NASHVILLE -- Former Tennessee House Speaker Glen Casada and his former chief of staff Cade Cothren pleaded not guilty in U.S. District Court Tuesday, hours after both men were arrested under a federal grand jury's 20-count indictment on charges of bribery, kickbacks and conspiracy to commit money laundering.
The alleged scheme involved taxpayer-funded constituent mail. The investigation erupted publicly in January 2021 when the FBI raided the homes of Casada, Cothren and then-Rep. Robin Smith, a Hixson Republican and political consultant who were all part of the scheme, the federal government says.
In March, it resulted in a guilty plea on a single count of wire fraud from Smith, who stepped down. She agreed to cooperate with federal prosecutors as part of her plea agreement.
While Smith is not mentioned by name in the charging document, actions by "Individual 4" match Smith's activity and publicly known interactions with Sante Fe, New Mexico-based Phoenix Solutions LLC, which was created by Cothren and was the nexus of the alleged scheme.
Early Tuesday morning, Casada, 63, a Franklin Republican, and Cothren, 35, of Nashville, were arrested by FBI agents. They entered U.S. Magistrate Judge Alistair E. Newborn's courtroom wearing hand and leg restraints, which were removed once they were in the courtroom.
Several of the charges carry prison terms of up to 20 years and $250,000 fines.
"The truth will come out," Cothren told reporters as he left the courthouse.
Casada had no comment.
Cade Cothren, center, the former chief of staff to former Tennessee House Speaker Glen Casada, leaves Federal Court Tuesday, Aug. 23, 2022, in Nashville, Tenn. Cothren and Casada have been arrested on federal charges including bribery, kickbacks and conspiracy to commit money laundering with federal funds. (AP Photo/Mark Humphrey)The charging document alleges Casada and Cothren worked with then-lawmaker Smith, a former Tennessee Republican Party chairwoman, in the alleged scheme to benefit from constituent mail accounts using Phoenix Solutions -- which was run by Cothren, not a fictional businessman named Matthew Phoenix -- to conceal their involvement.
Smith also made extensive use of Phoenix through her personal political campaign account to support GOP candidates. She later mounted a surprise leadership challenge in 2020 to House Republican Caucus Jeremey Faison, R-Cosby. Faison had unsuccessfully opposed the caucus' approval of Phoenix as one of its approved vendors for members, suspecting that Cothren, Smith and Casada might have been involved.
Smith then launched a challenge to Faison's leadership, he confirmed to the Chattanooga Times Free Press in March 2022.
"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. "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."
Casada briefly served as House speaker in 2019 but was forced to resign the powerful post after racist and sexist texts between Casada and Cothren were leaked by a third party.
Support for the sometimes-feared Casada had previously been weakened among GOP members after he forced through Republican Gov. Bill Lee's school-voucher bill by a single vote. There were allegations that intense horse-trading having pushed it across the finish line, and some critics openly questioned whether a legal line had been crossed.
Cothren left the staff of the legislature. His involvement in Phoenix Solutions was apparently concealed because of the damage the scandal did to his reputation.
Casada remained a member of the legislature and ran unsuccessfully this year for Williamson County clerk. He leaves office on Nov. 8.
Mailer program
The indictment alleges "it was a purpose of the conspiracy for Casada and Cothren and Individual 4 to enrich themselves by embezzling, stealing, obtaining by fraud, and otherwise without authority knowingly converting to the use of any person other than the rightful owner and intentionally misapplying, property and money that was owned by, and was under the care, custody, and control of the State of Tennessee, that is, Mailer Program funds."
It also alleges it was a part of the conspiracy of the trio "to enrich themselves" by exploiting Casada and Smith's official positions. The indictment lays a foundation for federal involvement, noting Tennessee government receives more than $10,000 from the federal government. That's vast understatement of the billions of dollars Tennessee gets annually from Uncle Sam's coffers.
The indictment says Casada and Smith used their official positions to obtain state approval of Phoenix Solutions as a mailer program vendor, resulting in state funds for Phoenix Solutions and other companies to share in the proceeds of those fraudulently induced disbursements.
The other companies apparently refer to Smith and Casada's political consulting firms.
Phoenix received an estimated $52,000 from the General Assembly's constituent mail program.
Assuming the role
Charging documents say Cothren launched Phoenix Solutions with Smith's and Casada's "knowledge and support" to offer mail and consulting services to lawmakers.
The two told legislative officials the firm was run by "Matthew Phoenix," actually an alias for Cothren. Casada was aware of that, the indictment alleges.
Under the apparent direction of top legislative officials and the FBI, Connie Frederick, the General Assembly's director of legislative administration, began requiring more information and documentation as well as saying she wanted to speak directly with the "Matthew Phoenix."
