Nashville's private club with a PAC

• The Standard operates its own state political action committee.
• The PAC has donated almost $100,000 to state and local leaders who are members or who frequent the club.
• Some of the PAC money is from Andy Miller, a controversial Republican donor with ties to ousted former lawmaker Jeremy Durham.

The menu at The Standard is not unexpected for a Nashville eatery that bills itself as elite: $38 blackened Chilean sea bass, $100 steaks and “exotic game,” priced at market value.

But the restaurant at The Smith House on Rosa Parks Boulevard, a few blocks from the state Capitol, offers more than just a good meal on the first floor. There is a swanky private club for those who buy their way in.

Some nights, the club brings in boxers for a “gentlemen’s brawl,” accompanied by lobster and cocktails. On one night, a hate group hosted an event about Islam.

Many nights, the most powerful state lawmakers imbibe and eat at the club. Often it’s at the expense of their campaign donors. A USA TODAY NETWORK-Tennessee analysis found 25 Tennessee legislators and one prominent Nashville elected official, or their political action committees, combined with seven other state PACs to spend $150,000 from their campaign coffers at the restaurant and club since 2009.

More than $50,000 of that money was spent by elected officials to pay for their personal memberships in the club.

Those officials include House Speaker Beth Harwell, House Majority Leader Glen Casada, Nashville District Attorney Glenn Funk, former House majority leader and current state Rep. Gerald McCormick and former Lt. Gov. Ron Ramsey. Funk is the only Democrat.

“I’m sure it was entertaining people who come to town. I’m sure that’s what it was. Legislators, et cetera. I will look into it. I don’t even know if I currently am (a member),” said Harwell, when asked why spending donor money on a membership at a private club is a legitimate campaign expense.

The Standard also operates its own state political action committee, which has donated almost $100,000 to state and local leaders who are members or who frequent the club.

Some of the PAC money is from Andy Miller, a controversial Republican donor with ties to ousted former lawmaker Jeremy Durham and the Tennessee Freedom Coalition, an organization deemed a hate group by the Southern Poverty Law Center.

The private club’s PAC, club memberships and restaurant tabs paid with campaign funds shed new light on a state campaign finance system that has come under fire in recent months. A six-month state investigation discovered Durham possibly violated state campaign law nearly 700 times.

After analyzing hundreds of pages of reports, the USA TODAY NETWORK-Tennessee found nearly $32,000 in total possible double dipping — using campaign money to pay expenses already paid for by public funds — by 55 lawmakers. The analysis also showed hundreds of thousands of dollars in campaign spending by almost every lawmaker combined that may be considered using donor money for personal gain.

Across the country, state and federal prosecutors have zeroed in on lawmakers they believe have used campaign money to benefit themselves.

Read more:

Analysis: Possible double dipping at Tennessee statehouse

Dry cleaning, tickets and Barney Fife: How Tennessee lawmakers spend your donations

‘A sense of mystery’

Big corporations, nonprofits and politicos have PACs. Restaurants typically don’t.

Josh Smith, 40, worked in real estate and as an executive with Titan Financial Group before establishing The Standard and the private club in 2009.

"It's private but not secretive," Smith said about the club in an interview with the Nashville Business Journal.

In May 2011, The Standard hosted an event with Miller and the Tennessee Freedom Coalition.

The coalition and Miller are both known for their anti-Islamic rhetoric. That permeated the event, called “Sam Solomon — Sharia-straight talk at The Smith House.” The Southern Poverty Law Center tracks people who travel the country telling the “horrors of Sharia Law,” and Solomon “may fit that mold,” said Ryan Lenz, a senior writer for the Intelligence Project at the SPLC.

At the time of the event at The Standard, the Tennessee Freedom Coalition was at its peak of “cultivating a pretty toxic climate” by spreading anti-Muslim bigotry in the state, Lenz said. Lenz said he’s seen venues host hate groups without actually knowing the views of the group. But if an organizer knowingly has an entity like the Tennessee Freedom Coalition speak at his or her location, "then one can only assume that they espouse those ideologies as well.”

By 2012, Smith was looking for more people to join the private club, according to a testimonial from The Bohan Group, a prominent Nashville advertising company.

The testimonial states Bohan was able to increase the club’s membership by 73 percent, thanks in part to changing its branding with its menu and event invites so that they “gave the private club a sense of mystery.” The Business Journal article states the club had 173 members by 2014, charging $3,300 for dues.

Records indicate Smith started his political action committee around the same time he asked for Bohan’s help. He appointed Troy Brewer as his treasurer, a move that is noteworthy in Tennessee politics. Brewer, who unsuccessfully challenged Rep. Bo Mitchell for a Nashville seat in the legislature, is the pre-eminent accountant used by the Tennessee Republican Party and many Republican candidates around the state.

