By Brody Mullins and Devlin Barrett
A federal grand jury has obtained records from companies tied to
a prominent Washington consultant in the government investigation
involving Evan Morris, a former drug-industry lobbyist suspected of
embezzling millions of dollars, said people familiar with the
matter.
The Wall Street Journal reported this week that Mr. Morris was
suspected by authorities of siphoning money from his employers,
Genentech Inc. and Roche Holding AG, to pay for real estate and a
lavish lifestyle of food, wine and golf. He died in 2015.
The Federal Bureau of Investigation and Justice Department are
looking at whether media strategist James Courtovich or any
employee of National Media Inc., where he was formerly a
consultant, had knowingly assisted Mr. Morris to hide unlawful
payments or kickbacks, the people familiar with the matter
said.
Prosecutors are examining financial records from Genentech and
Mr. Morris's personal bank account that show Mr. Morris gave tens
of millions of dollars' worth of business from 2005 to 2015 to
three companies with ties to Mr. Courtovich, including National
Media, according to people familiar with the matter and records
viewed by the Journal. The companies sent millions of dollars to
Mr. Morris's personal bank account, the records show.
Federal investigators suspect that roughly half the money the
Genentech lobbyist steered to Courtovich-related firms ended up in
Mr. Morris's personal accounts or was used to buy luxury items or
services for Mr. Morris, said people familiar with the matter.
"Any attempt to portray National Media Inc. other than as an
innocent party and victim of deception would be grossly
inaccurate," said Evan Tracey, a National Media senior vice
president. He said previously the firm's account with Genentech had
appropriate contracts, purchase orders and "a clearly defined
approval and verification process."
National Media and its affiliated companies together make up one
of the largest political-advertising firms in Washington. Their
clients have included President Donald Trump's election campaign
and the Republican National Committee.
Eric Lewis, a lawyer for Mr. Courtovich and one of Mr.
Courtovich's firms, Sphere Consulting LLC, said Sphere has
cooperated with the government.
"It is our understanding that multiple companies, in addition to
Sphere, provided documents in connection with the investigation of
Mr. Morris," he said. "During our communications with the
government we have been given no indication that Sphere or any of
its employees are targets of any investigation."
Mr. Lewis said Sphere's strict accounting controls "required
full documentation prior to the release of any reimbursement
checks."
Genentech said it didn't have an arrangement with National Media
or Sphere Consulting that might explain why outside companies would
have reimbursed Mr. Morris for expenses.
"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," the company said.
The grand jury in a Washington, D.C., federal court had issued
subpoenas to obtain financial records involving Mr. Morris and the
companies affiliated with Mr. Courtovich, the people with knowledge
of the matter said. The companies provided documents and records to
prosecutors, the people said.
Prosecutors also have collected documents from vendors who did
personal business with Mr. Morris, including home remodeling firms,
people with knowledge of the matter said.
Among the transactions scrutinized by investigators is a
$303,048.95 payment to a luxury boat builder that sold a mahogany
speedboat to Mr. Morris, who had headed Genentech's lobbying office
in Washington, according to the people familiar with the matter.
Mr. Morris kept the boat at his $3 million vacation home.
A few days after Genentech sent National Media a $750,000
payment for consulting work in 2012, National Media paid
$303,048.95 to Hacker Boat Co., which Hacker said was the price of
the custom-made craft Mr. Morris named the Mulligan.
Mr. Tracey, of National Media, has said the payment was made
after Mr. Morris provided invoices for expenses to pay for a
"Democratic attorney general event." He said Mr. Morris submitted
invoices that tallied the rental of the boat company's showroom,
catering and hiring water taxis.
A Hacker Boat executive and a spokesman for the Democratic
Attorneys General Association said no such event took place.
The payment was issued by Jon Ferrell, the National Media chief
financial officer. Through a company official, Mr. Ferrell declined
to comment.
In a statement, National Media pointed responsibility toward
former Genentech account manager, Mr. Courtovich: "Our policy is
that client expense payment requests are the responsibility of the
account manager who has knowledge of the client's activities. Such
expenses are paid by the accounting department if supported by
proper documentation. This was the case for all Genentech expenses
paid."
Mr. Lewis, the lawyer for Mr. Courtovich, said his client had
"no financial or signing authority" while at National Media.
Genentech in an internal investigation found Mr. Morris had
"created schemes to misappropriate company funds for personal gain,
and deliberately concealed his actions."
The South San Francisco biotechnology company, the U.S.
subsidiary of Roche Holding AG of Switzerland, suspended Mr. Morris
in July 2015 while it conducted an investigation.
Mr. Morris committed suicide that month, hours after
investigators for Genentech confronted him about unusual
payments.
(END) Dow Jones Newswires
February 16, 2017 18:13 ET (23:13 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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