Smith emailed Cothren saying he "may have to assume the role of Matthew again," according to the indictment.
Cothren replied, saying, "Matthew, reporting for duty!"
He included a GIF of "a salute from Harrison Ford's character Han Solo in the movie 'Star Wars,'" the indictment states.
A separate text exchange showed Casada texted Cothren in late 2019 saying, "I think this is starting off well I'm pleased!"
Cothren responded, "we just have to make sure no one knows it's me involved," according to federal officials.
Legislative Director Ridley also began pressing "Matthew Phoenix" to submit a signed IRS W-9 document to participate as a vendor. Cothren signed the form as Phoenix, authorities allege.
The document states that the person signing is acting "under penalties of perjury" if caught lying on the form. The form was emailed to the state.
Casada at one point fretted that lawmakers wanted "representatives from Phoenix" to make an in-person presentation.
Cothren replied that they needed to remind lawmakers "they live in New Mexico. Will have to get on the phone for it and I could disguise my voice if I has (sic) to," the indictment says.
Much of the political mail was run through a mail house in Hixson.
Phoenix was not the only new vendor with murky origins involved in 2020 elections.
Another was the Utah-based "Faith Family Freedom Fund" which launched independent-expenditure attacks on then-Rep. Rick Tillis, R-Lewisburg, whose lampooning on Twitter of Casada and ultra-conservative Republicans drew the wrath of Casada and others and also resulted in someone urinating on Tillis' office chair.
The Tennessee Registry of Election Finance moved to subpoena Casada as well Cothren to audit the fund after hearing tearful testimony from a former Cothren girlfriend who said she created the fund at the request of Cothren, her then-boyfriend. She said Cothren assured her there was nothing wrong in what she was doing and that she never took any further actions.
Cothren continues to battle the subpoena to testify before the Registry of Election Finance.
Tillis faced GOP challenger Todd Warner of Lewisburg in the House District 92's August 2020 GOP primary race.
A political consultant told the Times Free Press last year that he dealt with Cothren on business involving both Phoenix's political mailers and the Faith Family Freedom Fund and was told to bill some expenses to Phoenix and others to the Faith Family Freedom Fund.
Warner also used unknown political vendor, Dixieland Strategies of Rainbow City, Alabama. He beat Tillis. Earlier this year, Tillis sat in a federal courtroom in Nashville as Smith pled guilty.
Cothren's attorney, Cynthia Sherwood, told reporters after Tuesday's arraignment that Cothren plans on "strongly defending [against] the charges. We've got to let this matter proceed through the judicial process and Mr. Cothren looks very forward to being vindicated."
Casada attorney Ed Yarbrough had no comment. Nor did Casada.
Assistant U.S. Attorney Amanda J. Klopf and trial attorney John P. Taddei of the Justice Department's Public Integrity Section are leading the prosecution of Casada and Cothren.
High standards
House Speaker Cameron Sexton, a Crossville Republican who succeeded Casada and whose office began cooperating with the FBI soon after Casada resigned the post, was among a group of lawmakers and former or current staffers to troop before a federal grand jury in March, providing information.
"In Tennessee, we will not tolerate public corruption, defrauding our state, or bribery at any level," Sexton said in a statement on Tuesday. "I commend the Federal Bureau of Investigation for its hard work, diligence, and dedication that resulted in this morning's arrests.
"As I have previously stated on several occasions, shortly after becoming speaker in 2019, I began assisting the federal authorities during and throughout their investigation -- including leading up to today's indictments, and I will continue to do so if a trial is needed," Sexton said. "Today is a good day for Tennesseans because we did not turn a blind eye on these criminal activities."
Gov. Lee spokeswoman Casey Sellers issued a statement Tuesday.
"We trust the process, the legal process, and continue to hold Tennessee's public servants to high standards of accountability," the statement said. "The governor commends Speaker Sexton for running the House with integrity and setting the expectation that elected leaders must serve Tennesseans in good faith."
BACKGROUND
FBI searches offices, homes, of Tennessee lawmakers, including Hixson Rep. Robin Smith
FBI investigation throws curve ball as Tennessee General Assembly annual session kicks off Tuesday
Tennessee lawmakers in FBI probe spent nearly $200,000 with new campaign vendors
Tennessee Rep. Robin Smith directed colleagues' taxpayer-funded mail to New Mexico vendor
Political vendor Phoenix Solutions tied to Sen. Gardenhire's campaign
Republican political vendor Phoenix Solutions worked in bitter Tennessee primary battle last fall
FBI investigation at Tennessee statehouse continued through legislative session
Former Tennessee Rep. Robin Smith pleads guilty to fraud
Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.