The Untalented Mr. Santos

George Anthony Devolder Santos

It only took around four months from being sworn in as a Congressmember before George Anthony Devolder Santos was indicted by a federal grand jury in the Eastern District of New York on 13 criminal counts. The allegations are quite serious, and the top line ones carry hefty sentences of up to 20 years. 

Nonetheless, a defiant “George Santos” (using the quotes that the indictment hilariously uses around his name), perhaps channeling his favorite other huckster, proclaimed the whole prosecution a “witch hunt” and vowed to continue his fight for re-election.

So how much legal doo-doo is Santos in? And what about all those other shady things not covered (yet) in the indictment? And why is he still even in Congress? 

It’s a Thorough Thursday, so let’s break it all down methodically.

The indictment: a play in three acts

The best way to think about the 20 page indictment is to break it down into three basic subject areas:

First, there’s a scheme to line his own fancy pockets. Santos solicited at least $50,000 from wealthy donors for a fake super PAC. Santos then used the money to pay off personal debts and for personal expenses like designer clothes. Very on brand! That got him charged not just with wire fraud for the false solicitation over email, but for money laundering when he took amounts over $10,000 and moved them to his own account. (Don’t ever do that, by the way. Prosecutors love to charge wire fraud and money laundering together.)

Second, Santos conducted a pretty lame unemployment benefit scam where he applied for state unemployment benefits during the pandemic, even though he was still receiving $120,000 a year in salary from his then-employer, Harbor City Capital. In total, he received some $24,000 in benefits, which he had applied for week after week for nearly a year. That earned him a charge of stealing public funds and two more wire fraud counts. The gag is that Santos is a co-sponsor of a bill in the House to crack down on… unemployment fraud. The GOP began considering that bill in the House the same day Santos was arrested for it. 

Third, Santos got hit with two counts of making false statements to Congress on his personal finance disclosures. That doozy of a lie came in 2022, when he claimed he earned $750,000 from his own company, the Devolder Organization, and that he had earned something between $1 and $5 million in dividends. The indictment says this was false. Stepping out a bit, this lie was probably so Santos could continue the ruse he had begun that he was a rich banker who had worked at Citigroup and Goldman Sachs.

In plain sight, but not at all hidden 

From a higher level, the indictment portrays Santos as something of a bumbling idiot rather than a crafty conman. He left a clear paper trail of illegal email solicitations, written by an associate at Santos’s request. And his attempts to hide the true origin and nature of various entities were quickly uncovered.

Take the fake super PAC he set up. The indictment calls it Company #1, but based on the establishment date and prior reporting, we pretty much know the indictment refers to the firm RedStone Strategies. Santos never even bothered to register RedStone with the FEC as a super PAC, even though emails to donors falsely described it as an “independent expenditure committee under federal campaign finance law.” That’s a fraudulent representation right there, so any money that comes in as a result of that comprises wire fraud.

A quick check of RedStone Strategies’ registration files revealed that the Devolder Organization—for which he is the sole member—was actually one of RedStone’s managing officers. It’s right there on the internet for anyone to find, and that seems like a huge red flag for a supposedly independent PAC. Prosecutors also allege that Santos transferred funds out of the fake super PAC directly to two personal bank accounts controlled by Santos. This was also probably not hard for federal prosecutors to trace.

Nor will it be hard to make the case that Santos committed unemployment fraud, assuming it is true that he was being also being paid concurrently by his former employer, identified as Investment Firm #1 but which is known widely as Harbor City Capital. Santos’s defense strategy here, which he articulated a bit in a press conference yesterday, appears to be that “during the pandemic, it wasn’t really clear” what he was entitled to claim. An odd thing to say for someone who is co-sponsoring legislation designed to catch and punish cheats.

The same goes for his statements to Congress on his financial disclosures. If he didn’t really earn $750,000 in salary from his own company in 2022, and he didn’t really receive between $1 to $5 million in dividends from it, that should be easy to show. On the other hand, if he did receive or move any large sums of money, he’s got even more explaining to do.

