Grand jury hears from speaker over murky political vendor Phoenix
NASHVILLE — Tennessee House Speaker Cameron Sexton, R-Crossville, and two Hamilton County GOP representatives were among several lawmakers and staffers who testified Monday before a federal grand jury here that is following up on a taxpayer-funded constituent mail “kickback” scheme that netted a guilty plea from former Rep. Robin Smith, R-Hixson, earlier this month.
The federal investigation appears to be focused on former House Speaker Glen Casada, R-Franklin, and his one-time chief of staff, Cade Cothren, who has been accused of creating a shadowy political consulting company, New Mexico-based Phoenix Solutions, which provided political and campaign services to a number of GOP lawmakers.
Sexton, who spent nearly 25 minutes before the closed-door session, later told reporters he was neither a target nor a subject of the inquiry and was there as a witness.
“I can’t talk about what was asked in the grand jury,” Sexton said. “Today my role is to provide factual information and be a factual witness, which I happily did and answered all the questions under oath.”
Sexton said none of the questions were surprising.
“I’ve been working and assisting them [FBI] since 2019,” said Sexton, who told reporters much the same thing in January 2021 on the day the FBI raided the homes of Smith, Casada, Cothren and freshman Rep. Warner, R-Lewisburg. “I was pretty comfortable answering every question they had.”
Rep. Esther Helton, R-East Ridge, who spent about eight minutes behind closed doors with the grand jury, later agreed with Sexton’s assessment.
“I was here as a witness,” Helton said after leaving the Estes Kefauver Federal Building and Courthouse.
“I really don’t have anything to say other than I just appeared here as a witness today,” said Rep. Patsy Hazlewood, R-Signal Mountain, who spent about nine minutes before grand jurors.
Smith, a 58-year-old political consultant, pleaded guilty March 8 to a single count of honest services wire fraud, after federal agents laid out a scheme by which Smith deprived customers of Phoenix Solutions of honest services in the mailers and other services provided. According to the federal documents, Smith vouched for the newly minted company, covering up the involvement of Cothren, who had left House staff in a scandal. Smith, a former Tennessee Republican Party chair, received kickbacks for her efforts.
Both Hazlewood and Helton used Phoenix Solutions services, as did a number of other lawmakers.
Smith and others falsely claimed Phoenix Solutions was operated by a consultant named “Matthew Phoenix,” who was fictional. The federal filings state that Matthew Phoenix was actually Cothren, one-time chief of staff to disgraced House Speaker Casada, who was forced out in part to a scandal involving sexually explicit and racist texts sent by Cothren to Casada.
Neither Cothren nor Casada were mentioned by name but were referred to as a former House chief of staff and a former speaker who left office in 2019.
Federal filings also stated that in September and December 2020, Smith received two checks from Phoenix Solutions totaling more than $24,000, which she deposited into her consulting firm’s bank account. Smith will be sentenced Oct. 17.
Other lawmakers testifying were Reps. Bud Hulsey, R-Kingsport, and Jason Zachary, R-Knoxville. Also testifying was Connie Ridley, the director of legislative administration whose office was over legislators’ constituent mail accounts. Former House Republican staffer Holt Whitt, who along with Ridley dealt with lawmakers as well as Matthew Phoenix, and Smith and Casada also testified.
Neither Hulsey nor Zachary used Phoenix Solutions for their government-funded constituent mail accounts but did use Casada’s Right Way Consulting.
“I fully support the FBI and the U.S. Attorney’s Office through their investigation,” Zachary later said to reporters.
He declined to provide details on what he was asked during proceedings.
“It’s unfortunate that the actions of a few have brought this kind of attention to the Tennessee General Assembly. But I hope for a quick resolution just like everything else,” Zachary said.
Zachary also said no when asked by a reporter if there was any questioning about Gov. Bill Lee’s private school voucher bill.
“No, no,” Zachary said. “No.”
The bill hung up on a 49-49 vote tie for some 40 minutes in 2019 as Casada offered pork-barrel projects and other enticements to get to the required 50 votes. Zachary changed his vote to yes after an agreement to take Knox County out of the bill, which was considered part of customary horse-trading practices to get some legislation through.
Zachary said prosecutors had little to say other than they might need to call him back for additional questions.
During the 2020 election cycle, Smith advocated for the House Republican Caucus to use unknown Phoenix as one the group’s preferred vendors. House Republican Caucus chair Jeremy Faison, R-Cosby, opposed the move and said Smith’s subsequent move to challenge him for the leadership post stemmed from that.
“When I raised my questions and pushed against her, she announced the next day she was going to run against me,” Faison told the Times Free Press during an interview at the state Capitol last week. “Because I knew something was wrong, and I’ve maintained since Day 1 that Matthew Phoenix was bull—— and that the whole thing was a lie, and the whole thing was her and Glen Casada.”