This week, ahead of an anticipated revelation that he had allowed himself and the ruling coalition on the city council he heads to be taken in by a conman now under federal investigation, San Bernardino Mayor John Valdivia first asked and then unsuccessfully pressured City Manager Teri Ledoux to use the authority Valdivia had vested in her to rescind the contract his action engendered after the city was burned for nearly $37,000 in the deal.
Following Ledoux’s refusal to help Valdivia make the problem with now-discredited lobbyist Michael Esposito go away quietly, the city council is now scheduled to deal with the issue very publicly next week.
Last year, in June, Valdivia and his then-chief of staff, Bill Essayli spearheaded a proposal to make a combined $160,800 in cuts to the pay provided to the city attorney and city clerk, whose status as elected officials will expire in March of this year in accordance with the revamped city charter that was approved by voters in November 2016, and divert that money to hiring what Valdivia and other city officials euphemistically refer to as “advocates,” and who in reality are lobbyists in Sacramento and Washington D.C. Before legal challenges by City Attorney Gary Saenz and City Clerk Georgeann Hanna succeeded in nixing the combined takeaway of their salaries and benefits through March and necessitating that the city reinstitute their wages with backpay, Valdivia and his new chief of staff, Matt Brown by late September had convinced a majority of the city council to go along with the hiring of two lobbying firms. City Manager Teri Ledoux and her support staff had invited various lobbying firms to submit proposals to do that work and then did a survey of those responding to determine which ones might be considered by the city council as suitable candidates to serve as San Bernardino’s state and federal legislative and governmental advocates. According to Ledoux, Sacramento-based Joe A. Gonsalves & Son topped the list of the city’s best options for representation in the state capital and Washington, D.C.-based Townsend Public Affairs qualified as the best fit to work on behalf of the city in the nation’s capital. The city council took up the prospect of hiring a lobbying firm at its October 2 meeting. After hearing from city residents Treasure Ortiz and Luis Ojeda, who inveighed against using city funds to employ the firms for what they considered questionably-effective efforts that would take money away from other more meaningful and productive efforts, Councilman Henry Nickel insisted that having federal and state lobbyists is de rigeur for a municipality in this day and age, rejecting Ortiz’s and Ojeda’s objections as juvenile naïveté. “Any city of our size and caliber has an advocacy team working for them in the state and at the Capitol,” Nickel said, asserting that employing lobbyists is how the city wrings more money for itself in state and federal pass-through funds. “We’re the largest city in the county, the county seat,” he said, before derisively referring to Ortiz and Ojeda as “individuals who’d say we don’t need this.” Paying lobbyists may have seemed penny foolish to the likes of Ortiz and Ojeda, Nickel said, but expending the money was truly pound-wise he insisted. “This is how we get that revenue back,” he said. “As your elected officials, [we] work to get that money back to use to your benefit. We need this service.”
Councilwoman Bessine Richard concurred, saying hiring a lobbyist was tantamount to making an “investment” in the city.
It was at that point that Valdivia, who normally has no vote on the seven-councilmember panel, leapt in to convince the council that it should rethink the recommendation that Ledoux had made with regard to the federal lobbyist. Suggesting that he had spoken directly with Mike Esposito, Valdivia indicated he had gotten him to reduce from $120,000 the bid Esposito had made for his company, Federal Advocates, to work on behalf of the city annually to $100,000. Councilman Jim Mulvihill said he did not think that Esposito’s direct contact with Valdivia in the midst of the city’s bid evaluation process was appropriate, indicating that should not have altered the city’s decision-making process. “Getting a phone call from somebody shouldn’t change what the staff recommendation has been,” Mulvihill said, a reference to the consideration that despite the price cut, Federal Advocates was still deemed to be the third-place finisher in the competition for the lobbying assignment among four firms.
Councilwoman Sandra Ibarra offered a substitute motion to postpone the city securing advocacy services until the city redressed the issue with the salaries of the city clerk and city attorney. That motion failed with her vote and that of councilmen Mulvihill and Fred Shorett in support of it and the opposition of councilmembers Richard, Nickel, Ted Sanchez and Juan Figueroa. Sanchez then made a motion, seconded by Nickel, to employ Federal Advocates as the city’s federal lobbyist at the rate of $100,000 per year and to hire Joe Gonsalvez and Son for $50,000 per year to provide state advocacy. That passed 4-to-3, with Richard, Nickel, Sanchez and Figueroa prevailing over Mulvihill, Shorett and Ibarra in opposition.
Later that month, Esposito’s status as a superlobbyist began to unravel. Somewhat inexplicably, he had risen, through a combination of circumstance, misinterpretation, mystique and outright deception to become one of the most sought-after lobbyists in the nation’s capital during the first three years of Donald Trump’s presidency, rocketing skyward on a trajectory before plunging earthward in the days, weeks and months after the City of San Bernardino hired his firm.