Lingering questions

Those, including me, who were hoping for a few more clues about the larger story around Santos will have to wait to see if anything comes out at trial or in subsequent investigations or charges. There are many unanswered but tantalizing questions yet to be addressed.

For example, Santos’s donors included Andrew Intrater, the wealthy cousin of Russian oligarch Viktor Vekselberg. Intrater also helped fund Santos’s employer, Investment Firm #1 aka Harbor City Capital, with a half million dollar investment. Why would he do that? Did Santos help bring in that investment? Did any of it flow back to Santos? 

Harbor City Capital is now under SEC investigation as an alleged Ponzi scheme, and as reported by Mother Jones, four of its principals are directly connected to a larger GOP operation involving Santos’s campaign treasurer, Nancy Marks, called “Red Strategies USA.” We have yet to hear whether the current case will extend past Santos and to Marks or others. That would be a bigger news story: Marks was also the treasurer for dozens of Republican PACs and GOP campaigns, including Lee Zeldin’s congressional and gubernatorial campaigns in New York. 

There is also the question of how much money “George Santos” actually made. His financial disclosures claim millions in income in 2022 from the Devolder Organization, but this makes little sense. Devolder was organized quickly and, as far as anyone currently knows, owns no real assets. Did Santos inflate the amount? If so, why? Just to appear rich? Or did some big money actually come in, but it wasn’t as he had described? 

The FEC will also want to explore a number of questionable Santos donations from people who apparently do not exist or who claim they never gave money to the campaign. But if they didn’t, where did the money actually come from? The indictment doesn’t raise this question, yet.

Why is Santos still in Congress?

The most common question I have seen also has one of the most frustrating answers. When a Congressmember is under investigation or even indictment, the practice generally is to continue to allow them to serve and vote if they do not resign on their own. Republicans have been quick to point out that politicians from both parties who were under indictment have generally continued to serve unless and until proven guilty.

Speaker Kevin McCarthy, whose majority and speakership hangs by a mere four votes, has protected Santos ever since the allegations broke. While Santos’s fellow GOP congressmembers from New York have called for his resignation, McCarthy and the Republican leadership have called for the process to play out and for a presumption of innocence—even though Santos himself admitted that he had “embellished” his resume to help get elected.

If Santos does not voluntarily resign, he can continue to serve and vote until he pleads or is found guilty on the charges. At that point, if he is sentenced to more than two years in prison, the House Rules dictate that he would not have a vote in committees or the floor. (It would also be impossible for him to vote in person, which is now required.)

A different question is whether McCarthy as Speaker and leader of his party in the House should demand Santos resign or call for a floor vote to expel him. Santos’s district, NY-3, is one that Biden won in 2020. It is very possible that angry Democrats would turn out in force to elect one of their own in a special election should Santos’s seat become vacant. McCarthy definitely does not want to see that happen, and he likely will push off such a result for as long as he can.

That’s because in two critical instances, Santos’s “yes” provided the deciding vote: McCarthy would not have been elected Speaker after 15 rounds of balloting without Santos’s support, and the debt ceiling bill would not have passed either. To underscore his own importance, Santos waited till the end to cast the decisive 217th yes vote in favor of the debt ceiling bill—as if to signal to McCarthy that he cannot afford to lose his vote in the House going forward.

The Feds may have a different take. As part of any plea deal, which Santos really ought to consider to reduce his possible prison time, it would not be surprising for them to demand Santos step down immediately from his seat in Congress. The longer he holds on to it, the greater damage he continues to do to the system, and that can be taken into account in sentencing. 

If I were Santos’s lawyer, looking at the clear paper trail laid out in the indictment, I would tell my client to get to a deal as quickly as possible, and even to cooperate and provide any information he may have on possible campaign misdeeds by others, including his own campaign treasurer, Nancy Marks.

But will the fabulist George Anthony Devolder Santos do that? It would mean he would fade quickly from the spotlight, perhaps a fate worse for him than a long prison sentence.

Stay tuned.