[Ip-health] WSJ: Rise and Fall of a Pharma Lobbyist
rweissman at citizen.org
Wed Feb 15 10:03:47 PST 2017
The Rise and Fall of a K Street Renegade
Evan Morris, a high-flying corporate lobbyist, is suspected of embezzling millions of dollars in what is shaping up to be a sprawling Washington influence scandal
By Brody Mullins
Few outside Washington had ever heard of Evan Morris. Yet in the capital of wheeling and dealing, he was one of its most gifted operators.
>From his start as an intern in the Clinton White House, he made powerful friends and at age 27 became a top Washington lobbyist for Roche Holding AG of Switzerland, one of the world's largest pharmaceutical companies.
Mr. Morris seized on an idea to reach past elected officials and take the company's message directly to voters, a strategy that helped generate hundreds of millions of dollars for his company. By 2010, he was one of the youngest vice presidents in Roche's 120-year history.
As head of the company's Washington office, Mr. Morris oversaw a budget that over a decade ballooned to about $50 million a year and supported hundreds of lobbyists and consultants.
His apparent success afforded luxuries including $2,000 bottles of wine, a $3 million waterfront vacation home, a $300,000 mahogany speedboat and four Porsches. He belonged to eight private golf courses and hired top chefs to cook for dinner parties at his home. He married and had two children.
On July 8, 2015, Mr. Morris stayed up drinking with Virginia Gov. Terry McAuliffe and a few others after a campaign fundraiser at Mr. Morris's house. They smoked cigars and shared a bottle of Petrus, one of the world's most expensive wines, produced on a 28-acre estate in Bordeaux.
The next day, everything fell apart. The company's general counsel had arranged to meet with Mr. Morris about some unusual expenses. Mr. Morris arrived, then fled the meeting early.
He ended up at his favorite golf club, where he retreated to a secluded spot on the course, carrying a bottle of wine. Mr. Morris sat in a wooden lounge chair, took out his phone and started texting his wife.
Government investigators now suspect Mr. Morris embezzled millions of dollars from his company over a decade in a kickback scheme involving Washington consultants he did business with, according to people familiar with the probe by the Justice Department and Federal Bureau of Investigation.
It is shaping up to be one of the biggest U.S. investigations into Washington's influence business since the bribery and corruption case surrounding lobbyist Jack Abramoff rocked the nation's capital in the mid-2000s.
Investigators are trying to determine if any of the lobbyists, media advisers, political strategists and consultants hired by Mr. Morris had helped hide alleged kickback payments, which could yield fraud or other charges. Federal prosecutors have already presented evidence to a grand jury.
Millions of dollars went missing from the Washington accounts overseen by Mr. Morris, said people familiar with the findings of an internal company investigation. The inquiry concluded that "a senior vice president of the company had violated our policies and procedures," a spokesman said.
Prosecutors are investigating whether Mr. Morris took company money to pay for real estate, golf memberships, Rolex watches, fancy wine and cigars.
Among Washington lobbyists, Mr. Morris was an early pioneer in the practice of exploiting gaps in disclosure laws for companies to spend millions of dollars, much of it untraceable, to fund stealthy influence campaigns.
What might appear to lawmakers as a public outcry could instead be the product of a lobbying operation conducted beyond the bounds of conventional tactics-what Mr. Morris and his team had called "black ops." The lobbyist rode that wave, boosted his employer and made himself rich, until he crashed.
The account of Mr. Morris's rise and fall is based on interviews with consultants, lobbyists and government officials, as well as friends and colleagues who witnessed it.
Road to riches
Born in Queens, N.Y., Mr. Morris grew up with his sister and parents in a 1,500 square-foot home located roughly between the LaGuardia and John F. Kennedy airports in New York City.
While a student at Union College, Mr. Morris interned in 1996 at the White House, where he sat outside the office of Harold Ickes, a top adviser to then-President Bill Clinton. In 1999, Mr. Morris graduated cum laude with a degree in political science.