Smith declined to provide much information about the club or the PAC, but did say “there’s nothing to hide” and the PAC is “very transparent.”

The rationale for the club having the PAC, formed in 2012, is quite simple, in Ramsey’s opinion.

“To help good people get elected, why everybody has a PAC,” Ramsey said.

“(Smith) wanted to be more involved in campaigns, and he said how’s the best way to do that, and I told him what I thought was the best way to do that. So that’s the way we did it,” Ramsey said, adding he’s helped Smith raise money for the PAC.

“He’s had dinners down there, things of that nature, and asked if I would come in. Obviously, people like to have access to lawmakers. I’d go into dinners, we’d talk to them about different issues up at the legislature right now.”

Casada said in his conversations with Smith he thought the PAC is “a pro-business PAC that meets with legislators to talk about making and keeping Tennessee a pro-business state.”

Records show the committee started out small, with a $100 loan from Smith in January 2012. There have been about 60 donations totaling $260,000 to The Standard Club PAC since it was formed, a relatively small number of contributions.

They come from Miller and an array of farmers, authors, musicians and a group of small hotel owners around Nashville. The Tennessee Hospitality Association PAC contributed $6,250 to The Standard Club PAC in May 2014.

The PAC and lawmakers

A USA TODAY NETWORK-Tennessee analysis of spending and donations by the PAC shows a peculiar circle of payments that end up helping lawmakers politically and personally.

On Dec. 19, 2013, McCormick’s PAC paid $3,000 in membership dues. On Jan. 9, 2014, The Standard Club PAC gave McCormick’s PAC $3,000.

And in 2016, The Standard Club PAC gave McCormick’s campaign committee $3,000 on Oct. 24. McCormick’s PAC paid the exact same amount to The Standard club for membership dues 38 days later.

Ramsey paid $3,000 for dues at The Standard from his PAC in June 2014 and received a $3,000 contribution from The Standard Club PAC in October 2014.

The recently retired lieutenant governor said the money his PAC received from the club’s PAC is “completely unrelated” to the campaign money he used to pay the club's membership fee, even though The Standard Club PAC donations to Ramsey were at times the exact amount of a membership at The Standard Club.

Casada agreed the donations and dues don’t go hand in hand.

“I can’t speak on specifics, but I just contend that’s coincidental,” Casada said.

McCormick said the campaign finance reports are accurate, but maintained there was no deal or conversation about using the contribution from The Standard Club PAC to buy a membership.

“I see where it would raises questions. But again, in my case, and hopefully in the other cases, there was never any hint of a quid pro quo on that. And if there had been, I would have called the TBI,” McCormick said, referring to the Tennessee Bureau of Investigation.

“And $3,000, when you’re raising hundreds of thousands of dollars, is certainly not enough to risk federal prison over. ... As a matter of fact, no amount of money is worth risking federal prison over.”

Smith also said there was no correlation between his PAC giving campaign contributions to lawmakers and those lawmakers using campaign funds to pay for their memberships in the private club.

“No, there’s not. Not at all. Never has been,” Smith said.

Funk, who successfully ran in 2014 for district attorney general of Nashville, said it’s not a coincidence, at least in his case.

“What I was pitched on was hey, The Standard PAC will give money, up to $10,000 to another PAC, we’ll start with $3,000 (and) you’ll be able to use this facility to host events that could serve as fundraisers,” Funk said Wednesday in a phone interview.

“So they donated $3,000 to Funk PAC and I used that $3,000 to have the PAC become a member of the club.”

Campaign reports for Funk’s PAC show on June 13, 2014, The Standard PAC gave $3,000 to Funk’s PAC. On June 16, the reports show Funk’s PAC spent $3,000 on “dues/subscription” at The Standard.

Funk said he wanted to use the PAC to raise money for nonprofits, such as Tennessee Voices for Victims and the YWCA. However, he said he never got around to raising the money after he won and eventually closed the PAC after reports were filed late.

Receiving money from The Standard Club PAC and then using that money to pay for a personal membership at the club raises serious questions, said Brendan Fischer, a program director for the Campaign Legal Center.

“If this is a private club with a set membership fee, they would likely be prohibited under state law to just allow lawmakers to join for free, that that would be an impermissible gift,” said Fischer, who is also an attorney for the Washington, D.C.-based nonprofit advocacy group.

“This would be their workaround: They give a contribution in the amount of the membership fee, and then it’s basically assumed the lawmaker would use that contribution as a cost for the membership fee. That definitely does seem to raise questions about whether a gift rule is being violated.”

