamed lobbying company.
The Joint Statement continues:
“From approximately the fall of 2009 through June 30, 2011, John H. Estey, through the Lobbying Firm, represented the (the FBI’s) UCC in lobbying efforts before the Pennsylvania General Assembly.
“On multiple occasions between approximately October 14, 2009, and June 30, 2011, Estey met with undercover agents of the Federal Bureau of Investigation who were posing as executives of the UCC. During the same time period, Estey engaged in multiple telephone conversations with the undercover agents.
“During meetings and telephone conversations, the undercover agents indicated to Estey that they were the principals of an out-of-state business interested in doing business in the Commonwealth of Pennsylvania and that they needed assistance to obtain legislation favorable to the UCC. Estey advised the undercover agents that Estey could influence Members of the Pennsylvania General Assembly to support passage of legislation favorable to the UCC and that campaign contributions would be necessary to facilitate access to, and the attention of, the legislators. Estey assured the undercover agents that the process would not be prohibitively expensive.
“On or about April 28, 2011, Estey spoke on the telephone with an undercover agent who was posing as an executive of the UCC. At the time of the conversation, Estey was in Pennsylvania and the undercover officer was in a state other than the Commonwealth of Pennsylvania so the signals and sounds transmitted during the telephone wire communication crossed state lines.
“Estey indicated to the undercover agent that the UCC should pay $20,000 to the Lobbying Firm which Estey would then cause to be transferred to Members of the General Assembly as campaign contributions. Estey indicated that, although the campaign contributions would appear to be made to the legislators by Estey, the legislators would know that the contributions were actually made by the UCC.
“During the telephone conversation, Estey advised the UCC to pay $20,000 in campaign contributions, discussing three $5,000 contributions to the campaigns of members of the Pennsylvania General Assembly and a $5,000 contribution to a particular leadership caucus. Estey agreed that Estey would run the contributions through the Lobbying Firm. The UCC was thereafter instructed to send the funds to the Lobbying Firm.
“A check in the amount of $20,000 was thereafter paid by the UCC to the Lobbying Firm for use as campaign contributions to Members of the General Assembly. The check was deposited into a bank account of the Lobbying Firm on May 10, 2011.
“On May 30, 2011, Estey wrote out a Lobbying Firm check in the amount of $20,000, the initials of the UCC were written in the ‘Memo’ portion of the check, and Estey caused the check to be deposited into a joint personal bank account. While ultimately $7,000 in campaign contributions were made by Estey, $13,000 were converted to Estey’s own use.
“On June 30, 2011, Estey had a telephone conversation with an undercover agent acting as a UCC executive. Estey conveyed the impression that the $20,000 had passed-through or would be passed-through the Lobbying Firm to elected officials when, in fact, ultimately Estey had converted $13,000 of the $20,000 to his own use.
“In summary, the facts establish: that John H. Estey knowingly devised a scheme to defraud and to obtain money or property by materially false and fraudulent pretenses, representations and promises; that Estey acted with the intent to defraud; and, that in advancing, furthering, and carrying out the scheme, Estey transmitted signals and sound by means of a wire communication in interstate commerce.”
This much is known and agreed upon, even by Estey: a former chief of staff to Gov. Ed Rendell, general counsel and officer with the Hershey Trust, and attorney for the high-profile Philadelphia law firm of Ballard Spahr, acted fraudulently to make misrepresentation and false promises, and stole from an FBI undercover operation.
On the face of it, these scant facts are bad enough.
Reading between the lines, it gets worse for everyone, including perhaps for the FBI and the Justice Department.
Though the court documents lay out a clear timeline of when the FBI’s undercover scheme began, left unexplained is the crucial question of when the government lowered the boom on Estey.
Other questions come to mind.
Did Estey become a confidential government informant and, if so, when?
Was Estey directed by the FBI? While acting under the federal government’s supposed supervision and oversight, did Estey and those around him (“along with others”) continue to misbehave?
The court papers don’t explain who else is involved.
These mysteries have set Pennsylvania political circles into frenzy.
Mysterious lobby records
Lobbyist disclosure statements filed with the state list Estey, in years past, as a lobbyist with Ballard Spahr, starting in July 2008, after he left the governor’s office.
(Just as cryptically, those same disclosure documents report that Estey’s lobbying activities were since “Terminated,” at an unknown date.)
Campaign finance records disclose that Estey tendered a total of $7,500 (not $7,000) to five political candidates in 2011, including $1,000 to Treasurer Rob McCord, and $2,500 to then-AG candidate Kathleen Kane.
So the numbers on the obvious state disclosure reports don’t add up.
A staff member of a state representative listed as receiving $1,000 from Estey on April 28, 2011 (the day Estey took the call offering money from the FBI’s fake company) says that the $1,000 the legislator received from Estey was an up-and-up donation made at the state representative’s birthday party.
Neither the state representative, nor the two state senators who altogether received a total of $4,000 from Estey, say they have been contacted by federal investigators.
One staffer confided that he had heard that several other individuals have received letters from the feds indicating they are subjects of investigation mentioned on recordings.
