APNewsBreak: Iowa congressman failed to disclose new company

A congressman from Iowa violated House ethics rules by failing to disclose his role in a company that he formed, a mysterious outfit that uses his top federal staffer in a false testimonial promoting its services, an Associated Press review shows.

Posted: Feb 21, 2018 1:32 PM
Updated: Feb 21, 2018 1:32 PM

IOWA CITY, Iowa (AP) — A congressman from Iowa violated House ethics rules by failing to disclose his role in a company that he formed, a mysterious outfit that uses his top federal staffer in a false testimonial promoting its services, an Associated Press review shows.

Rep. Rod Blum was one of two directors of the Tin Moon Corp. when the internet marketing company was incorporated in May 2016, as the Republican was serving his first term, a business filing shows. Among other services, Tin Moon promises to help companies cited for federal food and drug safety violations bury their Food and Drug Administration warning letters below positive internet search results.

Tin Moon's website had listed Blum as its CEO and featured an official photo of Blum wearing his congressional pin in front of an American flag. The company removed the photo and changed Blum's title to "majority shareholder" Tuesday after the AP raised questions about House ethics rules. Tin Moon is based in the same Dubuque office as a construction software company he owns, called Digital Canal.

The company has kept up an online video testimonial showing "John Ferland representing Digital Canal" and claiming to be a satisfied customer. Ferland — who is actually chief of staff in Blum's congressional office and has never worked for Digital Canal — claims that Tin Moon is "saving us thousands of dollars every month, keeping our traffic and leads higher," and implores: "From one business owner to another, I suggest you take a look at Tin Moon."

Blum didn't list his positions as director or CEO of Tin Moon on his personal financial disclosure for 2016, despite House rules that require members to identify all corporate positions they held during any part of the year even if they're unpaid. He also didn't list the company as an asset, which would have been required if his interest was valued at $1,000.

In response to questions, Blum told AP he didn't consider the company an asset because it was "worth zero" and "not a functioning company in 2016." Ferland's testimonial was uploaded in September 2016; a YouTube user named "rodblum" uploaded a similar Tin Moon testimonial two weeks earlier.

Blum said he doesn't receive any income from Tin Moon, isn't involved in the company's operations and is "merely a shareholder," but didn't explain why he didn't disclose his role as a director as outlined in the incorporation papers. He said he wasn't aware the company used his official photo, had no idea why Ferland appeared in the testimonial and has no knowledge of the company's guarantee to help hide FDA warning letters.

"I have never seen the website," Blum said.

Ferland said he was asked to film the testimonial by "a friend of mine, Ed Graham," who is president of Tin Moon and Digital Canal and the treasurer of Blum's campaign committee.

Experts on House ethics rules said that, in addition to the lack of disclosure, Blum and Ferland potentially violated others, including those that bar members and staff from using official resources to promote private companies and bringing disrepute upon the institution.

"This is just wrong from A to Z," said lawyer Melanie Sloan , former executive director of the watchdog group Citizens for Responsibility and Ethics in Washington, one of four experts who told AP they saw multiple potential ethics violations. "There is no gray here. He just can't do what he's doing. We were just laughing about it because it's so ridiculous."

Blum, who chairs a House subcommittee on small business, has embraced President Donald Trump's call to "drain the swamp," pushing for congressional term limits and a lifetime ban on lobbying for former House members. Blum, 62, is facing a tough race for a third term representing Iowa's 1st District, which has trended Republican recently after long favoring Democrats. His seat is seen as one of many that Democrats need to capture to win control of the House.

Blum caught national attention last year when he had a heated town hall meeting with constituents and stormed out of a television interview. State Rep. Abby Finkenauer and former U.S. Department of Labor official Thomas Heckroth are among the candidates running for the Democratic nomination to challenge him.

Experts said that Blum will likely face a review by the Office of Congressional Ethics or the House ethics committee, which could result in anything from no action to a warning or reprimand. He could potentially draw scrutiny from the Justice Department because submitting false or materially incomplete disclosures is a crime if done "knowingly and intentionally," but prosecutions are rare and usually are tied to broader corruption cases.

"Either the member and his associates totally didn't know what they were doing, or you've got what could be serious violations of the ethics rules," said attorney Brian Svoboda, an expert on campaign and ethics law.

Tin Moon says it uses search engine optimization techniques to enhance corporations' reputations by ensuring only positive results come back on page one of search engines. It claims 11,000 satisfied clients.

Digital marketing expert Rand Fishkin said the company looks "very sketchy" because reputable firms do not guarantee rankings, which can be influenced but are ultimately controlled by search engines such as Google.

Tin Moon has solicited business by reaching out to companies that have received FDA warning letters that notify them of safety violations and order corrective action, promising: "We WILL remove the derogatory FDA letter from page one so it no longer damages your business and reputation!" Companies that have recently received such letters have been cited over misbranded dietary supplements, unapproved drugs and unsafe seafood imports.

Tin Moon urges recipients of warning letters to contact Monty Alexander, its "reputation management professional." Alexander is also a GOP activist who has supported Blum's campaigns.

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