He landed a job in 2003 at Patton Boggs, a prominent Washington lobbying firm with close ties to the Democratic Party. The office was founded by Thomas "Tommy" Hale Boggs Jr., whose father was the Democratic House majority leader and whose mother served nearly 20 years in Congress. No firm earned more in lobbying fees during the 2000s, disclosure reports show.
Roche spent a few million dollars a year on outside lobbying firms, including Patton Boggs, and the company was interested in expanding its own Washington lobbying office. The company in 2004 had revenues of $27 billion for drugs to treat HIV, anxiety, breast cancer, and the avian flu, among others.
While working for Patton Boggs, Mr. Morris met George Abercrombie, then the chief executive of Roche's North America operations. Mr. Abercrombie wanted more wins from his Washington team. Mr. Morris told him that with enough resources he could do better.
Months later, in 2005, Roche hired Mr. Morris as a lobbyist. Not long after, he was running the Washington office.
Those who knew Mr. Morris say he was gifted at his job and impressed senior colleagues as someone eager to make a name for himself. In early 2005, he got the chance.
A few dozen people abroad had died after contracting the avian flu, and Americans began to worry about a U.S. outbreak. Mike Leavitt, secretary of Health and Human Services in the Bush administration, said at the time the federal government wasn't prepared for the threat.
Roche produced the leading treatment, a pill called Tamiflu. Sensing opportunity, Mr. Morris adopted an emerging lobbying tactic: build support among a lawmaker's constituents to supplement the traditional glad-handing of elected officials with dinners and campaign donations.
Mr. Morris contracted consultants who promoted news stories that stoked fears about an avian-flu outbreak. The goal was to sell more Tamiflu.
In October 2005, 32 Democratic senators wrote a letter to President George W. Bush expressing their "grave concern that the nation is dangerously unprepared for the serious threat of avian influenza."
Within weeks, Mr. Bush created an emergency stockpile of avian flu treatments that eventually included more than $1 billion worth of Tamiflu pills. His administration offered subsidies that led to millions of dollars of additional Tamiflu sales to state governments.
Overnight, Mr. Morris was a company star.
In 2009, Roche acquired Genentech Inc., a San Francisco-area drug firm, and took the name Genentech for its U.S. pharmaceutical business. The deal set off a bruising internal fight.
The two companies had their own Washington lobbying operations, and now needed only one. Mr. Morris wanted to lead it. So did Genentech lobbyist Heidi Wagner. One of her allies called Democratic congressional aides and asked them to call company executives on Ms. Wagner's behalf.
Other Capitol Hill aides friendly with Mr. Morris heard about the calls and alerted him. His backers contributed to an article in the news outlet Politico that quoted anonymous sources saying Mr. Morris was the better pick: He was a Democrat, the party that controlled the White House and Congress at the time. Ms. Wagner, the story noted, was a Republican.
A few weeks later, Mr. Morris got the job. He began work by 6 a.m., often with a meeting on the golf course, and he usually stayed late.
In 2010, the Food and Drug Administration began steps to ban the use of Avastin to treat breast cancer. The FDA had given conditional approval to Avastin-one of Genentech's top-selling products-but reversed course after the agency said its effectiveness against breast cancer couldn't be proved, and it posed a greater risk for severe side effects. Its use to treat other types of cancer wasn't challenged.
At a cost of nearly $90,000 per patient, Avastin provided the company with $6 billion in sales in 2009, including $1 billion from breast-cancer cases. Mr. Morris set out to stop or stall the FDA.
His team launched the Patient Care Action Network, a nonprofit group, which recruited doctors and patients to urge their congressional representatives to fight the decision. Mr. Morris's team promoted articles on conservative websites such as RedState, Breitbart News and BigGovernment.com that quoted women in treatment who said the drug was their best chance at recovery.
Among the readers was Republican Sen. David Vitter, who said efforts to remove Avastin were akin to a death-panel decision. "I shudder at the thought of a government panel assigning a value to a day of a person's life," he said in a July 2010 news release.
The FDA reached a final decision more than a year later. In late 2011, the agency rescinded its approval of Avastin to treat breast cancer.