So it’s not at all clear if these are the contributions mentioned by the feds.
Estey was obviously gaming the FBI. Was he lying to the FBI about other things?
Documents chart Estey’s close relationship to former First Deputy AG Adrian King
Estey’s document trail sheds light on his relationship with another member of the Ed Rendell’s inner circle, fellow Ballard Spahr attorney Adrian King.
(View these financial documents here.)
King, until June 2014, was first deputy state attorney general under Pennsylvania AG Kathleen Kane.
John Estey and Adrian King are brothers-in-law and law partners. Documents also suggest they’re business partners.
John Estey’s sister, Caroline Eshleman Estey, married Adrian King in October 1996. At the time, King was an administrator at Allegheny University of Health Sciences in Philadelphia.
By all accounts, his brother-in-law, John Estey, skyrocketed Adrian King’s career.
“Adrian King and John Estey were very close,” I’m told. “John brought King into Ballard, and introduced him to Rendell.”
In May 2012, about a year after Estey apparently found himself ensnared in the undercover FBI sting operation, Estey curiously amended his financial disclosure statements with the state Ethics Commission to list, in years’ past, a financial interest in a company called Eleven Twelve Partners.
A Certificate of Organization filed with the state in October 2008 lists the organizer of Eleven Twelve Partners as Estey’s brother-in-law, Adrian King.
A filing with the state Ethics Commission by King as first deputy attorney general on April 30, 2013, declares King at that time held a 50 percent interest in Eleven Twelve Partners. The address for Eleven Twelve is listed as Adrian King’s home.
Eleven Twelve Partners, to which both Estey and King hold an interest, is variously described in documents as a grocery or convenience store operation.
As well as their joint interest in Eleven Twelve, both Estey and King at times have been registered as lobbyists with the Ballard Spahr law firm.
A lobbyist disclosure statement filed with the state lists Estey as a lobbyist for Ballard Spahr beginning on July 1, 2008.
Estey’s lobbyist registration apparently was valid through 2012, though it has since been listed as “Terminated,” at an unknown date.
Estey reported himself as a lobbyist with Ballard on October 27, 2008 — on the same day that Eleven Twelve Partners’ certificate of organization was filed with the state.
Estey’s two lobbying clients with Ballard at the time were listed as Drexel University and Laboratory Corporation of America Holdings.
The president of Drexel University, John Fry, was appointed to the board of the Hershey Trust in January 2013, about the time AG Kane and First Deputy AG Adrian King came into office. Fry resigned from the Hershey board last fall.
Ballard Spahr, meanwhile, lists King and three others, including Rendell-circle insider Ken Jarin, as current state lobbyists, with a large portfolio of clients.
King was appointed first deputy AG by Attorney General Kathleen Kane in January 2013, at the same time Estey held key legal and leadership positions with the Hershey Trust, which the AG’s office was investigating.
Questionable political donations
As well as the political donations tendered by Estey personally, such as his $2,500 personal contribution to AG-candidate Kane on December 12, 2011, Ballard Spahr or King are also listed as campaign contributors to some of the parties involved.
On December 29, 2011, then-AG candidate Kane received a $2,500 contribution from Adrian King, Jr, of Ballard Spahr — about two weeks after Estey gave Kane the same amount.
In 2014, Estey tendered large and questionable political donations to state treasurer and gubernatorial candidate Rob McCord. McCord has since resigned, and is currently the subject of prosecution by the U.S. Justice Department for corrupt practices.
It’s worth noting that Estey’s questionable political contributions to McCord in 2014 came well after Estey was ensnared in the FBI sting in 2011.
As well, Adrian King has played a central role in the criminal case against AG Kane. King, court records say, was involved in discussions to facilitate the leaking of grand jury documents to the Philadelphia Daily News, which led to Kane’s pending criminal prosecution.
One of the current controversies in Kane’s prosecution involves the origin of leaked FBI transcripts tied to the federal criminal investigation of former state Treasurer McCord.
Plenty of questions remain
Many in Pennsylvania political circles are asking whether John Estey is a confidential informant, or a cooperating witness, with the FBI.
If so, when did Estey begin cooperating with, or working for, the FBI and the U.S. Justice Department? The charging documents and proposed plea deal filed by the U.S. attorney’s office last week don’t explain this.
But the court documents repeatedly state that Estey’s lobbying firm (“created … along with others”) represented the FBI’s fake company until June 30, 2011.
This June 2011 date would seem to be when the FBI changed the terms of its arrangement with John Estey.
All this raises the question: were Estey’s donations to McCord, or others, part of an ongoing FBI sting?
Or, was Estey conducting himself in an inappropriate manner while supposedly under FBI oversight or supervision?
What considerations including but not limited to his plea deal did the FBI or the Justice Department give to John Estey for his cooperation?
Is anyone else protected by a deal between Estey and the feds — such as his family members?
And are other Estey family members also working for, or with, the FBI?
Estey and Adrian King certainly have some ‘splaining to do.
But so do the FBI, and the U.S. Justice Department.
Very interesting, and very well documented — THANKS Bill Keisling