As someone who doesn’t drink or smoke, Funk said he didn’t use the membership to regularly attend the club. Asked whether his membership could be akin to skirting state gift regulation, Funk said he needed to do more research.

“If there are questions, I want to answer them, and if I received bad advice in 2014 I’ll take proper steps to correct it,” Funk said.

On Friday morning, a spokeswoman for Funk sent a statement the district attorney had received from Drew Rawlins, executive director of the Tennessee Bureau of Ethics and Campaign Finance. Funk briefly explained the situation in the email to Rawlins.

"Based on the information you have provided below, I do not see that any campaign finance statutes were violated," Rawlins said in the email to Funk.

In a follow-up email, Rawlins said there are no limits on a private club giving lawmakers anything, as long as the club doesn't employ a lobbyist.

"Lobbyists and employers of lobbyists are subject to the gift ban and its exceptions. Non-lobbyist individuals, PACs, businesses who are not employers of lobbyists are not subject to a gift ban (as long as it is not at the direction of a lobbyist or employer of a lobbyist)," Rawlins said in an email.

None of the lawmakers said they thought buying the membership with campaign donations was wrong.

State campaign finance law says donor contributions may be used for membership fees, but no purchases can be made for personal purposes. The fact that anyone who isn't a lobbyist can give gifts to lawmakers was highlighted in a previous USA TODAY NETWORK-Tennessee investigation, which found several politicos paying for plane rides or offering up condos for legislators. In light of that investigation, lawmakers are preparing to pass a new law that would create greater transparency requirements for reporting such gifts.

In Tennessee, using campaign funds for personal purposes is punishable by a fine of up to $10,000 for each offense.

In other states, federal and local prosecutors have charged state lawmakers with wire fraud or mail fraud when those lawmakers have solicited campaign donations through the mail or online and then spent that money on non-campaign-related items.

The FBI, U.S. attorney for Middle Tennessee and a special state prosecutor are all investigating Durham on the possibility he committed such crimes. Durham has denied any wrongdoing.

The PAC and Miller

Two weeks after Smith started the PAC in 2012, Miller contributed $10,000. Miller later made two other donations totaling $20,000 and may have orchestrated as much as $116,000 in additional contributions.

In October 2013, the PAC for Joe Carr gave $10,000 to The Standard Club PAC. Carr is a former GOP state lawmaker who challenged U.S. Sen. Lamar Alexander in 2014 through a campaign largely bankrolled by Miller. Carr and Miller also faced scrutiny during that campaign after Carr invested campaign funds into Miller’s personal business.

The largest donation made to The Standard Club PAC may be an attempt to obscure where a state lawmaker is sending some of his campaign funds, thanks to several contributions that appear connected.

On July 11, state Sen. Brian Kelsey gave $106,000 from his campaign committee to The Standard Club PAC. Within 10 days, The Standard Club PAC attempted to contribute $97,000 to a federal PAC called “Citizens for Ethics in Government.”

There is no federal PAC with that name. However, Miller founded a federal PAC called “Citizens 4 Ethics in Government.” Records for the Citizens 4 Ethics in Government PAC show it received $37,000 in July from The Standard Club PAC. Even though the Citizens for Ethics in Government PAC does not exist, state campaign finance records show The Standard Club PAC rescinded $60,000 of its contribution.

Also in July, The Standard Club PAC gave $30,000 to the federal PAC for the American Conservative Union, a national political organization that advocates for conservative policies. Miller’s federal PAC took the $37,000 given to it by The Standard PAC — the only contribution it received that financial quarter — and gave all but $1,000 of it to the ACU PAC as well.

Smith ended a telephone interview before questions about these contributions could be asked. Later he declined further comment.

Miller did not return a phone call seeking comment. Kelsey refused to speak to a reporter, referring questions to a spokeswoman. The spokeswoman has yet to provide a comment.

A spokesman for the ACU also didn’t comment.

Brent Ferguson, an attorney for the Brennan Center for Justice, a public policy and law institute at New York University Law School, thought Miller’s actions raised questions.

“For some reason it sounds like this donor wants to funnel money to this club,” Ferguson said.

In general, the actions of state PACs are supposed to be regulated by the Tennessee Registry of Election Finance. However, the registry only randomly audits 2 percent of campaign accounts every two years, leaving enormous leeway for PACs as long as a complaint is not filed.

Even if a complaint is filed and the registry finds some wrongdoing, it’s rare for the entity to levy any large fines.

Reach Dave Boucher at dboucher@tennessean.com or 615-259-8892 and on Twitter @Dave_Boucher1. Reach Joel Ebert at jebert@tennessean.com or 615-772-1681 and on Twitter @joelebert29.