Mr. Morris took credit for orchestrating a delay that, he boasted to colleagues, generated roughly $1 billion in revenue.
Success paid off for Mr. Morris. In 2006, he traded in his purple Mazda Miata for a Porsche 911 convertible. The next year, he and his wife moved into a $1.7 million house in the Washington suburb of Belle Haven, Va. He told people he spent $1 million on home renovations, transforming it into a five-bedroom, seven-bath showpiece with a 3,000-bottle wine cellar.
Mr. Morris loved golf, food and wine. He kept more than 1,000 cigars in six humidors at Genentech's Washington office. On afternoons, he often retreated to the W. Curtis Draper cigar shop, next to the White House, where he could smoke while doing business by phone.
A former colleague recalled the day Mr. Morris ordered a $2,000 bottle of wine during lunch. When they finished, another bottle was delivered free.
In October 2010, Mr. Morris bought a $1.4 million condo in San Francisco's tallest residential building. He told colleagues it was a bonus for his help in the Genentech merger. Real-estate records show Mr. Morris bought it himself.
Mr. Morris belonged to eight exclusive country clubs in Washington, New Jersey and California. He kept a set of clubs at each. The courses-including the Baltusrol Golf Club in Springfield Township, N.J., and The Olympic Club in San Francisco-were expensive. His favorite was the Robert Trent Jones Golf Club in suburban Virginia, which cost more than $100,000 to join.
Mr. Morris told friends various stories to explain how he paid for his golf memberships. In one version, he covered the fees by holding fundraising events at the golf courses for the Bill, Hillary and Chelsea Clinton Foundation. He told others he received the memberships as a bonus from his company.
A spokesman for the Clinton foundation said the group never had such an arrangement with Mr. Morris. A spokesman for his company said the firm didn't give Mr. Morris golf memberships.
In June 2011, Mr. Morris paid $3.1 million in cash for a waterfront Georgian Estate on Maryland's Eastern Shore. The 7,800 square-foot house had six bedrooms, eight baths, a pool, hot tub and a pair of Sea-Doos, the personal watercraft. He called it the "House that Tamiflu bought," friends said.
Mr. Morris in 2012 bought the mahogany speedboat that he kept docked at the house. He named the custom-made craft the Mulligan. To practice docking it at his private pier, he bought a second motor boat.
Mr. Morris gave different accounts of how he got the boat, according to people who asked him about it. He told some he won it at a charity auction after buying $50,000 worth of raffle tickets. He told others he bought it from someone who had ordered the boat but went bankrupt before it was delivered.
His lobbying victories afforded him relative autonomy over his office-budget spending-as much as $3 million without prior approval from Genentech.
Mr. Morris got on the board of the James Beard Foundation after paying $150,000 with Genentech funds, according to Diane Stefani, a spokeswoman for the prestigious culinary arts organization.
In early 2015, the Morris family was featured in a Washington Post story about people who hired top chefs to cook for dinner parties at home. Mr. Morris told friends he paid $10,000 for David Chang, the chef and founder of New York City's Momofuku, to cook for a dinner party at his home that January.
By law, companies must make public how much they spend lobbying members of Congress and high-level officials in the executive branch. By that measure, Genentech spent about $5 million in 2015.
In reality, companies, including Genentech, spend far more on campaigns to rally people in ways favorable to their business.
Mr. Morris was an early adopter of the strategy and among the most aggressive. He paid for TV and internet ads, opinion polls and focus groups. He sponsored nonprofits that engaged in letter-writing campaigns and organized patient groups that demanded Medicare reimbursement for his firm's drugs.
Expenditures on such under-the-radar tactics aren't required to be made public. Altogether, Genentech spent as much as $50 million a year to shape government policy under Mr. Morris.
He also had control of political fundraising accounts, which allowed him to direct money to favored members of Congress.
>From 2005 to 2015, Mr. Morris steered nearly $3 million in political donations, according to campaign-contribution records. Roche and Genentech donated more than $1 million to the Democratic and Republican governors associations.