An airline pilot by trade, Mike Esposito is the son of Sante Esposito, an attorney who has been active in government and politics most of his career, as a staffer and lawyer on Capitol Hill for nearly two decades, a lobbyist after that and then as the owner of his own lobbying firm, Key Advisors, which he founded in 2006. Sante Esposito at one point was associated, at his son’s invitation, with Federal Advisors. In 2016, however, foreseeing difficulties ahead, Sante Esposito disassociated himself with Federal Advisors and his son. Sante Esposito has long been associated with the Democratic Party and was the Democratic chief counsel of the House Transportation Committee. His son, Mike Esposito, shared that association with the Democratic Party.
Those Democratic leanings, however, did not keep the younger Esposito from involving or intertwining himself in business dealings involving Republicans or those involved with Republicans. Sometime after his father’s creation of Key Advisors, Mike Esposito became active himself as a lobbyist, although he did not always act in this capacity directly, sometimes shrouding himself in mystery or using cut-outs or stand-ins to engage in activities or skulduggery when he did not want to be identified or when what he was doing for one client ran counter to the interests of another client. Something that was kept a secret from the outer world but which was known by at least some of those within Esposito’s circle was that he had created an alter ego, Mike Ferrari, under whose identity he carried out a good deal of his activity. One of the more remarkable elements of the entire matter relating to Mike Esposito was that right up until the time Donald Trump was elected, like his father he was a major Democratic Party operative. Then chameleon-like he transformed, somehow without those within the Beltway or the rest of the county catching on, into a Trump sycophant, reaping a benefit of approaching or exceeding $50 million in doing so.
An illustration of this is that in October 2016, at the height of the 2016 presidential campaign, Esposito was making postings in which he was referring to Donald Trump as an “idiot.” In the guise of Mike Ferrari, using the identification “ferrarimike,” Esposito, referring to himself as a lobbyist in Northern Virginia in the weeks just ahead of the election, posted a prediction on Reddit that Donald Trump would lose the election in a landslide that would embarrass himself and the GOP. At the same time, he lionized Hillary Clinton.
“You can scream rigged and unfair all you want but you all nominated the idiot,” ferrarimike wrote in a pointed jab at the Republicans. “There’s something wrong with you if you can’t see how more qualified she is compared to that doof. It’s almost insulting that she has to stand on the same stage as him.”
Magically, however, after Donald Trump’s inauguration, Esposito slithered off his Democratic skin and entirely reinvented himself as a dyed-in-the-wool Republican.
Key to his establishing himself as a rock-ribbed Republican was to step up his conspicuous consumption, showing up in high profile places in luxury vehicles such as Rolls Royces, Lamborghinis and Ferraris, decked out in Louis Vuitton, Cesare Attolini, Luigi Borelli and Luciano Barbera suits. He then made substantial donations to Republican candidates or conservative causes, most often using money collected from others which he pooled and provided in his own name. In one way or another, he wangled an appointment to the Republican National Committee Chairman’s Advisory Board, an honorary position that can be claimed by donors contributing at least $5,000 to the Republican National Committee. Despite his previous close association with the Democrats, Esposito had the foresight in 2016 to make $2,700 in contributions to two Republicans vying for reelection to Congress, though at the same time he had made $5,950 in contributions to Democrats seeking reelection to the House of Representatives.
By June 2017, Esposito was fully involved in financing Republican candidates, particularly ones who were deemed to be potentially vulnerable in the upcoming 2018 election, such that his efforts brought with them some attention. He gave Senator Dean Heller $5,000. He has since provided another $114,000 to Republican members of Congress since the spring of 2017. He provided $5,400 to Trump’s reelection campaign.
Esposito, who could lay claim to but a single federal client for his lobbying firm in 2012, was making humongous strides by the summer of 2017. To help himself, he shouted out that he was a “former staffer on the House Transportation Committee.” That was a prevarication. While his father had worked on the committee for more than a decade, Michael Esposito had never been an employee of the committee. The closest he had come to that was when, while his father was yet on the committee’s staff, he had briefly done a seven-month internship there. By mid-2017, Michael Esposito had divested himself of any vestige of his Democratic Party-affiliated past. In his biography on Federal Advocate’s website, he is described as “an integral part of the senior-most leadership of the RNC and directly advises the chairwoman on issues of significance to the nation.” Michael Esposito is, according to the Federal Advocate’s website “a major player in Republican party politics.”