Mr. Morris and his wife, a former schoolteacher, made more than $125,000 in personal campaign contributions from 2003 to 2015, the records show. The couple donated to nearly 50 lawmakers, almost all Democrats. Mrs. Clinton was a top recipient.
Mr. Morris helped the Biotechnology Innovation Organization, a Washington trade group, hire Mrs. Clinton to address its 2014 annual convention. She was paid $335,000, records show. He arranged donations to the Clinton foundation of between $110,000 and $275,000 from the Roche Family Foundation and Genentech, public records show.
After a 2010 fundraising event he organized for a Democratic lawmaker at the Bayonne Golf Club in New Jersey, Mr. Morris invited donors to meet and take photos with Mr. Clinton, who had just finished a round of golf.
Genentech donated $750,000 to help fund festivities for former President Barack Obama 's second-term inauguration in January 2013. Mr. Morris and his wife, Tracy, attended a White House party hosted by the Obamas a few days before the swearing-in ceremony. On Inauguration Day, the couple sat in prime seats in front of the White House for the parade.
The next year, Mr. Morris was invited to a White House concert with performers Aretha Franklin, Patti LaBelle, Ariana Grande and Melissa Etheridge. About 200 people attended, including the president, first lady Michelle Obama and several cabinet secretaries, visitor logs show. Mr. Morris and his wife sat in the front row.
Behind the curtain
Mr. Morris wasn't required to publicly report most of his spending. As it turned out, he also sought to keep others in the dark.
In 2005, Mr. Morris started working with the advertising firm National Media Inc. and James Courtovich, a Washington media consultant who worked for National Media and started two other firms, including Sphere Consulting LLC.
Financial transactions viewed by The Wall Street Journal showed the three firms did millions of dollars in consulting business with Genentech from 2005 to 2015. The records also showed that National Media and Mr. Courtovich's two firms sent millions of dollars to Mr. Morris's personal bank account.
Mr. Morris "created schemes to misappropriate company funds for personal gain and deliberately concealed his actions," Genentech said in a written statement. Genentech didn't say how much it paid the firms over the decade, or how much the firms paid Mr. Morris.
People familiar with the matter said Genentech's contracts with the three firms reached $3 million in some years.
In one example, Mr. Morris hired Mr. Courtovich's Sphere Consulting in 2012 for $880,000 to do policy work with think tanks, according to documents viewed by the Journal. Genentech paid Sphere two payments of $440,000 each on Nov. 1 and Dec. 1.
On Dec. 10, Mr. Courtovich's firm sent a payment of $448,986.22 to Mr. Morris's personal bank account.
Eric Lewis, a lawyer for Mr. Courtovich and Sphere Consulting, said the payment was to reimburse Mr. Morris for personal funds that he said he used for an event with the American Enterprise Institute, a Washington think tank. Mr. Lewis provided the Journal with an AEI invoice for $448,986.22 that Mr. Morris gave Sphere.
An AEI spokeswoman said the invoice was falsified.
"Sphere is shocked and dismayed that Sphere's client provided fake documents that defrauded not only his company but Sphere as well," Mr. Lewis said. The standard practice at National Media and Sphere, he said, was that an accounting team would review and approve receipts from Mr. Morris before issuing a reimbursement check. The Sphere transactions were reviewed in a random audit by the Internal Revenue Service, he said.
"It was always Sphere's understanding that these documents were not only provided for reimbursement by Evan Morris, but also provided duly to the accounting team at Genentech," Mr. Lewis said.
Genentech said in a statement: "We do not have any information to suggest that these reimbursements were legitimate, and in any event would not authorize payments to a vendor to reimburse an employee for business-related expenses."
In another instance, Genentech paid National Media $2 million for public affairs counseling and strategic consulting, the records show. On April 6, 2012, days after National Media received the final installment of $750,000, the firm sent $303,048.95 to the Hacker Boat Company, which made and sold the Mulligan, Mr. Morris's boat.
Evan Tracey, a vice president at National Media, said Mr. Morris had submitted an invoice for that amount saying it was for the cost of renting space, buying food and other expenses related to an event at the Hacker Boat Company for the "Democratic attorney general group."
The Democratic Attorneys General Association and the boat company said no such event took place. A spokesman for Hacker said Mr. Morris's boat cost $303,048.95.
National Media ended its relationship with Genentech in 2012, Mr. Tracey said. Mr. Morris worked with Mr. Courtovich, independently of National Media, until 2015, according to people familiar with the matter.
Mr. Tracey said National Media's business with Genentech was performed with "appropriate contracts, purchase orders, and with a clearly defined approval and verification process."
Mr. Lewis, the lawyer for Sphere, said: "At no time did the Sphere team (or anyone else to our knowledge) have any reason to believe that any of these payments were anything other than what they were on their face: bona fide reimbursements."
In January 2015, the Democratic Party announced Mr. Morris would serve on the fundraising committee for the 2016 Democratic National Convention.
Mr. Morris told colleagues he might be done with lobbying. He said he had an exit plan: Raise enough money for Democrats and Mrs. Clinton's 2016 presidential campaign to land a job as a U.S. ambassador, perhaps to Switzerland, where Roche had its world headquarters.
In May 2015, Genentech said it received an anonymous letter that warned of unusual financial arrangements by Mr. Morris and triggered an internal investigation.
On July 8, 2015, Frederick Kentz, the chief compliance officer and head of legal affairs at Genentech, told Mr. Morris he was flying to Washington from San Francisco to meet with him the next day. The lawyer told Mr. Morris to clear his schedule.
That night, Mr. Morris and his wife hosted a fundraiser at their home for a Democrat running for the Virginia state senate. Afterward, Messrs. Morris and McAuliffe, the Virginia governor, smoked cigars and drank on a back patio with a few other guests.
Mr. Morris had confided to a few people at the fundraiser that he was nervous about the meeting with the lawyer. Mr. McAuliffe, through a spokesman, said Mr. Morris didn't appear troubled that night and had talked about hosting a fundraising event for Mrs. Clinton's presidential campaign.
The next morning, July 9, Mr. Morris drove a new Porsche to the company's downtown Washington office and parked in the building's garage.
The meeting took place at the office of one of Genentech's law firms. When Mr. Morris arrived, he was ushered into a conference room where a member of the firm told him that an investigation had found unusual payments.
Mr. Kentz planned to tell Mr. Morris that he was being suspended, but Mr. Morris abruptly left the office before the lawyer had a chance.
When Mr. Morris's wife didn't hear from him that afternoon, she called and sent text messages. He answered by text saying he was in meetings.
Mr. Morris went to the Robert Trent Jones Golf Club in Virginia. Employees were preparing for a coming professional golf tournament hosted by Tiger Woods. Genentech was a sponsor.
Mr. Morris had landed a coveted spot in a charity tournament scheduled the day before the PGA event. He was slated to tee off with Erik Compton, a professional golfer who had used a Genentech drug after a heart transplant.
As afternoon turned to evening, his wife began to worry. Mr. Morris hadn't returned her calls. Family friends searched the parking garage for his Porsche. Someone suggested she check his debit and credit cards online.
She learned her husband had made a purchase that day-at Loudoun Guns Inc. in Leesburg, Va. She called him again, but he didn't answer. She left him a voice mail saying that everything would be OK. She texted photos of their two children and then called police.
When Mr. Morris finished his round of golf, he went to the locker room, showered and put on a blue blazer with the club's insignia. He ordered a steak dinner at the clubhouse and bought a round of drinks for everyone at the restaurant.
Mr. Morris asked for a bottle of Petrus. Around sunset, he walked to a secluded spot a few hundred yards from the clubhouse where members sometimes smoked cigars around a fire pit. He sat in an Adirondack chair and drank. He texted his wife the contact information for his accountant, financial planner and a life-insurance provider.
Mr. Morris, 38 years old, placed an instruction on his lap: "Do not resuscitate." He took out his new revolver and fired one shot into the fire pit. Then he put the muzzle of the gun to his mouth.
Around 10 p.m., a server from the clubhouse found the body.
-Devlin Barrett contributed to this article.
Write to Brody Mullins at brody.mullins at wsj.com
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