Indeed, Esposito and Federal Advocates at that point began to shun any clients vaguely associated with the Democrats, focusing exclusively on companies or entities looking to get the ear of the Republican establishment. That strategy worked. Those who did not have complete amnesia with regard to Michael Esposito’s past, at least experienced brain fade. Simultaneously, Esposito was making a series of bold, indeed outlandish, claims about his firm’s, and his own personal, closeness not only to the Trump administration but to the president himself and his family. Remarkably, for two years, Esposito got away with it.
Not only did he get away with it, he profited incredibly by doing so.
In 2014, Esposito could rightfully claim but a handful of federal clients. By 2016, he was doing somewhat better, with Federal Advocates having brought in $907,000 from clients that year. In 2017, Federal Advocates made a major leap forward, pulling down $3.25 million, prompting Bloomberg Government News Service to proclaim Federal Advocates the “best performing” lobbying firm of 2017. Other media outlets followed suit, and Esposito was suddenly being celebrated as the most influential lobbyist in all of Washington, D.C. In 2018, Federal Advocates’ income grew to $4.66 million.
In 2019, Federal Advocates appeared to be moving so rapidly up the charts that the trajectory could not be shown on a single page. Moreover, the firm was beginning to take on international clients. On December 21, 2018, Esposito registered to represent three overseas entities: the Justice political party in Ukraine; Citizen, a nonprofit led by a Justice party lawyer; and a Poland-based company called Zeset Sp. In the spring of last year, more foreign clients signed up with Federal Advocates. One Ukrainian client wrote the company a $500,000 check. The Chinese technology company Huawei paid Federal Advocates $1.65 million. Simultaneously, cities and counties around the country were racing each other to land Federal Advocates as their lobbyist. The City of San Bernardino appears to have been one of the last of these.
At this point, Federal Advocates and Esposito appear to have been undone in part by the company’s success and in part by Esposito’s misrepresentations. It was perhaps the contract with Huawei or maybe the work for the Ukrainian clients or both, together with Esposito’s boast, freely written in scores of work solicitation letters to local municipalities, that Esposito had a “strong personal and professional relationship with President Trump” or variously, “No other government relations firm possesses the level of personal and professional relationships with President Trump, his family and senior advisors in the White House” that finally rang alarms. In some of those letters, it was stated that Esposito had “independently represented both the Kushner and Trump families’ businesses for over a decade.” It was a claim that Esposito has “an open line of communication to the President of the United States” and is in “regular” contact with the president, which ultimately resulted in a November 1 tweet from the president which at last exposed Esposito as someone who was trading on access that simply did not exist.
“Many people say they know me, claiming to be ‘best friends’ and really close etc., when I don’t know these people at all,” President Trump tweeted. “This happens, I suppose, to all who become president. With that being stated, I don’t know, to the best of my knowledge, a man named Michael Esposito.”
Instantaneously, Esposito and Federal Advocates found themselves under the mcroscope of media scrutiny. In short order, the FBI opened an investigation. Uncovered in the course of that was Esposito’s efforts to involve himself in business ventures with a number of politicians or their family members, activity which the FBI focused upon as potential money laundering, bribery and kickback schemes. On January 2, the FBI served search warrants at Esposito’s home and at the offices of Federal Advocates.
This week, as the implication of what had occurred with Esposito and Federal Advocates was registering across the country, Valdivia, who is himself under investigation by the FBI for allegedly receiving bribe money from the proprietors of businesses or the owners of business licenes applicants in San Bernardino, took note as well. The Sentinel is informed Valdivia approached City Manager Teri Ledoux and requested that she use her authority to cancel the city’s contract with Federal Advocates that was approved by the city council, upon his urging, on October 2. Ledoux told Valdivia she was not willing to scrap a contract approved by council action. This has created a situation in which the matter has now been put on the agenda for next week’s January 15 meeting of the city council. The council will at that point consider rescinding the contract with Federal Advocates, which has been paid or is due to be paid $36,827.62. Since Federal Advocates was given the contract in October, it has not achieved any results for the city.
Valdivia was unwilling to make any public comment on the matter.
Councilman Henry Nickel, who in October had insisted that hiring a federal lobbyist was a necessity and seconded and then supported the hiring of Esposito and Federal Advocates, this morning somewhat sheepishly told the Sentinel, “I don’t think we want to be doing business with someone who is under federal investigation.” He acknowledged, without being specific, that “In the past we had experience with a lobbyist who was a shady figure and we ended that relationship. I think we have to be consistent. I believe next Wednesday we are to reconsider who will be handling our federal advocacy going forward. I still support the advocacy of our city in Washington, D.C. and in Sacramento, for that matter, but I think we will need someone different than we currently have for the federal end of that.”
Nickel said he believed the recommendation that is coming will be to hire Townsend Public Affairs, the firm that Ledoux had earlier recommended and which he and his colleagues had jettisoned in favor of Federal Advocates in compliance with Valdivia’s prompting in October.
-Mark Gutglueck